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EXHIBIT 10.18
PURCHASE AGREEMENT
THIS AGREEMENT, entered into as of the 30th day of September 1996, is
by and among J & R MANUFACTURING, INC., a Michigan corporation (the "Seller"),
and Theodore H. Dezenski and Roger H. Ducoffre (each individually a
"Shareholder" and collectively the "Shareholders"), and JR ACQUISITION INC.
(the "Buyer"), a Michigan corporation.
WITNESSETH:
WHEREAS, Seller is engaged in, among other things, the business of
designing and manufacturing prototypes of stamped automotive parts;
WHEREAS, the Shareholders are shareholders, directors and officers of
Seller; and
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase
from Seller, all of the assets and properties of Seller used in connection with
the operation of its businesses, upon the terms and conditions set forth
herein.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants set forth herein, the parties hereto agree as follows:
ARTICLE 1
PURCHASE AND SALE OF ASSETS
1.1 Purchased Assets. Seller shall sell, transfer, assign, convey
and deliver to Buyer, and Buyer shall purchase and acquire from Seller, all
right, title and interest in and to all of the assets, properties, goodwill and
businesses, as going concerns, of every kind and description (except for the
Excluded Assets as defined in Section 1.2 hereof) owned, held, used or claimed
by Seller (the "Purchased Assets"), including, but not by way of limitation,
the following:
(a) All inventories, including, without limitation, all
inventories in transit, inventories paid for but not yet delivered, raw
materials, supplies, work in progress and
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finished goods inventory, and all of Seller's inventory of kirksite,
but excluding materials owned by customers of Seller;
(b) All accounts and notes receivable (whether billed or
unbilled), and all collections thereon from and after the Closing Date
(as hereinafter defined);
(c) All machinery and equipment, and all parts,
accessories, tools, dies and supplies pertaining thereto;
(d) All trucks, automobiles and vehicles titled in the
name of the Seller, and all parts, accessories, tools and supplies
pertaining thereto;
(e) All furniture, fixtures, shelving, office supplies,
computers and equipment, and all parts, accessories, tools and supplies
pertaining thereto;
(f) All prepaid taxes and expenses;
(g) The exclusive world-wide rights to use the name "J & R
Manufacturing, Inc." or any variations thereof;
(h) All patents, inventions, trade secrets, trademarks,
trade names, know-how, service marks, copyrights and applications for
any of the foregoing, including all rights of Seller under any royalty,
license or similar agreements pertaining thereto;
(i) All leaseholds and leasehold improvements and fixtures;
(j) All warranties, guarantees and the like of
manufacturers, contractors, sellers or suppliers which pertain to the
Purchased Assets;
(k) All interest in and to the telephone numbers, facsimile
numbers and telex numbers, if any, and all listings pertaining to the
Seller in all telephone books and directories;
(l) All past and present insurance policies and indemnity
bonds, and all claims or rights thereunder;
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(m) All customer orders and inquiries, all commitments and
contracts, chooses in action, claims and rights of recovery or set-off
of every type or character;
(n) All of Seller's interests and rights to possession in
any tools, dies, inventory, fixtures or other property of the customers
or suppliers of Seller which is in Seller's possession; and
(o) All of Seller's businesses as going concerns, including
its goodwill, if any, and all information pertaining thereto, including
all records, books, manuals, customer lists, supplier lists, permits,
franchises, brochures, advertising and sales literature, product
testing records and results, credit information and any and all other
operating data of Seller. After the Closing, Buyer shall make all
records and books provided hereunder, including financial and
historical records of Seller, available to Seller, to the Shareholders,
or to their representatives, on the premises of the Buyer upon
reasonable notice and for a reasonable purpose, and shall make
available facilities to make any copies which Seller, the Shareholders,
or their representatives may reasonably request. Buyer shall be
entitled to reimbursement of its actual costs incurred in providing
such copies.
1.2 Excluded Assets. Notwithstanding the foregoing, the Purchased
Assets shall not include any of those assets listed on Schedule 1.2 attached
hereto (the "Excluded Assets").
1.3 Assumed Liabilities. On the Closing Date (as hereinafter
defined), Buyer shall deliver to Seller an Undertaking and Assumption pursuant
to which Buyer shall assume only the following obligations and liabilities of
Seller (the "Assumed Liabilities"):
(a) Those trade accounts payable (the "Trade Accounts
Payable") included in the Closing Net Asset Statement (as hereinafter
defined); provided, however that Trade
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Accounts Payable shall not include any professional or other fees
incurred in connection with this Agreement or the transactions
contemplated hereby.
(b) Those accrued expenses (the "Accrued Expenses")
included in the Closing Net Asset Statement;
(c) The obligations of Seller under certain equipment
leases described in Schedule 1.3(c) attached hereto (the "Equipment
Leases"); and
(d) Those obligations specifically listed on Schedule
4.15.
1.4 Excluded Obligations. Except as expressly assumed pursuant to
Section 1.3 hereof, Buyer shall not assume and Seller shall remain liable for
and discharge all liabilities, claims and obligations of Seller of any and
every kind and nature whatsoever (the "Excluded Obligations"), including, but
not by way of limitation, any of the following:
(a) Any obligations incurred or to be incurred for any
claims for product warranties, product recalls or product liability
occurrences with respect to goods produced and shipped prior to the
Closing, or with respect to services provided by Seller prior to the
Closing or otherwise arising out of the pre-Closing business or
operations of Seller;
(b) Any foreign, federal, state, county or local income,
transfer, sales, use or other taxes of Seller incurred in connection
with the sale of the Purchased Assets (other than any sales tax with
respect to any automobiles transferred hereunder, which shall be the
responsibility of the Buyer);
(c) Any liabilities, costs or expenses incurred or to be
incurred with respect to any lawsuits, claims, suits, proceedings or
investigations, including without limitation any governmental or other
fines or penalties of any nature whatsoever, relating to any period
through the Closing Date;
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(d) Any liability resulting from or in connection with the
Seller's operations or the condition of its premises or assets through
the Closing Date, including but not limited to any failure to comply
with any federal, state or local law, regulation or ordinance,
including, but without limitation, any Environmental Laws (as
hereinafter defined); or
(e) Any other liabilities of Seller of any nature whatsoever
which are not included in the Financial Statements, including, without
limitation, all liabilities and obligations under any federal, state or
local law, any employee benefit plans or otherwise with respect to
current or past-employees of Seller (or its predecessors in interest),
all employee bonus expenses, all workers compensation and other claims
arising from any event, condition or activity which occurred or was in
existence prior to or through the Closing Date.
ARTICLE 2
PURCHASE PRICE AND PAYMENT
2.1 Purchase Price. The purchase price (the "Purchase Price") for
the Assets shall be equal to the sum of the following:
(a) Four Million Seven Hundred Fifty Thousand ($4,750,000)
Dollars (the "Purchase Amount"), which Purchase Amount shall be
increased or decreased, as the case may be, to the extent that the Net
Asset Value (as hereinafter defined) as of the Closing Date (as
hereinafter defined) is greater than or less than Four Million Six
Hundred Twenty Eight Thousand ($4,628,000) Dollars, and which amount
shall be payable as follows:
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i) Four Million Five Hundred Thousand ($4,500,000)
Dollars of the Purchase Price shall be paid to Seller at the
Closing by certified check or wire transfer; and
ii) Two Hundred Fifty Thousand ($250,000) Dollars
shall be paid by Buyer's execution and delivery at the Closing
of a Promissory Note (the"Promissory Note") in such amount in
the form attached hereto as Exhibit A;
iii) The balance of the Purchase Price, if any,
together with interest thereon at the prime rate of interest
charged from time to time by Comerica Bank from and after the
Closing Date until the date of payment, shall be paid to Seller
by certified check or wire transfer within thirty (30) days
following the finalization of the Closing Net Asset Statement
(as hereinafter defined) as provided in Section 2.2(c) hereof;
--- provided, however, in the event that the Purchase Amount, as
adjusted as provided above, is less than Four Million Seven Hundred
Fifty Thousand ($4,750,000) Dollars, then in such event Seller and
Shareholders, jointly and severally, shall immediately pay to Buyer,
upon demand and by certified check or wire transfer, the amount by
which such Purchase Amount is less Four Million Seven Hundred Fifty
Thousand ($4,750,000) Dollars;
---and
(b) The assumption of the Assumed Liabilities at the
Closing.
2.2 Preparation of Closing Net Asset Statement.
(a) Simultaneously with the Closing, Buyer and Seller shall
jointly cause a physical inventory (the "Physical Inventory") to be
taken of the Inventory (as hereinafter defined) as of the close of
business on the Closing Date.
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(b) Within forty-five (45) days following the Closing Date,
Buyer and Seller shall jointly cause an audited statement of the Net
Asset Value (as hereinafter defined) to be prepared (the "Closing Net
Asset Statement"), as follows:
(i) The preparation of the Closing Net Asset
Statement shall be prepared and audited in accordance with
generally accepted accounting principles, with the Inventory
valued as provided in Section 2.3(b) hereof; and
(ii) All auditing and other accounting procedures
required hereunder shall be performed by Ernst & Young L.L.P.
("Accountants"), the cost of which shall be paid by Buyer.
(c) The Closing Net Asset Statement as presented shall be
final and binding on the parties unless either party shall give written
notice of its objection to the same within twenty-one (21) days after
its receipt thereof. In the event either party raises any objection,
then the Buyer and Seller shall, within twenty-one (21) business days
thereafter, mutually select an independent accountant (other than the
Accountants), who shall audit the Closing Net Asset Statement, and the
determination by said independent accountant of the Closing Net Asset
Statement shall be final and binding on the parties. Buyer and Seller
shall each pay one half of the fees and costs due to the independent
accountant.
2.3 Definitions. For purposes hereof, the following terms shall
have the following definitions:
(a) "Net Asset Value" shall be equal to the aggregate sum of
Seller's accounts receivable acquired hereunder, Inventory (as
hereinafter defined), prepaid expenses, and Fixed Assets (as
hereinafter defined), less the sum of the Trade Accounts Payable (as
defined in Section 1.3 hereof) and Accrued Expenses (as defined in
Section 1.3 hereof),
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all as of the Closing Date, provided, however, except as otherwise
defined herein, all of the foregoing shall be determined in accordance
with generally accepted accounting principles, and, provided, further,
that the Net Asset Value shall not include any amounts with respect to
any life insurance policies on the Shareholders.
(b) "Inventory" shall include all inventories, including,
without limitation, all inventories in transit, inventories paid for
but not yet delivered, raw materials, supplies, work in progress and
finished goods inventory, but excluding materials owned by customers of
Seller; provided, however:
(i) "Inventory" shall include only those items of
Seller's inventory which are good and saleable or usable in the
ordinary course of business. "Inventory" shall be valued at the
lower of cost or market, except for obsolete and excess items
(as determined in accordance with generally accepted accounting
principles); and
(ii) Seller's inventory of kirksite (including all
kirksite tools and dies owned by Seller) shall be valued based
on the number of pounds of kirksite in inventory as of the
Closing Date multiplied by the price per pound charged by Arco
Alloys as of the Closing Date; provided, however, in no event
shall the Seller's inventory of kirksite be valued at an amount
in excess of Nine Hundred Fifty Thousand ($950,000) Dollars.
(d) "Fixed Assets" shall mean the Seller's fixed assets,
net of depreciation, and excluding any amounts for any capitalized
leases.
2.4 Purchase Price Allocation, Buyer and Seller shall allocate the
Purchase Price among the Purchased Assets as set forth on Schedule 2.4 hereof.
ARTICLE 3
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CLOSING
3.1 Closing, The purchase and sale of the Purchased Assets shall be
consummated (the "Closing") contemporaneously with the execution of this
Agreement (the "Closing Date") at the offices of Timmis & Inman L.L.P. or at
such other place as Seller and Buyer shall mutually agree upon;
3.2 Closing Date Deliveries. At the Closing:
(a) Seller shall deliver to Buyer a Bill of Sale and
Assignment of all the Purchased Assets in the form of Exhibit B
attached hereto;
(b) Seller shall receive from Timmis & Inman L.L.P.,
counsel for Buyer, an opinion covering the matters set forth in
Schedule 3.2(b);
(c) Buyer shall receive from Bassey & Selesko, P.C.,
counsel for Seller, an opinion covering the matters set forth in
Schedule 3.2(c);
(d) Buyer and Seller shall deliver, or cause to be
delivered, executed copies of the following (collectively the "Related
Agreements"):
(i) Agreements Not to Compete and Confidentiality
Agreement, between Buyer and Seller and its shareholders, in the
forms attached hereto as Exhibits C-1, C-2 and C-3 (the
"Agreements Not to Compete");
(ii) Employment Agreements between the Buyer and the
Shareholders in the forms attached hereto as Exhibits D-1 and
D-2 (the "Employment Agreements");
(iii) Undertaking and Assumption, between Buyer and
Seller, as required pursuant to Section 1.3 hereof, in the form
attached hereto as Exhibit E;
(iv) Assignment of Lease in the form attached hereto
as Exhibits F (the "Assignments of Leases");
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(v) Leases in the forms attached hereto as Exhibits
G-1, G-2 and G-3 (the "Affiliate Leases");
(vi) Guaranty by Hawthorne Metal Products Co.
("Hawthorne") in the form of Exhibit H attached hereto (the
"Hawthorne Guaranty"); and
(vii) MESC Form 1027, Business Transferor's Notice to
Transferee of Unemployment Tax Liability and Rate, together
with a statement from the Commissioner of MESC certifying the
status of Seller's contribution liability under Section 15(g)
of the Michigan Employment Security Act, attached hereto as
Exhibit I.
(e) Buyer shall receive from Seller a copy of the following:
(i) All consents required for Buyer to obtain the
benefits of the Contracts and Leases described in Schedules 4.5
and 4.6 hereof;
(ii) Certified copies of the Articles or Certificates
of Incorporation and Bylaws of the Seller;
(iii) Certificates of Good Standing of the Seller from
the jurisdiction in which the Seller is incorporated and each
jurisdiction in which the Seller is qualified to transact
business;
(iv) Certified copies of the resolutions of the
Seller's shareholders and directors approving and authorizing
the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby; and
(v) Certificate of Amendment to Seller's Articles of
Incorporation changing Seller's name to permit Buyer to assume
or adopt the name "J & R Manufacturing".
(f) Seller shall receive from Buyer a copy of the following:
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(i) Certified copy of the Articles of Incorporation
and Bylaws of the Buyer;
(ii) Certificates of Good Standing from the
jurisdiction in which the Buyer is incorporated and each
jurisdiction in which the Buyer is qualified to transact
business; and
(iii) Certified copy of the resolutions of the Buyer's
Board of Directors approving and authorizing the execution and
delivery of this Agreement and the consummation of the
transactions contemplated hereby.
(g) Seller shall deliver any and all other documents or
instruments reasonably requested by Buyer prior to the Closing Date and
necessary to transfer the Purchased Assets to the Buyer.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDERS
Seller and Shareholders, jointly and severally, represent and warrant to Buyer
that:
4.1 Corporate Standing and Authority.
(a) Seller is a corporation duly organized and validly
existing and in good standing under the laws of the State of Michigan,
with full corporate power and authority to own its assets and to
conduct its business. Seller is not required to be qualified as a
foreign corporation with respect to any business under the laws of any
other jurisdiction.
(b) Seller has the legal capacity and authority to execute
this Agreement and to perform the transactions contemplated hereby. The
execution, delivery and performance of this Agreement do not and will
not violate or cause a default under any provision of Seller's Articles
of Incorporation or Bylaws, or result in the breach, termination or
acceleration of any obligation or constitute a default or permit the
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termination of any right under any mortgage indenture, lien, lease,
contract, agreement, instrument, order, arbitration award, judgment or
decree to which Seller is a party or by which Seller or its properties
are bound. Seller and Shareholders have taken all necessary action
required by law, Seller's Articles of Incorporation and Bylaws or
otherwise, to authorize the execution, delivery and performance of this
Agreement. This Agreement and each document and instrument executed
pursuant to this Agreement by Seller or Shareholders constitutes a
valid and binding obligation of Seller or Shareholders, as the case may
be, enforceable in accordance with their respective terms, except as
such enforcement may be limited by bankruptcy, insolvency or similar
laws affecting the enforcement of creditors' rights generally. Neither
Seller nor Shareholders are required to obtain the consent, approval or
waiver of any person not a party to this Agreement to enter into this
Agreement or to consummate the transactions contemplated hereby, except
for the consents of the lessors and parties under various of the Leases
and Contracts (as defined in Sections 4.5 and 4.6 hereof), as more
fully set forth in Schedules 4.5 and 4.6 attached hereto, which
consents are to be obtained on or prior to the Closing Date in
accordance with the provisions of Section 3.2(f)(i) hereof.
4.2 Title to Purchased Assets, Seller owns and will convey to Buyer
on the Closing Date good and marketable title to the Purchased Assets, free and
clear of any liens, pledges, security interests, leases, claims, encumbrances,
restrictive agreements or other adverse interests, charges or defects of any
kind except as otherwise set forth in Schedule 4.2(a) attached hereto (the
"Liens"), all of which Liens shall have been released, discharged or otherwise
removed prior to or concurrently with the Closing hereunder. Neither Seller,
Shareholders nor any officer of Seller knows of any facts or circumstances
which are not disclosed or otherwise revealed in this Agreement which would
adversely affect or impair the value of the Purchased
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Assets, or which would adversely affect or impair the right or ability of Buyer
to carry on any of Seller's operations substantially as heretofore conducted.
Except as described in Schedule 4.2(b), all tangible personal property
owned or used by the Seller is situated at its business premises and is
currently used in its businesses. Schedule 4.2(c) lists or describes all
tangible personal property owned by or an interest in which is claimed by any
other person (whether a customer, supplier or other person) for which the
Seller is responsible (copies of all agreements relating thereto have been
delivered to Buyer), and all such property is in the Seller's actual possession
and is in such condition that upon the return of such property in its present
condition to its owner, the Seller will not be liable in any amount to such
owner.
4.3 Financial Statements.
(a) Seller has made available to Buyer the balance sheets of Seller
for the period ending July 31, 1996 and the related statement of income for the
period then ended (the "July Financial Statements"), together with the reviewed
balance sheets of the Seller for each of the fiscal years ending October 31,
1992 through October 31, 1995 and the related reviewed statements of income and
retained earnings and changes in financial position for the periods then ended,
including the notes thereto and any supplemental information provided therewith
(all of which, together with the Closing Net Asset Statement and the July
Financial Statements, are collectively referred to herein as the "Financial
Statements"). The Financial Statements:
(i) Are true, complete and correct in all material
respects;
(ii) Fairly present the properties, assets, financial
position and results of operations of its business as of the respective
dates and for the respective periods stated above, except for capital
leases not recorded as outlined in the accountant's report letter; and
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(iii) Have been prepared pursuant to and in accordance with
generally accepted accounting principles applied on a consistent basis.
(b) Adequate provision has been made in the Financial Statements for
doubtful accounts receivable, and sales are stated net of discounts, returns
and allowances, all taxes due or paid are reflected and taxes not yet due and
payable are fully accrued or otherwise provided for; and, except to the extent
reflected therein, or as set forth in Schedule 4.3(b), neither the Seller nor
the Shareholders have any knowledge of any liability or obligation, whether
accrued, absolute, or contingent, arising out of transactions entered into or
any state of facts existing as of the dates thereof. No provision in the
Financial Statements is necessary (except as otherwise disclosed therein),
under generally accepted accounting principles, for liability on account of
product warranties or with respect to the manufacture or sale of defective
products. All significant items of income or expense which are unusual or of a
non-recurring nature are separately disclosed in the Financial Statements.
(c) Except to the extent reflected therein or as set forth in
Schedule 4.3(c), the Seller has paid all known federal, local and foreign
income, franchise, real property, personal property and all other taxes,
including, but not limited to, all withholding, employment, sales, use, ad
valorem and other taxes of the Seller, including interest and penalties in
respect thereof, if any, for the fiscal period ended October 31, 1995, all
fiscal periods prior thereto, and except as set forth in Schedule 4.3(c), has
paid, remitted or accrued in the Financial Statements all of the aforesaid known
taxes accruing and becoming due and payable by the Seller on or before the
Closing Date. Except with respect to any returns or reports, the filing of which
has been duly extended, the Seller has duly, and to the best of its and the
Shareholders' knowledge, accurately filed all tax returns and reports which are
required to be filed, subject to permissible extensions, including, without
limitation, returns and reports covering all the aforesaid taxes and has paid
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all taxes or other amounts reflected thereon. Seller has made available to
Buyer copies of the Seller's federal income, state and other tax returns filed
for each of the fiscal years ending October 31, 1992 through October 31, 1995.
The Seller has filed returns for and paid in full all known taxes, penalties,
interest and related charges and fees to the extent such filings and payments
are required. The Seller does not have any deficiency with respect to any tax
period and is not and will not be subject to any current or deferred liability
with respect to taxes or penalties or interest thereon, or related charges and
fees, whether or not assessed, which are not timely and adequately provided for
in the tax accruals in the most recent of the Financial Statements, other than
current and deferred taxes of the Seller not yet due which arise solely from
income earned after the date of the most recent Financial Statements and which
are consistent in character and amounts with the tax accruals reflected in the
Financial Statements. No consents extending or waiving the time limited for
reassessment of any taxes, duties, governmental charges, penalties, interest or
fines, or any statutes of limitations related thereto have been filed with
respect to the Seller for any fiscal year.
The Seller has withheld from each payment made to any of its officers,
Shareholders, directors, former directors, and employees and former employees
the amount of all taxes and other deductions (including without limitation,
income taxes, unemployment, disability, and other required taxes and
contributions) required to be withheld and has paid the same together with the
employer's share of same, if any, to the proper tax or other receiving officers
within the prescribed times and has filed, in complete and accurate form, all
information and other returns required pursuant to any applicable legislation
within the prescribed times.
(d) As of the Closing, the Seller shall have made and paid in full
(i) contributions for the current fiscal year to the J & R Manufacturing, Inc.
Profit Sharing Plan (under agreement dated October 30, 1995) in an amount equal
to Zero ($0) Dollars, and (ii)
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employee bonus expenses for the current fiscal year in an amount equal to Fifty
Thousand ($50,000) Dollars.
4.4 No Material Changes. Since October 31, 1995, except as disclosed
in the Financial Statements, or as set forth in Schedule 4.4, there has not
been, to the best of Seller's and Shareholders' knowledge, any material adverse
change or changes, either individually or in the aggregate, in the general
affairs, business, prospects, properties, financial position, results of
operations or net worth of Seller and the business affairs of Seller have been
conducted in the usual and ordinary course and in the manner as theretofore
conducted. Except as set forth on Schedule 4.4 hereof, since October 31, 1995,
Seller has not:
(a) sold or transferred any asset, other than in the
ordinary course of business;
(b) entered into any transactions affecting the Purchased
Assets, or the business or operations of Seller, nor acquired
additional assets or entered into any contracts for the acquisition of
same or incurred or increased any obligation or liability (absolute or
contingent), other than in the ordinary course of business;
(c) paid or otherwise satisfied any obligations other
than the obligations arising in the ordinary course of business, except
as set forth in Schedule 4.4;
(d) subjected any of the Purchased Assets to any Lien;
(e) entered into any transaction other than in the
ordinary course of business;
(f) incurred any obligation for or paid for any capital
expenditures in excess of Twenty-Five Thousand ($25,000) Dollars in the
aggregate (other than as described in Schedule 4.4(f));
(g) issued any capital stock or, declared or paid any
dividend or made any other payment from capital or surplus or other
distribution of any nature, or directly or
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indirectly redeemed, purchased or otherwise acquired or recapitalized
or reclassified any capital stock or liquidated in whole or in part;
(h) created, incurred, or assumed any indebtedness or other
liability, except for accounts payable or other current liabilities
(other than for borrowed money) incurred in the ordinary course of
business;
(i) raised salaries or hourly rates or the rate of bonuses
or commissions or other compensation of any employee, other than those
made which were consistent with past practices and other than those
which have been disclosed in writing to the Buyer in favor of Roger H.
Ducoffre and Theodore H. Dezenski;
(j) materially amended or terminated any contract,
agreement, franchise, permit or license other than in the ordinary
course of business; or
(k) entered into any agreement or commitment with respect to
any of the foregoing.
4.5 Leases. Schedule 4.5 sets forth a list and brief description
(including in each case the names of the lessee and lessor, the monthly rentals
payable, the expiration date thereof, the details of any options to renew and
to purchase thereunder and the property covered thereby, and whether any
action, consent or notice is required as a result of this Agreement) of every
lease or agreement under which Seller is a lessee of, or primarily or
secondarily liable under, or holds or operates, any property, real or personal,
owned by any third party and used in the Seller's businesses (the "Leases").
The Leases are in full force and effect, are valid and binding obligations of
the parties thereto, and no defaults exist thereunder. Buyer has been furnished
with true and complete copies of all Leases described on Schedule 4.5.
The Seller's rights under all real estate leasehold estates (the
"Leased Real Estate") are not subordinate to, or defeasible by, any lien or any
prior lease thereon. There are no ground
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subsidences or slides on such Leased Real Estate. The Leased Real Estate and
the improvements thereon are fully accessible by public roads, are free, to the
best of Seller's and Shareholders' knowledge, from strips, gores and enclaves,
and, to the best of Seller's and Shareholders' knowledge, the improvements
thereon do not encroach onto the property of other persons. No governmental
authority having jurisdiction over such Leased Real Estate has given any notice
of a possible future imposition of assessments affecting the properties or to
exercise the power of eminent domain. The Leased Real Estate is serviced by
utilities, including but not limited to, water, sewage, gas, waste disposal,
electricity and telephone, and the Seller and Shareholders are not aware of any
inadequacies with respect to such utilities.
4.6 Contracts. Schedule 4.6 contains a list and brief description
(including in each case the names of the parties thereto, the terms of any
payments, the execution and termination date thereof, a summary of the
obligations of the parties thereto, and whether any action, consent or notice
is required as a result of this Agreement) of all contracts, agreements and
other instruments of any type or kind to which Seller is a party (the
"Contracts") (other than those described in other Schedules attached hereto and
other than oral employment agreements terminable by Seller at will without
penalty under which the only obligation of Seller is to make current wage
payments and provide current fringe benefits), including, without limitation,
any:
(a) manufacturer's representative, distributor, license,
sales, agency or other contract which is not terminable at will
without penalty;
(b) guarantee of any obligations of customers or others; or
(c) contract for the future purchase of materials, supplies,
merchandise, services or equipment, except for any contract continuing
for a period of less than three months or involving payments of less
than Ten Thousand ($10,000) Dollars over its remaining term (including
periods covered by any option to renew by either party).
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Buyer has been furnished with true and complete copies of all Contracts
described on the foregoing Schedule.
The Contracts have been entered into in the ordinary course of
business, are in full force and effect, and are the valid and binding
obligations of the parties thereto, and no defaults exist thereunder. The
Contracts do not contain any provision, oral or written, expressed or implied,
prohibiting, or requiring the consent of any third party to the transfer of the
Purchased Assets to Buyer.
4.7 Employee Benefit Plans. Except as set forth on Schedule 4.7,
Seller has not, directly or indirectly, maintained or contributed to any
employee welfare benefit plan, employee pension benefit plan, deferred
compensation plan, bonus plan, stock option plan, employee stock purchase plan,
hospitalization plan, employees' insurance plan or other employee or independent
contractor benefit plan, agreement, arrangement or commitment (collectively the
"Employee Benefit Plans"), except for normal policies concerning holidays and
vacations. All Employee Benefit Plans have at all times, to the best of Seller's
and Shareholders' knowledge, complied with and been administered according to
the provisions of all applicable laws, rules, regulations, orders, judgments,
decrees and other requirements of governmental authorities (collectively the
"Employee Benefit Laws"). With respect to each Employee Benefit Plan, to the
best of Seller's and Shareholders' knowledge: (1) all required reports have been
appropriately filed, (2) all notices required by the Employee Benefit Laws have
been appropriately filed, (3) all funding requirements and/or contributions have
been timely made, and (4) there have been no actions, suits, grievances or other
manner of litigation or claim with respect thereto, the assets thereof or any
fiduciary thereof. There are no Employee Benefit Plans which are subject to the
provisions of the Employee Benefit Laws. The Seller does not maintain any
welfare benefit plans within the meaning of the Employee Benefit Laws which
provide for any benefits after
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termination of employment. To the best of Seller's and Shareholders' knowledge,
no reportable events under the Employee Benefit Laws have occurred with respect
to any Employee Benefit Plan, and there exists no condition or set of
circumstances which could result in a reportable event. The value of all
accrued benefits are fully funded by the assets of such Employee Benefit Plans.
True and complete copies of all Employee Benefit Plans have been furnished to
Buyer, together with copies the most recent determination letters with respect
to each such Employee Benefit Plan, copies of all annual reports with respect
thereto, and copies of the most recent actuarial reports and trustee reports
with respect to each such Employee Benefit plan. The Seller has not
participated in any "multiemployer plan" as defined in the Employee Retirement
Income Security Act of 1974, as amended. Buyer will not incur any obligation,
liability or expense whatsoever with respect to any matter directly or
indirectly arising from any Employee Benefit Plan.
4.8 Compensation. Schedule 4.8 attached hereto contains a true and
complete list showing the names of all employees of Seller whose current annual
compensation (including bonuses) in the aggregate equals or exceeds Fifty
Thousand ($50,000) Dollars, such employees present annual compensation
including bonus, if any, and the increases, if any, in such annual compensation
for each of the calendar years 1993 through 1995 and through the Closing.
Schedule 4.8 also contains the names of all employees of the Seller who receive
any compensation whatsoever (including bonuses) from Shareholders or any
company affiliated with Seller and/or Shareholders and the amount of such
compensation received.
4.9 Governmental Regulations and Litigation. To the best of Seller's
and Shareholders' knowledge, and except as set forth in Schedule 4.9, Seller
has complied with all applicable laws, orders and other requirements of
governmental authorities, including all Environmental Laws. Seller is not
subject to any court or administrative order, judgment or
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decree. Except as set forth in Schedule 4.9, no investigation, governmental or
administrative proceeding or other litigation of any kind or nature to which
Seller may be a party is now pending or threatened; no claim which has not
ripened into litigation or other proceeding has been made or threatened against
Seller; and to the best of Seller's and Shareholders' knowledge, no facts,
circumstances or conditions exist which might give rise to any such claims,
investigations, proceedings or litigation.
4.10 Environmental Compliance.
(a) The use by the Seller of Leased Real Estate commonly known as
40739 Irwin Drive (the "Camphous Property") and the conduct thereon of the
businesses of the Seller has not violated,'and based upon present uses of the
Camphous Property is not expected to violate, any law, rule, regulation, code
or ordinance of any governmental authority (collectively the "Environmental
Laws"), including but not limited to, any federal, state, local or common law
(including provisions of law or regulations scheduled for future
implementation), any environmental laws rules or regulations of any
governmental authority, or any of the following:
(a) The Resource Conservation and Recovery Act;
(b) The Comprehensive Environmental Response Compensation
and Liability Act;
(c) The Federal Occupations Safety and Health Act;
(d) The Toxic Substances Control Act;
(e) The Environmental Protection Act;
(f) The Federal Water Pollution Control Act; and
(g) The Clean Air Act;
and Seller and Shareholders have not received notice of any such violation. The
Camphous Property is not and has not been contaminated, tainted or polluted in
any manner whatsoever from the conduct of any activities of the Seller prior to
the Closing Date, nor will the Camphous Property become contaminated, tainted
or polluted in any manner whatsoever from the conduct of any activities of the
Seller prior to the Closing Date or, to the best knowledge of the Seller
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and the Shareholders, from the migration of contaminants from property adjacent
to the Camphous Property. The Camphous, Property does not appear on the
National Priority List or any state listing which identifies sites for remedial
clean-up or investigatory actions and has not been used to handle, treat, store
or dispose of asbestos, PCB's, ureaformaldehyde or any hazardous or toxic waste
or substance, and has not otherwise been contaminated (including, without
limitation, contamination of soils, groundwater and surface waters located on
or under such premises) with pollutants or other substances which may give rise
to a clean-up obligation under any Environmental Laws.
(b) To the best knowledge of the Seller and the Shareholders, the
Leased Real Estate other than the Camphous Property (the "Remaining Property"),
the use of the Remaining Property and the conduct thereon of the businesses of
the Seller has not violated, and based upon present uses of the Remaining
Property are not expected to violate, any of the Environmental Laws and Seller
and Shareholders have not received notice of any such violation. To the best
knowledge of the Seller and the Shareholders, the Remaining Property is not and
has not been contaminated, tainted or polluted in any manner whatsoever, nor
will such Remaining Property become contaminated, tainted or polluted in any
manner whatsoever from the conduct of any activities prior to the Closing Date
or from the migration of contaminants from property adjacent to such Remaining
Property. To the best knowledge of the Seller and the Shareholders, the
Remaining Property does not appear on the National Priority List or any state
listing which identifies sites for remedial clean-up or investigatory actions
and has not been used to handle, treat, store or dispose of asbestos, PCB's,
ureaformaldehyde or any hazardous or toxic waste or substance, and has not
otherwise been contaminated (including, without limitation, contamination of
soils, groundwater and surface waters located on or under such premises) with
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pollutants or other substances which may give rise to a clean-up obligation
under any Environmental Laws.
(c) The Seller has utilized, stored, disposed of and transported all
hazardous, polluting and toxic substances (including petroleum products) and
all wastes, whether hazardous or not, in full compliance with all Environmental
Laws so as not to contaminate any property.
(d) Schedule 4. 10 lists, to the best knowledge of the Seller and
the Shareholders, all waste hauling companies at which wastes generated by the
Seller have been disposed of (in each case identifying such wastes). Neither
the Seller nor the Shareholders has received any notice (i) of any claim or
potential responsibility for the cost of remedial clean-up or investigating any
sites or areas at which such waste hauling companies disposed of any wastes
generated by the Seller, or (ii) that any such waste hauling companies has
violated any applicable federal, state or local law, rule or regulation. No
claims, actions, protests or complaints have been or will be filed or made by
any of Seller's employees, agents or any other persons with respect to the
presence, use, storage or disposal of any hazardous or toxic wastes, materials
or other substances by the Seller through the Closing Date and no basis for any
such claims exist.
4.11 LABOR AND ENVIRONMENT RELATIONS. Seller is not a party to or bound
by any collective bargaining agreement with any labor organization. Schedule
4.11 contains a true and complete list of all actions before federal and state
bodies (including arbitration cases), pending or closed, wherein Seller is a
party, which involve the labor and employment relations of Seller relating to
its businesses during the last five years. Except as disclosed on Schedule 4.11,
Seller has not received notice of or been the subject of any strike, work
stoppage, labor dispute, union organization drive, demands for representation,
primary or secondary boycott, unfair labor practice or employment
discrimination charge.
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4.12 Operating Condition of Assets.
(a) Each item of inventory is in good condition, usable
and saleable in the usual and ordinary course of business and meets all
current customer specifications.
(b) To the best of Seller's and Shareholders' knowledge, the
plants, buildings, machinery, fixtures, equipment, tools, dies, jigs,
and improvements which are owned, used, leased or held by Seller:
(i) are in good operating and usable condition,
subject to normal maintenance and repair, such that following
Closing Buyer can produce, manufacture, assemble and sell
products which meet the applicable specifications and conform
with the quality standards acceptable to the customers of the
Seller;
(ii) are, and the use thereof is, in compliance in
all material respects with all laws, ordinances and regulations
of all government authorities including, but not by way of
limitation, all Environmental Laws; and
(iii) are not the subject of, and are not affected by,
any condemnation or eminent domain proceedings, presently
instituted or pending, and neither Seller, Shareholders nor any
officer of Seller has any knowledge that such premises or
properties are or will be threatened by any such proceedings.
(c) Neither Seller nor Shareholders have received any notice
of any claimed violation of any such laws, ordinances or regulations
referred to in subparagraph (ii) above.
(d) Except for the Excluded Assets, the Purchased Assets
constitute all the assets used by Seller with respect to or arising out
of the operation of the Seller's businesses.
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4.13 INTANGIBLE ASSETS, Schedule 4.13 contains a true and complete
list of all patents and patent applications (pending or in the process of
preparation), domestic or foreign, patent rights, trademarks, trade names and
licenses under the patents of others, trade secrets, secret processes and other
proprietary rights of every kind and nature used or necessary for use by Seller
in its businesses as presently conducted, or controlled in whole or in part by
Seller or directly or indirectly owned or controlled in whole or in part by
Shareholders or any of Seller's officers, directors or key employees. To the
best of Seller's and Shareholders' knowledge, all such patents, patent
applications, patent rights and licenses are valid and effective in accordance
with their terms, and all such trade names, trade secrets, secret processes and
other proprietary rights are valid and effective. Except as disclosed in
Schedule 4.13, there are no agreements, contracts or obligations under which
Seller is obligated with respect to, or is using, any patents, patent
applications, patent rights, trademarks, trade names, licenses under the
patents of others, trade secrets, secret processes or other proprietary rights.
The manufacturing and engineering drawings, process sheets, specifications,
bills of material, trade secrets, "know-how" and other like data of Seller are
solely in the possession of and owned by Seller, and are in such form and of
such quality that, Buyer can, following the Closing, design, produce,
manufacture, assemble and sell the products and provide the services heretofore
provided by Seller so that such products and services meet applicable
specifications and conform with the quality standards acceptable to Seller's
customers.
To the best of Seller's and Shareholders' knowledge, the conduct of
Seller's businesses, including the manufacture and sale of its products, does
not infringe upon the patents, trademarks, trade secrets, trade names, or
copyrights or other intellectual property rights, of any other party. Neither
Seller nor Shareholders have received any notice of any claim of infringement
except as described in Schedule 4.13 attached hereto. Seller has not disclosed
in
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any way to any third party, other than to Buyer on a "confidential" basis or to
suppliers or customers of Seller on a ""confidential" and "need to know" basis
in the ordinary course of business, confidential information or trade secrets
including, but not by way of limitation, confidential product or process data,
information as to new product developments and product costs data, related to
the operations of Seller, nor entered into any contract or agreement to
disclose any of the above to a third party.
4.14 INSURANCE. Schedule 4.14 attached hereto contains a true and
correct list and summary description of the insurance coverage held by Seller
with respect to its businesses, the Purchased Assets, and any property of
others under Seller's care, custody and/or control, including, but not limited
to all policies of fire, liability and other forms of casualty insurance,
product liability insurance, and group and worker's compensation insurance held
by Seller with respect to its businesses. All such policies (copies of which
have been delivered to Buyer) are freely assignable to Buyer and have been
maintained in force and effect by Seller and Seller is not in default under any
of such policies and have not been refused any insurance by any insurance
carrier at any time during the past five (5) years.
4.15 CUSTOMERS AND COMMITMENTS. Schedule 4.15 lists (a) the ten (10)
largest customers of, and the ten (10) largest suppliers to, the Seller during
the twelve (12) month period ended October 31, 1995 and for the six (6) month
period ended April 30, 1996 (stating for each the dollar volume of the sales or
purchases, as the case may be), and (b) as of the date hereof all of the
existing executory contracts and commitments of Seller in excess of Ten
Thousand ($10,000) Dollars of any kind or nature whatsoever (including, without
limiting the generality of the foregoing, all labor agreements, leases, notes
or other evidences of indebtedness, mortgages, sales representation agreements,
and purchase orders and commitments
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and powers of attorney). Seller has delivered to Buyer all copies of the
written instruments, if any, evidencing the items listed on Schedule 4.15.
Neither Seller nor Shareholders have any knowledge that any supplier
or customer of the Seller or any other person intends to cease dealing with the
Seller, or intends to alter in any material respect the amount of such person's
dealings with the Seller or that any such person would alter in any material
respect such dealings in the event of the consummation of the transactions
contemplated hereby.
4.16 Finder's or Broker's Fee, There are no broker's commissions,
finder's fees or other payments of like nature payable to any person or entity
in connection with the transactions contemplated by this Agreement, except for
the fees payable to Plante & Moran, LLP, which shall be the sole responsibility
of the Seller, and in no event will the Buyer have any liability for any fee or
commission in the nature of a finder's, originator's or broker's fee in
connection with the transactions contemplated hereby.
4.17 Licenses, Permits and Approvals. Schedule 4.17 contains a true
and complete list and description of all licenses, permits, authorizations and
approvals required by any federal, state or local governments' administrative
or judicial authorities or any of Seller's customers or suppliers in connection
with the operation of Seller's businesses. No approval of any of such
organizations is required for the consummation of the transactions contemplated
by this Agreement or which would materially adversely affect or impair the
right or ability of Buyer following the Closing to carry on any of Seller's
operations substantially as heretofore conducted.
4.18 General Warranty. The representations and warranties of Seller
contained in this Agreement and all exhibits, certificates, statements and
other documents furnished to Buyer by Seller or Shareholders in connection with
the transactions contemplated hereby are accurate and
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complete, and do not and will not contain any untrue statement of material
fact, or omit to state a material fact necessary to make the statements herein
and therein not misleading. Seller and Shareholders have made full disclosure
of all facts necessary to provide Buyer with all material information with
respect to the Seller's businesses, assets and liabilities.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller that:
5.1 Corporate Standing and Authority.
(a) Buyer is a corporation duly organized and validly
existing and in good standing under the laws of the State of Michigan.
(b) Buyer has legal capacity and authority to execute this
Agreement and to perform the transactions contemplated hereby. The
execution, delivery and performance of this Agreement do not and will
not violate or cause a default under any provision of Buyer's Articles
of Incorporation or Bylaws, or result in the breach, termination or
acceleration of any obligation or constitute a default or permit the
termination of any right under any mortgage indenture, lien, lease,
contract, agreement, instrument, order, arbitration award, judgment or
decree to which Buyer is a party or by which it or its properties are
bound. Buyer has taken all necessary action required by law, its
Articles of Incorporation and Bylaws or otherwise, to authorize the
execution, delivery and performance of this Agreement. This
Agreement,and each document and instrument executed pursuant to this
Agreement by Buyer constitutes a valid and binding obligation of Buyer,
enforceable in accordance with its terms, except as such enforcement
may be limited by bankruptcy, insolvency or similar laws affecting the
enforcement of creditors' rights generally. Buyer is not required to
obtain the consent, approval or waiver of any
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person not a party to this Agreement to enter into this Agreement or to
consummate the transactions contemplated hereby.
ARTICLE 6
INDEMNITIES
6.1 Indemnification by Seller and Shareholders.
(a) The Seller and the Shareholders, jointly and severally,
shall indemnify, defend and hold Buyer, and its officers, directors and
employees harmless, from, against and with respect to any claim,
liability, obligation, loss, damage, assessment, judgment, cost and
expense (including, without limitation, reasonable attorney's fees and
costs and expenses reasonably incurred in investigating, preparing,
defending against or prosecuting any litigation or claim, action, suit,
proceeding or demand), of any kind or character, arising out of or in
any manner incident, relating or attributable to:
(i) any breach or failure of any representation or
warranty of the Seller contained in this Agreement or in any
certificate, instrument of transfer or other document or
agreement (other than the Employment Agreements) executed by the
Seller, Shareholders or Seller's officers in connection with
this Agreement or otherwise made or given by Seller,
Shareholders or Seller's officers in connection with this
Agreement;
(ii) any failure by the Seller or Shareholders to
perform or observe, or to have performed or observed, in full
any covenant, agreement or condition to be performed or
observed by Seller or Shareholders under this Agreement or
under any certificates or other documents or agreements (other
than the Employment Agreements) executed by Seller, or
Shareholders in connection with this Agreement;
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(iii) reliance by Buyer on any books or records of
Seller or the reliance by Buyer on any written information
furnished by Seller, Shareholders or any of Seller's officers,
to Buyer, to the extent any of such information should prove to
be false.
(iv) any liability or claim resulting from the
conduct of the Seller businesses through the Closing Date,
including but not limited to any liability or claim for product
warranties, product recalls or personal injury or damage to
property based on or resulting from any product manufactured or
sold by Seller through the Closing Date, or any liability or
claim for any income, capital, transfer, sales, use, goods and
services or other tax, assessment, penalty or interest of any
nature which relates to any period prior to or including the
Closing Date or any liability or claim for any income, capital,
transfer, sales, use, goods and services or other tax,
assessment, penalty or interest of any nature which relates to
any period prior to or including the Closing Date;
(v) any agreements, contracts, negotiations or other
dealings by Seller or Shareholders with any person concerning
the sale of the stock or business of the Seller;
(vi) any losses incurred by the Seller prior to the
Closing Date which are of a nature customarily insured against
by a business similar to that of the Seller, including any
losses of a nature covered by any insurance plans maintained by
or on behalf of the Seller;
(vii) any liability or claim for workers' compensation
benefits, health, life or other insurance benefits, or any
other employee benefits or claims for or by
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any of the Seller's employees resulting from or relating to any
occurrence during any period prior to or including the Closing
Date;
(viii) any liability or claim resulting from the
employment or termination of any employee of the Seller on or
prior to the Closing Date;
(ix) the Excluded Obligations and any other
liabilities of Seller or Shareholders;
(x) any trade or other accounts receivable (whether
billed or unbilled) purchased hereunder (net of the allowance
for bad debts as reflected in the Net Asset Statement) which are
not paid in cash without resort to legal proceedings within One
Hundred Twenty (120) days following the Closing; or
(xi) any liability or claim resulting from the
matters disclosed on Schedules 4.9 or 4.11 attached hereto.
(b) The aggregate amount of indemnification to which Buyer
shall be entitled hereunder from all parties for all claims for
indemnification shall not exceed a total of Three Million Five Hundred
Thousand ($3,500,000) Dollars.
(c) Buyer shall notify the Seller and Shareholders in a
timely manner of any matters as to which Buyer or any of its officers,
directors or employees are entitled to receive indemnification and/or
defense under this Section, and shall set forth in such notice
reasonable detail regarding specific facts and circumstances then known
by Buyer which pertain to such matters.
(d) In the event the Buyer has asserted a claim for
indemnification under this Agreement, in addition to all other rights
and remedies available to Buyer, the Buyer shall be entitled to set-off
the amount of such claim against any amounts due, directly or
indirectly, to Seller or Shareholders under any agreement or
arrangement until Buyer's
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claim has been fully satisfied, including without limitation, any
amount payable pursuant to the terms of this Agreement, the Promissory
Note, the Employment Agreements or the Affiliate Leases.
(e) Except with respect to claims for indemnity pursuant to
Sections 6.1(a)(x) and 6.1 (a)(xi) hereof, Buyer shall not demand
payment of otherwise enforce any claim for indemnification or defense,
or any right to setoff, under this Section unless the total amount of
Buyer's claims under this Section exceeds Fifty Thousand ($50,000)
Dollars (exclusive of any amounts recovered pursuant to Sections 6.1
(a)(x) or 6.1 (a)(xi) hereof).
(f) In the event that Buyer shall make any claims against
Seller and/or Shareholders pursuant to Section 6.1(a)(x) hereof, and
Seller and/or Shareholders pay such claims in full, then, upon Seller's
or Shareholders' request, Buyer shall promptly transfer to Seller or
Shareholders, as the case may be, for collection any such unpaid
accounts receivables which have been paid by Seller or Shareholders
pursuant to Section 6.1(a)(x). In such event, Seller and/or
Shareholders shall be entitled to take reasonable collection actions
with respect to any account so transferred so long as such actions do
not materially interfere with the business operations of the Buyer. In
this connection, all payments received from any customer following the
Closing Date shall be deemed to be made first in payment of the account
of said customer outstanding on the Closing Date, unless otherwise
designated by said customer and except for any amounts as to which
there is a bona fide dispute.
(g) Buyer shall have no right to indemnification, defense or
setoff under this Section matter or claim unless Buyer provides the
notice required under Section 6.1(c) as to that matter or claim
within four (4) years following the Closing Date.
6.2 Indemnification by Buyer.
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(a) The Buyer shall indemnify, defend and hold harmless
Seller, and its officers, directors and employees, from, against and
with respect to any claim, liability, obligation, loss damage,
assessment, judgment, cost and expense (including, without limitation,
reasonable attorneys' fees and costs and expenses reasonably incurred
in investigation, preparing, defending against or prosecuting any
litigation or claim, action, suit, proceeding or demand), of any kind
or character, arising out of or in any manner incident, relating or
attributable to:
(i) any breach or failure of any representation or
warranty of the Buyer contained in this Agreement or in any
certificate, instrument of transfer or other document or
agreement executed by the Buyer in connection with this
Agreement or otherwise made or given by Buyer in connection with
this Agreement; or
(ii) any failure by the Buyer to perform or observe,
or to have performed or observed, in full any covenant,
agreement or condition to be performed or observed by Buyer
under this Agreement or under any certificates or other
documents or agreements executed by Buyer in connection with
this Agreement.
(b) Seller shall notify Buyer in a timely manner of any matters as
to which Seller or any of its officers, directors or employees are
entitled to receive indemnification and/or defense under this Section, and
shall set forth in such notice reasonable detail regarding specific facts and
circumstances then known by Seller which pertain to such matters.
6.3 Third Party Claims. In the event either party makes a claim for
indemnification under this Agreement as a result of any action, suit,
proceeding, claim, demand or assessment brought by a third party (a "Third Party
Claim"), then the party seeking indemnification (the "Indemnitee") shall advise
the indemnifying party (the
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"Indemnitor") of the same in the notice pursuant to Section 6.1(b) or
6.2(b) hereof and include a copy of all relevant materials with respect
to such Third Party Claim received by the Indemnitee, and such Third
Party Claim, shall be administered as follows:
(a) The Indemnitor shall, at its own expense, contest and
defend such Third Party Claim; provided, however, Indemnitee shall have
the right to participate in such defense (the costs and expenses of
which shall be borne by the Indemnitor) and, provided, further, in the
event the Indemnitor shall fail to proceed with reasonable diligence in
defending any Third Party Claim, then the Indemnitee, upon reasonable
notice to the Indemnitor stating its objections to the conduct of the
defense by the Indemnitor, shall have the right to take over the
defense of the Third Party Claim, with the reasonable costs and
expenses of such defense continued to be borne by the Indemnitor. In no
event shall the Indemnitor have the right to settle any Third Party
Claim without the prior written consent of the Indemnitee, nor shall
the Indemnitee have the right to settle any Third Party Claim without
the prior written consent of the Indemnitor. Consent to the settlement
shall not be unreasonably withheld.
(b) Each party shall cooperate with each other in connection
with any such Third Party Claim and provide each other with reasonable
access to any books, records or other documents or information which
they may possess relating to such claim.
6.4 Payment and Interest. In the event any party makes a
claim for indemnification hereunder, such amounts shall be paid or the
defense of the claim undertaken, by the indemnifying party within
thirty (30) days following such indemnifying party's receipt of notice
of such claim. In the event such amounts are not paid or such defense
is not undertaken within such thirty (30) day period, any unpaid
amounts ultimately found to be due and owing shall bear interest from
and after the
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expiration of such thirty (30) day period at the prime rate of interest
charged from time to time by Comerica Bank, until the date of payment.
ARTICLE 7
COVENANTS
7.1 Covenants Following Closing. Buyer hereby covenants and agrees
that following the Closing all of the Assumed Liabilities will be paid by the
Buyer as they come due and in the ordinary course of business, and that any
payments to any third party to whom such Assumed Liabilities are owed will be
allocated first to the payment of Assumed Liabilities until such obligations are
paid in full, and only thereafter to post-Closing obligations.
7.2 Employees
(a) On the Closing Date, the Seller shall terminate all of
its employees, and the Buyer shall extend an offer of employment to any
such employees which Buyer, in its discretion, desires to hire
commencing on the next business day immediately following the Closing
Date.
(b) Buyer shall give those former employees of Seller which
are hired by Buyer (the "Former Employees") credit for prior service
with the Seller for qualification for any vacation benefits, 401(k)
and profit sharing plans, and disability and life insurance benefits.
(c) Buyer shall provide to the Former Employees continued
coverage under their current Blue Cross/Blue Shield Master Medical
insurance plan (the "Blue Cross Plan") through December 31, 1996. On
or about such date, Buyer shall, in its discretion, either continue
the Blue Cross Plan coverage for such Former Employees for such period
of time as Buyer may deem appropriate or provide such Former Employees
alternative medical coverage generally comparable to the Blue Cross
Plan.
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7.3 MESC Rating. Buyer hereby acknowledges that, following Closing,
Buyer may be deemed a successor to Seller's Michigan Employment Security
Commission experience rating and unemployment tax rate.
ARTICLE 8
MISCELLANEOUS
8.1 Additional Documents. Following the Closing Date, Buyer, Seller
and Shareholders shall execute and deliver any and all other documents and take
such other actions as may be reasonably requested by the other which are
necessary or desirable to effectuate the terms of this Agreement.
8.2 Bulk Sales Law. The parties hereto agree to waive compliance
with any applicable bulk sales laws.
8.3 Survival. All representations, warranties, covenants and
agreements of the parties set forth in this Agreement, shall be deemed restated
as of the Closing Date and shall survive the Closing and continue in full force
and effect after the consummation of the transactions contemplated hereby.
8.4 Interpretation. Article titles, Schedule titles and headings to
Sections herein are inserted for convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement. The Schedules and Exhibits referred to herein shall be deemed an
integral part of this Agreement to the same extent as if they were set forth
verbatim herein.
8.5 Entire Agreement. This Agreement, the Related Agreements and
the Appendices, Schedules and Exhibits attached hereto, constitute the entire
agreement among the parties pertaining to the contemporaneous agreements,
representations, and understandings of the parties. All prior negotiations,
writings and discussions between the parties are merged in this
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Agreement. The parties hereto, by mutual agreement, may amend, modify and
supplement this Agreement. Any supplement, modification, or amendment of this
Agreement shall not be binding unless executed in writing.
8.6 Notices. All notices, requests, demands, and other
communications under this Agreement shall be in writing and shall be deemed to
have been duly given on the date of service if served personally on the party to
whom notice is to be given, or on the date of mailing if mailed to the party to
whom notice is to be given, by first class mail, registered or certified,
postage prepaid, and properly addressed as follows:
(a) To Buyer at:
c/o Talon Automotive Group LLC
900 Wilshire Dr.
Suite 203
Troy, Michigan 48084
Attention: David J. Woodward
with a copy to:
Timmis & Inman L.L.P.
300 Talon Centre
Detroit, Michigan 48207
Attn: Richard M. Miettinen
(b) To Seller and Shareholders at:
Roger H. Ducoffre
31325 North River Road
Harrison Township, Michigan 48045
and
Theodore H. Dezenski
4728 Lockwood Drive
Washington, Michigan 48094
with a copy to:
Bassey & Selesko, P.C.
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27777 Franklin Road
Suite 1400
Southfield, Michigan 48034-2379
Attn: Dennis C. Modzelewski
Any party may change its address for purposes of this paragraph by giving the
other party written notice of the new address in the manner set forth above.
8.7 Governing Law. This Agreement shall be construed in accordance
with and governed by the laws of the State of Michigan.
8.8 Waivers. Any term or provision of this Agreement may be waived,
or the time for its performance may be extended, by the party or parties
entitled to the benefit thereof. Any such waiver shall be validly and
sufficiently authorized for the purposes of this Agreement if it is in writing
and, as to the Shareholders, if it is executed by them, or, as to Buyer or
Seller, if it is executed by their respective Presidents. The failure of any
party hereto to enforce at any time any provision of this Agreement shall not be
construed to be a waiver of such provision, nor in any way to affect the
validity of this Agreement or any part hereof or the right of any party
thereafter to enforce each and every such provision. No waiver of any breach of
this Agreement shall be held to constitute a waiver of any other or subsequent
breach.
8.9 Expenses. Each party hereto (other than the Seller) will pay all
costs and expenses incident to its negotiation and preparation of this
Agreement and to its performance and compliance with all agreements and
conditions contained herein on its part to be performed or complied with,
including the fees, expenses and disbursements of its counsel and accountants,
and in no event shall Seller bear any such costs and expenses of the
Shareholders (except to the extent of time incurred by various employees of
Seller).
8.10 Partial Invalidity. Wherever possible, each provision hereof
shall be interpreted in such manner as to be effective and valid under
applicable law, but in case any one or more
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of the provisions contained herein shall, for any reason, be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality
or unenforceability shall not affect any other provisions of this Agreement and
this Agreement shall be construed as if such invalid, illegal or unenforceable
provision or provisions had never been contained herein unless the deletion of
such provision or provisions would result in such a material change as to cause
completion of the transactions contemplated hereby to be unreasonable.
8.11 Assignment. The rights and obligations under this Agreement may
not be assigned, except by the Buyer (without discharge of its obligations
hereunder). This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors or permitted assigns.
Nothing in this Agreement, express or implied, is intended or shall be
construed to confer upon any person (other than the parties hereto and their
respective successors or permitted assigns) any right, remedy or claim under or
by reason of this Agreement.
8.12 Attorneys Fees. In the event of any litigation arising out of
this Agreement, the prevailing party shall be entitled to recover its
reasonable attorneys fees and costs and expenses of litigation from the
non-prevailing party.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
SELLER: BUYER:
J & R MANUFACTURING, INC. JR ACQUISITION INC.
By: Roger H. Ducoffre By: David Woodward, V.P.
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SHAREHOLDERS:
Roger H. Ducoffre Theodore H. Dezenski
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Roger H. Ducoffre Theodore H. Dezenski
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