Exhibit 99.2
ASSET PURCHASE AGREEMENT
DATED AS OF FEBRUARY 16, 2004
BY AND AMONG
J&L SPECIALTY STEEL, LLC,
ARCELOR S.A.,
JEWEL ACQUISITION LLC,
AND
ALLEGHENY LUDLUM CORPORATION
ASSET PURCHASE AGREEMENT
This is an Asset Purchase Agreement (this "AGREEMENT"), dated as of
February 16, 2004, by and among J&L Specialty Steel, LLC, a Delaware limited
liability company ("SELLER"), Arcelor S.A., a Luxembourg corporation ("PARENT"),
Jewel Acquisition LLC, a Delaware limited liability company ("BUYER), and
Allegheny Ludlum Corporation, a Pennsylvania corporation ("ALC").
Seller is engaged in the business of manufacturing and selling flat
rolled stainless steel (the "BUSINESS").
Seller owns and desires to sell and assign to Buyer certain of Seller's
assets used or held for use in the Business. Buyer desires to purchase such
assets from Seller.
Certain terms used in this Agreement are defined separately in Article
VII and are integral to this Agreement.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
expressly acknowledged, the parties hereto, intending to by legally bound, agree
as follows:
ARTICLE I.
THE SALE AND PURCHASE TRANSACTION
1.1. SALE AND PURCHASE OF THE PURCHASED ASSETS. At the Closing, Seller
shall sell and transfer to Buyer, and Buyer shall purchase from Seller, free and
clear of all Encumbrances other than Permitted Encumbrances, all of Seller's
assets, properties and business of every kind, nature and description, wherever
located and whether real, personal or mixed, tangible or intangible, in
electronic form or otherwise, and whether or not having any value for accounting
purposes or carried or reflected on or specifically referred to in its books or
financial statements, except as set forth below and except those assets
specifically excluded pursuant to Section 1.2 or set forth on Schedule 1.2. This
sale and purchase transaction is subject to the conditions described in Article
II. The properties, business, goodwill and assets of Seller to be sold and
transferred to Buyer hereunder (collectively, the "PURCHASED ASSETS") shall
include the following:
(A) That portion of the Real Property, as is more particularly
described on Schedule 1.1(a), as is designated in writing by Buyer to Seller not
later than March 31, 2004;
(B) All of Seller's machinery, equipment, components, parts, tooling,
tools, dies, jigs, spare parts, supplies and materials;
(C) All of Seller's inventories of raw materials, work-in-process,
parts, subassemblies and finished goods, and all other materials and supplies to
be used or consumed by Seller in the
production of finished goods, wherever located and whether or not obsolete or
carried on Seller's books of account;
(D) All of Seller's other tangible personal property, including office
furniture, office equipment and supplies, leasehold improvements, vehicles and
computers;
(E) All of Seller's advance payments, rental deposits, prepaid items,
claims, deferred charges, rights of offset and credits and claims for refund, in
each case with respect to the Purchased Assets;
(F) All notes and accounts receivable and other rights to payments from
customers of Seller, including trade accounts receivable from goods shipped,
products sold or services rendered, and the full benefit of all security for
such accounts or rights to payment;
(G) All of Seller's books, records, manuals, documents, books of
account, whether inscribed on tangible medium or stored in electronic or other
medium, including sales and credit reports, client and customer lists,
literature, brochures, advertising material, maintenance records, service and
warranty records, referral sources, research and development records, production
records, equipment logs, operating guides and manuals, financial and accounting
records, creative materials, advertising materials, promotional materials,
studies, reports, correspondence and other similar documents and, subject to
Legal Requirements, copies of all personnel records in each case with respect to
the Purchased Assets and/or the Transferred Employees, as the case may be;
(H) All of Seller's rights under Contracts identified on Schedule
1.1(h) and all outstanding offers and solicitations made to or by Seller
identified on Schedule 1.1(h) to the extent such Contracts, offers and
solicitations are designated in writing by Buyer to Seller not later than March
31, 2004, and those Contracts, offers and solicitations made or entered into by
Seller in the ordinary course after the date hereof and prior to the Closing
Date;
(I) All of Seller's intangible rights and property, including goodwill
and rights in and to the name "J&L Specialty Steel" and in any other tradename,
trademark, fictitious name or service mark, or any variant of any of them, and
any applications therefor or registrations thereof, and any other forms of
Intellectual Property, and all of Seller's research related to the Business
conducted by Seller, all of Seller's development facilities and inventions and
work-in-process or a part thereof, and all rights to Seller's Software,
telephone numbers, facsimile numbers, e-mail addresses, Internet sites, Internet
addresses and domain names thereof and other listings;
(J) All of the Governmental Authorizations and all pending applications
for issuance or renewal thereof to the extent that they may be legally
transferred by agreement;
(K) All rights to proceeds from Seller's insurance policies after the
Closing Date for events occurring prior to the Closing Date, to the extent
arising from or relating to the Purchased Assets or the Assumed Liabilities and
otherwise not arising from or relating to the Seller Liabilities.
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(L) All of Seller's assets, other than Retained Assets, not otherwise
identified above that are employed by Seller in connection with the Business;
and
(M) All of Seller's choses in action, causes of action and judgments,
all express and implied warranties and all existing and inchoate claims, rights
and remedies related to any of the foregoing or the Assumed Liabilities, other
than choses in action, causes of action and judgments, express and implied
warranties and existing and inchoate claims, rights and remedies against
Affiliates of Seller (excluding the Receivables payable to Seller by Affiliates
of Seller included in Net Working Capital), which shall be Retained Assets.
1.2. RETAINED ASSETS. Seller shall retain and the Purchased Assets
shall not include the following assets:
(A) the consideration to be delivered to Seller pursuant to, and all
other rights under, this Agreement and the Other Agreements to which Seller is a
party;
(B) all proceeds from Seller's insurance policies, other than those
described in Section 1.1(k);
(C) Seller's company seals, certificates of incorporation and
formation, limited liability company operating agreement, minute books, stock
books, Tax Returns, equity records, books of account or other records relating
to the organization of Seller and its predecessors as entities, all
qualifications to do business as a foreign company and all arrangements with
registered agents relating to foreign qualifications;
(D) all claims, choses in action, causes of action and judgments in
respect of any litigation matter identified on Schedule 4.12 and with respect to
any other Liability other than the Assumed Liabilities;
(E) those Contracts identified on Schedule 1.2;
(F) all books and records related to the Retained Assets and the Seller
Liabilities;
(G) advance payments, rental deposits, prepaid items, claims, deferred
charges, rights of offset and credits and claims for refund other than those
described in Section 1.1(e);
(H) all rights of Seller to use any service marks, service names,
trademarks, trade names, domain names, logos or brand names of, or sublicensed
to Seller by, any Affiliate of Seller (including any derivatives thereof) or
blueprints, drawings, designs, manuals, documentation or other intellectual
property rights under any Contract identified on Schedule 1.2 or attributable to
or that are used or usable exclusively in Seller's manufacturing of products for
Parent or any other Affiliate of Seller (the "EXCLUDED INTELLECTUAL PROPERTY");
(I) all personnel records related to non-Transferred Employees or that
Seller is required by law to retain in its possession;
(J) the Retained Real Property;
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(K) all cash, cash in banks, cash equivalents, investments, including
stock, debt, instruments, options and other instruments and securities, and bank
and mutual fund accounts;
(L) all accounts or notes receivable owed to Seller by Parent or any
Affiliate of Parent included on Schedule 1.2(l);
(M) refunds or claims for refunds of Taxes paid by Seller, including
Seller's federal income tax refund for the four-year period ending on December
31, 1994 of approximately $1.5 million;
(N) all shares of capital stock or other ownership interests held by
Seller in any Subsidiary;
(O) all payments, deposits or other prepaid expenses with respect to
any of Seller's, or any of Seller's Affiliates, representatives or any of the
Retained Assets;
(P) all insurance policies, fidelity or surety bonds or fiduciary
liability policies covering the Purchased Assets, the Business or the
operations, employees, officers or directors of Seller, all of Seller's rights
of every nature and description under or arising out of such policies and bonds,
as well as all rights under past and current policies of insurance held by
Seller (to the extent of any coverage for Seller Liabilities);
(Q) the Benefit Plans and all assets maintained pursuant to or in
connection with the Benefit Plans; and
(R) all other assets set forth on Schedule 1.2 (collectively, the
"RETAINED ASSETS").
1.3. ASSUMED LIABILITIES. At the Closing, Buyer shall assume and agree
to perform, pay or discharge, when due, to the extent not theretofore performed,
paid or discharged, (i) each of the trade accounts payable (other than trade
accounts payable to any Related Party of Seller, except trade accounts payable
to the vendors identified on Schedule 1.3(i) in the amounts set forth thereon)
reflected on the Balance Sheet that remains unpaid at and is not delinquent as
of the Closing Date (trade payables subject to payment arrangements specifically
disclosed on Schedule 1.1(h) are deemed not to be delinquent provided that
Seller performs in accordance with the disclosed payment arrangements) and any
trade accounts payable (other than trade accounts payable to any Related Party
of Seller, except for trade accounts payable to the vendors identified on
Schedule 1.3(i)) incurred by Seller as a result of the purchase of raw
materials, energy, supplies and other similar items incident to the manufacture
of stainless steel in accordance with the operating plan set forth on Schedule
3.1 (the "OPERATING PLAN") between the date of the Balance Sheet and the Closing
Date that remain unpaid at and are not delinquent as of the Closing Date and do
not together exceed $55,600,000 in the aggregate (the "TRADE ACCOUNTS PAYABLE")
and (ii) those liabilities specifically described on Schedule 1.3(ii) (the
"SCHEDULED LIABILITIES", and together with the Trade Accounts Payable, the
"ASSUMED LIABILITIES"). The Assumed Liabilities shall not include any expenses
of Seller incurred in connection with this Agreement and the Contemplated
Transactions, including all accounting, legal and brokers' fees.
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1.4. SELLER LIABILITIES. Notwithstanding anything else herein to the
contrary, Buyer does not hereby and shall not assume or in any way undertake to
pay, perform, satisfy or discharge any Liability of Seller or any Predecessor
existing before, on or after the Closing Date or arising out of any transactions
entered into, or any state of facts existing, before, on or after the Closing
Date, and whether or not related to or arising out of any of the Purchased
Assets, except for the Assumed Liabilities (the "SELLER LIABILITIES"), and
Seller acknowledges that it remains solely liable for all the Seller
Liabilities, including, without limitation, (i) any Environmental Liability with
respect to the Business, the Real Property or the Purchased Assets to the extent
arising out of any facts or circumstances existing at any time on or before the
Closing Date, (ii) any Liability of Seller or any Predecessor arising under
ERISA, and (iii) any Liability of Seller or any Predecessor arising under the
Benefit Plans. Parent acknowledges that Buyer does not hereby assume or in any
way undertake to pay, perform, satisfy or discharge, (i) the Seller Liabilities,
including any Seller Liabilities to Parent or any other Affiliate of Seller or
Parent, or (ii) any Liability of any Affiliate of Seller.
1.5. PURCHASE PRICE. The purchase price for the Purchased Assets (the
"PURCHASE PRICE") shall be an amount equal to the Net Working Capital of Seller
derived from Seller's March 31, 2004 balance sheet (or the most recent available
month-end balance sheet of Seller subsequent to March 31, 2004 that is available
prior to the Closing Date) (the "REFERENCE NET WORKING CAPITAL"), as adjusted by
the Purchase Price Adjustment and Section 1.12.
1.6. PAYMENT.
(A) DELIVERIES. Buyer shall deliver the Purchase Price to Seller at the
Closing as follows:
(i) Seven Million Five Hundred Thousand US Dollars ($7,500,000) by
wire transfer of immediately available federal funds;
(ii) Seven Million Five Hundred Thousand US Dollars ($7,500,000) in
the form of a non-negotiable, non-transferable Promissory Note
of ALC in the form attached hereto as Exhibit A (the "ALC
PROMISSORY NOTE"); and
(iii) The balance of the Purchase Price, subject to adjustment by
the Purchase Price Adjustment, Section 1.6(c) and Section
1.12, in the form of a non-negotiable, non-transferable,
secured Promissory Note of the Buyer in the form attached
hereto as Exhibit B (the "BUYER PROMISSORY NOTE" and together
with the ALC Promissory Note, the "PROMISSORY NOTES").
(B) PURCHASE PRICE ADJUSTMENT. The Purchase Price Adjustment shall be
paid by means of an increase or decrease, as the case may be, in the principal
amount of the Buyer Promissory Note within three Business Days after the
Purchase Price Adjustment is finally determined.
(C) PROMISSORY NOTES. Buyer shall offset and recoup against amounts due
under the Buyer Promissory Note any amounts otherwise due by Seller to Buyer
hereunder, including Seller's indemnification obligations under this Agreement
and the inventory and Receivables
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adjustments as set forth in Section 1.12. Buyer may offset and recoup against
the ALC Promissory Note Seller's indemnification obligations under
Section 6.2(c).
1.7. PURCHASE PRICE ADJUSTMENT. The Purchase Price shall be adjusted
after the Closing as follows (the "PURCHASE PRICE ADJUSTMENT"): If the Closing
Net Working Capital is less than the Reference Net Working Capital, then the
Purchase Price shall be reduced dollar-for-dollar by the amount of the
deficiency. If the Closing Net Working Capital is greater than the Reference Net
Working Capital, then the Purchase Price shall be increased dollar-for-dollar by
the amount of the excess. The Purchase Price Adjustment shall be without
prejudice to Buyer's rights of indemnification under Article VI.
1.8. CLOSING STATEMENT.
(A) PREPARATION OF CLOSING STATEMENT. After the Closing, Buyer shall
prepare a statement (the "CLOSING STATEMENT") of Net Working Capital as of the
close of business on the Closing Date (the "CLOSING NET WORKING CAPITAL"). The
Closing Statement shall be prepared in accordance with GAAP applied on a basis
consistent with the Reference Net Working Capital. The parties shall conduct a
physical count of the inventory of Seller as of the close of business on or
about the Closing Date. The Auditors and Seller's accountants may observe the
inventory count which shall be used to prepare the Closing Statement. Buyer
shall engage the Auditors to examine the Closing Statement in accordance with
generally accepted auditing standards and make all adjustments necessary for the
Closing Statement to be presented in accordance with GAAP. Buyer shall bear the
fees and expenses of the Auditors.
(B) DELIVERY OF CLOSING STATEMENT. Buyer shall deliver the Closing
Statement and its determination of the resulting Purchase Price Adjustment to
Seller accompanied by the report of the Auditors within 60 days after the
Closing Date. The Auditors' report shall state without qualification that, in
the Auditors' opinion, the Closing Statement presents fairly the Closing Net
Working Capital in conformity with GAAP and Section 1.8(a). Buyer shall provide
Seller with full access to all information, including books, records, work
papers and backup materials used by Buyer in preparing the Closing Statement.
The Closing Statement delivered to Seller shall be conclusive and binding on the
parties for purposes of determining the Purchase Price Adjustment, unless Seller
notifies Buyer of Seller's disagreement with the Purchase Price Adjustment in
writing within 30 days after Seller's receipt of the Closing Statement. Seller's
notice must state with specificity the amounts and the reasons for Seller's
disagreement.
(C) ARBITRATION. If Seller notifies Buyer of its disagreement with the
Purchase Price Adjustment, Buyer and Seller shall use their good faith efforts
to agree on the amount of the Purchase Price Adjustment. If Buyer and Seller do
not agree on the amount of the Purchase Price Adjustment within 30 days
following Seller's receipt of the Closing Statement, Buyer and Seller shall
promptly engage a nationally recognized firm of independent accountants to
resolve their dispute. In the absence of prompt agreement on the identity of the
independent accountants, the parties shall engage the Chicago office of the
accounting firm of PricewaterhouseCoopers to resolve the dispute within 90 days
of the engagement. Seller and Buyer shall furnish or cause to be furnished to
the independent accountants such work papers and other documents and information
relating to the disputed issues as the independent accountants may request and
are available to that party or its agents and shall be afforded the
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opportunity to present to the independent accountants any material relating to
the disputed issues and to discuss the issues with the independent accountants.
Absent fraud, the independent accountants' decision shall be final, binding and
conclusive upon the parties and shall be the parties' sole and exclusive remedy
regarding any dispute concerning the Purchase Price Adjustment, except as
provided in Article VI. Buyer and Seller shall share equally the fees and
expenses of the independent accountants with respect to the dispute.
1.9. ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be
allocated among the Purchased Assets in accordance with the allocation set forth
in IRS Form 8594 attached as Schedule 1.9. Seller shall timely and properly
prepare, execute, file and deliver any and all documents, forms and
authorizations (including powers of attorney) as Buyer may reasonably request in
order to prepare and report such allocation (including any amendments thereto)
to Taxing authorities. Buyer shall prepare and deliver a final IRS Form 8594 to
Seller within 45 days after the Closing Date. Buyer and Seller shall report the
federal, state and local income and other tax consequences of the purchase and
sale contemplated hereby, including those required by IRC Section 1060 and IRS
Form 8594, in a manner consistent with such allocation and shall not take any
position inconsistent therewith upon examination of any tax return, in any
refund claim, in any litigation, or otherwise. Any Purchase Price Adjustment
shall be allocated by Buyer among the Purchased Assets consistent with the
allocation set forth on Schedule 1.9 and shall be binding upon Seller.
1.10. PASSAGE OF TITLE. Title to all Purchased Assets shall pass from
Seller to Buyer at Closing, subject to the terms and conditions of this
Agreement. Buyer assumes no risk of loss to the Purchased Assets prior to
Closing.
1.11. CERTAIN CONSENTS. Nothing in this Agreement shall be construed as
an attempt to assign any Contract or Governmental Authorization included in the
Purchased Assets and as to which all the remedies for the enforcement thereof
enjoyed by Seller would not, as a matter of law, pass to Buyer as an incident of
the assignments provided for by this Agreement, without an applicable Legal
Approval or Consent. If any such Legal Approvals or Consents are not obtained,
Buyer shall have the option of electing either to (i) consummate the
Contemplated Transactions and forego any one or more of such assignments and not
assume the obligations and liabilities under any one or more of such Contracts
or Governmental Authorizations designated by Buyer upon notice to Seller (in
which case the rights and obligations under such specified Contracts and
Governmental Authorizations shall be Retained Assets and Seller Liabilities,
respectively), or (ii) consummate the Contemplated Transactions without such
Legal Approvals and Consents, subject to Seller's commitment in this Section
1.11. With respect to each such Contract (other than Contracts identified on
Schedule 1.2) and Governmental Approval not subject to the notice identified in
option (i) immediately preceding, Seller shall, at the request and under the
direction of Buyer, in the name of Seller or otherwise as Buyer shall specify,
take all commercially reasonable action (including the appointment of Buyer as
attorney-in-fact for Seller) and do or cause to be done all such commercially
reasonable things as shall in the opinion of Buyer or its counsel be necessary
or proper (i) to assure that the rights of Seller under such Contracts and
Governmental Authorizations shall be preserved for the benefit of Buyer, (ii) to
facilitate receipt of the consideration to be received by Seller in and under
every such Contract and Governmental Authorization, which consideration shall be
held for the exclusive benefit of, and shall be delivered to, Buyer, and (iii)
continue to use its commercially
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reasonable efforts to obtain such Legal Approvals and Consents as soon as
reasonably possible after Closing. Nothing in this Section 1.11 shall in any way
diminish Seller's obligations hereunder to obtain all Consents or Legal
Approvals and to take all such other actions prior to or at Closing as are
necessary to enable Seller to convey or assign valid title to all Contracts and
Governmental Authorizations to Buyer.
1.12 INVENTORY AND RECEIVABLES ADJUSTMENT. To the extent that Buyer is
unsuccessful in selling the inventory included in the Purchased Assets within
six (6) months after the Closing Date at a price at least equal to its cost,
Buyer shall notify Seller of Buyer's intent to write-off that inventory
("INVENTORY ADJUSTMENT NOTICE"). If Seller notifies Buyer of its disagreement
with the Inventory Adjustment Notice within 30 days following receipt of the
Inventory Adjustment Notice, Buyer and Seller shall use their good faith efforts
to agree on the items in dispute. If Buyer and Seller do not agree on the items
set forth in the Inventory Adjustment Notice, Buyer and Seller shall promptly
engage a nationally recognized firm of independent accountants to resolve the
disputed items. The principal amount of the Buyer Promissory Note will be
reduced effective as of the Closing Date by an amount equal to the aggregate
adjustment as set forth in the Inventory Adjustment Notice as finally
determined. Seller shall have the option, exercisable within 15 days after such
final determination, to elect to treat any such inventory as a Retained Asset
and the principal amount of the Buyer Promissory Note shall be adjusted
accordingly. To the extent that Buyer is unsuccessful in collecting all or any
portion of the Receivables within 180 days of the Closing Date, upon advance
written notice to Seller, the principal amount of the Buyer Promissory Note will
be reduced effective as of the Closing Date by an amount equal to the aggregate
amount of such unpaid Receivables and such unpaid Receivables shall be assigned
(together with the full benefit of all security for such Receivables) to Seller
for collection and deemed Retained Assets.
ARTICLE II.
CLOSING; CONDITIONS TO CLOSING; TERMINATION
2.1. CLOSING. The parties shall consummate the purchase and sale of the
Purchased Assets and the consummation of the other Contemplated Transactions
(the "CLOSING") at 1:00 p.m., local time, on the later of (such later date, the
"CLOSING DATE"): (i) May 3, 2004, and (ii) the date two (2) Business Days after
satisfaction of the conditions set forth in Sections 2.2 and 2.3 below. Closing
shall be effective, and all references herein to "Closing" and "Closing Date"
shall mean, 12:01 a.m., local time, on the Closing Date. The Closing shall occur
at the offices of Kirkpatrick & Lockhart LLP, Henry W. Oliver Building, 535
Smithfield Street, Pittsburgh, Pennsylvania 15222-2312. The Closing may occur at
such other date, time and place as the parties may agree. The rights and
obligations of the parties if there is no Closing are set forth in Section 2.5.
2.2. CONDITIONS PRECEDENT TO OBLIGATION OF BUYER AND ALC. The
obligation of Buyer and ALC to proceed with the Closing is subject to the
fulfillment prior to or at Closing of the conditions set forth in this Section
2.2. Any one or more of these conditions may be waived in whole, or in part, by
Buyer and ALC at Buyer's and ALC's option.
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(A) INTEGRATION TRIALS. On or before March 15, 2004, the results of the
integration trials testing the combined operational capabilities of ALC and
Seller shall be satisfactory to Buyer and ALC in their sole and absolute
discretion.
(B) DUE DILIGENCE. On or before March 31, 2004, Buyer shall have
completed to its satisfaction its business and legal due diligence investigation
of Seller, its properties, the Purchased Assets, including the items set forth
in the Schedules, and the Business (including the prospects of the Business) and
shall not have discovered any facts, circumstances, Seller Liabilities or
conditions that, in Buyer's sole discretion, may adversely affect the value of
the Purchased Assets or the Business or that may adversely affect the ability of
the Business to meet Buyer's financial expectations for the Business. Without
limiting the foregoing, on or before March 31, 2004, (i) Buyer shall have
confirmed that there are no Regulated Materials present at any Real Property in
material violation of any Environmental Law or that may require material
Environmental Remedial Action and (ii) Buyer shall have received all
environmental site assessment reports that it, in its sole discretion, deems
necessary with respect to the Real Property, which reports shall be acceptable
in form and substance to Buyer in its sole discretion. Seller and Parent
acknowledge that Buyer has not reviewed the matters set forth in the Schedules
and that nothing contained in the Schedules shall limit Buyer's rights under
this Section 2.2(b).
(C) LENDER APPROVAL. On or before April 15, 2004, any requisite consent
to the Contemplated Transactions of the lenders under the primary credit
facility to which ALC is a party shall have been obtained on terms and
conditions satisfactory to ALC in its sole discretion.
(D) COLLECTIVE BARGAINING AGREEMENTS. On or before April 30, 2004, ALC
shall have modified its collective bargaining agreements with the USWA on terms
satisfactory to ALC in its sole and absolute discretion, and ALC's bargaining
unit employees shall have ratified such agreements. On or before April 30, 2004,
the collective bargaining agreements covering the employees of Seller to be
hired by Buyer shall have been modified and ratified on terms satisfactory to
ALC in its sole and absolute discretion or the existing collective bargaining
agreements covering the employees of Seller shall have been terminated and new
collective bargaining agreements with Buyer covering the employees of Seller
shall have been approved and ratified on terms satisfactory to ALC in its sole
and absolute discretion.
(E) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Seller contained in Article IV shall be accurate and complete, individually
and collectively, in all respects (i) as of the date of this Agreement and (ii)
as of the Closing Date as if made on the Closing Date, except for any failures
to be accurate and complete, individually or collectively, as have not resulted
or would not reasonably be expected to result in a Material Adverse Effect or a
material adverse effect on Buyer's ability to consummate the Contemplated
Transactions.
(F) AGREEMENTS. Seller shall have performed, in all material respects,
all of the covenants and agreements and complied with, in all material respects,
all of the provisions required by this Agreement to be performed or complied
with, individually and collectively, by it at or before the Closing Date.
(G) LITIGATION. No Legal Requirement shall be in effect that prohibits
or threatens to prohibit the Contemplated Transactions or that would limit or
adversely affect Buyer's
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ownership of the Purchased Assets. No Legal Proceeding instituted by a
Governmental Body shall be pending, or to the knowledge of Seller, threatened
challenging the lawfulness of the Contemplated Transactions, seeking to prevent
or delay any of the Contemplated Transactions or seeking relief by reason of the
Contemplated Transactions or that, if true, would result in a Material Adverse
Effect.
(h) NO MATERIAL ADVERSE CHANGE; OPERATING PLAN. Between the date of
this Agreement and the Closing Date, (i) there shall have been no material
adverse change, regardless of insurance coverage, in the Business, the Purchased
Assets taken as a whole, results of operations or condition, financial or
otherwise, of Seller; and (ii) the Business shall have been operated and shall
have performed in all material respects in accordance with the Operating Plan.
(I) CLOSING CERTIFICATE. Seller shall have delivered a certificate,
dated as of the Closing Date, in form and substance reasonably satisfactory to
Buyer certifying to the fulfillment of the conditions set forth in subparagraphs
(e), (f), (g) and (h) of this Section 2.2. The contents of that certificate
shall constitute a representation and warranty of Seller as of the Closing Date
and shall be deemed relied upon by Buyer and ALC and fully incorporated in this
Agreement.
(J) LEGAL APPROVALS. Each party to this Agreement shall have received
all Legal Approvals necessary to consummate the Contemplated Transactions.
Without limiting the foregoing, (i) the waiting period under the HSR Act with
respect to the Contemplated Transactions shall have expired or earlier
terminated, (ii) all requisite notice periods under the WARN Act shall have
expired, and (iii) Seller shall have received all Legal Approvals identified on
Schedule 4.3.
(K) CONSENTS. Each party to this Agreement shall have received all
material Consents, including the Consents identified on Schedule 4.3.
(L) GOVERNMENTAL AUTHORIZATIONS. Buyer shall have received:
(I) all Governmental Authorizations necessary to own and
operate the Purchased Assets, Real Property and the Business, in form and
substance reasonably satisfactory to Buyer and on terms and conditions that do
not create a Regulatory Material Adverse Effect; or
(II) reasonable assurances from such Governmental Bodies, in a
form reasonably satisfactory to Buyer (which may be in the form of comfort
letters or other acceptable documentation from such Governmental Bodies), that:
(A) the Governmental Authorizations set forth on
Schedule 4.14 will be transferred or issued effective on the
Closing Date; or
(B) (I) Buyer has submitted all required applications
to obtain such Governmental Authorizations, (II) such consents
or approvals will be issued at or following Closing in the
ordinary course without additional terms and conditions other
than as stated in the comfort letter or other documentation,
and without additional terms and conditions stated in such
comfort letter or other documentation that would create a
Regulatory Material Adverse Affect; and (III) Buyer's
ownership and operation of the
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Purchased Assets, Real Property and Business at and following
the Closing may be lawfully conducted under the Governmental
Authorizations previously issued to Seller pending the
transfer, issuance or reissuance of such Governmental
Authorizations to Buyer.
(M) ENCUMBRANCES. All Encumbrances, other than Permitted Encumbrances,
on any Purchased Assets shall have been terminated or removed as of the Closing
Date.
(N) TITLE INSURANCE. Buyer shall have obtained for the Real Property
owned in fee simple by Seller and described on Schedule 1.1(a) (the "OWNED REAL
PROPERTY") final marked commitments to issue to Buyer ALTA (1990-Form B with
appropriate state endorsements) owner and leasehold policies of title insurance
in coverage amounts equal to the fair market values of the Owned Real Property
or leasehold interests, insuring good and marketable fee simple title to the
Owned Real Property and good title to such leasehold interests with mechanic's
liens coverage and such endorsements as Buyer may have reasonably requested and
with exceptions only for ALTA standard printed exceptions (other than mechanic's
and materialmen's liens and rights of possession). All costs and expenses
incurred in connection with obtaining such marked commitments and endorsements
other than costs and expenses associated with any documents to be delivered or
actions to be taken by Seller pursuant to this Agreement shall be paid by Buyer.
(O) OTHER DELIVERIES. Buyer shall have received with respect to the
Owned Real Property:
(I) surveys of such property which conform to the standards
set forth in the ALTA/ACSM 1999 Minimum Standard Detail Requirements for Land
Title Surveys, which include Items 1-4, 6, 8, 10, 11 and 14-16 of Table A
thereof, which satisfy the applicable accuracy standards for land surveys
adopted by ACSM, the National Society of Professional Surveyors and ALTA, and
which disclose no state of facts inconsistent with the representations and
warranties of Seller set forth in Section 4.16 hereof, with all costs and
expenses incurred in connection with obtaining such surveys to be paid by Buyer;
(II) ALTA extended coverage statements/affidavits executed by
Seller in form and substance reasonably satisfactory to Buyer's title insurer
regarding title, mechanic's liens and such other customary matters as may be
reasonably requested by Buyer title insurer; and
(III) a certificate, duly executed and acknowledged by an
officer of Seller under penalties of perjury, in the form prescribed by Treasury
Regulation Section 1.1445-2(b)(2)(iii)(B), including (A) Seller's name, address
and U.S. employer identification number and (B) that Seller is not a "foreign
person."
(P) SUBDIVISION APPROVALS. Seller shall have either (i) received the
necessary Legal Approvals from the applicable Governmental Bodies for any and
all subdivisions necessary to separate the Owned Real Property from the Retained
Real Property pursuant to one or more subdivision plans or plats reasonably
acceptable to Buyer, which subdivision plans and plats shall have been recorded
in the applicable Governmental Body recording offices, or (ii) delivered
11
lease and purchase arrangements reasonably satisfactory to Buyer with respect
to any such Owned Real Property for which such Legal Approvals are pending.
(Q) TRANSITION SERVICES AGREEMENT. Parent shall have entered into a
transition services agreement with Buyer and ALC, in a form to be agreed upon
among the parties on or prior to March 31, 2004, pursuant to which Parent shall
provide technical assistance for a period of two years to the extent reasonably
requested by Buyer with respect to operation of the DRAP Line at the Seller's
Midland, Pennsylvania facility with an agreed per diem and reimbursement of
expenses (the "TRANSITION SERVICES AGREEMENT").
(R) TRADE ACCOUNTS PAYABLE. Buyer shall have received a complete and
accurate list of the Trade Accounts Payable as of a date not more than two (2)
Business Days prior to the Closing Date. As of the Closing Date, the ratio of
Trade Accounts Payable to Receivables shall not be greater than 1.35:1.00.
(S) RECEIVABLES. Buyer shall have received a complete and accurate list
of Receivables as of the Closing Date.
(T) CLOSING DELIVERIES. Buyer shall also have received the other
documents referred to in Section 2.4(a).
(U) CLOSING DOCUMENTS. All certificates and other documents delivered
by Seller to Buyer under this Agreement shall be reasonably satisfactory to
Buyer in form and substance.
2.3. CONDITIONS PRECEDENT TO OBLIGATION OF SELLER AND PARENT. The
obligation of Seller and Parent to proceed with the Closing is subject to the
fulfillment prior to or at Closing of the conditions set forth in this Section
2.3. Any one or more of these conditions may be waived in whole, or in part, by
Seller and Parent at Seller's and Parent's option, respectively.
(A) COLLECTIVE BARGAINING AGREEMENTS. On or before April 30, 2004, ALC
shall have negotiated collective bargaining agreements with the USWA effective
as of and after the Closing covering those bargaining unit employees of Seller
to be hired by Buyer, on terms and conditions satisfactory to Buyer in its sole
and absolute discretion, and such agreements shall have been ratified by
affected employees of Seller. On or before April 30, 2004, Seller, Parent, and
the USWA shall have negotiated amendments to, or the termination of, Seller's
collective bargaining agreements on terms satisfactory to Seller and Parent in
their sole and absolute discretion.
(B) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Buyer and ALC contained in Article V shall be accurate and complete,
individually and collectively, in all material respects (i) as of the date of
this Agreement and (ii) as of the Closing Date as if made on the Closing Date.
The representations and warranties of Buyer and ALC contained in Article V that
contain an express materiality qualifier shall be accurate and complete,
individually and collectively, in all respects (i) as of the date of this
Agreement and (ii) as of the Closing Date as if made on the Closing Date.
(C) AGREEMENTS. Buyer and ALC shall have performed, in all material
respects, all of the covenants and agreements and complied with, in all material
respects, all of the provisions
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required by this Agreement to be performed or complied with by them at or
before the Closing Date.
(D) LITIGATION. No Legal Requirement shall be in effect that prohibits
or threatens to prohibit the Contemplated Transactions. No Legal Proceeding
instituted by a Governmental Body shall be pending or threatened challenging the
lawfulness of the Contemplated Transactions, seeking to prevent or delay any of
the Contemplated Transactions or seeking relief by reason of the Contemplated
Transactions.
(E) LEGAL APPROVALS. Each party to this Agreement shall have received
all Legal Approvals necessary to consummate the Contemplated Transactions.
Without limiting the foregoing, the waiting period under the HSR Act with
respect to the Contemplated Transactions shall have expired or earlier
terminated and Buyer shall have received all Legal Approvals identified on
Schedule 4.3.
(F) CLOSING CERTIFICATE. Buyer and ALC shall have delivered a
certificate, dated as of the Closing Date, in form and substance reasonably
satisfactory to Seller and Parent certifying to the fulfillment of the
conditions set forth in subsections (b), (c) and (d) of this Section 2.3. The
contents of that certificate shall constitute a representation and warranty of
Buyer and ALC as of the Closing Date and shall be deemed relied upon by Seller
and Parent and fully incorporated in this Agreement.
(G) CLOSING DOCUMENTS. Seller shall also have received the documents
referred to in Section 2.4(b). All certificates and other documents delivered by
Buyer to Seller under this Agreement shall be reasonably satisfactory to Seller
in form and substance.
2.4. DELIVERIES AND PROCEEDINGS AT CLOSING.
(A) DELIVERIES BY SELLER AND PARENT. Seller and, as specified, Parent,
shall deliver to Buyer at the Closing:
(I) A general warranty deed or deeds to the Owned Real
Property in a form reasonably acceptable to Buyer, which shall include, as
applicable, all necessary grants of easements required as a result of the
subdivision of the Owned Real Property pursuant to Section 2.2(p), accompanied
by all applicable realty transfer tax returns, declarations or other filings,
duly executed and acknowledged by Seller, and an assignment and assumption of
lease for the Real Property leased by Seller as lessee, in a form reasonably
acceptable to Buyer, duly executed by Seller.
(II) An Assignment and Assumption Agreement, duly executed
by Seller.
(III) Assignments of all transferable or assignable licenses,
Governmental Authorizations and warranties relating to the Purchased Assets and
of any trademarks, trade names, patents and other Intellectual Property that
constitutes Purchased Assets, including a Registrant Name Change Agreement -
Transfer, for the domain name "www.jlspecialty.com", duly executed and in forms
reasonably acceptable to Buyer.
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(IV) Title certificates to any motor vehicles included in the
Purchased Assets duly executed by Seller (together with any other transfer forms
necessary to transfer title to such vehicles).
(V) Such other deeds, bills of sale, assignments, certificates
of title, documents and other instruments of transfer and conveyance as may
reasonably be requested by Buyer to transfer the Purchased Assets, each in form
and substance reasonably satisfactory to Buyer and its legal counsel and
executed by Seller.
(VI) Certificates of the appropriate public officials dated
not more than 10 days prior to the Closing Date to the effect that Seller is a
validly existing entity in good standing in its state of formation.
(VII) Incumbency and specimen signature certificates dated as
of the Closing Date, signed by the officers of Seller and certified by its
Secretary.
(VIII) Correct and complete copies of the (A) Governing
Documents of Seller dated not more than 10 days prior to the Closing Date,
certified by the Secretary of State of its state of formation, and (B) the
operating agreement or other similar agreement of Seller, certified by an
appropriate officer.
(IX) A certificate of an appropriate officer of Seller (A)
setting forth all resolutions of the governing body of Seller and Parent, as the
case may be, authorizing the execution and delivery of this Agreement and the
performance by Seller and Parent of the Contemplated Transactions, and (B)
stating that the Governing Documents of Seller delivered under Section
2.4(a)(viii) were in effect on the date of adoption of those resolutions, the
date of execution of this Agreement and the Closing Date.
(X) Amendments to Seller's Governing Documents and all other
actions necessary to change Seller's name to one sufficiently dissimilar to
Seller's present name, in Buyer's reasonable judgment, to avoid confusion.
(XI) If requested by Buyer, any consents or other instruments
that may be required to permit Buyer's qualification in each jurisdiction in
which Seller is licensed or qualified to do business as a foreign corporation
under the name "J&L Specialty Steel" or any derivative thereof.
(XII) Delivery of copies of all Consents required by Section
2.2(k) and evidence of satisfaction of all Legal Approvals required in Section
2.2(j).
(XIII) A copy of each recorded subdivision plan or plat as
required by Section 2.2(o)or such other arrangement as contemplated by Section
2.2(p).
(XIV) The Transition Services Agreement as required by Section
2.2(q).
(XV) A sublease reasonably satisfactory to Seller and Buyer
with respect to a designated portion of Seller's head office premises until
December 31, 2004.
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(XVI) Such other agreements and documents as Buyer may
reasonably request to more fully consummate the Contemplated Transactions.
(B) DELIVERIES BY BUYER AND ALC. Buyer and ALC shall deliver or cause
to be delivered to Seller at the Closing:
(I) (A) A wire transfer of immediately available federal funds
in accordance with Section 1.6(a)(i) according to wire transfer instructions
delivered by Seller (with accompanying Federal tax identification number) to
Buyer in writing at least five days prior to the Closing Date, (B) the
Promissory Notes and (C) all documents necessary to evidence first mortgages and
first priority, perfected security interests (in each case, subject to
Encumbrances which shall have attached prior to the Closing) on all of the Real
Property, machinery and equipment forming part of the Purchased Assets, which
will secure payment of the Buyer Promissory Note, such security documents in
form reasonably satisfactory to Seller.
(II) A counterpart of the Assignment and Assumption Agreement,
duly executed by Buyer.
(III) A certificate of the appropriate public official dated
not more than 10 days prior to the Closing Date to the effect that each of Buyer
and ALC is a validly existing corporation in its state of incorporation or
formation.
(IV) Incumbency and specimen signature certificates signed by
the appropriate officers of Buyer and ALC and certified by the Secretary of each
of Buyer and ALC.
(V) The Transition Services Agreement as required by Section
2.2(q).
(VI) Correct and complete copies of (A) the Governing
Documents (other than the bylaws) of Buyer and ALC as of a date not more than 10
days prior to the Closing Date, certified by the Secretary of State of the state
of Buyer's and ALC's incorporation or formation, as the case may be, and (B) the
bylaws of Buyer and ALC as of the Closing Date, certified by the Secretary of
Buyer or ALC, as the case may be.
(VII) Certificates of the Secretaries of Buyer and ALC (A)
setting forth the respective resolutions of the Board of Directors of Buyer and
ALC authorizing the execution and delivery of this Agreement and the performance
by Buyer and ALC of the Contemplated Transactions, certified by the Secretary of
Buyer or ALC, as the case may be, and (B) stating that the Governing Documents
of Buyer and ALC delivered under Section 2.4(b)(v) were in effect on the date of
adoption of those resolutions, the date of execution of this Agreement and the
Closing Date.
(VIII) Such other agreement and documents as Seller or Parent
may reasonably request to more fully consummate the Contemplated Transactions.
2.5. TERMINATION PRIOR TO CLOSING.
(A) EVENTS OF TERMINATION. This Agreement may be terminated by written
notice at any time prior to the Closing by: (i) the consent of the parties; (ii)
Buyer and ALC, subject to
15
Section 3.6(h), if (A) any of the conditions specified in Section 2.2 shall not
have been fulfilled (or if satisfaction becomes impossible) on or before June
30, 2004 (or such earlier date as is specified in Sections 2.2(a), (b), (c) or
(d)) and shall not have been waived by Buyer and ALC, or (B) Buyer and ALC
notify Seller and Parent that any of the conditions set forth in Sections 2.2
(a), (b), (c) or (d) have not been fulfilled prior to the date for satisfaction
of such conditions set forth in Sections 2.2 (a), (b), (c) or (d) as applicable;
(iii) Seller and Parent, if (A) any of the conditions specified in Section 2.3
shall not have been fulfilled (or if satisfaction becomes impossible) on or
before June 30, 2004 shall not have been waived by Seller and Parent, or (B)
Seller and Parent receive notice from Buyer and ALC that any of the conditions
set forth in Sections 2.2 (a), (b), (c) or (d) have not been fulfilled prior to
the date for satisfaction of such conditions set forth in the Sections 2.2 (a),
(b), (c) or (d) as applicable; (iv) Buyer and ALC, if a material breach of any
provision of this Agreement has been committed by Seller or Parent and such
breach has not been waived by Buyer and ALC, provided that if the breach is
curable through the exercise of Seller's or Parent's commercially reasonable
efforts, then Buyer and ALC may only terminate ten Business Days after Seller or
Parent, as applicable, shall have received written notice of such breach from
Buyer and ALC (so long as Seller continues to use commercially reasonable
efforts to cure such breach), it being understood that Buyer and ALC may not
terminate this Agreement if such breach is cured within such ten Business Day
period; or (v) Seller and Parent, if a material breach of any provision of this
Agreement has been committed by Buyer or ALC and such breach has not been waived
by Seller and Parent, provided that if the breach is curable through the
exercise of Buyer's commercially reasonable efforts, then Seller and Parent may
only terminate ten Business Days after Buyer shall have received written notice
of such breach from Seller and Parent (so long as Buyer and ALC continue to use
commercially reasonable efforts to cure such breach), it being understood that
Seller and Parent may not terminate this Agreement if such breach is cured
within such ten Business Day period.
(B) CONSEQUENCES OF TERMINATION. If this Agreement is terminated by
consent of the parties, no party shall have any obligation to any other party as
a result of that termination. If any party terminates this Agreement for any
reason other than described in Section 2.5(a), such party shall be liable to the
other for any material breach of this Agreement by such party which breach led
to such termination. Each party shall also be entitled to any other remedy to
which it may be entitled at law or in equity, including injunctive relief and
specific performance, in the event of a termination of this Agreement. If the
Closing does not occur on or before June 30, 2004, and no party's material
breach of this Agreement was the cause of the failure to Close by that date,
then no party shall have any liability to any party under this Agreement, and
this Agreement shall terminate. All rights and obligations of the parties set
forth in this Section 2.5 and Sections 3.3, 3.4, and 8.1 shall survive
termination of this Agreement.
(C) EXCEPTIONS; TERMINATION FEE. Notwithstanding the foregoing, if (i)
Seller becomes the debtor in a bankruptcy or similar proceeding (other than an
involuntary bankruptcy proceeding if Seller is operating at all times, in all
material respects, in accordance with the Operating Plan) and (ii) this
Agreement (A) is rejected by Seller or (B) is not approved by the bankruptcy
court or applicable Governmental Body on or before June 24, 2004, then within
three Business Days following such event (but in the case of (B), no later than
June 30, 2004), Parent shall pay to Buyer in cash by wire transfer in
immediately available funds to an account designated by Buyer a termination fee
in an amount equal to Two Million Five Hundred
16
Thousand US Dollars ($2,500,000) (the "TERMINATION FEE"). The Termination Fee
constitutes liquidated damages, because calculation of actual damages would be
speculative, and the Termination Fee represents the parties' reasonable estimate
of actual damages.
2.6. FULFILLMENT OF CONDITIONS AND AGREEMENTS PRIOR TO CLOSING; LEGAL
APPROVALS AND CONSENTS. Each party shall cooperate with the others and use
commercially reasonable efforts to take, or cause to be taken, all action and
do, or cause to be done, all things necessary, proper or advisable, including
taking all commercially reasonable actions to make or obtain any and all Legal
Approvals and Consents, to consummate and make effective the Contemplated
Transactions, including making all filings under applicable Legal Requirements.
Without limiting the foregoing, prior to the Closing, the parties shall take all
commercially reasonable actions and do all commercially reasonable things
necessary, proper or advisable to consummate and make effective as promptly as
practicable the Contemplated Transactions and to cooperate with the other
parties in connection with the foregoing, including using their commercially
reasonable efforts (i) to secure all Legal Approvals and Consents from
Governmental Bodies or third parties as may be required in order to enable
parties to effect the Contemplated Transactions and to enable Buyer to conduct
the Business in substantially the same manner as it was conducted prior to the
Closing Date, (ii) to lift or rescind any injunction or restraining order
against the Contemplated Transactions, (iii) to effect any necessary
registrations and filings and (iv) to fulfill the conditions to closing within
the reasonable control of the parties. Promptly after the date hereof, the
parties shall file the required notifications with the Federal Trade Commission
("FTC") and the Antitrust Division of the Department of Justice ("DOJ") pursuant
to and in compliance with the HSR Act. The parties hereto shall not
intentionally or negligently delay submission of information requested by FTC
and DOJ under the HSR Act or any applicable foreign filings under applicable
Legal Approvals and shall use their respective commercially reasonable efforts
promptly to supply, or cause to be supplied, such information and shall request
early termination of the applicable waiting period. Notwithstanding the
foregoing, neither Buyer nor ALC shall be required to take any action to comply
with any Legal Requirement or agree to the imposition of any Order that would
(x) prohibit or restrict the ownership or operation by Buyer of any material
portion (or any portion in the case of any Order of FTC or DOJ) of the Business
or Purchased Assets, (y) compel Buyer or ALC to dispose of or hold separate any
material portion of its assets or the Business (or any portion of its assets or
Business in the case of any Order of FTC or DOJ), or (z) impose any material
limitation (or any limitation in the case of any Order of FTC or DOJ) on the
ability of Buyer to own or operate the Business.
ARTICLE III.
CERTAIN COVENANTS
3.1. CONDUCT OF BUSINESS PENDING THE CLOSING. Between the date of this
Agreement and the Closing Date, unless Buyer otherwise consents in writing,
Seller shall conduct its affairs as follows:
(A) OPERATIONS; COMPLIANCE. The Business shall be conducted as a going
concern consistent with the Operating Plan. Seller shall maintain the Purchased
Assets consistent with past practice and shall comply in a timely fashion with
the provisions of all material Contracts, Governmental Authorizations and Legal
Requirements. Seller shall use commercially
17
reasonable efforts to keep its business organizations intact, keep available the
services of its present employees and preserve the goodwill of its suppliers,
customers and others having business relations with it. Seller shall maintain in
full force and effect its insurance policies, in effect as of the date hereof,
subject only to variations required by the ordinary operations of the Business.
In the alternative, Seller shall obtain prior to the lapse of any such policy
substantially similar coverage with insurers of recognized standing.
(B) TRANSACTIONS. Seller shall not: (i) make any distributions (other
than distributions of cash in the ordinary course of business); (ii) enter into
or amend any material Contract or Governmental Authorization, the performance of
which may extend beyond the Closing, except in the ordinary course of business,
consistent with past practice; (iii) enter into or make any material amendment
to any employment or consulting Contract that is not terminable at will and
without penalty or continuing obligation; (iv) fail to pay any material Tax or
any other material Liability or charge when due, other than charges contested in
good faith by appropriate proceedings and brought to the attention of Buyer; (v)
intentionally fail to collect any material Receivable or fail to pay any
material accounts payable and pursuant to the terms of any such Receivable or
account payable; (vi) take any action or omit to take any action that will cause
a breach or termination of any material Contract or Governmental Authorization,
other than termination by fulfillment of its terms in the ordinary course of
business; (vii) allow the levels of raw materials, supplies or other materials
included in the inventories to vary materially from the levels contemplated by
the Operating Plan; or (viii) take any action that is likely to result in the
occurrence of any event described in Section 4.7 or cause the material breach or
inaccuracy of any other representation and warranty in Article IV as of the date
of this Agreement or on the Closing Date. Seller shall confer with Buyer prior
to implementing operational decisions of a material nature, and shall otherwise
report periodically to Buyer concerning the status of Seller's business,
operations and finances.
(C) ACCESS, INFORMATION AND DOCUMENTS. Seller shall give to Buyer and
to Buyer's employees, representatives and agents (including accountants,
actuaries, financial advisors, attorneys, environmental consultants and
engineers) reasonable access during normal business hours and on reasonable
notice to all of the properties, books, Contracts, commitments, records,
officers, other personnel and accountants (including any independent public
accountants and their audit workpapers concerning Seller) of Seller except to
the extent prohibited by law. Seller shall furnish to Buyer, at Buyer's cost,
all such documents and copies of documents and all information with respect to
the properties, Seller Liabilities, financial position and performance and
affairs of Seller as Buyer may reasonably request. In addition, Buyer shall have
the right to have the Real Property and tangible personal property inspected by
Buyer, at Buyer's sole cost and expense, for purposes of determining the
physical condition and legal characteristics of the Real Property and tangible
personal property. Buyer shall conduct no subsurface investigation of the Real
Property of the sort referred to as a Phase II environmental assessment without
the prior written consent of Seller.
3.2. CERTAIN TAX MATTERS.
(A) PAYMENT OF TAXES ON THE SALE OF THE PURCHASED ASSETS. Subject to
Buyer's obligations hereunder, Seller shall pay in a timely manner all Taxes
resulting from or payable in connection with the sale of the Purchased Assets
pursuant to this Agreement, regardless of the
18
person on whom such Taxes are imposed by Legal Requirements. All transfer,
documentary, sales, use, stamp, registration and other such Taxes, and all
conveyance fees, recording charges and other fees and charges (including any
penalties and interest) incurred in connection with consummation of the
transactions contemplated by this Agreement shall be borne equally by Buyer and
Seller when due, and each party will, at its own expense, file all necessary Tax
Returns and other documentation with respect to all such Taxes, fees and
charges.
(B) MUTUAL COOPERATION. Buyer and Seller shall each assist the other as
may reasonably be requested by either of them with the preparation of any Tax
Return, any Tax audit, or any judicial or administrative proceedings relating to
any Tax. In addition, each party shall retain and provide the other with any
records or information that may be relevant to such Tax Return, Tax audit,
proceeding or determination. The party requesting assistance under this Section
shall reimburse the party providing assistance for direct expenses incurred in
providing such assistance.
3.3. PUBLICITY. No Party shall issue any press release or otherwise
make any announcements to the public regarding this Agreement or the
Contemplated Transactions without the prior written consent of the other Party
hereto, except as required by any applicable Legal Requirements. Seller and
Buyer shall consult concerning the means by which the employees, customers, and
suppliers and others having dealings with Seller will be informed of the
Contemplated Transactions, and Buyer shall have the right to be present for, and
to speak at, information meetings with the employees of Seller.
3.4. CONFIDENTIALITY. Buyer, Parent and Seller shall abide by the terms
and conditions of that certain Confidentiality Agreement by and among the
parties dated as of December 19, 2003. ALC hereby agrees to be bound, and to
abide by, the terms and conditions of such confidentiality agreements as if it
were a signatory thereto.
3.5. NOTIFICATION. Between the date of this Agreement and the Closing
Date, Seller and Buyer shall promptly notify the other in writing if it becomes
aware of any fact or condition that causes or constitutes, or would cause or
constitute, a material breach of any of the representations and warranties
contained in Article IV, or would cause a breach had such representation and
warranty been made at the time of such occurrence. Seller and Buyer also shall
promptly notify the other of the occurrence of any material breach of any
covenant by it or any other party in this Agreement or of the occurrence of any
event that may make the satisfaction of the conditions in Article II impossible
or unlikely.
3.6. CERTAIN TRANSITIONAL MATTERS.
(A) COLLECTION OF ACCOUNTS RECEIVABLE. Seller agrees that Buyer, from
and after the Closing, shall have the right and authority to collect for Buyer's
own account all accounts receivable and other items which shall be transferred
to Buyer as provided herein. Buyer agrees that Seller, from and after the
Closing, shall have the right and authority to collect for Seller's own account
all accounts receivable and other items which shall not be transferred to Buyer
as provided herein or which shall be transferred to Seller pursuant to Section
1.12.
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(B) ENDORSEMENT OF CHECKS. From and after the Closing, Buyer shall have
the right and authority to retain and endorse without recourse the name of
Seller on any check or any other evidences of indebtedness received by Buyer on
account of any of the Business and Purchased Assets transferred to Buyer
hereunder. Seller shall have the right and authority to retain and endorse
without recourse the name of Buyer on any check or any other evidences of
indebtedness received by Seller on account of any of the Retained Assets not
transferred to Buyer hereunder and any unpaid Receivables assigned to Seller for
collection pursuant to Section 1.12.
(C) REMIT FUNDS. After the Closing, Seller and Buyer shall promptly
transfer and deliver to Buyer or Seller, as the case may be, any cash or other
property, if any, that it may receive related to the Business or the Purchased
Assets or the Retained Assets, as applicable, and to which the other is entitled
pursuant to the terms of this Agreement. Without limiting the generality of the
foregoing, Buyer shall remit to Seller any insurance proceeds received by Buyer
under Seller's insurance policies arising from claims which are subject to
indemnification under Article VI of this Agreement to the extent Buyer has
received indemnification in respect of such claims from Seller pursuant to
Article VI of this Agreement.
(D) USE OF NAME "J&L SPECIALTY STEEL". Promptly after the Closing,
Seller shall change its name to a name bearing no resemblance to its present
name.
(E) ASSISTANCE.
(I) Seller shall cooperate with and assist Buyer, ALC and
their authorized representatives in order to provide, to the extent reasonably
requested by Buyer, an efficient transfer of control and use of the Purchased
Assets.
(II) Seller, to the best of its ability under the prevailing
circumstances, will cooperate with Buyer and its counsel in the contest or
defense of, and make available its personnel and provide any testimony and
access to its books and records in connection with, any Legal Proceeding
involving or relating to (a) any Contemplated Transaction or (b) any action,
activity, circumstance, condition, conduct, event, fact, failure to act,
incident, occurrence, plan, practice, situation, status or transaction on or
before the Closing Date involving Seller or the Business.
(III) After the Closing, Seller, to the best of its ability
under the prevailing circumstances, will cooperate with Buyer in its efforts to
continue and maintain for the benefit of Buyer those business relationships of
Seller existing prior to the Closing and relating to the business to be operated
by Buyer after the Closing, including relationships with lessors, employees,
regulatory authorities, licensors, customers, suppliers and others. Seller will
refer to Buyer all inquiries relating to such business.
(IV) Neither Seller nor any of its officers, employees, agents
or shareholders shall take any action that would tend to diminish the value of
the Purchased Assets after the Closing or that would interfere with the business
of Buyer to be engaged in after the Closing, including disparaging the name or
business of Buyer.
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(F) INTEGRATION TRIALS. Seller will reasonably cooperate with Buyer and
ALC to test the compatibility of the Purchased Assets with ALC's production
facilities on an integrated basis.
(G) SUBDIVISION PLANS AND PLATS. Seller will reasonably cooperate with
Buyer and ALC in their efforts to obtain all necessary Legal Approvals of the
subdivision plans and plats for the Owned Real Property.
(H) NOTIFICATION AS TO CERTAIN CLOSING CONDITIONS. Buyer and ALC shall
notify Seller and Parent on or before the applicable dates set forth in Sections
2.2(a), 2.2(b), 2.2(c) and 2.2(d) if Buyer, in its sole and absolute discretion,
determines that such closing conditions have not been fulfilled or satisfied
prior to such date. Notwithstanding the foregoing, Buyer and ALC acknowledge
that the failure to deliver notice pursuant to this Section 3.6(h) with respect
to any of Section 2.2(a), 2.2(b), 2.2(c), and 2.2(d) on or prior to the
applicable date set forth therein shall constitute a waiver of the closing
condition contained in such Section.
3.7. SEVERANCE AND TERMINATION PAYMENTS. Seller shall (i) be solely
liable for all severance payments and other Seller Liabilities with respect to
employees of Seller which result from the transfer of the Purchased Assets
hereunder and the termination of employment of employees by Seller, including
accrued but unpaid vacation, sick leave and similar items (except accrued
liabilities for Transferred Employees as set forth on Schedule 1.3(ii)), and
(ii) indemnify and hold harmless Buyer and its directors, officers and
Affiliates from and against any and all Damages, that any of the aforesaid may
suffer or incur by reason of or relating to any Seller Liabilities referred to
in subsection (i). All such severance and termination payments are identified on
Schedule 3.7. In addition, notwithstanding anything to the contrary herein,
Seller shall be solely liable for any and all severance and termination payments
and all layoff and supplemental unemployment benefits payable in the respective
amounts for Transferred Employees which would have been payable to such
Transferred Employees for termination of employment on the day prior to the
Closing Date with respect to Transferred Employees who are terminated by Buyer
within four months after the Closing Date (except accrued liabilities for
Transferred Employees as set forth on Schedule 1.3(ii)). Notwithstanding the
foregoing, Seller shall not be liable for any claims arising under the WARN Act
solely as a result of Buyer's termination of any Transferred Employees.
3.8. SELLER'S EMPLOYEES. Buyer shall have the right, but not the
obligation, to employ any or all of the employees of Seller. Each such person
who is employed with Buyer shall be a "TRANSFERRED EMPLOYEE". Buyer shall
provide such information to Seller as Seller may reasonably request to permit
Seller to assess its obligations, if any, under the WARN Act and to take
whatever compliance actions that Seller, in consultation with Buyer, elects to
take.
3.9. RESTRICTIVE COVENANTS.
(A) SELLER'S RESTRICTIVE COVENANTS
(I) NONCOMPETITION. From and after the Closing Date, Seller
shall not, directly or indirectly, own, manage, operate, join, control or
participate in the ownership, management, operation or control of any business
operating under any name similar to "J&L
21
Specialty Steel". For a period of three years from and after the Closing Date,
Seller shall not, own, manage, operate, join, control or participate in the
ownership, management, operation or control of any business that at any relevant
time during such period manufactures or sells stainless or specialty steel in
the United States. Ownership of not more than 2% of the outstanding stock of any
publicly traded company shall not be a violation of this Section.
(II) NONSOLICITATION. For a period of three years from and
after the Closing Date, Seller shall not, directly or indirectly (i) solicit the
business of any person who is a customer of Buyer; (ii) cause, induce or attempt
to cause or induce any customer, supplier, licensee, licensor, franchisee,
employee, consultant or other business relation of Buyer to cease doing business
with Buyer, to deal with any competitor of Buyer or in any way interfere with
its relationship with Buyer; (iii) cause, induce or attempt to cause or induce
any customer, supplier, licensee, licensor, franchisee, employee, consultant or
other business relation of Seller on the Closing Date or within the year
preceding the Closing Date to cease doing business with Buyer, to deal with any
competitor of Buyer or in any way interfere with its relationship with Buyer; or
(iv) hire, retain or attempt to hire or retain any employee or independent
contractor of Buyer or in any way interfere with the relationship between Buyer
and any of its employees or independent contractors.
(III) ENFORCEMENT. The restrictive covenants contained in this
Section are covenants independent of any other provision of this Agreement and
the existence of any claim that Seller may allege against Buyer, whether based
on this Agreement or otherwise, shall not prevent the enforcement of this
covenant. Seller agrees that Buyer's remedies at law for any breach or threat of
breach by Seller of the provisions of this Section will be inadequate, and that
Buyer shall be entitled to an injunction or injunctions to prevent breaches of
the provisions of this Section and to enforce specifically the terms and
provisions hereof, in addition to any other remedy to which Buyer may be
entitled at law or equity. In the event of litigation regarding the covenant not
to compete, the prevailing party in such litigation shall, in addition to any
other remedies the prevailing party may obtain in such litigation, be entitled
to recover from the other party its reasonable legal fees and out of pocket
costs incurred by such party in enforcing or defending its rights hereunder. The
length of time for which this covenant not to compete shall be in force shall
not include any period of violation or any other period required for litigation
during which Buyer seeks to enforce this covenant. Should any provision of this
Section be adjudged to any extent invalid by any competent tribunal, such
provision shall be deemed modified to the extent necessary to make it
enforceable.
(B) PARENT'S RESTRICTIVE COVENANTS
(I) NONCOMPETITION. From and after the Closing Date, Parent
shall not, directly or indirectly, own, manage, operate, join, control or
participate in the ownership, management, operation or control of any steel
business operating in the United States under any name containing the term
"J&L". For a period of two years from and after the Closing Date, Parent shall
not: (A) own, manage, operate, join, control or participate in the ownership,
management, operation or control of any business whose primary business activity
at the relevant time during such period is manufacturing (viz., melting, hot
rolling, cold rolling, pickling and annealing) stainless steel sheet in coils,
strip in coils and plate in coils (the "PRODUCT") in the United States or (B)
export to, or import into, the United States the grades of the Product, in
22
gages and widths and finishes within the gage-and-width and finish capabilities
of Seller for such grades on the date of this Agreement, as listed on Schedule
3.9(b)(i), in aggregate quantities exceeding, (I) in the one-year period ending
on the first anniversary of the date of this Agreement, 40,000 metric tons, or
(II) in the one-year period ending on the second anniversary of the date of this
Agreement, 40,000 metric tons increased by the greater of (x) the percentage
increase (if any) in U.S. quarterly apparent consumption (U.S. production plus
imports minus exports) of stainless steel sheet and strip and plate for (a) the
first two calendar quarters of 2004 over (b) the first two calendar quarters of
2003, as reflected in the statistical data reported by the Stainless Steel
Industry of North America (SSINA) and (y) five percent. Ownership of not more
than 2% of the outstanding stock of any publicly traded company shall not be a
violation of this Section.
(II) NONSOLICITATION. For a period of two years from and after
the Closing Date, Parent shall not, directly or indirectly (i) cause, induce or
attempt to cause or induce any customer, supplier, licensee, licensor,
franchisee, employee (other than Seller employees terminated or not hired by
Buyer and employees listed on Schedule 3.9(b)(ii)), individual consultant or
other business relation (collectively "BUSINESS RELATION") of Buyer who was a
Business Relation of Seller on the Closing Date or within the year preceding the
Closing Date to cease doing business with Buyer, or otherwise interfere with
such Business Relation's relationship with Buyer; or (ii) solicit (other than
through general employment ads or job listings) for employment or retention any
employee (other than Seller employees terminated or not hired by Buyer and
employees listed on Schedule 3.9(b)(ii)) or individual consultant of Buyer or in
any way interfere with the relationship between Buyer and any of such employees
or individual consultants.
(III) ENFORCEMENT. Parent agrees that Buyer's remedies at law
for any breach or threat of breach by Parent of the provisions of this Section
will be inadequate, and that Buyer shall be entitled to seek an injunction or
injunctions to prevent breaches of the provisions of this Section and to enforce
specifically the terms and provisions hereof, in addition to any other remedy to
which Buyer may be entitled at law or equity. In the event of litigation
regarding the covenant not to compete, the prevailing party in such litigation
shall, in addition to any other remedies the prevailing party may obtain in such
litigation, be entitled to recover from the other party its reasonable legal
fees and out of pocket costs incurred by such party in enforcing or defending
its rights hereunder. The length of time for which this covenant not to compete
shall be in force shall not include any period of violation. Should any
provision of this Section be adjudged to any extent invalid by any competent
tribunal, such provision shall be deemed modified to the extent necessary to
make it enforceable.
3.10. INTERIM FINANCIAL STATEMENTS. Until the Closing Date, Seller
shall deliver to Buyer within 20 days after the end of each month a copy of the
Seller's internal financial statements for such month prepared in a manner and
containing information consistent with Seller's current practices and certified
by Seller's chief financial officer as to compliance with Section 4.5(b). Seller
shall use commercially reasonable efforts to cause Seller's independent auditors
to consent from time to time to the inclusion of their report on Seller's
financial statements included in any periodic report or registration statement
filed with the Securities and Exchange Commission by Allegheny Technologies
Incorporated.
23
3.11. BENEFIT PLAN MATTERS. Seller acknowledges that Buyer is not
obligated to establish any employee benefit plan within the meaning of Section
3(3) of ERISA or any other arrangement under which any employee of Buyer may
become entitled to a benefit or payment. Nothing in this Agreement shall, nor is
intended to, create third party beneficiary rights in participants in any plan.
3.12. RETENTION OF RECORDS. After the Closing Date, Buyer shall retain
for a period consistent with Buyer's record-retention policies and practices,
but in no case for less than five years, those records of Seller delivered to
Buyer. Buyer also shall provide Seller reasonable access thereto, during normal
business hours and on at least 3 days' prior written notice, to enable it to
prepare financial statements or tax returns or deal with tax audits. After the
Closing Date, Seller shall provide Buyer and its representatives reasonable
access to records that relate to the Business or the Purchased Assets, during
normal business hours and on at least 3 days' prior written notice, for any
reasonable purpose related to the Business or the Purchased Assets specified by
Buyer in such notice.
3.13 NOTICE OF DEVELOPMENTS; UPDATING DISCLOSURE SCHEDULES.
(a) Each party will give prompt written notice to the other of any
development affecting the ability or obligation of the parties to consummate the
transactions contemplated by this Agreement or any of the Other Agreements.
Except as provided in Section 3.13(b), no such written notice of a development
will be deemed to have amended the Schedules, to have qualified the
representations and warranties contained herein and to have cured any
misrepresentation or breach of warranty that otherwise might have existed
hereunder by reason of such material development.
(b) Seller will deliver to Buyer at least five business days prior to
the Closing Date a written update or supplement to the Article IV Schedules
attached to this Agreement reflecting events occurring and contracts and
agreements entered into in the ordinary course of business from the date of this
Agreement through the Closing Date. All changes from the Article IV Schedules
attached to this Agreement will be marked clearly on such updated or
supplemental Article IV Schedules. To the extent that such updated or
supplemental Article IV Schedules reflect matters or events which have occurred
after the date of this Agreement in the ordinary course of business and do not
constitute a violation of any of Seller's representations and warranties so as
to cause a Material Adverse Effect, then the Schedules shall be deemed to be
amended as of the Closing Date to include the information set forth on such
updated or supplemental Schedules. To the extent that such updated or
supplemental Article IV Schedules reflect matters or events which have occurred
after the date of this Agreement and which represent a Material Adverse Effect
then (i) the parties will negotiate in good faith during the seven-day period
immediately after delivery of the updated or supplemental Article IV Schedules
to determine the consequences of such disclosures, (ii) the Article IV Schedules
attached to this Agreement will be amended only to the extent that the parties
mutually agree as a result of such negotiation and (iii) Buyer may in, its sole
and absolute discretion, elect to terminate this Agreement after the expiration
of such seven-day period, in which event Seller and Buyer will have no liability
to each other as a result of such termination.
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ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF SELLER AND PARENT
Seller and, solely with respect to Sections 4.1, 4.2 and 4.3 (and
solely with respect to Parent), Parent, represent and warrant to Buyer and ALC
as set forth in this Article IV.
4.1. ORGANIZATION; QUALIFICATION. Each of Seller and Parent is an
entity duly organized, validly existing and in good standing under the laws of
its jurisdiction of organization. Seller has the requisite limited liability
company power and authority to operate, own and lease its properties, perform
its obligations under the Contracts to which it is a party and the Governmental
Approvals and otherwise carry on the Business as now conducted. Each of Seller
and Parent has the power and authority to enter into this Agreement and the
Other Agreements to which it is or is to become a party and perform its
obligations under this Agreement and such Other Agreements.
4.2. AUTHORIZATION; ENFORCEABILITY. This Agreement and each Other
Agreement to which Seller or Parent, as the case may be, is a party have been
duly executed and delivered by Seller or Parent, as the case may be, and
assuming the due authorization, execution and delivery by Buyer and/or ALC, as
the case may be, constitute the legal, valid and binding obligations of Seller
or Parent, as the case may be, enforceable against it in accordance with their
respective terms, subject to the effect of any applicable bankruptcy,
moratorium, insolvency, fraudulent conveyance, reorganization or other similar
law affecting the enforceability of creditors' rights generally and to the
effect of general principles of equity that may limit the availability of
remedies (whether in a proceeding at law or in equity). Each Other Agreement to
which Seller or Parent, as the case may be, is to become a party, when executed
and delivered by Seller or Parent, as the case may be, assuming the due
authorization, execution and delivery by Buyer and/or ALC, as the case may be,
shall constitute the legal, valid and binding obligation of Seller or Parent, as
the case may be, enforceable against it in accordance with the terms of such
Other Agreement, subject to the effect of any applicable bankruptcy, moratorium,
insolvency, fraudulent conveyance, reorganization or other similar law affecting
the enforceability of creditors' rights generally and to the effect of general
principles of equity that may limit the availability of remedies (whether in a
proceeding at law or in equity). Seller and Parent, as the case may be, has duly
and validly authorized this Agreement and the Other Agreements to which it is or
is to become a party and all of the Contemplated Transactions to be taken by it.
4.3. NO VIOLATION OF LAWS OR AGREEMENTS; LEGAL APPROVALS; CONSENTS.
Except as disclosed on Schedule 4.3, the execution and delivery of this
Agreement and the Other Agreements and the consummation of the Contemplated
Transactions by either Seller and Parent shall not, directly or indirectly (with
or without notice or the lapse of time or both):
(I) contravene, conflict with, or result in a violation of any
provision of the Governing Documents of Seller or Parent or the resolutions
adopted by the governing body or member of Seller or Parent;
(II) contravene, conflict with, result in a breach of,
constitute a default or an event of default under, give any person the right to
consent, approve, terminate or revoke (including the right to consent, approve,
terminate or revoke upon a change of control or deemed
25
assignment), or give to any person the right to cause any of the foregoing with
respect to, any asset or Liability of Seller, including any Contract,
Governmental Authorization, or any other agreement or instrument to which Seller
is a party or by which any of its assets may be bound or affected, except for
any such contravention, conflict, breach, default or event of default as would
not reasonably be expected to have a Material Adverse Effect;
(III) accelerate, alter or cause the maturation of or create
any material Liability of Seller, or give to any other person the right to cause
any of the foregoing, or give any person any rights or remedies against Seller,
except for any such acceleration, alteration or creation as would not reasonably
be expected to have a Material Adverse Effect;
(IV) alter, diminish or result in the termination, revocation,
suspension, cancellation, withdrawal or loss of any of the Purchased Assets, or
create any rights or assets in any other person that may be adverse to Seller,
except for any rights or assets which would not reasonably be expected to have a
Material Adverse Effect;
(V) violate, or give any person the right to obtain any relief
or exercise any remedy under, any material Legal Requirement to which Seller is
subject, or by which any of its respective assets may be bound or affected, or
give any person the right to challenge any of the Contemplated Transactions; or
(vi) result in the creation or imposition of any Encumbrance
or Security Rights upon any of the Purchased Assets (other than Encumbrances or
Security Rights granted in connection with the Promissory Note), give rise to
any rights or Liability under any Security Rights in any Purchased Assets or
give to any other person any interest or right in any of the Purchased Assets,
except for any such creation or imposition as would not reasonably be expected
to have a Material Adverse Effect.
Except as disclosed on Schedule 4.3, no person is required to make, give or
obtain any Legal Approvals or Consents in connection with the execution,
delivery or performance by Seller of this Agreement or any Other Agreement or
the consummation by Seller of the Contemplated Transactions, except for such
Legal Approvals and Consents as would not reasonably be expected to have a
Material Adverse Effect.
4.4. SUBSIDIARIES. Schedule 4.4 discloses the name, jurisdiction of
incorporation or organization and the type and number of authorized and
outstanding equity interests of each Subsidiary. No Subsidiary owns any of the
Purchased Assets.
4.5. RECORDS; FINANCIAL INFORMATION.
(A) RECORDS. The books of account and related records of Seller reflect
accurately and in detail the Purchased Assets. The books of account of Seller
represent actual, bona fide transactions and have been maintained in accordance
with sound business practices, including the maintenance of adequate internal
controls.
(B) FINANCIAL STATEMENTS. Attached as Exhibit C are the balance sheets,
statements of operations, changes in shareholder's equity and statements of cash
flows for Seller as of and for the years ended December 31, 2001, December 31,
2002 and December 31, 2003
26
(collectively, the "FINANCIAL STATEMENTS"). The Financial Statements (i) are
accurate, correct and complete, in all material respects, and in accordance with
the books of account and records of Seller, (ii) have been prepared in
accordance with IAS, and (iii) present fairly the financial condition, assets
and Seller Liabilities and results of operation, changes in shareholders equity
and cash flows of Seller at the dates and for the relevant periods indicated in
accordance with IAS on a basis consistently applied (except as noted therein).
4.6. UNDISCLOSED SELLER LIABILITIES. Seller has no Seller Liabilities
except: (i) those reflected or reserved against on the Balance Sheet in the
amounts identified on the Balance Sheet and those disclosed in the footnotes to
the Financial Statements; (ii) those disclosed on the Schedules (iii) those of
the same nature as those set forth on the Balance Sheet that have arisen in the
ordinary course of business of Seller after the Balance Sheet Date none of which
is materially different in amount than as reflected in the Financial Statements;
and (iv) those under this Agreement or the Other Agreements or resulting from
the Contemplated Transactions.
4.7 NO CHANGES. From the Balance Sheet Date to the date hereof, and
except as set forth on Schedule 4.7, Seller has conducted the Business only in
the ordinary course, consistent with the Operating Plan. From the Balance Sheet
Date to the date hereof, except as expressly disclosed on the Schedules attached
to this Agreement, there has been no:
(I) material damage or destruction to any Purchased Asset,
whether or not covered by insurance (other than inventory and supply damage
offset by fully collectible freight claims against common carriers for the fair
value thereof);
(II) strike or other material labor trouble at Seller;
(III) declaration or payment of any dividend, other
distribution, redemption or purchase of or with respect to the membership
interests of Seller, or creation or cancellation of any Security Rights with
respect to the membership interests of Seller other than distributions of cash
in the ordinary course of business;
(IV) increase in the salary, wage or bonus of any employee of
Seller, or payment of any bonuses to any employee of Seller other than in the
ordinary course of business or as required by the applicable collective
bargaining agreements or employment agreements;
(V) asset acquisition or expenditure, including capital
expenditure, in excess of $100,000 in the aggregate by Seller, other than the
purchase of inventory in the ordinary course of business;
(VI) change in any method of accounting by Seller;
(VII) disposition by Seller of any asset (other than inventory
in the ordinary course of business) for more than $50,000 in the aggregate or
for less than fair market value;
(VIII) creation or incurrence by Seller of any Encumbrance
other than in the ordinary course of business, or which is a Permitted
Encumbrance;
27
(IX) termination or amendment of, or waiver of any right
under, any material Contract other than in the ordinary course of business; or
(X) agreement or commitment to do any of the foregoing.
4.8 TAXES. Seller has filed on a timely basis all material Tax Returns
that are or were required to be filed by it under applicable Legal Requirements.
All such Tax Returns were correct and complete in all material respects and have
been prepared in accordance with applicable Legal Requirements. Seller has paid
all material Taxes that have or may have become due for all periods covered by
the Tax Returns or otherwise, or pursuant to any assessment received by Seller,
except such Taxes, if any, are being contested in good faith. There are no liens
for Taxes on any of the Purchased Assets that arose in connection with any
failure (or alleged failure) to pay any Tax. Seller has no Tax Liability for the
Taxes of any person (other than Seller) (i) under Treasury Regulation Section
1.1502-6 (or any similar provision of state, local or foreign law), (ii) as a
transferee or successor, (iii) by contract, or (iv) otherwise.
4.9 [INTENTIONALLY OMITTED]
4.10 [INTENTIONALLY OMITTED]
4.11 CONDITION OF PURCHASED ASSETS; TITLE; BUSINESS. Except as
disclosed on Schedule 4.11, the buildings, plants, structures, furniture and
fixtures, improvements, machinery, equipment, tools, improvements and other
tangible personal property owned or used by Seller and included in the Purchased
Assets, including those reflected on the Balance Sheet, are structurally sound,
in good operating condition and repair, adequate for the uses to which they are
being put and sufficient for the continued conduct of the Business after Closing
in substantially the same manner as conducted prior to the Closing. Except as
disclosed on Schedule 4.11, none of the material Purchased Assets is in need of
maintenance or repairs except for ordinary, routine maintenance and repairs that
are not material in nature or cost. Seller has good and valid title to all of
the Purchased Assets. All of the Purchased Assets are reflected on the Balance
Sheet, or, under IAS, are not required to be reflected thereon. Other than the
Retained Assets, the Purchased Assets include all assets that are necessary for
use in and operation of the Business. Seller does not own or lease any material
assets not used in the Business. Except as disclosed on Schedule 4.11, none of
the Purchased Assets is subject to any Encumbrance other than Permitted
Encumbrances.
4.12 LEGAL PROCEEDINGS; ORDERS. Except as disclosed on Schedule 4.12,
no Legal Proceeding is pending or, to the knowledge of Seller, threatened
against Seller, the Business, any of the Purchased Assets or the Contemplated
Transactions, Seller has made or will make available to Buyer copies of all
pleadings, correspondence, and other documents relating to each Legal Proceeding
identified on Schedule 4.12. To the knowledge of Seller, no event has occurred
or circumstance exists that is reasonably likely to give rise to or serve as a
basis for the commencement of any Legal Proceeding.
4.13 CONTRACTS; COMPLIANCE. Disclosed on Schedule 4.13 is a brief
description of each Contract (and all amendments thereto) that is material to
the Business or the Purchased Assets. Schedule 4.13 separately identifies all
outstanding offers and solicitations made to or by Seller
28
that are material to the business. True and complete copies of all Contracts
disclosed on Schedule 4.13 have been made available or promptly after the date
hereof will be made available to Buyer. Each Contract disclosed on Schedule 4.13
is a legal, valid and binding obligation of Seller and is in full force and
effect. Except as disclosed on Schedule 4.13, no Legal Approval or Consent is
needed in order for the Contracts disclosed on Schedule 4.13 to continue in full
force and effect under the same terms and conditions currently in effect
following consummation of the Contemplated Transactions. To the knowledge of
Seller, each Contract disclosed on Schedule 4.13 is a legal, valid and binding
obligation of each other party to each Contract.
4.14 GOVERNMENTAL AUTHORIZATIONS. Schedules 4.14 and 4.22 identify all
Governmental Authorizations that are required under applicable Legal
Requirements to conduct and operate the Business in the manner currently
conducted and to own, operate and use the Purchased Assets in the manner in
which they are currently owned, operated and used, except for such Governmental
Authorizations the failure of which to obtain would not reasonably be expected
to have a Material Adverse Effect. Each such Governmental Authorization is
valid, subsisting and in full force and effect; and no appeals or other Legal
Proceedings are pending or, to the knowledge of Seller, threatened with respect
to the issuance, terms or conditions of any such Governmental Authorization.
Seller is in material compliance with and has fulfilled and performed its
obligations under each such Governmental Authorization. To the knowledge of
Seller, no event or condition or state of facts exists (or would exist upon the
giving of notice or lapse of time or both) that could constitute a violation,
breach or default under any such Governmental Authorization. Except as disclosed
on Schedule 4.14, Seller has no knowledge of and has not received, at any time
since January 1, 2001 (or if unresolved, at any previous time) any written
notice or other communication from any Governmental Body or any other person
regarding any actual, alleged, possible, or potential (i) violation of or
failure to comply with any term or requirement of any such Governmental
Authorization, or (ii) revocation, withdrawal, non-renewal, suspension,
cancellation, termination, or modification of any such Governmental
Authorization. No Legal Proceeding is pending or, to the knowledge of Seller,
threatened to revoke, suspend or modify any such Governmental Authorization or
to deny any renewal of any such Governmental Authorization. All applications
required to have been filed for the renewal of any material Governmental
Authorization have been duly filed on a timely basis with the appropriate
Governmental Bodies.
4.15 COMPLIANCE WITH LEGAL REQUIREMENTS. Seller is and has been in
compliance in all material respects with all material Legal Requirements
applicable to Seller and the Business. To the knowledge of Seller, no event has
occurred or condition or state of facts exists that (with or without notice or
lapse of time or both) (i) may constitute or result in a material violation or
non-compliance by Seller of any Legal Requirement, or (ii), except as disclosed
on Schedule 4.22, would reasonably be expected to give rise to any material
Liability on the part of Seller to undertake, or to bear all or any portion of
the cost of, any remedial action of any nature (including any Environmental
Remedial Action). Except as disclosed on Schedule 4.15 or as disclosed on
Schedule 4.22, Seller has not received any written notice or other communication
from any Governmental Body or from any other person regarding (y) any actual,
alleged, possible, or potential violation of, or failure to comply with, any
material Legal Requirement, or (z) any actual, alleged, possible, or potential
material Liability on the part of Seller to undertake, or to bear all or any
portion of the cost of, any remedial action of any nature (including any
Environmental Remedial Action). True and complete copies of the Seller's code of
ethics or
29
similar policy have been made available by Seller to Buyer. Schedule 4.15
discloses any and all complaints or other submissions received by Seller
regarding accounting, internal controls or auditing.
4.16 REAL PROPERTY. Schedule 4.16 discloses and summarizes all real
properties currently owned, occupied, used or leased by Seller or in which
Seller has an interest that are included in the Purchased Assets (such real
properties, including buildings, structures, fixtures, improvements, leaseholds,
privileges, rights, easements, hereditaments, Appurtenances and related rights
of every nature, collectively, the "REAL PROPERTY") and identifies the record
title holder of all Real Property. Schedule 4.16 identifies the correct legal
description, street address and tax parcel identification number of all tracts,
parcels and subdivided lots of all Real Property owned by Seller. Seller has
good and marketable fee simple title to all Real Property shown as owned by it
on Schedule 4.16, free and clear of all Encumbrances, other than Permitted
Encumbrances. Seller has the right to quiet enjoyment of all Real Property in
which it holds a leasehold interest for the full term, including all renewal
rights, of the leasehold interest. Schedule 4.16 identifies each lease
agreement, and all amendments and supplements thereto, for each parcel of Real
Property shown as leased by Seller on Schedule 4.16. Seller has not received any
written notice of assessments for public improvements against any Real Property
or any written notice or Order by any Governmental Body, insurance company or
board of fire underwriters or other body exercising similar functions that (i)
relates to violations of zoning, land use, building, safety or fire ordinances
or regulations, (ii) claims any defect or deficiency with respect to any Real
Property or (iii) requests the performance of any repairs, alterations or other
work to or in any Real Property or in any streets bounding the Real Property.
There is no pending condemnation, expropriation, eminent domain or similar
proceeding affecting all or any portion of the Real Property. Seller has not
received any written notice of any proposed, planned or actual curtailment of
service of any utility supplied to any facility located on the Real Property.
There exists no outstanding option, right of first refusal or other contractual
right to purchase, sell, assign or dispose of any owned Real Property. Seller
has all certificates of occupancy and Governmental Authorizations necessary for
current and continued use and operation of the Real Property.
4.17 TRANSACTIONS WITH RELATED PARTIES. No Related Party is or has been
since July 1, 2002 a party to any transaction, agreement or understanding with
Seller except for arrangements disclosed on Schedule 4.17. Schedule 4.17
separately identifies all services that any Seller Affiliate provides to the
Business, and all assets that any Seller Affiliate owns or leases that are used
in the Business.
4.18 LABOR RELATIONS. Seller has complied in all material respects with
all material Legal Requirements relating to employment practices, terms and
conditions of employment, equal employment opportunity, nondiscrimination,
immigration, wages, hours, benefits, collective bargaining and other
requirements, the payment of social security and similar Taxes and occupational
safety and health. Seller has provided to Buyer a true and complete copy of the
collective bargaining agreements, including all amendments and modifications to
such agreements. No representation election, arbitration proceeding, grievance,
picketing, labor strike, slowdown, lockout, stoppage or other labor dispute is
pending or, to the knowledge of Seller, threatened against or affecting Seller.
No complaint against Seller is pending or, to the knowledge of Seller,
threatened before the National Labor Relations Board, the Equal
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Employment Opportunity Commission or any similar state or local agency. Except
as set forth on Schedule 4.18, Seller has no contingent Liability for sick
leave, vacation time, severance or occupational disease pay not fully reserved
on the Balance Sheet. Schedule 4.18 contains a complete and accurate list of the
following for each employee or director of Seller, including each employee on
leave of absence or layoff status: employer; name; job title; current
compensation paid or payable and any change in compensation since January 1,
2003; vacation accrued; and service credited for purposes of vesting and
eligibility to participate under any Benefit Plan. Seller has taken no action
that would give rise to any notice required to be delivered under the WARN Act.
Seller has not made a commitment to increase the salaries, bonuses or other
benefits of the employees employed in the Business, except as provided in
collective bargaining agreements identified on Schedule 4.18. Schedule 4.18
separately discloses all employment or retention agreements that would obligate
Seller or Buyer to make any form of severance or termination payment on
stipulated conditions, including discharge after a change of control.
4.19 PRODUCTS LIABILITY. Schedule 4.19 identifies a claims history for
products liability against Seller during the past five years. Schedule 4.19
separately discloses all products that Seller currently sells or previously sold
that contain asbestos or silica or other potentially hazardous or toxic
materials. Schedule 4.19 discloses and describes the terms of all express
product warranties.
4.20 INTELLECTUAL PROPERTY RIGHTS.
(A) IDENTIFICATION; VALIDITY; ETC. Schedule 4.20 discloses all of the
trademark and service mark rights, applications and registrations, trade names,
fictitious names, service marks, logos and brand names, copyrights, copyright
applications, letters patent, patent applications and licenses of any of the
foregoing owned or used by Seller in or applicable to the Business. Schedule
4.20 also discloses Seller's telephone numbers, facsimile numbers, yellow pages
and other advertising, e-mail addresses, Internet sites containing Business
product information and all domain names owned by or for the benefit of Seller.
Seller has the entire right, title and interest in and to, or has the exclusive
perpetual royalty-free right to use, the intellectual property rights disclosed
on Schedule 4.20 and all other processes, know-how, show-how, formulae, trade
secrets, inventions, discoveries, improvements, blueprints, specifications,
drawings, designs, moral rights, Software, technical documentation of the
Software, and other proprietary rights necessary or applicable to or advisable
for use in the Business (all of the foregoing, including the intellectual
property rights disclosed on Schedule 4.20, collectively, "INTELLECTUAL
PROPERTY"). Schedule 4.20 separately discloses all Intellectual Property under
license and all other Contracts relating to Intellectual Property owned, used or
leased by Seller, excluding commercially available off-the-shelf Software
purchased or licensed for less than a total cost of $1,000 in the aggregate. The
Intellectual Property is valid and not the subject of any interference,
opposition, reexamination or cancellation. To the knowledge of Seller, no person
is infringing upon, nor has any person misappropriated, any Intellectual
Property. The Intellectual Property identified on Schedule 4.20 is all of the
Intellectual Property necessary for the operation of the Business. Except as
disclosed on Schedule 4.20, Seller has all right, title and interest in and to
the Intellectual Property identified on Schedule 4.20, free and clear of all
Encumbrances other than Permitted Encumbrances. Seller is not infringing upon
the intellectual property rights of any other person.
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(B) PATENTS; TRADEMARKS; COPYRIGHTS; TRADE SECRETS. All of the issued
patents and registered trademarks and copyrights identified on Schedule 4.20 are
currently in compliance with all Legal Requirements (including payment of
filing, examination, and maintenance fees, proofs of working or use, the timely
post-registration filing of affidavits of use and incontestability and renewal
applications), are valid and enforceable, and are not subject to any maintenance
fees or taxes or actions falling due within 90 days after the Closing Date. No
patent identified on Schedule 4.20 has been or is now involved in any
interference, reissue, reexamination, opposition, invalidation or cancellation
proceeding. All products made, used, or sold under the patents identified on
Schedule 4.20 have been marked with the proper patent notice. All of Seller's
products and materials containing a trademark bear the proper federal
registration notice where permitted by applicable Legal Requirements. All of
Seller's works encompassed by the copyrights identified on Schedule 4.20 have
been marked with the proper copyright notice. To the knowledge of Seller, there
is no potentially interfering patent or patent application of any third party.
The documentation relating to Seller's trade secrets is current, accurate, and
sufficient in detail and content to identify and explain them and to allow them
full and proper use without reliance on the knowledge or memory of any
individual. Seller has taken all reasonable precautions to protect the secrecy,
confidentiality, and value of the trade secrets. The trade secrets are not part
of the public knowledge or literature, and, to the knowledge of Seller, have not
been used, divulged, or appropriated either for the benefit of any person or to
the detriment of Seller.
4.21 BENEFIT PLANS. Schedule 4.21 lists each material Benefit Plan.
Seller has made available, or will make available promptly after the date of
this Agreement, to Buyer true and complete copies of the following with respect
to each Benefit Plan, to the extent applicable: (i) all current summary plan
descriptions, and (ii) with respect to each Benefit Plan that is a Qualified
Plan, the most recent IRS determination, opinion and or notification letter.
4.22 ENVIRONMENTAL MATTERS. Except as disclosed on Schedule 4.22:
(A) GOVERNMENTAL AUTHORIZATIONS. Seller possesses all Governmental
Authorizations that are required by Environmental Law for the construction, use
or operation of the Real Property and Purchased Assets and the operation of the
Business.
(B) COMPLIANCE. Seller is in compliance in all material respects with
all Environmental Laws relating to or otherwise affecting the Business and the
ownership or operation of the Real Property and Purchased Assets.
(C) LIABILITY. Seller is not subject to any material Environmental
Liability, and Buyer will not after Closing suffer or incur any material
Environmental Liability, as a result of: (i) a violation or noncompliance with
any Environmental Law by Seller, any Predecessor or any other person for whose
conduct Seller is legally responsible; (ii) the ownership or operation of, or
any condition at, the Real Property or Purchased Assets on or prior to the
Closing Date; (iii) the Release or threatened Release of any Regulated Material
at, on or under any Real Property on or prior to the Closing Date; (iv) any
Hazardous Activity conducted by Seller, any Predecessor or by any other person
for whose conduct Seller is legally responsible; (v) the Release, threatened
Release of any Regulated Material at, on or under the Retained Real Property or
real property of Seller not otherwise included in the Owned Real Property; (vi)
any Environmental Remedial
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Action required to be taken by Seller or any Predecessor; or (vii) the
treatment, storage, transportation or disposal of any Regulated Material or the
arrangement for treatment, storage, transportation or disposal of any Regulated
Material by Seller or any other person for whose conduct Seller is legally
responsible.
(D) TREATMENT, DISPOSAL & RELEASES. Neither Seller nor, to the
knowledge of Seller, any other person has treated, stored, recycled or disposed
of any Regulated Material on any Real Property or any part of the Facilities in
material violation of any Environmental Law or in a manner that would reasonably
be expected to result in a material or potentially material Environmental
Liability. There is and has been no Release or, to the knowledge of Seller,
threat of Release of any Regulated Material to the Environment at, on or under
or related to any Real Property or Facility in material violation of any
Environmental Law or that would reasonably be expected to give rise to a
material or potentially material Environmental Liability. There is no Regulated
Material present in the Environment at, on or under any Real Property in
material violation of any Environmental Law.
(E) SITES USED FOR REGULATED MATERIALS; TRANSACTIONS WITH LISTED
HAZARDOUS SITES. As promptly as practicable following the date of this
Agreement, Seller will provide to Buyer a list of all sites at which, to the
knowledge of Seller, Seller has arranged for the transportation, recycling,
treatment, disposal, or other handling of any Regulated Material. Neither Seller
nor any Predecessor has arranged for the treatment or disposal of any Regulated
Material generated at the Facilities or Purchased Assets or related to the
Business, or arranged for the transportation of any such Regulated Material for
treatment or disposal, at any Listed Hazardous Site, which treatment or disposal
would reasonably be expected to result in a material Environmental Liability.
(F) STATUS OF REAL PROPERTY. None of the Real Property is listed, or to
the knowledge of Seller proposed for listing on, (i) the National Priorities
List under CERCLA, (ii) CERCLIS or (iii) any list established by a Governmental
Body of sites potentially requiring Environmental Remedial Action.
(G) NOTICES RELATING TO REAL PROPERTY; LIENS. Seller is not required to
place any notice or restriction relating to the presence of any Regulated
Material at any Real Property or in any deed to any Real Property. No liens have
arisen under or pursuant to any Environmental Law on the Purchased Assets, and,
to the knowledge of Seller, no action has been taken or threatened by any
Governmental Body that could subject any of the Purchased Assets to such liens.
(H) CLAIMS. Seller has not received any written request for
information, notice of claim, demand or other written notification or
communication that Seller is or may be potentially responsible with respect to
any material or potentially material Environmental Liability or Environmental
Remedial Action or any material threatened or actual Release of any Regulated
Material. There is no pending or, to the knowledge of Seller, contemplated claim
by or against Seller under any Environmental Law.
(I) STORAGE TANKS. All underground storage tanks located on the Real
Property are disclosed on Schedule 4.22. All tanks and associated piping have
been maintained, inspected
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and tested in compliance in all material respects with applicable Environmental
Laws, are in sound condition and are not leaking. All storage tanks on the Real
Property which were previously removed from service have been properly closed in
compliance in all material respects with all applicable Environmental Law, and
with respect to each such tank, testing and observations confirm that there were
no Releases requiring material Environmental Remedial Actions, or that any
required material Environmental Remedial Actions have been completed.
(J) PCBS AND ASBESTOS CONTAINING MATERIALS. There is no PCB Equipment
at the Real Property. Any PCB Equipment which previously existed at the Real
Property has been flushed of polychlorinated biphenyls, or has been removed and
properly disposed of, in material compliance with applicable Environmental Laws.
Any remaining PCB Equipment is and has been labeled, inspected, and managed in
material compliance with applicable Environmental Laws. Any Regulated Asbestos
Containing Material at the Real Property is being managed in material compliance
with all applicable Environmental Laws.
(K) ENVIRONMENTAL INFORMATION AND REPORTS. Seller has made available to
Buyer true and complete copies and results of any material assessments, audits,
reports, studies, analyses, tests, or monitoring possessed, controlled or
initiated by Seller pertaining to (A) the matters in this Section 4.22, (B)
Regulated Materials or activities in, on or under the Real Property or Purchased
Assets, (C) compliance with Environmental Laws by the Business, the Real
Property and Purchased Assets, Seller or any other person for whose conduct
Seller is legally responsible. To the knowledge of Seller, no other documents
reflecting such assessments, audits, reports, studies, analyses, tests, or
monitoring pertaining to the Real Property or Business exist.
(L) REPORTS. Seller has or will provide to Buyer reasonable access to
all written information in its possession or control pertaining to the matters
set forth in this Section 4.22, including all documents pertaining to
Environmental audits or assessments prepared for Seller or relating to the
Facilities.
4.23 ASBESTOS OR SILICA ACTIVITY. Except as disclosed on Schedule 4.23,
neither Seller nor, to the knowledge of Seller, any Predecessor has ever
possessed, purchased, sold, brokered, owned, leased, used, manufactured,
fabricated, controlled, handled, encapsulated, disposed of, remediated, or
transported any asbestos or silica or any products, assets, materials, supplies
or other property (including personal property, real property and fixtures)
containing asbestos or silica (any one of the foregoing, an "ASBESTOS OR SILICA
ACTIVITY") so as to give rise to any material or potentially material Liability.
Neither Seller nor, to the knowledge of Seller, any Predecessor has ever
engaged, directed or instructed by any means or methods, including, without
limitation, by contract, subcontract, independent contractor, respondeat
superior, arrangement or custom, any person to conduct any Asbestos or Silica
Activity so as to give rise to any material or potentially material Liability.
Neither Seller nor, to the knowledge of Seller, any Predecessor has ever,
directly or indirectly, exposed or permitted any person to become exposed to
asbestos or silica or any products, assets, materials, supplies or other
property (including personal property, real property and fixtures) containing
asbestos or silica or any other Asbestos or Silica Activity so as to give rise
to any material or potentially material Liability. Seller has no material or
potentially material Liability for, and neither Seller nor, to the knowledge of
Seller, any Predecessor has ever been subject to or received any claim or
allegation
34
or Legal Proceeding by or from any person threatening or alleging, material or
potentially material Damages related to asbestos or silica or products, assets,
materials or supplies containing asbestos or silica or related to asbestosis or
mesothelioma or any other condition resulting from exposure thereto, and, to the
knowledge of Seller, there is no basis for any such claim, allegation or Legal
Proceeding.
4.24 CERTAIN PAYMENTS. To the knowledge of Seller, during the past five
years, neither Seller nor any director, officer, agent, or employee of Seller,
or any other person associated with or acting for or on behalf of Seller, has
directly or indirectly (i) made any contribution, gift, bribe, rebate, payoff,
influence payment, kickback, or other payment to any person, private or public,
regardless of form, whether in money, property, or services (A) to obtain
favorable treatment in securing business, (B) to pay for favorable treatment for
business secured, (C) to obtain special concessions or for special concessions
already obtained, for or in respect of Seller or any Affiliate of Seller, or (D)
in violation of any applicable Legal Requirements, or (ii) established or
maintained any fund or asset that has not been recorded in the books and records
of Seller. Seller has at all times been in material compliance with all Legal
Requirements relating to export control and trade embargoes.
4.25 CUSTOMER RELATIONS. Except as disclosed on Schedule 4.25, no
customer or distributor has during the past year informed Seller of an intention
to cease doing business with such person, refused to honor a purchase commitment
or advised Seller or its Affiliates that it may cease doing business with
Seller, or that it may reduce the volume of business that it does with Seller if
it is acquired by Buyer or any of its Affiliates.
4.26 FINDERS' FEES; NO EXISTING DISCUSSIONS. Except for Houlihan Lokey
Howard & Zukin Capital, the fees of which Seller and Parent agree will be paid
out of the Purchase Price received by Seller in connection with this Agreement,
neither Seller nor any of its respective officers, directors or employees has
employed any broker or finder or incurred any Liability for any brokerage fee,
commission or finders' fee in connection with any of the Contemplated
Transactions. Neither Parent nor Seller is engaged, directly or indirectly, in
any discussions or negotiations with any other party with respect to any
proposal to acquire, in any manner, the Purchased Assets.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF BUYER AND ALC
Buyer and, with respect to Sections 5.1, 5.2 and 5.3, ALC, represent
and warrant to Seller and Parent as follows:
5.1. ORGANIZATION. Each of Buyer and ALC is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation. Each of Buyer and ALC has the requisite corporate
power and authority to own or lease its properties, carry on its business, enter
into this Agreement and the Other Agreements to which it is or is to become a
party and perform its obligations under this Agreement and such Other
Agreements.
5.2. AUTHORIZATION; ENFORCEABILITY. This Agreement and each Other
Agreement to which Buyer or ALC, as the case may be, is a party have been duly
executed and delivered by
35
Buyer or ALC, as the case may be, and, assuming the due authorization, execution
and delivery by Seller and/or Parent, as the case may be, constitute the legal,
valid and binding obligations of Buyer or ALC, as the case may be, enforceable
against it in accordance with their respective terms, subject to the effect of
any applicable bankruptcy, moratorium, insolvency, fraudulent conveyance,
reorganization or other similar law affecting the enforceability of creditors'
rights generally and to the effect of general principles of equity that may
limit the availability of remedies (whether in a proceeding at law or in
equity). Each Other Agreement to which Buyer or ALC, as the case may be, is to
become a party, when executed and delivered by Buyer or ALC, as the case may be,
and assuming the due authorization, execution and delivery by Seller and/or
Parent, as the case may be, constitute the legal, valid and binding obligation
of Buyer or ALC, as the case may be, enforceable against it in accordance with
the terms of such Other Agreement, subject to the effect of any applicable
bankruptcy, moratorium, insolvency, fraudulent conveyance, reorganization or
other similar law affecting the enforceability of creditors' rights generally
and to the effect of general principles of equity that may limit the
availability of remedies (whether in a proceeding at law or in equity). All
Contemplated Transactions to which Buyer or ALC, as the case may be, is or is to
become a party have been duly and validly authorized by all necessary corporate
proceedings by Buyer or ALC, as the case may be.
5.3. NO VIOLATION OF LAWS OR AGREEMENTS; LEGAL APPROVALS; CONSENTS. The
execution and delivery of this Agreement and the Other Agreements and the
consummation and compliance with the transactions, terms and conditions of this
Agreement and the Other Agreements by Buyer and ALC, will not directly or
indirectly (with or without notice or the lapse of time or both): (i)
contravene, conflict with or result in a violation of any provision of the
Governing Documents of Buyer or ALC or the resolutions adopted by the governing
body of Buyer or ALC; or (ii) violate, or give any person the right to obtain
any relief or exercise any remedy under, any Legal Requirement to which Buyer or
ALC is subject, or by which any of its assets may be bound or affected, or give
any person the right to challenge any of the Contemplated Transactions. Except
as disclosed on Schedule 5.3, neither Buyer nor ALC is required to make, give or
obtain any Legal Approvals in connection with the execution, delivery or
performance by Buyer or ALC of this Agreement or any Other Agreement or the
consummation by Buyer or ALC of the Contemplated Transactions.
5.4. FINDERS' FEES. None of Buyer, ALC and their officers, directors or
employees has employed any broker or finder or incurred any Liability for any
brokerage fee, commission or finders' fee in connection with any of the
Contemplated Transactions.
5.5 FINANCING REPRESENTATION. ALC has available and will have available
to it and Buyer at Closing, cash sufficient to enable it to fund the cash
portion of the Purchase Price at Closing. ALC's and Buyer's ability to close the
Contemplated Transactions is not dependent or contingent on financing.
5.6 LEGAL PROCEEDINGS; ORDERS. Except as disclosed on Schedule 5.6, no
Legal Proceeding is pending or, to the knowledge of Buyer, threatened against
Buyer, ALC or the Contemplated Transactions, and there is no basis for any of
the foregoing, which would have an adverse effect on the ability of Buyer and
ALC to consummate the Contemplated Transactions.
36
To the knowledge of Buyer, no event has occurred or circumstance exists that is
reasonably likely to give rise to or serve as a basis for the commencement of
any Legal Proceeding.
ARTICLE VI.
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
6.1. SURVIVAL OF REPRESENTATIONS. Subject to Section 6.3(c), all
representations, warranties, covenants and obligations made by any party in this
Agreement are several and independent obligations and shall survive the Closing.
Any limitation or qualification set forth in any one representation and warranty
in Articles IV or V shall not limit or qualify any other representation and
warranty in Articles IV or V. Each representation and warranty included in
Articles IV and V is independent and shall be interpreted without regard to any
other representation or warranty included in Articles IV or V. The right to
indemnification under this Article VI or any other remedy based on the breach or
inaccuracy of any representation or warranty in Articles IV or V, or breach of,
or noncompliance with, any covenant or obligation in this Agreement will not be
affected by any investigation conducted with respect to, or any knowledge
acquired (or capable of being acquired) at any time, whether before or after the
execution and delivery of this Agreement or the Closing Date, with respect to
any such representation, warranty, covenant or obligation. The waiver by either
party of any condition at Closing or the breach or inaccuracy of any
representation or warranty, or breach of, or noncompliance with, any covenant or
obligation, will not affect the right of such party to indemnification, payment
of Damages or other remedy based on such breach, inaccuracy or noncompliance.
The Post-Closing Purchase Price Adjustment shall not adversely affect any rights
of Buyer Indemnitees under this Article VI.
6.2. INDEMNIFICATION BY SELLER. Subject to the limitations set forth
below, Seller shall indemnify, defend, save and hold harmless Buyer and ALC and
their respective officers, directors, employees, agents and Affiliates (each a,
"BUYER INDEMNITEE") from and against, and shall reimburse Buyer Indemnitees for,
all Damages (collectively, "BUYER DAMAGES") directly or indirectly asserted
against, imposed upon, resulting to, or incurred or required to be paid by any
Buyer Indemnitee from or in connection with:
(A) any breach or inaccuracy of any representation or warranty made by
Seller in this Agreement (without giving effect to any supplement to the
Schedules), in any Schedules or supplement to the Schedules, in any certificate
or document delivered in connection with this Agreement or any Other Agreement
to which Seller is or is to become a party;
(B) any breach or nonperformance of any covenant or obligation made by
Seller in connection with this Agreement or any Other Agreement to which Seller
is or is to become a party; and
(C) any Seller Liabilities, including without limitation, any
Environmental Liability with respect to the Business, the Real Property or the
Purchased Assets arising out of any facts or circumstances existing at any time
on or before the Closing Date.
6.3. LIMITATION OF LIABILITY FOR SELLER'S BREACH OF REPRESENTATIONS AND
WARRANTIES. Notwithstanding the foregoing, Seller's obligations after Closing to
indemnify Buyer
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Indemnitees against any Buyer Damages under Section 6.2(a) shall be subject
to all of the following limitations:
(A) THRESHOLD. No indemnification shall be made under Section 6.2(a)
until the aggregate amount of Buyer Damages under this Agreement exceeds Five
Hundred Thousand Dollars ($500,000) and indemnification shall be made by Seller
under this Agreement only to the extent Buyer Damages exceed Five Hundred
Thousand Dollars ($500,000) in the aggregate.
(B) CEILING. No indemnification shall be made under Section 6.2(a) to
the extent that Buyer Damages exceeds Twenty Five Million Dollars ($25,000,000)
in the aggregate.
(C) TIME PERIOD. Any claim for Buyer Damages sustained by reason of a
breach or inaccuracy of any representation or warranty as provided under Section
6.2(a) shall be limited to Buyer Damages arising from claims set forth in a
written notice delivered to Seller within twenty-four (24) months after the
Closing Date.
(D) FRAUD. The limitations set forth in Sections 6.3(a), (b) and (c)
shall not apply to Buyer Damages arising out of (i) fraud, or (ii) the breach of
any representation or warranty contained in Article IV if such representation or
warranty was made with actual knowledge that it contained an untrue statement of
a fact or omitted to state a fact necessary to make the statements of facts
contained in those Articles not misleading.
(E) EXCLUSIONS. The limitations set forth in Section 6.3 above shall
not limit or otherwise adversely affect Buyer's rights to indemnification for
Buyer Damages under any provision of Section 6.2 other than Section 6.2(a),
including Buyer's remedies in respect of Seller Liabilities, without regard to
any time or dollar limitation. Nothing contained in this Section 6.3 shall limit
the indemnification obligations of Parent under Section 6.4.
6.4. INDEMNIFICATION BY PARENT. Parent shall indemnify, defend, save
and hold harmless Buyer Indemnitees from and against, and shall reimburse Buyer
Indemnitees for, all Buyer Damages directly or indirectly asserted against,
imposed upon, resulting to, or incurred or required to be paid by any Buyer
Indemnitee from or in connection with:
(A) any breach or inaccuracy of any representation or warranty made by
Parent in this Agreement (without giving effect to any supplement to the
Schedules), in any Schedules or supplement to the Schedules, in any certificate
or document delivered by in connection with this Agreement or any Other
Agreement to which Parent is or is to become a party; and
(B) any breach or nonperformance of any covenant or obligation made by
Parent in connection with this Agreement or any Other Agreement to which Parent
is or is to become a party; and
(C) any liability or obligation of Seller to any Affiliate of Seller
except to the extent included in the Assumed Liabilities.
6.5. INDEMNIFICATION BY BUYER AND ALC. Buyer and ALC shall indemnify,
defend, save and hold harmless Seller and Parent and their respective officers,
directors, employees, Affiliates and agents (each, a "SELLER INDEMNITEE") from
and against any and all Damages
38
(collectively, "SELLER DAMAGES") directly or indirectly asserted against,
imposed upon, resulting to, or incurred or required to be paid by any Seller
Indemnitee from or in connection with, (i) any breach or inaccuracy of any
representation or warranty made by Buyer or ALC in this Agreement or in any
certificate or document delivered by Buyer or ALC in connection with this
Agreement or any Other Agreement to which Buyer or ALC is or is to become a
party, (ii) a breach or nonperformance of any covenant or agreement made by
Buyer or ALC in connection with this Agreement or in any Other Agreement to
which Buyer or ALC is or is to become a party, and (iii) the Assumed
Liabilities.
6.6. NOTICE OF CLAIMS. If any Buyer Indemnitee or Seller Indemnitee (an
"INDEMNIFIED PERSON") believes that it has suffered or incurred, or will suffer
or incur, any Damage for which it is entitled to indemnification under this
Article VI, the Indemnified Party shall notify the party or parties from whom
indemnification is being claimed (the "INDEMNIFYING PERSON"). This notice shall
specify the factual basis of the claim in reasonable detail in light of the
circumstances then existing. If any Legal Proceeding is instituted by or against
a third party with respect to which any Indemnified Party intends to claim any
Damages, such Indemnified Party shall notify the Indemnifying Party of such
action or suit. The failure of an Indemnified Party to give any notice required
by this section shall not affect any of such party's rights under this Article
VI or otherwise, except and to the extent that such failure is actually
prejudicial to the rights or obligations of the Indemnifying Party. In the event
of a dispute or controversy arising out of a claim for indemnification under
Section 6.2(a) or 6.2(b), the rights of Buyer and Seller shall be subject to
Section 8.17 of this Agreement.
6.7. THIRD-PARTY CLAIMS.
(A) NOTICE. Promptly after receipt by an Indemnified Person of notice
of the assertion of a third-party claim against it, such Indemnified Person
shall give notice to the Indemnifying Person under the applicable Section
thereof of the assertion of such third-party claim, provided that the failure to
notify the Indemnifying Person will not relieve the Indemnifying Person of any
liability that it may have to any Indemnified Person, except to the extent that
the Indemnifying Person demonstrates that the defense of such third-party claim
is prejudiced by the Indemnified Person's failure to give such notice.
(B) ASSUMPTION OF DEFENSE. If an Indemnified Person gives notice to the
Indemnifying Person pursuant to Section 6.7(a) of the assertion of a third-party
claim, the Indemnifying Person shall be entitled to participate in the defense
of such third-party claim and, to the extent that it wishes (unless (i) the
Indemnifying Person is also a person against whom the third-party claim is made
and the Indemnified Person determines in good faith that joint representation
would be inappropriate or (ii) the Indemnifying Person fails to provide
reasonable assurance to the Indemnified Person of its financial capacity to
defend such third-party claim and provide indemnification with respect to such
third-party claim), to assume the defense of such third-party claim with counsel
satisfactory to the Indemnified Person. After notice from the Indemnifying
Person to the Indemnified Person of its election to assume the defense of such
third-party claim, the Indemnifying Person shall not, so long as it diligently
conducts such defense, be liable to the Indemnified Person under this Article VI
for any fees of other counsel or any other expenses with respect to the defense
of such third-party claim, in each case subsequently incurred by the Indemnified
Person in connection with the defense of such third-
39
party claim, other than reasonable costs of investigation. If the Indemnifying
Person assumes the defense of a third-party claim, no compromise or settlement
of such third-party claims may be effected by the Indemnifying Person without
the Indemnified Person's consent, unless (x) there is no finding or admission of
any violation of Legal Requirement or any violation of the rights of any person;
(y) the sole relief provided is monetary damages that are paid in full by the
Indemnifying Person; and (z) the Indemnified Person shall have no liability with
respect to any compromise or settlement of such third-party claims effected
without its consent. If notice is given to an Indemnifying Person of the
assertion of any third-party claim and the Indemnifying Person does not, within
10 days after the Indemnified Person's notice is given, give notice to the
Indemnified Person of its election to assume the defense of such third-party
claim, the Indemnifying Person will be bound by any determination made in such
third-party claim or any compromise or settlement effected by the Indemnified
Person.
(C) EXCEPTIONS. Notwithstanding the foregoing, if an Indemnified Person
determines in good faith that there is a reasonable probability that a
third-party claim may adversely affect it or its Related Parties (including
claims for Environmental Liability that could adversely effect the operations of
the Business and claims that could adversely affect the customer base of the
Business), the Indemnified Person may, by notice to the Indemnifying Person,
assume the exclusive right to defend, compromise or settle such third-party
claim, but the Indemnifying Person will not be bound by any determination of any
third-party claim so defended for the purposes of this Agreement or any
compromise or settlement effected without its Consent (which may not be
unreasonably withheld).
(D) JURISDICTION. Notwithstanding the provisions of Section 8.7, Seller
hereby consents to the nonexclusive jurisdiction of any court in which a
proceeding in respect of a third-party claim is brought against any Buyer
Indemnified Person for purposes of any claim that a Buyer Indemnified Person may
have under this Agreement with respect to such proceeding or the matters alleged
therein and agree that process may be served on Seller with respect to such a
claim anywhere in the world.
(E) COOPERATION. With respect to any third-party claim subject to
indemnification under this Article VI, (i) both the Indemnified Person and the
Indemnifying Person, as the case may be, shall keep the other person fully
informed of the status of such third-party claim and any related proceedings at
all stages thereof where such person is not represented by its own counsel, and
(ii) the parties agree (each at its own expense) to render to each other such
assistance as they may reasonably require of each other and to cooperate in good
faith with each other in order to ensure the proper and adequate defense of any
third-party claim.
40
(F) CONFIDENTIAL INFORMATION; PRIVILEGE. With respect to any
third-party claim subject to indemnification under this Article VI, the parties
agree to cooperate in such a manner as to preserve in full (to the extent
possible) the confidentiality of all Confidential Information and the
attorney-client and work-product privileges. In connection therewith, each party
agrees that: (i) it will use its commercially reasonable efforts, in respect of
any third-party claim in which it has assumed or participated in the defense, to
avoid production of Confidential Information (consistent with the applicable
Legal Requirement and rules of procedure), and (ii) all communications between
any party hereto and counsel responsible for or participating in the defense of
any third-party claim shall, to the extent possible, be made so as to preserve
any applicable attorney-client or work-product privilege.
6.8. CUMULATIVE RIGHTS AND REMEDIES. The rights to indemnification of
the parties under this Article VI, other than those rights to indemnification
set forth in Section 6.2(a), which shall be subject to the limitations and
exclusions set forth in Section 6.3 and to which this Section 6.8 shall not
apply, are independent, several, cumulative and non-exclusive and are in
addition to the other rights and remedies that the parties may have in law or
equity.
6.9. UNDERSTANDINGS AND PROCEDURES REGARDING ENVIRONMENTAL REMEDIAL
ACTIONS.
(A) ENVIRONMENTAL REMEDIAL ACTION APPROACH. With respect to any
Environmental Remedial Actions relating to any Existing Environmental Condition,
Seller and Buyer agree:
(I) to seek, accept and support the use of either remediation
standards published by applicable Governmental Bodies pursuant to applicable
Environmental Laws based upon reasonably appropriate remedial standards or
site-specific remediation standards pursuant to applicable Environmental Laws
based upon the assessment of risks to human health and the environment,
considering, if so provided under applicable Environmental Laws (a) the current
and future uses of and operations at the Real Property, and (b) the use of
institutional and engineering controls to eliminate or minimize exposure
pathways to the extent allowed under clause (iii);
(II) to support the selection of a remedial method capable of
meeting the applicable remediation standards (including any site-specific
risk-based standards) that is most cost-effective considering both initial
capital costs, the present discounted value of anticipated future monitoring,
operation and maintenance costs and any costs incurred with respect to
disruption of business operations at the Real Property or Facilities;
(III) that institutional or engineering controls may be
utilized to eliminate or minimize exposure pathways where the use of such
controls does not significantly interfere with the current and future uses and
operations at the Real Property and Facilities or the operation of the Business,
provided that Buyer shall not be required to agree to any covenants or other
limitations restricting future use and development of the Real Property except
as set forth on Schedule 6.9(a).
(B) COMMUNICATIONS, NOTICE, COORDINATION AND AVOIDANCE OF INTERFERENCE.
The following procedures shall govern the conduct by either party after the
Closing Date of any Environmental Remedial Actions to address any Existing
Environmental Condition.
41
(I) The parties shall promptly provide one another notice and
copies of any correspondence to or from any Governmental Body or third party
concerning any Existing Environmental Condition or any Environmental Remedial
Action affecting the Real Property. The parties shall provide to one another for
review and comment drafts of any proposed plans for any Environmental Remedial
Action affecting the Real Property. The non-controlling party shall have at
least 60 days to provide comments to the controlling party regarding any such
draft plans. The controlling party shall give good faith consideration to the
non-controlling party's comments regarding such draft plans.
(II) The non-controlling party shall be advised of, and have
the opportunity to attend and participate in any meetings or other
communications with any involved Governmental Body concerning any Existing
Environmental Condition or any Environmental Remedial Action affecting the Real
Property.
(III) Seller shall provide Buyer with written notice prior to
any required entry onto the Real Property or Facilities to conduct any
Environmental Remedial Actions. Seller shall consult and coordinate with Buyer
the planning for, timing, and method of conducting any such Environmental
Remedial Actions so as to reasonably avoid or minimize any interference with the
then existing facilities, uses and operations at the affected Real Property.
(IV) Seller shall conduct all Environmental Remedial Actions
in a manner that avoids any material interference with the then existing
facilities, uses and operations at the affected Real Property and Facilities;
and Seller shall indemnify, defend, and save and hold harmless the Buyer
Indemnified Parties from and against any Damages arising from Environmental
Remedial Actions undertaken by Seller or persons acting on behalf of Seller.
ARTICLE VII.
DEFINITIONS; CONSTRUCTION
7.1. DEFINITIONS. The following terms have the meanings specified below
or are defined in the Sections referred to below. All accounting terms not
specifically defined in this Agreement shall be construed in accordance with
GAAP.
"AFFILIATE" means, with respect to any person, any other person that,
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with such person. "Control" for this
purpose means the possession, directly or indirectly, of more than five percent
of the voting power of a person.
"AAA" is defined in Section 8.17.
"AAA RULES" is defined in Section 8.17.
"AGREEMENT" means this Asset Purchase Agreement, as it may be amended
from time to time.
"APPURTENANCES" means all privileges, rights, easements, hereditaments
and appurtenances belonging to or for the benefit of the Land, including all
easements appurtenant to and for the benefit of any Land (a "Dominant Parcel")
for, and as the primary means of access
42
between, the Dominant Parcel and a public way, or for any other use upon which
lawful use of the Dominant Parcel for the purposes for which it is presently
being used is dependent, and all rights existing in and to any streets, alleys,
passages and other rights-of-way included thereon or adjacent thereto (before or
after vacation thereof) and vaults beneath any such streets.
"ALC" means Allegheny Ludlum Corporation, a Pennsylvania corporation.
"ALC PROMISSORY NOTE" is defined in Section 1.6(a).
"ASBESTOS OR SILICA ACTIVITY" is defined in Section 4.23.
"ASSUMED LIABILITIES" is defined in Section 1.3.
"AUDITORS" means Ernst & Young LLP.
"BALANCE SHEET" means Seller's balance sheet at December 31, 2003.
"BALANCE SHEET DATE" means December 31, 2003.
"BENEFIT PLAN" means any "employee benefit plan" within the meaning of
Section 3(3) of ERISA, and any other written or unwritten profit sharing,
pension, savings, deferred compensation, fringe benefit, insurance, medical,
medical reimbursement, life, disability, accident, post-retirement health or
welfare benefit, stock option, stock purchase, sick pay, vacation, employment,
severance, termination or other employee benefit plan, agreement, Contract,
policy, trust fund or arrangement for the benefit of employees that is
maintained or sponsored by Seller or in which employees of Seller participate
prior to the Closing Date.
"BUSINESS" is defined in the Recitals.
"BUSINESS DAY" means any day other than (i) Saturday or Sunday or (ii)
any other day on which banks in Pittsburgh, Pennsylvania are permitted or
required to be closed.
"BUSINESS RELATION" is defined in Section 3.9(b)(ii).
"BUYER" means Jewel Acquisition LLC, a Delaware limited liability
company.
"BUYER DAMAGES" is defined in Section 6.2.
"BUYER INDEMNITEE" is defined in Section 6.2.
"BUYER PROMISSORY NOTE" is defined in Section 1.6(a).
"CERCLA" "means the Comprehensive Environmental Response Compensation
and Liability Act of 1980, 42 U.S.C. Section 9601 et seq., as amended.
"CERCLIS" means the Comprehensive Environmental Response Compensation
Liability Information System List under CERCLA.
"CLOSING" is defined in Section 2.1.
43
"CLOSING DATE" is defined in Section 2.1.
"CLOSING NET WORKING CAPITAL" is defined in Section 1.8(a).
"CLOSING STATEMENT" is defined in Section 1.8(a).
"CONSENT" means any registration, filing, declaration, application,
rights of first refusal or notice to or with any person and any consent,
approval, permit, qualification, waiver, waiting period, authorization, or
action of or by any person other than a Governmental Body. "CONSENT" shall
include any consent, approval, waiver, authorization or other action required
under any Contract or to prevent any assets, Seller Liabilities or Assumed
Liabilities from being in default, terminating, accelerating, revoking,
suspending, canceling, losing or diminishing in value, changing in any respect
or creating any Liability or giving any person any rights or remedies as a
result of the consummation of the Contemplated Transactions.
"CONTEMPLATED TRANSACTIONS" means the sale and purchase of the
Purchased Assets, the assumption of the Assumed Liabilities, and the other
transactions contemplated by this Agreement and the Other Agreements.
"CONTRACT" means any agreement, contract, lease (relating to real or
personal property), license, indenture, mortgage, instrument, commitment,
purchase or sale orders, consensual obligation, promise or obligation or other
arrangement or understanding, oral or written, formal or informal, express or
implied, whether or not legally binding, to which Seller is a party or by which
its assets may be affected.
"DAMAGE" means any loss, demand, claim, allegation, assertion, action
or cause of action, assessment, damage, deficiency, Liability, cost, expense,
diminution of value, fine, penalty, judgment, award or settlement, whether or
not involving a third-party claim, including reasonable legal fees, Interest,
and all reasonable amount paid in investigation, defense or settlement of any of
the foregoing.
"DOJ" is defined in Section 2.6.
"ENCUMBRANCE" means any debt, mortgage, deed of trust, community or
marital property interest, equitable interest, pledge, security interest,
encumbrance, option, right of first option or refusal, agreement of sale,
adverse claim, easement, lien, lease, assessment, restrictive covenant,
Liability, encroachment, right-of-way, servitude, restriction on use or any
other burden, charge or restriction of any kind or nature whatsoever, legal or
equitable, or any item similar or related to the foregoing.
"ENVIRONMENT" means soil, land, surface or subsurface strata, surface
waters (including navigable waters, ocean waters, streams, ponds, drainage
basins, and wetlands), groundwaters, drinking water supply, stream sediments,
ambient air (including indoor air), plant and animal life, and any other
environmental medium or natural resource.
"ENVIRONMENTAL CONDITION" means the presence of a Regulated Material
on, in, under or within any property (including the presence in surface water,
groundwater, soils or subsurface
44
strata, or air), other than the presence of a Regulated Material in locations
and at concentrations that are naturally occurring.
"ENVIRONMENTAL LAW" means all Legal Requirements as in effect on or
prior to the Closing Date that relate to protection of the environment, natural
resources, or public or employee health and safety, or relating to the
production, generation, use, storage, treatment, processing, transportation,
disposal or Release of Regulated Materials, including common law trespass,
nuisance, property damage and similar environmental common law theories. The
term "Environmental Law" includes but is not limited to: (i) the Comprehensive
Environmental Response, Compensation, and Liability Act, 42 U.S.C. Sections
9601-9675 ("CERCLA"); (ii) the Superfund Amendments and Reauthorization Act,
Public Law 99-499, 100 Stat. 1613 ("SARA"); (iii) the Emergency Planning and
Community Right to Know Act, 42 U.S.C. Sections 11001-11050; (iv) the Resource
Conservation and Recovery Act, 42 U.S.C. Sections 6901-6992k; (v) the National
Environmental Policy Act, 42 U.S.C. Sections 4321-4370e; (vi) the Safe Drinking
Water Act, 42 U.S.C. Sections 300f to 300j-26; (vii) the Toxic Substances
Control Act, 15 U.S.C. Sections 2601-2692; (viii) the Hazardous Materials
Transportation Act, 49 U.S.C. Sections 5101-5127; (ix) the Federal Water
Pollution Control Act, 33 U.S.C. Sections 1251-1387; () the Oil Pollution Act of
1990, 33 U.S.C. Sections 2701-2761; (xi) the Rivers and Harbors Acts of 1899, 44
U.S.C. Section 401 et seq. (xii) the Clean Air Act, 42 U.S.C. Sections
7401-7671q; (xiii) the Atomic Energy Act of 1954, as amended, 42 U.S.C. Sections
2011 et seq.; (xiv) the Low Level Radioactive Waste Policy Act, as amended, 42
U.S.C. Section 2021b et seq.; (xv) any Occupational Safety and Health Law,
including the Occupational Safety and Health Act, 29 U.S.C. Sections 651-678;
(xvi) the Pennsylvania Hazardous Sites Cleanup Act, 35 P.S. Section 6020.101 et
seq.; (xvii) the Pennsylvania Solid Waste Management Act, 35 P.S. Section
6018.101 et seq.; (xviii) the Municipal Waste Planning, Recycling and Waste
Reduction Act, 53 P.S. Section 4000.101 et seq.; (xix) the Pennsylvania Clean
Streams Law, 35 P.S. Section 691.1 et seq.; (xx) the Pennsylvania Air Pollution
Control Act, 35 P.S. Section 4000.1 et seq.; (xxi) the Pennsylvania Storage Tank
and Spill Prevention Act, 35 P.S. Section 6021.101 et seq. (the "Storage Tank
Act"); (xxii) the Combustible and Flammable Liquids Act, 35 P.S. Section
1241-1252 ("CF Liquids Act"); (xxiii) the Pennsylvania Dam Safety and
Encroachments Act, 32 P.S. Section 693.1 et seq.; (xxiv) the Pennsylvania Land
Recycling and Environmental Remediation Standards Act, 35 P.S. Sections
6026.101-6026.908; () the Pennsylvania Worker and Community Right-to-Know Act,
35 P.S. Sections 7301-7320; (xxvi) the Pennsylvania Hazardous Material Emergency
Planning and Response Act, 35 P.S. Sections 6022.101-6022.307; (xxvii) the
Pennsylvania Safe Drinking Water Act, 35 P.S. Sections 721.1-721.17; (xxviii)
the Pennsylvania Sewage Facilities Act, 35 P.S. Sections 750.1-750.20a; (xxix)
the Ohio Air Pollution Control provisions, Ohio Rev. Code Sections
3704.01-3704.99; (xxx) the Ohio Solid and Hazardous Wastes provisions, Ohio Rev.
Code Sections 3734.01-3734.99; (xxxi) the Ohio Voluntary Action Program, Ohio
Rev. Code Sections 3746.01-3746.99; (xxxii) the Ohio Emergency Planning
provisions, Ohio Rev. Code Sections 3750.01-3750.99; (xxxiii) the Ohio Hazardous
Substances provisions, Ohio Rev. Code Sections 3751.01-3751.99; (xxxiv) the Ohio
Risk Management Program, Ohio Rev. Code Sections 3753.01-3753.99; (xxxv) the
Ohio Safe Drinking Water provisions, Ohio Rev. Code Sections 6109.01-6109.35;
(xxxvi) the Ohio Water Pollution Control provisions, Ohio Rev. Code Sections
6111.01-6111.99; and, and in each case the regulations adopted pursuant to the
above listed statutes and all decisional law of courts and administrative
tribunals regarding same
"ENVIRONMENTAL LIABILITY" means any Liability imposed upon or arising
under any Environmental Law, including those consisting of or relating to any:
(i) duty imposed by, breach
45
of or noncompliance with any Environmental Law, (ii) environmental, health or
safety matters or conditions (including on-site or off-site contamination,
occupational safety and health and regulation of Regulated Materials); (iii)
Environmental Remedial Action undertaken by any person; (iv) bodily injury
(including illness, disability and death, and regardless of when any such bodily
injury occurred, was incurred, or manifested itself), property damage (including
trespass, nuisance, wrongful eviction, and deprivation of the use of real or
personal property), or other Damage of any other person (including any employee
or former employee of such person); (v) any injury to, destruction of, or loss
of natural resources, or costs of any natural resource damage assessments; (vi)
Hazardous Activity conducted by any person; and (vii) the presence or Release of
any Regulated Material at or on any property.
"ENVIRONMENTAL REMEDIAL ACTION" means any and all actions required to
(i) investigate, clean up, remediate, remove, treat, contain or in any other way
address any Regulated Materials in the Environment, (ii) prevent the Release or
threat of Release or minimize the further Release of Regulated Materials so they
do not migrate or endanger public health or welfare or the indoor or outdoor
Environment, and (iii) perform pre-remedial studies and investigations and
post-remedial monitoring, maintenance and care. The term "Environmental Remedial
Action" includes without limitation any action which constitutes a "removal",
"remedial action" or "response" as defined by Section 101 of CERCLA, 42 U.S.C.
Section 9601(23), (24), and (25); any action which constitutes a "response" as
defined by Section 103 of the Pennsylvania Hazardous Sites Cleanup Act, 35 P.S.
Section 6020.103; and any action which constitutes a "remedy" or remedial
activities" as defined under Ohio's Voluntary Action Program, Ohio Rev. Code
Sections 3746.01(N).
"ERISA" means the U.S. Employee Retirement Income Security Act of 1974,
as amended, and the applicable rulings and regulations under that statute.
"EXISTING ENVIRONMENTAL CONDITION" means any environmental condition
existing prior to or as of the Closing Date at any Real Property or Facilities
that are part of the Purchased Assets, including the subsequent migration of any
Regulated Materials comprising such an environmental condition.
"FACILITY" means any real property, leasehold, or other real property
interest currently or formerly owned, leased, controlled, used or operated by
Seller or any Predecessor and any building, plant, structure or equipment
(including motor vehicles, tank cars, and rolling stock) currently or formerly
owned, leased, used or operated by Seller, including the Real Property.
"FINANCIAL STATEMENTS" is defined in Section 4.5(b).
"FTC" is defined in Section 2.6.
"GAAP" means U.S. generally accepted accounting principles.
"GOVERNING DOCUMENTS" means, with respect to any person who is not a
natural person, the certificate or articles of incorporation, bylaws, deed of
trust, formation or governing agreement and other charter, organic, organization
or governing documents or instruments of such person relating to the creation,
formation, organization, management or operation of such person or relating to
the rights, duties and obligations of the equity holders of such person.
46
"GOVERNMENTAL AUTHORIZATION" means any permit, certificate, license,
franchise, privilege, approval, registration and authorization required under,
or otherwise made available by or under the authority of, any applicable Legal
Requirement or otherwise advisable in connection with the operation of or used
in the Business and the Purchased Assets.
"GOVERNMENTAL BODY" means any nation, state, county, city, town,
borough, village, district or other jurisdiction, court, tribunal, government,
quasi-governmental authority of any nature, department, commission, board,
bureau, agency, official or other regulatory, administrative or governmental
authority or instrumentality (foreign, federal, state, local or other political
subdivision) or any body similar or related to the foregoing.
"HAZARDOUS ACTIVITY" means the distribution, generation, handling,
importing, management, manufacturing, processing, production, refinement,
Release, storage, transfer, transportation, treatment or use of Regulated
Materials in, on, under, about, or from any Facility or any part of any Facility
into the Environment.
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"IAS" means International Accounting Standards.
"INDEMNIFIED PERSON" is defined in Section 6.6.
"INDEMNIFYING PERSON" is defined in Section 6.6.
"INTELLECTUAL PROPERTY" is defined in Section 4.20.
"INTEREST" applicable to any amount means interest on such amount until
paid at an annual rate equal to the prime rate as reported by the Wall Street
Journal, plus 1 %, compounded annually on the basis of a 360 day year consisting
of 12 thirty-day months, such rate to change simultaneously with changes in such
prime rate.
"INVENTORY ADJUSTMENT NOTICE" is defined in Section 1.12.
"IRC" means the U.S. Internal Revenue Code of 1986, as amended, as
amended, and the applicable rulings and regulations under that statute.
"IRS" means the U.S. Internal Revenue Service and, to the extent
applicable, the United States Department of the Treasury.
"LEGAL APPROVAL" means any registration, filing, declaration,
application, rights of first refusal or notice to or with any person and any
consent, approval, permit, qualification, waiver, waiting period, authorization,
Order or action of or by any Governmental Body. "LEGAL APPROVAL" shall include
any consent, approval, waiver, authorization or other action required under any
Contract or Governmental Authorization (including those required under the HSR
Act) or to prevent any assets or Seller Liabilities of Seller from being in
default, terminating, accelerating, revoking, suspending, canceling, losing or
diminishing in value, changing in any
47
respect or creating any Liability or giving any person any rights or remedies as
a result of the consummation of the Contemplated Transactions.
"LEGAL PROCEEDING" means any action, arbitration, audit, hearing,
investigation, litigation or suit (whether civil, criminal, administrative,
investigative, or informal, public or private) or Order commenced, brought,
conducted, or heard by or before, or otherwise involving, any Governmental Body
or arbitrator.
"LEGAL REQUIREMENT" means any applicable international, multinational,
national, foreign, federal, state, municipal, local (or other political
subdivision) or administrative law, constitution, statute, code, ordinance,
rule, regulation, requirement, standard, policy or guidance having the force of
law, treaty, judgment or Order of any kind or nature whatsoever including any
judgment or principle of common law.
"LIABILITY" with respect to any person or any property of such person,
means any and all debt, liability or obligation of such person of any nature,
kind, character or description whatsoever, whether or not due or to become due,
known or unknown, accrued, unaccrued, fixed, absolute, matured, liquidated,
asserted, conditional, secondary, potential, determined, determinable or
contingent, executory, liquidated or unliquidated, secured or unsecured, joint
or several, vested or unvested and whether or not incurred directly by such
person or by any Predecessor of such person, whether or not required to be
accrued on the financial statements of such person and whether or not arising
out of any act, omission, transaction, circumstance, sale of goods or service,
setoff, recoupment, counterclaim or otherwise.
"LISTED HAZARDOUS SITE" means any site or facility listed or proposed
for listing on the National Priority List established pursuant to CERCLA or on
any list established by another Governmental Body of sites potentially requiring
Environmental Remedial Action.
"MATERIAL ADVERSE EFFECT" means any change or effect that, individually
or taken together with all other such changes or effects that have occurred
prior to the date of the determination of the Material Adverse Effect, and
regardless of insurance coverage, is materially adverse to the Business, the
Purchased Assets taken as a whole, results of operations, Seller Liabilities or
condition, financial or otherwise, of Seller.
"NET WORKING CAPITAL" means the amount by which (a) the Receivables and
the inventory included in the Purchased Assets exceeds (b) the Assumed
Liabilities, determined in accordance with GAAP.
"OCCUPATIONAL SAFETY AND HEALTH LAW" means any Legal Requirement
designed to provide safe and healthful working conditions and to reduce
occupational safety and health hazards, and any program, whether governmental or
private (including those promulgated or sponsored by industry associations and
insurance companies), designed to provide safe and healthful working conditions.
"OPERATING PLAN" is defined in Section 1.3.
48
"ORDER" means any order, award, decision, injunction, judgment, ruling,
writ, assessment, decree, determination, subpoena, stipulation or verdict
entered, issued, made, or rendered by any court, administrative agency, or other
Governmental Body or by any arbitrator.
"OTHER AGREEMENT" means any other agreement or document contemplated by
this Agreement to be executed and delivered in connection with the transactions
contemplated by this Agreement on or before the Closing, including all
conveyance documents and instruments.
"OWNED REAL PROPERTY" is defined in Section 2.2(n).
"PARENT" means Arcelor S.A., a Luxembourg corporation.
"PARTY" or "PARTIES" mean a party or the parties to this Agreement.
"PCB EQUIPMENT" means PCB equipment as defined in 40 C.F.R Part 761.
"PERMITTED ENCUMBRANCE" means, with respect to any Purchased Asset, (A)
any Encumbrance imposed by Legal Requirement for Taxes that are Scheduled
Liabilities, (B) any non-monetary charges and encumbrances of record that do not
(either individually or in the aggregate) interfere with or detract from the use
or value of the Real Property or (C) all Encumbrances of record that are set
forth on a Schedule of Permitted Encumbrances prepared by Seller and accepted by
Buyer on or prior to March 31, 2004.
"PERSON" means and includes a natural person, a corporation, an
association, a partnership, a limited liability company, a trust, a joint
venture, an unincorporated organization, a business, a Governmental Body or any
other legal entity.
"PREDECESSOR" means any person that may be a predecessor entity or
entities to Seller by any legal means, including, without limitation, (i)
pursuant to any Legal Requirement, whether by statutory merger, de facto merger,
consolidation, combination, division, dissolution, reorganization or otherwise
or (ii) based on any theory or doctrine of successor liability, whether by
statute or at common law.
"PRODUCT" is defined in Section 3.9(b)(i).
"PROMISSORY NOTES" is defined in Section 1.6(a)(iii).
"PURCHASE PRICE" is defined in Section 1.5.
"PURCHASE PRICE ADJUSTMENT" means the post-closing adjustment to the
Purchase Price set forth in Section 1.7.
"PURCHASED ASSETS" is defined in Section 1.1.
"QUALIFIED PLAN" is a qualified plan under Section 401(a) of the IRC
and exempt from the United State federal income Tax under Section 501(a) of the
IRC.
"REAL PROPERTY" is defined in Section 4.16.
49
"RECEIVABLE" means each trade and other account receivable of Seller.
"REFERENCE NET WORKING CAPITAL" is defined in Section 1.5.
"REGULATED ASBESTOS CONTAINING MATERIAL" means regulated asbestos
containing material as defined by 40 C.F.R. Section61.141.
"REGULATED MATERIAL" means any (i) hazardous substance as defined by
any Environmental Law, (ii) any petroleum or petroleum product, oil or waste
oil; (iii) any asbestos or polychlorinated byphenyls; (iv) any hazardous
material, toxic substance, toxic pollutant, solid waste, municipal waste,
industrial waste, hazardous waste, flammable material, radioactive material,
pollutant or contaminant or words of similar meaning and regulatory effect under
any Environmental Law; and (v) any other chemical, material, or substance
exposure to which or whose discharge, emission, disposal or Release is
prohibited, limited, or regulated under any Environmental Law. "REGULATED
MATERIAL" includes any mixture or solution of the foregoing, and all derivatives
or synthetic substitutes of the foregoing.
"REGULATORY MATERIAL ADVERSE EFFECT" means effects or circumstances
which (i) could render the ownership, use and operation of the Business, any
Real Property or other Purchased Assets in the manner used and operated prior to
the Closing Date, to be a violation of any Legal Requirement, (ii) could
reasonably result in an action by any Governmental Body or third party to
suspend, curtail or limit the use or operation of the Business, any portion of
any Real Property or any other Purchased Assets; or (iii) could reasonably
result in the Buyer becoming subject to fines, penalties, administrative,
judicial or other enforcement actions by any Governmental Body or third party.
"RELATED PARTY" means (i) Seller, (ii) any Affiliate of Seller,
including Parent, (iii) any officer, director, partner, executor or trustee (or
similar capacity) of any person identified in clauses (i) or (ii) preceding,
(iv) any spouse, sibling, ancestor, lineal descendant of or person who resides
with any natural person identified in any one of the preceding clauses and any
Affiliate of any such person, and (v) any person with respect to whom any
natural person identified in any one of the preceding clauses is an officer,
director, partner, executor or trustee (or similar capacity) and any Affiliate
of any such person.
"RELEASE" means any spill, leak, emission, discharge, deposit,
disposal, escape, leach, dump or other release of any Regulated Material into
the Environment, whether intentional or unintentional, including the abandonment
or discarding of barrels, containers and other receptacles containing any
Regulated Material.
"RETAINED ASSETS" is defined in Section 1.2.
"RETAINED REAL PROPERTY" means all real property owned or leased by
Seller that is not included in the Purchased Assets and that is not purchased by
Buyer.
"SCHEDULED LIABILITIES" is defined in Section 1.3.
"SECURITY RIGHT" with respect to any security, means any option,
warrant, subscription right, preemptive right, right to convert or exchange
other right, proxy, put, call, demand, plan,
50
commitment, agreement, understanding or arrangement of any kind relating to such
security, whether issued or unissued, or any other security convertible into or
exchangeable for any such security. "Security Right" includes convertible or
exchangeable debt or equity securities and any right relating to issuance, sale,
assignment, transfer, purchase, redemption, conversion, exchange, registration
or voting and includes rights conferred by statute, by the issuer's Governing
Documents or by Contract.
"SELLER" means J&L Specialty Steel, LLC, a Delaware limited liability
corporation.
"SELLER DAMAGE" is defined in Section 6.5.
"SELLER INDEMNITEE" is defined in Section 6.5.
"SELLER LIABILITIES" is defined in Section 1.4.
"SOFTWARE" means all computer software programs and applications and
subsequent versions thereof, including source code, object, executable or binary
code, objects, comments, screens, user interfaces, report formats, templates,
menus, buttons and icons and all files, data, materials, manuals, design notes
and other items and documentation related thereto or associated therewith.
"SUBSIDIARY" means any corporation, partnership, joint venture, limited
liability company or other person in which Seller owns, directly or indirectly,
more than 20% of the outstanding voting securities or equity interests or in
which Seller, directly or indirectly, has the power to direct the business and
policies of that person (including upon the happening of a contingency that has
not yet occurred). For this purpose, "indirectly" includes ownership, control or
direction through multi-tiered ownership structure (including foreign ownership
and venture arrangements), by contract or otherwise.
"TAX" any income, gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium, property, environmental, windfall profit,
customs, vehicle, airplane, boat, vessel or other title or registration, capital
stock, franchise, employees' income withholding, foreign or domestic
withholding, social security, unemployment, disability, real property, personal
property, sales, use, transfer, value added, alternative, add-on minimum and
other tax, fee, assessment, levy, tariff, charge or duty of any kind whatsoever
and any interest, penalty, addition or additional amount thereon imposed,
assessed or collected by or under the authority of any Governmental Body or
payable under any tax-sharing agreement or any other Contract.
"TAX RETURN" any return (including any information return), report,
statement, schedule, notice, form, declaration, claim for refund or other
document or information filed with or submitted to, or required to be filed with
or submitted to, any Governmental Body in connection with the determination,
assessment, collection or payment of any Tax or in connection with the
administration, implementation or enforcement of or compliance with any Legal
Requirement relating to any Tax.
"TERMINATION FEE" is defined in Section 2.5.
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"TRADE ACCOUNTS PAYABLE" is defined in Section 1.3.
"TRANSFERRED EMPLOYEE" is defined in Section 3.8.
"TRANSITION SERVICES AGREEMENT" is defined in Section 2.2(q).
"TREASURY REGULATION" means regulations by the U.S. Department of
Treasury promulgated under the IRC.
"USWA" means the United Steel Workers of America.
"WARN ACT" means the Worker Adjustment and Retraining Notification Act
of 1988, 25 U.S.C. Section 2101 et seq. as amended, and any similar state or
local Legal Requirement.
7.2. CONSTRUCTION. As used in this Agreement, unless a clear contrary
intention applies: (i) references to "Article" or "Section" are to an article or
section of this Agreement, and references to "hereunder," "hereof," "hereto,"
and words of similar import are references to this Agreement as a whole and not
to any particular Article, Section or other provision hereof; (ii) references to
the singular number includes the plural number, and vice versa, and reference to
any gender includes each other gender; (iii) all "Exhibits" and "Schedules"
referred to in this Agreement are to Exhibits and Schedules attached to this
Agreement and are incorporated into this Agreement by reference and made a part
of this Agreement; (iv) "include", "includes" and "including" are deemed to be
followed by "without limitation" whether or not they are in fact followed by
such words or words of like import; (v) with respect to the determination of any
period of time, "from" means "from and including" and "to" means "to but
excluding"; (vi) the headings of the various articles, sections and other
subdivisions of this Agreement are for convenience of reference only and shall
not modify, define or limit any of the terms or provisions of this Agreement;
(vii) reference to any agreement, document or instrument means such agreement,
document or instrument as amended or modified and in effect from time to time in
accordance with the terms thereof and shall include all addenda, exhibits and
schedules thereto; and (viii) reference to any Legal Requirement means such
Legal Requirement as amended, modified, codified, replaced or reenacted, in
whole or in part, and in effect from time to time, including rules and
regulations promulgated thereunder, and reference to any section or other
provision of any Legal Requirement means that provision of such Legal
Requirement from time to time in effect and constituting the substantive
amendment, modification, codification, replacement or reenactment of such
section or other provision.
ARTICLE VIII.
MISCELLANEOUS
8.1. COSTS AND EXPENSES. Each party shall pay its respective expenses,
brokers' fees and commissions. Each party shall pay all of the pre-Closing
expenses of such party incurred in connection with this Agreement and the
Contemplated Transactions, including all accounting, legal and appraisal fees
and settlement charges. All transfer, documentary, sales, use, stamp,
registration, and such other transfer Taxes incurred as a result of the transfer
of the Purchased Assets shall be borne equally by Seller and Buyer. Buyer will
pay one-half and Seller will pay one-half of the HSR Act filing fee. If this
Agreement is terminated, the obligation of each party
52
to pay its own fees and expenses will be subject to any rights of such party
arising from a breach of this Agreement by another party.
8.2. PRORATION OF EXPENSES. All accrued expenses associated with the
Real Property included in the Purchased Assets, such as electricity, gas, water,
sewer, telephone, property Taxes, security services and similar items, shall be
prorated between Buyer and Seller as of the Closing Date (in accordance with
local custom, in the case of real property taxes). Buyer and Seller shall settle
such amounts on the Closing Date.
8.3. BULK SALES. The parties hereto waive compliance with the
provisions of any bulk sales law applicable to the Contemplated Transactions,
and, notwithstanding anything else in this Agreement to the contrary, Seller
shall hold Buyer harmless from and against all claims asserted against the
Purchased Assets or Buyer pursuant to such bulk sales laws.
8.4. FURTHER ASSURANCES. After Closing, without further consideration,
each of Seller and Buyer shall take or cause to be taken such actions (including
the execution, acknowledgment and delivery of instruments, documents, transfers,
conveyances and assurances) as another party may request in order to consummate
the Contemplated Transactions.
8.5. NOTICES. All notices given or made in connection with this
Agreement shall be in writing. Delivery of written notices will be effective:
(i) on the fifth Business Day after the date of mailing, if delivered by
registered or certified mail, postage prepaid, (ii) upon delivery, if sent by
hand delivery, (iii) upon delivery, if sent by prepaid courier, with a record of
receipt, or (iv) on the next day after the date of dispatch, if sent by cable,
telegram or facsimile. All deliveries shall be made to the following addresses:
(I) if to Buyer and/or ALC, to:
c/o Allegheny Technologies Incorporated
1000 Six PPG Place
Pittsburgh, Pennsylvania 15222
Facsimile: (412) 394-3010
Attention: Jon D. Walton, Executive Vice President,
Human Resources, Chief Legal and Compliance
Officer, General Counsel and Corporate Secretary
with a required copy to:
Kirkpatrick & Lockhart LLP
Henry W. Oliver Building
535 Smithfield Street
Pittsburgh, Pennsylvania 15222-2312
Facsimile: 412-355-6501
Attention: Ronald D. West
53
(II) if to Seller:
J&L Specialty Steel, LLC
Westpointe Corporate Center One, Suite 500
1550 Coraopolis Heights Road
Coraopolis, Pennsylvania 15108
Attention: President and General Counsel
Telephone: (412) 375-1631
Facsimile: (412) 375-1749
with a required copy to:
Kirkland & Ellis LLP
200 East Randolph Drive
Chicago, Illinois 60601
Attention: Jeffrey A. Fine
Marc Kieselstein
Telephone: (312) 861- 2000
Facsimile: (312) 861-2200
(III) if to Parent, to:
Arcelor S.A.
19 Avenue de la Liberte
Luxembourg, L-2930
Attention: Executive Vice President, Mergers & Acquisitions -
Strategy Executive Vice President, Finance
Telephone: 011 352-47-92-23-60
Facsimile: 011 352-47-92-21-89
011 322-47-41-27-17
with a required copy to:
Piper Rudnick LLP
1251 Avenue of the Americas
New York, New York 10020
Attention: Garry McCormack
Telephone: (212) 835-6000
Facsimile: (212) 835-6001
Piper Rudnick LLP
6225 Smith Avenue
Baltimore, Maryland 21209
Attention: Eric B. Miller
Telephone: (410) 580-3000
Facsimile: (410) 580-3001
54
Either party may change the address to which notices (or copies) to it shall be
addressed by giving notice of that change to the other parties in accordance
with this Section 8.5.
8.6. CURRENCY. All currency references in this Agreement are to United
States dollars.
8.7. JURISDICTION; SERVICE OF PROCESS. Any action or proceeding seeking
to enforce any provision of, or based on any right arising out of, this
Agreement, the Other Agreements or any Contemplated Transaction may be brought
against any party in the courts of the Commonwealth of Pennsylvania, County of
Allegheny, or, if it has or can acquire jurisdiction, in the United States
District Court for the Western District of Pennsylvania. Each party consents to
the jurisdiction of these courts (and of the appropriate appellate courts) in
any such action or proceeding and waives any objection to convenience of forum
or venue laid in such courts. Process in any action or proceeding referred to in
the preceding sentence may be served on any party anywhere in the world. Each
party agrees that all claims in respect of any proceeding arising out of this
Agreement, the Other Agreements or any Contemplated Transaction shall be heard
and determined only in any such court and agrees not to bring any such
proceeding in any other court. The parties agree that either or both of them may
file a copy of this paragraph with any court as written evidence of the knowing,
voluntary and bargained agreement between the parties irrevocably to waive any
objections to venue or to convenience of forum. Process in any such proceeding
referred to in the first sentence of this section may be served on any party
anywhere in the world.
8.8. ENFORCEMENT. Seller acknowledges and agrees that Buyer would be
irreparably damaged if any of the provisions of this Agreement are not performed
in accordance with their specific terms and that any breach of this Agreement by
Seller could not be adequately compensated in all cases by monetary damages
alone. Accordingly, in addition to any other right or remedy to which Buyer may
be entitled, at law or in equity, except with respect to those rights to
indemnification set forth in Section 6.2(a), which shall be subject to the
limitations and exclusions set forth in Section 6.3 and to which this Section
8.8 shall not apply, it shall be entitled to enforce any provision of this
Agreement by a decree of specific performance and to temporary, preliminary and
permanent injunctive relief to prevent breaches or threatened breaches of any of
the provisions of this Agreement, without posting any bond or other undertaking.
8.9. SETOFF; ASSIGNMENT. Buyer shall be entitled to offset, setoff or
recoup from any amounts due to Seller and Parent from Buyer under this Agreement
or under any Other Agreement against any obligation of Seller and Parent to
Buyer under this Agreement or under any Other Agreement. The exercise of such
right, whether or not ultimately determined to be justified, will not constitute
an event of default by Buyer under this Agreement or any Other Agreement. This
Agreement and all the rights and powers granted by this Agreement shall bind and
inure to the benefit of the parties and their respective successors and
permitted assigns. This Agreement and the rights, interests and obligations
under this Agreement may not be assigned by any party without the prior written
consent of the other parties, except that Buyer may assign this Agreement and
the Other Agreements to any Affiliate of Buyer, Buyer may collaterally assign
this Agreement and the Other Agreements to any secured lender of Buyer and Buyer
may assign this Agreement and the Other Agreements in connection with a sale of
all or substantially all of the assets of the Business (such assignment to be
deemed to be a novation).
55
8.10. RECITALS; GOVERNING LAW. The recitals set forth beginning on page
one of this Agreement are incorporated into this Agreement and made a part of
this Agreement. This Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Pennsylvania without regard to its conflict
of laws doctrines.
8.11. TIME IS OF THE ESSENCE. With regard to all dates and time periods
set forth or referred to in this Agreement, time is of the essence.
8.12. SCHEDULES. The disclosures in the Schedules to this Agreement,
and those in any supplement to the Schedules, relate only to the representations
and warranties in the Section of the Agreement to which they expressly refer and
not to any other representation or warranty in this Agreement. In the event of
any inconsistency between the statements in this Agreement and those in the
Schedules, the statements in this Agreement will control.
8.13. AMENDMENT AND WAIVER; CUMULATIVE EFFECT. To be effective, any
amendment or waiver under this Agreement must be in writing and signed by the
party against whom enforcement of the same is sought. Neither the failure of any
party to exercise any right, power or remedy provided under this Agreement or to
insist upon compliance by any other party with its obligations under this
Agreement, nor any custom or practice of the parties at variance with the terms
of this Agreement, shall constitute a waiver by such party of its right to
exercise any such right, power or remedy or to demand such compliance. To the
maximum extent permitted by applicable law, (i) no claim or right arising out of
this Agreement or any of the documents referred to in this Agreement can be
discharged by one party, in whole or in part, by a waiver or renunciation of the
claim or right unless in writing signed by the other party; (ii) no waiver that
may be given by a party will be applicable except in the specific instance for
which it is given; and (iii) no notice to or demand on one party will be deemed
to be a waiver of any obligation of that party or of the right of the party
giving such notice or demand to take further action without notice or demand as
provided in this Agreement or the documents referred to in this Agreement. The
rights and remedies of the parties are cumulative and not exclusive of the
rights and remedies that they otherwise might have now or hereafter at law, in
equity, by statute or otherwise.
8.14. ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This Agreement
and the Schedules and Exhibits set forth a complete and exclusive statement of
the promises, covenants, agreements, conditions and undertakings between the
parties with respect to the subject matter of this Agreement. Except for the
Confidentiality Agreement among the parties, this Agreement supersedes all prior
or contemporaneous agreements and understandings, negotiations, inducements or
conditions, express or implied, oral or written, between the parties. Except for
the provisions of Sections 6.2, 6.4 and 6.5 relating to Buyer Indemnitees and
Seller Indemnitees, this Agreement is not intended to confer upon any person
other than the parties any rights or remedies under this Agreement.
8.15. SEVERABILITY. If any term or other provision of this Agreement is
held by a court of competent jurisdiction to be invalid, illegal or incapable of
being enforced under any applicable Legal Requirement in any particular respect
or under any particular circumstances, then, so long as the economic or legal
substance of the Contemplated Transactions is not affected in any manner
materially adverse to any party, (i) such term or provision shall nevertheless
56
remain in full force and effect in all other respects and under all other
circumstances, and (ii) all other terms, conditions and provisions of this
Agreement shall remain in full force and effect. Upon such determination that
any term or other provision is invalid, illegal or incapable of being enforced,
the parties shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in an
acceptable manner so that the Contemplated Transactions are fulfilled to the
fullest extent possible.
8.16. COUNTERPARTS. This Agreement may be executed in more than one
counterparts, each of which shall be deemed to be an original but all of which
together shall be deemed to be one and the same instrument. The exchange of
copies of this Agreement and of signature pages by facsimile transmission shall
constitute effective execution and delivery of this Agreement as to the parties
and may be used in lieu of the original Agreement for all purposes. Signatures
of the parties transmitted by facsimile shall be deemed to be their original
signatures for all purposes.
8.17 ARBITRATION. Buyer and Seller shall seek to solve amicably through
negotiations any disputes or controversy arising out of claims for
indemnification arising under Sections 6.2(a) or 6.2(b). If Buyer and Seller
fail to resolve such dispute or controversy by an amicable written agreement
within 25 business days after such negotiations have been initiated, Buyer and
Seller hereby irrevocably and unconditionally agree that except for the
enforcement of arbitral awards, any such dispute or controversy shall be finally
settled by arbitration by three arbitrators appointed and proceeding in
Pittsburgh, Pennsylvania in accordance with the Rules (the "AAA RULES") of the
American Arbitration Association (the "AAA") as the exclusive means of resolving
such disputes or controversies. Buyer and Seller shall each appoint one
arbitrator. The third arbitrator shall be selected by the two party-appointed
arbitrators or, failing agreement within 30 days after the party-appointed
arbitrators have been confirmed, by the AAA in accordance with the AAA Rules.
All expenses of the arbitration, including required traveling and other expenses
and fees of legal counsel and arbitrators and the expenses of any witness or the
cost of any proof produced at the request of the arbitrators, shall be borne as
determined by the arbitrators. The arbitrators shall decide the case on the
basis of the terms and conditions of this Agreement as construed, interpreted
and enforced under the laws of the Commonwealth of Pennsylvania. Any award shall
be final and not subject to appeal and the parties hereby waive all challenge to
any award by the arbitrators under this Section 8.17. The decision of the
arbitrators shall be final and binding on the parties. The enforcement of any
such award (or any judgment thereon) shall be in accordance with Section 6.8 of
this Agreement. In any such enforcement action, irrespective of where it is
brought, no party will (and the parties hereby waive any right to) seek to
invalidate or modify the decision of the arbitrators or otherwise to invalidate
or circumvent the procedures set forth in this Section 8.17. Each party
acknowledges that its agreements set forth in this Section 8.17 are material
inducements for the other parties to execute, deliver and perform this
Agreement. Further, the parties understand and agree that the provisions of this
Section 8.17 may be specifically enforced by injunction or otherwise in any
court of competent jurisdiction.
[The remainder of this page intentionally left blank.]
57
The parties, each intending to be legally bound by this Agreement, have
executed this Agreement as of the first date identified in the first sentence to
this Agreement.
J&L SPECIALTY STEEL, LLC
By /s/ Joseph K. Kusic By /s/ Daniel W. Amidon
------------------------------- ----------------------------
Name: Joseph K. Kusic Name: Daniel W. Amidon
Title: President and CEO Title: Secretary and General Counsel
ARCELOR S.A.
By /s/ Pierre Bouckaert By /s/ Jean-Yves Gilet
------------------------------- ----------------------------
Name: Pierre Bouckaert Name: Jean-Yves Gilet
Title: Executive Vice President Title: Senior Executive Vice
Mergers & Acquisitions-Strategy President
JEWEL ACQUISITION LLC
By /s/ Jon D. Walton
-------------------------------
Name: Jon D. Walton
Title: President
ALLEGHENY LUDLUM CORPORATION
By /s/ Richard J. Harshman
-------------------------------
Name: Richard J. Harshman
Title: Senior Vice President, Finance
58