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EXHIBIT 10.4
ASSET PURCHASE AGREEMENT
BETWEEN
LDM TECHNOLOGIES, INC.,
a Michigan corporation
AND
DBM TECHNOLOGIES, LLC,
a Michigan limited liability company
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TABLE OF CONTENTS
1. SALE AND TRANSFER OF ASSETS.......................................... 1
1.1 Transfer of Assets ........................................... 1
1.2 Retained Assets .............................................. 3
1.3 Business ..................................................... 3
1.4 Retained Contracts ........................................... 3
2. CONSIDERATION ....................................................... 3
2.1 Purchase Price ............................................... 3
2.2 Cash Price ................................................... 3
2.3 Current Assets ............................................... 3
2.4 Current Liabilities .......................................... 4
2.5 Assumed Liabilities .......................................... 4
2.6 Inventory .................................................... 4
2.7 Accounts Receivable .......................................... 4
2.8 Retained Liabilities ......................................... 4
2.9 Time for Determination ....................................... 5
2.10 Payment of the Purchase Price ................................ 5
2.11 Determination of the Cash Price .............................. 5
2.12 Assignment ................................................... 6
3. CLOSING PAYMENT AND OTHER MATTERS ................................... 6
3.1 Closing ...................................................... 6
3.2 Closing Deliveries ........................................... 6
3.3 Allocation ................................................... 6
3.4 (Reserved) ................................................... 7
3.5 Seller to Assume Risk Prior to Closing ....................... 7
4. CERTAIN COVENANTS OF SELLER AND BUYER................................ 7
4.1 Negative Covenants ........................................... 7
4.2 Affirmative Covenants ........................................ 7
4.3 Seller's Employees ........................................... 7
5. REPRESENTATIONS AND WARRANTIES OF SELLER ............................ 8
5.1 Organization and Good Standing ............................... 8
5.2 Authority .................................................... 9
5.3 Due Authorization: Enforceability ............................ 9
5.4 No Conflicts ................................................. 9
5.5 Permits ...................................................... 9
5.6 Title to Property ............................................ 10
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5.7 Litigation ................................................... 10
5.8 Delivery of Schedules ........................................ 10
6. REPRESENTATIONS AND WARRANTIES OF BUYER ............................. 10
6.1 Organization and Good Standing ............................... 10
6.2 Authority .................................................... 10
6.3 Due Authorization; Enforceability ............................ 10
6.4 No Conflicts ................................................. 11
7. CONDITIONS TO BUYER'S PERFORMANCE.................................... 11
7.1 Representations and Warranties ............................... 11
7.2 Approval ..................................................... 11
7.3 Organizational Documents ..................................... 12
7.4 No Litigation ................................................ 12
7.5 Licenses and Permits ......................................... 12
7.6 Consents...................................................... 12
7.7 Performance .................................................. 12
7.8 Real Property Leases with Seller ............................. 12
8. CONDITIONS TO SELLER'S PERFORMANCE .................................. 12
8.1 Representations and Warranties ............................... 12
8.2 Approval ..................................................... 13
8.3 Organizational Documents ..................................... 13
8.4 No Litigation ................................................ 13
8.5 Real Property Leases with Buyer .............................. 13
8.6 Performance .................................................. 13
9. OTHER COVENANTS AND AGREEMENTS ...................................... 13
9.1 Assignment ................................................... 13
9.2 Bulk Sales Law ............................................... 13
9.3 Further Assurances ........................................... 13
9.4 Broker's Fees ................................................ 14
9.5 Communications ............................................... 14
9.6 Misdirected Property ......................................... 14
9.7 Business Records ............................................. 14
9.8 Confidentiality .............................................. 14
9.9 Joint Obligations of the Parties.............................. 15
9.10 Employee Benefit Plans.......... ............................. 16
10. INDEMNIFICATION ..................................................... 17
10.1 Survival ..................................................... 17
10.2 Indemnification by Seller or Buyer ........................... 18
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10.3 Indemnity Payments ........................................... 19
11. GENERAL PROVISIONS .. ............................................... 19
11.1 Successors and Assigns ....................................... 19
11.2 Section Headings ............................................. 19
11.3 Cooperation .................................................. 20
11.4 Expenses ..................................................... 20
11.5 Schedules .................................................... 20
11.6 Counterparts ................................................. 20
11.7 Notice ....................................................... 20
11.8 Severability ................................................. 21
11.9 Governing Law ................................................ 21
11.10 Waiver ....................................................... 21
11.11 Public Statements ............................................ 22
11.12 Entire Agreement ............................................. 22
11.13 Termination .................................................. 22
11.14 Affiliate; Knowledge ......................................... 22
LIST OF SCHEDULES ........................................................ 24
SCHEDULE 1.2 ............................................................. 25
SCHEDULE 1.4 ............................................................. 26
SCHEDULE 3.3 ............................................................. 27
SCHEDULE 5.4 ............................................................. 28
SCHEDULE 5.6 ............................................................. 29
SCHEDULE 5.7 ............................................................. 30
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THIS AGREEMENT dated as of December 31, 1998, between DBM Technologies,
LLC, a Michigan limited liability company ("Buyer") and LDM Technologies, Inc.,
a Michigan corporation ("Seller"),
WITNESSETH:
WHEREAS, Buyer desires to purchase from Seller, and Seller desire to sell
to Buyer, substantially all of the assets owned or used by Seller in the
Business (as defined in Section 1.3),
AGREEMENTS:
NOW, THEREFORE, in consideration of the above premises and of the mutual
representations, warranties and covenants contained in this Agreement, Seller
and Buyer agree as follows:
1. SALE AND TRANSFER OF ASSETS.
1.1 Transfer of Assets. Subject to the terms and conditions of this
Agreement, Seller hereby agrees to sell, and Buyer hereby agrees to purchase, on
the Closing Date (as defined in Section 3.1) all of Seller's right, title, and
interest in and to all of the assets owned or used by Seller in the Business,
other than the Retained Assets (as defined in Section 1.2), including, without
limitation, inventory, accessories, intellectual property, specified contracts,
permits, licenses, and selected other personal property (collectively referred
to as the "Assets"). Without limiting the foregoing, the Assets include the
Accessories, Intellectual Property, Permits, Business Records, Rights Under
Assumed Contracts, Inventory, Receivables, Cash and Data as follows:
A. All motor vehicles, furniture (other than the Retained Assets) and
removable fixtures or other appurtenances ("Accessories") used by Seller or any
of its affiliates in connection with the Business, but excluding (i) the
Retained Assets, and (ii) items solely used by Seller or its affiliates to
provide centralized administrative services to the Business;
B. All of Seller's ownership, use, license or similar rights and
interests in the Business's trade names, trademarks and service marks, licenses,
copyrights, technical information, know-how, proprietary information, computer
software, all letters patent (utility and design) and pending applications for
patents as well as any rights in all other intellectual property (excluding
Retained Assets) used in the Business (collectively "Intellectual Property"),
together with the goodwill associated with trademarks and service marks of the
Business and other goodwill of the Business (collectively the "Goodwill");
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C. All governmental permits, consents, authorizations, approvals, and
licenses (collectively, "Permits") now held by Seller in connection with the
Business to the extent that Seller's rights under such Permits are transferable;
D. All engineering drawings, material specifications, process and
routing sheets, bills of materials, employee records, test data, catalogs,
brochures, advertising materials, and business records of Seller relating to the
Business (excluding tax records and corporate minute books of Seller) ("Business
Records");
E. All of Seller's rights relating to the Business under (i) all
licenses (the "Licenses"); (ii) contracts to sell Inventory and/or provide
services to Seller's customers; (iii) contracts to purchase raw materials and
supplies from suppliers; (iv) customer purchase orders; and (v) other contracts
entered into in the Business, whether or not in the ordinary course of Business,
and whether or not executory, performed, terminated or otherwise involving
on-going rights or obligations, other than Retained Contracts as hereinafter
defined (collectively items (i), (ii), (iii), (iv) and (v) being the "Assumed
Contracts") (collectively "Rights Under Assumed Contracts");
F. All of Seller's "Inventory" (as defined in Section 2.7) relating to
the Business on the Closing Date.
G. All rights to payment of any kind (and any security therefor) owing
to Seller, with respect to the Business (exclusive of Retained Assets),
including, without limitation, rights to payment by reason of: (i) accounts
receivable and any other accounts, whether such right to payment is classified
by law as an instrument, chattel paper, contract right, account, general
intangible or otherwise; (ii) rights to refunds or rebates arising from
operation of the Business; and (iii) general intangibles, including rights,
claims or causes of action against third parties (collectively, "Receivables");
H. All cash and cash equivalents of the Business on hand and in
accounts and all security deposits of any kind whatsoever ("Cash"); and
I. All computerized data bases containing information relating to the
Business, including, but not limited to, customer lists, third party
contractors, suppliers, and accounting records and any and all other information
related to the Business to be provided to Purchaser in the form currently used
by Seller in the ordinary course of operating the Business ("Data").
Seller agrees to deliver to Buyer at the Closing good, clear,
marketable title to the Assets, free and clear of all claims, liabilities,
obligations, restrictions, security interests, leases, liens, charges and
encumbrances (other than Assumed Liabilities as hereinafter defined and other
than set forth in Schedule 5.6)
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1.2 Retained Assets. The term "Retained Assets" shall mean the machinery
and equipment of the Business and owned by Seller, Seller's minute books, and
any tax attributes relating to the Business prior to the Closing Date, including
tax refunds, credits and net operating loss carry-overs of Seller for periods up
to the Closing Date, rights of Seller in its six (6) real estate leases of the
facilities identified on Schedule 1.2, and Seller's rights in Retained
Contracts, and any assets of Seller not located at the Schedule 1.2 locations
(including those used to provide administrative services to those locations).
1.3 Business. The term "Business" as used in this Agreement shall mean the
operations of manufacture and sale of various automotive components and services
related thereto (including, without limitation, tooling and engineering)
conducted at the six (6) facilities identified on Schedule 1.2.
1.4 Retained Contracts. "Retained Contracts" shall mean Seller's six (6)
real estate leases of the facilities identified on Schedule 1.2 under which
Seller is the lessee, all contracts in which Seller is a party that do not
relate to the Business, or which solely relate to providing administrative
services to the Business by Seller or its affiliates, and any other contracts
identified on Schedule 1.4.
2. CONSIDERATION.
2.1 Purchase Price. In consideration for the sale and transfer of the
Assets of the Business effective as of the Closing Date, Buyer hereby agrees to
and will pay, perform and discharge, as of the Closing Date or as otherwise
provided, all of the following, which will collectively be described as the
"Purchase Price":
A. The "Cash Price" as hereinafter defined; plus
B. The amount of the "Assumed Liabilities", as hereinafter defined.
2.2 Cash Price. The "Cash Price" shall be the:
A. "Current Assets" (as defined herein) for the Business,
less the:
B. "Current Liabilities" (as defined herein) for the Business.
2.3 Current Assets. The "Current Assets" shall mean the amount at which
Current assets are carried on the "Closing Balance Sheet" (as defined herein) of
the Business. As to "Inventory" (as defined herein), this will be the lower of
cost or market, and as to "Accounts
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Receivable" (as defined herein), it will be the book amount of such receivables
subject to any reserve or credit for uncollectible accounts or adjustments owed
to customers not already taken into account in the definition of Accounts
Receivable.
2.4 Current Liabilities. The "Current Liabilities" shall be the amount of
current liabilities carried on the balance sheet of the Business as of the
Closing Date.
2.5 Assumed Liabilities. The "Assumed Liabilities" means the obligations
and liabilities contained within or resulting from the following items, whether
now existing or arising in the future:
A. All obligations and liabilities under Assumed Contracts;
B. all obligations and liabilities which are Current Liabilities;
C. all other obligations and liabilities arising out of the ownership
or operation of the Business, whether or not incurred in the ordinary course of
business, and whether incurred or arising before or after the Closing Date,
apart from federal, state or local income tax or Single Business Tax liabilities
of Seller arising out of ownership or operation of the Business for periods
prior to the Closing Date;
excluding only Retained Liabilities.
2.6 Inventory. The "Inventory" shall mean the inventory of items for
sale to customers as part of the Business, which includes, but is not
necessarily limited to, the raw materials, spare parts, work-in-process and
finished goods as of a given point in time.
2.7 Accounts Receivable. The "Accounts Receivable" shall mean the book
amount of accounts receivable carried on the balance sheet of the Business at a
given point in time, prior to any reduction for reserves for uncollectible
accounts or credits or adjustments owed customers not reflected in such book
amount.
2.8 Retained Liabilities. Seller shall specifically retain, and Buyer shall
not assume or pay, any obligations, liabilities and commitments of Seller under
the items described below in this Section, which items shall collectively
constitute the "Retained Liabilities":
A. All obligations and liabilities for taxes (including penalties,
interest and additions to tax) of Seller, including all obligations and
liabilities for taxes relating to consolidated or combined tax returns which
include the Business activities up to the Closing Date;
B. any obligations of Seller under Retained Contracts; and
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C. any other liability or obligation of Seller not expressly assumed by
Buyer hereunder.
2.9 Time for Determination. For purposes of computing, determining and
identifying the components of the Purchase Price, or identifying the Assets,
each definition used in this regard is computed, determined and its components
identified as of the date of the Closing Balance Sheet, with the exception of
Assumed Liabilities, which may arise or become quantified both before and after
the Closing Date.
2.10 Payment of the Purchase Price. Buyer shall pay and perform the
following in order to provide the Purchase Price to Seller:
A. At Closing. At the Closing, on the Closing Date (as such terms are
defined herein), Buyer will:
1. Deliver cash or immediately available funds, in U.S. currency, to
Seller in the amount of eighty percent (80%) of the Cash Price,
with each component of that Cash Price determined as of the date
of the Closing Balance Sheet.
2. Deliver its subordinated promissory note ("Buyer Note") in the
form of Exhibit 2.10.A.2 attached hereto in the amount of twenty
percent (20%) of the Cash Price.
3. Assume or pay all Assumed Liabilities.
B. After Closing. After the Closing, Buyer will:
1. Pay or otherwise discharge and perform all Assumed Liabilities
whether under Assumed Contracts or otherwise, as they come due,
without incurring penalty or interest or permitting default in
any of such obligations.
2.11 Determination of the Cash Price. The Cash Price will be determined as
follows:
A. Seller shall prepare and deliver to Buyer at the Closing a balance
sheet for the Business dated December 31, 1998 (the "Closing Balance Sheet")
along with a computation of the Cash Price as of the Closing Date, each of
which shall be prepared in accordance with generally accepted accounting,
principles ("GAAP") and, even if differing from GAAP, the provisions of this
Agreement and Seller's past practices. The Closing Balance Sheet will be used to
compute the Cash Price. All monetary amounts referred to in this Agreement are
in U.S. funds.
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B. If Buyer agrees with the Closing Balance Sheet, it shall so notify
Seller at the Closing in writing. The date such notification is received by
Seller is the date the Cash Price has been determined by agreement.
2.12 Assignment. Contracts assumed by Buyer hereunder (Assumed Contracts)
shall be deemed to have been assigned by Seller to Buyer effective with the
Closing; provided, however, that to the extent that the assignment of any such
Assumed Contracts requires the consent of the other parties thereto, this
Agreement and any closing documents ancillary hereto shall not constitute a
breach thereof. In cases in which the consent of a third party to assignment of
a contract is legally required, Seller will exercise reasonable efforts to
obtain such consent, unless directed otherwise by Buyer or its representatives.
In the event that any third party shall refuse to grant consent, or as to any
contracts on which Buyer directs Seller not to seek consent, Seller shall retain
such contract in its name and attempt, to the extent reasonably possible, to
provide Buyer with the benefits of such contracts. To the extent Buyer is able
to enjoy the benefits of each contract, the costs and performance of such
contract shall be the responsibility of Buyer, and the lack of such consent
shall not then be a breach of any representation or obligation of Seller
hereunder.
3. CLOSING PAYMENT AND OTHER MATTERS.
3.1 Closing. The closing of the transactions contemplated hereby
("Closing") shall be held at the offices of Dean & Fulkerson, P.C., 801 West Big
Beaver Road, Suite 500, Troy, Michigan, at 9:00 a.m (local time) on February 1,
1999, or such other date as the parties agree upon in writing (the "Closing
Date"), and shall be effective as of 12:01 a.m. on the date following the
Closing Date. Unless the parties otherwise agree in writing, if the Closing has
not occurred by the Closing Date, then this Agreement will be deemed to have
been terminated and abandoned, in which event all obligations of the parties
herewith shall terminate except for the parties' obligations in Sections 9.4,
9.8, 11.4 and 11.11, subject to the legal rights and remedies of either party
arising out of the other party's breach of any provision of this Agreement.
3.2 Closing Deliveries. On the Closing Date, Seller shall grant and deliver
to Buyer exclusive possession of the Assets in the manner required by this
Agreement. In addition to delivering all other documents required under the
terms of this Agreement to be delivered by Seller at the Closing, Seller will
deliver to Buyer: (a) a Bill of Sale for the Assets; (b) recordable assignments
of all rights in or evidencing the use of all Intellectual Property which is or
could be of public record; (c) assignments of all Assumed Contracts (in the form
of an Assignment and Assumption Agreements); and (d) all documents and
agreements referenced in this Agreement and the schedules hereto (the
"Schedules") or otherwise reasonably required to implement the provisions of
this Agreement.
3.3 Allocation. The parties agree that all Assumed Liabilities and all
other capitalized costs shall be allocated for all purposes (including,
financial, accounting and tax purposes) in
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accordance with Schedule 3.3, which Schedule shall be agreed upon by Buyer and
Seller prior to the Closing Date.
3.4 (Reserved).
3.5 Seller to Assume Risk Prior to Closing. Possession of the Assets will
be given to Buyer at the Closing. Buyer will not acquire any title to the
Assets until Closing occurs and possession has been given to it in accordance
with this Section 3.5, and, accordingly, all risk of loss with respect to the
Assets will be borne by Seller until possession has been given to Buyer. For
purposes of this Section 3.5, possession will be deemed to have been given to
Buyer when Seller delivers or causes to be delivered to Buyer good and
sufficient instruments of transfer and conveyance as provided in this Agreement.
4. CERTAIN COVENANTS OF SELLER AND BUYER.
Seller, and as set forth below, Buyer, covenant and agree that:
4.1 Negative Covenants. Except as Buyer may otherwise consent in writing,
and between the date of this Agreement and the Closing Date Seller shall not:
A. sell or otherwise dispose of any part of the Business or Assets,
except Inventory sold in the ordinary course of business; or
B. create or suffer to exist any new encumbrances (other than any Lien
for taxes not yet due and payable on any of the Assets.
4.2 Affirmative Covenants. Except as Buyer may otherwise consent in
writing, between the date of this Agreement and the Closing Date Seller shall:
A. operate the Business only in the ordinary course and in accordance
with past practices; and
B. give to Buyer and to its counsel, accountants, and other
representatives reasonable access to the premises of the Business and all of the
Assets and the personnel of Seller related thereto during normal business hours
upon reasonable notice; furnish to Buyer and Buyer's representatives such
additional documents, financial information, and information with respect to
any of the Assets or the Business as Buyer may from time to time reasonably
request; and cause Seller's independent accountant to permit Buyer and its
independent accountant to examine the records and working papers pertaining to
financial information.
4.3 Seller's Employees.
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A. Except as otherwise specifically provided herein, on or before 11:59
p.m. on the Closing Date, Seller shall terminate the employment of all employees
of the Business and cause the employees of the Business to cease active
participation in all Benefit Plans of Seller, including, without limitation, all
health insurance, welfare and health benefit plans, all pension, profit sharing,
and savings and stock ownership plans, all workers' compensation insurance and
all payments into any unemployment compensation funds
B. Buyer shall offer employment to substantially all of Seller's
employees identified by Buyer in its sole discretion, but in all events Buyer
will employ no less than the number of then-terminated employees of Seller that
will prevent a plant closing or mass layoff under, or imposition of any
liability on Seller for violation of, the Worker Adjustment and Retraining
Notification Act of 1988 ("WARN"), due to such terminations, failure to give
notice, or transactions pursuant to this Agreement. Buyer shall be solely liable
for, and will pay any amount owing for, failure of Seller or Buyer to provide
any notice required under the Worker Adjustment and Retraining Notification Act
of 1988 in connection with the transaction contemplated by this Agreement. Buyer
will be solely responsible for any obligations to pay severance or WARN
benefits, if any, due to Seller's former employees who do not become employed by
Buyer immediately after the Closing Date.
C. Seller hereby consents to the negotiation by Buyer, if Buyer elects
to do so, before or after Closing, with the appropriate collective bargaining
units of new collective bargaining agreements with respect to the terms and
conditions of employment of certain hourly employees represented by such union
as to certain plant facilities in the Business. Seller shall take all steps
reasonably necessary to assist Buyer in negotiations of such collective
bargaining agreements, which shall be in form and substance satisfactory to
Buyer, in its sole discretion. In the event Buyer elects to enter into such
negotiations (rather than assume the existing collective bargaining agreement),
Buyer, will then not assume the existing collective bargaining agreement as
amended ("Union Contract") with the union, identified on Schedule 4.3.C., and
Buyer shall make its election to Seller in writing on or before the Closing
Date. In the event Buyer elects the negotiation alternative, any penalty or new
cost imposed on Seller under the Union Contract due to or arising out of this
Agreement or its transactions will be assumed and paid by Buyer as an additional
Assumed Liability. The Union Contract will then be treated as a Retained
Contract rather than an Assumed Contract.
5. REPRESENTATIONS AND WARRANTIES OF SELLER.
To induce Buyer to enter into this Agreement and to consummate the
transactions provided for herein, Seller represents and warrants to Buyer that:
5.1 Organization and Good Standing. Seller is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Michigan
with full power and authority
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to own and operate its properties and to carry on its business as it is now
being conducted. Seller is authorized to transact business in the State of
Michigan and any other State in which the nature of its business and the
ownership of its properties makes such qualification necessary.
5.2 Authority. Seller has full power, authority, and legal capacity to
enter into this Agreement and to perform its obligations hereunder.
5.3 Due Authorization; Enforceability. The execution and delivery of this
Agreement by Seller and the performance of the obligations of Seller under this
Agreement have been duly authorized by the Board of Directors of Seller and to
the extent necessary, by its Shareholders, and all other corporate action has
been taken which is necessary to authorize the execution and delivery of this
Agreement by Seller and the performance of the obligations of Seller hereunder.
This Agreement has been duly and validly executed and delivered by Seller and
assuming valid execution thereof by Buyer, it will constitute a legal, valid,
and binding obligation of Seller and be enforceable against Seller in accordance
with its terms, subject to the effects of bankruptcy, insolvency and similar
laws affecting the enforcement of creditors' rights generally and except as
enforceability is subject to general equity principles.
5.4 No Conflicts. The execution, delivery, and performance of this
Agreement: (a) will not conflict with or result in a breach of any provision
contained in the charter or bylaws or other organizational documents of Seller;
(b) will not result in any conflict with, breach of, or default under or require
any notice, consent or approval which has not been obtained with respect to any
of the terms, conditions or provisions of any contract, agreement, lease,
license, franchise, permit, indenture, agreement or mortgage for borrowed money
or other arrangement to which Seller is a party or is bound or to which any of
its respective assets is subject or bound; and (c) will not violate any order,
law, rule or regulation applicable to Seller or to the Assets. To the best of
Seller's officers' knowledge, no action, consent or approval by, or filing by
Seller with, any federal, state, municipal, foreign or other court or
governmental body or agency, or any other regulatory body, is required in
connection with the execution, delivery or performance by Seller of this
Agreement or the consummation of the sale of the Assets and the other
transactions contemplated hereby. Other than as described on Schedule 5.4, to
the knowledge of Seller's officers, Seller is not in default under any contract,
transaction, agreement, lease, or instrument to which it is a party or by which
it is bound which default is likely to have a material adverse effect upon the
Assets or any portion thereof or the Business. Except as set forth on Schedule
5.6, neither the execution of this Agreement nor the consummation of the
transactions herein contemplated will result in the creation of any Lien on any
of the Assets; and neither Seller nor, to its officers' knowledge, any third
party is in default (or would be in default upon the giving or receipt of
notice or the passage of time or both) under any of the Assumed Contracts or
other contracts to which Seller is a party relating to the Business.
5.5 Permits. The "Permits" referenced in Section 1.1.C. are, to Seller's
officers' knowledge, the only permits consents, approvals, licenses and
authorizations required to enable the
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Business, as currently operated, to comply with applicable laws and regulations.
Seller is in compliance in all material respects with the terms of all of said
Permits.
5.6 Title to Property. Except as set forth in Schedule 5.6. Seller owns and
possesses all right, title and interest in and to the Assets free and clear of
all Liens or other restrictions on transfer.
5.7 Litigation. Except as set forth in Schedule 5.7, (a) there is no claim,
action, suit, charge, proceeding, arbitration, investigation, hearing, or notice
of hearing (each and all of the foregoing items being herein referred to as
"Litigation"), pending or, to the knowledge of Seller's officers, threatened by
or before any court or governmental or administrative authority or private
arbitration tribunal against Seller which relates to or affects the Assets or
Business or the transactions contemplated hereby, (b) Seller has not been
permanently or temporarily enjoined or barred by order, judgment, or decree of
any court or other tribunal or any agency or self-regulatory body from engaging
in or continuing any conduct or practice in connection with the Business, and
(c) there is not in existence any order, judgment, or decree of any court or
other tribunal or any agency or self-regulatory body requiring Seller to take
any action of any kind which is not required generally of other entities in
businesses similar to the Business with respect to the Business or Assets or to
which Seller or its properties or Assets are subject or by which Seller is bound
with respect to the Business or Assets.
5.8 Delivery of Schedules. Seller will be entitled to update all Schedules
to the date of Closing.
6. REPRESENTATIONS AND WARRANTIES OF BUYER.
To induce Seller to enter into this Agreement and to consummate the
transactions provided for herein, Buyer represents and warrants to Seller that:
6.1 Organization and Good Standing. Buyer is a limited liability company
duly organized, validly existing, and in good standing under the laws of the
State of Michigan with full power and authority to own and operate its
properties and to carry on its business as it is now being conducted.
6.2 Authority. Buyer has full power, authority, and legal capacity to enter
into this Agreement and to perform its obligations hereunder.
6.3 Due Authorization: Enforceability. The execution and delivery of this
Agreement by Buyer and the performance of the obligations of Buyer under this
Agreement have been duly authorized by the Members of Buyers, and to the extent
necessary by its Managers, Officers or Directors, if any, and all other limited
liability company action has been taken which is necessary
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to authorize the execution and delivery of this Agreement by Buyer and the
performance of the obligations of Buyer hereunder. This Agreement has been duly
and validly executed and delivered by Buyer and, assuming valid execution
thereof by Seller, it will constitute a legal, valid and binding obligation of
Buyer and be enforceable against Buyer in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, or other similar laws
affecting the enforcement of creditors rights generally and except as
enforceability is subject to general equity principles.
6.4 No Conflicts. The execution, delivery, and performance of this
Agreement: (a) will not conflict with or result in a breach of any provision
contained in the Articles of Organization; Operating Agreement or other
organizational documents of Buyer, (b) result in any conflict with, breach of,
or default under or require any notice, consent or approval which has not been
obtained with respect to any of the terms, conditions or provisions of any
contract, agreement, lease, license, franchise, permit, indenture, agreement or
mortgage for borrowed money, instrument of indebtedness, or other arrangement to
which Buyer is a party or by which it is bound or to which any of its assets is
subject or bound; and (c) will not violate any order, law, rule or regulation
applicable to Buyer. No action, consent or approval by, or filing by Buyer with,
any United States, federal, state, municipal, foreign or other court or
governmental body or agency, or any other regulatory body, is required in
connection with the execution, delivery or performance by Buyer of this
Agreement or the consummation of the sale of the Assets and the other
transactions contemplated hereby.
7. CONDITIONS TO BUYER'S PERFORMANCE
The obligations of Buyer under this Agreement, including that of
consummating the transactions contemplated herein, shall be subject to the
satisfaction on or prior to the Closing Date of the following conditions:
7.1 Representations and Warranties. All representations and warranties of
Seller contained in this Agreement, or any of the certificates, schedules,
exhibits, or other documents attached to this Agreement or delivered to Buyer
pursuant to this Agreement shall be true, correct, and complete on and as of the
date when made and on and as of the Closing Date, and Seller's authorized
Officer shall have executed and delivered to Buyer a certificate dated as of the
Closing Date to the foregoing effect.
7.2 Approval. The execution, delivery, and performance of this Agreement
and of the other documents provided for herein shall have been approved by the
Board of Directors of Seller, and Buyer shall have received copies of
resolutions to that effect duly adopted by the Board of Directors of Seller and
certified by the Secretary or an Assistant Secretary of Seller.
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7.3 Organizational Documents. Seller shall have delivered to Buyer
certified copies of the charter and bylaws and other organizational documents of
Seller, as amended to the Closing Date, and a Certificate of Good Standing of
such Seller issued by the appropriate authority in Michigan.
7.4 No Litigation. No action or proceeding shall have been instituted or
threatened before any court or governmental agency to restrain or prohibit
performance of this Agreement or the transactions contemplated herein.
7.5 Licenses and Permits. Seller shall have transferred to Buyer, or Buyer
shall have otherwise obtained, all licenses and permits with respect to the
Business, the absence of which would be likely to have a material adverse effect
on the ability of Buyer to conduct the Business after the Closing Date in the
manner in which it has been conducted by Seller.
7.6 Consents. Seller shall have obtained and delivered to Buyer all of the
consents of third parties required for the assignment to Buyer of all Assumed
Contracts, subject to the provisions of Section 2.13.
7.7 Performance. The performance by Buyer of its covenants under this
Agreement and the Closing of the transactions contemplated hereby shall be
subject to the full performance by Seller of each and every covenant and
condition imposed upon it hereunder; provided, however, that Buyer may at its
option waive in writing the performance of any of such covenants or conditions
imposed hereunder. Such waiver, however, shall not constitute a waiver of any
other covenant or condition.
7.8 Real Property Leases with Seller. Buyer and Seller shall have entered
into one or more subleases to sublease the real properties described in Schedule
1.2 upon terms mutually satisfactory to Buyer and Seller, and Seller shall have
delivered evidence of any required landlord consents to sublease.
8. CONDITIONS TO SELLER'S PERFORMANCE.
The obligations of Seller under this Agreement, including that of
consummating the transactions contemplated herein, shall be subject to the
satisfaction on or prior to the Closing Date of the following conditions:
8.1 Representations and Warranties. All representations and warranties of
Buyer contained in this Agreement or any of the certificates, schedules,
exhibits, or other documents attached to this Agreement or delivered to
Seller pursuant to this Agreement shall be true, correct, and complete on and as
of the date when made and on and as of the Closing Date, and a Member of Buyer
shall have executed and delivered to Seller a certificate dated as of the
Closing Date to the foregoing effect.
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8.2 Approval. The execution, delivery, and performance of this Agreement
and of the other documents provided for herein shall have been approved by the
Members of Buyer, and Seller shall have received copies of resolutions to that
effect duly adopted by the Members of Buyer and certified by a Member of Buyer.
8.3 Organizational Documents. Buyer shall have delivered to Seller
certified copies of the organizational documents of Buyer, as amended to the
Closing Date, and a certificate of the good standing of Buyer issued by the
appropriate authority in the jurisdiction of its creation.
8.4 No Litigation. No action or proceeding shall have been instituted or
threatened before any court or governmental agency to restrain or prohibit
performance of this Agreement
8.5 Real Property Leases with Buyer. Buyer and Seller shall have entered
into one or more subleases to sublease the real properties described in Schedule
1.2 upon terms mutually satisfactory to Buyer and Seller.
8.6 Performance. The performance by Seller of its covenants under this
Agreement and the Closing of the transactions contemplated hereby shall be
subject to the full performance by Buyer of each and every covenant and
condition imposed upon it hereunder; provided, however, that Seller may at its
option waive in writing the performance of any of such covenants or conditions
imposed hereunder. Such waiver, however, shall not constitute a waiver of any
other covenant or condition.
9. OTHER COVENANTS AND AGREEMENTS.
9.1 Assignment. As of the Closing Date, Seller shall be deemed to have
assigned to Buyer all right, title, and interest of Seller in and to such
warranties (express and implied) that continue in effect with respect to the
Assets or any portion of the Assets and to have nominated Buyer as the true and
lawful attorney of Seller to enforce such warranties. From time to time after
the Closing Date, Seller shall execute and deliver to Buyer such specific
assignments of such warranty rights held by Seller as Buyer may reasonably
request to enable Buyer to enforce such warranties.
9.2 Bulk Sales Law. Buyer and Seller agree to waive compliance under this
Agreement with the Michigan bulk sales law. Seller hereby agrees to indemnify,
defend, and hold Buyer harmless from and against any and all claims based on
non-compliance with the Michigan bulk sales law in this transaction, other than
for claims pertaining to Assumed Liabilities.
9.3 Further Assurances. At or after the Closing, at the request of Buyer,
Seller shall promptly execute and deliver or cause to be executed and delivered
to Buyer all such assignments, bills of sale, endorsements, powers of attorney,
and other documents, in addition to those otherwise required by this Agreement,
in form and substance reasonably required to (a) vest in Buyer title to
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and possession of the Assets, and (b) perfect and record, if necessary, the
sale, transfer, assignment, conveyance, and delivery to Buyer of the Assets.
9.4 Broker's Fees. Seller represents and warrants to Buyer that Seller has
not incurred any obligation or liability, contingent or otherwise, for brokerage
fees, finder's fees, agent's commissions or similar payments in connection with
this Agreement or the transactions contemplated hereby. Buyer represents and
warrants to Seller that Buyer has not incurred any obligation or liability,
contingent or otherwise, for brokerage fees, finder's fees, agent's commissions
or similar payments in connection with this Agreement or the transactions
contemplated hereby. Buyer and Seller each agree to indemnify and hold the other
party harmless against claims arising out of a breach of the representation and
warranty of such party contained in this Section.
9.5 Communications. Seller hereby authorizes Buyer from and after the
Closing Date to receive and open all mail and other communications received by
the Business, and, except as otherwise provided herein, to act with respect to
such communications in such manner as Buyer may elect if such communications
relate to the Business or the Assets, or, if such communications do not so
relate, to forward the same promptly to Seller. Seller shall promptly deliver to
Buyer the original of any mail or other communication received by it after the
Closing pertaining to any of the Assets or the Business or the obligations of
liabilities assumed by Buyer hereunder, and any monies, checks, or other
instruments of payment for amounts to which Buyer is entitled.
9.6 Misdirected Property. After the Closing, (i) Buyer shall deliver to
Seller any property which is owned by Seller and which comes into the possession
of Buyer but is not included in the Assets transferred hereunder, and (ii)
Seller shall deliver to Buyer any property which is owned by Buyer and comes
into the possession of Seller.
9.7 Business Records. Upon consummation of the Closing, Buyer shall
maintain for at least five (5) years the Business Records pertaining to the
pre-Closing Business operations. Buyer agrees to provide Seller reasonable
access to and copies of such Business Records as Seller reasonably requires to
conduct its business after Closing, including reporting any tax, claiming any
tax refund or disputing any tax matter, upon reasonable advance notice to Buyer
(which, absent actual emergency, will not be less than forty-eight (48) hours).
9.8 Confidentiality.
A. Except as required to assert or defend its rights in a judicial or
administrative proceeding, (x) neither Seller nor Buyer will, at any time prior
to the Closing Date disclose to any third parties the existence or the terms of
this Agreement, and (y) Seller will not, at any time after the Closing Date
disclose to any third parties any of Seller's trade secrets or proprietary
information assigned to Buyer under this Agreement or which is licensed to
Seller under any agreement being assigned to Buyer under this Agreement;
provided, that Seller or its affiliates may use or disclose
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any such information once it (i) becomes generally publicly known through no
fault of Seller or its affiliates, (ii) is generally or readily obtainable
within the industry relating to the Business, or (iii) to the extent that Seller
or its affiliates may become legally compelled to disclose any of such
information. Buyer will be given a reasonable opportunity to obtain a protective
order prior to disclosure under (iii).
B. Except as required to assert or defend its right in a judicial or
administrative proceeding, prior to the Closing, Buyer will not disclose or use
or enable anyone else to disclose or use any "Confidential Information", which
term shall mean all information relating to the Assets or the Business, except
information which (i) is generally publicly known or becomes generally publicly
known through no fault of Buyer, (ii) is generally or readily obtainable within
the industry relating to the Business, (iii) was available or becomes available
to Buyer on a non-confidential basis, or (iv) Buyer is legally required to
disclose. Seller will be given a reasonable opportunity to obtain a protective
order prior to disclosure under (iv). Notwithstanding the above, in connection
with the transactions contemplated hereunder, Buyer may disclose Confidential
Information to its accountants, lawyers and other representatives advising or
assisting Buyer in connection herewith and to third parties for the purpose of
obtaining debt or equity financing for the purchase of the Assets, provided that
all such parties are informed of this confidentiality arrangement and the
confidential nature of such information. In the event of termination of this
Agreement, upon the written request of Seller, Buyer shall use all reasonable
efforts to (x) cause to be delivered to Seller and retain no copies of any
documents, work papers, and other materials obtained by Buyer or on its behalf
from Seller, whether so obtained before or after the execution hereof, and (y)
destroy any documents, memoranda, notes, or other writings prepared by Buyer
based on information contained in such materials. Buyer's obligations under this
Section 9.8. B. shall terminate on the Closing Date assuming the Closing is
consummated.
C. Any non-public information that Seller obtains in connection herewith
with respect to Buyer shall be deemed confidential, and Seller will not disclose
such information to any third party or use such information to the detriment of
Buyer; provided, that (i) Seller or its affiliates may use and disclose any such
information once it has been publicly disclosed (other than by Seller in breach
of its obligations under this Section 9.8. C. or which has rightfully come into
the possession of Seller or its affiliates (other than from Buyer), and (ii) to
the extent that Seller or its affiliates may become legally compelled to
disclose any of such information, Seller or its affiliates may disclose such
information if reasonable efforts have been used by Seller (and Buyer has been
afforded the opportunity) to obtain an appropriate protective order or other
satisfactory assurance of confidential treatment for the information required
to be disclosed.
9.9 Joint Obligations of the Parties.
A. The parties agree to treat, and to cause all of their respective
affiliates to treat, the Seller and the Buyer as Predecessor and Successor
Corporations, respectively, pursuant to 26
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CFR Section 31.3121(a)(1)-(1)(b)and 26 CFR Section 31.3306(b)(1)-l(b) for
purposes of computing the annual wage limitations prescribed by 26 USC Section
3121(a)(1) and 26 USC Section 3306(b)(1) and the regulations thereunder. Such
treatment shall apply to all persons employed by the Seller and employed by the
Buyer after the Closing. The parties further agree to handle all reporting
requirements mandated by 26 USC Section 6011(a) and 26 USC Section 6051(a)
and the regulations thereunder under the procedures set forth in Section 5
("Alternate Procedures") of Rev. Proc. 83-66, 1983-36 I.R.S. 15, as amended by
Rev. Proc. 84-77, and particularly Section 5 (Alternate Procedure) thereof. The
parties shall cooperate in the exchange of information required by this Section.
The Buyer shall reimburse the Seller for any and all penalties assessed on the
Seller due to the Buyer's failure to comply with 26 USC Section 6051(a) and
regulations thereunder.
B. Pursuant to Section 5 of IRS Rev. Proc. 84-77, Buyer will assume
Seller's obligation to furnish Forms W-2 to employees of the Business subject to
U.S. income tax for the year in which the Closing occurs. Seller will provide
Buyer the information not available to Buyer relating to periods ending on or
before the Closing necessary for Buyer to prepare and distribute Forms W-2 to
employees of the Business for the year in which the Closing occurs, which forms
will reflect all remuneration earned by employees from both Seller and Buyer
during such year. Buyer will prepare and distribute such forms.
9.10 Employee Benefit Plans.
A. On the Closing Date, Buyer will:
1. Become plan sponsor, plan administrator, and assume all "Employee
Benefit Plans" as defined herein, which are separately maintained
by Seller for the Business (or simply assume any Employee Benefit
Plans maintained by or for any union representing employees of
the Business) as of the Closing Date, and all contributions
therefor will be prorated as of the Closing Date; and
2. Not become plan sponsor, plan administrator or assume any other
Employee Benefit Plans which are not described in Section 9.10.
A.1. above to cover employees of the Business. Buyer will
establish comparable Employee Benefit Plans to those not assumed
hereunder to cover employees of the Business it hires on or after
the Closing Date.
B. Seller shall have the obligation to continue to offer and provide
such continuation of coverage as required by Section 4980B of the Code and in
Regulation ss. 1. 162-26 and Sections 601 and 608 of ERISA and compliance with
the Health Insurance Portability and Accountability Act of 1996 to all of its
employees, former employees and qualified beneficiaries
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(including employees and qualified beneficiaries who incur a qualifying event as
the result of the sale of assets contemplated by this Agreement). Buyer shall
also fulfill the requirements of the Family and Medical Leave Act (FMLA) with
respect to employees of the Business who have taken or requested an
FMLA-qualifying leave on or before the time of the Closing. Buyer shall have no
obligation to provide continuation of coverage except with respect to those
employees (and their qualifying beneficiaries) who are employed by Buyer and who
after enrollment in Buyer's group health plan incur a subsequent qualifying
event which causes a loss of coverage under Buyer's group health plan.
C. "Employee Benefit Plan(s)" means all benefit plans within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended (29 USC 100 et seq.) ("ERISA"), which have been or are currently
contributed to or maintained by the Seller or any predecessor employer as such
term is utilized in Section 414(a) of the Internal Revenue Code of 1986, as
amended, (the "Code") or any employer who was or is within the same controlled
group of corporation as with the Seller (as defined in Code Section 414(b)), or
any employer who was or is in a partnership under common control with the Seller
(as defined in Code Section 414(c)), or any employer who was or is a member of
an affiliated service group with the Seller (as defined in Code Section 414(m)),
including but not limited to any agreement, policy or practice providing
benefits including any payroll practice, severance pay plan, arrangement or
practice, percentage compensation plan, executive compensation plan, bonus plan,
profit sharing, incentive compensation plan or arrangement, union plan, employee
stock ownership or stock purchase plan, deferred compensation or supplemental
agreement or arrangement, and any fringes such as holiday pay, employee gifts
and employee discount purchases.
10. INDEMNIFICATION.
10.1 Survival. All representations, warranties, covenants and agreements
set forth in this Agreement or in any writing delivered in connection with this
Agreement will survive the Closing Date and the consummation of the transactions
contemplated hereby. Representations, warranties and covenants made hereunder,
other than those contained in Section 10.2.A.(iv), shall survive the execution
and delivery of this Agreement and the Closing Date for a period of one (1) year
after the Closing Date. Representations, warranties and covenants contained in
Section 10.2.A.(iv) shall survive the execution and delivery of this Agreement
and the Closing Date for a period of six (6) years after the Closing Date.
Seller's liabilities with respect to the Retained Liabilities are unlimited as
to dollar amount and survival period and nothing herein shall be deemed to limit
in any way whatsoever Seller's liability respecting the Retained Liabilities.
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10.2 Indemnification by Seller or Buyer.
A. Subject to the limitations set forth in Section 10.2B. below, the
Seller agrees to indemnify Buyer, its officers, managers, and members (the
"Buyer Parties") and hold them harmless against any loss, liability, deficiency,
damage or expense including, but not limited to, legal expenses and costs,
("Losses") which Buyer Parties may suffer, sustain or become subject to, as a
result of (i) the breach of any representation or warranty contained in Article
5 of this Agreement; (ii) the breach of any representation, warranty (other than
representations or warranties set forth in Article 5), covenant or agreement
made by the Seller contained in this Agreement; (iii) any Retained Liabilities
or Retained Contracts; or (iv) any liability or obligation known by Seller's
officers to exist or to be likely to be incurred but not disclosed to Buyer's
president prior to the date of this Agreement; and any other liability or
obligation arising out of Seller's conduct of the Business or state of facts in
existence prior to the Closing Date to the extent such liabilities or
obligations give rise to any personal or vicarious liability to any of Buyer's
members or their affiliates.
B. The indemnification provided for in Section 10.2A.(i) or (ii) is
subject to the following limitations:
1. The Seller will be liable to Buyer Parties for a Loss only if the
Buyer gives the Seller a written "Claim Notice" (as defined in
Section 10.2. D.) therefor within one (1) year after the Closing
Date;
2. The Seller will not be liable to Buyer Parties for any such
Losses unless and until the aggregate amount of all such Losses
relating to all such breaches exceeds Fifty Thousand and no/100
Dollars ($50,000.00), and then only for the amount in excess of
that level; and
3. The Seller will not be liable to Buyer Parties for any such
Losses to the extent that such Losses exceed One Million Fifty
Thousand Dollars ($1,050,000.00) in the aggregate.
C. The Buyer agrees to indemnify the Seller, its officers, directors
and shareholders (the "Seller Parties") and hold them harmless against any
Losses the Seller Parties may suffer, sustain or become subject to, as a result
of (i) a breach (or alleged breach) of any representation, warranty, covenant,
or agreement by Buyer contained in this Agreement, or (ii) any Assumed
Liability, including any Assumed Contract or Current Liability.
D. If a party hereto seeks indemnification under this Section 10.2,
such party (the "Indemnified Party") shall give written notice to the other
party (the "Indemnifying Party") specifying in reasonable detail the basis for
the claim. In that regard, upon any suit, action, or claim
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of liability or obligation being brought or asserted by any third party which,
if adversely determined, would entitle the Indemnified Party to indemnity
pursuant to this Section 10.2, the Indemnified Party shall promptly notify the
Indemnifying Party of the same in writing, specifying in detail the basis of
such claim and the facts pertaining thereto (a "Claim Notice"). Then
Indemnifying Party shall, at its own expense, be entitled to participate in and,
to the extent that it shall desire, assume the defense of any such claim or
proceeding. If the Indemnifying Party elects to assume control of such defense
or settlement, the Indemnifying Party shall within thirty (30) days (or sooner,
if the nature of the matter so requires) notify the Indemnified Party of its
intent to do so, and the indemnified party shall cooperate with all reasonable
requests, in the compromise of, or defense against, such claim or proceeding and
shall make available to the Indemnifying Party any books, records, other
documents or personnel within its control that are necessary or appropriate for
such defense. If the Indemnifying Party elects to assume control of such defense
or settlement, it shall conduct such defense or settlement in a manner
reasonably satisfactory and effective to protect the Indemnified Party; no
compromise or settlement shall be agreed or made without the Indemnified Party's
written consent. In any case, the Indemnified Party shall have the right to
employ its own counsel and such counsel may participate in such action, but the
fees and expenses of such counsel shall be at the expense of the Indemnified
Party. If the Indemnifying Party does not elect to assume the defense or
settlement in a manner reasonably satisfactory to protect the Indemnified Party
fully, the Indemnified Party may engage independent counsel to assume the
defense and may contest, pay, settle or compromise any such claim on such terms
and conditions as the Indemnified Party may determine. The reasonable fees and
disbursements of such counsel (as well as amounts paid in settlement and any
amount paid under a judgment against any Seller Parties) shall constitute
amounts for which indemnification shall be made hereunder. Indemnification
obligations shall survive until paid, once a timely Claim Notice has been given.
10.3 Indemnity Payments. The parties agree that any amounts owed by the
Indemnifying Party to the Indemnified Party pursuant to this Section 10 may be
offset by the Indemnifying Party against any other amounts owing from the
Indemnified Party to the Indemnifying Party.
11. GENERAL PROVISIONS.
11.1 Successors and Assigns. The rights under this Agreement are not
assignable, nor are the duties delegable by a party, without the written
consent of the other party first having been obtained, and any attempted
assignment or delegation without such consent will be null and void.
11.2 Section Headings. The Section headings contained in this Agreement are
for convenience of reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
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11.3 Cooperation. Each of the parties hereto agrees to use reasonable
commercial efforts to cause all conditions precedent to its obligations under
this Agreement to be satisfied.
11.4 Expenses. Whether or not the obligations of the parties hereto are
performed and except as otherwise expressly provided herein, each party shall
pay its own expenses incident to the preparation of this Agreement and for the
consummation of the transactions contemplated hereby.
11.5 Schedules. The Schedules to this Agreement shall be delivered by the
parties hereto contemporaneously with the execution and delivery of this
Agreement, except as otherwise expressly provided herein. All the Schedules,
Exhibits and other attachments to this Agreement are hereby incorporated herein
by reference and constitute a part of this Agreement as if fully set forth
herein. This Agreement together with the Schedules, Exhibits and other
attachments hereto constitutes the entire agreement among the parties hereto
with respect to the subject matter hereof and may not be changed, modified or
amended except by an instrument in writing signed by the parties; provided,
however, that Seller is permitted to unilaterally update any Schedule or Exhibit
to the date of Closing as it deems necessary, and Seller will not have breached
any representation or warranty due to the differing content or time of making
such Schedule disclosures.
11.6 Counterparts. This Agreement maybe executed in any number of
counterparts, each of which when executed and delivered shall be an original,
and all such counterparts shall constitute but one and the same instrument. This
Agreement, once executed, may be delivered to either party through the use of
facsimile transmission. In this regard, any and all signatures of the parties
appearing on any facsimile copies of the signature page of this Agreement shall
be deemed, unless otherwise proved, the lawful and valid signature of the
executing party.
11.7 Notice. All notices, requests, demands and other communications under
this Agreement must be in writing and will be deemed duly given, unless
otherwise expressly indicated to the contrary in this Agreement: (i) when
personally delivered; (ii) upon receipt of a telephonic facsimile transmission
with a confirmed telephonic transmission answer back; (iii) three (3) days after
having been deposited in the United States mail, certified or registered, return
receipt requested, postage prepaid; or (iv) one (1) business day after having
been dispatched by a nationally recognized overnight courier service, addressed
to the intended recipient or its permitted assigns at the following addresses
(or at such other address or number as is given in writing by either party to
the other) as follows:
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If to Seller or Seller Parties:
LDM Technologies, Inc. Facsimile: (248) 858-2812
2500 Executive Hills Drive
Auburn Hills, Michigan 48326
Attn: Gary E. Borushko
With a copy to:
Michael B. Lewis, Esq. Facsimile: (248) 362-1358
Dean & Fulkerson, P.C.
801 W. Big Beaver Road, Suite 500
Troy, Michigan 48084
If to Buyer or Buyer Parties:
DBM Technologies, Inc. Facsimile: (313) 465-7513
2500 Executive Hills Drive
Auburn Hills, Michigan 48326
Attn: Larry Crawford
With a copy to:
Alex L. Parrish, Esq. Facsimile: (313) 465-7513
Honigman Miller Schwartz & Cohn
2290 First National Building
Detroit, Michigan 48226
11.8 Severability. In the event that any provision of this Agreement shall
be declared by a court of competent jurisdiction to be invalid, illegal, or
otherwise unenforceable, the validity, legality, and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
11.9 Governing Law. This Agreement shall be governed by the laws of the
State of Michigan.
11.10 Wavier. No delay or omission to exercise any right, power, or remedy
accruing to any party hereto upon any breach or default by another party shall
impair any such right, power, or remedy except as expressly set forth herein.
Any waiver, permit, consent, or approval of any kind or character of any breach
or default under this Agreement or any waiver of any provisions or conditions of
this Agreement must be in writing and shall be effective only to the extent
specifically
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set forth in such writing. The rights and remedies granted the parties under
this Agreement are cumulative and the waiver of any single remedy will not
constitute a waiver of such party's right to assert all other legal remedies
available to it under the circumstances.
11.11 Public Statements. After the date of this Agreement, neither Seller
nor Buyer will issue any press release or make any other public statement with
respect to this Agreement and the transactions contemplated hereby without the
prior consent of the other party (which consent shall not be unreasonably
withheld), except as may be required by applicable law; provided that the
foregoing limitation shall terminate with respect to each party upon Closing,
subject to the restrictions of Section 9.8.
11.12 Entire Agreement. This Agreement constitutes an agreement solely
between the parties hereto, and is not intended to and shall not confer any
rights, remedies, obligations, or liabilities, legal or equitable, including any
right of employment, on any person (including, without limitation, any employees
or former employees of the Business) other than the parties hereto and their
respective legal representatives, successors, or permitted assigns, or otherwise
constitute any person a third party beneficiary under or by reason of this
Agreement. Nothing in this Agreement, expressed or implied, is intended to or
shall constitute the parties hereto partners or participants in a joint venture.
11.13 Termination. This Agreement may be terminated by mutual written
consent of all of the parties hereto.
11.14 Affiliate; Knowledge. The term "Affiliate" or "affiliate" shall mean
any person or entity, directly or indirectly controlling, controlled by, or
under common control with the other person or entity. "Knowledge" of a person as
used in this Agreement with respect to facts or circumstances shall mean actual
knowledge of the person. Actual knowledge of any officer, but only an officer
(or if there are no officers, of a manager) of such party will be imputed and
deemed to be actual knowledge of such party.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date set forth above.
SELLER:
WITNESSES: LDM TECHNOLOGIES, INC.
By:
- ----------------------------- -----------------------------------------
Its:
- ----------------------------- -----------------------------------
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BUYER:
DBM TECHNOLOGIES, LLC
By:
- ------------------ ---------------------------
Its: CEO
- ------------------ ---------------------------
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LIST OF SCHEDULES
-----------------
1.2 Facility Locations
1.4 Retained Contracts
3.3 Allocation
5.4 Conflicts
5.6 Encumbered Assets
5.7 Litigation
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SCHEDULE 1.2
FACILITY LOCATIONS
------------------
1. 1470 McMillan ("Owosso West")
Owosso, Michigan 48867
2. 1650 E. South Street ("Owosso East")
Owosso, Michigan 48867
3. 503 S. Shiawassee
Corunna, Michigan 48817
4. 539 N. Belvedere
Gallatin, Tennessee 37066
5. 838 Industrial ("Owensboro North")
Owensboro, Kentucky 42301
6. 518 Industrial ("Owensboro South")
Owensboro, Kentucky 42301
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SCHEDULE 1.4
RETAINED CONTRACTS
------------------
NONE.
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SCHEDULE 3.3
ALLOCATION
-----------
Cash $ 4,352
Other Current Assets $ 8,785,733
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SCHEDULE 5.4
CONFLICTS
---------
NONE.
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SCHEDULE 5.6
ENCUMBERED ASSETS
-----------------
- - BankAmerica Business Credit, Inc. ("BABC") has a security interest in
all of the Assets of Seller. Such security interest will be released
by BABC at the Closing, and Seller shall own and possess all right,
title and interest in and to the Assets free and clear of all Liens or
other restrictions on transfer.
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SCHEDULE 5.7
LITIGATION
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See attached.
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January 29, 1999
OUTSTANDING LIABILITY CLAIMS - DBM
KENCO NORTH
Rebecca Mendez Employment Claim.
Settled in the amount of $2,000.00. Check issued on 1/21/99.
Waiting for signed settlement & release.
Larry Jackson Labor Arbitration
10/9/98 had a triple by-pass and was returned to work
without restriction. Claimed he could not pick-up part
weighing 20 pounds (part actually weighed less than ig).
He was terminated and wants to return to work with back
pay. We won the unemployment case and so far all of the
arbitration appeals. Anita does not believe he will get
his job back.
Paulette Parson Department of Labor - Denied family leave.
Dismissed or dropped. Employee falsified the doctors note.
No other correspondence received after 9/30/97 (See
attached)
KENCO SOUTH
No outstanding liability cases.
KENCO CORUNNA
Charel Stevens The Bullard-Plawecki Act
Settlement in the amount of $9,000.00 was awarded to
Ms. Stevens. Approval for settlement and payment given on
January 20, 1999. Waiting for signed settlement & release.
(See attached)
Donald Weekly Employee was terminated for attendance on December 3,
1998. Missed the day after the funeral of his grandparent.
Received letter from an attorney inquiring into the
termination. Our attorney responded to the letter. No
petitions or legal papers have been filed.
Amy Kingsler Sexual Harassment Case
Karrie Lane No correspondence since late 1998.
Lisa Reed (See R. Lapak to view file.)
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Page Two
January 29, 1999
OUTSTANDING LIABILITY CLAIMS-DBM
Linda McIntire Terminated from employment on August 5, 1997.
Letter received from an attorney August 20, 1997. No
correspondence to date.
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JANUARY 29, 1999
WORKER'S COMP RESOLVED/UNRESOLVED POSSIBLE LEGAL CASES AT DBM TECHNOLOGIES
MICHIGAN
EMPLOYEE NAME DATE OF INCIDENT CURRENT STATUS
Ariss, Charles 4/17/97 Discussion of offer occurred.
Redemption offer made ($70,000) file to be closed in approximately 60 days.
Permanently restricted, unable to work here.
Brewer, Bradley 6/18/98 Applied for Mediation or Hearing,
disputes compensation paid by Travelers. RESOLVED, compromised and petition
removed. Quit employment.
Harvey, Marcus 4/19/98 Made application for Hearing, disputes
Travelers denial of claim. Trial date set for 2/2/99. Released from employment.
Horn, Christopher 10/9/97 Made application for Hearing disputes
Travelers response to claim. RESOLVED, compromised and petition removed.
Currently working.
Kingsley, Amy 9/18/97 Made application for Hearing, disputes
Travelers response to claim. Nuisance settlement offer made ($3,500) to date not
response. Permanently laid off of work.
McCormic, Cheryl 4/2/97 Made application for Hearing, disputes
Travelers response to claim. Redemption to occur 2/10/99 for $10,000.
Theil, Colleen 8/2/97 Made application for Hearing, disputes
Travelers response to claim. Settlement negotiations currently on-going (max
offer $10,000). Released from employment.
Ulrich, Debbie 12/13/96 Discussion of offer has occurred.
Fireman's Fund has not responded to my question of whether Kenco was premium
paid or self-insured. Currently off of work due to restrictions. If under
insured plan, approved S44,000.00.
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LIST OF EXHIBITS
----------------
2.10.A.2 Buyer Note
39
EXHIBIT 2.10.A.2
BUYER NOTE
----------
See attached.
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40
SUBORDINATED
PROMISSORY NOTE
$ 1,758,015.00 DECEMBER 31, 1999
AUBURN HILLS, MICHIGAN
FOR VALUE RECEIVED, the undersigned, DBM Technologies, LLC ("DBM") a
Michigan limited liability company ("Maker") promises to pay to the order of LDM
TECHNOLOGIES, INC. ("Holder") the principal sum of One Million Seven Hundred
Fifty-Eight Thousand and Fifteen ($ 1,758,015.00) Dollars in lawful money of the
United States of America, or such greater or lesser amount as may be set forth
in the grid attached hereto, together with interest on the unpaid principal
balance at the rate of nine and one-half percent (9.50%), compounded quarterly
until fully paid, and if any principal or interest is not paid when due, then
interest upon the unpaid balance shall be at the rate of eleven percent (11%)
per annum during the period of any default in payment. Said principal and
interest shall be paid by Maker during the term hereof in lawful money of the
United States in quarterly principal payments of ___________________________
($________________) Dollars, together with accrued interest, with the first
payment due on April 1, 1999, provided, however, that this Subordinated
Promissory Note shall be paid in full on or before February 2, 2003.
All payments shall be applied first against accrued interest, if any, and
the remainder against the principal amount then outstanding.
Payments hereunder shall be made to: LDM Technologies, Inc.
2500 Executive Hills Dr.
Auburn Hills, Michigan 48326
Attention: Gary E. Borushko
or such other place as Holder shall designate from time to time.
This Subordinated Promissory Note is subordinated to the interest of
BankAmerica Business Credit, Inc. ("BABC") pursuant to that certain
Subordination Agreement dated as of December 31, 1998 by and between Holder and
BABC and its Agents. In addition, Maker is a party to a Loan and Security
Agreement (the "Loan and Security Agreement") with BABC which provides that
Maker may not make any payments hereunder during the term of the Loan and
Security Agreement. In the event that Maker is prevented from paying principal
and interest hereunder by the terms of the Loan and Security Agreement, the
failure to make such payments shall not constitute a default hereunder and
principal due hereunder shall continue to accrue interest at the rate of nine
and one-half (9.5%) percent until such restriction is no longer applicable.
If any payment of principal of, or interest on, this Subordinated
Promissory Note shall become due on a Saturday, Sunday or public holiday under
applicable laws, or any other day on which banking institutions are authorized,
or obligated by law, to close, such payment shall be made
41
on the next succeeding business day and the extension of time shall in such case
be included in computing interest in connection with such payment.
Maker shall have the right at any time, and from time to time, to prepay,
in whole or in part, the unpaid principal and/or interest accrued thereon,
without penalty, such payments being applied first to the payment of accrued
interest and the balance to the payment of principal.
In the case of (a) a default in the payment of principal of and/or interest
on this Subordinated Promissory Note when due, (b) an assignment for the benefit
of the creditors of maker, (c) the filing of a petition in bankruptcy or under
any debtor's law by or against Maker (which is not stayed or vacated within
thirty days thereafter) for the relief or reorganization of Maker, or for the
composition, extension, arrangement or readjustment of any of the obligations of
Maker, (d) the appointment of any trustee, receiver or liquidator or similar
official having jurisdiction over any substantial part of the property of Maker,
or (e) a default in any other obligation of maker under this Subordinated
Promissory Note, then in any such event, the principal of this Subordinated
Promissory Note and all accrued interest thereon may, at the option of Holder,
be declared due and payable, whereupon the same shall forthwith immediately
become due and payable.
If suit is brought to enforce the terms of this Subordinated Promissory
Note, Holder shall be entitled to collect all reasonable costs and expenses of
such suit, including, but not limited to, actual reasonable attorney's fees.
Each party to this Subordinated Promissory Note, whether as Maker,
endorser, guarantor, surety or assignor, waives presentment for payment, demand,
protest, notice of protest and notice of dishonor and nonpayment of this
Subordinated Promissory Note, and all defenses on the grounds of delay or of any
extension of time at or after maturity for the payment of this Subordinated
Promissory Note, which may hereafter be given by the Holder or holders to them,
any of them or to anyone who has assumed the payment of this Subordinated
Promissory Note, and each of them agrees to all of the terms of this
Subordinated Promissory Note and agrees that this is the joint and several
obligation of the parties to this Subordinated Promissory Note.
No failure or delay on the part of Holder in exercising any power or right
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power, or any abandonment or discontinuance of
steps to enforce such a right or power, preclude any other or further exercise
thereof, or the exercise of any other right or power. The rights and remedies of
Holder hereunder are cumulative and not exclusive of any rights or remedies
which otherwise would be available. Neither any modification or waiver of any
provision of this Subordinated Promissory Note, nor any consent to any departure
by Maker therefrom, shall in any event be effective unless the same shall be in
writing, signed by the person against whom enforcement of such modification,
waiver or consent is sought, and then such modification, waiver or consent shall
be effective only in the specific instance and for the purpose for which given.
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The provisions of this Subordinated Promissory Note shall be liberally
construed in favor of the subordination of Holder's debt to its Lenders (as
defined in the Loan and Security Agreement) and shall be cumulative to the
rights its Lenders may have or acquire pursuant to the Loan Agreement, whether
by operation of law, by contract or otherwise.
The obligations of Maker under this Subordinated Promissory Note shall
inure to the benefit of Holder and its successors, assigns and legal
representatives, as the case may be. This Subordinated Promissory Note is made
in and shall be governed by the laws of the State of Michigan.
DBM Technologies, LLC
"Maker"
By: ______________________
Its: _____________________
3