ASSET PURCHASE AND SALE AGREEMENT among Maxco, Inc., Atmosphere Annealing, Inc. and BCGW, Inc. (as “Selling Parties”) and Quanex Corporation and Quanex Technologies, Inc. (as “Purchasing Parties”) Dated December 13, 2006
among
Maxco,
Inc.,
Atmosphere
Annealing, Inc.
and
BCGW,
Inc.
(as
“Selling Parties”)
and
Quanex
Corporation
and
Quanex
Technologies, Inc.
(as
“Purchasing Parties”)
Dated
December 13, 2006
TABLE
OF CONTENTS
Page
|
||
ARTICLE
I
|
PURCHASED
ASSETS AND ASSUMED OBLIGATIONS
|
1
|
1.1
|
PURCHASED
ASSETS
|
1
|
1.2
|
PROCEDURES
FOR ASSETS NOT TRANSFERABLE
|
3
|
1.3
|
EXCLUDED
ASSETS
|
4
|
1.4
|
ASSUMED
OBLIGATIONS
|
4
|
1.5
|
EXCLUDED
OBLIGATIONS
|
5
|
|
||
ARTICLE
II
|
PURCHASE
PRICE AND PAYMENT
|
6
|
|
||
2.1
|
PRE-CLOSING
DELIVERIES
|
6
|
2.2
|
DETERMINATION
OF PURCHASE PRICE PAYABLE AT THE CLOSING
|
7
|
2.3
|
PAYMENT
OF PURCHASE PRICE
|
7
|
2.4
|
PURCHASE
PRICE ADJUSTMENT
|
7
|
2.5
|
ALLOCATION
OF PURCHASE PRICE
|
9
|
|
||
ARTICLE
III
|
REPRESENTATIONS
AND WARRANTIES OF THE SELLING PARTIES
|
9
|
|
||
3.1
|
EXISTENCE
AND GOOD STANDING
|
10
|
3.2
|
DUE
AUTHORIZATION
|
10
|
3.3
|
CORPORATE
ORGANIZATION
|
10
|
3.4
|
CONSENTS
|
10
|
3.5
|
ABSENCE
OF CONFLICTS
|
11
|
3.6
|
FINANCIAL
STATEMENTS
|
11
|
3.7
|
TITLE
TO ASSETS
|
11
|
3.8
|
COMPLIANCE
WITH LAWS; PERMITS
|
12
|
3.9
|
TAXES
|
13
|
3.10
|
LITIGATION
|
14
|
3.11
|
BROKERS
|
14
|
3.12
|
CONTRACTS
|
15
|
3.13
|
EMPLOYMENT
MATTERS
|
15
|
3.14
|
EMPLOYEE
BENEFIT MATTERS
|
17
|
3.15
|
INTELLECTUAL
PROPERTY
|
18
|
3.16
|
ENVIRONMENTAL
|
19
|
3.17
|
TANGIBLE
ASSETS
|
21
|
3.18
|
SUFFICIENCY
OF ASSETS
|
21
|
3.19
|
NO
ADVERSE CHANGE
|
22
|
3.20
|
INSURANCE
|
22
|
3.21
|
INVENTORY
|
22
|
3.22
|
ACCOUNTS
RECEIVABLE
|
23
|
3.23
|
BOOKS
AND RECORDS
|
23
|
3.24
|
NO
MATERIAL ADVERSE EFFECT
|
23
|
3.25
|
CUSTOMERS
AND SUPPLIERS
|
23
|
3.26
|
AFFILIATE
TRANSACTIONS
|
24
|
3.27
|
BACKLOG
|
24
|
3.28
|
DERIVATIVE
CONTRACTS
|
24
|
3.29
|
OTHER
INFORMATION
|
24
|
3.30
|
NO
UNDISCLOSED LIABILITY
|
25
|
|
||
ARTICLE
IV
|
REPRESENTATIONS
AND WARRANTIES OF THE PURCHASING PARTIES
|
25
|
|
||
4.1
|
EXISTENCE
AND GOOD STANDING
|
25
|
4.2
|
DUE
AUTHORIZATION
|
25
|
TABLE
OF CONTENTS
(CONTINUED)
Page
|
||
4.3
|
CONSENTS
|
25
|
4.4
|
ABSENCE
OF CONFLICTS
|
26
|
4.5
|
LITIGATION
|
26
|
4.6
|
BROKERS
|
26
|
|
||
ARTICLE
V
|
COVENANTS
OF THE SELLING PARTIES
|
26
|
|
||
5.1
|
CONDUCT
OF BUSINESS
|
26
|
5.2
|
NEGATIVE
COVENANTS RELATING TO CONDUCT OF THE BUSINESSES OF THE
SELLERS
|
26
|
|
||
ARTICLE
VI
|
COVENANTS
OF THE PURCHASING PARTIES AND THE SELLING PARTIES
|
28
|
|
||
6.1
|
HSR
ACT NOTIFICATION AND OTHER CONSENTS
|
28
|
6.2
|
ACCESS
TO INFORMATION AND INSPECTIONS
|
28
|
6.3
|
TITLE
COMMITMENT AND SURVEY
|
29
|
6.4
|
MOTOR
VEHICLES
|
30
|
6.5
|
TAX
MATTERS
|
30
|
6.6
|
BULK
SALES COMPLIANCE
|
31
|
6.7
|
CONFIDENTIALITY
AND PUBLICITY
|
32
|
6.8
|
PAYMENTS
RECEIVED
|
33
|
6.9
|
SATISFACTION
OF CONDITIONS AND FURTHER ASSURANCES
|
33
|
6.10
|
EXCLUSIVITY
AGREEMENT
|
33
|
6.11
|
LIMITATION
ON PURCHASING PARTIES’ OBLIGATION WITH RESPECT TO RETURNED
PRODUCTS
|
33
|
6.12
|
EXPENSES
|
33
|
6.13
|
MAXCO’S
PROXY MATERIALS AND STOCKHOLDERS’ MEETING
|
34
|
6.14
|
ENVIRONMENTAL
MATTERS
|
34
|
6.15
|
NON-COMPETITION
|
34
|
|
||
ARTICLE
VII
|
EMPLOYEES
AND BENEFIT PLANS
|
35
|
|
||
7.1
|
OFFER
OF EMPLOYMENT
|
35
|
7.2
|
VACATION
|
35
|
7.3
|
SALARIES
AND BENEFITS
|
36
|
7.4
|
NO
TRANSFER OF ASSETS
|
36
|
7.5
|
EMPLOYEE
RECORDS
|
36
|
7.6
|
GENERAL
EMPLOYMENT PROVISIONS
|
36
|
ARTICLE
VIII
|
CONDITIONS
PRECEDENT TO OBLIGATIONS OF THE PURCHASING PARTIES
|
37
|
|
||
8.1
|
ACCURACY
OF REPRESENTATIONS AND WARRANTIES
|
37
|
8.2
|
COMPLIANCE
WITH AGREEMENTS AND COVENANTS
|
37
|
8.3
|
XXXX-XXXXX-XXXXXX
|
37
|
8.4
|
NO
INJUNCTIONS
|
37
|
8.5
|
TITLE
INSURANCE
|
37
|
8.6
|
DELIVERIES
|
37
|
8.7
|
LIST
OF NEW CONTRACTS
|
38
|
8.8
|
CONSENTS
|
38
|
8.9
|
ENVIRONMENTAL
ASSESSMENT
|
38
|
8.10
|
NO
MATERIAL ADVERSE EFFECT
|
38
|
8.11
|
TERMINATION
OF CONFIDENTIALITY AGREEMENT
|
38
|
8.12
|
EMPLOYMENT
AGREEMENT
|
38
|
8.13
|
AMENDMENT
TO EMPLOYEE HANDBOOK
|
38
|
8.14
|
INSURANCE
|
38
|
ii
TABLE
OF CONTENTS
(CONTINUED)
Page
|
||
|
||
ARTICLE
IX
|
CONDITIONS
PRECEDENT TO OBLIGATIONS OF THE SELLING PARTIES
|
39
|
|
||
9.1
|
ACCURACY
OF REPRESENTATIONS AND WARRANTIES
|
39
|
9.2
|
COMPLIANCE
WITH AGREEMENTS AND COVENANTS
|
39
|
9.3
|
XXXX-XXXXX-XXXXXX
|
39
|
9.4
|
NO
INJUNCTIONS
|
39
|
9.5
|
DELIVERIES
|
39
|
9.6
|
STOCKHOLDER
APPROVAL
|
39
|
ARTICLE
X
|
CLOSING
|
39
|
|
||
10.1
|
CLOSING
|
39
|
10.2
|
DELIVERIES
BY THE SELLING PARTIES
|
40
|
10.3
|
DELIVERIES
BY THE PURCHASING PARTIES
|
41
|
10.4
|
PASSAGE
OF TITLE AND RISK OF LOSS
|
41
|
|
|
|
ARTICLE
XI
|
TERMINATION
|
42
|
|
||
11.1
|
TERMINATION
|
42
|
11.2
|
EFFECT
OF TERMINATION
|
42
|
|
|
|
ARTICLE
XII
|
INDEMNIFICATION
|
42
|
|
||
12.1
|
SURVIVAL;
REMEDY FOR BREACH
|
42
|
12.2
|
INDEMNIFICATION
BY THE SELLING PARTIES
|
43
|
12.3
|
INDEMNIFICATION
BY THE PURCHASING PARTIES
|
45
|
12.4
|
CLAIMS
|
46
|
12.5
|
ASSUMPTION
OF DEFENSE
|
46
|
12.6
|
SETTLEMENT
OR COMPROMISE
|
46
|
12.7
|
FAILURE
OF INDEMNIFYING PERSON TO ACT
|
47
|
12.8
|
DIRECT
CLAIMS
|
47
|
|
||
ARTICLE
XIII
|
POST-CLOSING
DISPUTE RESOLUTION AND PRE-CLOSING REMEDIES
|
47
|
|
||
13.1
|
INITIAL
MUTUAL DISPUTE RESOLUTION
|
47
|
13.2
|
ARBITRATION
|
47
|
13.3
|
JURISDICTION
AND JURY TRIAL WAIVER WITH RESPECT TO PRE-CLOSING DISPUTES
|
48
|
13.4
|
SPECIFIC
PERFORMANCE
|
49
|
|
||
ARTICLE
XIV
|
MISCELLANEOUS
|
49
|
|
||
14.1
|
AMENDMENT
|
49
|
14.2
|
INTERPRETATION
|
49
|
14.3
|
NOTICES
|
49
|
14.4
|
WAIVERS
|
50
|
14.5
|
SUCCESSORS
AND ASSIGNS
|
51
|
14.6
|
NO
THIRD PARTY BENEFICIARIES
|
51
|
14.7
|
SEVERABILITY
AND REFORM
|
51
|
14.8
|
ENTIRE
UNDERSTANDING
|
51
|
14.9
|
APPLICABLE
LAW
|
51
|
14.10
|
COUNTERPARTS
|
51
|
iii
EXHIBITS
Exhibit
|
Description
|
Exhibit
A
|
Escrow
Agreement
|
Exhibit
B
|
Assignment
and Assumption Agreement
|
Exhibit
C
|
General
Warranty Deeds
|
Exhibit
D
|
Xxxx
of Sale
|
Exhibit
E
|
Selling
Parties’ Legal Opinion
|
Exhibit
F
|
Purchasing
Parties’ Legal Opinion
|
INDEX
TO DEFINITIONS
Defined TermsSection |
Where
DefinedSection
Where Defined
|
AAA
|
13.2
|
AAI
Banked Vacation Time Cash-Out
|
7.2
|
AAI
Benefit Plan
|
3.14(a)
|
AAI
Financial Statements
|
3.6
|
AAI
Intellectual Property
|
3.15(a)
|
AAI
|
Introduction
|
Accounts
Payable
|
1.4(b)
|
Accounts
Receivable
|
1.1(h)
|
Acquisition
Proposals
|
6.10
|
Adjusted
Purchase Price
|
2.4(c)
|
Affiliate
|
3.11
|
Agreement
|
Introduction
|
Ancillary
Agreements
|
3.2
|
Assigned
Contracts
|
1.1(j)
|
Assigned
Purchase Orders
|
1.1(j)
|
Assignment
and Assumption Agreement
|
10.2(a)
|
Assumed
Obligations
|
1.4
|
Banked
Vacation Time
|
7.2
|
Baseline
Working Capital Amount
|
2.1
|
BCGW
|
Introduction
|
Xxxx
of Sale
|
10.2(a)
|
Books
and Records
|
1.1(i)
|
Business
Day
|
2.1
|
Business
Employee
|
1.5(d)
|
CERCLA
|
3.16(a)
|
Closing
|
1.1
|
Closing
Date
|
1.1
|
Closing
Date Financial Statements
|
2.4(a)
|
Closing
Purchase Price
|
2.2
|
iv
COBRA
|
3.14(f)
|
Code
|
2.5
|
Commitment
|
6.3(a)
|
Competitive
Business
|
6.15
|
Competitive
Products
|
6.15
|
Consent
|
3.4
|
Contract
|
1.1(j)
|
Direct
Claim
|
12.8
|
Disclosure
Document
|
1.1(a)
|
EBITDA
Statement
|
2.4(a)
|
EBITDA
|
2.4(a)
|
Effective
Time
|
1.1
|
Encumbrance
|
3.7(a)
|
Environmental
Laws
|
3.16(a)
|
Environmental
Liabilities
|
3.16(i)
|
ERISA
Affiliate
|
3.14(d)
|
ERISA
|
3.14(a)
|
Escrow
Agreement
|
2.3
|
Excluded
Assets
|
1.3
|
Excluded
Obligations
|
1.5
|
Extended
Coverage Endorsement
|
6.3(a)
|
Facilities
|
1.1(d)
|
Final
Statement
|
2.4(b)
|
GAAP
|
2.4(a)
|
General
Warranty Deeds
|
10.2(a)
|
Governmental
Authority
|
3.5
|
Group
Health Plan
|
3.14(f)
|
Hazardous
Substances
|
3.16(d)
|
HSR
Act
|
6.1(a)
|
Including
|
14.2
|
Indemnified
Person
|
12.4
|
Indemnifying
Person
|
12.4
|
Independent
Accounting Firm
|
2.4(b)
|
Intellectual
Property
|
3.15(a)
|
Inventory
|
1.1(c)
|
Knowledge
|
3
and 4
|
Law
|
3.5
|
Litigation
|
3.10
|
Loss
|
12.2(a)
|
Material
Adverse Effect
|
3.10
|
Material
Contract
|
3.12(a)
|
Maxco
|
Introduction
|
New
Contracts
|
1.1(j)
|
Owned
Real Property
|
1.1(d)
|
Owner’s
Policy
|
6.3(a)
|
Parties
|
1.1(a)
|
v
Paying
Party
|
6.5(a)
|
Permit
|
3.5
|
Permitted
Encumbrances
|
3.7(a)
|
Person
|
1.2
|
Post-Closing
Remediation
|
6.14
|
Preliminary
Statement of Working Capital
|
2.1
|
Property
Tax
|
6.5(a)
|
Purchased
Assets
|
1.1
|
Purchaser
|
Introduction
|
Purchasing
Parties
|
Preamble
|
Purchasing
Parties’ Basket
|
12.3(b)
|
Purchasing
Parties’ Group
|
12.2(a)
|
Purchasing
Parties’ Maximum Indemnity Amount
|
12.3(b)
|
Quanex
|
Introduction
|
Registered
Intellectual Property
|
3.15(a)
|
Reimbursing
Party
|
6.5(a)
|
SEC
|
3.6
|
Seller
|
Preamble
|
Seller
Group Health Plan
|
7.3(c)
|
Selling
Parties
|
Preamble
|
Selling
Parties’ Basket
|
12.2(b)
|
Selling
Parties’ Group
|
12.3(a)
|
Selling
Parties’ Maximum Indemnity Amount
|
12.2(b)
|
Statement
of Working Capital
|
2.4(a)
|
Stockholder
Approval
|
3.2
|
Straddle
Period
|
6.5(a)
|
Survey
|
6.3(b)
|
Tangible
Assets
|
1.1(a)
|
Tax
Return
|
3.9(a)
|
Tax
|
3.9(a)
|
Third
Party
|
1.2
|
Third
Party Claim
|
12.4
|
Title
Cure Period
|
6.3(c)
|
Title
Objection Letter
|
6.3(c)
|
Title
Objections
|
6.3(c)
|
Title
Response Letter
|
6.3(c)
|
Title
Review Period
|
6.3(c)
|
Transfer
Tax
|
6.5(c)
|
Transferred
Employee
|
7.1
|
Treasury
Regulations
|
2.5
|
Working
Capital
|
2.1
|
vi
This
ASSET PURCHASE AND SALE AGREEMENT (this “Agreement”) is made on December 13,
2006, by and among Maxco, Inc., a Michigan corporation (“Maxco”), Atmosphere
Annealing, Inc., a Michigan corporation (“AAI”), BCGW, Inc., a Michigan
corporation (“BCGW”), Quanex Corporation, a Delaware corporation (“Quanex”), and
Quanex Technologies, Inc., a Delaware corporation (the
“Purchaser”).
WITNESSETH:
WHEREAS,
the Purchaser wishes to purchase from each of AAI and BCGW (individually, a
“Seller” and collectively, the “Sellers”) and each of the Sellers wishes to sell
to the Purchaser, substantially all of its assets on the terms and conditions
set forth in this Agreement;
WHEREAS,
the Purchaser is a wholly owned subsidiary of Quanex, AAI is a wholly owned
subsidiary of Maxco, and BCGW is a wholly owned subsidiary of AAI;
NOW,
THEREFORE, in consideration of the foregoing and the mutual warranties,
representations, covenants and agreements contained in this Agreement, the
Sellers and Maxco (together, the “Selling Parties”) and the Purchaser and Quanex
(together, the “Purchasing Parties”) agree as follows:
ARTICLE
I
PURCHASED
ASSETS and assumed obligations
1.1 Purchased
Assets.
In
reliance on the representations and warranties contained in this Agreement,
and
subject to the conditions and on the terms set forth in this Agreement, on
the
date (the “Closing Date”) of the consummation of the transactions described in
this Agreement in accordance with Article X (the “Closing”), but effective as of
12:01 a.m. Eastern Time on the Closing Date (the “Effective Time”), each of the
Sellers shall sell, assign, convey, transfer and deliver to the Purchaser,
and
the Purchaser shall purchase, acquire and take assignment and delivery of,
all
of the right, title and interest of the Sellers in and to the assets, properties
and rights described in Sections 1.1(a) through 1.1(n) below (but specifically
excluding the Excluded Assets, as defined in Section 1.3), free and clear of
Encumbrances (other than Permitted Encumbrances):
(a) Tangible
Assets.
The
tangible personal property set forth in Section 1.1(a) of the disclosure
schedule document (the “Disclosure Document”) that is being executed and
delivered by the Selling Parties and the Purchasing Parties (the “Parties”)
concurrently with the execution and delivery of this Agreement, any replacements
of that property acquired before the Effective Time and all other tangible
personal property of every kind and description that is used in or useful to
the
operation of the businesses of the Sellers, including all machinery, equipment,
fixed assets, furniture, tools, dies, automobiles, trucks, loaders, vehicles
and
other rolling stock, maintenance equipment and materials, (collectively, the
“Tangible Assets”);
1
(b) Data
Processing Hardware and Software.
Those
items listed in Section 1.1(b) of the Disclosure Document and all other data
processing hardware and software that is used in the operation of the businesses
of the Sellers;
(c) Inventory.
All
supplies, materials (including raw materials), work-in-progress, semi-finished
goods, finished goods, components, stores, goods in transit, spare parts,
packaging materials, other consumables, and other inventories, including
warehoused and consigned inventories (if any), inventories covered by purchase
orders or held by distributors, used in the operation of the businesses of
the
Sellers (collectively, the “Inventory”) as of the Effective Time;
(d) Owned
Real Property.
The
real property owned by either of the Sellers in Lansing, Michigan, Canton,
Ohio
and North Xxxxxx, Indiana, as described in Section 1.1(d) of the Disclosure
Document (the “Owned Real Property”), including all appurtenant easements
related to the Owned Real Property and all buildings, structures, improvements,
plants, offices, facilities, and fixtures located on the Owned Real Property
(the “Facilities”);
(e) Intangibles.
All
Intellectual Property of the Sellers described in Section 1.1(e) of the
Disclosure Document, all other Intellectual Property used in the businesses
of
the Sellers and all goodwill and going concern value relating to the businesses
of the Sellers;
(f) Other
Current Assets.
All
prepaid expenses, credits, deposits, customer deposits, employee receivables,
letters of credit supporting or in lieu of deposits, claims, prepayments,
refunds, rebates, warranties, choses-in-action, accounts, rights to payment,
existing and future instruments, chattel paper, documents of title, commodity
contracts, rights under derivative, hedging and similar Contracts, and other
similar items relating to or associated with the operation of the businesses
of
the Sellers;
(g) Permits.
All
Permits and permit applications that are legally capable of being
transferred;
(h) Accounts
Receivable.
All
trade and non-trade receivables of a Seller that are payable as a result of
goods sold or services provided by a Seller, excluding any Tax refunds or
credits and excluding any offset amounts under the Honda of America contra
account for sleeves purchased by AAI (“Accounts Receivable”) as of the Effective
Time;
(i) Books
and Records.
Copies
or originals of all records related to the operation of the businesses of the
Sellers, including specifications, service records, plans and designs of
fixtures and equipment, monitoring and test records, customer lists and files,
customer and supplier records, production records, quality control analyses,
sales and warranty records, operating guides and manuals, financial and
accounting records, studies, reports, correspondence and other similar documents
and records (“Books and Records”);
(j) Assigned
Contracts.
The
contracts, leases, easements, licenses, sales orders, purchase orders, supply
agreements, plans and any other agreements, commitments or understandings,
whether oral or written (the “Contracts”) described in Section 1.1(j) of the
Disclosure Document, which describes all Contracts (other than Permits and
purchase orders entered into or accepted by a Seller in the ordinary course
of
business) to which a Seller is a party that relate to the businesses of the
Sellers and that exist as of the date of this Agreement (the “Assigned
Contracts”); all purchase orders entered into or accepted by a Seller in the
ordinary course of business and that are in effect as of the Effective Time
(the
“Assigned Purchase Orders”); and all Contracts (other than purchase orders
entered into or accepted by a Seller in the ordinary course of business) entered
into by a Seller between the date of this Agreement and the Effective Time,
which additional Contracts will be described on a document to be delivered
by
the Selling Parties to the Purchaser at the Closing (the “New
Contracts”);
2
(k) Certain
Insurance Claims.
All of
the Sellers’ insurance claims and rights to the extent that they pertain to the
Assumed Obligations;
(l) Certain
Warranty and Indemnification Rights.
Express
or implied warranties from the Sellers’ suppliers related to their businesses
and all rights of the Sellers to indemnification under any Contracts related
to
their businesses;
(m) Name.
The
trade name “Atmosphere Annealing” and any and all variations thereof and any
related goodwill, trademark applications and registrations, and internet domain
names that consist of or incorporate the name “Atmosphere Annealing” and any and
all variations thereof; and
(n) Other
Assets.
Subject
to the provisions of Section 1.3 of this Agreement, all other assets owned
by
either Seller as of the Effective Time, wherever located, even if not named
or
described in this Agreement, the AAI Financial Statements or the Disclosure
Document, including tangible and intangible assets owned by either
Seller.
All
of
the foregoing assets described in this Section 1.1 (excluding the Excluded
Assets) are referred to collectively as the “Purchased Assets”.
1.2 Procedures
for Assets Not Transferable.
The
Purchasing Parties acknowledge the Sellers’ ability to assign their rights under
the Permits and under the Contracts included within the Purchased Assets may
be
subject to receipt of Consent from individuals, corporations, business trusts,
proprietorships, firms, partnerships, limited partnerships, limited liability
partnerships, limited liability companies, trusts, associations, joint ventures,
Governmental Authorities or other entities (“Persons”). The Selling Parties
shall use all commercially reasonable efforts to obtain those Consents as soon
as possible after the date of this Agreement. To the extent that any Consent
is
required, this Agreement and the Assignment and Assumption Agreement shall
not
constitute an agreement to assign a Permit or a Contract if an assignment or
attempted assignment would constitute a breach of the Permit or Contract. If
any
Permit or Contract cannot, in the reasonable opinion of the Purchasing Parties’
counsel, be transferred effectively without the Consent of a Person other than
a
Selling Party, a Purchasing Party or any Affiliate of a Selling Party or a
Purchasing Party (a “Third Party”), and the Selling Parties are unable to obtain
that Consent even after using all of their commercially reasonable efforts
to do
so, the Selling Parties shall use its best efforts to provide the Purchaser
the
benefits of the Permit or Contract at their cost and expense. At the Closing,
the Selling Parties shall execute and deliver to the Purchaser such
documentation that assures the Purchaser of those benefits and under which
the
Selling Parties shall agree to enforce, at the request of the Purchaser and
for
the account of the Purchaser, any rights of the Selling Parties arising from
any
such Permit or Contract, including the right to elect to terminate in accordance
with its terms on the advice of the Purchaser (to the extent legally
permissible) and to cooperate in any commercially reasonable and lawful
arrangement designed to provide the benefits of the Permit or Contract to the
Purchaser.
3
1.3 Excluded
Assets.
The
following assets (the “Excluded Assets”) shall be retained by the Sellers or the
other Persons owning them, and are not being sold, assigned, transferred or
conveyed to the Purchaser under this Agreement:
(a) Employee
Benefits and Records.
The
assets described in Sections 7.4 and 7.5 of this Agreement;
(b) Cash.
Cash,
investments and other cash equivalents of the Sellers;
(c) Certain
Corporate Records.
The
Sellers’ minute books and other corporate organizational documents, Tax Returns
and financial and employment records;
(d) BCGW
Stock.
All
equity interests in BCGW;
(e) Foreign
Qualifications and Identification Numbers.
All
qualifications of the Sellers to transact business as a foreign corporation,
arrangements with registered agents with respect to foreign qualifications
of
the Sellers, the Sellers’ taxpayer and other identification
numbers;
(f) Tax
Benefits.
Any of
the Sellers’ Tax benefits and rights to refunds, including rights to any net
operating losses;
(g) Rights
Under Debt Agreements.
Any
Contracts or rights of the Sellers relating to borrowed money, as to which
either Seller is the debtor;
(h) Related
Party Receivables.
Amounts
reflected on the Sellers’ financial statements as of the Closing Date as
receivables by a Seller from any stockholder, officer, director or Affiliate
of
a Seller;
(i) Insurance.
All of
the Sellers’ insurance contracts and policies, insurance refunds from prepaid
insurance, and insurance deposits, recoveries and rights under any current
or
prior insurance contracts or policies;
(j) Benefit
Plan Rights.
Any
assets, Contracts or rights relating to the AAI Benefit Plans; and
(k) Loan
Costs.
The
Sellers’ prepaid loan closing costs and related accumulated
amortization.
1.4 Assumed
Obligations.
In
reliance on the representations and warranties of the Selling Parties contained
in this Agreement, and subject to the conditions and on the terms set forth
in
this Agreement, on the Closing Date, but effective as of the Effective Time,
the
Purchaser shall assume and agree to discharge, the following specified
obligations of the Sellers, excluding the Excluded Obligations (the “Assumed
Obligations”):
4
(a) Contract
Obligations.
The
obligations of each Seller to be performed after the Effective Time under the
Assigned Contracts, the Assigned Purchase Orders and the New Contracts,
excluding any obligation arising from or relating to a breach of, or default
under, an Assigned Contract, Assigned Purchase Order or New Contract by either
Seller;
(b) Accounts
Payable.
All
trade payables and accrued expenses of the Sellers that are payable as a result
of goods sold to, or services provided for or to, a Seller, excluding any Taxes
payable and excluding any accrued expenses for which a Seller retains the
corresponding asset or liability pursuant to the terms of this Agreement
(“Accounts Payable”) as of the Effective Time;
(c) Product
Replacement.
Subject
to the provisions of Section 6.11, all warranty obligations to repurchase or
replace products produced by a Seller in the ordinary course of business that
are either in process at the Effective Time or that are produced by a Seller
before the Effective Time and returned by the purchasers thereof after the
Effective Time; and
(d) Employee
Accruals.
All
accruals shown on the Closing Date Financial Statements for the payment of
compensation to the Transferred Employees, including vacation (after giving
effect to Section 7.2), holiday pay, and bonuses, with respect to any
Transferred Employee.
Notwithstanding
the foregoing, nothing contained in this Section 1.4 shall affect the Selling
Parties’ obligations under Section 12.2.
1.5 Excluded
Obligations.
The
Purchaser shall not assume, and shall have no obligation with respect to, the
following obligations (the “Excluded Obligations”), which shall be retained by
the Selling Parties or the other Persons responsible for those
obligations:
(a) Excluded
Assets.
Any
liabilities or obligations relating to the Excluded Assets;
(b) Debt.
Any
debt or other obligations of any Selling Party related to borrowed money,
including interest payable and prepayment or other penalties.
(c) Taxes.
Any
liability or obligation for any Tax of any Selling Party, including any Tax
liability or obligation (i) with respect to a Selling Party’s business
operations on, before or after the Closing Date, (ii) with respect to the
ownership, possession, purchase, lease, sale, disposition, use or operation
of
any of the Purchased Assets at any time on or before the Closing Date, (iii)
that results from the sale of the Purchased Assets under this Agreement or
otherwise results from the consummation of the transactions described in this
Agreement or (iv) with respect to Taxes of any Person for which any Selling
Party is or may be liable under applicable law as a transferee or successor,
by
contract or otherwise;
(d) Employees
and Seller Benefit Plans.
Except
as provided in Sections 1.4(d) and 7.2, all obligations with respect to the
employment of the Persons employed by either Seller or by any Affiliate of
a
Seller with respect to a Seller’s business (“Business Employees”) or the
cessation of such employment (including unfair labor practice charges,
employment discrimination charges, wrongful termination claims, workers’
compensation claims, and any employment-related tort claims); and any AAI
Benefit Plan or other benefit liabilities of either Seller;
5
(e) Fees
and Expenses.
Fees
and expenses incurred in connection with the negotiation, execution, performance
and delivery of this Agreement and the transactions described in this Agreement,
including the fees and expenses of counsel, investment bankers, and brokers
or
finders fees, of any Person other than the Purchasing Parties;
(f) Environmental
Liabilities.
Any
Environmental Liabilities or other obligation or responsibility of a Seller
or
any Affiliate of a Seller relating to environmental matters or arising out
of or
relating to the operation of the businesses of the Sellers or the ownership
or
operation of the Purchased Assets before the Effective Time;
(g) Certain
Payables.
Amounts
reflected on AAI’s books and records as of the Effective Time as payables by a
Seller to any stockholder, officer, director or Affiliate of a
Seller;
(h) Product
Liability.
Any
liability relating to products produced or in-process by a Seller before the
Effective Time (other than obligations to repurchase or replace products under
Section 1.4(c));
(i) Litigation.
The
Litigation described in Schedule 3.10;
(j) General
Obligations.
Except
to the extent specifically assumed under Section 1.4, obligations and
liabilities relating to events occurring before the Effective Time or arising
from ownership or use of the Purchased Assets before the Effective Time or
the
conduct of the business of the Sellers before the Effective Time;
and
(k) Other
Liabilities.
Any
obligation or liability that is not specifically assumed by the Purchaser under
Section 1.4.
ARTICLE
II
PURCHASE
PRICE AND PAYMENT
2.1 Pre-Closing
Deliveries.
At
least two Business Days before the Closing Date, the Selling Parties shall
deliver to the Purchasing Parties (a) an estimated statement of consolidated
Working Capital of AAI as of the Closing Date (the "Preliminary Statement of
Working Capital"), setting forth the Selling Parties' good faith estimate of
each of the components making up, or expected to make up, the Working Capital
as
of the Closing Date and setting forth in reasonable detail the calculation
of
the Working Capital and (b) all necessary wire transfer account information
necessary for the Purchasing Parties to pay the Closing Purchase Price pursuant
to Section 2.2. For purposes of this Agreement, "Business Day" means any day
of
the year other than (y) any Saturday or Sunday; or (z) any other day on which
banks located in Houston, Texas, are generally closed for business; and "Working
Capital" means (i) Accounts Receivable, plus (ii) Inventory, minus (iii)
Accounts Payable, minus (iv) accrued employee compensation payables, as such
terms are used in the Closing Date Financial Statements. The consolidated
Working Capital of AAI as of June 30, 2006, less $446,453.00, was $4,123,376.07
(the "Baseline Working Capital Amount"), and its calculation is set forth in
Section 2.1 of the Disclosure Document. The Preliminary Statement of Working
Capital shall be prepared using the same methodology as was used to prepare
the
calculation of the Baseline Working Capital Amount, except that the $446,453.00
will not be subtracted in determining Working Capital for purposes of the
Preliminary Statement of Working Capital.
6
2.2 Determination
of Purchase Price Payable at the Closing.
If the
Working Capital set forth in the Preliminary Statement of Working Capital
exceeds the Baseline Working Capital Amount, then the Purchase Price payable
at
the Closing (the "Closing Purchase Price") shall be the sum of $58,000,000
and
the amount of that excess. If the Working Capital set forth in the Preliminary
Statement of Working Capital is less than the Baseline Working Capital Amount,
then the Closing Purchase Price shall be $58,000,000 less the amount of that
excess.
2.3 Payment
of Purchase Price.
On the
Closing Date, in consideration for the sale, assignment, conveyance, transfer
and delivery of the Purchased Assets to the Purchaser pursuant to the terms
of
this Agreement, the Purchaser shall assume the Assumed Obligations and shall
pay
the Sellers the Closing Purchase Price, subject to the post-Closing adjustments
described in Section 2.4. The Closing Purchase Price shall be paid as follows:
The Purchaser shall pay $5,000,000.00 of the Closing Purchase Price by wire
transfer of immediately available funds to the escrow account under the terms
of
the escrow agreement to be executed by the Parties and U.S. Bank, National
Association, on the Closing Date, substantially in the form of Exhibit A (the
"Escrow Agreement"); and the Purchaser shall pay BCGW $3,025,000.00 and AAI
the
remaining amount of the Closing Purchase Price, in each case by wire transfer
of
immediately available funds to the accounts specified by the Selling Parties
pursuant to Section 2.1.
2.4 Purchase
Price Adjustment.
(a) As
soon
as practicable, but not later than 30 days after the Closing Date, the Selling
Parties shall provide the Purchasing Parties with (i) unaudited consolidated
financial statements of AAI as of the Closing Date (the “Closing Date Financial
Statements”), (ii) a statement of consolidated Working Capital of AAI as of the
Closing Date (the “Statement of Working Capital”), setting forth a true, correct
and complete description of each of the components making up the Working Capital
as of the Closing Date and setting forth in reasonable detail the calculation
of
the Working Capital and (iii) a statement of earnings before income taxes,
depreciation and amortization (“EBITDA”) of AAI, on a consolidated basis, for
the 12-month period ending December 31, 2006 (the “EBITDA Statement”), setting
forth a true, correct and complete description of each of the components making
up EBITDA as of December 31, 2006 and setting forth in reasonable detail
the calculation of EBITDA as of December 31, 2006. The Statement of Working
Capital and the EBITDA Statement shall be based on a consolidated balance sheet
of AAI prepared in accordance with generally accepted accounting principles
applied in a consistent manner throughout the period specified (“GAAP”) using
the same methodology as was used to prepare the AAI Financial Statements,
subject to the provisions of Section 7.2, and the Preliminary Statement of
Working Capital (including
with respect to the $446,453.00) without regard to any effects of the
transactions related to the Closing. The Purchasing Parties and their
independent auditors and other representatives shall have the right to review
and to verify the Statement of Working Capital and the EBITDA Statement when
received, and the Selling Parties shall provide the Purchasing Parties with
access to all related working papers.
7
(b) The
Purchasing Parties shall have 30 days following receipt by them of the Statement
of Working Capital and the EBITDA Statement during which to dispute the
Statement of Working Capital and the EBITDA Statement. The Purchasing Parties
shall notify the Selling Parties of any dispute regarding those statements
by
delivering written notice to the Selling Parties, which shall specifically
describe each line item of the Statement of Working Capital and the EBITDA
Statement in dispute and the reasons for the dispute. If the Purchasing Parties
fail to notify the Selling Parties in writing of any such dispute within that
30-day period, the Statement of Working Capital and the EBITDA Statement shall
be final and binding on both the Purchasing Parties and the Selling Parties
and
shall be the “Final Statement”. If the Purchasing Parties timely notify the
Selling Parties of a dispute, and the Selling Parties and the Purchasing Parties
cannot resolve the dispute within 20 days after receipt by the Selling Parties
of the notice, the dispute shall be resolved by an independent accounting firm
mutually agreed to by Maxco and Quanex (the “Independent Accounting Firm”).
Maxco and Quanex shall cause the Independent Accounting Firm to make its
determination as promptly as practicable and in any event within 45 days after
the submission of the dispute to the Independent Accounting Firm. The
determination of the Independent Accounting Firm shall be limited only to the
matters in dispute and shall be final and binding on all Parties. The fees
and
expenses of the Independent Accounting Firm shall be shared equally by the
Purchasing Parties, on the one hand, and the Selling Parties, on the other
hand.
In the event of a dispute, the Statement of Working Capital and the EBITDA
Statement, as modified in writing by the Purchasing Parties and the Selling
Parties, or by the Independent Accounting Firm, shall be the “Final
Statement”.
(c) If
the
Working Capital as of the Closing Date, as set forth in the Final Statement,
exceeds the Working Capital set forth in the Preliminary Statement of Working
Capital, then the Closing Purchase Price, as adjusted pursuant to this Section
2.4(b) (the “Adjusted Purchase Price”) shall be increased by that excess. If the
Working Capital, as set forth in the Final Statement, is less than the Working
Capital set forth in the Preliminary Statement of Working Capital, then the
Adjusted Purchase Price shall be decreased by that deficit. Furthermore, if
the
EBITDA as of December 31, 2006, as set forth in the EBITDA Statement, is less
than $9,600,000 (after adding back any adjustment included in the Final
Statement related to the vacation policy amendment by AAI described in Section
7.2), then the Purchase Price shall be decreased by that deficit, but there
shall be no further adjustment to the Adjusted Purchase Price if the EBITDA
exceeds $9,600,000. After the adjustments described in this Section 2.4(c),
if
the Adjusted Purchase Price exceeds the Closing Purchase Price, then the
Purchasing Parties shall pay the Sellers an amount equal to that excess, and
if
the Adjusted Purchase Price is less than the Closing Purchase Price, then the
Selling Parties shall pay the Purchaser an amount equal to that
deficit.
(d) Any
payment to be made pursuant to Section 2.4(c) shall be made by wire
transfer of immediately available funds within five Business Days after the
date
on which the Statement of Working Capital and the EBITDA Statement become the
Final Statement (either upon expiration of the 30-day period referred to in
Section 2.4(b) or resolution of any dispute with respect to the Statement
of Working Capital or the EBITDA Statement), in an amount determined pursuant
to
Section 2.4(c), together with interest on that amount from the Closing Date
through the date the payment is made, at the average prime lending rate for
the
30-day period before the date of the payment as announced by Citibank,
N.A.
8
(e) From
and
after the Closing Date, the Purchaser will cooperate with the Selling Parties
in
the preparation of the Closing Date Financial Statements and the Statement
of
Working Capital and will permit Transferred Employees having primary
responsibility for the preparation of financial statements to assist the Selling
Parties in the preparation of the Closing Date Financial Statements and the
Statement of Working Capital. The Selling Parties shall be responsible for
the
costs and expenses of the preparation of the Closing Date Financial Statements
and Statement of Working Capital and shall reimburse the Purchasers for any
costs or expenses incurred by the Purchasing Parties in connection with their
obligations under this Section 2.4(e), including reimbursement for overhead
expenses allocable to those obligations. For purposes of the foregoing sentence,
overhead expenses shall include compensation paid or payable to a Purchasing
Party’s employees (including employee benefits).
2.5 Allocation
of Purchase Price.
The
Adjusted Purchase Price and the Assumed Obligations shall be allocated among
the
Purchased Assets as set forth in Section 2.5 of the Disclosure Document for
all
Tax purposes. This allocation shall be appropriately adjusted to reflect any
increase or decrease in the Purchase Price under Section 2.5. The Parties shall
use this allocation for all Tax purposes. Each of the Parties shall file
Internal Revenue Service Form 8594 with its applicable federal income Tax Return
(or the federal income Tax Return of the consolidated group) as required by
Law.
Each of the Selling Parties, on the one hand, and the Purchasing Parties, on
the
other hand, shall provide the other with such assistance as is reasonably
necessary to satisfy its reporting obligations under Section 1060 of the
Internal Revenue Code of 1986, as amended through the date of this Agreement,
and the related Treasury Regulations (the “Code”), including as a result of
adjustments to the Closing Purchase Price under Section 2.4. For purposes of
this Agreement, “Treasury Regulations” means the income tax regulations,
including temporary regulations, promulgated under the Code. If any Party
receives a notice from a Governmental Authority disputing its allocation of
the
Adjusted Purchase Price and the Assumed Obligations, the Party receiving the
notice shall promptly notify the other Parties and forward to the other Parties
copies of all correspondence with the Governmental Authority in respect of
the
disputed allocation.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF THE SELLING PARTIES
Each
of
the Selling Parties represents and warrants to the Purchasing Parties as set
forth below in this Article III, as of the date of this Agreement and as of
the
Closing Date. For purposes of this Section III, “Knowledge” of the Selling
Parties means the actual knowledge of each Person listed in Section 3 of the
Disclosure Document and such facts and other matters as any of those Persons
should reasonably be aware of in light of that Person’s position with a Selling
Party and upon reasonable inquiry of the personnel of the Selling Parties.
9
3.1 Existence
and Good Standing.
Each of
the Selling Parties is a corporation duly organized, validly existing and in
good standing under the laws of Michigan. Each of the Sellers has all requisite
corporate power and authority to own, lease and operate its assets and to
conduct its business as it is currently conducted, and is duly qualified to
transact business as a foreign corporation and is in good standing in each
jurisdiction in which its assets are owned, leased or operated by it or the
nature of the operation of its business requires it to qualify to transact
business as a foreign corporation. The jurisdictions in which each Seller is
so
qualified are set forth in Section 3.1 of the Disclosure Document.
3.2 Due
Authorization.
Each of
the Selling Parties has all requisite corporate power and authority to execute,
deliver and perform this Agreement and the Ancillary Agreements to which it
is a
party and to consummate the transactions described in this Agreement and the
Ancillary Agreements. For purposes of this Agreement, “Ancillary Agreements”
shall mean the Assignment and Assumption Agreement, the Xxxx of Sale, the
General Warranty Deeds, the Escrow Agreement and all other documents to be
delivered pursuant to the terms of this Agreement or the terms of any of the
aforementioned agreements. Except for approval by the stockholders of Maxco
(the
“Stockholder Approval”), the execution, delivery and performance by each of the
Selling Parties of this Agreement and the Ancillary Agreements to which it
is a
party and the consummation by each of the Selling Parties of the transactions
described in this Agreement and the Ancillary Agreements have been duly and
validly authorized by all necessary corporate action on the part of the Selling
Parties and no other corporate actions or proceedings on the part of any Selling
Party are necessary to authorize the execution, delivery and performance by
each
of the Selling Parties of this Agreement and the Ancillary Agreements to which
it is a party or the transactions described in this Agreement and the Ancillary
Agreements. Each of the Selling Parties has duly and validly executed and
delivered this Agreement and has duly and validly executed and delivered (or
before or at the Closing shall duly and validly execute and deliver) the
Ancillary Agreements to which it is a party. This Agreement constitutes, and
upon execution and delivery (assuming due execution and delivery by all other
applicable Parties), the Ancillary Agreements to which each Selling Party is
a
party shall constitute, legal, valid and binding obligations of that Selling
Party, enforceable against it in accordance with their terms, except as may
be
limited by (a) applicable bankruptcy, insolvency, moratorium, reorganization
or
similar Laws in effect that affect creditors’ rights generally; or (b)
principles of equity, including legal or equitable limitations on the
availability of specific remedies.
3.3 Corporate
Organization.
Maxco
owns all of the outstanding capital stock of AAI. AAI owns all of the
outstanding capital stock of BCGW. AAI’s only subsidiary is BCGW, and AAI is not
a partner, member or holder of any equity interest of any other Person. BCGW
has
no subsidiaries and is not a partner, member or holder of any equity interest
of
any other Person.
3.4 Consents.
Except
for the Stockholder Approval, the Consents described in Section 3.4 of the
Disclosure Document or as set forth in Section 4.3 of the Disclosure Document,
no consent, authorization, order or approval of, or filing or registration
with,
or notification to any Person (“Consent”) is required in connection with the
execution, delivery and performance of this Agreement and the Ancillary
Agreements by the Selling Parties, the consummation of the transactions
described in this Agreement or the Ancillary Agreements or the conduct of the
businesses of the Sellers after the Closing in substantially the same manner
presently conducted.
10
3.5 Absence
of Conflicts.
Neither
the execution and delivery of this Agreement or any of the Ancillary Agreements
to which a Selling Party is a party, nor the consummation of the transactions
(subject to obtaining Consents described in Section 3.4) described in this
Agreement or the Ancillary Agreements, will result in the creation of, or
adverse change in, any Encumbrance on any of the Purchased Assets or violate,
conflict with or result in the breach of (a) the charter, bylaws or other
organizational documents of a Selling Party; or (b) any judgment, decree or
order of any Governmental Authority to which a Selling Party is subject or
by
which a Selling Party or the business or assets of a Selling Party are bound;
(c) any requirements of Laws applicable to a Selling Party or to the business
or
the assets of a Selling Party; (d) any Contracts to which a Selling Party is
a
party or by which the business or assets of a Selling Party are bound or (e)
any
Permit or AAI Benefit Plan. For purposes of this Agreement, “Governmental
Authority” means the government of the United States or any other country, or
any state, provincial, county, city, township or other political subdivision
of
the United States or any other country, and any entity, body, court or other
authority exercising executive, legislative, judicial, regulatory, taxing or
administrative functions of, or pertaining to, government; “Law” means any law,
statute, code (including the Code), regulation, ordinance, or rule enacted
or
promulgated by any Governmental Authority and shall include the prevailing
judicial or administrative interpretation of any of the foregoing; and “Permits”
means permits, tariffs, authorizations, licenses, certificates, variances,
consents, interim permits, approvals, franchises and rights under any Law or
otherwise issued or required by any Governmental Authority and any applications
for any of the foregoing that are required by Law for the Sellers to engage
in
their businesses.
3.6 Financial
Statements.
Section
3.6 of the Disclosure Document sets forth true, complete and correct copies
of
(a) the audited consolidated balance sheet of AAI as of March 31, 2006, and
the
related statements of income and cash flow for the year ended March 31, 2006,
and (b) the unaudited consolidated balance sheet of AAI as of October 31, 2006,
and the related statements of income and cash flow for the seven months ended
October 31, 2006 (the “AAI Financial Statements”). The Baseline Working Capital
Amount and the AAI Financial Statements have been prepared in accordance with
GAAP and fairly present the financial position of the Sellers as of their dates
and the results of operations for the periods covered by them. The unaudited
financial statements referred to in the first sentence of this Section 3.6
and
the Baseline Working Capital Amount have been prepared on a basis consistent
with the audited financial statements referred to in that sentence and the
audited financial statements of Maxco contained in its Annual Report on Form
10-K filed with the Securities and Exchange Commission (the “SEC”) on July 14,
2006. Since March 31, 2006, there has been no material adverse change to the
financial condition, results of operations, business, properties, assets or
liabilities of either Seller or the business of either Seller.
3.7 Title
to Assets.
(a) Except
as
set forth in Section 3.7(a) of the Disclosure Document and other than the Owned
Real Property, which is addressed in Section 3.7(b), AAI or BCGW (as
applicable) has, and as of the Effective Time the Purchaser shall have, good,
valid and marketable title to all of the Purchased Assets free and clear of
all
Encumbrances, other than Permitted Encumbrances. For purposes of this Agreement,
"Encumbrance" means any charge, claim, condition, equitable interest, lien,
option, pledge, security interest, mortgage, judgment, attachment, restriction
on transfer, right of way, easement, encroachment, servitude, right of first
option, right of first refusal, or similar restriction or encumbrance, and
"Permitted Encumbrance" means (i) liens of mechanics, carriers, workmen or
repairmen or other like liens arising or incurred in the ordinary course of
business that have not yet become due and payable; (ii) liens for Taxes,
assessments and other governmental charges that are not due and payable or
that
may be paid without penalty; (iii) other ordinary imperfections of title that
do
not have a material adverse effect on the assets as to which the imperfection
of
title applies; and (iv) those Encumbrances specifically identified in Section
3.7(a) of the Disclosure Document as permitted encumbrances.
11
(b) Except
as
set forth in Section 3.7(b) of the Disclosure Document, the only real property
now or in the past owned or leased (as lessor or as lessee) by AAI, or now
or
within the last nine years owned or leased (as lessor or lessee) by BCGW, is
the
Owned Real Property. Either AAI or BCGW (as applicable) has good, valid and
marketable fee title to the Owned Real Property, free and clear of all
Encumbrances, other than Permitted Encumbrances. Except for AAI or BCGW, as
applicable, there are no persons in possession or occupancy of any part of
the
Owned Real Property or the Facilities, or who have possessory rights with
respect to any part of the Owned Real Property or the Facilities. None of the
Selling Parties has received any notice of any alleged violations of or
liability under any applicable Law within the last nine years with respect
to
any part of the Owned Real Property or the Facilities or the operation of any
part of the Owned Real Property or the Facilities, except as described in
Section 3.16 of the Disclosure Document. There is no existing, pending or,
to
the Knowledge of the Selling Parties, threatened or anticipated, condemnation
or
other taking of all or any part of the Owned Real Property or the Facilities.
Except for the lease agreements between AAI and BCGW as to the Owned Real
Property, true and correct copies of which have been provided to the Purchasing
Parties, neither Seller is a party to any lease or rental agreement with respect
to any real property (whether as lessee or lessor) or any buildings, structures,
improvements, plants, offices, facilities, or fixtures located on any real
property.
(c) There
is
no existing Contract with, option or right of, or commitment to any Person
to
acquire any of the Purchased Assets or any interest in any of the Purchased
Assets other than Contracts entered into in the ordinary course of business
consistent with past practices for the sale of Inventory.
3.8 Compliance
with Laws; Permits.
Section
3.8 of the Disclosure Document sets forth a list entitled Permits which contains
a list of all Permits currently held by (a) a Seller or (b) any other Person
with respect to the business of either Seller. Each Permit described in
Section 3.8 of the Disclosure Document is valid and current. There has been
no violation of any of the requirements pertaining to those Permits. Neither
the
execution and delivery of this Agreement nor, subject to either obtaining the
Consents described in Section 3.4 for the transfer or reissuance of the Permits,
the consummation of the transactions described in this Agreement will cause
any
of the Permits described in Section 3.8 of the Disclosure Document to terminate,
to become null or void, or to be otherwise adversely affected. All Permits
necessary to conduct the businesses of the Sellers have been acquired and are
in
full force and effect. Except as set forth in Section 3.8 of the Disclosure
Document, to the Selling Parties’ Knowledge, the businesses of the Sellers are,
and for the last nine years have been conducted in compliance with all
applicable Laws. Except as set forth in Section 3.8 of the Disclosure Document,
to the Selling Parties’ Knowledge, all required action to be in compliance with
all applicable Laws has been completed to the extent that at any time in the
past the businesses of the Seller have not been in compliance with all
applicable Laws. No currently existing condition, circumstance or event
reasonably could be expected to result in any future expenditure to maintain
those businesses in compliance with requirements of Law.
12
3.9 Taxes.
(a) All
Taxes
(whether or not shown on any Tax Return) relating to the Purchased Assets that
are due and payable have been or will be paid in full on or before the Closing
Date. Except for Permitted Encumbrances, (i) there are no Encumbrances for
Taxes
on any of the Purchased Assets and (ii) no claim for unpaid Taxes has been
made
by any Governmental Authority that could give rise to any such Encumbrance.
For
purposes of this Agreement, “Tax” (and, with correlative meaning, “Taxes”
and
“Taxable”)
means
(a) all federal, state, provincial, county, local or foreign taxes, charges,
fees, duties (including customs duties), levies or other assessments, including
income, gross receipts, net proceeds, ad valorem, turnover, real and personal
property (tangible and intangible), sales, gains, use, franchise, excise, value
added, alternative, add-on minimum, stamp, leasing, lease, user, transfer,
fuel,
excess profits, occupational, interest equalization, windfall profits, license,
payroll, environmental, capital stock, disability, severance, employee’s income
withholding, other withholding, unemployment and Social Security taxes, which
are imposed by any Governmental Authority, including any interest, penalties,
fines or additions to tax attributable to or associated with any of the
foregoing (whether or not disputed); (b) any liability for the payment of any
item described in clause (a) of this definition as a result of being a member
of
an affiliated, consolidated, combined or unitary group for any period, including
pursuant to Treasury Regulations Section 1.1502-6 or any other analogous or
similar law; (c) any liability for the payment of an item described in clause
(a) or (b) of this definition as a result of any express or implied obligation
to indemnify any Person as a result of any obligation under any agreements
or
arrangements with any Person with respect to such item; and (d) any successor
liability for the payment of any item described in clause (a), (b) or (c) of
this definition, including by reason of being a party to any merger,
consolidation, conversion or otherwise; and “Tax Return” means any report,
return (including any information return), statement, form, declaration,
election certificate or other document or information filed with, submitted
to,
or required to be filed with or submitted to any Governmental Authority in
connection with the determination, assessment, collection or payment of any
Tax
or in connection with the administration, implementation or enforcement of
or
compliance with any Law relating to any Tax.
(b) The
Selling Parties have withheld or collected and paid over to the appropriate
Governmental Authority all Taxes required by applicable Law to be withheld
or
collected by them and have properly received and maintained any and all
certificates, forms and other documents required by applicable Law for any
exemption from withholding and remitting any Taxes.
(c) Except
as
disclosed in Section 3.9 of the Disclosure Document, no Selling Party is under
audit or examination by any Governmental Authority with respect to any Tax
relating to the Purchased Assets, and no notice of such an audit or examination
has been received, and the Selling Parties have no Knowledge of any threatened
audits, investigations or claims for or relating to such Taxes.
13
(d) None
of
the Assumed Obligations includes: (i) an obligation to make a payment to any
Person under any Tax allocation or Tax-sharing agreement; (ii) an obligation
to
pay the Taxes of any Person as a transferee or successor, by Contract or
otherwise, including an obligation under Treasury regulations Section 1.1502-6
(or any similar provision of state, local or foreign Law); (iii) an obligation
under any record retention, transfer pricing, closing or other agreement or
arrangement with any Governmental Authority that will survive the Closing or
impose any liability on any Purchasing Party after the Closing; or (iv) an
obligation under any Contract to indemnify, gross up or otherwise compensate
any
Person, in whole or in part, for any excise Tax under Section 4999 of the Code
that is imposed on such Person or any other Person.
(e) None
of
the Purchased Assets is property that is treated or will be required to be
treated as being owned by another Person pursuant to the provisions of Section
168(f)(8) of the Code (as in effect before amendment by the Tax Reform Act
of
1986) or is “tax-exempt use property” within the meaning of Section 168(h) of
the Code.
(f) None
of
the Purchased Assets includes any stock, partnership interests, limited
liability company interests, legal or beneficial interests or any other equity
interests in or of any Person, and none of the Purchased Assets is subject
to
any Tax partnership Contract or other Contract requiring a partnership income
Tax Return to be filed under Subchapter K of Chapter 1 of Subtitle A of the
Code.
(g) No
Selling Party is a “foreign person” within the meaning of Section 1445 of the
Code.
3.10 Litigation.
Except
for those matters described in Section 3.10 of the Disclosure Document, there
is
no legal, administrative or arbitration proceeding, suit, action, claim, order,
investigation, inquiry, judgment, writ, injunction, award, judgment or decree
in, by or before any Governmental Authority (“Litigation”) pending or, to the
Knowledge of the Selling Parties, threatened or contemplated against a Selling
Party with respect to the businesses of the Sellers. None of the Litigation
described in Section 3.10 of the Disclosure Document could reasonably be
expected to have an effect on the businesses of the Sellers or any of the
Purchased Assets that could (a) enjoin, restrict or prohibit the transfer of
any
of the Purchased Assets, (b) prevent a Selling Party from fulfilling all of
its
obligations set out in this Agreement or arising under this Agreement or any
Ancillary Agreement, or (c) reasonably be expected to result in a Material
Adverse Effect. For purposes of this Agreement, “Material Adverse Effect” means
any event, circumstance, change or effect that has a material and adverse effect
on the business, operations or financial condition of the Sellers, taken as
a
whole.
3.11 Brokers.
None of
the Selling Parties nor any Affiliate of a Selling Party has used any broker
or
finder other than GBQ Consulting LLC, in connection with the transactions
described in this Agreement. Neither of the Purchasing Parties nor any Affiliate
of a Purchasing Party shall have any liability or otherwise suffer or
incur
any Loss as a result of or in connection with any brokerage or finder’s fee or
other commission of any Person retained by any of the Selling Parties or any
Affiliate of a Selling Party in connection with any of the transactions
described in this Agreement or any of the Ancillary Agreements. For purposes
of
this Agreement, “Affiliate” means, with respect to any specified Person, any
other Person who, directly or indirectly, owns or controls, is under common
ownership or control with, or is owned or controlled by, the specified Person.
Without limiting the generality of the foregoing, a Person shall be deemed
to
“own” another Person if it owns, directly or indirectly, more than 50% of the
capital stock or other equity interest of the other Person generally entitled
to
vote, without regard to specified contingencies, for the election of directors
or equivalent governing body of the other Person.
14
3.12 Contracts.
(a) All
Material Contracts relating to the businesses conducted by the Sellers to which
a Seller is a party are listed in Section 3.12 of the Disclosure Document.
To
the Knowledge of the Selling Parties, there are no Material Contracts to which
neither Seller is a party but as to which either Seller is a third-party
beneficiary. A “Material Contract” means a Contract (i) the term of which
extends beyond the one-year anniversary date of this Agreement; (ii) that
obligates either Seller to future expenditures of $50,000 or more (or assets
having that value); (iii) that entitles either Seller to future receipts of
$50,000 or more (or assets having that value); or (iv) the lack of which would
have a Material Adverse Effect.
(b) Each
Material Contract is in full force and effect and is the valid and binding
obligation of either Seller, as applicable, and, to the Knowledge of the Selling
Parties, the other parties to it. Neither Seller, and, to the Knowledge of
the
Selling Parties, no other party to any Material Contract is in breach of any
Material Contract and no default exists under any Material Contract. The Selling
Parties have provided the Purchasing Parties with true, complete and correct
copies of or access to all written Material Contracts and all extensions,
amendments and schedules to them and a written description of all Material
Contracts that are not in writing. Except for the AAI Benefit Plans, neither
Seller has any Contract with any director, officer, employee or Affiliate of
either Seller or of any Affiliate of either Seller. Neither Seller has
affirmatively waived any right under any Material Contract. Each Seller is
in
substantial compliance with all purchase orders and sales orders to the extent
it is obligated to perform under those orders. Neither Seller has, expressly
or
by operation of law, assumed or undertaken any liability of any other
Person.
3.13 Employment
Matters.
(a) Section
3.13(a) of the Disclosure Document sets forth a true and correct list of each
Business Employee, together with each Business Employee’s title or job
description, work location and annual salary or hourly wage rate as of the
date
of this Agreement.
(b) Except
as
set forth in Section 3.13(b) of the Disclosure Document:
(i) Neither
Seller is a party to any collective bargaining or similar agreement with respect
to Business Employees.
(ii) Each
Seller and each Affiliate of a Seller is in substantial compliance with all
Laws
applicable to the businesses of the Sellers or the Business Employees with
respect to employment and employment practices, terms and conditions of
employment, wages and hours, and occupational safety and health, and is not
engaged in any unfair labor or unfair employment practices.
15
(iii) There
is
no unfair labor practice charge or complaint against either Seller or any
Affiliate of either Seller involving or related to Business Employees pending
(with service of process having been made, or written notice of investigation
or
inquiry having been served, on a Selling Party or any Affiliate of a Selling
Party), or to the Knowledge of the Selling Parties threatened (or pending
without service of process having been made, or written notice of investigation
or inquiry having been served, on a Selling Party or any Affiliate of a Selling
Party), before the National Labor Relations Board or any court.
(iv) There
is
no labor strike, or other material dispute, slowdown or stoppage pending against
either Seller or an Affiliate of a Seller involving or related to any Business
Employee.
(v) No
union
certification or decertification petition has been filed (with service of
process having been made on either Seller or any Affiliate of a Seller), or
to
the Knowledge of the Selling Parties threatened (or pending without service
of
process having been made on either Seller or any Affiliate of a Seller), that
relates to Business Employees, and no union authorization campaign has been
conducted, in each case, within the past 24 months.
(vi) No
grievance proceeding or arbitration proceeding arising out of or under any
collective bargaining agreement is pending (with service of process having
been
made on either Seller or any Affiliate of either Seller), or to the Knowledge
of
the Selling Parties threatened (or pending without service of process having
been made on a Seller or any Affiliate of a Seller), against either Seller
or
any Affiliate of a Seller involving or related to any Business
Employee.
(vii) There
are
no charges, investigations, administrative proceedings or formal complaints
of
discrimination (including discrimination based on sex, sexual harassment, age,
marital status, race, national origin, sexual preference, handicap, disability
or veteran status) pending (with service of process having been made, or written
notice of investigation or inquiry having been served, on either Seller or
any
Affiliate of a Seller), or to the Knowledge of the Selling Parties threatened
(or pending without service of process having been made, or written notice
of
investigation or inquiry having been served, on a Seller or any Affiliate of
a
Seller), before the Equal Employment Opportunity Commission or any federal,
state or local agency or court against a Seller or any Affiliate of a Seller
involving or related to any Business Employee.
(viii) There
are
no charges, investigations, administrative proceedings or formal complaints
of
overtime or minimum wage violations involving the business of either Seller
pending (with service of process having been made, or written notice of
investigation or inquiry having been served on either Seller or any Affiliate
of
a Seller), or to the Knowledge of the Selling Parties threatened (or pending
without service of process having been made, or written notice of investigation
or inquiry having been served, on either Seller or any Affiliate of a Seller),
before the Department of Labor or any other Governmental Authority.
16
(ix) There
are
no citations, investigations, administrative proceedings or formal complaints
of
violations of local, state or federal occupational safety and health laws
pending (with service of process having been made, or written notice of
investigation or inquiry having been served, on either Seller or any Affiliate
of a Seller), or to the Knowledge of the Selling Parties pending without service
of process having been made, or written notice of investigation or inquiry
having been served, on either Seller or any Affiliate of a Seller before the
Occupational Safety and Health Administration or any Governmental Authority
against either Seller or any Affiliate of either Seller involving or related
to
the businesses of the Sellers.
(c) The
businesses of the Sellers have employees sufficient to operate those businesses
in the ordinary course consistent with past practices. During the last year,
other than changes in the ordinary course of operation of the business of each
of the Sellers, consistent with past practices, no material changes have
occurred in the work force of those businesses, including material employee
terminations, employee transfers in or out, employee leasing arrangements,
secondments, reallocations of duties and outsourcing of duties or
functions.
3.14 Employee
Benefit Matters.
(a) Section
3.14 of the Disclosure Document sets forth a true, complete and accurate list
of
all AAI Benefit Plans. The Selling Parties have delivered to or made available
for review by the Purchasing Parties, a complete and accurate copy of (i) each
AAI Benefit Plan, (ii) the trust, group annuity Contract or other document
that
provides the funding for each AAI Benefit Plan, (iii) the three most recent
annual Form 5500 reports for each AAI Benefit Plan, (iv) the most current
summary plan description, booklet, or other descriptive written materials,
and
each summary of material modifications prepared after the last summary plan
description for each AAI Benefit Plan, (v) the most recent IRS determination
letter and all rulings or determinations requested from the IRS after the date
of that determination letter with respect to each AAI Benefit Plan, (vi) the
most recent statement filed with the Department of Labor pursuant to 29 U.S.C.
§
2520.104-23 with respect to each AAI Benefit Plan, (vii) if applicable, a
written summary of the legal basis for an exemption from the obligation to
file
annual Form 5500 reports with respect to each AAI Benefit Plan and (viii) all
other correspondence from the Internal Revenue Service or the Department of
Labor received by a Selling Party that relates to any AAI Benefit Plan with
respect to any matter, audit or inquiry that is pending. For purposes of this
Agreement, “AAI Benefit Plan” shall mean (a) any employee welfare benefit plan
or employee pension benefit plan as defined in sections 3(1) and 3(2) of
the Employee Retirement Income Security Act of 1974, as amended (“ERISA”),
including a plan that provides retirement income or results in deferrals of
income by employees for periods extending to their terminations of employment
or
beyond, and a plan that provides medical, surgical or hospital care benefits
or
benefits in the event of sickness, accident, disability, death or unemployment
and (b) any other employee benefit agreement or arrangement that is not an
ERISA
plan, including any deferred compensation plan, incentive plan, bonus plan
or
arrangement, stock option plan, stock purchase plan, stock award plan, golden
parachute agreement, severance pay plan, dependent care plan, cafeteria plan,
employee assistance program, scholarship program, employment contract, retention
incentive agreement, noncompetition agreement, consulting agreement,
confidentiality agreement, vacation policy, or other similar plan, agreement
or
arrangement that is maintained by a Seller, was maintained by a Seller within
three years of the date of this Agreement or has been approved by a Seller
but
is not yet effective, for the benefit of one or more Business Employees or
their
beneficiaries. No Selling Party is required to file any 990 or 1041 reports
with
respect to any AAI Benefit Plan.
17
(b) No
Seller
has any liability for any failure to operate and administer any AAI Benefit
Plan
in compliance with its provisions and applicable Law. There is no litigation,
action, legal proceeding, investigation or claim asserted or, to the Knowledge
of the Selling Parties, threatened or contemplated, with respect to any AAI
Benefit Plan (other than the payment of benefits in the normal
course).
(c) All
AAI
Benefit Plans that are intended and required to qualify under Section 401(a)
of
the Code, as identified in Section 3.14 of the Disclosure Document, either
(i)
have been determined by the IRS to be qualified under Section 401(a) of the
Code
or (ii) have applicable remedial amendment periods that will not have ended
before the Closing. No facts have occurred that if known by the Internal Revenue
Service could reasonably be expected to result in the disqualification of any
of
those plans.
(d) No
pension benefit plan (as defined in Section 3(2) of ERISA) that is maintained
or
contributed to by a Seller or any ERISA Affiliate of a Seller or with respect
to
which a Seller or an ERISA Affiliate of a Seller may have any liability had
an
accumulated funding deficiency as defined in Section 302 of ERISA and Section
412 of the Code, whether or not waived, as of the last day of the most recent
fiscal year of the plan ending on or before the Closing Date. For purposes
of
this Agreement, “ERISA Affiliate” means the Sellers and all other trades or
businesses, whether or not incorporated, which together with the Sellers would
be deemed a “single employer” within the meaning of Section 414(b), (c) or
(m) of the Code.
(e) Neither
Seller nor any entity that was at any time during the last six years an ERISA
Affiliate of a Seller has ever maintained, contributed to, had an obligation
to
contribute to, or incurred any liability with respect to a plan that is or
was
either (i) a pension benefit plan (as defined in Section 3(2) of ERISA) that
is
or was subject to Title IV of ERISA, or (ii) a multiemployer plan (as defined
in
Section 3(37) of ERISA).
(f) No
employee welfare benefit plan (as defined in Section 3(1) of ERISA) maintained
by any of the Selling Parties provides medical, surgical, hospitalization or
life insurance benefits (whether or not insured by a third party) for employees
or former employees of either Seller for periods extending beyond their
retirements or other terminations of service, other than coverage mandated
by
the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”); and
neither Seller has made any commitment to provide retiree medical, surgical,
hospitalization or life insurance coverage for any current or former employee
or
directors of either Seller (except as required by COBRA). To the extent
applicable, all AAI Benefit Plans have been operated in compliance with COBRA,
and the Selling Parties (or one of their ERISA Affiliates) intends to continue
to maintain a group health plan as defined in Section 5000(b) of the Code other
than a flexible spending account arrangement described in Section 125 of the
Code and the Treasury Regulations (“Group Health Plan”) after the
Closing.
3.15 Intellectual
Property.
18
(a) Except
as
set forth in Section 3.15 of the Disclosure Document, each Seller owns, or
possesses legally enforceable rights to use, free and clear of all Encumbrances,
all Intellectual Property used in connection with its business (“AAI
Intellectual Property”). For purposes of this Agreement, “Intellectual Property”
shall mean intellectual property of every kind and nature, including all
inventions, information, data, samples, formulae, specifications, plans,
drawings, blueprints, compositions, processes, designs, technology, know-how,
confidential information and trade secrets (whether or not patentable or reduced
to practice), confidential or proprietary technical and business information,
computer software, domain names, United States and foreign patents and xxxxx
patents (including continuations, continuations-in-part, divisions, reissues,
re-examinations, extensions and renewals), patent applications, registered
and
unregistered trade names, brand names, trademarks, service names, service marks,
logos and designs (and applications for registration of the same), all goodwill
symbolized by or associated with any of them, copyrights and copyright
registrations (and applications for the same), extensions, renewals of United
States and foreign registrations and applications to register copyrights,
technical manuals and documentation made or used in connection with any of
the
foregoing, and any and all rights associated therewith. Section 1.1(e) of the
Disclosure Document sets forth an accurate and complete list of (i) all patents
and patent applications and all registered and unregistered trademarks, trade
names and service marks, registered copyrights and domain names owned by either
Seller and used in the operation of its business (“Registered Intellectual
Property”), (ii) all licenses, sublicenses and other agreements pursuant to
which any Person is authorized to use any of the AAI Intellectual Property
and
(iii) all licenses, sublicenses and other agreements pursuant to which either
Seller is authorized to use any Person’s Intellectual Property in its business
(other than commercial software).
(b) To
the
Knowledge of the Selling Parties, the operation of the businesses of the
Sellers, including the design, development, use, import, manufacture and sale
of
the products, technology and services of the Sellers in their businesses, does
not infringe on or misappropriate the Intellectual Property of any other Person,
and there is no claim, notice, suit, demand or action of any nature currently
pending or, to the Knowledge of the Selling Parties, threatened, alleging
unauthorized use, disclosure, infringement, misappropriation or other violation
by either Seller of any Intellectual Property of any other Person.
(c) Neither
Seller has entered into any arrangements granting rights in the AAI Intellectual
Property to any Person. To the Knowledge of the Selling Parties, there is no
unauthorized use, disclosure, infringement or misappropriation of any of the
AAI
Intellectual Property or breach of any Contract involving the AAI Intellectual
Property, and there are no pending, or to the Knowledge of the Selling Parties,
threatened claims, suits, demands or actions of any nature affecting the AAI
Intellectual Property. Neither Seller has brought any action, suit or proceeding
or asserted any claim against any Person for interfering with, infringing on,
misappropriating or otherwise coming into conflict with any Intellectual
Property or breach of any license or agreement involving any Intellectual
Property.
3.16 Environmental.
Except
as set forth in Section 3.16 of the Disclosure Document:
(a) Each
of
the Sellers is operating, and in the past has operated, its business in material
compliance with all limitations, restrictions, conditions, standards,
prohibitions, requirements and obligations established under all Laws relating
to (a) pollution, (b) protection of the environment (including air, water or
land) or human health, (c) solid, gaseous or liquid waste generation, handling,
treatment, storage, disposal or transportation, and (d) the regulation of or
liability for omissions into the environment, or the cleanup of contamination
or
exposure to any toxic agent. Including the following statutes and related
regulations: the Clean Air Act, 42 U.S.C. § 7401 et
seq.,
the
Clean Water Act, 33 U.S.C. § 1251 et
seq.,
the
Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et
seq.,
the
Superfund Amendments and Xxxxxxxxxxxxxxx Xxx, 00 X.X.X. § 00000
et
seq.,
the
Toxic Substances Control Act, 15 U.S.C. § 2601 et
seq.,
the
Water Pollution Control Act, 33 U.S.C. § 1251 et
seq.,
the
Safe Drinking Water Act, 42 U.S.C. § 300f et
seq.,
the
Comprehensive Environmental Response, Compensation, and Liability Act
(“CERCLA”), 42 U.S.C. § 9601 et
seq.,
the
Occupational Safety and Health Act, 29 U.S.C. § 651 et
seq.,
the
Hazardous Materials Transportation Act, 49 U.S.C. § 1801 et
seq.,
and any
Law similar to those statutes and related regulations (“Environmental
Laws”).
19
(b) Each
of
the Sellers has obtained all Permits required by Environmental Laws to operate
its business in the manner it is currently being operated. All of those Permits
are validly issued and in good standing. To the Knowledge of the Selling
Parties, each of the Sellers is in compliance with those Permits, and all of
those Permits can be transferred or reissued to the Purchaser in a manner that
allows the Purchaser to continue to operate the businesses of the Sellers after
the Closing in compliance with Environmental Laws.
(c) To
the
Knowledge of the Selling Parties, there are no requirements under Environmental
Laws that will obligate the Purchaser, or conditions that will cause the
Purchaser to be obligated, to make capital improvements to any of the Purchased
Assets or incur other significant expenses with respect to the Purchased Assets
or the businesses of the Sellers in order to remain, or to operate the
businesses of the Sellers (as they are currently being operated), in compliance
with Environmental Laws.
(d) To
the
Knowledge of the Selling Parties, and except as in compliance with Environmental
Laws, there are no Hazardous Substances at, in, under or migrating from any
of
the Purchased Assets that, because of their nature or quantity, (i) create
a
risk of exposure to Hazardous Substances that is or reasonably could be expected
to be deleterious to human health, (ii) create a risk of damage to natural
resources or the environment, or (iii) are required to be removed, abated or
remediated under Environmental Laws or could reasonably be expected to result
in
any cleanup required under Environmental Laws. For purposes of this Agreement,
“Hazardous Substances” shall mean (a) any substance, material, form of energy or
pathogen that (i) is listed, defined or otherwise designated as a “hazardous
substance” under Section 101(14) of CERCLA, (ii) constitutes a “hazardous
substance” as defined by 1994 PA 451, MCL 324.20101, as amended, “hazardous
waste” as defined by the Resource Conservation and Recovery Act, as amended, or
“pollutant”, “contaminant”, “hazardous material”, “hazardous chemical”, “toxic
air contaminant”, or “regulated substance” within the meaning of any applicable
Environmental Law, or (iii) is otherwise regulated or controlled by, or that
otherwise gives rise to liability under, any applicable Environmental Law;
(b)
any substance that contains petroleum or any petroleum product; (c) any
radioactive material or substance that contains urea formaldehyde, asbestos
or
polychlorinated biphenyls; and (d) any substance that is flammable, explosive
or
corrosive.
(e) There
are
no pending or, to the Knowledge of the Selling Parties, threatened actions,
suits, claims, investigations, inquiries or proceedings by any Person or before
any court or other Governmental Authority directed against a Seller, the
business of a Seller or any of the Purchased Assets that pertain or relate
to
(i) any obligations or liabilities, contingent or otherwise, under any
Environmental Law, (ii) violations or alleged violations of Environmental Laws,
or (iii) personal injury or property damage claims relating to Hazardous
Substances.
20
(f) Neither
of the Sellers is operating or required to be operating its business or any
of
the Purchased Assets under any compliance or consent order, decree or agreement
issued or entered into under Environmental Laws.
(g) To
the
Knowledge of the Selling Parties, no asbestos, asbestos containing materials
or
polychlorinated biphenyls are present at or in any of the Purchased
Assets.
(h) There
are
no underground storage tanks located at or on any of the Purchased
Assets.
(i) There
are
no Environmental Liabilities arising from or related to the Purchased Assets
or
the businesses of the Sellers that either of the Sellers has assumed, retained
or otherwise agreed to, by Contract or otherwise. For purposes of this
Agreement, “Environmental Liabilities” shall mean any and all Losses (including
any remedial, removal, response, abatement, cleanup, investigation or monitoring
costs and associated legal costs) incurred or imposed pursuant to (a) any
agreement, order, notice of responsibility, directive (including directives
embodied in Environmental Laws), injunction, judgment or similar document
(including settlements) arising out of, in connection with, or under any
Environmental Laws, or (b) any claim by a Governmental Authority or any other
Person for personal injury, property damage, damage to natural resources,
economic loss, remediation, or payment or reimbursement of response costs
incurred or expended by the Governmental Authority or other Person, pursuant
to
common law or Law and related to the use or release of Hazardous
Substances.
(j) The
Selling Parties have provided the Purchasing Parties copies of all environmental
audits, assessments, investigations or evaluations of the businesses of the
Sellers or any of the Purchased Assets that are in the possession of or subject
to the control of either of the Sellers or any Affiliate of a
Seller.
3.17 Tangible
Assets.
The
Tangible Assets listed in Section 1.1(a) of the Disclosure Document or subject
to the equipment leases or other leases listed in Section 1.1(j) of the
Disclosure Document constitute all of the Tangible Assets used in or considered
part of the businesses of the Sellers. All Tangible Assets (except for
uninstalled equipment identified as such in Section 1.1(a) of the Disclosure
Document) that constitute part of the businesses of the Sellers (whether owned
or leased by a Seller) are in normal operating condition and repair, subject
to
ordinary wear, tear and maintenance and to the Knowledge of the Selling Parties:
(i) are operating and being used in compliance with the requirements of Law,
and
(ii) all required action to be in compliance with all requirements of Law has
been completed to the extent that at any time in the past such Tangible Assets
have not been operated or used in compliance with the requirements of
Law.
21
3.18 Sufficiency
of Assets.
The
Purchased Assets constitute all of the assets used in the businesses of the
Sellers and are sufficient to operate the businesses of the Sellers as currently
operated. No asset (whether tangible or intangible) used in the conduct of
the
businesses of the Sellers is owned by any other Person (other than a Seller
or
the lessor thereof with respect to any assets subject to equipment
leases).
3.19 No
Adverse Change.
Except
as set forth in Section 3.19 of the Disclosure Document, since March 31, 2006,
no Seller has (a) except in the ordinary course of the businesses of the Sellers
in connection with the sale of Inventory, sold, transferred, or otherwise
disposed of, or agreed to sell, transfer, or otherwise dispose of, any of the
assets of either Seller; (b) except in the ordinary course of the businesses
of
the Sellers in connection with the sale of Inventory, entered or agreed to
enter
into any agreement or arrangement granting any preferential rights to purchase
any of the assets related to the businesses of the Sellers, or requiring the
consent of any Person to the transfer or assignment of any assets relating
to
the businesses of the Sellers; (c) made or permitted any amendment or
termination of any Contract or Permit relating to the businesses of the Sellers;
(d) taken any action with respect to the payment of any dividends or other
stockholder distributions by AAI to its stockholder or by BCGW to its
stockholder in cash or property; (e) entered into any agreement or arrangement
with any officers, directors, stockholders or Affiliates of any Selling Party;
or (f) entered into any other transaction or taken any other action other than
in the ordinary course of the business of the Sellers.
3.20 Insurance.
Section
3.20 of the Disclosure Document sets forth a list of (a) all current insurance
policies maintained by any Selling Party covering any employees or other agents
of either Seller, the business of either Seller, or any of the Purchased Assets
and (b) all unpaid or unsettled insurance claims made with respect to the
businesses of the Sellers. Each of the Sellers has in place such insurance
policies with respect to the Purchased Assets, the Sellers and the businesses
of
the Sellers as are normal and prudent in the industry, and all such policies
are
in full force and effect. All actual and estimated retroactive premium
adjustments under any workers’ compensation policy of the Sellers have been
recorded in the AAI Financial Statements.
3.21 Inventory.
Section
3.21 of the Disclosure Document sets forth a list of all Inventory as of the
date of this Agreement. All Inventory as of October 31, 2006 that is part of
the
AAI Financial Statements is reflected on the consolidated balance sheet of
AAI
as of October 31, 2006. All Inventory as of the Effective Time will, as of
the
Effective Time, be reflected on the books and records and in the Closing Date
Financial Statements. All Inventory is valued at the lower of cost or market
value. The Inventory as of the Effective Time will consist of items useable
or
saleable in the ordinary course of the businesses of the Sellers, except for
customary amounts of raw materials that cannot be incorporated into finished
products and items of obsolete materials and materials of below-standard quality
that have been written off or written down to AAI’s best estimate of net
realizable value. The Inventory does not include any materials held by either
Seller on consignment from any Third Parties. All Inventory disposed of since
October 31, 2006, has been disposed of only in the ordinary course of the
businesses of the Sellers, consistent with the past practice of the Sellers.
All
Inventory as of the Effective Time will be free from any defect or other
deficiency (based on industry standards for the grades and usage of raw
materials) except for items of obsolete materials and materials of
below-standard quality that have been written off or written down to AAI’s best
estimate of net realizable value. The quantities of Inventory as of the
Effective Time will be adequate to conduct the businesses of the Sellers under
the current circumstances of the businesses of the Sellers. None of the
Inventory is in the possession of others, except Inventory in transit to either
Seller in the ordinary course of its business. The Inventory is not subject
to
any claim with respect to the use of materials held on consignment. All products
manufactured (whether or not completed) or sold by a Seller before the Effective
Time will be in compliance with all warranties with respect to that
product.
22
3.22 Accounts
Receivable.
The
Accounts Receivable reflected on the AAI Financial Statements are, and the
Accounts Receivable that will be reflected on the Statement of Working Capital
will be, valid and collectible using commercially reasonable collection
practices, subject to normal market write-offs for bad debt consistent with
past
practices. Section 3.22 of the Disclosure Document sets forth a true and correct
copy of the aging of the Accounts Receivable as of the date of this Agreement.
All of those Accounts Receivable arose in the ordinary course of the businesses
of the Sellers and none is subject to any Encumbrance (other than Permitted
Encumbrances). Since March 31, 2006, there has not been any material adverse
change in the collectibility of the Accounts Receivable, taken as a
whole.
3.23 Books
and Records.
To the
Knowledge of the Selling Parties, the Books and Records accurately and fairly
reflect the transactions and the assets and liabilities of the
Sellers.
3.24 No
Material Adverse Effect.
Except
as set forth in Section 3.24 of the Disclosure Document, since March 31,
2006, there has not occurred (a) any Material Adverse Effect, (b) any material
damage, destruction or loss with respect to the Purchased Assets or the
businesses of the Sellers, (c) any material changes in terms of transactions
between a Seller, on the one hand, and any Affiliate of a Seller, on the other
hand, (d), any sale, assignment, transfer or acquisition (or Contract to do
so)
of any material operating asset of the business of either Seller or a
cancellation of, or any agreement to cancel, any material debts or claims of
the
business of either Seller except, in each case, in the ordinary course of
business, (e) any increase in the rate of compensation or benefits payable
or to
become payable by a Seller or any Affiliate of a Seller to any Business Employee
over the rate being paid to the Business Employee at September 30, 2006 (other
than increases in the ordinary course of business in accordance with past
practices and other than bonus arrangements identified in Section 3.24 of the
Disclosure Document as to which the Purchasing Parties will have no obligation),
or any Contract to do so, or (f) any termination or material amendment of any
Assigned Contract that has or is expected to result in a Material Adverse
Effect.
3.25 Customers
and Suppliers.
(a) Section
3.25(a) of the Disclosure Document sets forth (a) the names of all customers
of
each Seller that ordered goods or services from either Seller with an aggregate
purchase price for each such customer of $200,000 or more during the 12-month
period ended September 30, 2006, and (b) the amount for which each such customer
was invoiced by a Selling Party during that period. As of the date of this
Agreement and to the Knowledge of the Selling Parties, except as identified
in
Section 3.25(a) of the Disclosure Document, no such customer has notified a
Selling Party or any Affiliate of a Selling Party that it (i) will materially
reduce purchases of products from either Seller or (ii) has ceased, or will
cease, to purchase products from either Seller.
23
(b) Section
3.25(b) of the Disclosure Document sets forth (a) the names of all suppliers
from which each Seller ordered raw materials, supplies, merchandise, other
goods
or services with an aggregate purchase price for each such supplier of $50,000
or more during the 12-month period ended September 30, 2006, and (b) the amount
for which each such supplier invoiced a Selling Party during that period. To
the
Knowledge of the Selling Parties, no such supplier has notified either Seller
or
any Affiliate of either Seller that it (i) will materially reduce the amount
of
raw materials or equipment available for purchase by either Seller, or (ii)
has
ceased, or will cease, to sell raw materials or equipment to either
Seller.
3.26 Affiliate
Transactions.
(a) Except
as
set forth in Section 3.26(a) of the Disclosure Document, no employee, officer
or
director of any of the Selling Parties or any Affiliate of a Selling Party
(i)
owns, directly or indirectly, in whole or in part, any Permits, real property,
leasehold interests or other property, the use of which is necessary for the
operation of the businesses of the Sellers, (ii) has any claim or cause of
action or any other action, suit or proceeding against, or owes any amount
to,
either Seller, or (iii) is a party to any Contract pursuant to which either
Seller provides to, or receives services from, any such Person, except as to
any
such individual in his or her capacity as a Business Employee.
(b) Except
as
set forth in Section 3.26(b) of the Disclosure Document, neither Seller is
a
party to any Contract that relates to the businesses of the Sellers (i) with
Maxco or any Affiliate of Maxco or (ii) among a Selling Party, on the one hand,
and a Third Party, on the other hand, in each case, in which the terms or
conditions of the Contract or transaction are materially more favorable to
a
Selling Party or the Third Party than the terms and conditions that could be
achieved in an arm’s length Contract or transaction with a Third
Party.
3.27 Backlog.
To the
Knowledge of the Selling Parties, all outstanding customer or distributor
purchase orders for products of the businesses of the Sellers have been entered
at prices and on terms and conditions consistent with the normal practices
of
the businesses of the Sellers. To the Knowledge of the Selling Parties, neither
Seller, nor any Affiliate of a Seller has been informed by any customer or
distributor that any material order included in the backlog of the business
of
either Seller is likely to be canceled or terminated before its
completion.
3.28 Derivative
Contracts.
Except
as set forth in Section 3.28 of the Disclosure Document, neither Seller nor
any
Affiliate of a Seller is a party to any derivative or hedging Contracts relating
to the businesses of the Sellers.
3.29 Other
Information.
The
information provided by the Selling Parties in this Agreement and in the
Disclosure Document does not contain any untrue statement of a material fact
or
omit to state a material fact necessary to make the statements and facts
contained in this Agreement and the Disclosure Document, in light of the
circumstances under which they are made, not false or misleading. All documents
that the Selling Parties have provided or made available to the Purchasing
Parties pursuant to this Agreement were complete and accurate as of the time
they were made available.
24
3.30 No
Undisclosed Liability.
Except
to the extent specifically reflected in the AAI Financial Statements or
described in the Disclosure Document and except as related to the vacation
policy amendment by AAI described in Section 7.2, neither Seller has any
liabilities or obligations of any nature, whether absolute, accrued, contingent
or otherwise, and whether due or to become due (including any liability for
Taxes and interest, penalties and other charges payable with respect to any
liability or obligation) with respect to the ownership of the Purchased Assets
or the conduct of the businesses of the Sellers.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF THE PURCHASING PARTIES
Each
of
the Purchasing Parties represents and warrants to the Selling Parties as set
forth below in this Article IV, as of the date of this Agreement and as of
the
Closing Date. For purposes of this Section IV, “Knowledge” of the Purchasing
Parties means the actual knowledge of each Person listed in Section 4 of the
Disclosure Document and such facts and other matters as any of those Persons
should reasonably be aware of in light of that Person’s position with a
Purchasing Party and upon reasonable inquiry of the personnel of the Purchasing
Parties.
4.1 Existence
and Good Standing.
Each of
the Purchasing Parties is a corporation duly organized, validly existing and
in
good standing under the laws of Delaware.
4.2 Due
Authorization.
Each of
the Purchasing Parties has all requisite corporate power and authority to
execute, deliver and perform this Agreement and the Ancillary Agreements to
which it is a party and to consummate the transactions described in this
Agreement or the Ancillary Agreements. The execution, delivery and performance
by each Purchasing Party of this Agreement and the Ancillary Agreements to
which
it is a party and the consummation by the each Purchasing Party of the
transactions described in this Agreement and the Ancillary Agreements have
been
duly and validly authorized by all necessary corporate action on the part of
each Purchasing Party, and no other corporate actions or proceedings on the
part
of each Purchasing Party are necessary to authorize the execution, delivery
and
performance by each Purchasing Party of this Agreement and of the Ancillary
Agreements to which it is a party or the transactions described in this
Agreement or the Ancillary Agreements. Each of the Purchasing Parties has duly
and validly executed and delivered this Agreement and has duly and validly
executed and delivered (or before or at the Closing shall duly and validly
execute and deliver) the Ancillary Agreements to which it is a party. This
Agreement constitutes, and upon execution and delivery of (assuming due
execution and delivery by all other parties) the Ancillary Agreements to which
a
Purchasing Party is a party shall constitute, legal, valid and binding
obligations of the Purchasing Party, enforceable against it in accordance with
their terms, except as may be limited by (a) applicable bankruptcy, insolvency,
moratorium, reorganization or similar laws in effect that affect creditors’
rights generally; or (b) principles of equity including legal or equitable
limitations on the availability of specific remedies.
25
4.3 Consents.
Except
for the Consents required by the Selling Parties described in Section 3.4 of
the
Disclosure Document and Consents described in Section 4.3 of the Disclosure
Document, no consent of any Person or any Governmental Authority (other than
in
connection with Permits) is required in connection with the execution, delivery
and performance of this Agreement and the Ancillary Agreements by the Purchasing
Parties, or the consummation by the Purchasing Parties of the transactions
described in this Agreement or the Ancillary Agreements.
4.4 Absence
of Conflicts.
Neither
the execution and delivery of this Agreement nor any of the Ancillary Agreements
to which a Purchasing Party is a party nor the consummation of any of the
transactions described in this Agreement or the Ancillary Agreements will
violate, conflict with, or result in a breach of (a) the certificate of
incorporation or bylaws of a Purchasing Party; (b) any judgment, decree or
order
of any Governmental Authority to which a Purchasing Party is subject or by
which
a Purchasing Party or the assets of a Purchasing Party are bound; or (c) any
requirements of Laws applicable to a Purchasing Party.
4.5 Litigation.
There
is no Litigation of any nature pending, asserted, or to the Knowledge of the
Purchasing Parties, threatened against a Purchasing Party by or before any
Governmental Authority or by or on behalf of any Third Party which would
(a) enjoin, restrict or prohibit the transfer of any of the Purchased
Assets as described in this Agreement; (b) prevent a Purchasing Party from
fulfilling all of its obligations set out in
this
Agreement or arising under this Agreement or any Ancillary Agreement; or (c)
reasonably be expected to adversely affect the ability of a Purchasing Party
to
consummate the transactions described in this Agreement.
4.6 Brokers.
Neither
Purchasing Party has used any broker or finder in connection with the
transactions described in this Agreement, and none of the Selling Parties nor
any of their Affiliates has or shall have any liability or otherwise suffer
or
incur any Loss as a result of or in connection with any brokerage or finder’s
fee or other commission of any Person retained by a Purchasing Party in
connection with any of the transactions described by this Agreement or any
of
the Ancillary Agreements.
ARTICLE
V
COVENANTS
OF THE SELLING PARTIES
Each
of
the Selling Parties covenants with the Purchasing Parties as
follows:
5.1 Conduct
of Business.
Except
as otherwise described in this Agreement, and except as otherwise consented
to
by the Purchasing Parties, from the date of this Agreement until the Closing
Date, the Selling Parties shall cause the Sellers to conduct their businesses
in
the usual and ordinary course in accordance with past practice, including the
maintenance of Inventory levels, the payment of Accounts Payable and compliance
with the warranty policies of the Sellers, and the Selling Parties shall cause
the Sellers to use commercially reasonable efforts consistent with their current
business practices, to preserve the goodwill of their businesses, including
to
preserve their current relationships with customers, suppliers, agents and
employees of their businesses.
26
5.2 Negative
Covenants Relating to Conduct of the Businesses of the Sellers.
Except
as otherwise described in this Agreement, and except as consented to by the
Purchasing Parties in writing, neither Seller shall, and Maxco shall cause
the
Sellers not to, from the date of this Agreement until the Closing
Date:
(a) Enter
into, terminate or amend any Material Contract or, in any material respect,
any
Assigned Contract;
(b) Other
than pursuant to this Agreement, sell, transfer, lease, encumber or dispose
of
any of the Purchased Assets except Inventory in the ordinary course of
business;
(c) Increase
the rate of compensation of, or pay or agree to pay any benefit to the Business
Employees, except as may be required by the terms of any existing AAI Benefit
Plan, agreement or arrangement that is disclosed in the Disclosure
Document;
(d) Enter
into, adopt or amend any AAI Benefit Plan, or employment or severance agreement
affecting the businesses of the Sellers or the Business Employees, except as
required by applicable Law or as provided by Section 7.2;
(e) Incur
any
obligation or liability, absolute, accrued, contingent or otherwise, whether
due
or to become due, except current liabilities for trade or business obligations
incurred in connection with the purchase of goods or services in the ordinary
course of business consistent with past practice, none of which liabilities,
in
any case or in the aggregate, could have a Material Adverse Effect;
(f) Forgive,
cancel or compromise any material debt or material claim, or intentionally
waive
or release any material right of substantial value;
(g) Make
any
material changes in policies or practices relating to selling practices, product
returns, discounts or other terms of sale or accounting;
(h) Make
any
prepayment of any Accounts Payable, delay payment of any trade payables or
other
obligations other than in the ordinary course of business consistent with past
practice, or make any other cash payments other than in the ordinary course
of
business;
(i) Fail
to
maintain all of the Tangible Assets in normal operating repair, working order
and operating condition, in accordance with the usual and customary maintenance
schedule and practices, subject to ordinary wear and tear;
(j) Acquire
any assets that would constitute Purchased Assets or assume any obligations
or
liabilities that would constitute Assumed Obligations, except, in each case,
in
the ordinary course of business;
(k) Change
any accounting policies or principles of the Sellers or the methods of applying
those policies or principles;
(l) Declare
or pay any dividend or other distribution with respect to the capital stock
of
either Seller;
27
(m) Make
any
advances to Business Employees if the total amount of advances to Business
Employees would exceed $10,000; or
(n) Agree,
whether in writing or otherwise, to do any of the foregoing.
ARTICLE
VI
COVENANTS
OF THE PURCHASING PARTIES AND THE SELLING PARTIES
6.1 HSR
Act Notification and Other Consents.
(a) Each
of
the Purchasing Party and the Selling Parties shall cause to be filed as promptly
as practicable with the Federal Trade Commission and the Department of Justice
the notification and report form required under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the “HSR Act”), for the transactions
described in this Agreement and the Ancillary Agreements and shall use
commercially reasonable efforts to provide any supplemental information that
may
be reasonably requested in connection with those filings. The fees payable
in
connection with filings and notices made under the HSR Act shall be borne 50%
by
the Selling Parties and 50% by the Purchasing Parties.
(b) The
Selling Parties shall, as promptly as practicable following the date of this
Agreement, make all other filings and notifications required in connection
with
the consummation of the transactions described in this Agreement and use
commercially reasonable efforts to obtain the Consents of all Third Parties
described in Section 3.4 of the Disclosure Document and required in connection
with the consummation of the transactions described in this Agreement. The
Purchasing Parties shall, as promptly as practicable following the date of
this
Agreement, make all other filings and notifications required in connection
with
the consummation of the transactions described in this Agreement and use
commercially reasonable efforts to obtain the Consents of all Third Parties
described in Section 4.3 of the Disclosure Document. The Parties shall
coordinate and cooperate with each other in exchanging information and
assistance in connection with obtaining all Consents of Third Parties and making
all filings or notifications necessary to transfer the Permits to the Purchaser,
or in connection with any applications for new Permits relating to the
businesses of the Sellers.
6.2 Access
to Information and Inspections.
(a) During
the period from the date of this Agreement through the Closing Date, the Selling
Parties shall afford promptly to the Purchasing Parties and their authorized
representatives, including environmental and real estate professionals,
reasonable access during regular business hours and upon reasonable notice,
to
all of the Facilities, Business Employees and Books and Records as they may
reasonably request. Notwithstanding and without limiting the foregoing, the
Purchasing Parties shall not undertake any sampling or testing, including
intrusive soil or groundwater testing, without AAI’s approval, which approval
shall not be unreasonably withheld, conditioned or delayed. A representative
of
AAI shall be present at all site visits and inspections and the representative
of the Purchasing Parties shall, at all times while on the Sellers’ premises,
comply with all directions and requests relating to safety, security and
confidentiality.
28
(b) The
Purchaser shall, on and for two years after the Closing Date, afford promptly
to
the Selling Parties and their agents reasonable access during normal business
hours, upon reasonable notice, to the Facilities, Business Employees and Books
and Records, to the extent reasonably necessary to permit the Selling Parties
to
determine any matter relating to or arising during any period ending on or
before the Closing Date. If the Purchaser proposes to destroy or otherwise
dispose of any Books and Records, on or before the fifth anniversary of the
Closing Date, other than in the ordinary course of business consistent with
its
written document retention policy, the Purchaser shall first notify Maxco in
writing, and afford it the opportunity, for a period of at least 90 days
following the date of the notice, to take custody of those records or make
extracts from them or copies of them.
(c) The
Selling Parties shall, on and for two years after the Closing Date, afford
promptly to the Purchasing Parties and their agents reasonable access during
normal business hours, upon reasonable notice, to the properties, employees
and
books and records that are not part of the Purchased Assets of the Selling
Parties, to the extent reasonably necessary to permit the Purchasing Parties
to
determine any matter relating to or arising during any period ending on or
before the Closing Date. If a Selling Party proposes to destroy or otherwise
dispose of any records relating to the businesses of the Sellers on or before
the fifth anniversary of the Closing Date, other than in the ordinary course
of
business consistent with its written document retention policy, Maxco shall
first notify Quanex in writing, and afford Quanex the opportunity, for a period
of at least 90 days following the date of the notice, to take custody of those
records or make extracts from them or copies of them.
6.3 Title
Commitment and Survey.
(a) As
evidence of title to the Owned Real Property, the Selling Parties shall cause
to
be prepared and delivered to the Purchasing Parties, as soon as practicable
but
not later than 20 Business Days after the date of this Agreement, a commitment
for title insurance from Chicago Title Insurance Company covering the Owned
Real
Property (the “Commitment”), together with copies of all exception documents,
referenced on either Schedule B or C thereto, binding said title company, to
issue to the Purchaser at Closing, an ALTA Form B owner’s title insurance policy
(the “Owner’s Policy”). The Owner’s Policy delivered pursuant to the Commitment
described in this Section 6.3(a) shall (i) insure title to the Owned Real
Property and all recorded easements benefiting the Owned Real Property; (ii)
contain an “Extended Coverage Endorsement” insuring over the general exceptions
contained customarily in such policies; (iii) contain an ALTA Zoning Endorsement
3.1 (or equivalent); (iv) contain an endorsement insuring that the Owned Real
Property described in the Owner’s Policy is the same real estate as shown on the
survey to be provided by the Selling Parties pursuant to this Section 6.3;
(v)
contain an endorsement insuring that each street adjacent to the Owned Real
Property is a public street and that there is direct and unencumbered access
to
each street from the Owned Real Property; and (vi) contain such other
endorsements as may be required by the lenders of the Purchasing Parties or
otherwise reasonably required by the Purchasing Parties. The cost of the Owner’s
Policy (including premiums) shall be borne by the Purchasing
Parties.
(b) The
Selling Parties shall deliver to the Purchaser, within five Business Days after
the date of this Agreement, any survey with respect to the Owned Real Property
currently in the possession of the Selling Parties or any Affiliate of a Selling
Party and, as soon as practicable after the date of this Agreement, an updated
survey of the Owned Real Property (the “Survey”). The cost of the surveys and
updates shall be borne by the Selling Parties.
29
(c) The
Purchaser shall have twenty (20) days (the “Title Review Period”) after receipt
of the Commitment, all of the exception documents referenced in Schedule B
and C
to the Commitment, and the Survey to provide Maxco with written notice (the
“Title Objection Letter”) of the Purchaser’s objections to anything contained in
the Commitment or the Survey (the “Title Objections”); provided, however, that
none of the items described in Section 3.7(a)(i) through (iii) may be a basis
for a Title Objection. Except as expressly provided herein, any item contained
in the Commitment or the Survey to which the Purchaser does not object pursuant
to the Title Objection Letter shall be deemed a Permitted Encumbrance on and
as
of the date the Title Review Period expires. If the Purchaser delivers to Maxco
the Title Objection Letter, the Selling Parties shall have 10 days, or such
greater time period as may be agreed upon by the Purchaser and the Selling
Parties (the “Title Cure Period”), during which the Selling Parties shall have
the right, but not the obligation, to cure or remove the Title Objections and
deliver to the Purchaser a revised Commitment evidencing such cure or removal.
Promptly after the expiration of the Title Cure Period, the Selling Parties
shall provide the Purchaser with written notice (the “Title Response Letter”)
setting forth those Title Objections that the Selling Parties have cured or
removed and those Title Objections that the Selling Parties are unable or
unwilling to cure or remove. If the Selling Parties fail to cure or remove
all
of the Title Objections to the reasonable satisfaction of the Purchaser and
Chicago Title Insurance Company, the Purchaser may, as its sole and exclusive
remedy which may be exercised at any time within 5 Business Days after the
Purchaser’s receipt of the Title Response Letter, either to terminate this
Agreement by written notice to the Selling Parties or waive all uncured Title
Objections and accept title as the Selling Parties are able to convey without
any reduction in or effect on the Closing Purchase Price. The Purchaser’s
failure to send written notice of the election available to it pursuant to
the
preceding sentence within 5 Business Days after receipt of the Title Response
Letter shall be deemed an election by the Purchaser to waive all uncured Title
Objections and accept title as the Selling Parties are able to convey without
any reduction or effect on the Closing Purchase Price, in which case all uncured
Title Objections shall automatically be deemed Permitted Encumbrances on and
as
of the date on which such 5 Business Days expire.
6.4 Motor
Vehicles.
The
Selling Parties shall take all actions and prepare all documents necessary
to
effect the transfer to the Purchaser of all motor vehicle licenses and
registrations pertaining to automobiles, trucks and other motor vehicles and
rolling stock used in the businesses of the Sellers, in compliance with the
motor vehicle registration, licensing and other applicable Laws of any
jurisdictions where the motor vehicles are registered or licensed. All costs,
including transfer and sales taxes, related to the sale of motor vehicles in
connection with the consummation of the transactions described in this Agreement
shall be borne 50% by the Purchasing Parties and 50% by the Selling
Parties.
6.5 Tax
Matters.
30
(a) The
liability for any real property, personal property, ad valorem and other similar
Tax, including payments in lieu of such Taxes (each, a “Property Tax”), assessed
on any of the Purchased Assets for a taxable period or year commencing on or
before and ending after the Closing Date (“Straddle Period”), Property Tax shall
be prorated on a daily basis between the Selling Parties and the Purchaser
as of
the Closing Date, with the Selling Parties being liable for the portion of
that
Property Tax equal to the product of (i) the amount of the Property Tax for
the
entirety of the Straddle Period, multiplied by (ii) a fraction, the numerator
of
which is the number of days in the Straddle Period ending on and including
the
Closing Date and the denominator of which is the number of days in the Straddle
Period, and with the Purchaser being liable for the remainder of that Property
Tax. After the Closing, the Party (the “Paying Party”) receiving a Property Tax
xxxx or notice applicable to the Purchased Assets shall promptly notify the
other applicable Party (the “Reimbursing Party”) in writing and the Paying Party
shall pay that Property Tax xxxx before the last day that the Property Tax
may
be paid without penalty or interest. Upon receipt of the written notice from
the
Paying Party, which shall include appropriate supporting documentation, the
Reimbursing Party shall promptly pay the Paying Party an amount equal to the
portion of the Property Tax for which the Reimbursing Party is liable under
this
Agreement. The Parties shall reasonably cooperate with each other after the
Closing with respect to any Property Tax assessment or valuation (or protest
in
connection therewith) by any Governmental Authority with respect to a Straddle
Period. The Party receiving any refund of any Property Taxes for a Straddle
Period, whether received in cash or as a credit against another Property Tax,
shall, within 30 days after the receipt of the refund, pay to the appropriate
Party an amount equal to the product of (i) the amount of the refund, multiplied
by (ii) a fraction, the numerator of which is the number of days in the Straddle
Period that the other Party owned the Purchased Assets, and the denominator
of
which is the total number of days in the Straddle Period.
(b) The
Selling Parties shall promptly deliver to the Purchasing Parties any and all
notices, tax bills, tax statements, correspondence, applications, renditions,
orders, or other similar documents or communications received by any of the
Selling Parties and relating to Property Taxes affecting all or any portion
of
the Purchased Assets.
(c) The
Parties acknowledge that the Purchase Price, as adjusted under Section 2.2,
includes and is inclusive of all stock transfer, real estate transfer, sales,
use, deed, documentary, stamp, conveyance, recording and other similar taxes
(“Transfer Taxes”) that may be imposed as a result of the consummation of the
transactions described in this Agreement. The Selling Parties shall be
responsible for the filing of all Tax Returns that may be required in connection
with these Transfer Taxes (including expenses incurred to prepare those Tax
Returns). The Selling Parties shall promptly provide proof to the Purchasing
Parties of the timely filing of those Tax Returns and the payment of those
Transfer Taxes. At the Closing, each of the Parties shall provide the other
Parties with appropriate exemption certificates to establish the right to any
exemption from Transfer Taxes. After the Closing, each Party shall provide
each
other Party with any additional exemption certificates and other documentation
as may be required by Governmental Authorities for such purpose. The Selling
Parties shall reasonably cooperate with the Purchasing Parties, including
providing the Purchasing Parties with reasonable access to the Selling Parties’
books and records and such other data as the Purchasing Parties may reasonably
request in order to support all applicable Transfer Tax exemptions. If any
exemption claimed by any of the Parties is subsequently denied by any
Governmental Authority, and as a result any of the Parties is assessed
additional Transfer Taxes, then the Selling Parties shall pay such Transfer
Taxes, including interest and penalties, to the appropriate Governmental
Authority.
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6.6 Bulk
Sales Compliance.
The
Parties waive compliance with the provisions of any applicable statutes relating
to bulk transfers or bulk sales. The Parties mutually agree to cooperate in
securing any available exemptions from any such provisions.
6.7 Confidentiality
and Publicity.
(a) For
a
period of five years after the Closing Date and except as otherwise required
by
Law, each of the Selling Parties shall, and shall cause its respective officers,
directors, Affiliates, employees, agents and representatives to, hold in
confidence and not disclose or use (i) any proprietary or other confidential
and
non-public information regarding a Purchasing Party or any Affiliate of a
Purchasing Party disclosed to any Selling Party in connection with the
negotiation or preparation of this Agreement; (ii) the nature or resolution
of
any disputes arising under this Agreement after the Closing; and (iii) any
proprietary or other confidential non-public information relating to the
Purchased Assets or the businesses of Sellers, except for disclosures made
pursuant to Section 6.7(c); provided, however, that the term “confidential and
non-public information” shall not include any information publicly known through
no fault of a Selling Party. The Purchasing Parties acknowledge that Maxco
is a
publicly held company and will be required to disclose information about the
transactions described in this Agreement and the businesses of the Sellers
by
Law, by Nasdaq or in connection with securities Laws, and will be required
by
Law to file a copy of this Agreement with the SEC and Nasdaq and to include
such
filings as part of Maxco's website; all such filings and disclosures may be
made
by Maxco notwithstanding the provisions of this Section 6.7.
(b) For
a
period of five years after the Closing Date and except as otherwise required
by
Law, each Purchasing Party shall, and shall cause its officers, directors,
Affiliates, employees, agents and representatives to, hold in confidence and
not
disclose or use (i) any proprietary or other confidential and non-public
information (excluding information relating to the Purchased Assets regarding
the Selling Parties disclosed to the Purchasing Party in connection with the
negotiation or preparation of this Agreement or the consummation of the
Transactions described in this Agreement; and (ii) the nature or resolution
of
any dispute arising under this Agreement after the Closing, except for
disclosures made pursuant to Section 6.7(c); provided, however, that the term
“confidential and non-public information” shall not include any information
publicly known through no fault of a Purchasing Party. The Selling Parties
acknowledge that Quanex is a publicly held company and will be required to
disclose information about the transactions described in this Agreement, the
Purchased Assets and the businesses of the Sellers by Law, by the New York
Stock Exchange or in connection with securities Laws, and will be required
by
Law to file a copy of this Agreement with the SEC and the New York Stock
Exchange and to include such filings as part of Quanex’s website; all such
filings and disclosures may be made by Quanex notwithstanding the provisions
of
this Section 6.7.
(c) No
public
announcement or other publicity regarding the transactions described in this
Agreement shall be made by any Party or any of its Affiliates, officers,
directors, employees, representatives or agents, without the prior written
agreement of Maxco and Quanex. The Parties shall prepare and release public
announcements or press releases regarding the execution and delivery of this
Agreement and the Closing. Any announcement shall be agreed to by Maxco and
Quanex as to form, content, timing and manner of distribution or publication.
Nothing in this Section 6.7 shall prevent the Parties from discussing the
transactions described in this Agreement with those Persons whose Consent is
required for consummation of those transactions. The Parties shall exercise
all
reasonable efforts to assure that those Persons keep confidential any
information relating to this Agreement.
32
6.8 Payments
Received.
After
the Closing, the Selling Parties and the Purchaser shall hold and promptly
transfer and deliver to the other, from time to time as and when received by
either of them, any cash, checks with appropriate endorsements (using
commercially reasonable efforts not to convert checks into cash), or other
property that either of them may receive on or after the Closing Date which
properly belongs to the other Party, including any insurance proceeds, and
shall
account to the other Party for all such receipts.
6.9 Satisfaction
of Conditions and Further Assurances.
Without
limiting the generality or effect of any provision of Articles VIII and IX,
before the Closing, each of the Parties shall use its reasonable efforts in
good
faith to satisfy promptly all conditions required by this Agreement to be
satisfied by it to expedite the consummation of the transactions described
in
this Agreement. After the Closing, the Selling Parties shall execute and deliver
such other documents, certificates, agreements and other writings and take
such
other actions as may be reasonable, necessary or desirable to consummate or
implement expeditiously the transactions described in this Agreement and any
agreement, document or instrument described in this Agreement. If a Material
Contract not otherwise described in Section 3.12 of the Disclosure Document
and
transferred to the Purchaser at Closing is identified by the Purchaser or a
Selling Party after the Closing, that Material Contract shall be, at the request
of the Purchaser, deemed a Purchased Asset and the Selling Parties agree to
comply with Section 1.2 with respect to that Material
Contract.
6.10 Exclusivity
Agreement.
Neither
a Selling Party nor any Affiliate of a Selling Party, nor any of their
directors, officers, employees, representatives or agents, nor anyone acting
on
their behalf shall, directly or indirectly solicit, encourage (including
furnishing information to any Third Party), respond to negotiate or assist
in
any manner any offers, bids or proposals involving, directly or indirectly,
(a)
the sale or other disposition of the Purchased Assets (other than sales of
Inventory in the ordinary course of business) or (b) the sale or exchange
(whether through a merger or otherwise) of all or any portion of the capital
stock of AAI or BCGW if such sale or exchange would result in the Purchased
Assets being owned, directly or indirectly, by a Person other than a Selling
Party (all such bids, offers and proposals being referred to as “Acquisition
Proposals”). Neither of the Selling Parties shall enter into any letter of
intent, agreement in principle or other agreement with respect to any matter
involving an Acquisition Proposal. The Selling Parties shall immediately notify
the Purchasing Parties in writing should either of them receive any Acquisition
Proposal, including the terms thereof.
6.11 Limitation
on Purchasing Parties’ Obligation With Respect to Returned
Products.
Any
obligations assumed by the Purchaser for returned products pursuant to this
Agreement shall be limited to the Purchaser’s replacement of or reimbursement
for the cost of the product and all expenses incidental to that replacement
or
reimbursement, such as packing, handling and shipping costs. The Selling Parties
shall, on the Purchaser’s request, reimburse the Purchaser for its out-of-pocket
costs for the reimbursement or replacement of product produced or in process
before the Effective Time to the extent that all of those costs exceed
$75,000.
33
6.12 Expenses.
Except
as otherwise provided in this Agreement, each Party shall bear its own expenses
with respect to the transactions described in this Agreement.
6.13 Maxco’s
Proxy Materials and Stockholders’ Meeting.
Maxco
shall, as promptly as reasonably possible, prepare a preliminary proxy statement
and related proxy materials with respect to the Stockholder Approval, as
required by applicable securities Laws and by Nasdaq, and submit a draft thereof
for the Purchasing Parties’ review and comment. The Purchasing Parties shall
cooperate with Maxco to provide all information about the Purchasing Parties
necessary to complete the preliminary proxy statement, shall promptly provide
Maxco with comments on all drafts of the preliminary proxy statements provided
to the Purchasing Parties and shall otherwise cooperate with Maxco to complete
the preparation of the preliminary proxy statement and cause it to be filed
with
the SEC as soon as practicable after the execution and delivery of this
Agreement. Each of the Parties shall cooperate with each other to respond to
comments on the preliminary proxy statement provided by the SEC and to cause
the
definitive proxy statement to be filed with the SEC as soon as reasonably
possible. Maxco shall take all actions necessary to call a meeting of its
stockholders to approve the sale of the Purchased Assets pursuant to this
Agreement in accordance with Michigan Law and to provide its stockholders with
the definitive proxy statement and related materials. Maxco shall recommend
to
its stockholders the approval of the sale of Purchased Assets pursuant to this
Agreement and shall take such actions as are commercially reasonable to
encourage its stockholders to vote in favor of the sale of the Purchased Assets
pursuant to this Agreement.
6.14 Environmental
Matters.
After
the Closing, the Purchasing Parties may conduct or arrange to conduct any
investigation, assessment, subsurface testing, removal, remediation, abatement,
response, cleanup or groundwater monitoring of Hazardous Substances at, on
or
under the Owned Real Property as the Purchaser may reasonably believe to be
required by any governing Environmental Law, existing as of the Closing Date,
with respect to any environmental matters arising from or attributable to (a)
any condition, event, circumstance, activity, practice, incident, action or
omission existing or occurring before the Effective Time or (b) the use,
storage, disposal, treatment, transportation or release of Hazardous Substances
before the Effective Time (“Post-Closing Remediation”). The performance of any
Post-Closing Remediation shall not void, alter or otherwise affect the
indemnification of obligations of the Selling Parties set forth in Article
XII.
6.15 Non-Competition.
Each
Selling Party covenants and agrees that it shall not, for the period ending
five
years after Closing, participate, directly or indirectly, in the ownership,
management, financing or control of, or act as a consultant or agent to, or
furnish services or advice to, any Person that develops, manufactures, sells
or
provides services with respect to Competitive Products (a “Competitive
Business”). For purposes of this Agreement, “Competitive Products” means heat
treated forged or cast ferrous components. The geographic scope of the foregoing
covenants is North America. The covenants set forth in this Section 6.15 shall
not prohibit any Selling Party or its Affiliates from, directly or indirectly,
making any equity investment in any publicly owned company that conducts a
Competitive Business, provided that the investment does not confer control
of
more than 5% of the outstanding voting securities of such company upon that
Selling Party. The Parties agree and intend that the time period, geographic
coverage and scope of the covenants set forth in this Section 6.15 are
reasonable.
34
ARTICLE
VII
EMPLOYEES
AND BENEFIT PLANS
7.1 Offer
of Employment.
The
Purchaser or an Affiliate of the Purchaser shall offer employment, effective
as
of the Effective Time, to such Business Employees as it determines in its sole
discretion. Each employee who accepts any such offer of employment shall be
referred to in this Agreement as a “Transferred Employee”.
7.2 Vacation.
AAI
shall, effective January 1, 2007, amend the vacation policy in its handbook
to
establish that: (i) January 1 is the date on which an employee is credited
with
the vacation he or she has earned during the prior calendar year (currently
based on anniversary date), (ii) earned but not yet credited vacation is payable
on an annualized pro-rata basis in the event of the termination of the
employment of an employee, and (iii) AAI has the right to transfer vacation
liability to a purchasing party in the event of the sale of substantially all
of
the operating assets of AAI. Further, effective January 1, 2007, AAI shall
cause
each employee of AAI to be credited the amount of vacation he or she has earned
through December 31, 2006, and such credited vacation shall be added to the
vacation amounts each such AAI employee already had banked. Thereafter,
AAI’s accrued vacation liability shall reflect all vacation earned, whether or
not credited and available for use.
Prior
to
the Closing Date, AAI shall provide a cash payment to each Transferred Employee
in an amount equal to the cash equivalent of all
vacation time available for use (“Banked Vacation Time”) based on the
Transferred Employee’s wage or salary on the date of such payment, but only to
the extent that the Banked Vacation Time for any individual Transferred Employee
exceeds the amount that the Transferred Employee would earn in one year of
service based on his or her tenure (“AAI Banked Vacation Time
Cash-Out”). After
effecting the AAI Banked Vacation Time Cash-Out, the remaining amount of Banked
Vacation Time each Transferred Employee has available for use as of the Closing
Date will become his or her starting amount of paid vacation with the
Purchaser, or any Affiliate of the Purchaser, as the case may be, for the 2007
calendar year. The
Purchaser shall be responsible for all accrued vacation liability reflected
on
the Closing Date Financial Statements and any vacation accruing after the
Effective Time by any Transferred Employees.
7.3 Salaries
and Benefits.
(a) The
Selling Parties shall be responsible for the payment of all wages and other
remuneration due to Business Employees up until the Effective Time.
(b) Except
for the Purchaser’s obligations as to vacation liabilities for Transferred
Employees described in the last sentence of Section 7.2, the Selling Parties
shall be liable for any claims made by Business Employees and their
beneficiaries under the AAI Benefit Plans, including any claims with respect
to
the proper crediting of earned vacation before the Closing or the AAI Banked
Vacation Time Cash-Out.
35
(c) Welfare
benefit plan coverage of the Sellers for Transferred Employees shall cease
as of
the Effective Time and the welfare benefit plan coverage under the Purchaser’s
plans for Transferred Employees shall immediately commence. The Selling Parties
shall be solely responsible for any continuation coverage required by COBRA
for
those Business Employees of the Seller who are not Transferred Employees. To
the
extent required by Law the Selling Parties shall cause a Group Health Plan
maintained by one or more of them to provide COBRA continuation coverage to
M&A qualified beneficiaries with respect to the sale of the Purchased Assets
pursuant to this Agreement within the meaning of Treasury Regulation Section
54.4980B-9, Q-4(a). With respect to each Transferred Employee who is covered
under a Group Health Plan maintained by a Selling Party or any Affiliate of
a
Selling Party (the “Seller Group Health Plan”), the Purchaser shall waive all
pre-existing conditions, limitations or exclusions and waiting periods for
those
Transferred Employees under all employee welfare plans and fringe benefits
programs of the Purchaser, including vacation, bonus and other incentive
programs, to the extent that those pre-existing conditions, limitations or
exclusions as of the Closing Date would be excluded from coverage under the
Seller Group Health Plan.
(d) The
Selling Parties shall retain all assets in the pension and retirement funds
of
the Sellers, and shall distribute pension and retirement benefits that the
Transferred Employees shall become entitled to receive from either Seller in
accordance with the applicable plan document and the Transferred Employees’
elections, as applicable.
(e) Effective
as of the Closing Date, the Purchaser shall give past service credit to all
the
Transferred Employees for purposes of determining vesting, eligibility and
benefit accruals under all employee benefit programs, including vacation,
severance, bonus, incentive, compensation and employee welfare benefit plans
of
the Purchaser, with the exception of benefit accruals for pension and profit
sharing plans and eligibility for post-retirement health benefits.
(f) The
Selling Parties will retain all incentive savings plan (401(k) plan) benefits
held in the name of the Transferred Employees, if any, unless otherwise directed
by a Transferred Employee or unless distribution is otherwise allowed or
mandated pursuant to the plan document. The Purchaser shall accept qualified
direct and indirect rollovers from incentive savings plans of the Sellers,
if
the Purchaser obtains such information as is satisfactory to the Purchaser
to
assure itself that these incentive savings plans satisfy the qualification
requirements of Section 401(a) of the Code.
7.4 No
Transfer of Assets.
No
pension or other employee benefit plan assets held by either Seller shall be
transferred to any Purchasing Party or any Affiliate of a Purchasing
Party.
7.5 Employee
Records.
The
Selling Parties shall make available to the Purchaser records that provide
information regarding employees’ names, Social Security numbers, dates of hire
by each Seller, date of birth, number of hours worked each calendar year and
salary histories for all Transferred Employees. The Selling Parties shall not
provide the Purchasing Parties with records pertaining to performance ratings
and evaluations, disciplinary records and medical records of the Transferred
Employees.
7.6 General
Employment Provisions.
(a) The
Selling Parties and the Purchaser shall give any notices required by Law and
take whatever other actions with respect to the plans, programs and policies
described in this Article VII as may be necessary to carry out the
agreements described in this Agreement.
36
(b) The
Selling Parties and the Purchaser shall each provide the other with such plan
documents and summary plan descriptions, employee data or other information
as
may be reasonably required to carry out the agreements described in this Article
VII.
If
any of
the agreements described in this Article VII are determined by any
Governmental Authority to be prohibited by Law, the Selling Parties and the
Purchaser shall modify those agreements to as closely as possible reflect their
expressed intent and retain the allocation of economic benefits and burdens
to
the Parties described in this Agreement in a manner not otherwise prohibited
by
Law.
ARTICLE
VIII
CONDITIONS
PRECEDENT TO OBLIGATIONS OF THE PURCHASING PARTIES
The
obligations of the Purchasing Parties to consummate the transactions described
in this Agreement are subject to the satisfaction or waiver (to the extent
permitted by applicable Law) by the Purchasing Parties of the following
conditions precedent on or before the Closing Date:
8.1 Accuracy
of Representations and Warranties.
The
representations and warranties of the Selling Parties contained in this
Agreement and in any certificate or other writing delivered by a Selling Party
pursuant to this Agreement or the Ancillary Agreements shall be true, accurate
and correct as of the date of this Agreement and on and as of the Closing Date,
as if made at and as of the Closing Date (unless any representation or warranty
refers specifically to a specified date, in which case the representation or
warranty shall be true, accurate and correct on and as of the specified
date).
8.2 Compliance
with Agreements and Covenants.
Each of
the Selling Parties shall have performed and complied with all of its
covenants, obligations and agreements contained in this Agreement to be
performed and complied with by it on or
before
the Closing Date.
8.3 Xxxx-Xxxxx-Xxxxxx.
All
applicable waiting periods under the HSR Act shall have expired or been
terminated without action by the Justice Department or the Federal Trade
Commission to prevent the consummation of the transactions described in this
Agreement and the Ancillary Agreements.
8.4 No
Injunctions.
There
shall not be in effect any temporary restraining order, preliminary injunction,
injunction or other pending or threatened action by any Third Party or any
order
of any
court
or Governmental Authority restraining or prohibiting the Closing of the
transactions described in this Agreement and the Ancillary
Agreements.
8.5 Title
Insurance.
The
Purchasing Parties shall have received a binding commitment to issue a policy
of
title insurance consistent with Section 6.3, dated the Closing Date, in an
aggregate amount equal to the portion of the Purchase Price allocated to the
Owned Real Property.
37
8.6 Deliveries.
The
Purchaser shall have received the documents of transfer described in Article
X;
any documentation related to unassignable Permits or Contracts described in
Section 1.2; the certificates and legal opinion described in Article X; the
schedules and lists described in Article X; and all other documents described
in
Article X that are to be delivered to the Purchaser; and all such documents
relating to the Owned Real Property that are required to be filed or recorded
shall be in the proper filing and recordable form; and the content of the
schedules and lists delivered pursuant to Article X shall be reasonably
satisfactory to the Purchasing Parties.
8.7 List
of New Contracts.
The
Purchasing Parties shall have received the list of New Contracts (described
in
Section 1.1(j)), and that list shall be in form and content reasonably
acceptable to the Purchasing Parties.
8.8 Consents.
The
Selling Parties shall have received all Consents necessary to transfer the
Assigned Contracts to the Purchaser, all Consents necessary to transfer the
Permits to the Purchaser and all Consents necessary to transfer all Material
Contracts to the Purchaser, in each case in form and substance satisfactory
to
the Purchaser, or shall have otherwise complied with the Selling Parties’
obligations under Section 1.2, in form and substance satisfactory to the
Purchaser.
8.9 Environmental
Assessment.
The
findings and conclusions of any environmental assessment conducted by or on
behalf of the Purchasing Parties pursuant to Section 6.2 of this Agreement
shall
be satisfactory to the Purchasing Parties.
8.10 No
Material Adverse Effect.
No
event, occurrence, fact, condition, change, development or effect shall have
occurred, exist or come to exist since the date of this Agreement that,
individually or in the aggregate, has constituted or resulted in a Material
Adverse Effect.
8.11 Termination
of Confidentiality Agreement.
The
Confidentiality Non-Disclosure Agreement dated June 30, 2006, between Quanex
MACSTEEL and GBQ Consulting LLC shall have been terminated in
writing.
8.12 Employment
Agreement.
Xxxxxxx
Xxxxxxxxx shall have executed and delivered to the Purchaser an employment
agreement in form and content acceptable to the Purchaser.
8.13 Amendment
to Employee Handbook.
AAI
shall have performed and complied with all of its obligations under Section
7.2.
8.14 Insurance.
AAI
shall
have obtained
successor liability and discontinued product liability insurance coverage
for
commercial general liabilities and aviation related product liabilities,
including all liabilities relating to product produced or in process by a Seller
before the Effective Time, with the Purchaser as a named insured. The
policies shall provide limits of liability in the amount of $2.0 million each,
shall have no deductible and shall be in force for three years beginning on
the
Closing Date. The
Purchasing Parties shall be provided with a true and correct copy of the policy
and a related certificate of liability insurance.
38
ARTICLE
IX
CONDITIONS
PRECEDENT TO OBLIGATIONS OF THE SELLING PARTIES
The
obligations of the
Selling Parties to consummate the transactions contemplated hereby are subject
to the satisfaction or waiver (to the extent permitted by applicable Law) by
the
Selling Parties of the
following conditions precedent on or
before
the Closing Date:
9.1 Accuracy
of Representations
and Warranties.
The
representations and warranties of the
Purchasing Parties contained in this Agreement and in any certificate or other
writing delivered by the Purchasing Parties pursuant to this Agreement or the
Ancillary Agreements shall be true, accurate and correct as of the
date
of this Agreement and on and
as
of the
Closing Date, as if made on and as of the
Closing Date (unless any representation or warranty refers specifically to
a
specified date, in which case the representation or warranty shall be true,
accurate and correct on and
as
of the
specified date).
9.2 Compliance
with Agreements and Covenants.
Each of
the Purchasing Parties shall have performed and complied in all material
respects with all of its covenants, obligations and agreements contained in
this
Agreement to be performed and complied with by it on or before the Closing
Date.
9.3 Xxxx-Xxxxx-Xxxxxx.
All
applicable waiting periods under the HSR Act shall have expired or been
terminated without action by the Justice Department or the Federal Trade
Commission to prevent the consummation of the transactions described in this
Agreement and the Ancillary Agreements.
9.4 No
Injunctions.
There
shall not be in effect any temporary restraining order, preliminary injunction,
injunction or other pending or threatened action by any Third Party or any
order
of any court or Governmental Authority restraining or prohibiting the Closing
of
the transactions contemplated by this Agreement and the Ancillary
Agreements.
9.5 Deliveries.
The
Purchasing Parties shall have made all of the deliveries set forth in
Section 10.3.
9.6 Stockholder
Approval.
The
Stockholder Approval shall have been obtained.
ARTICLE
X
CLOSING
10.1 Closing.
The
Closing shall take place at the offices of Xxxxxx Xxxxxxx Xxxxxxxx &
Xxxxxxxx, P.C., at 0000 Xxxxxxx Xxxxxxx, Xxxxxx, Xxxxxxxx, at 9:00 a.m. on
February 1, 2007 or such other time and date that the Parties may agree to
in writing. The date on which the Closing occurs is referred to in this
Agreement as the “Closing Date.” The Closing shall be effective as of the
Effective Time.
39
10.2 Deliveries
by the Selling Parties.
At or
before the Closing, the Selling Parties shall deliver to the Purchasing Parties
the following, each dated the Closing Date and duly executed by the applicable
Selling Parties:
(a) An
assignment and assumption agreement substantially in the form of Exhibit B
(the
“Assignment and Assumption Agreement”), together with general warranty deeds for
the Owned Real Property substantially in the form of Exhibit C (the “General
Warranty Deeds”), and a xxxx of sale substantially in the form of Exhibit D (the
“Xxxx of Sale”);
(b) Possession
of the Purchased Assets;
(c) Certificates
of title for all vehicles included in the Purchased Assets, duly endorsed for
transfer to the Purchaser and any related documents necessary to effect the
transfer of the vehicles;
(d) Other
instruments of transfer reasonably requested by the Purchasing Parties to
evidence the transfer of the Purchased Assets to the Purchaser and consummation
of the transactions described in this Agreement, including assignments with
respect to any Registered Intellectual Property to be registered, recorded
or
filed with any Governmental Authority, in a form suitable for registration,
recordation or filing with the Governmental Authority, in each case duly
executed by the appropriate Selling Party;
(e) A
certificate, dated the Closing Date, of an appropriate officer of each of the
Selling Parties certifying as to the compliance by it with Sections 8.1 and
8.2;
(f) A
certificate of the Secretary of each of the Selling Parties certifying
resolutions of its board of directors and its stockholders approving and
authorizing the execution, delivery and performance by it of this Agreement
and
the Ancillary Agreements to which it is a party and the consummation by it
of
the transactions described in this Agreement and the Ancillary Agreements
(together with an incumbency and signature certificate regarding the officers
signing on behalf of each Selling Party);
(g) The
Consents set forth on Section 3.4 of the Disclosure Document (or, if applicable,
the documentation related to unassignable Permits and Contracts described in
Section 1.2) and all consents and waivers of any Governmental Authority or
other Third Party that are otherwise required in connection with the execution
and delivery of this Agreement or any Ancillary Agreement, the performance
by
each Selling Party of its obligations under this Agreement or the Ancillary
Agreements, and the consummation of the transactions described in this Agreement
and the Ancillary Agreements, each of which shall be in form and substance
reasonably satisfactory to the Purchasing Parties;
(h) A
certificate, in the form prescribed by Treasury Regulations under
Section 1445 of the Code, that the Selling Parties are not “foreign
persons” within the meaning of Section 1445 of the Code;
40
(i) The
surveys and title insurance policies described in Section 6.3 in an
aggregate amount equal to the portion of the Purchase Price allocated to the
Owned Real Property and containing no exceptions to title except Permitted
Encumbrances and those to which the Purchasing Parties did not object in
accordance with Section 6.3;
(j) An
opinion of legal counsel for the Selling Parties including the matters set
forth
on Exhibit E;
(k) The
Escrow Agreement; and
(l) Such
other documents and instruments as may be reasonably required to consummate
the
transactions described in this Agreement and the Ancillary
Agreements.
10.3 Deliveries
by the Purchasing Parties.
At the
Closing the Purchaser shall make the payments described in Section 2.3 and
shall deliver to the Selling Parties the following, each dated the Closing
Date
and duly executed by the Purchasing Parties, as applicable:
(a) The
Assignment and Assumption Agreement;
(b) A
certificate, dated the Closing Date, of an appropriate officer of each of the
Purchasing Parties, certifying as to compliance by it with Sections 9.1 and
9.2;
(c) A
certificate of the Secretary of each of the Purchasing Parties certifying
resolutions of its board of directors approving and authorizing the execution,
delivery and performance of this Agreement by it and the Ancillary Agreements
to
which it is a party and the consummation by it of the transactions described
in
this Agreement (together with an incumbency and signature certificate regarding
the officers signing on behalf of the Purchasing Parties);
(d) All
Consents described in Section 4.3 of the Disclosure Document and waivers of
any
Governmental Authority or other Third Party that are otherwise required in
connection with the execution and delivery of this Agreement or any Ancillary
Agreement, the performance by each of the Purchasing Parties of its obligations
under this Agreement or any Ancillary Agreement, and the consummation of the
transactions described in this Agreement and the Ancillary Agreements, each
of
which shall be in form and substance reasonably satisfactory to the Selling
Parties;
(e) An
opinion of legal counsel for the Purchasing Parties including the matters set
forth on Exhibit F;
(f) The
Escrow Agreement; and
(g) Such
other documents and instruments as may be reasonably required to consummate
the
transactions described in this Agreement and the Ancillary
Agreements.
10.4 Passage
of Title and Risk of Loss.
Legal
title, equitable title, and risk of loss in respect of the Purchased Assets
will
pass to the Purchaser at the Closing, which transfer, once it has occurred,
will
be deemed effective for tax, accounting, and other computational purposes as
of
the Effective Time.
41
ARTICLE
XI
TERMINATION
11.1 Termination.
This
Agreement may be terminated at any time on or before the Closing Date by any
of
the following:
(a) By
the
mutual written agreement of Maxco and Quanex;
(b) By
Maxco
or Quanex if the Closing shall not have taken place on or before March 1, 2007;
provided, however, that no Selling Party, if Maxco is the terminating Person,
or
no Purchasing Party, if Quanex is the terminating Person, shall have failed
to
fulfill any obligation under this Agreement or be in breach of any
representation, warranty or covenant under this Agreement, which failure or
breach was the cause of or resulted in the failure of the Closing to occur
on or
before that date;
(c) By
Maxco
or Quanex, if any court of competent jurisdiction or other Governmental
Authority shall have issued a final and non-appealable order, decree or ruling
or taken any other action permanently restraining, enjoining or otherwise
prohibiting the consummation of the transactions described in this
Agreement;
(d) By
Maxco
or Quanex, if before the Closing Date, a Selling Party, if Quanex is the
terminating Party, or a Purchasing Party, if Maxco is the Terminating Party,
is
in default or breach in any material respect of any representation, warranty,
covenant, or agreement contained in this Agreement, and the default or breach
shall not be cured within five Business Days after the date notice of the breach
is delivered by the Party claiming the default or breach to the Party in default
or breach; and
(e) By
Quanex
pursuant to Section 6.3(c) above.
In
the
event of any termination pursuant to this Section 11.1 (other than pursuant
to clause (a)), written notice setting forth the reasons for the termination
shall promptly be given by the terminating Party to the other
Parties.
11.2 Effect
of Termination.
If this
Agreement is terminated pursuant to Section 11.1, all obligations of the
Parties under this Agreement shall terminate, except for the obligations set
forth in Articles XII, XIII and XIV and Section 6.7, which shall survive the
termination of this Agreement, and except that no termination of this Agreement
shall relieve any Party from liability for any breach of this Agreement before
such termination of this Agreement.
ARTICLE
XII
INDEMNIFICATION
12.1 Survival;
Remedy for Breach.
The
representations and warranties contained in this Agreement shall survive until
the third-year anniversary of the Closing Date, at which time they shall expire;
provided, however, that the representations in Sections 3.3 and 4.2 shall
survive indefinitely, the representations in Section 3.16 of this Agreement
shall survive until the fourth-year anniversary of the Closing Date, and the
representations in Sections 3.7, 3.9, 3.13 and 3.14 shall survive until 30
days
after the expiration of the applicable statute of limitations. No claim
regarding a breach of a representation or warranty contained in this Agreement
shall be made after the expiration of the period of survival. Any claim asserted
in writing within the period of survival shall be timely made for purposes
of
this Agreement. The foregoing shall not limit the rights of any Person with
respect to covenants and agreements to be performed after the Closing Date
(including the covenant and agreement to provide indemnification), which shall
survive until the expiration of the applicable statute of limitations period
or,
as applicable, in accordance with their own terms. The indemnification
obligations under Sections 12.2(a)(x) and 12.3(a)(iii) shall survive
indefinitely.
42
12.2 Indemnification
by the Selling Parties.
(a) Subject
to Sections 12.1, 12.2(b), and 12.2(c), each of the Selling Parties shall
indemnify, defend, hold harmless and pay each Purchasing Party, its Affiliates
and their stockholders, officers, directors, employees, agents, representatives,
successors and assigns (the “Purchasing Parties’ Group”) from and against any
and all damages, losses, actions, proceedings, causes of action, liabilities,
claims, encumbrances, penalties, assessments, judgments, Tax, costs and
expenses, including removal, remediation or cleanup costs and costs of any
Post-Closing Remediation, sales credits, court costs, responsible fees of
attorneys and consultants and costs of litigation (“Losses”) incurred or
suffered by any of them arising out of or relating to any of the
following:
(i) any
breach of any representation or warranty made by the Selling Parties in this
Agreement or the Ancillary Agreements;
(ii) any
breach of or failure by a Selling Party to perform any covenant or obligation
set forth in this Agreement or the Ancillary Agreements:
(iii) the
ownership or operation of the Excluded Assets;
(iv) the
Sellers’ failure to comply with any applicable Law relating to bulk transfers or
bulk sales;
(v) the
employment of any Business Employee by a Seller or its Affiliates or the
cessation of that employment (including unfair labor practice charges,
employment discrimination charges, wrongful termination claims, workers’
compensation claims, and any employment-related tort claims);
(vi) any
AAI
Benefit Plan or other benefit liabilities of AAI or its Affiliates (other than
Assumed Obligations);
(vii) any
law
or regulation requiring a Seller or its Affiliates to provide severance benefits
or notices of termination of employment, including the Worker Adjustment and
Retraining Notification Act or any legal requirement or obligation that may
result from an “employment loss”, as that term is defined by 29 U.S.C.
§2101(a)(6), caused by any action or inaction of any Selling Party before the
Closing or by the decision of the Purchaser not to hire prior employees of
the
Selling Parties;
43
(viii) any
COBRA
claims pertaining to individuals (and their spouses and children) who are or
were employed by a Seller or any Affiliate of a Seller other than Transferred
Employees (and their spouses and children) who are hired by the
Purchaser;
(ix) the
ownership of the Purchased Assets or operation of the businesses of the Sellers
before the Effective Time;
(x) the
Excluded Obligations; and
(xi) any
Environmental Liability or other Loss relating to environmental matters arising
from or attributable to (1) any condition, event, circumstance, activity,
practice, incident, action or omission existing or occurring before the
Effective Time and related to the Purchased Assets, or the businesses of the
Sellers, or (2) the use, storage, disposal, treatment, transportation or release
of Hazardous Substances before the Effective Time and related to the Purchased
Assets or the businesses of the Sellers.
(b) The
Selling Parties shall not be liable with respect to any matter referred to
in
Section 12.2(a) unless the Losses thereunder exceed an aggregate deductible
of $100,000 (the “Selling Parties’ Basket”), in which event the Selling Parties
shall be liable for all claims under Sections 12.2(a) to the extent such
Losses exceed the Selling Parties’ Basket; provided, however, that the Selling
Parties’ combined aggregate liability for Losses with respect to any matter
referred to in Sections 12.2(a) that exceed the Selling Parties’ Basket shall in
no event exceed an amount equal to $5,800,000 (the “Selling Parties’ Maximum
Indemnity Amount”). Notwithstanding the foregoing, the Selling Parties’ Basket
and the Selling Parties’ Maximum Indemnity Amount shall not apply to any Losses
relating to the Excluded Obligations or any breach of the Selling Parties’
representations, warranties or covenants relating to Taxes. For clarification,
the Selling Parties’ Maximum Indemnity Amount includes, and is not in addition
to, any amounts in the escrow fund established under the Escrow
Agreement.
(c) The
amount for which the Selling Parties shall be liable with respect to any Loss
pursuant to Sections 12.2(a) and 12.2(b) shall be reduced to the extent
that the Purchasing Parties or any other member of the Purchasing Parties’ Group
shall have realized any net proceeds recovered from Third Parties with respect
to the Loss. If a Purchasing Party or any other Person entitled to indemnity
under Section 12.2(a) shall have received or shall have had paid on its
behalf an indemnity payment with respect to a Loss and shall subsequently
receive, directly or indirectly, any proceeds, then the Purchasing Party shall
promptly pay to the Sellers the net amount of those proceeds or, if less, the
amount of the indemnity payment. The Purchasing Parties shall take all
commercially reasonable actions to file claims under applicable policies to
recover insurance proceeds that may be due to the Purchasing Parties or any
other Person in order to mitigate the Selling Parties’ obligations under this
Agreement; provided, however, that the aforesaid obligation to mitigate shall
not extend beyond six months from the date that the relevant claim becomes
known
to the Purchaser; provided further, however, that the Purchasing Parties shall
not be required to first seek recovery under any applicable insurance policy
before making any claim for indemnification pursuant to this Article XII. The
Selling Parties shall cooperate with the Purchasing Parties to pursue any claims
that the Purchasing Parties may have with respect to the matters described
in
this Agreement and reasonably believe are covered under any insurance policy
under which a Selling Party is a named insured.
44
12.3 Indemnification
by the Purchasing Parties.
(a) Subject
to Sections 12.1, 12.3(b) and 12.3(c), the Purchasing Parties shall
indemnify, defend and hold harmless and pay the Selling Parties, their
Affiliates and their stockholders, officers, directors, employees, agents,
representatives, successors and assigns (the “Selling Parties’ Group”), from and
against any and all Losses incurred or suffered by them arising out of any
of
the following:
(i) any
breach of any representation or warranty made by the Purchasing Parties in
this
Agreement or the Ancillary Agreements;
(ii) any
breach of or failure by the Purchasing Parties to perform any covenant or
obligation set forth in this Agreement or the Ancillary Agreements;
(iii) any
of
the Assumed Obligations; and
(iv) any
Losses directly caused by the Purchasing Parties’ access and inspections
pursuant to Section 6.2(a), other than Losses resulting from or related to
the
detection, discovery or evaluation of Hazardous Substances in the course of
those inspections.
(b) The
Purchasing Parties shall not be liable with respect to any matter referred
to in
Section 12.3(a) unless the Losses thereunder exceed an aggregate deductible
of
$100,000 (the “Purchasing Parties’ Basket”) in which event the Purchasing
Parties shall be liable for all claims under Section 12.3(a) to the extent
such
Losses exceed the Purchasing Parties’ Basket; provided, however, that the
Purchasing Parties’ combined aggregate liability for Losses that exceed the
Purchasing Parties’ Basket shall in no event exceed an amount equal to
$3,000,000 (the “Purchasing Parties’ Maximum Indemnity Amount”). Notwithstanding
the foregoing, the Purchasing Parties' Basket and the Purchasing Parties'
Maximum Indemnity Amount shall not apply to any Losses that constitute Assumed
Obligations.
(c) The
amount for which the Purchasing Parties shall be liable with respect to any
Loss
pursuant to Sections 12.3(a) and 12.3(b) shall be reduced to the extent
that a Seller or any other member of the Selling Parties’ Group shall have
realized any net proceeds recovered from Third Parties with respect to the
Loss.
If a Seller or any other Person entitled to indemnity under Section 12.3(a)
shall have received or shall have had paid on its behalf an indemnity payment
with respect to a Loss and shall subsequently receive, directly or indirectly,
any proceeds, then AAI shall promptly pay to the Purchasing Parties the net
amount of the proceeds or, if less, the amount of the indemnity payment. The
Selling Parties shall take all commercially reasonable actions to file claims
under applicable policies to recover insurance proceeds that may be due to
any
Selling Party or any other Person in order to mitigate the Purchasing Parties’
obligations under this Agreement; provided, however, that the aforesaid
obligation to mitigate shall not extend beyond six months from the date that
the
relevant claim becomes known to the Selling Parties; provided further, however,
that the Selling Parties shall not be required to first seek recovery under
any
applicable insurance policy before making any claim for indemnification pursuant
to this Article XII. The Purchasing Parties shall cooperate with the Selling
Parties to pursue any claims that the Selling Parties may have with respect
to
the matters described in this Agreement and reasonably believe are covered
under
any insurance policy under which a Purchasing Party is a named
insured.
45
12.4 Claims.
As soon
as is reasonably practicable after becoming aware of a claim by a Third Party
(“Third-Party Claim”) with respect to which indemnity may be claimed pursuant to
the terms of this Agreement, the Person entitled to, or claiming a right to,
indemnification (the “Indemnified Person”) shall promptly give notice to the
Person claimed by the Indemnified Person to be obligated under this Article
XII
(the “Indemnifying Person”) of the claim or the commencement of the Third Party
Claim and a good faith estimate of the amount the Indemnified Person will be
entitled to receive under this Agreement from the Indemnifying Person; provided,
however, that the failure of the Indemnified Person to give notice shall not
relieve the Indemnifying Person of its obligations under this Article XII
except to the extent (if any) that the Indemnifying Person shall have been
actually prejudiced by that failure. A claim for indemnification for any matter
not involving a Third Party Claim may be asserted by notice to the Indemnifying
Person without the need to comply with Sections 12.5 through 12.7.
12.5 Assumption
of Defense.
The
Indemnifying Person may, at its own expense, participate in the defense of
any
Third Party Claim and upon written acknowledgement to the Indemnified Person
that the Indemnified Person is entitled to indemnification pursuant to
Section 12.2 or 12.3, as applicable, for all Losses arising out of the
Third Party Claim, at any time during the course of any Third Party Claim assume
the defense of the Third Party Claim; provided, however, that (a) the
Indemnifying Person’s counsel is reasonably satisfactory to the Indemnified
Person, (b) after assuming the defense the Indemnifying Person shall consult
with and update the Indemnified Person upon the Indemnified Person’s reasonable
request for consultation or update from time to time with respect to the Third
Party, and (c) the Third Party Claim involves only monetary damages and does
not
seek an injunction or other equitable relief or does not, in the good faith
judgment of the Indemnified Person, involve a conflict of interest. If the
Indemnifying Person assumes the defense, the Indemnified Person shall have
the
right (but not the obligation) to participate in the defense and to employ
counsel, at its own expense, separate from the counsel employed by the
Indemnifying Person; provided, however, that if (i) the Indemnified Person
determines that a conflict of interest exists or (ii) the Indemnifying Person
fails to actively and diligently conduct the defense of a Third Party Claim,
then in either event, the Indemnified Person may hire separate counsel, at
the
Indemnifying Person’s expense. Whether or not the Indemnifying Person chooses to
defend or prosecute any Third Party Claim, all of the Parties shall reasonably
cooperate in the defense or prosecution of the claim.
12.6 Settlement
or Compromise.
Any
settlement or compromise made or caused to be made by the Indemnified Person
or
the Indemnifying Person, as the case may be, of a Third Party Claim shall also
be binding on the Indemnifying Person or the Indemnified Person, as the case
may
be, in the same manner as if a final judgment or decree had been entered by
a
court of competent jurisdiction in the amount of the settlement or compromise;
provided, however, that (a) subject to Section 12.7, no obligation,
restriction, course of conduct or Loss shall be imposed on the Indemnified
Person as a result of the settlement or compromise without the prior written
consent of such Indemnified Person; and (b) the Indemnifying Person shall not
enter into any settlement or compromise without obtaining a duly executed
unconditional release of the Indemnified Person from all liability in respect
of
the Third Party Claim. The Indemnified Person or the Indemnifying Person, as
the
case may be, shall give the other Person at least ten (10) days’ prior written
notice of any proposed settlement or compromise of any Third Party Claim it
is
defending, during which time the other Person may reject the proposed settlement
or compromise. If the Indemnified Person is the rejecting party, it shall be
obligated to assume the defense of, and full and complete liability and
responsibility for, the Third Party Claim and any and all Losses in connection
with it in excess of the amount of Losses which the Indemnified Person would
have incurred under the proposed settlement or compromise. If the Indemnifying
Person is the rejecting party, the Indemnifying Person shall be obligated to
assume the defense of, and full and complete liability and responsibility for,
the Third Party Claim and any and all Losses in connection with it.
46
12.7 Failure
of Indemnifying Person to Act.
If the
Indemnifying Person does not elect to assume the defense of any Third Party
Claim, then (a) the Indemnified Person shall (upon further notice to the
Indemnifying Person) have the right to undertake the defense, compromise or
settlement of the Third Party Claim on behalf of and for the account and risk
of
the Indemnifying Person, subject to the Indemnifying Person’s election to assume
the defense of the Third Party Claim at any time prior to settlement, compromise
or final determination of the claim; and (b) any failure of the Indemnified
Person to defend or to participate in the defense of a Third Party Claim or
to
cause the same to be done, shall not relieve the Indemnifying Person of its
obligations under this Agreement.
12.8 Direct
Claims.
The
Indemnifying Person will have a period of 30 calendar days within which to
respond in writing to any claim made in writing by an Indemnified Person on
account of any Loss that does not result from a Third Party Claim (a “Direct
Claim”). If the Indemnifying Person does not so respond within that 30-day
period, the Indemnifying Person will be deemed to have rejected the Direct
Claim, in which event the Indemnified Person will be entitled to pursue such
remedies as may be available to the Indemnified Person.
ARTICLE
XIII
POST-CLOSING
DISPUTE RESOLUTION AND PRE-CLOSING REMEDIES
13.1 Initial
Mutual Dispute Resolution.
Except
as provided in Section 2.4 (regarding adjustments to the Purchase Price),
any dispute or difference arising out of or in connection with this Agreement
(including any contested claim for indemnification pursuant to Article XII)
after the Closing, shall be first submitted for resolution pursuant to the
following procedure. First, a senior executive officer of each of Quanex and
Maxco shall meet in person to resolve the dispute within five days after written
notice of the dispute is provided by a Party to the other Parties. If those
executive officers are unable to resolve the dispute within three days after
their meeting, the chief executive officers of Quanex and Maxco shall promptly
attempt to resolve the dispute. If the chief executive officers are unable
to
resolve the dispute within 15 days following the original notice of the claim
or
dispute, then the provisions of Section 13.2 shall apply.
47
13.2 Arbitration.
Any
dispute or difference arising after the Closing Date out of or in connection
with this Agreement or the formation of this Agreement (including any contested
claim for indemnification pursuant to Article XII), that is not addressed
pursuant to Section 13.1 shall be first submitted for resolution pursuant to
the
following procedure. The Party seeking resolution shall give notice of the
dispute to the other Parties and to the American Arbitration Association
(“AAA”), at its office in Houston, Texas, and the dispute shall be submitted to
a sole arbitrator who is independent and impartial, for binding arbitration
in
Houston, Texas, in accordance with AAA’s Commercial Arbitration Rules. The
Parties shall faithfully abide by and perform any award rendered by the
arbitrator. The award of the arbitrator shall be final and binding on all
Parties, and judgment upon the award of the arbitrator may be entered and
enforced by any court having jurisdiction. Any monetary award shall be
denominated and payable in United States Dollars. With respect to disputes
arising after the Closing Date, no litigation, administrative or other
proceeding may ever be instituted at any time in any court or before any
administrative agency or body for the purpose of adjudicating, interpreting
or
enforcing any of the rights, duties, liabilities or obligations of the Parties
or any rights, duties, liabilities or obligations relating to any dispute under
this Agreement or the Ancillary Agreements, whether or not covered by the
express terms of this Agreement, or for the purpose of adjudicating a breach
or
determination of the validity of this Agreement, or for the purpose of appealing
any decision of an arbitrator, except a proceeding instituted (a) for the
purpose of having the award of an arbitrator entered and enforced, (b) to seek
an injunction or restraining order (but not damages in connection therewith)
in
circumstances in which such relief is available or (c) to request a court to
grant interim measures of protection: (i) to preserve the status quo pending
resolution of the dispute; (ii) to prevent the destruction of documents and
other information or things related to the dispute; (iii) to prevent the
transfer, dissipation or hiding of assets; or (iv) to aid the arbitral
proceedings and the award; any request for such measures to a judicial authority
shall not be deemed incompatible with or a waiver of a Party’s right to
arbitrate a dispute. The arbitrator shall have the right to grant the same
relief as that provided in any applicable Law or court decisions.
13.3 Jurisdiction
and Jury Trial Waiver with Respect to Pre-Closing Disputes.
(a) Each
Party irrevocably agrees that the courts of the State of Texas or the United
States of America for the Southern District of Texas are to have jurisdiction
to
settle any claims, differences or disputes which may arise out of or in
connection with this Agreement before the Closing and with respect to
proceedings described in Section 13.2(a) through (c).
(b) Each
Party irrevocably waives any objection it may now or hereafter have to the
laying of the venue of any proceedings in any court referred to in this
Section 13.3 and any claim that any proceedings brought in any such court
have been brought in an inconvenient forum and further irrevocably agrees that
a
judgment in any proceedings brought in a court of the State of Texas or of
the
United States of America for the Southern District of Texas shall be conclusive
and binding on the Parties and may be enforced in the courts of any other
jurisdiction with respect to pre-Closing disputes and with respect to
proceedings described in Section 13.2(a) through (c).
(c) The
Parties waive any right to trial by jury in any proceeding arising out of or
relating to pre-Closing disputes under this Agreement, whether grounded in
contract, tort, strict liability or otherwise. The Parties agree that any of
them may file a copy of this Section 13.3 with any court as written
evidence of the knowing, voluntary and bargained for agreement among the Parties
irrevocably to waive trial by jury and that any proceeding whatsoever between
or
among them relating to pre-Closing disputes under this Agreement shall instead
be tried in a court of competent jurisdiction by a judge sitting without a
jury.
48
13.4 Specific
Performance.
The
Parties recognize that if the Selling Parties refuse to perform or do not
perform under the provisions of this Agreement, monetary damages alone will
not
be adequate to compensate the Purchasing Parties for their Losses. The
Purchasing Parties shall therefore be entitled, in addition to any other
remedies that may be available, to obtain specific performance of the terms
of
this Agreement.
ARTICLE
XIV
MISCELLANEOUS
14.1 Amendment.
This
Agreement and the Disclosure Document may be amended, modified or supplemented
only by a writing signed by the Parties.
14.2 Interpretation.
The
headings preceding the text of articles and sections included in this Agreement
and the headings contained in exhibits to this Agreement are for convenience
only and shall not be deemed part of this Agreement or be given any effect
in
interpreting this Agreement. The terms set forth in this Agreement have been
arrived at after mutual negotiation with the advice of counsel representing
Selling Parties and counsel representing the Purchasing Parties and, therefore,
it is the intention of the Parties that its terms may not be construed against
any of the Parties by reason of the fact that it was prepared by one or more
of
the Parties. Unless the context otherwise requires, (a) the gender (or lack
of
gender) of all pronouns used in this Agreement includes the masculine, feminine
and neuter; (b) references to articles, sections and exhibits refer to articles
and sections of, or exhibits to this Agreement; and (c) “including” means
“including without limitation”. References to this Agreement are intended to
include this Agreement and all exhibits and amendments (if any) to this
Agreement. Capitalized terms used in this Agreement that have been defined
in
this Agreement shall have the meanings defining them in the text of this
Agreement.
14.3 Notices.
Any
notice, request, instruction or other document to be given under this Agreement
by a Party shall be in writing and shall be deemed to have been given (a) when
received if given in person or by courier or a courier service; (b) on the
date
of transmission if sent by telex, facsimile or other wire transmission (receipt
confirmed); or (c) five Business Days after being deposited in the U.S. mail,
certified or registered, postage prepaid:
If
to a
Selling Party, addressed as follows:
Maxco,
Inc.
0000
Xxxxxxxxxx Xx., Xxxxx 000
Xxxxxxx,
Xxxxxxxx 00000
Attention:
Xxx X. Xxxx
Telephone
No.: 000-000-0000
Facsimile
No.: 000-000-0000
49
With
a
copy to:
J.
Xxxxxxx Xxxxxx
Xxxxxx
Xxxxxxx Xxxxxxxx & Xxxxxxxx, P.C.
X.X.
Xxx
00000
Xxxxxxx,
Xxxxxxxx 00000
Telephone
No.: 000-000-0000
Facsimile
No.: 000-000-0000
If
to a
Purchasing Party, addressed as follows:
Quanex
Corporation
0000
Xxxx
Xxxx Xxxxx
Xxxxx
0000
Xxxxxxx,
Xxxxx 00000
Attention:
Senior Vice President and Chief Financial Officer
Telephone
No.: (000) 000-0000
Facsimile
No.: (000) 000-0000
With
copies to:
Quanex
Corporation
0000
Xxxx
Xxxx Xxxxx
Xxxxx
0000
Xxxxxxx,
Xxxxx 00000
Attention:
Senior Vice President and General Counsel
Telephone
No.: (000) 000-0000
Facsimile
No.: (000) 000-0000
Xx.
Xxxxx
X. Xxxxxxx
Fulbright
& Xxxxxxxx, L.L.P.
0000
XxXxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx,
Xxxxx 00000-0000
Telephone
No.: (000) 000-0000
Facsimile
No.: (000) 000-0000
or
to
such other individual or address or facsimile number as a Party may designate
for itself by notice given as provided in this Section 14.3.
14.4 Waivers.
The
failure of a Party at any time or times to require performance of any provision
of this Agreement shall in no manner affect its right at a later time to enforce
the same provision. No waiver by a Party of any condition or of any breach
of
any term, covenant, representation or warranty contained in this Agreement
shall
be effective unless in writing, and no waiver in any one or more instances
shall
be deemed to be a further or continuing waiver of any condition or breach of
this Agreement in other instances or a waiver of any other condition or breach
of any other term, covenant, representation or warranty of this
Agreement.
50
14.5 Successors
and Assigns.
This
Agreement shall be binding on and shall inure to the benefit of each Party
and
its permitted successors and assigns; provided, however, that neither this
Agreement, nor any Ancillary Agreements (except as may be expressly provided
otherwise in any Ancillary Agreement) nor any right or obligation under this
Agreement or any Ancillary Agreement may be assigned by any Party other than
to
an Affiliate of that Party without the prior written consent of the other
Parties; provided further, that no such assignment shall relieve a Party from
its obligations under this Agreement or any Ancillary Agreement.
14.6 No
Third Party Beneficiaries.
This
Agreement is solely for the benefit of the Parties and no provision of this
Agreement shall be deemed to confer upon any other Person any remedy, claim,
liability, reimbursement, cause of action or other right, including the rights
of any Business Employees.
14.7 Severability
and Reform.
If any
provision of this Agreement shall be held invalid, illegal or unenforceable,
the
validity, legality or enforceability of the other provisions of this Agreement
shall not be affected by that holding, and there shall be deemed substituted
for
the provision at issue a valid, legal and enforceable provision as similar
as
possible to the provision at issue.
14.8 Entire
Understanding.
This
Agreement, the Disclosure Document, the Ancillary Agreements and the
Confidentiality Agreement (as amended under Section 6.7), including schedules,
exhibits and annexes to any of the foregoing, set forth the entire agreement
and
understanding of the Parties with respect to the transactions described in
this
Agreement and the Ancillary Agreements and supersede any and all prior
agreements, arrangements and understandings among the Parties relating to the
subject matter of this Agreement. The letter of intent dated October 3, 2006,
executed by Maxco and Quanex is terminated, but this termination shall not
relieve Maxco or Quanex of any liability under that letter of intent for any
existing breach.
14.9 Applicable
Law.
This
Agreement shall be governed by and construed and enforced in accordance with
the
internal laws of the State of Texas without giving effect to the principles
of
conflicts of law.
14.10 Counterparts.
This
Agreement may be executed in counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same original
instrument.
51
IN
WITNESS OF THE PROVISIONS OF THIS AGREEMENT, the Parties have executed and
delivered this Agreement on the date set forth in the opening paragraph of
this
Agreement.
SELLING
PARTIES:
|
|||
MAXCO,
INC.
|
|||
By:
|
/s/ Max. X. Xxxx | ||
Name:
|
Max.
X. Xxxx
|
||
Title:
|
President
|
||
ATMOSPHERE
ANNEALING, INC.
|
|||
By:
|
/s/ Max. X. Xxxx | ||
Name:
|
Xxx
X. Xxxx
|
||
Title:
|
Secretary
|
||
BCGW,
INC.
|
|||
By:
|
/s/ Max. X. Xxxx | ||
Name:
|
Xxx
X. Xxxx
|
||
Title:
|
Vice
President
|
||
PURCHASING
PARTIES:
|
|||
QUANEX
CORPORATION
|
|||
By:
|
/s/ Xxxx X. Xxxxxxxx | ||
Name:
|
Xxxx
X. Xxxxxxxx
|
||
Title:
|
Vice
President - Corporate Development
|
||
QUANEX
TECHNOLOGIES, INC.
|
|||
By:
|
/s/ Xxxxx X. Xxxxxxx | ||
Name:
|
Xxxxx
X. Xxxxxxx
|
||
Title:
|
Vice
President - Secretary
|
52