ASSET PURCHASE AGREEMENT
BETWEEN
ATLANTIC STEEL INDUSTRIES, INC.
AND
MMI PRODUCTS, INC.
DATED AS OF JUNE 10, 1996
Table of Contents
Page
ARTICLE I SALE AND PURCHASE OF ASSETS 1
1.1 Agreement to Sell and Purchase 1
1.2 Purchase Price; Assumed Liabilities, Etc 3
1.3 Prorations 5
1.4 Allocation of Consideration 5
1.5 Post-Closing Adjustment 6
ARTICLE II REPRESENTATIONS AND WARRANTIES 7
2.1 Representations and Warranties of Seller 7
2.1.1 Corporate Matters 7
2.1.2 Authorization and Effect of Agreement 7
2.1.3 Conflicts 8
2.1.4 Consents 8
2.1.5 Selected Financial Data. 8
2.1.6 Absence of Certain Changes and Events 8
2.1.7 Real Property 9
2.1.8 Physical Assets and Properties 9
2.1.9 Contracts. 10
2.1.10 Conversion Costs 11
2.1.11 Assumed Liability Obligations to Affiliates 11
2.1.12 Compliance With Laws 11
2.1.13 Environmental Matters 11
2.1.14 Litigation; Decrees 13
2.1.15 Employee Plans 13
2.1.16 Warranty and Product Liability Claims 16
2.1.17 Labor Matters 16
2.1.18 Customers. 16
2.1.19 Licenses, Permits, Etc. 16
2.1.20 Compensation 17
2.1.21 Intellectual Properties 17
2.1.22 Finders 17
2.1.23 Sufficiency of Acquired Assets 17
2.2 Representations and Warranties of Purchaser 18
2.2.1 Corporate Organization 18
2.2.2 Authorization and Effect of Agreement 18
2.2.3 Conflicts 18
2.2.4 Consents 18
2.2.5 Finders 18
2.2.6 Financing 18
ARTICLE III PRE-CLOSING COVENANTS 19
3.1 Covenants of Seller 19
3.1.1 Employees and Business Relations 19
3.1.2 Incorrect Representations or Warranties 19
3.1.3 Satisfaction of Conditions 19
3.1.4 Sale of Acquired Assets, Negotiations 19
3.1.5 Access 20
3.1.6 Operation of the Business 20
3.1.7 Updates to Selected Financial Data 21
3.1.8 Rod Orders 21
3.1.9 WARN Act Compliance 21
3.1.10 Real Property Transfer Related Documents 21
3.2 Covenants of Purchaser 21
3.2.1 Cooperation 22
3.2.2 Employees 22
3.2.3 Employee Plans 22
3.3 HSR Act 26
3.4 Duty to Inform 26
3.5 Real Property Transfer Related Documents 26
3.6 Estoppel Certificates 26
3.7 Ivaco Steel Xxxxx Personnel 27
ARTICLE IV CLOSING 27
4.1 Closing 27
4.2 Conditions to Closing 27
ARTICLE V SURVIVAL AND INDEMNIFICATION 30
5.1 Survival of Representations, Warranties and Covenants 30
5.2 Indemnification by Seller 31
5.3 Indemnification by Purchaser 32
5.4 Indemnification Procedures 33
5.5 Limitations 37
5.6 Adjustment to Purchase Price 37
ARTICLE VI POST-CLOSING COVENANTS 37
6.1 Non-Competition 37
6.2 Accounts Receivable 38
6.3 Intentionally Omitted 38
6.4 Galvanized Wire Operation Assistance 38
6.5 Access to Records 39
6.6 Physical Inventory 39
6.7 Further Assurances 40
6.8 Florida Plant Evaluation 40
ARTICLE VII MISCELLANEOUS PROVISIONS 42
7.1 Termination 42
7.2 Transfer Taxes; Title Insurance Premiums, Etc. 42
7.3 Expenses 42
7.4 Contents of Agreement; Parties in Interest; etc. 42
7.5 Assignment and Binding Effect 43
7.6 Waiver 43
7.7 Notices 43
7.8 Bulk Sales 44
7.9 Governing Law 44
7.10 Confidentiality 44
7.11 No Benefit to Others 44
7.12 Headings; Gender; Certain Terms 44
7.13 Severability 45
7.14 Remedies Cumulative 45
7.15 Specific Performance, Injunctive Relief 45
7.16 Counterparts 45
7.17 Schedules 45
7.18 Public Announcements 45
Schedules
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Schedule 1.1A Georgia Plant Acquired Assets
Schedule 1.1B Records
Schedule 1.1C Certain Excluded Assets
Schedule 1.1D Seller's Safety and Environmental Rules
Schedule 1.2A Conversion Costs
Schedule 1.2B Certain Assumed Liabilities
Schedule 2.1.1 Foreign Jurisdictions
Schedule 2.1.4 Required Consents
Schedule 2.1.5 Selected Financial Data
Schedule 2.1.6 Changes
Schedule 2.1.7A Owned Real Property
Schedule 2.1.7B Leased Real Property
Schedule 2.1.7C Encumbrances on Owned Real Property
Schedule 2.1.7D Real Property Compliance
Schedule 2.1.8A Listed Acquired Assets
Schedule 2.1.8B Leased Tangible Property
Schedule 2.1.9A Contracts
Schedule 2.1.9B Defaults
Schedule 2.1.11 Affiliate Obligations
Schedule 2.1.12 Compliance With Laws
Schedule 2.1.13A Environmental Notices
Schedule 2.1.13B Environmental Conditions
Schedule 2.1.13C Hazardous Materials
Schedule 2.1.13D Environmental Proceedings
Schedule 2.1.13E Storage Tanks and Permits
Schedule 2.1.14 Litigation
Schedule 2.1.15B Employee Plan Compliance
Schedule 2.1.15C Employee Plan Liability
Schedule 2.1.16 Warranties and Claims
Schedule 2.1.17 Labor Matters
Schedule 2.1.18 Customers
Schedule 2.1.19 Licenses, Permits, Etc.
Schedule 2.1.20A Compensation
Schedule 2.1.20B Employment Agreements
Schedule 2.1.20C Consulting, Commission Agreements
Schedule 2.1.21 Intellectual Properties
Schedule 2.2.4 Purchaser Consents
Schedule 5.2(c) Known Environmental Matters
Exhibits
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Exhibit A Xxxx of Sale
Exhibit B Assignment and Assumption Agreement
Exhibit C Lease Assignment
Exhibit D Certain Licenses and Permits
Exhibit E Form of Opinion of Seller's Counsel
Exhibit F Form of Opinion of Purchaser's Counsel
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered into
as of the 10th day of June, 1996, between Atlantic Steel Industries, Inc., a
New York corporation ("Seller"), and MMI Products, Inc., a Delaware corporation
("Purchaser").
RECITALS:
A. Seller, through its Sivaco/National Wire Group division, presently
produces wire mesh in the United States (such production, and the marketing and
sale of such production, being hereinafter referred to as the "Wire Mesh
Business").
B. Seller conducts the Wire Mesh Business exclusively through
Seller's facilities in Baltimore, Maryland (the "Maryland Plant"), Toledo, Ohio
(the "Ohio Plant"), Tampa, Florida (the "Florida Plant") and Newnan, Georgia
(the "Georgia Plant," and together with the Maryland Plant, the Ohio Plant and
the Florida Plant, the "Plants").
C. Seller also produces galvanized wire at the Maryland Plant (the
"Galvanized Wire Operation").
D. Seller desires to sell, and Purchaser desires to purchase, the
Acquired Assets (as hereinafter defined), on the terms and subject to the
conditions set forth in this Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
SALE AND PURCHASE OF ASSETS
1.1 Agreement to Sell and Purchase.
(a) Subject to the provisions of this Agreement, Seller hereby
agrees to sell to Purchaser, and Purchaser hereby agrees to purchase from
Seller, all of Seller's assets and properties of every nature, whether real,
personal or mixed, that either (a) are used in the conduct of the Wire Mesh
Business at the Plants or (b) are used in the conduct of the Galvanized Wire
Operation (excluding, however, the Excluded Assets, as hereinafter defined),
provided that with respect to the Georgia Plant, such assets and properties
will only include those assets and properties specifically listed or described
on Schedule 1.1A (collectively, the "Acquired Assets"). Without limiting the
foregoing, the Acquired Assets will include the following (except to the extent
any of the following constitute Excluded Assets): (i) the real property owned
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by Seller represented by the Maryland Plant and the Florida Plant, as more
particularly described on Schedule 2.1.7A, (ii) leasehold interests in the real
property represented by the Ohio Plant and in certain real property represented
by the Florida Plant, as more particularly described on Schedule 2.1.7B, (iii)
all tangible personal property (owned or leased) located on the premises of the
Maryland Plant, the Ohio Plant and the Florida Plant and, to the extent
specifically listed or described on Schedule 1.1A, the Georgia Plant, (iv)
Seller's rights under the contracts, agreements and purchase orders under which
Purchaser assumes any obligations pursuant to this Agreement ("Contracts"), (v)
to the extent available, originals or copies (as determined by Seller) of the
information listed or described on Schedule 1.1B (collectively, the "Records"),
(vi) warranty or similar rights relating to the Acquired Assets, (vii) all
rights of ownership of Seller, if any, to the use of the name "National Wire,"
(viii) all raw material, work-in-process and finished goods inventory related
to the Wire Mesh Business or the Galvanized Wire Operation (collectively, the
"Acquired Business"), as applicable, including, without limitation, all zinc
related to the Galvanized Wire Operation, whether in the galvanizing line or
otherwise located at the Maryland Plant, and all wire and wire rod at the
Plants, but with respect to the Georgia Plant, only the wire and wire rod
related to the wire mesh business conducted there (the "Acquired Inventory"),
(ix) the Intellectual Properties (as hereinafter defined) and (x) all rights to
receive payment for goods shipped on or following the Closing Date (as
hereinafter defined), provided, that such goods are part of the Acquired
Inventory and purchased by Purchaser pursuant to this Agreement (the "Purchaser
Receivables"). As used in this Agreement, "Excluded Assets" means (A) cash,
certificates of deposit, bank or savings and loan accounts, U.S. government
securities, and any other marketable securities, (B) accounts receivable
existing as of the close of business on the day immediately prior to the
Closing Date (which shall include rights to receive payment for goods shipped
prior to the Closing Date) (the "Seller Receivables"), (C) records, files and
similar data not listed or described on Schedule 1.1B, (D) deposits held by
utilities or governmental authorities, (E) all claims, deposits, prepayments,
refunds, rebates, causes of action, choses in action, rights of recovery,
rights of setoff, and rights of recovery including, without limitation, any
such item relating to the payment of taxes, including, without limitation,
those taxes described in the last sentence of Section 1.2(b), (F) insurance
policies and proceeds from such policies (except for insurance proceeds that
relate to damage or loss of any Acquired Assets, which proceeds will be
included as Acquired Assets), (G) any right to receive general and/or
administrative services following the Closing from personnel at Seller's
Atlanta headquarters or from any of Seller's affiliates, (H) employee and
intercompany receivables existing as of the close of business on the day
immediately prior to the Closing Date and (I) the other assets listed on
Schedule 1.1C. The Acquired Assets shall be sold and transferred to the
Purchaser free and clear of all liens, pledges, mortgages, charges, burdens,
options or other rights to acquire the same, security interests, easements,
restrictive covenants and other restrictions on use, adverse claims, or other
encumbrances of any character whatsoever ("Encumbrances"), other than Permitted
Encumbrances (hereinafter defined) and subject to obtaining the consents set
forth on Schedule 2.1.4. On the Closing Date, all of the Acquired Assets that
consist of tangible personal property will be located either (1) at the
Maryland, Ohio or Florida Plants (collectively, the "Continuing Plants") or (2)
the Georgia Plant. The Acquired Assets consisting of tangible personal
property located at the Georgia Plant (the "Georgia Tangible Assets") shall be
removed by Purchaser from such facility as soon as reasonably practicable
following Closing Date, but in no event more than 120 days following the
Closing Date. Seller will provide Purchaser, without charge to Purchaser, with
reasonable assistance in the supervision of the disconnection and loading of
the Georgia Tangible Assets for transport. Except as provided in the
immediately preceding sentence, the loading and transportation of the Georgia
Tangible Assets will be at Purchaser's sole expense, and Purchaser represents
and warrants that it will have reasonable insurance coverage for all risks that
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may be reasonably likely to be applicable under the circumstances. Purchaser
will not be responsible for any modifications or repairs at the Georgia Plant
that are made necessary as a result of the removal of the Georgia Tangible
Assets other than modifications or repairs which are solely the result of
Purchaser's negligence. Purchaser shall and shall cause its designees to
comply with Seller's reasonable safety and environmental rules, as set forth on
Schedule 1.1D, with respect to such disconnection, loading and removal of the
Georgia Tangible Assets.
(b) Anything in this Agreement to the contrary notwithstanding,
this Agreement shall not constitute an agreement to assign any lease, contract,
purchase order or other agreement if an attempted assignment thereof, without
the consent of a third party thereto, would constitute a breach or default
thereof, cause or permit the acceleration or termination thereof, or in any way
materially and adversely affect the rights of Seller or Purchaser thereunder.
If Seller shall be unable to obtain a consent necessary for the assignment of
its title to, interest in or rights under any lease, contract, purchase order
or other agreement to be assigned hereunder, then, unless such consent is a
condition to Closing pursuant to Section 4.2(a)(viii), Seller and Purchaser
shall cooperate in any reasonable arrangement designed to (i) provide Purchaser
with the benefits, risks and burdens of such lease, contract, purchase orders
or other agreement, including without limitation, (A) compliance by Seller on
Purchaser's behalf and at Purchaser's expense with any such lease, contract,
purchase order or other agreement and (B) enforcement for the benefit of
Purchaser of any and all rights of Seller against a third party thereto arising
out of the breach or cancellation by such third party or otherwise, or (ii)
enable Seller to meet its obligations, if any, under any such lease, contract,
purchase order or other agreement, or to limit, to the greatest extent
reasonably possible, any liability of Seller arising from its failure to
perform any obligation thereunder.
1.2 Purchase Price; Assumed Liabilities, Etc.
(a) In consideration for the sale of the Acquired Assets to
Purchaser, and in consideration of the other agreements related thereto or
entered into in connection therewith, the Purchaser hereby agrees (i) to pay to
Seller at the Closing (as hereinafter defined), the sum of (A) $10,425,000 plus
(B) the Acquired Inventory Value (as hereinafter defined), less (C) the Accrued
Vacation Amount (as hereinafter defined), in cash or immediately available
funds to an account designated by Seller at least two business days prior to
the Closing (collectively the "Closing Payment") and (ii) to assume at the
Closing the obligation to pay, perform and discharge the Assumed Liabilities,
as defined in Section 1.2(b) below. In order to facilitate the Closing, Seller
shall prepare and deliver to Purchaser, at least three business days prior to
the Closing Date, a statement (the "Estimate Statement") showing the amount
reasonably estimated by Seller, in good faith, to be the Acquired Inventory
Value and the Accrued Vacation Amount. Prior to the Closing, Seller shall
provide Purchaser with copies of or reasonable access to such books and records
4
as are reasonably necessary for purposes of verifying the amounts set forth in
the Estimate Statement. The consideration paid by Purchaser at Closing shall
be based on the Estimate Statement and shall be adjusted post-Closing, if
necessary, pursuant to Section 1.5 hereof. For purposes of this Agreement,
"Acquired Inventory Value" shall mean the lower of market or Cost (as
hereinafter defined) of the Acquired Inventory, in each case determined in
accordance with generally accepted accounting principles, consistently applied
("GAAP"). For purposes of this Section 1.2(a), "Cost" shall mean, with respect
to Acquired Inventory classified in accordance with GAAP as (a) raw materials
(wire, wire rod and zinc), Seller's cost of such materials, including, without
limitation, any customs duties or import taxes (Seller's cost and use of such
materials being determined by the first in, first out method blending purchases
monthly on a Plant-by-Plant basis) and (b) work-in-process and finished goods,
Seller's raw material cost determined in accordance with clause (a) of this
sentence plus Seller's conversion cost determined based on Seller's actual
year-to-date (through April 28, 1996) conversion costs at the Plant at which
such work-in-process or finished goods have been produced, as set forth for
each Plant on Schedule 1.2A. For purposes of this Agreement, "Accrued Vacation
Amount" shall mean the amount accrued by Seller in compliance with Seller's
vacation policy, through the date immediately preceding the Closing Date, for
vacation time with respect to employees of Seller whom Purchaser has employed.
(b) "Assumed Liabilities" means (i) the contractual obligations
of Seller existing at the Closing under raw material purchase orders placed by
Seller in the ordinary course of business in a manner consistent with prior
practice to the extent not filled as of the Closing and which relate
exclusively to the Acquired Business (as hereinafter defined) (the "Supply
Orders"); (ii) customer purchase orders relating exclusively to the Acquired
Business that exist at the Closing and which were accepted by Seller in the
ordinary course of business in a manner consistent with prior practice under
which obligations exist to supply goods to customers following the Closing (the
"Customer Orders"), (iii) contractual obligations of Seller under the contracts
and agreements listed or described on Schedule 2.1.7B, but only to the extent
that such obligations relate to periods after the Closing, (iv) obligations of
Seller to its employees whom Purchaser has employed for accrued vacation time,
amounts in respect of which are included in the Accrued Vacation Amount
pursuant to Section 1.2(a), (v) all liabilities relating to Employees (as
hereinafter defined) and Former Employees (as hereinafter defined) assumed by
Purchaser pursuant to Section 3.2.3, (vi) contractual obligations of Seller
under the contracts and agreements existing at the Closing and listed on
Schedule 2.1.8B (as updated pursuant to the last sentence of Section 2.1), or
not required to be so listed because such contracts or agreements do not meet
the dollar threshold set forth in Section 2.1.8B, but only to the extent such
obligations relate to periods after the Closing, (vii) contractual obligations
of Seller under contracts and agreements existing at the Closing and listed on
Schedule 2.1.9A and Schedule 2.1.11 (as updated pursuant to the last sentence
of Section 2.1), or not required to be so listed because such contracts or
agreements do not meet the dollar, cancelability or materiality thresholds set
forth in Section 2.1.9(a), but only to the extent such obligations relate to
periods after the Closing and (viii) contractual obligations of Seller under
the collective bargaining agreements listed on Schedule 2.1.17, but only to the
extent such obligations relate to periods after the Closing, and (ix) the other
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obligations listed on Schedule 1.2B. Purchaser does not and shall not agree to
pay, assume, perform, or discharge any of Seller's debts, obligations, or
liabilities (whether known or unknown, direct or indirect, absolute or
contingent, matured or unmatured, or otherwise), whether the same currently
exist or come to exist in the future, except the Assumed Liabilities. Without
limiting the foregoing, Assumed Liabilities shall not include any of (a)
Seller's liabilities for borrowed money, (b) Seller's liabilities and
obligations for federal, state or local income taxes resulting from the sale of
the Acquired Assets hereunder, (c) except as otherwise provided in Section 7.2,
Seller's liabilities and obligations for any federal, state, local or foreign
excise, franchise, sales, use, gross receipts, property, ad valorem or other
taxes or imports (including any penalties or interest attributable thereto) or
any governmental assessments for contributions to workers' compensation or
similar funds attributable either to Seller's operations not involving the
Acquired Assets or to the period ending concurrently with the Closing or (d)
any liability with respect to all reports, returns and similar documents with
respect to the Union Employee Plan, as defined in Section 2.1.15, required to
be filed with any governmental agency or distributed to any Union Employee Plan
participant or any liability with respect to the individual retirement accounts
to which Seller has forwarded payroll deductions for Employees and Former
Employees pursuant to the Agreement between Sivaco/National Wire of Florida, a
division of Atlantic Steel Industries, Inc., and United Steelworkers of America
Local Union No. 6813 effective November 15, 1993, and any predecessor thereto.
1.3 Prorations. Ad valorem taxes, real property taxes, personal
property taxes and other assessments including, without limitation, water,
sewage and other utility charges on the Acquired Assets, and rents and other
charges payable with respect to leases assumed by Purchaser, will be prorated
between Seller and Purchaser as of 12:01 a.m. on the Closing Date based on the
number of days of the applicable period that each party owns the Acquired
Assets or is the lessee under such leases. Utility charges relating to the
Acquired Assets will be prorated between Seller and Purchaser as of 12:01 a.m.
on the Closing Date. To the extent practicable, all such prorations and
payments will be made on the Closing Date, with the balance to be made as soon
as practicable following the Closing Date.
1.4 Allocation of Consideration. As used herein, the term
"Consideration" shall mean the sum of (a) the cash amounts paid by Purchaser
pursuant to Section 1.2(a), as adjusted pursuant to Section 1.5, plus (b) the
Assumed Liabilities. Within 60 days after the Closing Date, Purchaser shall
prepare and deliver to Seller a schedule (the "Price Allocation Schedule"),
allocating, with the consent of Seller (which consent shall not be unreasonably
withheld), the Consideration paid by Purchaser among the non-competition
covenant and each category of the Acquired Assets in accordance with Section
1060 of the Code (as hereinafter defined). Any objections by Seller to the
Price Allocation Schedule prepared by Purchaser shall be raised, in writing,
within ten business days after the receipt of Seller of such Schedule. Any
such objection that is not resolved by mutual agreement of the parties within
ten business days of the date of Purchaser's receipt of Seller's written
objection shall be resolved by a nationally recognized accounting firm chosen
by and mutually acceptable to both Purchaser and Seller. The resolution by
such selected accounting firm shall be final and binding upon the parties
hereto and, if necessary, a revised Price Allocation Schedule reflecting such
resolution shall be prepared by Purchaser as soon as possible thereafter. The
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Price Allocation Schedule (as revised, if applicable) shall be binding on the
parties hereto, and Seller and Purchaser agree to act in accordance with such
Schedule in the preparation of IRS Form 8594 (and any similar form prepared
under applicable state, local or foreign tax law) and in the preparation,
filing and audit of any tax return.
1.5 Post-Closing Adjustment.
(a) Within 45 days after the Closing Date, Seller shall prepare and
deliver to Purchaser a statement (the "Final Statement"), setting forth
Seller's good faith determination of the actual adjustment, if any, to the
Closing Payment (the "Final Adjustment Amount"). During the 15-day period
following delivery of the Final Statement to Purchaser, Seller shall provide
Purchaser with access during normal business hours to such books, records,
working papers or other information as is reasonably necessary in the review of
the Final Statement and the calculation of the Final Adjustment Amount to
enable Purchaser to verify the accuracy of the Final Statement. The Final
Statement shall become final and binding upon all parties hereto on the
sixteenth day following delivery thereof (without counting such day of
delivery) to Purchaser unless the Purchaser gives written notice of
disagreement with the Final Statement (a "Notice of Disagreement") to Seller
prior to such date. Any Notice of Disagreement shall specify in reasonable
detail the nature of any disagreement so asserted, and relate solely to the
review of the Final Statement and the calculation of the Final Adjustment
Amount.
(b) If a Notice of Disagreement is given by Purchaser in a timely
manner, then the Final Statement shall become final and binding upon all
parties hereto on the earlier of (x) the date Seller and Purchaser resolve in
writing any differences they may have with respect to all matters specified in
the Notice of Disagreement and (y) the date all disputed matters are finally
resolved in writing by the Arbitrator (as hereinafter defined). During the
15-day period following the delivery of a Notice of Disagreement, Seller and
Purchaser shall seek in good faith to resolve any differences which they may
have with respect to any matter specified in the Notice of Disagreement and
each shall provide the other with reasonable access to such books, records,
working papers or other information as is reasonably necessary in the
preparation or calculation of (i) the Final Adjustment Amount, (ii) the Final
Statement, (iii) any Notice of Disagreement or (iv) otherwise with respect to
any thereof. At the end of such 15-day period if there has been no resolution
of the matters specified in the Notice of Disagreement, Seller and Purchaser
shall submit to an arbitrator (the "Arbitrator") for review and resolution any
and all matters arising under this Section which remain in dispute. The
Arbitrator shall be the Atlanta, Georgia office of a nationally recognized
independent public accounting firm mutually selected by Seller and Purchaser
that is not the principal outside accounting firm for Seller or Purchaser or
any person which directly or indirectly controls 25% or more of the voting
stock of Seller or Purchaser. If Seller and Purchaser are unable to agree upon
an Arbitrator, their respective principal outside accounting firms shall
mutually select another nationally recognized independent public accounting
firm to act as Arbitrator hereunder. The Arbitrator shall render a decision
resolving each of the matters submitted to the Arbitrator within 30 days
following submission thereto (or as soon thereafter as reasonably practicable).
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All fees and expenses of the Arbitrator pursuant to this Agreement with respect
to such dispute shall be borne by the party who the Arbitrator determines was
not the one closer in the aggregate to being correct with respect to the
matters being disputed. All determinations made by the Arbitrator pursuant to
this Section 1.5 shall be set forth in writing and shall be final, conclusive
and binding on the parties hereto and shall not be subject to any judicial
review.
(c) Within five business days after the Final Statement becomes final
and binding upon the parties, Seller or Purchaser, as the case may be, shall
pay the Final Adjustment Amount. All payments pursuant to this Section 1.5
shall be by wire transfer of immediately available funds to an account
designated by the recipient at least two business days prior to the date of
payment.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of Seller. Seller represents and
warrants to Purchaser as follows:
2.1.1 Corporate Matters. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New York and has the requisite corporate power and authority to own, lease or
otherwise hold the Acquired Assets owned, leased or otherwise held by it and to
carry on the Acquired Business as presently conducted by it. Schedule 2.1.1
contains a listing of all of the jurisdictions in which Seller is in good
standing and duly qualified to conduct business as a foreign corporation as a
result of its ownership or lease of Acquired Assets or its conduct of the
Acquired Business.
2.1.2 Authorization and Effect of Agreement. Seller has the
requisite corporate power and authority to execute, deliver and perform its
obligations under each of the Transaction Documents (as hereinafter defined)
executed or to be executed by Seller. The execution, delivery and performance
by Seller of each of the Transaction Documents executed or to be executed by
Seller have been duly authorized by all necessary corporate action of Seller.
This Agreement has been duly executed and delivered by Seller. This Agreement
constitutes, and each of the other Transaction Documents to be executed by
Seller will constitute, the valid and binding obligation of Seller, enforceable
against Seller, in accordance with its terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors, rights and remedies generally) and subject as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity. As used herein, the
term "Transaction Documents" refers collectively to this Agreement, the special
warranty deeds to be executed and delivered by Seller relating to the Owned
Real Property (as hereinafter defined), the Xxxx of Sale and Assignment to be
executed and delivered by Seller in the form of Exhibit A hereto (the "Xxxx of
Sale"), the Assignment and Assumption Agreement to be executed and delivered by
Seller and Purchaser in the form of Exhibit B hereto (the "Assignment and
Assumption Agreement") and any other agreement or other document executed by
Seller or Purchaser pursuant to this Agreement.
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2.1.3 Conflicts. Neither the execution, delivery nor performance
of any Transaction Document executed or to be executed by Seller will violate
or conflict with, or result in any default under, or result in the creation of
any lien, charge or encumbrance under, (a) any statute, law, ordinance, rule,
regulation, judgment, writ or decree ("Law") applicable to Seller, or any of
its properties, which violation, conflict, default or creation could reasonably
be expected to have a Material Adverse Effect (as hereinafter defined), (b)
assuming the receipt of the consents of third parties listed on Schedule 2.1.4,
any agreement or commitment to which Seller is a party or by which any of its
properties are bound, which violation, conflict, default or creation could
reasonably be expected to have a Material Adverse Effect, or (c) the charter or
bylaws of Seller. As used herein, the term "Material Adverse Effect" means any
material adverse effect on the operations, assets, liabilities or value of the
Acquired Business (other than any material adverse effect resulting from events
or circumstances affecting the wire mesh or galvanized wire industries
generally) or on the ability of Seller to consummate the transactions
contemplated hereunder.
2.1.4 Consents. Except as listed or described on Schedule
2.1.4, no actions, consents, or approvals of, or filings with, any third
parties or governmental authorities (collectively, "Consents") are required in
connection with the execution, delivery or performance by Seller of the
Transaction Documents executed or to be executed by Seller; provided, however,
that Seller is not required to list on Schedule 2.1.4 any Consents required for
the assignment to Purchaser of any agreements, arrangements, commitments,
guarantees, or other instruments not required to be listed on Schedule 2.1.7B,
2.1.8B, 2.1.9A or 2.1.17.
2.1.5 Selected Financial Data. The selected financial data at and
for the year ended December 31, 1995, and at and for the 17 weeks ended April
28, 1996, as set forth on Schedule 2.1.5 (the "Selected Financial Data"), is
true and correct in all material respects. The Selected Financial Data
includes all elements of the pre-tax income statements for the Maryland,
Florida and Ohio Plants with the exception of (a) costs of goods sold
(including raw material cost, manufacturing costs which are shown separately,
and changes in inventory), (b) retiree health benefits except as set forth in
the notes to Schedule 2.1.5, (c) interest expense and income except as set
forth in the notes to Schedule 2.1.5, (d) gains or losses on disposal of fixed
assets, (e) costs relating to the moving of personnel and the administrative
offices from Baltimore, Maryland to Newnan, Georgia, (f) overhead expenses
charged to the Acquired Business from Seller's group, corporate or parent
offices, (g) computer department charges including those with respect to data
line communications, and (h) general accounting costs and audit fees. The
Selected Financial Data for the Georgia Plant includes conversion costs,
departmental costs and inventories (tons) only.
2.1.6 Absence of Certain Changes and Events. Except as set forth
on Schedule 2.1.6, since December 31, 1995, Seller has not conducted the
Acquired Business other than in the ordinary course, consistent with prior
practice. Except as set forth on Schedule 2.1.6, since December 31, 1995,
there has not been any Material Adverse Effect nor has there been any event or
circumstance which could be reasonably likely to cause such a Material Adverse
Effect.
9
2.1.7 Real Property.
(a) All of the real property owned by Seller and included in the
Acquired Assets (the "Owned Real Property") is listed, along with a legal
description of each parcel of such Owned Real Property, on Schedule 2.1.7A.
There are no leases or other agreements granting to any other party the right
to occupy or use any of the Owned Real Property. Schedule 2.1.7B sets forth a
true and complete list of each lease or other agreement (the "Real Property
Leases") under which Seller leases, or otherwise occupies or uses any real
property (other than Owned Real Property) included in the Acquired Assets (the
"Leased Real Property" and together with the Owned Real Property, the "Real
Property"). At Closing, Seller will convey to Purchaser the lessee's leasehold
interests in the Leased Real Property, free and clear of all Encumbrances,
other than Permitted Encumbrances. As used in this Agreement, "Permitted
Encumbrances" means (i) liens for taxes, assessments and governmental charges
not yet due and payable, (ii) zoning Laws, (iii) with respect to Owned Real
Property, the encumbrances listed on Schedule 2.1.7C , (iv) with respect to the
Leased Real Property the matters and terms set forth in the Real Property
Leases; (v) with respect to Leased Tangible Property (as hereinafter defined)
the matters and terms set forth in the leases related thereto; (vi) with
respect to the Owned Real Property, any state of facts either (x) a survey of
the Real Property would show, provided that no such state of facts will be
considered a Permitted Encumbrance if such state of facts (A) could reasonably
be expected to interfere in any material respect with Purchaser's ability to
use any such Owned Real Property as it is currently being used by Seller or (B)
would constitute or result in any violation of Law which would be material to
any parcel of Owned Real Property, or (y) shown on surveys delivered to and
approved by Buyer prior to the date hereof and (vii) any Encumbrances created
by the Purchaser.
(b) Except as set forth on Schedule 2.1.7D, the Real Property, any
improvements thereon, and the use by Seller thereof conform, to the Knowledge
of Seller, in all material respects, to (i) all applicable Laws, including but
not limited to zoning requirements and the Americans With Disabilities Act, and
(ii) all restrictive covenants, if any.
2.1.8 Physical Assets and Properties.
(a) The physical assets and properties listed on Schedule 2.1.8A
are included within the Acquired Assets (it being understood that such schedule
is not a complete list of the Acquired Assets). Seller (subject to the
exception set forth on Schedule 2.1.8A) has, and upon the Closing Purchaser
(not subject to the exception set forth on Schedule 2.1.8A) will have, good
title to all tangible assets and properties, whether personal or mixed,
included in the Acquired Assets (the "Owned Tangible Property"), free and clear
of all Encumbrances, other than Permitted Encumbrances. Schedule 2.1.8B sets
10
forth a true and complete list and brief description, as of the date of this
Agreement, of each lease or other agreement under which Seller leases,
licenses, holds, or operates any item of physical property, other than Real
Property and other than the Owned Tangible Property, used exclusively with
respect to the Acquired Business (such leased tangible property being referred
to herein as the "Leased Tangible Property"); provided, however, that Schedule
2.1.8B need not include a list or description of any such lease involving
payments by Seller, computed on an annual basis, of less than $10,000 per year
and which, together with all other such leases not listed or described on
Schedule 2.1.8B, involve payments by Seller computed on an annual basis, of
less than $100,000 per year in the aggregate. Seller has valid and enforceable
leasehold interests in the Leased Tangible Property, free and clear of all
Encumbrances, other than Permitted Encumbrances.
(b) The Owned Tangible Property and the Leased Tangible Property
complies, in all material respects, with all applicable Laws. There are no
items of tangible personal property situated on the Real Property that are not
included in (or with respect to which valid leasehold interests are not
included in) the Acquired Assets.
2.1.9 Contracts. Set forth on Schedule 2.1.9A is a list of the
following agreements (whether written or oral), arrangements, commitments,
guarantees, or other instruments to which Seller is a party and which relate
exclusively to the Acquired Business, excluding, however, (a) the contracts and
agreements listed on Schedule 2.1.7B, 2.1.8B, 2.1.11, 2.1.17 or 2.1.20C and
(b) employee benefit plans and arrangements either (x) not being assumed by
Purchaser or (y) referred to in Section 2.1.15:
(i) any agreement, arrangement, commitment, guarantee or other
instrument under which Seller has outstanding obligations of more than $25,000
(or obligations of more than $100,000 in the aggregate with all other
agreements, arrangements, commitments, guarantees or other instruments not
listed on Schedule 2.1.7B, 2.1.8B, 2.1.9A or 2.1.17);
(ii) any agreement that restricts the right of Seller to engage in
any type of business that would be binding on Purchaser;
(iii) any customer contracts which either (a) have a performance
period of longer than 60 days following the Closing Date, (b) involve more than
ten truckloads of product or (c) involve a purchase price of $100,000 or more;
(iv) any partnership or joint venture agreement; and
(v) any arrangements with third parties to act as manufacturer
representatives with respect to the Acquired Business.
11
The agreements, arrangements, commitments, guarantees and other documents
listed on Schedule 2.1.9A are legal, valid and binding obligations of Seller
and, to the Knowledge (as hereinafter defined) of Seller, of the other parties
thereto, enforceable in accordance with their terms subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors, rights and remedies generally and subject to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity); and no defenses,
offsets or counterclaims thereto have been asserted in writing, or, to the
Knowledge of Seller, is there a reasonable basis for any defense, offset or
counterclaim to be asserted by any party thereto other than Seller, nor has
Seller waived any substantial rights thereunder. For purposes of this
Agreement, "Knowledge" of a party means actual knowledge of any executive
officers of such party and, in addition, in the case of Seller, any of Xxxxxx
Xxxxxxxxx or the most senior management person at each Plant. Except as
disclosed on Schedule 2.1.9B, Seller has not, since December 31, 1995, received
written notice of any material default, and Seller is not in material default,
under any of the agreements, arrangements, commitments, guarantees and other
documents listed on Schedule 2.1.9A, and there has not occurred any event
which, with the lapse of time or giving of notice, or both, would constitute a
material default by Seller under any of such agreements, arrangements,
commitments, guarantees and other documents listed on Schedule 2.1.9A
2.1.10 Conversion Costs. Schedule 1.2A fairly presents the
year-to-date (through April 28) conversion costs at each Plant, prepared on a
consistent basis with the prior year, except as otherwise indicated in Schedule
2.1.5.
2.1.11 Assumed Liability Obligations to Affiliates. Except as set
forth on Schedule 2.1.11, none of the Assumed Liabilities will constitute
obligations to any Affiliate of Seller. As used in this Agreement, an
"Affiliate" of any party means any corporation or other entity with respect to
which such party (or any Affiliate thereof) owns a majority of the common stock
or has the power to vote or direct the voting of sufficient securities to elect
a majority of the directors or members of equivalent governing body.
2.1.12 Compliance With Laws. Except as set forth in Schedule
2.1.12, Seller is not in violation of, nor, since December 31, 1995, has Seller
received any written notice of any alleged violation of, any Law in the conduct
of the Acquired Business, the violation of which could reasonably be expected
to have a Material Adverse Effect.
2.1.13 Environmental Matters.
(a) Except as set forth in Schedule 2.1.13A, since December 31,
1995 (or, to the Knowledge of Seller, before such date regarding any unresolved
written notices), Seller has not received written notice alleging violation of
any applicable federal, state, or local Laws, licenses or permits relating to
the environment in effect as of the date hereof, or orders or agreements now in
effect with any governmental authority or other person (collectively,
"Environmental Laws") and none of the Real Property is in violation of any
applicable Environmental Laws, the violation of which could reasonably be
expected to have a Material Adverse Effect.
12
(b) Except as set forth on Schedule 2.1.13B, there are no facts,
circumstances or conditions relating to, arising from, associated with or
attributable to the Real Property or the facilities or operations thereon that
will give rise to an environmental claim or obligation to clean up or remediate
contamination resulting in Environmental Costs and Liabilities which facts,
circumstances or conditions result from or arise out of any action or inaction
by Seller prior to the Closing and which could reasonably be expected to have a
Material Adverse Effect. "Environmental Costs and Liabilities" shall mean any
and all losses, liabilities, obligations, damages, fines, penalties, judgments,
actions, claims, costs and expenses (including reasonable fees, disbursements
and expenses of legal counsel, experts, engineers and consultants and the costs
of investigation and feasibility studies, remedial or removal actions and
cleanup activities) which result from or arise out of any requirement under any
Environmental Law; provided, however, that, "Environmental Costs and
Liabilities" shall not include consequential damages other than of the nature
described in the following sentence, provided that under no circumstances will
the term "consequential damages" as used herein be deemed to refer to any
damages resulting from third party actions or claims. "Environmental Costs and
Liabilities" shall include any amount up to, but not more than, $25,000 per
week of consequential damages to the extent such damages are suffered or
incurred during each of the second, third and fourth weeks of the first two
occasions in which there occurs a temporary or permanent shut-down of the
operations of a Plant or any portion of a Plant in connection with a response
or compliance-related action required under any Environmental Law (each of such
first two occasions, a "Plant Shut-Down"); provided, however, that in no event
shall Environmental Costs and Liabilities include consequential damages arising
out of any Plant Shut-Down resulting from any condition, fact or occurrence or
any series of conditions, facts, or occurrences related to any prior Plant
Shut-Down; and provided, further, however, that in no event shall such
consequential damages exceed $75,000 in the case of any single Plant Shut-Down,
or $150,000 in the aggregate.
(c) Except as set forth on Schedule 2.1.13C, to the Knowledge of
Seller and except for any of the following which would not result in a
violation of any Environmental Law or in any Environmental Costs and
Liabilities, (i) there is no friable asbestos contained in or forming a part
of any building, building component, structure or office space included in the
Real Property, (ii) no polychlorinated biphenyls are used or stored on any Real
Property, (iii) there are no underground storage tanks or surface impoundments
located on, under or at any Real Property, and (iv) Seller in operating the
Acquired Business, has not generated, stored, treated or disposed of any
Hazardous Wastes (as defined under 40 C.F.R. Parts 260-270 or applicable
analogous state law) nor, to the Knowledge of Seller, has any predecessor done
so on any Real Property, excluding, solely with respect to clause (iv), any
Environmental Costs and Liabilities incurred in the ordinary course of
business.
(d) Except as disclosed on Schedule 2.1.13D, none of the
operations of the Acquired Business is subject to any judicial or
administrative civil or criminal proceeding (including potentially responsible
party notices or information requests issued pursuant to the federal Superfund
law or any state analogs) pursuant to Environmental Laws nor, to the Knowledge
of Seller, has such a proceeding been threatened.
13
(e) Without limiting the generality or effect of the foregoing
subsections, Schedule 2.1.13E is a true and correct list of (i) all underground
storage tanks, and the capacity, contents and age of such tanks, located on any
Real Property and (ii) all material permits, variances, authorizations or
approvals issued to Seller and necessary for the continued operation of the
Acquired Business in the same manner as presently conducted.
2.1.14 Litigation; Decrees. Except as disclosed on Schedule
2.1.14, there are no lawsuits, claims or administrative or other proceedings or
investigations pending or, to the Knowledge of Seller, threatened by, against
or affecting Seller and relating to the Acquired Assets or the Acquired
Business, which could reasonably be expected to have a Material Adverse Effect.
Except as disclosed on Schedule 2.1.14, Seller is not a party to or subject to
the provisions of any judgment, order, writ, injunction, decree or award of any
court, arbitrator or governmental or regulatory official, body or authority
relating to the Acquired Assets or the Acquired Business, which could
reasonably be expected to have a Material Adverse Effect.
2.1.15 Employee Plans.
(a)Definitions:
(i) "Employee" shall mean any person employed by Seller on the
day immediately prior to the Closing Date in connection with the Acquired
Business at the Maryland Plant, Ohio Plant or Florida Plant or, in the case of
the Georgia Plant, those persons listed on Schedule 2.1.20A under the heading
"SNW-Georgia." Where applicable, Employee shall include the beneficiaries and
dependents of such Employee.
(ii) "Former Employee" shall mean any person formerly employed
by the Seller, or any predecessor thereto, who rendered any services in
connection with the Acquired Business. Where applicable, Former Employee shall
include the beneficiaries and dependents of such Former Employee.
(iii) "Multiemployer Pension Plan" shall mean the Central
States, Southeast and Southwest Areas Pension Fund.
(iv) "Salaried Savings Plan" shall mean the National Wire
Products Tax Incentive Savings Plan for Salaried Employees.
(v) "Union Employee Plan" shall mean the Revised Pension
Plan Agreement of National Wire Products and United Steelworkers of America,
Local 5861.
14
(b) The Union Employee Plan:
(i) With respect to the Union Employee Plan, the Seller has
provided Purchaser with copies of the (a) the plan and trust (including all
amendments thereto), (b) the most recent annual report, actuarial report and
financial report, (c) the most recent determination letter issued by the
Service, and (d) the most recent summary plan description and summary of
material modifications.
(ii) The Union Employee Plan has been maintained and
administered in all material respects in compliance with its terms and with
applicable law. The Union Employee Plan is intended to be qualified within the
meaning of section 401 of the Internal Revenue Code of 1986, as amended (the
"Code"), and the Seller has received a determination letter from the Internal
Revenue Service (the "Service") to the effect that the Union Employee Plan is
qualified and exempt from Federal income taxes under sections 401(a) and
501(a), respectively, of the Code, this determination letter has not been
revoked, and, to the Knowledge of the Seller, revocation has not been
threatened; and the Union Employee Plan has not been amended since the
effective date of its most recent determination letter in any respect that
might adversely affect its qualification, materially increase its cost or
require security under section 307 of ERISA. The Seller has also provided the
Purchaser with all amendments to the Union Employee Plan made since the most
recent favorable determination letter. No event has occurred that could
subject the Union Employee Plan to tax under section 511 of the Code.
(iii) Except as disclosed in Schedule 2.1.15B, there are no
investigations by any governmental agency, termination proceedings or other
claims (except for claims for benefits payable in the normal operation of the
Union Employee Plan), suits or proceedings against or involving the Union
Employee Plan or asserting any rights or claims to benefits under the Union
Employee Plan that could give rise to any material liability.
(iv) Except as disclosed in Schedule 2.1.15B, (1) all
contributions to, and payments from, the Union Employee Plan that have been
required to be made in accordance with the terms of the Union Employee Plan,
any applicable collective bargaining agreement, and section 302 of ERISA or
section 412 of the Code have been timely made except where any failure would
not result in a material liability, (2) there has been no application for or
waiver of the minimum funding standards of section 412 of the Code with respect
to the Union Employee Plan, and (3) the Union Employee Plan does not have an
"accumulated funding deficiency" within the meaning of section 412(a) of the
Code as of the end of the most recently completed plan year.
(v) Schedule 2.1.15B discloses whether, with respect to the
Union Employee Plan: (1) any "prohibited transaction" (as defined in section
4975 of the Code or section 406 of ERISA) has occurred that involves the assets
of the Union Employee Plan, which is not exempt under section 408 of ERISA and
4975 of the Code, and with respect to which there is a reasonable likelihood of
a material liability to the Purchaser; (2) the Union Employee Plan has been
15
terminated or been the subject of a "reportable event" (as defined in section
4043 of ERISA and the regulations promulgated thereunder) other than a
reportable event with respect to which the 30-day notice requirement has been
waived or which may result from the consummation of the transactions
contemplated by the Agreement; and (3) the Seller or any trustee, administrator
or other fiduciary of the Union Employee Plan or any agent of any of the
foregoing has engaged in any transaction or acted in a manner that could, or
failed to act so as to, subject the Purchaser or any trustee, administrator or
other fiduciary to any material liability for breach of fiduciary duty under
ERISA or any other applicable law.
(vi) Except as disclosed in Schedule 2.1.15B, all premium
payments due to the Pension Benefit Guaranty Corporation pursuant to ERISA
section 4007 prior to the date hereof have been timely paid.
(vii) With respect to the Union Employee Plan, the Seller
has provided the Purchaser with a letter from the Plan's actuary (receipt of
which is acknowledged) regarding the Plan's funded status, on both an ongoing
and termination basis, as of the most recent valuation date. The information
supplied to the actuary by the Seller for use in preparing these reports was
complete and accurate in all material respects and the Seller has no reason to
believe that the conclusions expressed in this letter were incorrect.
(viii) No employee of the Seller will be entitled to any
additional benefits or any acceleration of the time of payment or vesting of
any benefits under the Union Employee Plan as a result of the transaction
contemplated by this Agreement.
(ix) Notwithstanding anything to the contrary in this
Agreement, on the Closing Date, the Seller will provide the Purchaser with
copies of all records for any Employee or Former Employee that will be required
to administer the Union Employee Plan and warrants and represents that such
records are complete and accurate in all material respects. The Seller agrees
to reasonably cooperate with the Purchaser in the event that an Employee or
Former Employee challenges the accuracy of any record provided pursuant to this
Section in the course of a claim for benefits under the Union Employee Plan.
(c) The Multiemployer Plan: The Seller has provided the Purchaser
with a letter from the Multiemployer Plan (receipt of which is hereby
acknowledged) regarding the amount of withdrawal liability (as defined in
section 4201 of ERISA) that would be incurred if the Seller had withdrawn from
the plan in 1995. Except as disclosed in Schedule 2.1.15C, the Seller has no
reason to believe that the conclusion expressed in this letter is incorrect.
(d) The Salaried Savings Plan: The Salaried Savings Plan is
intended to be qualified within the meaning of section 401 of the Internal
Revenue Code of 1986, as amended (the "Code"), and the Seller has received a
determination letter from the Internal Revenue Service (the "Service") to the
16
effect that the Salaried Savings Plan is qualified and exempt from Federal
income taxes under sections 401(a) and 501(a), respectively, of the Code; this
determination letter has not been revoked, and, to the knowledge of the Seller,
revocation has not been threatened; and the Salaried Savings Plan has not been
amended since the effective date of its most recent determination letter in any
respect that might adversely affect its qualification or exempt status. The
Salaried Savings Plan has been maintained and administered in all material
respect in compliance with the applicable provisions of the Code relating to
qualified plans. The Seller has delivered to the Purchaser a copy of the most
recent determination letter received with respect to the Salaried Savings Plan,
along with a copy of any pending application for a determination letter. The
Seller has also provided the Purchaser with all amendments to the Salaried
Savings Plan made since the most recent favorable determination letter.
2.1.16 Warranty and Product Liability Claims. Except as described
on Schedule 2.1.16, Seller has not made any express warranties or guaranties
with respect to any products manufactured or sold or services rendered in the
operation of the Acquired Business. Except as described on Schedule 2.1.16, no
written claims have been asserted during the past two years that any product of
the Acquired Business caused any injury or harm to any person.
2.1.17 Labor Matters. Except as listed on Schedule 2.1.17
Seller, with respect to Employees and Former Employees, (a) has no written
handbook applicable to such Employees, (b) is and has been in compliance since
January 1, 1996, with all applicable Laws regarding employment and employment
practices, terms and conditions of employment, wages and hours, occupational
safety and health and workers' compensation and is not engaged in any unfair
labor practices, which the failure to comply with could reasonably be expected
to have a Material Adverse Effect, (c) has no grievances pending or, to the
Knowledge of Seller, threatened against it that could reasonably be expected to
have a Material Adverse Effect and (d) has no charges or complaints pending or,
to the Knowledge of Seller, threatened against it before the National Labor
Relations Board, the Equal Employment Opportunity Commission or any other
federal, state or local agency responsible for the prevention of unlawful
employment practices. There is no labor strike, slowdown, work stoppage or
lockout actually pending or, to the Knowledge of Seller, threatened against or
affecting the Acquired Business or the Acquired Assets. Except as listed on
Schedule 2.1.17, Seller is not a party to any collective bargaining agreement,
no such agreement determines the terms and conditions of the employment of any
Employee or Former Employee, and no collective bargaining agent has been
certified as a representative of any of the Employees or Former Employees.
Except as listed on Schedule 2.1.17, to the Knowledge of Seller, no union
organizational campaign is currently pending with respect to any of the
Employees or Former Employees.
2.1.18 Customers. Schedule 2.1.18 contains a listing of the
ten largest customers of each Plant (based on purchases) for (i) the 17 weeks
ended April 30, 1995, (ii) the 12 months ended December 31, 1995 and (iii) the
17 weeks ended April 28, 1996.
17
2.1.19 Licenses, Permits, Etc. Schedule 2.1.19 sets forth, to
the Knowledge of Seller, all governmental licenses, franchises, permits and
other authorizations held by Seller and relating to the Acquired Business
(other than those listed on Schedule 2.1.13E). Seller holds all government
licenses, franchises, permits and other authorizations necessary in the conduct
of the Acquired Business which the failure to hold could reasonably be expected
to have a Material Adverse Effect.
2.1.20 Compensation. Schedule 2.1.20A contains the name and
position of each salaried Employee as of the date hereof and sets forth the
total current annual salary, bonus and commission arrangements for each such
person. Schedule 2.1.20B sets forth a true and complete list of all employment
agreements between Seller and any Employee. Schedule 2.1.20C sets forth a true
and complete list of all consulting, service or commission agreements to which
Seller is a party and which relate to the Acquired Business.
2.1.21 Intellectual Properties. Set forth on Schedule 2.1.21
is a listing of all patents, trademarks, trade names, service marks, copyrights
and other items of intellectual property included in the Acquired Assets (the
"Intellectual Properties"). No rights with respect to any of the Intellectual
Properties have been licensed to any other person. To the knowledge of Seller,
the Intellectual Properties used in connection with the operations of the
Acquired Business do not violate or infringe upon the rights of any other
person in any patent, trademark, trade name, service xxxx, copyright or other
intellectual property. Except for the service xxxx and trade name "Sivaco,"
and any derivative or form thereof (the rights to which name are not being
transferred to Purchaser and are not included in the Acquired Assets), the
Intellectual Properties constitute all intellectual properties currently used
in connection with and material to the operations of the Acquired Business.
2.1.22 Finders. Neither Seller nor any other Affiliate of Seller
has made any agreement with any person or taken any action which would cause
any person to become entitled to an agent's, broker's, or finder's fee or
commission in connection with the transactions contemplated hereby.
2.1.23 Sufficiency of Acquired Assets. The Acquired Assets
constitute all properties and assets (other than the Excluded Assets and other
than inventory and other assets acquired or disposed of in the ordinary course
of business) currently used in connection with the Acquired Business.
Except as expressly set forth in this Section 2.1, Seller makes no
representations or warranties, express or implied, at law or in equity, in
respect of any of the Acquired Assets, liabilities or operations, including,
without limitation, with respect to merchantability or fitness for any
particular purpose, and any such other representations or warranties are hereby
expressly disclaimed. Purchaser hereby acknowledges and agrees that, except to
the extent specifically set forth in this Section 2.1, the Purchaser is
purchasing the Acquired Assets on an "as-is, where-is" basis. Without limiting
the generality of the foregoing, Seller makes no representation or warranty
regarding any assets other than the Acquired Assets or any liabilities other
than the Assumed Liabilities, and none shall be implied at law or in equity.
Seller shall be permitted to update Schedules 2.1.8A, 2.1.8B, 2.1.9A, 2.1.11,
18
2.1.20A and 2.1.20C at any time or from time to time prior to the Closing to
reflect changes occurring after the date hereof but prior to the Closing,
provided that such changes do not occur as a result of any violation by Seller
of Section 3.1.6 of this Agreement or any other provision of this Agreement.
2.2 Representations and Warranties of Purchaser. Purchaser represents
and warrants to Seller as follows:
2.2.1 Corporate Organization. Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware.
2.2.2 Authorization and Effect of Agreement. Purchaser has
the requisite corporate power and authority to execute, deliver and perform its
obligations under each of the Transaction Documents executed or to be executed
by Purchaser. The execution, delivery and performance by Purchaser of each of
the Transaction Documents executed or to be executed by Purchaser have been
duly authorized by the board of directors of Purchaser. This Agreement has
been duly executed and delivered by Purchaser. This Agreement constitutes, and
each of the other Transaction Documents to be executed by Purchaser will
constitute, the valid and binding obligation of Purchaser, enforceable against
Purchaser in accordance with its terms.
2.2.3 Conflicts. Neither the execution, delivery, nor performance
of any Transaction Document executed or to be executed by Purchaser will
violate or conflict with, or result in any default under (a) any Law applicable
to Purchaser, which violation, conflict or default could reasonably be expected
to have a Material Adverse Effect, (b) assuming the receipt of the consents
listed in Schedule 2.2.4, any agreement or commitment to which Purchaser is a
party or by which any of its properties are bound, which violation, conflict or
default could reasonably be expected to have a Material Adverse Effect, or (c)
any provision of the certificate of incorporation or bylaws of Purchaser.
2.2.4 Consents. Except as listed on Schedule 2.2.4, no actions,
consents, or approvals of, or filings with, any third parties or governmental
authorities are required in connection with the execution, delivery or
performance by Purchaser of the Transaction Documents executed or to be
executed by Purchaser.
2.2.5 Finders. Neither Purchaser nor any Affiliate of Purchaser
has made any agreement with any person or taken any action which would cause
any person to become entitled to an agent's, broker's or finder's fee on
commission in connection with the transactions contemplated hereby.
2.2.6 Financing. Purchaser has financing available to permit
Purchaser to effect the purchase of the Acquired Assets pursuant to this
Agreement.
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ARTICLE III
PRE-CLOSING COVENANTS
3.1 Covenants of Seller. Seller covenants and agrees that, pending
the Closing and except as otherwise agreed to in writing by Purchaser:
3.1.1 Employees and Business Relations. Seller shall use
commercially reasonable efforts to keep available the services of the present
Employees (except normal separations of Employees in the ordinary course of the
Business and consistent with prior practice), agents and consultants of the
Acquired Business and to maintain the relations and goodwill with the
suppliers, customers, distributors and any others having business relations
with the Business; it being understood by Purchaser, however, that Employees of
Seller upon becoming aware of the transactions contemplated by this Agreement
may voluntarily terminate their employment with Seller and Seller has no
control over such voluntary terminations. Seller shall provide "continuation
coverage" to any "qualified beneficiary" who is covered by a "group health
plan" sponsored, maintained or contributed to by Seller and who has experienced
a "qualifying event" or is receiving such "continuation coverage" on or prior
to the Closing Date. "Continuation coverage," "qualified beneficiary,"
"qualifying event" and "group health plan" shall have the meanings given such
terms under Section 4980B of the Code and Section 601 et seq. of ERISA.
3.1.2 Incorrect Representations or Warranties. Seller shall
promptly disclose to Purchaser any information contained in its representations
and warranties or the schedules hereto which, because of an event occurring
after the date hereof as to which Seller has Knowledge, makes said warranties
and representations or schedules incomplete or incorrect in any material
respect (or in any respect in the case of representations and warranties which
contain materiality qualifiers) as of any time after the date hereof until the
Closing Date.
3.1.3 Satisfaction of Conditions. Subject to the requirements of
Section 3.1.6, Seller shall use commercially reasonable efforts to conduct the
Acquired Business in such a manner that on the Closing Date the representations
and warranties of Seller contained in this Agreement shall be true in all
material respects (or in all respects in the case of representations and
warranties that contain materiality qualifiers) as though such representations
and warranties were made on and as of such date. Furthermore, Seller shall
cooperate with Purchaser and use commercially reasonable efforts to satisfy
promptly all conditions required hereby to be satisfied by Seller in order to
expedite the consummation of the transactions contemplated hereby.
3.1.4 Sale of Acquired Assets, Negotiations. Seller will not, and
will cause its Affiliates, employees, agents, legal counsel, and financial
advisors not to, solicit, accept, consider or approve any other offer to
purchase any of the Acquired Assets (other than sales of inventory and other
dispositions of assets in the ordinary course of business), or engage in any
similar transaction nor hold discussions or negotiations with, or provide any
information to, any other individual, corporation, partnership or other entity
concerning such sales or transactions (other than such actions which are in
furtherance of the transactions contemplated herein or are required by any
applicable regulatory authorities). Seller shall not provide any confidential
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information concerning the Acquired Business to any third party other than in
the ordinary course of business and consistent with prior practice or as
required by law.
3.1.5 Access. Subject to the terms of the Confidentiality
Agreement referred to in Section 7.4, Seller shall provide to Purchaser's
officers, employees, counsel, accountants, lenders and other representatives,
during normal business hours, the following: (i) reasonable access to all
Records, any items that appear on any of the Schedules to this Agreement, any
customer or supplier invoices, and other items to which Purchaser needs access
for the purpose of making an orderly transition of the Acquired Business to
Purchaser, (ii) the ability, at reasonable times, to meet with the senior Plant
managers and, under the supervision of such senior Plant managers, to take
Plant tours and meet with salaried Employees (provided that such meetings with
salaried Employees will not include a discussion of compensation unless
approved in writing by Xxxxx Xxxxxx), (iii) the ability to conduct third party
appraisals of the Acquired Assets, and (iv) reasonable access in connection
with the conduct of the physical inventory provided for by Section 6.6.
Purchaser will limit the number of persons provided with access to Seller's
assets or personnel in accordance with this Section 3.1.5 (the "Access
Personnel") in order to minimize disruption to Seller and not to unreasonably
interfere with Seller's business operations. Persons within Purchaser's
organization who constitute Access Personnel with respect to any given area of
access will be persons responsible for, or regularly involved in, such subject
matters within Purchaser's organization. Access of Purchaser's lenders in
accordance with this Section 3.1.5 will be cleared in advance by Purchaser with
the applicable Plant manager and will be supervised by such Plant manager.
3.1.6 Operation of the Business. Seller will:
(a) Conduct the Acquired Business consistently in all material
respects with Seller's prior practice, and not take or permit to be taken or do
or suffer to be done with respect to the Acquired Business anything other than
in the ordinary course of the Acquired Business as presently conducted, and not
permanently move from its current location (other than from a Plant to a
Continuing Plant) any asset to be sold to Purchaser;
(b) Maintain the tangible Acquired Assets in at least as good
condition as they were being maintained as of the date hereof, normal wear and
tear excepted; provided, however, that Seller will not be required to make any
repair except for repairs necessary to keep each Plant operational;
(c) Not terminate, create or amend any Employee Plan except as
required by law;
(d) Not grant any increases in Employee compensation, except
in the ordinary course of business and consistent with prior practice; and
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(e) Absent the approval of Purchaser, not accept or otherwise
enter into any customer contract which either (i) has a performance period of
longer than 60 days following the Closing, (ii) involves more than ten
truckloads of product or (iii) involves a purchase price of $100,000 or more;
provided, however, that Seller will not be required to inventory spare parts or
supplies in the quantities consistent with prior practices but will be required
to maintain reasonably adequate inventories thereof.
3.1.7 Updates to Selected Financial Data. Until the Closing,
within five days after the preparation thereof, from financial data regularly
prepared for Seller's management, Seller will provide to Purchaser, to the
extent available, an update of the Selected Financial Data. The information
provided in such update shall be true and correct in all material respects.
3.1.8 Rod Orders. Prior to the Closing Date, Seller shall
consult with Purchaser prior to making any new orders for rod. If Purchaser
shall inform Seller within 48 hours of such consultation with respect to any
particular rod order (each, a "Seller's Order") that Purchaser is able to
arrange a substitute order for rod at an aggregate cost (including shipping)
which is at least 5% lower, Seller shall make such substitute order; provided
that Seller shall be under no obligation to make any substitute order (a) for
rod which in the sole reasonable judgment of Seller is not of a comparable
quality to the rod Seller may obtain pursuant to the Seller's Order for which
Purchaser has offered a substitute or (b) that cannot be placed and filled
within substantially the same time periods as such Seller's Order.
3.1.9 WARN Act Compliance. Through the Closing Date, Seller
shall take all necessary actions to comply with the Federal Workers Adjustment
and Retraining Act to the extent applicable with respect to employees at the
Georgia Plant. Purchaser shall not take any action with respect to the
Employees of Seller at the Maryland Plant, Ohio Plant or Florida Plant which
would result in Seller having any disclosure or announcement obligations under
such act. Purchaser shall not have any disclosure or announcement obligations
under the WARN Act with respect to any employees or former employees of Seller
at the Georgia Plant. Seller and Purchaser shall indemnify and hold each other
harmless from any action, claim, suit, proceeding or assertion of liability
resulting from any noncompliance with this Section 3.1.9.
3.1.10 Real Property Transfer Related Documents. Seller shall
prepare and file all transfer related affidavits, reports, statements or
similar documents required to be prepared or filed by Seller with respect to
conveyances of Real Property.
3.2 Covenants of Purchaser. Purchaser covenants and agrees that, pending
the Closing,
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3.2.1 Cooperation. Purchaser will cooperate with Seller and use
commercially reasonable efforts to satisfy promptly all conditions required
hereby to be satisfied by Purchaser in order to expedite the consummation of
the transactions contemplated hereby.
3.2.2 Employees. Within 15 days following the date of this
Agreement, Purchaser will provide Seller with a list (the "Employee List") of
Employees to whom Purchaser does not intend to make offers of employment (which
list shall not include more than 12 Employees). Purchaser will offer
employment as of the Closing to all Employees, other than those included on the
Employee List, at the same level of base compensation (excluding any bonus and
commission arrangements) and on other terms of employment and conditions
substantially similar to those in effect immediately prior to the Closing for
other comparably situated employees of Purchaser (other than terms and
conditions relating to employee benefit plans which are the subject of Section
3.2.3 and will be governed by that Section); provided, however, that nothing
herein shall limit the ability of Purchaser to change the level of compensation
and other terms and conditions of employment after the Closing Date. Seller
shall be responsible for and shall cause to be discharged and satisfied in full
all amounts owed to any Employee or Former Employee, including wages, salaries,
accrued vacation, any employment, incentive, compensation or bonus agreements
or other benefits or payments on account of termination of employment prior to
Closing by Seller (other than such amounts which are included in the definition
of Assumed Liabilities for which Purchaser shall be responsible and shall cause
to be discharged and satisfied in full) and shall indemnify Purchaser and hold
Purchaser harmless from any losses thereunder.
3.2.3 Employee Plans.
(a) Employee Benefit Plans. Purchaser shall cause all
Employees to become participants effective as of the Closing in the employee
benefit plans sponsored by Purchaser on the same terms as similarly situated
employees of Purchaser. With respect to each plan of Purchaser that is an
"employee welfare benefit plan" as defined in Section 3(1) of ERISA ("Purchaser
Welfare Plans"), Purchaser will waive all pre-existing condition exclusions,
actively at work and waiting period conditions. Purchaser will provide credit
under its employee benefit plans to Employees for service with Seller and its
Affiliates for all purposes for which such service was recognized by Seller and
its Affiliates, other than for benefit accrual under the pension plans
sponsored by or contributed to by Purchaser, provided that such service credit
shall not be required to the extent that it would result in duplication of
benefits in respect of the same period of service. Employees' medical expenses
incurred prior to the Closing shall be taken into account in satisfying
deductible and out-of-pocket limitations for the year in which the Closing
occurs under the Purchaser Welfare Plans. Seller will retain all liabilities
accrued prior to the Closing Date under the employee plans sponsored by or
contributed to by Seller, other than the Union Employee Plan or the
Multiemployer Pension Plan (to the extent provided below in Section 3.2.3(c)),
including (i) in the case of medical benefits, liability for all medical
expenses incurred prior to the Closing Date and liability for all medical
expenses incurred by employees not actively performing services as of the
Closing Date due to an injury or illness that is determined to result in the
Employee's disability, without regard to whether such determination is made
prior to or after the Closing and without regard to whether such medical
23
expenses are incurred prior to or after the Closing, and (ii) in the case of
disability benefits, liability for employees who were not actively performing
services as of the Closing Date due to an injury or illness that is determined
to result in the Employee's disability, without regard to whether such
determination is made prior to or after the Closing. To the extent Purchaser
pays any benefits with respect to which Seller has retained the liability
pursuant to the preceding sentence, Seller will reimburse Purchaser for all
such amounts as soon as practicable after receipt of written notice from
Purchaser. Purchaser agrees to cooperate reasonably with any Employee with
respect to whom Seller has retained liability for medical or disability
benefits and to take all commercially reasonable action to enable such Employee
to return to active service as soon as appropriate. Purchaser shall be
responsible for all Employee-related liabilities accrued or incurred following
the Closing, including in the case of medical benefits, except to the extent
provided above, liability for medical expenses incurred following the Closing.
(b) Pension Plans.
(i) 401(k) Plan. Purchaser will permit Employees
who participate in the National Wire Products Tax Incentive Savings Plan for
Salaried Employees to effect a direct rollover of their accounts to Purchaser's
401(k) plan (including outstanding participant loans). Purchaser will amend
its 401(k) plan if necessary to allow such rollovers.
(ii) Defined Benefit Plan for Union Employees. Prior
to the Closing, Seller and Purchaser will take all action necessary so that
Purchaser will, effective as of the Closing Date, become the employer and plan
sponsor of the Revised Pension Plan Agreement of National Wire Products and
United Steelworkers of America, Local 5861 (the "Union Employee Plan"); subject
however, to Seller's Election (as defined below) to retain such plan. On or
after the Closing, Purchaser shall continue to maintain (for such period as may
be required by the applicable Collective Bargaining Agreement) the Union
Employee Plan in accordance with its terms as in effect immediately prior to
the Closing and as may be required by the applicable Collective Bargaining
Agreement (with such changes as may be required by law or the applicable
Collective Bargaining Agreement). Seller will cause the trustees of the master
trust in which the Union Employee Plan participates (the "Master Trust"), as of
the Master Trust's valuation date next following the Closing Date (the "Union
Employee Plan's Valuation Date"), to value, in a manner consistent with its
prior practices, the Union Employee Plan's allocable share of the assets of the
Master Trust (the "Union Employee Plan's Asset Value"). As soon as practicable
after the determination of the Union Employee Plan's Asset Value, Seller shall
cause the trustees of the Master Trust to transfer to a successor trustee
designated by Purchaser an amount in cash or other property mutually acceptable
to Purchaser and Seller (the "Union Employee Plan's Transferred Assets") equal
to the Union Employee Plan's Asset Value, (a) increased by interest during the
period from the Union Employee Plan's Valuation Date to the date of transfer
(the "Interim Period") on the portion of the Union Employee Plan's Transferred
Assets held in cash at an interest rate equal to the interest rate credited
24
from time to time during the Interim Period on short term investments held in
the Master Trust (the "Interest Rate"), and (b) reduced by (i) an amount equal
to the benefit payments made to participants in the Union Employee Plan or
their beneficiaries under the Union Employee Plan during the Interim Period
plus interest at the Interest Rate on such benefit payments for the Interim
Period and (ii) an amount equal to the allocable share (determined in
accordance with past practice) of fees and expenses of the Union Employee Plan
arising during the Interim Period plus interest at the Interest Rate on such
allocable share of fees and expenses for the Interim Period.
Within 60 days after the Closing Date, Purchaser will either (a) provide
Seller with an opinion letter of counsel acceptable to Seller that the
successor trust established by Purchaser in connection with the Union Employee
Plan satisfies the requirements for exemption under Section 501 of the Code as
of the later of its effective date or the date of transfer of the Union
Employee Plan's Transferred Assets or (b) deliver to Seller a favorable
determination letter issued by the IRS that the successor trust established by
Purchaser in connection with the Union Employee Plan satisfies the requirements
for exemption under Section 501 of the Code as of the later of its effective
date or the date of transfer of the Union Employee Plan's Transferred Assets.
No transfer shall be made unless Purchaser provides Seller with the opinion
letter or determination letter referred to herein.
In consideration for the transfer of assets described in this section,
Purchaser shall, effective as of the Closing Date, assume all of the
liabilities and obligations of the Seller and its Affiliates in respect of the
Union Employee Plan (i) relating to benefits accrued as of the Closing Date,
(ii) for all minimum funding obligations payable after the Closing Date and
(iii) all other obligations of a plan sponsor arising after the Closing Date
and Seller and its Affiliates shall be relieved of all such liabilities and
obligations with respect to the Union Employee Plan.
If Seller elects within five days prior to Closing in writing to retain
the Union Employee Plan (the "Election"), the foregoing terms regarding
transfer of the sponsorship of the Union Employee Plan and the assets relating
thereto shall be ineffective and the Purchase Price will be increased by
$700,000.
(iii) Pension Plan for Non-Union Employees. Seller will
retain all liabilities under, and there will be no transfer of assets with
respect to, the Employees' Retirement Plan of National Wire Products. All
Employees participating in such plan as of the Closing will be treated as
having terminated as of the Closing Date. Such Employees will be permitted to
participate in any pension plans established or maintained by Purchaser for
similarly situated employees.
(c) Union Employees.
(i) Collective Bargaining Agreements. Purchaser will
assume all collective bargaining agreements currently in force at the Plants,
specifically: the Agreement between SNW/Ohio, a Division of Atlantic Steel
Industries, Inc. and Teamsters, Chauffeurs, & Warehousemen, Local No. 20; the
Agreement between Sivaco/National Wire of Florida and United Xxxxxxxxxxxx xx
Xxxxxxx, Xxxxx Xxxxx Xx. 0000; and the Agreement between Sivaco/National Wire
25
Maryland and United Steelworkers of America, Local Union No. 5861, and as
provided in Section 1.2(b), all of Seller's obligations thereunder arising
after the Closing.
(ii) Multiemployer Pension Plan. (A) With respect to
the Multiemployer Pension Plan, Purchaser and Seller intend to satisfy the
requirements of Section 4204 of ERISA to avoid a withdrawal by Seller or its
Affiliates as a result of the transactions contemplated hereby from the
Multiemployer Pension Plan in respect of the Employees covered by the
Multiemployer Pension Plan. In this regard, effective as of 12:01 a.m. on the
Closing Date, Purchaser shall become a successor employer contributing to the
Multiemployer Pension Plan on behalf of the Employees participating therein
pursuant to the terms of the applicable Collective Bargaining Agreement and
Purchaser will make contributions after the Closing Date to the Multiemployer
Pension Plan for substantially the same number of contribution base units (as
defined in ERISA Section 4001 (a)(11)) for which the Seller or its Affiliates
had an obligation to contribute to the Multiemployer Pension Plan.
(B) Purchaser will provide to the Multiemployer
Pension Plan, as soon as practicable after the Closing Date and in any event by
the time required pursuant to Section 4204 of ERISA, a bond issued by a
corporate surety company that is an acceptable surety for purposes of Section
412 of ERISA with a five-year term commencing as of the first day of the first
plan year of the Multiemployer Pension Plan immediately following the Closing
Date (the "Protected Period") or establish an escrow account with a bank or
similar financial institution, with the same term, satisfactory to the trustees
of the Multiemployer Pension Plan in an amount equal to the greater of (x) the
average of Seller's or its Affiliate's annual contributions to the
Multiemployer Pension Plan for the three plan years preceding the plan year in
which the Closing Date occurs, or (y) Seller's contribution to the
Multiemployer Pension Plan for the plan year preceding the plan year in which
the Closing Date occurs.
(C) If there is a partial or complete withdrawal (as such
terms are defined in Sections 4205(a) and 4203(a) of ERISA respectively) from
the Multiemployer Pension Plan by Purchaser prior to the end of the Protected
Period, Seller or such Affiliate of Seller that was obligated to contribute to
such Multiemployer Pension Plan shall be secondarily liable for any withdrawal
liability Seller or such Affiliate would have had to the Multiemployer Pension
Plan had Seller and Purchaser not entered into the agreements contained in this
Section 3.2.3(c) to the extent the liability of Purchaser to the Multiemployer
Pension Plan as a result of such complete or partial withdrawal therefrom is
not paid by Purchaser or its Affiliates to the Multiemployer Pension Plan in
respect of such withdrawal.
(D) Purchaser and Seller agree to take all action
necessary to request and use all reasonable efforts to obtain a variance or
exemption from the Multiemployer Pension Plan or Pension Benefit Guaranty
Corporation with respect to the Purchaser's bond or escrow obligation and the
Seller's contractual promise to be secondarily liable in accordance with ERISA
26
Section 4204 and the regulations promulgated thereunder. If such variance or
exemption is granted or in the event an exemption from such requirements is
available under applicable regulation and the Multiemployer Pension Plan
confirms that such exemption is applicable, then paragraph (B) and/or (C) of
this Section 3.2.3(c)(ii), as the case may be, shall not apply.
(d) Retiree Medical Benefits. Seller shall retain all
liability for all post retirement medical and life insurance benefits for all
Former Employees who have retired prior to the Closing. Purchaser shall be
responsible for all post retirement medical and life insurance benefits for any
Employee who retires after the Closing; provided, however, that nothing herein
shall obligate Purchaser to provide either post-retirement medical or life
insurance benefits to any Employee after the Closing.
3.3 HSR Act. Seller and Purchaser agree to make (or that their
respective ultimate parent entities, if different, will make) appropriate
filings of Notification and Report Forms pursuant to the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), with respect to
the transactions contemplated hereby within three business days after the date
of execution of this Agreement and to supply promptly any additional
information and documentary material that may be requested pursuant to the HSR
Act. Neither Seller nor Purchaser will take any action that will have the
effect of delaying, impairing or impeding the receipt of any required approvals
or consents or the termination of any waiting periods. Seller, within two days
following written notification of Purchaser's filing of a Notification and
Report Form pursuant to the HSR Act, will reimburse Purchaser for one-half of
the HSR Act filing fee paid by Purchaser.
3.4 Duty to Inform. If, prior to the Closing, Purchaser discovers any
facts that would make any of Seller's representations or warranties or
schedules set forth in this Agreement incomplete or incorrect, in any material
respect, Purchaser shall disclose such information to Seller promptly, and in
all cases, prior to Closing. Notwithstanding anything to the contrary in the
foregoing sentence, the discovery by Purchaser of such facts shall not relieve
Seller of any of the consequences associated with the discovery and existence
of such information.
3.5 Real Property Transfer Related Documents. Purchaser shall prepare
and file all transfer related affidavits, reports, statements or similar
documents required to be prepared or filed by Purchaser with respect to
conveyances of Real Property.
3.6 Estoppel Certificates. Seller will use commercially reasonable
efforts to assist Purchaser in obtaining from the landlords with respect to the
Ohio Plant and the leased portion of the Florida Plant such landlords' estoppel
certificates as are requested by Purchaser's lenders; provided, that Seller
shall not be obligated under this Section 3.6 to incur any out-of-pocket costs
unless such costs are advanced to Seller by Purchaser without restriction.
27
3.7 Ivaco Steel Xxxxx Personnel. Purchaser shall permit the five
employees of Ivaco Steel Xxxxx who currently maintain offices at the Maryland
Plant to continue to use such offices, without charge, following the Closing
Date until September 30, 1996.
ARTICLE IV
CLOSING
4.1 Closing. Unless this Agreement is first terminated as provided in
Section 7.1 hereof, and subject to the satisfaction or waiver of all conditions
to the consummation of the transactions contemplated hereby, the closing of the
transactions contemplated hereby (the "Closing") shall take place at the
offices of Xxxxx & Xxxxx, L.L.P., Houston, Texas, beginning at 9:00 a.m. (local
time) on the later of July 15, 1996, or five business days following the
expiration of the applicable waiting period under the HSR Act. The date on
which the Closing occurs is referred to herein as the "Closing Date." The
Closing shall not be deemed to have been completed until the last of the
conditions to be satisfied pursuant to this Agreement has been satisfied or
waived.
4.2 Conditions to Closing.
(a) The obligations of Purchaser to effect the Closing are
subject to the fulfillment, satisfaction or waiver of each of the following
conditions precedent:
(i) The representations and warranties of Seller contained in
this Agreement or in any schedule, certificate or document delivered by Seller
to Purchaser pursuant to the provisions hereof shall have been true on the date
hereof in all material respects (except that any representations and warranties
of Seller which contain materiality qualifiers shall have been true in all
respects) and after taking into account the last sentence of Section 2.1 shall
be true on the Closing Date in all material respects (except that any
representations and warranties of Seller which contain materiality qualifiers
shall be true in all respects), with the same effect as though such
representations and warranties were made as of such date. Purchaser shall have
received a certificate of the President or a Vice President of Seller or Xxxxxx
Xxxxxxxxx, dated the Closing Date, to the effect that the conditions specified
in this clause (i) have been fulfilled.
(ii) Seller shall have performed and complied in all material
respects with all agreements and conditions required by this Agreement to be
performed or complied with by Seller prior to or at the Closing. Purchaser
shall have a received certificate of the President or a Vice President of
Seller or Xxxxxx Xxxxxxxxx, dated the Closing Date, to the effect that the
conditions specified in this clause (ii) have been fulfilled.
(iii) Seller shall have executed and delivered to Purchaser special
warranty deeds in a form customary in each jurisdiction in which the Owned Real
Property is located.
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(iv) Seller shall have executed and delivered to Purchaser the
Xxxx of Sale and such other instruments of conveyance in a form reasonably
satisfactory to Purchaser as shall in Purchaser's reasonable opinion be
necessary or appropriate to convey to Purchaser all of the Acquired Assets
(other than the Owned Real Property) free and clear of all Encumbrances other
than Permitted Encumbrances.
(v) Purchaser shall have received title insurance commitments for
the Owned Real Property in a form, and with such modifications, deletions and
endorsements reasonably requested by Purchaser, customary in each jurisdiction
in which the Owned Real Property is located redated to the date and time of the
Closing with no Encumbrances other than Permitted Encumbrances and the printed
exceptions set forth therein (amended or deleted as is customary in the
applicable jurisdiction).
(vi) Seller shall have executed and delivered an Assignment and
Assumption Agreement.
(vii) Seller shall have executed and delivered a Lease
Assignment and Assumption Agreement (the "Lease Assignment") in substantially
the form of Exhibit C hereto.
(viii) All Consents listed (or required to be listed) on
Schedule 2.1.4 shall have been obtained (except any such Consents identified as
"immaterial" consents on Schedule 2.1.4).
(ix) Purchaser shall have obtained any governmental licenses or
permits listed on Exhibit D.
(x) Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx, counsel for Seller,
shall have delivered to Purchaser a written opinion, dated the Closing Date, in
substantially the form of Exhibit E hereto.
(xi) No injunction shall have been instituted by a court of
competent jurisdiction restraining or prohibiting the consummation by Purchaser
of the transactions contemplated by this Agreement. In the event any such
injunction shall have been issued, Purchaser agrees to use its reasonable
efforts, through the 120th day following the date hereof, to have such
injunction lifted, provided that (A) Seller and Purchaser share equally in all
costs associated with such efforts and (B) neither Seller nor Purchaser is
obligated to spend more than an aggregate of $50,000 with respect thereto.
(xii) No proceeding which, in the reasonable opinion of
Purchaser (based on the advice of its counsel), is material shall have been
instituted in a court of competent jurisdiction seeking damages on account or
as a result of the consummation by Purchaser of the transactions contemplated
29
by this Agreement which, if adversely determined, would have a Material Adverse
Effect and which presents a reasonable probability that the plaintiff will
prevail on the merits.
(xiii) Between the date hereof and the Closing Date, there
shall have been no Material Adverse Effect.
(xiv) The New Florida Consultant (as hereinafter defined) shall
have been jointly selected by Purchaser and Seller.
(xv) Purchaser shall be reasonably satisfied that, at the time
of Closing, the Maryland Plant air emissions (at normal operating levels)
comply with all applicable Environmental Laws such that the Maryland Plant air
emissions shall not prevent Purchaser from obtaining any permits required to be
obtained as a result of Purchaser acquiring the Maryland Plant.
(b) The obligations of Seller to effect the Closing are subject to the
fulfillment, satisfaction or waiver of each of the following conditions
precedent:
(i) The representations and warranties of Purchaser contained in
this Agreement or in any list, certificate or document delivered by Purchaser
to Seller pursuant to the provisions hereof shall have been true on the date
hereof in all material respects (except that any representations and warranties
of Purchaser which contain materiality qualifiers shall have been true in all
respects) and shall be true on the Closing Date in all material respects
(except that representations and warranties of Purchaser which contain
materiality qualifiers shall be true in all respects) with the same effect as
though such representations and warranties were made as of such date. Seller
shall have received a certificate of the President or a Vice President of
Purchaser, dated the Closing Date, to the effect that the conditions specified
in this clause (i) have been fulfilled.
(ii) Purchaser shall have performed and complied in all material
respects with all agreements and conditions required by this Agreement to be
performed or complied with by Purchaser prior to or at the Closing. Seller
shall have received a certificate of the President or a Vice President of
Purchaser, dated the Closing Date, to the effect that the conditions specified
in this clause (ii) have been fulfilled.
(iii) Purchaser shall have executed and delivered to Seller the
Assignment and Assumption Agreement.
(iv) Purchaser shall have executed and delivered to Seller the
Lease Assignment.
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(v) All consents or approvals listed (or required to be listed)
on Schedule 2.2.4 shall have been obtained.
(vi) Xxxxx & Xxxxx, L.L.P., counsel for Purchaser, shall have
delivered to Seller a written opinion dated the Closing Date, in substantially
the form of Exhibit F hereto.
(vii) No injunction shall have been instituted by a court of
competent jurisdiction restraining or prohibiting the consummation by Seller of
the transactions contemplated by this Agreement. In the event any such
injunction shall have been issued, Seller agrees to use its reasonable efforts,
through the 120th day following the date hereof, to have such injunction
lifted, provided that (A) Seller and Purchaser share equally in all costs
associated with such efforts and (B) neither Seller nor Purchaser is obligated
to spend more than an aggregate of $50,000 with respect thereto.
(viii) No proceeding which, in the reasonable opinion of Seller
(based on the advice of its counsel), is material shall have been instituted in
a court of competent jurisdiction seeking damages on account or as a result of
the consummation by Seller of the transactions contemplated by this Agreement
which, if adversely determined, would have a Material Adverse Effect and which
presents a reasonable probability that the plaintiff will prevail on the
merits.
(ix) The New Florida Consultant shall have been jointly selected
by Purchaser and Seller.
ARTICLE V
SURVIVAL AND INDEMNIFICATION
5.1 Survival of Representations, Warranties and Covenants.
(a) Each of the representations and warranties contained in this
Agreement or in any document delivered in connection herewith will survive the
Closing and remain in full force and effect thereafter until the date that is
one year following the Closing Date, except that the representations and
warranties set forth in Section 2.1.8 (as to title to assets only) and 2.1.15
will survive the Closing and remain in full force and effect thereafter until
30 days following the expiration of any applicable statutes of limitation, and
the representations and warranties set forth in Section 2.1.13 shall survive
the Closing and remain in full force and effect thereafter until the date that
is forty-two (42) months following the Closing Date.
(b) Unless a specified period is set forth in this Agreement (in
which event such specified period will control), the covenants contained in
Article VI of this Agreement will survive the Closing and remain in effect
until complied with by the applicable party or parties.
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5.2 Indemnification by Seller. Within the time periods specified
in Section 5.1 with respect to representations and warranties of Seller, and
within the time periods specified in subparagraph (c) below with respect to the
indemnification provided by Seller pursuant to such subparagraph, and subject
to the procedures set forth in Section 5.4 and the limitations set forth in
Section 5.5, if the Closing occurs, Seller shall indemnify and hold harmless
each Purchaser Party (as hereinafter defined) in respect of any and all Damages
(as hereinafter defined) resulting from or relating to:
(a) any and all liabilities and obligations of Seller of any
nature whatsoever, except for the Assumed Liabilities;
(b) breach of any representation or warranty or nonfulfillment
of any covenant or agreement on the part of Seller under this Agreement, or any
misrepresentation in or omission from any certificate, schedule, statement,
document or instrument furnished to Purchaser pursuant hereto or in connection
with the negotiation, execution or performance of this Agreement as to which
Seller has received notification, pursuant to Section 5.4 below, from any
Purchaser Party within the time periods specified in Section 5.1;
(c) any Environmental Costs and Liabilities (except such
Environmental Costs and Liabilities which result from or arise out of any
action or decision after the Closing by Purchaser to change the use of a given
property to a nonindustrial use, and except for any Identified Florida Plant
Response Costs (as hereinafter defined) which shall be governed by Section
5.2(e) and Section 6.8) as to which Seller has received notification, pursuant
to Section 5.4(d) below, from any Purchaser Party within 42 months following
the Closing Date, which result from or arise out of (i) any action or inaction
of Seller or any director, officer, employee, agent, representative or
subcontractor of Seller or any other third party occurring prior to the Closing
relating to or resulting from the operation of the Acquired Business or (ii)
any condition on, under or at the Real Property prior to the Closing; provided,
however, that Seller shall have no indemnification obligations with respect to
any Environmental Costs and Liabilities to the extent resulting from (A) any
voluntary actions (other than (x) routine environmental compliance audits
performed by or on behalf of the Purchaser, (y) environmental assessments
required by, and performed in the ordinary course of due diligence on behalf
of, any lender or investor of Purchaser or (z) in connection with the matters
set forth on Schedule 5.2(c)), by Purchaser or any director, officer, employee,
agent, representative or subcontractor of Purchaser or any other third party
acting on behalf of, or under the supervision of, Purchaser to investigate or
remediate Hazardous Wastes on, under or at any of the Real Property, or (B) any
disclosure, report or other communication (whether oral or written) from
Purchaser or any director, officer, employee, agent, representative or
subcontractor of Purchaser or any other third party acting on behalf of, or
under the supervision of, Purchaser to any governmental authority or other
third party ("Notification"), unless Purchaser believes, in its good faith
business judgment (exercised without regard to the availability of
indemnification hereunder), and after consultation with counsel, that such
Notification is required under any Environmental Law. Purchaser agrees to
consult with Seller prior to any such Notification, except in the event that
such advance consultation is prohibited or rendered impracticable by exigent
circumstances, in which case Purchaser shall promptly thereafter notify Seller
of such Notification;
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(d) failure to comply with any bulk sales or similar provisions
of law in connection with the transfer of the Acquired Assets to Purchaser; or
(e) if (and only if) Purchaser exercises its right pursuant to
Section 6.8(b) to require Seller to repurchase the Owned Florida Real Property
(as hereinafter defined), any and all Environmental Costs and Liabilities
(including but not limited to the Identified Florida Plant Response Costs)
incurred by any Purchaser Party relating to the Owned Florida Real Property,
except for any Environmental Costs and Liabilities caused by Purchaser or any
director, officer, employee, agent, representative or subcontractor of
Purchaser or any third party during the period in which Purchaser owns the
Owned Florida Real Property.
"Purchaser Party" shall mean Purchaser, any Affiliate of Purchaser, and any
officer, director, or employee of Purchaser or of any Affiliate of Purchaser.
"Damages" shall mean any and all actual damages, liabilities, fines, fees,
penalties, interest obligations, deficiencies, losses and expenses, including,
without limitation, reasonable attorneys' fees and expenses. A party suffering
any Damages shall have an obligation to mitigate such Damages; provided that
such Damages can be mitigated without unreasonable effort (as determined by
such party in its sole and reasonable discretion) and without any out-of-pocket
cost to such party (unless such out-of-pocket costs are advanced without
restriction by the other party).
5.3 Indemnification by Purchaser. Within the time periods specified
in Section 5.1 with respect to representations and warranties of Purchaser and
subject to the procedures set forth in Section 5.4 and the limitations set
forth in Section 5.5, if the Closing occurs, Purchaser shall indemnify and hold
harmless each Seller Party (hereinafter defined) in respect of any and all
Damages resulting from or relating to:
(a) any and all Assumed Liabilities;
(b) breach of any representation or warranty or nonfulfillment of
any covenant or agreement on the part of Purchaser under this Agreement, or any
misrepresentation in or omission from any certificate, schedule, statement,
document or instrument furnished to Seller pursuant hereto or in connection
with the negotiation, execution or performance of this Agreement as to which
Purchaser has received notification, pursuant to Section 5.4 below, from any
Seller Party within the time periods specified in Section 5.1; or
(c) any Environmental Costs and Liabilities incurred by any Seller
Party which result from or arise out of (i) any action or inaction (other than
with respect to such Environmental Costs and Liabilities subject to Seller's
indemnification obligation in Section 5.2(c), or which would be subject to such
obligation if not for the limitation period in Section 5.2(c), or Section
5.2(e)) of Purchaser or any director, officer, employee, agent, representative
33
or subcontractor of Purchaser occurring after the Closing relating to or
resulting from the operation of the Acquired Business, or any third party after
the Closing through the date of sale of the applicable Real Property by
Purchaser to a non-Affiliated purchaser, or (ii) any condition which results
from or arises out of the introduction of any Hazardous Wastes on, under or at
the Real Property by Purchaser or any director, officer, employee, agent,
representative or subcontractor of Purchaser after the Closing, or any third
party after the Closing through the date of sale of the applicable Real
Property by Purchaser to a non-Affiliated purchaser. Notwithstanding anything
to the contrary in this Agreement, for the purposes of this Section 5.3(c)
only, Environmental Laws shall include such Laws, licenses, permits and orders
and agreements with any governmental authority or third party, in each case as
in effect on or after the Closing.
"Seller Party" shall mean Seller, any Affiliate of Seller, or any officer,
director, or employee of Seller or of any Affiliate of Seller.
5.4 Indemnification Procedures.
(a) If an indemnitee becomes aware of any matter (other than
environmental matters which are addressed in Section 5.4(d)) that it believes
is indemnifiable pursuant to Section 5.2 or 5.3 and such matter involves (i)
any claim made against the indemnitee by any person or entity other than a
Purchaser Party or a Seller Party or (ii) the commencement of any action, suit,
investigation, arbitration, or similar proceeding against the indemnitee by any
Person other than a Purchaser Party or a Seller Party, the indemnitee will give
the indemnifying party prompt written notice of such claim or the
commencement of such action, suit, investigation, arbitration, or similar
proceeding. Such notice will (x) provide (with reasonable specificity) the
basis on which indemnification is being asserted, (y) set forth the actual or
estimated amount of Damages for which indemnification is being asserted, if
known, and (z) be accompanied by copies of all relevant pleadings, demands, and
other papers served on the indemnitee. Failure of the indemnitee to give
prompt notice pursuant to this Section 5.4(a) shall not relieve the
indemnifying party of its obligations, except to the extent that the
indemnifying party is actually prejudiced by such failure to give prompt
notice.
(b) The indemnifying party will have a period of 30 days after the
delivery of each notice required by Section 5.4(a) hereof during which to
respond to such notice. If the indemnifying party elects to defend the claim
described in such notice, the indemnifying party will be obligated to
compromise or defend (and will control the defense of) such claim, at its own
expense and by counsel chosen by the indemnifying party and reasonably
satisfactory to the indemnitee. The indemnitee will cooperate with the
indemnifying party and counsel for the indemnifying party in the defense
against any such claim, and the indemnitee will have the right to participate
at its own expense in the defense of any such claim. If the indemnifying party
does not respond within such 30-day period or responds during such 30 day
period but elects not to defend such claim, the indemnitee will be free,
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without prejudice to any of the indemnitee's rights hereunder, to compromise or
defend (and control the defense of) such claim and to pursue such remedies as
may be available to the indemnitee under applicable Law; provided that any
compromise or settlement of such claim will require the prior written consent
of the indemnifying party, which shall not be unreasonably withheld. The
election by an indemnifying party to defend a claim shall not be deemed an
admission by such party that such claim is indemnifiable pursuant to Section
5.2 or 5.3 hereof.
(c) If an indemnitee becomes aware of any matter (other than
environmental matters which are addressed in Section 5.4(d)) that it believes
is indemnifiable pursuant to Section 5.2 or 5.3 other than any matter described
in Section 5.4(a) hereof, the indemnitee will give the indemnifying party
prompt written notice of such claim. Such notice will (i) provide (with
reasonable specificity) the bases for which indemnification is being asserted
and (ii) set forth the actual or estimated amount of Damages for which
indemnification is being asserted. Failure of the indemnitee to give prompt
notice pursuant to this Section 5.4.3 shall not relieve the indemnifying party
of its obligations, except to the extent that the indemnifying party is
actually prejudiced by such failure to give prompt notice. The indemnifying
party will have a period of 30 days after the delivery of each notice required
by this Section 5.4.3 during which to respond to such notice. If the
indemnifying party accepts (in writing) full responsibility for the claim
described in such notice, the actual or estimated amount of Damages reflected
in such notice will be conclusively deemed a liability that the indemnifying
party owes, and will pay (in cash) upon demand, to the indemnitee. If the
indemnifying party has disputed such claim or does not respond within such
30-day period, the indemnifying party and the indemnitee agree to proceed in
good faith to negotiate a resolution of such dispute. If all such disputes are
not resolved through negotiations within 30 days after such negotiations begin,
either the indemnifying party or the indemnitee may initiate litigation to
resolve such disputes. If the indemnifying party does not respond within 30
days after delivery of any claim notice required by this Section 5.4.3, the
indemnitee may initiate litigation to resolve such claim.
(d) Notwithstanding anything to the contrary contained in this
Section 5.4, any claims for indemnification pursuant to Section 5.2(b) relating
to the breach of any representation or warranty set forth in Section 2.1.13,
Section 5.2(c), Section 5.2(e) or Section 5.3(c) shall be governed exclusively
by the procedures set forth in this Section 5.4(d).
(i) If an indemnitee seeking indemnification under Section 5.2(b)
relating to the breach of any representation or warranty set forth in Section
2.1.13, Section 5.2(c), Section 5.2(e) or Section 5.3(c) receives notice of any
order, directive, decree, demand, notice of potential liability, or complaint
by any governmental authority or other third party, or the commencement of any
action, proceeding or investigation by any governmental authority (including,
without limitation, those resulting from any routine environmental compliance
audit or any disclosure, report or other communication by Purchaser to any
governmental authority in accordance with Section 5.2(c)) or other third party,
or becomes aware of any other claim for indemnification other than a third-
party claim, in each case that may result in Environmental Costs and
35
Liabilities ("Environmental Claim"), the indemnitee promptly shall give written
notice thereof ("Environmental Claim Notice") to the indemnifying party. The
Environmental Claim Notice shall (x) provide (with reasonable specificity) the
bases for which indemnification is being asserted, (y) indicate, to the extent
that may reasonably be determined, the amount (estimated, if necessary) of any
Environmental Costs and Liabilities for which indemnification is being
asserted, and (z) be accompanied by copies of all the relevant pleadings,
demands, and other papers served on or received by the indemnitee. Failure of
the indemnitee to give prompt notice pursuant to this Section 5.4(d) shall not
relieve the indemnifying party of its obligations, except to the extent that
the indemnifying party is actually prejudiced by such failure to give prompt
notice. The indemnifying party shall have a period of 30 days after the
delivery of each notice required by this Section 5.4(d) during which to respond
to such notice. If the indemnifying party elects to assume the defense or
control (including the planning or implementation of any investigation,
remediation or other response action) of the Environmental Claim described in
the Environmental Claim Notice, then the indemnifying party shall be obligated
to defend or control the Environmental Claim, at its own expense and by counsel
and environmental experts chosen by the indemnifying party and reasonably
satisfactory to the indemnitee, it being understood that following any such
assumption, the indemnifying party shall have no indemnification obligation
hereunder to pay any fees or expenses of any consultants, experts or legal
counsel of the indemnitee thereafter expended or incurred by the indemnitee in
connection with such Environmental Claim. The indemnitee shall cooperate with
the indemnifying party and counsel and environmental experts for the
indemnifying party in the defense or control of the Environmental Claim, and
the indemnitee shall have the right, at its own expense, to consult with the
indemnifying party in the defense or control of any Environmental Claim (it
being understood that in no event shall any such consultation interfere with
the indemnifying party's defense or control). If the indemnifying party does
not respond within such 30-day period or responds during such 30-day period but
elects not to assume the defense or control of the Environmental Claim, the
indemnitee shall be free, without prejudice to any of the indemnitee's rights
hereunder, to defend or control the Environmental Claim, with counsel and
environmental experts selected by the indemnitee and reasonably satisfactory to
the indemnifying party, at the indemnifying party's expense; provided, however,
that any compromise or settlement of any Environmental Claim will require the
prior written consent of the indemnifying party, which consent shall not be
unreasonably withheld. The election by an indemnifying party to control any
Environmental Claim shall not be deemed an admission by such party that such
Environmental Claim is indemnifiable pursuant to Section 5.2 or 5.3 hereof.
(ii) Subject to the terms and conditions set forth in this Section
5.4(d), in the event that an Environmental Claim Notice shall have been given
by the indemnitee to the indemnifying party prior to the expiration of the
applicable survival period of the right to indemnification for such
Environmental Claim, then such right to indemnification shall survive, to the
extent of such Environmental Claim only, until such Environmental Claim is
36
resolved, whether or not the Environmental Costs and Liabilities resulting from
such Environmental Claim have been finally determined at the time the
Environmental Claim Notice is given, but only if (y) in the case of any
Environmental Claim made by reason of a written third-party claim, the
Environmental Claim Notice is accompanied by a copy of the written notice of
the third-party claimant and (z) in the case of any Environmental Claim made
other than by reason of a written third-party claim, some Environmental Costs
and Liabilities shall have been incurred in good faith at or prior to the date
of such Environmental Claim Notice in connection with a requirement of
Environmental Law and such Environmental Claim Notice is accompanied by
available test results, if any, setting forth the basis for the Environmental
Claim as to which the Environmental Claim Notice relates.
(iii) Notwithstanding anything to the contrary contained in this
Section 5.4(d), the indemnifying party or the indemnitee, as the case may be,
having undertaken to defend or control any Environmental Claim, shall undertake
such defense or control (including the planning or implementation of any
investigation, remediation or other response action) in a Commercially
Reasonable Manner. "Commercially Reasonable Manner" shall be determined from
the perspective of a reasonable business person acting (without regard to the
availability of indemnification hereunder) to achieve compliance (based on
reasonable reliance on the advice of expert third-party environmental
consultants or counsel) with or avoid or mitigate liability under Environmental
Laws. The indemnitee's rights with respect to Environmental Costs and
Liabilities under Section 5.2(b) relating to the breach of any representation
or warranty set forth in Section 2.1.13, Section 5.2(c) or Section 5.3(c) shall
be reduced to the extent that actions undertaken by it are not conducted in a
Commercially Reasonable Manner and such actions (y) increase the amount of
Environmental Costs and Liabilities, or (z) result in Environmental Costs and
Liabilities which but for such actions would not have been expended or
incurred. In the event of a disagreement between the indemnifying party and
the indemnitee concerning whether any action with respect to any Environmental
Claim is taken in a Commercially Reasonable Manner, the parties shall each
designate one representative to represent them respecting such disagreement and
the designated representatives shall in good faith attempt to resolve such
disagreement on a reasonable basis with the assistance of their respective
environmental consultants; any disagreements which cannot be resolved by the
designated representatives after sixty (60) business days shall promptly be
referred to an independent consultant having expertise in the matter at issue,
mutually acceptable to the parties (or, if the parties cannot so agree, the
American Arbitration Association shall select such a consultant who shall be
independent from each of the parties and whose fees and expenses shall be paid
equally by the parties), who shall evaluate the facts and circumstances at
issue and shall recommend a course of action which the independent consultant
believes in its good faith judgment should be taken (but shall not itself
perform such action). Such recommendation shall be final and binding upon the
parties. The parties agree to act as promptly as practicable in implementing
the foregoing procedures, and further agree that, in the event of exigent
circumstances that require any actions by the indemnifying party or the
indemnitee, as the case may be, before the foregoing procedures can be
implemented, each of the indemnifying party and the indemnitee, as the case may
be, may undertake such actions at its own expense and shall be entitled to
indemnification hereunder to the extent that its actions are subsequently
ratified by such procedure.
(iv) The respective indemnification obligations of Seller and
Purchaser under Section 5.2(b) relating to the breach of any representation or
warranty set forth in Section 2.1.13, or Section 5.2(c), Section 5.2(e),
Section 5.3(c), or Section 6.8 shall constitute the sole and exclusive remedy
of each of Seller and Purchaser for the recovery of Environmental Costs and
Liabilities and each of Seller and Purchaser hereby waives any rights and
remedies that it may have against, and covenants not to xxx, the other under
any Environmental Law, including, without limitation, any claims for
contribution under CERCLA or common law; provided that the foregoing limitation
shall not apply to Environmental Costs and Liabilities arising out of any fraud
or intentional misconduct of Seller or Purchaser.
5.5 Limitations. No claim by an indemnitee for indemnification which
relates solely to the breach of a representation or warranty may be made unless
and until such indemnitee (and all other indemnitees that have incurred Damages
otherwise indemnifiable by such indemnifying party) have incurred Damages
otherwise indemnifiable under this Agreement which total at least $375,000 in
the aggregate (the "Basket"), at which time all amounts in excess of $175,000
(the "Deductible") may be recovered as provided in this Article V. In
addition, Seller will not be liable under this Article V for claims by all
indemnitees for indemnification which relates solely to the breach of a
representation or warranty for an aggregate amount in excess of the
Consideration (the "Cap"). Notwithstanding the foregoing, irrespective of the
Deductible, Basket or the Cap, full recovery may be had for all Damages
resulting from the intentional, willful or reckless breach of any
representation or warranty, and any amount so recovered will not be applied to
either the applicable Deductible, the Basket or the Cap. The right of
Purchaser for indemnification under and in accordance with the provisions of
this Article V shall be the exclusive remedy of the Purchaser and each other
Purchaser Party against Seller in the event of any breaches by Seller of any of
its representations and warranties set forth in this Agreement.
5.6 Adjustment to Purchase Price. Seller and Purchaser agree that
any indemnity payment made to Seller or Purchaser under this Article V will be
treated by the parties on their tax returns as an adjustment to the purchase
price for the Acquired Assets.
ARTICLE VI
POST-CLOSING COVENANTS
6.1 Non-Competition. Until and including the third anniversary
of the Closing Date (the "Non-Competition Period"), neither Seller, nor any
other Affiliate of Seller will, directly or indirectly, engage in the
manufacturing of wire mesh in the United States; provided, however, that Seller
and its Affiliates shall not be prohibited during the Non-Competition Period
from selling in the United States within the 12-month period commencing on the
Closing Date or the 12-month periods commencing on the first and second
anniversary of the Closing Date, up to 1,500 tons of wire mesh during each such
12-month period. Without limiting the foregoing, a person will be deemed to be
engaged in the manufacturing or sale of wire mesh in the United States if it
owns any equity interest in an entity engaging in such activities; provided,
however, that this Section 6.1 shall not be violated solely as a result of the
ownership of less than 5% of any class of equity securities of a publicly-
traded company. Nothing in this Section 6.1 shall prohibit Seller or its
affiliates from engaging in the manufacturing and/or sale of galvanized wire or
any other wire or other products not specifically covered by this Section 6.1
in the United States. It is the intention of the parties that, in the event a
court of competent jurisdiction determines that the scope and/or duration of
the covenant set forth in this Section 6.1 is excessive so as to render the
covenant unenforceable as written, such court shall reduce the scope and/or
duration of such covenant to the minimum extent necessary to make the covenant
enforceable.
6.2 Accounts Receivable.
(a)Purchaser will pay to Seller, on a weekly basis following the
Closing Date, all amounts received by Purchaser and identified by the obligor
as payments in respect of the Seller Receivables. With respect to any payments
received by Purchaser from obligors with respect to Seller Receivables which
are not clearly identifiable as relating to invoices in respect of Purchaser
Receivables, Purchaser and Seller will cooperate (including jointly contacting
the obligors) to determine the intent of the obligors with respect to such
payments, and such payments will be applied in accordance with the obligors'
intent.
(b) Seller will pay to Purchaser, on a weekly basis following the
Closing Date, all amounts received by Seller and identified by the obligor as
payments in respect of Purchaser Receivables. With respect to any payments
received by Seller from obligors with respect to Purchaser Receivables which
are not clearly identifiable as relating to invoices in respect of Seller
Receivables, Seller and Purchaser will cooperate (including jointly contacting
the obligors) to determine the intent of the obligors with respect to such
payments, and such payments will be applied in accordance with the obligors'
intent.
(c) Neither Purchaser nor Seller shall instruct any obligor to pay
such party's invoices in lieu of paying the other party's invoices.
6.3 Intentionally Omitted.
6.4 Galvanized Wire Operation Assistance. Seller shall provide to
Purchaser, at Purchaser's request, for a period of 45 days following the
Closing, reasonable assistance in introducing customers of the Galvanized Wire
Operation to Purchaser's personnel who will be responsible for servicing such
customers.
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6.5 Access to Records. Seller and Purchaser shall cooperate fully,
as and to the extent reasonably requested by the other party, in connection
with the provision of access to information relating to any of the Acquired
Assets or any aspect of the Acquired Business that is in the possession of any
party and is reasonably requested by the other party, including but not limited
to any such information requested in connection with any (a) audit, litigation
or other proceeding with respect to taxes, (b) claim for indemnification
hereunder, (c) inquiry of any governmental authority, (d) financial reporting
and accounting matters (but only to the extent required by law) and (e)
litigation or other proceedings with third parties. Such cooperation shall
include the retention and (upon the other party's request) the provision of
records and information which are reasonably relevant to any such matter and
making employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder; provided,
however, that such records or information so provided may be used only for the
purposes specifically described in this Section 6.5 and may not be used to the
competitive disadvantage of the party providing such records or information or
for any other purpose. Seller and Purchaser shall (i) retain all books and
records with respect to the foregoing matters until the applicable statutes of
limitations (including any extensions) shall have run), (ii) abide by all
record retention agreements entered into with any governmental authority and
(iii) give the other party reasonable written notice (and opportunity to copy)
prior to destroying or discarding any such books and records proposed for
destruction or discard. A party that is supplied with Confidential Information
(as hereinafter defined) of the other party pursuant to this Section 6.5 shall,
except as otherwise required by law or by the reasonable purposes for which
such information was requested, keep such information confidential and limit
the use of such information to the reasonable purposes for which such
information is supplied. In the event that the party receiving any
Confidential Information hereunder (the "Receiving Party") is compelled (by
oral questions, interrogatories requests for information or documents,
subpoena, civil investigative demand or other process) to disclose any
Confidential Information, such party will provide the other party (the
"Providing Party) with prompt notice of such request or requirement so that the
Providing Party may seek an appropriate protective order or other appropriate
remedy or waive compliance with the provisions of this Section 6.5. In the
absence of the entry of a protective order or other appropriate remedy, the
Receiving Party may disclose that portion of the Confidential Information
which, in the opinion of its counsel it is compelled by law to disclose. The
Receiving Party will use its best efforts to assist the Providing Party in
obtaining a protective order and, upon the failure of the Providing Party to
obtain a protective order, will use its best efforts to obtain reliable
assurance that confidential treatment will be accorded the Confidential
Information. As used herein, "Confidential Information" shall have the same
meaning ascribed to the term "Information" in the Confidentiality Agreement
referred to in Section 7.4. Any Confidential Information provided pursuant to
this Section 6.5 which is no longer necessary for the purposes described herein
shall be destroyed or returned immediately by the Receiving Party.
Notwithstanding anything to the contrary herein, the Receiving Party will not
be restricted from using any information, including Confidential Information,
received pursuant to this Section 6.5 for the reasonable purposes for which it
is supplied.
6.6 Physical Inventory. The Acquired Inventory Value for purposes
of the Closing Payment shall be based on book inventory as of the close of
business on the day immediately prior to the Closing Date. A physical
inventory with respect to the Acquired Inventory will be conducted on or prior
to the Closing Date, but as close to the Closing Date as possible, by Plant
40
personnel under the joint supervision of Seller, Purchaser and their respective
outside accounting firms. Any adjustment to the Acquired Inventory Value
resulting from such physical inventory will be reflected in the Final
Adjustment Amount in accordance with the provisions of Section 1.5.
6.7 Further Assurances. From time to time at or after the Closing,
at the request of either Purchaser or Seller, Seller or Purchaser, as
applicable, will execute and deliver such other instruments of conveyance,
assignment, transfer and delivery and take such other action as the other party
reasonably may request in order to consummate the transactions contemplated
hereby, including but not limited to the execution and delivery of such
instruments and agreements as may be necessary or advisable to fully effect the
transfer to Purchaser of the Acquired Assets and the assumption by Purchaser of
the Assumed Liabilities.
6.8 Florida Plant Evaluation.
(a) Purchaser shall permit an environmental consultant jointly
selected by Purchaser and Seller (the "New Florida Consultant") to conduct soil
and groundwater sampling and analysis in the area of the Florida Plant's
stormwater retention pond. The fees and expenses of the New Florida Consultant
in conducting such sampling and analysis shall be paid 50% by Seller and 50% by
Purchaser. Within 20 days following the completion of the soil and groundwater
sampling and analysis (which completion shall in no event be later than 30 days
following the Closing), or, if the New Florida Consultant recommends additional
monitoring, as soon as practicable thereafter (which in no event shall be later
than 90 days following the Closing) the New Florida Consultant shall deliver to
Seller and Purchaser a written report (the "Florida Pond Assessment") setting
forth the results of the sampling and analysis. The New Florida Consultant
shall recommend in such Florida Pond Assessment a remedial or other response
action (including, if applicable, that no further action is required) or, if
applicable, alternative remedial or other response actions with respect to such
stormwater retention pond (each a "Proposed Florida Response Action," and
collectively, "Proposed Florida Response Actions"), and the estimated costs
thereof; provided, however, that in no event shall the New Florida Consultant
itself perform such Proposed Florida Response Action within 20 days following
the receipt by Seller and Purchaser of the Florida Pond Assessment (other than
any such Proposed Florida Response Action which Purchaser believes, in its good
faith business judgment (exercised without regard to the availability of
indemnification hereunder), and after consultation with counsel, is required,
and cannot be delayed until after such 20 days, under applicable Environmental
Laws). In the event that Purchaser does not exercise its right pursuant to
Section 6.8(b) to require Seller to repurchase the Owned Florida Real Property,
then the costs of any Proposed Florida Response Action or, if the New Florida
Consultant recommends alternative Proposed Florida Response Actions, then the
costs of any Proposed Florida Response Action selected by Purchaser to be
implemented (including, without limitation, any fees and expenses of the
environmental consultant(s) selected to perform the Proposed Florida Response
Action) (the "Identified Florida Plant Response Costs"), shall be borne as
follows: (i) 50% by Seller and 50% by Purchaser with respect to the first
$100,000 of Identified Florida Plant Response Costs; (ii) 100% by Seller with
respect to the next $100,000 of Identified Florida Plant Response Costs; and
(iii) 100% by Purchaser with respect to any remaining Identified Florida Plant
Response Costs; it being understood that in no event shall Seller's obligations
with respect to Identified Florida Plant Response Costs exceed, in the
aggregate, $150,000.
41
(b) In the event that (i) the upper limit of the New Florida
Consultant's estimate of Identified Florida Plant Response Costs contained in
the Florida Pond Assessment equals or exceeds, in the aggregate, $300,000, or
(ii) the New Florida Consultant fails to deliver the Florida Pond Assessment on
or prior to 90 days following the Closing, then Purchaser, at its sole option,
may elect, by delivery of written notice (the "Repurchase Exercise Notice") to
Seller within 20 days following delivery, if any, to Purchaser of the Florida
Pond Assessment but, in any event, no later than 100 days following the
Closing, to require Seller to purchase from Purchaser the Owned Real Property
located in Florida and identified on Schedule 2.1.7A (the "Owned Florida Real
Property") for a cash purchase price of $300,000 (the "Florida Repurchase
Option"). The closing of the sale of the Owned Florida Real Property to Seller
shall occur, subject to the provisions of Section 6.8(c), as soon as
practicable and in any event not more than 20 days after the delivery to Seller
of the Repurchase Exercise Notice. At such closing, (i) Purchaser shall
deliver to Seller a special warranty deed to the Owned Florida Real Property,
duly executed by Purchaser, in a form customary in the State of Florida, and
(ii) Seller shall pay to Purchaser $300,000 in immediately available funds
(with real property taxes and other assessments relating to the Owned Florida
Real Property being prorated between Seller and Purchaser as of 12:01 a.m. on
the date of such closing based on the number of days in the applicable period
that each party owns the Owned Florida Real Property in a manner consistent
with Section 1.3 hereof). Notwithstanding anything contained in this Agreement
to the contrary, the Florida Repurchase Option shall expire and shall be deemed
null and void in the event that either (i) Purchaser fails to exercise such
Florida Repurchase Option within 20 days following the delivery to Purchaser of
the Florida Pond Assessment or, in any event, no later than 100 days following
the Closing, or (ii) any Identified Florida Plant Response Costs shall have
been actually incurred (other than as permitted pursuant to Section 6.8(a) or
required by any order or other directive issued by any governmental entity
under applicable law).
(c) If Purchaser delivers the Repurchase Exercise Notice in
accordance with Section 6.8(b), then Purchaser shall have the option,
exercisable by Purchaser by delivery of written notice of such exercise to
Seller (the "Lease Exercise Notice") within ten days following the delivery to
Seller of the Repurchase Exercise Notice, to lease the Owned Florida Real
Property from Seller. If Purchaser exercises such option to lease the Owned
Florida Real Property, then the parties will, on the closing date of the
purchase of the Owned Florida Real Property by Seller, enter into a triple net
lease with respect to the Owned Florida Real Property (the "New Florida Real
Property Lease") which will contain substantially the same terms as the lease
and agreement renewal between General Management and Development Corp. and
Atlanta Steel Industries, Inc., dated June 1, 1993, relating to the Leased Real
Property in Tampa, Florida (the "Existing Florida Real Property Lease") and
which will provide for a two-year lease term (with an option on the part of
Purchaser to extend such lease for an additional two years). The New Florida
Property Lease will provide for fixed rent payments by Purchaser on a per
square foot basis equal to $3.15 per square foot per year (which includes
applicable sales tax). The New Florida Real Property Lease shall additionally
provide for Purchaser to pay to Seller all other sums and amounts that are
payable by the tenant under the Existing Florida Real Property Lease
(appropriately adjusted to take into account the different square footages of
the premises). Notwithstanding the exercise by Purchaser of the Florida
Repurchase Option or the execution of the New Florida Real Property Lease, the
indemnification provisions herein with respect to Environmental Costs and
Liabilities relating to the Florida Plant shall remain in full force and
effect.
42
ARTICLE VII
MISCELLANEOUS PROVISIONS
7.1 Termination.
(a) Anything herein or elsewhere to the contrary notwithstanding,
this Agreement may be terminated by written notice of termination at any time
before the Closing only as follows:
(i) by mutual consent of Seller and Purchaser;
(ii) by Purchaser or Seller in writing if the Closing shall not
have occurred on or before the 120th day following the date hereof;
(iii) by Purchaser or Seller if the other party is in breach
in any material respect (or in the case of representations and warranties
containing materiality qualifiers, in any respect) of any representation,
warranty, covenant or other agreement set forth in this Agreement and such
breach has not been cured to the reasonable satisfaction of the non-breaching
party within ten days following the delivery of notice to the non-breaching
party of such breach; or
(iv) by Purchaser or Seller if damage in excess of $1,000,000
(based on replacement cost) in the aggregate occurs to any of the Acquired
Assets.
(ii) In the event of the termination hereof pursuant to the
provisions of this Section 7.1, no party shall have any liability under this
Agreement other than for breaches of this Agreement occurring prior to such
termination. Additionally, nothing contained herein shall be construed to
limit any party's right of specific performance of this Agreement.
7.2 Transfer Taxes; Title Insurance Premiums, Etc. Purchaser and
Seller shall each pay 50% of all applicable transfer, sales, use or similar
taxes, if any, and recording charges and fees due as a result of the sale or
transfer of any interest in Real Property in accordance with this Agreement.
Purchaser shall pay all applicable transfer, sales, use or similar taxes, if
any, due as a result of the sale or transfer of all other Acquired Assets in
accordance with this Agreement. Purchaser shall pay all premiums and expenses
in connection with the issuance to Purchaser of title insurance policies on all
Owned Real Property in such amounts as Purchaser elects. The costs of
obtaining any land title surveys of the Owned Real Property that were ordered
by Purchaser in connection with obtaining clean title commitments on the Owned
Real Property shall be paid by Purchaser.
7.3 Expenses. Except as otherwise provided in this Agreement, each
party hereto shall pay its own expenses (including legal, accounting and
investment banking fees and expenses) incidental to the preparation of this
Agreement, the carrying out of the provisions of this Agreement and the
consummation of the transactions contemplated hereby.
7.4 Contents of Agreement; Parties in Interest; etc. This Agreement
and the related Transaction Documents set forth the entire understanding of the
parties hereto with respect to the transactions contemplated hereby. This
43
Agreement shall not be amended or modified except by written instrument duly
executed by each of the parties hereto. Any and all previous agreements and
understandings between or among the parties regarding the subject matter
hereof, whether written or oral, are superseded by this Agreement; provided,
however, that the Confidentiality Agreement between Purchaser and Seller and
dated as of November 30, 1994, as amended, shall continue in full force and
effect until the Closing.
7.5 Assignment and Binding Effect. This Agreement may not be assigned
prior to the Closing by any party hereto without the prior written consent of
the other parties; provided, however, that this Agreement (or any portion
thereof) may be assigned by Purchaser to a direct or indirect wholly owned
subsidiary of Purchaser; provided, however, that no such assignment by
Purchaser shall relieve Purchaser of liability hereunder in the event of
nonperformance of any provision of this Agreement by such direct or indirect
wholly owned subsidiary. Subject to the foregoing, all of the terms and
provisions of this Agreement shall be binding upon and inure to the benefit of
and be enforceable by the successors and permitted assigns of Seller and
Purchaser.
7.6 Waiver. Any term or provision of this Agreement may be waived at
any time by the party entitled to the benefit thereof by a written instrument
duly executed by such party.
7.7 Notices. Any notice, request, demand, waiver, consent, approval
or other communication which is required or permitted hereunder shall be in
writing and (a) delivered personally; (b) sent by telex or telecopy; (c)
delivered by overnight express (charges prepaid); or (d) sent by first class
registered mail or certified mail, postage prepaid, as follows:
If to Purchaser, to:
MMI Products, Inc.
000 X. Xxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxx
Fax: (000) 000-0000
With a required copy to:
Xxxxx & Xxxxx, L.L.P.
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxx
Fax: (000) 000-0000
44
If to Seller, to:
Atlantic Steel Industries, Inc.
Sivaco/National Wire Group
Overlook III, Suite 1900
0000 Xxxxx Xxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx Xxxxxxxxx
Fax: (000) 000-0000
With a required copy to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxxx Xxxxxx
Fax: (000) 000-0000
or to such other address as the addressee may have specified in a notice duly
given to the sender as provided herein. Notices sent by hand delivery shall be
deemed to have been given when received; notices mailed in accordance with the
foregoing shall be deemed to have been given three days following the date so
mailed; notices sent by telex or telecopy shall be deemed to have been given
when electronically confirmed; and notices sent by next day overnight courier
shall be deemed to have been given on the next business day following the date
so sent.
7.8 Bulk Sales. The parties waive compliance with any bulk sales or
similar provisions of law applicable to the transfer of the Acquired Assets in
accordance with this Agreement. Seller will indemnify Purchaser pursuant to
Article V hereof for any Damages incurred by Purchaser as a result of the
failure to comply with any such bulk sales or similar provisions of law.
7.9 Governing Law. This Agreement shall be governed by and interpreted
and enforced in accordance with the laws of the State of Delaware, without
regard to principles of conflict of laws.
7.10 Confidentiality. Following the Closing, neither Seller, nor any
other Affiliate of Seller will use or disclose any confidential documents or
information relating to the Acquired Assets. All information and documents
relating to the Acquired Assets will be deemed to be confidential unless such
documents or information can be shown to have been in the public domain prior
to such use or disclosure other than as a result of information disclosed by
Seller, or any agent or Affiliate of Seller in violation of this Agreement.
7.11 No Benefit to Others. The representations, warranties, covenants
and agreements contained in this Agreement are for the sole benefit of the
parties hereto and, in the case of Article V hereof, the other indemnified
parties, and their heirs, executors, administrators, legal representatives,
successors and assigns, and they shall not be construed as conferring any
rights on any other persons.
7.12 Headings; Gender; Certain Terms. All section headings contained in
this Agreement are for convenience of reference only, do not from a part of
this Agreement and shall not affect in any way the meaning or interpretation of
this Agreement. Words used herein, regardless of the number and gender
specifically used, shall be deemed and construed to include any other number,
singular or plural, and any other gender, masculine, feminine, or neuter, as
45
the context requires. Any reference to a "person" herein shall include an
individual, firm, corporation, partnership, trust, governmental authority or
body, association, unincorporated organization or any other entity. Any
reference to "including" herein shall mean "including but not limited to." The
conjunction "or" shall denote any one or more, or any combination or all, of
the specified items or matters involved in the applicable list.
7.13 Severability. Any provision of this Agreement which is invalid
or unenforceable in any jurisdiction shall be ineffective to the extent of such
invalidity or unenforceability without invalidating or rendering unenforceable
the remaining provisions hereof, and any such invalidity or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction. Furthermore, in lieu of such invalid or unenforceable
provision, there shall be added automatically as a part of this Agreement a
provision as similar in terms to such invalid or unenforceable provision as may
be possible and be valid and enforceable.
7.14 Remedies Cumulative. The remedies (including indemnification) of
the parties under this Agreement are cumulative and will not exclude any other
remedies to which any party may be lawfully entitled.
7.15 Specific Performance, Injunctive Relief. Each of the Seller and
Purchaser acknowledges and agrees that the other party would be damaged
irreparably in the event any of the provisions of this Agreement are not
performed in accordance with their specific terms or otherwise are breached.
Accordingly, each of the Seller and Purchaser agrees that the other party shall
be entitled to an injunction or injunctions to prevent breaches of the
provisions of this Agreement and to enforce specifically this Agreement and the
terms and provisions hereof in any action instituted in any court of the United
States or any state thereof having jurisdiction over the parties and the matter
in addition to any other remedy to which they may be entitled, at law or in
equity.
7.16 Counterparts. This Agreement may be executed in any number of
counterparts and any party hereto may execute any such counterpart, each of
which when executed and delivered shall be deemed to be an original and all of
which counterparts taken together shall constitute but one and the same
instrument. This Agreement shall become binding when one or more counterparts
taken together shall have been executed and delivered by the parties. It shall
not be necessary in making proof of this Agreement or any counterpart hereof to
produce or account for any of the other counterparts.
7.17 Schedules. Any information disclosed in any schedule hereto will
be deemed to be included in all schedules except where the information
disclosed on a particular schedule cannot reasonably be determined to apply to
another schedule.
7.18 Public Announcements. Neither Seller nor Purchaser shall make any
public statements, including, without limitation, any press releases, with
respect to this Agreement and the transactions contemplated hereby, without the
prior written consent of the other party (which consent may not be unreasonably
withheld) except as may be required by law or by any exchange or market on
which its securities are traded.
46
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
ATLANTIC STEEL INDUSTRIES, INC.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
MMI PRODUCTS, INC.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
EXHIBIT A
XXXX OF SALE
THIS XXXX OF SALE (this "Xxxx of Sale"), dated as of ________, 1996, is
made by Atlantic Steel Industries, Inc., a New York corporation ("Seller") to
MMI Products, Inc., a Delaware corporation ("Purchaser").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Asset Purchase Agreement (the "Purchase
Agreement"), dated as of June 10, 1996, by and between Seller and Purchaser,
Seller has agreed to sell to Purchaser the Acquired Assets, on the terms and
subject to the conditions set forth in the Purchase Agreement, and Purchaser
has agreed to acquire and accept the Acquired Assets from the Seller on such
basis; and
WHEREAS, Seller desires to deliver to Purchaser such instruments of
transfer as are required effectively to vest in Purchaser all right, title and
interest in and to the Acquired Assets to be conveyed pursuant hereto;
WHEREAS, Section 4.2(a)(iv) of the Purchase Agreement contemplates that
this Xxxx of Sale is to be delivered by Seller to Buyer at Closing; and
WHEREAS, all capitalized terms used herein and not otherwise defined
herein shall have the respective meanings ascribed thereto in the Purchase
Agreement.
NOW, THEREFORE, in consideration of the promises, covenants and agreements
contained herein and in the Purchase Agreement and other good and valuable
consideration (the receipt and sufficiency of which are hereby acknowledged),
Seller does hereby sell, assign, transfer and deliver to Purchaser all of
Seller's right, title and interest in and to the Acquired Assets that
constitute tangible personal property (the "Tangible Personal Property"), free
and clear of all Encumbrances (other than the Permitted Encumbrances) of any
kind or character;
FURTHER, except as expressly set forth in the Purchase Agreement, Seller
makes no representations or warranties, express or implied, at law or in
equity, including, without limitation, with respect to merchantability or
fitness for any particular purpose, and Seller disclaims any such other
representations or warranties. Purchaser hereby acknowledges and agrees that,
except to the extent specifically set forth in the Purchase Agreement, the
Purchaser is purchasing the Acquired Assets on an "as-is, where-is" basis;
FURTHER, Seller and Purchaser acknowledge that the Excluded Assets are
specifically excluded from the Acquired Assets and are not being sold pursuant
hereto;
TO HAVE AND TO HOLD the Tangible Personal Property, with all of the
appurtenances thereto, unto Purchaser and its successors and assigns for its
and their use.
IN WITNESS WHEREOF, this Xxxx of Sale has been duly executed by an officer
of the undesigned thereunto duly authorized all on the date first above
written.
ATLANTIC STEEL INDUSTRIES, INC.
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
EXHIBIT B
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Agreement"), dated as of
___________, 1996, is entered into by and between Atlantic Steel Industries,
Inc., a New York corporation ("Seller"), and MMI Products, Inc., a Delaware
corporation ("Purchaser").
WITNESSETH:
WHEREAS, pursuant to that certain Asset Purchase Agreement, dated as of
June 10, 1996 (the "Purchase Agreement"), between Purchaser and Seller, Seller
has agreed to sell to Purchaser the Acquired Assets, on the terms and subject
to the conditions set forth in the Purchase Agreement;
WHEREAS, Section 1.2 of the Purchase Agreement provides that Purchaser
shall, as of the Closing Date, assume, pay, perform and discharge certain
liabilities of Seller;
WHEREAS, Sections 4.2(a)(vi) and 4.2(b)(iii) of the Purchase Agreement
contemplate that this Agreement is to be entered into and delivered at Closing;
and
WHEREAS, all capitalized terms not otherwise defined herein and defined in
the Purchase Agreement shall have the meaning attributed thereto in the
Purchase Agreement;
NOW, THEREFORE, in consideration of the promises, covenants and agreements
contained herein and in the Purchase Agreement and other good and valuable
consideration (the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
8. Assignment of Assets. Seller does hereby sell, assign, transfer and
deliver to Purchaser all of Seller's right, title and interest in and to the
Acquired Assets, other than (a) interests in Real Property (including but not
limited to leases of Real Property) which are being conveyed or assigned to
Purchaser separately, and (b) any Acquired Assets being conveyed to Purchaser
pursuant to that certain Xxxx of Sale of even date herewith, executed and
delivered by Seller to Purchaser, and Purchaser does hereby accept such
assignment, free and clear of all Encumbrances (other than Permitted
Encumbrances) of any kind or character.
9. Assumption of Liabilities. Purchaser does accept the foregoing
assignment and hereby assume and will pay, perform and discharge when due, all
of the Assumed Liabilities. Except for the Assumed Liabilities, Purchaser does
not assume, nor will Purchaser be obligated to pay, perform, discharge or be
responsible or liable for, any obligations, duties or liabilities of Seller.
10. No Assignment Where Prohibited. Anything in this Agreement to the
contrary notwithstanding, unless any such necessary consent shall have been
obtained, this Agreement shall not constitute an agreement to assign any lease,
contract, purchase order or other agreement if an attempted assignment thereof,
without the consent of a third party thereto, would constitute a breach thereof
or default thereof, cause or permit the termination thereof, or in any way
materially and adversely affect the rights of Seller and Purchaser thereunder.
11. Seller Not Bound. Seller shall not be bound by, liable for or
required to perform any duties or obligations under the Contracts which are
provided for in any amendment, modification, renewal, extension or supplement to
any of the Contracts which may be entered into by Purchaser after the date
hereof.
12. Successors. This Agreement shall be binding upon and inure to the
benefit of the respective successors and assigns of the parties hereto.
13. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
14. Conflicts. In the event of a conflict between the terms and
conditions of this Agreement and the terms and conditions of the Purchase
Agreement, the terms and conditions of the Purchase Agreement shall govern,
supersede and prevail.
15. Controlling Law. This Agreement and all questions relating to
its validity, interpretation, performance and enforcement (including, without
limitation, provisions concerning limitations of actions) shall be governed by
and construed in accordance with the internal laws (and not principles of
conflict of laws) of the State of Delaware.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first written above.
Seller:
ATLANTIC STEEL INDUSTRIES, INC.
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
Purchaser:
MMI PRODUCTS, INC.
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
EXHIBIT C
ASSIGNMENT AND ASSUMPTION OF LEASE
THIS ASSIGNMENT AND ASSUMPTION OF LEASE (the "Agreement"), dated as of
_______________, 1996, is entered into by and between Atlantic Steel Industries,
Inc., a New York corporation ("Seller"), and MMI Products, Inc., a Delaware
corporation ("Purchaser").
WITNESSETH:
WHEREAS, pursuant to that certain Asset Purchase Agreement, dated as of
June 10, 1996 (the "Purchase Agreement"), between Purchaser and Seller, Seller
has agreed to sell to Purchaser the Acquired Assets, on the terms and subject
to the conditions set forth in the Purchase Agreement;
WHEREAS, Seller and ____________________ ("Landlord") are parties to that
certain Lease Agreement dated ____________________, as amended to the date
hereof (the "Lease Agreement");
WHEREAS, Sections 4.2(a)(vii) and 4.2(b)(iv) of the Purchase Agreement
contemplate that this Agreement is to be entered into and delivered at Closing;
and
WHEREAS, all capitalized terms not otherwise defined herein and defined in
the Purchase Agreement shall have the meaning attributed thereto in the Purchase
Agreement.
NOW, THEREFORE, in consideration of the premises, the parties hereto agree
as follows:
1. Seller hereby assigns and transfers to Purchaser all of Seller's
right, title and interest in and to the Lease Agreement, effective as of the
date hereof.
2. Purchaser hereby (i) accepts the foregoing assignment and transfer
to Purchaser of all of Seller's right, title and interest in and to the Lease
Agreement effective as of the date hereof and (ii) assumes and agrees to comply
with all of the terms and provisions of the Lease Agreement and perform all of
the covenants and obligations of Seller under the Lease Agreement, but only to
the extent such covenants and obligations relate to periods from and after the
date hereof.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first above written.
Seller:
ATLANTIC STEEL INDUSTRIES, INC.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
Purchaser:
MMI PRODUCTS, INC.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
EXHIBIT D
CERTAIN LICENSES AND PERMITS
None.
EXHIBIT E
OPINION OF FRIED, FRANK, HARRIS, XXXXXXX & XXXXXXXX
_________, 1996
MMI Products, Inc.
000 X. Xxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Ladies and Gentlemen:
We have acted as special counsel for Atlantic Steel Industries, Inc., a
New York corporation (the "Company"), in connection with the Asset Purchase
Agreement, dated as of June 10, 1996 (the "Agreement"), between you and the
Company. This opinion is delivered to you pursuant to Section 4.2(xi) of the
Agreement. All capitalized terms used herein that are defined in, or by
reference in, the Agreement have the meanings assigned to such terms therein,
or by reference therein, unless otherwise defined herein. With your
permission, all assumptions and statements of reliance herein have been made
without any independent investigation or verification on our part except to the
extent otherwise expressly stated, and we express no opinion with respect to the
subject matter or accuracy of such assumptions or items relied upon.
In connection with this opinion, we have (i) investigated such questions
of law, (ii) examined originals or certified, conformed or reproduction copies
of such agreements, instruments, documents and records of the Company, such
certificates of public officials and such other documents, and (iii) received
such information from officers and representatives of the Company as we have
deemed necessary or appropriate for the purposes of this opinion.
In all such examinations, we have assumed the legal capacity of all natural
persons executing documents, the genuineness of all signatures, the authenticity
of original and certified documents and the conformity to original or certified
copies of all copies submitted to us as conformed or reproduction copies. As to
various questions of fact relevant to the opinions expressed herein, we have
relied upon, and assume the accuracy of, representations and warranties
contained in the Transaction Documents (as hereinafter defined) and certificates
and oral or written statements and other information of or from representatives
of the Company and others and assume compliance on the part of the parties to
the Transaction Documents with their respective covenants and agreements
contained therein.
To the extent it may be relevant to the opinions expressed herein, we have
assumed that the Purchaser has the power to enter into and perform the
Transaction Documents and to consummate the transactions contemplated thereby
and that the Transaction Documents have been duly authorized, executed and
delivered by, and constitute valid and binding obligations of, the Purchaser,
enforceable against the Purchaser in accordance with their terms.
Based upon the foregoing, and subject to the limitations, qualifications
and assumptions set forth herein, we are of the opinion that:
1. The Company is a corporation incorporated, validly existing and in
good standing under the laws of the State of New York and has full corporate
power and authority to execute and deliver the Agreement and each of the
documents which are exhibits to the Agreement and which are being executed and
delivered by the Company (collectively, the "Transaction Documents") and to
consummate the transactions contemplated thereby. The execution, delivery and
performance by the Company of the Transaction Documents and the consummation by
the Company of the transactions contemplated thereby have been duly authorized
by all necessary corporate action on the part of the Company.
2. Each of the Transaction Documents has been validly executed and
delivered by the Company and constitutes a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms.
3. The execution, delivery and performance of the Transaction Documents
by the Company will not (a) violate any provision of the certificate of
incorporation or bylaws of the Company, (b) conflict with, or result in the
breach, termination or acceleration of rights or obligations under, or
constitute a default under, any of the terms, conditions or provisions of any
mortgage, indenture, bond, or other material agreement (collectively, "Material
Agreements") identified to us in the Officer's Certificate of the Company
delivered to us in connection with this opinion, a copy of which is attached
hereto as Annex A (the "Officer's Certificate") upon which we have relied, (c)
constitute a violation of any law or regulation of the State of New York or the
United States applicable to the Company, or (d) violate any writ, order,
injunction or decree of any court or governmental instrumentality which is
identified to us in the Officer's Certificate (collectively, "Orders").
4. Except as contemplated by the Agreement or the schedules thereto, no
consent, approval, waiver, license or authorization or other action by or
filing with any Governmental Authority is required in connection with the
execution, delivery or consummation at the Closing of the Transaction Documents
by the Company. As used herein "Governmental Authority" means any legislative,
judicial, administrative or regulatory body of the State of New York or the
United States of America having jurisdiction or authority over the Company.
5. In the course of our engagement to represent or advise the Company
professionally, we have not become aware of any pending legal proceeding
before, or pending investigation by, any Governmental Authority or any
arbitration tribunal, nor have we devoted substantive attention in the form of
legal representation as to any current overtly threatened litigation, against
or directly affecting the Company and related to the Acquired Assets or the
Acquired Business, or the transactions contemplated by the Transaction
Documents, which with respect to any of the foregoing could reasonably be
expected to have a Material Adverse Effect, other than as may be referred to
in the Officer's Certificate. In making the foregoing statement, we have
endeavored, to the extent we have believed necessary, to determine from lawyers
currently in our firm who have performed substantive legal services for the
Company, whether such services involved substantive attention in the form of
legal representation concerning pending legal proceedings or pending
investigations or overtly threatened litigation of the nature referred to above,
and we have relied upon the Officer's Certificate. Beyond that, we have not
made any review, search or investigation of public files or records or files or
records of the Company or of its transactions, or any other investigation or
inquiry with respect to the foregoing statement.
The opinions set forth above are subject to the following limitations:
(a) the opinion in paragraph 2 above is subject to (i) applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or
similar laws, and related judicial doctrines now or hereafter in effect
affecting creditors'rights generally and (ii) general principles of equity
(including, without limitation, standards of materiality, good faith, fair
dealing and reasonableness, equitable defenses and limits on the availability of
equitable remedies), whether such principles are considered at law or in equity;
(b) the opinions in clauses (b) and (d) of paragraph 3 above are limited
in that we express no opinion with respect to any violation not readily
ascertainable from the face of any Material Agreement or Order, or arising under
or based upon any cross default provision insofar as it relates to a default
under an agreement not identified to us in the Officer's Certificate, or arising
under or based upon any covenant of a financial or numerical nature or requiring
computation (it being understood that we have not made any review, search or
investigation of public files or records or files or records of the Company or
of its transactions, nor have we made any other investigation or inquiry with
respect to any Material Agreement or Order;
(c) the opinions in clauses (c) of paragraph 3 above and paragraph 4
above are limited to our review of only those laws and regulations that, in our
experience, are normally applicable to transactions of the type contemplated by
the Agreement.
In addition, we express no opinion (a) as to the enforceability of any
provision in the Transaction Documents (i) relating to indemnification,
contribution or exculpation in connection with violations of any statutory
duties or public policy, or in connection with willful, reckless or unlawful
acts or gross acts of negligence of the indemnified or exculpated party or the
party receiving contributions; (ii) restricting or purporting to restrict the
freedom of a party to compete or freely engage in any activity to sell, develop
or utilize any product; or (iii) relating to choice of governing law to the
extent that the enforceability of any such provision is to be determined by any
court other than a court of the State of New York, (b) as to the effect on
enforceability of any of the Transaction Documents of any decision of an
arbitration tribunal or an arbitrator pursuant to any provision for mandatory or
optional arbitration to the extent such decision does not give effect to the
terms of such Transaction Document, (c) as to the enforceability of any
provision of the Transaction Documents requiring arbitration or (d) as to the
application of state or federal anti-fraud, trade regulation, antitrust or
similar laws.
In rendering our opinion in paragraph 3(b) above insofar as it requires
interpretation of the Material Agreements referred to therein (i) we have
assumed with your permission that all courts of competent jurisdiction would
enforce such Material Agreements as written but would apply the internal laws of
the State of New York without giving effect to any choice of law provisions
contained therein or any choice of law principles which would result in the
application of the internal laws of any other state; (ii) to the extent that any
questions of legality or legal construction have arisen in connection with our
review, we have applied the internal laws of the state of New York in resolving
such questions; and (iii) we express no opinion with respect to the effect of
any discretionary action or inaction by the Company under such Material
Agreements which may result in a breach or default thereunder. We advise you
that certain of such Material Agreements may be governed by laws other than the
laws of the State of New York, that such laws may vary substantially from the
laws of the State of New York and that this opinion may not be relied upon as to
whether or not a breach would occur under the law actually governing such
Material Agreements.
The opinions expressed herein are limited to the laws of the United States
of America and the laws of the State of New York, as currently in effect. For
purposes of this opinion, we have assumed, with your permission, that the laws
of the State of Delaware (other than the General Corporation Law of the State of
Delaware) are the same as the laws of the State of New York.
The opinions expressed herein are solely for your benefit in connection
with the Agreement and may not be relied on in any manner or for any purpose by
any other person or entity and may not be quoted in whole or in part without our
prior written consent.
Very truly yours,
FRIED, FRANK, HARRIS, XXXXXXX & XXXXXXXX
By:
-------------------------
Xxxxxxx Xxxxxx
EXHIBIT F
OPINION OF XXXXX & XXXXX, L.L.P.
____________, 1996
Atlantic Steel Industries, Inc.
Sivaco/National Wire Group
Overlook III, Suite 1900
0000 Xxxxx Xxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Ladies and Gentlemen:
We have acted as counsel for MMI Products, Inc., a Delaware corporation
(the "Company") in connection with that certain Asset Purchase Agreement, dated
as of June 10, 1996 (the "Agreement"), between you and the Company. Unless
otherwise defined herein, all capitalized terms used herein shall have the
respective meanings assigned to them in the Agreement. This opinion is being
furnished to you pursuant to Section 4.2 of the Agreement.
We have familiarized ourselves with the Company's Certificate of
Incorporation and Bylaws, each as amended to date, and have examined the
originals, or copies certified or otherwise identified, of corporate records of
the Company, certificates of public officials and representatives of the
Company and other instruments and documents, as a basis for the opinions
hereinafter expressed. In giving such opinions, we have relied upon
certificates of officers of the Company with respect to the accuracy of the
material factual matters contained in such certificates. We have assumed that
all signatures on all documents examined by us are genuine, that all documents
submitted to us as originals are authentic and that all documents submitted to
us as copies are true and correct copies of the originals thereof.
On the basis of the foregoing, and subject to the assumptions, limitations
and qualifications set forth herein, we are of the opinion that:
1. The Company is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Delaware.
2. The Company has full corporate power and authority to execute and
deliver the Agreement and each of the documents which is an exhibit to the
Agreement and which is being executed and delivered by the Company
(collectively, the "Transaction Documents"), and to consummate the transactions
contemplated thereby. The execution, delivery and performance by the Company
of the Transaction Documents and the consummation of the transactions
contemplated thereby have been duly and validly authorized by all necessary
corporate action on the part of the Company.
3. Each of the Transaction Documents has been validly executed and
delivered by the Company and constitutes a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except
as such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally, or by the
application of general principles of equity.
4. The execution, delivery and performance of the Transaction Documents
by Seller will not (a) violate any provision of the Certificate of
Incorporation or Bylaws of the Company, (b) conflict with, or result in the
breach or acceleration of rights or obligations under, or constitute a default
under, any of the terms, conditions or provisions of any mortgage, indenture,
bond, or other material agreement to which the Company is a party or by which
any of its assets may be bound (collectively, "Material Agreements") identified
to us in the Officer's Certificate of the Company delivered to us in connection
with this opinion, a copy of which is attached hereto as Annex A (the
"Officer's Certificate"), (c) constitute a violation of any applicable law or
regulation of the State of Texas or the United States applicable to the Company
or (d) violate any writ, order, injunction or decree of any court or
governmental instrumentality binding on the Company which is identified in the
Officer's Certificate (collectively, "Orders").
5. Except as contemplated by the Agreement or the schedules thereto, no
consent, approval, waiver, license or authorization or other action by or
filing with any governmental authority of the State of Texas or the United
States is required in connection with the execution, delivery or performance of
the Transaction Documents by the Company.
6. To our knowledge, there are no claims, actions, suits, proceedings
or investigations pending or threatened, at law or in equity, or before or by
and court, arbitrator or governmental or regulatory official, body or authority
which (i) question the legality or validity of any of the Transaction
Documents, (ii) question the legality or validity of actions taken or to be
taken pursuant to any of the Transaction Documents, (iii) seek to prohibit the
execution and delivery of, or prevent the consummation of any of the
transactions contemplated by any of the Transaction Documents, or (iv) seek
damages arising out of or related to the execution and delivery of, or on
account of actions to be taken under, any of the Transaction Documents.
The foregoing opinions are subject to the following additional
assumptions, limitations, qualifications and exceptions:
(A) With respect to the opinions set forth in paragraph 1 above, we have
relied, with your permission and without any independent investigation or
verification, solely upon certificates furnished to us by the Secretary of
State of the State of Delaware.
(B) The opinions set forth above, insofar as they relate to the
enforceability of the Transaction Documents, are subject to general principles
of equity (whether considered in a proceeding at law or in equity). In
addition, we give no opinion with respect to the enforceability of any
provision in the Transaction Documents providing for the remedy of specific
performance. In addition, we express no opinion (i) as to the enforceability
of any provision in the Transaction Documents (a) relating to indemnification,
contribution or exculpation in connection with violations of any statutory
duties or public policy, or in connection with willful, reckless or unlawful
acts or gross acts of negligence of the indemnified or exculpated party or the
party receiving contributions; (b) restricting or purporting to restrict the
freedom of a party to compete or freely engage in any activity to sell, develop
or utilize any product; or (c) relating to choice of governing law to the
extent that the enforceability of any such provision is to be determined by any
court other than a court of the State of Texas, (ii) as to the effect on
enforceability of any of the Transaction Documents of any decision of an
arbitration tribunal or an arbitrator pursuant to any provision for mandatory
or optional arbitration to the extent such decision does not give effect to the
terms of such Transaction Document, (iii) as to the enforceability of any
provision of the Transaction Documents requiring arbitration or (iv) as to the
application of state or federal anti-fraud, trade regulation, antitrust or
similar laws.
(C) The opinions in clauses (b) and (d) of paragraph 4 above are
limited in that we express no opinion with respect to any violation not readily
ascertainable from the face of any Material Agreement or Order, or arising
under or based upon any cross default provision insofar as it relates to a
default under an agreement not identified to us in the Officer's Certificate,
or arising under or based upon any covenant of a financial or numerical nature
or requiring computation (it being understood that we have not made any review,
search or investigation of public files or records or files or records of the
Company or of its transactions, nor have we made any other investigation or
inquiry with respect to any Material Agreement or Order);
(D) We have assumed, with your permission and without any independent
investigation or verification, (i) Seller has all requisite power to execute,
deliver and perform its obligations under such Transaction Documents; (ii) the
execution, delivery and performance of each of the Transaction Documents has
been duly authorized by all requisite action on the part of Seller; (iii) the
due execution and delivery of the Transaction Documents by Seller; (iv) that
each of the Transaction Documents constitutes the legal, valid and binding
obligation of Seller, enforceable against such party in accordance with its
terms; (v) that the representations and warranties as to factual matters made
by the Company in the Asset Purchase Agreement are true and complete; (vi) the
authenticity of all documents submitted to us as original documents; (vii) the
conformity to authentic, original documents of all documents submitted to us as
copies (whether telecopies, photocopies or conformed copies); (viii) the
genuineness of all signatures (and the competency of any signatories who are
natural persons); and (ix) that all information submitted to us was accurate
and complete (including the completeness of all documents furnished to us, and
that no amendments, modifications or revisions to such documents are in
existence).
(E) The opinions in paragraph 4(c) above are limited to our review of
only those laws and regulations that, in our experience, are normally
applicable to transactions of the type contemplated by the Agreement.
(F) In rendering our opinion in paragraph 4(b) above insofar as it
requires interpretation of the Material Agreements referred to therein (i) we
have assumed with your permission that all courts of competent jurisdiction
would enforce such Material Agreements as written but would apply the internal
laws of the State of Texas without giving effect to any choice of law
provisions contained therein or any choice of law principles which would result
in the application of the internal laws of any other state; (ii) to the extent
that any questions of legality or legal construction have arisen in connection
with our review, we have applied the internal laws of the state of Texas in
resolving such questions; and (iii) we express no opinion with respect to the
effect of any discretionary action or inaction by the Company under such
Material Agreements which may result in a breach or default thereunder. We
advise you that certain of such material Agreements may be governed by laws
other than the laws of the State of Texas that such laws may vary substantially
from the laws of the State of Texas and that this opinion may not be relied
upon as to whether or not a breach would occur under the law actually governing
such Material Agreements.
(G) Whenever an opinion herein is qualified by "known to us" or similar
phrase, this firm has relied exclusively, without independent investigation, on
one or more certificates from one or more officers of the Company with respect
to the matters set forth in such opinion. This firm has made no independent
investigation as to the accuracy or completeness of any of the information
contained in such certificate(s). However, in the course of rendering the
legal services described in the introductory paragraphs of this opinion, no
facts or circumstances have come to the attention of those attorneys in this
firm who rendered such legal services that gave this firm current actual
knowledge that any such information is incorrect in any material respect.
(H) The foregoing opinions are limited in all respects to the laws of
the State of Texas, the Delaware General Corporation Law and applicable Federal
law, and we express no opinion as to matters governed by the laws of any other
jurisdiction. We undertake no obligation or responsibility to update or
supplement this opinion in response to subsequent changes in the law or future
events affecting any of the transactions contemplated by the Asset Purchase
Agreement. We note that the Transaction Documents provide that they are
governed by the laws of the State of Delaware. While we express no opinion
with respect to the laws of the State of Delaware (other than the General
Corporation Law of the State of Delaware), we have assumed that the internal
laws of the State of Delaware (other than General Corporation Law of the State
of Delaware) are the same as the internal laws of the State of Texas. We have
made no investigation to confirm whether such assumption is correct.
The foregoing opinions are rendered to you at the request of the Company,
are solely for your benefit in connection with the transactions consummated on
the date hereof pursuant to the Asset Purchase Agreement and may not be relied
upon by any other person or for any other purpose.
Very truly yours,
