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EXHIBIT 2.1
Acquisition Agreement and Plan of Merger
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EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
Dated October 23, 2000,
Between
QUANEX CORPORATION,
a Delaware corporation
and
QUANEX FIVE, INC.,
a Delaware corporation
and
TEMROC METALS, INC.,
a Minnesota corporation
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TABLE OF CONTENTS
This Table of Contents is solely for convenience of reference and shall
be given no effect in the construction or interpretation of this Agreement.
PAGE
1. GENERAL DESCRIPTION OF THE MERGER.........................................................................1
1.1 EFFECTIVENESS OF THE MERGER......................................................................1
1.2 NAME AND GOVERNING LAW OF THE SURVIVING CORPORATION..............................................1
1.3 CHARTER DOCUMENTS OF THE SURVIVING CORPORATION...................................................1
1.4 OFFICERS AND DIRECTORS OF THE SURVIVING CORPORATION..............................................2
1.5 DISPOSITION OF PARTNERSHIP INTERESTS AND AACRON CAPITAL STOCK....................................2
1.6 CONVERSION OF STOCK..............................................................................2
1.7 SHARES OF DISSENTING SHAREHOLDERS................................................................3
1.8 ADDITIONAL ESCROW CONSIDERATION..................................................................3
1.9 PURCHASE PRICE ADJUSTMENTS.......................................................................3
(a) PURCHASE PRICE ADJUSTMENT AT CLOSING....................................................3
(b) PREPARATION OF THE POST-CLOSING DATE BALANCE SHEET......................................4
(c) PROCEDURE FOR OBJECTING TO AND FINALLY DETERMINING THE CLOSING DATE BALANCE SHEET.......4
(d) PAYMENT OF ADJUSTMENT AMOUNT............................................................4
(e) DEFINITION OF NET ASSET VALUE...........................................................5
2. CLOSING...................................................................................................5
2.1 TIME AND PLACE OF THE CLOSING....................................................................5
2.2 ACTIONS TO BE TAKEN AT THE CLOSING...............................................................5
(a) DOCUMENTS TO BE FILED...................................................................5
(b) ESCROW AGREEMENT; PAYING AGENT AGREEMENT................................................5
(c) CORPORATE RECORDS.......................................................................6
(d) CERTAIN ADDITIONAL AGREEMENTS...........................................................6
(e) LEGAL OPINIONS..........................................................................6
(f) COMPLIANCE CERTIFICATES.................................................................6
(g) CERTIFICATES OF INCUMBENCY AND AUTHORITY................................................6
(h) OTHER DOCUMENTS TO BE DELIVERED.........................................................6
(i) FORM OF DOCUMENTS DELIVERED.............................................................7
(j) TIMING OF ACTIONS TO BE TAKEN AT THE CLOSING............................................7
2.3 DISBURSEMENT OF THE MERGER CONSIDERATION.........................................................7
(a) PAYMENT OF CASH CONSIDERATION...........................................................7
(b) ISSUANCE OF NEW CERTIFICATE REPRESENTING STOCK OF THE SURVIVING CORPORATION.............7
(c) EFFECTIVENESS OF SHARE OWNERSHIP........................................................7
2.4 DISBURSEMENT OF THE ADJUSTMENT AMOUNT AND ADDITIONAL ESCROW CONSIDERATION........................7
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3. REPRESENTATIONS AND WARRANTIES OF TEMROC..................................................................8
3.1 ORGANIZATION AND EXISTENCE.......................................................................8
3.2 AUTHORITY, CAPACITY AND ENFORCEABILITY...........................................................8
3.3 CAPITALIZATION...................................................................................8
3.4 INTERESTS IN OTHER ENTITIES AND SCOPE OF BUSINESS................................................8
3.5 NO CONFLICT......................................................................................9
3.6 NO GOVERNMENTAL NOTICES, CONSENTS OR APPROVALS...................................................9
3.7 FINANCIAL CONDITION..............................................................................9
3.8 CORPORATE RECORDS................................................................................10
3.9 TITLE TO AND POSSESSION OF ASSETS................................................................10
3.10 REAL PROPERTIES..................................................................................10
3.11 EQUIPMENT USED IN THE BUSINESS...................................................................11
3.12 CONTRACTS........................................................................................11
3.13 CONDITION OF ASSETS..............................................................................12
3.14 CLAIMS...........................................................................................12
3.15 NO ADVERSE CHANGE................................................................................12
3.16 CERTAIN TRANSACTIONAL FEES.......................................................................13
3.17 EMPLOYEE MATTERS.................................................................................13
(a) DOCUMENTS...............................................................................13
(b) COMPLIANCE AND CERTAIN AGREEMENTS.......................................................13
(c) DIRECTORS, OFFICERS AND EMPLOYEES.......................................................14
3.18 EMPLOYEE BENEFIT MATTERS.........................................................................14
(a) IDENTIFICATION OF PLANS.................................................................14
(b) COMPLIANCE..............................................................................14
(c) CERTAIN PENSION PLANS...................................................................15
(d) NO DEFINED BENEFIT PENSION PLANS........................................................15
(e) EXTENDED MEDICAL COVERAGE...............................................................15
(f) EFFECT OF THIS TRANSACTION..............................................................15
3.19 REGULATORY AUTHORITY AND COMPLIANCE..............................................................15
3.20 INSURANCE........................................................................................16
3.21 TAX MATTERS......................................................................................16
(a) FILING OF RETURNS.......................................................................16
(b) PAYMENT OF TAXES........................................................................16
(c) WITHHOLDING.............................................................................16
(d) ENCUMBRANCES............................................................................16
(e) EXTENSIONS..............................................................................17
(f) THIRD-PARTY TAXES.......................................................................17
(g) STATUTES OF LIMITATIONS.................................................................17
(h) CLAIMS..................................................................................17
(i) AUDITS..................................................................................17
(j) TAX SHARING.............................................................................17
(k) POWERS OF ATTORNEY......................................................................17
(l) PARACHUTE PAYMENTS......................................................................17
(m) 341(f) CONSENTS.........................................................................17
(n) CERTAIN PROPERTY........................................................................17
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(o) 481(a) ADJUSTMENTS......................................................................17
(p) BOYCOTTS................................................................................17
(q) PAST AUDITS.............................................................................18
(r) INFORMATION PROVIDED....................................................................18
(s) DEFINITIONS.............................................................................18
3.22 INTELLECTUAL PROPERTY............................................................................18
3.23 INVENTORY........................................................................................18
3.24 ACCOUNTS RECEIVABLE..............................................................................19
3.25 OTHER INFORMATION................................................................................19
3.26 NO UNDISCLOSED LIABILITY.........................................................................19
4. REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB..........................................................19
4.1 ORGANIZATION AND GOOD STANDING...................................................................19
4.2 AUTHORITY........................................................................................20
4.3 CAPITALIZATION...................................................................................20
4.4 NO CONFLICT......................................................................................20
4.5 NO CONSENTS OR GOVERNMENTAL APPROVALS............................................................20
4.6 CERTAIN TRANSACTIONAL FEES.......................................................................20
5. CERTAIN COVENANTS OF TEMROC, PARENT AND SUB...............................................................20
5.1 CONDUCT OF BUSINESS..............................................................................20
(a) ORDINARY COURSE.........................................................................20
(b) COMPENSATION AND PRICING................................................................21
(c) MAINTENANCE.............................................................................21
(d) CHARTER DOCUMENTS AND DIVIDENDS.........................................................21
(e) NO NEW AGREEMENT........................................................................21
(f) PLAN LIABILITIES........................................................................21
(g) CAPITAL EXPENDITURES....................................................................21
(h) PERFORMANCE BONUSES.....................................................................21
(i) COMPLIANCE..............................................................................21
5.2 CORPORATE ACTIONS................................................................................21
5.3 FILINGS, AUTHORIZATIONS AND OTHER ACTIONS........................................................22
5.4 SUPPLYING OF INFORMATION.........................................................................22
5.5 INSPECTION OF PROPERTIES.........................................................................22
5.6 NOTICE OF CERTAIN CHANGES REGARDING TEMROC.......................................................22
5.7 EXPENSES.........................................................................................23
5.8 PUBLICITY........................................................................................23
5.9 CONFIDENTIAL INFORMATION.........................................................................23
5.10 EXCLUSIVITY......................................................................................23
5.11 EMPLOYEE BENEFITS................................................................................24
5.12 QUANEX NONCOMPETITION COVENANT...................................................................25
5.13 RELATIONSHIP WITH AACRON.........................................................................25
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6. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PARENT AND SUB TO CLOSE........................................25
6.1 TEMROC'S FULFILLMENT OF COVENANTS................................................................25
6.2 TEMROC'S REPRESENTATIONS.........................................................................25
6.3 AUTHORIZATIONS; CONSENTS; LEGAL PROHIBITION......................................................25
6.4 CONSENTS.........................................................................................26
6.5 TERMINATION OF PLANS.............................................................................26
6.6 BOARD APPROVAL...................................................................................26
6.7 TEMROC APPROVAL..................................................................................26
6.8 DUE DILIGENCE....................................................................................26
6.9 UPDATED SCHEDULES................................................................................26
6.10 DOCUMENTS DESCRIBED IN ARTICLE 2.................................................................26
6.11 MERGER DOCUMENTS.................................................................................27
6.12 CERTIFIED TEMROC CHARTER DOCUMENTS...............................................................27
6.13 TEMROC RESOLUTIONS...............................................................................27
6.14 SCHUMER NON-COMPETITION AGREEMENT................................................................27
6.15 DISPOSITION OF PARTNERSHIP INTERESTS AND AACRON CAPITAL STOCK....................................27
6.16 EXERCISE OF DISSENTERS' RIGHTS...................................................................27
6.17 ENVIRONMENTAL INSURANCE..........................................................................27
7. CONDITIONS PRECEDENT TO TEMROC'S OBLIGATIONS TO CLOSE.....................................................27
7.1 FULFILLMENT OF COVENANTS OF PARENT AND SUB.......................................................27
7.2 REPRESENTATIONS OF PARENT AND SUB................................................................27
7.3 AUTHORIZATIONS; CONSENTS; LEGAL PROHIBITION......................................................27
7.4 PAYMENT OF INITIAL PURCHASE PRICE AND DOCUMENTS DESCRIBED IN ARTICLE 2...........................28
7.5 PARENT AND SUB'S RESOLUTIONS.....................................................................28
8. TERMINATION...............................................................................................28
8.1 MANNER OF TERMINATION............................................................................28
(a) BY PARENT OR SUB FOR DEFAULT............................................................28
(b) BY TEMROC FOR DEFAULT...................................................................28
(c) BY MUTUAL CONSENT.......................................................................29
(d) BY EITHER PARTY AFTER DEADLINE..........................................................29
8.2 EFFECT OF TERMINATION............................................................................29
9. SURVIVAL..................................................................................................30
10. GENERAL PROVISIONS........................................................................................30
10.1 AMENDMENTS.......................................................................................30
10.2 NOTICES..........................................................................................30
10.3 WAIVER...........................................................................................32
10.4 HEADINGS.........................................................................................33
10.5 SEVERABILITY.....................................................................................33
10.6 ENTIRE AGREEMENT; SCHEDULES......................................................................33
10.7 GOVERNING LAW....................................................................................33
10.8 COUNTERPARTS.....................................................................................33
10.9 NO THIRD-PARTY BENEFICIARIES.....................................................................33
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10.10 WAIVER OF JURY TRIAL.............................................................................33
10.11 CONSTRUCTION.....................................................................................34
10.12 KNOWLEDGE........................................................................................34
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INDEX OF DEFINITIONS
This Index of definitions is solely for convenience of reference and
shall be given no effect in the construction or interpretation of this
Agreement.
TERMS DEFINED IN THIS AGREEMENT WHERE DEFINED
Aacron.......................................................................................Section 1.5
Additional Closing Consideration.............................................................Section 1.9(a)
Affiliated Group.............................................................................Section 3.21(a)
Agreement....................................................................................[Introduction]
Alternate Accounting Firm....................................................................Section 1.9(c)
Alternative Transaction......................................................................Section 5.10
Articles of Merger...........................................................................Section 1.1
Business.....................................................................................[Introduction]
Certificate of Merger........................................................................Section 1.1
Class A Stock................................................................................Section 1.6
Class A Consideration........................................................................Section 1.6(a)
Class B Stock................................................................................Section 1.6
Class B Consideration........................................................................Section 1.6(b)
Closing......................................................................................Section 2.1
Closing Date Balance Sheet...................................................................Section 1.9(b)
Closing Date Net Asset Value.................................................................Section 1.9(d)
Closing Time.................................................................................Section 3.23
COBRA........................................................................................Section 3.18(e)
Code.........................................................................................Section 3.18(b)
Confidential Information.....................................................................Section 5.9
Delaware Law.................................................................................Section 1.1
Dissenting Shareholder(s)....................................................................Section 1.7
DOJ..........................................................................................8.1(d)
Effective Time...............................................................................Section 1.1
Encumbrances.................................................................................Section 3.3
Environmental Laws...........................................................................Section 3.10(c)
ERISA........................................................................................Section 3.18(a)
Escrow Agreement.............................................................................Section 1.8
Escrow Consideration.........................................................................Section 1.8
Facilities...................................................................................Section 3.4
FTC..........................................................................................8.1(d)
GAAP.........................................................................................Section 1.9(b)
Governmental Body............................................................................Section 3.6
Hazardous Material...........................................................................Section 3.10(c)
HSR Act......................................................................................Section 3.6
Inventory....................................................................................Section 3.23
IRS..........................................................................................Section 3.18(a)
key employee.................................................................................Section 3.17(c)
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Legal Requirements...........................................................................Section 3.5
Material Contract............................................................................Section 3.12
Merger.......................................................................................[Introduction]
Merger Consideration.........................................................................Section 1.6
Minnesota Act................................................................................Section 1.1
Net Asset Value..............................................................................Section 1.9(e)
Parent.......................................................................................[Introduction]
Partnerships.................................................................................Section 1.5
Paying Agent Agreement.......................................................................Section 2.2(b)
Real Property................................................................................Section 3.10(a)
Sub..........................................................................................[Introduction]
Sub Stock....................................................................................Section 1.6(c)
Superior Proposal............................................................................Section 5.10
Surviving Corporation........................................................................Section 1.2
Tax Return...................................................................................Section 3.21(s)
Taxes........................................................................................Section 3.21(s)
Temroc.......................................................................................[Introduction]
Temroc Representative........................................................................Section 1.9(b)
Temroc Stock.................................................................................Section 1.6
Third Party..................................................................................Section 5.10
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INDEX OF EXHIBITS AND SCHEDULES
This Index of Exhibits and schedules is solely for convenience of
reference and shall be given no effect in the construction or interpretation of
this Agreement.
EXHIBITS: WHERE REFERRED TO
Exhibit A - Form of Certificate of Merger............................Section 1.1
Exhibit B - Form of Articles of Merger...............................Section 1.1
Exhibit C - Form of Bylaws of Surviving Corporation..................Section 1.3(b)
Exhibit D - Form of Escrow Agreement.................................Section 1.8
Exhibit E - Form of Paying Agent Agreement...........................Section 2.2(b)
Exhibit F - Form of Temroc's Legal Opinion of Counsel................Section 2.2(e)
Exhibit G - Form of Sub's Legal Opinion of Counsel...................Section 2.2(e)
Exhibit H - Form of Schumer and Crown Extrusions, Inc.
Non-Competition Agreement................................Section 6.14
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SCHEDULES DELIVERED SEPARATELY AT SIGNING: WHERE REFERRED TO
Schedule 1.9(b) - Exceptions to GAAP.......................................Section 1.9(b)
Schedule 1.9(d) - Calculation of Adjustment Amount.........................Section 1.9(d)
Schedule 3.1 - Organization and Existence...............................Section 3.1
Schedule 3.3 - Capitalization...........................................Section 3.3
Schedule 3.4(a) - Subsidiaries and Partnership Interests...................Section 3.4
Schedule 3.4(b) - Facilities...............................................Section 3.4
Schedule 3.7(b) - Certain actions..........................................Section 3.7(b)
Schedule 3.9 - Title to and Possession of Assets........................Section 3.9
Schedule 3.10 - Real Property............................................Section 3.10(a)
Schedule 3.11 - Equipment Used in the Business...........................Section 3.11
Schedule 3.12 - Material Contracts, Purchase Orders and Sales Orders.....Section 3.12
Schedule 3.13 - Condition of Assets......................................Section 3.13
Schedule 3.14 - Claims...................................................Section 3.14
Schedule 3.15 - No Adverse Changes.......................................Section 3.15
Schedule 3.17 - Employee Matters.........................................Section 3.17
Schedule 3.18 - Employee Benefits........................................Section 3.18
Schedule 3.19 - Regulatory Authority and Compliance......................Section 3.19
Schedule 3.20 - Insurance................................................Section 3.20
Schedule 3.21 - Tax Matters..............................................Section 3.21
Schedule 3.22 - Intellectual Property....................................Section 3.22
Schedule 3.23 - Inventory................................................Section 3.23
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Schedule 3.24 - Accounts receivable......................................Section 3.24
Schedule 5.1 - Compliance...............................................Section 5.1(i)
Schedule 5.1(g) - Capital Expenditures.....................................Section 5.1(g)
SCHEDULES TO BE DELIVERED AT CLOSING
Schedule 3.12-A - Updated Purchase Orders and Sales Orders.................Section 6.9
Schedule 3.23-A - Updated Inventory........................................Section 6.9
Schedule 3.24-A - Updated accounts receivable..............................Section 6.9
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ACQUISITION AGREEMENT AND PLAN OF MERGER
THIS ACQUISITION AGREEMENT AND PLAN OF MERGER (this "Agreement") dated
October 23, 2000, is between Quanex Corporation, a Delaware corporation
("Parent"), Quanex Five, Inc., a Delaware corporation and wholly owned
subsidiary of Parent ("Sub"), and Temroc Metals, Inc., a Minnesota corporation
("Temroc").
WHEREAS, Temroc is engaged in the business of manufacturing and selling
customized aluminum extrusions and fabricated metal products and operations
incidental thereto (the "Business");
WHEREAS, Parent, Sub and Temroc wish to set forth the representations,
warranties, agreements and conditions under which the merger of Sub with and
into Temroc (the "Merger") will occur;
NOW THEREFORE, in consideration of the mutual agreements and covenants
contained in this Agreement and for other good, fair and valuable consideration,
the receipt and sufficiency of which are acknowledged, Parent, Sub and Temroc
agree as follows:
1. GENERAL DESCRIPTION OF THE MERGER.
1.1 EFFECTIVENESS OF THE MERGER. Subject to the terms and
conditions of this Agreement, Sub shall be merged with and into Temroc in
accordance with the General Corporation Law of the State of Delaware (the
"Delaware Law") and the Minnesota Business Corporation Act (the "Minnesota
Act"). Subject to the provisions of Articles 6 and 7 of this Agreement
(regarding conditions to the Merger), the closing of the Merger shall take place
in the manner and at the time described in Article 2 of this Agreement. The
Merger shall be effective at the time (the "Effective Time") when (i) a properly
executed certificate of merger (the "Certificate of Merger") in substantially
the form attached to this Agreement as Exhibit A (together with any other
documents required by the Delaware Law to effect the Merger) shall have been
filed with the Secretary of State of Delaware and (ii) properly executed
articles of merger (the "Articles of Merger") in substantially the form attached
to this Agreement as Exhibit B (together with any other documents required by
the Minnesota Act to effect the Merger) shall have been filed with the Secretary
of State of Minnesota.
1.2 NAME AND GOVERNING LAW OF THE SURVIVING CORPORATION.
Following the Merger, the separate corporate existence of Sub shall cease and
Temroc shall continue as the surviving corporation (the "Surviving Corporation")
under the name "Temroc Metals, Inc.", and shall be organized under and be
governed by the Minnesota Law. The Surviving Corporation shall possess all the
rights, privileges, powers and franchises and be subject to all the
restrictions, disabilities and duties of each of Temroc and Sub.
1.3 CHARTER DOCUMENTS OF THE SURVIVING CORPORATION. (a) At the
Effective Time of the Merger, the articles of incorporation of the Surviving
Corporation shall be the amended and restated articles of incorporation of
Temroc as provided in the Articles of Merger, and shall continue as the Amended
and Restated Articles of Incorporation of the Surviving Corporation until
further amended in the manner provided by the Minnesota Act.
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(b) At the Effective Time of the Merger, the bylaws of the
Surviving Corporation shall be the bylaws attached to this Agreement as Exhibit
C, until amended in the manner provided therein or by the provisions of the
Minnesota Act or the Amended and Restated Articles of Incorporation of the
Surviving Corporation.
1.4 OFFICERS AND DIRECTORS OF THE SURVIVING CORPORATION. (a)
The directors of Sub at the Effective Time of the Merger shall be the directors
of the Surviving Corporation and shall hold office until the earlier of their
resignation or removal or until their successors are duly elected and qualified.
(b) The officers of Sub at the Effective Time of the Merger
shall be the officers of the Surviving Corporation and shall hold office until
the earlier of their resignation or removal or until their successors are duly
elected and qualified.
1.5 DISPOSITION OF PARTNERSHIP INTERESTS AND AACRON CAPITAL
STOCK. Immediately prior to the Closing, Temroc will sell, distribute or
otherwise transfer all of its right, title and interest in and to the Medina
Parks, Highway 55 and 18 and JGM Energy Investments - Mon. Dak. - - 1981-3
Drilling Fund partnerships (the "Partnerships") and all of the capital stock of
Aacron, Inc. ("Aacron"), so that as a result of such sales, distributions or
transfers, Temroc shall not have any direct or indirect ownership interest in
the Partnerships or Aacron.. All of the agreements relating to those sales,
distributions and transfers shall be subject to written agreements, which shall
contain provisions releasing Temroc and its affiliates and successors from any
liabilities with respect to the interests and stock sold and the assets of the
Partnerships and Aacron and indemnifying them with respect to those liabilities.
The form and substance of the provisions releasing Temroc and its affiliates and
survivors from those liabilities and indemnifying them with respect to those
liabilities shall be in a form reasonably satisfactory to Parent.
1.6 CONVERSION OF STOCK. In reliance on the representations
and warranties of Temroc contained in this Agreement, and on the terms and
subject to the conditions set forth in this Agreement, except as provided in
Section 1.7 (regarding shares held by dissenting shareholders), Parent shall pay
the shareholders of Temroc a total consideration of $18,771,300, plus the
adjustments described in Section 1.9, as applicable (the "Merger
Consideration"). Subject to the terms and conditions set forth in this
Agreement, as of the Effective Time of the Merger, by virtue of the Merger and
without any action on the part of the holders of shares of the Class A Common
stock, $.10 par value per share, of Temroc (the "Class A Stock"), the holders of
shares of the Class B Common stock, $.10 par value, of Temroc (the "Class B
Stock" and, together with the Class A Stock, the "Temroc Stock") or Parent, as
the sole stockholder of Sub:
(a) each share of Class A Stock outstanding immediately before
the Effective Time shall be converted at the Effective Time into the right to
receive in cash $291.99 per share (the "Class A Consideration") plus the
allocable portion of the purchase price adjustment described in Section 1.9;
(b) each share of Class B Stock outstanding immediately before
the Effective Time shall be converted at the Effective Time into the right to
receive in cash $583.98 per share
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(the "Class B Consideration") plus the allocable portion of the purchase price
adjustment described in Section 1.9.
(c) each share of Sub's common stock, $.01 par value per share
(the "Sub Stock"), outstanding immediately before the Effective Time shall
remain outstanding and constitute one share of common stock, $.01 par value per
share, of the Surviving Corporation.
As of and after the Effective Time, except as set forth in Section 1.7,
no holder of any certificate that immediately before the Effective Time
represented shares of Temroc Stock shall have any rights as a shareholder of
Temroc other than to receive the applicable Merger Consideration and the
allocable portion of the Escrow Consideration, in accordance with the terms of
this Agreement. Immediately after the Effective Time, Parent shall be the sole
shareholder of the Surviving Corporation.
1.7 SHARES OF DISSENTING SHAREHOLDERS. Notwithstanding
anything in this Agreement to the contrary, any issued and outstanding shares of
Temroc Stock held by persons who object to the Merger and comply with all the
provisions of the Minnesota Act concerning the right of holders of Temroc Stock
to dissent from the Merger and require appraisal of their shares of Temroc Stock
(each a "Dissenting Shareholder" and, collectively, the "Dissenting
Shareholders"), shall not be converted as described in Section 1.6 but shall
only be entitled to such rights as are granted by the Minnesota Act; provided,
however, that shares of Temroc Stock outstanding immediately prior to the
Effective Time of the Merger and held by a Dissenting Shareholder who shall,
after the Effective Time of the Merger, withdraw his demand for appraisal or
lose his right of appraisal, shall be deemed to be converted, as of the
Effective Time of the Merger, only into the right to receive the Merger
Consideration. Temroc shall give Sub prompt notice of any written demands for
appraisal of shares of Temroc Stock received by Temroc. The Surviving
Corporation shall make any and all payments due to Dissenting Shareholders.
1.8 ADDITIONAL ESCROW CONSIDERATION. In reliance on the
representations and warranties of Temroc contained in this Agreement, and on the
terms and subject to the conditions set forth in this Agreement, Sub shall pay,
as additional consideration for the Merger, $900,000 (the "Escrow
Consideration") by wire transfer of immediately available funds to an escrow
account under the terms of an escrow agreement in substantially the form of
Exhibit D (the "Escrow Agreement").
1.9 PURCHASE PRICE ADJUSTMENTS.
(a) PURCHASE PRICE ADJUSTMENT AT CLOSING. The Net Asset Value
as of December 31, 1999 was $5,227,368. If, based on Temroc's financial
statements as of July 31, 2000, the Net Asset Value as of July 31, 2000 exceeds
$5,227,368, then Parent shall pay at Closing, in addition to the Merger
Consideration, an amount equal to such excess (the "Additional Closing
Consideration"). If the Net Asset Value as of July 31, 2000 does not exceed
$5,227,368, then Parent shall not pay any amount in addition to the Merger
Consideration at the time of the Closing. Any cash proceeds received by Temroc
pursuant to the disposition of its interests in the Partnerships and the stock
of Aacron will be in addition to the Merger Consideration and shall be
distributed to the shareholders of Temroc at the Closing.
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(b) PREPARATION OF THE POST-CLOSING DATE BALANCE SHEET. Within
sixty (60) calendar days after the Closing, Parent shall cause the accounting
firm of Deloitte & Touche LLP to prepare an audited balance sheet of Temroc as
of the Closing Time (the "Closing Date Balance Sheet"). The Closing Date Balance
Sheet shall be prepared in accordance with generally accepted accounting
principles ("GAAP") applied on a basis consistent with the preparation of
Temroc's financial statements as of December 31, 1999 and for the twelve months
then ended, subject to such interpretations and modifications of GAAP as are set
forth on SCHEDULE 1.9(b). Parent shall cause a copy of the Closing Date Balance
Sheet to be delivered to ▇▇▇▇▇ ▇▇▇▇▇▇▇ (the "Temroc Representative") promptly
upon its completion.
(c) PROCEDURE FOR OBJECTING TO AND FINALLY DETERMINING THE
CLOSING DATE BALANCE SHEET. If the Temroc Representative has not given any
notice of objection with respect to the Closing Date Balance Sheet within ten
(10) calendar days after its receipt by the Temroc Representative, then the
calculation of the Closing Date Net Asset Value described in this Section 1.9
shall be based on the Closing Date Balance Sheet. If, however, the Temroc
Representative has given a notice of objection with respect to the Closing Date
Balance Sheet within such ten (10) calendar day period, then the Temroc
Representative and Parent shall attempt to resolve their differences. If the
Temroc Representative and Parent cannot agree on appropriate changes to be made
to the Closing Date Balance Sheet within fifteen (15) business days after the
Temroc Representative has delivered his notice of objection, then the Temroc
Representative and Parent shall submit the Closing Date Balance Sheet, along
with the written objections of the Temroc Representative and Parent, to KPMG LLP
(the "Alternate Accounting Firm"). The Temroc Representative and Parent shall
request the Alternate Accounting Firm to determine only those aspects of the
Closing Date Balance Sheet that are in controversy and to make that
determination in accordance with the terms of this Agreement within 30 days
after the request. The Alternate Accounting Firm shall make its determination
based solely on presentations by the Temroc Representative and Parent, and not
by independent review, and its determination shall be conclusive and binding
upon the parties and unreviewable by any court. In resolving any disputed item,
the Alternate Accounting Firm (1) shall be bound by the provisions of Section
1.9(b) and (2) may not assign a value to any item greater than the greatest
value for such item claimed by either party or less than the smallest value for
such item claimed by either party. The Closing Date Net Asset Value described in
this Section 1.9 shall then be based on the Closing Date Balance Sheet as
adjusted to take into account the Alternate Accounting Firm's determinations of
those matters that are in controversy. Any fees of the Alternate Accounting Firm
(1) shall be borne by Parent in the proportion that the aggregate dollar amount
of such disputed items so submitted that are unsuccessfully disputed by Parent
bears to the aggregate dollar amount of such items so submitted and (2) shall be
borne by the Temroc Representative (out of the funds deposited into the escrow
account under the Escrow Agreement described in Section 1.8) in the proportion
that the aggregate dollar amount of such disputed items so submitted that are
successfully disputed by Parent bears to the aggregate dollar amount of such
items so submitted. Parent and the Temroc Representative shall make available to
the other their respective work papers generated in connection with the
preparation or review of the Closing Date Balance Sheet.
(d) PAYMENT OF ADJUSTMENT AMOUNT. If the Net Asset Value,
based on the Closing Date Balance Sheet (the "Closing Date Net Asset Value"), is
greater than the sum of
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$5,227,368 and the Additional Closing Consideration, Parent shall pay the Temroc
shareholders an Adjustment Amount equal to the excess of the Net Asset Value
over the sum of $5,227,368 and the Additional Closing Consideration, plus
interest on such excess amount based on an annual rate of 7.5% from the date of
the Closing until the date of payment by the Parent. If the Net Asset Value is
less than the sum of $5,227,368 and the Additional Closing Consideration, the
Escrow Agent (as defined in the Escrow Agreement) shall pay Parent an Adjustment
Amount equal to the excess of the sum of $5,227,368 and the Additional Closing
Consideration over the amount of the Closing Date Net Asset Value, plus interest
on the Additional Closing Consideration based on an annual rate of 7.5%, from
the date of the Closing until the date of payment by the Escrow Agent. An
illustration of the calculation required by this Section 1.9(d) is set forth on
SCHEDULE 1.9(d). The Adjustment Amount shall be paid within five (5) business
days after its determination in accordance with this Section 1.9. The Adjustment
Amount shall be payable by wire transfer of immediately available funds to the
account designated in writing by the party to receive it.
(e) DEFINITION OF NET ASSET VALUE. For purposes of this
Agreement, "Net Asset Value" means the excess of the total assets of Temroc,
(exclusive of intercompany accounts), as shown on the Balance Sheet for July 31,
2000 or the Closing Date Balance Sheet as applicable, over the total liabilities
of Temroc as shown on the Balance Sheet for July 31, 2000, or the Closing Date
Balance Sheet, as applicable. Transactions between Temroc and Aacron or any
Partnership reflected on the Closing Date Balance Sheet shall not be treated as
intercompany accounts.
2. CLOSING.
2.1 TIME AND PLACE OF THE CLOSING. Subject to the satisfaction
or waiver of the conditions to the obligations of the parties contained in this
Agreement, the closing of the transactions described in this Agreement (the
"Closing") shall take place at Temroc's headquarters at 10:00 o'clock a.m.
central daylight time on November 30, 2000, or such other place, time and date
as Temroc and Parent may agree on in writing. Failure to consummate the
transactions described in this Agreement at or before that time shall not result
in a termination of this Agreement or relieve any party to this Agreement of any
obligation under this Agreement, except as otherwise provided in Article 8 of
this Agreement.
2.2 ACTIONS TO BE TAKEN AT THE CLOSING.
(a) DOCUMENTS TO BE FILED. At the Closing, concurrently with
the performance by all other parties to this Agreement of their obligations to
be performed at the Closing, Temroc shall cause the Articles of Merger to be
filed with the Secretary of State of Minnesota and Sub shall cause the
Certificate of Merger to be filed with the Secretary of State of the State of
Delaware.
(b) ESCROW AGREEMENT; PAYING AGENT AGREEMENT. At the Closing,
(1) the Temroc Representative and Parent shall execute and deliver, and cause
the Escrow Agent to execute and deliver, the Escrow Agreement and (2) the Temroc
Representative and Parent shall execute and deliver, and cause the Paying Agent
(as defined in the Paying Agent Agreement) to
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execute and deliver, the Paying Agent Agreement in the form of Exhibit E (the
"Paying Agent Agreement").
(c) CORPORATE RECORDS. At the Closing, Temroc shall deliver to
Parent and Sub the minute books, the stock ledger and all similar records of
Temroc and the corporate seal of Temroc, if any.
(d) CERTAIN ADDITIONAL AGREEMENTS. At the Closing, Temroc
shall deliver to Parent and Sub originally executed copies of any consents of
third parties (i) necessary to ensure that all contracts, agreements, licenses,
permits or other instruments under which Temroc has rights or derives benefits
will continue after the Closing or (ii) necessary to effect the transactions
described in this Agreement.
(e) LEGAL OPINIONS. At the Closing, Temroc shall cause
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ P.L.L.P., counsel to Temroc, to deliver its written opinion
to Parent and Sub to the effect described on Exhibit F, and Sub shall cause
Fulbright & ▇▇▇▇▇▇▇▇ L.L.P., counsel to Parent and Sub, to deliver its written
opinion to Temroc, to the effect described on Exhibit G.
(f) COMPLIANCE CERTIFICATES. At the Closing, (i) Temroc shall
deliver to Parent and Sub a certificate dated as of the date of the Closing and
executed by the President of Temroc, stating that the representations made by
Temroc in this Agreement are accurate as of the date of the Closing and that all
covenants, agreements and conditions required by this Agreement to be performed
or fulfilled by Temroc before the Closing have been performed or fulfilled, (ii)
Sub shall deliver to Temroc a certificate dated as of the date of the Closing
and executed by the president or any vice president of Sub stating that the
representations made by Sub in this Agreement are accurate as of the date of the
Closing and that all covenants, agreements and conditions required by this
Agreement to be performed or fulfilled by Sub before the Closing have been
performed or fulfilled, and (iii) Parent shall deliver to Temroc a certificate
dated as of the date of the Closing and executed by the president or any vice
president of Parent stating that the representations made by Parent in this
Agreement are accurate as of the date of the Closing and that all covenants,
agreements and conditions required by this Agreement to be performed or
fulfilled by Parent before the Closing have been performed or fulfilled.
(g) CERTIFICATES OF INCUMBENCY AND AUTHORITY. At the Closing,
(i) Temroc shall deliver to Parent and Sub a properly executed certificate of
incumbency and resolutions or other evidence of company authority satisfactory
to Parent authorizing the individual signing this Agreement and all related
documents to do so on behalf of Temroc, (ii) Sub shall deliver to Temroc a
properly executed certificate of corporate incumbency and resolutions
authorizing the individuals signing this Agreement and all related documents to
do so on behalf of Sub, and (iii) Parent shall deliver to Temroc a properly
executed certificate of corporate incumbency and resolutions authorizing the
individuals signing this Agreement and all related documents to do so on behalf
of Parent.
(h) OTHER DOCUMENTS TO BE DELIVERED. At the Closing, the
parties to this Agreement shall deliver or shall cause to be delivered such
other documents as a party may
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reasonably require to evidence compliance with the covenants contained in this
Agreement and the fulfillment of the conditions contained in this Agreement.
(i) FORM OF DOCUMENTS DELIVERED. Each document delivered at or
before the Closing pursuant to this Section 2.2 shall be in form reasonably
satisfactory to counsel for each of the parties to this Agreement, shall be
appropriately executed and, if applicable, shall be in form suitable for filing
or recording. Each party to this Agreement shall deliver such number of executed
agreements, certificates and opinions as the parties to this Agreement may
reasonably request.
(j) TIMING OF ACTIONS TO BE TAKEN AT THE CLOSING. Unless
otherwise stated in this Agreement or mutually agreed to by the parties, all
actions to be taken at the Closing shall be deemed to occur concurrently.
2.3 DISBURSEMENT OF THE MERGER CONSIDERATION.
(a) PAYMENT OF CASH CONSIDERATION. Immediately after the
Effective Time, Parent shall (i) disburse the Merger Consideration (as adjusted
pursuant to Section 1.9(a)) to the Paying Agent, in the manner described in this
Section 2.3. As promptly as practicable after the Effective Time, the Paying
Agent shall mail to each person who was, immediately before the Effective Time,
a holder of record of issued and outstanding shares of Temroc Stock, a letter of
transmittal and instructions for use in effecting the surrender, in exchange for
such person's proportionate share of the Merger Consideration, of the
certificates that, immediately before the Effective Time, represented those
shares. On surrender of a certificate to the Paying Agent, together with a
letter of transmittal, duly executed and completed in accordance with its
instructions, the Paying Agent shall promptly pay to the stockholder whose name
is shown on the certificate the Merger Consideration to which the stockholder is
entitled. Parent shall be obligated to pay, or shall cause the Paying Agent to
pay, the Merger Consideration to those former shareholders, subject only to
applicable abandoned property, escheat or other similar laws. Parent shall also
be obligated to pay all costs and expenses of the Paying Agent.
(b) ISSUANCE OF NEW CERTIFICATE REPRESENTING STOCK OF THE
SURVIVING CORPORATION. As soon as practicable after the Effective Time, Parent
shall cause the certificate representing shares of Sub Stock held by Parent to
be canceled and a new certificate to be issued to Parent in substitution for the
old one indicating the name of the Surviving Corporation.
(c) EFFECTIVENESS OF SHARE OWNERSHIP. Notwithstanding the
provisions of this Section 2.3, as of the Effective Time, Parent shall be deemed
to be the sole shareholder of Surviving Corporation, regardless of whether the
stock certificate described in this Section 2.3 shall have actually been
delivered.
2.4 DISBURSEMENT OF THE ADJUSTMENT AMOUNT AND ADDITIONAL
ESCROW CONSIDERATION. The Paying Agent shall distribute the Adjustment Amount
and the Additional Escrow Consideration, if any, to the Temroc shareholders in
accordance with the provisions of the Paying Agent Agreement.
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3. REPRESENTATIONS AND WARRANTIES OF TEMROC.
Temroc represents and warrants to Parent and Sub that:
3.1 ORGANIZATION AND EXISTENCE. Temroc is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Minnesota and has the corporate power and authority to own, operate and lease
its properties and carry on its business as now owned, operated, leased or
conducted. To the extent Temroc does business outside its jurisdiction of
incorporation, it is duly qualified to conduct its business and is in good
standing in such jurisdictions, each of which is listed on SCHEDULE 3.1 attached
hereto, except where the failure to be so qualified would not have a material
adverse effect on the operations or financial condition of Temroc. True and
correct copies of the articles of incorporation and the bylaws of Temroc as in
effect on the date of this Agreement have been provided to Parent.
3.2 AUTHORITY, CAPACITY AND ENFORCEABILITY. Temroc has all
requisite corporate power and authority to enter into, deliver and perform this
Agreement and any other agreement or document necessary to perform this
Agreement and to consummate the Merger and other transactions described in this
Agreement. This Agreement has been duly executed and delivered by Temroc
pursuant to all necessary corporate action. Assuming the due authorization,
execution and delivery by Parent and Sub, this Agreement constitutes the legal,
valid and binding obligation of Temroc, enforceable against Temroc in accordance
with its terms, except as may be limited by principles of equity or bankruptcy,
insolvency, reorganization, moratorium or similar laws or judicial decisions
relating to or affecting the enforcement of creditors' rights or equitable
remedies.
3.3 CAPITALIZATION. The authorized capital stock of Temroc
consists of 100,000 shares of Class A Stock, 56,948 shares of which are issued
and outstanding, and 60,000 shares of Class B Stock, 3,670 shares of which are
issued and outstanding. Each issued and outstanding share of Class A Stock and
each issued and outstanding share of Class B Stock is duly authorized, validly
issued, fully paid and nonassessable and has not been issued, and is not owned
or held, in violation of any preemptive right of shareholders or other persons.
All issued and outstanding shares of the Class A Stock and Class B Stock are
owned of record by the persons and in the amounts set forth on SCHEDULE 3.3, and
to Temroc's knowledge, except as set forth on SCHEDULE 3.3, all such shares are
free and clear of all liens, judgments, claims, security interest, pledges,
attachments, mortgages, restrictions on transfer and encumbrances
("Encumbrances"), stockholders' agreements and voting trusts, and there are no
other beneficial owners of that stock. Except pursuant to this Agreement, there
is no commitment, plan or arrangement to issue, and no outstanding option,
warrant or other right calling for the issuance of, any share of capital stock
of Temroc, or any security or other instrument convertible into, or exercisable
or exchangeable for, capital stock of Temroc. No security or other instrument
convertible into or exchangeable for capital stock of Temroc is issued and
outstanding.
3.4 INTERESTS IN OTHER ENTITIES AND SCOPE OF BUSINESS. Except
as set forth on SCHEDULE 3.4(a), Temroc does not own or control any securities
or other ownership interest in any corporation, association, joint venture,
limited liability company, partnership or other business entity. Except as set
forth on SCHEDULE 3.4(a),Temroc is not a general partner of, and
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does not have responsibility for, the management of any joint venture, limited
liability company or partnership. SCHEDULE 3.4(b) sets forth the complete list
of all facilities owned or operated at any time by Temroc (collectively, the
"Facilities"). Temroc has not engaged in any activities and has not conducted
any operations other than those activities and operations that are incident to
the Business.
3.5 NO CONFLICT. Neither the execution and delivery by Temroc
of this Agreement, the consummation of the Merger and the transactions described
in this Agreement by Temroc nor compliance by Temroc with any of the provisions
of this Agreement will violate, conflict with, result in a breach of or
constitute a default under (a) Temroc's articles of incorporation or bylaws, (b)
any material contracts, commitments or agreements to which Temroc is a party or
by which any assets of Temroc are bound, (c) any law, statute, code, act,
ordinance, order, judgment, decree, injunction, rule, regulation, permit,
license, authorization, direction or requirement, other than Environmental Laws,
as defined in Section 3.10 (collectively, "Legal Requirements"), by which Temroc
is subject or bound, or (d) any Environmental Law, as defined in Section 3.10,
by which Temroc is subject or bound.
3.6 NO GOVERNMENTAL NOTICES, CONSENTS OR APPROVALS. Except for
filings required to be made under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of ▇▇▇▇ (▇▇▇ "▇▇▇ ▇▇▇"), Temroc is not required to submit any notice, report
or other filing with any federal, state, local, foreign or other governmental
agency, department, commission, board, bureau, instrumentality, authority,
court, administration or body ("Governmental Body") in connection with the
execution, delivery or performance of this Agreement by Temroc and the
consummation of the Merger and the transactions described in this Agreement.
3.7 FINANCIAL CONDITION. (a) Temroc has delivered to Parent
true and correct copies of the audited consolidated balance sheets of Temroc as
of December 31, 1999, 1998 and 1997, the unaudited balance sheets of Temroc as
of September 30, 2000, the audited consolidated income statements of Temroc for
the years ended December 31, 1999, 1998 and 1997, and the unaudited income
statements of Temroc for the nine months ended September 30, 2000. Each of those
balance sheets presents fairly the financial condition, assets, liabilities and
stockholders' equity of Temroc as of its date, subject, in the case of interim
statements, to normal year-end adjustments. Each of the statements of income
presents fairly the results of operations of Temroc for the periods indicated,
subject, in the case of interim statements, to normal year-end adjustments.
Except as set forth on SCHEDULE 1.9(b), each of the financial statements
referred to in this Section 3.7 has been prepared in accordance with GAAP
consistently applied throughout the periods indicated, subject, in the case of
interim statements, to normal year-end adjustments, and is in accordance with
the books and records of Temroc. Since December 31, 1999, there has been no
material adverse change in the financial condition, results of operations,
business, properties, assets or liabilities of Temroc.
(b) Except as disclosed in SCHEDULE 3.7(b), since December 31,
1999, Temroc has not taken any action with respect to: (i) any sale of any
material assets; (ii) any stock-split, stock dividend or reverse stock-split
relating to any class of its stock; (iii) any dividend payable in cash or
property or any issuance of any shares of its capital stock, any option, warrant
or other right calling for the issuance of any shares of its capital stock, or
any security convertible into or
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exchangeable for any shares of its capital stock; (iv) any authorization of any
other class of stock; or (v) the issuance of any additional shares of its
capital stock or any agreement or arrangement to issue additional shares of its
capital stock; and
(c) Since December 31, 1999, the operations and business of
Temroc have been conducted in all material respects only in the ordinary course.
3.8 CORPORATE RECORDS. The stock ledgers and stock transfer
books and the minute book records of Temroc relating to all issuances and
transfers of stock by Temroc, and all proceedings of the shareholders, the board
of directors and committees of Temroc that have been made available to Parent,
are the original stock ledgers, stock transfer books and minute book records of
Temroc or exact copies of them. Temroc has maintained those ledgers, transfer
books and minute book records that (a) it is required to maintain under the laws
of Minnesota or (b) should be maintained by a prudently managed corporation.
Temroc is not in violation or breach of, or in default with respect to, any term
of its articles of incorporation or bylaws.
3.9 TITLE TO AND POSSESSION OF ASSETS. Except as set forth on
SCHEDULE 3.9, Temroc has good and marketable title to all of the assets used in
or useful to the Business, free and clear of all Encumbrances. Except as
disclosed on SCHEDULE 3.9, none of Temroc's assets is in the possession of any
person other than Temroc.
3.10 REAL PROPERTIES. (a) The only real property now owned or
operated by Temroc is the real property located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ (the "Real Property"). Except as set forth on SCHEDULE 3.10, Temroc
owns good and marketable title to the Real Property, free and clear of liens,
claims, encumbrances, options and restrictions of every kind and description.
Except as set forth on SCHEDULE 3.10, Temroc has not received any notice of any
alleged violations of any applicable Legal Requirement of any government or
governmental authority having jurisdiction over any part of the Real Property or
the operation of any part of the Real Property that has not been resolved before
the date of this Agreement. To the knowledge of Temroc, there is no existing,
pending, contemplated, threatened or anticipated condemnation or other taking of
all or any part of the Real Property.
(b) Except for Temroc, there are no persons in possession or
occupancy of any part of the Real Property or who have possessory rights with
respect to any part of the Real Property. Temroc has not received any notice of
any alleged violations of or liability under any applicable Legal Requirements
of any Governmental Body having jurisdiction over any part of the Real Property
or the operation of any part of the Real Property or the Business. Except for
the Real Property, Temroc is not a party to any lease or rental agreement with
respect to any real property (whether as a landlord or a tenant).
(c) Temroc has delivered to Parent all environmental studies,
reports, assessments, sampling results or audits that have been conducted with
respect to the Real Property, the Facilities or the Business. Except as set
forth on SCHEDULE 3.10, no person has disposed of any Hazardous Material or
solid waste on the Real Property or at the Facilities during Temroc's tenure
there, or to Temroc's knowledge, at any other time. No polychlorinated biphenyls
were introduced to the Real Property or any Facility during the tenure there of
Temroc, or to Temroc's knowledge, at any other time. Except as set forth on
SCHEDULE 3.10, Temroc has
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not disposed of or released any Hazardous Material or solid waste at any
property such that Temroc or any other person reasonably could be expected to
incur any environmental liability. Except as set forth on SCHEDULE 3.10, There
is no contamination from any Hazardous Material or waste on the Real Property or
otherwise relating to the Business that reasonably could be expected to result
in any person incurring any cleanup cost (including any cost of investigation,
abatement, removal, remediation, or corrective action). For purposes of this
Agreement, (i) "Hazardous Material" means all those materials, byproducts,
wastes or substances that are regulated by, or that may form the basis of
liability under, any Environmental Law, including all materials, byproducts,
wastes or substances identified under any Environmental Law as a pollutant,
contaminant, hazardous waste, hazardous constituent, hazardous chemical, special
waste, hazardous substance, regulated substance, hazardous material, or toxic
substance, and includes any material, byproduct, waste or substance that
contains petroleum or any fraction thereof, asbestos, or polychlorinated
biphenyls, or that is flammable, explosive or radioactive; and (ii)
"Environmental Laws" means all federal, state and local laws in effect as of the
date of this Agreement relating to pollution, protection of the environment or
occupational health and safety, including court decisions, statutes, covenants
and any other laws and authorities relating to emissions, discharges, releases
or threatened releases of pollutants, contaminants, chemicals or industrial,
toxic or hazardous substances or wastes into the environment or the workplace
(including ambient air, surface water, ground water or land) or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, removal, transport or handling of pollutants, contaminants, chemicals
or industrial, toxic or hazardous substances or wastes and all regulations
promulgated or approved under those laws, and orders, directives and permits
issued or entered in connection with those laws by a federal, state or local
environmental agency. Except as set forth on SCHEDULE 3.10, no underground
storage tanks or septic fields have been used by Temroc or to Temroc's
knowledge, by any other person at the Facilities or on the Real Property. Except
as set forth on SCHEDULE 3.10, no claim has been made alleging that Temroc is
liable for the cost of cleaning up any third-party site, including any to which
it sent waste or byproduct.
3.11 EQUIPMENT USED IN THE BUSINESS. The furniture, fixtures,
tools, dies, machinery, equipment, vehicles and other rolling stock listed in
SCHEDULE 3.11 and the equipment leases or other leases listed on SCHEDULE 3.11
constitute all of the furniture, fixtures, tools, dies, machinery, equipment,
equipment leases, vehicles and other rolling stock used in or considered part of
the Business as of July 31, 2000.
3.12 CONTRACTS. SCHEDULE 3.12 contains a list of each
contract, commitment, agreement, instrument, lease, license and arrangement (a)
to which Temroc is a party, by which Temroc is or any of its assets are bound or
relating to the Business and (b) which, after the Closing Time, requires or
could require the Surviving Corporation to pay or give, or gives or could give
the Surviving Corporation the right to receive, cash or assets having a value of
at least $25,000 ("Material Contract"). There has not been any violation or
breach of, or default with respect to complying with, any provision of any
Material Contract by Temroc or, to Temroc's knowledge, any other party to such
contract. Each Material Contract is in full force and effect; is the legal,
valid and binding obligation of Temroc and, to Temroc's knowledge, the other
parties thereto and, except as may be limited by principles of equity or
bankruptcy, insolvency, reorganization, moratorium or other similar laws or
judicial decisions relating to or affecting the
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enforcement of creditors' rights, is enforceable against the parties to the
respective Material Contract in accordance with their respective terms. Temroc
enjoys peaceful and undisturbed possession of the assets, properties and rights
possessed under any leases and licenses that constitute Material Contracts.
Except for employee benefit plans listed in SCHEDULE 3.18, Temroc has no
contract, commitment, agreement, lease, license, arrangement or understanding
with any director, officer, employee or affiliate of Temroc. Temroc has not
waived any right under any Material Contract. To the best of Temroc's knowledge,
there is no reason why any of the Material Contracts could not be continued on
the same terms and conditions as currently apply, assuming that there is no
material change in the nature of the Business after the Closing Time. To the
best of Temroc's knowledge, there is no reason to believe that any other party
to a Material Contract will terminate its relationship with the Business as a
result of the transactions described in this Agreement. Without limiting the
foregoing, Temroc is in material compliance with all purchase orders and sales
orders to the extent it is obligated to perform under those orders. SCHEDULE
3.12 includes a list of all purchase orders and sales orders relating to the
Business as of July 31, 2000. Except as set forth on SCHEDULE 3.12, a true and
complete copy of each Material Contract has been delivered to Parent. Temroc has
not, either expressly or by operation of law, assumed or undertaken any
liability of, or taken any action that could cause it to be deemed a successor
to, any other person.
3.13 CONDITION OF ASSETS. Except as set forth on SCHEDULE
3.13, the property, plant, furniture, fixtures, tools, machinery and equipment
of Temroc are in good and normal operating condition and repair (ordinary wear
and tear excepted). Except as set forth on SCHEDULE 3.13, the assets (whether
tangible or intangible) currently owned or leased by Temroc (as lessee)
constitute assets that are sufficient to operate the Business, as currently
operated, and none of those assets is owned by any shareholder or affiliate of
Temroc or any other person (other than Temroc).
3.14 CLAIMS. Except as set forth on SCHEDULE 3.14, there is no
suit, action, proceeding, investigation or claim pending or, to the knowledge of
Temroc, threatened or contemplated against or affecting Temroc, the Class A
Shares, the Class B Shares or the assets of Temroc or the Business in or by any
Governmental Body or arbitration panel. There is no outstanding order, writ,
injunction, decree, judgment or award by any Governmental Body or arbitration
panel against Temroc or affecting the Class A Shares or the Class B Shares, the
assets of Temroc or the Business.
3.15 NO ADVERSE CHANGE. Except as set forth on SCHEDULE 3.15,
since December 31, 1999, Temroc has not (a) except in the ordinary course of
business in connection with the sale of its inventory, sold, transferred, or
otherwise disposed of, or agreed to sell, transfer, or otherwise dispose of, any
portion of its assets; (b) except in the ordinary course of business in
connection with the sale of its inventory, entered or agreed to enter into any
agreement or arrangement granting any preferential rights to purchase any
material portion of its assets, or requiring the consent of any party to the
transfer or assignment of any of its assets; (c) made or permitted any amendment
or termination of any Material Contract, (d) taken any action with respect to
the payment of any dividends or other distributions to its shareholders in cash
or property; (e) except in the ordinary course of business, entered into any
agreement or arrangement with any officers, directors, stockholders or
affiliates of Temroc; or (f) except in the
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ordinary course of business, entered into any other material transaction or
taken any other material action.
3.16 CERTAIN TRANSACTIONAL FEES. None of Parent, Sub nor the
Surviving Corporation has or will have any obligation to pay any broker's,
finder's, investment banker's, financial advisor's or similar fee or expense in
connection with the transactions described in this Agreement by reason of any
action taken by or on behalf of Temroc or any of its affiliates.
3.17 EMPLOYEE MATTERS.
(a) DOCUMENTS. Temroc has delivered to Parent, or provided
Parent with access to, complete and correct copies of Temroc's employment
records for the period after December 31, 1997; collective bargaining, union or
other employee association agreements to which Temroc is a party or by which
Temroc is bound; employment, managerial, advisory and consulting agreements to
which Temroc is a party or by which Temroc is bound; employee confidentiality or
other agreements protecting proprietary processes, formulas or information to
which Temroc is a party or by which Temroc is bound; any employee handbooks
provided to Temroc's employees; and any reports or plans prepared or adopted
pursuant to the Equal Opportunity Act of 1972, as amended, and relating to
Temroc's employees.
(b) COMPLIANCE AND CERTAIN AGREEMENTS. Temroc is in
substantial compliance with all applicable laws and collective bargaining
agreements relating 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 practice within the meaning of section 8 of the
National Labor Relations Act, and, except as set forth on SCHEDULE 3.17, there
is no action, suit or legal, administrative, arbitration, grievance or other
proceeding pending or, to the knowledge of Temroc, threatened, or any
investigation pending or, to the knowledge of Temroc, threatened or contemplated
against Temroc relating to any of such matters, and to the knowledge of Temroc,
no basis exists for any such action, suit or legal, administrative, arbitration,
grievance or other proceeding or governmental investigation. There is no labor
strike, dispute, slowdown or stoppage pending or, to the knowledge of Temroc,
threatened or contemplated against Temroc. Except as set forth on SCHEDULE 3.17,
none of the employees of Temroc is a member of or represented by any labor union
in connection with the Business and, there are no attempts being made to
organize any employees of Temroc. No certification or decertification is pending
or was filed within the past 12 months with respect to the employees of Temroc
and no certification or decertification petition is being or was circulated
among the employees of Temroc within the past 12 months. Except as set forth on
SCHEDULE 3.17, no agreement, arbitration or court decision, decree or order or
governmental order that is binding on Temroc limits or restricts Temroc from
relocating or closing any of its operations. Temroc has not experienced any
organized work stoppage in the last five years. Except as set forth on SCHEDULE
3.17, there are no charges, administrative proceedings or formal complaints of
discrimination (including discrimination based on sex, age, marital status,
race, national origin, sexual preference, handicap or veteran status) pending
or, to the knowledge of Temroc, threatened or contemplated or any investigation
pending or, to the knowledge of Temroc, threatened or contemplated before the
Equal Employment Opportunity Commission or any federal, state or local agency or
court, and no basis for any such claim exists.
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(c) DIRECTORS, OFFICERS AND EMPLOYEES. SCHEDULE 3.17 sets
forth a complete and correct list of all directors and officers of Temroc and
all other individuals employed by Temroc, together with each individual's title
and job description and date of hire by Temroc, and, for each salaried
individual, each individual's salary (with last date of increase) and incentive
compensation arrangements with Temroc. Except as and to the extent set forth on
SCHEDULE 3.17, to the knowledge of Temroc, no current employee of Temroc
designated as a "key employee" on SCHEDULE 3.17 plans to terminate his or her
employment during the 2000 calendar year, whether by reason of the transactions
described in this Agreement or otherwise.
3.18 EMPLOYEE BENEFIT MATTERS.
(a) IDENTIFICATION OF PLANS. SCHEDULE 3.18 includes a complete
and accurate list of (1) all employee welfare benefit and employee pension
benefit plans as defined in sections 3(l) and 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), including plans that provide
retirement income or result in a deferral of income by employees for periods
extending to termination of employment or beyond, and plans that provide
medical, surgical, or hospital care benefits or benefits in the event of
sickness, accident, disability, death or unemployment, and (ii) all other
employee benefit agreements or arrangements, including deferred compensation
plans, incentive plans, bonus plans or arrangements, stock option plans, stock
purchase plans, stock award plans, golden parachute agreements, severance pay
plans, dependent care plans, cafeteria plans, employee assistance programs,
scholarship programs, employment contracts, vacation policies, and other similar
plans, agreements and arrangements that are currently in effect or have been
maintained, or have been approved before this date but are not yet effective,
for the benefit of directors, officers, employees or former employees (or their
beneficiaries) of Temroc, or with respect to which Temroc may have any
liability. As to each plan, agreement or arrangement listed in SCHEDULE 3.18,
Temroc has delivered to Parent, a complete and accurate copy of (i) the plan,
agreement or arrangement, (ii) the trust, group annuity contract or other
document that provides the funding for the plan, agreement or arrangement, (iii)
the three most recent annual Form 5500, 990 and 1041 reports, (iv) the most
recent actuarial report or valuation statement, (v) 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, (vi) the most recent Internal Revenue Service ("IRS") determination
letter and all rulings or determinations requested from the IRS after the date
of that determination letter, (vii) the most recent statement filed with the
Department of Labor pursuant to 29 U.S.C. Section 2520.104-23, (viii) a written
summary of the legal basis for an exemption from the obligations to file annual
Form 5500 reports, (ix) the most recent financial statement and valuation, and
(x) all other correspondence from the IRS or the Department of Labor received
that relate to one or more of the plans, agreements or arrangements with respect
to any matter, audit or inquiry that is still pending.
(b) COMPLIANCE. With respect to each employee welfare benefit
plan and employee pension benefit plan as defined in sections 3(l) and 3(2) of
ERISA that has been or is sponsored by, participated in, or contributed to, by
Temroc: (1) the plan is in compliance with ERISA in all material respects,
including but not limited to all reporting and disclosure requirements of Part I
of Subtitle B of Title I of ERISA; (2) the appropriate Form 5500 has been timely
filed, for each year of its existence; (3) there has been no transaction
described in sections
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406 or 407 of ERISA or section 4975 of the Internal Revenue Code of 1986, as
amended (the "Code") relating to the plan unless exempt under section 408 of
ERISA or section 4975 of the Code, as applicable; (4) the bonding requirements
of section 412 of ERISA have been satisfied; and (5) all contributions required
to have been made with respect to the plan have been timely made. Except as set
forth in SCHEDULE 3.18, there is no litigation, action, proceeding,
investigation or claim asserted or, to the knowledge of Temroc, threatened or
contemplated, with respect to any arrangement or agreement listed on SCHEDULE
3.18 (other than the payment of benefits in the normal course) nor any issue if
resolved adversely to Temroc that may subject Temroc to the payment of a
penalty, interest, tax or other amount. Except as set forth in SCHEDULE 3.18,
each arrangement or agreement listed on SCHEDULE 3.18 can be unilaterally
terminated or amended by Temroc on no more than 90 days' notice. Except as set
forth in SCHEDULE 3.18, no notice has been received by Temroc of an increase or
proposed increase in the cost of any agreement or arrangement listed in SCHEDULE
3.18.
(c) CERTAIN PENSION PLANS. All pension plans listed in
SCHEDULE 3.18 that are intended to qualify under section 401 (a) of the Code
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 IRS
could cause disqualification of any of those plans.
(d) NO DEFINED BENEFIT PENSION PLANS. Neither Temroc nor any
entity that has been treated as a single employer together with Temroc under
section 414 of the Code has maintained, had an obligation to contribute to,
contributed to, or incurred any liability with respect to a plan that is or was
a pension plan (as defined in section 3(2) of ERISA) that is or was subject to
Title IV of ERISA.
(e) EXTENDED MEDICAL COVERAGE. No employee welfare benefit
plan (as defined in section 3(l) of ERISA) maintained by Temroc provides
medical, surgical, hospitalization or life insurance benefits (whether or not
insured by a third party) for employees or former employees of Temroc for
periods extending beyond their terminations of employment, other than coverage
mandated by the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended ("COBRA"); and Temroc has not made any commitment to provide retiree
medical, surgical, hospitalization or life insurance coverage for any current or
former employees or directors of Temroc (except as required by COBRA).
(f) EFFECT OF THIS TRANSACTION. The consummation of the Merger
and the transactions contemplated by this Agreement, either alone or in
conjunction with another event (such as a termination of employment), will not
(i) entitle any current or former employee or officer of Temroc, to severance
pay from Temroc, or any other payment under a plan, (ii) accelerate the time of
payment or vesting of benefits under a plan, or (iii) increase the amount of
compensation due any such employee or officer by Temroc.
3.19 REGULATORY AUTHORITY AND COMPLIANCE. SCHEDULE 3.19
contains a list of all governmental franchises, licenses, authorizations,
permits, consents and approvals currently held by (i) Temroc or (ii) any other
party with respect to the Business. Each governmental franchise, license,
authorization, permit, consent and approval listed on SCHEDULE 3.19 is valid
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and current and in full force and effect. There has been no violation of any of
the requirements pertaining to those franchises, licenses, authorizations,
permits, consents and approvals. Neither the execution and delivery of this
Agreement nor the consummation of the transactions described in this Agreement
will cause any of the franchises, licenses, authorizations, permits and consents
listed on SCHEDULE 3.19 to terminate, to become null or void, or to be otherwise
adversely affected. All governmental franchises, licenses, authorizations,
permits, consents and approvals required to carry on the Business have been
acquired and have been in full force and effect except as listed on SCHEDULE
3.19. The Business has been and is conducted in compliance with all applicable
Legal Requirements of all Governmental Bodies. No currently existing condition,
circumstance or event reasonably could be expected to result in any future
expenditure to maintain the Business in compliance with any applicable Legal
Requirements.
3.20 INSURANCE. SCHEDULE 3.20 lists all current insurance
policies maintained by Temroc covering Temroc, any of its employees or other
agents, the Business or any of the assets of Temroc. All retroactive premium
adjustments under any workers' compensation policy of Temroc have been recorded
in its financial statements in accordance with GAAP applied on a basis
consistent with the preparation of Temroc's financial statements as of and for
the twelve months ended December 31, 1999.
3.21 TAX MATTERS.
(a) FILING OF RETURNS. Temroc and any affiliated group (within
the meaning of Section 1504 of the Code) or similar group under state, local or
other applicable law of which Temroc is or has been a member ("Affiliated
Group") have filed, or caused to be filed in a timely manner, all Tax Returns
(as defined below) required to be filed on or before the date of this Agreement
(taking into account any and all extensions) and all of those Tax Returns are
complete and correct.
(b) PAYMENT OF TAXES. All Taxes (as defined below) due and
payable or claimed to be due and payable from Temroc have been timely paid in
full or are not yet delinquent. Since December 31, 1999, Temroc has not incurred
any Taxes other than in the ordinary course of business.
(c) WITHHOLDING. Temroc has complied with all applicable laws
relating to the withholding of Taxes (including, without limitation, withholding
of Taxes pursuant to Sections 1441 and 1442 of the Code or similar provisions
under any foreign laws), has, within the time and in the manner prescribed by
those laws, withheld and paid over to the proper Governmental Body all amounts
required to be so withheld and paid over under all such applicable laws and has,
within the time and in the manner prescribed by those laws, filed all Tax
Returns with respect to withholding.
(d) ENCUMBRANCES. Except for liens for ad valorem Taxes and
real and personal property Taxes not yet delinquent, there are no Encumbrances
for Taxes on the assets of Temroc.
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(e) EXTENSIONS. Except as set forth on SCHEDULE 3.21, Temroc
has not requested, nor has any person requested on its behalf, any extension of
time within which to file any Tax Return in respect of any taxable period that
has not since been filed.
(f) THIRD-PARTY TAXES. Temroc has no liability for the Taxes
of any other person by contract or as transferor or successor, or otherwise.
(g) STATUTES OF LIMITATIONS. There is no outstanding waiver or
extension of time regarding the application of the statute of limitations with
respect to any Taxes of Temroc or Tax Returns required to be filed by or
including Temroc.
(h) CLAIMS. No deficiency or claim has been formally proposed,
asserted or assessed nor, to the knowledge of Temroc, threatened with regard to
any Taxes of Temroc or Tax Returns including or required to be filed by Temroc
which has not been resolved and paid in full.
(i) AUDITS. No audit or other administrative proceeding or
court proceeding is pending and no written notification of such proceedings has
been received by Temroc with regard to any Taxes of Temroc or Tax Returns
required to be filed by or including Temroc.
(j) TAX SHARING. Except for Taxes in connection with leases of
personal property by or to Temroc, Temroc is not a party to, is not bound by,
and has no obligation under, any contract, agreement or arrangement providing
for the allocation or sharing of Taxes.
(k) POWERS OF ATTORNEY. No power of attorney has been granted
with respect to any matter relating to Taxes of Temroc that is currently in
force.
(l) PARACHUTE PAYMENTS. Temroc (i) is not a party to any
contract, agreement or arrangement that could result, separately or in the
aggregate, in the payment of any "excess parachute payments" within the meaning
of Section 280G of the Code and (ii) has not made any such excess parachute
payments.
(m) 341(f) CONSENTS. Temroc has not filed a consent pursuant
to Section 34 1 (of the Code (or any predecessor provision) or agreed to have
Section 341(f)(2) of the Code apply to any disposition of a subsection (f) asset
(as that term is defined in Section 341(f)(4) of the Code) owned by Temroc.
(n) CERTAIN PROPERTY. No property of Temroc is property that
Temroc or any party is or will be required to treat as being owned by another
person pursuant to the provisions of Section 168(f)(8) of the Code (as in effect
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.
(o) 481(a) ADJUSTMENTS. Temroc has not agreed to make, and is
not required to make, any adjustment under Section 481 (a) of the Code.
(p) BOYCOTTS. Temroc has not participated in or cooperated
with an international boycott within the meaning of Section 999 of the Code.
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(q) PAST AUDITS. Except as set forth on SCHEDULE 3.21, none of
the federal income Tax Returns of Temroc have been audited by the IRS. No other
tax audits (whether federal, state, local or foreign) have been made, conducted
or instituted with respect to Temroc.
(r) INFORMATION PROVIDED. Temroc has provided Parent or its
representatives (i) complete and correct copies of the consolidated federal
income Tax Returns that include Temroc for the taxable periods ended 1997, 1998
and 1999, (ii) complete and correct copies of the state, local and foreign
income Tax Returns of or including Temroc for the taxable periods ended 1997,
1998 and 1999, and (iii) all examination reports, closing agreements and
statements of deficiencies, if any, relating to the audit of the tax returns or
relevant portions of them by the IRS or the relevant state, local or foreign
taxing authorities.
(s) DEFINITIONS. For purposes of this Agreement, "Taxes" shall
mean and include all taxes, charges, fees, duties, levies, penalties or other
assessments proposed by any federal, state, local or foreign authority,
including income, gross IMP receipts, excise, property, sales, gains, use,
license, capital stock, transfer, franchise, payroll, withholding, social
security or other taxes, including any interest, penalties or additions
attributable thereto (whether or not disputed); and "Tax Returns" shall mean and
include all federal, state, local and foreign tax returns, declarations,
statements, reports, schedules, forms or information returns or claims for
refunds relating to Taxes or other written information required to be supplied
to any taxing authority in connection with Taxes (including any amended Tax
Returns).
3.22 INTELLECTUAL PROPERTY. SCHEDULE 3.22 contains a list and
brief description of all patents, applications for patents, trademarks,
copyrights and service marks for which Temroc has a registration or which are
used in the Business. Temroc owns (or possesses adequate or enforceable licenses
or other rights to use) all trade secrets, inventions, copyrights, processes and
other technical know-how and proprietary rights used in the conduct of the
Business to the extent that the absence of such ownership would have a material
adverse effect on the Business as currently conducted. Temroc has not received
any notice of conflict with the asserted rights of others with respect to any
trademarks, trade names, copyrights or patents or any material trade secrets,
inventions, processes or other technical know-how or proprietary rights used in
the conduct of the Business. All software used by Temroc or in connection with
the Business is properly licensed and there are no unresolved claims pending
against or in respect of the Business for unlicensed use of computer software.
As of the date of Closing none of Temroc's affiliates (other than the Surviving
Corporation) shall own or possess any rights to use the name "Temroc Metals",
"Temroc" or similar names.
3.23 INVENTORY. All inventory owned or held by Temroc or used
in the conduct of the Business, including manufacturing supplies, raw materials,
components, repair parts, work-in-progress, finished goods and similar items,
whether raw or used ("Inventory") as of September 30, 2000 is reflected on the
balance sheet as of September 30, 2000 described in Section 3.7. All Inventory
owned or held by Temroc or used in the conduct of the Business as of 11:59 p.m.
central time on the date of Closing (the "Closing Time") will, as of the Closing
Time, be reflected on the books and records of Temroc. All Inventory is valued
at the lower of cost or market value. The Inventory owned or held by Temroc or
used in the conduct of the Business as of the Closing Time will consist of items
of Inventory useable or saleable in the ordinary course
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of the Business. All Inventory disposed of since December 31, 1999 has been
disposed of only in the ordinary course of the Business, consistent with the
past practice of Temroc. The Inventory does not include any materials held by
Temroc on consignment from any third party. All Inventory as of the Closing Time
will be free from any material defect or other deficiency except for items of
obsolete materials and materials of below-standard quality that have been
written off or written down to Temroc's best estimate of net realizable value.
The quantities of Inventory as of the Closing Time will be reasonable under the
current circumstances of the Business. Except as set forth on SCHEDULE 3.23,
none of the Inventory is in the possession of others, other than Inventory in
transit from suppliers or to customers in the ordinary course of 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
before the Closing Time are in material compliance with all warranties with
respect to that product.
3.24 ACCOUNTS RECEIVABLE. The accounts receivable reflected on
the financial statements described in Section 3.7 or otherwise provided to
Parent are valid and collectible using commercially reasonable collection
practices, subject to normal market write-offs for bad debt consistent with past
practices. SCHEDULE 3.24 is a true and correct copy of the aging of those
accounts receivable as of July 31, 2000. All of those accounts receivable arose
in the ordinary course of business and none is subject to any defense,
counterclaim or set-off.
3.25 OTHER INFORMATION. None of the information provided by
Temroc in this Agreement and in the schedules to this Agreement contains any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements contained in this Agreement and the schedules to this
Agreement, in light of the circumstances under which they are made, not false or
misleading.
3.26 NO UNDISCLOSED LIABILITY. Except to the extent
specifically reflected in Temroc's financial statements described in Section 3.7
of this Agreement, or described in this Agreement or the schedules to this
Agreement, and except for liabilities or obligations arising or incurred in the
ordinary course of business since September 30, 2000, Temroc has no 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 interests, penalties and other charges payable with respect to any such
liability or obligation).
4. REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB.
Parent and Sub represent and warrant to Temroc as follows:
4.1 ORGANIZATION AND GOOD STANDING. Sub is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has the corporate power and authority to own, operate and lease its
properties and carry on its business as now owned, operated, leased or
conducted. Parent is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has the corporate power and
authority to own, operate and lease its properties and carry on its business as
now owned, operated, leased or conducted.
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4.2 AUTHORITY. Subject to the receipt of approval of the board
of directors of Parent and Sub, (a) Parent and Sub have all requisite corporate
power and authority to enter into, deliver and perform this Agreement and any
other agreement or document necessary to perform this Agreement and to
consummate the transactions described in this Agreement; (b) this Agreement has
been duly executed and delivered by Parent and Sub pursuant to all necessary
corporate action; and (c) assuming the due authorization, execution and delivery
by Temroc, this Agreement constitutes the legal, valid and binding obligation of
Parent and Sub, enforceable against Parent and Sub in accordance with its terms,
except as may be limited by principles of equity or bankruptcy, insolvency,
reorganization, moratorium or similar laws or judicial decisions relating to or
affecting the enforcement of creditors' rights or equitable remedies.
4.3 CAPITALIZATION. The authorized capital stock of Sub
consists of 10,000 shares of Sub Stock, 1,000 shares of which are issued and
outstanding. Each issued and outstanding share of Sub Stock has been duly
authorized, validly issued, fully paid and nonassessable and has not been
issued, and is not owned or held, in violation of any preemptive right of the
shareholders of Sub or other persons. All issued and outstanding shares of Sub
Stock are owned of record and beneficially by Parent, free and clear of all
Encumbrances.
4.4 NO CONFLICT. Neither the execution and delivery by Parent
and Sub of this Agreement, the consummation of the Merger or the transactions
described in this Agreement by Parent and Sub nor compliance by Parent and Sub
with any of the provisions of this Agreement will violate, conflict with, result
in a breach of or constitute a default under (a) the certificate of
incorporation or bylaws of Parent or the articles of incorporation or bylaws of
Sub, (b) any contracts, commitments or agreements to which Parent or Sub is a
party or by which the respective assets of Parent or Sub are bound, or (c) any
Legal Requirement by which Parent or Sub is subject or bound.
4.5 NO CONSENTS OR GOVERNMENTAL APPROVALS. Except for filings
required to be made under the HSR Act, Parent and Sub are not required to submit
any notice, report or other filing with any Governmental Body in connection with
the execution, delivery or performance of this Agreement by Parent and Sub and
the consummation of the Merger and the transactions described in this Agreement.
4.6 CERTAIN TRANSACTIONAL FEES. Temroc will not have any
obligation to pay any broker's, finder's, investment banker's, financial
advisor's or similar fee or expense in connection with the transactions
described in this Agreement by reason of any action taken by or on behalf of
Parent or Sub.
5. CERTAIN COVENANTS OF TEMROC, PARENT AND SUB.
Temroc, Parent and Sub covenant with each other that:
5.1 CONDUCT OF BUSINESS. Except to the extent waived or
consented to in writing by Parent and Sub and except for the transactions
described in Section 6.15:
(a) ORDINARY COURSE. Temroc shall conduct the Business only in
the ordinary course.
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(b) COMPENSATION AND PRICING. (i) No increase shall be made in
the compensation of any director, officer or any other employee or group of
employees of Temroc; (ii) no new agreement or arrangement, written or oral,
shall be made with any employee or group of employees of Temroc with respect to
employment for a term that extends after the Closing Time; and (iii) no decrease
shall be made in present pricing practices for products sold by or on behalf of
Temroc other than in the ordinary course of business.
(c) MAINTENANCE. Temroc shall use such efforts as are
consistent with prior practices to keep the Business intact, maintain, preserve
and protect the property used to conduct the Business, keep in faithful service
the present key employees of Temroc, and preserve the goodwill of suppliers and
customers and others having business relations with Temroc.
(d) CHARTER DOCUMENTS AND DIVIDENDS. Temroc shall not (i)
amend its articles of incorporation or bylaws or (ii) pay or declare any
dividends or make any distributions with respect to its capital stock.
(e) NO NEW AGREEMENT. Temroc shall not enter into any (i) new
written lease agreements or other agreements relating to Real Property or any
extensions of any existing lease agreements or other agreements relating to Real
Property, (ii) agreements or other arrangements with any affiliates of Temroc,
(iii) arrangements or other agreements relating to the borrowing of money, the
guaranty of obligations of another party or the pledging or any other
encumbrance of assets, or (iv) arrangements or agreements, or any group of
related arrangements or agreements, that would require the expenditure of more
than $50,000 by Temroc.
(f) PLAN LIABILITIES. Temroc shall not adopt or commit to
adopt any new employee benefit plan (as defined in ERISA) or amend any existing
one. Effective no later than the Closing, Temroc shall terminate its
participation in each employee benefit plan (as defined in ERISA) for which
Temroc is not the plan sponsor (as defined in ERISA).
(g) CAPITAL EXPENDITURES. Except as set forth on SCHEDULE
5.1(g), Temroc shall not incur any capital expenditures that individually or in
the aggregate exceed $50,000.
(h) PERFORMANCE BONUSES. Before the Closing, the board of
directors of Temroc may authorize, and Temroc may pay, such performance bonuses
to employees of Temroc as are in the ordinary course of business and consistent
with past practice.
(i) COMPLIANCE. Prior to Closing, Temroc shall take the
actions described in SCHEDULE 5.1 and provide to Parent documentation of their
completion.
5.2 CORPORATE ACTIONS. Except with respect to the Merger and
the transactions contemplated by this Agreement, Temroc shall not take any
actions with respect to: (a) any merger, consolidation, reorganization or other
business combination; (b) any sale of its material assets; (c) any stock split,
stock dividend or reverse stock split relating to any class of its stock; (d)
any dividend payable in cash or property or any issuance of any shares of its
capital stock, any option, warrant or other right calling for the issuance of
any shares of its capital stock, or any security convertible into or
exchangeable for any shares of its capital stock; (e) any
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authorization of any other class of stock; (f) the issuance of any additional
shares of its capital stock or any agreement or arrangements to issue additional
shares of its capital stock; (g) the amendment of its articles of incorporation
or bylaws; or (h) any proposition the effect of which may be to inhibit,
restrict or delay the consummation of the Merger or any of the transactions
contemplated by this Agreement or impair the contemplated benefits of the Merger
and the transactions contemplated by this Agreement.
5.3 FILINGS, AUTHORIZATIONS AND OTHER ACTIONS. Each of Temroc,
Parent and Sub, as promptly as practicable, (a) will make, or cause to be made,
any filings and submissions required under laws, rules and regulations
applicable to it, or to its subsidiaries and affiliates, as may be required for
it to consummate the transactions described in this Agreement; (b) will use all
commercially reasonable efforts to obtain, or cause to be obtained, all
authorizations, approvals, consents and waivers from all persons and
governmental authorities necessary to be obtained by it, or its affiliates, to
consummate the transactions described in this Agreement; and (c) will use all
commercially reasonable efforts to take or cause to be taken, all other actions
necessary, proper or advisable for it to fulfill its obligations under this
Agreement and satisfy the conditions to closing contained in this Agreement.
5.4 SUPPLYING OF INFORMATION. Before the Closing, Temroc shall
furnish to Parent, Sub and their representatives such information with respect
to Temroc and the Business as they may reasonably request in cooperation with
any review, investigation or examination of the books and records, accounts,
contracts, properties, assets, operations and facilities of Temroc or relating
to the Business.
5.5 INSPECTION OF PROPERTIES. Before the Closing, Parent, Sub
and their employees, agents, contractors and subcontractors may enter upon the
properties during the Business hours and make surveys and appraisals, take
measurements and make tests, borings and other tests of surface and subsurface
conditions, soil tests and structural and engineering studies of the
improvements thereon, in accordance with the provisions of that certain
Environmental Testing Agreement between the Parent and Temroc dated March 16,
2000.
5.6 NOTICE OF CERTAIN CHANGES REGARDING TEMROC. Before the
Closing, Temroc shall promptly inform Parent and Sub in writing of any
litigation or administrative proceeding, or of any claim, controversy or
contingent liability that might reasonably be expected to become the subject of
litigation or an administrative proceeding, against it or any of its affiliates
or affecting any of its properties if (a) the litigation or administrative
proceeding or the threatened litigation or administrative proceeding would have
been required to be disclosed under Section 3.14 of this Agreement had it
existed on the date of this Agreement or (b) if the litigation or administrative
proceeding or the threatened litigation or administrative proceeding is related
to the transactions contemplated by this Agreement. Temroc shall promptly inform
the other parties to this Agreement in writing if any change shall have occurred
or shall have been threatened (or any development shall have occurred or shall
have been threatened involving a prospective change) in its financial condition,
results of operations or business that is or may reasonably be expected to have
a material adverse effect on that party. Temroc shall promptly inform the other
parties to this Agreement in writing if any representation or warranty made by
Temroc in this Agreement shall cease to be accurate.
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5.7 EXPENSES. Each party to this Agreement shall pay its own
costs and expenses (including all legal and accounting fees) relating to this
Agreement, the negotiations leading up to this Agreement and, except as
otherwise provided in this Agreement, the transactions described in this
Agreement. At the Closing, Temroc shall pay all accrued but unpaid legal and
accounting fees.
5.8 PUBLICITY. Until the business day after the date of
Closing and except for any public disclosure that Parent, Sub or Temroc in good
faith believe is required by law, no party to this Agreement shall issue any
press release or make any public statement regarding the transactions described
in this Agreement, without the prior written approval of the other parties,
which approval will not be unreasonably withheld.
5.9 CONFIDENTIAL INFORMATION. Subject to the provisions of
that certain Confidentiality Agreement between Temroc and Parent dated May 13,
1999, each of Temroc, Parent and Sub shall treat in confidence all documents,
materials and other information (whether tangible, oral or electronic) that is
obtained from any unaffiliated party or from the unaffiliated party's employees,
agent or affiliates (the "Confidential Information"). If this Agreement is
terminated, each party to this Agreement shall return all Confidential
Information to the party that has furnished it and, at the request of the
furnishing party, will destroy all copies of that Confidential Information and
any notes, studies or other written or electronic information related to that
Confidential Information. This Section 5.9 shall not apply to any Confidential
Information (a) that a party to this Agreement possessed before its receipt from
the other party to this Agreement, (b) that is available to the public and did
not become available to the public through any violation of a legal obligation
(including, but not limited to, the obligations of this Section 5.9) or (c) that
is lawfully acquired from sources other than the parties to this Agreement or
their affiliates.
5.10 EXCLUSIVITY. Temroc shall not, and shall cause its
officers, directors, employees, representatives, agents, and affiliates
(including, but not limited to any investment banker, attorney or accountant
retained by Temroc) not to, directly or indirectly, solicit, knowingly
encourage, initiate, or participate in any way in discussions or negotiations
with, or knowingly provide any nonpublic information to, any corporation,
partnership, person, or other entity or group (other than Parent or any
affiliate or agent of Parent) concerning any proposed Alternative Transaction
(as defined below), or otherwise knowingly facilitate any effort or attempt to
propose, make or implement an Alternative Transaction. For purposes of this
Agreement, "Alternative Transaction" shall mean any of the following involving
Temroc: (i) any tender offer, exchange offer, merger, consolidation, share
exchange, business combination or similar transaction; (ii) any transaction or
series of related transactions pursuant to which any person or entity (or its
shareholders), other than Parent, Sub, or any of their affiliates (a "Third
Party") acquires shares (or securities exercisable for or convertible into
shares) representing more than 25% of the outstanding shares of any class of
capital stock of Temroc; or (iii) any sale, lease, exchange, licensing, transfer
or other disposition pursuant to which a Third Party acquires control of more
than 25% of the assets of Temroc (determined by reference to the fair market
value of such assets), in a single transaction or series of related
transactions. Temroc will promptly communicate to Parent the name of the person
or entity submitting, and the terms and conditions of, any proposal or inquiry
that it receives after the date hereof in respect of any
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proposed Alternative Transaction or a reasonably detailed description of any
such information requested from it after the date hereof or of any such
negotiations or discussions being sought to be initiated or continued with the
Company after the date hereof in respect of a proposed Alternative Transaction.
The foregoing notwithstanding, this Agreement shall not prohibit the Board of
Directors of Temroc from, prior to the vote of Temroc's shareholders, furnishing
nonpublic information to or entering into discussions or negotiations with, any
person or entity that makes an unsolicited Superior Proposal (as defined below),
if, and only to the extent that:
(a) the Board of Directors reasonably and in good faith
determines that failure to take such action would be inconsistent with the
fiduciary duties of the Board of Directors to its stockholders under applicable
law, based on written advice from legal counsel for Temroc, a copy of which is
provided to Parent;
(b) prior to first furnishing nonpublic information to, or
first entering into any substantive discussions and negotiations with, such
person or entity after the date hereof, Temroc provides written notice to Parent
to the effect that it intends to furnish information to, or enter into
discussions or negotiations with, a person or entity making a Superior Proposal,
and naming and identifying the person or entity making the Superior Proposal;
(c) Temroc provides Parent with all non-public information to
be provided to such person or entity which Parent has not previously received
from Temroc, and Temroc keeps Parent informed, on a regular basis, of the
status, terms and conditions and all other material information with respect to
any such discussions or negotiations.
Nothing in this Section 5.10 shall (x) permit Temroc to terminate this Agreement
(except as specifically provided in Article 8 hereof), or (y) permit Temroc to
enter into any agreement providing for an Alternative Transaction (other than as
specifically provided in Article 8 hereof, and in the circumstances and under
the conditions set forth, above) for as long as this Agreement remains in
effect.
For purposes of this Agreement, a "Superior Proposal" shall mean a proposal for
an Alternative Transaction that the Board of Directors of Temroc has reasonably
and in good faith determined (with the advice of its financial advisors and
taking into account all legal, financial and regulatory aspects of the
likelihood of the consummation of such Alternative Transaction, including, but
not limited to, the conditions to consummation and the consequences under such
Alternative Transaction proposal of any material adverse effects or changes in
Temroc) to be more favorable to Temroc's shareholders than the transactions
contemplated by this Agreement.
5.11 EMPLOYEE BENEFITS. All employees of Temroc shall receive
recognition for their service with Temroc for purposes of seniority, eligibility
to participate, eligibility for benefits and vesting under any plans, agreements
or arrangements of Parent to which those employees may become eligible for after
Closing. Parent shall take into account, under the employee benefit plans of
Parent, any medical or dental welfare expenses incurred under any plan of Temroc
during the plan year or other coverage period in which those employees are first
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provided coverage under the employee benefit plans of Parent, for purposes of
satisfying applicable deductible, coinsurance and maximum out-of-pocket
provisions.
5.12 QUANEX NONCOMPETITION COVENANT. For a period of three (3)
years following the Closing, Parent shall not, directly or indirectly, engage or
invest in, own, manage, operate, finance, control, or participate in the
ownership, management, operation, financing, or control of, be associated with,
or in any manner connected with, lend the name of Quanex or any similar name to,
lend credit to, or render services or advice to, any anodizing business located
in the states of Illinois, Iowa, Minnesota, North Dakota, South Dakota or
Wisconsin. Notwithstanding the foregoing sentence, Parent or any of its
affiliates may acquire any business in the above-described geographical areas
and own, manage, operate, finance, control and participate in the ownership,
management, operation, financings and control of the business, be associated
with the business, lend its name to the business, lend credit to the business
and render services or advice to the business, if at the time of the acquisition
of the business, less than 20% of its revenues for its last fiscal year were
attributable to providing anodizing services.
5.13 RELATIONSHIP WITH AACRON. For a period of three years
following the Closing, Parent will cause the Surviving Corporation to cooperate
with Aacron to continue and maintain the business relationship between the two
companies as it exists as of the date of Closing; provided, however, that this
Section 5.13 shall not be deemed to require either Parent or the Surviving
Corporation to conduct business with Aacron with respect to (i) any existing
customer of Temroc if Aacron cannot or does not continue to provide services to
that customer meeting current standards with respect to that customer, (ii) any
new customers of the Surviving Corporation if there is a commercially compelling
reason to conduct the business relationship with a third party after Aacron has
had an opportunity to bid on the business project with the third party or (iii)
any customers of the Surviving Corporation if the business project involves
technologies that differ from those currently used by Aacron.
6. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PARENT AND SUB TO CLOSE.
The obligation of Parent and Sub to close shall, at the option of Parent, be
subject to the following conditions:
6.1 TEMROC'S FULFILLMENT OF COVENANTS. Temroc shall have
fulfilled its covenants, obligations and agreements as set forth in this
Agreement insofar as they are required to be fulfilled before the Closing.
6.2 TEMROC'S REPRESENTATIONS. The representations of Temroc
contained in this Agreement shall continue to be true and correct from the date
of this Agreement until and including the date of the Closing.
6.3 AUTHORIZATIONS; CONSENTS; LEGAL PROHIBITION.
(a) Temroc shall have obtained all governmental or other
authorizations, approvals, consents and waivers including the expiration of all
waiting periods under the HSR Act and shall have made all filings, the lack of
any of which before the Closing, under any
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applicable law, rule or regulation (i) would render legally impermissible the
Merger pursuant to the terms of this Agreement or (ii) would have a material
adverse effect on Temroc or the Business.
(b) Parent and Sub shall have obtained all governmental or
other authorizations, approvals, consents and waivers including the expiration
of all waiting periods under the HSR Act and shall have made all filings, the
lack of any of which before the Closing, under any applicable law, rule or
regulation (i) would render legally impermissible the Merger pursuant to the
terms of this Agreement or (ii) would have a material adverse effect on Temroc
or the Business.
(c) On the date of the Closing, there shall not exist any
pending injunction or other order of a court of competent jurisdiction that
would make unlawful the consummation of the Merger or the transactions described
in this Agreement.
6.4 CONSENTS. All consents, waivers, approvals and
authorizations required to be obtained by Temroc for the consummation of the
transactions described in this Agreement shall have been obtained by Temroc and
originally executed copies thereof shall have been provided to Sub.
6.5 TERMINATION OF PLANS. Temroc shall have terminated its
participation in each employee benefit plan (as defined in ERISA) for which it
is not the plan sponsor (as defined in ERISA) and provided Sub with evidence of
that termination.
6.6 BOARD APPROVAL. The transactions described in this
Agreement shall have been approved by the boards of directors of Parent and Sub.
6.7 TEMROC APPROVAL. The Merger and other transactions
described in this Agreement shall have been approved by the board of directors
and shareholders of Temroc in accordance with the Minnesota Act and with
Temroc's articles of incorporation and bylaws.
6.8 DUE DILIGENCE. Parent shall not have discovered any facts
or circumstances during its due diligence inspection of Temroc and the Business
that it reasonably believes would have a material adverse effect on Temroc or
the Business, or Parent's valuation of or current plans for Temroc or the
Business.
6.9 UPDATED SCHEDULES. Temroc shall have delivered to Parent
an updated SCHEDULE 3.12-A (which shall include a list of all purchase orders
and sales orders existing as of the Closing Time), an updated SCHEDULE 3.23-A
(which shall include a list of all Inventory in the possession of others) and an
updated SCHEDULE 3.24-A (which shall include an aging of accounts receivable of
Temroc as of the Closing Time), in each case, to the reasonable satisfaction of
Parent.
6.10 DOCUMENTS DESCRIBED IN ARTICLE 2. Parent and Sub shall
have received all other documents described in Article 2 of this Agreement that
are to be delivered to Parent, Sub or other persons.
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6.11 MERGER DOCUMENTS. The Articles of Merger and the
Certificate of Merger shall have been executed and delivered.
6.12 CERTIFIED TEMROC CHARTER DOCUMENTS. Parent shall have
received from Temroc copies of its articles of incorporation certified by the
Secretary of State of Minnesota, a certificate of good standing from the
appropriate state authority or authorities of Minnesota and bylaws, certified by
Temroc's Secretary or an Assistant Secretary.
6.13 TEMROC RESOLUTIONS. Parent shall have received a
certificate signed by the Secretary or an Assistant Secretary of Temroc
attaching a copy of the resolutions adopted by the board of directors and a copy
of the resolutions adopted by the shareholders of Temroc, approving the Merger
and certifying that the resolutions were duly adopted and continue to be in
effect.
6.14 SCHUMER NON-COMPETITION AGREEMENT. Parent shall have
received a Non-Competition Agreement signed by ▇▇▇▇▇ ▇▇▇▇▇▇▇ and Crown
Extrusions, Inc., substantially in the form of Exhibit H attached hereto.
6.15 DISPOSITION OF PARTNERSHIP INTERESTS AND AACRON CAPITAL
STOCK. Temroc shall have sold, distributed or otherwise transferred all of its
right, title and interest in and to the Partnerships and the capital stock of
Aacron.
6.16 EXERCISE OF DISSENTERS' RIGHTS. No shareholder of Temroc
shall have duly exercised and not withdrawn such shareholder's dissenters'
rights under the Minnesota Law prior to the date of Closing.
6.17 ENVIRONMENTAL INSURANCE. Parent shall have obtained a
policy of insurance relating to environmental matters in connection with Temroc
and any of its current or former affiliates for a period of 10 years, for an
amount of at least $10,000,000 and with an aggregate deductible not exceeding
$50,000, and otherwise in form and substance satisfactory to Parent.
7. CONDITIONS PRECEDENT TO TEMROC'S OBLIGATIONS TO CLOSE.
The obligation of Temroc to close shall, at the option of Temroc, be subject to
the following conditions:
7.1 FULFILLMENT OF COVENANTS OF PARENT AND SUB. Parent and Sub
shall each have fulfilled its respective covenants, obligations and agreements
as set forth in this Agreement insofar as they are required to be fulfilled
before the Closing.
7.2 REPRESENTATIONS OF PARENT AND SUB. The representations of
Parent and Sub contained in this Agreement shall continue to be true and correct
from the date of this Agreement until and including the date of the Closing.
7.3 AUTHORIZATIONS; CONSENTS; LEGAL PROHIBITION.
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(a) Temroc shall have obtained all governmental or other
authorizations, approvals, consents and waivers including the expiration of all
waiting periods under the HSR Act and shall have made all filings, the lack of
any of which before the Closing, under any applicable law, rule or regulation
(i) would render legally impermissible the Merger pursuant to the terms of this
Agreement or (ii) would have a material adverse effect on Temroc or the
Business.
(b) Parent and Sub shall have obtained all governmental or
other authorizations, approvals, consents and waivers including the expiration
of all waiting periods under the HSR Act and shall have made all filings, the
lack of any of which before the Closing, under any applicable law, rule or
regulation (i) would render legally impermissible the Merger pursuant to the
terms of this Agreement or (ii) would have a material adverse effect on Temroc
or the Business.
(c) On the date of the Closing, there shall not exist any
pending injunction or other order of a court of competent jurisdiction that
would make unlawful the consummation of the transactions contemplated by this
Agreement.
7.4 PAYMENT OF INITIAL PURCHASE PRICE AND DOCUMENTS DESCRIBED
IN ARTICLE 2. The Paying Agent shall have received payment of the Merger
Consideration. Parent or Sub, as applicable, shall have delivered all other
documents described in Article 2 of this Agreement that are to be delivered by
Parent or Sub. In addition, Sub shall have funded the escrow account provided
for in the Escrow Agreement
7.5 PARENT AND SUB'S RESOLUTIONS. Temroc shall have received
(i) a certificate signed by the Secretary or an Assistant Secretary of Sub
attaching a copy of the resolutions adopted by Sub's board of directors and a
copy of the resolutions adopted by the sole shareholder of Sub, approving the
Merger and certifying that the resolutions were duly adopted and continue to be
in effect and (ii) a certificate signed by the Secretary or an Assistant
Secretary of Parent attaching a copy of the resolutions adopted by Parent's
board of directors, approving the Merger and certifying that the resolutions
were duly adopted and continue to be in effect.
8. TERMINATION.
8.1 MANNER OF TERMINATION. Subject to the provisions of
Section 8.1, this Agreement may, by written notice given at or prior to the
Closing in the manner provided, be terminated and abandoned:
(a) BY PARENT OR SUB FOR DEFAULT. By Parent or Sub if a
material default or breach shall be made by Temroc with respect to the due and
timely performance of any of its covenants and agreements contained in this
Agreement, or with respect to the continuing accuracy of any of its
representations and warranties contained in this Agreement, and the default has
not been waived;
(b) BY TEMROC FOR DEFAULT. By Temroc if a material default or
breach shall be made by Parent or Sub with respect to the due and timely
performance of any of their
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covenants and agreements contained in this Agreement, or with respect to the
continuing accuracy of any of their representations and warranties contained in
this Agreement, and the default has not been waived;
(c) BY MUTUAL CONSENT. By mutual written consent of Parent,
Sub and Temroc; or
(d) BY EITHER PARTY AFTER DEADLINE. By any of Parent, Sub or
Temroc if the Closing is not completed before the close of business on December
31, 2000, but only if the terminating party's failure to fulfill any obligation
under this Agreement in any material respect shall not have been the cause of,
or resulted in, the failure of the Closing to occur on or before such date.
Provided that, if a request for additional information is received from the U.S.
Federal Trade Commission ("FTC") or Department of Justice ("DOJ") pursuant to
the HSR Act, such date shall be extended to the 90th day following
acknowledgment by the FTC or DOJ, as applicable, that Parent and Temroc have
complied with such request, but in any event not later than February 28, 2001;
(e) By either Parent or Temroc if a court of competent
jurisdiction or an administrative, governmental, or regulatory authority has
issued a final nonappealable order, decree, or ruling, or taken any other
action, having the effect of permanently restraining, enjoining, or otherwise
prohibiting the Merger;
(f) By either Parent or Temroc if, at the Temroc shareholders'
meeting, the requisite vote of the shareholders of Temroc for approval and
adoption of this Agreement and the Merger is not obtained;
(g) By Temroc or Parent prior to the required vote of Temroc's
shareholders if (i) the Board of Directors of Temroc has complied with, and
continues to comply with, all requirements and procedures of Section 5.10 in all
material respects and has authorized, subject to complying with the terms of
this Agreement, Temroc to enter into a letter of intent or binding written
agreement concerning a transaction that constitutes a Superior Proposal and
Temroc notifies Parent in writing that it intends to enter into such agreement,
attaching the most current version of such agreement to such notice, (ii) Parent
does not make, within ten (10) business days after receipt of Temroc's written
notice of its intention to enter into a letter of intent or binding agreement
for a Superior Proposal, any offer that the Board of Directors of Temroc
reasonably and in good faith determines, after consultation with its financial
and legal advisors, is at least as favorable to the shareholders of Temroc as
the Superior Proposal and (iii) upon termination pursuant to this Section
8.1(g), Temroc pays to Parent the fee required by Section 8.2 to be paid to
Parent in the manner therein provided.
8.2 EFFECT OF TERMINATION. If this Agreement is terminated
pursuant to Section 8.1, all further obligations of Temroc, Parent and Sub shall
terminate, except that the obligations set forth in Sections 5.8 and 5.9 shall
survive; provided, however, that if this Agreement is terminated by one party
pursuant to subsection 8.1 (a) or subsection 8.1(b) above, any aggrieved party's
right to pursue all legal remedies for breach of contract or otherwise,
including damages relating thereto, shall also survive such termination
unimpaired.
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In recognition of the time, effort, and expenses expended and incurred by Parent
with respect to Temroc and the opportunity that the acquisition of Temroc
presents to Parent, if this Agreement is validly terminated pursuant to Section
8.1(g), then in any such event Temroc will pay to Parent upon the termination
date in the event of termination pursuant to Section 8.1(g) (by wire transfer of
immediately available funds to an account designated by Parent for such
purpose), a fee equal to $300,000.
9. SURVIVAL.
Except as otherwise herein provided, all representations and warranties
of the parties hereto shall survive the Closing hereof and any investigations
made by or on behalf of any of the parties hereto for the following periods,
after which periods such representations and warranties shall be of no further
force or effect unless written notice of a claim with respect to such
representation and warranty shall have been given to the party responsible
therefor prior to the expiration thereof:
(a) The representations and warranties contained in Section
3.21 shall survive, with respect to a particular tax period, until the
applicable limitations period shall have barred any assessment of tax
deficiencies for such tax period.
(b) The representations and warranties contained in Sections
3.17 and 3.18 shall survive with respect to any matter covered thereby, until
the applicable limitations period shall have expired with respect to that
matter.
(c) The representations and warranties contained in Sections
3.1 through 3.5, inclusive, and Sections 4.1 and 4.2 shall survive the Closing
for a period of four (4) years.
(d) All representations and warranties contained in this
Agreement, insofar as they relate to environmental matters and Environmental
Laws, including the representations and warranties contained in Section 3.10(c),
shall expire at the Closing.
(e) All other representations and warranties shall survive the
Closing for a period of twelve (12) months.
All covenants of any party hereto which are not fully performed as of the
Closing shall survive the Closing.
10. GENERAL PROVISIONS.
10.1 AMENDMENTS. This Agreement may be amended only by a
written agreement signed by Parent, Sub and Temroc.
10.2 NOTICES. All notices, requests, demands and other
communications made in connection with this Agreement shall be in writing and
shall be deemed to have been duly given on the date delivered, if delivered
personally or sent by facsimile to the persons identified below, or three days
after mailing in the United States mail if mailed by certified or registered
mail, postage prepaid, return receipt requested, addressed as follows:
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(a) if to Temroc:
Temroc Metals, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
with a copies to:
▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇▇▇▇
▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Law Offices, P.A.
860 Rand Tower
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
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Ravich, Meyer, Kirkman, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
4545 IDS Center
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ P.L.L.P.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to Parent or Sub:
Quanex Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Fulbright & ▇▇▇▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
(c) if to the Temroc Representative:
▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
The addresses and numbers may be changed by means of a notice given in the
manner provided in this Section 10.2.
10.3 WAIVER. No failure of any party to this Agreement to
pursue any remedy resulting from a breach of this Agreement shall be construed
as a waiver of that breach or as a waiver of any subsequent or other breach. No
waiver shall be enforceable against a party unless the waiver is in writing and
signed by the party against whom enforcement of such is sought.
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10.4 HEADINGS. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
10.5 SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon a determination that any term or other provision is
invalid, illegal or incapable of being enforced, Temroc and Sub shall negotiate
in good faith to modify this Agreement so as to effect their original intent as
closely as possible in an acceptable manner to the end that transactions
described in this Agreement are effected to the extent legally possible.
10.6 ENTIRE AGREEMENT; SCHEDULES. This Agreement, the Exhibits
attached to this Agreement and the Schedules identified in and delivered
pursuant to this Agreement constitute the entire agreement and supersede all
other prior agreements and undertakings, both written and oral, among the
parties hereto, or any of them, with respect to the subject matter of this
Agreement. The schedules identified in this Agreement have been delivered to
Parent, Sub and Temroc separate from this Agreement; those schedules, however,
shall constitute a part of this Agreement and are incorporated by reference into
this Agreement.
10.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED AS TO ALL
MATTERS BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
MINNESOTA, EXCLUDING ANY OTHER LAWS THAT MIGHT APPLY PURSUANT TO ITS CONFLICT OF
LAWS RULES. THIS AGREEMENT IS PERFORMABLE IN MINNEAPOLIS, HENNEPIN COUNTY,
MINNESOTA. EXCLUSIVE VENUE FOR ANY DISPUTE ARISING WITH RESPECT TO THIS
AGREEMENT SHALL BE MINNEAPOLIS, MINNESOTA. THE PARTIES ACCEPT THE EXCLUSIVE
JURISDICTION OF ANY COURT OF COMPETENT JURISDICTION IN MINNEAPOLIS, MINNESOTA,
AND IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION
THAT THEY MAY HAVE TO THE LAYING OF THE VENUE OF ANY SUIT, ACTION OR PROCEEDING
RELATING TO THE TERMS OF THIS AGREEMENT BROUGHT IN A COURT OF COMPETENT
JURISDICTION IN MINNEAPOLIS, MINNESOTA, AND WAIVE ANY CLAIM THAT ANY SUCH SUIT,
ACTION OR PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
10.8 COUNTERPARTS. This Agreement and all agreements executed
and delivered pursuant to this Agreement may be executed in one or more separate
counterparts, each of which when executed shall be deemed to be an original but
all of which shall constitute one and the same agreement.
10.9 NO THIRD-PARTY BENEFICIARIES. Other than the shareholders
of Temroc, this Agreement does not create, and shall not be construed as
creating, any rights enforceable by any person who is not a party to this
Agreement.
10.10 WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, EACH PARTY TO THIS AGREEMENT IRREVOCABLY WAIVES
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THE RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY AND ALL ACTIONS OR PROCEEDINGS IN
WHICH TEMROC, PARENT OR SUB IS A PARTY, WHETHER OR NOT THOSE ACTIONS OR
PROCEEDINGS ARISE OUT OF THIS AGREEMENT OR ANY OTHER AGREEMENT EXECUTED IN
CONJUNCTION WITH THIS AGREEMENT. THE WAIVERS CONTAINED IN THIS SECTION 10.10
HAVE BEEN VOLUNTARILY GIVEN, WITH FULL KNOWLEDGE OF THEIR CONSEQUENCES.
10.11 CONSTRUCTION. Unless the context otherwise requires, (a)
the gender (or lack of gender) of all words used in this Agreement includes the
masculine, feminine and neuter; (b) references to articles, sections, exhibits
and schedules refer to articles and sections of, or exhibits and schedules to,
this Agreement; and (c) "including" means "including without limitation".
10.12 KNOWLEDGE. For purposes of this Agreement, any reference
to "the knowledge of," "the best knowledge of," "known" or other similar term of
Temroc, when modifying any representation, warranty, covenant or agreement made
by Temroc, shall mean that none of the executive officers or directors of Temroc
listed on SCHEDULE 3.17 has any actual knowledge of a matter or of any
information that after reasonable investigation or inquiry reasonably could be
expected to result in knowledge of a matter.
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IN WITNESS WHEREOF, Parent, Sub and Temroc have caused this Agreement
to be executed on the day and year first above written.
QUANEX CORPORATION,
a Delaware corporation
By: /s/
------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
Title: Vice President-Finance & CFO
---------------------------------------
QUANEX FIVE, INC.,
a Delaware corporation
By: /s/
------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
Title: Vice President
---------------------------------------
TEMROC METALS, INC.,
a Minnesota corporation
By: /s/
------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------
Title: President
---------------------------------------
48
Exhibit A to
Agreement and Plan of Merger
CERTIFICATE OF MERGER
Merging
QUANEX FIVE, INC.
a Delaware corporation,
Into
TEMROC METALS, INC.,
a Minnesota corporation
Pursuant to the provisions of Section 252(c) of the General Corporation
Law of the State of Delaware (the "DGCL"), the undersigned corporation submits
the following Certificate of Merger for the purpose of effecting a merger under
the DGCL.
1. The name and state of incorporation of each of the constituent
corporations are as follows:
Name of Corporation State of Incorporation
------------------- ----------------------
Quanex Five, Inc. Delaware
Temroc Metals, Inc. Minnesota
2. An Agreement and Plan of Merger (the "Merger Agreement") has been
approved, adopted, certified, executed and acknowledged by each of the
constituent corporations in accordance with Section 252 of the DGCL and Section
___ of the Minnesota Business Corporation Act.
3. The name of the surviving corporation is "Temroc Metals, Inc.", a
Minnesota corporation.
4. The articles of incorporation of the surviving corporation shall be
in the form attached hereto as Exhibit A.
5. The executed Merger Agreement is on file at the principal place of
business of the surviving corporation, located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
6. A copy of the Merger Agreement will be furnished by the surviving
corporation, on request and without cost, to any stockholder of any constituent
corporation.
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7. The surviving corporation agrees that it may be served with process
in the State of Delaware in any proceeding for the enforcement of any obligation
of any constituent corporation of the State of Delaware, as well as for
enforcement of any obligation of the surviving corporation arising from the
merger, including any suit or other proceeding to enforce the right of any
stockholder as determined in appraisal proceedings pursuant to Section 262 of
the DGCL, and irrevocably appoints the Secretary of State of Delaware as its
agent to accept service of process in any such suit or other proceedings. Copies
of any such documents regarding service of process should be mailed to the
surviving corporation at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
Dated as of the ____ day of ____________, 2000.
TEMROC METALS, INC.,
a Minnesota corporation
------------------------------------
[Name]
[Title]
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EXHIBIT A
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Exhibit B to
Agreement and Plan of Merger
ARTICLES OF MERGER
MERGING
QUANEX FIVE, INC.
INTO
TEMROC METALS, INC.
Pursuant to the provisions of Minnesota Statutes, Section 302A.651, the
undersigned officers of TEMROC METALS, INC., a Minnesota corporation (the
"Surviving Corporation"), and QUANEX FIVE, INC., a Delaware corporation (the
"Merged Corporation"), hereby certify that:
(a) attached hereto as Exhibit A is a true and correct copy of the Plan
and Agreement of Merger (the "Plan of Merger") merging the Merged Corporation
into the Surviving Corporation;
(b) the Plan of Merger has been approved by a vote of the shareholders
of the Surviving Corporation pursuant to Section 302A.613, Subd. 2 of the
Minnesota Business Corporation Act by unanimous writing in lieu of a meeting of
the shareholders; and
(c) the Plan of Merger is permitted by the laws of Delaware and has
been approved by the shareholders of the Merged Corporation in accordance with
the provisions of the laws of Delaware.
(d) the Articles of Incorporation of the Surviving Corporation shall be
the Amended and Restated Articles of Incorporation attached hereto as Exhibit B.
(e) these Articles of Merger, and the Plan of Merger and Amended and
Restated Articles of Incorporation attached hereto, shall be effective as of
_______________, 2000.
QUANEX FIVE, INC.
By
--------------------------------
Its
---------------------------
TEMROC METALS, INC.
By
--------------------------------
Its
--------------------------
52
Exhibit A to Articles of Merger
PLAN AND AGREEMENT OF MERGER
MERGING
QUANEX, INC.
(a Delaware corporation)
INTO
TEMROC METALS, INC.
(a Minnesota corporation)
This Plan of Merger, dated as of _____________, 2000, is made and
entered into by and between TEMROC METALS, INC., a Minnesota corporation (the
"Surviving Corporation"), and QUANEX FIVE, INC., a Delaware corporation (the
"Merged Corporation").
WITNESSETH:
WHEREAS, the Board of Directors and shareholders of each of said
corporations deem it advisable for their corporation to enter into this Plan of
Merger pursuant to Sections 302A.601 et. seq. of the Minnesota Business
Corporation Act and Section 252 of the General Corporation Law of the State of
Delaware.
NOW, THEREFORE, it is hereby agreed by and between the parties that
effective as of ______________, 2000, (the "Effective Date") the Merged
Corporation shall be merged into the Surviving Corporation according to the
following terms and conditions:
1. Effective as of the Effective Date, the Merged Corporation is hereby
merged into the Surviving Corporation, and the name of the continuing
corporation shall be Temroc Metals, Inc.
2. Upon the Effective Date, each share of Class A Common Stock, $.10
par value, of the Surviving Corporation which is outstanding immediately prior
to the Effective Date shall automatically be converted into the right to receive
$291.99 in cash merger consideration, and each share of Class B Common Stock,
$.10 par value, shall automatically be converted into the right to receive
$538.90 in cash merger consideration, in each case plus certain closing
adjustments. Each share of the issued and outstanding common stock, $.01 par
value, of the Merged Corporation shall remain outstanding immediately after the
Effective Date and constitute one share of common stock, $.01 par value, of the
Surviving Corporation.
3. Upon the Effective Date, the merger shall have the effects set forth
in Section 259 of the General Corporation Law of the State of Delaware and
Section 302A.641 of the Minnesota Business Corporations Act.
4. The Articles of Incorporation and Bylaws of the Surviving
Corporation shall be the Amended and Restated Articles of Incorporation being
adopted pursuant to the Articles of Merger filed in connection herewith, and the
Bylaws shall be the Amended Bylaws being adopted in connection herewith, each
effective as of the Effective Date.
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5. The officers and Directors of the Merged Corporation immediately
prior to the Effective Date shall continue to be the officers and Directors of
the Surviving Corporation immediately after the merger, until the next election
of the Board of Directors and officers of the Surviving Corporation or as
required by the Surviving Corporation's Amended and Restated Articles of
Incorporation and Bylaws.
6. This Plan and Agreement of Merger may be executed in any number of
counterparts, each of which when so executed shall be deemed an original and all
such counterparts shall constitute one and the same Plan and Agreement of
Merger.
7. This Agreement shall be governed by the laws of the State of
Minnesota excluding the conflicts of law provisions thereof.
IN WITNESS WHEREOF, each of the parties hereto have executed this Plan
and Agreement of Merger the day and year first above mentioned.
QUANEX FIVE, INC., a Delaware corporation
By
-----------------------------------------
Its
----------------------------------
TEMROC METALS, INC., a Minnesota corporation
By
-----------------------------------------
Its
----------------------------------
This Agreement has been approved and adopted by a majority of the
outstanding voting stock of the Merged Corporation entitled to vote thereon.
__________________________________
_______________________, Secretary
of Merged Corporation
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Exhibit B to Articles of Merger
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF TEMROC METALS, INC.
The undersigned being the Secretary of TEMROC METALS, INC., a Minnesota
Corporation, does hereby certify that the foregoing articles were duly adopted
by the pursuant to all requirements of the Minnesota Business Corporations Act,
Chapter 302A of the Minnesota Statutes:
ARTICLE I
The name of the Corporation shall be Temroc Metals, Inc.
ARTICLE II
The address of the Corporation's registered office in this state shall
be ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇.
ARTICLE III
The total number of shares of stock that the Corporation shall
have authority to issue is Ten Thousand (10,000) shares of Common Stock, of the
par value of $.01 per share.
ARTICLE IV
The Board of Directors shall have the authority to designate more than
one class or series of shares of the Corporation, which shall have the relative
rights and preferences, with such designations, as the Board of Directors by
resolution may provide.
Article V
Except as may be otherwise provided by the Board of Directors in a
resolution establishing a class or series of the shares of the Corporation,
shareholders shall have no preemptive rights.
ARTICLE VI
There shall be no cumulative voting by shareholders for the election of
directors.
ARTICLE VII
Any action required or permitted to be taken at a meeting of the Board
of Directors may be taken by written action signed by all of the directors then
in office, unless the action is one which need not be approved by the
shareholders, in which case such action shall be effective if signed by the
number of directors that would be required to take the same action at a meeting
at which all directors were present.
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ARTICLE VIII
A director of the Corporation shall not personally be liable to the
Corporation or its shareholders for monetary damages for breach of fiduciary
duty as a director, except for (i) liability based on a breach of the duty of
loyalty to the Corporation or the shareholders; (ii) liability for acts or
omissions not in good faith or that involve intentional misconduct or a knowing
violation of law; (iii) liability based on the payment of an improper dividend
or improper repurchase of the Corporation's stock under Section 559 of the
Minnesota Business Corporation Act (Minnesota Statutes, Chapter 302A) or sale of
unregistered securities or securities fraud under Section 23 of the Minnesota
Securities Act (Minnesota Statutes, Chapter 80A) or; (iv) liability for any
transaction from which the director derived an improper personal benefit. If
Chapter 302A, the Minnesota Business Corporation Act, hereafter is amended to
authorize the further elimination or limitation of liability of directors, the
liability of a director of the corporation in addition to the limitation on
personal liability provided herein, shall be limited to the fullest extent
permitted by such amendment. Any repeal or modification of this Article by the
shareholders of the corporation shall be prospective only and shall not
adversely affect any limitation on the personal liability of a director of the
corporation existing at the time of such repeal or modification.
IN WITNESS WHEREOF, these Articles have been executed as of this ______
day of ________________, 2000
______________________________
___________________, Secretary
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Exhibit C to
Agreement and Plan of Merger
AMENDED BYLAWS
OF
TEMROC METALS, INC.
Adopted on ___________, 2000
ARTICLE I
OFFICES
SECTION 1.01. Registered Office. The registered office of the
corporation in the State of Minnesota shall be ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇.
SECTION 1.02. Other Offices. The corporation may also have offices at
such other places both within and without the State of Minnesota as the Board of
Directors may from time to time determine or the business of the corporation may
require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
SECTION 2.01. Place of Meeting. All meetings of shareholders for the
election of directors shall be held at such place, either within or without the
State of Minnesota, as shall be designated from time to time by the Board of
Directors and stated in the notice of the meeting.
SECTION 2.02. Annual Meeting. The annual meeting of shareholders shall
be held at such date and time as shall be designated from time to time by the
Board of Directors and stated in the notice of the meeting.
SECTION 2.03. Voting List. The officer who has charge of the stock
ledger of the corporation shall prepare and make, at least 10 days before every
meeting of shareholders, a complete list of the shareholders entitled to vote at
the meeting, arranged in alphabetical order, and showing the address of each
shareholder and the number of shares registered in the name of each shareholder.
Such list shall be open to the examination of any shareholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
10 days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice, or if not
so specified, at the place where the meeting is to be held. The list shall also
be produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any shareholder who is present.
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SECTION 2.04. Special Meeting. Special meetings of the shareholders,
for any purpose or purposes, unless otherwise prescribed by statute or by the
Articles of Incorporation, may be called by the Chairman of the Board or by the
President of the corporation or by the Board of Directors or by written order of
a majority of the directors and shall be called by the President or the
Secretary at the request in writing of shareholders owning a majority in amount
of the entire capital stock of the corporation issued and outstanding and
entitled to vote. Such request shall state the purposes of the proposed meeting.
The Chairman of the Board or the President of the corporation or directors so
calling, or the shareholders so requesting, any such meeting shall fix the time
and any place, either within or without the State of Minnesota, as the place for
holding such meeting.
SECTION 2.05. Notice of Meeting. Written notice of the annual, and each
special meeting of shareholders, stating the time, place, and purpose or
purposes thereof, shall be given to each shareholder entitled to vote thereat,
not less than 10 nor more than 60 days before the meeting.
SECTION 2.06. Quorum. The holders of a majority of the shares of the
corporation's capital stock issued and outstanding and entitled to vote thereat,
present in person or represented by proxy, shall constitute a quorum at any
meeting of shareholders for the transaction of business, except as otherwise
provided by statute or by the Articles of Incorporation. Notwithstanding the
other provisions of the Articles of Incorporation or these bylaws, the holders
of a majority of the shares of the corporation's capital stock entitled to vote
thereat, present in person or represented by proxy, whether or not a quorum is
present, shall have power to adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present
or represented. If the adjournment is for more than 30 days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each shareholder of record entitled to
vote at the meeting. At such adjourned meeting at which a quorum shall be
present or represented, any business may be transacted which might have been
transacted at the meeting as originally notified.
SECTION 2.07. Voting. When a quorum is present at any meeting of the
shareholders, the vote of the holders of a majority of the shares of the
corporation's capital stock having voting power present in person or represented
by proxy shall decide any question brought before such meeting, unless the
question is one upon which, by express provision of the statutes, of the
Articles of Incorporation or of these bylaws, a different vote is required, in
which case such express provision shall govern and control the decision of such
question. Every shareholder having the right to vote shall be entitled to vote
in person, or by proxy appointed by an instrument in writing subscribed by such
shareholder, bearing a date not more than three years prior to voting, unless
such instrument provides for a longer period, and filed with the Secretary of
the corporation before, or at the time of, the meeting. If such instrument shall
designate two or more persons to act as proxies, unless such instrument shall
provide the contrary, a majority of such persons present at any meeting at which
their powers thereunder are to be exercised shall have and may exercise all the
powers of voting or giving consents thereby conferred, or if only one be
present, then such powers may be exercised by that one; or, if an even number
attend and a majority do not agree on any particular issue, each proxy so
attending shall be entitled to
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exercise such powers in respect of the same portion of the shares as he is of
the proxies representing such shares.
SECTION 2.08. Consent of Shareholders. Whenever the vote of
shareholders at a meeting thereof is required or permitted to be taken for or in
connection with any corporate action by any provision of the statutes, the
meeting and vote of shareholders may be dispensed with if all the shareholders
who would have been entitled to vote upon the action if such meeting were held
shall consent in writing to such corporate action being taken.
SECTION 2.09. Voting of Stock of Certain Holders. Shares of the
corporation's capital stock standing in the name of another corporation,
domestic or foreign, may be voted by such officer, agent, or proxy as the bylaws
of such corporation may prescribe, or in the absence of such provision, as the
Board of Directors of such corporation may determine. Shares standing in the
name of a deceased person may be voted by the executor or administrator of such
deceased person, either in person or by proxy. Shares standing in the name of a
guardian, conservator, or trustee may be voted by such fiduciary, either in
person or by proxy, but no such fiduciary shall be entitled to vote shares held
in such fiduciary capacity without a transfer of such shares into the name of
such fiduciary. Shares standing in the name of a receiver may be voted by such
receiver. A shareholder whose shares are pledged shall be entitled to vote such
shares, unless in the transfer by the pledgor on the books of the corporation,
he has expressly empowered the pledgee to vote thereon, in which case only the
pledgee, or his proxy, may represent the stock and vote thereon.
SECTION 2.10. Authorized, but Unissued Stock. The corporation shall not
vote, directly or indirectly, shares of its own capital stock owned by it; and
such shares shall not be counted in determining the total number of outstanding
shares of the corporation's capital stock.
SECTION 2.11. Fixing Record Date. The Board of Directors may fix in
advance a date, which shall not be more than 60 days nor less than 10 days
preceding the date of any meeting of shareholders, nor more than 60 days
preceding the date for payment of any dividend or distribution, or the date for
the allotment of rights, or the date when any change, or conversion or exchange
of capital stock shall go into effect, or a date in connection with obtaining a
consent, as a record date for the determination of the shareholders entitled to
notice of, and to vote at, any such meeting and any adjournment thereof, or
entitled to receive payment of any such dividend or distribution, or to receive
any such allotment of rights, or to exercise the rights in respect of any such
change, conversion or exchange of capital stock, or to give such consent, and in
such case such shareholders and only such shareholders as shall be shareholders
of record on the date so fixed, shall be entitled to such notice of, and to vote
at, any such meeting and any adjournment thereof, or to receive payment of such
dividend or distribution, or to receive such allotment of rights, or to exercise
such rights, or to give such consent, as the case may be, notwithstanding any
transfer of any stock on the books of the corporation after any such record date
fixed as aforesaid.
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ARTICLE III
BOARD OF DIRECTORS
SECTION 3.01. Powers. The business and affairs of the corporation shall
be managed by its Board of Directors, which may exercise all such powers of the
corporation and do all such lawful acts and things as are not by statute or by
the Articles of Incorporation or by these bylaws directed or required to be
exercised or done by the shareholders.
SECTION 3.02. Number, Election and Term. The number of directors that
shall constitute the whole Board of Directors shall be not less than one. Such
number of directors shall from time to time be fixed and determined by the
directors and shall be set forth in the notice of any meeting of shareholders
held for the purpose of electing directors. The directors shall be elected at
the annual meeting of shareholders, except as provided in Section 3.03, and each
director elected shall hold office until his successor shall be elected and
shall qualify. Directors need not be residents of Minnesota or shareholders of
the corporation.
SECTION 3.03. Vacancies, Additional Directors, and Removal From Office.
If any vacancy occurs in the Board of Directors caused by death, resignation,
retirement, disqualification, or removal from office of any director, or
otherwise, or if any new directorship is created by an increase in the
authorized number of directors, a majority of the directors then in office,
though less than a quorum, or a sole remaining director, may choose a successor
or fill the newly created directorship; and a director so chosen shall hold
office until the next election and until his successor shall be duly elected and
shall qualify, unless sooner displaced. Any director may be removed either for
or without cause at any special meeting of shareholders duly called and held for
such purpose.
SECTION 3.04. Regular Meeting. A regular meeting of the Board of
Directors shall be held each year, without other notice than this bylaw, at the
place of, and immediately following, the annual meeting of shareholders; and
other regular meetings of the Board of Directors shall be held each year, at
such time and place as the Board of Directors may provide, by resolution, either
within or without the State of Minnesota, without other notice than such
resolution.
SECTION 3.05. Special Meeting. A special meeting of the Board of
Directors may be called by the Chairman of the Board of Directors or by the
President of the corporation and shall be called by the Secretary on the written
request of any two directors. The Chairman or President so calling, or the
directors so requesting, any such meeting shall fix the time and any place,
either within or without the State of Minnesota, as the place for holding such
meeting.
SECTION 3.06. Notice of Special Meeting. Written notice of special
meetings of the Board of Directors shall be given to each director at least 48
hours prior to the time of such meeting. Any director may waive notice of any
meeting. The attendance of a
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director at any meeting shall constitute a waiver of notice of such meeting,
except where a director attends a meeting for the purpose of objecting to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
special meeting of the Board of Directors need be specified in the notice or
waiver of notice of such meeting, except that notice shall be given of any
proposed amendment to the bylaws if it is to be adopted at any special meeting
or with respect to any other matter where notice is required by statute.
SECTION 3.07. Quorum. A majority of the Board of Directors shall
constitute a quorum for the transaction of business at any meeting of the Board
of Directors, and the act of a majority of the directors present at any meeting
at which there is a quorum shall be the act of the Board of Directors, except as
may be otherwise specifically provided by statute, by the Articles of
Incorporation or by these bylaws. If a quorum shall not be present at any
meeting of the Board of Directors, the directors present thereat may adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present.
SECTION 3.08. Action Without Meeting. Unless otherwise restricted by
the Articles of Incorporation or these bylaws, any action required or permitted
to be taken at any meeting of the Board of Directors, or of any committee
thereof as provided in Article IV of these bylaws, may be taken without a
meeting, if a written consent thereto is signed by all members of the Board of
Directors or of such committee, as the case may be, unless the action is one
which need not be approved by the shareholders, in which case such action shall
be effective if signed by the number of directors that would be required to take
the same action at a meeting at which all directors were present, and such
written consent is filed with the minutes of proceedings of the Board of
Directors or such committee.
SECTION 3.09. Compensation. Directors, as such, shall not be entitled
to any stated salary for their services unless voted by the shareholders or the
Board of Directors; but by resolution of the Board of Directors, a fixed sum
and expenses of attendance, if any, may be allowed for attendance at each
regular or special meeting of the Board of Directors or any meeting of a
committee of directors. No provision of these bylaws shall be construed to
preclude any director from serving the corporation in any other capacity and
receiving compensation therefor.
ARTICLE IV
COMMITTEES OF DIRECTORS
SECTION 4.01. Designation, Powers and Name. The Board of Directors may,
by resolution passed by a majority of the whole Board of Directors, designate
one or more committees, including, if they shall so determine, an Executive
Committee, each such committee to consist of two or more of the directors of the
corporation. The committee shall have and may exercise such of the powers of the
Board of Directors in the management of the business and affairs of the
corporation as may be provided in such resolution. The committee may authorize
the seal of the corporation to be affixed to all papers that may require it. The
Board of Directors may designate one or more directors as alternate members of
any committee, who may replace
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any absent or disqualified member at any meeting of such committee. In the
absence or disqualification of any member of such committee or committees, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absent or disqualified member. Such committee or committees shall have
such name or names and such limitations of authority as may be determined from
time to time by resolution adopted by the Board of Directors.
SECTION 4.02. Minutes. Each committee of directors shall keep regular
minutes of its proceedings and report the same to the Board of Directors when
required.
SECTION 4.03. Compensation. Members of special or standing committees
may be allowed compensation for attending committee meetings, if the Board of
Directors shall so determine.
ARTICLE V
NOTICE
SECTION 5.01. Methods of Giving Notice. Whenever under the provisions
of applicable statutes, the Articles of Incorporation or these bylaws, notice is
required to be given to any director, member of any committee, or shareholder,
such notice shall be in writing and delivered personally or mailed to such
director, member, or shareholder; provided that in the case of a director or a
member of any committee such notice may be given orally or by telephone or
telegram. If mailed, notice to a director, member of a committee, or shareholder
shall be deemed to be given when deposited in the United States mail first class
in a sealed envelope, with postage thereon prepaid, addressed, in the case of a
shareholder, to the shareholder at the shareholder's address as it appears on
the records of the corporation or, in the case of a director or a member of a
committee, to such person at his business address. If sent by telegraph, notice
to a director or member of a committee shall be deemed to be given when the
telegram, so addressed, is delivered to the telegraph company.
SECTION 5.02. Waiver. Whenever any notice is required to be given under
the provisions of an applicable statute, the Articles of Incorporation, or these
bylaws, a waiver thereof in writing, signed by the person or persons entitled to
said notice, whether before or after the time stated therein, or attendance at
any meeting, shall be deemed equivalent thereto.
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ARTICLE VI
OFFICERS
SECTION 6.01. Officers. The officers of the corporation shall be a
Chairman of the Board and a Vice Chairman of the Board (if such offices are
created by the Board), a President, who shall also be designated the Chief
Executive Officer, a Chief Financial Officer, one or more Vice Presidents, any
one or more of which may be designated Executive Vice President or Senior Vice
President, a Secretary and a Treasurer. The Board of Directors may appoint such
other officers and agents, including Assistant Vice Presidents, Assistant
Secretaries, and Assistant Treasurers, in each case as the Board of Directors
shall deem necessary, who shall hold their offices for such terms and shall
exercise such powers and perform such duties as shall be determined by the
Board. Any two or more offices may be held by the same person. No officer shall
execute, acknowledge, verify or countersign any instrument on behalf of the
corporation in more than one capacity, if such instrument is required by law, by
these bylaws or by any act of the corporation to be executed, acknowledged,
verified, or countersigned by two or more officers. The Chairman and Vice
Chairman of the Board shall be elected from among the directors. With the
foregoing exceptions, none of the other officers need be a director, and none of
the officers need be a shareholder of the corporation.
SECTION 6.02. Election and Term of Office. The officers of the
corporation shall be elected annually by the Board of Directors at its first
regular meeting held after the annual meeting of shareholders or as soon
thereafter as conveniently possible. Each officer shall hold office until his
successor shall have been chosen and shall have qualified or until his death or
the effective date of his resignation or removal, or until he shall cease to be
a director in the case of the Chairman.
SECTION 6.03. Removal and Resignation. Any officer or agent elected or
appointed by the Board of Directors may be removed without cause by the
affirmative vote of a majority of the Board of Directors whenever, in its
judgment, the best interests of the corporation shall be served thereby, but
such removal shall be without prejudice to the contractual rights, if any, of
the person so removed. Any officer may resign at any time by giving written
notice to the corporation. Any such resignation shall take effect at the date of
the receipt of such notice or at any later time specified therein, and unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
SECTION 6.04. Vacancies. Any vacancy occurring in any office of the
corporation by death, resignation, removal, or otherwise, may be filled by the
Board of Directors for the unexpired portion of the term.
SECTION 6.05. Salaries. The salaries of all officers and agents of the
corporation shall be fixed by the Board of Directors or pursuant to its
direction; and no officer shall be prevented from receiving such salary by
reason of his also being a director.
SECTION 6.06. Chairman of the Board. The Chairman of the Board (if such
office is created by the Board) shall preside at all meetings of the Board of
Directors or of the
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shareholders of the corporation. The Chairman shall formulate and submit to the
Board of Directors or the Executive Committee matters of general policy for the
corporation and shall perform such other duties as usually appertain to the
office or as may be prescribed by the Board of Directors or the Executive
Committee.
SECTION 6.07. Vice Chairman of the Board. The Vice Chairman of the
Board (if such office is created by the Board) shall, in the absence or
disability of the Chairman of the Board, perform the duties and exercise the
powers of the Chairman of the Board. The Vice Chairman shall perform such other
duties as from time to time may be prescribed by the Board of Directors or the
Executive Committee or assigned by the Chairman of the Board.
SECTION 6.08. President and Chief Executive Officer. The President
shall be the Chief Executive Officer of the corporation and, subject to the
control of the Board of Directors, shall in general supervise and control the
business and affairs of the corporation. In the absence of the Chairman of the
Board or the Vice Chairman of the Board (if such offices are created by the
Board), the President shall preside at all meetings of the Board of Directors
and of the shareholders. He may also preside at any such meeting attended by the
Chairman or Vice Chairman of the Board if he is so designated by the Chairman,
or in the Chairman's absence by the Vice Chairman. He shall have the power to
appoint and remove subordinate officers, agents and employees, except those
elected or appointed by the Board of Directors. The President shall keep the
Board of Directors and the Executive Committee fully informed and shall consult
them concerning the business of the corporation. He may sign with the Secretary
or any other officer of the corporation thereunto authorized by the Board of
Directors, certificates for shares of the corporation and any deeds, bonds,
mortgages, contracts, checks, notes, drafts, or other instruments that the Board
of Directors has authorized to be executed, except in cases where the signing
and execution thereof has been expressly delegated by these bylaws or by the
Board of Directors to some other officer or agent of the corporation, or shall
be required by law to be otherwise executed. He shall vote, or give a proxy to
any other officer of the corporation to vote, all shares of stock of any other
corporation standing in the name of the corporation and in general he shall
perform all other duties normally incident to the office of President and such
other duties as may be prescribed by the shareholders, the Board of Directors,
or the Executive Committee from time to time.
SECTION 6.9. Chief Financial Officer. The Chief Financial Officer, who
may also be the President and Chief Financial Officer, shall prepare and
maintain accurate financial records for the corporation and, together with the
Treasurer, shall (a) have charge and custody of and be responsible for all funds
and securities of the corporation; (b) receive and give receipts for moneys due
and payable to the corporation from any source whatsoever and deposit all such
moneys in the name of the corporation in such banks, trust companies, or other
depositories as shall be selected in accordance with the provisions of Section
7.03 of these bylaws; (c) prepare, or cause to be prepared, for submission at
each regular meeting of the Board of Directors, at each annual meeting of the
shareholders, and at such other times as may be required by the Board of
Directors, the President or the Executive Committee, a statement of financial
condition of the corporation in such detail as may be required; and (d) in
general, perform all the duties incident to the office of Chief Financial
Officer and such other duties as
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from time to time may be assigned to him by the President, the Board of
Directors or the Executive Committee.
SECTION 6.10. Vice Presidents. In the absence of the President, or in
the event of his inability or refusal to act, the Executive Vice President (or
in the event there shall be no Vice President designated Executive Vice
President, any Vice President designated by the Board) shall perform the duties
and exercise the powers of the President. Any Vice President may sign, with the
Secretary or Assistant Secretary, certificates for shares of the corporation.
The Vice Presidents shall perform such other duties as from time to time may be
assigned to them by the President, the Board of Directors or the Executive
Committee.
SECTION 6.11. Secretary. The Secretary shall (a) keep the minutes of
the meetings of the shareholders, the Board of Directors and committees of
directors; (b) see that all notices are duly given in accordance with the
provisions of these bylaws and as required by law; (c) be custodian of the
corporate records and of the seal of the corporation, and see that the seal of
the corporation or a facsimile thereof is affixed to all certificates for shares
prior to the issue thereof and to all documents, the execution of which on
behalf of the corporation under its seal is duly authorized in accordance with
the provisions of these bylaws; (d) keep or cause to be kept a register of the
post office address of each shareholder which shall be furnished by such
shareholder; (e) sign with the President, or an Executive Vice President or Vice
President, certificates for shares of the corporation, the issue of which shall
have been authorized by resolution of the Board of Directors; (f) have general
charge of the stock transfer books of the corporation; and (g) in general,
perform all duties normally incident to the office of Secretary and such other
duties as from time to time may be assigned to him by the President, the Board
of Directors or the Executive Committee.
SECTION 6.12. Treasurer. If required by the Board of Directors, the
Treasurer shall give a bond for the faithful discharge of his duties in such sum
and with such surety or sureties as the Board of Directors shall determine. He
shall (a) have charge and custody of and be responsible for all funds and
securities of the corporation; (b) receive and give receipts for moneys due and
payable to the corporation from any source whatsoever and deposit all such
moneys in the name of the corporation in such banks, trust companies, or other
depositories as shall be selected in accordance with the provisions of Section
7.03 of these bylaws; (c) prepare, or cause to be prepared, for submission at
each regular meeting of the Board of Directors, at each annual meeting of the
shareholders, and at such other times as may be required by the Board of
Directors, the President or the Executive Committee, a statement of financial
condition of the corporation in such detail as may be required; and (d) in
general, perform all the duties incident to the office of Treasurer and such
other duties as from time to time may be assigned to him by the President, the
Board of Directors or the Executive Committee.
SECTION 6.13 Assistant Secretary and Treasurer. The Assistant
Secretaries and Assistant Treasurers shall, in general, perform such duties as
shall be assigned to them by the Secretary or the Treasurer, respectively, or by
the President, the Board of Directors, or the Executive Committee. The Assistant
Secretaries and Assistant Treasurers shall, in the absence of the Secretary or
Treasurer, respectively, perform all functions and duties which such absent
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officers may delegate, but such delegation shall not relieve the absent officer
from the responsibilities and liabilities of his office. The Assistant
Secretaries may sign, with the President or a Vice President, certificates for
shares of the corporation, the issue of which shall have been authorized by a
resolution of the Board of Directors. The Assistant Treasurers shall
respectively, if required by the Board of Directors, give bonds for the faithful
discharge of their duties in such sums and with such sureties as the Board of
Directors shall determine.
ARTICLE VII
CONTRACTS, CHECKS AND DEPOSITS
SECTION 7.01. Contracts. Subject to the provisions of Section 6.01, the
Board of Directors may authorize any officer, officers, agent, or agents, to
enter into any contract or execute and deliver any instrument in the name of and
on behalf of the corporation, and such authority may be general or confined to
specific instances.
SECTION 7.02. Checks. All checks, demands, drafts, or other orders for
the payment of money, notes, or other evidences of indebtedness issued in the
name of the corporation, shall be signed by such officer or officers or such
agent or agents of the corporation, and in such manner, as shall be determined
by the Board of Directors.
SECTION 7.03. Deposits. All funds of the corporation not otherwise
employed shall be deposited from time to time to the credit of the corporation
in such banks, trust companies, or other depositories as the Board of Directors
may select.
ARTICLE VIII
CERTIFICATES OF STOCK
SECTION 8.01. Issuance. Each shareholder of this corporation shall be
entitled to a certificate or certificates showing the number of shares of
capital stock registered in his name on the books of the corporation. The
certificates shall be in such form as may be determined by the Board of
Directors, shall be issued in numerical order and shall be entered in the books
of the corporation as they are issued. They shall exhibit the holder's name and
number of shares and shall be signed by the President or a Vice President and by
the Secretary or an Assistant Secretary. If any certificate is countersigned (1)
by a transfer agent other than the corporation or any employee of the
corporation, or (2) by a registrar other than the corporation or any employee of
the corporation, any other signature on the certificate may be a facsimile. If
the corporation shall be authorized to issue more than one class of stock or
more than one series of any class, the designations, preferences, and relative
participating, optional, or other special rights of each class of stock or
series thereof and the qualifications, limitations, or restrictions of such
preferences and rights shall be set forth in full or summarized on the face or
back of the certificate which the corporation shall issue to represent such
class of stock; provided that, except as otherwise provided by statute, in lieu
of the foregoing requirements there may be set forth on the face or back of the
certificate which the corporation shall issue to represent such class or series
of stock, a statement that the corporation will furnish to each shareholder who
so
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requests the designations, preferences and relative, participating, optional or
other special rights of each class of stock or series thereof and the
qualifications, limitations, or restrictions of such preferences and rights. All
certificates surrendered to the corporation for transfer shall be canceled and
no new certificate shall be issued until the former certificate for a like
number of shares shall have been surrendered and canceled, except that in the
case of a lost, stolen, destroyed, or mutilated certificate a new one may be
issued therefor upon such terms and with such indemnity, if any, to the
corporation as the Board of Directors may prescribe. Certificates shall not be
issued representing fractional shares of stock.
SECTION 8.02. Lost Certificates. The Board of Directors may direct a
new certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the corporation alleged to have been lost,
stolen, or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to the issuance
thereof, require (1) the owner of such lost, stolen, or destroyed certificate or
certificates, or his legal representative, to advertise the same in such manner
as it shall require, (2) such owner to give the corporation a bond in such sum
as it may direct as indemnity against any claim that may be made against the
corporation with respect to the certificate or certificates alleged to have been
lost, stolen, or destroyed, or (3) both.
SECTION 8.03. Transfers. Upon surrender to the corporation or the
transfer agent of the corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment, or authority to
transfer, it shall be the duty of the corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate, and record the
transaction upon its books. Transfers of shares shall be made only on the books
of the corporation by the registered holder thereof, or by his attorney
thereunto authorized by power of attorney and filed with the Secretary of the
corporation or the Transfer Agent.
SECTION 8.04. Registered Shareholders. The corporation shall be
entitled to treat the holder of record of any share or shares of the
corporation's capital stock as the holder in fact thereof and, accordingly,
shall not be bound to recognize any equitable or other claim to or interest in
such share or shares on the part of any other person, whether or not it shall
have express or other notice thereof, except as otherwise provided by the laws
of the State of Minnesota.
ARTICLE IX
DIVIDENDS
SECTION 9.01. Declaration. Dividends with respect to the shares of the
corporation's capital stock, subject to the provisions of the Articles of
Incorporation, if any, may be declared by the Board of Directors at any regular
or special meeting, pursuant to applicable law. Dividends may be paid in cash,
in property, or in shares of capital stock, subject to the provisions of the
Articles of Incorporation.
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SECTION 9.02. Reserve. Before payment of any dividend, there may be set
aside out of any funds of the corporation available for dividends such sum or
sums as the Board of Directors from time to time, in their absolute discretion,
think proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the corporation, or
for such other purpose as the Board of Directors shall think conducive to the
interest of the corporation, and the Board of Directors may modify or abolish
any such reserve in the manner in which it was created.
ARTICLE X
INDEMNIFICATION
SECTION 10.01. Third Party Actions. The corporation shall indemnify any
director or officer of the corporation, and may indemnify any other person, who
was or is a party or is threatened to be made a party to any threatened,
pending, or completed action, suit, or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of the
corporation) by reason of the fact that he is or was a director, officer,
employee, or agent of the corporation, or is or was serving at the request of
the corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other enterprise, against
expenses (including attorneys' fees), judgments, fines, and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit, or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit, or proceeding by judgment, order, settlement, or conviction, or
upon a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
SECTION 10.02. Actions by or in the Right of the Corporation. The
corporation shall indemnify any director or officer and may indemnify any other
person who was or is a party or is threatened to be made a party to any
threatened, pending, or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that he is
or was a director, officer, employee, or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee, or
agent of another corporation, partnership, joint venture, trust, or other
enterprise against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection with the defense or settlement of such action or
suit if he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue, or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses as the court shall
deem proper.
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SECTION 10.03. Mandatory Indemnification. To the extent that a
director, officer, employee, or agent of the corporation has been successful on
the merits or otherwise in defense of any action, suit, or proceeding referred
to in Sections 10.01 and 10.02, or in defense of any claim, issue, or matter
therein, he shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith.
SECTION 10.04. Determination of Conduct. The determination that a
director, officer, employee, or agent has met the applicable standard of conduct
set forth in Sections 10.01 and 10.02 (unless indemnification is ordered by a
court) shall be made (1) by the Board of Directors by a majority vote of a
quorum consisting of directors who were not parties to such action, suit, or
proceeding, or (2) if such quorum is not obtainable, or, even if obtainable a
quorum of disinterested directors so directs, by independent legal counsel in a
written opinion, or (3) by the shareholders.
SECTION 10.05. Payment of Expenses in Advance. Expenses incurred in
defending a civil or criminal action, suit, or proceeding shall be paid by the
corporation in advance of the final disposition of such action, suit, or
proceeding upon receipt of an undertaking by or on behalf of the director,
officer, employee, or agent to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the corporation as
authorized in this Article X.
SECTION 10.06. Indemnity Not Exclusive. The indemnification and
advancement of expenses provided or granted hereunder shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under the Articles of Incorporation, any
other bylaw, agreement, vote of shareholders, or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office.
SECTION 10.07. Definitions. For purposes of this Article X:
(a) "the corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger that, if its separate
existence had continued, would have had power and authority to indemnify
its directors, officers, and employees or agents, so that any person who is
or was a director, officer, employee, or agent of such constituent
corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other enterprise, shall
stand in the same position under this Article X with respect to the
resulting or surviving corporation as he would have with respect to such
constituent corporation if its separate existence had continued;
(b) "other enterprises" shall include employee benefit plans;
(c) "fines" shall include any excise taxes assessed on a person with
respect to any employee benefit plan;
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(d) "serving at the request of the corporation" shall include any
service as a director, officer, employee, or agent of the corporation that
imposes duties on, or involves services by, such director, officer,
employee, or agent with respect to an employee benefit plan, its
participants or beneficiaries; and
(e) a person who acted in good faith and in a manner he reasonably
believed to be in the interest of the participants and beneficiaries of an
employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this
Article X.
SECTION 10.08. Continuation of Indemnity. The indemnification and
advancement of expenses provided or granted hereunder shall, unless otherwise
provided when authorized or ratified, continue as to a person who has ceased to
be a director, officer, employee, or agent and shall inure to the benefit of the
heirs, executors, and administrators of such a person.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Seal. The corporate seal, if one is authorized by the
Board of Directors, shall have inscribed thereon the name of the corporation,
and the words "Corporate Seal, Minnesota." The seal may be used by causing it or
a facsimile thereof to be impressed or affixed or otherwise reproduced.
SECTION 11.02. Books. The books of the corporation may be kept (subject
to any provision contained in the statutes) outside the State of Minnesota at
the offices of the corporation, or at such other place or places as may be
designated from time to time by the Board of Directors.
ARTICLE XII
AMENDMENT
These bylaws may be altered, amended, or repealed (i) by a vote of the
shareholders as provided in Section 2.07 or 2.08 hereof, or (ii) unless
shareholder approval is otherwise required pursuant to Minnesota law, by a
majority of the number of directors then constituting the Board of Directors at
any regular meeting of the Board of Directors without prior notice, or at any
special meeting of the Board of Directors if notice of such alteration,
amendment, or repeal be contained in the notice of such special meeting.
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Exhibit D to
Agreement and Plan of Merger
ESCROW AGREEMENT
This Escrow Agreement (the "Escrow Agreement"), dated as of
_________________, 2000, among Quanex Corporation, a Delaware corporation
("Quanex"), Temroc Metals, Inc., a Minnesota corporation (the "Surviving
Corporation"), ▇▇▇▇▇ ▇▇▇▇▇▇▇, as representative for the former shareholders of
Temroc Metals, Inc. (the "Shareholder Representative"), and Associated Bank
Minnesota, a Minnesota state banking association (the "Escrow Agent");
WITNESSETH:
WHEREAS, Quanex, Quanex Five, Inc., a Delaware corporation ("Sub") and
Temroc Metals, Inc., a Minnesota corporation ("Temroc") have entered into an
Agreement and Plan of Merger dated October 23, 2000 (the "Merger Agreement"),
pursuant to which Sub will merge with and into Temroc, with Temroc surviving as
a wholly owned subsidiary of Quanex (the "Surviving Corporation");
WHEREAS, the Merger Agreement provides that Sub is to pay $900,000 as
Additional Escrow Consideration to be placed in escrow;
WHEREAS, Quanex, the Surviving Corporation and the Shareholder
Representative, on behalf of the former shareholders of Temroc and who are
listed on Exhibit A (the "Shareholders"), desire to enter into this Escrow
Agreement to create the escrow required by the Merger Agreement; and
WHEREAS, Quanex and Sub have requested the Escrow Agent to act as the
escrow agent under this Escrow Agreement, and the Escrow Agent has agreed to do
so.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the parties to this Escrow Agreement agree as follows:
1. Effective Time. This Escrow Agreement shall be effective as of the
Effective Time of the Merger.
2. Appointment of Escrow Agent. Quanex, the Surviving Corporation and
Shareholder Representative appoint Associated Bank Minnesota as the Escrow Agent
for the purposes set forth in this Escrow Agreement, and the Escrow Agent
accepts the appointment under the terms of this Escrow Agreement.
3. Deposit of Escrow Fund. For the purposes set forth in this Escrow
Agreement, Sub is depositing or has deposited with the Escrow Agent $900,000 in
cash or immediately available funds (the "Escrow Fund"). The Escrow Agent shall
hold, invest, reinvest and disburse the Escrow Fund in accordance with the terms
of this Escrow Agreement. The Escrow Fund
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shall be under the sole and exclusive dominion and control of the Escrow Agent,
and neither Quanex, the Surviving Corporation nor the Shareholder Representative
shall have any right with respect to the Escrow Fund except as set forth in this
Escrow Agreement.
4. Satisfaction of Claims with Escrow Fund.
(a) DISTRIBUTIONS TO PAY CLAIMS. At all times during the term
of this Escrow Agreement, the Escrow Fund will be retained by the Escrow Agent
and shall be distributed at any time, or from time to time, for the purpose of
paying any and all Claims (as defined below) pursuant to the terms of this
Escrow Agreement.
(b) THE ESCROW FUND. During the term hereof the Escrow Fund
shall be distributed at any time, or from time to time, for the purpose of
paying (1) any Adjustment Amount owed to Quanex or the Surviving Corporation
pursuant to Section 1.9 of the Merger Agreement, (2) any and all claims, losses,
costs, damages (whether actual, punitive or consequential and including strict
liability claims) or expenses of any kind or nature whatsoever, whether or not
the result of a third-party claim and including diminution in value, court
costs, attorneys' fees and expenses and consultants' fees and expenses (each, a
"Loss") that Quanex, the Surviving Corporation or any of their officers,
directors, employees, agents or affiliates (each, a "Quanex Indemnified Party")
shall suffer or incur arising out of or in connection with any breach of the
representations, warranties, covenants and agreements contained in the Merger
Agreement or in any document signed by Temroc referred to in Article 2 of the
Merger Agreement which was delivered by Temroc for the benefit of Quanex or the
Surviving Corporation (excluding the representations and warranties described in
Section 9(d), which expired at the Closing) (each a "Claim" and collectively,
the "Claims"), (3) any Loss that a Quanex Indemnified Party shall suffer or
incur arising out of the tax treatment, for federal and state law purposes, of
the sale, distribution or other transfer by Temroc of the stock of Aacron, Inc.
("Aacron") and Temroc's interests in the Medina Parks, Highway 55 and 18 and JGM
Energy Investments - Mon. Dak. -- 1981-3 Drilling Fund partnerships (the
"Partnerships") in accordance with the Merger Agreement, and (4) any Loss that a
Quanex Indemnified Party shall suffer or incur arising out of any liability or
obligation of Aacron or any of the Partnerships.
(c) DEFINITION AND SCOPE OF CLAIMS. A Claim shall include all
reasonable expenses, disbursements and advances, including reasonable attorneys'
fees, expenses and disbursements, incurred or made in the investigation, defense
or administration of a Claim by Quanex or the Surviving Corporation.
Notwithstanding anything contained in this Escrow Agreement to the contrary,
there shall be no obligation under this Agreement for indemnification or the
satisfaction of a Claim unless and until the aggregate amount of all Claims
exceeds $50,000, and then only for the amount of Claims in excess of $50,000.
(d) NOTICE AND PAYMENT OF CLAIMS. From time to time in
accordance with the terms of this Escrow Agreement, a Quanex Indemnified Party
may give written notice (the "Notice") of a Claim, including a description of
the nature and amount of the Adjustment Amount, Loss or other obligation for
which payment is requested, to the Shareholder Representative. A copy of the
Notice shall be contemporaneously provided to the Escrow Agent
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and, if the Quanex Indemnified Party is a person other than Quanex, to Quanex.
The Shareholder Representative shall have a period of 15 days from the date of
receipt of the Notice in which the Shareholder Representative may make Quanex,
the Surviving Corporation and the Escrow Agent aware of, and attempt to settle,
any dispute the Shareholder Representative may have regarding the Claim. If the
Shareholder Representative has not notified Quanex and the Surviving Corporation
of any such dispute within that 15-day period, then Quanex shall so notify the
Escrow Agent and the Escrow Agent shall immediately disburse the amount of the
Claim to Quanex. If the Shareholder Representative has notified Quanex and the
Surviving Corporation of any such dispute within that 15-day period, then the
Shareholder Representative, Quanex and the Surviving Corporation shall instruct
the Escrow Agent to pay Quanex immediately any amount of the Claim that is not
in dispute. If Quanex believes it is entitled to additional funds beyond the
agreed upon amount, then Quanex shall commence an arbitration proceeding within
ten business days of receipt of the objection to the distribution. Unless
otherwise agreed to by all parties, the arbitration shall be conducted according
to the AAA Commercial Arbitration Rules and a hearing must be held within 45
days of the filing by Quanex. Quanex shall notify AAA that a decision must be
issued within 21 days of the conclusion of the hearing. The arbitration shall be
instituted to determine only the matter in dispute. The Shareholder
Representative shall cooperate fully with AAA and Quanex in causing the decision
to be issued on a timely basis. If there has been no determination of the
dispute within the period described above and the failure to obtain a
determination is due to any actions or inactions of the Shareholder
Representative, then (a) Quanex shall notify the Escrow Agent and the Escrow
Agent by submission of a sworn statement providing the amount to be distributed
and the facts and circumstances warranting distribution of the requested funds
and the Escrow Agent shall immediately disburse the disputed amount of the Claim
to Quanex, (b) the Shareholder Representative, Quanex and the Surviving
Corporation shall continue to resolve the dispute through the arbitration
process, and (c) to the extent that the arbitration decision is not in favor of
Quanex and the Surviving Corporation, Quanex shall repay to the Escrow Agent the
difference between the amount paid to Quanex under the foregoing clause (a) and
the amount to which Quanex is entitled under the arbitration decision.
5. Investment of Escrow Fund.
(a) MEANS OF INVESTING. The Escrow Fund shall be invested by
the Escrow Agent in such investments as the Escrow Agent and the Shareholder
Representative shall agree upon from time to time. The foregoing
notwithstanding, such investments shall be in savings deposits, certificates of
deposit or government obligations.
(b) ALLOCATION OF INCOME. All income earned on the Escrow Fund
(the "Escrow Income") shall be paid in accordance with Section 6(c).
6. Payment of Escrow Fund Amounts.
(a) PAYMENTS. If the amount in the Escrow Fund (excluding
Escrow Income) on an Applicable Date (as defined below) exceeds the sum of the
related Applicable Balance (as defined below) and the amount of any unpaid
Claims as of the Applicable Date, then the Escrow
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Agent shall pay and distribute to the Shareholders (or cause the Paying Agent to
do so pursuant to the Paying Agent Agreement) the amount of that excess, unless
on or before the Applicable Date Quanex has given notice to the Shareholder
Representative and the Escrow Agent that Quanex is aware of a Claim with respect
to which it is unable to specify the amount of damages, in which case the Escrow
Agent shall make no payments to the Shareholders with respect to the Applicable
Date. For purposes of this Section 6(a), the "Applicable Dates" and the related
"Applicable Balances" are as follows:
Applicable Date Applicable Balance
________, 2001 [one year after Closing] $800,000
________, 2002 [two years after Closing] $534,000
________, 2003 [three years after Closing] $268,000
On the fourth anniversary of the Closing (the "Termination Date"), the Escrow
Agent shall pay and distribute the remaining principal balance of the Escrow
Fund as of that date to the Shareholders unless (i) any Claims are then pending,
in which case the Escrow Agent shall retain in the Escrow Fund an amount equal
to the aggregate amount of those Claims and pay the balance, if any, to the
Shareholders or (ii) Quanex has given notice to the Shareholder Representative
and the Escrow Agent of any other Claim a Quanex Indemnified Party may have
under this Escrow Agreement with respect to which it is unable to specify the
amount of damages, in which case the entire amount of the Escrow Fund (excluding
Escrow Income) as of that date shall be retained by the Escrow Agent. Balances
retained in the Escrow Fund under clause (i) or (ii) of the immediately
preceding sentence shall not be distributed until the Escrow Agent receives
written instructions of Quanex and the Shareholder Representative, but in no
event shall any balance be retained in the Escrow Fund one year after the
Termination Date, regardless of whether any actual or potential Claim has been
resolved. Any of the Escrow Fund remaining after the resolution of all Claims,
including all matters relating to those Claims and counterclaims and other
claims arising out of those matters, described in clauses (i) and (ii) shall be
promptly distributed by the Escrow Agent to the Shareholders.
(b) ALLOCATION OF PAYMENTS AMONG SHAREHOLDERS. All
distributions to the Shareholders under this Escrow Agreement, including
distributions under Section 6(a), shall be made pro rata according to the
percentages set forth on Exhibit A.
(c) DISTRIBUTION OF INTEREST. During the period of any dispute
under Section 4(b), all interest earned on that part of the Escrow Fund which is
in dispute and which is ultimately determined to be payable to Quanex shall be
paid to Quanex concurrently with the payment of those funds to Quanex. Subject
to the foregoing sentence, the Shareholder Representative may request that the
Escrow Agent distribute to him all or a portion of any accrued interest held in
the Escrow Fund to pay the reasonable legal fees and expenses incurred by him in
connection with any dispute or defense of claims that he may undertake pursuant
to the terms of this Agreement. Except for interest on the Escrow Fund payable
in accordance with the
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foregoing two sentences, all other interest earned on the Escrow Fund shall be
paid to the Shareholders on the Termination Date.
7. Shareholder Representative. The Shareholders have irrevocably made,
constituted and appointed the Shareholder Representative as their agent and true
and lawful attorney-in-fact, for such person and in such person's name, (i) to
execute and deliver to the Buyer on behalf of all the Shareholders this Escrow
Agreement, and to take all other actions on behalf of all such Shareholders
which the Shareholder Representative deems appropriate in his discretion in
connection with this Escrow Agreement as effectively as such person could act
for himself, herself or itself, (ii) to receive all claim notices and all of the
notices and communications directed to such person under this Escrow Agreement
and to take any action (or to determine to take no action) with respect thereto
as the Shareholder Representative may deem appropriate in his discretion as
effectively as such person could act for himself, herself or itself, including,
without limitation, the settlement or compromise of any dispute relating to the
Escrow Agreement or the Escrow Fund, or any other dispute or controversy
relating to this Escrow Agreement, and (iii) to execute and deliver all
instruments and documents of every kind incident to the foregoing to all intents
and purposes and with the same effect as such person could do personally, and
each Shareholder has ratified and confirms as his, her or its own act, all that
the Shareholder Representative shall do or cause to be done pursuant to the
provisions hereof. Each Shareholder has further agreed to indemnify the
Shareholder Representative and to hold the Shareholder Representative harmless
against any loss, liability, cost or expense suffered or incurred without
negligent conduct or bad faith on the part of the Shareholder Representative and
arising out of or in connection with his duties as Shareholder Representative,
including the costs and expenses incurred by such Shareholder Representative in
defending against any claim of liability in connection herewith. The Shareholder
Representative is specifically authorized to reimburse himself for any and all
such loss, liability, cost or expense suffered or incurred without negligent
conduct or bad faith on the part of the Shareholder Representative out of any
portion of the Escrow Fund that becomes actually and finally payable and
distributable to Shareholders in accordance with the provisions of Section 6(a),
6(b) or 6(c) before such funds are disbursed or distributed to any of the
Shareholders.
8. Rights and Duties of the Escrow Agent.
(a) GENERAL SCOPE AND LIMITATIONS. The duties of the Escrow
Agent under this Escrow Agreement shall be limited to the observance of the
provisions of this Escrow Agreement. The Escrow Agent will not be subject to, or
be obliged to recognize, any other agreement between Quanex, the Surviving
Corporation and the Shareholder Representative. The Escrow Agent shall not make
any payment or disbursement from or out of the Escrow Fund that is not
authorized pursuant to this Escrow Agreement. The Escrow Agent may rely on and
act based on any instrument received by it pursuant to the provisions of this
Escrow Agreement that it reasonably believes to be genuine and in conformity
with the requirements of this Escrow Agreement. The Escrow Agent will not be
liable for any error of judgment for any act done or any step taken by it in
good faith in compliance with the provisions of this Escrow Agreement, for any
mistake of fact or law or for anything that it might do or refrain from doing in
complying
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75
with this Escrow Agreement, except to the extent those actions shall be proved
to constitute gross negligence or willful misconduct on the part of the Escrow
Agent.
(b) INDEMNIFICATION OF THE ESCROW AGENT. Quanex, the Surviving
Corporation and the Shareholder Representative shall jointly and severally
indemnify and hold harmless the Escrow Agent from and against any and all
losses, costs, damages and expenses (including reasonable attorneys' fees) it
may sustain by reason of its services as Escrow Agent under this Escrow
Agreement, except those losses, costs, damages and expenses (including without
limitation reasonable attorneys' fees) incurred by reason of those acts or
omissions for which the Escrow Agent is liable or responsible under the last
sentence of Section 8(a).
(c) RESIGNATION OF ESCROW AGENT. The Escrow Agent may resign
from its duties under this Escrow Agreement by giving Quanex, the Surviving
Corporation and the Shareholder Representative not less than 30 days' prior
written notice of the effective date of its resignation (which effective date
shall be at least 30 days after the date the notice is given). If on or before
the effective date of the resignation, the Escrow Agent has not received written
instructions from the Surviving Corporation and the Shareholder Representative
regarding the transfer of the Escrow Fund to a substitute escrow agent, it may
institute a ▇▇▇▇ of interpleader and deposit the Escrow Fund with the registry
of a court of competent jurisdiction. The parties intend that a substitute
Escrow Agent will be appointed to fulfill the duties of the Escrow Agent under
this Escrow Agreement for the remaining term of this Escrow Agreement if the
Escrow Agent resigns.
(d) CONSULTATION WITH LEGAL COUNSEL. The Escrow Agent may
consult with its counsel or other counsel satisfactory to it in respect of any
question relating to its duties or responsibilities under this Escrow Agreement
and shall not be liable for any action taken, suffered or omitted by the Escrow
Agent in good faith on the advice of that counsel. The Escrow Agent may act
through its officers, employees, agents and attorneys.
9. Fees and Expenses of the Escrow Agent. All fees of the Escrow Agent
for its services under this Escrow Agreement, together with any expenses
reasonably incurred by the Escrow Agent in connection with this Escrow
Agreement, shall be split, fifty percent (50%) being paid by Quanex and fifty
percent (50%) being paid from the Escrow Fund. The Escrow Agent's current fee
schedule is $800 on the execution and delivery of this Agreement and $800
annually thereafter.
10. Notices. All notices, requests, demands and other communications
made in connection with this Escrow Agreement shall be in writing and shall be
deemed to have been duly given on the date delivered, if delivered personally or
sent by facsimile to the persons identified below, or three days after mailing
in the United States mail if mailed by certified or registered mail, postage
prepaid, return receipt requested, addressed as follows:
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(a) if to Quanex or the Surviving Corporation:
c/o Quanex Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Fulbright & ▇▇▇▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to the Shareholder Representative:
▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Law Office
860 Rand Tower
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
(c) If to the Escrow Agent:
Associated Bank Minnesota
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention:_____________________
Each party shall have the right to change its address for notice to any other
location by giving written notice to the other parties in the manner set forth
above.
11. Binding Effect. This Escrow Agreement shall be binding on and shall
inure to the benefit of each party to this Escrow Agreement and its successors
and permitted assigns.
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77
12. Amendment and Termination. This Escrow Agreement contains the
entire agreement among the parties relating to the subject matter of this Escrow
Agreement. This Escrow Agreement may be amended only by a written instrument
executed by the parties to this Escrow Agreement. This Escrow Agreement will
terminate when all of the Escrow Fund and the Escrow Income have been disbursed
in accordance with the terms of this Escrow Agreement; provided, however, that
Quanex and the Shareholder Representative (out of the remaining Escrow Funds)
shall each pay half of the Escrow Agent's reasonable fees and expenses incurred
by it and remaining unpaid on the date of termination.
13. Applicable Law. This Escrow Agreement will be governed by and
construed in accordance with the laws of the State of Minnesota, without giving
effect to conflicts of law principles.
14. Counterparts. This Escrow Agreement may be executed in two or more
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
15. Captions and Paragraph Headings. Captions and paragraph headings
used in this Escrow Agreement are for convenience only, are not part of this
Escrow Agreement and shall not be used in construing it.
16. Defined Terms and Construction. Capitalized terms used in this
Escrow Agreement shall have the meanings ascribed to them in the Merger
Agreement unless the context requires otherwise. All references to "Section" or
"Sections" refer to the corresponding Section or Sections of this Agreement
unless otherwise specified. All words used in this Agreement will be construed
to be of such gender or number as the circumstances require. Unless otherwise
expressly provided, the word "including" does limit the preceding words or
terms.
* * *
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78
IN WITNESS WHEREOF, Quanex, the Surviving Corporation, the Shareholder
Representative and the Escrow Agent have caused this Escrow Agreement to be
executed by their duly authorized officers, effective as of the date first above
written.
QUANEX CORPORATION
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
TEMROC METALS, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
SHAREHOLDER REPRESENTATIVE
--------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
ASSOCIATED BANK MINNESOTA
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
9
79
EXHIBIT A
PROPORTIONAL AMOUNTS OF DISTRIBUTIONS TO SHAREHOLDERS
ADDRESS FOR DELIVERY PERCENTAGE OF
NAME OF SHAREHOLDER OF PAYMENTS PAYMENTS
------------------- -------------------- -------------
-----------------------------------------------------------------------------------------------
10
80
Exhibit E to
Agreement and Plan of Merger
______________, 2000
American Stock Transfer & Trust Company
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ______________
Re: Paying Agent Agreement
Ladies and Gentlemen:
This letter confirms our understanding with you in regard to the merger
(the "Merger") of Quanex Five, Inc., a Delaware corporation ("Sub") and wholly
owned subsidiary of Quanex Corporation, a Delaware corporation ("Quanex"), with
and into Temroc Metals, Inc., a Minnesota corporation ("Temroc"), pursuant to
which (1) except for any shares held by Dissenting Shareholders, each share of
Class A Common Stock, par value $.10 per share, of Temroc (the "Class A Shares")
that was outstanding immediately prior to the effective time of the Merger (the
"Effective Time") will be converted into the right to receive $291.99 in cash,
plus the applicable pro rata proportion of any purchase price adjustment under
Section 1.9(a) of the Agreement and Plan of Merger dated October 23, 2000 by and
among Quanex, Sub and Temroc (the "Merger Agreement") (the "Class A Merger
Consideration"), (2) except for any shares held by Dissenting Shareholders, each
share of Class B Common Stock, par value $.10 per share, of Temroc (the "Class B
Shares" and, together with the Class A Shares, the "Shares") that was
outstanding immediately prior to the Effective Time will be converted into the
right to receive $583.98 in cash, plus the applicable pro rata proportion of any
purchase price adjustment under Section 1.9(a) of the Merger Agreement (the
"Class B Merger Consideration"); for purposes of this agreement, the Class A
Merger Consideration and the Class B Merger Consideration shall collectively be
referred to as the "Merger Consideration") and (3) each issued and outstanding
shares of Class A Common Stock or Class B Common Stock that is held by
Dissenting Shareholders will be converted into the right to receive the
consideration as may be determined to be due such Dissenting Shareholders
pursuant to the laws of the State of Minnesota. You have agreed to act as paying
agent (the "Paying Agent") in connection with the Merger on the terms set forth
herein. The Effective Time is expected to be on _________, 2000. Until written
confirmation from Quanex or its counsel that the Effective Time has occurred,
the Merger Consideration shall be held by the Paying Agent for the exclusive
benefit of Quanex and Sub and shall not be distributed to any shareholder of
Temroc.
1. Attached as Exhibit A hereto is a list of names, addresses and the
number of Class A Shares or Class B Shares owned by each of the holders of
Shares, except for Dissenting
81
American Stock Transfer & Trust Company
__________, 2000
Page 2
Shareholders (the "Shareholder List"). Temroc shall update such list
periodically to reflect the ownership of Shares (except for shares held by
Dissenting Shareholders) immediately prior to the Effective Time. Promptly after
the Effective Time, Sub will deposit with the Paying Agent $_________ for the
Merger Consideration. Such funds will be held by the Paying Agent for the
purpose of paying to the holders of certificates formerly representing Shares
the Merger Consideration for each Share so converted. Pending payment by the
Paying Agent of any funds deposited with the Paying Agent pursuant to this
Paragraph 1, such funds will be invested in such short-term investments as
approved by ▇▇▇▇▇ ▇▇▇▇▇▇▇, as the shareholder representative (the "Shareholder
Representative") and all proceeds of such investments as herein provided will be
paid to the holders of certificates formerly representing Shares in accordance
with the instructions of the Shareholder Representative. Any funds deposited
with the Paying Agent pursuant to this Paragraph 1, together with any interest
accrued thereon, that have not been used to make the payments described in this
Paragraph 1 within six months after the Effective Time will, at such time, be
paid to Temroc, and the Paying Agent will at such time deliver to Temroc the
Shareholder List. After such time, holders of the Shares will look only to
Temroc for payment.
2. Upon the presentation and surrender to the Paying Agent of
certificates formerly representing Shares, together with a properly completed
and duly executed Letter of Transmittal, the Paying Agent will examine such
certificates and Letters of Transmittal to determine whether all signatures,
endorsements, stock powers, signature guarantees, evidence of authority and the
like required by the instructions to the Letter of Transmittal have been
provided. In the event such examination reveals any defect, the Paying Agent
will advise the person so surrendering the certificate or Letter of Transmittal
of such defects as soon as practicable. If there are no such defects noted, the
Paying Agent will promptly make payment to the registered owner (or such other
person who by accompanying documentation meeting normal transfer requirements,
including payment of any applicable transfer taxes, shall become the registered
owner) as set forth in Paragraph 1 hereof from the funds deposited with the
Paying Agent for such purpose pursuant to Paragraph 1 hereof.
3. All certificates formerly representing Shares surrendered to the
Paying Agent with respect to which the Paying Agent has made payment as
contemplated herein will be canceled.
4. The Paying Agent will take all such actions as may from time to time
be required by the Shareholder Representative, Quanex or Temroc to furnish
copies of the Letter of Transmittal and other documents relating to the Merger
in the possession of the Paying Agent to all persons requesting the same. Quanex
and Temroc will provide to the Paying Agent copies of such documents in such
quantities as the Paying Agent may reasonably request.
5. The Paying Agent will comply with all of the requirements of the
Internal Revenue Code of 1986, as amended, and the Treasury Regulations
promulgated thereunder with respect to obtaining or retaining documents required
to be so obtained or retained by the Paying Agent with respect to payments,
including without limitation the obtaining and retaining of Substitute
82
American Stock Transfer & Trust Company
__________, 2000
Page 3
Forms W-9. On or before January 31, 2001, the Paying Agent will prepare and mail
to each holder of the Shares, other than holders who demonstrate their status as
nonresident aliens in accordance with the United States Treasury Regulations, a
Form 1099-B reporting any cash payments in accordance with the United States
Treasury Regulations. The Paying Agent will also prepare and file copies of such
Forms 1099-B by magnetic tape with the Internal Revenue Service in accordance
with United States Treasury Regulations. If the Paying Agent has not received
notice from the surrendering holder of the Shares of that holder's certified
Taxpayer Identification Number, the Paying Agent will deduct and withhold backup
withholding tax from any cash payment pursuant to Internal Revenue Code
regulations. Should any issue arise regarding federal income tax reporting or
withholding, the Paying Agent will take such action as Quanex or Temroc
instructs the Paying Agent in writing.
6. The Paying Agent will furnish to Quanex and Temroc periodic reports
(on a weekly basis until 60 days after the Effective Time and thereafter on a
monthly basis by the 10th day of each month) showing the total number of Shares
surrendered and funds distributed. The Paying Agent will also furnish such other
information concerning its actions as Quanex or Temroc may reasonably request.
7. The Paying Agent:
(a) will have no obligations to make payments as set
forth in Paragraph 2 unless the funds therefor have
been deposited as set forth in Paragraph 1 hereof;
(b) will have no duties or obligations other than those
specifically set forth herein, or as may subsequently
be agreed to by the Paying Agent, Quanex and Temroc;
(c) may rely on and will be protected in acting upon any
certificate formerly representing Shares, instrument,
opinion, notice, letter, telegram or other document
delivered to the Paying Agent to be genuine and to
have been signed by the proper party or parties;
(d) may rely on and will be protected in acting upon the
written or oral instructions, with respect to any
matter relating to its actions as the Paying Agent
specifically covered by this Agreement, of Quanex,
Temroc or their authorized representatives; and
(e) may consult with counsel satisfactory to the Paying
Agent (including counsel for Quanex and Temroc) and
the advice or opinion of such counsel will be full
and complete authorization and protection in
83
American Stock Transfer & Trust Company
__________, 2000
Page 4
respect of any action taken or omitted to be taken by
the Paying Agent hereunder in good faith and in
accordance with such advice or opinion of such
counsel.
8. For services rendered hereunder, __________ will pay to the Paying
Agent a fee of $____ plus any out-of-pocket expenses incurred by Paying Agent.
The Paying Agent will not be entitled to any additional compensation for its
services hereunder.
9. Quanex and Temroc will jointly and severally indemnify and hold the
Paying Agent harmless against any costs, expenses, losses or damages that, in
the absence of negligence, misconduct or bad faith on the Paying Agent's part,
may be paid or incurred by the Paying Agent as a result of the performance of
its duties hereunder in accordance with the terms hereof. In no event will
Quanex or Temroc be liable under such indemnity with respect to any claim
asserted against the Paying Agent unless Quanex or Temroc shall have been
notified by the Paying Agent in writing of the assertion of such claim against
it after it receives notice of such claim from the person asserting the same.
Quanex and Temroc will be entitled to participate in the defense and, if it so
elects, to assume the defense of any suit or action brought to enforce any such
claim. In the event that it elects to assume the defense of any such suit or
action, Quanex and Temroc may select counsel of its own choosing for such
purpose and thereafter will not be liable for the fees or expenses of any
additional counsel retained by the Paying Agent. Notwithstanding the foregoing,
neither Quanex nor Temroc will have any obligation to indemnify the Paying Agent
with respect to any claim, suit or action that is compromised or settled by the
Paying Agent without Quanex's and Temroc's prior written consent.
10. This agreement will be construed and enforced in accordance with
the substantive laws of the State of Minnesota without regard to the principles
of conflict of laws thereof.
11. The instructions to the Paying Agent contained herein may at any
time or from time to time be modified or supplemented by further reasonable
written instructions delivered to the Paying Agent by Quanex or Temroc.
12. The Paying Agent will supply a standard Letter of Transmittal
relating to holders of the Shares, a copy of which is attached hereto as Exhibit
A. Any inconsistency between the agreement, on the one hand, and the Letter of
Transmittal, on the other hand, will be resolved in favor of the latter.
13. Capitalized terms used herein and not defined herein have the
meanings set forth in the Merger Agreement. A copy of the Merger Agreement is
attached to this letter as Exhibit B.
[SIGNATURE PAGE FOLLOWS]
84
American Stock Transfer & Trust Company
__________, 2000
Page 5
Please acknowledge receipt of this letter and confirm the arrangements
herein provided by signing and returning the enclosed copy.
Very truly yours,
QUANEX CORPORATION
By:
---------------------------
Name:
-------------------------
Title:
------------------------
QUANEX FIVE, INC.
By:
---------------------------
Name:
-------------------------
Title:
------------------------
TEMROC METALS, INC.
By:
---------------------------
Name:
-------------------------
Title:
------------------------
Accepted and Agreed to:
AMERICAN STOCK TRANSFER & TRUST CO.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
85
EXHIBIT A
86
EXHIBIT B
87
Exhibit F to
Agreement and Plan of Merger
OPINION OF TEMROC'S COUNSEL
1. Temroc is a corporation duly organized, validly existing and in good
standing under the laws of the State of Minnesota and has the corporate power
and authority to own, operate and lease its properties and carry on its business
in all material respects as now owned, operated, leased or conducted. Temroc is
duly qualified to conduct its business and is in good standing in each
jurisdiction in which the failure to be so qualified would have a material
adverse effect on Temroc's business.
2. Temroc has all requisite corporate power and authority to enter
into, deliver and perform the Agreement and each agreement that is an exhibit to
the Agreement and to which Temroc is a party and to consummate the transactions
described in the Agreement. The Agreement has been duly executed and delivered
by Temroc pursuant to all necessary corporate action.
3. The authorized capital stock of the Company consists of 100,000
shares of Class A Stock, $.10 par value, and 60,000 shares of Class B Stock,
$.10 par value, and based solely on our review of Temroc's minute book and stock
ledger there are 56,948 shares of Class A Stock and 3,670 shares of Class B
Stock which are issued and outstanding. Based solely on our review of Temroc's
minute book and stock ledger, each issued and outstanding share of Temroc's
Class A Stock and Class B Stock is duly authorized, validly issued, fully paid
and nonassessable and, to our knowledge, has not been issued and is not owned or
held, in violation of any preemptive right of shareholders. Based solely on our
review of Temroc's minute book and stock ledger, all issued and outstanding
shares of Temroc's Class A Stock and Class B Stock are owned of record by the
persons named on Exhibit A attached hereto.
4. Neither the execution and delivery by Temroc of the Agreement, the
consummation of the transactions described in the Agreement by Temroc nor
compliance by Temroc with any other provisions of the Agreement will conflict
with, result in a breach of or constitute a default under (a) Temroc's Articles
of Incorporation or Bylaws, (b) any contracts, commitments or agreements listed
in a schedule to the Agreement or (c) any law, statue, ordinance, regulation or,
to our knowledge, court or administrative order by which Temroc is subject or
bound.
5. Except as specifically set forth in the Agreement, to our knowledge,
Temroc is not required to submit any notice, report or other filing with any
governmental or regulatory authority or instrumentality in connection with the
execution, delivery or performance of the Agreement by Temroc and the
consummation of the transactions described in the Agreement.
6. The Agreement is the legal, valid and binding obligation of Temroc;
and, except as may be limited by principles of equity or bankruptcy, insolvency,
reorganization, moratorium or other similar laws or judicial decision relating
to or affecting the enforcement of creditors' rights, is enforceable against
Temroc in accordance with its terms.
1
88
7. Assuming no shareholder of Temroc duly exercises such shareholders'
rights of dissent pursuant to Section 302A.471 of the Minnesota Business
Corporation Act or makes any claim of fraudulent activity with respect to the
Merger, no shareholder will be entitled to the payment of any amounts in
connection with shares of Temroc stock with respect to the Merger, other than he
consideration described in the Agreement and, if applicable, the Escrow
Agreement.
2
89
Exhibit G to
Agreement and Plan of Merger
OPINION OF QUANEX'S COUNSEL
(a) Each of Quanex and Quanex Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.
(b) Each of Quanex and Quanex Subsidiary has all requisite corporate
power and authority to enter into, deliver and perform the Agreement and each
agreement that is an exhibit to the Agreement and to which Quanex or Quanex
Subsidiary is a party (excluding the Noncompetition Agreement) and to consummate
the transactions described in the Agreement. The Agreement has been duly
executed and delivered by Quanex and Quanex Subsidiary pursuant to all necessary
corporate action.
(c) Neither the execution and delivery by Quanex or Quanex Subsidiary
of the Agreement, the consummation of the transactions described in the
Agreement by Quanex or Quanex Subsidiary nor compliance by Quanex or Quanex
Subsidiary with any of the provisions of the Agreement will conflict with,
result in a breach of or constitute a default under (a) the certificate of
incorporation or bylaws of Quanex or Quanex Subsidiary, (b) any contracts,
commitments or agreements listed as an exhibit to Quanex's Annual Report on Form
10-K for the year ended October 31, 1999, to which Quanex or Quanex Subsidiary
is a party or by which the assets of Quanex or Quanex Subsidiary are bound, or
(c) any law, statute, ordinance, regulation or, to our knowledge, court or
administrative order by which Quanex or Quanex Subsidiary is subject or bound.
(d) Except as specifically set forth in the Agreement, to our
knowledge, neither Quanex nor Quanex Subsidiary is required to submit any
notice, report or other filing with any governmental or regulatory authority or
instrumentality in connection with the execution, delivery or performance of the
Agreement by Quanex and Quanex Subsidiary and the consummation of the
transactions described in the Agreement.
(e) The Agreement is the legal, valid and binding obligation of Quanex
and Quanex Subsidiary, as applicable; and except as may be limited by principles
of equity or bankruptcy, insolvency, reorganization, moratorium or other similar
laws or judicial decisions relating to or affecting the enforcement of
creditors' rights, is enforceable against Quanex and Quanex Subsidiary in
accordance with its terms.
90
Exhibit H to
Agreement and Plan of Merger
NONCOMPETITION AGREEMENT
This Noncompetition Agreement (this "Agreement") dated as of
_____________, 2000, by and among ▇▇▇▇▇ ▇▇▇▇▇▇▇ ("Schumer"), Crown Extrusions,
Inc., a Minnesota corporation ("Crown"), Quanex Corporation, a Delaware
corporation ("Quanex"), and Temroc Metals, Inc., a Minnesota corporation
("Temroc").
WHEREAS, Quanex, Quanex Five, Inc., a Delaware corporation, and a
wholly owned subsidiary of Quanex ("Sub"), and Temroc have entered into that
certain Agreement and Plan of Merger dated as of October 23, 2000 (the "Merger
Agreement"), pursuant to which Sub will merge with and into Temroc, with Temroc
surviving as a wholly owned subsidiary of Quanex;
WHEREAS, Schumer is and has been employed by Temroc as its President
for the last four years and has owned approximately 26% of the outstanding
capital stock of Temroc for the last three years;
WHEREAS , Schumer is the majority shareholder and a director of Crown;
WHEREAS, the Merger Agreement contemplates the execution of this
Agreement; and
WHEREAS, Quanex and Sub would not consummate the merger contemplated by
the Merger Agreement if Schumer and Crown did not enter into this Agreement.
Now, therefore, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are acknowledged,
Schumer, Crown Quanex and Temroc agree as follows:
1. DEFINITIONS
Capitalized terms not expressly defined in this Agreement shall have
the meanings ascribed to them in the Merger Agreement.
2. ACKNOWLEDGMENTS
Schumer and Crown acknowledge that (a) Schumer has occupied a position
of trust and confidence with Temroc before the date of this Agreement and has
become familiar with the following: (i) any and all trade secrets concerning the
business and affairs of Temroc, product specifications, data, know-how,
formulae, compositions, processes, designs, sketches, photographs, graphs,
drawings, samples, inventions and ideas, past, current and planned research and
development, current and planned manufacturing and distribution methods and
processes, customer lists, current and anticipated customer requirements, price
lists, market studies, business plans, computer software and programs (including
object code and source code), computer software and database technologies,
systems, structures and architectures (and related
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processes, formulae, compositions, improvements, devices, know-how, inventions,
discoveries, concepts, ideas, designs, methods and information of Temroc); (ii)
any and all information concerning the business and affairs of Temroc (which
includes historical financial statements, financial projections and budgets,
historical and projected sales, capital spending budgets and plans, the names
and backgrounds of key personnel, personnel training and techniques and
materials), however documented; and (iii) any and all notes, analyses,
compilations, studies, summaries, and other material prepared by or for Temroc
containing or based, in whole or in part, on any information included in the
foregoing, (b) the business of Temroc is national in scope, (c) its products and
services are marketed throughout the United States; (d) Temroc competes with
other businesses that are or could be located in any part of the United States;
(e) Quanex and Sub have required that Schumer and Crown make the covenants set
forth in Section 3 of this Agreement as a condition to their obligation to
consummate the Merger; (f) the provisions of Section 3 of this Agreement are
reasonable and necessary to protect and preserve the business of Temroc; and (g)
Temroc and Quanex would be irreparably damaged if Schumer or Crown were to
breach the covenants set forth in Section 3 of this Agreement.
3. NONCOMPETITION
As an inducement for Quanex and Sub to enter into the Merger Agreement
and for the additional consideration to be paid to Schumer under this Agreement,
Schumer and Crown agree that:
(a) For a period of two years after the Closing, Schumer and Crown will
not, directly or indirectly, anywhere in the United States, (i) engage or invest
in, own, manage, operate, finance, control, or participate in the ownership,
management, operation, financing, or control of, be employed by, associated
with, or in any manner connected with, lend the name of Schumer or Crown or any
similar name to, lend credit to, or render services or advice to, any business
that calls on, solicits, or takes away, or attempts to call on, solicit or take
away the business of Temroc provided by any of the customers listed on Exhibit
A, except in the circumstance in which an existing customer of Crown is merged
into or purchased by a customer listed on Exhibit A or (ii) call on, solicit or
take away, or attempt to call on, solicit or take away, the business of Temroc
provided by any of the customers listed on Exhibit A, except in the circumstance
in which an existing customer of Crown is merged into or purchased by a customer
listed on Exhibit ▇. ▇▇▇▇▇▇▇ and Crown agree that this covenant is reasonable
with respect to its duration, geographical area, and scope. Schumer and Crown
agree that the restrictions of this Section 3(a) shall apply to any business
entity to which the business of any customer listed on Exhibit A is transferred,
to the extent of the transferred business.
(b) For a period of one year after the Closing, Schumer and Crown will
not, directly or indirectly, anywhere in the United States, (i) engage or invest
in, own, manage, operate, finance, control, or participate in the ownership,
management, operation, financing, or control of, be employed by, associated
with, or in any manner connected with, lend the name of Schumer or Crown or any
similar name to, lend credit to, or render services or advice to, any business
that calls on, solicits, or takes away, or attempts to call on, solicit or take
away the business of Temroc provided by any of the customers listed on Exhibit
B, except in the circumstance in which an existing customer of Crown is merged
into or purchased by a customer listed on Exhibit B or (ii) call on, solicit or
take away, or attempt to call on, solicit or take away, the
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business of Temroc provided by any of the customers listed on Exhibit B, except
in the circumstance in which an existing customer of Crown is merged into or
purchased by a customer listed on Exhibit ▇. ▇▇▇▇▇▇▇ and Crown agree that this
covenant is reasonable with respect to its duration, geographical area, and
scope. Schumer and Crown agree that the restrictions of this Section 3(b) shall
apply to any business entity to which the business of any customer listed on
Exhibit B is transferred, to the extent of the transferred business.
(c) For a period of two years after the Closing, Schumer and Crown will
not, directly or indirectly, either for themselves or any other person, (A)
induce or attempt to induce any employee of Temroc to leave the employ of
Temroc, (B) in any way interfere with the relationship between Temroc , on the
one hand, and any employee of Temroc, on the other hand, or (C) employ, or
otherwise engage as an employee, independent contractor, or otherwise, any
person who is an employee of Temroc as of the date of the Merger Agreement or as
of the date of the Closing.
(d) If Schumer or Crown breaches any covenant set forth in Subsection
3(a) or 3(b), the term of this Agreement will be extended by the period of the
duration of that breach as to the specific customer or customers that are the
subject of the breach. If Schumer or Crown breaches any covenant set forth in
Subsection 3(c), the term of this Agreement will be extended by the period of
the duration of that breach.
(e) For a period of two years after the Closing, neither Schumer nor
Crown shall make any statement, oral or written, that (i) is reasonably likely
to have a material adverse effect on Quanex (including its subsidiaries other
than Temroc and any other subsidiary that derives more than 25% of its annual
revenues from aluminum extrusion and fabrication (an "Aluminum Extrusion and
Fabrication Subsidiary")) or any of the shareholders, directors, officers or
employees of Quanex or any of its subsidiaries other than Temroc or an Aluminum
Extrusion and Fabrication Subsidiary, except insofar as any such statement is
accurate, expresses ascertainable facts and does not express opinion or
speculation, and is necessary to the conduct of the business of Schumer or Crown
or (ii) is reasonably likely to have a material adverse effect on the ability of
Temroc or any Aluminum Extrusion and Fabrication Subsidiary to engage in any
business acquisition, except insofar as any such statement is accurate,
expresses ascertainable facts and does not express opinion or speculation, and
is necessary to the conduct of the business of Schumer or Crown.
(f) Schumer shall, for a period of two years after the Closing, advise
Quanex of the identity of any employer of Schumer within ten days after
accepting any employment. Quanex or Temroc may give notice upon each such
employer that Schumer is bound by this Agreement and furnish each such employer
with a copy of this Agreement or relevant portions of this Agreement.
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4. ADDITIONAL CONSIDERATION
As additional consideration for the covenants in Section 3 of this
Agreement, Quanex shall pay Schumer the sum of Two Hundred Thousand Dollars
($200,000), at Closing.
5. ADDITIONAL AGREEMENTS
(a) Quanex and Temroc agree that Schumer's ownership of Aacron and
Norfab and the activities of Aacron and Norfab shall not constitute a breach of
this Agreement with respect to the lines of business in which Aacron and Norfab
are currently engaged.
(b) For a period of two years after the Closing, neither Quanex nor
Temroc shall make any statements, oral or written, that could negatively affect
Aacron or Norfab or any of their shareholders, directors, officers, employees or
agents except insofar as any such statement is accurate, expresses ascertainable
facts and does not express opinion or speculation, and is necessary to the
conduct of the business of Quanex and Temroc.
6. REMEDIES
If either Schumer or Crown breaches the covenants set forth in Section
3 of this Agreement, Quanex and Temroc will be entitled to the following
remedies:
(a) monetary damages from Schumer and Crown, severally and not jointly;
and
(b) In addition to its right to damages and any other rights it may
have, injunctive or other equitable relief to restrain any breach or threatened
breach or otherwise to specifically enforce the provisions of Section 4 of this
Agreement, it being agreed that money damages alone would be inadequate to
compensate Quanex and Temroc and would be an inadequate remedy for such breach.
The rights and remedies of the parties to this Agreement shall be
cumulative and not alternative.
6. SUCCESSORS AND ASSIGNS
This Agreement will be binding on Quanex, Temroc, Schumer and Crown and
will inure to the benefit of Quanex, Temroc and their respective affiliates,
successors and assigns, and Schumer and his assigns, heirs and legal
representatives.
7. WAIVER
No failure or delay by any party in exercising any right, power or
privilege under this Agreement will operate as a waiver of any right, power or
privilege, and no single or partial exercise of any right, power or privilege
under this Agreement will preclude any other or further exercise of any right,
power or privilege or the exercise of any other right, power, or privilege. To
the maximum extent permitted by applicable law, (a) no claim or right arising
out of this Agreement can be discharged by one party, in whole or in part, by a
waiver or renunciation of the
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claim or right unless in writing signed by the other party; (b) no waiver that
may be given by a party will be applicable except in the specific instance for
which it is given; and (c) no notice to or demand by a party to this Agreement
will be deemed to be a waiver of any obligation of that party to take further
action without notice or demand.
8. GOVERNING LAW
This Agreement will be governed by the internal laws of the State of
Minnesota without regard to conflicts of laws principles of any jurisdiction.
9. SEVERABILITY
Whenever possible each provision and term of this Agreement will be
interpreted in a manner to be effective and valid but if any provision or term
of this Agreement is held to be prohibited or invalid, then the provision or
term will be ineffective only to the extent of the applicable prohibition or
invalidity, without invalidating or affecting the remainder of the provision or
term or the remaining provisions or terms of this Agreement. Upon a
determination that any provision or term of this Agreement is prohibited or
invalid, the parties to this Agreement shall negotiate in good faith to modify
this Agreement to effect the original intent of the parties as closely as
possible in an acceptable manner, to the end that the transactions contemplated
by this Agreement are fulfilled to the extent possible. If any of the covenants
set forth in Section 3 are held to be unreasonable, arbitrary or against public
policy, it is the intention of the parties that the applicable covenants shall
not be terminated but shall be deemed amended to the extent required to render
them valid and enforceable.
10. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original copy of this Agreement and all of which,
when taken together, shall be deemed to constitute one and the same agreement.
11. SECTION HEADINGS, CONSTRUCTION
The headings of sections in this Agreement are provided for convenience
only and shall not affect its construction or interpretation. All references to
"Section" or "Sections" refer to the corresponding Section or Sections of this
Agreement unless otherwise specified. All words used in this Agreement shall be
construed to be of such gender or number as the circumstances require. Unless
otherwise expressly provided, the word "including" does not limit the preceding
words or terms.
12. NOTICES
All notices, consents, waivers, and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given when
(a) delivered by hand (with written confirmation of receipt), (b) sent by
facsimile (with written confirmation of receipt), provided that a copy is mailed
by registered mail, return receipt requested, or (c) when received by the
addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in
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each case to the appropriate addresses and facsimile numbers set forth below (or
to such other addresses and facsimile numbers as a party may designate by notice
to the other parties):
Schumer: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Crown: Crown Extrusions, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Lindquest & ▇▇▇▇▇▇ P.L.L.P.
4200 IDS Center
▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Quanex or Temroc: Quanex Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with copy to: Fulbright & ▇▇▇▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
13. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement among the parties with
respect to the subject matter of this Agreement and supersedes all prior written
and oral agreements and understandings between Quanex, Temroc, Crown and Schumer
with respect to the subject matter of this Agreement. This Agreement may not be
amended except by a written agreement executed by the party or parties whose
obligations under this Agreement are affected by the amendment or except with
respect to any deemed amendment pursuant to Section 9.
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IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first above written.
QUANEX CORPORATION:
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
TEMROC METALS, INC.:
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇:
----------------------------------
CROWN EXTRUSIONS, INC.
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
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Exhibit A
Polaris
Wenger
Sico, Inc.
Master Machine
Gross-Given
▇▇▇▇▇ Enterprises
▇▇▇▇▇▇▇ Engineering
Ohmeda
▇▇▇▇ Valve
Ericco
Arden Architectural
Universal Harvester
Food Engineering
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Exhibit B
Quality Manufacturing
Gemini
▇.▇. ▇▇▇▇▇▇▇
Exterior Wall
Intercept Industries
Ready Access Inc.
Waterloo Tent & Tarp
Advanced Manufacturing
Osage Manufacturing
2