Business-Combination Transaction Communication — Rule 425
Filing Table of Contents
Document/Exhibit Description Pages Size
1: 425 Reliance Steel & Aluminum Co. 8K 4 13K
2: EX-2.1 Plan of Acquisition, Reorganization, Arrangement, 43 156K
Liquidation or Succession
3: EX-99.1 Miscellaneous Exhibit 2± 10K
EX-2.1 — Plan of Acquisition, Reorganization, Arrangement, Liquidation or Succession
Exhibit Table of Contents
Exhibit 2.1
ACQUISITION AGREEMENT
THIS ACQUISITION AGREEMENT (the "Agreement") is entered into this 27th
day of February, 2006, by and between FLAT ROCK METAL PROCESSING L.L.C., a
Michigan limited liability company ("Seller"), and PRECISION STRIP, INC., an
Ohio corporation ("Purchaser") under the following circumstances:
A. Seller desires to sell to Purchaser certain of Seller's assets used
in connection with its facilities located in Perrysburg, Ohio, Eldridge, Iowa,
and Portage, Indiana upon the terms hereinafter set forth.
B. Subject to the terms and conditions of this Agreement, Purchaser
desires to acquire such assets from Seller.
NOW THEREFORE, in consideration of and in reliance upon the
representations, warranties and obligations in this Agreement, the parties agree
as follows:
ARTICLE I
DEFINITIONS
1.1 As used in this Agreement, the following terms shall have the
following respective meanings (all terms defined in this Article I or in other
provisions of this Agreement in the singular to have the same meanings when used
in the plural, and vice versa):
"Affiliate" of any Person means any person directly controlling,
controlled by, or under common control with, any such Person, and with respect
to Seller includes, but is not limited to Shields Acquisition Company, Inc.,
Flat Rock Metal, Inc. and Bar Processing Corporation.
"Assumed Liabilities" shall mean the obligations set forth in Section
3.1.
"Books and Records" means all books and records of Seller relating to
the businesses and properties of the Seller, including, but not limited to: (i)
all books and records relating to the purchase of materials and supplies, sales
of products, dealings with customers, invoices, suppliers lists and personnel
records related to attendance, training and a list of the current pay-rates for
all of the employees set forth on Schedule 10.4.1; (ii) all contracts, reports,
opinions, maps and other documents affecting the title to properties of the
Seller; (iii) Tax returns excluding U.S. Form 1065 and State income tax filings;
(iv) all information on the Flat Rock Coils necessary for Purchaser to fulfill
its obligations under Section 10.5; and (v) all financial and operating data,
files and other information with respect to Seller's business and properties,
including the "flat file" of information downloaded from Seller's computer
system; provided, however, that the books and records relating to Seller's
properties not being sold are not covered by this Agreement and those set forth
in Schedule 2.2 as retained assets shall not be included in the definition of
Books and Records.
"Closing" and "Closing Date" are defined in Article VIII.
"Communications Act" is defined in Section 5.1.2(a).
"Contract" means any written pledge, mortgage, indenture, note, lease,
agreement, purchase or sale order, or contract.
"Disposal" means disposal as defined by RCRA or as defined by any
applicable federal, state, or local Environmental Law.
"Employee Benefit Plan" means any employee benefit plan within the
meaning of Section 3(3) of ERISA, other than a Multiemployer Plan.
"Employee Claims" is defined in Section 5.6.1.
"Employment Loss" means employment loss as defined in the regulations
issued under the federal Worker Adjustment and Retraining Notification Act, as
amended.
"Environmental Law" means any federal, state or local law, regulation,
or other legal requirement pertaining to the environment or the health or safety
of the public or employees, including but not limited to the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C.
ss.ss. 9601 et seq., as amended; the Resource Conservation and Recovery Act
("RCRA"), 42 U.S.C. ss.ss. 6901 et seq., the Hazardous Materials Transportation
Authorization Act of 1994, 49 U.S.C. ss.ss. 5101 et seq. , as amended; the Clean
Air Act, 42 U.S.C. ss.ss. 7401 et seq., as amended; the Clean Water Act, 33
U.S.C. ss.ss. 1251 et seq., as amended; the Toxic Substances Controls Act, 15
U.S.C. ss.ss. 2602 et seq., as amended; laws regulating underground storage
tanks; all permits issued to the Seller or any of its subsidiaries pursuant to
the foregoing; and any other state, federal or local law, regulation, rule,
ordinance or order, whether currently in existence or hereafter enacted
pertaining to:
(i) the existence, clean-up and/or remedy of contamination at, on or
emanating from the Facilities as defined hereinafter during
Seller's occupancy;
(ii) the emission, discharge, or release of Hazardous Substances into
the environment, including, without limitation, into air, land,
water or sewer systems;
(iii) the control of Hazardous Wastes;
(iv) the use, generation, transport, treatment, storage, disposal,
removal or recovery of Hazardous Substances or Hazardous Wastes;
(v) worker or community protection; or
(vi) the existence of Petroleum Product underground storage tanks or
the clean up or other remedy associated with Petroleum Product
underground storage tanks.
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"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Facilities" means Seller's facilities located at 7401 Ponderosa Road,
Perrysburg, Ohio 43551, 951 Trails Road, Eldridge, Iowa 52748 and 6720 Waterway
Drive, Portage, Indiana 46368. The Facility in Ohio may be referred to
individually as the "Ohio Facility" the Facility located in Iowa may be referred
to individually as the "Iowa Facility" and the Facility located in Indiana may
be referred to individually as the "Indiana Facility".
"FCC" means the Federal Communications Commission.
"FCC Consent" is defined in Section 10.9.
"FCC Licenses" means the four Radio Station Licenses set forth on
Schedule 5.1.2.
"Flat Rock Coils" is identified in Section 10.5.
"GAAP" means United States generally accepted accounting principles
consistently applied by Seller throughout the periods indicated.
"Governmental Authority" means any foreign, federal, state, regional or
local authority, agency, body, court or instrumentality, regulatory or
otherwise, which, in whole or in part, was formed by or operates under the
auspices of any foreign, federal, state, regional or local government.
"Hazardous Substances" means hazardous substances as defined by CERCLA,
or as defined by any applicable similar Law of the jurisdictions where the
Facilities are located or where Hazardous Substances were transported or
disposed.
"Hazardous Wastes" shall have the meaning given it at 42 U.S.C.
ss.6903(5) [SWDA ss.1004(5)], or as defined by any applicable similar Law of the
jurisdictions where the Facilities are located or where Hazardous Wastes were
transported for Disposal and shall include any wastes meeting the general
criteria set forth at 42 U.S.C. ss.6921 [SWDA ss.3001] as specified at 40 CFR
ss.260.
"Indiana Facility" is defined under "Facilities".
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended.
"Iowa Facility" is defined under "Facilities".
"Law" means any common law and any federal, state, regional, local or
foreign law, rule, statute, ordinance, rule, order or regulation.
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"Liabilities" means responsibilities, losses, damages, obligations,
duties, commitments, claims, and liabilities of any and every kind, whether
known or unknown, accrued, absolute, contingent or otherwise, excluding lost
profits and consequential damages.
"Lien" means any lien, charge, covenant, condition, easement, adverse
claim, demand, encumbrance, limitation, security interest, option, pledge, or
any other title defect or restriction of any kind.
"Material Adverse Effect" means any change or changes or effect or
effects that individually or in the aggregate are materially adverse to (i) the
business, condition, assets, or results of operations of the Seller, (ii) the
transactions contemplated by this Agreement, (iii) the ability of Seller or the
Seller Affiliates to perform its or their obligations under this Agreement, or
(iv) the legality or enforceability against Seller or the Seller Affiliates of
this Agreement.
"Multiemployer Plan" means any multiemployer plan within the meaning of
Section 3(37) of ERISA.
"Ohio Facility" is defined under "Facilities".
"Other Plan" means any employment, noncompetition, management, agency
or consulting arrangement, bonus, profit-sharing, deferred compensation,
incentive, stock option, stock ownership or stock purchase plan, or other
similar plan, policy, or arrangement, whether or not in written form, which does
not constitute an Employee Benefit Plan.
"Parent" means Shields Acquisition Company, Inc., a
Michigan corporation.
"Permitted Exceptions" is identified in Section 5.1.1.
"Person" means any individual, corporation, partnership, association
or any other entity or organization.
"Petroleum Products" means petroleum, gasoline, oil, fuel oil, diesel
fuel and petroleum solvents.
"Phase I Environmental Reports" means those reports specified in
Section 7.1.17.
"Purchased Assets" means the assets that are set forth in Section 2.1.
"Purchase Price" is defined in Section 4.1.
"Purchaser" means Precision Strip, Inc., an Ohio corporation.
"Purchaser Indemnified Parties" is defined in Section 11.2.
"RCRA" means the Resource Conservation and Recovery Act of 1976, as
amended, and as codified in the Solid Waste Disposal Act, 42 U.S.C. ss. 6901, et
seq. (SWDA ss. 1002, et seq.). All references to RCRA in this Agreement
incorporate all regulations at 40 C.F.R. ss. 260, et seq. which are intended to
implement its provisions as well as all applicable state statutes and
regulations adopted pursuant to RCRA.
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"Release" means any direct or indirect spilling, leaching, pumping,
pouring, emitting, emptying, placing, discharging, injecting, escaping, leaking,
dumping, or disposing on or into any building or facility or the environment of
any Hazardous Substance whether intentional or unintentional, known or unknown,
and includes a threatened Release.
"Seller" means Flat Rock Metal Processing L.L.C., a Michigan
limited liability company.
"Seller Indemnified Parties" is defined in Section 11.3.
"Shields Group" means the Seller, Shields Acquisition Company, Inc.,
Flat Rock Metal, Inc. and Bar Processing Corporation.
"Specified Date" means January 1, 2005.
"Storage" means storage as defined by RCRA or as defined by any
applicable federal, state, or local Environmental Law; however, "Storage," as
used herein shall not be limited to the storage of "hazardous wastes" as defined
in RCRA, but shall extend to encompass the storage of any Hazardous Substances.
"Tangible Personal Property" is defined in Section 2.1(a).
"Tax" means any charge or assessment by or Liability to any
Governmental Authority, including, but not limited to, any deficiency, interest
or penalty.
"Tax Returns" is defined in Section 5.4.2.
"to the Knowledge of Seller" means the actual knowledge of Peter F.
Shields, Michael F. Shields, Howard McFarland, Keith King and Richard Steiner
and also means the knowledge any such individuals would have after reviewing the
Seller's Books and Records and other documents in the possession or control of
Seller.
"Transport" means transport as defined by RCRA or as defined by any
applicable federal, state, or local Environmental Law.
"Treatment" means treatment as defined by RCRA or as defined by any
applicable federal, state, or local Environmental Law.
"Welfare Plan" means any employee welfare benefit plan within the
meaning of Section 3(1) of ERISA, other than a Multiemployer Plan.
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1.2 Accounting terms used in this Agreement and not otherwise defined
herein shall have the meanings attributed to them under GAAP.
ARTICLE II
PURCHASE OF ASSETS
2.1 Purchased Assets. Seller agrees to sell, transfer and
assign to Purchaser free of all Liens, and Purchaser agrees to purchase, the
following assets:
(a) Tangible Personal Property. All of Seller's right, title
and interest in and to all tangible personal property owned by Seller as of the
Closing and used in connection with the Facilities, including, but not limited
to, all machinery, equipment, tools, fixtures, parts, supplies, furniture,
furnishings, and motor vehicles and personal computers, all of which are set
forth on Schedule 2.1(a) (the "Tangible Personal Property");
(b) Contract Rights. To the extent assignable, rights under
Contracts to be assumed by Purchaser pursuant to Section 3.1;
(c) Authorizations. To the extent assignable, all licenses,
approvals, certificates, permits or other evidence of authority issued by a
Governmental Authority relating to or utilized in connection with the
Facilities, the business of Seller performed at the Facilities, or any other
Purchased Assets;
(d) Intellectual Property Rights. All of Seller's right, title
and interest in and to (i) the FCC Licenses, and all pending applications
thereto, subject to FCC Consent, (ii) all off the shelf software used by Seller
on or in connection with the personal computers or machinery contained in the
Tangible Personal Property, and (iii) Invera software and other leased software
are described on Schedule 2.1(d), which Purchaser may assume as an Assumed
Liability if it desires.
(e) Documentation. Technical documentation, patterns, plans,
designs, drawings, models, blueprints, specifications, flow sheets, equipment
and parts lists and descriptions and related instructions, manuals, data,
records and procedures relating to the Facilities or any other Purchased Assets,
including, without limitation, Books and Records;
(f) Listings and Materials. Interest in and to telephone and
fax machine numbers at the Facilities; all listings pertaining to the Facilities
in all telephone books and directories; and
(g) Warranty Rights. Rights in, to and under third-party
manufacturers', deliverers' and installers' warranties relating to any of the
Purchased Assets.
2.2 Retained Assets. Seller shall not sell, transfer or
assign, and Purchaser shall not purchase, the assets of Seller set forth on
Schedule 2.2.
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ARTICLE III
ASSUMPTION OF LIABILITIES
3.1 Assumed Liabilities. Purchaser agrees to assume, pay, and timely
discharge Liabilities arising after Closing from those Contracts and leases of
Seller relating to or in connection with the Purchased Assets, and/or the
Facilities that are listed on Schedule 3.1 attached hereto, but only to the
extent that: (a) the Contracts are assignable as of the Closing Date and the
assignment thereof has been approved in writing and in advance of the Closing
Date by the parties thereto, if necessary; and (b) Seller is not in default
thereof as of, or as a result of, the Closing and no event exists as of Closing
which with the passing of time or the giving of notice, or both, would
constitute a default by Seller or permit termination, modification or
acceleration thereunder (the "Assumed Liabilities"). Purchaser agrees that it is
responsible for all actions taken at the Facilities after the Closing, including
without limitation product Liability, environmental Liability and litigation or
claims Liability.
THE FOREGOING NOTWITHSTANDING, NOTHING IN THIS SECTION 3.1 SHALL BE CONSTRUED OR
IMPLIED TO IMPOSE UPON PURCHASER ANY LIABILITIES RETAINED BY SELLER UNDER
SECTION 3.2.
3.2 Retained Liabilities. Notwithstanding anything in this Agreement to
the contrary, Purchaser does not assume and will not become responsible for any
Liability (whether known or unknown) of Seller except the Assumed Liabilities,
and Seller shall be responsible for all Liabilities relating or pertaining to it
or its business, other than the Assumed Liabilities. Without limiting the
generality of the foregoing, the following are included among the Liabilities of
Seller which Purchaser does not expressly or impliedly assume:
(a) Product Liability. All Liabilities with respect to
products manufactured, acquired for resale, sold or leased by Seller, without
regard to: (i) the basis or theory of claim (negligence, strict tort, breach of
express or implied warranty, fraud or failure to warn, test, inspect or instruct
or otherwise); (ii) the nature of the damages sought (property damage, economic
loss, personal injury, wrongful death or other); or (iii) whether the claim
arose or is asserted before or after the Closing;
(b) Product Warranty or Shortage. All Liabilities of Seller to
customers or third parties with respect to shortages or defects in goods
delivered to customers or placed in transit to customers by Seller including,
but not limited to, Liabilities for product warranty claims;
(c) Services. All Liabilities to customers or third parties
with respect to services performed by Seller;
(d) Environmental. All Liabilities arising out of or
attributable to the Release, generation, Treatment, Transport, recycling,
Storage or Disposal of any Hazardous Substance, Hazardous Waste, Toxic Substance
or Petroleum Product by Seller prior to the Closing Date, at, upon or from the
Facilities;
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(e) Claims. All Liabilities of Seller with respect to any
pending, threatened or unasserted litigation, claim, demand, investigation or
proceeding including, without limitation, Liabilities relating to the
Facilities, which accrued prior to the Closing, or to any assets not being
acquired;
(f) Employees. Except for Liabilities arising out of an
employment relationship between Purchaser and any of Seller's employees that
Purchaser hires that accrue on or after the Closing, all Liabilities arising out
of the employment relationship between Seller and any of its employees or former
employees existing at any time, whether before or after the Closing, including,
but not limited to, all Liabilities relating to any Employee Benefit Plan or
Other Plan sponsored or maintained by Seller or any Affiliate of Seller or to
which Seller has made contributions, all severance claims of any employee of
Seller (including but not limited to such claims relating to or resulting from
the consummation of the transactions contemplated hereby) and all workers'
compensation or EEOC claims, demands, investigations or proceedings relating to
matters which occurred prior to the Closing. Purchaser agrees that it is
responsible for its hiring decisions and employment practices, and will
indemnify Seller for any claims brought against Seller regarding Purchaser's
hiring decisions and employment practices, but not against any claims made
against Seller for defamation or other actions or communications of Seller
regarding employees or employment.
(g) Taxes. All Liabilities relating to (i) any Tax owed or
alleged to be owed as claimed by any Governmental Authority in connection with
the Purchased Assets, which accrued prior to the Closing, or (ii) any Tax owed
or alleged to be owed by Seller as claimed by any Governmental Authority;
(h) Other Liabilities. All other Liabilities relating or
pertaining to the conduct of business by Seller, whether such liabilities are
known or unknown or are discovered or arise prior to or after the Closing and
which are not expressly assumed by Purchaser under Section 3.1; and
(i) Breaches. Any Liability the existence of which is a breach
of any representation, warranty or covenant of Seller in this Agreement.
3.3 Satisfaction of Liabilities by Seller. To preserve for Purchaser
the opportunity to maintain good relations with Seller's business partners as it
may so elect, and to preclude the assertion of claims for nonpayment against
Purchaser or against the Purchased Assets, Seller agrees to pay or otherwise
satisfy and discharge promptly after the Closing or otherwise in accordance with
their terms all Liabilities, except the Assumed Liabilities, owed by Seller in
connection with the Purchased Assets, goods or services provided to or for the
Facilities, and Liabilities arising prior to Closing in connection with the
Contracts to be assumed by Purchaser under Section 3.1; provided, however, that
this obligation shall not apply to Liabilities for which Seller has a good faith
dispute. Purchaser and Seller waive compliance with any applicable "Bulk Sales
Laws" in connection with the transaction contemplated hereby.
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ARTICLE IV
CONSIDERATION
4.1 Consideration Generally. As consideration for the Purchased Assets,
Purchaser shall, at the Closing, pay to Seller the sum of $20,500,000.00, plus
or minus the prorations for real and personal property taxes, security deposits
and utilities determined at Closing and the amount paid for the trucks specified
in Section 7.1.16 (the "Purchase Price") in immediately available funds by bank
wire transfer to one or more accounts specified by Seller.
4.2 Prorations.
(a) Ohio Facility. Seller shall pay all personal property
Taxes on the Tangible Personal Property located at the Ohio Facility for the
year ending December 31, 2005. Personal property taxes for the Tangible Personal
Property located at the Ohio Facility for the year ending December 31, 2006
shall be paid by Purchaser; provided that such Taxes shall be prorated as of the
Closing Date using the rates and valuation shown on the latest available tax
return by charging Seller with a portion of such Taxes, prorated on a daily
basis through the Closing Date. The proration on the Closing Date shall be
final.
(b) Indiana Facility. Purchaser shall prepare and file the
personal property Tax Returns that become due after the Closing Date for Taxes
on the Tangible Personal Property located at the Indiana Facility. No less than
10 days before Closing, Purchaser shall submit to Seller its calculations that
show an estimated amount of Taxes that will be due for the March 1, 2006 Lien
date. Purchaser shall pay such personal property Taxes; provided that, Purchaser
shall hold back from the Purchase Price at Closing an amount agreed to by Seller
equal to the amount of personal property Taxes due for the March 1, 2006 Lien
date, less Purchaser's share of the personal property Taxes due for the March 1,
2006 Lien date prorated on a daily basis from the Closing Date through March 1,
2006. The proration on the Closing Date shall be final.
4.3 Charges. Seller shall be charged the prorated personal property
Taxes as described above; and Purchaser shall be charged the prorated personal
property Taxes not charged to Seller. Real estate taxes and utilities shall be
prorated based on usage to the Closing. In the event such items are paid in
advance, a credit shall be given Seller; in the event such items are paid in
arrears, a credit shall be given Purchaser. Appropriate credit will be given to
Seller at Closing for security deposits that are Retained Assets of Seller.
4.4 Allocation of Purchase Price. Purchaser and Seller agree that the
total consideration paid by Purchaser for the Purchased Assets (including the
amount of the Assumed Liabilities) shall be allocated as set forth on Schedule
4.4. Purchaser and Seller each further agree to prepare and file such forms and
reports as are consistent with the foregoing and which are required under the
Internal Revenue Code, and to provide each other with a signed copy of such
party's Form 8594 which is filed with the Internal Revenue Service. Seller's
Taxpayer Identification Number is 38-3508219; Purchaser's Taxpayer
Identification Number is 34-1207681.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Purchaser that each of the statements
contained in this Article V (including the Schedules attached hereto) is true
and correct as of the date of this Agreement and will be true and correct at and
as of the Closing.
5.1 Assets.
5.1.1 Title. Seller has title to, or valid and enforceable
leasehold interests in, all Purchased Assets, free and clear of all Liens except
the "Permitted Exceptions" set forth on Schedule 5.1.1. Except as disclosed on
Schedule 5.1.1, the Purchased Assets constitute all of the assets owned or used
by Seller to conduct Seller's business at the Facilities and include all assets
located at the Facilities other than the Retained Assets. The Purchased Assets
are sufficient to permit Purchaser to conduct Seller's business as Seller has
been conducting its business at the Facilities, have been maintained in
accordance with normal industry practice and all manufacturers' specifications,
are in good condition and repair (reasonable wear and tear excepted) and are
suitable for the purposes for which they are presently being used and are in
compliance with all rules and regulations of the Occupational Safety and Health
Administration of the United States government. To the Knowledge of Seller, all
of the Contracts under Section 3.1 by which Seller is bound and with respect to
which Seller is assigning its rights to Purchaser pursuant hereto are valid, in
full force and effect and enforceable in accordance with their terms by Seller
and no Purchased Asset is subject to any other Contract. There exists no
condition affecting the title to or use of any part of the Purchased Assets
which would prevent Purchaser from occupying, using, or enforcing its rights in
respect of any part of the Purchased Assets to the same full extent that Seller
could continue to do so if the transactions contemplated hereby did not take
place.
5.1.2 Intellectual Property.
(a) Validity. The FCC Licenses are all the licenses,
permits, authorizations, franchises and approvals issued by the FCC that are
required for Seller to operate its internal facilities communication. Each of
the FCC Licenses listed on Schedule 5.1.2 is valid and in full force and effect
and the most recent renewals of the FCC Licenses have been granted in the
ordinary course, each for a full renewal term, without any conditions, other
than conditions set forth in the general rules of the FCC. Seller has not
received notice from the FCC with respect to any breach or alleged breach of any
covenant under, or any default with respect to, any of the FCC Licenses. Seller
has fulfilled and performed all of its obligations with respect thereto, and
complete and correct copies of the FCC Licenses have been delivered to
Purchaser. The internal facilities communication are operated in all material
respects in accordance with the terms and conditions of the FCC Licenses
applicable thereto and the Communications Act of 1934, as amended, and the
rules, regulations and policies promulgated thereunder (collectively, the
"Communications Act"). No proceedings are pending or are threatened which may
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result in the revocation, modification, non-renewal or suspension of any of the
FCC Licenses, the denial of any pending applications, the issuance of any cease
and desist order or the imposition of any fines, forfeitures or other
administrative actions by the FCC with respect to any internal facilities
communications. No event has occurred which: (i) results in, or after notice or
lapse of time or both would result in, revocation or termination of any FCC
License, or (ii) has a Material Adverse Effect upon any of the rights of Seller
under the FCC Licenses or the rights of Purchaser to be enjoyed as a result of
the assignment of the FCC Licenses contemplated hereunder. No other license,
permit, franchise, approval, application, filing, registration, consent or other
action of any Governmental Authority is required as of the date hereof, or,
except for routine approvals, applications, filings and registrations required
in the normal course of business, hereafter, for Seller, or upon assignment,
Purchaser, to operate the internal facilities communication as now operated and
as proposed to be operated. Seller has filed all material reports, applications,
documents, instruments, and information required to be filed by it pursuant to
the Communications Act and all such reports, applications and documents are
true, correct and complete in all respects, and to the Knowledge of Seller there
are no matters which could reasonably be expected to result in the suspension or
revocation of or the refusal to renew any of the FCC Licenses or the imposition
on Seller, or upon assignment, Purchaser, of any material fines or forfeitures
by the FCC, or which could reasonably be expected to result in the revocation,
rescission, reversal or modification of Seller's, or upon assignment,
Purchaser's, authorization to operate internal facilities communications at the
Facilities as currently authorized as applicable, under the Communications Act.
There is no unsatisfied adverse FCC order, decree, or ruling outstanding against
Seller or any of the FCC Licenses; and there is no proceeding (including any
rulemaking proceeding), complaint, or investigation against Seller or any of the
FCC Licenses pending or threatened before the FCC (including any pending
judicial review of such an action by the FCC).
(b) Expiration. The FCC Licenses expire on the dates
set forth on Schedule 5.1.2. To the Knowledge of Seller, there are no facts
and/or circumstances that might lead to a successful challenge of the FCC
Licenses.
(c) Title to Software. Seller has good and lawful
title or leasehold estate to or a valid license to use all of the software used
by Seller on or in connection with the personal computers and machinery
contained in the Tangible Personal Property. Except as set forth on Schedule
5.1.2(c), Seller has the right to transfer and assign to Purchaser all such
software and the licenses therefor. There has been no claim made against Seller
asserting the invalidity or misuse of any of such software or challenging
Seller's right to use or ownership of any of such software, and there are no
grounds for any such claim or challenge. To Seller's Knowledge, there has been
no infringement or misappropriation of any of the software used by Seller on or
in connection with the personal computers or machinery contained in the Tangible
Personal Property or any facts raising a possibility of infringement or
misappropriation. The use of such software by Seller has not infringed or
misappropriated, and does not and will not, infringe or misappropriate, any
intellectual property or proprietary right of any other Person.
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5.1.3 Tangible Personal Property. Except as disclosed on
Schedule 5.1.3, and except for tangible personal property that has been replaced
in the ordinary course of business by comparable tangible personal property, the
Tangible Personal Property includes all tangible personal property used by
Seller in connection with the operation of Seller's business at the Facilities
since January 1, 2005 and no tangible personal property has been removed from
the Facilities since that date. There is no interest in the Tangible Personal
Property owned by any other Person for which Seller is responsible, nor is there
any interest in the Tangible Personal Property in which any other Person
(whether a customer, supplier or other person) has a claim, or claims to have,
an interest, except for Liens of secured creditors of Seller that will be
released as of the Closing.
5.1.4 Real Property. Seller owns no real property.
5.1.5 Environmental Matters. Except as described on Schedule
5.1.5 or otherwise disclosed to Purchaser in the Phase I Environmental Reports
(to be attached as a part of Schedule 5.1.5 at Closing), during the time that
Seller occupied the Facilities:
(a) Storage Tanks. To the Knowledge of Seller, no
underground storage tanks have been located on (nor
have any underground storage tanks been removed from) the Facilities;
(b) Disposal. To the Knowledge of Seller, there has
been no Disposal, arrangement for Disposal, or
Release of any Hazardous Substances at or from the Facilities;
(c) Release. To the Knowledge of Seller, there has
been no Release of any Hazardous Substances at or
from any of the Facilities;
(d) Asbestos. To the Knowledge of Seller, there are
not now nor have there ever been any asbestos-containing materials or urea
formaldehyde-containing materials incorporated into the buildings or interior
improvements that are a part of the Facilities, nor is there any electrical
transformer, fluorescent light fixture with ballasts, or other equipment
containing polychlorinated biphenyls on the Facilities;
(e) Hazardous Substances. To the Knowledge of Seller,
there has been no generation, Treatment, Storage, or Disposal of any Hazardous
Substances or Hazardous Wastes by Seller at or from the Facilities, and there is
not now, and there has not been during Seller's occupancy of the Facilities, any
Hazardous Substances or Hazardous Wastes located in or on the Facilities, other
than various cleaning products, solvents, paints, thinners, lubricants, fuels,
and related Hazardous Substances utilized in connection with everyday plant
operations or Hazardous Waste generated as a result thereof, which use,
generation, Treatment, Storage or Disposal of such Hazardous Substances or
Hazardous Wastes is not in material (meaning important or serious) violation of
any Environmental Law;
(f) Transport. To the Knowledge of Seller, Seller has
not, during the time it occupied the Facilities, sent a Hazardous Substance or
Hazardous Waste from the Facilities to a site that, pursuant to any
Environmental Law: (i) has been placed on the National Priorities List or any
similar state list; or (ii) is subject to or the source of an order from a
Government Authority to take "response," "corrective," "removal," or "remedial"
action, as defined in any Environmental Law, or to pay for the costs of any such
action at the site; and
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(g) Reports. To the Knowledge of Seller, Seller has
timely filed all reports required to be filed by Seller, and has (or had at all
appropriate times) all certificates, approvals and permits (and has generated
and maintained all data, documentation and records) required of Seller under all
Environmental Laws in connection with Seller's business, and has complied with
in all important or serious respects and currently is in compliance in all
important or serious respects with the terms and conditions of all such permits
and with all Environmental Laws. (h) Environmental Law. The Facilities, the
Purchased Assets, and Seller's operation of its business at the Facilities are
not in violation of any Environmental Law the violation of which would have a
Material Adverse Effect on the Facilities, the Purchased Assets or Purchaser's
ability to conduct business as Seller has been conducting its business at the
Facilities.
Schedule 5.1.5 also contains an accurate and complete list of all Hazardous
Substance and environmental reports prepared for Seller or in Seller's
possession with respect to the Facilities in the past seven years and all
permits required of Seller to conduct its operations in compliance with
Environmental Laws. Seller shall prepare and with Purchaser's cooperation,
submit all notices, forms and letters to the regulating authorities in order to
have such permits transferred to Purchaser within 45 days of Closing.
5.2 Organization and Power. Seller is a limited liability company duly
formed, validly existing and in good standing under the laws of the State of
Michigan. Seller has full power and authority to: (a) own, lease and operate its
properties and assets and carry on its business as and where such properties and
assets are now owned or leased and as such business is presently being
conducted; and (b) approve, execute, deliver and perform this Agreement and all
other agreements and documents to be executed and delivered by it in connection
herewith.
Parent represents and warrants that as of the date of this Agreement and as of
the Closing, it is a corporation duly formed, validly existing and in good
standing under the laws of the State of Michigan and has full power and
authority to approve, execute, deliver and perform this Agreement and all other
agreements and documents to be executed and delivered by it in connection
herewith, if any.
5.3 Agreements.
5.3.1 Seller Power and Enforceability. All requisite action to
approve, execute, deliver and perform this Agreement and each other agreement
and document delivered by Seller in connection herewith has been taken by
Seller. This Agreement and each other agreement and document delivered by Seller
in connection herewith have been duly executed and delivered by Seller and
constitute the legal, valid and binding obligations of Seller, enforceable
against Seller in accordance with their respective terms, and the individual
signing all such agreements and documents has been duly authorized by Seller to
bind Seller to the terms hereof and thereof.
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Parent represents and warrants that as of the date of this Agreement and as of
the Closing: (i) it has taken all requisite action to approve, execute, deliver
and perform this Agreement and each other agreement and document delivered by
Parent in connection herewith, if any, (ii) this Agreement and each other
agreement and document delivered by Parent in connection herewith, if any, have
been duly executed and delivered by Parent and constitute the legal, valid and
binding obligations of Parent, enforceable against Parent in accordance with
their respective terms, and (iii) the individual signing all such agreements and
documents, if any, has been duly authorized by Parent to bind Parent to the
terms hereof and thereof.
5.3.2 Consents. Except as set forth on Schedule 5.3.2, no
approval or consent of, or filing with, any Persons or any state or federal
Governmental Authority is required by Seller in connection with the transactions
contemplated hereby or the execution, delivery or performance by Seller of this
Agreement or any other agreement or document delivered by or on behalf of Seller
in connection herewith.
5.3.3 No Conflicts. Except as set forth on Schedule 5.3.3, the
execution, delivery and performance of this Agreement, and each other agreement
and document delivered by Seller in connection herewith, will not conflict with
or violate, result in a breach of, constitute a default under (whether upon
notice or the passage of time or both), give any party any additional right(s)
(including, but not limited to, the right to terminate) under, or result in the
creation of any lien on any of the Purchased Assets under: (a) any Law; (b)
Seller's Articles of Organization or Operating Agreement; (c) any Contract to
which Seller is a party or by which it or any of the Purchased Assets is bound;
(d) any judicial order, arbitration award, judgment, or decree to which Seller
or any of its assets or properties is subject; or (e) any Employee Benefit Plan,
Multiemployer Plan, Welfare Plan and Other Plan.
5.4 Financial.
5.4.1 Financial Records. Attached as Schedule 5.4.1 are the
Facilities' unaudited balance sheets of Seller as of December 31, 2004 and
December 31, 2005, and the related statements of income for the fiscal years
then ended, prepared by Seller ("Financial Statements"). All such Financial
Statements were prepared from Seller's Books and Records, and present fairly the
financial condition and results of operations of the Facilities at the date and
for the periods indicated on such financial statements. Seller has delivered to
Purchaser true, correct and complete copies of all management and internal
accounting control letters ("Letters") delivered to Seller by its auditors at
any time since January 1, 2004 to the extent the Letters dealt with an issue
regarding the Facilities or the Purchased Assets. Except as set forth on
Schedule 5.4.1, since December 31, 2005, there has been no change in the
business, assets or condition, financial or otherwise, of Seller, other than
changes in the ordinary course of business which have not, in the aggregate, had
a Material Adverse Effect, and Seller has not entered into any transaction
outside of the ordinary course of business.
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5.4.2 Taxes.
(a) Filing. All Tax returns, reports and declarations
(collectively, the "Tax Returns") required to be filed by or with any
Governmental Authority in connection with the properties, business, income,
expenses, net worth and franchises of Seller have been or will be timely filed,
and such returns are true, accurate and complete in all respects and Seller has
paid all required Taxes and, to the Knowledge of Seller, no Governmental
Authority has claimed that any Tax Return is inaccurate. Seller has delivered to
Purchaser copies of each of its most recent personal property and real property
Tax Returns for the Facilities. There have been and are no Tax claims, audits or
proceedings pending in connection with the personal property and real property
Tax Returns and, to the Knowledge of Seller, there are no such threatened
claims, audits or proceedings. There are no Liabilities related to Taxes of
Seller (or any Affiliate thereof) which could result in Liability to Purchaser
as a result of this transaction, or otherwise attach to the Purchased Assets.
(b) Liens. There are no Liens on any of the assets or
properties of Seller that arose in connection with any failure or alleged
failure on the part of Seller to pay any Tax.
(c) Withholding. Seller has withheld and paid to the
proper Governmental Authority all Taxes required to have been withheld and paid
in connection with amounts paid or owing to any employee, independent
contractor, creditor or other Person. Purchaser acknowledges that this
representation is not intended to apply to any withholding obligations of
Affiliates.
5.4.3 Books and Records. The Books and Records of Seller
delivered to Purchaser are, and have been, maintained in Seller's usual, regular
and ordinary manner consistent with past practice, and (except for information
retained by Seller and listed on Schedule 2.2) all material transactions related
to, pertaining to, or in any way connected with, the operation of the
Facilities, including, but not limited to, all material maintenance and repair
records relating to any equipment, are accurately reflected therein.
5.5 Legal.
5.5.1 Compliance with Laws.
(a) Violations. The Facilities, the Purchased Assets,
and Seller's operation of its business at the Facilities are not: (i) in
violation of any outstanding arbitration award, judgment, judicial order or
decree to which Seller is a party; or (ii) in violation of any Law, including,
but not limited to, any anti-discrimination, wage, hour, working condition,
payroll withholding, pension, building, zoning or Tax Law and the violation of
which Law would have a Material Adverse Effect on the Facilities, the Purchased
Assets or Purchaser's ability to conduct business as Seller has been conducting
its business at the Facilities.
(b) Possible Violations. Except as set forth in
Schedule 5.5.1(b), since the Specified Date, (i) there have been no allegations
of or inquiries concerning any violations by Seller of Law regarding Seller's
operations of its business at the Facilities, and (ii) there have been no
claims, notices, orders or directives issued by any Governmental Authority to
Seller alleging that Seller has operated its business at the Facilities in
violation of any Law. Except as listed on Schedule 5.5.1(b), no permits,
licenses, approvals or authorizations of any local, state, or federal
Governmental Authority are required to conduct Seller's business at the
Facilities as presently conducted and the absence of which would have a Material
Adverse Effect on the Facilities, the Purchased Assets or Purchaser's ability to
conduct business as Seller has been conducting its business at the Facilities.
All such permits, licenses, approvals and authorizations have been legally
obtained and maintained by Seller for the Purchased Assets and the Facilities
and are in full force and effect. No proceeding is pending to revoke or limit
any of them or otherwise to impose any conditions or obligations on the
possession or transfer of any of them and which proceeding would have a Material
Adverse Effect. Except as set forth in Schedule 5.5.1(b), all such permits,
licenses, approvals and authorizations are assignable or transferable to
Purchaser, and the consummation of the transactions contemplated hereby will not
require the consent of any Person or result in any revocation, cancellation or
suspension of any of such permits, licenses, approvals and authorizations.
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5.5.2 Product Warranty. Except as listed on Schedule
5.5.2:
(a) Claims. Since the Specified Date, there has been
no product or service warranty claim made or to the Knowledge of Seller
threatened by a customer of Seller in excess of $10,000.00 with respect to any
individual product or service produced at the Facilities;
(b) Recalls. There have been no product recalls by
Seller since the Specified Date for products produced at the Facilities; and
(c) Warranties. There are no product and service
warranties outstanding or currently being offered to customers of Seller.
5.5.3 Product Liability. Except as listed on Schedule 5.5.3,
no product Liability or other tort claims have been made or, to the Knowledge of
Seller, threatened against Seller alleging personal injury and relating to
products sold or services performed by Seller at the Facilities since the
Specified Date.
5.5.4 Insurance. There are no notices of any pending or
threatened terminations or premium increases with respect to any of such
insurance policies; Seller has not failed to give any notice or present any
claim under any insurance policy in due and timely fashion; and there are no
outstanding requirements or recommendations by or made on behalf of any
insurance company that issued a policy with respect to any of the Purchased
Assets, or the assets or operation of Seller requiring or recommending any
equipment or facilities to be installed on, or upgraded, or in connection with
any of the Facilities or assets or operations of Seller, the failure to comply
with would have materially adversely affected the insurance coverage or rates.
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5.5.5 Litigation. Except as listed in Schedule 5.5.2, 5.5.3,
or 5.5.5: (a) no claim, litigation, investigation or proceeding regarding the
Facilities, the Purchased Assets, or Seller's operation of its business at the
Facilities: (i) is pending against Seller or, to the Knowledge of Seller,
threatened against Seller; or (ii) involving Seller has been concluded since the
Specified Date; and (b) no arbitration award, judgment, judicial order, or
decree is outstanding against Seller.
5.5.6 Uninsured Claims. Schedule 5.5.6 describes:
(a) any self-insurance arrangement by or affecting
Seller, including any reserves established thereunder;
(b) any agreement or arrangement, other than a policy
of insurance, for the transfer or sharing of any risk to which Seller is a party
or which involves the business conducted at the Facilities; and
(c) all obligations of Seller to provide
insurance coverage to other Persons (for example, under leases or service
agreements) and identifies the policy under which such coverage is provided.
5.6 Business.
5.6.1 Employment. As of the date of this Agreement, Seller
employs a total of approximately 120 employees that work at or provide services
for the Facilities. Seller has paid in full to all employees all wages,
commissions, bonuses and other direct compensation for all services performed by
Seller's employees prior to the Closing. Except as set forth on Schedule 5.6.1,
there are no claims by any of the employees or former employees of Seller at the
Facilities pending with respect to their employment or benefits incident
thereto, including, but not limited to, sexual harassment and discrimination
claims and claims arising under workers' compensation laws ("Employee Claims")
and there have been no Employee Claims since the Specified Date. Except as set
forth on Schedule 5.6.1, there is no union representation of any employees at
the Facilities, there has been no attempt by a labor organization to organize
Seller's employees at the Facilities into a collective bargaining unit since the
Specified Date, and to the Knowledge of Seller there is no imminent threat of an
attempt to organize a union. Except as set forth on Schedule 5.6.1, since the
Specified Date, there has not been any general increase made or promised in the
level or rate of salaries or compensation (including, but not limited to,
bonuses) of Seller's employees at the Facilities. No employee of Seller is
currently covered by a defined benefit plan that will be terminated by Seller as
a result of the transaction contemplated by this Agreement. Seller is not
required to pay any bonuses or make any profit sharing contributions to its
employees during the period from January 1, 2006 through the Closing Date and
all bonuses or profit sharing contributions due to Seller's employees for prior
periods have been paid.
5.6.2 Employment Termination. Schedule 5.6.2 lists each
employee and former employee at the Facilities who has incurred an Employment
Loss with respect to Seller during the past 90 days and identifies the date on
which the Employment Loss occurred.
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5.6.3 Compliance with Contracts.
(a) Schedule 5.6.3(a) lists all Contracts (whether oral or
written) to which Seller is a party or by which it is bound that involve
performance of services or delivery of goods or materials by or to Seller, or
require Seller to make payments, of an amount or value in excess of $20,000
either as a one time payment or over the course of one year.
(b) Except as set forth in Schedule 5.6.3(e), with respect to
each Contract that is being assumed by Purchaser, (i) the agreement is legal,
valid, binding, enforceable and in full force and effect, (ii) the agreement
will continue to be legal, valid, binding, enforceable and in full force and
effect on identical terms following the consummation of the transactions
contemplated hereby, (iii) Seller is, and at all times has been, in material
compliance with all applicable terms and requirements of such agreement, (iv) to
the Knowledge of Seller, each other Person that has or has had any obligation or
liability under such agreement is, and at all times has been, in material
compliance with all applicable terms and requirements of such agreement, (v)
neither Seller, nor to the Knowledge of Seller, any other party thereto is in
breach or default thereof, and no event has occurred which with notice or lapse
of time, or both, would constitute a breach or default thereof, or permit
termination, modification, or acceleration thereunder, and (vi) neither Seller,
nor to the Knowledge of Seller, any other party has repudiated any material
provision of any such agreement.
(c) With respect to any Contract that is being assumed by
Purchaser, there are no renegotiations of, attempts to renegotiate or
outstanding rights to renegotiate any material amounts paid or payable to Seller
under any Contract with any Person having the contractual or statutory right to
demand or require such renegotiation and no such Person has made written demand
for such renegotiation.
(d) Seller has delivered to Purchaser a correct and complete
listing of each written agreement related to the Assumed Liabilities described
in Schedule 3.1 and a written summary setting forth the terms and conditions of
any oral agreement described in Schedule 3.1.
(e) With respect to the Contracts to be assumed by Purchaser
pursuant to Section 3.1, except as set forth on Schedule 5.6.3(e), to the
Knowledge of Seller, after due inquiry, there are no periods, events, or
circumstances which make a default under, or termination or suspension of, any
of the Contracts likely to occur subsequent to the date hereof, nor has any
third party raised any claim, dispute or controversy with respect to any
Contract. Except for Contracts with customers, such as formal Contracts,
purchase orders and releases, no Contract contains any provision which is
unusually burdensome, restrictive or unfavorable to Seller or which has a
Material Adverse Effect or is likely to have a Material Adverse Effect in the
future on the Facilities, the Purchased Assets or Purchaser's ability to conduct
business as Seller has been conducting its business at the Facilities;
(f) Seller has not released any of its material rights under
any of the Contracts listed on Schedule 3.1 thereof, except the purchase option
right according to Agreement dated October 20, 2005 between ADS Logistics, LLC
and the Seller (the "Purchase Option Buy Back Agreement");
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(g) No event has occurred under any Contract listed on
Schedule 3.1 that would permit the creation of any Lien upon, or the restriction
of the right to the use of, any of the Purchased Assets, and no party to any
Contract has repudiated or requested to amend or modify any provision of any
such Contract; and
(h) Except as set forth on Schedule 5.6.3(h), the Contracts
listed on Schedule 3.1 are freely assignable to Purchaser, no consent from any
third party is required under a Contract to consummate the transactions
contemplated hereunder or to assign to Purchaser any rights thereunder, and all
such Contracts are, and after the Closing will continue to be, legal, valid,
binding, enforceable in accordance with their terms and in full force and effect
on substantially identical terms to those in effect prior to the Closing.
5.6.4 Vacation Pay. Seller represents and warrants that Seller
has not accrued any Liability (and would not have accrued a Liability in the
ordinary course of business if the sale of the Facilities was not contemplated)
for vacation pay Liability for employees at the Facilities, other than the
accrual for vacation pay that has been earned by employees since January 1, 2006
according to the vacation accrual schedule set forth in Seller's employment
handbook delivered to Purchaser. Employees of Seller accrue vacation as
according to the schedules set forth in such employment handbook through the
Closing Date.
5.6.5 Change in Business. Except as disclosed on Schedule
5.6.5, there have been no changes in Seller's conduct of its business since the
Specified Date and there are no such changes currently being implemented.
5.7 Disclosure Regarding Customer Contracts. Prior to Closing, Seller
(a) has provided to the Purchaser access to all materials and documents related
to its customer Contracts set forth on Schedule 3.1 which are necessary for a
comprehensive review, and (b) has not omitted any information to which a
reasonable purchaser would attach importance in determining whether to assume
the Contracts.
5.8 Miscellaneous.
5.8.1 Conflicts of Interest. Except as described in Schedule
5.8.1, no member, officer or director of Seller nor family member of any member,
officer or director of Seller: (a) owns, directly or indirectly, any interest
in, or is an employee or agent of, any entity which is a lessor, lessee,
customer or supplier of Seller in connection with the Facilities; (b) owns,
directly or indirectly, any interest in, any tangible or intangible property,
asset, or right which Seller uses in its business at the Facilities; or (c) is a
party to any Contract that is to be assigned to Seller under Section 3.1.
5.8.2 Arms-Length Transactions. Except as described in
Schedule 5.8.2, all of Seller's transactions arising out of, resulting from, or
in any way connected with, the operation of the business at the Facilities have
been conducted on an arms-length basis except that in the case of transactions
between Seller and any Affiliate of Seller (all of which transactions are
described on Schedule 5.8.2) such transactions have been fair to Seller and on
terms comparable to those that would have prevailed in an arms-length
transaction. To the Knowledge of Seller, no employee of the business has
violated the published business policies of any third party with respect to
gifts, services or corporate business practices.
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5.8.3 Broker's or Finder's Fees. No agent, broker, person or
firm acting on behalf of Seller or its members is, or will be, entitled to any
commission or broker's or finder's fees from any of the parties hereto, or from
any Affiliate of any of the parties hereto, in connection with any of the
transactions contemplated herein, except Deloitte & Touche Corporate Finance,
LLC which fees shall be paid solely by Seller.
5.8.4 WARN Act Notice. Seller represents and warrants to
Purchaser that there is no requirement for a notice under the Worker Adjustment
and Retraining Notification Act with respect to the transaction contemplated by
this Agreement.
5.9 Survival Period of Representations and Warranties.
The foregoing representations shall survive the Closing only
for that period of time as expressly set forth in Section 11.5.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller that each of the statements
contained in this Article VI (including the Schedules attached hereto) is true
and correct as of the date of this Agreement and will be true and correct at and
as of the Closing.
6.1 Organization and Power. Purchaser is a corporation duly formed and
in good standing under the laws of the State of Ohio. Purchaser has full
corporate power to execute, deliver and perform this Agreement and all other
agreements and documents to be executed and delivered by it in connection
herewith.
6.2 Agreements.
6.2.1 Enforceability. All requisite action to approve,
execute, deliver and perform this Agreement and each other agreement and
document delivered by Purchaser in connection herewith has been taken by
Purchaser. This Agreement and each other agreement and document delivered by
Purchaser in connection herewith has been duly executed and delivered by
Purchaser and constitute the binding obligations of Purchaser enforceable
against Purchaser in accordance with their respective terms and the individual
signing all such agreements and documents has been authorized by Purchaser to
bind Purchaser to the terms hereof and thereof.
6.2.2 Consents. No approval or consent of, or filing with, any
Persons or any state or federal Governmental Authority is required by Purchaser
in connection with the transactions contemplated hereby or the execution,
delivery or performance by Purchaser of this Agreement or any other agreement or
document delivered by or on behalf of Purchaser in connection herewith (other
than any filing with respect to the FCC Licenses).
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6.2.3 No Conflicts. The execution, delivery and performance of
this Agreement, and each other agreement and document delivered by it in
connection herewith, does not conflict with or violate, or constitutes an event
which, after notice or lapse of time or both, could result in a breach or
violation of: (a) any Law; (b) Purchaser's Articles of Incorporation or Code of
Regulations; (c) any Contract to which Purchaser is a party or by which it is
bound; or (d) any judicial order, arbitration award, judgment, or decree to
which Purchaser or any of its assets or properties is subject.
6.3 Broker's or Finder's Fees. No agent, broker, person or firm acting
on behalf of Purchaser or its members is, or will be, entitled to any commission
or broker's or finder's fees from any of the parties hereto, or from any
Affiliate of any of the parties hereto, in connection with any of the
transactions contemplated herein.
6.4 Survival Period of Representations and Warranties. The foregoing
representations shall survive the Closing only for that period of time as
expressly set forth in Section 11.6.
ARTICLE VII
CONDITIONS TO CLOSING
7.1 Conditions to Purchaser's Obligation. The obligation of Purchaser
to perform this Agreement is subject to satisfaction of the following conditions
at or before the Closing, it being an explicit condition that all agreements and
documents to be delivered to Purchaser which are not attached as Exhibits and
Schedules (and therefore deemed satisfactory to Purchaser) must be in form and
substance reasonably satisfactory to Purchaser.
7.1.1 Agreements Performed. Seller shall have
performed all of the obligations required under this Agreement to
be performed by Seller at or before the Closing;
7.1.2 Representations Accurate. The representations and
warranties of Seller contained herein shall continue to be accurate in all
material respects just as if made as of the Closing; provided, however, that
Seller may provide Purchaser with updated supplemental schedules prior to
Closing that do not contain any material changes from the schedules attached
hereto on the date of execution hereof;
7.1.3 Seller's Certificate. Purchaser shall have received a
certificate signed by Seller certifying as to the matters set forth in Sections
7.1.1 and 7.1.2 above.
7.1.4 Opinion. Purchaser shall have received the legal
opinion, addressed to Purchaser as of the Closing Date, of Seller's counsel, in
form and substance satisfactory to Purchaser and its counsel, in the form as
attached in Exhibit 7.1.4.
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7.1.5 Certificate of Existence. Purchaser shall have received
a certificate of existence and/or good standing for Seller dated after December
31, 2005 from the Secretaries of State of each of Ohio, Indiana, Iowa and
Michigan;
7.1.6 No Change. There shall have been no material adverse
change in the financial condition, results of operations, assets, business or
prospects of Seller at the Facilities between the date of execution of this
Agreement and the Closing;
7.1.7 Legal Action. There shall be no pending or threatened
legal action or inquiry which challenges the validity or legality of or seeks or
could reasonably be expected to prevent, delay or impose conditions on the
consummation of the transaction contemplated by this Agreement;
7.1.8 Due Diligence Review. Purchaser shall complete further
due diligence review of any supplemental schedules or additional due diligence
materials provided by Seller after the date of this Agreement within three (3)
business days of receipt of any such supplemental schedule or additional due
diligence materials provided by Seller. If Purchaser does not advise Seller in
writing within such three (3) business days that the results of its review is
not satisfactory, the condition to Closing with respect to such supplemental
schedules or additional due diligence shall be waived by Purchaser. In the event
that a timely notice of reasonable dissatisfaction of the results of the
supplemental schedules or additional due diligence is given by Purchaser, Seller
shall then have sixty (60) days to cure the dissatisfaction defined by Purchaser
to Purchaser's sole but reasonable discretion. After the date hereof, the Seller
will not be required to deliver updates of the releases and purchaser orders
under Contracts with customers of Seller listed on Schedule 3.1 as long as
Seller delivers the flat file at or prior to Closing pursuant to a mutually
agreeable Information Transfer Plan (which has been preliminarily discussed and
agreed upon between the operational staff of Purchaser and Seller) and Seller
notifies Purchaser of any material events relating to the Contracts that occur
prior to Closing. The flat file is a data file that will include data (such as
customer information, inventory on hand, material identification, processing
specifications, finished inventory processed by Seller, weights and pricing) to
be mutually agreed to by Purchaser and Seller prior to Closing.
7.1.9 Consents. Purchaser shall have received all the material
consents, approvals, authorizations, permits, licenses and registrations of all
Persons and Governmental Authorities and as required under all material
Contracts set forth in Section 3.1, unless waived in writing by Purchaser, that
are required to consummate the transactions contemplated by this Agreement as
set forth on Schedule 5.3.2 (which is to be prepared jointly by Purchaser and
Seller); provided, however, that Purchaser shall waive a grant of the required
FCC Consent to the assignment of the FCC Licenses from Seller to Purchaser, so
long as Seller, at consummation, enters into a Radio Station Use Agreement for
the FCC Licenses in a form substantially similar to that set forth in Exhibit
10.8; Purchaser will require consents for any Contract set forth on Schedule 3.1
that requires the consent of Seller's customer for Purchaser to fulfill Seller's
obligations. A consent for any Contract with Marubeni-Itochu Steel America, Inc.
shall not be required.
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7.1.10 Lien Terminations. Purchaser shall have been provided
evidence satisfactory to Purchaser in its sole discretion that all security
interests in, and all Liens on, the Purchased Assets other than the Permitted
Exceptions have been terminated and released, such evidence to include, but not
be limited to, UCC Termination Statements from all secured creditors of Seller,
except those filings related to bailed goods;
7.1.11 Transfer Instruments. Purchaser shall have received
general bills of sale and assignment in the form and substance reasonably
satisfactory to it signed by Seller, and such certificates of title (including,
but not limited to, assignment of leases for equipment), endorsements,
assignments in recordable form, affidavits required under applicable law, and
other instruments of transfer as shall be required to permit Purchaser to
acquire the Purchased Assets free of any Liens;
7.1.12 Certified Resolutions. Purchaser shall have received
copies of the resolutions duly adopted by the members and/or shareholders of
Seller and Parent authorizing the execution, delivery and performance of this
Agreement and the other agreements, instruments and documents contemplated
hereby, duly certified by the Secretary of Seller and Parent, respectively,
which resolutions shall be in full force and effect on the Closing Date;
7.1.13 Payment of Bonuses and Vacation Pay. Seller shall have
paid bonuses and/or made profit sharing contributions to all eligible employees
thereof for all periods of operation up through December 31, 2005 and shall have
paid all prorated vacation pay to its employees earned through the Closing Date,
and Seller shall provide Purchaser with an accounting of the same;
7.1.14 Walk-Through. Purchaser has visited the Facilities and
is satisfied with its review of the Facilities and the Purchased Assets with the
following exceptions: (a) the slab jacking at the Iowa Facility, and (b) the pot
holes in the back driveway of the Ohio Facility. Once Seller shall have cured
such exceptions or satisfied Purchaser that Landlord at the Iowa Facility will
cure such exception, the Purchaser shall remove this Section 7.1.14 as a
condition to Closing.
7.1.15 Transitional Services Agreement. The Transitional
Services Agreement shall have been executed and delivered by Seller.
7.1.16 Flat Rock Metal Logistics, LLC. Flat Rock Metal
Logistics, LLC, a sister limited liability corporation to the Seller shall have
sold to Purchaser the two (2) cabs and trailers owned by Flat Rock Metal
Logistics, LLC identified during due diligence for the price of $220,000.
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7.1.17 Phase I Environmental Reports. Purchaser shall have
received Phase I Environmental Reports for each Facility, and each such report
shall be considered an additional due diligence material and therefore subject
to Section 7.1.8 above. The Phase I Environmental Reports will be performed at
Purchaser's direction and at Purchaser's sole cost and expense for Purchaser's
use (with a copy delivered to Seller).
7.1.18 Ohio Facility Lease. Purchaser, Seller and the primary
landlord of the Ohio Facility, Mitsui Steel Development Co., Inc. ("Mitsui"),
shall have entered into an assignment of the existing Lease Agreement dated as
of March 28, 2002 for the Ohio Facility that is between Mitsui and Flat Rock
Metal, Inc. on terms reasonably acceptable to Purchaser, with the assignment to
be effective as of the Closing. Seller shall use its best efforts to obtain an
estoppel certificate from Mitsui in substance reasonably acceptable to Purchaser
to be delivered at Closing and shall fully indemnify Purchaser for any failure
to obtain the estoppel certificate (which indemnity will not be subject to nor
count towards the cap or basket provisions of Section 11.5). Further, that the
existing Sublease Agreement between Flat Rock Metal, Inc. and Seller shall have
been terminated as of Closing.
7.1.19 Indiana Facility Lease. Purchaser and Seller shall have
entered into a valid sublease of the existing Multi-Tenant Industrial Building
Lease dated as of June 27, 2000 between Roll & Hold Warehousing Distribution
Corp., now known as ADS Logistics, LLC ("ADS"), and Seller (the "Existing
Indiana Sublease") effective as of the Closing. ADS must consent in writing to
the terms of the sublease between Purchaser and Seller. Seller shall use its
best efforts to obtain an estoppel certificate from ADS concerning the Existing
Indiana Sublease reasonably acceptable to Purchaser to be delivered at Closing
and shall fully indemnify Purchaser for any failure to obtain the estoppel
certificate (which indemnity will not be subject to nor count towards the cap or
basket provisions of Section 11.5). Seller shall use its best efforts to obtain
the consent in writing to the sublease between Purchaser and Seller of The
Indiana Port Commission ("IPC"), as Lessor under that certain Lease and Metals
Development and Operating Agreement dated as of October 28, 1996, if required
(which consent shall not be a condition to Closing). Seller shall use its best
efforts to obtain an estoppel certificate from IPC reasonably acceptable to
Purchaser to be delivered at Closing. Seller shall fully indemnify Purchaser for
any failure to obtain IPC's consent or the estoppel certificate (which indemnity
will not be subject to nor count towards the cap or basket provisions of Section
11.5). The sublease shall be for one year on a month to month basis at base rent
of $4,924 per month plus Seller's pro rata shares of taxes, assessments,
insurance and utilities, which Seller shall invoice to Purchaser on a monthly
basis. The sublease shall be terminable by Purchaser on 30 days notice. The
sublease shall contain Purchaser's option to require that Seller assign its
rights to Purchaser under the Existing Indiana Sublease which option will be
exercisable during the sublease term. Further, the Operating Agreement between
Seller and ADS relating to the Indiana Facility shall have been terminated as of
the Closing.
7.1.20 Iowa Facility Lease. Purchaser and Seller shall have
entered into an assignment of (a) the existing Amended and Restated Multi-Tenant
Industrial Building Sublease dated as of September 1, 2004 between Seller and
ADS (the "Iowa Sublease"), or (b) the Iowa Sublease as amended by that certain
First Amendment to Amended and Restated Multi-Tenant Industrial Building
Sublease dated as of March ___, 2006, depending on whichever is then binding
against Seller as of Closing for the Iowa Facility. The assignment, and with
respect to any amended Iowa Sublease as provided for in (b) above, the substance
of the amended Iowa Sublease, must be on terms reasonably acceptable to
Purchaser with the assignment to be effective as of the Closing. The substance
of the amended Iowa Sublease shall be acceptable to Purchaser if it determines
in its reasonable discretion that such amended Iowa Sublease is consistent with
the Agreement dated October 20, 2005 between ADS and Seller. Stag II Eldridge,
LLC ("Stag"), as successor in interest to Steel House LLC, as Landlord under
that certain Industrial Building Lease dated as of February 9, 2001 (the "Prime
Lease"), and ADS, as Tenant under the Prime Lease and Sublessor under the Iowa
Sublease, must each consent in writing to the terms of the assignment between
Purchaser and Seller, if such consent is required. If the Prime Lease has been
terminated and superseded by a new master lease prior to Closing, the landlord
and tenant under such new prime lease must each consent in writing to the terms
of the assignment between Purchaser and Seller, if such consent is required.
Seller shall use its best efforts to obtain an estoppel certificate reasonably
acceptable to Purchaser with respect to the Prime Lease, or any replacement
prime lease in place prior to Closing, and Iowa Sublease, as applicable, to be
delivered at Closing and shall fully indemnify Purchaser for any failure to
obtain an estoppel certificate (which indemnity will not be subject to nor count
towards the cap or basket provisions of Section 11.5). Further, the Eldridge
Amended and Restated Operating Agreement dated as of August 25, 2004 between
Seller and ADS relating to the Iowa Facility shall have been assigned from
Seller to Purchaser in writing with ADS's consent as of the Closing. Purchaser
shall have the right to negotiate with Stag or any future landlord under the
Prime Lease regarding a new lease directly with Purchaser. Purchaser shall have
the right to negotiate with ADS regarding an assignment of ADS' interest in the
Prime Lease to Purchaser. If Purchaser is successful in either such negotiation,
Seller shall cooperate to terminate the Iowa Sublease as of the effective date
of such new or assigned lease.
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7.2 Conditions to Seller's Obligation. The obligation of Seller to
perform this Agreement is subject to satisfaction of the following conditions at
or before the Closing, it being an explicit condition that all agreements and
documents to be delivered to Seller which are not attached as Exhibits (and
therefore deemed satisfactory to Seller) must be in form and substance
reasonably satisfactory to Seller.
7.2.1 Agreements Performed. Purchaser shall have
performed all of the obligations required under this Agreement to be performed
by it at or before the Closing;
7.2.2 Representations Accurate. The representations
and warranties of Purchaser contained herein shall continue to be accurate in
all material respects just as if made as of the Closing;
7.2.3 Purchaser Certificate. Seller shall have received
a certificate, signed by Purchaser, certifying as to the matters set forth in
Sections 7.2.1 and 7.2.2 above;
7.2.4 Legal Action. There shall be no pending or
threatened legal action or inquiry which challenges the validity or legality of
or seeks or could reasonably be expected to prevent, delay or impose conditions
on the consummation of the transaction contemplated by this Agreement;
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7.2.5 Certified Resolutions. Seller shall have received copies
of the resolutions duly adopted by the directors of Purchaser authorizing the
execution, delivery and performance of this Agreement and the other agreements,
instruments and documents contemplated hereby, duly certified by the Secretary
or Assistant Secretary of Purchaser, which resolutions shall be in full force
and effect on the Closing;
7.2.6 Wire Transfer. Seller shall have received immediately
available funds by wire transfer in the amount of the Purchase Price
($20,500,000, less any holdbacks for Taxes and plus or minus the prorations
under Section 4.1 or 4.3 and the amount for the trucks under Section 7.1.16);
7.2.7 Opinion. Seller shall have received the legal opinion,
dated as of the Closing Date, of Purchaser's counsel, satisfactory to Seller and
its counsel in the form as attached in Exhibit 7.2.7.
7.2.8 Transitional Services Agreement. The Transitional
Services Agreement shall have been executed and delivered by Purchaser.
7.2.9 Flat Rock Metal Logistics, LLC. Purchaser shall have
purchased and paid for the two (2) cabs and trailers owned by Flat Rock Metal
Logistics, LLC identified during due diligence for the price of $220,000.
ARTICLE VIII
CLOSING
If the conditions to the parties' obligations enumerated in Article
VII are satisfied, consummation of the transactions contemplated hereby (the
"Closing") shall take place at a mutually agreed upon place on March 24, 2006,
or on such other date as the parties may agree (the "Closing Date"). The
transfers and deliveries described in Article VII shall be mutually
interdependent and regarded as occurring simultaneously, and no such transfer or
delivery shall become effective until all the other transfers and deliveries
provided for in Article VII have also been consummated. The transfers and
deliveries herein contemplated shall be deemed to have occurred and the Closing
shall be effective as of Midnight on the Closing Date. Possession of the
Purchased Assets shall be delivered to Purchaser at the Closing.
ARTICLE IX
RISK OF LOSS PENDING CLOSING
The risk of any loss, destruction, or other damage to the Purchased
Assets, other than ordinary wear and tear, between the date of execution hereof
and the completion of the Closing on the Closing Date as provided in Article
VIII above, shall be solely that of Seller. If before completion of the Closing
any of the Purchased Assets are damaged or destroyed by fire, casualty, or any
other cause:
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(a) Over $500,000. If the replacement or repair cost is
determined by Purchaser (or at the request of Seller by an insurance appraiser
selected by Purchaser's then current insurance carrier) to be more than
$500,000, Purchaser, in its sole and absolute discretion, may either:
(i) Terminate this Agreement, without Liability; or
(ii) Complete the Closing hereunder, in which event
Purchaser shall be entitled to a credit against the
consideration payable hereunder to Seller equal to the greater of the insurance
proceeds paid or payable to Seller arising with respect to such damage or the
cost to repair the damage.
(b) Under $500,000. If such replacement or repair cost, as the
case may be, is less than $500,000, Purchaser shall be obligated to complete the
Closing hereunder and shall be entitled to a credit against the consideration
payable hereunder to Seller equal to the greater of the insurance proceeds
arising with respect to such damage or the cost to repair the damage.
ARTICLE X
COVENANTS
10.1 Pre-Closing Covenants.
10.1.1 Conduct of Business. Seller covenants that after the
date hereof and prior to the Closing, Seller shall conduct the business operated
at the Facilities in a commercially reasonable manner according to the normal
course of business and in accordance with its past practice to preserve its
business organization, keep available the services of its officers and
employees, maintain satisfactory relationships with suppliers, dealers,
customers, vendors, landlords and all others having business relationships with
it and continue to service and maintain all of its customers and assets in a
manner consistent with past practice (including maintaining assets according to
its normal maintenance program and repairing and replacing assets that may be
damaged on or prior to the Closing).
Seller covenants that, except as contemplated by this Agreement, Seller shall
not, after the date hereof and prior to the Closing, without the prior written
consent of Purchaser:
(a) sell, transfer, license, or assign any Purchased Assets;
(b) mortgage, pledge or otherwise encumber or create any Lien
on any of the Purchased Assets;
(c) create, assume or permit to exist any indebtedness (other
than indebtedness outstanding as of the date hereof, or subsequently
incurred in the ordinary course of business and consistent with past
practice, provided that such indebtedness is in compliance with all
terms and conditions of Seller's existing credit agreements and notes
payable);
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(d) increase compensation payable or to become payable or make
a bonus payment to or otherwise enter into one or more agreements with
any employee or agent of Seller;
(e) terminate any officer of Seller;
(f) take any action, or fail to take any action, the result of
which can reasonably be expected to be a termination of or default
under any Contract listed on Schedule 3.1;
(g) materially amend, modify or terminate, or agree to
materially amend, modify or terminate any Contract listed on Schedule
3.1;
(h) take any action, or knowingly omit to take any action,
which could reasonably be expected to result in a breach of any of the
representations, warranties or covenants set forth in this Agreement or
in any document to be executed or delivered by Seller hereunder; or
(i) enter into any agreement to do any of the things described
in clauses (a) through (i) above.
10.1.2 Access. Seller has or shall provide Purchaser with
access to the Facilities so that Purchaser may conduct its review of the
Facilities and Purchased Assets, but in a manner not to raise the suspicions of
employees and customers. After Purchaser has notified Seller in writing that it
has visited the Facilities and is satisfied with its review of the Facilities
and Purchased Assets and the provisions of Section 7.1.14 has been removed as a
condition to Closing, Purchaser and Purchaser's representatives, at all
reasonable times (8:00 a.m. to 6:00 p.m.) and upon reasonable notice (four hours
prior to visit) during and after the date hereof until Closing, shall be
permitted to further examine the Facilities to conduct such tests and
observations on machinery and equipment as Purchaser may choose to perform,
including, but not limited to, any steps Purchaser deems necessary to facilitate
the operation of the business of Purchaser at the Facilities following the
Closing. Purchaser shall repair all damage and hold Seller harmless from any
loss occasioned by such entry.
10.1.3 Supplemental Disclosure. From the date hereof until
Closing, Seller shall promptly notify Purchaser if Seller becomes aware of any
event or circumstance which: (a) makes it necessary to correct any
representation and warranty in Article V which has been rendered inaccurate
thereby; or (b) arises hereafter and which, had it existed on or prior to the
date hereof, would have resulted in an inaccuracy in a representation and
warranty in Article V.
10.1.4 Satisfaction of Conditions. Seller agrees to use
commercially reasonable efforts to cause each of the conditions set forth in
Section 7.1 to be satisfied at or before the Closing. Purchaser agrees to use
commercially reasonable efforts to cause each of the conditions set forth in
Section 7.2 to be satisfied at or before the Closing.
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10.1.5 Termination.
(a) By Whom. This Agreement may be terminated: (i) by
written agreement of Purchaser and Seller; or (ii) by Purchaser at any time
after the execution hereof and on or before the Closing Date pursuant to Article
IX above; or (iii) by Purchaser if it timely notifies Seller in writing that it
is reasonably dissatisfied with supplemental schedules or additional due
diligence supplied by Seller after the signing of this Agreement and Seller does
not cure such dissatisfaction within sixty (60) days after such notice by
Purchaser; or (iv) by Purchaser by written notice to Seller if any of the
conditions set forth in Section 7.1 shall not have been fulfilled by May 26,
2006 (or June 30, 2006 for conditions in Sections 7.1.18, 7.1.19 or 7.1.20),
unless such failure shall be due to the failure of Purchaser to perform or
comply with any of the covenants, agreements or conditions hereof to be
performed or complied by Purchaser prior to the Closing; or (v) by Seller by
written notice to Purchaser if any of the conditions set forth in Section 7.2
shall not have been fulfilled by May 26, 2006, unless such failure shall be due
to the failure of Seller to perform or comply with any of the covenants,
agreements or conditions hereof to be performed or complied with by Seller prior
to the Closing.
(b) Consequences. If this Agreement is terminated
pursuant to Section 10.1.5(a)(i), (ii), (iii) or (iv), all provisions of this
Agreement except the first sentence of Section 10.3.2 and the last sentence of
Section 10.1.2 shall become void without any Liability on the part of any party.
If this Agreement is terminated due to the breach by either party, all rights
and remedies of each party hereunder and all other provisions hereof related
thereto shall survive termination to the extent required so that any party
responsible for any breach or nonperformance of its obligations hereunder prior
to termination shall remain liable for the damages resulting therefrom. Further,
either party may waive and preserve its rights with respect to any breach or
non-performance by the other party and have a judgment for specific performance.
10.2 Post-Closing Covenants.
10.2.1 Noncompetition. Peter F. Shields, Michael F. Shields,
Keith King and the Seller shall not, directly or indirectly, alone or with
others, and Peter F. Shields shall cause the Shields Group not to, directly or
indirectly, alone or with others, install or operate any slitting line
(including slitting, multi-cut slitting, side trimming and oscillate slitting)
(a "Slitter Line" or "Slitting Business") or invest in, own, manage, operate,
finance, control, advise, render services to, provide financial assistance to,
guarantee the obligations of or be employed by any Person, that is directly or
indirectly, alone or with others, engaged in or planning to become engaged in
the Slitting Business, for a period of five (5) years expiring on [_______ ___,]
2011 (which date will be inserted at the Closing). In addition, the Seller shall
enter into a contract with Richard Steiner ("Steiner") that shall cause Steiner
not to, directly or indirectly, alone or with others, install or operate a
Slitter Line or become employed by an entity that, directly or indirectly,
operates a Slitter Line or conducts a Slitting Business, or invest in, own,
manage, operate, finance, control, advise, render services to, provide financial
assistance to or guarantee the obligations of any Person engaged in or planning
to become engaged in the Slitting Business, for a period of one (1) year
expiring on [___________ ___,] 2007 (which date will be inserted at the
Closing).
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Seller and the Shields Group shall, in the ordinary course of their business, be
permitted to sell products or services to a Person engaged in the Slitting
Business provided Seller or the Shields Group, as the case may be, is not
selling slitting line products or services (including slitting, multi-cut
slitting, side trimming and oscillate slitting).
10.2.2 Nonsolicitation. For a period of five (5) years after
the Closing Date, Seller, and Peter F. Shields and Keith King shall not,
directly or indirectly, alone or with others, and Peter F. Shields shall cause
the Shields Group not to, directly or indirectly, alone or with others:
(a) solicit the business of any Person who was at any
time prior to the Closing a customer of Seller, and thereafter, a customer of
Purchaser with respect to the Slitting Business;
(b) cause, induce or attempt to cause or induce any
customer, supplier, licensee, licensor, franchisee, employee, consultant or
other business relation (A) of Seller on the Closing Date or within the year
immediately preceding the Closing Date, or (B) of Purchaser after the Closing
Date, to cease doing business with Purchaser after the Closing Date, to deal
with any competitor of Purchaser with respect to a Slitting Business or in any
way interfere with its relationship with Purchaser; or
(c) hire, retain or attempt to hire or retain any
employee of Purchaser or in any way interfere with the relationship between
Purchaser and any of its employees or independent contractors.
10.2.3 Nondisparagement. After the Closing, Seller, Parent and
their respective Affiliates will not disparage Purchaser or any of its
Affiliates, or their employees or agents and after the Closing, Purchaser will
not disparage Seller, Parent and their respective affiliates, or their employees
or agents. The limitations set forth in this Section 10.2.3 shall not apply to
any statements made in connection with any efforts to enforce this Agreement, or
any agreement executed in connection with this Agreement.
10.2.4 Modification of Covenant. If a final judgment of a
court or tribunal of competent jurisdiction determines that any term or
provision contained in Section 10.2.1 through 10.2.3 is invalid or
unenforceable, then the parties agree that the court or tribunal will have the
power to reduce the scope, duration or geographic area of the term or provision,
to delete specific words or phrases or to replace any invalid or unenforceable
term or provision with a term or provision that is valid and enforceable and
that comes closest to expressing the intention of the invalid or unenforceable
term or provision. This Section 10.2 will be enforceable as so modified after
the expiration of the time within which the judgment may be appealed. This
Section 10.2 is reasonable and necessary to protect and preserve Purchaser's
legitimate business interests and the value of the Purchased Assets and to
prevent any unfair advantage conferred on Seller or Parent.
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10.2.5 Customer and Other Business Relationships. After the
Closing, Seller and Parent will cooperate with Purchaser in its efforts to
continue and maintain for the benefit of Purchaser those business relationships
of Seller existing prior to the Closing and relating to the business to be
operated by Purchaser after the Closing, including relationships with lessors,
employees, regulatory authorities, licensors, customers, suppliers and others.
Seller and Parent will refer to Purchaser all inquiries relating to such
business. The obligation imposed by this Section 10.2.5 shall not impose any
material cost or burden on Seller or Parent and shall be limited to a reasonable
period of time after the Closing.
10.2.6 Equipment Pits at Indiana. If Purchaser elects to
remove the equipment from the Indiana Facility (i) Purchaser shall do so at its
cost and expense and shall do so expeditiously and in a workman-like manner, and
(ii) Purchaser hereby indemnifies and holds harmless Seller from any claim by
Landlord at the Indiana Facility that damage was caused to the Indiana Facility
during such removal process. Seller hereby indemnifies and holds harmless
Purchaser from and against any claim by the Landlord at the Indiana Facility for
repair of the floor within the Indiana Facility due to the removal of the
equipment and the resulting open pits and remaining foundation structures within
the Indiana Facility and for any other failure to return the Indiana Facility
premises to the condition required. The indemnity from the Seller in the
previous sentence shall not apply if the Purchaser assumes the existing Lease or
enters a new lease at the Indiana Facility. No caps or deductibles shall apply
to the indemnity under this Section. Any indemnity under this Section shall not
count towards the caps or deductibles in Article XI.
10.3 Miscellaneous Covenants.
10.3.1 Publicity. All public announcements relating to this
Agreement or the transactions contemplated hereby will be made only as may be
agreed upon by Seller and Purchaser or as required by Law. If public disclosure
or notice is required by Law, the disclosing party will use its best efforts to
give the other prior written notice of the disclosure to be made.
10.3.2 Expenses; Transfer Taxes. Except to the extent
otherwise specifically provided herein, Purchaser shall pay all of the expenses
(including all fees of finders retained by Purchaser, attorneys and accountants)
incident to the transactions contemplated by this Agreement which are incurred
by Purchaser or its representatives, and Seller shall pay all of the expenses
(including all fees of finders retained by Seller, attorneys and accountants)
incident to the transactions contemplated by this Agreement which are incurred
by Seller or its representatives. Except to the extent otherwise specifically
provided herein, Seller shall pay all sales, or other transfer Taxes, if any,
which may be payable in connection with the transactions contemplated by this
Agreement. Any required transfer or assignment forms will be filed by Seller and
any required consents or other authorization from any Governmental Authority
will be obtained by Seller prior to the Closing.
10.3.3 No Assignment. No assignment by any party to this
Agreement of any right or obligation hereunder may be made without the prior
written consent of the other party, and any assignment attempted without that
consent will be void.
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10.3.4 Further Assurances. Seller (and its successors in
interest) agrees that, at any time and from time to time after the Closing, it
will, upon the request of Purchaser, do all such further acts as may be required
to further transfer, assign and confirm to Purchaser or to aid and assist in the
gaining of possession by Purchaser of or maintaining any of the Purchased
Assets, or to vest in Purchaser title to the Purchased Assets free of all Liens
arising from any action by Seller or its Affiliates.
10.3.5 Assignment of Contracts, Rights, Etc. Anything
contained in this Agreement to the contrary notwithstanding, this Agreement
shall not constitute an agreement to assign any Contract or any claim or any
right or benefit arising thereunder or resulting therefrom if an attempted
assignment thereof, without the consent of a third party thereto, would
constitute a breach thereof or in any way affect the rights of Purchaser
thereunder. Seller shall use commercially reasonable efforts to obtain the
consent of the other party to any of the Contracts and leases listed on Schedule
5.3.2 to the assignment thereof to Purchaser in all cases in which such consent
is required for assignment or transfer. If such consent is not obtained, Seller
(and its successors in interest) agrees to cooperate with Purchaser in any
reasonable arrangement designed to provide for Purchaser the benefits and the
obligations thereunder, including, but not limited to, having (a) Purchaser act
as agent for Seller, and (b) Seller enforce for the benefit of Purchaser any and
all rights of Seller against the other party thereto arising out of the
cancellation by such other party or otherwise.
10.4 Employee Covenants.
10.4.1 Employment. Pending the Closing, Seller shall use
commercially reasonable efforts to retain the services of Seller's employees and
encourage them to apply for possible employment with Purchaser to commence after
the Closing. Seller represents and warrants that Schedule 10.4.1 sets forth the
names, current hourly or annual compensation and other compensation arrangements
of Seller's employees at the Facilities on the date hereof and updated prior to
Closing. Purchaser shall offer employment, on such terms and conditions as shall
be determined by Purchaser in its sole discretion, to such employees of Seller
as Purchaser deems qualified and necessary for Purchaser's business in
Purchaser's sole discretion. The employment by Purchaser of any employee of
Seller who accepts the terms of employment offered by Purchaser will commence
after the Closing. Seller agrees in this regard to cooperate with Purchaser by
permitting Purchaser, prior to the Closing, to meet with Seller's employees at
such reasonable times as shall be approved by a representative of Seller and to
distribute to Seller's employees such forms and other documents relating to
employment by Purchaser after the Closing as Purchaser shall reasonably request.
Seller shall pay the cost of any compensation, severance or other benefits which
may be payable to any employees of Seller who do not seek employment with
Purchaser, accept Purchaser's offer of employment or do not receive offers of
employment from Purchaser. Nothing in this Section 10.4.1 shall be deemed to
require Purchaser to retain any of the employees it hires for any period of time
or at any particular compensation rate or in any particular position as any
employment with Purchaser after the Closing shall be terminable at-will.
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10.4.2 Tax Deposits. Seller shall make all required deposits
through the Closing for all withholding, social security and unemployment
insurance Taxes relating to Seller's employees (including, but not limited to,
those who become employees of Purchaser at Closing) and shall file timely
quarterly and annual reports with respect to such Taxes in accordance with
applicable Law whether such reports are due prior to or after the Closing.
10.4.3 COBRA Compliance. Purchaser shall not assume any
liabilities or obligations, and Seller shall discharge all liabilities and
obligations, including the timely provision of notices and any continuation of
health benefit coverage required to be provided to any of its employees, former
employees, or the beneficiaries or dependents of such employees or former
employees, under part 6 of Subtitle B of Title I of ERISA or Section 4980B(f) of
the Code (herein collectively referred to as "COBRA"), to the extent such
notices and continuation of health benefit coverage are legally required to be
provided by Seller by reason of a qualifying event occurring prior to or on the
Closing Date or by reason of the transactions contemplated by this Agreement.
10.5 Post-Closing Obligations. Purchaser and Seller acknowledge that
Seller will process coils and other materials ("Flat Rock Coils") for customers
through the Closing Date at the Facilities. Purchaser will store the Flat Rock
Coils for no charge for 180 days after the Closing Date. Seller and Purchaser
shall agree upon Schedule 10.5 that lists all the Flat Rock Coils and any
damages or problems to the same, after a mutual walk through inspection of the
Flat Rock Coils on the Closing Date. For any Flat Rock Coils stored at the
Facilities after such 180 day period, Seller shall be required to pay a market
storage charge to Purchaser, payable upon receipt of Purchaser's invoice.
Purchaser shall arrange for the shipment of the Flat Rock Coils to destinations
designated by Seller. Purchaser shall be responsible for any damage to the Flat
Rock Coils that would otherwise have been observable and was not noted in the
mutual walk through inspection and that occurs after the Closing Date. A
Transitional Services Agreement providing for the processing of coils, storage
of coils and other transitional issues such as books and records access by
Seller to enable it to collect accounts receivable shall be executed between
Seller and Purchaser on the Closing Date (the "Transitional Services
Agreement"). This Transitional Services Agreement shall also provide for (i)
Purchaser's cooperation in implementation of the provisions of the Purchase
Option Buy Back Agreement and a mechanism for payment to Seller of the Buy Back
Fee, as defined in the Purchase Option Buy Back Agreement and (ii) subject to
Purchaser's completion of due diligence with respect to the Ispat Inland
Contract and such terms in the Transitional Services Agreement as are acceptable
to Purchaser, both of which shall be determined by Purchaser in its sole and
absolute discretion, for Purchaser, as subcontractor to process any work arising
under the Storage and Processing Agreement dated April 2, 2002 between Ispat
Inland, Inc. and Seller ("Ispat Inland Contract"). Purchaser shall not assume
the Ispat Inland Contract and it shall not be considered an "Assumed Liability."
The Transitional Services Agreement shall be prepared and executed on the
Closing Date. The Buy Back Fee (referenced above), if received by Purchaser,
shall be promptly paid over to Seller.
33
10.6 Post-Closing Access to Seller's Records. Seller covenants and
agrees to make Keith King, or such other person designated by Seller, available
by telephone during normal business hours to provide information requested by
Purchaser regarding (a) Flat Rock Coils, (b) warranty work performed by
Purchaser at Seller's request, pursuant to Section 10.7, (c) processing
performed by Purchaser on product located at the Facilities at the time of
Closing, and (d) purchase orders outstanding on the Closing Date.
10.7 Post-Closing Warranty Work. Seller and Purchaser
shall enter into a Warranty Services Agreement on the Closing Date.
10.8 Access. Purchaser shall provide access to the Facilities
to employees of Seller between 8:00 a.m. and 6:00 p.m. on [__________ ___], 2006
for purposes of moving computer systems and other closing related issues. Seller
shall assure that all Seller employees are accompanied by representatives of
Purchaser.
10.9 FCC Consent. Seller and Purchaser shall submit an application for
assignment of the FCC Licenses to the FCC, requesting the FCC to consent to such
assignment (the "FCC Consent") without the imposition of conditions outside the
ordinary course. Seller agrees that Seller shall be solely responsible for any
and all filing fees associated therewith. The FCC Consent constitutes all
necessary consents, approvals, and authorizations required by the FCC for the
assignment of the FCC Licenses. Seller and Purchaser agree to use their best
efforts to obtain the FCC Consent and to promptly respond to any requests for
additional information made by the FCC in connection with the application for
FCC Consent. Upon consummation of this Agreement and until the FCC Consent is
obtained, Seller agrees to permit Purchaser to use and operate the FCC Licenses
pursuant to the terms of the Radio Station Use Agreement in the form to be
attached as Exhibit 10.9 at Closing and made a part hereof.
10.10 Access to Management. For 180 days following the Closing Date,
Purchaser agrees to make any former Seller management employees, then employed
by Purchaser, available by telephone during normal business hours to discuss
with Seller substantive issues regarding Seller's business but only after Seller
notifies Jim Davis and only during time periods approved by Jim Davis, which
approval shall not be unreasonably withheld. If Jim Davis is not available,
Seller shall notify and seek approval from Roslyn Bruns.
10.11 Insurance. Seller shall maintain the insurance listed in Section
5.5.3 for a period of at least one year from the Closing Date.
ARTICLE XI
INDEMNIFICATION.
11.1 Survival of Representations and Warranties. The representations
and warranties of Seller in Article V and of Purchaser in Article VI shall
survive the Closing for the periods of time set forth in Sections 11.5 and 11.6,
and the right of the Purchaser Indemnified Parties (as defined in Section 11.2)
to bring claims for breaches is subject to the time limits in paragraph (a) of
Section 11.5 and the other limits set forth therein, and the right of the Seller
Indemnified Parties (as defined in Section 11.3) to bring claims for breaches is
subject to the time limits in paragraph (a) of Section 11.6 and the other limits
set forth therein.
34
11.2 Indemnification by Seller. Except to the extent Seller
demonstrates that Purchaser or any of Purchaser's directors, officers,
employees, representatives, agents, attorneys, accountants or consultants
("Purchaser and its Agents") had "actual knowledge" (as defined below as
"Purchaser's Actual Knowledge") of the information resulting in any of the
events listed in Sections 11.2(a) through 11.2(c), Seller shall indemnify and
defend Purchaser and its directors, shareholders, officers, employees and agents
(the "Purchaser Indemnified Parties") against and hold them harmless from:
(a) Representations. All Liability resulting from or arising
out of any inaccuracy in or breach of any representation or warranty by Seller
or its Affiliates herein or in any Schedule or Exhibit attached hereto or in any
other document, instrument or agreement delivered in connection herewith;
(b) Covenants. All Liability resulting from or arising out of
any breach or nonperformance of any covenant or obligation made or incurred by
Seller in the main part of this Agreement (excluding any Schedule) or in any
Exhibit attached hereto;
(c) Liabilities. Any imposition (including, but not limited
to, imposition by operation of any bulk transfer or other Law) or attempted
imposition by a third-party upon any of the Purchaser Indemnified Parties or
against the Purchased Assets of (i) any Liability arising out of or relating to
the Purchased Assets or the business operated at the Facilities arising on or
before the Closing, which Purchaser has not specifically agreed to assume under
Section 3.1 of this Agreement and (ii) any Liability arising out of or relating
to Seller or its business other than the business operated at the Facilities,
whether arising before or after the Closing;
(d) Costs. Any and all costs and expenses (including, but not
limited to, reasonable legal and accounting fees) related to any of the
foregoing, or any investigation thereof.
For purposes of this Section 11.2 "Purchaser's Actual Knowledge" shall not
include verbal communications by Seller and its Agents with Purchaser and its
Agents or any other person, but shall only include (i) the information set forth
in Seller's due diligence responses and the Schedules to this Agreement which
have been Bates-stamped and reviewed by Purchaser and Seller and consists of
documents numbered [__________ through _________] [numbers to be inserted at
Closing] (the "Due Diligence Information"), (ii) the information contained in
the Phase I Environmental Reports, and (ii) commercial information that
Purchaser would be reasonably expected to know by being in the same industry as
Seller and serving similar customers. A complete duplicate set of the Due
Diligence Information will be maintained by Purchaser and Seller or their
respective legal counsel.
35
Purchaser shall promptly give to Seller written notice of the claim for which
indemnity is sought. A delay in giving notice shall relieve Seller of Liability
only to the extent Seller suffers actual prejudice because of the delay.
11.3 Indemnification by Purchaser. Except to the extent Purchaser
demonstrates that Seller, Parent or Seller's Affiliates or any of their
respective directors, officers, employees, representatives, agents, attorneys,
accountants or consultants ("Seller and its Agents") had "actual knowledge" (as
defined below as "Seller's Actual Knowledge") of the information resulting in
any of the events listed in Sections 11.3(a) through 11.3(d), Purchaser shall
indemnify and defend Seller and the members, officers, directors, employees and
agents of Seller (the "Seller Indemnified Parties") against and hold them
harmless from:
(a) Representations. All Liability resulting from or arising
out of any inaccuracy in or breach of any representation or warranty by
Purchaser herein or in any Schedule or Exhibit attached hereto;
(b) Covenants. All Liability resulting from or arising out of
any breach or nonperformance of any covenant or obligation made or incurred by
Purchaser herein or in any Schedule or Exhibit attached hereto;
(c) Liabilities. Any imposition (including, but not limited
to, by operation of Law) or attempted imposition by a third-party upon any of
the Seller Indemnified Parties of (i) any Liability of Seller which Purchaser
specifically agreed to assume under Section 3.1 of this Agreement, and (ii) any
Liability arising out of or relating to the Purchased Assets or the business
operated by Purchaser at the Facilities arising after the Closing, including,
without limitation, (1) all Liabilities with respect to products manufactured,
acquired for resale, sold, or leased by Purchaser, (2) all Liabilities arising
out of or attributable to the Release, generation, Treatment, Transport,
recycling, or Storage of any Hazardous substance by Purchaser on or after the
Closing, at, upon or from the Facilities, (3) all Liabilities of Purchaser with
respect to any litigation, claim, demand, investigation or proceeding, which
accrue on or after the Closing Date and which do not relate to a breach of
Seller's representations and warranties hereunder, (4) all Liabilities arising
out of an employment relationship between Purchaser and any of the individuals
listed on Schedule 10.3.1 that are hired by Purchaser that accrue on or after
the Closing, and (5) Liabilities Purchaser agreed to provide indemnity for
pursuant to the last sentence of Section 3.2(f); and
(d) Costs. Any and all related costs and expenses (including,
but not limited to, reasonable legal and accounting fees) related to any of the
foregoing or the investigation thereof.
For purposes of this Section 11.3 "Seller's Actual Knowledge" shall not include
verbal communications by Purchaser and its Agents with Seller and its Agents or
any other person, but shall only include (i) the information contained in the
Phase I Environmental Reports, (ii) commercial information that Seller would be
reasonably expected to know by being in the same industry as Purchaser and
serving similar customers, and (iii) the information set forth in the "Due
Diligence Information."
36
Seller shall promptly give to Purchaser written notice of the claim for which
indemnity is sought. A delay in giving notice shall only relieve Purchaser of
Liability to the extent Purchaser suffers actual prejudice because of the delay.
11.4 Third Party Claims. If any legal proceedings are instituted or
any claim is asserted by any third party in respect of which the Seller
Indemnified Parties on the one hand, or the Purchaser Indemnified Parties on the
other hand, may be entitled to indemnity hereunder, the party asserting such
right to indemnity shall promptly give the party from whom indemnity is sought
written notice thereof. A delay in giving notice shall only relieve the
recipient of Liability to the extent the recipient suffers actual prejudice
because of the delay. The party from whom indemnity is sought shall have the
right, at its option and expense, to participate in the defense of such a
proceeding or claim, but not to control the defense, negotiation or settlement
thereof, which control shall at all times rest with the party asserting such
right to indemnity, unless the proceeding or claim involves only money damages
(not an injunction or other equitable relief) and unless the party from whom
indemnity is sought: (a) irrevocably acknowledges in writing complete
responsibility for the claim and agrees to indemnify the party asserting such
right to indemnity, and (b) furnishes satisfactory evidence of the financial
ability to indemnify the party asserting such right to indemnity, in which case
the party from whom indemnity is sought may assume such control through counsel
of its choice and at its expense, but the party asserting such right to
indemnity shall continue to have the right to be represented, at its own
expense, by counsel of its choice in connection with the defense of such a
proceeding or claim. If the party from whom indemnity is sought does not assume
control of the defense of such a proceeding or claim, the entire defense of the
proceeding or claim by the party asserting such right to indemnity shall be
vigorously pursued, and any settlement or resolution of the proceeding or claim
by the party asserting such right to indemnity shall be subject to the prior
consent of the party from whom indemnity is sought. Any settlement or resolution
by the party asserting such right to indemnity made in accordance with the terms
hereof and any judgment entered in the proceeding or claim shall be binding on
the party from whom indemnity is sought as fully as though it alone had assumed
the defense thereof, except that the right of the party from whom indemnity is
sought to contest the right of the other to indemnification under this Agreement
with respect to the proceeding or claim shall not be extinguished. If the party
from whom indemnity is sought does assume control of the defense of such a
proceeding or claim, it will not, without the prior written consent of the party
asserting such right to indemnity, which consent shall not be unreasonably
withheld, settle the proceeding or claim or consent to entry of any judgment
relating thereto which does not include, as an unconditional term thereof, the
giving by the claimant to the party asserting such right to indemnity a release
from all Liability in respect of the proceeding or claim. The parties hereto
agree to cooperate fully with each other in connection with the defense,
negotiation or settlement of any such proceeding or claim. The Seller
Indemnified Parties and the Purchaser Indemnified Parties agree to take
reasonable action to mitigate any Liabilities, expense, or damages with respect
to any claim for indemnification.
11.5 Limitations on Indemnification of Purchaser Indemnified Parties.
The indemnification of the Purchaser Indemnified Parties provided for under
paragraph (a) of Section 11.2 and the other remedies of the Purchaser
Indemnified Parties arising out of this Agreement and the transactions
contemplated hereunder shall be limited in certain respects as follows:
37
(a) Time. Any claim for indemnification under paragraph (a) of
Section 11.2 by the Purchaser Indemnified Parties shall be made on or before the
first anniversary of the Closing Date, except that: (i) a claim for
indemnification relating to the representations and warranties contained in
Section 5.4.2 (Taxes) may be made until the expiration of the applicable statute
of limitations for either the assessment or collection of Taxes for the periods
referred to therein; (ii) a claim for indemnification relating to the
representations and warranties contained in Section 5.1.5 (Environmental
Matters) or in any other Section of Article V relating to Environmental Laws may
be made until the fifth anniversary of the Closing Date; and (iii) a claim for
indemnification relating to the representations and warranties contained in
Section 5.2 (Organization and Power), Section 5.3 (Agreements), and Section
5.1.1 (Title) may be made forever;
(b) Tippling Basket. Seller shall not be liable to the
Purchaser Indemnified Parties for indemnification claims under Section 11.2
until the aggregate amount of indemnification claims under Section 11.2 exceeds
$125,000, but if the aggregate amount of indemnification claims under paragraph
11.2 reaches such amount, Seller shall be liable to the Purchaser Indemnified
Parties for the full amount of such indemnified claims, in excess of $25,000
dollars;
(c) Maximum.
Non-Environmental Maximum. Notwithstanding anything to the
contrary in this Agreement (except as specified in this Section 11.5(c)), in no
event shall Seller be liable under Section 11.2(a), in the aggregate, for any
amounts exceeding $5,000,000 (the "$5,000,000 Cap").
Environmental Maximum. The $5,000,000 Cap shall not apply to
any Liability resulting from or arising out of any inaccuracy in or breach of
any representations and warranties contained in Section 5.1.5 (Environmental
Matters).
Absolute Cap. Except as provided below under "Exceptions," the
aggregate maximum liability of Seller for indemnity under Section 11.2(a), in
the aggregate, shall be $10,000,000, which shall be an absolute cap (the
"Absolute Cap").
Exceptions. The $5,000,000 Cap and the Absolute Cap shall not
apply to (i) to any Liability resulting from or arising out of any inaccuracy in
or breach of the representations or warranties by Seller in Section 5.3
(Agreements); Section 5.4.2 (Taxes); and Section 5.1.1 (Title) of this
Agreement; and (ii) in the event of fraud.
(d) Claim. A claim for indemnity is made by giving written
notice of the claim to the party from whom indemnity is sought. The written
notice must contain a description of the claim with reasonable detail and based
on information and knowledge available to the party asserting the right to
indemnity.
38
11.6 Limitations on Indemnification of Seller Indemnified Parties.
The indemnification of the Seller Indemnified Parties provided for under Section
11.3 and the other remedies of the Seller Indemnified Parties arising out of
this Agreement and the transactions contemplated hereunder shall be limited in
certain respects as follows:
(a) Time. Any claim for indemnification under paragraph (a) of
Section 11.3 by the Seller Indemnified Parties shall be made by the first
anniversary of the Closing Date;
(b) Tippling Basket. Purchaser shall not be liable to the
Seller Indemnified parties for indemnification claims under Section 11.3 until
the aggregate amount of indemnification claims Section 11.3 exceeds $125,000,
but if the aggregate amount of indemnification claims under Section 11.3 reaches
such amount, Purchaser shall be liable to the Seller Indemnified Parties for the
full amount of such indemnified claims, in excess of $25,000 dollars;
(c) Maximum. Notwithstanding anything to the contrary in this
Agreement, in no event shall Purchaser be liable for amounts exceeding
$5,000,000; and
(d) Claim. A claim for indemnity is made by giving written
notice of the claim to the party from whom indemnity is sought. The written
notice must contain a description of the claim with reasonable detail and based
on information and knowledge available to the party asserting the right to
indemnity.
11.7 Exclusive Remedy. A claim for indemnity under this Article XI
shall be the sole and exclusive remedy of any party seeking redress of an
alleged breach of this Agreement or making any claims with respect to this
Agreement or the transactions contemplated hereby, except in the event of fraud.
ARTICLE XII
NOTICES
12.1 Notices. All notices shall be in writing delivered
as follows:
(a) If to Purchaser, to: Thomas
A. Compton President
Precision Strip, Inc. 86
South Ohio Street P.O. Box
104 Minster, Ohio
45865-0104
With a copy to: James G. Ryan, Esq.
Bailey Cavalieri LLC
10 West Broad Street, Suite 2100
Columbus, Ohio 43215
If to Seller, to: Peter F. Shields, Chairman
Flat Rock Metal, Inc.
26601 W. Huron River Drive
P.O. Box 1090
Flat Rock, MI 48134-1090
With a copy to: Thomas J. Strobl, Esq.
Strobl & Sharp, P.C.
300 E. Long Lake Road, Suite 200
Bloomfield Hills, MI 48304
39
or to such other address as may have been designated in a prior notice. Notices
sent by registered or certified mail, postage prepaid, return receipt requested,
shall be deemed to have been given three business days after being mailed;
otherwise, notices shall be deemed to have been given when received by the
Person to whom the notice is addressed or any other Person with apparent
authority to accept notices on behalf of the Person to whom the notice is
addressed.
12.2 Binding Effect. Except as may be otherwise provided herein, this
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and permitted assigns. Except as otherwise provided
in this Agreement, nothing in this Agreement is intended or shall be construed
to confer on any Person other than the parties any rights or benefits hereunder.
If Seller fails to honor a request for indemnification hereunder then Parent
shall become responsible for Seller's indemnification Liability.
12.3 Headings. The headings in this Agreement are intended solely
for convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.
12.4 Exhibits and Schedules. The Exhibits and Schedules identified
in this Agreement are incorporated herein by reference and made a part hereof.
Capitalized terms not otherwise defined in the Exhibits or Schedules to this
Agreement will have the meanings given to them in this Agreement, (i) the
disclosure of any item on any Exhibit or Schedule to this Agreement will be
deemed to be a disclosure of such item for all purposes of this Agreement,
including a disclosure of such item on each other Exhibit and Schedule to this
Agreement, and (ii) matters reflected in any Exhibit or Schedule to this
Agreement are not necessarily limited to matters required to be reflected in any
such Exhibit or Schedule, any such additional matters are set forth for
informational purposes and do not necessarily include other matters of a similar
nature and inclusion of any matter in any Exhibit or Schedule to this Agreement
will not be considered an admission that such matter is or may be material for
purposes of this Agreement or otherwise. All Schedules referred to in this
Agreement shall be initialed by the party delivering the same and dated the date
of delivery.
12.5 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same document.
40
12.6 Governing Law. This Agreement shall be governed by and
construed under Ohio law, without regard to conflict of laws principles.
12.7 Waivers. Compliance with this Agreement may be waived only by a
written instrument specifically referring to this Agreement and signed by the
party waiving compliance. No course of dealing, nor any failure or delay in
exercising any right, shall be construed as a waiver, and no single or partial
exercise of a right shall preclude any other or further exercise of that or any
other right.
12.8 Pronouns. The use of a particular pronoun herein shall not be
restrictive as to gender or number but shall be interpreted in all cases as the
context may require.
12.9 Time Periods. Unless otherwise specified in this Agreement, any
action required hereunder to be taken within a certain number of days shall be
taken within that number of calendar days; provided, however, that if the last
day for taking such action falls on a weekend or a holiday, the period during
which such action may be taken shall be automatically extended to the next
business day.
12.10 No Strict Construction. The language used in this Agreement
will be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction will be applied against either
party.
12.11 Modification. No supplement, modification or amendment of this
Agreement shall be binding unless made in a written instrument which is signed
by all of the parties and which specifically refers to this Agreement.
12.12 Entire Agreement. Except for the Confidentiality Agreement
between Purchaser and Seller dated November 8, 2005 and the Letter of Intent
dated January 19, 2006, this Agreement and the agreements and documents referred
to in this Agreement or delivered hereunder are the exclusive statement of the
agreement among the parties concerning the subject matter hereof. All
negotiations among the parties are merged into this Agreement, and there are no
representations, warranties, covenants, understandings, or agreements, oral or
otherwise, in relation thereto among the parties other than those incorporated
herein and to be delivered hereunder.
12.13 Counterparts. This Agreement may be signed in one or more
counterparts, and each counterpart will be considered an original Agreement. All
of the counterparts will be considered one document and become a binding
agreement when one or more counterparts have been signed by each of the Parties
and delivered to the other by facsimile or scanned email.
INTENDING TO BE LEGALLY BOUND, the parties have signed this Acquisition
Agreement as of the date first above written.
41
PARENT:
SHIELDS ACQUISITION COMPANY, INC.,
a Michigan corporation
By:
-------------------------------
Print Name: Peter F. Shields
Its: Chairman
SELLER: PURCHASER:
FLAT ROCK METAL PROCESSING L.L.C. PRECISION STRIP, INC.
By By:
-------------------------------- ----------------------------------
Print Name: Peter F. Shields Print Name:
-----------------------
Its: Chairman Its:
------------------------------
Peter F. Shields acknowledges receiving direct or indirect consideration for
being bound by Sections 10.2.1 and 10.2.2 and that Purchaser would not have
entered into this Agreement unless Peter F. Shields agreed to be bound by such
sections.
------------------------------------
Peter F. Shields
As to Section 10.2.1 Only
Keith King acknowledges receiving direct or indirect consideration for being
bound by Sections 10.2.1 and 10.2.2 and that Purchaser would not have entered
into this Agreement unless Keith King agreed to be bound by such sections.
------------------------------------
Keith King
As to Section 10.2.1 Only
42
Michael F. Shields acknowledges receiving direct or indirect consideration for
being bound by Sections 10.2.1 and 10.2.2 and that Purchaser would not have
entered into this Agreement unless Michael F. Shields agreed to be bound by such
sections.
------------------------------------
Michael F. Shields
As to Section 10.2.1 Only
43
Dates Referenced Herein and Documents Incorporated by Reference
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