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EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
by and among
NIAGARA CORPORATION,
NIAGARA COLD DRAWN CORP.
and
QUANEX CORPORATION
APRIL 18, 1997
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TABLE OF CONTENTS
Page
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ARTICLE I
PURCHASE AND SALE OF THE SHARES; THE CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Purchase and Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 The Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.4 Actions Taken Prior to the Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 Deliveries by the Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.6 Deliveries by Niagara and the Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.7 Post-Closing Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.1 Organization and Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.2 Organizational Documents and Corporate Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.3 Equity Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.4 Authorization; Binding Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.5 Capitalization; Title to the Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.6 Consents and Approvals; No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.7 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.8 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.9 Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.10 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.11 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.12 Properties and Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.13 Certain Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.14 Compliance with Laws and Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.15 Litigation and Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.16 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.17 Personnel Information; Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.18 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.19 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.20 Compliance with Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.21 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.22 Bank Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.23 Customers and Suppliers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.24 Affiliate Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.25 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.26 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF NIAGARA AND THE BUYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.1 Organization and Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.2 Authorization; Binding Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.3 Consents and Approvals; No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.4 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
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ARTICLE IV
ADDITIONAL COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.1 Benefit Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.2 Further Assurances; Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.3 Notification of Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.4 Confidentiality/Non-Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.5 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE V
TAX MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.1 Section 338(h)(10) Election . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.2 Tax Indemnity by the Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.3 Tax Indemnity by Niagara and the Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.4 Transfer Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.5 Allocation of Certain Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.6 Return Filings, Refunds and Credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.7 Tax Contests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.8 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.9 Termination of Tax Sharing Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.10 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.11 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.12 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.13 Exclusivity of Article V . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE VI
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.1 Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.2 Indemnification by the Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.3 Indemnification by Niagara and the Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.4 Limitations on Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.5 Indemnification Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.6 Application to Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.7 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE VII
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.1 Parties in Interest; No Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.2 Exhibits and Disclosure Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.3 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.4 Waiver of Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.5 Validity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.6 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.7 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.8 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.9 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Exhibit A - Termination Agreement
Exhibit B - Certificate of Non-Foreign Status
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement"), dated April 18,
1997, is made by and among NIAGARA CORPORATION, a Delaware corporation
("Niagara"), NIAGARA COLD DRAWN CORP., a Delaware corporation and wholly owned
subsidiary of Niagara (the "Buyer"), and QUANEX CORPORATION, a Delaware
corporation (the "Seller," and together with Niagara and the Buyer, the
"Parties").
WHEREAS, the Seller is the beneficial and record owner of all of the
issued and outstanding shares of common stock, par value $1.00 per share
(collectively, the "Shares"), of LaSalle Steel Company, a Delaware corporation
(the "Company");
WHEREAS, the Company is engaged in the business of manufacturing cold
drawn and chrome-plated steel bars for a variety of applications (the
"Business");
WHEREAS, the Buyer desires to purchase, and the Seller desires to
sell, all of the Shares, upon the terms and conditions set forth herein; and
WHEREAS, prior to Closing (as defined in Section 1.1 hereof) (i) the
Seller obtained the consent to its sale of the Shares to the Buyer from each of
the banks who are parties to the Seller's Revolving Credit and Term Loan
Agreement, dated July 23, 1996 (the "Credit Agreement"), (ii) the Guaranty,
dated July 23, 1996, executed and delivered by the Company in connection with
the Credit Agreement (the "Guaranty"), was terminated and (iii) the Seller and
the Company executed and delivered an agreement (the "Termination Agreement")
terminating each of (x) the Intercompany Interest Bearing Open Account
Agreement, dated February 24, 1993, by and between the Seller and the Company
and (y) the Management Agreement, dated February 24, 1993, between the Seller
and the Company.
NOW, THEREFORE, in consideration of the mutual agreements, covenants,
representations and warranties set forth herein, and intending to be legally
bound hereby, the Parties agree as follows:
ARTICLE I
PURCHASE AND SALE OF THE SHARES; THE CLOSING
1.1 Purchase and Sale Upon the terms and subject to the conditions
hereof, at the closing referred to in Section 1.3 hereof and taking place
simultaneously herewith (the "Closing"), the Seller is selling, assigning,
transferring and delivering to the Buyer, and the Buyer is accepting and
purchasing from the Seller, free and clear of all Encumbrances (as defined in
Section 2.5(b) hereof), the Shares.
1.2 Consideration Upon the terms and subject to the conditions
hereof, in reliance on the representations, warranties, covenants and
agreements of the Seller contained herein, and in consideration of the
aforementioned sale, assignment, transfer and delivery of the Shares (i) the
Buyer is delivering to the Seller, at the Closing, $65,500,000 (the "Estimated
Purchase Price"), by interbank or wire transfer of immediately available funds
and (ii) on the Adjustment Date (as defined in Section 1.7(e) hereof), the
Buyer or the Seller, as the case may be, shall make the payment called for in
Section 1.7(e) hereof.
1.3 The Closing The Closing of the transactions contemplated
hereby is taking place at the offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx
LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx on April 18, 1997 (the "Closing
Date"), simultaneously with the execution of this Agreement and the other
agreements, documents, instruments and writings (collectively, the "Other
Documents") executed and delivered by the Parties pursuant hereto or in
connection herewith. At the Closing, the actions described in Sections 1.5 and
1.6 hereof are being taken. All such actions shall be deemed to have occurred
simultaneously.
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1.4 Actions Taken Prior to the Closing Prior to the Closing, the
following actions were taken (which occurred in the order set forth below):
(a) the banks who are parties to the Credit Agreement
executed and delivered their consent to the sale of the Shares to the
Buyer;
(b) the Guaranty was terminated; and
(c) the Seller and the Company entered into the
Termination Agreement, attached hereto as Exhibit A.
1.5 Deliveries by the Seller At the Closing, the Seller is
delivering to the Buyer (unless delivered previously) the following:
(a) stock certificates representing the Shares
accompanied by stock powers duly endorsed in blank or accompanied by
duly executed instruments of transfer, with all necessary transfer tax
and other revenue stamps affixed thereto;
(b) a receipt for the Estimated Purchase Price;
(c) copies of the Certificates of Incorporation and
By-laws of the Seller and the Company, certified by the Secretaries of
the Seller and the Company, respectively, as being complete and
correct;
(d) the stock books, stock ledgers and minute books of
the Company (all other records of the Company being located on the
premises of the Company);
(e) copies of the resolutions adopted by the Board of
Directors of the Seller, certified by the Secretary of the Seller as
having been duly and validly adopted and as being in full force and
effect, autho- rizing, among other things, the execution and delivery
by the Seller of this Agreement, the Termination Agreement and the
Other Documents executed and delivered by the Seller pursuant hereto
or in connection herewith, and the performance by the Seller of its
obligations hereunder and thereunder;
(f) copies of the resolutions adopted by the Board of
Directors of the Company, certified by the Secretary of the Company as
having been duly and validly adopted and as being in full force and
effect, autho- rizing, among other things, the termination of the
Guaranty and the execution and delivery by the Company of the
Termination Agreement, and the performance by the Company of its
obligations thereunder;
(g) certificates evidencing the good standing of the
Seller and the Company under the laws of the State of Delaware;
(h) the resignations of the officers and directors of the
Company as requested by the Buyer prior to the Closing;
(i) a duly executed Certificate of Non-Foreign Status
duly executed by the Seller, attached hereto as Exhibit B; and
(j) executed counterparts (or, in the case of the
consents referred to in Section 1.4(a) hereof, copies thereof) of all
Consents (as defined in Section 2.6 hereof) obtained by the Seller and
the Company in connection with this Agreement and the Other Documents.
1.6 Deliveries by Niagara and the Buyer At the Closing, Niagara or
the Buyer, as the case may be, is delivering to the Seller (unless delivered
previously) the following:
(a) the Estimated Purchase Price;
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(b) certificates evidencing the good standing of Niagara
and the Buyer under the laws of the State of Delaware;
(c) copies of the Certificates of Incorporation and
By-laws of Niagara and the Buyer, certified by the Secretaries of
Niagara and the Buyer, respectively, as being complete and correct;
(d) copies of the resolutions adopted by the Board of
Directors of Niagara, certified by the Secretary of Niagara as having
been duly and validly adopted and as being in full force and effect,
authorizing, among other things, the execution and delivery by Niagara
of this Agreement and the Other Documents executed and delivered by
Niagara pursuant hereto or in connection herewith, and the performance
by Niagara of its obligations hereunder and thereunder; and
(e) copies of the resolutions adopted by the Board of
Directors of the Buyer, certified by the Secretary of the Buyer as
having been duly and validly adopted and as being in full force and
effect, autho- rizing, among other things, the execution and delivery
by the Buyer of this Agreement and the Other Documents executed and
delivered by the Buyer pursuant hereto or in connection herewith, and
the performance by the Buyer of its obligations hereunder and
thereunder.
1.7 Post-Closing Adjustment
(a) As soon as reasonably practicable, and in any event
within 60 days of the Closing Date, the Seller shall deliver to
Niagara and the Buyer, in accordance with the provisions of Section
7.9 hereof, the audited balance sheet of the Company as of March 31,
1997 (the "Closing Financial Statement Date") (once finalized and
binding in accordance with this Section 1.7, the "Closing Balance
Sheet"), together with the related audited statements of (i) income
and retained earnings and (ii) cash flows, each for the period
November 1, 1996 through the Closing Financial Statement Date
(collectively with the Closing Balance Sheet, once finalized and
binding in accordance with this Section 1.7, the "Closing Financial
Statements"), prepared (i) from the books and records of the Company,
(ii) in accordance with generally accepted accounting principles
applicable to a fiscal year end ("GAAP"), (iii) on a basis consistent
with (x) the audited balance sheet of the Company as at October 31,
1996 (the "1996 Balance Sheet") and the related audited statements of
(A) income and retained earnings and (B) cash flows, each for the
fiscal year then ended and (y) the unaudited balance sheet of the
Company as at January 31, 1997, and the related unaudited statements
of (A) income and retained earnings and (B) cash flows, each for the
three months ending January 31, 1997, (iv) with respect to pension and
post- retirement welfare benefits, on an ongoing basis using the
actuarial assumptions and procedures used in connection with the 1996
Balance Sheet and without reflecting any adjustment for settlements,
curtailments or business combinations relating to the sale of the
Shares to the Buyer pursuant to this Agreement and (v) fairly
presenting the financial condition and results of operations of the
Company as of the Closing Financial Statement Date and for the portion
of the fiscal year then ending; provided,however, that the Closing
Balance Sheet (which shall be prepared in accordance with GAAP) shall
not reflect any reserves, provisions, or accruals for any Taxes (other
than deferred income Taxes) relating to any consolidated federal
income Tax Returns or any consolidated, combined, affiliated or
unitary state, local or foreign income Tax Returns (including, but not
limited to, Indiana Corporation Income Tax Returns filed on a combined
basis) which include the Company, including, but not limited to, such
reserves, provisions or accruals for "Income Taxes Payable to Parent"
(which the Parties acknowledge and agree will be subtracted from any
intercompany receivable to the Company from the Seller or added to any
intercompany payable by the Company to the Seller, as the case may be,
in connection with the preparation and finalization of the Closing
Balance Sheet). The costs and expenses incurred in connection with
the preparation and delivery of the Closing Financial Statements shall
be borne by the Seller.
(b) From time to time following the Closing and until the
Closing Financial Statements have been finalized in accordance with
this Section 1.7, Niagara and the Buyer on the one hand, and the
Seller on the other hand, shall give each other, and any of its or
their independent accountants and authorized representatives,
reasonable access during normal business hours to the properties,
books, records and personnel of the Seller and the Company, and shall
use its or their reasonable best efforts (which shall not be deemed to
require the Seller to make any unreasonable expenditures) to cause the
Company's independent accountants to make available to each such
Party, and its or their authorized representatives, their work papers
generated in connection with their
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review and audit of the Company's financial statements, in each case
relating to periods ending on or prior to the Closing Date, for
purposes of preparing, reviewing and resolving any disputes concerning
the Closing Financial Statements. All such information and access
shall be conducted in a manner which does not unreasonably interfere
with such other Party's business and operations and shall be subject
to the provisions of Section 4.4(a) hereof.
(c) Niagara and the Buyer shall have 45 days following
delivery of the financial statements referred to in Section 1.7(a)
hereof during which to submit to the Seller, in accordance with
Section 7.9 hereof, a written statement (a "Buyer's Statement")
setting forth any disputed item (and shall provide, in reasonable
detail, the basis for such dispute) in such financial statements. In
this regard, it is understood and agreed that Niagara and the Buyer
may themselves prepare financial statements of the Company as of the
Closing Date and for the portion of the fiscal year then ended or
submit specific changes to the financial statements delivered by the
Seller to Niagara and the Buyer pursuant to Section 1.7(a) hereof.
The Seller shall cooperate with Niagara and the Buyer as reasonably
requested in the preparation of any such financial statements. The
costs and expenses incurred in connection with the preparation and
delivery of a Buyer's Statement shall be borne by the Buyer. If
Niagara and the Buyer fail to submit a Buyer's Statement within such
45-day period, then the financial statements delivered by the Seller
to Niagara and the Buyer pursuant to Section 1.7(a) hereof shall be
deemed the Closing Financial Statements.
(d) In the event Niagara and the Buyer deliver to the
Seller a Buyer's Statement, the Parties shall consult and attempt to
resolve, as soon as practicable, all disputes set forth therein. In
the event the Parties are unable to resolve any such dispute within 30
days of the delivery of the Buyer's Statement, such disputes shall be
resolved by Xxxxxx Xxxxxxxx & Co. (the "Independent Accounting Firm").
If, for any reason, Xxxxxx Xxxxxxxx & Co. cannot serve as the
Independent Accounting Firm or declines to so serve, then such dispute
shall be resolved by Coopers & Xxxxxxx and such accounting firm shall
be the Independent Accounting Firm for purposes of this Agreement.
If, for any reason, Coopers & Xxxxxxx cannot serve as the Independent
Accounting Firm or declines to so serve, then such disputes shall be
resolved by KPMG Peat Marwick and such accounting firm shall be the
Independent Accounting Firm for purposes of this Agreement. The
Independent Accounting Firm shall be instructed to make its
determination as promptly as practicable and such determination shall
be final and binding upon the Parties enforceable by appropriate
judicial proceedings. The fees and expenses of the Independent
Accounting Firm in performing such function shall be shared equally by
Niagara or the Buyer, on the one hand, and the Seller, on the other
hand. The financial statements delivered by the Seller to Niagara and
the Buyer pursuant to Section 1.7(a) hereof, as modified to reflect
the resolution of disputes by the Parties or by the Independent
Accounting Firm in accordance with this Section 1.7, shall be the
"Closing Financial Statements."
(e) On the tenth business day following the delivery of
the Closing Financial Statements (the "Adjustment Date") either (i)
the Buyer shall pay to the Seller the difference between the Purchase
Price (as defined below) and the Estimated Purchase Price, if the
Purchase Price exceeds the Estimated Purchase Price or (ii) the Seller
shall pay to the Buyer the difference between the Purchase Price and
the Estimated Purchase Price, if the Estimated Purchase Price exceeds
the Purchase Price, in either case by interbank or wire transfer of
immediately available funds to an account designated in writing by the
recipient of such payment at least two business days prior to the
Adjustment Date. In this regard, it is understood and agreed that any
payable to or receivable from the Seller as of the Closing Financial
Statement Date shall be cancelled without any payment by one Party to
another Party in respect thereof. For purposes of this Agreement, (i)
"Purchase Price" shall mean the sum of (x) $58,862,000 and (y) Total
Equity (as defined below) reduced by Estimated Total Equity (as
defined below); (ii) "Total Equity" shall mean the sum of (x) total
stockholder's equity stated on the Closing Balance Sheet and (y) the
amount of any intercompany payable from the Company to the Seller
stated on the Closing Balance Sheet reduced by the amount of any
intercompany receivable of the Company from the Seller stated on the
Closing Balance Sheet and (iii) "Estimated Total Equity" shall mean
$4,709,000, which is the total stockholder's equity stated on the 1996
Balance Sheet reduced by the amount of the intercompany receivable due
the Company from the Seller (other than in respect of Taxes) stated on
the 1996 Balance Sheet.
(f) The rights to indemnification in favor of any Buyer
Indemnified Party (as defined in Section 6.3 hereof) pursuant to
Section 6.3(i) hereof (and any limitations on such rights) shall not
be deemed to limit,
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supersede or otherwise affect the rights of the Buyer and the Seller
for a full purchase price adjustment pursuant to this Section 1.7,
provided that no claim for indemnification may be made pursuant to
Section 6.3(i) hereof with respect to any Losses (as defined in
Section 6.3 hereof) to the extent that such Losses are included as a
liability on the Closing Balance Sheet.
(g) Within two business days of the Closing Date, the
Seller shall deliver to Niagara and the Buyer, by overnight delivery
(Federal Express) to the addresses set forth in Section 7.9 hereof, a
statement (the "Intercompany Statement") of the results of the cash
activity in the intercompany account between the Seller and the
Company (taking into account (i) cash transfers to and from the Seller
and (ii) non-cash xxxxxxxx from the Seller only to the extent that
such xxxxxxxx result from cash disbursements made by the Seller on
behalf of the Company) from (but not including) the Closing Financial
Statement Date through (and including) the Closing Date (the "Interim
Period"), together with appropriate supporting documentation
(including any such supporting documentation that Niagara or the Buyer
may reasonably request). Within seven business days of the Closing
Date, and notwithstanding the delivery of a Buyer's Intercompany
Statement (as defined below), the Buyer shall pay to the Seller, or
the Seller shall pay to the Buyer, the amount of the intercompany
payable in respect of such activity as set forth on such statement
(the "Intercompany Payment"), in either case by interbank or wire
transfer of immediately available funds to an account designated in
writing by the recipient of such payment at least one business day
prior to such date. From and after the Closing, the Seller shall
promptly deliver all funds and mail of any kind or form relating to
the Business or the Company to the Company's administrative offices in
Hammond, Indiana. Niagara and the Buyer shall have 30 days following
delivery of the Intercompany Statement during which to submit to the
Seller, in accordance with Section 7.9 hereof, a written statement (a
"Buyer's Intercompany Statement") setting forth any disputed item (and
shall provide, in reasonable detail, the basis for such dispute) in
the Intercompany Statement. In the event Niagara and the Buyer
deliver to the Seller a Buyer's Intercompany Statement, the Parties
shall consult and attempt to resolve, as soon as practicable, all
disputes set forth therein. In the event the Parties are unable to
resolve any such dispute within 15 days of the delivery of a Buyer's
Intercompany Statement, such disputes shall be resolved by the
Independent Accounting Firm. The Independent Accounting Firm shall be
instructed to make its determination as promptly as practicable and
such determination shall be final and binding upon the Parties
enforceable by appropriate judicial proceedings. The fees and
expenses of the Independent Accounting Firm in performing such
function shall be shared equally by Niagara or the Buyer, on the one
hand, and the Seller, on the other hand. On the fifth business day
following the resolution of all disputes set forth in the Buyer's
Intercompany Statement (either by the Parties or by the Independent
Accounting Firm) in accordance with this Section 1.7(g), the Buyer or
the Seller, as the case may be, shall make a payment to the other in
an amount that reflects the resolution of all such disputes. Such
payment shall be made by interbank or wire transfer of immediately
available funds to an account designated in writing by the recipient
of such payment at least two business days prior to such payment date.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to Niagara and the Buyer as follows:
2.1 Organization and Standing Each of the Seller and the Company is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
authority to own, lease and operate its properties and assets and to carry on
its business and operations as now being and, in the case of the Company, as
heretofore conducted. The Company received its Certificate of Authority to
transact business in the State of Indiana on January 5, 1982, and is currently
duly authorized to transact business in such State. The Company has filed its
most recent annual report required by Indiana law to be filed with the Indiana
Secretary of State, or is not yet required to file such annual report, and the
Company has not filed an Application for a Certificate of Withdrawal with the
Indiana Secretary of State. The Company is duly qualified or licensed to do
business as a foreign corporation and is in good standing in each other
jurisdiction set forth on Schedule 2.1 of the disclosure schedule delivered by
the Seller to Niagara and the Buyer concurrently herewith (the "Disclosure
Schedule"), which, in addition to Indiana, are the only jurisdictions in which
the property owned, leased or operated by the Company or the conduct of the
Business makes such qualification necessary.
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2.2 Organizational Documents and Corporate Records. (a) The Seller
is concurrently delivering to Niagara and the Buyer complete and correct copies
of the Certificate of Incorporation and By-laws of the Company as currently in
effect. The minute books of the Company (and with respect to the Business,
excerpts of the minutes of the Seller) have been made available to Niagara and
the Buyer for their inspection, and such minute books (and excerpts) contain
complete and correct records in all material respects of all meetings (or, in
the case of the Seller, all portions thereof) and consents in lieu of a
meeting, of the respective Boards of Directors (and any committees thereof)
and, in the case of the Company, its stockholders, and accurately reflect in
all material respects all transactions referred to therein. The stock books
and ledgers of the Company have been made available to Niagara and the Buyer
for their inspection, and such books and ledgers are complete and correct in
all material respects.
(b) The Seller has made available to Niagara and the
Buyer all of the accounting, corporate and financial books and records relating
to the Business. Such books and records are, in the aggregate, true, accurate
and complete in all material respects and fairly reflect the basis for the
Company's financial condition and results of operations as set forth in the
Audited Financial Statements (as defined in Section 2.7 hereof) and the
Unaudited Financial Statements (as defined in Section 2.7 hereof).
2.3 Equity Investments The Company does not directly or indirectly
own or control any capital stock or other securities of or other interests or
investments in any other individual, partnership, firm, trust, association,
corporation, joint venture, joint stock company, unincorporated organization,
Governmental Authority (as defined in Section 2.6 hereof), or other entity
(each of which, a "Person") nor does the Company have any obligation or right
to acquire any such capital stock, securities interest or investment.
2.4 Authorization; Binding Obligation The Seller, and to the extent
it is a party thereto, the Company, have all requisite corporate power and
authority to execute and deliver this Agreement and the Other Documents
executed and delivered by such parties pursuant hereto or in connection
herewith, and to consummate the transactions contemplated hereby and thereby
and to perform their obligations hereunder and thereunder. The execution and
delivery of this Agreement and the Other Documents executed and delivered by
the Seller and the Company pursuant hereto or in connection herewith, and the
consummation of the transactions contemplated hereby and thereby by such
parties, have been duly and validly authorized by the Boards of Directors of
such parties, and no other corporate proceedings on the part of the Seller or
the Company are necessary to authorize this Agreement or the Other Documents
executed and delivered by such parties pursuant hereto or in connection
herewith, or for such parties to consummate the transactions contemplated
hereby and thereby. This Agreement and the Other Documents executed and
delivered by the Seller and the Company pursuant hereto or in connection
herewith have been duly and validly executed and delivered by such parties and,
assuming the due authorization, execution and delivery by Niagara, the Buyer
and any other party thereto, constitute legal, valid and binding obligations of
the Seller and the Company, as the case may be, enforceable against such
parties in accordance with their respective terms. Except as and to the extent
set forth on Schedule 2.4 of the Disclosure Schedule, no power of attorney has
been granted by the Seller or the Company and is currently in force with
respect to any matter relating to the Company, the Shares, the Business or the
Company's assets.
2.5 Capitalization; Title to the Shares . (a) The capitalization of
the Company consists of 100,000 shares of common stock, par value $1.00 per
share, of which 1,000 shares are issued and outstanding. The Company has no
other classes of capital stock authorized or outstanding. None of the
Company's shares of capital stock have been reserved for any purpose. All of
the Shares are duly authorized and validly issued, fully paid, nonassessable
and were not issued in violation of any preemptive rights. There are no (i)
options, warrants, calls, commitments or rights of any character to purchase or
otherwise acquire from the Company shares of capital stock of the Company of
any class, (ii) outstanding securities of the Company that are convertible into
or exchangeable or exercisable for shares of any class of capital stock of the
Company, (iii) options, warrants or other rights to purchase from the Company
any such convertible or exchangeable securities or (iv) Contracts (as defined
in Section 2.13 hereof) of any kind relating to the issuance of any capital
stock of the Company, or any such options, warrants or rights, pursuant to
which, in any of the foregoing cases, the Company is subject or bound.
(b) Immediately prior to the Closing, the Seller was the
record and beneficial owner of, and had good and marketable title to, the
Shares, free and clear of all Encumbrances (as defined below). The Shares are
not subject to any restrictions on transferability other than those imposed by
the Securities Act of 1933, as amended (the "Securities Act") and applicable
state securities laws. There are no options, warrants, calls, commitments or
rights of
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any character to purchase or otherwise acquire Shares from the Seller pursuant
to which the Seller may be obligated to sell or transfer any of the Shares,
other than this Agreement. At the Closing, the Seller is transferring good and
marketable title to the Shares, free and clear of all Encumbrances. For
purposes of this Agreement, "Encumbrances" shall mean and include all liens
(including any liens filed under the Internal Revenue Code of 1986, as amended
(the "Code") or under the tax laws of any foreign, state or local Governmental
Authority), encumbrances, proxies, voting trust arrangements, pledges, security
interests, collateral security agreements, financing statements (and similar
notices) filed with any Governmental Authority, claims, charges, mortgages,
equities, title defects, options, restrictive covenants or restrictions on
transfer of any nature whatsoever.
2.6 Consents and Approvals; No Violation Except as and to the extent
set forth on Schedule 2.6 of the Disclosure Schedule, neither the execution and
delivery of this Agreement and the Other Documents executed and delivered by
the Seller and the Company pursuant hereto or in connection herewith, nor the
consummation by the Seller or the Company of the transactions contemplated
hereby or thereby, nor compliance by the Seller or the Company with any of the
provisions hereof or thereof (a) conflicts with any provision of the
Certificate of Incorporation or By-laws or other similar organizational
documents of the Company or the Seller, (b) requires any consent, Permit (as
defined in Section 2.14 hereof) or waiver (collectively, "Consents") of, filing
with or notification to, or any other action by, any Governmental Authority (as
defined below) by the Company or the Seller, (c) violates any law, rule,
regulation, restriction (including zoning), code, statute, ordinance, order,
writ, injunction, judgment or decree (collectively, "Laws") of a government or
political subdivision thereof, whether federal, state, local or foreign, or any
agency, department, commission, board, bureau, court, tribunal, body,
administrative or regulatory authority or instrumentality of any such
government or political subdivision (collectively, "Governmental Authorities")
applicable to the Company or the Seller, or by which any of their businesses,
properties or assets (including, without limitation, the Shares) is bound or
affected or (d) violates, breaches, or conflicts with, or constitutes (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration or any obligation to pay or
result in the imposition of any Encumbrance upon any of the property
(including, without limitation, the Shares)) under any of the terms, conditions
or provisions of any credit agreement (including, without limitation, the
Credit Agreement), letter of credit, guaranty obligation (including, without
limitation, the Guaranty), note, bond, mortgage, indenture, Encumbrance,
contract, Permit, Order (as defined in Section 2.14 herein), or other
instrument or obligation to which the Seller or the Company is a party or by
which any of their businesses, properties or assets (including, without
limitation, the Shares) is bound or affected.
2.7 Financial Statements Schedule 2.7 of the Disclosure Schedule
consists of complete and correct copies of (i) the audited balance sheets of
the Company as at October 31 in each of the years 1994 through 1996, and the
related audited statements of (x) income and retained earnings and (y) cash
flows, each for the fiscal years then ended (together with the notes thereto),
certified by Deloitte & Touche, LLP, the Company's independent public
accountants, and accompanied by their reports thereon (collectively, the
"Audited Financial Statements") and (ii) the unaudited balance sheet of the
Company as at January 31, 1997 (the "January 97 Balance Sheet") and the related
unaudited statements of (x) income and retained earnings and (y) cash flows,
each for the quarter ended January 31, 1997 (collectively with the January 97
Balance Sheet, the "Unaudited Financial Statements"). The Audited Financial
State- ments and the Unaudited Financial Statements (i) have been prepared from
the books and records of the Company in accordance with GAAP consistently
applied and maintained throughout the periods indicated (except as indicated in
the notes thereto and subject in the case of the Unaudited Financial Statements
to adjustments and accruals normally made in the preparation of year-end
financial statements) and (ii) and fairly presents the financial condition and
results of operations of the Company, as at the date thereof and for the
periods then ended.
2.8 Absence of Undisclosed Liabilities The Company has no
liabilities or obligations of any nature arising from or relating to its
business and operations (whether absolute, accrued, fixed, contingent,
liquidated, unliquidated or otherwise and whether due or to become due) that
are required to be reflected or reserved against on the 1996 Balance Sheet (or
the notes thereto) in accordance with GAAP which were not reflected or reserved
against on the 1996 Balance Sheet, except for liabilities or obligations
incurred since October 31, 1996 in the ordinary course of business consistent
with past practice. Schedule 2.8 of the Disclosure Schedule sets forth a
complete and correct list of all obligations (the "Indebtedness") of the
Company at the Closing with respect to borrowed money and letters of credit,
and any notes, bonds or similar instruments or under any capitalized lease or
guarantee of the Company, and the balances due thereunder. The transfer of the
Shares pursuant hereto will not cause the acceleration of or otherwise
adversely affect the terms or conditions of such obligations.
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2.9 Accounts Receivable Schedule 2.9(a) of the Disclosure Schedule
sets forth a complete and correct list of all accounts and notes receivable
("Accounts Receivable"), together with the customer name, aging and dollar
amount, as of the Closing Financial Statement Date. All Accounts Receivable
reflected on the 1996 Balance Sheet and the January 97 Balance Sheet, and all
Accounts Receivable as of the Closing Date, are (i) except as and to the extent
set forth on Schedule 2.9(b) of the Disclosure Schedule, in respect of sales
actually made in the ordinary course of business, (ii) subject to no prior
assignment or, except as and to the extent set forth on Schedule 2.9(c) of the
Disclosure Schedule, Encumbrance and (iii) to the knowledge of those Persons
identified on Schedule 2.9(d) of the Disclosure Schedule, subject to no
counterclaim or setoff.
2.10 Inventory All inventory owned or held by the Company and used
in the conduct of the Business, including manufacturing supplies, raw
materials, components, repair parts, work-in-progress, finished goods and other
similar items, whether raw or used ("Inventory") which is reflected on the 1996
Balance Sheet and the January 97 Balance Sheet, and all such Inventory as of
the Closing Financial Statement Date, is valued at the lower of cost or market
value. To the knowledge of those Persons identified on Schedule 2.10(a) of the
Disclosure Schedule, the Inventory reflected on the 1996 Balance Sheet and the
January 97 Balance Sheet, and the Inventory as of the Closing Financial
Statement Date, consists of items salable in the ordinary course of business
except for (i) items of obsolete materials and materials of below-standard
quality, which, in the case of Inventory reflected on the 1996 Balance Sheet,
have been written off or written down to the Company's best estimate of net
realizable value and (ii) items which, after the Closing Financial Statement
Date, the Company has a right to return to the respective vendor or supplier.
The Inventory reflected on the 1996 Balance Sheet and the Inventory as of the
Closing Date does not include any materials held by the Company on consignment
from any third parties. All Inventory disposed of by the Company since October
31, 1996 has been disposed of only in the ordinary course of the Company's
business consistent with past practice. To the knowledge of those Persons
identified on Schedule 2.10(b) of the Disclosure Schedule, all Inventory is
free from any defect or other deficiency except for items of obsolete materials
and materials of below-standard quality which have been written off or written
down to the Company's best estimate of net realizable value. The quantities of
all Inventory are reasonable under the current circumstances of the Company's
business and operations. Except as and to the extent set forth on Schedule
2.10(c) of the Disclosure Schedule, none of the Inventory is in the possession
of others.
2.11 Absence of Certain Changes or Events Except as and to the
extent set forth on Schedule 2.11(a) of the Disclosure Schedule, since October
31, 1996:
(i) the Company has operated its business in the
ordinary course consistent with past practice;
(ii) there has not been any material adverse
change in the business, results of operations, assets,
liabilities, financial condition or prospects of the Company;
(iii) the Company has not incurred any material
damage, destruction or loss (whether or not covered by
insurance) to its owned or leased property or assets;
(iv) the Company has not transferred, licensed,
sublicensed, disposed of, abandoned or permitted to lapse or
otherwise failed to preserve any material rights to use any
Intellectual Property (as defined in Section 2.19 hereof) or
disclosed to any third party, other than representatives of
Niagara and the Buyer, any trade secret, process or know-how
not theretofore a matter of public knowledge relating to the
Company's business or operations;
(v) the Company has not transferred, disposed of,
abandoned or permitted to lapse or otherwise failed to
preserve any Permit issued by a Governmental Authority;
(vi) the Company has not sold, assigned, leased,
transferred, incurred any Encumbrance on or license with
respect to, or disposed of, abandoned, or conveyed any of its
properties or assets (whether real, personal or mixed,
tangible or intangible) with a book value of $100,000 or more,
except in the ordinary course of business consistent with past
practice;
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(vii) the Company has not modified, amended or
terminated any Material Contract (as defined in Section 2.13
hereof) other than Material Contracts that are Designated
Plans, or, to the knowledge of those Persons identified on
Schedule 2.11(b) of the Disclosure Schedule, canceled any
debts or claims or waived any rights of substantial value;
(viii) the Company has not made, or committed to
make, any capital expenditures except capital expenditures
made in the ordinary course of business consistent with past
practice, of which no such expenditure for a single project
exceeds $25,000 and which in the aggregate do not exceed
$100,000 and has no uncommitted capital expenditures for
projects;
(ix) the Company has not incurred any liabilities
or obligations of any nature (whether absolute, accrued or
contingent, for borrowed money or otherwise, and whether due
or to become due) other than (a) Contracts entered into in the
ordinary course of business consistent with past practice or
(b) Contracts which do not involve monetary obligations by or
to the Company of more than $100,000;
(x) the Company has not paid, discharged or
satisfied any Encumbrance or liability (whether absolute,
accrued, contingent or otherwise and whether due or to become
due), other than Encumbrances or liabilities which are (a)
incurred in the ordinary course of business or (b) reflected
or reserved against on (or in the notes to) the 1996 Balance
Sheet and the related audited statements of income and
retained earnings, and cash flows;
(xi) the Company has not (a) created or entered
into any employment agreements that are not terminable at
will, (b) granted or agreed to an increase in the compensation
of the current or former employees of the Company (other than
increases for employees who are not and were not officers of
the Company made in the ordinary course of business and
consistent with past practices), (c) created or entered into a
Designated Plan (as defined in Section 2.16 hereof), or (d)
amended any Designated Plan to increase any benefits payable
thereunder except as required by the Code or ERISA (as defined
in Section 2.16 hereof);
(xii) the Seller has not created or entered into a
Designated Plan or amended any Designated Plan to increase
benefits payable thereunder except as required by the Code or
ERISA;
(xiii) the Company has not declared, paid or made or
set aside for payment or making, any dividend or other payment
or distribution of any kind in respect of its capital stock or
other securities, or to its securityholder, or directly or
indirectly retired, redeemed, purchased or otherwise acquired
any shares of its capital stock or other securities;
(xiv) the Company has not issued, authorized or
proposed the issuance of, reclassified, or sold any shares of
its capital stock, or securities convertible into or ex-
changeable or exercisable for, or rights, warrants or options
to acquire, any such shares or other convertible securities or
acquired any capital stock or other securities or interests of
any Person, or otherwise made a loan or advance to or
investment in any Person;
(xv) neither the Company nor, with respect to the
Business, the Seller, has made any change in any accounting
methods, principles or practices (including, without
limitation, changes in depreciation or amortization policies
or rates or relating to the establishment or accrual of
reserves) or any material election with respect to Taxes (as
defined in Section 2.18 hereof);
(xvi) except as will be reflected in the Closing
Financial Statements, the Company has not paid, loaned or
advanced any amount to or in respect of, or sold, transferred
or leased any properties or assets (whether real, personal or
mixed, tangible or intangible) in an
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amount in excess of $25,000 to, or entered into any agreement,
arrangement or transaction with, the Seller or any of the
Seller's Affiliates (as defined in Section 2.24 hereof);
(xvii) neither the Company nor, with respect to the
Business, the Seller, has instituted, settled or agreed to
settle any litigation, action or proceeding by or before any
Governmental Authority;
(xviii) the Company has not ordered any materials
from the Seller or any Seller's Affiliate; and
(xix) neither the Company nor, with respect to the
Business, the Seller, has agreed, whether in writing or
otherwise, to take any action described in this Section 2.11.
2.12 Properties and Assets. (a) The Company has good, valid,
marketable and fee simple title to, or a valid leasehold interest in, all of
the real property owned or leased by the Company as more particularly described
on Schedule 2.12(a)-1 of the Disclosure Schedule (the "Real Property"). Except
as and to the extent set forth on Schedule 2.12(a)-2 of the Disclosure
Schedule, the Real Property owned or, in respect of the Real Property leased by
the Company, its leasehold interest, is subject to no Encumbrance,
encroachment, building or use restriction, zoning violation, exception,
reservation or limitation.
(b) Except as and to the extent set forth on Schedule
2.12(b)-1 of the Disclosure Schedule, the Company and the Seller have
not received any written notice advising them of any general or
special assessment relating to the Real Property. There are no
condemnation or eminent domain proceedings pending (for which written
notice has been provided to the Company or the Seller) or, to the
knowledge of those Persons identified on Schedule 2.12(b)-2 of the
Disclosure Schedule, threatened, against the Real Property by any
Governmental Authority. There are no variances, special exceptions,
conditions or agreements pertaining to the Real Property imposed or
granted by or entered into by the Company with, or, to the knowledge
of those Persons identified on Schedule 2.12(b)-3 of the Disclosure
Schedule, enforceable by, any Governmental Authority. Except as and
to the extent set forth on Schedule 2.12(b)-4 of the Disclosure
Schedule, no written notice from any Governmental Authority has been
provided to the Company or the Seller requiring or calling attention
to the need for any work, repair, construction, alteration or
installation on, or in connection with, the Real Property. To the
knowledge of those Persons identified on Schedule 2.12(b)-5 of the
Disclosure Schedule, the current operations of the Company are
permitted uses under applicable zoning regulations and there is no
requirement for any special exception, variance or other conditional
approval to permit the Company to continue to operate at the
respective locations where the Company currently operates.
(c) Except as and to the extent set forth in Items 3, 4
and 5 on Schedule 2.12(c)-1, the Company has good, valid and
marketable title to, or a valid leasehold interest in, all items of
personal property, buildings, improvements, equipment and all other
assets and properties (whether personal or mixed, tangible or
intangible (and whether or not fully depreciated, amortized or
expensed)) used in the Business, and such items are subject to no
Encumbrance except as and to the extent set forth in Items 1 and 2 on
Schedule 2.12(c)-1 of the Disclosure Schedule. All buildings,
improvements, equipment or other material assets currently used in
connection with the business and operations of the Company are
structurally sound, and to the knowledge of those Persons identified
on Schedule 2.12(c)-2 of the Disclosure Schedule, contain no material
defects. Such buildings, improvements, equipment and other material
assets are suitable for their intended use and are subject to no
commitment or other arrangement for their sale or use by any third
party. Except as and to the extent set forth on Schedule 2.12(c)-3 of
the Disclosure Schedule and except for the Inventory, none of the
Company's tangible assets are in the possession of others.
(d) Except as and to the extent set forth on Schedule
2.12(d) of the Disclosure Schedule, the equipment and other items of
tangible personal property of the Company are in good and normal
operating condition and repair (ordinary wear and tear excepted).
2.13 Certain Contracts. Schedule 2.13(a) of the Disclosure Schedule
sets forth a complete and correct list of all Material Contracts (as defined
below). Complete and correct copies of all written Material Contracts,
including any
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and all amendments and other modifications thereto, have been delivered to or
been made available for inspection by Niagara and the Buyer. All Material
Contracts (x) are valid and binding obligations of the Company and, to the
knowledge of those Persons identified on Schedule 2.13(b) of the Disclosure
Schedule, the other parties thereto, (y) are in full force and effect and are
enforceable as to the Company and, to the knowledge of those Persons identified
on Schedule 2.13(c) of the Disclosure Schedule, the other parties thereto, in
accordance with their respective terms and (z) except for any Material Contract
that is a Designated Plan, have not been amended or terminated except in the
ordinary course of business consistent with past practice. The Company is not
in default under nor has it breached in any respect any Material Contract. No
other party to any Material Contract (i) has, to the knowledge of those Persons
identified on Schedule 2.13(d) of the Disclosure Schedule, breached or is in
default thereunder, (ii) has given notice that it intends to terminate such
Material Contract or (iii) has altered, in any way adverse to the Company, its
performance under such Material Contract. No event or condition has occurred
(or is alleged by any other party to a Material Contract to have occurred)
which, with or without due notice or lapse of time or both, would constitute, a
breach or event of default on the part of the Company, would provide a basis
for a valid claim or acceleration under any Material Contract as against the
Company or would prevent the Company from exercising and obtaining the full
benefits of any rights or options contained therein. For purposes of this
Agreement, "Contracts" shall mean and include all leases, contracts,
agreements, license agreements, purchase orders, invoices, sales orders,
instruments evidencing indebtedness for borrowed money, mortgages or other
documents securing any indebtedness for borrowed money, commitments and
understandings, written or oral, and all amendments or modifications thereto,
to which the Company is a party or by which the Company, or any of the
Company's business, properties or assets, is bound; and "Material Contracts"
shall mean and include all (a) Contracts evidencing or relating to indebtedness
for borrowed money, (b) Contracts relating to the Real Property, (c) Contracts
for the development of the Intellectual Property, the license agreements set
forth on Schedule 2.19(b) of the Disclosure Schedule and assignments of any
Intellectual Property, (d) leases of personal property by or to the Company
involving monetary obligations of more than $25,000 per year, (e) purchase or
supply Contracts with terms extending for a period of more than three months
involving monetary obligations by or to the Company of more than $25,000 per
year ( but specifically excluding the informal arrangement identified on
Schedule 2.13(a)-1 of the Disclosure Schedule), (f) Contracts with any other
direct or indirect subsidiary of the Seller providing for payments in excess of
$25,000 or Contracts with any Seller's Affiliate other than such subsidiaries,
(g) any employment, severance, retention, consulting, non-competition or
confidentiality Contract, (h) Contracts relating to the shipment or transport
of the Company's finished goods involving monetary obligations exceeding
$25,000 per year and (i) Contracts which otherwise are material to the
Business.
2.14 Compliance with Laws and Permits. (a) The Business has been
conducted and is now being conducted in all material respects in compliance
with all Laws and orders, judgments, injunctions, awards, decrees, writs and
similar actions ("Orders") of all Governmental Authorities having jurisdiction
over the Company and all franchises, licenses, certificates, registrations,
permits, authorizations, approvals of, and any required registration with, all
Governmental Authorities ("Permits") relating to any of its properties or
applicable to the Business.
(b) To the knowledge of those Persons identified on
Schedule 2.14(a) of the Disclosure Schedule, the Company possesses all
Permits necessary to own and operate its properties and assets and to
conduct its business as it is currently conducted. To the knowledge
of those Persons identified on Schedule 2.14(b) of the Disclosure
Schedule, such Permits are valid, subsisting and in full force and
effect, and the Company has fulfilled its obligations under each of
such Permits, and no event has occurred or condition or state of facts
exists which constitutes or, after notice or lapse of time or both,
would constitute, a default or violation under any of such Permits or
would permit revocation or termination of any of such Permits. In
respect of any such Permits, no proceeding is pending for which notice
has been provided to the Company or the Seller or, to the knowledge of
those Persons identified on Schedule 2.14(c) of the Disclosure
Schedule, threatened, looking toward revocation or termination of any
such Permits.
2.15 Litigation and Arbitration. (a) Neither the Company nor the
Seller is subject to any Order affecting the Company or the Business. Neither
the Company nor, with respect to the Company, the Seller, is a party to, is
bound by, or has any obligation under any settlement agreement affecting the
Business or any agreement, waiver or Consent tolling any statute of
limitations. Except as and to the extent set forth on Schedule 2.15(a) of the
Disclosure Schedule and except for workers compensation claims, there are no
claims, actions, causes of action, suits, proceedings, inquiries or
investigations pending (for which notice has been provided to the Seller or the
Company) or, to the knowledge of those Persons identified on Schedule 2.15(b)
of the Disclosure Schedule, threatened against the Company or affecting the
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Business, and no such claim, action, suit, inquiry, proceeding or investigation
has been pending (for which notice was provided to the Seller or the Company)
during the three-year period preceding the date hereof except as and to the
extent set forth on Schedule 2.15(c) of the Disclosure Schedule. Schedule
2.15(d) of the Disclosure Schedule sets forth a complete and correct list of
all workers compensation claims in excess of $10,000 brought by employees of
the Company during the three years prior to the date hereof, together with the
amount of all workers compensation claims brought by employees of the Company
for each such year. None of the Persons identified on Schedule 2.15(e) of the
Disclosure Schedule has knowledge of any fact or circumstance which could
reasonably be expected to result in any other claim, action, cause of action,
suit, proceeding, inquiry, investigation or Order against the Company or the
Business.
(b) No claim, action, suit, proceeding, inquiry or
investigation set forth on Schedules 2.15(a) or (d) of the Disclosure
Schedule, individually or in the aggregate, if adversely decided,
could have a material adverse affect on the Company or the Business or
prevent the consummation of the transactions contemplated by this
Agreement or the Other Documents executed and delivered pursuant
hereto or in connection herewith.
2.16 Employee Benefit Plans. (a) Schedule 2.16(a) of the Disclosure
Schedule contains a complete and correct list of (i) all employee welfare
benefit and employee pension benefit plans as defined in Sections 3(1) and 3(2)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
including, without limitation, plans that provide retirement income or result
in a deferral of income by employees for periods extending to termination of
employment or beyond, and plans that provide medical, surgical, or hospital
care benefits or benefits in the event of sickness, accident, disability, death
or unemployment ("Plans") and (ii) all other material employee benefit
agreements or arrangements that are not Plans ("Benefit Arrangements"),
including without limitation deferred compensation plans, incentive plans,
bonus plans or arrangements, stock option plans, stock purchase plans, stock
award plans, golden parachute agreements, severance pay plans, dependent care
plans, cafeteria plans, employee assistance programs, scholarship programs,
employment contracts, retention incentive agreements, non-competition
agreements, consulting agreements, confidentiality agreements, vacation
policies, and other similar plans, agreements and arrangements that are
currently in effect or were maintained within three years of the date hereof,
or have been approved before this date but are not yet effective, for the
benefit of directors, officers, employees or former employees (or their
beneficiaries) of the Company (Plans and Benefit Arrangements being
collectively referred to herein as "Designated Plans"). Schedule 2.16(a) of
the Disclosure Schedule identifies each of the Plans that is subject to Section
302 or Title IV of ERISA or Section 412 of the Code.
(b) With respect to each Designated Plan, the Seller or
the Company has heretofore delivered to Niagara and the Buyer,
complete and correct copies of each of the following documents:
(i) the Designated Plan and any amendments
thereto (or if the Designated Plan is not a written Plan, a
description thereof);
(ii) the three most recent annual Form 5500
reports;
(iii) the three most recent actuarial reports;
(iv) the three most recent reports prepared in
accordance with Statement of Financial Accounting Standards
No. 87;
(v) the most recent summary plan description;
(vi) the trust agreement, group annuity contract
or other funding agreement that provides for the funding of
the Designated Plan;
(vii) the most recent financial statement; and
(viii) the most recent determination letter received
from the Internal Revenue Service ("IRS") with respect to each
Designated Plan that is intended to qualify under Section 401
of the Code.
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(c) No asset of the Company, or any entity (whether or
not incorporated) that is treated as a single employer together with
the Company under Section 414 of the Code (an "ERISA Affiliate"), is
the subject of any lien arising under Section 302(f) of ERISA or
Section 412(n) of the Code; no Company or ERISA Affiliate has been
required to post any security under Section 307 of ERISA or Section
401(a)(29) of the Code; and no fact or event exists that could
reasonably be expected to give rise to any such lien or requirement to
post any such security.
(d) The Pension Benefit Guaranty Corporation ("PBGC") has
not instituted proceedings to terminate any pension benefit plan as
defined in Section 3(1) of ERISA that is maintained or contributed to
by the Company or any ERISA Affiliate and no condition exists that
presents a material risk that such proceedings will be instituted.
(e) Except as and to the extent set forth on Schedule
2.16(b) of the Disclosure Schedule, no pension benefit plan as defined
in Section 3(1) of ERISA that is maintained or contributed to by the
Company or any ERISA Affiliate had an accumulated funding deficiency
as defined in Section 302 of ERISA and Section 412 of the Code,
whether or not waived, as of the last day of the most recent fiscal
year of the Plan ending on or prior to the Closing Date. All
contributions required to be made with respect to any Plan on or prior
to the Closing Date have been timely made or will be reflected on the
Closing Balance Sheet.
(f) Neither the Company nor any entity that was at any
time during the six-year period ending on the date hereof an ERISA
Affiliate has ever maintained, had an obligation to contribute to,
contributed to, or incurred any liability with respect to a plan that
is both a multiemployer plan (as defined in Section 3(37) of ERISA)
and a pension benefit plan (as defined in Section 3(1) of ERISA) or a
plan described in Section 4063(a) of ERISA.
(g) To the knowledge of the Seller and the Company,
neither the Company nor any other entity has engaged in a transaction
that could reasonably be expected to result in the imposition upon the
Company of a civil penalty under Section 409 or 502(i) of ERISA or a
tax under Section 4975 or 4976 of the Code with respect to any
Designated Plan.
(h) Each Designated Plan has been operated and
administered in all material respects in accordance with its terms and
applicable Law, including but not limited to ERISA and the Code.
(i) The terms of all Designated Plans that are intended
to qualify under Section 401(a) of the Code (i) have been determined
by the IRS to qualify under Section 401(a) of the Code or (ii) of the
applicable remedial amendment periods under Section 401(b) of the Code
will not have expired prior to the Closing Date. The Seller and the
Company have no knowledge of any event or circumstance that could
reasonably be expected to cause the IRS to disqualify any Designated
Plan that is intended to qualify under Section 401(a) of the Code. To
the knowledge of the Seller and the Company, each Designated Plan that
is intended to satisfy the requirements of Section 501(c)(9) of the
Code has satisfied such requirements.
(j) Schedule 2.16(a) of the Disclosure Schedule
identifies each Designated Plan that provides medical, surgical,
hospitalization, or life insurance benefits (whether or not insured by
a third party) for employees or former employees of the Company for
periods extending beyond their retirements or other terminations of
service, other than (i) coverage mandated by applicable Law, (ii)
death benefits under any pension benefit plan as defined in Section
3(1) of ERISA, or (iii) benefits the full cost of which is borne by
the current or former employee (or his beneficiary).
(k) Except as and to the extent set forth on Schedule
2.16(c) of the Disclosure Schedule, the consummation of the
transactions contemplated by this Agreement and the Other Documents,
either alone or in conjunction with another event (such as a
termination of employment), will not (i) entitle any current or former
employee or officer of the Company, to severance pay, or any other
payment under a Designated Plan, (ii) accelerate the time of payment
or vesting of benefits under a Designated Plan or (iii) increase the
amount of compensation due any such employee or officer.
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(l) There is no litigation, action, proceeding, or claim
pending, or to the knowledge of the Seller and the Company, threatened
or contemplated relating to any Designated Plan (other than routine
claims for benefits).
(m) Except as and to the extent set forth on Schedule
2.16(d) of the Disclosure Schedule, neither the Company nor any entity
that was at any time during the six-year period ending on the date
hereof an ERISA Affiliate has incurred any liability under Title IV of
ERISA that has not been satisfied in full (other than liability to the
PBGC for the payment of premiums pursuant to Section 4007 of ERISA).
No condition exists for which the PBGC is authorized to seek from the
Company or an ERISA Affiliate a late payment charge under Section
4007(b) of ERISA. Except as and to the extent set forth on Schedule
2.16(e) of the Disclosure Schedule, no condition exists that presents
a risk that the Company or an ERISA Affiliate will incur any liability
under Title IV of ERISA (other than liability to the PBGC for the
payment of premiums pursuant to Section 4007 of ERISA).
(n) During the six-year period ending on the day before
the Closing Date, no "reportable event" within the meaning of Section
4043(c) of ERISA with respect to which the 30-day notice requirement
has not been waived by the PBGC has occurred with respect to the
LaSalle Steel Company Pension Plan for Hourly Employees.
2.17 Personnel Information; Labor Relations.
(a) Schedule 2.17(a) of the Disclosure Schedule sets
forth a complete and correct list of all directors and officers of the
Company and all other individuals employed by the Company as of the
close of business on the day prior to the date hereof, together with
such individual's title and/or job description and date of hire, and,
for each salaried individual, such individual's salary (with last date
of increase) and incentive compensation paid in respect of the last
calendar year, and Benefit Arrangements (as defined in Section 2.16
hereof). Except as and to the extent set forth on Schedule 2.17(a) of
the Disclosure Schedule, as of the date prior to the date hereof,
neither the Company nor the Seller has received notification that any
of the current employees of the Company presently plans to terminate
his or her employment during the 1997 calendar year, whether by reason
of the transactions contemplated by this Agreement (and the Other
Documents) or otherwise.
(b) Except as and to the extent set forth on Schedule
2.17(b) of the Disclosure Schedule: (i) there is no labor strike,
stoppage, lockout or material dispute or material slowdown pending or,
to the knowledge of those Persons identified on Schedule 2.17(c) of
the Disclosure Schedule, threatened against the Company, and there has
not been any such action during the last three years; (ii) the Company
is not a party to or bound by any (A) collective bargaining or similar
agreement with any labor organization (complete and correct copies of
which have heretofore been delivered to the Buyer and Niagara) or (B)
written work rules or practices agreed to with any labor organization
or employee association applicable to employees of the Company
(complete and correct copies of which have hereto been delivered to
the Buyer and Niagara); (iii) no employee of the Company is
represented by any labor organization and, to the knowledge of those
Persons identified on Schedule 2.17(d) of the Disclosure Schedule,
there are no current union organizing activities among the employees
of the Company; (iv) there are no material written personnel policies,
rules or procedures applicable to employees of the Company (complete
and correct copies of which have heretofore been delivered to the
Buyer and Niagara); (v) the Company is, and during the last three
years has been, in material compliance with all applicable Laws in
respect of employment and employment practices, terms and conditions
of employment, wages, hours of work and occupational safety and
health, and is not engaged in any unfair labor practices as defined in
the National Labor Relations Act; (vi) there is no unfair labor
practice charge or complaint against the Company pending (for which
notice has been provided to the Seller or the Company) or, to the
knowledge of those Persons identified on Schedule 2.17(e) of the
Disclosure Schedule, threatened before the National Labor Relations
Board or any similar state or foreign agency; (vii) there have been no
arbitration proceedings or material grievance proceedings arising out
of any collective bargaining agreement during the last three years;
(viii) no charges with respect to or relating to the Company are
pending (for which notice has been provided to the Seller or the
Company) before the Equal Employment Opportunity Commission or any
other agency responsible for the prevention of unlawful employment
practices; (ix) neither the Company nor the Seller has received notice
of the intent of any Governmental Authority responsible for the
enforcement of labor or employment Laws to conduct an investigation
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with respect to or relating to the Company and no such investigation
is in progress; and (x) there are no complaints, lawsuits or other
proceedings pending (for which notice has been provided to the Seller
or the Company) or, to the knowledge of those Persons identified on
Schedule 2.17(f) of the Disclosure Schedule, threatened in any forum
by or on behalf of any present or former employee of the Company, any
applicant for employment or classes of the foregoing, alleging breach
of any express or implied contract of employment, any Law governing
employment or the termination thereof or other discriminatory,
wrongful or tortious conduct in connection with the employment
relationship.
(c) During the last four years, the Company has not
effectuated (i) a "plant closing" (as defined in the Worker Adjustment
Retraining Notification Act of 1988 (the "WARN Act")) affecting any
site of employment or one or more facilities or operating units within
any site of employment or facility of the Company; or (ii) a "mass
layoff" (as defined in the WARN Act) affecting any site of employment
or facility of the Company; nor has the Company been affected by any
transaction or engaged in layoffs or employment terminations
sufficient in number to trigger application of any similar state or
local Law. Except as and to the extent set forth on Schedule 2.17(g)
of the Disclosure Schedule, none of the Company's employees has
suffered an "employment loss" (as defined in the WARN Act) in the
six-month period preceding the date hereof.
(d) The Company is in compliance in all material respects
with all Laws relating to employment or labor, including, without
limitation, ERISA, the WARN Act and those Laws relating to wages,
hours, collective bargaining, unemployment insurance, workers'
compensation, equal employment opportunity and payment and withholding
of Taxes.
2.18 Taxes. Except as and to the extent set forth in Schedule
2.18(a) of the Disclosure Schedule:
(a) The Company and any affiliated group (within the
meaning of Section 1504 of the Code) or similar group under state,
local or other applicable Law of which the Company is or has been a
member ("Affiliated Group") have filed, or caused to be filed, or
there have been filed on their behalf, in a timely manner, all Tax
Returns (as defined below) required to be filed on or before the date
hereof (taking into account any and all extensions) by or including
the Company and all such Tax Returns are complete and correct in all
material respects.
(b) All Taxes (as defined below) due and payable or
claimed to be due and payable from the Company have been timely paid
in full or are not yet delinquent. Since October 31, 1996, the
Company has not incurred any Taxes other than in the ordinary course
of business.
(c) The Company has complied in all respects with all
applicable Laws relating to the withholding of Taxes (including,
without limitation, withholding of Taxes pursuant to Sections 1441 and
1442 of the Code or similar provisions under any foreign Laws), has,
within the time and in the manner prescribed by such Laws, withheld
and paid over to the proper Governmental Authorities all amounts
required to be so withheld and paid over under all such applicable
Laws and has, within the time and within the manner prescribed by such
Laws, filed all Tax Returns with respect to such withholding.
(d) Except for liens for ad valorem Taxes and real and
personal property Taxes not yet delinquent, there are no Encumbrances
for Taxes upon the Company's assets.
(e) In respect of the Company's Taxes, the Company has
not requested, nor has any Person requested on its behalf, any
extension of time within which to file any Tax Return in respect of
any taxable year which has not since been filed.
(f) Except for Taxes in connection with leases of
personal property by or to the Company, the Company has no liability
for the Taxes of any other Person by Contract or as transferor or
successor.
(g) There are no outstanding waivers or extensions of
time regarding the application of the statute of limitations with
respect to any Taxes of the Company or Tax Returns required to be
filed by or including the Company.
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(h) No deficiency or claim has been formally proposed,
asserted or assessed with regard to any Taxes of the Company or Tax
Returns including or required to be filed by the Company, which has
not been resolved and paid in full.
(i) No audits or other administrative proceedings or
court proceedings are presently pending, and no written notification
of such proceedings has been received by the Seller or the Company,
with regard to any Taxes of the Company or Tax Returns required to be
filed by or including the Company.
(j) Except for leases of personal property by or to the
Company, the Company is not a party to, is not bound by, and has no
obligation under, any Contract providing for the allocation or sharing
of Taxes.
(k) No power of attorney has been granted with respect to
any matter relating to Taxes of the Company which is currently in
force.
(l) The Company is not a party to any Contract that could
result, separately or in the aggregate, in the payment of any "excess
parachute payments" within the meaning of Section 280G of the Code.
(m) The Company has not filed a consent pursuant to
Section 341(f) of the Code (or any predecessor provision) or agreed to
have Section 341(f)(2) of the Code apply to any disposition of a
subsection (f) asset (as such term is defined in Section 341(f)(4) of
the Code) owned by the Company.
(n) No property of the Company is property that the
Company or any Party is or will be required to treat as being owned by
another Person pursuant to the provisions of Section 168(f)(8) of the
Code (as in effect prior to amendment by the Tax Reform Act of 1986)
or is "tax-exempt use property" within the meaning of Section 168(h)
of the Code.
(o) The Company has not agreed to make, or is not
required to make, any adjustment under Section 481(a) of the Code.
(p) The Company has not participated in or cooperated
with an international boycott within the meaning of Section 999 of the
Code.
(q) The consolidated federal income Tax Returns of the
affiliated group (within the meaning of Section 1504 of the Code) of
which the Seller is the common parent (within the meaning of Section
1504 of the Code) and which includes the Company have been audited by
the IRS for all taxable periods through the taxable period ended
October 31, 1992, and the Company has been a member of such affiliated
group since December 30, 1981. The Indiana Corporation Income Tax
Returns which included the Company and which have been filed on a
combined basis with the Seller have been audited for all taxable
periods through the taxable period ended October 31, 1994 and the
Michigan Single Business Tax Return filed on behalf of the Company has
not been audited for any taxable periods. The Company does not file
and, to the knowledge of those Persons identified on Schedule 2.18(b)
of the Disclosure Schedule, is not required to file, income Tax
Returns in any other jurisdiction.
(r) The Seller has provided to Niagara and the Buyer or
their representatives (i) complete and correct copies of the relevant
portions of the consolidated federal income Tax Returns relating to
the Company and filed by or including the Company for the taxable
periods ended October 31, 1993, 1994 and 1995, (ii) complete and
correct copies of the state, local and foreign income Tax Returns,
(or, in the case of consolidated or combined state, local, and foreign
income Tax Returns the relevant portions thereof) relating to the
Company and filed by or including the Company for the taxable periods
ended October 31, 1993, 1994 and 1995, and (iii) all examination
reports, closing agreements and statements of deficiencies, if any,
relating to the audit of such Tax Returns or relevant portions thereof
by the IRS or the relevant state, local or foreign taxing authorities.
(s) For purposes of this Agreement, "Taxes" shall mean
and include all taxes, charges, fees, duties, levies, penalties or
other assessments imposed by any federal, state, local or foreign
taxing authority, including, but not limited to, income, gross
receipts, excise, property, sales, gains, use, license, capital stock,
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transfer, franchise, payroll, withholding, social security or other
taxes, including any interest, penalties or additions attributable
thereto; and "Tax Returns" shall mean and include all federal, state,
local and foreign tax returns, declarations, statements, reports,
schedules, forms, or information returns relating to Taxes or other
written information required to be supplied to a taxing authority in
connection with Taxes (including any amended Tax Returns).
2.19 Intellectual Property.
(a) The Company has the right and authority to use all of
the Intellectual Property (as defined below) that is used in the
Business as currently conducted or is the subject of an issued patent
or registra- tion, and the Company had the right and authority to use
all of the Intellectual Property used in the Business as heretofore
conducted, and, to the knowledge of those Persons identified on
Schedule 2.19(a) of the Disclosure Schedule, such use does not and did
not conflict with, infringe upon or violate any patent, trademark,
copyright, trade secret or other proprietary, personal or other right
of any other Person and no claim is existing or has been made in the
past three years to that effect. There are no, and, in the past three
years, have not been, any administrative, judicial, arbitration or
other adversary proceedings in any court, intellectual property
registry or other adjudicatory forum involving the Company and third
parties concerning the Intellectual Property or any third parties'
intellectual property.
(b) The Intellectual Property is not subject to any
Encumbrances, licenses or sublicenses in favor of third parties or
other Contracts, except the license agreements and other Contracts set
forth on Schedule 2.19(b) of the Disclosure Schedule, which sets forth
a complete and correct list of each Intellectual Property license
agreement and such other Contract presently in force, to which the
Company is a party or by which it is bound (whether as the licensor or
licensee), indicating, as to each, the parties (specifying which party
is the licensor and which party is the licensee), the title of the
agreement, the date executed, and the general subject matter. The
Seller does not have, and will not retain after the Closing, any
interest in the Intellectual Property.
(c) Schedule 2.19(c) of the Disclosure Schedule sets
forth a complete and correct list of each United States and foreign
(i) patent and patent application, indicating as to each, the country,
the patent number (or application number), the U.S. patent title, the
date issued, and the expiry date; (ii) registered trademark,
servicemark, or tradename and application therefor, indicating, as to
each, the country, the xxxx, the registration number (or application
number); (iii) copyright registration and copyright application
indicating, as to each, the country, the title of the work, the date
issued, and the copyright number; in each case owned in whole or in
part by the Company. Except as and to the extent set forth on
Schedule 2.19(c) of the Disclosure Schedule, the Company is the
current record owner of all registrations and applications set forth
on the Disclosure Schedule, the patents, applications and
registrations set forth on Schedule 2.19(c) of the Disclosure Schedule
are subsisting and in good standing, all maintenance fees currently
due have been paid, and no challenges to title thereto are pending
before the applicable intellectual property registry.
(d) To the knowledge of those Persons identified on
Schedule 2.19(d) of the Disclosure Schedule, the items of Intellectual
Property are valid and enforceable and there are no infringements of
the Company's rights in and to the Intellectual Property by any third
party. The Company has not entered into any consent, indemnification,
forbearance to xxx or settlement agreement with any Person relating to
any item of Intellectual Property or those of any third party. The
consummation of the transactions contemplated by this Agreement and
the Other Documents will not result in the loss or impairment of any
of the Company's rights to own or use any Intellectual Property.
(e) For purposes of this Agreement, "Intellectual
Property" shall mean and include all (i) U.S. and foreign (registered
and unregistered) patents, copyrights, trademarks, logos, proprietary
designs, phrases and other identifications, tradenames and service
marks used by the Company in the conduct of the Business including,
the name "LaSalle Steel Company" in those countries which it is
registered or currently in use and all variations thereon and all
logos, designs, phrases and other identifications or derivations
thereof used by the Company in the conduct of the Business, together
with the goodwill of the Business symbolized thereby, the right to xxx
for past infringement or misappropriation thereof, and all
applications and registrations therefor, (ii) software and computer
programs, and all user manuals, training manuals and technical
documentation relating
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to the Business, together with the Company's proprietary rights
therein and the right to xxx for past infringement or misappropriation
thereof and (iii) proprietary information, technology, trade secrets,
know- how, inventions, drawings and technical or marketing information
relating to the Business, together with the Company's proprietary
rights therein and the right to xxx for past infringement or
misappropriation thereof and (iv) any licenses relating to the use of
any of the items contained in (i)-(iii) of this Section 2.19(e).
2.20 Compliance with Environmental Laws.
(a) To the knowledge of those Persons identified on
Schedule 2.20(b) of the Disclosure Schedule, the Seller has provided
to Niagara or the Buyer all material information necessary to put
Niagara or the Buyer on notice of any and all of the following
environmental conditions affecting the Company's facilities:
(i) any actual or alleged non-compliance with
Environmental Laws (as defined below); and
(ii) any pending or threatened Environmental Claim
(as defined below).
(b) For purposes of this Agreement, information shall be
deemed to have been provided to Niagara and the Buyer if (i) it is set
forth on Schedule 2.20(a) of the Disclosure Schedule, (ii) it is set
forth in documents made available by the Seller, the Company or their
agents for inspection by Niagara, the Buyer or their agents, (iii) it
is identified in writing to Niagara, the Buyer or their agents or (iv)
Niagara or the Buyer has knowledge of, or is on notice of, the
information from any other source. Nothing in this Agreement shall
require the Seller to disclose communications protected from
disclosure by attorney-client privilege or any other lawful privilege,
it being agreed that a claim of privilege does not absolve the Seller
of any obligation to make disclosure of factual information if
required by Section 2.20(a) hereof.
(c) Notwithstanding any other provision of this
Agreement, the representations and warranties set forth in Section
2.20(a) are the only representations and warranties relating to
Environmental Matters made by the Seller in connection with the
transactions contemplated by this Agreement, and the Seller shall have
no responsibility with respect to any Environmental Matter other than
claims based on a breach of the representations and warranties
contained in Section 2.20(a) hereof.
(d) For purposes of this Agreement:
(i) "Environmental Claim" shall mean and include
any notice from any Person (including any employee of the
Company) of the existence of, or potential liability
(including without limitation, potential liability for
investigatory costs, cleanup costs, governmental response
costs, natural resources damages, property damages, personal
injuries, or penalties) arising out of, based on, or resulting
from (a) the presence or release into the environment, of any
Hazardous Material at any location, whether or not owned by
the Company or the Seller or (b) any violation or alleged
violation of any Environmental Law.
(ii) "Environmental Laws" shall mean and include
all federal, state, local and foreign Laws and regulations
relating to pollution or protection of human health or the
environment (including, without limitation, ambient air,
surface water, ground water, land surface or subsurface
strata), including without limitation, Laws relating to
emissions, discharges, releases or threatened releases of
Hazardous Materials, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials.
(iii) "Environmental Matters" shall mean and include
all costs, liabilities, obligations and proceedings arising
under the Environmental Laws or related to emissions, dis-
charges, releases or threatened releases of Hazardous
Materials, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials, and shall
include without limitation all Environmental Claims.
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(iv) "Hazardous Materials" shall mean and include
all chemicals, pollutants, contaminants, wastes, toxic
substances, and any other substances regulated as hazardous
under Environmental Laws.
2.21 Insurance Schedule 2.21(a) of the Disclosure Schedule sets
forth a complete and correct list as of the Closing Date of all primary, excess
and umbrella policies, bonds and other forms of insurance, and renewals
thereof, owned or held by or on behalf of or providing insurance coverage to or
for the benefit of the Company, copies of which have previously been provided
to Niagara and the Buyer or their representatives. All of such insurance
policies are in full force and effect, all premiums currently payable or
previously due have been paid, no notice of cancellation or termination has
been received with respect to any such policy and no assignment of proceeds or
Encumbrance exists with respect to the proceeds of any such policy. The unpaid
claims reported by the Company (or the Seller with respect to the Business) to
the insurer under such policies are set forth on Schedule 2.21(b) of the
Disclosure Schedule.
2.22 Bank Accounts Schedule 2.22 of the Disclosure Schedule sets
forth a complete and correct list of (i) the names and locations of all
financial institutions at which the Company (or the Seller with respect to the
Business) maintains a checking account, deposit account, securities account,
safety deposit box or other deposit or safekeeping arrangement, (ii) the number
or other identification of all such accounts and arrangements and (iii) the
names of all Persons authorized to draw thereon or have access thereto.
2.23 Customers and Suppliers There have been no material adverse
changes in the relationships between the Company and its customers and
suppliers since October 31, 1996. Except as and to the extent set forth on
Schedule 2.23(a) of the Disclosure Schedule, the Company and, with respect to
the Business, the Seller, have not been provided with any notice that any
significant supplier, manufacturer or customer intends to cease doing business
with the Company. To the knowledge of those Persons identified on Schedule
2.23(b) of the Disclosure Schedule, there are no facts or circumstances
(including, without limitation, the transactions contemplated by this Agreement
and the Other Documents) that could reasonably be expected to have a material
adverse affect on the Company's relationships with its customers, suppliers and
manufacturers.
2.24 Affiliate Transactions Schedule 2.24 of the Disclosure Schedule
sets forth a correct and complete list of all arrangements or transactions
since October 31, 1993 between the Company, on the one hand, and the Seller or
any affiliate or associate of the Company or the Seller, or any business or
entity in which the Seller, the Company, or any affiliate or associate
thereof, has or had any direct or indirect interest (collectively, the
"Seller's Affiliates"), on the other hand (other than (i) dividends and
distributions of profits as reflected on the Audited Financial Statements and
(ii) transactions entered into in the ordinary course of business consistent
with past practice), that involves an obligation or commitment on the part of
or for the benefit of the Company or such Seller's Affiliate of more than
$10,000 in any fiscal year. The Company and the Seller have terminated each of
the Quanex Management Agreement and the Intercompany Interest Bearing Open
Account Agreement, each dated February 24, 1993, by and between the Company and
the Seller, and such agreements are of no further force or effect.
2.25 Brokers Neither the Buyer nor the Company has or will have any
obligation to pay any broker's, finder's, investment banker's, financial
advisor's or similar fee or expenses in connection with this Agreement or the
Other Documents, or the transactions contemplated hereby or thereby, by reason
of any action taken by or on behalf of the Seller or, with respect to actions
taken on or before the Closing Date, the Company.
2.26 Disclosure The Seller has not knowingly failed to disclose to
the Buyer any facts material to the Company's business, results of operations,
assets, liabilities or financial condition. No representation or warranty by
the Seller in this Agreement and no statement by the Seller or the Company in
any Other Document (including the Schedules of the Disclosure Schedule),
contains any untrue statement of a material fact or omits to state any material
fact necessary, in order to make the statements made herein or therein, in
light of the circumstances under which they were made, not misleading.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF NIAGARA AND THE BUYER
Each of Niagara and the Buyer severally represents and warrants to the
Seller with respect to such Party as follows:
3.1 Organization and Standing Such Party is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and such Party has all requisite corporate power and authority to own,
lease and operate its properties and assets and to carry on its business and
operations as it is now being conducted.
3.2 Authorization; Binding Obligation Such Party has all requisite
corporate power and authority to execute and deliver this Agreement and the
Other Documents executed and delivered by such Party pursuant hereto or in
connection herewith and to consummate the transactions contemplated hereby and
thereby and to perform its obligations hereunder and thereunder. The execution
and delivery by such Party of this Agreement and the Other Documents executed
and delivered by such Party pursuant hereto or in connection herewith and the
consummation of the transactions contemplated hereby and thereby by such Party
have been duly and validly authorized by the Board of Directors of such Party
and no other corporate proceedings on the part of such Party are necessary to
authorize this Agreement or the Other Documents executed and delivered by such
Party pursuant hereto or in connection herewith or to consummate the
transactions contemplated hereby or thereby. This Agreement and the Other
Documents executed and delivered by such Party pursuant hereto or in connection
herewith have been validly executed and delivered by such Party and, assuming
the due authorization, execution and delivery by the Seller, the Company and
any other party thereto, constitute legal, valid and binding obligations of
such Party, enforceable against such Party in accordance with their respective
terms.
3.3 Consents and Approvals; No Violation Except for (i) filings or
recordings in public offices necessary in connection with the financing
arrangements of the Buyer and its affiliates and (ii) post-Closing securities
law filings, neither the execution and delivery of this Agreement and the Other
Documents executed and delivered by such Party pursuant hereto or in connection
herewith, nor the consummation by such Party of the transactions contemplated
hereby or thereby, nor compliance by such Party with any of the provisions
hereof or thereof (a) conflicts with any provision of the Certificate of
Incorporation or By-laws of such Party, (b) requires any Consent of, filing
with or notification to, or any other action by, any Governmental Authority by
such Party, (c) violates any Law of any Governmental Authority applicable to
such Party, or by which any of its businesses, property or assets is bound or
affected or (d) violates, breaches, or conflicts with, or constitutes (with or
without due notice or lapse of time or both) a default (or gives rise to any
right of termination, cancellation or acceleration or any obligation to pay or
result in the imposition of any Encumbrance upon any of the property) under,
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, Encumbrance, Contract, Permit, Order, or other instrument or
obligation to which such Party is a party or by which any of its businesses,
property or assets is bound or affected.
3.4 Brokers The Seller does not have, nor will the Seller have, any
obligation to pay any broker's, finder's, investment banker's, financial
advisor's or similar fee or expenses in connection with this Agreement or the
Other Documents, or the transactions contemplated hereby or thereby, by any
action taken by or on behalf of such Party.
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ARTICLE IV
ADDITIONAL COVENANTS
4.1 Benefit Matters.
(a) Salaried Pension Plan.
(i) As soon as practicable following the determination of
the Permitted Transfer Amount (as defined below) in accordance with
Section 4.1(a)(ii) hereof, the Seller shall direct the trustee of the
Quanex Corporation Salaried Employees' Pension Plan to transfer, in
cash, from the trust maintained under the Quanex Corporation Salaried
Employees' Pension Plan to the trust maintained under the LaSalle
Steel Company Salaried Employees' Pension Plan (the "Buyer Salaried
Pension Plan"), an amount equal to the amount required to be
transferred pursuant to Section 414(1) of the Code (determined as of
the Closing Date) with respect to current and former employees of the
Company set forth on Schedule 4.1(a) of the Disclosure Schedule (the
"Salaried Participants") and their beneficiaries calculated utilizing
such actuarial assumptions as are agreed upon by the enrolled
actuaries for the Quanex Corporation Salaried Employees' Pension Plan
and the Buyer Salaried Pension Plan, which agreement shall not be
withheld unreasonably (the "Permitted Transfer Amount"), provided,
however, that to the extent permitted by Section 414(1) of the Code,
the Permitted Transfer Amount shall be equal to $6,709,000 adjusted
for (i) contributions reflected on the Closing Balance Sheet and
benefit distributions made to the Salaried Participants and their
beneficiaries during the period (the "Adjustment Period") commencing
on October 31, 1996 and ending on the date on which the transfer
occurs (the "Transfer Date") and (ii) a pro rata share of the Quanex
Corporation Salaried Employees' Pension Plan actual investment
earnings or losses occurring during the Adjustment Period and Plan
administrative expenses actually paid from the Quanex Corporation
Salaried Employees' Pension Plan during the Adjustment Period (the
"Fixed Transfer Amount"); provided, further, that (i) if the Permitted
Transfer Amount is less than the Fixed Transfer Amount, then the
Permitted Transfer Amount shall be transferred from trust to trust,
and the Seller shall pay to the Buyer, in cash on the Transfer Date,
the excess of the Fixed Transfer Amount over the Permitted Transfer
Amount and (ii) if the Permitted Transfer Amount exceeds the Fixed
Transfer Amount, then the Permitted Transfer Amount shall be
transferred trust to trust, and the Buyer shall pay to the Seller, in
cash on the Transfer Date, the excess of the Permitted Transfer Amount
over the Fixed Transfer Amount.
(ii) The Seller shall deliver to Niagara and the Buyer (in
accordance with the provisions of Section 7.9 hereof) as soon as
reasonably practicable, and in any event within 60 days of the Closing
Date, a statement setting forth the proposed Fixed Transfer Amount and
Permitted Transfer Amount (collectively, the "Transfer Amounts") as
certified by the Seller's actuaries (the "Seller's Transfer Amount
Statement"). The costs and expenses incurred in connection with the
preparation and delivery of the Seller's Transfer Amount Statement
shall be borne by the Seller. Niagara and the Buyer shall have 45
days following the delivery of the Seller's Transfer Amount Statement
during which to submit to the Seller, in accordance with the
provisions of Section 7.9 hereof, a written statement setting forth
any dispute therewith (a "Buyer's Transfer Amount Statement"). The
costs and expenses incurred in connection with the preparation of a
Buyer's Transfer Amount Statement shall be borne by the Buyer. If
Niagara and the Buyer fail to submit a Buyer's Transfer Amount
Statement within such 45-day period, then the proposed Transfer
Amounts set forth on the Seller's Transfer Amount Statement, as
further adjusted in accordance with Section 4.1(a) hereof, shall be
deemed the Transfer Amounts. In the event Niagara and the Buyer
deliver a Buyer's Transfer Amount Statement, the Parties shall consult
and attempt to resolve, as soon as practicable, all disputes set forth
therein. In the event the Parties are unable to resolve any such
dispute within 30 days of the delivery of the Buyer's Transfer Amount
Statement, such dispute shall be resolved by a nationally recognized
independent actuarial firm mutually acceptable to the Parties (the
"Independent Actuarial Firm"). The Independent Actuarial Firm shall
be instructed to make its determination as promptly as practicable and
such determination shall be final and binding upon the Parties
enforceable by appropriate judicial proceedings. The fees and
expenses of the Independent Actuarial Firm shall be shared equally by
the Buyer and the Seller. The proposed Transfer Amounts set forth in
the Seller's Transfer Amount Statement, as modified to reflect the
resolution of disputes by the Parties or by the Independent Actuarial
Firm in accordance with this Section 4.1, shall be the "Transfer
Amounts".
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(iii) From time to time during the Adjustment Period,
Niagara and the Buyer on the one hand, and the Seller on the other
hand, shall give the other, and any of its or their independent
actuaries and authorized representatives, reasonable access during
normal business hours to the properties, books, records and personnel
of the Seller and the Company, and shall use all reasonable efforts to
cause their independent actuaries to make available to each such other
Party and its or their authorized representatives their work papers
generated in connection with the preparation of the Seller's Transfer
Amount Statement and any Buyer's Transfer Amount Statement for
purposes of resolving any disputes concerning the Transfer Amounts.
(iv) As soon as reasonably practicable, the Parties shall
cooperate with each other in making any required filings, including
Forms 5310-A (with all attachments), reflecting the transfer of assets
and assumption of liabilities pursuant to this Section 4.1(a). In
connection and concurrent with such transfer, the liabilities under
the Quanex Corporation Salaried Employees' Pension Plan in respect of
the Salaried Participants shall be transferred to the Buyer Salaried
Pension Plan.
(b) Savings Plans. As soon as reasonably practicable,
and in any event within 90 days of the Closing Date, each participant
in the Quanex Corporation Employee Savings Plan or the Quanex
Corporation Hourly Bargaining Unit Employee Savings Plan
(collectively, the "Seller Savings Plans") who is an employee or
former employee of the Company shall have the right to elect to
receive a distribution of all or a portion of such employee's account
balance in the applicable Seller Savings Plan (subject to, and in
accordance with, the provisions of the respective plan and applicable
Law). The Buyer shall take any and all necessary action to cause the
trustee of the Niagara Cold Drawn 401(k) Retirement Plan (the "Buyer
Savings Plan"), if requested to do so by a distributee, to accept the
"roll over" of all or a portion of any such distribution from the
applicable Seller Savings Plan.
(c) Group Benefits Plan. The Buyer hereby assumes all
liabilities under the Quanex Corporation Group Benefits Plan for all
participants who are employees or former employees of the Company, as
set forth on Schedule 4.1(b) of the Disclosure Schedule, and their
dependents, as of the Closing Date (the "LaSalle Group Benefit Plan
Participants") subject to the terms and conditions of such plan.
Effective as of the Closing, the Seller shall (i) cause the Company to
terminate its participation as an adopting employer with respect to
the Quanex Corporation Group Benefits Plan and (ii) cause that portion
of the Quanex Corporation Group Benefit Plan covering the LaSalle
Group Benefits Plan Participants to be spun-off into a new welfare
benefit plan entitled the "LaSalle Steel Company Group Benefits Plan"
which shall be sponsored by the Company and which, as of the Closing,
shall otherwise be substantially identical to the Quanex Corporation
Group Benefits Plan.
(d) Deferred Compensation Plan. Effective as of the
Closing, the Seller shall cause the Company to terminate its
participation as an adopting employer with respect to the Quanex
Corporation Deferred Compensation Plan maintained for the benefit of
current and former key salaried employees of the Seller and its
subsidiaries and their beneficiaries. None of the Company, the Buyer
or Niagara shall assume any liability with respect to the Quanex
Corporation Deferred Compensation Plan.
(e) Executive Incentive Compensation Plan. Effective as
of the Closing, the Seller shall cause the Company to terminate its
participation as an adopting employer with respect to the Quanex
Corporation Executive Incentive Compensation Plan maintained for the
benefit of current and former key salaried employees of the Seller and
its subsidiaries and their beneficiaries. None of the Company, the
Buyer or Niagara shall assume any liability with respect to the Quanex
Corporation Executive Incentive Compensation Plan.
(f) Management Incentive Program. Effective as of the
Closing, the Seller shall cause the Company to terminate its
participation as an adopting employer with respect to the Quanex
Corporation Management Incentive Program maintained for the benefit of
current and former employees of the Seller and its subsidiaries and
their beneficiaries. Effective as of the Closing, the Seller shall
cause that portion of the Quanex Corporation Management Incentive
Program covering current and former salaried employees of the Company
and their beneficiaries to be spun-off into a new deferred
compensation plan entitled the "LaSalle Steel Company Management
Incentive Program" which shall be solely a contractual obligation of
the Company and which, as of the Closing, shall otherwise be
substantially identical to the Quanex Corporation Management Incentive
Program.
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(g) Supplemental Salaried Employees' Pension Plan.
Effective as of the Closing, the Seller shall cause the Company to
terminate its participation as an adopting employer with respect to
the Quanex Corporation Supplemental Salaried Employees' Pension Plan
maintained for the benefit of current and former key salaried
employees of the Seller and its subsidiaries and their beneficiaries.
Except as and to the extent reflected as a liability on the Closing
Balance Sheet, none of the Company, the Buyer or Niagara shall assume
any liability with respect to the Quanex Corporation Supplemental
Salaried Employees' Pension Plan.
(h) Severance Allowance Policy. Effective as of the
Closing, the Seller shall cause the Company to terminate its
participation as an adopting employer with respect to the Quanex
Corporation Severance Allowance Policy maintained for the benefit of
current employees of the Seller and its subsidiaries. None of the
Company, the Buyer or Niagara shall assume any liability with respect
to the Quanex Corporation Severance Allowance Policy.
4.2 Further Assurances; Cooperation.
(a) Each of the Parties shall from time to time after the
Closing, upon the request of any other Party and without further
consideration, execute, acknowledge and deliver in proper form such
further instruments, and take such further actions, as such other
Party may reasonably require, to carry out effectively the intent of
this Agreement and the Other Documents.
(b) The Seller shall, from time to time after the
Closing, upon the request of Niagara, the Buyer or their designee, and
without further consideration, execute, acknowledge and deliver in
proper form such further instruments and take such further actions as
Niagara or the Buyer may reasonably require, to record the Company or
its designee as the record owner of any and all Intellectual Property
owned by the Company which may currently be standing, as of record, in
the name of the Company's predecessor in interest.
(c) The Parties shall cooperate with each other in
connection with any claim, action, suit, proceeding, inquiry or
investigation by any other Person which relates to the execution and
delivery of this Agreement or the Other Documents, or the consummation
of the transactions contemplated hereunder and thereunder.
(d) For a period of seven years following the Closing
Date, each of the Parties will retain any records or files within its
control after the Closing relating to the operations of the Company
prior to the Closing (including those relating to the Taxes of the
Company). During such seven-year period, each Party shall afford any
other Party, and such Party's counsel, accountants and other
representatives, reasonable access to such records during normal
business hours for any proper purpose.
4.3 Notification of Certain Matters. Niagara and the Buyer on
the one hand, and the Seller on the other hand, shall promptly notify the
other, in the manner provided in Section 7.9 hereof, of (i) any claim, action,
suit, proceeding, inquiry or investigation pending or, to such Party's
knowledge, threatened which relates to the execution and delivery of this
Agreement or the Other Documents, or the consummation of the transactions
contemplated hereunder or thereunder, (ii) any circumstance or development
which could adversely impair or affect its ability to perform its obligations
under this Agreement or the Other Documents, (iii) any notice or other
communication from any Person alleging that the consent of such Person is or
may be required in connection with the transactions contemplated by this
Agreement or the Other Documents or (iv) any notice or other communication from
any Governmental Authority in connection with the transactions contemplated by
this Agreement or the Other Documents.
4.4 Confidentiality/Non-Competition.
(a) The Seller acknowledges that Niagara and the Buyer
would be irreparably damaged if Company Information (as defined below)
were to be disclosed to or utilized on behalf of any Person, firm,
corporation or other business organization that competes in any
respect with the Business. As used herein, "Company Information"
shall include, without limitation, any and all proprietary or
confidential information pertaining to the Company or its business or
activities of any nature, including, without limitation, any
information relating to (i) the Company's operation or management,
finances or financial affairs, profits, profit
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margins, capital requirements, business methods, organization,
procedures or Contracts, (ii) the Company's customers (including
customer lists), suppliers or sources of supply, marketing strategies
or data, products, product plans, service lines or pricing, (iii) the
Company's personnel (including medical and salary information) and
(iv) the Intellectual Property. The Seller covenants and agrees that
it will not, and will cause its agents, affiliates, advisors,
directors, officers and employees (collectively, "Representatives")
not to, at any time, without the prior written consent of Niagara, use
or disclose any Company Information, except to employees and other
authorized Representatives of Niagara or the Buyer; provided, however,
that Company Information shall not include any information which (i)
was or becomes generally available to or known by the public (other
than as a result of a disclosure directly or indirectly by the Seller
or its Representatives) or (ii) is available to the Seller on a
non-confidential basis from a source other than Niagara, the Buyer or
their Representatives; provided, further, however, that the Seller may
use or disclose Company Information to the extent (i) required by Law
and (ii) necessary in connection with its Tax filing obligations. In
the event that the Seller or any of its Representatives are legally
compelled (by deposition, interrogatory, request for documents,
subpoena, civil investigative demand or otherwise) to disclose any
Company Information, such Person shall provide Niagara and the Buyer
with prompt prior written notice of such demand so that Niagara or the
Buyer may seek a protective order or other appropriate remedy or waive
compliance with the provisions of this Section 4.4(a). If a
protective order or other remedy is not obtained and Niagara has not
waived compliance with these provisions, the Seller or its
Representatives, as the case may be, shall furnish only that portion
of such Company Information which it is advised by its legal counsel
is legally required to be disclosed.
(b) The Seller agrees that for a period of two years
following the Closing Date, it shall not directly or indirectly
manufacture or invest in any entity which manufactures cold drawn or
chrome-plated steel bars.
(c) The Seller agrees that for a period of one year
following the Closing Date, it shall neither solicit, persuade or
induce any person employed by the Company to terminate his or her
employment with the Company, nor, except for Persons whose employment
has been terminated by the Company, employ any person employed by the
Company as of the Closing Date or in the three-month period prior
thereto without the consent of Niagara.
(d) The Seller acknowledges and agrees that the
provisions of this Section 4.4 are reasonable and necessary for the
protection of Niagara, the Buyer and the Company. It is understood
and agreed that money damages would not be a sufficient remedy for any
breach of this Section 4.4 by the Seller or its Representatives, and
that Niagara and the Buyer shall be entitled to specific performance
as a remedy for any such breach. Such remedy shall not be deemed to
be the exclusive remedy for any breach of this Section 4.4 but shall
be in addition to all other remedies available pursuant to the terms
of this Agreement.
4.5 Expenses. Except as otherwise specifically provided for
herein or in Paragraph 7 of the Letter of Intent (as defined in Section 7.3
hereof), each Party shall be solely responsible for all expenses incurred by it
or on its behalf in connection with the preparation and execution of this
Agreement and the Other Documents and the consummation of the transactions
contemplated hereby and thereby, including, without limitation, the fees and
expenses of its counsel, consultants, accountants, brokers, finders, investment
bankers, financial advisors and other representatives and advisors.
ARTICLE V
TAX MATTERS
5.1 Section 338(h)(10) Election.
(a) The Parties shall jointly make a timely election pursuant to
Section 338(h)(10) of the Code and Section 1.338(h)(10)-1 of the United States
Treasury Regulations (the "Regulations") and any comparable election under
applicable state or local Law (collectively, the "Section 338(h)(10) Election")
with respect to the purchase by the Buyer of the Shares pursuant hereto.
Subject to subsection (b) of this Section 5.1, as soon as practicable after the
Closing, with respect to such federal Section 338(h)(10) Election, the Parties
shall prepare a Form 8023-A (with all attachments), Niagara and the
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Seller shall execute such Form 8023-A, and Niagara shall promptly file or cause
to be filed such executed Form 8023-A and provide written evidence of such
filing to the Seller. In addition, the Seller, the Company, Niagara and the
Buyer shall, as promptly as practicable following the Closing, cooperate with
each other to take all actions necessary and appropriate (including filing such
additional forms, returns, elections, schedules and other documents as may be
required by applicable state or local Law) to effect and preserve a timely
Section 338(h)(10) Election in accordance with any comparable provision of
applicable state or local Law, and the Parties responsible for filing any such
Section 338(h)(10) Election under applicable state or local Law shall promptly
file or cause to be filed such Section 338(h)(10) Election with the appropriate
taxing authority and provide written evidence of such filing to the other
Parties. The Parties shall report the purchase by the Buyer of the Shares
consistent with the Section 338(h)(10) Election, and no Party shall take any
position to the contrary thereto in any Tax Return, any proceeding before any
taxing authority or otherwise, except in connection with the resolution of a
Tax Dispute (as defined in Section 5.7 hereof) in accordance with the
provisions of Section 5.7 hereof. In the event that any Section 338(h)(10)
Election is disputed by any taxing authority, the Party receiving notice of
such dispute shall promptly notify and consult with the other Parties
concerning such dispute.
(b) In connection with the Section 338(h)(10) Election, the
Parties shall determine, as promptly as reasonably practicable following the
Closing, the allocation of the Purchase Price and the liabilities of the
Company (and the liabilities to which the Company's assets are subject) as of
the beginning of the day after the Closing Financial Statement Date (other than
liabilities that were neither liabilities of the Company nor liabilities to
which the Company's assets were subject before the day after the Closing
Financial Statement Date) among the assets of the Company. The Parties shall
prepare and file all Tax Returns to be filed with any taxing authority in a
manner consistent with such allocation and shall take no position inconsistent
with such allocation in any Tax Return, any proceeding before any taxing
authority or otherwise, except in connection with the resolution of a Tax
Dispute in accordance with the provisions of Section 5.7 hereof. In the event
that such allocation is disputed by any taxing authority, the Party receiving
notice of such dispute shall promptly notify and consult with the other Parties
concern- ing such dispute.
5.2 Tax Indemnity by the Seller .
(a) Without duplication, and subject to the provisions of this
Article V, the Seller shall indemnify, defend and hold harmless each Buyer
Indemnified Party (as defined in Section 6.2 hereof), from and against any and
all Losses (as defined in Section 6.2 hereof) asserted against, resulting to,
imposed upon, or incurred by such Buyer Indemnified Party, directly or
indirectly, by reason of or resulting from:
(i) any and all Taxes imposed with respect to (A) any
consolidated federal income Tax Return of any "affiliated group" (as
such term is defined in Section 1504 of the Code) which includes or
included the Company for all periods or portions thereof ending on or
before the Closing Financial Statement Date, and (B) any state, local
or foreign consolidated, combined, affiliated or unitary income Tax
Return of an applicable group of corporations that includes or
included the Company for all periods or portions thereof ending on or
before the Closing Financial Statement Date, such Tax Returns
described in clauses (A) and (B) of this Section 5.2(a)(i) including,
but not being limited to, the Tax Returns described in Section 5.6(a);
(ii) any and all Taxes (other than Taxes described in
Section 5.2(a)(i)) imposed upon the Company with respect to any
taxable period ending on or before the Closing Financial Statement
Date ("Pre-Closing Periods");
(iii) any and all Taxes (other than Taxes described in
Section 5.2(a)(i)) imposed upon the Company with respect to any
taxable period beginning before and ending after the Closing Financial
Statement Date ("Straddle Periods") with respect to the portion of
such Straddle Period ending on the Closing Financial Statement Date
(the "Pre-Closing" portion of such Straddle Period);
(iv) the breach of or any inaccuracy in any of the
representations and warranties of the Seller contained in or made
pursuant to Section 2.18 (Taxes) hereof;
(v) the breach or nonperformance of any covenant or
agreement of the Seller contained in or made pursuant to this Article
V;
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(vi) any and all Taxes imposed upon the Company pursuant
to Treasury Regulations Section 1.1502-6 (or any comparable provision
under state, local, or foreign Tax Law imposing several liability upon
members of a consolidated, combined, affiliated or unitary group (a
"Group")) by virtue of the Company having been a member of a Group
that includes the Seller; and
(vii) any and all Taxes imposed upon the Company as a
result of the Section 338(h)(10) Election.
(b) The indemnifications in favor of the Buyer Indemnified Parties
contained in subsections (ii), (iii), (iv) and (v) of Section 5.2(a) hereof
shall not be effective until the aggregate amount of all Losses in respect
thereof exceeds the Tax Accrual (as defined herein), and then only to the
extent such Losses exceed the Tax Accrual. For purposes of this Agreement,
"Tax Accrual" shall mean and include the aggregate amount of accruals, reserves
and provisions for Taxes on the Closing Balance Sheet and the worksheets
thereto, it being understood that the Tax Accrual shall not include amounts on
the Closing Balance Sheet for "Deferred Income Taxes."
(c) Except as provided in Sections 5.2(a)(vi) and (vii) hereof,
nothing contained in this Section 5.2 shall require the Seller to indemnify any
Buyer Indemnified Party for any Losses with respect to any Taxes with respect
to any taxable period beginning after the Closing Financial Statement Date (a
"Post-Closing Period") or any portion beginning after the Closing Financial
Statement Date of any Straddle Period (a "Post-Closing" portion of such
Straddle Period).
5.3 Tax Indemnity by Niagara and the Buyer.
(a) Without duplication, and subject to the provisions of this
Article V, Niagara and the Buyer shall, jointly and severally, indemnify,
defend and hold harmless each Seller Indemnified Party (as defined in Section
6.3 hereof) from and against any and all Losses asserted against, resulting to,
imposed upon or incurred by such Seller Indemnified Party, directly or
indirectly, by reason of or resulting from:
(i) to the extent provided in Section 5.3(b), any and all
Taxes imposed upon the Company with respect to any Pre-Closing Period
and for the Pre-Closing portion of any Straddle Period other than
Taxes de- scribed in Sections 5.2(a)(i), (vi) and (vii) hereof;
(ii) any and all Taxes imposed upon the Company with
respect to any Post-Closing Period and the Post-Closing portion of any
Straddle Period, other than Taxes described in Sections 5.2(a)(vi) and
(vii) hereof;
(iii) the breach or nonperformance of any covenant or
agreement of Niagara or the Buyer contained in or made pursuant to
this Article V.
(b) The indemnifications in favor of the Seller Indemnified
Parties contained in subsection (i) of Section 5.3(a) hereof shall not exceed,
in the aggregate, the amount of the Tax Accrual.
5.4 Transfer Taxes. Notwithstanding anything contained in this
Agreement to the contrary, any and all sales, use, transfer, stamp,
documentary, gains and other similar Taxes, and any transfer, recording or
similar fees and charges, imposed in connection with the consummation of the
transactions contemplated by this Agreement (collectively, "Transfer Taxes")
shall be borne one-half by the Buyer and one-half by the Seller. The Parties
agree to use their commercially reasonable efforts to minimize the Transfer
Taxes. Each of the Buyer and the Seller shall cause to be prepared and timely
filed all Tax Returns relating to Transfer Taxes ("Transfer Tax Returns") which
such Party has primary responsibility for filing under applicable Law and shall
cause all such Transfer Taxes to be duly and timely paid in full. The Party
that has prepared any such Transfer Tax Return shall cause each such Transfer
Tax Return, together with all relevant work papers and other information, to be
delivered to the other Parties for their review and approval no later than 30
days prior to the due date for the filing of such Transfer Tax Return (giving
effect to any and all extensions thereof). As between the Buyer and the
Seller, the Party not required to file such Transfer Tax Return under this
Section 5.4 shall pay to the other such Party's share of the Transfer Taxes due
and payable not later than seven days prior to the due date for payment of such
Transfer Taxes (giving effect to any and all extensions thereof).
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5.5 Allocation of Certain Taxes. In the case of any Tax that
relates to any Straddle Period, the portion of such Tax attributable to the
Pre-Closing and Post-Closing portions of such Straddle Period shall be
determined as follows (provided, however, that this Section 5.5 shall not apply
with respect to any and all Taxes described in Sections 5.2(a)(vi) or (vii)
hereof):
(a) In the case of any franchise Tax based on capital and any ad
valorem Tax, the portion attributable to the Pre-Closing portion of such
Straddle Period shall be the amount of such Tax for the entire taxable period
multiplied by a fraction the numerator of which is the number of days
(including the Closing Financial Statement Date) in the Pre- Closing portion of
such Straddle Period and the denominator of which is the number of days in the
entire taxable period. The amount of such Tax remaining after subtracting the
portion attributable to the Pre-Closing portion of such Straddle Period (as
determined in accordance with the preceding sentence) shall be the amount of
such Tax attributable to the Post-Closing portion of such Straddle Period.
(b) In the case of any such Tax not described in Section 5.5(a)
above, the portion attributable to the Pre- Closing portion of such Straddle
Period shall be determined on the basis of an interim closing of the books as
of and including the Closing Financial Statement Date, provided, however, that
for purposes of this Section 5.5(b), no amount attributable to the Section
338(h)(10) Election shall be taken into account.
5.6 Return Filings, Refunds and Credits.
(a) The Seller shall (i) cause the Company to be included in the
consolidated federal income Tax Returns of the affiliated group (within the
meaning of Section 1504 of the Code) of which the Seller is the common parent
(within the meaning of Section 1504 of the Code) and the Indiana Corporation
Income Tax Returns (filed on a combined basis) that include the Seller and the
Company for (A) the taxable year of the Seller ended October 31, 1996 and (B)
the taxable year of the Seller that will end on October 31, 1997 (the "1997
Consolidated Returns"), which 1997 Consolidated Returns will include the tax
items of the Company for the portion of such taxable year ending on the Closing
Financial Statement Date, (ii) timely file such Tax Returns and (iii) timely
pay any Taxes shown as due on such Tax Returns.
(b) With respect to each Tax Return (other than the Tax Returns
described in Section 5.6(a) hereof) of the Company for Pre-Closing Periods
which have not been filed on or before the Closing Date,
(i) the Seller shall prepare or cause to be prepared each
such income Tax Return and franchise Tax Return; and
(ii) the Buyer shall prepare or cause the Company to
prepare all Tax Returns not described in Section 5.6(b)(i) hereof (to
the extent not prepared before the Closing Date).
Subject to Sections 5.2, 5.3, 5.6(d) and 5.6(e) hereof, the Buyer shall timely
file or cause the Company to timely file the Tax Returns described in this
Section 5.6(b) and shall timely pay or cause to be timely paid all Taxes shown
as due thereon. Subject to Sections 5.6(d) and 5.6(e) hereof, seven days prior
to the due date for the filing of each Tax Return referred to in this Section
5.6(b), the Seller shall pay to the Company the excess, if any, of (i) the
aggregate amount which will have been paid (when the amount of Taxes shown as
due on such Tax Return has been paid) by Niagara, the Buyer or the Company (to
any Seller Indemnified Party or to any taxing authority, as applicable)
pursuant to Section 5.3(a)(i) (including, but not limited to, payments made
under this Section 5.6) over (ii) the sum of (x) the Tax Accrual and (y) the
total aggregate amount previously paid to any Buyer Indemnified Party pursuant
to this Section 5.6.
(c) Subject to Sections 5.2, 5.3 and 5.6(d) and 5.6(e) hereof, the
Buyer shall prepare or cause to be prepared each Tax Return (other than the Tax
Returns described in Section 5.6(a) hereof) with respect to the Company for
Straddle Periods, shall timely file or cause the Company to timely file all
such Tax Returns, and shall timely pay or cause to be timely paid all Taxes
shown as due thereon. Subject to Section 5.6(d) and 5.6(e) hereof, seven days
prior to the due date for the filing of each Tax Return referred to in this
Section 5.6(c), the Seller shall pay to the Company the excess, if any, of (i)
the aggregate amount which will have been paid (when the amount of Taxes shown
as due on such Tax Return has been paid) by the Buyer or the Company (to a
Seller Indemnified Party or to any taxing authority, as applicable) pursuant to
Section 5.3(a)(i) (including, but not limited to, payments made under this
Section 5.6) over (ii)
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the sum of (x) the Tax Accrual and (y) the total aggregate amount previously
paid to any Buyer Indemnified Party pursuant to this Section 5.6.
(d) The Tax Returns referred to in Sections 5.6(b) and 5.6(c)
hereof shall be prepared in a manner consistent with past practice (including,
without limitation, as to accounting methods and methods of measuring sales,
income, property values or other relevant items), unless a contrary treatment
is required by an intervening change in applicable Law. The Seller shall cause
any Tax Return that is described in Section 5.6(b)(i) hereof, together with all
relevant work papers and any other information, to be delivered to Niagara and
the Buyer (in accordance with the provisions of Section 7.9 hereof) for their
review and approval at least 30 calendar days prior to the due date (giving
effect to any and all extensions thereof) for filing such Tax Return. The
Buyer shall cause any Tax Return that is described in Section 5.6(b)(ii) or
5.6(c) hereof, together with all relevant work papers and other information, to
be delivered to the Seller (in accordance with the provisions of Section 7.9
hereof) for its review and approval at least 30 calendar days prior to the due
date (giving effect to any and all extensions thereof) for filing such Tax
Return. With respect to any Tax Return described in Section 5.6(c) hereof
which is delivered to the Seller pursuant to the previous sentence, the Buyer
shall simultaneously deliver to the Seller (in accordance with the provisions
of Section 7.9 hereof) a statement (the "Buyer's Tax Statement") calculating
the portion of the Taxes shown as due on such Tax Return that is attributable
to the Pre-Closing portion of the Straddle Period under Section 5.5 hereof.
The costs and expenses incurred in connection with the preparation and delivery
of the Tax Returns referred to in Section 5.6(a) and (b)(i) hereof shall be
borne by the Seller. The costs and expenses incurred in connection with the
preparation and delivery of the Tax Returns referred to in Section 5.6(b)(ii)
and (c) hereof and the Buyer's Tax Statement shall be borne by the Buyer.
(e) The amount of Taxes shown to be due on any Tax Return
described in Section 5.6(b) or 5.6(c) hereof and on any Buyer's Tax Statement
related thereto described in Section 5.6(d) hereof shall be final and binding
upon the Parties, unless whichever of the Parties did not prepare or cause the
preparation of such Tax Return or the Buyer's Tax Statement, as the case may be
(the "Other Party"), shall have delivered to the Party that prepared or caused
the preparation of such Tax Return (within 10 calendar days after the date of
the Other Party's receipt of such Tax Return and, if applicable, the Buyer's
Tax Statement related thereto) a written report containing all changes that the
Other Party proposes to make to such Tax Return and, if applicable, to the
Buyer's Tax Statement related thereto, which report shall set forth in
reasonable detail the basis for such changes. The Parties shall undertake to
resolve any issues raised in any such report described in the first sentence of
this paragraph prior to the due date (including any extension thereof) for
filing such Tax Return and to mutually consent to the filing of such Tax Return
and, if applicable, to agree on the determination to be set forth in the
Buyer's Tax Statement related thereto, in which case the information and total
amount of Taxes shown to be due on such agreed Tax Return or, if applicable,
shown on such Buyer's Tax Statement (as agreed to) shall be final and binding
on the Parties. In the event the Parties are unable to resolve any dispute by
the date that is 15 calendar days prior to the due date for filing of the Tax
Return in question (including any extension thereof), the Parties shall jointly
engage the Independent Accounting Firm to make its independent determination
with respect to the item or items in dispute and the amount or amounts related
thereto. The Buyer and the Seller shall each bear and pay one-half of the fees
and other costs charged by the Independent Accounting Firm to perform such
function. If the Independent Accounting Firm is so engaged, the Parties agree
to provide the Independent Accounting Firm with all books, records and other
information relevant to the determination of the disputed items and the
Independent Accounting Firm shall be instructed to make its determination as
soon as possible. The Independent Accounting Firm's determination with respect
to the Tax treatment of any disputed item shall be made on the basis of the Tax
treatment for which the Independent Accounting Firm determines there is
substantial authority (or, if there is substantial authority for two or more
Tax treatments of such disputed item, the Tax treatment for which the weight of
the authorities supporting such Tax treatment is most substantial in relation
to the weight of authorities supporting the other Tax treatment or treatments).
The determination of the Independent Accounting Firm shall be final and binding
on the Parties enforceable by appropriate judicial proceedings. In any case
where a disputed item has not been resolved (either by mutual agreement of the
Parties or by a determination of the Independent Accounting Firm) 10 calendar
days prior to the due date (including any extension thereof) for filing such
Tax Return, then the Party required to file such Tax Return under Section
5.6(b) or 5.6(c) hereof, as the case may be, shall cause such Tax Return to be
filed on the due date (including any extension thereof) for filing such Tax
Return without the Parties' mutual agreement or the Independent Accounting
Firm's determination with respect thereto and (i) the Independent Accounting
Firm shall make a determination with respect to any such disputed item and (ii)
the amount of Taxes determined to be due with respect to such Tax Return or, if
applicable, determined to be properly set forth on the Buyer's Tax Statement
related to such Tax Return, shall be the amount of Taxes that would have been
due on such Tax Return or, if applicable, be the amount of Taxes that would be
properly set forth on the Buyer's Tax
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Statement related to such Tax Return, after giving effect to the Independent
Accounting Firm's determination. Any overpayments or underpayments as between
the Parties shall be equitably adjusted to take into account the determination
of the Independent Accounting Firm, with interest on any such payments to be
paid, from the date of payment, at the rate charged by the IRS for
underpayments under Section 6621 of the Code.
(f) Any refunds or credits of Taxes of the Company for any
Pre-Closing Period or any Pre-Closing portion of any Straddle Period together
with any after-tax interest received or credited thereon shall be for the
account of the Seller and shall be paid by Niagara, the Buyer or the Company to
the Seller within 10 days after such Person receives or utilizes such refund or
credit (or interest thereon). Any refunds or credits of Taxes of the Company
for any Post- Closing Period or any Post-Closing portion of any Straddle Period
together with any after-tax interest received or credited thereon shall be for
the account of the Buyer and shall be paid by the Seller to the Buyer within
ten days after the Seller receives or utilizes such refund or credit (or
interest thereon). In applying the provisions of the first two sentences of
this Section 5.6(f), any refunds or credits of Taxes of the Company for any
Straddle Period together with any after-tax interest received or credited
thereon shall be allocated between the Seller and the Buyer in a manner
consistent with Section 5.5 hereof.
5.7 Tax Contests.
(a) If any taxing authority proposes any adjustment or questions
the treatment of any item, which adjustment or question could, if pursued
successfully, result in or give rise to solely a claim for indemnification
against the Seller by any Buyer Indemnified Party under Section 5.2 hereof (a
"Seller Tax Claim"), solely a claim for indemnification against Niagara or the
Buyer by any Seller Indemnified Party under Section 5.3 hereof (a "Buyer Tax
Claim"), or both a Seller Tax Claim and a Buyer Tax Claim (a "Joint Tax
Claim"), then the Party first receiving notice of such adjustment or question
(a "Tax Dispute") shall promptly notify the other Parties in writing of such
Tax Dispute.
(b) In the case of a Buyer Tax Claim, the Buyer shall have the
right, at its sole cost and expense, to control the defense, prosecution,
settlement or compromise of the Tax Dispute underlying such Buyer Tax Claim.
(c) In the case of a Seller Tax Claim, the Seller shall have the
right, at its sole cost and expense, to control the defense, prosecution,
settlement or compromise of the Tax Dispute underlying such Seller Tax Claim.
(d) In the case of a Joint Tax Claim, the Buyer Indemnified Party
and the Seller Indemnified Party shall first attempt to separate such Joint Tax
Claim into two, one involving the Buyer Tax Claim portion thereof (which shall
be subject to the provisions of Section 5.7(b) hereof) and the other involving
the Seller Tax Claim portion thereof (which shall be subject to the provisions
of Section 5.7(c) hereof). If the Buyer Indemnified Party and the Seller
Indemnified Party are not successful in accomplishing such separation, the
Buyer Indemnified Party and the Seller Indemnified Party shall, and shall cause
their respective affiliates to, consult and cooperate with each other in
controlling such audit, examination, investigation, or administrative, court,
or other proceeding, shall not compromise or settle such Joint Tax Claim
without the other's prior written consent (which consent shall not be
unreasonably withheld or delayed), and shall share the costs and expenses
associated with such Joint Tax Claim on such equitable basis as the Parties
shall mutually agree. If the Buyer Indemnified Party and the Seller
Indemnified Party cannot agree with respect to any matter involving any such
Joint Tax Claim, the Buyer Indemnified Party and the Seller Indemnified Party
shall jointly engage independent tax counsel that is mutually acceptable to the
Buyer Indemnified Party and the Seller Indemnified Party to make its decision
with respect to such matter, which decision shall be final and binding on the
Parties, the Buyer Indemnified Party and the Seller Indemnified Party. The
Buyer and the Seller shall each bear and pay one-half of the fees and other
costs charged by such counsel.
(e) The Party that controls a Tax Dispute under the provisions of
this Section 5.7 shall keep the other Parties informed of all significant
events and developments relating to such Tax Dispute and the other Parties, or
their authorized representatives, shall be entitled, at their own expense, to
attend (but not control) all conferences, meetings and proceedings with the
relevant taxing authority relating to such Tax Dispute.
5.8 Cooperation. The Parties shall, and Niagara and the Buyer
shall cause the Company to, cooperate, and shall cause their respective
directors, officers, employees, agents, accountants and representatives to
cooperate, in preparing and filing all Tax Returns (including amended Tax
Returns and claims for refund), in handling audits,
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examinations, investigations, and administrative, court or other proceedings
relating to Taxes covered by this Agreement, in resolving all disputes, audits
and refund claims with respect to such Tax Returns and Taxes, and any earlier
Tax Returns and Taxes of the Company, and in all other Tax matters to which
this Agreement relates, in each case including making employees available to
assist the requesting Party, timely providing information reasonably requested,
maintaining and making available to each other all records necessary in
connection therewith, and the execution and delivery of IRS Form 2848 (or a
successor form or forms) and comparable forms for foreign, state and local Tax
purposes, as appropriate, when the requesting party reasonably requires such
forms in connection with any Tax Dispute and claims for refund. Any
information obtained by a Party or its affiliates from another Party or its
affiliates in connection with any Tax matters to which this Agreement relates
shall be kept confidential, except (i) as may be otherwise necessary in
connection with the filing of Tax Returns or claims for refund or in conducting
an audit or other proceeding relating to Taxes or as may be otherwise
reasonably required by applicable Law, (ii) for any external disclosure in
audited financial statements or regulatory filings which a Party reasonably
believes is required by applicable law or stock exchange rules or (iii) for any
disclosure which a Party or its affiliates, as the case may be, reasonably
believes is required by an entity which has made financing available to such
Party or affiliate or to which such Party or affiliate has applied for
financing in connection with this Agreement or with any other agreement (a
"Lender"), provided that such Lender shall have agreed to keep all such
information confidential.
5.9 Termination of Tax Sharing Agreements. Except as provided in
this Agreement, any and all Tax allocation agreements, Tax sharing agreements,
intercompany agreements, intercompany Indebtedness, or other agreements or
arrangements between the Company and the Seller or any of the Seller's
Affiliates and relating to any Tax matters shall be terminated with respect to
the Company as of the Closing Financial Statement Date, and from and after such
time will have no further force or effect for any taxable period (whether past,
current, or future taxable periods).
5.10 Purchase Price. Unless otherwise required by applicable Law,
the Parties shall treat any payments of Taxes made pursuant to this Article V
as an adjustment to the Purchase Price for federal, state and local Tax
purposes.
5.11 Payments. Except as otherwise provided in this Article V, any
amount to which a Party is entitled under this Article V shall be promptly paid
in immediately available funds to such Party by the Party or Parties obligated
to make such payment within five business days after written notice to the
Party so obligated stating that the Taxes to which such amount relates are due
or have been paid and providing details supporting the calculation of such
amount, but in no event shall such payment be required to be made earlier than
seven calendar days before the due date (giving effect to any and all valid
extensions) for payment of such Taxes.
5.12 Survival. All representations and warranties contained in
Section 2.18 hereof, and all covenants and agreements contained in or made
pursuant to this Article V, shall survive until 90 calendar days following
expiration of the applicable statute of limitations (including any and all
valid extensions thereof), provided, however, that a claim for indemnification
made within the applicable survival period in respect of any such
representation, warranty, covenant or agreement may continue to be asserted
beyond such period.
5.13 Exclusivity of Article V. Notwithstanding anything in this
Agreement to the contrary, this Article V shall be the exclusive agreement
among the Parties with respect to indemnification for any Losses in respect of
Taxes.
ARTICLE VI
SURVIVAL OF REPRESENTATIONS AND
WARRANTIES; INDEMNIFICATION
6.1 Survival of Representations and Warranties. All
representations and warranties of the Parties contained herein shall survive
the Closing and any investigation at any time made by or on behalf of any Party
for a period of two years after the Closing Date; provided, however, that the
representations and warranties contained in Section 2.18 (Taxes) hereof shall
survive in accordance with the provisions of Section 5.12 hereof. Provided
that a claim with respect to a breach of representation or warranty is made
within the applicable period, it may continue to be asserted beyond such period
with respect to the representation or warranty to which such claim relates.
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6.2 Indemnification by the Seller. Subject to the provisions of
this Article VI, and in addition to the obligations of the Seller pursuant to
Section 5.2 hereof, the Seller shall indemnify, defend and hold harmless
Niagara, the Buyer, any parent, subsidiary or affiliate of, and any director,
officer, employee, agent or advisor of, any of them, or any of their respective
heirs, successors or assigns (a "Buyer Indemnified Party"), from and against
any and all demands, claims, actions, causes of action, assessments, losses,
damages, liabilities, judgments, settlements, fines, penalties, sanctions,
costs, deficiencies and expenses (including, without limitation, reasonable
attorneys' fees and disbursements, interest and penalties, and all other
reasonable costs of investigating and defending third party claims as incurred)
(collectively, "Losses") asserted against, resulting to, imposed upon or
incurred by any Buyer Indemnified Party, directly or indirectly, by reason of
or resulting from:
(i) the breach of or any inaccuracy in any of the
representations and warranties of the Seller contained in or
made pursuant to this Agreement;
(ii) the breach or nonperformance of any covenant
or agreement of the Seller contained in or made pursuant to
this Agreement; and
(iii) any guarantee by the Company, made prior to
the Closing, of Indebtedness of the Seller or any Seller's
Affiliate.
6.3 Indemnification by Niagara and the Buyer. Subject to the
provisions of this Article VI, and in addition to the obligations of Niagara
and the Buyer under Section 5.3 hereof, Niagara and the Buyer shall, jointly
and severally, indemnify, defend and hold harmless the Seller, any parent,
subsidiary or affiliate of the Seller, and any director, officer, employee,
agent or advisor of any of them or any of their respective heirs, successors or
assigns (a "Seller Indemnified Party"), from and against any and all Losses
asserted against, resulting to, imposed upon or incurred by any Seller
Indemnified Party, directly or indirectly, by reason of or resulting from:
(i) the breach of or any inaccuracy in any of the
representations and warranties of Niagara or the Buyer
contained in or, made pursuant to this Agreement;
(ii) the breach or non-performance of any covenant
or agreement of Niagara or the Buyer contained in or made
pursuant to this Agreement; and
(iii) any actions or omissions by a Buyer
Indemnified Party or the Company following the Closing with
respect to any Designated Plan that is sponsored by the
Company immediately prior to the Closing; and
(iv) any matter relating to the Buyer Salaried
Pension Plan (as defined in Section 4.1(a) hereof), the
Buyer's Savings Plan (as defined in Section 4.1(b) hereof),
the LaSalle Steel Company Group Benefit Plan, and the LaSalle
Steel Company Management Incentive Program.
6.4 Limitations on Indemnification. (a) The indemnifications in
favor of the Buyer Indemnified Parties contained in Section 6.2(i) hereof shall
not be effective until the aggregate dollar amount of all Losses indemnified
against under such Section exceeds $250,000 (the "Seller's Threshold Amount"),
and then only to the extent such aggregate amount exceeds the Seller's
Threshold Amount. The indemnifications in favor of the Buyer Indemnified
Parties contained in Section 6.2(i) hereof shall terminate once the dollar
amount of all Losses indemnified against under such Section aggregates
$35,000,000.
(b) The indemnifications in favor of the Seller
Indemnified Parties contained in Section 6.3(i) hereof shall not be
effective until the aggregate dollar amount of all Losses indemnified
against under such Section exceeds $250,000 (the "Buyer's Threshold
Amount"), and then only to the extent such aggregate amount exceeds
the Buyer's Threshold Amount. The indemnifications in favor of the
Seller Indemnified Persons contained in Section 6.3(i) hereof shall
terminate once the dollar amount of all Losses indemnified against
under such Section aggregates $35,000,000.
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6.5 Indemnification Procedures.
(a) Notice. If any legal proceeding shall be threatened
or instituted or any claim or demand shall be asserted by any Buyer
Indemnified Party or Seller Indemnified Party in respect of which
indemnification may be sought under the provisions of this Agreement,
the Party seeking indemnification (the "Claiming Party") shall
promptly cause written notice of the assertion of any such claim,
demand or proceeding of which it has knowledge to be forwarded to the
Party from whom it is claiming indemnification (the "Indemnitor").
Such notice shall contain a reference to the provisions hereof or of
such other agreement, instrument or certificate delivered pursuant
hereto, in respect of which such claim is being made, and shall
specify, in reasonable detail, the amount of such Loss if determinable
at such time. The Claiming Party's failure to give the Indemnitor
prompt notice shall not preclude the Claiming Party from seeking
indemnification from the Indemnitor unless the Claiming Party's
failure has materially prejudiced the Indemnitor's ability to defend
the claim, demand or proceeding.
(b) Third Party Claims. If the Claiming Party seeks
indemnification from the Indemnitor as a result of a claim or demand
being made by a third party (a "Third Party Claim"), the Indemnitor
shall have the right to promptly assume the control of the defense of
such Third Party Claim, including, at its own expense, employment by
it of counsel reasonably satisfactory to the Claiming Party. The
Claiming Party may, in its sole discretion and at its own expense,
employ counsel to represent it in the defense of the Third Party
Claim, and in such event counsel for the Indemnitor shall cooperate
with counsel for the Claiming Party in such defense, provided that the
Indemnitor shall direct and control the defense of such Third Party
Claim or proceeding. The Indemnitor shall not consent to the entry of
any judgment, except with the written consent of the Claiming Party,
and shall not enter into any settlement of such Third Party Claim
without the written consent of the Claiming Party which (i) does not
include as an unconditional term thereof the release of the Claiming
Party from all liability in respect of such Third Party Claim or (ii)
results in the imposition on the Claiming Party of any remedy other
than money damages. If the Indemnitor elects not to exercise its
rights to assume the defense of the Third Party Claim, or if
injunctive relief is sought which would have an adverse effect on the
Claiming Party (or the Company if a Buyer Indemnified Party is the
Claiming Party), the Claiming Party may, but shall have no obligation
to, defend against such Third Party Claim or legal proceeding in such
manner as it may deem appropriate, and the Claiming Party may
compromise or settle such Third Party Claim and proceeding without the
Indemnitor's consent.
(c) Payment. After any final judgment or award shall
have been rendered by a court, arbitration board or administrative
agency of competent jurisdiction and the time in which to appeal
therefrom shall have expired, or a settlement shall have been
consummated, or the Claiming Party and the Indemnitor shall arrive at
a mutually binding agreement with respect to each separate matter
alleged to be indemnified by the Indemnitor hereunder, the Claiming
Party shall forward to the Indemnitor notice of any sums due and owing
by it with respect to such matter (in accordance with Section 7.9
hereof) and the Indemnitor shall pay all of the sums so owing to the
Claiming Party by wire transfer, certified or bank cashier's check
within 10 days after the date of such notice.
6.6 Application to Taxes. Notwithstanding anything in this
Agreement to the contrary, Article V shall be the exclusive agreement among the
Parties with respect to indemnification for any Losses in respect of Taxes.
6.7 Remedies. Except for Losses resulting from fraud, the rights
and remedies specifically provided for in this Agreement shall be the exclusive
rights and remedies of the Parties. Without limiting the foregoing, each of
Niagara and the Buyer waives any rights and remedies it may have against the
Seller under any Environmental Law, including without limitation the
Comprehensive Environmental Response, Compensation and Liability Act, the
Indiana Responsible Property Transfer Law and the Indiana Hazardous Substances
Response Trust Fund Law. For purposes of this Agreement, any statement made by
the Company in a notice delivered or filed pursuant to the Indiana Responsible
Property Transfer Law in connection with the financing arrangements of the
Buyer and its affiliates shall not be deemed to be a representation, warranty,
agreement or covenant pursuant to this Agreement and the Parties acknowledge
that the Seller shall not have any responsibility concerning the preparation,
delivery or filing of such notice.
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ARTICLE VII
MISCELLANEOUS
7.1 Parties in Interest; No Third Party Beneficiaries. (a) This
Agreement shall be binding upon, inure to the benefit of, and be enforceable
by, the Parties and their respective successors and permitted assigns. This
Agreement and the rights and obligations of the Parties hereunder may not be
assigned by any of the Parties without the prior written consent of the other
Parties.
(b) This Agreement is not intended, nor shall it be
construed, to confer upon any Person, except the Parties and their
respective successors and permitted assigns, any rights or remedies
under or by reason of this Agreement.
7.2 Exhibits and Disclosure Schedule. All Exhibits annexed hereto
and the Disclosure Schedule referred to herein are hereby incorporated in and
made a part of this Agreement as if set forth in full herein.
7.3 Entire Agreement. This Agreement (including the Exhibits
hereto and the Disclosure Schedule) and the other documents, certificates and
instruments referred to herein, together with the letter agreement dated the
date hereof by and among the Parties, embody the entire agreement and
understanding of the Parties in respect of the transactions contemplated by
this Agreement, and, except as provided in Section 4.5 hereof, supersedes all
prior agreements, arrangements and understandings of the Parties with respect
to such transactions, including (i) the Confidentiality Agreement, dated
December 19, 1995, by and between the Seller and Niagara and (ii) the Letter of
Intent, dated January 23, 1997, by and among Niagara, the Seller and the
Company, as amended.
7.4 Waiver of Compliance. No amendment, modification, alteration,
supplement or waiver of compliance with any obligation, covenant, agreement or
provision hereof or consent pursuant to this Agreement shall be effective
unless evidenced by an instrument in writing executed by both of the Parties or
in the case of a waiver, the Party against whom enforcement of any waiver, is
sought. Any waiver or failure to insist upon strict compliance with such
obligation, covenant, agreement, or provision shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure.
7.5 Validity. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, each of which shall remain in full force and
effect.
7.6 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same instrument.
7.7 Headings. The table of contents, article and section headings
contained in this Agreement or any Exhibit hereto or the Disclosure Schedule
are for convenience only and shall not control or affect in any way the meaning
or interpretation of this Agreement.
7.8 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without giving
effect to the principles of conflicts of law of such jurisdiction.
7.9 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if delivered personally (which is confirmed) or sent by registered
or certified mail (postage prepaid, return receipt requested) and, in the case
of the Intercompany Statement, by overnight delivery (Federal Express), to the
Parties at the following addresses:
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(a) If to Niagara:
Mr. Xxxxxxx Xxxxxx
President
Niagara Corporation
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxx X. Xxxxx, Esq.
(b) If to the Buyer to:
Mr. Xxxxx Xxxxxx
President
Niagara Cold Drawn Corp.
000 Xxxxxxx Xxxxxx
X.X. Xxx 000
Xxxxxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Copies to:
Mr. Xxxxxxx Xxxxxx
President
Niagara Corporation
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
and
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxx X. Xxxxx, Esq.
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(c) If to the Seller:
Xx. Xxxxx X. Xxxx
Vice President
Quanex Corporation
0000 Xxxx Xxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
With a copy to:
Fulbright & Xxxxxxxx L.L.P.
0000 XxXxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000-0000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx, Esq.
or to such other address as the Person to whom notice is to be given may have
previously furnished to the other in writing in the manner set forth above,
provided that notice of a change of address shall be deemed given only upon
receipt.
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IN WITNESS WHEREOF, the Parties have executed this Agreement,
on the day and year first above written.
QUANEX CORPORATION
By: /s/ Xxxxx X. Xxxx
-------------------------------
Name: Xxxxx X. Xxxx
Title: Vice President
NIAGARA CORPORATION
By: /s/ Xxxxxxx Xxxxxx
-------------------------------
Name: Xxxxxxx Xxxxxx
Title: President
NIAGARA COLD DRAWN CORP.
By: /s/ Xxxxx Xxxxxx
-------------------------------
Name: Xxxxx Xxxxxx
Title: President
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As permitted by Item 601(b)(2) of Regulation S-K, the Company has not
filed any schedules or exhibits with this Exhibit No. 2.1. Listed below is a
brief description of the omitted schedules and exhibits. The Company agrees to
furnish supplementally a copy of any of such omitted schedules and exhibits to
the Commission upon request.
Exhibits
--------
A Termination Agreement
B Certificate of Non-Foreign Status
Schedules
---------
2.1 Corporate good standing
2.4 Power of attorneys
2.6 Consents, approvals and no violations
2.7 Financial statements
2.8 Indebtedness
2.9(a) Accounts receivable
2.9(b) Non-ordinary course accounts receivables
2.9(c) Encumbrances on accounts receivables
2.9(d) Accounts receivables set-offs
2.10(a) Inventory financials
2.10(b) Inventory condition
2.10(c) Inventory in possession of others
2.11(a) Absence of certain changes or events
2.11(b) Canceled debts or claims
2.12(a)-1 Real property
2.12(a)-2 Encumbrances on real property
2.12(b)-1 Assessments on real property
2.12(b)-2 Governmental proceedings on real property
2.12(b)-3 Real property variances
2.12(b)-4 Governmental notice for real property
2.12(b)-5 Real property operations
2.12(c)-1 Title to property
2.12(c)-2 Asset defects
2.12(c)-3 Assets in possession of others
2.12(d) Condition of assets
2.13(a) Material contracts
2.13(a)-1 Informal arrangement
2.13(b) Contracts validity
2.13(c) Contracts in force
2.13(d) Contracts defaults
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2.14(a) Permits
2.14(b) Permit validity
2.14(c) Proceedings for permits
2.15(a) Litigation
2.15(b) Litigation pending
2.15(c) Litigation in last three years
2.15(d) Workers compensation claims
2.15(e) Workers compensation litigation
2.16(a) Employee benefit plans
2.16(b) Deficiency for benefit plan
2.16(c) Effect of transactions on benefit plans
2.16(d) ERISA liabilities
2.16(e) ERISA liabilities
2.17(a) Corporate officers and directors
2.17(b) Labor relations
2.17(c) Labor strikes
2.17(d) Organizing activities
2.17(e) NLRB actions
2.17(f) Labor litigation
2.17(g) Employment losses
2.18(a) Taxes
2.18(b) Tax returns
2.19(a) Intellectual property conflicts
2.19(b) Intellectual property encumbrances
2.19(c) List of intellectual property
2.19(d) Intellectual property validity
2.20(a) Environmental information
2.20(b) Environmental conditions
2.21(a) List of insurance
2.21(b) Unpaid claims
2.22 Bank accounts
2.23(a) Customers and suppliers
2.23(b) Loss of customers and suppliers
2.24 Affiliate transactions
4.1(a) Participants in pension plan
4.1(b) Participants in benefit plans
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