UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 1996
Commission File No. 1-13394
CHASE BRASS INDUSTRIES, INC.
(Exact name of Registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
51-0328047
(I.R.S. Employer
Identification Number)
State Route 15, Montpelier, Ohio 43543
(Address of principal executive offices, including Zip Code)
Registrant's telephone number, including area code:
(419) 485-3193
Not Applicable
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the Registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes [X] No [ ]
Number of shares of Common Stock outstanding as of
August 9, 1996: 5,963,471
Number of shares of Nonvoting Common Stock outstanding as of
August 9, 1996: 4,100,079*
_________
* The Registrant's Nonvoting Common Stock is convertible,
on a share-for-share basis, into Common Stock.
Page 1 of 32 pages.
Exhibit Index begins on Page 29.<PAGE>
CHASE BRASS INDUSTRIES, INC.
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
- - ------- --------------------
Consolidated Balance Sheet as of June 30, 1996 and
December 31, 1995
Consolidated Statement of Operations for the three and
six months ended June 30, 1996 and 1995
Consolidated Statement of Cash Flows for the six
months ended June 30, 1996 and 1995
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis
- - ------- ------------------------------------
of Financial Condition and Results of Operations
------------------------------------------------
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
- - ------- -----------------
Item 4. Submission of Matters to Vote of Security Holders
- - ------- -------------------------------------------------
Item 5. Other Matters
- - ------- -------------
Item 6. Exhibits and Reports on Form 8-K
- - ------- --------------------------------
Signature
<PAGE>
CHASE BRASS INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEET
(Unaudited; in thousands, except share information)
June 30, December 31,
1996 1995
__________ ____________
ASSETS
Current assets:
Cash and cash equivalents $ 27,243 $ 16,973
Receivables, net of allowance for
doubtful accounts and claims of
$1,061 and $1,036 in 1996 and 1995,
respectively 31,760 28,071
Inventories 13,683 15,975
Prepaid expenses 575 733
Deferred income taxes 850 850
_________ _________
Total current assets 74,111 62,602
Property, plant and equipment, net 37,118 38,445
Receivable from Seller 1,956 1,956
_________ _________
Total assets $ 113,185 $ 103,003
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 18,717 $ 18,900
Accrued liabilities 3,795 3,594
Accrued income taxes 2,258 3,310
_________ _________
Total current liabilities 24,770 25,804
Long-term debt 19,722 18,784
Deferred income taxes 4,744 4,770
_________ _________
Total liabilities 49,236 49,358
Commitments and contingencies -- --
Stockholders' equity:
Common stock, $.01 par value,
25,000,000 shares authorized;
5,963,171 and 5,960,721 shares
issued and outstanding
in 1996 and 1995, respectively 60 60
Nonvoting common stock, $.01 par
value, 5,000,000 shares authorized;
4,100,079 shares issued and
outstanding in 1996 and 1995 41 41
Additional paid-in capital 30,014 29,990
Retained earnings 33,834 23,554
_________ _________
Total stockholders' equity 63,949 53,645
Total liabilities and
stockholders' equity $ 113,185 $ 103,003
========= =========
The accompanying notes are an integral part
of the consolidated financial statements.<PAGE>
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited; in thousands, except share information)
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
________ ________ ________ _________
Net sales $ 82,095 $ 82,994 $172,012 $169,131
Cost of goods sold
(exclusive of depreciation
and amortization shown
separately below) 70,298 71,746 147,581 145,607
________ ________ ________ _______
Gross profit 11,797 11,248 24,431 23,524
Selling, general and
administrative expenses 1,966 1,942 4,373 4,369
Dep. and amortization 1,243 1,541 2,458 3,004
________ ________ _______ _______
Operating income 8,588 7,765 17,600 16,151
Net interest expense 260 378 610 867
________ _______ _______ _______
Income before
income taxes 8,328 7,387 16,990 15,284
Provision for income taxes 3,288 2,955 6,710 6,114
________ ________ ________ ________
Net income $ 5,040 $ 4,432 $ 10,280 $ 9,170
======== ======== ======== ========
Average shares
outstanding 10,062,659 10,060,800 10,061,853 10,060,800
Earnings per share $ .50 $ .44 $ 1.02 $ .91
======== ======== ======== ========
The accompanying notes are an integral part
of the consolidated financial statements.<PAGE>
CHASE BRASS INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited; in thousands)
Six Months Ended June 30,
1995 1996
_________ _________
Operating activities:
Net income $ 10,280 $ 9,170
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 2,458 3,004
Accretion of discount on subordinated
promissory note due Seller 938 844
Deferred income tax expense (benefit) (26) 57
Changes in assets and liabilities:
(Increase) in receivables (3,689) (7,502)
Decrease in inventories 2,292 4,452
(Decrease)in accounts payable (183) (4,232)
(Decrease)in accrued income taxes (1,052) (537)
Increase in accrued liabilities 201 315
Decrease in deferred income taxes, net -- 1,484
Other, net 158 (123)
_________ _________
Net cash provided by
operating activities 11,377 6,932
Investing activities:
Additions to property, plant and eqpt (1,131) (1,774)
_________ _________
Net cash (used in)
investing activities (1,131) (1,774)
Financing activities:
Issuance of common stock -
options exercised 24 --
_________ _________
Net cash provided by
financing activities 24 --
_________ _________
Net increase in cash and equivalents 10,270 5,158
Cash and cash equivalents,
beginning of period 16,973 173
_________ _________
Cash and cash equivalents,
end of period $ 27,243 $ 5,331
========= =========
Supplemental disclosures:
Interest and bank fees paid $ 71 $ 111
Income taxes paid $ 7,801 $ 5,418
The accompanying notes are an integral part
of the consolidated financial statements.<PAGE>
1. Significant Accounting Policies:
________________________________
Principles of Consolidation and Interim Financial Information
The consolidated balance sheet as of June 30, 1996, and December 31,
1995, the consolidated statement of operations for the three and six
months ended June 30, 1996 and 1995, and the consolidated statement of
cash flows for the six months ended June 30, 1996 and 1995, include the
accounts of Chase Brass Industries, Inc. (the "Company"), a Delaware
corporation, and its wholly-owned subsidiary, Chase Brass & Copper
Company, Inc. ("CBCC"), a Delaware corporation.
The accompanying financial statements have been prepared in
accordance with instructions to Form 10-Q and do not include all the
information and footnote disclosures required by generally accepted
accounting principles. The financial information for June 30, 1996 and
1995, included herein is unaudited, and, in the opinion of management,
reflects all adjustments necessary, consisting only of normal recurring
adjustments, for a fair presentation of such financial information.
The results of operations for the three and six months ended June
30, 1996, are not necessarily indicative of the results of operations
that may be expected for the year ended December 31, 1996. This
quarterly report on Form 10-Q should be read in conjunction with the
annual financial statements included in the Company's Form 10-K dated
March 27, 1996.
On August 24, 1990, the Company acquired certain assets and assumed
certain liabilities of a Delaware corporation formerly named Chase Brass
& Copper Company, Incorporated ("Old Chase"), pursuant to the Asset
Purchase Agreement ("Purchase Agreement") dated May 10, 1990, by and
between the Company, CBCC, Old Chase, BP Exploration (Alaska) Inc.
("BP") and The Standard Oil Company (the "CBCC Acquisition"). BP and The
Standard Oil Company (collectively referred to as the "Seller") own all
of the stock of Old Chase. The CBCC Acquisition was accounted for as a
purchase.
Earnings Per Share
Earnings per share is computed based upon the average number of
common shares and common share equivalents outstanding during the periods
presented.
2. Pending Acquisition:
____________________
On May 15, 1996, the Company signed a definitive agreement to
acquire the UNR-Leavitt Division of Chicago-based UNR Industries, Inc.
("Leavitt") for $95 million, subject to closing adjustments (the "Leavitt
Acquisition"). Leavitt produces structural and mechanical steel tubing
with plants in Chicago, Illinois, Hammond, Indiana, and Jackson,
Mississippi, and employs approximately 320 people. Structural steel
tubing is used in farm equipment, non-residential construction and other
structural applications. Mechanical steel tubing is used in a broad
range of consumer and commercial products, including furniture and
fixtures, lawn-care products, storage racks, exercise equipment, bicycles
and machine tools. Leavitt recorded 1995 sales of $156 million and
EBITDA of $18.1 million. The Leavitt Acquisition will be accounted for
as a purchase. The Company intends to finance a portion of the purchase
price with cash on hand and the remainder with bank debt. The Leavitt
Acquisition is scheduled to close August 30, 1996.
3. Inventories:
____________
Inventories are stated at the lower of cost-or-market, with cost
determined on the last-in, first-out (LIFO) basis. Inventories have been
written down to lower of cost-or-market and such amounts are considered
cost for subsequent periods. If the first-in, first-out (FIFO) method
for determining cost had been used, inventories would have been
approximately $3.9 million and $4.3 million higher at June 30, 1996, and
December 31, 1995, respectively. Inventories consisted of the following
(in thousands):
June 30, December 31,
1996 1995
______ _____ ______ _____
Raw materials $ 4,563 $ 6,641
Work in process 4,796 4,903
Finished goods 6,036 7,952
______________ ______ _____
15,395 19,496
Tolling metal due customers (1,712) (3,521)
______ _____ ______ _____
$ 13,683 $ 15,975
====== ===== ============
4. Commitments and Contingencies:
______________________________
In connection with the CBCC Acquisition, the Company and Seller
entered into a Remediation Agreement (the "Remediation Agreement"). Under
the terms of the Remediation Agreement, Seller is responsible for certain
remediation activities attributable to environmental releases which
occurred prior to the CBCC Acquisition at the Company's manufacturing
facility and the construction of a new waste water treatment plant to
enable the Company to comply with its waste water discharge permit (the
"Permit"). Seller also is obligated under the Purchase Agreement to
indemnify the Company for liabilities arising out of certain
environmental conditions that existed as of the CBCC Acquisition date.
Seller has performed certain activities in this regard and has
acknowledged liability for certain releases of regulated substances into
the environment which occurred prior to the CBCC Acquisition.
While the Company's new waste water treatment plant has been in
operation since May 1993, the Company is still experiencing exceedances
to certain limitations contained in the Permit, resulting in violations
of the Clean Water Act. Seller and the Company have identified several
conditions contributing to the exceedances and are actively working to
correct the problems that have precluded the Company's routine compliance
with the Permit. The Ohio Environmental Protection Agency (the "Ohio
EPA") is kept apprised as to the status of the parties' activities
concerning the elimination of exceedances, concurs with the proposals for
corrective measures, and has not initiated any enforcement action against
the Company for prior exceedances.
The Company and/or other entities named "Chase Brass & Copper Co."
(which may include Old Chase or divisions of Old Chase) have been named
by governmental agencies and/or private parties as a potentially
responsible party ("PRP") under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA") and/or analogous state
laws with respect to two sites, and may have been identified as a PRP at
one additional site.
In connection with one of the two sites, located in Cleveland, Ohio,
the Company has been named as one of over 130 defendants in a CERCLA
Section 107 action which seeks recovery of response costs previously
spent and proposed to be spent by the plaintiff. The plaintiff has
alleged that between 1990 and 1993 it and the other ordered parties have
incurred response costs in excess of $10 million. The Company believes
that it has had no contact with the site and has no knowledge as to what,
if any, share of response costs has been allocated to it. Seller has been
notified of this suit and has assumed the defense thereof because alleged
events giving rise to the CERCLA liability occurred prior to the CBCC
Acquisition.
With respect to the second site, located in Tifton, Georgia, the
Company has been notified by a group of private parties of its potential
identification as a PRP. The notice alleges that the Company may be
liable for contribution with respect to prior cleanup costs incurred by
third parties at this site and may be required to participate in funding
future cleanup costs at this site. The Company believes that it has had
no contact with the site and has no knowledge as to what, if any, share
of response costs would be allocated to it if it is determined that the
Company or Old Chase had any contact with this site. Seller has been
notified and has assumed defense of this matter.
The additional site, located in Mifflin County, Pennsylvania, was
placed on the United States Environmental Protection Agency's (the "EPA")
National Priorities List in 1989. While the Company has not received any
formal notification from the EPA or any third party, the Company believes
that Old Chase has been identified by the EPA as a PRP. To the Company's
knowledge, however, neither the Company nor the brass rod division of Old
Chase directly disposed of hazardous wastes at this site. Nevertheless,
Seller has been notified by the Company of its (or Old Chase's) apparent
identification as a PRP and Seller's responsibility for any liability
associated with this site as it relates to periods prior to the date of
the CBCC Acquisition. Based on information available to the Company, it
appears that if the Company or Old Chase were determined to be liable,
liability would be allocated on the basis of 0.5828% of total cleanup
costs of approximately $64.5 million (or approximately $376,000) at June
30, 1996.
The Company believes that it has no liability for the cleanup costs
related to these sites because (a) such liability is attributable to an
entity that had the same or similar name to that of the Company, such as
a division or subsidiary of Seller (other than the brass rod division of
Old Chase), or (b) such liability arose from acts that occurred prior to
the CBCC Acquisition and, therefore, Seller retained such liability under
the Purchase Agreement and is contractually obligated to indemnify the
Company for such liabilities. To the extent the Company incurs any
cleanup costs with respect to these sites, it intends to enforce its
rights under the Purchase Agreement to recover such amounts from Seller.
Preliminary studies conducted immediately prior to the CBCC
Acquisition indicated that the site upon which the Company's
manufacturing facility is located has been contaminated with certain
volatile organic compounds, including trichlorethylene, as well as total
petroleum hydrocarbons and certain metals from historical operating
practices. While the Company is aware that the site is contaminated, the
full extent and magnitude of contamination has not yet been determined.
Pursuant to the Remediation Agreement, Seller is required to fund a
comprehensive site investigation to determine the extent of contamination
and appropriate cleanup methods. The results of the initial site
investigation activities were provided to the Company in second quarter
1996, which results have identified the presence and location of certain
contaminants. Seller also provided to the Company a draft remediation
plan with respect to certain areas of the facility based on the results
of the initial sampling. The Company currently is reviewing the initial
sampling results and draft remediation plan provided to it to determine
appropriate cleanup standards. After the Company completes its review of
the material provided by Seller, the Company intends to meet with Seller
and the Ohio EPA to determine the extent of additional investigation
activities that may be required and to develop a comprehensive
remediation plan for the site. Thereafter, the Company anticipates that
actual cleanup of the site will be conducted by or on behalf of Seller in
accordance with regulatory approval.
Because the site investigatory activities are not yet complete, the
Company presently is unable to estimate with any degree of certainty the
extent of contamination or the amount of site cleanup costs associated
therewith. Moreover, because Seller has acknowledged its obligations with
respect to site contamination attributable to Old Chase's operations, the
probability that the Company would be required to make material
expenditures related to site cleanup appears to be remote. No reserves
have been established regarding the aforementioned matters. Additionally,
the Company expects no material impact on its financial position, results
of operations or liquidity as a result of the existence of any other
environmental conditions. To the extent the Company incurs cleanup costs
with respect to these sites, it intends to enforce its rights under the
Purchase Agreement to recover such amounts from Seller. In the event the
Company is entitled to recovery from Seller pursuant to the Purchase
Agreement, or otherwise, but is unable to collect such amounts from
Seller, the Company may elect to offset the amounts of such recoveries
against amounts payable under the $20 million Seller Note to the extent
it legally is entitled to do so.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
_______ _____________________________________________________________
Results of Operations
_____________________
General
The Company is an ISO 9002 certified manufacturer and supplier of
free-machining and forging brass rod in the United States and Canada and,
from its Montpelier, Ohio, plant supplied approximately 32% of copper
alloy rod shipped by U.S. mills in 1995. Free machining and forging
brass rod are the two primary types of copper alloy rod used in the
United States and Canada, which the Company estimates represent
approximately 80% and 12%, respectively, of total annual copper alloy rod
shipments by U.S. mills. The main attributes of copper alloy rod are its
excellent corrosion resistance, moderate strength and the ease with which
it can be machined or forged into a variety of shapes. The Company is
one of the largest manufacturers and suppliers in the United States and
Canada of free-machining brass rod, which accounted for approximately 95%
of the Company's total shipments and net sales in 1995 and first half
1996.
Free-machining brass rod is used to produce brass products, such as
valves and fittings, by a machining process during which the brass rod is
formed, drilled and cut. Forging brass is used to produce brass products
by a process during which a heated slug cut from a rod is pressed into an
impression die and then machined.
The primary distinction between products manufactured from free-
machining and forging brass rod is that free-machining brass products
generally are used in air and water applications (such as faucet,
industrial valve and automotive components), hardware products and
similar applications, whereas forging brass products are more dense and,
therefore, generally are used in industrial fluid (such as refrigerant)
and other high pressure applications.
The Company supplies a diverse customer base of over 300 companies
in the United States and Canada, including original equipment
manufacturers, independent fabricators and distributors. The Company's
25 largest customers, which represented approximately 50% of net sales
for 1995 and first half 1996, have been doing business with the Company
for an average of nearly 18 years. The Company markets its products
under its "Blue Dot" trademark, which the Company believes is recognized
throughout the industry for its high quality, low lead content and
uniform lead distribution which enhances the machinability of its brass
rod. The Company maintains the quality and consistency of its products
through an extensive quality control program, including the inspection of
incoming raw materials, utilization of statistical process control
procedures and quality testing throughout the manufacturing process.
The principal raw material used in the Company's manufacturing
process is brass scrap, approximately 80% of which is obtained from the
Company's customers and 20% of which is purchased from scrap dealers at
prevailing free-market prices. Free-market prices of brass scrap
fluctuate based on the supply of and demand for brass scrap and the price
for copper and zinc (the major components of brass), and generally are
less than the price at which brass scrap is purchased from customers
("Metal Buying Price").
The Company's pricing structure consists of a metal selling price
and a fabrication price as separate components. The metal price charged
to customers ("Metal Selling Price") is determined at the time of
shipment based on the then-current Metal Buying Price and is not directly
affected by fluctuations in free-market brass scrap prices. As a result
of this pricing structure, increases and decreases in the Metal Selling
Price will affect net sales levels and the Company's gross profit as a
percentage of sales, even in the absence of an increase or decrease in
shipments or the fabrication prices charged to customers, but will have
little impact on the Company's gross profit levels. However, the
quantity of free-market brass scrap purchased by the Company and changes
in the difference between the free-market prices paid for brass scrap and
the Metal Buying Price will affect the Company's gross profit, even in
the absence of an increase or a decrease in shipments or net sales
levels.
In addition to sales made under the pricing structure described
above, some sales are made on a tolling basis. In a tolling arrangement,
the customer consigns brass scrap to the Company and is charged a
fabrication price for processing the brass scrap into finished rod.
Tolling transactions reduce the Company's net sales by the Metal Selling
Price that otherwise would be charged to the customer in a sale of
finished brass rod and cost of goods sold by the Metal Buying Price that
otherwise would be paid to the customer. To a lesser extent, tolling
transactions also affect the Company's gross profit to the extent the
Company is unable to take advantage of the pricing differential on brass
scrap purchased and sold. To partially offset the effect of tolling
transactions on the Company's gross profit, in March 1994 the Company
began requiring tolling customers to deliver 1.03 pounds of brass scrap
in exchange for each pound of finished rod shipped and, in October 1994,
increased this tolling premium to 1.04 pounds of brass scrap in exchange
for each pound of finished rod shipped.
Results of Operations
Three Months Ended June 30, 1996, Compared with Three Months Ended
June 30, 1995
Net sales decreased $899,000, or 1%, to $82.1 million in 1996, due
to a decline in Metal Selling Prices and an increase in toll shipments
partially offset by an increase in shipments. Shipments increased 5.1
million pounds, or 7%, to 77.7 million pounds in second quarter 1996.
The shipment increase was influenced by continued customer demand and
declining net import levels. Net imports for the five months ended May
1996 (the most recent data available) totaled 31 million pounds compared
with 91.3 million pounds for the same period in 1995.
As a result of the above factors, the Company's gross profit
increased $549,000, or 5%, to $11.8 million in second quarter 1996.
Depreciation and amortization decreased $298,000, or 19%, to $1.2
million in second quarter 1996, principally due to intangible assets
becoming fully amortized in third quarter 1995, partially offset by
increased depreciation on capital additions.
As a result of the above factors, operating income increased
$823,000, or 11%, to $8.6 million in second quarter 1996.
Net interest expense decreased $118,000, or 31%, to $260,000 in
second quarter 1996, primarily as a result of a $159,000 increase in
interest income due to higher short-term investment levels.
Income tax expense increased $333,000, or 11%, to $3.3 million in
second quarter 1996 as a result of an increase of $941,000, or 13%, in
income before income taxes.
Based on the above factors, net income increased $608,000, or 14%,
to $5.0 million. Earnings per share increased to $.50 in second quarter
1996 compared with $.44 in second quarter 1995.
Six Months Ended June 30, 1996, Compared with Six Months Ended
June 30, 1995
Net sales increased $2.9 million, or 2%, to $172.0 million in first
half 1996, due primarily to increased shipments partially offset by lower
Metal Selling Prices and an increase in toll shipments. Shipments
increased 11.6 million pounds, or 8%, to 162.0 million pounds in first
half 1996 as customer demand remained strong and net imports declined.
Although industry shipments excluding Chase through June 1996 declined a
total of 29.1 million pounds, or 9%, compared with the prior year, Chase
increased shipments 11.6 million pounds, or 8%. Management believes that
the Company's ability to increase shipments despite reduced industry
demand results from the Company's quality product and emphasis on
customer service. Metal Buying and Selling Prices declined nearly 5%
from the beginning of first half 1995 to the end of first half 1996 due
to a downward trend in copper prices.
As a result of the above factors, the Company's gross profit
increased $907,000, or 4%, to $24.4 million in first half 1996.
Depreciation and amortization decreased $546,000, or 18%, to $2.5
million in first half 1996, principally due to intangible assets becoming
fully amortized in third quarter 1995, partially offset by increased
depreciation on capital additions.
Operating income increased $1.4 million, or 9%, to $17.6 million in
first half 1996 as a result of the above factors.
Net interest expense decreased $257,000, or 30%, to $610,000 in
first half 1996, primarily as a result of a $313,000 increase in interest
income due to higher short-term investment levels.
Income tax expense increased $596,000, or 10%, to $6.7 million in
first half 1996 as a result of an increase of $1.7 million, or 11%, in
income before income taxes.
Based on the above factors, net income increased $1.1 million, or
12%, to $10.3 million for the six months ended June 30, 1996. Earnings
per share increased to $1.02 for the six months ended June 30, 1996,
compared with $.91 for the six months ended June 30, 1995.
Liquidity and Capital Resources
General
At June 30, 1996, cash and cash equivalents totaled $27.2 million,
a $10.3 million, or 61% increase since year end 1995. The Company's
indebtedness consists solely of the Seller Note, which totaled $19.7
million and $18.8 million at June 30, 1996, and December 31, 1995,
respectively. The interest coverage ratio increased to 29:1 in first
half 1996 from 19:1 in first half 1995. The Company continues to meet
its operational and liquidity needs from cash on hand and internally
generated funds.
The Company intends to finance a portion of the Leavitt Acquisition
with cash on hand and the remainder with bank debt. The Company believes
that its operational and liquidity needs subsequent to the Leavitt
Acquisition and for the foreseeable future will be met by remaining cash
on hand, internally generated funds and amounts available under the New
Bank Credit Facility (as hereinafter defined).
Working Capital
At June 30, 1996, working capital was $49.3 million, a $12.5
million, or 34%, increase from $36.8 million at December 31, 1995.
The increase in working capital resulted from a $10.3 million, or
61%, increase in cash and cash equivalents, a $3.7 million, or 13%,
increase in accounts receivable, and a $1.1 million, or 32%, decrease in
accrued income taxes, partially offset by a $2.3 million, or 14%,
decrease in inventories. The increase in receivables was due principally
to an increase of $3.8 million, or 17%, in net sales in June 1996
compared with December 1995, partially offset by a 6% decline in Metal
Selling Prices in June 1996 compared with December 1995. The decrease in
inventories as of June 30, 1996, resulted principally from reduced
quantities following record first half 1996 shipments of 162 million
pounds. Inventories were increased in fourth quarter 1995 to meet first
quarter 1996 seasonal demand. The decrease in accrued income taxes
resulted from payment of estimated taxes due in second quarter 1996,
partially offset by additional accruals.
The Company's current ratio follows:
June 30, 1996 December 31, 1995
_____________ _________________
Current ratio 2.99 2.43
Current ratio excluding cash 1.89 1.77
Cash Flow Provided by Operating Activities
In the six months ended June 30, 1996, net cash provided by
operating activities was $11.4 million, which included net income of
$10.3 million, depreciation of $2.5 million and accretion of discount on
the Seller Note of $938,000, partially offset by an increase in working
capital, excluding cash, of $2.3 million.
In the six months ended June 30, 1995, net cash provided by
operating activities was $6.9 million. Net income of $9.2 million,
depreciation and amortization of $3.0 million and accretion of discount
on the Seller Note of $844,000 were the primary sources of cash from
operating activities, partially offset by an increase in working capital,
excluding cash, of $6.1 million.
Cash Flow Used in Investing Activities
Capital additions were $1.1 million for the six months ended June
30, 1996, and $1.8 million for the six months ended June 30, 1995. The
Company has allocated more than $5 million for capital improvements in
1996. The Company plans to focus on expansion of its extrusion press
system in 1996 and 1997, with an engineering study supporting that
project currently underway.
Cash Flow Provided by Financing Activities
Cash of $24,000 provided by financing activities in first half 1996
resulted from the issuance of Common Stock in connection with the
exercise of stock options. The Company did not have any financing
activities during the six months ended June 30, 1995.
Bank Credit Facility
CBCC has a $33 million revolving credit facility agreement (the
"Bank Credit Facility") which contains certain covenants that, among
other things, restrict CBCC's ability to incur additional debt and
require CBCC to maintain certain financial ratios. The Bank Credit
Facility also contains certain restrictions on CBCC making advances or
paying dividends to the Company. Under these restrictions, $49.3 million
and $36.3 million was available to be advanced to the Company at June 30,
1996, and December 31, 1995, respectively.
New Bank Credit Facility
The Company has entered into a commitment letter with PNC Bank to
provide a new credit facility (the "New Bank Credit Facility") upon
closing of the Leavitt Acquisition. The Company anticipates that the New
Bank Credit Facility will be approximately $110 million. The New Bank
Credit Facility will replace the existing Bank Credit Facility and will
be used to partially finance the Leavitt Acquisition and for working
capital and will also be available to fund future acquisitions.
Contingencies
In connection with the CBCC Acquisition, the Company issued the
Seller Note in the original principal amount of $20.0 million. The
Seller Note has an initial maturity in August 1996, is subordinated to
all other indebtedness of the Company and at the CBCC Acquisition date
was recorded at a discount using a 10.4% effective interest rate. The
Company has exercised its option, which it intends to exercise, to extend
the maturity date of the Seller Note for three additional years to August
1999. The Seller Note contains a contingent interest payment due in
August 1996 based upon average Company earnings (defined in the Seller
Note) for the years ended December 31, 1990 through 1995. At December
31, 1995, $491,000 of contingent interest was recorded as additional
acquisition cost and applied against the receivable from Seller. After
August 1996, interest will be payable annually on the Seller Note through
August 1999 at the average three-year U.S. Treasury Note rate plus 3%.
Environmental Matters
Capitalized terms used but not defined herein shall have the meaning
ascribed to them under Note 4 of Notes to Consolidated Financial
Statements included in "Item 1. Financial Statements" in Part I. hereof.
The Company's operations are subject to federal, state and local
pollution control laws and regulations relating to the discharge of
hazardous or regulated materials into the environment, the transport and
sale of hazardous or regulated materials and the disposal of certain
materials and wastes. These laws and related regulations are changing
constantly and, as a consequence, are subject to differing
interpretations by the agencies that administer them. Moreover,
increasingly stringent regulations often result in the mandatory
implementation of additional and/or modified pollution control procedures
and processes which may result in material increases in compliance costs.
Management currently is not aware of any pending changes to existing
environmental laws that would require the Company to incur significant
capital expenditures for pollution control.
For the above reasons, the Company cannot predict with certainty its
aggregate future capital expenditures for pollution control. However,
the Company estimates that it will incur capital expenditures for
pollution control of approximately $500,000 in 1996, a portion of which
may be subject to reimbursement by Seller under the Remediation Agreement
and the Purchase Agreement discussed below. Estimates of capital
expenditures for pollution control purposes beyond 1996 are even more
uncertain. However, assuming no significant manufacturing process
changes and no significant changes in applicable laws or regulations, the
Company currently anticipates that its capital expenditures for pollution
control purposes for 1997 will be approximately $500,000, and during the
period 1998-1999 will aggregate approximately $500,000. These estimates
of future capital expenditures are exclusive of capital expenditures
associated with on-site remediation activities, which the Company
anticipates will be paid for by Seller, as more fully discussed below.
The Company believes that expenditures for pollution control equipment
will continue to be required in the future for continued compliance with
applicable environmental laws and regulations.
The Remediation Agreement entered into between the Company and
Seller in connection with the CBCC Acquisition provides for, among other
things, Seller to fund certain post-closing activities, including the
investigation and remediation of on-site contamination that existed as of
the CBCC Acquisition date at the location on which the Company's
manufacturing facility is located and the construction of a new waste
water treatment plant to enable the Company to comply with the Permit. In
addition, under the Purchase Agreement, Seller is obligated to indemnify
the Company for liabilities arising out of certain environmental
conditions that existed as of the CBCC Acquisition date.
Although the Company's new waste water treatment plant (funded,
designed and installed by Seller) has been in operation since May 1993,
the Company is still experiencing exceedances to certain limitations
contained in the Permit, resulting in violations of the Clean Water Act.
Seller and the Company have identified several conditions contributing to
the exceedances and are actively working to correct the problems that
have precluded the Company's routine compliance with the Permit. The
Ohio EPA is kept apprised as to the status of the parties' activities
concerning the elimination of exceedances, concurs with the proposals for
corrective measures, and has not initiated any enforcement action against
the Company for prior exceedances.
Preliminary studies conducted immediately prior to the CBCC
Acquisition indicated that the site upon which the Company's
manufacturing facility is located has been contaminated by certain
volatile organic compounds, including trichloroethylene, as well as total
petroleum hydrocarbons and certain metals from historical operating
practices. Seller and the Company jointly approached the Ohio EPA and
proposed a voluntary cleanup approach for remediation at the site and
have conducted site investigation activities to determine the extent of
contamination and appropriate cleanup methods. The results of the
initial site investigation activities were provided to the Company in
second quarter 1996, which results have identified the presence and
location of certain contaminants. Seller also provided to the Company a
draft remediation plan with respect to certain areas of the facility
based on the results of the initial sampling. The Company currently is
reviewing the initial sampling results and draft remediation plan
provided to it to determine appropriate cleanup standards. After the
Company completes its review of the material provided by Seller, the
Company intends to meet with Seller and the Ohio EPA to determine the
extent of additional investigation activities that may be required and to
develop a comprehensive remediation plan for the site. The investigation
is being conducted on a voluntary basis with the concurrence of the Ohio
EPA. Until the Company's review of initial site investigatory studies
and any additional investigatory activities that are necessary are
completed, the Company will be unable to estimate with any degree of
certainty the extent of contamination or the amount of cleanup costs
associated therewith.
The cleanup costs associated with the environmental conditions
described above may be material and, in the event the Company were
determined to be solely responsible or liable for site cleanup activities
(due to the inability or unwillingness of other responsible parties to
perform or pay for such activities), such expenditures could have a
material adverse effect on the Company's earnings and financial
condition. However, as noted above, Seller is contractually obligated
under the Remediation Agreement to fund the investigation and remediation
of on-site contamination that existed at the CBCC Acquisition date.
Therefore, based on Seller's contractual obligation under the Remediation
Agreement, as well as Seller's contractual obligation under the Purchase
Agreement to indemnify the Company as described above, the Company does
not believe that the cleanup costs or other liabilities associated with
such conditions will have a material adverse effect on the Company's
financial position, results of operations or liquidity and the Company
has not made any related accruals of all or any part of such costs.
The Company and/or other entities named "Chase Brass & Copper Co."
(which may include Old Chase or divisions of Old Chase) have been named
by governmental agencies and/or private parties as a PRP under CERCLA
and/or state laws with respect to two sites, and may have been identified
as a PRP at one additional site. See Note 4 of Notes to Consolidated
Financial Statements. The Company believes that it has no liability for
the cleanup costs related to these sites because (a) such liability is
attributable to an entity that had the same or similar name to that of
the Company, such as a division or subsidiary of Seller (other than the
brass rod division of Old Chase), or (b) such liability arose from acts
that occurred prior to the CBCC Acquisition and, therefore, Seller
retained such liability under the Purchase Agreement and is contractually
obligated to indemnify the Company for such liabilities.
Notwithstanding these factors, because the Company is subject to
environmental laws such as CERCLA that impose liability retroactively and
without regard to fault, the Company could be deemed primarily liable for
cleanup costs associated with these sites.
To the extent the Company incurs any costs and expenses with respect
to the environmental matters discussed above, it intends to enforce its
rights under the Purchase Agreement and/or the Remediation Agreement to
recover such amounts from Seller. In the event the Company is entitled
to recovery from Seller pursuant to the Purchase Agreement, or otherwise,
but is unable to collect such amounts from Seller, the Company may elect
to offset the amounts of such recoveries against amounts payable under
the $20 million Seller Note to the extent it legally is entitled to do
so.<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
_______ _________________
Capitalized terms used but not defined herein shall have the meaning
ascribed to them under Note 4 of Notes to Consolidated Financial
Statements included in "Item 1. Financial Statements" in Part I. hereof.
The Company is involved from time to time in certain claims and
litigation arising in the ordinary course of business. Management
believes that the ultimate disposition of these matters will not have a
material effect on the Company's financial position, results of
operations or liquidity.
The Company and/or other entities named "Chase Brass & Copper Co."
(which may include Old Chase or divisions of Old Chase) have been named
by governmental agencies and/or private parties as a PRP under CERCLA
and/or analogous state laws with respect to two sites, and may have been
identified as a PRP at one additional site, as discussed in the following
paragraphs.
The Company has been named one of over 130 defendants in a CERCLA
Section 107 action styled Ashland Oil, Inc. v. Acme Scrap Iron & Metal
Corp., et. al. (Case No. I:94 CV 1592), which seeks recovery of response
costs previously spent and proposed to be spent by the plaintiff Ashland
Oil at the Huth Oil Services Company site located in Cleveland, Ohio. A
waste oil reclamation facility was operated at the site from 1938 until
1990. Beginning in 1983, and at various other times until 1990, both the
U.S. EPA and the Ohio EPA conducted inspections and sampling at this
site. In October 1990, the U.S. EPA ordered the plaintiffs, Ashland
Chemical Company (a division of Ashland Oil, Inc.), The Cleveland
Electric Illuminating Company and Huth Oil Services Company, to remediate
the site. As a result thereof, the plaintiff has alleged that between
1990 and 1993 it and the other ordered parties have incurred response
costs in excess of $10 million. The complaint alleges that the defendants
are each strictly, as well as jointly and severally, liable. The Company
believes, however, that it has had no contact with the site and has no
knowledge as to what, if any, share of response costs has been allocated
to it. The Seller has been notified of the institution of this suit and
has assumed the defense thereof because alleged events giving rise to
CERCLA liability occurred prior to the CBCC Acquisition.
The Company has been notified by a group of private parties of its
potential identification as a PRP at a site in Tifton, Georgia, commonly
known as the "SoGreen" site. According to the notice, a flue dust and
flyash recycling facility was operated at the site from approximately
1976 until 1993. Pursuant to a consent order entered into between
Atlantic Steel Industries, Inc., Florida Steel Corporation, Georgetown
Steel Corporation, Owen Electric Steel Company of South Carolina and U.S.
Foundry & Manufacturing Corporation (collectively, the "Steel Companies")
and the Georgia Department of Natural Resources Environmental
Protection Division, the Steel Companies have been engaged in removing a
flue dust pile, and also have undertaken an assessment of groundwater, at
this site. In addition, pursuant to a U.S. EPA unilateral order, the
Steel Companies apparently are engaged in a removal action to remediate
contaminated soils, and are undertaking the cleanup of non-metal
contaminants, at the site. The notice also indicates that the Steel
Companies settled, for approximately $3 million, a class action brought
by residents of the area near the site alleging property damage due to
the proximity of the residents' neighborhood to the site. The notice
alleges that the Company may be liable for contribution with respect to
prior cleanup costs incurred by the Steel Companies and may be required
to participate in funding future cleanup costs at the site. According to
the notice, the Steel Companies currently have expended or are committed
to expend approximately $17 million (including settlement of the class
action) on matters related to the site. The Company believes that it has
had no contact with this site and that this site received waste materials
from an entity named "Chase Brass & Copper Co.," which may have been a
division of Old Chase (not related to the brass rod division acquired by
the Company), located in North Carolina. Seller has been notified and
has assumed defense of this matter.
The Jack's Creek, or Sitkin Smelting & Refining, site located in
Mifflin County, Pennsylvania, was placed on the U.S. EPA's National
Priorities List in 1989. While the Company has not received any formal
notification from the U.S. EPA or any third party, the Company believes
that Old Chase has been identified by the U.S. EPA as a PRP. To the
Company's knowledge, however, neither the Company nor the brass rod
division of Old Chase directly disposed of hazardous wastes at this site.
Nevertheless, Seller has been notified by the Company of its (or Old
Chase's) apparent identification as a PRP and Seller's responsibility for
any liability associated with this site as it relates to periods prior to
the date of the CBCC Acquisition. Based on information available to the
Company, it appears that if the Company or Old Chase were determined to
be liable, liability would be allocated on the basis of 0.5828% of total
cleanup costs of approximately $64.5 million (or approximately $376,000)
at June 30, 1996.
The Company believes that it has no liability for the cleanup costs
related to the sites described above because (a) such liability is
attributable to an entity other than the Company that had the same or
similar name to that of the Company, such as a division or subsidiary of
Seller (other than the brass rod division of Old Chase), or (b) such
liability arose from acts that occurred prior to the CBCC Acquisition
and, therefore, Seller retained such liability under the Purchase
Agreement and is contractually obligated to indemnify the Company for
such liabilities.
To the extent the Company incurs any cleanup costs with respect to
these sites, it intends to enforce its rights under the Purchase
Agreement to recover such amounts from Seller. In the event the Company
is entitled to recovery from Seller pursuant to the Purchase Agreement,
or otherwise, but is unable to collect such amounts from Seller, the
Company may elect to offset the amounts of such recoveries against
amounts payable under the $20 million Seller Note to the extent it
legally is entitled to do so.
Item 4. Submission of Matters to a Vote of Security Holders
_______ ___________________________________________________
The Annual Meeting of Stockholders of the Company was held on May
16, 1996, for the purpose of electing a board of directors and ratifying
the appointment of independent accountants. Proxies for the meeting were
solicited pursuant to Section 14(a) of the Securities Exchange Act of
1934 and there was no solicitation in opposition to management's
solicitations.
All of management's nominees for directors as listed in the Proxy
Statement dated April 15, 1996, were elected with the following vote:
Shares Voted "For" Shares "Withheld" Broker Non-Votes
__________________ _________________ ________________
Martin V. Alonzo 3,493,397 20,891 -0-
Raymond E. Cartledge 3,493,397 20,891 -0-
Charles E. Corpening 3,493,297 20,991 -0-
Donald J. Donahue 3,493,397 20,891 -0-
Duane R. Grossett 3,493,397 20,891 -0-
John R. Kennedy 3,493,397 20,891 -0-
Thomas F. McWilliams 3,493,397 20,891 -0-
The appointment of Coopers & Lybrand L.L.P. as independent accountants
was ratified by the following vote:
Shares
________________________________________________
Voted "For" Voted "Against" Abstaining Broker Non-Votes
___________ _______________ __________ ________________
3,485,060 2,450 26,778 -0-
Item 5. Other Information
_______ _________________
On May 15, 1996, the Company signed a definitive agreement to acquire
the UNR-Leavitt Division of Chicago-based UNR Industries, Inc.
("Leavitt") for $95 million, subject to closing adjustments. Leavitt
produces structural and mechanical steel tubing with plants in Chicago,
Illinois, Hammond, Indiana, and Jackson, Mississippi, and employs
approximately 320 people. Structural steel tubing is used in farm
equipment, non-residential construction and other structural
applications. Mechanical steel tubing is used in a broad range of
consumer and commercial products, including furniture and fixtures, lawn-
care products, storage racks, exercise equipment, bicycles and machine
tools. Leavitt recorded 1995 sales of $156 million and EBITDA of $18.1
million. The Leavitt Acquisition will be accounted for as a purchase.
The Company intends to finance a portion of the purchase price with cash
on hand and the remainder with bank debt. The Leavitt Acquisition is
scheduled to close August 30, 1996.<PAGE>
Item 6. Exhibits and Reports on Form 8-K
_______ ________________________________
a. Exhibits
2.1 Sale and Purchase Agreement dated May 15, 1996, among Chase
Brass Industries, Inc. (the "Company"), Leavitt Structural
Tubing Co. and UNR Industries, Inc.
2.2 Amendment No. 1 to Sale and Purchase Agreement dated July 1,
1996, by and among the Company, Leavitt Tube Company, Inc., a
Delaware corporation and a wholly owned subsidiary of the
Company, Leavitt Structural Tubing Co., and UNR Industries, Inc.
2.3 Assignment and Assumption Agreement dated June 27, 1996, by and
between the Company and Leavitt Tube Company, Inc.
3.1 Restated Certificate of Incorporation of the Company
(incorporated by reference to Exhibit 4.1 to the Company's
Registration Statement on Form S-8 dated December 9, 1994,
Registration No. 33-87278).
3.2 By-Laws of the Company (incorporated by reference to Exhibit 3.2
of the Company's Registration Statement on Form S-1 as filed
with the Securities and Exchange Commission on November 3, 1994,
Registration No. 33-83178).
4.1 Specimen Common Stock Certificate (incorporated by reference to
Exhibit 4.1 of the Company's Registration Statement on Form S-1
as filed with the Securities and Exchange Commission on
November 3, 1994, Registration No. 33-83178).
4.2 Exchange Agreement dated November 4, 1994, between the Company
and Citicorp Venture Capital Ltd. ("CVC") (incorporated by
reference to Exhibit 4.4 to the Company's Registration Statement
on Form S-8 dated December 9, 1994, Registration No. 33-87278).
4.3 Voting Agreement dated November 10, 1994, between the Company,
CVC and Martin V. Alonzo (incorporated by reference to Exhibit
4.5 to the Company's Registration Statement on Form S-8 dated
December 9, 1994, Registration No. 33-87278).
10.1 Credit Agreement ("Credit Agreement") dated November 10, 1994,
between the Company and PNC Bank, National Association ("PNC")
(incorporated by reference to Exhibit 10.1 to the Company's
Quarterly Report on Form 10-Q for the quarter ended
September 30, 1994).
10.2 Assignment and Assumption Agreement dated November 21, 1994,
between PNC and the other banks named therein regarding
assignment of participation in the Credit Agreement
(incorporated by reference to Exhibit 10.2 to the Company's
Quarterly Report on Form 10-Q for the quarter ended Septem-
ber 30, 1994).
10.3 Employment Agreement dated November 10, 1994, between the
Company and Mr. Alonzo (incorporated by reference to Exhibit
10.3 to the Company's Annual Report on Form 10-K for the year
ended December 31, 1994).
10.4 Employment Agreement dated February 27, 1995, between Chase
Brass & Copper Company, Incorporated, a wholly owned subsidiary
of the Company, and Robert L. Meyer (incorporated by reference
to Exhibit 10.4 to the Company's Annual Report on Form 10-K for
the year ended December 31, 1994).
10.5 Chase Brass Industries, Inc., 1994 Long-Term Incentive Plan
(incorporated by reference to Exhibit 4.6 to the Company's
Registration Statement on Form S-8 dated December 9, 1994,
Registration No. 33-87278).
10.6 Indemnification Agreement dated November 10, 1994, between the
Company and Mr. Alonzo, together with a schedule identifying
substantially identical documents and setting forth the material
details in which those documents differ from that document
(incorporated by reference to Exhibit 10.6 to the Company's
Annual Report on Form 10-K for the year ended December 31,
1994).
10.7 Schedule identifying additional documents substantially
identical to the Indemnification Agreement included as Exhibit
10.6 and setting forth the material details in which those
documents differ from that document (incorporated by reference
to Exhibit 10.7 to the Company's Annual Report on Form 10-K for
the year ended December 31, 1995).
10.8 Registration Rights Agreement dated November 10, 1994, by and
among the Company, CVC and Mr. Alonzo (incorporated by reference
to Exhibit 10.7 to the Company's Annual Report on Form 10-K for
the year ended December 31, 1994).
10.9 Asset Purchase Agreement dated May 10, 1990, as amended, by and
among the Company, CBC Acquisition Corporation (a wholly-owned
subsidiary of the Company now named Chase Brass & Copper
Company, Incorporated ("CBCC"), Chase Brass & Copper Company,
Incorporated, a Delaware corporation now named Ken-Chas Reserve
Co. ("Old Chase"), BP Exploration (Alaska), Inc. ("BP") and The
Standard Oil Company ("Standard") (incorporated by reference to
Exhibit 10.5 to the Company's Registration Statement on Form S-1
as filed with the Securities and Exchange Commission on November
3, 1994, Registration No. 33-83178).
10.10 Lease Agreement dated January 9, 1987, between Old Chase and
Washington Boulevard Industrial Development Company
("Landlord"), together with all amendments thereto (the "Los
Angeles Lease") (incorporated by reference to Exhibit 10.6 to
the Company's Registration Statement on Form S-1 as filed with
the Securities and Exchange Commission on November 3, 1994,
Registration No. 33-83178).
10.11 Assumption Agreement dated August 24, 1990, entered into by CBCC
(incorporated by reference to Exhibit 10.7 to the Company's
Registration Statement on Form S-1 as filed with the Securities
and Exchange Commission on November 3, 1994, Registration No.
33-83178).
10.12 Subordinated Promissory Note dated August 24, 1990, between the
Company and CBCC (incorporated by reference to Exhibit 10.8 to
the Company's Registration Statement on Form S-1 as filed with
the Securities and Exchange Commission on November 3, 1994,
Registration No. 33-83178).
10.13 Assignment of the Los Angeles Lease dated August 24, 1990, from
Old Chase to CBCC (incorporated by reference to Exhibit 10.9 to
the Company's Registration Statement on Form S-1 as filed with
the Securities and Exchange Commission on November 3, 1994,
Registration No. 33-83178).
10.14 Remediation Agreement dated August 24, 1990, by and among the
Company, CBCC, BP and Standard (incorporated by reference to
Exhibit 10.10 to the Company's Registration Statement on Form
S-1 as filed with the Securities and Exchange Commission on
November 3, 1994, Registration No. 33-83178).
10.15 Tolling Agreement dated May 4, 1994, by and among the Company,
CBCC, Old Chase, BP and Standard (incorporated by reference to
Exhibit 10.13 to the Company's Registration Statement on Form
S-1 as filed with the Securities and Exchange Commission on
November 3, 1994, Registration No. 33-83178).
10.16 CBCC Savings and Profit Sharing Plan for Salaried Employees
(incorporated by reference to Exhibit 10.14 to the Company's
Registration Statement on Form S-1 as filed with the Securities
and Exchange Commission on November 3, 1994, Registration No.
33-83178).
(b) Reports on Form 8-K
During the quarter ended June 30, 1996, the Company did not
file any Current Reports on Form 8-K.
<PAGE>
S I G N A T U R E
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereto duly authorized.
CHASE BRASS INDUSTRIES INC.
Date: August 9, 1996
By: /s/ Martin V. Alonzo
_________________________
Martin V. Alonzo
Chairman of the Board,
President and Chief
Executive Officer
(Principal Financial
Officer)
<PAGE>
INDEX TO EXHIBITS
Exhibit Sequentially
No. Description of Exhibits Numbered Page
_______ _______________________ _____________
2.1 Sale and Purchase Agreement dated May 15, 1996,
among Chase Brass Industries, Inc. (the
"Company"), Leavitt Structural Tubing Co. and
UNR Industries, Inc.
2.2 Amendment No. 1 to Sale and Purchase Agreement
dated July 1, 1996, by and among the Company,
Leavitt Tube Company, Inc., a Delaware
corporation and a wholly owned subsidiary of
the Company, Leavitt Structural Tubing Co., and
UNR Industries, Inc.
2.3 Assignment and Assumption Agreement dated June
27, 1996, by and between the Company and
Leavitt Tube Company, Inc.
3.1 Restated Certificate of Incorporation of the
Company (incorporated by reference to Exhibit
4.1 to the Company's Registration Statement on
Form S-8 dated December 9, 1994, Registration
No. 33-87278).
3.2 By-Laws of the Company (incorporated by
reference to Exhibit 3.2 of the Company's
Registration Statement on Form S-1 as filed
with the Securities and Exchange Commission on
November 3, 1994, Registration No. 33-83178).
4.1 Specimen Common Stock Certificate (incorporated
by reference to Exhibit 4.1 of the Company's
Registration Statement on Form S-1 as filed
with the Securities and Exchange Commission on
November 3, 1994, Registration No. 33-83178).
4.2 Exchange Agreement dated November 4, 1994,
between the Company and Citicorp Venture
Capital Ltd. ("CVC") (incorporated by reference
to Exhibit 4.4 to the Company's Registration
Statement on Form S-8 dated December 9, 1994,
Registration No. 33-87278).
4.3 Voting Agreement dated November 10, 1994,
between the Company, CVC and Martin V. Alonzo
(incorporated by reference to Exhibit 4.5 to
the Company's Registration Statement on Form S-
8 dated December 9, 1994, Registration No.
33-87278).
10.1 Credit Agreement ("Credit Agreement") dated N-
ovember 10, 1994, between the Company and PNC
Bank, National Association ("PNC")
(incorporated by reference to Exhibit 10.1 to
the Company's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1994).
10.2 Assignment and Assumption Agreement dated N-
ovember 21, 1994, between PNC and the other
banks named therein regarding assignment of
participation in the Credit Agreement
(incorporated by reference to Exhibit 10.2 to
the Company's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1994).
10.3 Employment Agreement dated November 10, 1994,
between the Company and Mr. Alonzo
(incorporated by reference to Exhibit 10.3 to
the Company's Annual Report on Form 10-K for
the year ended December 31, 1994).
10.4 Employment Agreement dated February 27, 1995,
between Chase Brass & Copper Company,
Incorporated, a wholly owned subsidiary of the
Company, and Robert L. Meyer (incorporated by
reference to Exhibit 10.4 to the Company's
Annual Report on Form 10-K for the year ended
December 31, 1994).
10.5 Chase Brass Industries, Inc., 1994 Long-Term
Incentive Plan (incorporated by reference to
Exhibit 4.6 to the Company's Registration
Statement on Form S-8 dated December 9, 1994,
Registration No. 33-87278).
10.6 Indemnification Agreement dated November 10,
1994, between the Company and Mr. Alonzo,
together with a schedule identifying
substantially identical documents and setting
forth the material details in which those
documents differ from that document
(incorporated by reference to Exhibit 10.6 to
the Company's Annual Report on Form 10-K for
the year ended December 31, 1994).
10.7 Schedule identifying additional documents
substantially identical to the Indemnification
Agreement included as Exhibit 10.6 and setting
forth the material details in which those
documents differ from that document
(incorporated by reference to Exhibit 10.7 to
the Company's Annual Report on Form 10-K for
the year ended December 31, 1995).
10.8 Registration Rights Agreement dated
November 10, 1994, by and among the Company,
CVC and Mr. Alonzo (incorporated by reference
to Exhibit 10.7 to the Company's Annual Report
on Form 10-K for the year ended December 31,
1994).
10.9 Asset Purchase Agreement dated May 10, 1990, as
amended, by and among the Company, CBC
Acquisition Corporation (a wholly-owned
subsidiary of the Company now named Chase Brass
& Copper Company, Incorporated ("CBCC"), Chase
Brass & Copper Company, Incorporated, a
Delaware corporation now named Ken-Chas Reserve
Co. ("Old Chase"), BP Exploration (Alaska),
Inc. ("BP") and The Standard Oil Company
("Standard") (incorporated by reference to
Exhibit 10.5 to the Company's Registration
Statement on Form S-1 as filed with the
Securities and Exchange Commission on Novem-
ber 3, 1994, Registration No. 33-83178).
10.10 Lease Agreement dated January 9, 1987, between
Old Chase and Washington Boulevard Industrial
Development Company ("Landlord"), together with
all amendments thereto (the "Los Angeles
Lease") (incorporated by reference to Exhibit
10.6 to the Company's Registration Statement on
Form S-1 as filed with the Securities and
Exchange Commission on November 3, 1994,
Registration No. 33-83178).
10.11 Assumption Agreement dated August 24, 1990,
entered into by CBCC (incorporated by reference
to Exhibit 10.7 to the Company's Registration
Statement on Form S-1 as filed with the
Securities and Exchange Commission on N-
ovember 3, 1994, Registration No. 33-83178).
10.12 Subordinated Promissory Note dated August 24,
1990, between the Company and CBCC
(incorporated by reference to Exhibit 10.8 to
the Company's Registration Statement on Form S-
1 as filed with the Securities and Exchange
Commission on November 3, 1994, Registration
No. 33-83178).
10.13 Assignment of the Los Angeles Lease dated
August 24, 1990, from Old Chase to CBCC
(incorporated by reference to Exhibit 10.9 to
the Company's Registration Statement on Form S-
1 as filed with the Securities and Exchange
Commission on November 3, 1994, Registration
No. 33-83178).
10.14 Remediation Agreement dated August 24, 1990, by
and among the Company, CBCC, BP and Standard
(incorporated by reference to Exhibit 10.10 to
the Company's Registration Statement on Form S-
1 as filed with the Securities and Exchange
Commission on November 3, 1994, Registration
No. 33-83178).
10.15 Tolling Agreement dated May 4, 1994, by and
among the Company, CBCC, Old Chase, BP and
Standard (incorporated by reference to Exhibit
10.13 to the Company's Registration Statement
on Form S-1 as filed with the Securities and
Exchange Commission on November 3, 1994,
Registration No. 33-83178).
10.16 CBCC Savings and Profit Sharing Plan for
Salaried Employees (incorporated by reference
to Exhibit 10.14 to the Company's Registration
Statement on Form S-1 as filed with the
Securities and Exchange Commission on Novem-
ber 3, 1994, Registration No. 33-83178).
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 27243
<SECURITIES> 0
<RECEIVABLES> 31760
<ALLOWANCES> 1061
<INVENTORY> 13683
<CURRENT-ASSETS> 74111
<PP&E> 37118
<DEPRECIATION> 0
<TOTAL-ASSETS> 113185
<CURRENT-LIABILITIES> 24770
<BONDS> 19722
0
0
<COMMON> 101
<OTHER-SE> 63848
<TOTAL-LIABILITY-AND-EQUITY> 113185
<SALES> 172012
<TOTAL-REVENUES> 172012
<CGS> 147581
<TOTAL-COSTS> 147581
<OTHER-EXPENSES> 2458
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 16990
<INCOME-TAX> 6710
<INCOME-CONTINUING> 10280
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10280
<EPS-PRIMARY> 1.02
<EPS-DILUTED> 1.02
</TABLE>
SALE AND PURCHASE AGREEMENT
DATED MAY 15, 1996
among
CHASE BRASS INDUSTRIES, INC.,
LEAVITT STRUCTURAL TUBING CO.
and
UNR INDUSTRIES, INC.
TABLE OF CONTENTS
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1.0 Purchase and Sale of Shares and Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 The Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Purchased Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.0 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1 Amount of the Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.2 Allocation of the Purchase Price among the Shares and Purchased Assets . . . . . . . 4
2.3 Assumed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.4 Excluded Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.0 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.1 Time and Place of the Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.2 Procedure at the Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.3 Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.4 Adjustment of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.5 Accounts Receivable Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.6 Non-Assignable Purchased Contracts . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.0 Representations and Warranties of the Seller . . . . . . . . . . . . . . . . . . . . . . . . 16
4.1 Organization, Power and Authority of the Seller . . . . . . . . . . . . . . . . . . 16
4.2 Organization, Power, Authority and Assets and Properties of Holco . . . . . . . . . 16
4.3 Capital Stock of the Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.4 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.5 Status and Effect of Delivery of the Shares . . . . . . . . . . . . . . . . . . . . 17
4.6 Financial Summaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.7 Liabilities of the Seller and the Companies . . . . . . . . . . . . . . . . . . . . 18
4.8 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.9 Real Estate of the Seller and the Companies . . . . . . . . . . . . . . . . . . . . 20
4.10 Good Title to the Purchased Assets . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.11 Licenses and Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.12 Proprietary Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.13 Adequacy of the Purchased Assets . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.14 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.15 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.16 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.17 Absence of Certain Acts or Events . . . . . . . . . . . . . . . . . . . . . . . . . 23
</TABLE>
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4.18 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.19 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.20 Employee Matters; Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.21 Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.22 Product Recalls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.23 Absence of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.24 Due Authorization; Binding Obligation . . . . . . . . . . . . . . . . . . . . . . . 29
4.24.A Intercompany Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.24.B Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.24.C Business Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.24.D Product Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.24.E Location of Inventory and Assets . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.24.F No Production of Asbestos-Containing Products . . . . . . . . . . . . . . . . . . . 30
4.24.G Final Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.25 Limitations on Seller's Representations and Warranties . . . . . . . . . . . . . . . 30
4.26 True and Complete Copies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
4.27 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
4.28 Rohn Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.0 Representations and Warranties of the Purchaser . . . . . . . . . . . . . . . . . . . . . . 31
5.1 Organization, Power and Authority of the Purchaser . . . . . . . . . . . . . . . . . 31
5.2 Due Authorization; Binding Obligation . . . . . . . . . . . . . . . . . . . . . . . 31
5.3 Purchase for Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.4 Investigation by Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.5 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.6 Financial Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.0 Additional Covenants of the Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.1 All Reasonable Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.1.A HSR Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.2 Conduct of Business Pending the Closing . . . . . . . . . . . . . . . . . . . . . . 32
6.3 Access to the Properties and Records of the Businesses . . . . . . . . . . . . . . . 34
6.4 No Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.5 Bulk Sales Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.6 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.7 Employee Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.8 Obligation to Notify . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.9 Use of UNR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.10 Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.0 Conditions to the Obligation of the Purchaser . . . . . . . . . . . . . . . . . . . . . . . 40
7.1 Accuracy of the Seller's Representations and Warranties and Compliance
by the Seller with Its Obligations . . . . . . . . . . . . . . . . . . . . . 40
7.2 Certified Resolutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
</TABLE>
ii
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7.3 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.4 Receipt of Necessary Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.5 Title Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
7.6 No Adverse Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
7.7 No Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
8.0 Conditions to Obligations of the Seller . . . . . . . . . . . . . . . . . . . . . . . . . . 41
8.1 Accuracy of Representations and Warranties and Compliance with Obligations . . . . . 41
8.2 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
8.3 Certified Resolutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.4 No Adverse Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.5 HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
9.0 Certain Actions After the Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
9.1 Purchaser to Act as Agent for Seller . . . . . . . . . . . . . . . . . . . . . . . . 42
9.2 Purchaser Appointed Attorney for Seller . . . . . . . . . . . . . . . . . . . . . . 42
10.0 Product Warranty and Liability Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
10.1 Product Warranty and Liability Claims; Cooperation in Litigation . . . . . . . . . . 42
11.0 Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
11.1 Brokers' Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
11.2 Amendment and Modification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
11.3 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
11.3.A Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
11.4 Binding Effect; Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
11.5 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
11.6 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
11.7 Execution in Counterpart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
11.8 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
11.9 Governing Law; Consent to Jurisdiction; Waiver of Jury Right . . . . . . . . . . . . 47
11.10 Limitation on Rights of Other Persons . . . . . . . . . . . . . . . . . . . . . . . 47
11.11 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
11.12 Termination of Representations, Warranties and Agreements . . . . . . . . . . . . . 48
11.13 Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
12.0 Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . 48
12.1 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
12.2 Pursuit of Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
13.0 Indemnification and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
13.1 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
13.2 Indemnification Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
</TABLE>
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13.3 Certain Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
13.4 Claims Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
13.5 Tax Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
14.0 Exclusive Dealing and Termination Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
14.1 Exclusive Dealing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
14.2 Termination Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
15.0 Post-Closing Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
15.1 Seller Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
15.2 Purchaser Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
15.3 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
15.4 Section 338 Election . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
</TABLE>
iv
EXHIBITS
Exhibit A - Opinion of Seller's General Counsel (Section 7.3)
Exhibit B - Opinion of Purchaser's Counsel (Section 8.2)
Exhibit C - Non-Competition Agreement (Section 3.2.4.B)
Exhibit D - Supply Agreement (Section 3.2.4.B)
v
SCHEDULES
Schedule 1.2.6 Purchased Contracts
Schedule 1.2.8 Purchased Proprietary Rights and Proprietary Rights
of the Companies
Schedule 2.2 Allocation of Purchase Price
Schedule 3.4 Example of Net Assets Calculation
Schedule 3.5 C.O.D. Customers
Schedule 4.3 Capital Stock of the Companies
Schedule 4.6 Financial Summaries
Schedule 4.9 Real Estate
Schedule 4.10 Mortgages, Liens and Other Encumbrances
Schedule 4.11 Licenses and Permits
Schedule 4.15 Litigation and Claims
Schedule 4.17 Absence of Certain Acts or Events
Schedule 4.18 Compliance with Laws
Schedule 4.19 Environmental Matters
Schedule 4.20 Employee Matters; Labor Relations
Schedule 4.21 Employee Benefits
Schedule 4.24.E Location of Inventory and Assets
Schedule 4.25 Individuals with Knowledge
Schedule 6.7.1 Schedule of Salaried Employees
Schedule 6.7.2 Benefits Plans for Continued Employees
Schedule 6.7.7 Collective Bargaining Agreements
vi
SALE AND PURCHASE AGREEMENT
This Sale and Purchase Agreement (the "Agreement") is made and entered
into this 15th day of May, 1996 by and among the following parties: UNR
Industries, Inc., a Delaware corporation ("UNR"), Leavitt Structural Tubing
Co., a Delaware corporation ("Leavitt Structural"), and Chase Brass Industries,
Inc., a Delaware corporation (the "Purchaser"). Unless the context otherwise
requires, UNR and Leavitt Structural herein shall be referred to collectively
as the "Seller."
RECITALS
Seller desires to sell, convey, transfer and assign to the Purchaser,
and the Purchaser desires to purchase from Seller, the assets, properties and
business of the Leavitt division of UNR, including substantially all of the
assets and properties of Leavitt Structural and all of the issued and
outstanding shares of capital stock of Holco Corporation, an Illinois
corporation and a wholly-owned subsidiary of Leavitt Structural ("Holco;" Holco
and Leavitt Structural are herein sometimes referred to collectively as the
"Companies"), for a purchase price consisting of cash and the assumption by the
Purchaser of certain liabilities of the Seller, all as herein provided and on
the terms and conditions hereinafter set forth. The assets, properties and
businesses of the Leavitt division and Leavitt Structural and Holco are herein
sometimes referred to collectively as the "Businesses."
COVENANTS
In consideration of the mutual representations, warranties and
covenants and subject to the conditions herein contained, the parties hereto
agree as follows:
1.0 PURCHASE AND SALE OF SHARES AND ASSETS
1.1 THE SHARES. Leavitt Structural agrees to and will sell,
transfer, assign and deliver to the Purchaser at the Closing, free and clear of
all liens, pledges, encumbrances, claims and equitable interests of every kind,
and the Purchaser agrees to and will purchase and accept from Leavitt
Structural, on the terms and subject to the conditions set forth in this
Agreement, all of the issued and outstanding shares of capital stock of Holco
(the "Shares").
1.2 PURCHASED ASSETS. The Seller agrees to and will sell, convey,
transfer, assign and deliver to the Purchaser at the Closing (as hereinafter
defined), free and clear of all liens, mortgages, pledges, encumbrances and
charges of every kind (except liens incident to the liabilities and obligations
which the Purchaser has expressly agreed in Section 2.3 hereof to assume), on
the terms and subject to the conditions set forth in this Agreement, all of the
properties, business and assets of the Businesses of every kind and
description, real, personal and mixed, tangible and intangible, wherever
located (except those assets of the Businesses which are specifically excluded
from this sale by Section 1.3 hereof and those which are already owned by
Holco) as they shall exist at the Closing Date (as hereinafter defined)
(collectively, the "Purchased Assets"). Without limiting the generality of the
foregoing, the Purchased Assets shall include the following:
1.2.1 all right, title and interest of the Seller and UNR
Realty, Inc., an Illinois corporation ("UNR Realty"), in and to the
real property described in Schedule 4.9 hereto, including the real
property, buildings, facilities and other improvements thereon, and
all easements, rights of way and other appurtenances thereto (the
"Purchased Real Estate");
1.2.2 all of the interests of and the rights and benefits
accruing to the Seller as lessee of the real properties (the
"Purchased Leasehold Premises") identified on Schedule 4.9 hereto (the
"Purchased Leasehold Rights");
1.2.3 all machinery, vehicles, equipment, tools, spare parts,
construction in progress, computer equipment and computer programs,
furniture and fixtures and other material fixed assets owned by the
Seller and located on the Purchased Real Estate, the Purchased
Leasehold Premises or elsewhere, that are used primarily in the
Businesses (the "Purchased Fixed Assets");
1.2.4 all inventories of the Seller relating to the
Businesses as of March 31, 1996 as are included in the March 1996
Statement constituting a part of Schedule 4.6 hereto, less such items
of inventory as are consumed or sold, plus such items as are added to
inventory, in the ordinary course of business between March 31, 1996
and the Closing (the "Purchased Inventory");
1.2.5 all receivables of the Seller (other than intercompany
receivables) relating to the Businesses arising from sales of
inventory in the ordinary course of business as of March 31, 1996 as
are included in the March 1996 Statement constituting a part of
Schedule 4.6 hereto, less such receivables as are paid, plus such
receivables as are created, in the ordinary course of business between
March 31, 1996 and the Closing (the "Purchased Receivables");
1.2.6 all of the rights and benefits accruing to the Seller
under or pursuant to the receivables, contracts, agreements,
arrangements, commitments, open purchase orders for capital equipment
and blanket purchase orders identified in Schedule 1.2.6 (the
"Purchased Contracts");
1.2.7 all operating data and records of the Seller related to
the Businesses, including customer lists, financial, accounting and
credit records, correspondence, budgets and other similar documents
and records (the "Purchased Records");
1.2.8 except as provided in Section 1.3.3, all of the
proprietary rights of Seller relating to the Businesses, including
without limitation, all patents, patent applications, patent licenses,
trademarks, trade names and registrations and applications therefor,
trade secrets, technology, know-how, formulae, designs and drawings,
computer software, slogans, copyrights, processes and other similar
intangible property and rights relating to the Businesses, as set
forth on Schedule 1.2.8 (the "Purchased Proprietary Rights");
2
1.2.9 all prepaid and deferred items of the Seller existing
on the Closing Date with respect to the Businesses, including prepaid
rentals, taxes and unbilled charges and deposits relating to the
operations of the Businesses;
1.2.10 all of Seller's right, title and interest in and to
the goodwill of the Seller relating to the Businesses; and
1.2.11 all of Leavitt Structural's rights under and pursuant
to that certain Stock Purchase Agreement dated as of March 31, 1991,
among Leavitt Structural, Hoogovens Groep B.V. and Holco.
To the extent any affiliate of Seller (other than Holco) holds any
interest in or to any Purchased Assets or any other properties or assets used
primarily in the operation of the Businesses, Seller will cause such affiliate
to sell, convey, transfer, assign and deliver to the Purchaser at the Closing,
free and clear of all liens, mortgages, pledges, encumbrances and charges of
every kind (except liens incident to the liabilities and obligations which the
Purchaser has expressly agreed in Section 2.3 hereof to assume), without any
consideration except as provided in this Agreement, all of such assets and
properties to the same extent and on the same terms and conditions as if such
assets and properties were held by Seller as of Closing.
1.3 EXCLUDED ASSETS. Notwithstanding Section 1.1, the Seller is
not selling or assigning to Purchaser, and the Purchased Assets shall not
include, any of the following (collectively, the "Excluded Assets"):
1.3.1 the Cash Consideration and Seller's other rights under
this Agreement;
1.3.2 cash and cash equivalents of the Seller relating to the
Businesses and any intercompany account payable to Seller or Holco or
any affiliate (as defined in Section 11.13);
1.3.3 trademarks, trade names, service marks and symbols
denoting or connoting UNR, including without limitation, UNR
Industries, Inc. and UNR;
1.3.4 subject to Section 6.3.3, any document containing
information about the Businesses which is combined or consolidated
with other information of Seller and any documents prepared by Seller
for the purpose of informing its management about the sale of the
Businesses or the Purchased Assets;
1.3.5 any interest of the Businesses in the Chicago Bulls
Tickets, Section 112, Row 3, Seats 5, 6, 7 and 8 (the "Chicago Bulls
Tickets"); and
1.3.6 all privileged communications, oral or written, between
Seller's officers, directors or employees and Seller's attorneys (both
inside and outside counsel), on any subject whatsoever regarding any
of the Businesses. If any documents are inadvertently transferred to
Purchaser which contain such
3
privileged communications or attorney work product, Purchaser shall
immediately return such documents to the Seller upon discovery and
such inadvertent disclosure shall not be deemed to be a waiver of the
attorney-client privilege or work product doctrine.
2.0 PURCHASE PRICE
2.1 AMOUNT OF THE PURCHASE PRICE. As consideration for the Shares
and Purchased Assets (the "Purchase Price"), the Purchaser agrees, subject to
the terms, conditions and limitations set forth in this Agreement:
2.1.1 to pay to or for the account of the Seller, in the
manner specified in Section 3.2.5 hereof, $95,000,000.00 (the "Cash
Consideration"), subject to payment of the Discharge Obligations on
the Closing Date as provided in Section 3.2.6 hereof and subject to
adjustment as provided in Section 3.4 hereof; and
2.1.2 to assume and be responsible for the liabilities and
obligations of the Seller, to the extent provided in Section 2.3
hereof.
2.2 ALLOCATION OF THE PURCHASE PRICE AMONG THE SHARES AND
PURCHASED ASSETS. The Purchase Price shall be allocated among the Shares and
each item or class of the Purchased Assets as agreed by the parties hereto and
as specifically set forth in or determined pursuant to Schedule 2.2. The
Seller and the Purchaser agree that they will prepare and file their respective
federal and any state or local income tax returns based on such allocation of
the Purchase Price. The Seller and the Purchaser agree that they will prepare
and file any notices or other filings required pursuant to Section 1060 of the
Internal Revenue Code of 1986, as amended (the "Code") and that any such
notices or filings will be prepared based on such allocation of the Purchase
Price.
2.3 ASSUMED LIABILITIES. The Purchaser agrees to and will at the
Closing assume and agree to pay, discharge and perform when lawfully due the
following liabilities, contracts, commitments and other obligations of the
Seller relating to the Businesses and the Purchased Assets (the "Assumed
Liabilities"):
2.3.1 all liabilities and obligations of Seller to the extent
accrued on the Closing Statement prepared in accordance with Section
3.4 of this Agreement, subject to the payment of the Discharge
Obligations on the Closing Date as provided in Section 3.2.6 hereof;
2.3.2 all liabilities and obligations of Seller accruing
under or pursuant to the Purchased Contracts identified in Part II of
Schedule 1.2.6 hereto which are assigned to Purchaser on the Closing
Date and that either are accrued on the Closing Statement or relate to
any period or occurrence on or after the Closing Date;
4
2.3.3 all liabilities and obligations of Seller, in respect
of periods on or after the Closing Date, arising under or pursuant to
those contracts to which Seller is a party as of the Closing and that
(a) are not disclosed in Part II of Schedule 1.2.6 hereto, (b) were
entered into by Seller in the ordinary course of operations of the
Businesses on terms and conditions consistent with the past practices
of the Businesses and (c) are assigned to Purchaser pursuant to this
Agreement on the Closing Date;
2.3.4 all liabilities and obligations of Seller, in respect
of periods on or after the Closing Date, accruing under or pursuant to
all purchase orders that (a) were entered into before the Closing by
Seller for the purchase by Seller of equipment or raw material to be
used, or services to be performed, in the operations of the Businesses
and (b) were entered into in the ordinary course of operations of the
Businesses on terms and conditions consistent with past practices of
the Businesses, including without limitation those purchase orders
listed in Parts III and IV of Section 1.2.6 hereto, to the extent the
assets or services to be provided pursuant to such purchase orders
have not been delivered or provided to Seller (or Holco) prior to the
Closing or, in the event such assets or services have been so
delivered or provided, to the extent the liability under such purchase
orders related to such assets or services is accrued on the Closing
Statement;
2.3.5 all liabilities and obligations of Seller, in respect
of periods on or after the Closing Date, to be performed under or
pursuant to the Madison County Leases (as hereinafter defined) listed
in Part II of Schedule 4.9 hereto relating to the Purchased Leasehold
Premises;
2.3.6 all liabilities and obligations of Seller accruing
under or pursuant to each Non-Assignable Purchased Contract from and
after the date on which all consents required for the transfer and
assignment of such Non-Assignable Purchased Contract have been
obtained and delivered to Purchaser as contemplated by Section 3.6.1
hereto;
2.3.7 solely to the extent expressly provided in Section
6.7.6 of this Agreement, all liabilities and obligations of Seller
under the Change of Control Agreements listed in Part I of Schedule
4.20 hereto;
2.3.8 all liabilities and obligations of Seller accruing
under the collective bargaining agreements listed on Schedule 6.7.7 of
this Agreement to the extent relating to (i) any periods on or after
the Closing Date and (ii)(a) accumulated benefit obligations under the
employee benefit plans listed in Part II of Schedule 6.7.2 hereto as
determined under SFAS 87 in excess of the fair market value of the
assets of each such plan ("Unfunded Pension Plan Obligations") as of
the Closing Date, determined in accordance with generally accepted
actuarial assumptions applied in a manner consistent with the
determination of the
5
Unfunded Pension Plan Obligations as of December 31, 1995, and as
reasonably agreed to by Purchaser (or, if such determination as of
December 31, 1995, was not made with respect to any such plan, in a
manner as reasonably agreed to by Seller and Purchaser) and (b) all
other amounts (including contributions), relating to periods prior to
the Closing Date, with respect to pension, profit sharing, health and
welfare and other benefit plans required by such collective bargaining
agreements to be provided for the benefit of employees of the
Businesses ("Other Unpaid Benefit Obligations"), but in each of cases
(a) and (b) only to the extent an accrual therefor is included in the
Closing Statement; and
2.3.9 all monetary liabilities of Seller (other than for
borrowed money) related to the Businesses and arising in the ordinary
course of operations of the Businesses, but excluding any amounts
payable by Seller or Holco to any affiliate of Seller ("Residual
Liability"); provided, however, that the aggregate monetary liability
assumed by Purchaser under this Section 2.3.9 shall not exceed the
Residual Liability Cap (as hereinafter defined). For purposes of this
Section 2.3.9, the term "Residual Liability Cap" shall mean an amount
that, from time to time, will be equal to (i) $250,000, reduced by
(ii) any and all amounts that Purchaser is entitled pursuant to
Section 13.4.1 of this Agreement to apply toward the Deductible (as
hereinafter defined). Any and all reductions of the Residual Liability
Cap pursuant to this Section 2.3.9 will be deemed to occur
simultaneously with Purchaser becoming entitled, pursuant to Section
13.4.1 of this Agreement, to apply an amount towards the Deductible.
Notwithstanding the foregoing, Purchaser shall not assume any
liability of Seller arising as a result of any breach or any event, occurrence,
condition or act which, with the giving of notice, the lapse of time or both,
would result in a breach of any of the Purchased Contracts or other contracts
or agreements assigned to Purchaser pursuant to this Agreement to the extent
such breach, event, occurrence, condition or act existed prior to the Closing
Date.
The Assumed Liabilities as provided in this Section 2.3 shall be
subject to such exclusions as set forth in Section 2.4 hereof and, except as
expressly set forth in this Section 2.3, Purchaser shall not assume or be
deemed to have assumed any liabilities or obligations of Seller.
2.4 EXCLUDED LIABILITIES. Anything to the contrary in Section 2.3
notwithstanding, the Assumed Liabilities shall exclude the following
liabilities, contracts, commitments and other obligations of the Seller (the
"Excluded Liabilities"):
2.4.1 Seller's obligations and any liabilities arising under
this Agreement;
2.4.2 any obligation of the Seller for federal, state, local
or foreign income or franchise tax liability (including interest and
penalties) of the Seller, Leavitt Structural or Holco arising from the
operation of the Businesses up to the Closing Date or arising out of
the sale by the Seller of the Shares and Purchased Assets pursuant
hereto;
6
2.4.3 any obligation imposed by law on the Seller for any
transfer, sales or other taxes, fees or levies imposed by any state or
other governmental entity on or arising out of the sale of the Shares
and Purchased Assets pursuant hereto;
2.4.4 any obligation of the Seller for expenses incurred in
connection with the sale of the Shares and Purchased Assets pursuant
hereto, including without limitation the fees and expenses of its
counsel and independent auditors and one-half of the cost of title
insurance on the Purchased Real Estate;
2.4.5 any liability, contract, commitment or other obligation
of Seller, the existence of which constitutes or will constitute a
breach of any representation or warranty of Seller contained in or
made pursuant to Article 4.0 of this Agreement;
2.4.6 any liability or obligation arising as a result of any
violation of law or a breach of agreement by Seller, any affiliate of
Seller or any shareholder, officer, or director of Seller or any
affiliate of Seller (collectively, the "Seller Group") prior to
Closing;
2.4.7 any monetary damages (including, without limitation
direct, incidental, and consequential damages) or other liabilities,
obligations, losses or expenses (including, without limitation,
punitive, treble, and exemplary damages) for any personal injury,
product liability or tort to the extent arising as a result of the
acts or omissions of any member of the Seller Group prior to Closing;
2.4.8 any debt, liability or obligation arising from the
operations of any division or business of UNR other than the
Businesses, including without limitation debts or accounts owed by
divisions of UNR other than the Businesses for products purchased by
such other divisions from the Businesses;
2.4.9 any liability or obligation for or relating to workers
compensation or similar claims asserted by employees of Seller,
Leavitt Structural or Holco to the extent relating to any event
occurring prior to the Closing Date;
2.4.10 any liability or obligation under any Purchased
Contract or other contract or agreement assigned to Purchaser pursuant
to this Agreement to the extent relating to the business or a division
of UNR other than the Businesses;
2.4.11 any liability or obligation of UNR or UNR's
predecessors or affiliates, or the UNR Asbestos-Disease Claims Trust,
on account of claims or demands that were discharged, or with respect
to which the disposition or satisfaction thereof is expressly provided
for, pursuant to the case under Chapter 11 of the Federal Bankruptcy
Code styled UNR Industries., Inc., et al., Case No. 82-B-9841-9845
(the "Chapter 11 Case"), including without limitation claims and
demands that are subject to the injunction issued on or about June 1,
1989, in the Chapter 11 Case;
7
2.4.12 any liability of UNR for payments due employees of the
Businesses under the UNR Industries, Inc. Key Management Incentive
Variable Compensation Plan through the Closing Date (and no amounts
therefor shall be included in the Closing Statement); and
2.4.13 any obligation or liability of Seller under or
pursuant to either of (i) the Driver Leasing Agreement dated June 5,
1995, between UNR-Leavitt Division of UNR Industries, Inc., and P.T.O.
Service, Inc. and (ii) the Settlement Agreement between the Trustees
of the Chicago Truck Drivers, Helpers and Warehouse Workers Union
(Independent) Pension Fund and UNR-Leavitt Division of UNR Industries,
Inc. executed by such parties as of June 19, 1995, and June 15, 1995,
respectively (collectively, the "PTO Agreements").
3.0 CLOSING
3.1 TIME AND PLACE OF THE CLOSING. The closing of the sale of the
Purchased Assets shall take place at Bell, Boyd & Lloyd, Three First National
Plaza, Room 3300, Chicago, Illinois at 10:00 A.M., local time, on July 1, 1996;
provided, however, that if any of the conditions to the obligations of the
parties under this Agreement has not been satisfied (or waived) by said date,
then the closing shall take place on a subsequent date, which shall be
determined by the mutual agreement of the Purchaser and the Seller (unless this
Agreement is earlier terminated pursuant to Section 11.3 hereof). Throughout
this Agreement, such event is referred to as the "Closing" and such date and
time are referred to as the "Closing Date."
3.2 PROCEDURE AT THE CLOSING. At the Closing, the parties agree
to take the following steps in the order listed below (provided, however, that
upon their completion all such steps shall be deemed to have occurred
simultaneously):
3.2.1 The Seller shall deliver to the Purchaser evidence, in
such form as in each case is reasonably satisfactory to the Purchaser,
that each of the conditions to the obligation of the Purchaser to
purchase the Shares and Purchased Assets from the Seller which is set
forth in this Agreement has been satisfied.
3.2.2 The Purchaser shall deliver to the Seller evidence, in
such form as in each case is reasonably satisfactory to the Seller,
that each of the conditions to the obligation of the Seller to sell
the Shares and Purchased Assets to the Purchaser which is set forth in
this Agreement has been satisfied.
3.2.3 Leavitt Structural shall deliver to the Purchaser duly
executed certificates in valid form evidencing the Shares owned by
Leavitt Structural, legended to refer to the fact that the Shares have
not been registered under the Securities Act of 1933 or the securities
or "blue sky" laws of any state, duly endorsed in blank or accompanied
by duly executed stock powers.
8
3.2.4 The Seller shall deliver to the Purchaser such deeds,
bills of sale, endorsements, assignments and other instruments, in
such form as in each case is reasonably satisfactory to the Purchaser,
as shall be sufficient to vest in the Purchaser good and marketable
title to the Purchased Assets, free and clear of all liens, mortgages,
pledges, encumbrances, and charges of every kind (except liens
incident to the liabilities and obligations which the Purchaser has
expressly agreed in Section 2.3 hereof to assume and are not released
pursuant to Section 3.2.6 below, liens for taxes not yet due and
payable and liens or encumbrances as are not substantial in character,
amount or extent and do not materially detract from the value, or
interfere with the present use of, any of the Purchased Assets or
otherwise impair the operations of the Businesses in any material
respect).
3.2.4.A Seller shall deliver to Purchaser (i) a duly executed
estoppel certificate from the Industrial Development Authority of
Madison County, Mississippi ("Landlord"), in form and substance
reasonably acceptable to Purchaser with respect to the Lease Agreement
dated August 29, 1985, between Landlord and "UNR-Leavitt, Division of
UNR Industries, Inc.," and the Lease Agreement dated October 14, 1988,
between Landlord and "UNR-Leavitt, Division of UNR Industries, Inc.,"
in each case concerning certain real property located in Madison
County, Mississippi (collectively, the "Madison County Leases"), and
(ii) a consent to assignment duly executed by Landlord, in form and
substance reasonably acceptable to Purchaser, consenting to the
assignment of each of the Madison County Leases to Purchaser (the
"Madison County Lease Consents").
3.2.4.B The Seller and the Purchaser shall duly execute and
deliver to each other a copy of the (a) Non-Competition Agreement in
the form attached hereto as Exhibit C and (b) a copy of the Supply
Agreement in the form attached hereto as Exhibit D.
3.2.4.C Leavitt Structural will deliver to Purchaser an
executed amendment to its Certificate of Incorporation that, upon
filing, will have the effect of changing Leavitt Structural's name to
a name that is not similar to Leavitt Structural's current name.
3.2.5 The Purchaser shall pay to the Seller the Cash
Consideration by delivering to the Seller by wire transfer the sum of
$95,000,000 minus any amount paid pursuant to Section 3.2.6.
3.2.6 The Purchaser shall, on behalf and for the account of
the Seller, pay to the payee of each loan or debt instrument listed on
Schedule 4.10 or otherwise reflected in the March 1996 Statement
included in Schedule 4.6 hereto as "Long-Term Liabilities" and
"Current Portion of Long-Term Liabilities" (but excluding capital
leases in each case) (the "Outstanding Debt"), by such means as is in
each case satisfactory to such holder, an amount sufficient to fully
pay and discharge
9
such item of the total principal amount outstanding under such item of
Outstanding Debt together with accrued interest thereon through the
Closing Date and all prepayment penalties arising as a result of the
payment of such Outstanding Debt on the Closing Date (the "Discharge
Obligations"), and the Seller shall obtain and deliver copies to the
Purchaser of (i) such receipts or other appropriate evidence of
payment of such Discharge Obligations and (ii) such releases of liens
and encumbrances releasing all liens and encumbrances affecting the
Purchased Assets to the extent such liens and encumbrances were
granted to secure payment of such items of Outstanding Debt paid and
discharged pursuant to this Section 3.2.6 (including without
limitation those liens and encumbrances listed on Schedule 4.10
hereto), in each case as the Purchaser shall reasonably request.
3.2.7 The Purchaser shall deliver to the Seller instruments,
in such form as in each case is satisfactory to the Seller, as shall
be sufficient to effect the assumption by Purchaser of the Assumed
Liabilities.
3.2.7.A All intercompany receivables and payables between or
among Holco and any affiliate of Holco shall be cancelled with no
further liability of any party with respect thereto.
3.2.8 The Purchaser and the Seller shall execute and deliver
a cross receipt acknowledging receipt from the other, respectively, of
the Shares and Purchased Assets and the Purchase Price.
3.3 EFFECTIVE TIME. The transfer of the Purchased Assets shall be
deemed to occur at 12:01 A.M. Chicago, Illinois time on the Closing Date (the
"Effective Time"). All of the transactions described in this Article 3.0 shall
be deemed to occur simultaneously, and none shall be deemed completed until all
are completed.
3.4 ADJUSTMENT OF PURCHASE PRICE.
3.4.1 PREPARATION OF CLOSING STATEMENT. Purchaser shall
prepare and deliver to UNR, as promptly as reasonably practicable but
in any event within 90 days after the Closing Date (i) a balance sheet
prepared as of the Effective Time (the "Closing Statement") reflecting
the current assets and liabilities, property, plant, equipment and
fixed and other assets, other liabilities and owner's equity for the
Businesses as determined on a basis consistent with the March 1996
Statement included in Schedule 4.6 hereto and (ii) Purchaser's
calculation of the total assets of the Businesses less the liabilities
and capital leases of the Businesses being assumed by Purchaser, as
reflected in the Closing Statement (the "Closing Net Assets"). See
Schedule 3.4 hereto for an example of the calculation of "Net Assets"
as of March 31, 1996, as reflected in Section 3.4.4 hereto.
10
Notwithstanding the foregoing, in preparing the Closing
Statement (1) the current assets shall not include any cash, cash
equivalents or other Excluded Assets, (2) a physical inventory of the
Businesses shall be taken as of the Effective Time (which Purchaser
shall afford the Seller the opportunity to observe) and shall be
accounted for on the lower of cost or market method with cost, for
such purposes, determined on a first-in first-out basis, (3) no
Excluded Liability or other liabilities for which Seller is retaining
responsibility after the Closing shall be included in the amounts
reflected on the Closing Statement, (4) no prepaid item shall be
included in the amounts shown for current assets unless such item will
be usable in the Businesses after the Closing, (5) the Closing
Statement shall include accruals for (a) liabilities for Unfunded
Pension Plan Obligations as of the Closing Date determined as provided
in Section 2.3.8(ii), (b) accrued vacation for Continued Employees,
(c) sales and product rebates and discounts earned or granted but not
paid as of the Closing Date, (d) doubtful accounts receivable and
unearned sales claims taken by customers of the Businesses (to the
extent included as an asset in the Closing Statement), determined in a
manner consistent with historical practices of the Businesses, (e)
returned shipments in transit as of the Closing Date, and (f) Other
Unpaid Benefit Obligations as of the Closing Date, and (6) the Closing
Statement shall not include (a) any accruals for Discharge Obligations
or (b) any intercompany accounts payable or receivable among Seller or
any affiliate of Seller.
3.4.2 UNR REVIEW OF CLOSING STATEMENT. If UNR disagrees with
the calculation of the Closing Net Assets as reflected on the Closing
Statement, UNR may, within 30 days after delivery of the Closing
Statement, deliver a notice to Purchaser (a "Disagreement Notice"),
setting forth its calculation of the Closing Net Assets and
specifying, in reasonable detail, those items or amounts as to which
UNR disagrees, the reasons for such disagreement, and UNR's
calculation of each disputed item in sufficient detail to permit
Purchaser to verify same. UNR shall be deemed to have agreed with all
items and amounts contained in the Closing Statement other than those
specified in such Disagreement Notice. If UNR agrees with Purchaser's
calculation of the Closing Net Assets as reflected in the Closing
Statement, or if UNR fails to deliver to Purchaser a Disagreement
Notice within such 30 day period, the Closing Statement and
Purchaser's calculation of Closing Net Assets will be deemed final.
3.4.3 DISPUTE RESOLUTION. If a Disagreement Notice is
delivered pursuant to Section 3.4.2 hereof, the parties hereto shall,
during the 20 days following such delivery, use good faith efforts to
reach agreement on the disputed items or amounts in order to determine
the final Closing Net Assets. If UNR and Purchaser are unable to reach
such agreement during such 20 day period, they thereafter shall cause
the Chicago, Illinois, office of Price Waterhouse (or, if Price
Waterhouse fails to serve, some other independent accountants of
nationally recognized standing reasonably satisfactory to UNR and
Purchaser and who shall not have any material relationship with UNR or
Purchaser) (the "Independent
11
Accountants") promptly to review this Agreement and the disputed items
and amounts for the purpose of calculating the definitive amount of the
Closing Net Assets. In making such calculation, the Independent
Accountants shall consider only those items or amounts in the Closing
Statement as to which UNR has disagreed and, in their sole discretion,
will determine (i) the nature and extent of the participation by
Purchaser, UNR, and their agents in connection with the resolution of
any disagreement submitted to the Independent Accountants, (ii) the
nature and extent of information that Purchaser and UNR may submit to
the Independent Accountants for consideration in connection with such
resolution, and (iii) the personnel of the Independent Accountants who
will review such information and resolve such disagreement. The
Independent Accountants who make the final determination hereunder
shall deliver to UNR and Purchaser, as promptly as practicable, a
written report setting forth their determination of the disputed items
and amounts. Such report shall be final, conclusive and binding upon
the parties hereto. For purposes of Section 3.4.4 hereof, the "Closing
Statement" shall mean the Closing Statement prepared by Purchaser, as
modified or changed by any agreement of the parties hereto and by any
determinations of any firms of independent accountants made as provided
in this Section 3.4.3. The costs and expenses of the Independent
Accountants shall be borne equally by UNR and Purchaser.
3.4.4 ADJUSTMENT PAYMENTS. Within five business days after
the earlier to occur of (i) the parties' agreement with respect to the
Closing Net Assets or (ii) the delivery of the report of the
Independent Accountants as provided in Section 3.4.3 hereof, Purchaser
shall pay to UNR or UNR shall pay to Purchaser, as applicable, the
following amounts in cash (including interest thereon computed in the
manner set forth below):
(1) If the amount of the Closing Net Assets
exceeds $62,779,434, Purchaser shall pay to
UNR an amount equal to such excess;
(2) If the amount of the Closing Net Assets is
equal to $62,779,434, no payments shall be
required by Purchaser or UNR; or
(3) If the amount of the Closing Net Assets is
less than $62,779,434, UNR shall pay to
Purchaser an amount equal to such deficiency.
In the event that any payment is required to be made under this
Section 3.4.4, the amount of the payment shall include interest
computed at the Prime Rate (as hereinafter defined) as in effect on
the first day of each month, from the Closing Date to the date the
payment is made. The "Prime Rate" shall mean the predominant of the
base rates as announced from time to time by money center
12
banks for loans in New York, New York. Any payment made under this
Section 3.4.4 shall be deemed an adjustment in the Purchase Price and
shall be consistently treated by the parties hereto for federal income
tax purposes. Any payment required to be made pursuant to this
Section 3.4.4 will be made by wire transfer of immediately available
funds into such accounts as the party entitled to receive such payment
specifies in writing to the party required to make such payment.
3.4.5 ACCESS TO RECORDS. From the Closing Date until the
final determination of the adjustment payment, each party and its
independent accountants and other representatives will have such
access to the books, records and files of the Businesses as may
reasonably be required to prepare, audit, review and otherwise verify
the accuracy of the Closing Statement and its preparation in
accordance with this Section 3.4.
3.5 ACCOUNTS RECEIVABLE ADJUSTMENT.
3.5.1 PREPARATION OF RECEIVABLE STATEMENT. Purchaser shall
prepare and deliver to Seller within 195 days after the Closing Date a
statement (the "Receivable Statement") setting forth (i) the name of
the obligor and the amount of each Actual Uncollected Receivable (as
hereinafter defined) and (ii) the aggregate amount of all of the
Actual Uncollected Receivables. For purposes of this Agreement,
"Actual Uncollected Receivable" shall mean each account receivable and
sales claim that was included in the Closing Statement to the extent
that such receivable or claim was not collected by Purchaser on or
before 180 days after the Closing Date. In determining whether a
particular customer has paid a receivable included in the Closing
Statement, all post-Closing Date payments from customers who are not
"C.O.D. Customers" (as hereinafter defined) shall be applied to
receivables from such customer included in the Closing Statement
(regardless of any instructions to the contrary by the customer) until
the receivables for such customer included in the Closing Statement
have been paid in full, and all post-Closing Date C.O.D. payments
from C.O.D. Customers shall be applied to post-Closing Date
receivables and any excess amounts shall be applied as instructed by
the customer. For purposes of this Section 3.5, (i) "C.O.D. Customers"
shall mean (a) the customers of the Businesses listed on Schedule 3.5
attached hereto, (b) any additional customers that the Businesses ship
to on a "C.O.D. Basis" (as hereinafter defined) on or before the
Closing Date, and (c) any additional customers added to such schedule
at and as of the Closing Date that are reasonably acceptable to
Purchaser and Seller and (ii) "C.O.D. Basis" shall mean any method
pursuant to which a customer of the Businesses delivers to the
Businesses cash or other assets at or prior to the time of delivery of
finished goods manufactured by the Businesses as full payment or
partial payment of 50% or more of the Purchase Price of such goods.
13
3.5.2 UNR REVIEW OF RECEIVABLE STATEMENT AND DISPUTE
RESOLUTION. If UNR disagrees with the amount of the Actual
Uncollected Receivables as reflected on the Receivable Statement, UNR
may, within 10 days after delivery of the Receivable Statement,
deliver a notice to Purchaser (a "Receivable Disagreement Notice"),
setting forth UNR's calculation of the Uncollected Receivables and
specifying, in reasonable detail, those items or amounts as to which
UNR disagrees and the reasons for such disagreement. UNR shall be
deemed to have agreed with all items and amounts contained in the
Receivable Statement other than those specified in such Receivable
Disagreement Notice. If a Receivable Disagreement Notice is delivered
pursuant to this Section 3.5.2, UNR and Purchaser shall resolve the
dispute by following the procedures for resolution of disputes
concerning the Closing Assets set forth in Section 3.4 hereof. For
purposes of Section 3.5.3 hereof, the "Receivable Statement" shall
mean the Receivable Statement prepared by Purchaser, as modified or
changed by any agreement of the parties hereto and by any
determinations of any firms of independent accountants made as
provided in this Section 3.5.2.
3.5.3 RECEIVABLE ADJUSTMENT PAYMENTS. Based upon the
Receivable Statement, within five business days after the final
determination of the amount of the Actual Uncollected Receivables,
Purchaser shall pay to UNR or UNR shall pay to Purchaser, as
applicable, the following amounts in cash (including interest thereon
computed in the manner set forth below):
(1) If the aggregate amount of the Actual
Uncollected Receivables exceeds the amount of
the allowance for doubtful accounts included
in the Closing Statement (the "Receivable
Allowance"), UNR shall pay Purchaser an
amount equal to such excess;
(2) If the aggregate amount of the Actual
Uncollected Receivables is equal to the
amount of the Receivable Allowance, no
payment shall be made by either UNR or
Purchaser under this Section 3.5.3; or
(3) If the aggregate amount of the Actual
Uncollected Receivables is less than the
Receivable Allowance, Purchaser shall pay to
UNR an amount equal to such deficiency.
In the event that any payment is required to be made under this
Section 3.5.3, the amount of the payment shall include interest
computed at a rate of 12% per annum, from the 31st day after Closing
Date to the date the payment is made. Any
14
payment made under this Section 3.5.3 shall be deemed an adjustment in
the Purchase Price and shall be consistently treated by the parties
hereto for federal income tax purposes.
3.5.4 ASSIGNMENT OF COLLECTION RIGHTS. Promptly after the
determination of the Actual Uncollected Receivables and the receipt by
Purchaser of all payments from UNR required by Section 3.5.3 above,
Purchaser will assign to UNR all of Purchaser's rights to the Actual
Uncollected Receivables. Purchaser shall use all reasonable efforts
(as defined in Section 11.13) to make its employees available to UNR,
upon UNR's request, to assist UNR in the collection of the Actual
Uncollected Receivables; provided, that (i) Purchaser and its
employees shall have no obligation to assist UNR if such assistance
would interfere with the business or operation of the Businesses by
Purchaser or otherwise impose any unreasonable hardship on Purchaser
or its employees and (ii) UNR shall reimburse Purchaser and its
employees for any out-of-pocket expenses incurred by Purchaser or its
employees.
3.5.5 ACCESS TO RECORDS. From the Closing Date until the
final determination of the adjustment payment, each party and its
independent accountants and other representatives will have such
access to the books, records and files of the Businesses as may
reasonably be required to audit, review and otherwise satisfy
themselves of the accuracy of the Receivable Statement and its
preparation in accordance with this Section 3.5.
3.6 NON-ASSIGNABLE PURCHASED CONTRACTS.
3.6.1 In the case of any Purchased Contracts which are not
assignable or transferable, either by their terms or otherwise without
the prior consent of any third party thereto (such contracts being the
"Non-Assignable Purchased Contracts"), Seller shall use commercially
reasonable efforts to obtain, or cause to be obtained, prior to the
Closing Date, any written consents or waivers necessary to the
assignment of such Purchased Contract to Purchaser as contemplated by
this Agreement, and Purchaser shall cooperate with Seller, at no
additional cost to Purchaser, in such manner as may be reasonably
requested in connection therewith. In the event Seller shall be
unable to obtain any such consent or waiver to the assignment or
transfer of a Purchased Contract to Purchaser prior to the Closing (i)
Seller shall continue to use such commercially reasonable efforts
after the Closing, (ii) Seller shall provide to Purchaser, from and
after the Closing, at a cost to Purchaser no greater than the cost
Purchaser would have otherwise paid under the terms of such
Non-Assignable Purchased Contract (the "Contract Costs"), benefits
substantially equivalent to each such Non-Assignable Purchased
Contract, as fully as if such consent had been obtained, to the extent
Seller is reasonably capable of providing such benefits and (iii) at
Purchaser's option, Purchaser may procure such equivalent benefits
from third parties during the final 90 days of the current term of any
such Non-Assignable Purchased Contract (or at
15
any time within 90 days of the date on which the Non-Assignable
Purchased Contract which such equivalent benefits replace would have
by its terms terminated or entitled the other party thereto to
terminate or renegotiate the costs of such benefits) without any
further liability to Seller; provided, however, that (A) Purchaser
shall provide Seller prior written notice of procuring any such
equivalent benefits 30 days (or, if 30 days' notice is not
practicable, such notice, if any, which is practicable) prior to
obtaining such equivalent benefits pursuant to clause (iii) above, and
(B) in the event Purchaser procures equivalent benefits pursuant to
clause (iii), Seller shall be relieved of its obligations under this
Section 3.6.1 with respect to the Non-Assignable Purchased Contracts
with respect to which such equivalent benefits have been so procured
by Purchaser and may take any and all action available to Seller to
terminate its obligations under such Non-Assignable Purchased
Contracts.
3.6.2 Purchaser agrees to pay, or reimburse Seller for, 100%
of Seller's direct out-of-pocket cost, fees and expenses (excluding
attorneys' fees and fees and expenses of other professionals and
employees of Seller), actually incurred by Seller in fulfilling its
obligations to Purchaser under Section 3.6.1 (ii), provided, that the
amount of such costs, fees and expenses, shall not exceed the related
Contract Costs. Purchaser shall make such payments to Seller within 30
days after the Seller's submission of an itemized invoice therefor in
detail reasonably sufficient to Purchaser.
3.6.3 Notwithstanding the foregoing, the provisions of this
Section 3.6 shall not apply with respect to the Madison County Leases
or otherwise affect Seller's obligations under Section 3.2.4.A.
4.0 REPRESENTATIONS AND WARRANTIES OF THE SELLER
In order to induce the Purchaser to enter into this Agreement and to
consummate the transactions contemplated hereunder, UNR and Leavitt Structural,
jointly and severally, make the following representations and warranties (for
purposes of this Article 4.0, references to Purchased Assets and similar terms
shall include the assets of Holco except where the context otherwise requires):
4.1 ORGANIZATION, POWER AND AUTHORITY OF THE SELLER. Each of UNR
and Leavitt Structural is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation and has full
corporate power and authority (i) to own or lease the Purchased Assets being
transferred by it and to conduct its Business as now being conducted, (ii) to
enter into this Agreement and to sell, convey, transfer, assign and deliver the
Purchased Assets and the Shares being transferred by it to the Purchaser as
provided herein, and (iii) to carry out the other transactions and agreements
contemplated hereby.
4.2 ORGANIZATION, POWER, AUTHORITY AND ASSETS AND PROPERTIES OF
HOLCO. Holco is a corporation duly organized and legally existing in good
standing under the laws of its state of incorporation and has full corporate
power and authority and all licenses and permits necessary
16
to own or lease its properties and to carry on its business. Holco is
qualified to transact business as foreign corporations in each jurisdiction
where the failure to so qualify would have a material adverse effect (as
defined in Section 11.13).
4.3 CAPITAL STOCK OF THE COMPANIES. The authorized, issued and
outstanding capital stock of the Companies is as set forth in Schedule 4.3
hereto. All of such stock of Leavitt Structural is owned by UNR, and all of
such stock of Holco is owned by Leavitt Structural, all voting rights in the
Companies are vested exclusively in such stock, and all of such stock is
validly authorized and issued, fully paid and non-assessable. Except for this
Agreement, there are no outstanding warrants, options or rights of any kind to
acquire from UNR, Leavitt Structural or Holco any shares of capital stock or
securities of either of the Companies of any kind, and there are no voting
rights, voting trusts, proxies or other agreements or understandings affecting,
or any pre-emptive rights with respect to the issuance or sale of shares of
capital stock of, either of the Companies and neither of the Companies has any
obligation to acquire any of its issued and outstanding shares of capital stock
or any other security issued by it from any holder thereof. As of, and from
and after June 1, 1989, Leavitt Structural was and has been a direct or
indirect wholly-owned subsidiary of UNR.
4.4 SUBSIDIARIES. Except for Holco, neither of the Companies has
any subsidiary or any equity interest or the right or obligation to acquire an
equity interest in any other person or entity.
4.5 STATUS AND EFFECT OF DELIVERY OF THE SHARES. UNR is the
lawful owner of all of the capital stock of Leavitt Structural. Leavitt
Structural is the lawful owner of the Shares and has valid marketable title
thereto, free and clear of all liens, pledges, encumbrances, claims and
equitable interests of every kind, except that the Shares are pledged to secure
the repayment of indebtedness to the Bank of America Illinois under a Credit
Agreement dated April 5, 1991.
4.6 FINANCIAL SUMMARIES. Schedule 4.6 contains:
4.6.1 a statement of income and operating expenses of the
Businesses for each of the two years ended December 31, 1994 and 1995
("Statement of Operations");
4.6.2 a statement of assets and liabilities of the Businesses
as of December 31, 1994 and 1995 ("Year End Statement of Assets and
Liabilities");
4.6.3 a statement of assets and liabilities of the Businesses
as of March 31, 1996 (the "March 1996 Statement") (together with the
Year End Statement of Assets and Liabilities, the "Statement of Assets
and Liabilities").
The Statement of Operations and the Statement of Assets and Liabilities
(hereinafter sometimes referred to together as the "Financial Summaries") have
been prepared by UNR's management in accordance with UNR's accounting policies
and procedures, consistently applied, and are based on books and records of the
Seller relating to the Businesses which have been prepared on a consistent
basis, and have been derived from financial information included in the audited
17
consolidated financial statements of UNR, but such financial information has
not been audited by UNR's independent public accountants for the purpose of
expressing an opinion on the separate financial statements of the Businesses.
The Statement of Assets and Liabilities and the Statement of Operations in each
case are in accordance with accounting principles generally accepted for
divisional enterprises, which principles, with respect to the Statement of
Operations, were consistently applied for the periods to which the Statement of
Operations relate, and fairly present, as of their respective dates, the assets
and liabilities and the operations, respectively, of the Businesses.
4.7 LIABILITIES OF THE SELLER AND THE COMPANIES. The Seller and
the Companies have no liabilities or obligations, absolute, contingent or
otherwise, relating to the Businesses or the Purchased Assets except: (i) to
the extent reflected in the March 1996 Statement; (ii) to the extent
specifically set forth herein or in any of the Schedules attached hereto; and
(iii) normal liabilities incurred in the ordinary course of business since
March 31, 1996, and which, individually or in the aggregate, have not had and
would not reasonably be expected to have a material adverse effect.
4.8 TAX MATTERS.
4.8.1 Seller has timely filed all of the following tax
returns and reports (collectively the "Tax Returns") required to be
filed within three years prior to the Closing by UNR, the Companies,
and each consolidated or affiliated group of which Holco has been a
member prior to the Closing (an "Affiliated Group"); all federal
income tax returns, all state income tax returns with respect to which
Holco could be liable for the tax due, and all other returns,
including without limitation, all sales and use tax, gross receipts,
property, payroll and other tax returns with respect to which Holco
could be liable for a significant amount of the tax due. Neither UNR,
the Companies, nor any Affiliated Group was required during the three
year period prior to the Closing, nor was Holco required at any time,
to file any foreign or local income tax return. Seller has paid in
full or made adequate provision by the establishment of reserves for
all Taxes which have become due with respect to all tax returns and
reports for all periods. All Tax Returns are correct and complete in
all material respects. There are no tax liens upon any of the
Purchased Assets or assets of Holco. Seller has made all payments
when due of taxes or estimated taxes with respect to the Tax Returns
(or any return which would be a Tax Return but for the fact that it
has not been filed prior to the Closing) in amounts sufficient to
avoid the imposition of any penalty.
4.8.2 All taxes and other assessments and levies with respect
to the Purchased Assets and the operation of the Businesses which the
Seller or the Companies were required by law to withhold or to collect
have been duly withheld and collected, and have been paid over to the
proper governmental entity or are being held by the Seller or the
Companies for such payment.
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4.8.3 Except for (a) the current pending audit regarding
UNR's consolidated tax returns for the years 1983 through 1993 (the
"Pending Audit"), (b) audits of sales, use and similar taxes that do
not involve the Businesses and (c) audits that either have been
concluded more than three years prior to the Closing and with respect
to which any deficiency has been paid or which were concluded without
any change or deficiency proposed by the taxing authority, none of the
Tax Returns has been audited or is being audited by any taxing
authority, and no assessment, audit or other proceeding by any taxing
authority, court, or other governmental or regulatory authority is
proposed, pending, or threatened with respect to the Tax Returns.
4.8.4 There are no outstanding agreements, waivers, or
arrangements extending the statutory period of limitations applicable
to any claim for or the period for the collection or assessment of
Taxes for which either the Purchaser or Holco would or could be liable
or which would or could be a lien upon the Purchased Assets.
4.8.5 All positions taken on federal Tax Returns that could
reasonably be expected to give rise to a penalty for substantial
understatement pursuant to Section 6662(d) of the Internal Revenue
Code of 1986, as amended (the "Code") have been disclosed on such Tax
Returns.
4.8.6 Neither UNR nor Leavitt Structural is a foreign person
within the meaning of Section 1445(b)(2) of the Code.
4.8.7 Holco is not a partner of any partnership and no
interest in any partnership is included in the Purchased Assets.
4.8.8 Neither UNR nor any of the Companies has made any tax
elections under any section of the Code, including without limitation
under any of Sections 108, 168, 338, 441, 472, 1017, 1033, 1503, or
4977 of the Code or Treasury Regulations Section 1.1502 (or any
predecessor thereof) that affects Holco or the assets of Holco. No
consent to the application of Section 341(f)(2) of the Code (or any
predecessor thereof) has been made or filed by or with respect to
Holco. None of the Purchased Assets or assets of Holco is an asset or
property that the Purchaser or any of its affiliates is or will be
required to treat as being (i) owned by any other person pursuant to
the provisions of Section 168(f)(8) of the Internal Revenue Code of
1954 as amended, and in effect immediately before the enactment of the
Tax Reform Act of 1986, or (ii) tax-exempt use property within the
meaning of Section 168(h)(1) of the Code.
4.8.9 No closing agreement pursuant to Section 7121 of the
Code (or any predecessor provision) or any similar provision of any
state, local, or foreign law has been entered into by or with respect
to UNR or any of the Companies or any assets or properties thereof
which would be binding upon or enforceable against the Purchaser,
Holco or the Purchased Assets.
19
4.8.10 Neither UNR nor any of its Companies has agreed to or
is required to make any adjustment pursuant to Section 481(a) of the
Code (or any predecessor provision) by reason of any change in any
accounting method of UNR or the Companies, which change of accounting
method would be binding upon Holco or the Purchaser with respect to
the Businesses or the Purchased Assets. Neither UNR nor any of the
Companies has any application pending with any taxing authority
requesting permission for any changes in any accounting method of UNR
or any of the Companies which would have such effect, and the I.R.S.
has not proposed any such adjustment or change in accounting method
therefor.
4.8.11 UNR has previously delivered to Purchaser copies of
the portions of the federal and state income Tax Returns for 1994 that
related to Holco and the Businesses, and copies of any non-unitary
state income Tax Returns filed by any of the Companies, and represents
that such materials are true, correct and complete. UNR shall
promptly deliver true, correct, and complete copies of the same
materials in the same format for 1995 and 1996 when they are complete
and ready for filing.
4.8.12 None of UNR or the Companies is a party to, is bound
by, or has any obligation under any tax sharing contract or similar
contract and no such contract shall be entered into or amended by UNR
or the Companies at or prior to the Closing.
4.8.13 Neither UNR nor any member of its Affiliated Group has
an "excess loss account" (as such term is described in Treasury
Regulations Section 1.1502) existing with respect to any of the
Companies, and none of the Companies has any "deferred intercompany
gain" (as such term is described in Treasury Regulations Section
1.1502) with respect to UNR or any member of its Affiliated Group.
For purposes of this Agreement, the term "Taxes" and "taxes" shall
mean all taxes, charges, fees, levies, or other similar assessments or
liabilities, including without limitation (a) income, gross receipts, ad
valorem, premium, excise, real property, personal property, sales, use,
transfer, withholding, employment, payroll, medicare, and franchise taxes
imposed by the United States of America, or by any state, local, or foreign
government, or any subdivision, agency, or other similar person of the United
States or any such government; and (b) any interest, fines, penalties,
assessments, or additions to taxes resulting from, attributable to, or incurred
in connection with any Tax or any contest, dispute, or refund thereof.
4.9 REAL ESTATE OF THE SELLER AND THE COMPANIES.
4.9.1 Schedule 4.9 sets forth descriptions of the Purchased
Real Estate and of real properties owned by Holco (together with the
Purchased Real Estate, the "Transferred Real Estate") and the nature
and amount of any mortgages, tax liens or other liens thereon.
Schedule 4.9 also identifies each parcel of the
20
Purchased Leasehold Premises and real properties leased by Holco
(together with the Purchased Leasehold Premises, the "Transferred
Leasehold Premises") and the date and term of each lease, the lessee
and lessor, the location, including address and a brief description
thereof (including approximate square footage and usage). The
Transferred Real Estate and the Transferred Leasehold Premises
comprise all of the real property used in the operation of the
Businesses.
4.9.2 The Seller and Holco have good and marketable title to
the Transferred Real Estate and a valid leasehold interest in the
Transferred Leasehold Premises, free and clear of all liens,
mortgages, pledges, encumbrances, charges, assessments, restrictions,
covenants and easements or title defects of any nature whatsoever,
except for liens set forth on Schedule 4.10, liens for real estate
taxes not yet due and payable, and such imperfections of title and
encumbrances, if any, as are not substantial in character, amount or
extent and do not materially detract from the value, or materially
interfere with the present use, of the Transferred Real Estate or the
Transferred Leasehold Premises or otherwise impair the operations of
the Businesses in any material respect.
4.9.3 The buildings and related improvements located on the
Transferred Real Estate and the Transferred Leasehold Premises are in
good operating condition, normal wear and tear excepted, and are
sufficient to satisfy the current levels of operations of the
Businesses.
4.9.4 None of the Seller or Holco has received any notice of:
(i) any condemnation proceeding with respect to any portion of the
Transferred Real Estate or the Transferred Leasehold Premises and to
the best knowledge of the Seller and Holco no proceeding is
contemplated by any governmental authority; or (ii) any special
assessment which may affect the Transferred Real Estate or the
Transferred Leasehold Premises and to the best knowledge of the Seller
and Holco no such special assessment is contemplated by any
governmental authority.
4.10 GOOD TITLE TO THE PURCHASED ASSETS. UNR and the Companies
have good and marketable title to all of the Purchased Assets, free and clear
of all liens, mortgages, pledges, encumbrances or charges of every kind,
nature, and description whatsoever, except those set forth in Schedule 4.10 and
except for liens, mortgages, pledges, encumbrances or charges, if any, as are
not substantial in character, amount or extent and do not materially detract
from the value, or interfere with the present use, of any of the Purchased
Assets or otherwise impair the operations of the Businesses in any material
respect or which will be released at or prior to the Closing.
4.11 LICENSES AND PERMITS. Schedule 4.11 contains a true and
complete list of all licenses and other required governmental or official
approvals, permits or authorizations, which the failure to possess would have a
material adverse effect. UNR and the Companies possess all licenses,
approvals, permits and authorizations identified on Schedule 4.11, all such
licenses,
21
approvals, permits and authorizations are in full force and effect, UNR and the
Companies are in compliance in all material respects with their requirements,
and no proceeding is pending or, to the knowledge of UNR and the Companies,
threatened to revoke or amend any of them.
4.12 PROPRIETARY RIGHTS.
4.12.1 The Purchased Proprietary Rights and the proprietary
rights owned by Holco (together with the Purchased Proprietary Rights,
the "Transferred Proprietary Rights") include all proprietary rights
used in the Businesses (other than trademarks, trade names, service
marks and symbols denoting or connoting UNR, including, without
limitation, UNR Industries, Inc. and UNR), the failure to possess
which could reasonably be expected to have a material adverse effect.
Schedule 1.2.8 contains a complete list of all of the Transferred
Proprietary Rights.
4.12.2 Each of UNR and the Companies is the sole owner,
legally and beneficially, and has good and marketable title to the
Transferred Proprietary Rights set forth in Schedule 1.2.8 as being
owned by it, in each case free and clear of any and all liens,
pledges, obligations, charges, mortgages, agreements, claims,
liabilities, licenses, restrictions and encumbrances of any kind or
nature whatsoever, except such imperfections or encumbrances, if any,
as are not substantial in character, amount or extent and do not
materially detract from the value, or interfere with the present use,
of the Transferred Proprietary Rights. Except as set forth on
Schedule 1.2.8, to the best knowledge of UNR and the Companies, no
third party claims any rights in or to the Transferred Proprietary
Rights and the Transferred Proprietary Rights do not infringe on or
otherwise violate any rights of any third party and no third party has
asserted any claim of any such infringement or violation.
4.12.3 Upon the sale, assignment, transfer and conveyance by
Seller of the Purchased Proprietary Rights to Purchaser hereunder,
Purchaser will have good and marketable title to all of such Purchased
Proprietary Rights, free and clear of all liens, pledges, obligations,
charges, mortgages, agreements, claims, liabilities, licenses,
restrictions and encumbrances of any kind or nature whatsoever, except
such imperfections or encumbrances, if any, as are not substantial in
character, amount or extent and do not materially detract from the
value, or interfere with the present use of the Purchased Proprietary
Rights.
4.13 ADEQUACY OF THE PURCHASED ASSETS. The Purchased Assets
constitute, in the aggregate, all of the property necessary for the conduct of
the Businesses as presently conducted.
4.14 INSURANCE. The Purchased Assets and third-party claims are
insured or insured against to the extent and in the manner that is customary
for companies engaged in a business similar to each of the Businesses except to
the extent that such Purchased Assets or claims are self-insured. UNR and the
Companies will maintain such coverage in force up to the Closing
22
Date. The interest of UNR or the Companies in such insurance policies will not
be transferred hereunder and Purchaser shall not be subrogated to the rights of
UNR or the Companies thereunder.
4.15 LITIGATION. Except as set forth in Schedule 4.15, there are
no actions, suits, claims, governmental investigations or arbitration
proceedings pending or, to the knowledge of UNR and the Companies, threatened
against or affecting any of the Purchased Assets, the Businesses, Leavitt
Structural or Holco. There are no writs, judgments, decrees, injunctions or
similar orders of any person, entity or governmental agency or authority
outstanding against Seller or Holco affecting the Purchased Assets or the
Businesses or which may reasonably be expected to have a material adverse
effect, and Holco is not subject to or otherwise bound by any outstanding writ,
judgment, decree, injunction or similar order of any person, entity or
governmental agency or authority.
4.16 NO MATERIAL ADVERSE CHANGE. Since December 31, 1995, except
as disclosed in the Schedules hereto, there has not been (i) any change in the
business, properties or financial condition of the Businesses other than
changes occurring in the ordinary course of business which in the aggregate
have not had and could not reasonably be expected to have a material adverse
effect, or (ii) to the best knowledge of UNR and the Companies, any threatened
or prospective event or condition which could reasonably be expected to have a
material adverse effect.
4.17 ABSENCE OF CERTAIN ACTS OR EVENTS. Since December 31, 1995,
UNR and the Companies have not: (i) committed to or paid any bonus or increased
the rate of compensation or profit sharing of any of the employees of any of
the Businesses, except in the ordinary course and consistent with past
practice; (ii) sold or transferred any of the assets of any of the Businesses
other than in the ordinary course of business; (iii) made or obligated
themselves to make capital expenditures with respect to the Businesses
aggregating more than $500,000 except as disclosed in part III of Schedule
1.2.6; (iv) incurred any material obligations or liabilities (including any
indebtedness) or entered into any material transaction with respect to the
business and operations of the Businesses, except for this Agreement and the
transactions contemplated hereby; (v) suffered any theft, damage, destruction
or casualty loss with respect to the Businesses in excess of $500,000 or that
otherwise could reasonably be expected to have a material adverse effect; (vi)
experienced any material change in production schedules, acceleration of sales,
or reduction of aggregate administrative, marketing, advertising and
promotional expenses of the Businesses other than in the ordinary course of
business; or (vii) experienced any change in the relations of the Businesses
with their employees, agents, customers or material suppliers, or any loss of
business or increase of the cost of raw materials or packaging, which in any
case could reasonably be expected to have a material adverse effect.
4.18 COMPLIANCE WITH LAWS.
4.18.1 UNR and the Companies are, and, prior to the date
hereof have been (except to the extent cured with no further liability
or reasonable expectation of a material adverse effect), in compliance
with all laws, regulations, judgments,
23
decrees and similar orders applicable to the operations of the
Businesses and the Purchased Assets, the noncompliance with which
would be substantial in character or extent or which could reasonably
be expected to interfere with the use, or impair the operations, of
the Businesses in any material respect or result in the imposition of
any material penalty or otherwise result in a material adverse effect.
None of UNR or the Companies has received notification of any asserted
past or present failure to comply with any such laws, regulations,
judgments, decrees or similar orders and, to the best knowledge of
UNR and the Companies, no proceeding with respect to any such
violation is pending or contemplated.
4.18.2 None of UNR or the Companies, nor, to their best
knowledge, any employee of any of the Businesses, has made any payment
of funds in connection with the Businesses prohibited by law, and no
funds have been set aside to be used in connection with any of the
Businesses for any payment prohibited by law.
4.18.3 To Seller's knowledge, there are no criminal felony
indictments or other criminal felony proceedings pending or threatened
against any present officers, employees or agents of Seller or Holco
with respect to actions taken in such capacity.
4.18.4 Neither Seller nor Holco is subject to any pending
investigation by any governmental agency or authority, including the
United States Federal Trade Commission or Department of Justice, or
any order of or consent decrees issued by or entered into with any
such governmental agency or authority, and has not received any
notification and is not otherwise aware of any threatened or pending
investigation by any governmental agency or authority relating to
Holco or the Businesses.
4.19 ENVIRONMENTAL MATTERS.
4.19.1 Except as disclosed on Schedule 4.19 hereto: (i) to
the knowledge of the Seller and the Companies, (A) the business and
operations of the Businesses do not violate and have not (except to
the extent cured with no further liability or reasonable expectation
of a material adverse effect) violated any applicable Environmental
Law in effect as of the date hereof; (B) each Business is in
possession of all Environmental Permits required under any applicable
Environmental Law for the conduct or operation of its business (or any
part thereof), and each Business is in all material respects in
compliance with all of the requirements and limitations included in
such Environmental Permits; (C) none of the Businesses stores or uses
any pollutants, contaminants or hazardous or toxic wastes, substances
or materials; (ii) none of the Businesses has received any notice from
any governmental authority or any private person or entity that its
business or operations are in violation of any Environmental Law or
any Environmental Permit or that it is responsible (or potentially
responsible) for the cleanup of any pollutants, contaminants, or
hazardous or toxic wastes, substances
24
or materials; (iii) none of the Businesses is the subject of any
federal, state, local or private litigation or proceedings involving a
demand for damages or other potential liability with respect to
violations of Environmental Laws; and (iv) none of the Businesses has
buried, dumped, disposed of, or spilled or released material
quantities of any pollutants, contaminants or hazardous wastes,
substances or materials.
4.19.2 For purposes of this Agreement: (i) "Environmental
Law" means any law, statute, regulation or order, consent decree or
settlement agreement which relates to or otherwise imposes liability
or standards of conduct concerning discharges, emissions, releases or
threatened releases of noises, odors or any pollutants, contaminants
or hazardous or toxic waste, substances or materials, whether or not
as matter or energy, into ambient air, water, or land, or otherwise
relating to the manufacture, processing, generation, distribution,
use, treatment, storage, disposal, clean-up, transport or handling of
pollutants, contaminants, or hazardous waste, substances or materials,
including (but not limited to) the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 ("CERCLA"), the
Superfund Amendments and Reauthorization Act of 1986, as amended, the
Resource Conservation and Recovery Act of 1976, as amended, the
Federal Water Pollution Control Act Amendments of 1972, the Toxic
Substances Control Act, the Clean Water Act of 1977, as amended, any
so-called "Super Lien" law, and any other similar federal, state or
local statutes; (ii) "Environmental Permit" means any permit, license,
approval, consent or other authorization required by or pursuant to
any applicable Environmental Law; (iii) "Contaminant" means any
hazardous substance or any pollutant or contaminant, in each case
defined as such under CERCLA, or any petroleum or petroleum-derived
substance or waste; (iv) "Release" means release, spill, emission,
leaking, pumping, injection, deposit, disposal, discharge, dispersal,
leaching or migration into the indoor or outdoor environment or into
or out of the Purchased Real Estate and Purchased Leasehold Premises,
whether or not intentional, including the movement of Contaminants
through or in the air, soil, surface water, groundwater or Property;
and (v) "Remedial Action" means actions required to (A) clean up,
remove, treat or in any other way address Contaminants in the indoor
or outdoor environment; (B) prevent the Release or threat of Release
or minimize the further Release of Contaminants; or (C) perform
pre-remedial studies and investigations and post-remedial monitoring
care.
4.20 EMPLOYEE MATTERS; LABOR RELATIONS.
4.20.1 Except as set forth on Schedule 4.20, none of the
employees of any of the Businesses is covered by employment contracts
except customary written and non-written understandings concerning
employment, terminable at will without cost or other liability, nor
are any of the employees of any of the Businesses members of any union
or covered by union contracts, nor is any of the Seller or the
Companies aware of any plan or solicitation of employees of any of
25
the Businesses to form or join a union in the past 24 months. Except
as set forth on Schedule 4.20, none of the Seller or the Companies is a
party to or bound by any employment agreement (oral or written) or any
collective bargaining or other labor agreement with respect to any of
the Businesses that could in any way affect Purchaser, the Purchased
Assets or any employees of such Business which Purchaser may hire after
the Closing. Except as provided with respect to vacation pay in the
collective bargaining or other labor agreements set forth on Schedule
4.20 or pursuant to the Change of Control Agreements referred to in
Part I of Schedule 4.20 and as provided in the Severance Pay Policy
contained in the Standard Procedure Manual of the Businesses, none of
the employees of any of the Businesses is entitled to receive any
severance benefits from UNR or the Companies upon termination of
employment with UNR or either of the Companies.
4.20.2 With respect to the employees of the Businesses,
Seller and the Companies are in compliance in all material respects
with the Immigration Reform and Control Act of 1986, as amended, and
Seller and the Companies have complied in all material respects with
all applicable federal, state and local laws relating to the
employment of labor, including without limitation, the provisions
thereof relating to wages, non-discriminatory hiring, promotional and
employment practices and procedures, collective bargaining and payment
of Social Security, unemployment compensation, worker's compensation
and similar taxes, and Seller and the Companies are not presently
liable to any person or governmental agency for any arrears of wages
or subject to any liabilities or penalties for failure to comply with
any of the foregoing laws. With respect to the employees of the
Businesses and except as may be set forth on Schedule 4.20 or Schedule
4.15, there are no outstanding charges or claims of a material nature
against any of the Seller or the Companies or any of their respective
officers, directors, agents or employees involving any alleged or
actual violation of such employer or any such person of any provision
of the National Labor Relations Act, the Age Discrimination in
Employment Act, the Equal Employment Opportunity Act of 1964, or any
other federal, state or municipal law concerning equal employment
opportunities, equal pay legislation or wage and hour obligations
contained in the Fair Labor Standards Act; nor, to the knowledge of
such employer, has there been any threat of any such claim or charge.
4.20.3 Except as set forth on Schedule 4.15, no employee of
the Businesses has threatened or asserted any claim, or otherwise is
subject to any pending claim, against UNR or either of the Companies
regarding working conditions, labor relations, discrimination or other
employment or labor related matters.
4.21 EMPLOYEE BENEFITS. Schedule 4.21 contains a list of all
significant employee benefit plans and policies applicable to employees of the
Businesses. The term "employee benefit plans," as used herein, includes all
written or oral plans, contracts or other arrangements
26
of benefit or advantage to any employee or any class of employees among
employees of the Businesses including, without limitation, stock option, bonus,
management incentive, profit sharing, pension plan, deferred compensation,
retirement, medical, disability, life and other insurance, severance and
termination and income protection arrangements. Summaries of such plans and
policies have been provided to Purchaser and copies of all such written plans
and descriptions of non-written policies will be provided upon Purchaser's
request. Except as set forth on Schedule 4.21 or as contemplated by Section
4.20, all obligations of each of UNR and the Companies, or their affiliates,
whether arising by operation of law, by contract or by past custom, for
payments by such employer, with respect to unemployment compensation benefits,
pension and retirement benefits, social security benefits, or other benefits
for the employees of the Businesses, whether under such employer's benefit
plans or otherwise with respect to such plans, including, without limitation,
those set forth on Schedule 4.21, in respect of periods prior to the Closing
Date, have been paid or shall be paid when due by such employer or, if assumed
by Purchaser, properly accrued and reflected in the March 1996 Statement. Each
of the "employee benefit plans" listed on Schedule 4.21 is in compliance in all
material respects with all aspects of ERISA (as defined below), the Code, and
all other applicable laws, and any regulations or rulings under such laws. The
transactions contemplated by this Agreement will not result in the imposition
of any liability or obligation on Purchaser as a successor to UNR or the
Companies or otherwise with respect to such plans (except to the extent assumed
by Purchaser), and UNR shall promptly pay or discharge any such liability or
obligation and defend and hold Purchaser harmless from any liability,
obligation or loss resulting therefrom. No liability on the part of UNR or the
Companies to the Pension Benefit Guaranty Corporation, other than applicable
insurance premiums, has been or could reasonably be expected to be incurred
with respect to any such plan at or prior to the Closing. Except for asset
transfers which have been reported or with respect to which the reporting
requirements have been waived, there has been no reportable event (as described
in Section 4043(b) of the Employee Retirement Income Security Act of 1974, as
amended, and the regulations thereunder ("ERISA")) with respect to any such
plan, nor has any notice as to liability under Subtitle D of Title IV of ERISA
been received, and there are no circumstances that might result in the
imposition of a lien on any of the Purchased Assets pursuant to ERISA, the Code
or any other applicable law or regulation. A principal purpose of the
transactions described or contemplated in this Agreement is not to evade or
avoid liability under ERISA.
4.22 PRODUCT RECALLS. There has not been any product recall, or
post-sale warning or similar action (collectively, "recalls") conducted with
respect to any product manufactured, shipped, delivered or sold by any of the
Businesses, or, to the knowledge of UNR and the Companies, any investigation or
consideration of, or decision made by, any of the Businesses concerning whether
or not to undertake any recalls.
4.23 ABSENCE OF DEFAULTS.
4.23.1 Schedule 1.2.6 and Part II of Schedule 4.9 attached
hereto contain a true and complete list of the following:
27
(i) all leases pursuant to which UNR or the Companies lease
any real property for use in the Businesses;
(ii) all leases pursuant to which UNR or the Companies lease
any personal property for use in the Businesses that provide,
individually, rental payments in excess of $10,000 per year or in
excess of $20,000 during their duration;
(iii) all contracts, agreements or other instruments of UNR or
the Companies relating to the Businesses that by their terms can
reasonably be expected to require the future payment by or to UNR or
either of the Companies of $10,000 or more;
(iv) all sales agency or distributor agreements relating to
the Businesses.
(v) all contracts, agreements or other instruments related to
the Businesses which were not entered into in the ordinary course of
business of the Businesses or that by their terms reasonably can be
expected to require the future payment by or to UNR or either of the
Companies of $10,000 or more; and
(vi) all other contracts, agreements or other instruments to
which UNR or either of the Companies is a party and which are material
to the operations of the Businesses.
4.23.2 Schedule 4.10 attached hereto contains a true and
complete list of the following:
(i) all mortgages, indentures, notes, loan agreements,
security agreements, pledge agreements, lien retention agreements,
consignment agreements, processing agreements for third parties,
installment obligations or other instruments for or relating to any
borrowings or otherwise relating to the Businesses or the Purchased
Assets; and
(ii) all guarantees of Holco relating to any third party debt.
4.23.3 UNR and the Companies are not in material default
under any contract, order, lease, commitment or agreement referred to
in Schedules 1.2.6 or 4.9 hereto ("Material Agreements") and no
condition exists which, with the giving of notice or passage of time
or both, would constitute a material default thereunder or constitute
an event creating rights of acceleration, termination or cancellation
thereof, and no person has asserted in writing that UNR or either of
the Companies is in default under, or in breach of (with or without
the giving of notice or the passage of time), any material term or
provision of any of the Material Agreements. To the best of Seller's
and the Companies' knowledge, there are no existing material defaults
by any third party under any contract, order, lease, commitment or
agreement referred to in Schedule 1.2.6 hereto and no condition exists
which, with the giving of notice or passage of time or both, would
28
constitute a material default thereunder or constitute an event
creating rights of acceleration, termination or cancellation thereof,
and each such Material Agreement is in full force and effect and
enforceable in accordance with its terms (except as enforceability may
be limited by laws affecting creditors' rights or principles
restricting equitable relief). Neither UNR nor any Company has waived
any rights under any Material Agreement, which waiver reasonably could
be expected to have a material adverse effect.
4.24 DUE AUTHORIZATION; BINDING OBLIGATION. The execution,
delivery and performance of this Agreement and each of the other agreements
contemplated hereby and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate action of Seller.
This Agreement has been duly executed and delivered by Seller and is a valid
and binding obligation of Seller, enforceable in accordance with its terms.
Neither the execution and delivery of this Agreement nor the consummation of
the transactions contemplated hereby will: (i) conflict with or violate any
provision of Seller's certificate of incorporation or bylaws, or of any law,
ordinance or regulation or any decree or order of any court or administrative
or, to the best of such Seller's knowledge, other governmental body which is
either applicable to, binding upon or enforceable against the Seller or
requires any filing or authorization under any applicable law, ordinance or
regulation other than as may be required under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 and the rules and regulations thereunder (the "HSR
Act"); (ii) result in any breach of or default under any mortgage, contract,
agreement, indenture, will, trust or other instrument which is either binding
upon or enforceable against UNR or the Companies or the Purchased Assets
(except that security interests in certain of the Purchased Receivables may not
have been released by the date of execution hereof, but will be so released at
or prior to Closing); (iii) require UNR or either Company to obtain any
consent, approval, or action of, or make any filing with or the giving notice
to, any person or entity except under the HSR Act as contemplated by Section
3.2.4.A hereto or those which the failure to obtain, make or give, individually
or in the aggregate, would not reasonably be expected to have a material
adverse effect; or (iv) result in the creation or imposition of any lien or
encumbrance upon any of the Purchased Assets, other than liens and encumbrances
created by Purchaser.
4.24.A INTERCOMPANY TRANSACTIONS. Except for purchases by divisions
of UNR other than the Businesses of finished products manufactured by the
Businesses, there are no contracts or arrangements for purchase, sale or lease
of goods, equipment or services, or any tax sharing or similar agreements,
between Leavitt Structural, Holco or the Businesses, on the one hand, and
Seller or any affiliate of Seller other than Leavitt Structural or Holco, on
the other hand.
4.24.B INVENTORIES. The inventories included in the March 1996
Statement consist (and those to be reflected in the Closing Statement will
consist) only of items of quality and quantity commercially useable and
saleable in the ordinary course of the Businesses, except for any items of
obsolete material or material below standard quality or commercial
specifications, all of which have been (and for purposes of the Closing
Statement will be) written down to the lower of cost
29
or realizable market value, or for which adequate reserves have been (and for
purposes of the Closing Statement will be) provided. The quantities of all
inventories are reasonable, and as of the Closing Date will be reasonable, in
the circumstances of the Businesses business cycle.
4.24.C BUSINESS RELATIONS. The Businesses are not required to
provide any bonding or other financial security arrangements in any material
amount in connection with any transactions with any of their customers or
suppliers. To Seller's knowledge, no customer of the Businesses intends to
cease doing business with (or substantially reduce its business with) the
Businesses, which cessation (or reduction) would have a material adverse
effect. Since March 31, 1996, the Businesses have not experienced any
difficulties in obtaining any raw materials necessary to the operations of the
Businesses that had, or reasonably may be expected to have, a material adverse
effect and, to Seller's knowledge, no such shortage of raw materials that would
have such a material adverse effect is threatened.
4.24.D PRODUCT WARRANTIES. Neither UNR nor either Company has made
any express warranty as to the condition, value, design, operation, compliance
with applicable law, merchantability or fitness for use of any of the products
sold by the Businesses, except as such warranties as may be contained in
customer purchase orders or shipping tags with respect to the specifications
pursuant to which such products were manufactured or the tensile strength of
such products.
4.24.E LOCATION OF INVENTORY AND ASSETS. Except as set forth in
Schedule 4.24.E and except for inventory in-transit, and purchased material
in-transit, no inventory constituting part of the Purchased Assets is located
in any warehouse facilities or customer locations. All of the personal
property, excluding motor vehicles, inventory in-transit and purchased material
in-transit, constituting part of the Purchased Assets is located at one of the
Purchased Real Estate or Purchased Leasehold Premises as described on Schedule
4.9 attached hereto.
4.24.F NO PRODUCTION OF ASBESTOS-CONTAINING PRODUCTS. To the best
knowledge of Seller, the Businesses have never produced or otherwise sold
products which contain asbestos or asbestos-containing coatings or insulation.
4.24.G FINAL SALES. All sales of inventory by the Businesses have
been and currently are made on terms of a final sale, and not on terms of
consignment or pursuant to which such inventory may be returned if not sold or
utilized by customers of the Businesses.
4.25 LIMITATIONS ON SELLER'S REPRESENTATIONS AND WARRANTIES.
4.25.1 The exceptions, modifications, descriptions and
disclosures in any Schedule attached hereto are made for all purposes
of this Agreement.
4.25.2 To the extent that Seller's representations and
warranties expressed herein are qualified by reference to Seller's or
the Companies' knowledge, such reference shall be limited to the
actual knowledge of the individuals set forth on Schedule 4.25.
30
4.25.3 The representations and warranties set forth in this
Article 4.0 are the only representations and warranties made by UNR or
Leavitt Structural with respect to the Businesses and the Purchased
Assets. Except as specifically set forth herein, the Seller is
selling the Purchased Assets to the Purchaser "as is" and with all
faults.
4.26 TRUE AND COMPLETE COPIES. Copies of documents delivered and
to be delivered hereunder by Seller or Holco are and will be true and complete
copies of such documents.
4.27 BROKERS. UNR and the Companies have not employed any broker
or finder or incurred any liability for any brokerage fees, commissions or
finders' fees in connection with the transactions contemplated by this
Agreement, except J.P. Morgan Securities Inc., which UNR shall be solely
responsible to compensate.
4.28 ROHN PRODUCTS. The UNR-Rohn Division of the Seller does not
currently manufacture and sell tubing or pipe products other than the Rohn
Products, as defined in Exhibit C hereto.
5.0 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
In order to induce the Seller to enter into this Agreement and to
consummate the transactions contemplated hereunder, Purchaser makes the
following representations and warranties:
5.1 ORGANIZATION, POWER AND AUTHORITY OF THE PURCHASER. Purchaser
is a corporation duly organized and validly existing under the laws of its
state of incorporation, with full corporate power and authority to enter into
this Agreement and perform its obligations hereunder.
5.2 DUE AUTHORIZATION; BINDING OBLIGATION. The execution,
delivery and performance of this Agreement and all other agreements
contemplated hereby and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate action of
Purchaser. This Agreement has been duly executed and delivered by Purchaser
and is a valid and binding obligation enforceable in accordance with its terms.
Neither the execution and delivery of this Agreement nor the consummation of
the transactions contemplated hereby will: (i) conflict with or violate any
provision of the certificate of incorporation or bylaws of Purchaser, or of any
decree or order of any court or administrative or other governmental body which
is either applicable to, binding upon or enforceable against Purchaser or
requires any filing or authorization under any applicable law, ordinance or
regulation (other than as may be required by the HSR Act), or (ii) result in
any breach of or default under any mortgage, contract, agreement, indenture,
will, trust or other instrument which is either binding upon or enforceable
against Purchaser.
5.3 PURCHASE FOR INVESTMENT. The Purchaser is purchasing the
Shares for investment and not with a view to their distribution in whole or in
part, other than to any affiliate.
31
5.4 INVESTIGATION BY PURCHASER. Purchaser has conducted an
investigation of the Purchased Assets and of the operations of the Businesses.
Purchaser has reviewed all of the documents, records, reports and other
material identified in the Exhibits and Schedules hereto, and is familiar with
their content. Purchaser acknowledges that it has been given access to and has
visited and examined the premises of the Businesses and is familiar with the
condition thereof. For the purpose of conducting these investigations,
Purchaser has employed the services of its own agents, representatives,
counsel, experts and consultants. Purchaser has relied upon information
supplied by the Seller as set forth herein and in the Exhibits and Schedules
hereto and has not relied upon any other information or statement, oral or
written, not described herein or not included in a Schedule attached hereto.
Notwithstanding the foregoing, nothing contained in this Section 5.4 shall
affect or otherwise limit Purchaser's ability to rely on the representations
and warranties of Seller contained in this Agreement.
5.5 BROKERS. Purchaser has not employed any broker or finder or
incurred any liability for any brokerage fees, commissions or finders' fees in
connection with the transactions contemplated by this Agreement.
5.6 FINANCIAL RESOURCES. Purchaser has, and at the Closing,
Purchaser will have, the financial resources to consummate the transactions
contemplated hereby.
6.0 ADDITIONAL COVENANTS OF THE PARTIES
6.1 ALL REASONABLE EFFORTS. Each party hereto will use all
reasonable efforts to cause to be satisfied as soon as practicable and prior to
the Closing Date all of the conditions to its respective obligations to
consummate the sale and purchase of the Purchased Assets. Each party hereto
shall also execute prior to or after the Closing Date such other documents or
agreements and take such other actions as may be reasonably necessary or
desirable for the implementation of this Agreement and the consummation of the
transactions contemplated hereby, and, specifically, Seller shall use all
reasonable efforts to obtain all consents and approvals necessary for the
assignment to Purchaser of the Purchased Contracts, the Madison County Leases,
and such other contracts and agreements related to the Businesses to be
assigned to Purchaser pursuant to this Agreement.
6.1.A HSR FILINGS. Each party hereto will (i) take all actions
necessary to make the filings required of it or its affiliates under the HSR
Act with respect to the transactions contemplated by this Agreement, (ii)
comply with any requests for additional information received by such party or
its affiliates from the Federal Trade Commission or Antitrust Division of the
Department of Justice pursuant to the HSR Act, (iii) cooperate with the other
party hereto in connection with such other party's filings under the HSR Act
and, (iv) request early termination of the applicable waiting period under the
HSR Act.
6.2 CONDUCT OF BUSINESS PENDING THE CLOSING. From and after the
execution and delivery of this Agreement and until the Closing Date, except as
otherwise provided by the prior written consent of the Purchaser:
32
6.2.1 the Seller will, and the Seller will cause Holco to,
conduct the business and operations of the Businesses in the manner in
which the same have heretofore been conducted and as described to the
Purchaser, and it will use all reasonable efforts to (i) preserve the
business organization of the Businesses intact, (ii) keep available to
the Purchaser the services of the employees and agents of the
Businesses, and (iii) preserve the relationships with the customers of
the Businesses, suppliers and others having dealings with the
Businesses;
6.2.2 the Seller will, and the Seller will cause Holco to,
maintain all of the properties of the Businesses in customary repair,
order and condition, reasonable wear and use and damage by unavoidable
casualty excepted, and will maintain insurance of such types and in
such amounts upon all of the properties of the Businesses and with
respect to the conduct of the operations of the Businesses as are in
effect on the date of this Agreement; and
6.2.3 the Seller will not, and the Seller will cause Holco
not to, (i) pay any bonus or increase the rate of compensation of any
of the employees of any of the Businesses other than as required under
any collective bargaining agreement listed in Schedule 6.7.7; (ii)
sell or transfer any of the assets of any of the Businesses other than
in the ordinary course of business; (iii) make or obligate themselves
to make capital expenditures with respect to the Businesses
aggregating more than $500,000; (iv) with respect to the operations of
any of the Businesses, incur any material obligations or liabilities
or enter into any material transaction; (v) mortgage, pledge or
encumber (or permit any lien to attach to) any properties or assets of
the Businesses (other than purchase money security interests incurred
in connection with any purchase of properties or assets for use in the
Businesses); (vi) other than in the ordinary course of business, amend
or terminate any Material Agreement or any license or permit relating
to the Businesses; (vii) make any material change in any employee
benefit plans, except as required by law and except that Seller may
terminate the UNR Employees' Profit Sharing and 401(k) Plan, UNR
Industries, Inc. Supplemental Executive Retirement Plan, November
1993, prior to the Closing Date; (viii) increase or modify any
compensation or severance benefit payable to any employee of the
Businesses; (ix) incur any material changes in sales of inventory to
affiliates or divisions of UNR except as may be required by business
conditions of such affiliates or divisions; or (x) enter into any
other agreement, course of action or transaction material to the
Businesses except in the ordinary course of business.
6.2.4 Notwithstanding anything to the contrary in this
Section 6.2, Seller may take such action as is necessary to cancel or
reconcile intercompany accounts, as contemplated by Section 3.2.7.A
hereof, so long as such action does not involve distributing what
would otherwise be Purchased Assets.
33
6.3 ACCESS TO THE PROPERTIES AND RECORDS OF THE BUSINESSES.
6.3.1 From and after the execution and delivery of this
Agreement, the Seller will, and the Seller will cause Holco to, afford
to the representatives of the Purchaser access, during normal business
hours and upon reasonable notice, to the premises of the Businesses
sufficient to enable the Purchaser to inspect the Purchased Assets and
assets and properties of the Companies, and furnish to such
representatives during such period all such information relating to
the foregoing investigation as the Purchaser may reasonably request.
6.3.2 From and after the Closing, Seller will make available
to the representatives of the Purchaser access, during normal business
hours and upon reasonable notice, to the financial statements and
records of the Businesses and work papers of Seller's independent
auditors with respect to audits performed on the financial statements
of the Businesses and the financial statements of the Seller to the
extent reasonably requested by Purchaser to enable Purchaser to
prepare audited financial statements relating to the Businesses for
such periods and in such form as Purchaser reasonably determines is
required for purposes of Purchaser's filings under applicable
securities laws.
6.3.3 To the extent any document containing information about
the Businesses constitutes an Excluded Asset pursuant to Section 1.3.4
and is reasonably necessary to or requested by Purchaser in connection
with its operation of the Businesses after the Closing, Seller shall
make such document and/or information available to Purchaser and its
representatives during normal business hours of Seller upon prior
written notice by Purchaser. Purchaser shall be permitted to make
copies of any such documentation and/or information made available to
Purchaser pursuant to this Section 6.3.3 to the extent such
documentation and/or information pertains to the Businesses.
6.3.4 The Purchaser will hold in strict confidence all
documents and information concerning the Seller and/or the Businesses
furnished at any time by Seller or Holco, as and to the extent
provided under Section 11.3.A hereof.
6.4 NO DISCLOSURE. Neither party hereto will, prior to the
Closing Date, disclose the existence of or any term or condition of this
Agreement to any person or entity without the prior written consent of the
other party, except that such disclosure may be made (i) to any person to whom
such disclosure is necessary in order to satisfy any of the conditions to the
consummation of the purchase of the Shares and Purchased Assets which are set
forth in this Agreement, and (ii) to the extent the party making such
disclosure believes in good faith that such disclosure is required by law or
any rules of any securities exchange on which the stock of such party or its
affiliates are traded, it being understood that each party shall be entitled to
issue such press releases as it deems appropriate under such laws and rules (in
which case, such party will consult with the other party prior to making such
disclosure).
34
6.5 BULK SALES LAW. The Purchaser waives compliance with the bulk
sales law of any applicable state in connection with the transactions
contemplated by this Agreement.
6.6 EXPENSES. Purchaser, on the one hand, and Seller, on the
other hand, shall each bear its own respective expenses incurred in connection
with this Agreement and in connection with all obligations required to be
performed by each of them under this Agreement.
6.7 EMPLOYEE MATTERS.
6.7.1 Purchaser shall offer at will employment, on terms and
conditions substantially equivalent to those currently in effect,
including the compensation levels set forth in Schedule 6.7.1 hereto,
effective on the Closing Date, to all regular full time and part time
employees of the Businesses as of the Closing Date (including
employees on short term disability when the short term disability
period terminates but excluding employees covered by collective
bargaining agreements). Those employees who accept employment with
the Purchaser are referred to herein as the "Continued Employees."
6.7.2 From the Closing Date until December 31, 1996,
Purchaser (or an affiliate thereof) shall provide at its sole expense,
for the benefit of the Continued Employees, the benefit plans,
policies and procedures set forth in Schedule 6.7.2. Purchaser, in its
sole discretion, shall provide the benefit plans, policies and
procedures set forth in Schedule 6.7.2 for such time period by either
assuming the sponsorship of the existing benefit plans, policies and
procedures set forth in Schedule 6.7.2 or establishing mirror image
plans, policies and procedures which shall become effective
immediately following the Closing Date. Purchaser agrees that the
medical and disability benefits provided will contain a waiver of any
pre-existing condition exclusion for Continued Employees. From and
after January 1, 1997, Purchaser shall provide benefit plans, policies
and procedures to the Continued Employees that are on such terms as
Purchaser deems appropriate, subject to applicable provisions of
collective bargaining agreements as in effect from time to time.
Purchaser shall give each Continued Employee credit for accrued
vacation to the extent accrued on the Closing Statement.
6.7.3 Purchaser and Seller agree that, except as specifically
provided otherwise in this Agreement and except for any employee-paid
premiums for continuation of coverage required to be offered by UNR or
the Companies under the terms of an applicable employee benefit plan
of any such employer or otherwise required by law, the provision of
employee benefits to Continued Employees including, without
limitation, the employee benefits set forth on Schedule 6.7.2 on and
after the Closing Date shall be the sole responsibility of Purchaser.
Seller shall be fully responsible for health-care and disability
benefits incurred prior to the Closing Date, including costs for
employees hospitalized or on disability on the Closing Date, and,
except as specifically provided otherwise in this Agreement, such
other benefits to the extent accrued and vested on or
35
before the Closing Date. Notwithstanding the foregoing, Seller shall
be responsible for COBRA liabilities and obligations under Section
4980B of the Code and Sections 601-608 of ERISA with respect to any
individuals who incurred or incur a "qualifying event" (within the
meaning of Section 603 of ERISA) under an applicable employee benefit
plan of UNR or the Companies prior to the Closing Date.
6.7.4 If Purchaser terminates any Continued Employee within
12 months after the Closing Date for any reason other than
disciplinary reasons or unsatisfactory performance, he or she shall be
entitled to receive severance benefits (based on such employee's
aggregate years of employment with the Seller or Holco and Purchaser)
on terms and conditions no less favorable than those offered by Seller
or Holco to their similarly situated employees, and the cost of such
severance benefits shall be borne by Purchaser.
6.7.5 Except as specifically provided otherwise in this
Agreement, neither Purchaser nor Seller will solicit for employment,
for a period of 24 months after the Closing Date, any of the employees
of the other party.
6.7.6 Purchaser agrees to assume UNR's obligations under the
Change of Control Agreements between UNR and (i) Roy Herman, dated
September 15, 1993, (ii) William Spanos, dated September 15, 1993,
(iii) Parry Katsafanas, dated January 31, 1996, and (iv) David
Lichtfuss, dated January 31, 1996, and to indemnify and hold Seller
harmless from any amount UNR may be required to expend as a
consequence of such agreements; provided, however, that Purchaser
shall not assume any liability of Seller under any of such Change of
Control Agreements to the extent arising as a result of or otherwise
relating to any actions by Seller or any of its affiliates prior to
the Closing other than in connection with the transactions
contemplated by this Agreement, and, provided, further, that Purchaser
shall not assume any liability of Seller with respect to any Change of
Control Agreement between UNR and any of such persons if Purchaser
offers employment to such person in accordance with Section 6.7.1
hereof and the terms of such Change of Control Agreements and such
person refuses to accept such offer of employment by Purchaser.
6.7.7 Purchaser agrees to assume the obligations of Seller
under and be substituted for the Seller as a party to the collective
bargaining agreements listed on Schedule 6.7.7 hereto; provided,
however, that, except with respect to Unfunded Pension Plan
Obligations which are to be assumed by Purchaser as contemplated by
Section 2.3.8 hereof and for accrued vacation up to the Closing Date
to the extent reflected on the Closing Statement, Purchaser's
assumption of the obligations of Seller under such collective
bargaining agreements shall relate only to those liabilities and
obligations under the collective bargaining agreements that relate to
periods on or after the Closing Date.
36
6.7.8 Purchaser agrees to take the following actions with
respect to the multi-employer pension benefit plans ("Pension Plans")
to which UNR or the Companies have made contributions prior to the
Closing pursuant to the collective bargaining agreements shown in
Schedule in 6.7.7:
(i) to continue to contribute under the terms of the Pension
Plans for substantially the same number of contribution base units for
which UNR or the Companies had an obligation to contribute immediately
prior to the Closing;
(ii) unless an exemption or variance is available pursuant to
regulation or is obtained in accordance with Pension Benefit Guaranty
Corporation procedures, the Purchaser shall provide to each of the
Pension Plans for a period of five plan years, commencing with the
first plan year of each of the Pension Plans beginning after the
Closing, a bond issued by a surety company that is an acceptable
surety for purposes of Section 412 of ERISA in the amount described
below, or Purchaser shall establish an escrow fund held by a bank or
similar financial institution satisfactory to the respective Pension
Plan in the amount described below. Such amount shall be equal to the
greater of (x) the average annual contributions required to be made by
UNR or the Companies for three plan years of each of the Pension Plans
next preceding the respective plan year in which the Closing occurs,
or (y) the annual contribution UNR or the Companies were required to
make under the Pension Plans for the last plan year prior to the
respective plan year in which the Closing occurs, which bond or escrow
shall provide for payment to the respective Pension Plan if Purchaser
withdraws from the Pension Plan or fails to make a contribution to the
Pension Plans when due at any time during the first five plan years
beginning after the Closing;
(iii) unless an exemption or variance is available pursuant
to regulation or is obtained in accordance with Pension Benefit
Guaranty Corporation procedures, and otherwise subject to the
provisions of paragraph (iv) below, Seller agrees that if the
Purchaser withdraws from any of the Pension Plans in a complete
withdrawal or a partial withdrawal (as defined in Sections 4203 and
4205 of ERISA) with respect to operations of the Businesses for which
contributions under paragraph (i) were required during the first five
plan years described in paragraph (ii) above, the Seller shall be
secondarily liable for any withdrawal liability it would have had to
that Pension Plan with respect to such operations (but for Section
4204 of ERISA) if the liability of the Purchaser with respect to that
Pension Plan is not paid;
(iv) Seller's secondary liability for any withdrawal incurred
by the Purchaser as a result of the Purchaser's agreement to
contribute to any Pension Plan pursuant to paragraph (i) above, shall
be limited to an amount equal to the payment to that Pension Plan that
would have been due from Seller but for the undertakings of the
Purchaser and Seller pursuant to paragraphs (i), (ii) and (iii) above;
37
(v) if, notwithstanding the full cooperation of Seller,
Section 4204 of ERISA does not operate to shield Seller from
withdrawal liability resulting from the transfer of assets to
Purchaser, and such withdrawal liability is charged to Seller,
Purchaser will indemnify Seller for such withdrawal liability;
(vi) if Seller incurs any secondary withdrawal liability to
the Pension Plans with respect to the employees that are transferred
to Purchaser, Purchaser will indemnify Seller for such secondary
withdrawal liability; and
(vii) UNR agrees that it will request, and use commercially
reasonable efforts to obtain prior to the Closing Date, a withdrawal
liability report from the administrator of the Electrical Contractors'
Association and Local Union 134 I.B.E.W. Joint Pension Trust of
Chicago, Pension Plan No. 2 ("Electrical Contractors' Plan") showing
the withdrawal liability of UNR and/or the Companies as of the Closing
Date or a date within 30 days prior to the Closing Date. In the event
UNR is unable to obtain such withdrawal liability report prior to the
Closing Date or to the extent the withdrawal liability of UNR and/or
the Companies as reflected on such report exceeds $55,000, Seller
agrees to indemnify Purchaser against any withdrawal liability it or
any of its affiliates incur under the Electrical Contractors' Plan to
the extent such withdrawal liability as reflected in such report
exceeds $55,000, notwithstanding the preceding provisions of this
Section 6.7.8 hereof.
6.7.9 Seller agrees that, from and after the Closing, Seller
shall remain fully responsible for and shall fully satisfy or cause to
be satisfied all workers' compensation claims asserted by employees of
the Businesses (whether employed by UNR, Leavitt Structural or Holco)
to the extent such claim arises out of or results from any event
occurring prior to the Closing Date, regardless of whether such claim
is asserted prior to or on or after the Closing Date;
6.7.10 Notwithstanding anything contained in this Section
6.7, to the extent any provisions of this Section 6.7, as related to
employees governed by the collective bargaining agreements set forth
on Schedule 6.7.7 hereto, contradict or otherwise are inconsistent
with any terms, provisions or requirements under such collective
bargaining agreements, Purchaser's obligations under this Section 6.7
shall be deemed to be modified to the extent necessary to enable
Purchaser to comply with the applicable provisions of any such
collective bargaining agreements with respect to the employees covered
thereby, and any such modification or deviation from the terms of this
Section 6.7 as a result of such actions by Purchaser shall not be
deemed a breach or violation of this Agreement.
6.7.11 Seller agrees to pay within five days after
determination of the final Closing Statement, the amounts owing
employees or former employees of the Businesses under the UNR
Industries, Inc. Key Management Incentive
38
Variable Compensation Plan for periods through the Closing Date,
calculated on a pro rata basis for 1996 based on the financial
performance of the Businesses from January 1, 1996 to the Closing
Date.
6.7.12 Purchaser agrees to administer on Seller's behalf
claims which may be made under the Evanston Retirees UNARCO Health
Service Plan, provided, that, (i) Seller agrees to reimburse Purchaser
for its out-of-pocket expenses and to indemnify Purchaser for any
liabilities it may incur thereby, and Seller and Purchaser agree to
negotiate in good faith an agreement to compensate Purchaser for such
services if Purchaser so requests and to permit Purchaser to terminate
such services on 60 days notice to Seller in the absence of such an
agreement and (ii) Purchaser is not assuming and shall not assume or
be obligated for any liability of Seller with respect to any amounts
payable under or pursuant to such Plan.
6.8 OBLIGATION TO NOTIFY. Each party shall have the continuing
obligation until the Closing promptly to notify the other party in writing with
respect to any matter hereafter arising or discovered which, if existing or
known at the date of this Agreement, would have been required to be set forth
or described in this Agreement or the Schedules or other attachments annexed
hereto. To the extent any such matter causes or will cause any covenant under
this Agreement to be breached, or that renders or will render untrue any
representation or warranty contained in this Agreement, the party whose
covenant, agreement, representation or warranty would be breached or rendered
untrue shall use commercially reasonable efforts to cure, before the Closing,
any violation or breach of any covenant, agreement, representation or warranty
made in this Agreement. Notwithstanding the foregoing, the obligations under
this Section 6.8 shall not apply with respect to any event, transaction or
circumstance of which a party has been notified by the other party pursuant
hereto or with respect to which both parties to this Agreement have actual
knowledge, and the failure by any party to notify the other party pursuant to
this Section 6.8 with respect to any matter hereafter arising or discovered
shall not affect such party's rights or obligations under Article 13 hereof.
6.9 USE OF UNR. Purchaser agrees to abandon use by the Businesses
and otherwise of all trademarks, trade names, service marks and symbols
denoting or connoting UNR, including, without limitation, UNR Industries, Inc.
and UNR, as promptly as practicable and in any event by six months following
the Closing, provided that Purchaser's rights in and to, and use of, the terms
listed in part II of Schedule 1.2.8 hereto shall not be affected by this
covenant.
6.10 OTHER AGREEMENTS. Purchaser and Seller agree to use all
reasonable efforts to cause the rights of the Leavitt Division pursuant to the
PTO Agreements to continue after the Closing without imposing additional
liabilities on the Seller, provided, that, Purchaser and its affiliates shall
not be required to assume any liabilities that relate to conduct of the Seller
or the Businesses thereunder prior to the Closing or assume or otherwise become
a party to any existing agreement that reasonably may be expected to result in
obligations of Purchaser or its affiliates for any contributions or withdrawal
liability under or with respect to the CTD Pension Fund to
39
the extent related to or attributable to any period prior to the Closing.
Seller also agrees that Purchaser shall be entitled to use of the Chicago Bulls
Tickets on an equal sharing basis with Seller.
7.0 CONDITIONS TO THE OBLIGATION OF THE PURCHASER
The obligation of the Purchaser to purchase the Shares and Purchased
Assets shall be subject to the fulfillment at or prior to the Closing Date of
each of the following conditions:
7.1 ACCURACY OF THE SELLER'S REPRESENTATIONS AND WARRANTIES AND
COMPLIANCE BY THE SELLER WITH ITS OBLIGATIONS. The representations and
warranties of the Seller contained in this Agreement shall have been true and
correct in all material respects at and as of the date hereof, and they shall
be true and correct in all material respects at and as of the Closing Date with
the same force and effect as though made at and as of that time. The Seller
shall have performed and complied in all material respects with all of its
obligations required by this Agreement to be performed or complied with at or
prior to the Closing Date. Seller shall have delivered to the Purchaser a
certificate, dated as of the Closing Date and signed by an executive officer of
Seller, certifying that such representations and warranties are thus true and
correct in all material respects and that all such obligations have been thus
performed and complied with in all material respects.
7.2 CERTIFIED RESOLUTIONS. Seller shall have delivered to the
Purchaser copies of resolutions adopted by the board of directors and
stockholders of each of UNR and Leavitt Structural authorizing the transactions
contemplated by this Agreement, certified in each case as of the Closing Date
by a secretary or assistant secretary.
7.3 OPINION OF COUNSEL. The Purchaser shall have received an
opinion dated the Closing Date from the general counsel for the Seller, in form
and substance as set forth in Exhibit A attached hereto.
7.4 RECEIPT OF NECESSARY CONSENTS.
7.4.1 All required consents or approvals of third parties
necessary to convey to Purchaser all of the Purchased Assets as
contemplated by this Agreement, the absence of which would materially
adversely affect Purchaser's rights hereunder, shall have been
obtained and shown by written evidence reasonably satisfactory to the
Purchaser; provided, however, that, except as provided in Section
7.4.2 hereof, if Seller is unable to obtain any such consents or
approvals on reasonable commercial terms by the Closing Date, this
condition shall be satisfied if Seller, by acting as agent for
Purchaser or participating in any other reasonable and lawful
arrangement, is able to put the Purchaser in the same position in all
material respects as if such consents or approvals had been obtained,
in the manner as contemplated by Section 3.6 hereof.
40
7.4.2 Notwithstanding the provisions of Section 7.4.1 hereof,
(i) all waiting periods applicable to this Agreement and the
transactions contemplated hereby under the HSR Act shall have expired
or been waived and (ii) Seller shall have obtained and delivered to
Purchaser the estoppel certificate and consent to assignment, each
duly executed by Landlord, relating to the Madison County Leases, as
contemplated by Section 3.2.4.A hereof.
7.5 TITLE INSURANCE. Purchaser shall have received a commitment
for the issuance of an ALTA owner's title insurance policies (with costs to be
shared equally by Purchaser and Seller) with respect to the Purchased Real
Estate, subject only to those items set out in Schedule 4.9 and the customary
exceptions in the policy.
7.6 NO ADVERSE ORDER. There shall not be any order of any court
or governmental authority restraining, prohibiting or invalidating the sale of
the Shares and Purchased Assets to the Purchaser or any other material
transaction contemplated hereby, or materially and adversely affecting the
right of the Purchaser to own the Shares or own, operate or control the
Purchased Assets or the Businesses as currently conducted.
7.7 NO ADVERSE CHANGE. Since December 31, 1995, there shall not
have occurred any events that, individually or in the aggregate, have had, or
could reasonably be expected to have, a material adverse effect, provided,
that, matters occurring since December 31, 1995, as disclosed in the Schedules
hereto, shall not, individually or in the aggregate, be deemed to have had or
reasonably be expected to have a material adverse effect, but may be aggregated
with other matters not so disclosed for purposes of determining whether the
condition set forth in this Section 7.7 shall have been satisfied as of the
Closing.
8.0 CONDITIONS TO OBLIGATIONS OF THE SELLER
The obligations of the Seller to sell the Shares and Purchased Assets
shall be subject to the fulfillment at or prior to the Closing Date of each of
the following conditions:
8.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE WITH
OBLIGATIONS. The representations and warranties of Purchaser contained in this
Agreement shall have been true and correct in all material respects at and as
of the date hereof, and they shall be true and correct in all material respects
at and as of the Closing Date with the same force and effect as though made at
and as of that time. Purchaser shall have performed and complied in all
material respects with all of its obligations required by this Agreement to be
performed or complied with at or prior to the Closing Date. Purchaser shall
have delivered to the Seller a certificate, dated as of the Closing Date and
signed by an executive officer, certifying that such representations and
warranties are true and correct in all material respects and that all such
obligations have been thus performed and complied with in all material
respects.
8.2 OPINION OF COUNSEL. The Seller shall have received an
opinion, dated the Closing Date, from Winstead Sechrest & Minick P.C., counsel
for Purchaser, in form and substance as set forth in Exhibit B attached hereto.
41
8.3 CERTIFIED RESOLUTIONS. Purchaser shall have delivered to the
Seller a copy of a resolution adopted by its board of directors authorizing the
transactions contemplated by this Agreement, certified as of the Closing Date
by its secretary or assistant secretary.
8.4 NO ADVERSE ORDER. There shall not be any order of any court
restraining, prohibiting or invalidating the sale of the Purchased Assets or
Shares to the Purchaser or any other material transaction contemplated hereby.
8.5 HSR ACT. All waiting periods applicable to this Agreement and
the transactions contemplated hereby under the HSR Act shall have expired or
been waived.
9.0 CERTAIN ACTIONS AFTER THE CLOSING
9.1 PURCHASER TO ACT AS AGENT FOR SELLER. This Agreement shall
not constitute an agreement to assign any claim, contract, license, lease,
commitment, sales order or purchase order if any attempted assignment of the
same without the consent of the other party thereto would constitute a breach
thereof or in any way affect the rights of the Seller thereunder and, if after
the Seller shall have fulfilled its duties under Section 6.1 hereof with
respect to using reasonable efforts to obtain such required consents, such
consents shall not have been obtained. If such consent is not obtained or if
any attempted assignment would be ineffective or would affect Seller's rights
thereunder so that the Purchaser would not in fact receive all such rights,
then the Purchaser shall act as the agent for Seller in order to obtain for the
Purchaser the benefits thereunder.
9.2 PURCHASER APPOINTED ATTORNEY FOR SELLER. Effective at the
Closing Date, the Seller hereby constitutes and appoints the Purchaser, its
successors and assigns, the true and lawful attorney of Seller, in the name of
either the Purchaser or Seller (as the Purchaser shall determine in its sole
discretion) but for the benefit and at the expense of the Purchaser (except as
otherwise herein provided), (i) to institute and prosecute all proceedings
which the Purchaser may deem proper in order to collect, assert or enforce any
claim, right or title of any kind in or to the Purchased Assets as provided for
in this Agreement; (ii) to defend or compromise any and all actions, suits or
proceedings in respect of any of the Purchased Assets, and to do all such acts
and things in relation thereto as the Purchaser shall deem advisable; and (iii)
to take all action which the Purchaser may reasonably deem proper in order to
provide for the Purchaser the benefits under any of the Purchased Assets where
any required consent of another party to the sale or assignment thereof to the
Purchaser pursuant to this Agreement shall not have been obtained. The
Purchaser shall be entitled to retain for its own account any amounts collected
pursuant to the foregoing powers, including any amounts payable as interest in
respect thereof.
10.0 PRODUCT WARRANTY AND LIABILITY CLAIMS
10.1 PRODUCT WARRANTY AND LIABILITY CLAIMS; COOPERATION IN
LITIGATION. As to any product warranty or liability claims asserted against
Purchaser or Seller for products of any of the Businesses shipped after the
Closing, Purchaser shall be fully responsible for their defense and resolution.
As to product warranty and liability claims for products of any of the
Businesses shipped before the Closing and first asserted against Purchaser or
Seller or Holco after the
42
Closing, Seller shall be fully responsible for their defense and resolution
except to the extent an accrual therefor is included in the Closing Statement
as contemplated by Section 3.4.1(f), with respect to which Purchaser shall be
responsible to the extent of such accrual; provided, however, that, with
respect to any inventory returned to Purchaser in connection with the assertion
of any such product warranty or liability claim, Purchaser, at its option, may
either deliver to Seller the scrap value of such inventory returns to Purchaser
or credit the scrap value of such inventory against amounts then owing by
Seller to Purchaser pursuant to this Agreement. As to such claims first
asserted before the Closing, Seller shall be solely responsible. Purchaser and
Seller shall each cooperate with the other in the defense of any such action
and in the prosecution or defense of any other actions affecting the Businesses
to the extent reasonably so requested.
11.0 MISCELLANEOUS
11.1 BROKERS' COMMISSION. The Purchaser will indemnify and hold
harmless the Seller from the commission, fee or claim of any person, firm or
corporation employed or retained or claiming to be employed or retained by the
Purchaser to bring about, or to represent it in, the transactions contemplated
hereby. The Seller will indemnify and hold harmless the Purchaser from the
commission, fee or claim of any person, firm or corporation employed or
retained or claiming to be employed or retained by the Seller to bring about,
or to represent them in, the transactions contemplated hereby.
11.2 AMENDMENT AND MODIFICATION. The parties hereto may amend,
modify and supplement this Agreement in such manner as may be agreed upon by
them in writing.
11.3 TERMINATION.
11.3.1 Anything to the contrary herein notwithstanding, this
Agreement may be terminated and the transactions contemplated hereby
may be abandoned at any time prior to the Closing:
11.3.1.1 by the mutual written consent of the
parties hereto;
11.3.1.2 by the Purchaser or the Seller if there is
an order of any court or other governmental agency or
authority restraining, prohibiting or invalidating the sale of
the Purchased Assets or Shares to the Purchaser or any other
material transaction contemplated hereby, or, in the case of
the Purchaser, which would materially and adversely affect the
right of the Purchaser to own, operate or control the
Purchased Assets and such order is not dismissed, overturned
or otherwise vacated within 30 days after the entry thereof;
or
43
11.3.1.3 by either party in the event of the
material breach by the other party of any provisions of this
Agreement, which breach is not remedied by the breaching party
within 30 days after receipt of notice thereof from the
terminating party; or
11.3.1.4 by Seller or Purchaser if the Closing has
not taken place by August 31, 1996, provided that the failure
of the Closing to have occurred on or before such date shall
not have resulted from the breach by the terminating party of
any representation, warranty, covenant or agreement of such
party contained in this Agreement.
If this Agreement is terminated pursuant to clauses 11.3.1.1 or 11.3.1.2 of
this paragraph 11.3.1, no party shall have any liability for any costs,
expenses, loss of anticipated profit or any further obligation for breach of
warranty or otherwise to any other party to this Agreement. Any termination of
this Agreement pursuant to clauses 11.3.1.3 or 11.3.1.4 of this paragraph
11.3.1 shall be without prejudice to any other rights or remedies of the
respective parties hereof, including any rights against any other party for a
breach hereof occurring prior to termination of this Agreement.
11.3.A CONFIDENTIALITY.
11.3.A.1 From the date hereof until the earlier to occur of
the Closing Date or the termination of this Agreement pursuant to
Section 11.3 hereof, each of Purchaser and Seller will refrain, and
will cause its respective affiliates, officers, directors, employees,
agents, and other representatives to refrain, from disclosing to any
other person or entity any documents or information concerning the
other party hereto (including, with respect to Seller, the Companies
and the Businesses) acquired by it in connection with this Agreement
or the transactions contemplated hereby unless (i) such disclosure is
compelled by judicial or administrative process or by other
requirements of law (including in connection with obtaining necessary
insurance regulatory approvals) and notice of such disclosure is
furnished to such other party hereto; (ii) either party hereto deems
it advisable (upon advice of such party's legal counsel) to disclose
any such documents or information in connection with the requirements
of any securities law; or (iii) such documents or information can be
shown to have been (A) previously known by the party hereto receiving
such documents or information, (B) in the public domain through no
fault of such receiving party, or (C) later acquired by such receiving
party from other public sources.
11.3.A.2 If this Agreement is terminated pursuant to Section
11.3 hereof, Purchaser shall continue to adhere to the terms of the
Confidentiality Agreement dated February 8, 1996, between Purchaser
and J.P. Morgan Securities, Inc., as
44
agent for Seller, with respect to information concerning Seller, the
Companies or the Businesses obtained by Purchaser in connection with
this Agreement or investigations or evaluations concerning the
transactions contemplated hereby.
11.3.A.3 If the Closing occurs, following the Closing Date
(1) Seller will refrain, and will cause its affiliates, officers,
directors, employees, agents and other representatives to refrain,
from disclosing to any person or entity any information regarding the
Companies, the Businesses or the transactions contemplated hereby
unless (i) such disclosure is compelled by judicial or administrative
process or by other requirements of law and notice of such disclosure
is furnished to Purchaser; (ii) the Seller deems it advisable (upon
advice of legal counsel to Seller) to disclose any such documents or
information in connection with the requirements of any securities law;
or (iii) such documents or information can be shown to have been (A)
in the public domain through no fault of Seller, or (B) later acquired
by Seller from other public sources and (2) Purchaser will refrain,
and will cause its officers, directors, employees, agents and other
representatives to refrain, from disclosing to any other person or
entity any documents or information concerning the business or
operations of Seller other than to the extent relating to the
Companies or the Businesses unless (i) such disclosure is compelled by
judicial or administrative process or by other requirements of law and
notice of such disclosure is furnished to Seller; (ii) the Purchaser
deems it advisable (upon advice of legal counsel to Purchaser) to
disclose any such documents or information in connection with the
requirements of any securities law; or (iii) such documents or
information can be shown to have been (A) in the public domain through
no fault of Purchaser, or (B) later acquired by Purchaser from other
public sources.
11.3.A.4 The parties hereto acknowledge and agree that (i) a
breach of any of the terms or provisions of this Section 11.3.A would
cause irreparable damage to the non-breaching party for which adequate
remedy at law is not available; and (ii) the non-breaching party will
be entitled as a matter of right to obtain, without posting any bond
whatsoever, an injunction, restraining order, or other equitable
relief to restrain any threatened or further breach of this Section
11.3.A, which right will not be exclusive but will be cumulative and
in addition to any other rights and remedies available at law or in
equity.
11.3.A.5 At the Closing, Seller will assign to Purchaser the
non-exclusive right to enforce the rights of Seller and its affiliates
under each of the confidentiality agreements between Seller or its
affiliates (directly or indirectly through J.P. Morgan Securities,
Inc., acting as agent for Seller) and prospective purchasers of the
Companies and the Businesses.
11.4 BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of (i) the parties hereto and their respective
successors, assigns, heirs and legal representatives and (ii) all affiliates of
Seller to whom all or substantially all of the assets of the
45
UNR-Rohn Division of UNR are transferred or assigned, either as one or a series
of transactions. No rights or obligations hereunder may be assigned by Seller
or Purchaser without the prior written consent of the other, provided that
Purchaser may assign its rights and obligations hereunder to a wholly-owned
direct or indirect subsidiary of Purchaser without Seller's prior written
consent if Purchaser irrevocably and unconditionally guarantees the performance
of all the assignee's obligations under this Agreement, subject only to the
terms and conditions of this Agreement.
11.5 ENTIRE AGREEMENT. This Agreement, the Exhibits and Schedules
attached hereto and the confidentiality agreement between the Purchaser and
J.P. Morgan Securities Inc. dated February 8, 1996 contain the entire agreement
of the parties hereto with respect to the purchase of the Purchased Assets and
the other transactions contemplated herein, and supersede all prior
understandings and agreements of the parties with respect to the subject matter
hereof. Any reference herein to this Agreement shall be deemed to include the
Schedules and Exhibits attached hereto.
11.6 HEADINGS. The descriptive headings in this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.
11.7 EXECUTION IN COUNTERPART. This Agreement may be executed in
any number of counterparts, each of which shall be deemed an original.
11.8 NOTICES. Any notice, request, information or other document
to be given hereunder to any of the parties by any other party shall be in
writing and delivered to the parties at the following addresses (or to such
other address as a party may have specified by notice to the other party
pursuant to this provision):
If to Seller, addressed to:
UNR Industries, Inc.
332 South Michigan Avenue
Chicago, Illinois 60604
Attn: General Counsel
Fax: 312/341-0349
with a copy to:
Bell, Boyd & Lloyd
Three First National Plaza
70 West Madison Street
Suite 3300
Chicago, Illinois 60602
Attn: John H. Bitner, Esq.
Fax: 312/372-2098
46
If to Purchaser, addressed to:
Chase Brass Industries, Inc.
State Route 15
P.O. Box 152 (do not use for Federal Express
or other courier service) Montpelier Ohio
43543-0152 Attention: Corporation Secretary
Fax: 419/485-8150
with a copy to:
Winstead Sechrest & Minick P.C.
5400 Renaissance Tower
1201 Elm Street
Dallas, Texas 75270-2199
Attn.: Rodney L. Moore, Esq.
Fax: 214/745-5390
Any such notice shall be deemed given (i) when receipted for by the party to
whom addressed, in the case of personal delivery; (ii) the next business day
following service by overnight mail or delivery service; (iii) the third
business day following the deposit in the U.S. mail, postage prepaid,
registered or certified mail, return receipt requested; or (iv) upon receipt of
electronic facsimile transmission, provided that a copy of such facsimile
notice shall simultaneously be sent to the address by certified or registered
mail, return receipt requested.
11.9 GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY RIGHT.
This Agreement shall be governed by and construed in accordance with the
internal laws of the State of Delaware applicable to contracts made and to be
performed therein without regard to the conflicts of laws principles thereof.
Each of the parties to this Agreement irrevocably consents to the exclusive
jurisdiction and venue (and waives any inconvenient forum objection) of the
state and federal courts located in the State of Delaware for the purposes of
any court proceedings hereunder and to accept service of process by any means
specified in Section 11.8. EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY
WAIVES ITS RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING BROUGHT HEREUNDER.
11.10 LIMITATION ON RIGHTS OF OTHER PERSONS. Nothing expressed or
implied in this Agreement is intended or shall be construed to confer upon or
give any person, firm, corporation or entity other than the parties hereto any
rights or remedies under or by reason of this Agreement or any transaction
contemplated hereby, except as herein otherwise provided.
11.11 SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under present or future laws effective
during the term of this Agreement, such provision shall be fully severable and
this Agreement shall be construed and enforced as if such illegal, invalid, or
unenforceable provision had never comprised a part of this Agreement; and the
remaining provisions of this Agreement shall remain in full force and effect
and shall not be
47
affected by the illegal, invalid, or unenforceable provision or by its
severance from this Agreement. Furthermore, in lieu of such illegal, invalid
or unenforceable provision, there shall be added automatically as part of this
Agreement a provision as similar in its terms to such illegal, invalid or
unenforceable provision as may be possible and be legal, valid and enforceable.
11.12 TERMINATION OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. The
agreements of the parties contained in Sections 6.4, 6.6, 11.1, 11.2, 11.3.A,
11.9, 11.11 and 14.0 shall survive the termination of this Agreement. All
other representations, warranties, agreements and covenants in or pursuant to
this Agreement shall not survive the termination of this Agreement.
11.13 CERTAIN DEFINITIONS. As used herein, the term "reasonable
efforts" means those commercially reasonable efforts which would be exerted by
a substantial business enterprise to accomplish the desired result, short of
the expenditure of funds disproportionate to the benefit derived; and the term
"affiliate" shall mean, with respect to a person or entity, any other person or
entity which, directly, or indirectly or through one or more intermediaries,
controls or is controlled by, or is under common control with, the person or
entity specified; and the term "material adverse effect" shall mean a material
adverse effect on (i) the business, financial condition or results of
operations of the Businesses, taken as a whole, or (ii) the validity or
enforceability of this Agreement or the ability of the Seller to perform its
obligations under this Agreement.
12.0 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
12.1 SURVIVAL.
12.1.1 Subject to Section 12.2 hereof and Article 13.0
hereof, the representations and warranties respectively made by Seller
and Purchaser in this Agreement, in the Schedules hereto, or in any
certificate required to be delivered pursuant to this Agreement will
expire on the Closing Date except that (i) the representations and
warranties of Seller set forth in Sections 4.3, 4.8, 4.10 and 4.21
hereof shall survive until the expiration of all applicable statutes
of limitations (including all periods of extension, whether automatic
or permissive), and (ii) the representations and warranties of Seller
set forth in Sections 4.6, 4.7 and 4.19 hereof shall survive until the
first anniversary of the Closing Date.
12.1.2 The covenants and agreements of Seller and Purchaser
that, by their terms, are to be complied with prior to Closing will
survive the Closing until the first anniversary of the Closing Date.
12.1.3 The covenants and agreements of Seller and Purchaser
contained in this Agreement, to the extent that, by their terms, they
are to be performed or complied with after the Closing, including,
without limitation, the indemnification agreements set forth in
Article 13.0 hereof, will survive the Closing until the later of (i)
the first anniversary of the Closing Date, or (ii) the expiration of
all applicable statutes of limitations (including all periods of
extension, whether
48
automatic or permissive) affecting any such covenant or agreement;
provided, however, that any such covenant or agreement that specifies
a term or period expiring before the expiration of all applicable
statutes of limitations will survive for a period of 90 days following
the expiration of such specified term or period.
12.2 PURSUIT OF CLAIMS. Any claim for indemnification for a breach
of a representation or warranty hereunder shall be brought within the survival
period specified in Section 12.1 hereof. If a claim for indemnification is
made in accordance with Article 13.0 hereof before the expiration of the
applicable survival period set forth in Section 12.1 hereof, then
(notwithstanding such survival period) the representation, warranty, covenant,
or agreement applicable to such claim will survive until the resolution of such
claim by final, nonappealable judgment or settlement, but only with respect to
such claim.
13.0 INDEMNIFICATION AND PROCEDURES
13.1 INDEMNIFICATION.
13.1.1 BY SELLER. Each of UNR and Leavitt Structural,
jointly and severally, will defend, indemnify and hold harmless each
of the Purchaser and any of its officers, directors, employees,
representatives, agents, attorneys and affiliates (collectively, the
"Purchaser Indemnitees") from and against, and pay or reimburse the
Purchaser Indemnitees for, any and all liabilities, obligations,
commitments, losses, fines, penalties, sanctions, costs (including
court costs but excluding costs and expenses of in-house experts and
other personnel), expenses, interest, deficiencies or damages (whether
absolute, accrued, conditional or otherwise and whether or not
resulting from third-party claims), including reasonable out-of-pocket
expenses and reasonable fees and expenses of attorneys, accountants,
consultants and expert witnesses (collectively "Losses") resulting
from or arising out of:
(i) any inaccuracy of any representations or warranties made by
Seller in Sections 4.3, 4.6, 4.7, 4.10 and 4.21, of this
Agreement (it being understood that solely for purposes of
this Article 13.0, including, without limitation, the
calculations of Losses pursuant to Section 13.4.1, and
notwithstanding anything to the contrary contained in this
Agreement, to determine if there has been an inaccuracy of a
representation or warranty and the Losses arising from such an
inaccuracy, such representation or warranty shall be read as
if it were not qualified by materiality, including, without
limitation, qualifications indicating accuracy "in all
material respects" or accuracy except to the extent the
inaccuracy will not have a "material adverse effect");
(ii) any failure of Seller to perform any covenant or agreement of
Seller hereunder or fulfill any other obligation of Seller in
respect hereof;
(iii) any and all Excluded Liabilities;
49
(iv) liabilities for Taxes as provided in Section 13.5;
(v) the lawsuits and claims listed on Schedule 4.15 hereto, all
other lawsuits pending as of the Closing Date that would
require disclosure under Section 4.15 hereof, and any lawsuit
or claim that arises from conduct of any member of the Seller
Group that occurred prior to the Closing Date, in any such
case whether such Losses arise directly out of such lawsuits
and claims, or from the assertion of any other claims that
arise from the matters alleged in such lawsuits and claims, or
from the assertion of claims for contribution or indemnity in
connection with such lawsuits and claims under the Articles of
Incorporation or Certificate of Incorporation, as the case may
be, or Bylaws of Leavitt Structural or Holco (and the
resolutions of the respective boards of directors relating
thereto) that arise from conduct that occurred prior to the
Closing Date;
(vi) Subject to Section 13.4.2, (A) any inaccuracy of the
representations and warranties contained in Section 4.19 (it
being understood that solely for purposes of this Article 13,
including without limitation the calculations of Losses
pursuant to Section 13.4, and notwithstanding anything to the
contrary contained in this Agreement, to determine if there
has been an inaccuracy of a representation or warranty and the
Losses arising from such an inaccuracy, such representation or
warranty shall be read as if it were not qualified by
materiality, including, without limitation, qualifications
indicating accuracy "in all material respects" or accuracy
except to the extent the inaccuracy will not have a "material
adverse effect"); and (B) subject to Section 13.3 below, any
of the following: (1) any noncompliance by UNR, Leavitt
Structural or Holco with any Environmental Law on or before
the Closing Date; (2) any Release or threatened Release of
Contaminants occurring, or environmental conditions existing,
on or before the Closing Date at, on, under, or above any of
the properties and assets of the Businesses (including the
Purchased Real Property and Purchased Leasehold Premises) or
any other property currently or previously owned, leased,
operated or used by UNR, Leavitt Structural or Holco in
connection with the Businesses; or (3) any generation,
treatment, storage, disposal, transportation, shipment
offsite, or other management of a Contaminant by UNR, Leavitt
Structural or Holco on or before the Closing Date (for
purposes of this Section 13.1.1 (a)(vi), "UNR," the
"Businesses," "Leavitt Structural" and "Holco" shall include
any predecessor or affiliate of each of them) (the indemnity
provided by this Section 13.1.1(vi) herein referred to as the
"Environmental Indemnity");
(vii) any claim made or liability asserted against the Purchaser (or
any of its affiliates) for contributions to the Chicago Truck
Drivers, Helpers and Warehouse Workers Union Pension Fund (the
"CTD Pension Fund"), except for any contributions that the
Purchaser (or any of its affiliates) might become obligated to
make to the CTD Pension Fund solely by virtue of the Purchaser
(or any of its affiliates) becoming
50
a new contributing sponsor to the CTD Pension Fund pursuant to
a collective bargaining or other agreement that the Purchaser
(or any of its affiliates) enters into after the Closing Date;
and
(viii) claims for health care and disability benefits (including
retiree benefits) related to current or former employees of
UNR, Leavitt Structural or Holco incurred prior to the Closing
Date.
13.1.2 BY THE PURCHASER. The Purchaser will defend,
indemnify and hold harmless Seller and their officers, directors,
representatives, agents, attorneys and Affiliates (collectively, the
"Seller Indemnitees") from and against, and pay or reimburse the
Seller Indemnitees for, any and all Seller Losses resulting from or
arising out of:
(i) any breach by Purchaser of any representations or warranty
of Purchaser contained in Article 5.0 hereof;
(ii) any failure of the Purchaser to perform any covenant or
agreement of Purchaser hereunder or fulfill any other obligation of Purchaser
in respect hereof;
(iii) any and all Assumed Liabilities; and
(iv) any matter arising from the conduct of the Businesses
after the Closing.
13.2 INDEMNIFICATION PROCEDURES. Subject to Sections 13.3.2 and
13.5:
13.2.1 If a Purchaser Indemnitee or Seller Indemnitee (an
"Indemnitee") becomes aware of any matter that it believes is
indemnifiable pursuant to Section 13.1 and such matter involves (i)
any claim made against the Indemnitee by any person or entity other
than a Purchaser Indemnitee or a Seller Indemnitee or (ii) the
commencement of any action, suit, investigation, arbitration, or
similar proceeding against the Indemnitee by any person or entity
other than a Purchaser Indemnitee or a Seller Indemnitee (in either of
cases (i) or (ii), a "Third Party Claim"), the Indemnitee will give
the party obligated to indemnify the Indemnitee under this Article
13.0 (the "Indemnifying Party") prompt written notice of such claim or
the commencement of such action, suit, investigation, arbitration, or
similar proceeding, which notice must (A) provide (with reasonable
specificity) the basis on which indemnification is being asserted, (B)
set forth the actual or good-faith estimated amount of Losses for
which indemnification is being asserted, if known, and (C) be
accompanied by copies of all relevant pleadings, demands, and other
papers served on the Indemnitee; provided, however, that the
Indemnitee's failure to provide the Indemnifying Party with such
notice shall not relieve the Indemnifying Party of its obligations
under this Article 13.0, except to the extent that such Indemnifying
Party's ability to defend against such claim has been prejudiced as a
result of such failure.
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13.2.2 The Indemnifying Party will have a period of 30 days
after the delivery of each notice required by Section 13.2.1 hereof
during which to respond to such notice. If the Indemnifying Party
notifies the Indemnified Party that the Indemnifying Party does not
dispute its liability to the Indemnified Party, and that the
Indemnifying Party desires to defend the Indemnified Party with
respect to the Third-Party Claim, the Indemnifying Party will be
obligated to compromise or defend (and will control the defense of)
such claim, at its own expense and by counsel chosen by the
Indemnifying Party; provided, however, that the Indemnified Party may,
at any time prior to its receipt of such notice from the Indemnifying
Party, file any motion, answer or other pleadings that the Indemnified
Party may deem necessary or appropriate to protect its interest or
those of the Indemnifying Party and not materially prejudicial to the
Indemnifying Party. The Indemnitee will cooperate fully with the
Indemnifying Party and counsel for the Indemnifying Party in the
defense against any such claim, and the Indemnitee will have the right
to participate in the defense of such claim and to employ its own
separate counsel, but the fees and expenses of such separate counsel
shall be at the expense of the Indemnitee unless any of the following
provisions shall apply: (i) to the extent the employment of such
counsel shall have been authorized in writing by the Indemnifying
Party in connection with the defense of such claim, action or
proceeding; (ii) there shall be defenses available to the Indemnitee
that are different from or additional to those available to the
Indemnifying Party and that the Indemnifying Party is not able to
assert on behalf of or in the name of the Indemnitee; or (iii) there
is a conflict of interest that would make it inappropriate under
applicable standards of professional conduct to have common counsel.
If clause (i), (ii) or (iii) in the immediately preceding sentence is
applicable, then the Indemnitee may employ separate counsel at the
expense of the Indemnifying Party to represent or defend it, but in no
event shall the Indemnifying Party be obligated to pay the fees and
disbursements of more than one such separate counsel for any one such
claim, action or proceeding in any one jurisdiction or fees in excess
of fees that are reasonable. If the Indemnifying Party fails to notify
the Indemnified Party that the Indemnifying Party does not dispute its
liability to the Indemnified Party and that the Indemnifying Party
desires to defend the Indemnified Party with respect to the
Third-Party Claim pursuant to this Section 13.2.2, or if the
Indemnifying Party gives such notice but fails diligently and promptly
to defend against or settle the Third-Party Claim, the Indemnitee will
be free to compromise or defend (and control the defense of), at the
expense of the Indemnifying Party such claim and to pursue such
remedies as may be available to the Indemnitee under applicable law.
13.2.3 Any compromise or settlement of any claim (whether
defended by the Indemnitee or by the Indemnifying Party) will require
the prior written consent of the Indemnitee and the Indemnifying Party
(which consent will not be unreasonably withheld).
52
13.2.4 If an Indemnitee becomes aware of any matter that it
believes is indemnifiable pursuant to Section 13.1 hereof and such
matter involves a claim made by a Purchaser Indemnitee or a Seller
Indemnitee, the Indemnitee will give the Indemnifying Party prompt
written notice of such claim, which notice must, subject to Section
13.3.2, (i) provide (with reasonable specificity) the bases for which
indemnification is being asserted, and (ii) set forth the actual or
good-faith estimated amount of Losses for which indemnification is
being asserted. The Indemnifying Party will have a period of 30 days
after the delivery of each notice required by this Section 13.2.4
during which to respond to such notice. If the Indemnifying Party
accepts (in writing) full responsibility for the claim described in
such notice or does not respond within such 30-day period, the
Indemnifying Party will pay upon demand to the Indemnitee the actual
or estimated amount of Losses reflected in such notice. If the
Indemnifying Party disputes such claim, the Indemnifying Party and the
Indemnitee agree to proceed in good faith to negotiate a resolution of
such dispute. If all such disputes are not resolved through
negotiations within 30 days after such negotiations begin or if such
negotiations are not initiated within 30 days after notice is given,
either the Indemnifying Party or the Indemnitee may initiate
litigation to resolve such disputes or otherwise exercise any rights
it may have at law or equity with respect to such disputes.
13.3 CERTAIN ENVIRONMENTAL MATTERS.
13.3.1 The covenant to indemnify under Section 13.1.1(vi)(B)
shall only apply to the extent that the Losses incurred by an
Indemnitee is "Reasonable Environmental Expense." For purposes of this
Agreement, an expense or cost shall be deemed a "Reasonable
Environmental Expense" to the extent such expense or other cost is
incurred to perform activities (including without limitation a site
investigation and remediation or other cleanup activities) which are
required by any order or directive of any governmental agency or
authority or reasonably necessary to (i) cause the environmental
condition giving rise to such Losses to be in compliance with
Environmental Law as in effect at the time of such remedial or other
cleanup action or (ii) comply with or to discharge a duty imposed
under applicable Environmental Law then in effect, in each case after
giving consideration to applicable Environmental Law then in effect
that allows the Indemnitee a range of options with significantly
differing costs as to how to comply with such Environmental Law or
discharge any such duty (including formally adopted risk based cleanup
standards for the presence of Contaminants in the soil, groundwater
and other environmental media) and such factors as (1) the magnitude
and likelihood of future Losses, (2) the potential disruption of, or
the imposition of restrictions on, the continued use of the property
in a manner consistent with its general land use type as of the
Closing, and (3) the likelihood of the occurrence or creation of an
imminent and substantial endangerment to human health or the
environment, in each case that may result in the event any of such
options were utilized.
53
Notwithstanding the preceding paragraph, with respect to any
Losses, a cost or expense shall not be deemed a Reasonable
Environmental Expense to the extent such cost or expense, or any duty
under Environmental Law to undertake the activity giving rise to such
costs or expense, arises from any actual or proposed demolition,
remodeling, expansion, construction, replacement or similar activity
by or at the direction of the Purchaser or any affiliate of the
Purchaser in, on, under or within any such property that is not
otherwise required to be undertaken under any Environmental Law or
other applicable law.
13.3.2 (i) For a claim (an "Environmental Claim") to be a
Loss eligible for indemnification under Section 13.1.1(vi)(B), prior
to incurring costs or expenses for which indemnification is to be
sought, the Purchaser Indemnitee shall provide UNR with a notice (an
"Environmental Claim Notice") which notice shall include documentation
showing in reasonable detail the basis for Purchaser Indemnitee's
assertion that the proposed action and the costs and expenses are
Reasonable Environmental Expenses as contemplated by Section 13.3.1.
The Purchaser Indemnitee shall provide, and cause its representatives
to provide, UNR and UNR's authorized representatives access to and the
opportunity to review the subject of the Environmental Claim and any
studies, records, sampling data, cost estimates and other related
documents utilized by the Purchaser Indemnitee in connection with
establishing the Environmental Claim. Unless UNR delivers written
notice to the Purchaser Indemnitee prior to the 30th day following the
date on which such Environmental Claim Notice is deemed given pursuant
to Section 11.8 hereof that UNR disputes its liability to indemnify
the Indemnitee with respect to all or part of the Environmental Claim,
which notice shall specify in reasonable detail the basis therefor,
UNR shall be deemed to have agreed to indemnify the Indemnitee in
respect to the Environmental Claim. Notwithstanding any other
provision of this Section 13.3.2, Purchaser Indemnitee shall only be
required to give such prior notice as is reasonably practicable before
incurring any costs or expenses (1) pursuant to an order or directive
by a governmental agency or authority or (2) in order to prevent or
abate an imminent and substantial endangerment to human health or the
environment from any environmental condition, Release, or threatened
Release at any of the Purchased Real Property or Purchased Leasehold
Premises.
13.3.3 Upon the payment by UNR to any Purchaser Indemnitee
for any Loss arising out of an Environmental Claim, UNR shall be
subrogated to all rights and causes of action which such Purchaser
Indemnitee may have against any third party relating to such Loss.
13.3.4 For purposes of Section 13.1.1 (vi) and this Section
13.3, the term "Loss" shall be deemed to include any cost and expenses
related to any investigation, pre-remedial studies and investigations
or post-remedial monitoring
54
and care, and any required financial assurance, as well as cost of
clean-up, remedial, corrective, restorative or response actions with
respect to any Environment Claim.
13.4 CLAIMS LIMITATIONS. Notwithstanding the foregoing provisions
of this Article 13.0,
13.4.1 Seller shall have no liability for indemnification for
any Losses under Section 13.1.1(i) hereof until and unless the
cumulative total of such Losses exceeds in the aggregate $250,000 (the
"Deductible"), at which time all amounts of Losses in excess of
$250,000 may be claimed and recovered as provided in this Agreement;
provided, however, that the limitations of this Section 13.4.1 shall
not apply to any Losses resulting from or relating to (i) any
misrepresentation or breach of warranty contained in Section 4.3
hereof, or (ii) Seller's knowing or willful misrepresentations or
breaches of covenants or agreements made as a part of or contained in
this Agreement;
13.4.2 Seller shall have no liability for indemnification for
any Losses for Environmental Claims, unless the aggregate of all
Losses relating thereto for which Seller would, but for this clause,
be liable exceeds on a cumulative basis $400,000, and, to the extent
such Losses exceed on a cumulative basis $400,000 only to the extent
of 90% of the amount of such Losses in excess of $400,000;
13.4.3 If an Indemnitee recovers from any third party
(including insurers) all or any part of any amount previously paid to
it by an Indemnifying Party pursuant to Section 13.1, or 13.5 hereof,
such Indemnitee will promptly pay over to the Indemnifying Party the
amount so recovered (after deducting therefrom the full amount of the
expenses reasonably incurred by it in procuring such recovery), but
not in excess of any amount previously so paid by the Indemnifying
Party.
13.4.4 Notwithstanding anything contained in this Article 13,
Seller shall not be liable to indemnify any Purchaser Indemnity for
any Loss, and such Loss shall not be applied towards the thresholds in
Sections 13.4.1 and 13.4.2 hereof, to the extent such Losses are
reserved against or otherwise reflected as a liability in the Closing
Statement.
13.4.5 Notwithstanding anything contained in this Article 13,
Seller's liability for indemnification for any Losses hereunder shall
not exceed $80,000,000 in the aggregate.
13.5 TAX INDEMNIFICATION.
13.5.1 Seller will be responsible for, will pay or cause to
be paid, and will indemnify and hold harmless each Purchaser Indemnity
from and against, any and all Losses for or in respect of each of the
following:
55
(i) any and all Taxes arising out of or relating to operations of
the Businesses or other business or operations of,
transactions involving, and distributions made by or to, UNR,
Leavitt Structural, Holco or any other member of an Affiliated
Group, or the assets of any of them, with respect to any
taxable period (or portions thereof) of the Business, Leavitt
Structural or Holco (or any predecessor) ending on or before
the Closing Date (including, without limitation, any liability
for Taxes resulting from an acceleration of an "intercompany
transaction," within the meaning of Treasury Regulation
Section 1.1502-13(d) (or any analogous or similar provision
under state, local or foreign law or any predecessor provision
or regulation), that occurred on or before the Closing Date
and Taxes asserted against Purchaser or its affiliates,
including Holco, as a result of transferee liability);
(ii) any and all Taxes of any member (other than the Businesses,
Leavitt Structural or Holco) of an affiliated, consolidated,
combined, or unitary group of which the Businesses, Leavitt
Structural or Holco (or any predecessor) is or was a member on
or prior to the Closing Date by reason of the liability of the
Businesses, Leavitt Structural or Holco pursuant to Treasury
Regulation Section 1.1502-6(a) or any analogous or similar
state, local or foreign Law;
(iii) Taxes asserted against any person for which any Purchaser
Indemnity is liable under any agreement entered into by UNR,
Leavitt Structural or Holco prior to the Closing to indemnify
such person; and
(iv) any breach by Seller of any representation, warranty,
covenant, or agreement contained in Sections 4.8 or 13.5
hereof;
provided, however, that Seller shall not be liable for or obligated to
indemnify any Purchaser Indemnity for any Losses for or in respect of
Taxes to the extent such Taxes (A) result from an election or deemed
election by Purchaser under Section 338 of the Code with respect to
Holco (or any analogous provision under any state, local or foreign
tax law) or (B) arise as a result of the business, operations or
transactions of Purchaser or Holco after the Closing.
13.5.2 Purchaser agrees to pay, and to indemnify Seller in
respect of, and hold Seller harmless from and against, any and all
Losses for or in respect of Taxes incurred by, imposed upon, or
assessed against Seller or any affiliate of Seller (other than the
Businesses or Holco) described in the proviso at the end of Section
13.5.1 hereof.
13.5.3 The Purchaser will promptly notify Seller of the
commencement of any claim, audit, examination, or other proposed
change or adjustment by any taxing authority concerning any Taxes or
other Losses covered by Section 13.5.1 hereof ("Tax Claim"). Seller
shall control the defense and settlement of any Tax audit or
administrative or court proceeding relating to taxable periods of the
Business, Leavitt Structural or Holco ending on or prior to the
Closing Date,
56
provided, however, that if the results of any such Tax audit or
administrative or court proceeding could reasonably be expected to be
material to Purchaser, the Businesses or Holco, then Purchaser may, at
its expense, participate in any such contest or proceeding upon
written notice to UNR given within 30 days after being notified of the
commencement of such proceeding and neither party shall compromise or
settle such contest or refund suit without the consent of the other;
provided, that, nothing contained herein shall prevent Seller from
settling any such proceeding if the only potential effect of such
settlement on Purchaser is the possibility that Holco would be liable
for a resulting deficiency as a former member of Seller's consolidated
group, and if Seller pays or makes adequate provision for the payment
of any such deficiency. Seller shall promptly notify the Purchaser if
it decides not to participate in the defense or settlement of any such
Tax audit or administrative or court proceeding and Purchaser
thereupon shall be permitted to defend and settle such Tax audit or
proceeding. Seller will promptly notify the Purchaser of the
commencement of any claim, audit, examination, or other proposed
change or adjustment by any taxing authority which may affect the
liability of the Purchaser or either Company for Taxes (including any
audit or proceeding relating to Seller Consolidated Returns) and
Seller shall keep the Purchaser duly informed on a regular and
periodic basis of the progress thereof. For purposes of this
Agreement, "Seller Consolidated Returns" shall mean all consolidated,
combined, affiliated or unitary Tax Returns which include the
Businesses, Leavitt Structural or Holco with respect to the
Businesses', Leavitt Structural's or Holco's taxable income or loss
for periods through the Closing Date.
13.5.4 Any claim for indemnity hereunder must be made prior
to 60 days after the expiration of the applicable Tax statute of
limitations with respect to the relevant taxable period (including all
periods of extension, whether automatic or permissive).
14.0 EXCLUSIVE DEALING AND TERMINATION FEE
14.1 EXCLUSIVE DEALING.
14.1.1 Commencing on the date of this Agreement and
terminating at 5:00 p.m. Dallas, Texas time on the date this Agreement
is terminated pursuant to Section 11.3 (the "Exclusivity Period"),
except as determined by Seller (on the advice of counsel) as may
otherwise be required to enable the directors of Seller to fulfill
their fiduciary duties under applicable law, Seller shall not, and
shall not authorize or permit any officer, director, agent or employee
of, or any investment banker, financial advisor, attorney, accountant
or other representatives retained by, the Seller or any affiliate of
Seller (each a "Seller Representative"), to, directly or indirectly,
(i) solicit, initiate, seek or encourage (including by way of
furnishing information or assistance) or take other material action to
facilitate any inquiries or the making of any proposal which
constitutes or may reasonably be expected to
57
lead to, an Acquisition Proposal (as defined below) from any person
other than the Purchaser (a "Third Party"), or engage in any
discussions or negotiations relating thereto or in furtherance thereof
or accept any Acquisition Proposal, and Seller shall promptly (but in
any event within one day thereafter) notify the Purchaser orally
(which notice shall promptly be confirmed in writing) of any
Acquisition Proposal or any inquiry with respect thereto which Seller
or any of its affiliates or any Seller Representative may receive.
For purposes of this Agreement, (x) no Seller Representative shall be
deemed to have engaged in "discussions" if such Seller Representative
only advises another person that Seller Representative and Seller are
precluded from taking any action that would constitute a violation of
this Section 14.1.1, and (y) no Seller Representative shall be deemed
to have "furnished information" to any other person if such
information is public information and is furnished in the ordinary
course of Seller's investor relations program.
14.1.2 Seller has terminated and has caused its Seller
Representatives to terminate, all solicitations, encouragement,
activities, discussions and negotiations with any parties conducted
heretofore by Seller or any Seller Representatives with respect to any
Acquisition Proposal.
14.1.3 As used in this Agreement, "Acquisition Proposal"
shall mean any proposal or offer, other than a proposal or offer (1)
by the Purchaser or any of its affiliates or (2) with respect to any
Excluded Assets, for (i) any merger, consolidation, share exchange,
business combination or other similar transaction in which the
Businesses would be acquired by any person, (ii) any sale, lease,
exchange, mortgage, pledge, transfer or other disposition of the
assets of the Businesses, in a single transaction or series of
transactions (whether related or unrelated) other than in the ordinary
course of business, (iii) any exchange offer for outstanding shares of
UNR's common stock or debt securities pursuant to which the Businesses
or any portion there (including the capital stock of Leavitt
Structural or Holco) would be acquired by any Third Party, or the
filing of a registration statement under the Securities Act of 1933,
as amended, in connection therewith, or (iv) any public announcement
of a proposal, plan or intention to do any of the foregoing or any
agreement to engage in any of the foregoing.
14.2 TERMINATION PAYMENT. If this Agreement shall terminate
because of a material breach by the Seller of any representation, warranty,
covenant or agreement of Seller herein, or because of the occurrence of an
event, or the failure of a condition to Purchaser's obligations hereunder or
Seller's obligations hereunder to have been satisfied, which event or failure
is a result of a breach by Seller of its covenants and agreements hereunder,
then, in the event that during or within nine months after the end of the
Exclusivity Period, Seller enters into an agreement providing for a transaction
of a type included within the definition of "Acquisition Proposal," and which
transaction will provide consideration to the Seller or its stockholders
substantially equivalent to or in excess of that contemplated by this
Agreement, with any person (other than the Purchaser or an affiliate of the
Purchaser) with whom Seller or any Seller
58
Representative engaged in discussions or negotiations, or to whom Seller or any
Seller Representative furnished information concerning Seller or assets of the
Businesses, or from whom Seller or any Seller Representative has solicited,
initiated, sought, or encouraged an Acquisition Proposal, during the
Exclusivity Period, whether or not such discussions or negotiations or the
provision of such information was in violation of this Agreement, Seller shall
be obligated to pay Purchaser an amount in cash equal to $3,000,000 (the
"Termination Amount"). Purchaser shall be entitled to receive the Termination
Amount immediately upon the execution by Seller of any such agreement.
15.0 POST-CLOSING TAX MATTERS
15.1 SELLER TAX RETURNS. Seller will prepare and file, or cause to
be prepared and filed, all appropriate and necessary Tax Returns which include,
on a consolidated or any other reporting basis, the results of operations of
the Businesses, Leavitt Structural and Holco for all taxable periods ending on
or before the Closing Date, including the period beginning January 1, 1996,
through the Closing Date (the "Interim Tax Returns") (collectively, the "Seller
Tax Returns"). Seller will timely pay or discharge, or cause to be paid or
discharged, any and all Taxes for which the Businesses, Leavitt Structural and
Holco may be held liable as a result of Seller Tax Returns, unless such Taxes
are being contested in good faith; provided, however, nothing in this Section
15.1 shall be construed to limit Seller's or Purchaser's indemnification rights
set forth in Article 13.0 hereof. Seller and its affiliates will not amend any
Seller Consolidated Return with respect to either of the Companies in a manner
which may adversely affect tax liability of either Company in a taxable period
ending after the Closing Date without consulting with Purchaser and obtaining
the written consent of Purchaser to such amended Tax Return.
15.2 PURCHASER TAX RETURNS. Purchaser will timely prepare and
file, or cause to be timely prepared and filed, all appropriate and necessary
returns, reports and estimates for all Taxes of Holco which relate to taxable
periods ending after the Closing Date, including the period from and after the
Closing Date through December 31, 1996 (collectively, the "Purchaser Tax
Returns"). To the extent any Purchaser Tax Return relates to the operations of
Holco during any period prior to the Closing Date, Purchaser will consult with
Seller in the preparation of such tax return and shall not file such tax return
until obtaining the written consent of Seller (which consent shall not be
unreasonably withheld). Purchaser will pay or cause to be paid to the taxing
authority any and all Taxes due as a result of Purchaser Tax Returns required
to be filed pursuant to the preceding sentence, unless such Taxes are being
contested in good faith; provided, however, that, except to the extent such
Taxes are reserved against or reflected as a liability in the Closing
Statement, Seller shall pay to and reimburse Purchaser for any Taxes paid by
Purchaser or Holco under or pursuant to the Purchaser Tax Returns to the extent
relating to the operations of the Businesses prior to the Closing Date within
five days after Purchaser delivers to UNR a copy of the Purchaser Tax Return
pursuant to which such Tax is payable, and nothing in this Section 15.2 shall
be construed to limit any Purchaser Indemnitee's indemnification rights set
forth in Article 13.0 hereof.
59
15.3 COOPERATION. Purchaser and Seller agree to furnish or cause
to be furnished to each other, upon request, as promptly as practicable, such
information (including, without limitation, access to books and records) and
reasonable assistance relating to the Businesses, Leavitt Structural and Holco
as is reasonable necessary for the preparation and filing of any Tax Return
contemplated in this Article 15.0, for the preparation for any audit, and for
the prosecution of any proceeding in respect of any proposed adjustment.
Purchaser and Seller shall cooperate with each other in the conduct of any
audit or other proceedings involving the Businesses, Leavitt Structural and
Holco or any entity with which they are consolidated or combined for any Tax
purposes and each shall execute and deliver such documents as are necessary to
carry out the intent of this Article 15.0.
15.4 SECTION 338 ELECTION. If Purchaser makes, or is deemed to
make, an election under Section 338 of the Code with respect to Holco,
Purchaser shall be solely responsible for any Taxes resulting from such
election. The election provided for in Section 338(h)(10) of the Code shall
not be made.
60
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
CHASE BRASS INDUSTRIES, INC.
By /s/ Martin V. Alonzo
------------------------------------------
Martin V. Alonzo
President and Chief Executive Officer
UNR INDUSTRIES, INC.
By /s/ T. A. Gildehaus
------------------------------------------
Thomas A. Gildehaus
President and Chief Executive Officer
LEAVITT STRUCTURAL TUBING CO.
By /s/ T. A. Gildehaus
------------------------------------------
Thomas A. Gildehaus
President and Chief Executive Officer
61
<PAGE>
Schedule "A"
The Schedules to the Sale and Purchase Agreement included
herewith as Exhibit 2.1 have been omitted as permitted under item
601(b)(2) of Regulation S-K. A list of omitted schedules is
included at page (vi) of the Sale and Purchase Agreement included
as Exhibit 2.1.
<PAGE>
EXHIBIT "A"
OPINION OF SELLER'S COUNSEL
As used herein, all capitalized terms shall have the
meanings ascribed to them in the Agreement.
1.0 Each of the Seller and the Companies is a corporation
duly incorporated, validly existing and in good standing under
the laws of the jurisdiction of its incorporation and has full
corporate power and authority to carry on the Businesses as now
being conducted by it and to own or hold under lease the
Purchased Assets owned or held under lease by it.
2.0 The Seller has full corporate power and authority to
enter into the Agreement, to sell, convey, assign, transfer and
deliver the Shares and the Purchased Assets to the Purchaser as
provided in the Agreement and to carry out any other transactions
and agreements contemplated thereby.
3.0 The authorized, issued and outstanding capital stock of
the Companies is as set forth on Schedule 4.2. The Shares are
validly issued and outstanding, fully paid and nonassessable.
There are no outstanding warrants, options or rights of any kind
to acquire from UNR, Leavitt Structural or Holco any Shares or
securities of any kind.
4.0 The instruments of transfer and assignment delivered by
the Seller to the Purchaser pursuant to the Agreement are
adequate to convey all rights of the Seller in the Purchased
Assets and the Shares to the Purchaser.
5.0 All corporate and other proceedings required to be
taken by or on the part of the Seller to authorize the Seller to
execute and deliver the Agreement, to sell, convey, assign,
transfer and deliver the Purchased Assets and the Shares pursuant
to the Agreement and to carry out the other transactions contem
plated thereby, have been fully and properly taken.
6.0 The Agreement has been duly executed and delivered by
the Seller and constitutes its valid and binding obligation,
enforceable in accordance with its terms, except as such terms
may be limited by (i) any applicable bankruptcy, reorganization,
moratorium or similar laws, now or hereafter in effect, affecting
the enforceability of creditors' rights generally, or (ii)
general principles of equity.
7.0 The execution and delivery of the Agreement by the
Seller and the consummation of the transactions contemplated
thereby do not and will not (i) conflict with or result in a
breach of or constitute a default under, (ii) result in the
creation of any lien, security interest, charge or other encum
brance upon the Purchased Assets pursuant to, or (iii) give any
third party the right to accelerate any obligation under, any
provision of: (1) the certificates or articles of incorporation
and bylaws of UNR or of either the Companies, (2) any indenture,
mortgage, lease, loan agreement or other agreement or instrument
known to us by which UNR or either of the Companies is bound or
affected or to which any of the Purchased Assets is subject, (3)
any law, statute, rule or regulation to which UNR or either of
the Companies is subject or (4) any judgment or decree known to
me to which UNR or either of the Companies is subject.
8.0 No permit, consent, approval or authorization of, or
declaration to or filing with, any regulatory or other government
authority is required in connection with the execution and
delivery of the Agreement by the Seller and the consummation of
the transactions contemplated thereby, except those which have
been accomplished or obtained or waived in writing by the
Purchaser.
9.0 To my knowledge, there are no actions, suits,
proceedings, orders, investigations or claims pending or threat
ened against the Seller, at law or in equity, or before or by any
federal, state, municipal or other governmental department,
commission, board, bureau, agency or other instrumentality,
domestic or foreign, which reasonably would be expected to
adversely affect its performance under the Agreement or the
consummation of the transactions contemplated thereby.
10.0 Except as set forth in the schedules to the Agreement,
to my knowledge, there are no actions, suits, proceedings,
orders, investigations or claims pending or threatened against
the Seller, at law or in equity, or before or by any federal,
state, municipal or other governmental department, commission,
board, bureau, agency or other instrumentality, domestic or
foreign, which might materially and adversely affect the
Purchased Assets or the business, financial condition or results
of operations of the Businesses.
[Counsel may state that his opinion is in accordance with
the Legal Opinion of the American Bar Association Section of
Business Law (1991).]
<PAGE>
Exhibit "B"
OPINION OF PURCHASER'S COUNSEL
1.0 The Purchaser is a corporation duly organized and
legally existing in good standing under the laws of the State of
Delaware.
2.0 The Purchaser has full corporate power and authority to
enter into the Agreement and to take all of the other actions and
carry out all of the other agreements and transactions
contemplated by the Agreement.
3.0 The Agreement has been duly authorized, executed and
delivered by the Purchaser, and constitutes a valid and binding
obligation of the Purchaser, enforceable in accordance with its
terms, except as such terms may be limited by (i) any applicable
bankruptcy, reorganization, moratorium or similar laws, now or
hereafter in effect, affecting the enforceability of creditors'
rights generally or (ii) general principles of equity.
4.0 To our knowledge, there are no actions, suits,
proceedings, orders, investigations or claims pending or threat
ened against the Purchaser, at law or in equity, or before or by
any federal, state, municipal or other governmental department,
commission, board, bureau, agency or other instrumentality,
domestic or foreign, which reasonably would be expected to
adversely affect the Purchaser's performance under the Agreement
or the consummation of the transactions contemplated thereby.
[Counsel may state that their opinion is in accordance with
the Legal Opinion of the American Bar Association Section of
Business Law (1991).]
<PAGE>
Exhibit "C"
NON-COMPETITION AGREEMENT
THIS NON-COMPETITION AGREEMENT (this "Agreement") is made
and entered into as of the ________ day of 1996, by and between
UNR Industries, Inc., a Delaware corporation ("Seller"), and
_______________________, a Delaware corporation.
W I T N E S S E T H:
WHEREAS, Seller, through the UNR-Leavitt Division of Seller,
Leavitt Structural Tubing Company, a Delaware corporation and
wholly-owned subsidiary of Seller ("Leavitt"), and Holco
Corporation, an Illinois corporation and wholly-owned subsidiary
of Leavitt ("Holco" and, together with the UNR-Leavitt Division
of Seller and Leavitt the "Division"), presently is engaged in
the manufacture and marketing of mechanical and structural steel
tubular products (as such business is conducted through the
Division on the date hereof, the ("Business");
WHEREAS, pursuant to a Sale and Purchase Agreement (the
"Purchase Agreement"),dated _________________, 1996, by and
between Seller, Leavitt and Chase Brass Industries, Inc., a
Delaware corporation ("Chase Brass"), Purchaser is acquiring
substantially all of the assets of Seller used in the operations
of the Division, including without limitation substantially all
of the assets and properties of Leavitt and all of the capital
stock of Holco (collectively, the "Division Assets");
WHEREAS, after the acquisition of the Division Assets,
Purchaser intends to continue the conduct and operation of the
Business as presently conducted;
WHEREAS, Purchaser irreparably will be harmed if, within the
period set forth below, Seller, or any other business owned in
whole or in part by any Seller, directly or indirectly competes
with the Business as continued by Purchaser; and
WHEREAS, the execution of this Agreement by Seller
constitutes a material inducement for the closing of the
transactions contemplated under the Purchase Agreement by
Purchaser;
NOW, THEREFORE, in consideration of the premises and other
consideration as herein recited, the receipt and sufficiency of
which is hereby acknowledged, the parties agree as follows:
1. Covenants.
1.1 No Competition. (a) For a period of five years after
the date hereof the Seller covenants and agrees that it will not,
without the prior written consent of Purchaser, directly or
indirectly (i) engage in or carry on any business engaged in the
manufacture or marketing of mechanical and structural steel
tubing in any geographic area in which the Division now conducts
the Business or makes sales of Products (as herein defined), (ii)
become involved in the development, manufacture, distribution,
licensing, or sale of any products, including without limitation
any mechanical and structural steel tubular products in such
shapes and sizes, which are now being produced by the Business or
whose development, manufacture, distribution, licensing or sale
currently is being researched and developed by the Division for
sale to customers or which have been identified by Purchaser as
products which Purchaser intends to develop through the Division
for sale to customers as listed on Annex A hereto (collectively,
"Products") in any geographic area in which the now conducts the
Business or makes sales of Products; (iii) solicit any current
customer of the Division with respect to the sale of Products; or
(iv) have any ownership or similar economic interest in any firm,
person, partnership, joint venture, corporation, unincorporated
association, or other entity (collectively, a "Person"), whether
as a security holder or investor owning either more than five
percent of any class of unlisted or untraded securities of any
Person or more than five per cent of any class of the issued and
outstanding securities of any Person that is traded on a national
securities exchange or in the over-the-counter market, a creditor
(other than as a trade creditor), a consultant, or otherwise,
that engages in any business, trade, or venture competing with
any component of the Business in any geographic area in which
the Division now conducts the Business or makes sales of
Products.
(b) Notwithstanding Section 1.1(a) hereof, the parties
acknowledge that Seller, through its UNR-Rohn business is engaged
in the manufacture of steel tubing up to two and one-half inches
in diameter and the sale and distribution of fabricated steel
tubing components, galvanized or painted tubing and galvanized or
painted pipe (collectively "Rohn Product"). Nothing in this
Agreement shall prohibit Seller, its successors and assigns, from
(i) the
manufacture of steel tubing up to two and one-half inches in
diameter, (ii) the sale and distribution of Rohn Products which
have been fabricated or machined ("Fabricated Rohn Products") or
otherwise are being sold for application with Fabricated Rohn
Products, (iii) the sale or distribution of Rohn Products
intended for telecommunications, livestock handling or fencing
applications or (iv) other sales of Rohn Products that do not
exceed $1,000,000 in gross revenues in any calendar year,
provided that Seller, its successors and assigns, shall not sell
or distribute Rohn Products or Fabricated Rohn Products to steel
service centers or knowingly sell or attempt to sell such
products to other customers in competition with the Division.
For purposes of this Section 1.1 the term "fabricated or
machined" shall mean the modification of a steel tube in such a
manner as to change the shape or straightness of a tube product
from its original finished state or cutting or drilling openings
or slots within a tube for use in specific applications, but
shall not include any process which only galvanizes, paints, or
otherwise changes the outer or inner coating of a tube.
1.2 Agreement Concerning Employees. For a period of five
years after the date hereof the Seller covenants and agrees that
it will not, without the prior written consent of the Purchaser,
directly or indirectly (including, without limitation, as an
owner, partner, shareholder, investor, lender, consultant or
advisor), alone or with others, solicit for employment, hire,
retain, employ or otherwise provide compensation for or to any
employee of the Purchaser or any of its affiliates, or any person
who is or was an employee of the Division during the 30 days
immediately prior to the date hereof without the prior written
consent of the Purchaser, provided, that, this Section 1.2 shall
not apply to any employee terminated by Purchaser after the
Closing Date.
1.3 Confidentiality. Seller acknowledges that it may have
had access to confidential information, and trade secrets of the
Division regarding the business and customers of the Business and
that such information constitutes valuable, special, and unique
property of the Business. Seller further acknowledges that,
pursuant to the Purchase Agreement, Purchaser is, through the
acquisition of the Division Assets, acquiring the exclusive
ownership and control of, and right to use, such confidential
information and trade secrets of the Division in any State of the
United States and that maintenance by Purchaser of the ownership
and confidentiality of such confidential information and trade
secrets, to the fullest extent feasible is important to
Purchaser. Accordingly, to the extent Seller, and any affiliate
of Seller ("Seller Affiliate"), may have actual knowledge of or
access to any such confidential information or trade secrets, for
a period of five years after the date hereof, except as agreed
upon in writing between Purchaser and Seller, Seller will not,
and will not cause or allow any Seller Affiliate to, in any
manner whatsoever, directly or indirectly, disclose or
communicate to any Person or otherwise use, whether for the
benefit of Seller, any Seller Affiliate, or any other Person, any
such confidential information or trade secrets of the Division
regarding the Business; provided, that Seller may use such
presently existing confidential information and trade secrets in
the businesses directly or indirectly retained by Seller to the
extent Seller presently is doing so and may disclose such
information and trade secrets to the extent and to such persons
or entities as may be required by applicable law and, provided
further that, Seller has given prior written notice and
disclosure to Purchaser and cooperated with Purchaser where
practical to prevent or limit such disclosure.
1.4 Enforcement. The parties hereto agree that the
covenants of Seller contained in this Section 1 are special and
unique, that a breach of any term or provision in this Section 1
may cause irreparable injury to Purchaser and that remedies at
law for the breach of any provision of this Section 1 will be
inadequate and that, in addition to any other remedies it may
have in the event of breach, Purchaser shall be entitled to
enforce specific performance of the terms and provisions of this
Section 1, to obtain temporary and permanent injunctive relief to
prevent the continued breach of such provisions without the
necessity of posting bond or proving actual damage. The
covenants in this Agreement are independent, and the existence of
any claim or cause of action of the Seller or any affiliate of
Seller against Purchaser, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement of
this Agreement by Purchaser. For purposes of this Agreement,
each of Chase Brass and Holco shall be deemed a third party
beneficiary entitled to the benefits of this Agreement and shall
be entitled to enforce this Agreement.
1.5 Separate Covenants. The parties hereto intend that the
covenants contained in Subsections 1.1(a) (i), (ii), (iii) and
(iv) of this Agreement be construed as a series of separate
covenants, one for each county or other defined province in each
geographic area in which the Division now conducts the Business
or makes sales of Products. Except for geographic coverage, each
such separate covenant shall be deemed identical in terms to the
covenant contained in Subsections 1.1(a), (ii), (iii) and (iv)
hereof. If, in any judicial proceeding, a court shall refuse to
enforce any of such separate covenants, then the unenforceable
covenant(s) shall be deemed eliminated from these provisions for
the purpose of those proceedings to the extent necessary to
permit the remaining separate covenants to be enforced; provided,
however, in the event any such unenforceability is caused by such
separate covenant(s) being held to be excessively broad as to
duration, geographical scope, activity or subject, such separate
covenant(s), at the option of Purchaser, shall remain a part of
this Agreement and shall be construed by limiting and reducing it
so as to be enforceable to the extent compatible with the then
applicable law.
1.6 Tolling of Term. If, during any calendar month within
the term of this Agreement, Seller is not in compliance with the
terms of this Section 1, Purchaser shall be entitled to, among
other remedies, compliance by Seller with the terms of this
Section 1 for an additional number of calendar months that equals
the number of calendar months during which such noncompliance
occurred.
1.7 Reasonableness of Restrictions. Seller acknowledges
that the geographic boundaries, scope of prohibited activities,
and time duration of the provisions of Sections 1.1(a)(i), (ii),
(iii) and (iv) and Sections 1.2 and 1.3 are reasonable and are no
broader than are necessary to maintain to protect the legitimate
business interests of Purchaser.
2. Consideration. For and in consideration of the
covenants of the Seller hereunder, Purchaser agrees to pay to
Seller, at the Closing of the acquisition of the Division Assets,
the sum of _________ Dollars ($_____________).
3. Integration. This Agreement represents the entire
understanding and agreement between the parties hereto with
respect to the subject matter hereof, and all other written or
oral agreements relating to the subject matter hereof hereby are
superseded.
4. Amendment; Waiver. No modification or amendment hereof
shall be valid and binding unless it be in writing and signed by
the parties hereto. The waiver of any provision hereof shall be
effective only in the specific instance and for the particular
purpose for which it was given. No failure to exercise, and no
delay in exercising any right or power hereunder shall operate as
a waiver thereof.
5. Benefit; Assignment. This Agreement shall inure to the
benefit of and shall be binding upon the parties hereto and their
respective successors and assigns. The rights of Purchaser
hereunder shall not be diminished by reason of the merger of
Seller into or with any other corporation, any other combination,
consolidation or reorganization of Seller, or the dissolution of
Seller during the term hereof. The rights of Purchaser hereunder
are assignable in whole or in part to any person or entity that
acquires the Business.
6. Invalid Provisions. If any provision of this Agreement
is held to be illegal, invalid, or unenforceable under present or
future laws effective during the term of this Agreement, such
provisions shall be fully severable and this Agreement shall be
construed and enforced as if such illegal, invalid, or
unenforceable provision had never comprised a part of this
Agreement; and the remaining provisions of this Agreement shall
remain in full force and effect and shall not be affected by the
illegal, invalid, or unenforceable provision or by its severance
from this Agreement. Furthermore, in lieu of each such illegal,
invalid, or unenforceable provision, at the option of Purchaser,
there shall be added as a part of this Agreement a provision as
similar in terms to such illegal, invalid, or unenforceable
provision as may be possible and be legal, valid, and
enforceable. Each of the covenants contained in Subsections
1.1(a)(i), (ii), (iii) and (iv) and Sections 1.2 and 1.3 of this
Agreement shall be deemed a separate covenant each being
enforceable irrespective of the enforceability (with or without
reformations of the other covenants contained in Subsections
1.1(a)(i), (ii), (iii) and (iv) and Sections 1.2 and 1.3 of this
Agreement.
7. Governing Law. This Agreement is to be interpreted and
enforced according to the laws of the State of Illinois.
8. Costs. If any action at law or in equity is necessary
to enforce or interpret the terms of this Agreement, the
prevailing party shall be entitled to reasonable attorney's fees,
costs, and necessary disbursements in addition to any other
relief to which it may be entitled.
9. Remedies Cumulative. No remedy
conferred by any of the specific provisions of this Agreement is
intended to be exclusive of any other remedy, and each and every
remedy shall be cumulative and shall be in addition to every
other remedy given hereunder or now or hereafter existing at law
or in equity or by statute or otherwise. The election of any one
or more remedies by any party hereto shall not constitute a
waiver of the right to pursue other available remedies.
10. Affiliates. As used herein, the term "affiliate" means
any Person controlling, controlled by, or under common control
with, the subject Person.
11. Multiple Counterparts. This Agreement may be executed
in a number of identical counterparts, each of which for all
purposes is to be deemed an original, and all of which constitute
collectively, one Agreement; but in making proof of this
Agreement, it shall not be necessary to produce or account for
more than one such counterpart.
12. Cumulative Rights. The rights of the parties under
this Agreement are cumulative and in addition to all similar and
other rights of the parties under other agreements between them,
or among them and others.
IN WITNESS, WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
UNR INDUSTRIES, INC.
By:
Printed Name:
Title:
[PURCHASER]
By:
Printed Name:
Title:
<PAGE>
ANNEX A
Galvanized Steel Tubing and Pipe
Stainless Steel Tubing and Pipe
<PAGE>
Exhibit "D"
SUPPLY AGREEMENT
THIS SUPPLY AGREEMENT (the "Agreement") is made and entered
into as of the ____day of ________________, 1996 by and between
UNR-Rohn, a Division of UNR Industries, Inc., a Delaware
corporation ("UNR-Rohn"), and __________________, Inc., a
Delaware corporation ("Manufacturer").
R E C I T A L S:
A. UNR-Rohn purchases from Manufacturer mechanical and
structural tubing in excess of 2.375 inches in diameter (the
"Tubing"). The term "Tubing" shall also include tubing of 1.9
inches in diameter which UNR-Rohn determines is in compliance
with its quality standards and specifications.
B. Manufacturer manufacturers and sells the Tubing.
BC. Manufacturer required this Agreement as a condition to
Manufacturer's agreement to enter into the Sale and Purchase
Agreement dated May 15, 1996, between Chase Brass Industries,
Inc., UNR Industries, Inc. and Leavitt Structural Tubing Co.
CD. Manufacturer and UNR-Rohn desire to enter into an
agreement whereby UNR-Rohn will only purchase the Tubing from
Manufacturer, except as otherwise provided herein.
A G R E E M E N T:
NOW THEREFORE, in consideration of Ten and 00/100 Dollars
($10.00), the premises, the mutual promises herein contained, the
potential benefits to both parties arising from this Agreement,
and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, UNR-Rohn and
Manufacturer agree as follows:
1. SALE. Manufacturer will sell and UNR-Rohn will purchase
all of UNR-Rohn's requirements for Tubing of the type produced by
Manufacturer from Manufacturer. The quantities and delivery
schedules shall be as specified in purchase orders submitted by
UNR-Rohn. No purchase order shall be binding on Manufacturer or
UNR-Rohn until Manufacturer issues a written confirmation of the
purchase order within five business days of receipt of such
purchase order. In the event Manufacturer does not issue a
written confirmation with respect to any purchase order within
five business days, UNR-Rohn shall be free to purchase the
product set forth in its purchase order from any other supplier.
UNR-Rohn shall pay all invoices for Tubing delivered by
Manufacturer in accordance with normal commercial terms.
2. PRICE. The prices provided by the Manufacturer to UNR-
Rohn shall be no less favorable than the most favorable prices
offered to any other customer of Manufacturer for similar
quantities of Tubing. If more favorable prices are available
from other suppliers of Tubing ordered or to be ordered by UNR-
Rohn, UNR-Rohn will notify Manufacturer of such prices and
Manufacturer may elect within five business days of such notice
to provide the same prices to UNR-Rohn. If Manufacturer elects
not to provide such prices, then UNR-Rohn shall be free to
purchase such Tubing from such other suppliers at such more
favorable prices. For purposes of this paragraph 2, if
Manufacturer's price is (or is reduced to be) within 2% of the
most favorable price available to UNR-Rohn from another supplier,
then the Manufacturer shall be deemed to have satisfied its
obligation under the second sentence of this paragraph.
2. QUALITY. The Tubing supplied by Manufacturer shall be
of a quality that is commercially acceptable and consistent with
UNR-Rohn's quality standards ("Quality Standards"). If
Manufacturer delivers Tubing to UNR-Rohn that is not consistent
with Quality Standards, UNR-Rohn may reject such Tubing and
Manufacturer shall replace such Tubing with Tubing that meets
Quality Standards within a commercially reasonable period of
time. If Manufacturer fails to so replace such Tubing,
Manufacturer shall accept return of Tubing that does not meet
Quality Standards, and UNR-Rohn shall be free to purchase similar
Tubing from any other supplier.
3. DELIVERY. Manufacturer shall deliver all Tubing ordered
by UNR-Rohn in accordance with UNR-Rohn's purchase orders as
accepted by Manufacturer. If Manufacturer fails to deliver
Tubing within five business days after the delivery date with
respect to two or more purchase orders in any calendar year after
receiving written notice from UNR-Rohn of two or more prior late
deliveries within such calendar year, UNR-Rohn, at its sole
option, may terminate this Agreement without any further
liability. UNR-Rohn shall retain all rights and remedies with
respect to any late delivery of any accepted purchase order.
4. OTHER TERMS. Other terms and conditions of sale of
Tubing to UNR-Rohn pursuant to this Agreement that are not
expressly provided for herein shall be in accordance with
commercially reasonable standards and substantially similar in
all material respects to terms and conditions offered to any
other customer of Manufacturer in sales of similar quantities of
Tubing.
5. TERM OF AGREEMENT. This Agreement shall last for a
period of five (5) years from the date first above-written.
6. SEVERABILITY. If any provision of this Agreement is
held to be illegal, invalid, or unenforceable, such provision
shall be fully severable and this Agreement shall be construed
and enforced as is such illegal, invalid, or unenforceable
provision never comprised a part of this Agreement. Furthermore,
in lieu of such illegal, invalid or unenforceable provision there
shall be added automatically as part of this Agreement a
provision as similar in its terms to such illegal, invalid, or
unenforceable provision as may be possible and be legal, valid,
and enforceable.
7. AMENDMENT WAIVER. This Agreement may only be amended by
written instrument signed by UNR-Rohn and Manufacturer.
8. INJUNCTIVE RELIEF. In addition to all other remedies
available at law or in equity, either party shall be entitled to
seek and obtain temporary restraining orders and/or preliminary
or permanent injunctions to restrain or enjoin any violation of
this Agreement. In the granting of any
ch equitable relief, the party entitled to relief shall not be
required to post bond or prove damages. These remedies are in
addition to all other relief set forth in this Agreement and
available at law, along with attorney's fees and costs of
pursuing available remedies, to enforce the terms of this
Agreement. The parties hereby waive, with respect to any future
dispute related to this Agreement, any defense based on the
argument that the other party will not be irreparably harmed or
that they have available an adequate remedy at law.
9. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an
original but all of which together will constitute one and the
same instrument.
10. SUCCESSORS AND ASSIGNS; LIMITATION UPON ASSIGNMENT.
This Agreement shall inure to the benefit of, and shall be
binding upon, the respective legal representatives, successors,
and assigns of each of the parties. This Agreement may not be
assigned or the duties and responsibilities contained herein
otherwise transferred by UNR-Rohn or by Manufacturer without the
express written consent of the other party.
11. INTEGRATION. This Agreement represents the entire
agreement between the parties with respect to the subject matter
of this Agreement, and all other written or oral agreements
relating to the subject matter hereof are hereby superseded.
12. NOTICES. All notices, demands, requests or other
communications that may be or are required to be given, served or
sent by either party to the other party pursuant to this
Agreement shall be in writing and shall be mailed by first-class,
registered or certified mail, return receipt requested, postage
prepaid, or transmitted by hand delivery, telegram or facsimile
transmission addressed as set forth on the signature pages
hereof. Each party may designate by notice in writing a new
address to which any notice, demand, request or communication may
thereafter be so given, served or sent. Each notice, demand,
request or communication that is mailed, delivered or transmitted
in the manner described above shall be deemed sufficiently given,
served, delivered, sent and received for all purposes at such
time as it is delivered to the addressee with the return
receipt, the delivery receipt, the affidavit of messenger or
(with respect to a facsimile transmission) the answer back being
deemed conclusive evidence of such delivery or at such time as
delivery is refused by the addressee upon presentation.
13. GOVERNING LAW. THE TERMS AND PROVISIONS OF THIS
AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY,
THE LAWS OF THE STATE OF ILLINOIS.
IN WITNESS WHEREOF, the parties have executed this Agreement
to be effective as of the date first above-written.
UNR-Rohn:
[Manufacturer:]
UNR-Rohn, A DIVISION OF UNR
________________________, INC.
INDUSTRIES, INC., a Delaware corporation a
_________________corporation
By: _______________________________ By:
__________________________
Name: _____________________________ Name:
________________________
Title: ____________________________
Title:________________________
Address: __________________________ Address:
_____________________
___________________________________
______________________________
___________________________________
______________________________
Facsimile: ________________________
Facsimile:_________________________
AMENDMENT NO. 1
TO SALE AND PURCHASE AGREEMENT
This AMENDMENT NO. 1 TO SALE AND PURCHASE AGREEMENT (the "Amendment")
is made as of the 1st day of July, 1996, by and among CHASE BRASS
INDUSTRIES, INC., a Delaware corporation ("CBI"), LEAVITT TUBE COMPANY,
INC. ("Purchaser"), a Delaware corporation and wholly-owned subsidiary
of CBI, UNR INDUSTRIES, INC., a Delaware corporation ("UNR"), and
LEAVITT STRUCTURAL TUBING CO., a Delaware corporation and an
wholly-owned subsidiary of UNR ("LST" and collectively with UNR
"Seller"), to amend that certain Sale and Purchase Agreement, dated as
of May 15, 1996 ("Purchase Agreement"), by and among CBI, UNR and LST,
as assigned by CBI to, and assumed by, Purchaser pursuant to that
certain Assignment and Assumption Agreement dated June 26, 1996
("Assignment").
1. Definitions. Unless the context indicates otherwise, capitalized
terms used but not defined in this Amendment and defined in the
Purchase Agreement shall have the meanings ascribed to them in the
Purchase Agreement.
2. Section 3.1.
Section 3.1 of the Purchase Agreement hereby is amended to read in its
entirety as follows:
3.1 Time and Place of Closing. The closing of the sale
of the Purchased Assets and the Shares shall take place st
Bell, Boyd & Lloyd, Three First National Plaza Room 3300,
Chicago, Illinois at 10:00 o'clock A.M. local time, on August
30, 1996; provided, however, that if any conditions to the
obligations of the parties under this Agreement has not been
satisfied or waived by said date, then the closing shall take
place on a subsequent date, which shall be determined by the
mutual agreement of Purchaser and Seller (unless this Agreement
is earlier terminated pursuant to Section 11.4 hereof).
Throughout this Agreement, such event is referred to as the
"Closing" and such date and time referred to as the "Closing
Date."
3. Section 3.3.
Section 3.3 of the Purchase Agreement hereby is amended to read in its
entirety as follows:
3.3 Effective Time. The transfer of the Purchased Assets
and the Shares shall be deemed to occur at 12:01 o'clock A.M.
Chicago, Illinois time on the Closing Date, unless the Closing
Date is the last Business Day of the month, in which case the
transfer of the Purchased Assets and the Shares shall be deemed
to occur at 11:59 o'clock P.M. Chicago, Illinois time on the
Closing Date (the "Effective Time"). All of the transactions
described in this Article 3.0 shall be deemed to occur
simultaneously, and none shall be deemed completed until all
are completed.
4. Section 3.4.4.; Schedule 3.4.4.
a. Section 3.4.4 of the Purchase Agreement hereby is amended by
deleting all references to "$62,779,434" in each place where such
number is written in Section 3.4.4. and replacing all such references
with "$62,819,245".
b. Schedule 3.4.4 of the Purchase Agreement hereby is deleted in
its entirety and replaced with Schedule 3.4.4 attached hereto.
5. Schedule 4.21. Schedule 4.21 of the Purchase Agreement hereby is
deleted in its entirety and replaced with Schedule 4.21 attached
hereto.
6. Section 11.3.1.4. Section 11.3.1.4 of the Purchase Agreement hereby
is amended by deleting the reference to "August 31, 1996" contained
therein and replacing such date with "September 30, 1996".
7. Stockholder Approval. UNR shall take commercially reasonable
efforts to obtain approval of the majority stockholder of UNR of the
transactions contemplated by the Purchase Agreement as soon as
reasonably practicable after the date hereof.
8. Incorporation by Reference. Sections 11.2, 11.4, 11.6, 11.7, 11.9,
11.10 and 11.11 of the Purchase Agreement are incorporated herein by
reference.
As hereby amended, the Purchase Agreement shall remain in full force
and effect.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date above first written.
<PAGE>
CHASE BRASS INDUSTRIES, INC.
By: /s/ Martin V. Alonzo
Martin V. Alonzo,
President and Chief Executive Officer
LEAVITT TUBE COMPANY, INC.
By: /s/ Peter H. Santoro
Peter H. Santoro,
Vice President
UNR INDUSTRIES, INC.
By: /s/ Thomas A. Gildehaus
Thomas A. Gildehaus,
President and Chief Executive Officer
LEAVITT STRUCTURAL TUBING CO.
By: /s/ Thomas A. Gildehaus
Thomas A. Gildehaus,
President and Chief Executive Officer
<PAGE>
Schedule "A"
The following schedules were omitted from the Amendment No. 1 to
Sale and Purchase Agreement included herewith as Exhibit 2.2, as
permitted under item 601(b)(2) of Regulation S-K:
Schedule 3.4.4 Example of Assets Calculation
Schedule 4.2.1 Employee Benefits
Chase Brass Industries, Inc., agrees to furnish supplementally to
the Securities and Exchange Commission a copy of any omitted
schedule upon request.
ASSIGNMENT AND ASSUMPTION AGREEMENT
(Sale and Purchase Agreement)
This ASSIGNMENT AND ASSUMPTION AGREEMENT ("Agreement") is
entered into as of the 27th day of June, 1996, effective as of
12:01 o'clock a.m. Chicago, Illinois time, by and between CHASE
BRASS INDUSTRIES, INC., a Delaware corporation ("Assignor"), and
LEAVITT TUBE COMPANY, INC., a Delaware corporation and wholly
owned subsidiary of Assignor ("Assignee").
WHEREAS, pursuant to that certain Sale and Purchase
Agreement (the "Purchase Agreement"), dated the 15th day of May,
1996, by and among Assignor, UNR Industries, Inc., a Delaware
corporation ("UNR"), and Leavitt Structural Tubing Co., a
Delaware corporation and wholly owned subsidiary of UNR ("LST"),
Assignor has agreed to purchase substantially all of the assets,
property and business of the Leavitt division of UNR, including
without limitation substantially all of the assets of LST and all
of the issued and outstanding shares of capital stock of Holco
Corporation, an Illinois corporation and wholly owned subsidiary
of LST; and
WHEREAS, Assignor desires to assign to Assignee, and
Assignee desires to assume, the rights and obligations of
Assignor under the Purchase Agreement pursuant to Section 11.4 of
the Purchase Agreement;
NOW, THEREFORE, in consideration of the above premises and
other good and valuable consideration, the receipt and
sufficiency of which hereby is acknowledged, Assignor and
Assignee hereby agree as follows:
1. Definitions. Unless the context otherwise requires,
all capitalized terms used but not defined herein and defined in
the Purchase Agreement shall have the meanings ascribed to them
in the Purchase Agreement.
2. Assignment and Assumption. Assignor hereby conveys,
transfers, and assigns to Assignee all rights and all debts,
liabilities, obligations, commitments, claims, and duties of
Assignor, and Assignee hereby assumes all rights and assumes and
agrees to pay, perform, fulfill and discharge all debts,
liabilities, obligations, commitments, claims, and duties of
Assignor, of any kind, known or unknown, under the Purchase
Agreement ("Assumed Rights and Obligations").
3. Indemnity. Assignee will indemnify, defend and hold
harmless Assignor from, against, and with respect to any claim,
liability, obligation, loss, damage, assessment, judgment, cost,
expense, action, suit, proceeding or demand, of any kind or
character (including but not limited to reasonable attorneys'
fees and expenses and costs reasonably incurred in investigating,
preparing or defending any litigation or claim), arising out of
or relating to the Assumed Rights and Obligations.
4. No Modification of Assignor's Obligations. Assignor
and Assignee each acknowledge and agree that the execution and
delivery of this Agreement does not modify or otherwise affect
Assignor's duties, liabilities and obligations under the Purchase
Agreement and that Assignor shall remain fully liable for all,
and shall not be relieved of any, of the duties, liabilities and
obligations of Assignor under the Purchase Agreement to the
extent such duties, liabilities and obligations are not fully
performed by Assignee.
5. No Further Assignment. Assignee acknowledges and
agrees that it may not assign any of its Assumed Rights and
Obligations under the Purchase Agreement, as assigned to Assignee
hereunder or otherwise, to any other person without the prior
written consent of UNR.
6. Amendment. This Agreement may be modified or amended
only by a writing duly executed by or on behalf of each of
Assignor, Assignee and UNR.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
CHASE BRASS INDUSTRIES, INC.
By:
Martin V. Alonzo, President and
Chief Executive Officer
LEAVITT TUBE COMPANY, INC.
By:
Peter H. Santoro, Vice Presidnet
