ASSET PURCHASE AGREEMENT

Exhibit 10.1

Execution Version

ASSET PURCHASE AGREEMENT

BY AND AMONG

ARBOR-CROWLEY, INC.

BUYER,

AZZ INCORPORATED

and

WITT INDUSTRIES, INC.

SELLER

and

MARCY R. WYDMAN

SHAREHOLDER

October 31, 2006

TABLE OF CONTENTS

 

Exhibit

 

Schedule

 

 

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ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT (the “ Agreement ”) is made as of November 1, 2006, by and among ARBOR-CROWLEY, INC. , a Delaware corporation (“ Buyer ”), AZZ INCORPORATED , a Texas corporation (“ AZZ ”), WITT INDUSTRIES, INC. , a Delaware corporation (“ Seller ”), and MARCY R. WYDMAN (the “ Shareholder ”).

WHEREAS, the Shareholder is the record and beneficial owner of all of the issued and outstanding capital stock of Seller;

WHEREAS, Seller desires to sell to Buyer, and Buyer desires to acquire from Seller, all of the Purchased Assets (as such term is hereinafter defined) in accordance with the terms and conditions hereinafter set forth; and

WHEREAS, AZZ is the sole shareholder of Buyer;

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

1. Purchase and Sale .

1.1 Purchased Assets .

1.1.1 On the terms and subject to the conditions contained in this Agreement, at the Closing (as such term is hereinafter defined), Seller shall sell, assign, grant, convey, transfer and deliver to Buyer, and Buyer shall purchase and acquire from Seller, the real property described in clause (xiii) of this Section 1.1.1 and all of the assets and properties of Seller of every kind, nature and description (wherever located) used in connection with or relating to its galvanizing division (the “ Galvanizing Division ”), except the Excluded Assets (as such term is hereinafter defined). The assets and properties to be sold, granted, conveyed, transferred, assigned and delivered by Seller to Buyer hereunder are hereinafter referred to collectively as the “ Purchased Assets .” Without limiting the generality of the foregoing, the Purchased Assets shall include, without limitation, the following assets and properties of Seller, in the case of clauses (i) through (xii) and (xiv), used in connection with or relating to its Galvanizing Division (except any of the following which are Excluded Assets):

(i) all accounts, notes, vendor rebate, agency commission, credit card and other receivables (including, without limitation, amounts due from Seller’s customers whether recorded as accounts, notes, vendor rebate, agency commission, credit card or other receivables or reductions in accounts payable) and related deposits, security or collateral therefor (including, without limitation, recoverable customer deposits of Seller);

 

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(ii) all machinery, inventories, inventories of parts, computers, furniture, furnishings, fixtures, office supplies and equipment, automobiles, trucks, vehicles, returnable containers, tools and parts, raw materials and work in process;

(iii) all drawings, blueprints, specifications, designs and data of Seller;

(iv) all technology, know-how, designs, devices, processes, methods, inventions, drawings, schematics, specifications, standards, trade secrets and other proprietary information, and all patents and applications therefor;

(v) all right, title and interest of Seller in and to the name “Witt Galvanizing” and all trademarks and trade names, trademark and trade name registrations, service marks and service mark registrations, copyrights and copyright registrations relating specifically to such name, the applications therefor and the licenses thereto, together with the goodwill and the business appurtenant thereto;

(vi) all catalogues, brochures, sales literature, promotional material, samples and other selling material of Seller;

(vii) all books and records and all files, documents, papers, agreements, books of account and other records pertaining to the Purchased Assets or to Seller’s business;

(viii) all right, title and interest of Seller under all contracts, agreements, licenses, leases, sales orders, permits, purchase orders and other commitments (whether oral or written) by which any of the Purchased Assets are bound or affected, or to which Seller is a party or by which it is bound, and that Buyer has requested be assigned to it pursuant to Section 1.2 hereof (the “ Contracts ”);

(ix) all lists of past, present and qualified prospective customers of Seller’s Galvanizing Division;

(x) all goodwill relating to the Purchased Assets or Seller’s Galvanizing Division as a going concern;

(xi) all governmental, establishment and product licenses and permits, approvals, license and permit applications and license and permit amendment applications;

(xii) all claims against third parties, whether or not asserted and whether now existing or hereafter arising, related to Seller’s Galvanizing

 

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Division or the Purchased Assets (including, without limitation, all claims based on any indemnities or warranties in favor of Seller relating to Seller’s Galvanizing Division or any of the Purchased Assets);

(xiii) all real property owned by Seller, whether or not used in connection with or relating to the Galvanizing Division, together with all interests in such real property, all buildings, improvements and other structures located on such real property, all uses, easements, appurtenant rights and rights-of-way which benefit such real property and all minerals (including, without limitation, oil, gas, clay, sand and all other surface or subsurface minerals or materials and other substances of any nature however mined or severed) (the “ Owned Real Property ”); and

(xiv) all other assets and rights of every kind and nature, tangible or intangible, of Seller, excluding cash on hand.

Without limiting the generality of the foregoing, the Purchased Assets shall, except for the Excluded Assets listed and denoted as such in Section 1.1.1 hereof, include all assets which are held in connection with, or used or held for use in the business or operations of, Seller’s Galvanizing Division, including those set forth in a detailed list of plant and equipment as of the Balance Sheet Date (as such term is hereinafter defined) prepared from the accounting records of Seller and attached hereto as Schedule 1.1.1 and denoted as the Purchased Assets therein, and all such assets of Seller as may have been acquired by Seller which would be included on a list prepared in like manner from such accounting records as of the Closing Date, except any such assets which may have been disposed of since the Balance Sheet Date in the ordinary course of business.

1.1.2 Anything herein contained to the contrary notwithstanding, the assets of Seller used solely in connection with or related solely to its Products Division (other than the Owned Real Property) (collectively the “ Excluded Assets ”) are specifically excluded from the Purchased Assets and shall be retained by Seller. Without limiting the generality of the foregoing, the Excluded Assets are listed and denoted as such on Schedule 1.1.1 hereof.

1.1.3 Subject to Section 1.1.4 hereof, at the Closing, Seller shall execute and deliver to Buyer (i) a Bill of Sale, Assignment and Assumption Agreement, in the form attached hereto as Exhibit A (the “ Bill of Sale, Assignment and Assumption Agreement ”), under the terms of which Seller shall sell, grant, convey, assign, transfer and deliver the Purchased Assets to Buyer, and (ii) such other bills of sale, deeds, instruments of assignment and other appropriate documents as may be requested by Buyer in order to carry out the intentions and purposes hereof, which shall include Limited Deeds in the Form of Exhibit A-1 (the “ Deeds ”) conveying the Owned Real Property to Buyer.

1.1.4 Notwithstanding the foregoing, this Agreement shall not constitute an agreement to assign or transfer any Contract if an assignment or transfer or an

 

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attempt to make such an assignment or transfer without the consent of a third party would constitute a breach or violation thereof or affect adversely the rights of Buyer or Seller thereunder; and any transfer or assignment to Buyer by Seller of any interest under any such Contract that requires the consent or approval of a third party shall be made subject to such consent or approval being obtained. In the event any such consent or approval is not obtained on or prior to the Closing Date and Buyer waives as of the Closing Date the condition that such consent or approval be obtained, each of Seller and the Shareholder shall continue to use all reasonable efforts to obtain any such consent or approval after the Closing Date until such time as such consent or approval has been obtained, and each of Seller and the Shareholder will cooperate with Buyer in any lawful and economically feasible arrangement to provide that Buyer shall receive the interest of Seller in all benefits under any such Contract, including without limitation performance by Seller as agent if economically feasible; provided , however , that Buyer shall undertake to pay or satisfy the corresponding liabilities for the enjoyment of such benefit to the extent Buyer would have been responsible therefor hereunder if such consent or approval had been obtained as of the Closing Date

1.2 Assumption of Specified Liabilities . Upon the terms and subject to the conditions set forth herein, subject however to Section 1.1.4 and 1.3 hereof, and as additional consideration for Buyer’s purchase of the Purchased Assets, Buyer shall, at Closing, assume, and covenant and agree to pay, perform and discharge when due, only the following liabilities and obligations of Seller relating to its Galvanizing Division (the “ Assumed Liabilities ”):

(i) liabilities for accrued vacation and holiday pay for employees of Seller’s Galvanizing Division who are employed by Buyer immediately after the Closing to the extent such liabilities are reflected on the Interim Financial Statements (as such term is hereinafter defined); and

(ii) those liabilities or obligations of Seller relating to its Galvanizing Division accruing or arising after the Closing Date under the terms of a Contract or other obligation which is listed on Schedule 1.2 hereof.

Subject to Sections 1.1.4 and 1.3 hereof, at the Closing, Buyer shall execute and deliver to Seller the Bill of Sale, Assignment and Assumption Agreement assuming the Assumed Liabilities.

1.3 Non-Assumption of Certain Liabilities . Notwithstanding any other provision of this Agreement, Buyer shall not assume, and shall not be deemed to have assumed or be in any way liable for or subject to or have any obligation for or with respect to, any liabilities or obligations of Seller of any kind, nature or description whatsoever, except as expressly provided in this Section 1.3 or in Section 1.2 hereof (the “ Excluded Liabilities ”). Anything in Section 1.2 hereof or elsewhere herein to the contrary notwithstanding and without limiting the generality of the foregoing, Buyer shall not assume, and shall not be deemed to have assumed or be in any way liable for or

 

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subject to or have any obligation for or with respect to, any of the following Excluded Liabilities:

(i) except as specifically provided in Section 1.2(i), any and all claims, liabilities or obligations that arise, result from, or relate in any way to any or all employment practices, decisions, actions, or proceedings undertaken by Seller prior to or on the Closing Date in connection with persons employed or seeking to be employed, including without limitation any and all claims, liabilities or obligations that arise out of, result from, or relate to (a) Employment and Labor Agreements, Employee Policies and Procedures or Plans (as such terms are hereinafter defined), (b) any National Labor Relations Board (“ NLRB ”) proceedings, (c) any other matters arising out of the employment of people, such as workers’ compensation, wage and hour, safety and health, employment discrimination, unfunded pension liability for vested and non-vested employees, vacation accruals, and the like, and (d) any liability, including without limitation federal and state income tax liability, by reason of Seller’s failure, through any act or omission prior to or on the Closing Date, to comply with the requirements of COBRA (as such term is hereinafter defined) with respect to any “qualified beneficiary” (as defined in COBRA); or

(ii) any and all liabilities or obligations of Seller in respect of (x) any Taxes (as such term is hereinafter defined) attributable to periods or events prior to or ending or occurring on the Closing Date, or (y) any Taxes, legal, accounting, brokerage, finder’s fees, or other expenses of whatsoever kind or nature incurred by Seller or any partner, affiliate, director, employee or officer of Seller as a result of the execution of this Agreement or the consummation of the transactions contemplated hereby; or

(iii) any and all liabilities or obligations of Seller arising out of any litigation, action, suit or proceeding based upon an event occurring, a condition existing or a claim arising (x) on or prior to the Closing Date (including, without limitation, the litigation, actions, suits, proceedings and claims listed on Schedule 3.15 hereof), or (y) after the Closing Date in the case of claims, litigation, actions, suits or proceedings in respect of products sold or services provided by Seller on or prior to the Closing Date and attributable to acts performed or omitted by Seller on or prior to the Closing Date; or

(iv) all warranties, liabilities or obligations to customers with respect to the repair or replacement of any products which have been manufactured, sold or otherwise provided by Seller on or prior to the Closing Date and which have been shipped by Seller on or prior to the Closing Date; or

(v) all warranties, liabilities or obligations to customers with respect to the repair or replacement of any products which have been manufactured, sold or otherwise provided by Seller on or prior to the Closing Date and which are shipped by Buyer after the Closing Date; or

 

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(vi) any and all liabilities or obligations of Seller under any of the Contracts assigned to Buyer hereunder based upon an event occurring, a condition existing or a claim arising (x) on or prior to the Closing Date, or (ii) after the Closing Date in the case of liabilities or obligations thereunder attributable to acts performed or omitted by Seller on or prior to the Closing Date; or

(vii) any and all liabilities or obligations of Seller arising out of or related to this Agreement; or

(viii) any and all liabilities or obligations of Seller arising out of or related to City of Plymouth, Indiana Variable Rate Demand Economic Development Revenue Bonds, Series 1997 (the “Plymouth Revenue Bonds”); or

(ix) any Release (as such term is hereinafter defined) or threat of Release into the environment of a Hazardous Material (as such term is hereinafter defined) attributable to any condition or circumstance, known or unknown, existing or occurring at or on any real property or premises (1) owned, leased or occupied by Seller on or prior to the Closing Date, or (2) to which Hazardous Material has been sent or arranged for shipment by Seller on or prior to the Closing Date (hereafter an “ Environmental Condition ”), including without limitation (x) any suits, causes of action, proceedings, judgments, administrative and judicial orders arising out of any matter relating to such Environmental Condition, (y) any liability arising in tort (strict or otherwise) resulting from any such Environmental Condition, and (z) any required cleanup or full or partial remediation of such Environmental Condition in accordance with the provisions or requirements of any Environmental Law (as such term is hereinafter defined), provided that the level of cleanup is consistent with the prior use of such property or premises.

As used herein, the term “ CERCLA ” means the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. §9601 et seq., as amended.

As used herein, the term “ COBRA ” means the provisions of the Code, ERISA and the Public Health Service Act enacted by Sections 10001 through 10003 of the Consolidated Omnibus Budget Reconciliation Act of 1985 (P.L. 99-272), including any subsequent amendments to such provisions.

As used herein, the term “ Code ” means the Internal Revenue Code of 1986, as amended.

As used herein, the term “ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.

As used herein, the term “ Environmental Laws ” shall mean all applicable laws and regulations (federal, state, and local) relating to pollution or to the protection of public safety, public health, public welfare, industrial hygiene, or the environment (including, without limitation, ambient air, surface water, groundwater, land surface or

 

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subsurface strata), including without limitation (i) those laws and regulations relating to the Release or threatened Release of Hazardous Materials and to the manufacture, generation, management, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, (ii) duties or requirements arising out of common law, and (iii) judicial and administrative interpretations thereof.

As used herein, the term “ Hazardous Material ” shall mean (i) any chemicals, materials, wastes or substances that are defined, regulated, determined or identified as toxic or hazardous in any Environmental Law (including, without limitation, substances defined as “hazardous substances,” “hazardous materials,” or “hazardous waste,” “pollutant or contaminant,” “petroleum” or “natural gas liquids” in CERCLA, the Hazardous Materials Transportation Act, the Resource Conservation and Recovery Act, or comparable state and local statutes or in the regulations adopted pursuant to said statutes), and (ii) any asbestos, polychlorinated biphenyls, urea formaldehyde, lead based paint, petroleum, petroleum products, oil, solid waste, pollutants, and other contaminants (whether or not regulated under any Environmental Law).

As used herein, the term “ Release ” shall mean emitting, depositing, leaking, spilling, pumping, pouring, emptying, discharging, injecting, escaping, leaching, dumping or disposing.

As used herein, the terms “ Tax ” or “ Taxes ” means all federal, foreign, state, county, local or other net or gross income, gross receipts, sales, use, transfer, transfer gains, ad valorem, value-added, franchise, production, severance, windfall profit, withholding, payroll, employment, excise or similar taxes, assessments, duties, fees, levies or other governmental charges (together with any interest thereon, any penalties, additions to tax or additional amounts with respect thereto and any interest in respect of such penalties, additions or additional amounts).

1.4 No Expansion of Third-Party Rights . The assumption by Buyer of any liabilities of Seller hereunder shall in no way expand the rights or remedies of any third party against Buyer as compared to the rights and remedies that such third party would have had against Seller had Buyer not assumed such liabilities. Without limiting the generality of the preceding sentence, the assumption by Buyer of such liabilities shall not create any third-party beneficiary rights.

2. Closing Consideration; Adjustment; Allocation of Consideration .

2.1 Closing Consideration . The total consideration for the Purchased Assets shall consist of the following payments:

2.1.1 At the Closing, Buyer shall pay to Seller an amount equal to $12,150,000.00, as adjusted pursuant to this Section 2.1.1, less the Deposit (as defined in Section 2.1.2, (the “ Initial Payment ”). The Initial Payment shall be made by wire transfer to an account or accounts designated by Seller by written notice to Buyer given at least two (2) business days prior to the Closing Date. Seller shall deliver to Buyer an estimated balance sheet of the Seller as of the last

 

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day of the calendar month preceding the month in which the Closing Date occurs (the “ Estimated Balance Sheet ”), such balance sheet to be prepared in accordance with generally accepted accounting principles. If the excess of the total assets reflected on the Estimated Balance Sheet over the value of the Excluded Assets reflected on the Estimated Balance Sheet (the “ Purchased Assets Value ”) is greater than $8,802,000.00, the Initial Payment shall be increased by the amount by which the Purchased Assets Value is greater than $8,802,000.00. If the Purchased Assets Value is less than $8,802,000.00, the Initial Payment shall be decreased by the amount by which the Purchased Assets Value is less than $8,802,000.00.

2.1.2 (a) At the Closing, Buyer also shall deposit $715,000.00 (such amount, the “ Deposit ”) with U.S. Bank, N.A., as escrow agent (the “ Escrow Agent ”), which amount shall be held and disposed of pursuant to the terms of this Agreement and an Escrow Agreement in substantially the form attached hereto as Exhibit B (the “ Escrow Agreement ”).

(b) For United States federal income tax purposes (and any relevant state or local income, franchise or sales and use taxes purposes), (x) Seller and Buyer shall (x) treat all amounts deposited into the Escrow Fund as the property of Buyer on the date such amounts are deposited into the Escrow Fund, (y) Buyer shall report and pay any Taxes due and payable on any income earned on or with respect to the funds deposited in the Escrow Fund and (z) upon payment of funds from the Escrow Fund to Seller, Seller shall treat such funds as proceeds from the sale of Purchased Assets.

2.1.3 At the Closing, Buyer and Shareholder shall execute an Environmental Remediation Agreement in the form attached hereto as Exhibit C (the “ Remediation Agreement ”), pursuant to which Shareholder shall be responsible for (i) environmental remediation of the Owned Real Property located at Muncie, Indiana (the “ Muncie Property ”), and (ii) obtaining a Covenant Not to Sue from the State of Indiana Governor’s office concerning the Muncie Property (the “Covenant Not to Sue”).

2.2 Adjustment .

2.2.1 Within 90 days after the Closing Date, Seller shall deliver to Buyer financial statements for Seller as of the Closing Date which have been prepared in accordance with, and reflect all audit adjustments (regardless of amounts or materiality and whether or not waived in prior periods) required by, generally accepted accounting principles applied consistently with Seller’s prior financial statements and audited by Barnes Dennig & Company, Ltd. (the “ Audited Financial Statements ”). The balance sheet in the Audited Financial Statements shall separately list the assets and liabilities of the Galvanizing Division and the Products Division. At the time the audited financial statements are delivered to Seller, Seller shall make available to Buyer copies of the work papers and back-up materials used by Seller’s independent accounting firm in preparing the Audited

 

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Financial Statements and such other documents as Buyer may reasonably request in connection with its review of the Audited Financial Statements. The fees and expenses payable to Barnes Dennig & Company, Ltd. shall be paid 50% by Seller and the Shareholder (jointly and severally) and 50% by Buyer.

2.2.2 Within 30 days after Buyer’s receipt of the Audited Financial Statements, Buyer shall review the Audited Financial Statements and notify Seller in writing whether or not Buyer accepts the Audited Financial Statements. If Buyer accepts the Audited Financial Statements, the Audited Financial Statements shall become final and binding on all parties.

2.2.3 If Buyer in good faith objects to any item set forth on the Audited Financial Statements, Buyer shall give notice thereof to Seller in writing within 30 days after receipt of the Audited Financial Statements, specifying in reasonable detail the nature and extent of such disagreement, and Buyer and Seller shall have a period of 30 days from Seller’s receipt of such notice in which to resolve such disagreement. Any disputed items which cannot be agreed to by the parties within 30 days from Seller’s receipt of Buyer’s notice of objection to any of the items set forth in the Final Adjustments Report shall be determined by the Fort Worth, Texas office of the accounting firm of Ernst & Young LLP. The engagement of and the determination by Ernst & Young LLP (or any other accounting firm designated by Ernst & Young LLP as set forth below) shall be completed within 60 days after such assignment is given to Ernst & Young LLP and shall be final and binding and shall be nonappealable by Seller and Buyer. If for any reason Ernst & Young LLP is unable to act in such capacity, such determination will be made by any other nationally recognized accounting firm selected by the Fort Worth, Texas office of Ernst & Young LLP. The fees and expenses payable to Ernst & Young LLP (or any other accounting firm designated by Ernst & Young LLP) in connection with such determination will be borne 50% by Seller and the Shareholder (jointly and severally) and 50% by Buyer, unless (i) the determination of Ernst & Young LLP (or any other accounting firm designated by Ernst & Young LLP) with respect to the disputed amounts results in a payment by Seller, out of the Escrow Fund or otherwise, in an amount which exceeds by more than $5,000.00 the amount Seller shall have last claimed Seller owes hereunder at the end of the 30 day period following Seller’s receipt of Buyer’s notice of objection, in which case the fees and expenses payable to Ernst & Young LLP (or any other accounting firm designated by Ernst & Young LLP) shall be paid by Seller and the Shareholder (jointly and severally), or (ii) the determination of Ernst & Young LLP (or any other accounting firm designated by Ernst & Young LLP) with respect to the disputed amounts results in a payment by Buyer in an amount which exceeds by more than $5,000.00 the amount Buyer shall have last claimed it owes hereunder at the end of the 30 day period following Seller’s receipt of Buyer’s notice of objection, in which case the fees and expenses payable to Ernst & Young LLP (or any other accounting firm designated by Ernst & Young LLP) shall be paid by Buyer.

 

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2.2.4 Within three (3) business days after the date that the Audited Financial Statements become final and binding in accordance with Section 2.2.2 or 2.2.3, as the case may be, either (i) Buyer shall pay to Seller in cash (by means of federal funds wire or interbank transfer in immediately available funds) the amount by which the Purchased Assets Value determined based on the Audited Financial Statements is more than the Purchased Assets Value determined based on the Estimated Balance Sheet or (ii) Buyer shall be entitled to receive from the Escrow Fund a portion of the Deposit equal to the amount by which the Purchased Assets Value determined based on the Audited Financial Statements is less than the Purchased Assets Value determined based on the Estimated Balance Sheet, and Buyer and Seller shall promptly execute and deliver a joint instruction letter to the Escrow Agent to such effect. If Buyer is required to make a payment to Seller pursuant to this Section 2.2.4 and fails to do so, AZZ shall make such payment on behalf of Buyer as soon as practicable.

2.3 The Closing . The execution of this Agreement and the other documents contemplated herein shall occur at the offices of Kelly Hart & Hallman LLP, 201 Main Street, Suite 2500, Fort Worth, Texas 76102, at 2:00 p.m, local time, on October 31, 2006 and the closing of the purchase and sale of the Purchased Assets provided herein (the “ Closing ”) shall take place simultaneously at the offices of Kelly Hart & Hallman LLP, 201 Main Street, Suite 2500, Fort Worth, Texas 76102, at 2:00 p.m., local time (such date and time of Closing being herein referred to collectively as the “ Closing Date ”). The Closing shall be deemed to have occurred as of 12:00 a.m. on November 1, 2006.

3. Representations and Warranties of Seller and the Shareholder . Seller and the Shareholder, jointly and severally, represent and warrant to Buyer as follows:

3.1 Existence; Good Standing; Corporate Authority; Compliance With Law . Except as set forth on Schedule 3.1 hereof, Seller (i) is a corporation duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation; (ii) is duly licensed or qualified to do business as a foreign corporation under the laws of any jurisdiction in which the character of the properties owned or leased by it therein or in which the transaction of its business makes such qualification necessary except where the failure be so licensed or qualified would not result in a material adverse affect; (iii) has all requisite corporate power and authority to own its properties and carry on its business as now conducted; (iv) is not in default with respect to any order of any court, governmental authority or arbitration board or tribunal to which Seller is a party or is subject; (v) is not in violation of any laws, ordinances, governmental rules or regulations to which it is subject; and (vi) has obtained all licenses, permits and other authorizations and has taken all actions required by applicable laws or governmental regulations in connection with its business as now conducted.

3.2 Authorization, Validity and Effect of Agreements .

3.2.1 The execution and delivery of this Agreement and all agreements and documents contemplated hereby by Seller, and the consummation by it of the transactions contemplated hereby, have been duly authorized by the Board of

 

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Directors of Seller and all of Seller’s stockholders, and no other corporate proceedings on the part of Seller are necessary to authorize this Agreement and the transactions contemplated hereby.

3.2.2 This Agreement constitutes, and all agreements and documents contemplated hereby when executed and delivered pursuant hereto for value received will constitute, the valid and legally binding obligations of Seller and the Shareholder (but only with respect to such agreements and documents actually executed by such party) enforceable in accordance with their terms, except that enforceability may be limited by applicable bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium, bulk sales, preference, equitable subordination, marshalling or other similar laws of general application now or hereafter in effect relating to the enforcement of creditors’ rights generally and except that the remedies of specific performance, injunction and other forms of equitable relief are subject to certain tests of equity jurisdiction, equitable defenses and the discretion of the court before which any proceeding therefor may be brought.

3.2.3 The execution and delivery of this Agreement by each of Seller and the Shareholder does not, and the consummation of the transactions contemplated hereby by each of Seller and the Shareholder will not, (i) except as set forth on Schedule 3.2 hereof, require the consent, approval or authorization of, or declaration, filing or registration with, any governmental or regulatory authority or any third party; (ii) result in the breach of any term or provision of, or constitute a default under, or result in the acceleration of or entitle any party to accelerate (whether after the giving of notice or the lapse of time or both) any obligation under, or result in the creation or imposition of any Encumbrance (as such term is hereinafter defined) upon any part of the property of Seller or the Shareholder pursuant to any provision of, any order, judgment, arbitration award, injunction, decree, indenture, mortgage, lease, license, lien, or other agreement or instrument to which Seller or the Shareholder is a party or by which any of them is bound; or (iii) violate or conflict with any provision of the bylaws or certificate of incorporation of Seller as amended to the date hereof. As used herein, the term “ Encumbrance ” means any security interest, pledge, mortgage, lien (including without limitation, environmental and tax liens), charge, adverse claim, preferential arrangement, or restriction of any kind, including, without limitation, any restriction on the use, transfer, or other exercise of any attributes of ownership.

3.3 Ownership of Capital Stock of Seller . Except as set forth on Schedule 3.3 hereof:

3.3.1 The Shareholder is the record and beneficial owner of all of the issued and outstanding capital stock of Seller.

3.3.2 There are no options, warrants, convertible securities or other rights, agreements, arrangements or commitments of any character relating to the capital stock of Seller or obligating Seller or the Shareholder to issue or sell any shares of capital stock of, or any other interest in, Seller.

 

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3.4 Financial Statements .

3.4.1 Seller has furnished to Buyer (i) a balance sheet of Seller as of December 31, 2005; (ii) a statement of operations of Seller for the year ended December 31, 2005; (iii) a balance sheet of Seller as of September 30, 2006 (the “ Balance Sheet Date ”); and (iv) a statement of operations of Seller for the nine months ended on the Balance Sheet Date; copies of which are attached hereto as Exhibit D . The financial statements referred to in (iii) and (iv) above are herein collectively referred to as the “ Interim Financial Statements ”. The financial statements referred to in (i) through (iv) above are herein collectively referred to as the “ Financial Statements ”.

3.4.2 The Financial Statements fully and fairly set forth, in all material respects, the financial condition of Seller as of the dates indicated, and the results of its operations for the periods indicated, in accordance with generally accepted accounting principles consistently applied, except as otherwise stated therein.

3.4.3 Seller has furnished to Buyer a balance sheet of Seller as of the Balance Sheet Date identifying assets unique to its Products Division and prepared in the same manner and in form consistent with the Products Division Balance Sheet attached as Attachment I to the Letter of Intent entered into by and among the parties on May 2, 2006.

3.5 Absence of Certain Changes or Events . Except as set forth on Schedule 3.5 hereof, since the Balance Sheet Date, there has not been: (i) any material adverse change in the business, operations, properties, condition (financial or other) or prospects of Seller, and no factor or condition exists and no event has occurred that would be likely to result in any such change, (ii) any material loss, damage or other casualty to the Purchased Assets (other than any for which insurance awards have been received or guaranteed), or (iii) any loss of the employment, services or benefits of any key employee of Seller’s Galvanizing Division. Except as set forth on Schedule 3.5 hereof, since the Balance Sheet Date, Seller has operated its business in the ordinary course of business consistent with past practice and has not: (i) incurred or failed to pay or satisfy any material obligation or liability (whether accrued, contingent or otherwise) except in the ordinary course of business, (ii) incurred or failed to discharge or satisfy any Encumbrance other than Encumbrances arising in the ordinary course of business consistent with past practice, (iii) sold or transferred any of the assets of Seller’s Galvanizing Division or canceled any debts or claims or waived any rights material to the operations of its business except in the ordinary course of business, (iv) defaulted on any material obligation, (v) entered into any transaction material to its business, or materially amended or terminated any arrangement material to its business or relating to its business, except in the ordinary course of business consistent with past practice, (vi) redeemed any of its capital stock or declared, made or paid any dividends or distributions (whether in cash, securities or other property) to the holders of its capital stock or

 

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otherwise, or (vii) settled, released or forgiven any claim or litigation or waived any right thereto; (viii) made, changed or revoked any election or method of accounting with respect to Taxes affecting or relating to its business; (ix) entered into, or permitted to be entered into, any closing or other agreement or settlement with respect to Taxes, or (x) entered into any agreement or made any commitment to do any of the foregoing.

3.6 Taxes .

(i) Except as provided in Schedule 3.6 attached hereto, the Seller has timely filed all returns and reports required to be filed for Taxes for all taxable years or periods that end on or before the Closing Date and, with respect to any taxable year or period beginning before and ending after the Closing Date, the portion of such taxable year or period ending on and including the Closing Date (“ Pre-Closing Periods ”) (collectively, the “ Returns ”) and such Returns as filed are accurate and complete in all material respects.

(ii) Except as provided in Schedule 3.6 attached hereto, the Seller has timely paid all Taxes (whether or not shown on a Return) for all Pre-Closing Periods or adequately disclosed and fully provided for such Taxes on the balance sheet of the Seller as of the Balance Sheet Date.

(iii) Except as provided in Schedule 3.6 attached hereto, there is no action, suit, proceeding, investigation, audit or claim now pending or, to the knowledge of the Seller, threatened by any authority regarding any Taxes relating to the Seller or the Assets for any Pre-Closing Period.

(iv) No claim has been made in the ten years preceding the date of this Agreement by any taxing authority in a jurisdiction where the Seller does not file Returns that the Seller or any of the Assets are or may be subject to taxation by that jurisdiction.

(v) There are no liens or security interests on any of the Assets that arose in connection with any failure (or alleged failure) to pay any Taxes.

(vi) Except as provided in Schedule 3.6 attached hereto, there are no agreements for the extension or waiver of the time for assessment of any Taxes relating to the Seller or the Assets for any Pre-Closing Period and the Seller has not been requested to enter into any such agreement or waiver.

(vii) All Taxes which the Seller is required by law to withhold or collect have been duly withheld or collected, and have been timely paid over to the proper authorities to the extent due and payable.

(viii) Except pursuant to this Agreement, Seller is not now nor has been a party to any tax indemnification, tax allocation or tax sharing agreement that could result in any liability to the Purchaser.

 

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(ix) Except as provided in Schedule 3.6 attached hereto, Seller has not been included in any “consolidated,” “unitary” or “combined” Return provided for under the law of the United States, any foreign jurisdiction or any state or locality with respect to Taxes for any taxable period for which the statute of limitations has not expired.

3.7 Personal Property . The machinery, equipment, furniture, fixtures and other tangible personal property owned, leased or used by Seller in its Galvanizing Division are sufficient and adequate to carry on its business as presently conducted and, except as provided in Schedule 3.7 attached hereto, are in operating condition and repair and are suitable for the purposes for which they are used, normal “wear and tear” excepted.

3.8 Accounts Receivable . All trade accounts, notes and other receivables of Seller’s Galvanizing Division reflected in the Balance Sheet and all trade accounts, notes and other receivables of Seller’s Galvanizing Division included in the Purchased Assets or arising between the Balance Sheet Date and the date hereof have arisen in the ordinary course of business and represent bona fide, undisputed indebtedness (subject to no counterclaim, right of setoff or warranty claim, or to the extent subject to any counterclaim, right of setoff or warranty claim, are net of appropriate reserves therefor properly reflected in the Balance Sheet) incurred by the applicable account debtor for goods held subject to delivery instructions or heretofore shipped or delivered pursuant to a contract of sale or for services heretofore performed by Seller.

3.9 Inventory . The inventories of Seller’s Galvanizing Division reflected in the Interim Financial Statements or included in the Purchased Assets, or acquired by Seller between the Balance Sheet Date and the date hereof, are carried on a LIFO basis and do not include any inventory (other than the amount of normal shrinkage in inventory since the Balance Sheet Date) which is not usable or saleable in the ordinary course of business as heretofore conducted, unless full and adequate reserves have been provided therefor on such Interim Financial Statements in accordance with generally accepted accounting principles consistently applied.

3.10 Business Property Rights .

3.10.1 Schedule 3.10 hereof sets forth (i) all computer software, patents, and registrations for trademarks, trade names, service marks and copyrights which are unexpired as of the date hereof and which are used or held for use in connection with Seller’s Galvanizing Division, as well as all applications pending on said date for patents or for trademark, trade name, service mark or copyright registrations, and all other proprietary rights, owned or held by Seller; and (ii) all licenses granted by or to Seller and all other agreements to which Seller is a party and which relate, in whole or in part, to any items of the categories mentioned in (i) above or to other proprietary rights of Seller which are used or held for use in connection with Seller’s Galvanizing Division.

 

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3.10.2 The property referred to in Section 3.10.1 hereof, together with (i) all designs, methods, inventions and know-how, related thereto and (ii) all trademarks, trade names, service marks, and copyrights claimed or used by Seller in connection with its Galvanizing Division which have not been registered (collectively “ Business Property Rights ”), constitute all such proprietary rights owned or held by Seller.

3.10.3 Seller owns or has valid rights to use all such Business Property Rights without conflict with the rights of others. Except as set forth in Schedule 3.15 hereof, no person or entity has made or, to the best of Seller’s and the Shareholder’s knowledge, threatened to make any claims that Seller is in violation of or infringes any other proprietary or trade rights of any third party. To the best of Seller’s and the Shareholder’s knowledge, no third party is in violation of or is infringing upon any Business Property Rights.

3.11 Real Property .

3.11.1 (a) Except as set forth on Schedule 3.11 ,

(i) Seller currently has in place commercial general liability insurance with respect to damage or injury to person or property occurring on the Owned Real Property and fire and extended coverage property insurance policies (collectively “ Policies ”); the Policies are in full force and effect and all premiums due thereunder have been paid; and Seller has not received any notice from any insurance company or the insurance companies which issued the Policies, stating (or indicating) that any of the Policies will not be renewed or will be renewed at a substantially higher premium than is presently payable therefor;

(ii) Seller has not received any notice from any insurance company which has issued a policy with respect to the Owned Real Property or from any board of fire underwriters (or other body exercising similar functions) claiming any defects or deficiencies in the Owned Real Property or suggesting or requesting the performance of any repairs, alterations or other work to the Owned Real Property;

(iii) To the best of Seller’s and the Shareholder’s knowledge, all roads, parking areas, curbs, sidewalks, sewers and other utilities, buildings, fixtures and all other improvements included within the Owned Real Property (collectively, the “ Improvements ”), have been completed, constructed, and installed substantially in accordance with the plans and specifications therefor approved by the governmental authorities having jurisdiction, and all permanent certificates of occupancy and all other licenses, permits, authorizations, consents, certificates and approvals required by all governmental authorities having jurisdiction and the requisite certificates of the local board of fire insurance underwriters (or other body exercising similar functions) have been issued for the Owned Real Property, have been paid for, and are in full force and effect; all of the same are assignable by Seller on the date hereof, and none of them will be invalidated, violated or otherwise adversely affected by the assignment thereof or by the transfer of the Owned Real Property to Buyer;

 

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(iv) To the best of Seller’s and Shareholder’s knowledge, the Improvements have been constructed in a good and workmanlike manner, free from material defects in workmanship and material, in accordance with all applicable laws, rules, regulations, ordinances and codes and are being maintained and operated in compliance with all applicable laws, regulations, insurance requirements, contracts, leases, permits, licenses, ordinances, restrictions and easements (except where failure to be in compliance therewith would not have a material adverse effect on the value or use of the Owned Real Property), and Seller has not received notice, written or verbal, claiming any violation of any of the same;

(v) The location, construction, occupancy, operation and use of the Owned Real Property do not violate any applicable law, statute, ordinance, rule, regulation, order, certificate of occupancy or determination of any governmental authority or any board of fire underwriters (or other body exercising similar functions), or any restrictive covenant or deed restriction (recorded or otherwise) affecting the Owned Real Property, including without limitation all applicable zoning ordinances and building codes, flood disaster laws, Americans with Disabilities Act, and health and Environmental Laws and regulations, including, without limitation, CERCLA;

(vi) No material defective condition (latent or otherwise), structural or nonstructural, with respect to the Owned Real Property or the Improvements exists; and, as applicable, the heating, ventilating and air conditioning, plumbing, sprinkler, electrical and drainage systems, the elevators, and the roofs at or serving the Owned Real Property are in working order;

(vii) Adequate water, sanitary sewer, storm sewer, drainage, electric, telephone, gas and other public utility systems and lines serve the Owned Real Property and are directly connected to the lines and/or other facilities of the respective public authorities or utility companies providing such services or accepting such discharge, either adjacent to the Owned Real Property or through easements or rights of way appurtenant to and forming a part of the Owned Real Property; and any such easements or rights-of-way have been fully granted, and all charges therefor have been fully paid by Seller and all charges for the aforesaid utility systems and the connection of the Owned Real Property thereto, including without limitation connection fees, “tie-in” charges and other charges now or hereafter to become due and payable, have been fully paid by Seller;

(viii) All contractors, subcontractors and other persons or entities furnishing work, labor, materials or supplies to Seller or any of Seller’s predecessors in interest for the development and construction of the Owned Real Property have been paid in full for all work performed to date except for retainage in customary amounts in accordance with the construction contracts for the Owned Real Property, and there are no claims against Seller or the Owned Real Property in connection therewith;

 

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(ix) No zoning variances, special exceptions or other special relief from applicable governmental requirements have been issued for the construction of the Owned Real Property or for its present or intended use;

(x) No Improvements lie outside the boundaries and building restriction lines or encroach upon existing easements; no improvements on adjoining properties encroach upon the Owned Real Property; and no existing restrictions are or will be violated by the Improvements located upon the Owned Real Property;

(xi) Seller has not received any notice of any governmental regulation, order or requirement restricting the operation of the Owned Real Property in the manner in which the Owned Real Property is being operated on the date of this Agreement;

(xii) Seller has not received any written notice of, nor to the best of Seller’s or the Shareholder’s knowledge, is there any proceeding pending for the increase or decrease of the assessed valuation of all or any portion of the Owned Real Property;

(xiii) Seller has not received any notice of any condemnation proceeding or other proceedings in the nature of eminent domain in connection with the Owned Real Property;

(xiv) No portion of the Owned Real Property is located within an area designated as a flood hazard area or an area which will require the purchase of flood insurance for the obtaining of any federally insured or federally related loan; and no portion of the Owned Real Property is located in any conservation or historic district;

(xv) No assessments for public improvements have been made against the Owned Real Property which remain unpaid and all such assessments which have been or could be levied for public improvements ordered, commenced or completed prior to the Closing Date have been paid for in full by Seller;

(xvi) There are no special assessments respecting the Owned Real Property which will result from work, activities or improvements done to the Owned Real Property by Seller in the course of construction, alteration or repair of the Owned Real Property;

(xvii) Seller is the sole owner of the Owned Real Property and has good and marketable fee simple title to the Owned Real Property, free and clear of any encumbrances, except the Real Property Encumbrances (as defined in Section 7.12.1); and

 

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(xviii) Other than Buyer, no person, firm, corporation or other entity has any right or option to acquire the Owned Real Property or any part thereof, or any interest therein.

(xix) Seller has not received any notice of any governmental regulation, order on requirement restricting the operation of the Owned Real Property in the manner in which the Owned Real Property is being operated on the date of this Agreement.

(b) Schedule 3.11(b) attached hereto identifies the real property leased or subleased by Seller relating to its Galvanizing Business (the “ Leases ”). Seller has not received any notification that it is in default with respect to any of the Leases, nor are there any disputes between any landlord and Seller with respect to the Leases that would affect the right of Seller