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Exhibit 2.1
REORGANIZATION AGREEMENT
BY AND AMONG
XXXXXXX FINANCIAL SERVICES CORPORATION,
DMR FINANCIAL SERVICES, INC.,
XXXXXXX & XXXXXXX MORTGAGE ASSOCIATES, INC.
AND
DETROIT MORTGAGE AND REALTY COMPANY
JUNE 30, 1999
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REORGANIZATION AGREEMENT
This Reorganization Agreement (the "Agreement") is made and entered
into as of June 30, 1999, by and among XXXXXXX FINANCIAL SERVICES CORPORATION, a
Michigan corporation ("Xxxxxxx"), DMR FINANCIAL SERVICES, INC., a Michigan
corporation ("DMRFS"), XXXXXXX & XXXXXXX MORTGAGE ASSOCIATES, INC., a Michigan
corporation ("H&W"), and DETROIT MORTGAGE AND REALTY COMPANY, a Michigan
corporation and the sole shareholder of both DMRFS and H&W ("DMR"). For the
purposes of this Agreement, Xxxxxxx, DMR, H&W and DMRFS are referred to
sometimes collectively as the "Parties" and individually as a "Party".
RECITALS:
WHEREAS, Xxxxxxx, DMR, DMRFS and H&W desire to consummate the
transactions provided for in this Agreement pursuant to which Xxxxxxx will
acquire all of the issued and outstanding shares of the capital stock of H&W, as
and in the manner contemplated in this Agreement, from DMRFS in exchange for
shares of Xxxxxxx'x capital stock.
WHEREAS, the Parties had originally intended that Xxxxxxx acquire all
of the issued and outstanding shares of the capital stock of DMRFS and H&W
simultaneously.
WHEREAS, for business purposes, the Parties have determined that it is
in their best interests for Xxxxxxx to accelerate acquisition of H&W by
acquiring all of the issued and outstanding shares of the capital stock of H&W
pursuant to this Agreement and subsequently acquiring all of the issued and
outstanding shares of the capital stock of DMRFS, subject to the execution of,
and satisfaction of the terms and conditions of, a mutually acceptable
Reorganization Agreement with respect to DMRFS.
WHEREAS, subject to the conditions described in the previous paragraph,
the Parties contemplate that the acquisition of H&W by Xxxxxxx would be followed
by the acquisition of DMRFS and the Parties intend that the acquisition of H&W
and DMRFS be an integrated transaction and together qualify as a tax-free
reorganization under Section 368(a)(1)(C) of the Code.
NOW, THEREFORE, for and in consideration of the foregoing Recitals, the
mutual covenants and undertakings set forth below and other good and valuable
consideration, the receipt and adequacy of which are acknowledged, the Parties
hereby agree as follows:
1. CERTAIN DEFINITIONS. For purposes of this Agreement, the following
capitalized terms shall have the following meanings:
1.1. "Act" means the Michigan Business Corporation Act, as the same
has and may be amended.
1.2. "Xxxxxxx Business" means, collectively, the respective
businesses in which Xxxxxxx and its subsidiaries are engaged.
1.3. "Consent" means any consent, approval or authorization of, or
withholding of objection on the part of, or filing, registration
or qualification with, or notice to, any Governmental Authority
(defined in this Section 1) or any lenders, creditors,
shareholders or other third parties.
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1.4. "Code" means the Internal Revenue Code of 1986, as amended.
1.5. "DMRFS Business" means the business in which DMRFS is engaged.
1.6. [intentionally omitted]
1.7. [intentionally omitted]
1.8. [intentionally omitted]
1.9. [intentionally omitted]
1.10. [intentionally omitted]
1.11. [intentionally omitted]
1.12. [intentionally omitted]
1.13. [intentionally omitted]
1.14. [intentionally omitted]
1.15. [intentionally omitted]
1.16. "Governmental Authority" means any court, administrative agency,
commission or other governmental authority or instrumentality,
whether federal, state, local or foreign.
1.17. "H&W Assets" means all of the assets and properties, whether
known or unknown, tangible or intangible, real or personal,
wherever situated, owned by H&W or in which H&W has any right,
title or interest.
1.18. "H&W Business" means the business in which H&W is engaged.
1.19. "H&W Certificate" means certificates evidencing H&W Shares
(defined in this Section 1).
1.20. [intentionally omitted]
1.21. "H&W Shares" means the issued and outstanding shares of the
capital stock of H&W, as reflected in the books and records of
H&W as of the date of this Agreement.
1.22. "H&W Stock" means H&W's sole class of capital stock, common
stock, $1.00 par value.
1.23. "Liens" means title defects, judgments, objections, security
interests, liens, charges, liabilities, mortgages, easements,
restrictions, reservations, tenancies, agreements, rights of
redemption, third-party rights and other obligations and
encumbrances of any nature whatsoever.
1.24. "SEC" means the Securities and Exchange Commission.
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1.25. "Treasury Regulation" means any regulation promulgated under the
Code including any amendments or any substitute or successor
provisions thereto.
1.26. "'33 Act" means the Securities Act of 1933, as amended.
1.27. "'34 Act" means the Securities Exchange Act of 1934, as amended.
2. EXCHANGE OF SHARES.
2.1. General. On the terms and subject to the conditions set forth in
this Agreement, on the Closing Date (defined in Section 14.1
below), DMRFS shall transfer and otherwise convey to Xxxxxxx,
and Xxxxxxx shall acquire from DMRFS, DMRFS's entire right,
title and interest in and to all of the H&W Shares, free and
clear of all Liens, as provided in this Agreement. The Parties
intend that this transaction together with the contemplated
acquisition of DMRFS by Xxxxxxx shall constitute a
reorganization within the meaning of Section 368(a)(1)(C) of the
Code, and that this Agreement shall constitute a "plan of
reorganization" for the purposes of Section 368 of the Code.
DMR, DMRFS and H&W agree not to take any action inconsistent
with that intent, and in furtherance of that intent, Xxxxxxx
shall comply with its obligations under Section 11.6 below. None
of the Parties shall be under any other obligation to
restructure the transactions, to amend this Agreement or to take
any other action whatsoever so as to effectuate that intent, if
such transactions do not constitute a reorganization within the
meaning of Section 368(a)(1)(C) of the Code, or this Agreement
does not constitute a "plan of reorganization" for the purposes
of Section 368 of the Code.
2.2. [intentionally omitted]
2.3. Directors and Officers of H&W. The directors and officers of H&W
from and after the Closing Date shall be as set forth on the
attached Schedule 2.3 (retaining their respective positions and
terms of office until their successors are duly elected and
qualified in accordance with the Articles of Incorporation and
the bylaws of H&W, as both may have been or may subsequently be
amended or restated).
2.4. [intentionally omitted]
3. ASSUMPTION OF LIABILITIES AND RELATED MATTERS.
3.1. [intentionally omitted]
3.2. [intentionally omitted]
3.3. DMR and DMRFS have fully paid, discharged and satisfied any and
all debts, liabilities and other obligations which they owe or
have to H&W.
3.4. DMR and DMRFS have caused all debts, liabilities and other
obligations H&W owes or has to DMR or any of DMR's affiliates to
be fully discharged and satisfied, and for H&W to be fully and
completely released from all such debts, liabilities and other
obligations. The discharge and satisfaction of such debts has
been structured so that H&W does not and will not incur any
income from the discharging of such debts.
3.5. [intentionally omitted]
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4. [intentionally omitted]
5. [intentionally omitted]
6. CONSIDERATION.
6.1. Initial Consideration. Effective as of the close of business
July 2, 1999, for and in consideration of the H&W Shares,
Xxxxxxx shall issue to DMRFS an aggregate of sixty-six thousand
six hundred sixty-seven (66,667) shares (the "Initial
Consideration Shares") of its common stock, without par value
("Xxxxxxx Common Stock").
6.2. [intentionally omitted]
6.3. [intentionally omitted]
6.4. [intentionally omitted]
6.5. [intentionally omitted]
6.6. [intentionally omitted]
6.7. [intentionally omitted]
6.8. [intentionally omitted]
6.9. [intentionally omitted]
7. REPRESENTATIONS AND WARRANTIES CONCERNING DMRFS. DMR and DMRFS hereby
jointly and severally represent, warrant and covenant the following to
Xxxxxxx and H&W:
7.1. Good Standing and Authority. DMRFS is a corporation duly
organized, validly existing and in good standing under the laws
of the State of Michigan. DMRFS is duly qualified to do business
as a foreign corporation and is in good standing in each
jurisdiction in which it is required to be so qualified, except
where the failure to be so qualified, individually or in the
aggregate, would not have a material adverse effect on the
business, properties, operations or financial condition
("Material Adverse Effect") of DMRFS. All such jurisdictions are
listed on the attached Schedule 7.1. DMRFS has the corporate
power and authority to enter into this Agreement and any and
all other documents contemplated in or to be executed in
connection with this Agreement (the "Attendant Documents") to
which it is or will be a party and to consummate the
transactions contemplated in this Agreement and the Attendant
Documents. This Agreement and all of the Attendant Documents to
which DMRFS is or will be a party, and the consummation of the
transactions contemplated in this Agreement, have been duly
authorized and approved by all necessary and proper corporate
action on the part of DMRFS. This Agreement, and all of the
Attendant Documents to which DMRFS is or will be a party, when
executed and delivered, will constitute legal, valid and binding
obligations of DMRFS, enforceable against DMRFS in accordance
with their respective terms, subject to DMR's and DMRFS's
shareholders approving this Agreement in accordance with
applicable law. DMR is the sole shareholder of DMRFS.
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7.2. Consents, Approvals and Authorizations. Except for (i)
[intentionally omitted],(ii) [intentionally omitted], (iii)
[intentionally omitted], (iv) [intentionally omitted], and (v)
the obtainment of those Consents listed on the attached Schedule
7.2, no Consent is required on the part of DMRFS in connection
with the valid execution and delivery of this Agreement and the
Attendant Documents to which DMRFS is or will be a party or the
consummation of the transactions contemplated in this Agreement
and the Attendant Documents which, if not obtained or made, will
result in a breach or violation of an agreement, lease,
indenture or other instrument, or a judgment, decree, order,
award, law, rule or regulation applicable to or affecting DMRFS,
the DMRFS Business or DMRFS's properties, except where the
failure to obtain the same, individually or in the aggregate,
would not have a Material Adverse Effect on DMRFS. All Consents
listed on the attached Schedule 7.2 have been obtained and
remain in full force and effect and all statutory waiting
periods in respect thereof have expired.
7.3. [intentionally omitted]
7.4. [intentionally omitted]
7.5. [intentionally omitted]
7.6. [intentionally omitted]
7.7. [intentionally omitted]
7.8. [intentionally omitted]
7.9. [intentionally omitted]
7.10. [intentionally omitted]
7.11. [intentionally omitted]
7.12. [intentionally omitted]
7.13. [intentionally omitted]
7.14. [intentionally omitted]
7.15. Financial Information. Set forth on the attached Schedule 7.15
are: (i) the audited balance sheet of DMRFS as of December 31,
1998 and the related statements of income and expenses, retained
earnings and cash flow, and notes thereto, for the year then
ended, certified by DMR's regularly engaged certified public
accountants (collectively, the "1998 DMRFS Financial
Statements"); and (ii) the unaudited balance sheets of DMRFS as
of March 31, 1999, April 30, 1999 and May 31, 1999 and the
related statements of income and expenses, retained earnings and
cash flow for the months then ended (collectively, the
"Subsequent Monthly DMRFS Financial Statements", and together
with the 1998 DMRFS Financial Statements, the "DMRFS Financial
Statements"). All of the DMRFS Financial Statements (i) are
true, correct and complete in all material respects; (ii) have
been prepared in accordance with generally accepted accounting
principles applied consistently with all corresponding prior
fiscal periods of DMRFS; and (iii) fairly present the financial
condition, results of operation and cash flows of DMRFS as of
the dates and for the periods indicated; subject, in the case of
the
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Subsequent Monthly DMRFS Financial Statements only, to normal
year-end adjustments consistent with past practices and the
absence of footnotes (the "Missing DMRFS
Adjustments/Footnotes"). Except to the extent disclosed on the
attached Schedule 7.15, the Missing DMRFS Adjustments/Footnotes,
if presented in the Subsequent Monthly DMRFS Financial
Statements, would not differ materially from those included in
the 1998 DMRFS Financial Statements. The DMRFS Financial
Statements make substantially full and adequate provision for
all obligations, liabilities or commitments, whether fixed or
contingent, and doubtful accounts receivable of DMRFS. Xxxxxxx
acknowledges that DMRFS prepares cash flow statements on a
quarterly basis only, any other provision of this Agreement to
the contrary notwithstanding.
7.16. [intentionally omitted]
7.17. [intentionally omitted]
7.18. Non-Violative Agreement. Neither the execution and delivery of
this Agreement or the Attendant Documents to which DMRFS is or
will be a party nor the consummation of the transactions
contemplated in this Agreement and the Attendant Documents will
conflict with, result in the breach or violation of or
constitute a default under the terms, conditions or provisions
of DMRFS's Articles of Incorporation or Bylaws, both as amended,
or any other agreement or instrument to which DMRFS is a party,
or by which DMRFS may be bound or to which DMRFS may be subject.
7.19. Brokerage or Finder's Fee. Neither DMRFS nor DMR has engaged any
broker or finder or incurred any liability for any brokerage
fees, commissions or finder's fees in connection with the
transactions contemplated in this Agreement.
7.20. Disclosure. No representation or warranty by DMR or DMRFS
contained in this Agreement and no statement contained in any of
the Attendant Documents to which DMR or DMRFS is or will be a
party or any other certificate or instrument furnished or to be
furnished pursuant to this Agreement or in connection with the
transactions contemplated in this Agreement contains or will
contain any untrue statement of a material fact, or omits or
will omit to state a material fact, necessary in order to make
any of the statements not misleading.
7.21. [intentionally omitted]
7.22. Xxxx-Xxxxx-Xxxxxx Compliance. Pursuant to 16 CFR ss.802.20, no
notification filing is required pursuant to the
Xxxx-Xxxxx-Xxxxxx Anti-Trust Improvements Act of 1976 in
connection with the transactions contemplated in this Agreement.
7.23. [intentionally omitted]
7.24. [intentionally omitted]
7.25. Reorganization. DMRFS has not willfully taken or agreed to take,
and shall not take, any action, and neither DMRFS nor DMR have
knowledge of any fact or circumstance, that would prevent the
transactions contemplated in this Agreement from constituting a
reorganization within the meaning of Section 368(a) of the Code.
Except as set forth on the attached Schedule 7.25, other than
the directors and officers of DMR and of DMRFS, there are no
"affiliates" of DMRFS, as that term is defined in Rule 144(a)
promulgated under the '33 Act.
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7.26. Knowledge. One or more of the persons listed on the attached
Schedule 17.11(a) could reasonably be expected to have
sufficient knowledge regarding the facts, matters and
circumstances underlying each of the representations and
warranties set forth in this Section 7 so as to be capable of
ascertaining whether or not they are completely accurate.
Identified on the attached Schedule 7.26 are various public
filings made by Xxxxxxx with the SEC pursuant to its XXXXX
filing requirements (the "Xxxxxxx Reports") which are available
to DMR, DMRFS and H&W over the Internet. DMR and DMRFS have had
access to, and have had sufficient time to review and consider,
such Xxxxxxx Reports and all due diligence materials provided or
otherwise made available to DMR or its representatives by or on
behalf of Xxxxxxx. DMR and DMRFS have been afforded an
opportunity to ask questions of and receive answers from
representatives of Xxxxxxx concerning the terms and conditions
of the transactions and matters described in the Xxxxxxx Reports
or such due diligence materials and to obtain any additional
information as DMR or DMRFS have identified in such documents
that DMR or DMRFS have requested.
8. REPRESENTATIONS AND WARRANTIES CONCERNING H&W. DMR and DMRFS hereby
jointly and severally represent, warrant and covenant the following to
Xxxxxxx and H&W:
8.1. Good Standing and Authority. H&W is a corporation duly
organized, validly existing and in good standing under the laws
of the State of Michigan. H&W is duly qualified to do business
as a foreign corporation and is in good standing in each
jurisdiction in which it is required to be so qualified, except
where the failure to be so qualified, individually or in the
aggregate, would not have a Material Adverse Effect on H&W. All
such jurisdictions are listed on the attached Schedule 8.1. H&W
has the corporate power and authority to enter into this
Agreement and the Attendant Documents to which it is or will be
a party and to consummate the transactions contemplated in this
Agreement and the Attendant Documents. This Agreement and all of
the Attendant Documents to which H&W is or will be a party, and
the consummation of the transactions contemplated in this
Agreement, have been duly authorized and approved by all
necessary and proper corporate action on the part of H&W. This
Agreement, and all of the Attendant Documents to which H&W is or
will be a party, when executed and delivered, will constitute
legal, valid and binding obligations of H&W, enforceable against
H&W in accordance with their respective terms. DMR is the sole
shareholder of DMRFS. DMRFS is the sole shareholder of H&W. H&W
does not have any subsidiaries, and H&W does not have any equity
interest in, or any right to acquire any equity interest in, any
other entity.
8.2. Consents, Approvals and Authorizations. Except for (i)
[intentionally omitted], (ii) [intentionally omitted], (iii)
[intentionally omitted], (iv) [intentionally omitted], and (v)
the obtainment of those Consents listed on the attached Schedule
8.2, no Consent is required on the part of H&W in connection
with the valid execution and delivery of this Agreement and the
Attendant Documents to which H&W is or will be a party or the
consummation of the transactions contemplated in this Agreement
and the Attendant Documents which, if not obtained or made, will
result in a breach or violation of an agreement, lease,
indenture or other instrument, or a judgment, decree, order,
award, law, rule or regulation applicable to or affecting H&W,
the H&W Business or H&W's properties, except where the failure
to obtain the same, individually or in the aggregate, would not
have a Material Adverse Effect on H&W. All Consents listed on
the attached Schedule
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8.2, other than the approval by FHLMC of the change in control
of H&W, have been obtained and remain in full force and effect.
8.3. Accounts Receivable. Except as set forth on the attached
Schedule 8.3: (i) the accounts receivable which are reflected in
the Most Recent Balance Sheet of H&W (defined in Section 8.15
below) or which arose subsequent thereto were validly obtained
in the ordinary course of the H&W Business; and (ii) except to
the extent of applicable reserves shown in such balance sheet,
to the knowledge of DMR, DMRFS and H&W, all of the receivables
owing to H&W constitute valid and enforceable claims arising
from bona fide arms-length transactions, and H&W has not
received any written or oral claims, defenses or refusals to
pay, or granted any rights of set-off with respect to any
receivables.
8.4. Investigations; Litigation. Except as described on the attached
Schedule 8.4, there are no claims or actions by anyone against
or affecting H&W, the H&W Business or H&W's properties that are
pending or, to the knowledge of H&W, have been threatened. To
DMR, DMRFS and H&W's knowledge, there is no basis for any such
claim or action which, if asserted and decided adversely to H&W,
could reasonably be expected to have a Material Adverse Effect
on H&W.
8.5. Title to Property; Condition. Except as set forth on the
attached Schedule 8.5:
(a) H&W has good and marketable title in and to all of
the assets reflected in the Most Recent Balance Sheet
of H&W and all assets purchased or otherwise acquired
since December 31, 1998 (except for such assets as
may have been sold or otherwise disposed of in the
ordinary course of the H&W Business), subject to no
Liens (other than those Liens which secure,
exclusively, indebtedness disclosed in the H&W
Financial Statements); and
(b) H&W owns no real property.
8.6. Tax Returns. Except as disclosed on the attached Schedule 8.6:
(a) To DMR, DMRFS and H&W's knowledge, proper and
accurate amounts have been and will be withheld by
H&W from its employees and properly deposited in
appropriate accounts, for all periods up to and
through the Closing Date, in full and complete
compliance with the tax withholding, deposit and
payment provisions of applicable federal, state and
local laws. H&W has filed (or has caused to be
filed), on its behalf either separately or as a
member of a consolidated group of companies, all
federal, state and local, as well as other returns
and reports that were required to be filed for all
periods for which returns, were due up to and through
the Closing Date, and H&W has made (or has caused to
be made), on its behalf either separately or as a
member of a consolidated group of companies, payments
of all governmental taxes, levies, duties, license
and registration fees, charges or withholdings of any
nature whatsoever ("Taxes") shown to be due and
payable in respect of such returns and reports. To
DMR, DMRFS and H&W's knowledge, all such returns are
true, correct and complete in all material respects
and no penalties or interest will be asserted by any
federal, state, local or other taxing authority
(each, a "Tax Authority") arising out of a late
payment of Taxes. Neither DMR, DMRFS nor H&W owes any
deficiency for any Taxes (other than those which are
accrued as liabilities on the Most Recent Balance
Sheet of H&W), and no tax returns
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are presently under audit or examination by any Tax
Authority, and neither DMR, DMRFS nor H&W has
received notice of any adjustments proposed or
asserted by the Internal Revenue Service or any other
agency in respect of any liability for Taxes arising
out of or relating to such returns.
(b) No claim has ever been made by a Tax Authority in a
jurisdiction where H&W does not file Tax returns that
H&W is or may be subject to taxation by that
jurisdiction. There are no excess loss accounts,
gains or losses from "Deferred Intercompany
Transactions" (as defined in Treasury Regulations
Section 1.1502-13 in effect before July 12, 1995) or
"Intercompany Transactions" (as defined in Treasury
Regulations Section 1.1502-13 in effect on or after
July 12, 1995) pertaining to H&W (whether or not they
are taken into account as a result of the
transactions contemplated in this Agreement).
(c) H&W has accrued, adequately reserved and shown on the
H&W Financial Statements as a liability, all Taxes
for any taxable period (or portions thereof) which
ends on or before the Closing Date. Any Tax return
for any taxable period ending on or before the
Closing Date has been prepared in a manner consistent
with the accrual method of accounting.
(d) H&W has not waived any statute of limitations in
respect of Taxes or agreed to any extension of time
with respect to any Tax assessment or deficiency.
(e) H&W (i) has not filed a consent under Code Section
341(f) concerning collapsible corporations; (ii) has
not made any payment, is not obligated to make any
payment, and is not a party to any agreement that
under certain circumstances could obligate it to make
any payment that will not be deductible under Code
Section 280G; (iii) has not been a United States real
property holding corporation within the meaning of
Code Section 897(c)(2) during the applicable period
specified in Code Section 897(c)(1)(A)(ii); (iv) is
not a party to any Tax allocation or sharing
agreement; (v) has not been a member of an
"Affiliated Group" (meaning any affiliated group
within the meaning of Code Section 1504(a) or any
similar group defined under a similar provision of
state, local or foreign law) filing a consolidated
federal income Tax return, other than the Affiliated
Group consisting of DMR, DMRFS, H&W and those other
entities, if any, identified on the attached Schedule
7.6; (vi) has no liability for the Taxes of any
person under Treasury Regulation Section 1.1502-6 (or
any similar provision of state, local, or foreign
law) as a transferee or successor, by contract, or
otherwise; (vii) has not granted a power of attorney
with respect to any matter relating to Taxes, whether
of DMR, DMRFS or itself; (vii) has not participated
in an international boycott under Code Section 999;
(ix) is not a party to any safe harbor lease within
the meaning of Code Section 168(f)(8) as in effect
prior to amendment by the Tax Equity and
Responsibility Act of 1982; (x) has not had any
permanent establishments in any foreign country as
defined in any applicable treaty or convention
between the United States and such foreign countries;
(xi) is not a party to any joint venture, partnership
or other arrangement or contract that could be
treated as a partnership for federal income tax
purposes; (xii) has not made and is not bound by any
election under Code Section 197; (xiii) has no debt
the interest on which is tax
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exempt under existing or prior law; (xiv) has no
property that is tax exempt use property within the
meaning of Code Section 168(h); (xv) is not bound by
any closing agreement within the meaning of Code
Section 7121; and (xvi) has not agreed to and is not
required to make any adjustments under Code Section
481(a) or any similar provision of state, locate or
foreign law.
For all purposes relevant to determining whether or not there
has been any breach of any of the foregoing representations and
warranties for which any of the Xxxxxxx Parties (defined in
Section 15.1 below) are entitled to indemnification pursuant to
Section 15.1 below, and the amount of the Xxxxxxx Parties'
damages caused by such breach, all occurrences of the phrase
"except as disclosed on the attached Schedule 8.6" in this
Section 8.6 shall be ignored.
8.7. Insurance. The attached Schedule 8.7 contains an accurate and
complete list of all policies of fire and other casualty,
general liability, theft, life, workers' compensation, health,
directors' and officers' liability, business interruption and
other forms of insurance owned or held by H&W, DMRFS or DMR in
respect of the H&W Business, specifying the insurer, the policy
number, the term of the coverage and, in the case of any
"occurrence" coverage, the same information as to predecessor
policies for the previous five (5) years. All premiums that are
due as of the Closing Date with respect thereto have been paid
and no notice has been received by DMR, DMRFS or H&W that the
present policies are not in full force and effect. Neither H&W,
DMRFS nor DMR, in respect of the H&W Business, have been denied
any form of insurance, and no policy of insurance has been
revoked or rescinded during the past three (3) years, except as
described under the attached Schedule 8.7.
8.8. Benefit Plans. Except as disclosed on the attached Schedule 8.8,
H&W does not maintain and is not party to, bound by or a
contributor to, or required to contribute to, (a) any employee
pension benefit plans whether or not qualified under Section
401(a) of the Code, (b) any employee welfare benefit plans, or
(c) any other compensation, fringe or welfare plan or program,
policy, understanding or arrangement providing plan benefits or
welfare, with respect to its employees or employees of others
(collectively, the "H&W Employee Plans"). As used in this
Section 8.8, the terms "employee pension benefit plan" and
"employee welfare benefit plan" have the respective meanings
assigned to such terms in Section 3 of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"). No H&W
Employee Plan is (and H&W has no liability with respect to any
plan that is) (i) subject to the minimum funding requirements of
ERISA or the Code, (ii) a "multiemployer plan" (as defined in
Section 3(37) of ERISA), (iii) a multiple-employer plan within
the meaning of Section 413 of the Code, or (iv) an employee
welfare benefit plan or plan providing welfare-type benefits to
current or future retirees or current or future former employees
(or their spouses or dependents) other than as required by COBRA
or any other state continuation coverage law. Each H&W Employee
Plan that is an employee pension benefit plan, to DMR's, DMRFS's
and H&W's knowledge, now meets, and since its inception has met,
in form and operation, the requirements of a tax-qualified plan
under Section 401(a) of the Code, and the Internal Revenue
Service has issued a favorable determination letter with respect
to the tax-qualified status of such plan. To DMR's, DMRFS's and
H&W's knowledge, each H&W Employee Plan has been maintained,
administered and funded in material compliance with all
applicable laws and regulations, including, without limitation,
the Code and ERISA. There are no actions, suits, or claims
(other than routine undisputed
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claims for benefits) pending or, to DMR's, DMRFS's and H&W's
knowledge, threatened against or with respect to any H&W
Employee Plan. To DMR's, DMRFS's and H&W's knowledge, with
respect to the H&W Employee Plans, all required government
filings and disclosures have been timely made and are true,
correct and complete in all material respects, and no prohibited
transaction or other act or omission has occurred which has
resulted in, or could reasonably be expected to result in, the
imposition of an excise tax or other penalty, including, without
limitation, any penalties under ERISA or the Code. Except as
disclosed in the attached Schedule 8.8, H&W is not now and has
not been a member of: (i) a controlled group of corporations as
defined in Section 414(b) of the Code; (ii) a group of trades or
businesses under common control as defined in Section 414(c) of
the Code; (iii) an affiliated service group as defined in
Section 414(m) of the Code; (iv) a group of businesses referred
to in Section 414(o) of the Code; (v) a group of trades or
businesses under common control as defined in Section 4001(b) of
ERISA; or (vi) any other group under the law, rules or
regulations of a foreign country similar to (i) through (v).
DMR, DMRFS and H&W have provided to Xxxxxxx true and correct
copies of all current and prior material documents relating to
the H&W Employee Plans listed in the attached Schedule 8.8,
including, but not limited to: (i) plan documents; (ii) trust
documents; (iii) plan and trust amendments; (iv) summary plan
descriptions, amendments thereto, and all other communication
material provided to employees; (v) summaries of material
modifications; (vi) insurance (including reinsurance),
administrative services or annuity contracts; (vii) collective
bargaining agreements or contracts and all amendments thereto;
(viii) the most recent financial statements; (ix) with regard to
self-funded welfare plans, experience and enrollment data for
the prior three (3) plan years as well as documentation and
calculations demonstrating the present value of accrued
obligations under such plans as of the Closing Date; (x) if H&W
provides, or has any commitment or obligation to provide, any
H&W Employee Plan benefits to its retirees, copies of all
documentation and calculations demonstrating the present value
of such obligation or commitment as of the Closing Date; (xi) if
H&W or any controlled group member maintains a defined benefit
pension plan, as defined in Section 3(35) of ERISA with respect
to former or current H&W employees, the most recent actuarial
valuation for each such plan and copies of any funding waivers
and applications therefor, and all related correspondence and
documentation; (xii) the three (3) most recent annual reports;
(xiii) agreements with respect to leased or temporary employees;
(xiv) all Internal Revenue Service rulings, if any; and (xv) the
most recent Internal Revenue Service determination letters.
8.9. Contracts and Commitments; No Default. The attached Schedule 8.9
sets forth a complete and accurate list of all written or oral
agreements or other binding commitments or proposals (i)
involving the provision of goods or services to or by H&W
involving an aggregate sale price or consideration of more than
$25,000 (exclusive of mortgage loans made in the ordinary course
of business), (ii) pursuant to which H&W is obligated to make
periodic payments totaling, on an annualized basis, more than
$60,000, or (iii) which are not terminable without penalty at
the option of H&W upon no more than 30 days notice (the "H&W
Contracts"). DMR, DMRFS and H&W have made available to Xxxxxxx
true and accurate copies of the H&W Contracts. To DMR's, DMRFS's
and H&W's knowledge, all of the H&W Contracts are valid, binding
and in full force and effect, and are enforceable in accordance
with their respective terms (subject to bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance and similar
laws relating to or affecting the enforcement of creditors'
rights generally, or general principles of equity, whether at
law or in equity). Except as set forth on
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13
the attached Schedule 8.9, H&W is not in default under any of
the H&W Contracts, nor has any notice of default been received
by DMR, DMRFS or H&W. To DMR's, DMRFS's and H&W's knowledge, all
other parties to the H&W Contracts have performed or are
performing all material obligations required to be performed by
them and are not in default thereunder.
8.10. Labor Matters. The attached Schedule 8.10 sets forth, as of a
date not more than twenty (20) days prior to the date this
representation and warranty is given, a list of all employees of
H&W and includes their position, current salary, and 1998 wage
information for each person. Except as set forth on the attached
Schedule 8.10 and except as are not material to the H&W
Business; (i) to DMR's, DMRFS's and H&W's knowledge, H&W is and
has at all times been in compliance with all applicable laws
respecting employment and employment practices, terms and
conditions of employment and wages and hours, including without
limitation any such laws respecting employment discrimination
and occupational safety and health requirements, and has not and
is not engaged in any unfair labor practice; (ii) there is no
unfair labor practice complaint against H&W pending or, to
DMR's, DMRFS's or H&W's knowledge, threatened before the
National Labor Relations Board or any other comparable
Governmental Authority; (iii) there is no labor strike, dispute,
slowdown or stoppage actually pending or, to DMR's, DMRFS's or
H&W's knowledge, threatened against or directly affecting H&W;
(iv) no collective bargaining agreement is binding and in force
against H&W or is currently being negotiated by H&W; (v) H&W is
not delinquent in payments to any person for any wages,
salaries, commissions, bonuses or other direct or indirect
compensation for any services performed by them or amounts
required to be reimbursed to such persons, including without
limitation any amounts due under any pension plan, welfare plan
or compensation plan; and (vi) no current officer or key
employee of H&W has expressed, either verbally or in writing, to
H&W that he or she desires to terminate his or her employment
with the company, other than such expressions which have since
been retracted or resolved in light of a mutually agreeable
resolution of the matter by H&W and such employee.
8.11. Intellectual Property Rights. Except as disclosed on the
attached Schedule 8.11, H&W does not own or use any patents,
trade names, service names, trademarks, service marks,
copyrights, or any other intellectual or intangible property or
applications therefor nor has H&W conducted business under any
corporate, trade or fictitious name other than its current
corporate name. There are no pending or, to DMR's, DMRFS's or
H&W's knowledge, threatened claims of infringement upon the
rights to any intellectual or intangible property of others or,
except as set forth on the attached Schedule 8.11, any
agreements or undertakings with respect to any such rights.
8.12. Hazardous Substances and Hazardous Wastes. Except as set forth
on the attached Schedule 8.12:
(a) To DMR, DMRFS and H&W's knowledge, there is not now,
nor has there ever been, any disposal, release or
threatened release of Hazardous Materials (as defined
below) on, from or under properties now or ever
owned, leased or operated by or to H&W (the "H&W
Properties"). There has not been generated by or on
behalf of H&W any Hazardous Material, other than in
compliance with applicable law. No Hazardous Material
has been disposed of or allowed to be disposed of,
from, on or off any of the H&W Properties during the
period that H&W owned, leased or operated
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the H&W Properties which may, to DMR's, DMRFS's or
H&W's knowledge, give rise to a clean-up
responsibility, personal injury liability or property
damage claim against H&W or either being named a
potentially responsible party for any such clean-up
costs, personal injuries or property damage or create
any cause of action by any third party against H&W.
For purposes of this subsection, the terms
"disposal," "release," and "threatened release" shall
have the definitions assigned thereto by the
Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, and the term
"Hazardous Material" means any hazardous or toxic
substance, material or waste or pollutants,
contaminants, gasoline, oil, diesel fuel, petroleum
products or fractions thereof, or asbestos containing
material which is or becomes regulated by any
Governmental Authority in any jurisdiction in which
any of the H&W Properties are located. The term
"Hazardous Material" also includes without limitation
any material or substance which is (i) defined as a
"hazardous waste" or a "hazardous substance" under
applicable law; (ii) designated as a "hazardous
substance" pursuant to Section 311 of the Federal
Water Pollution Control Act, (iii) defined as a
"hazardous waste" pursuant to Section 1004 of the
Federal Resource Conservation and Recovery Act, or
(iv) defined as a "hazardous substance" pursuant to
Section 101 of the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, all
as amended.
(b) To DMR's, DMRFS's and H&W's knowledge, none of the
H&W Properties is (or with respect to previously
owned H&W Properties was at the time of disposition)
in violation of any law (or with respect to
previously owned H&W Properties, laws in effect at
the time of disposition) relating to the
environmental conditions on, under or about such H&W
Properties, including without limitation soil and
ground water condition, and there are (or at the time
of disposition were) no underground tanks or relating
piping, conduits or related structures. During the
period that H&W owned, leased or operated the H&W
Properties, to DMR's, DMRFS's and H&W's knowledge,
neither H&W nor any third party used, generated,
manufactured or stored on, under or about such H&W
Properties or transported to or from such H&W
Properties any Hazardous Materials except in
compliance with applicable law, and there has been no
litigation brought or to DMR's, DMRFS's or H&W's
knowledge, threatened against H&W or any settlement
reached by H&W with any third party or third parties
alleging the presence, disposal, release or
threatened release of any Hazardous Materials on,
from or under any of such H&W Properties.
(c) DMR, DMRFS and H&W have provided Xxxxxxx with true,
correct and complete copies of all environmental
review and assessment reports which DMR, DMRFS or H&W
has in its possession with respect to the H&W
Properties or any other parcel or real property ever
owned, leased or operated by H&W or any subsidiary,
affiliate or predecessor in interest of H&W.
8.13. Permits and Licenses. The attached Schedule 8.13 lists all
material governmental franchises, permits, licenses or other
authorizations held by H&W in connection with the H&W Business
or H&W's properties (the "H&W Licenses"), true and complete
copies of all of which have been made available to Xxxxxxx.
Except as set forth on the attached Schedule 8.13, all of the
H&W Licenses are in full force
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and effect and will not be affected in any material way by, and
will continue to be in full force and effect after, the
consummation of the transactions contemplated in this Agreement
and the Attendant Documents. Except as set forth on the attached
Schedule 8.13, H&W has obtained all permits, licenses,
franchises and other authorizations necessary or reasonably
desirable with respect to, and has complied with all laws
applicable to, the operation of the H&W Business and the
ownership, lease or use of H&W's properties, and H&W has not
engaged in any activity which would cause revocation or
suspension of any of the H&W Licenses. Except as set forth on
the attached Schedule 8.13, to DMR, DMRFS and H&W's knowledge,
no action or proceeding looking to or contemplating the
revocation or suspension of any of the H&W Licenses is pending
or threatened.
8.14. Compliance with Applicable Laws and Regulations. Except as set
forth on the attached Schedule 8.14, to the knowledge of DMR,
DMRFS and H&W, H&W has complied in all material respects with
all laws, regulations, rules, orders, judgments, decrees and
other requirements imposed by any Governmental Authority
applicable to it in connection with the operation of the H&W
Business or the ownership or use of H&W's properties.
8.15. Financial Information. Set forth on the attached Schedule 8.15
are: (i) the audited balance sheet of H&W as of December 31,
1998 (the "Most Recent Balance Sheet of H&W") and the related
statements of income and expenses, retained earnings and cash
flow, and notes thereto, for the year then ended, certified by
DMR's regularly engaged certified public accountants
(collectively, the "1998 H&W Financial Statements"); and (ii)
the unaudited balance sheets of H&W as of March 31, 1999, April
30, 1999 and May 31, 1999 and the related statements of income
and expenses, retained earnings and cash flow for the months
then ended (collectively, the "Subsequent Monthly H&W Financial
Statements", and together with the 1998 H&W Financial
Statements, the "H&W Financial Statements"). All of the H&W
Financial Statements (i) are true, correct and complete in all
material respects; (ii) have been prepared in accordance with
generally accepted accounting principles applied consistently
with all corresponding prior fiscal periods of H&W; and (iii)
fairly present the financial condition, results of operation and
cash flows of H&W as of the dates and for the periods indicated;
subject, in the case of the Subsequent Monthly H&W Financial
Statements only, to normal year-end adjustments consistent with
past practices and the absence of footnotes (the "Missing H&W
Adjustments/Footnotes"). Except to the extent disclosed on the
attached Schedule 8.15, the Missing H&W Adjustments/Footnotes,
if presented in the Subsequent Monthly H&W Financial Statements,
would not differ materially from those included in the 1998 H&W
Financial Statements. The H&W Financial Statements make
substantially full and adequate provision for all obligations,
liabilities or commitments, whether fixed or contingent, and
doubtful accounts receivable of H&W. Xxxxxxx acknowledges that
H&W prepares cash flow statements on a quarterly basis only, any
other provision of this Agreement to the contrary
notwithstanding.
8.16. No Undisclosed Liabilities. Except as and to the extent set
forth on the attached Schedule 8.16 or reflected in the H&W
Financial Statements, and except for liabilities incurred by H&W
in connection with or with respect to the H&W Business in the
ordinary course since the date of the Most Recent Balance Sheet
of H&W, H&W has no debts, liabilities or obligations of any
nature or kind (whether absolute, accrued, contingent,
unliquidated or otherwise, whether due or to become due and
regardless of when asserted) arising out of transactions entered
into, at or prior to the Closing, or any action or inaction at
or prior to the Closing
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or any state of facts existing at or prior to the Closing, which
could, individually or in the aggregate, have a Material Adverse
Effect on H&W. Except as set forth on the attached Schedule
8.16, and except for changes in the prospects of the H&W
Business or H&W caused by events (i) which concern, as a whole,
either the economy of the United States or the economy of the
industry in which H&W does business, and (ii) which are not
particular to H&W, neither DMR, DMRFS nor H&W know of any
existing, proposed or threatened change which could have a
Material Adverse Effect on H&W.
Except as and to the extent set forth on the attached Schedule
8.16 or reflected in the pro forma July 2, 1999 balance sheet of
H&W included as part of the attached Schedule 8.16, and except
for commissions to be paid to H&W employees in the ordinary
course of business consistent with past practice, H&W has no
debts, liabilities or obligations of any nature or kind (whether
absolute, accrued, contingent, unliquidated or otherwise,
whether due or to become due and regardless of when asserted)
arising out of transactions entered into, at or prior to the
Closing, or any action or inaction at or prior to the Closing or
any state of facts existing at or prior to the Closing, which
could, individually or in the aggregate, have a Material Adverse
Effect on H&W.
8.17. Millennium Compliance.
(a) H&W has (i) conducted a comprehensive review and
assessment of all areas of the H&W Business that
could be adversely affected by the "Year 2000
Problem" (that is, the risk that computer
applications may not be able to properly perform
date-sensitive functions after December 31, 1999),
(ii) developed a detailed plan for addressing the
Year 2000 Problem, and (iii) implemented that plan.
All computer applications that are material to the
H&W Business are able properly to perform
date-sensitive functions for all dates before and
after January 1, 2000 (i.e., are "Year 2000
Compliant").
(b) H&W has made inquiry of each of its key suppliers and
vendors with respect to the Year 2000 Problem and,
based on that inquiry, believes that each of them
will on a timely basis be Year 2000 Compliant, except
to the extent that their failure, individually or in
the aggregate, to be Year 2000 Compliant would not
have a Material Adverse Effect on H&W or the H&W
Business.
8.18. Non-Violative Agreement. Neither the execution and delivery of
this Agreement or the Attendant Documents to which H&W is or
will be a party nor the consummation of the transactions
contemplated in this Agreement and the Attendant Documents will
conflict with, result in the breach or violation of or
constitute a default under the terms, conditions or provisions
of H&W's Articles of Incorporation or Bylaws, both as amended,
or any other agreement or instrument to which H&W is a party, or
by which H&W may be bound or to which H&W may be subject.
8.19. Brokerage or Finder's Fee. Neither H&W, DMRFS nor DMR has
engaged any broker or finder or incurred any liability for any
brokerage fees, commissions or finder's fees in connection with
the transactions contemplated in this Agreement.
8.20. Disclosure. No representation or warranty by DMR, DMRFS or H&W
contained in this Agreement and no statement contained in any of
the Attendant Documents
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to which DMR, DMRFS or H&W is or will be a party or any other
certificate or instrument furnished or to be furnished pursuant
to this Agreement or in connection with the transactions
contemplated in this Agreement contains or will contain any
untrue statement of a material fact, or omits or will omit to
state a material fact, necessary in order to make any of the
statements not misleading.
8.21. Capitalization; Ownership of Shares. The attached Schedule 8.21
sets forth the number of authorized and the number of issued and
outstanding shares of H&W Stock. DMRFS owns all of the H&W
Shares free and clear of all Liens. All such issued shares have
been duly authorized and validly issued, are fully paid and
non-assessable and were issued by H&W without violating any
applicable laws, rules, orders, judgments, decrees or other
requirements imposed by any governmental authority. All holders
of shares of H&W Stock have equal rights. Except as set forth on
the attached Schedule 8.21, there are no preemptive or first
refusal rights to purchase or otherwise acquire shares of H&W
Stock pursuant to H&W's governing documents or agreement or
otherwise. Except as set forth on the attached Schedule 8.21,
there are no outstanding agreements, commitments, rights,
options, warrants or claims of any nature whatsoever for the
issuance, sale, purchase or redemption of any shares of H&W
Stock or any other securities convertible into or exchangeable
for such shares. On consummation of the transactions
contemplated in this Agreement, Xxxxxxx will be the sole
shareholder of H&W, and will acquire valid and marketable title
to all issued and outstanding shares of H&W Stock, free and
clear of all Liens, and no other person or entity will have any
rights to purchase or otherwise acquire shares of H&W Stock.
8.22. Xxxx-Xxxxx-Xxxxxx Compliance. Pursuant to 16 CFR ss.802.20, no
notification filing is required pursuant to the
Xxxx-Xxxxx-Xxxxxx Anti-Trust Improvements Act of 1976 in
connection with the transactions contemplated in this Agreement.
8.23. [intentionally omitted]
8.24. Recent Conduct of H&W Business; Interim Operations. Except as
set forth on the attached Schedule 8.24, since the date of the
Most Recent Balance Sheet of H&W, there has not been any
Material Adverse Effect with respect to H&W. Except as set forth
on the attached Schedule 8.24, since the date of the Most Recent
Balance Sheet of H&W, DMR, DMRFS and H&W have caused the H&W
Business to be conducted only in the ordinary course. Except as
set forth on the attached Schedule 8.24, since the date of the
Most Recent Balance Sheet of H&W, H&W has not, without the prior
written consent of Xxxxxxx, which may be granted or withheld in
Xxxxxxx'x sole discretion:
(a) made or incurred any capital expenditures with
respect to the H&W Business in excess of Ten Thousand
Dollars ($10,000.00) in any one transaction or Fifty
Thousand Dollars ($50,000.00) in a series of similar
transactions;
(b) except in accordance with consistent prior practice
and in the ordinary course, made any change in the
rate of compensation, commission, bonus or other
direct or indirect remuneration payable or to become
payable to any current or former employee of H&W or
agent of H&W, or agreed or orally promised to pay,
conditionally or otherwise, any bonus, extra
compensation, pension or severance or vacation pay to
any H&W employee, former employee of H&W or agent of
H&W;
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(c) sold or transferred any of the assets of the H&W
Business, other than inventories in the ordinary
course of business;
(d) terminated or materially amended any material
contract;
(e) subjected any of H&W's properties to, or permitted
any of H&W's properties to become subject to, any
Lien other than in the ordinary course of the H&W
Business;
(f) split, combined or reclassified its outstanding
capital stock, declared, set aside or paid any
dividend or distribution payable in cash, stock,
property or otherwise, or repurchased any shares of
its outstanding capital stock;
(g) issued, sold, pledged or disposed of any additional
shares of, or any options, warrants or rights of any
kind to acquire any shares of, its capital stock or
any debt or equity securities convertible into or
exchangeable for such capital stock;
(h) redeemed, purchased, acquired or offered to purchase
or acquire any shares of its capital stock or any
options, warrants or rights to acquire any of its
capital stock or any security convertible into or
exchangeable for its capital stock;
(i) assumed, incurred or become contingently liable with
respect to any indebtedness for borrowed money other
than borrowings in the ordinary course of business
(other than pursuant to credit facilities) or
borrowings under credit facilities existing as of the
date of this Agreement up to the existing borrowing
limit on the date of this Agreement; or
(j) entered into any agreement or commitment (other than
this Agreement or any arrangement provided for or
contemplated in this Agreement) to take any of the
types of action described in subsection (a) through
(i) of this Section 8.24.
8.25. Reorganization. H&W has not willfully taken or agreed to take
any action, and neither H&W, DMRFS nor DMR have knowledge of any
fact or circumstance, that would prevent the transactions
contemplated in this Agreement from constituting a
reorganization within the meaning of Section 368(a) of the Code.
Except as set forth on the attached Schedule 8.25, other than
the directors and officers of DMR, DMRFS and H&W, there are no
"affiliates" of H&W, as that term is defined in Rule 144(a)
promulgated under the '33 Act.
8.26. Knowledge. One or more of the persons listed on the attached
Schedule 17.11(a) could reasonably be expected to have
sufficient knowledge regarding the facts, matters and
circumstances underlying each of the representations and
warranties set forth in this Section 8 so as to be capable of
ascertaining whether or not they are completely accurate. DMR,
DMRFS and H&W have had access to, and have had sufficient time
to review and consider, the Xxxxxxx Reports and all due
diligence materials provided or otherwise made available to DMR
or its representatives by or on behalf of Xxxxxxx. DMR, DMRFS
and H&W have been afforded an opportunity to ask questions of
and receive answers from representatives of Xxxxxxx concerning
the terms and conditions of the transactions and matters
described in the Xxxxxxx Reports or such due diligence
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materials and to obtain any additional information as DMR, DMRFS
or H&W have identified in such documents that DMR, DMRFS or H&W
have requested.
8.27. Certificate of Deposit. H&W is the sole and exclusive owner of a
Certificate of Deposit issued by the Bank of Xxx Arbor in the
amount of Two Hundred Fifty Thousand Dollars ($250,000.00). H&W
owns such Certificate of Deposit free and clear of any and all
Liens.
9. REPRESENTATIONS AND WARRANTIES CONCERNING DMR. DMR hereby represents,
warrants and covenants the following to Xxxxxxx and H&W:
9.1. Good Standing and Authority. DMR is a corporation duly
organized, validly existing and in good standing under the laws
of the State of Michigan. DMR is duly qualified to do business
as a foreign corporation and is in good standing in each
jurisdiction in which it is required to be so qualified, except
where the failure to be so qualified, individually or in the
aggregate, would not have a Material Adverse Effect on DMR,
DMRFS or H&W. All such jurisdictions are listed on the attached
Schedule 9.1. DMR has the corporate power and authority to enter
into this Agreement and the Attendant Documents to which it is
or will be a party and to consummate the transactions
contemplated in this Agreement and the Attendant Documents. This
Agreement and all of the Attendant Documents to which DMR is or
will be a party, and the consummation of the transactions
contemplated in this Agreement, have been duly authorized and
approved by all necessary and proper corporate action on the
part of DMR. This Agreement, and all of the Attendant Documents
to which DMR is or will be a party, when executed and delivered,
will constitute legal, valid and binding obligations of DMR,
enforceable against DMR in accordance with their respective
terms. DMR is the sole shareholder of DMRFS and, indirectly, of
H&W.
9.2. Consents, Approvals and Authorizations. Except for (i)
[intentionally omitted], (ii) [intentionally omitted], (iii)
[intentionally omitted], (iv) [intentionally omitted], and (v)
the obtainment of those Consents listed on the attached Schedule
9.2, no Consent is required on the part of DMR in connection
with the valid execution and delivery of this Agreement and the
Attendant Documents to which DMR is or will be a party or the
consummation of the transactions contemplated in this Agreement
and the Attendant Documents which, if not obtained or made, will
result in a breach or violation of an agreement, lease,
indenture or other instrument, or a judgment, decree, order,
award, law, rule or regulation applicable to or affecting DMR,
DMR's business or DMR's properties, except where the failure to
obtain the same, individually or in the aggregate, would not
have a Material Adverse Effect on DMR, DMRFS or H&W. All
Consents listed on the attached Schedule 8.2 have been obtained
and remain in full force and effect and all statutory waiting
periods in respect thereof have expired.
9.3. Financial Information. Set forth on the attached Schedule 9.3
are: (i) the audited, consolidated balance sheet of DMR as of
December 31, 1998 and the related, consolidated statements of
income and expenses, retained earnings and cash flow, and notes
thereto, for the year then ended, certified by DMR's regularly
engaged certified public accountants (collectively, the "1998
DMR Financial Statements"); and (ii) the unaudited balance
sheets of DMR as of March 31, 1999, April 30, 1999 and May 31,
1999 and the related statements of income and expenses, retained
earnings and cash flow for the months then ended (collectively,
the "Subsequent Monthly DMR Financial Statements", and together
with the 1998 DMR Financial Statements, the "DMR Financial
Statements"). All of the DMR
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Financial Statements (i) are true, correct and complete in all
material respects; (ii) have been prepared in accordance with
generally accepted accounting principles applied consistently
with all corresponding prior fiscal periods of DMR; and (iii)
fairly present the financial condition, results of operation and
cash flows of DMR as of the dates and for the periods indicated;
subject, in the case of the Subsequent Monthly DMR Financial
Statements only, to normal year-end adjustments consistent with
past practices and the absence of footnotes (the "Missing DMR
Adjustments/Footnotes"). Except to the extent disclosed on the
attached Schedule 9.3, the Missing DMR Adjustments/Footnotes, if
presented in the Subsequent Monthly DMR Financial Statements,
would not differ materially from those included in the 1998 DMR
Financial Statements. The DMR Financial Statements make
substantially full and adequate provision for all obligations,
liabilities or commitments, whether fixed or contingent, and
doubtful accounts receivable of DMR. Xxxxxxx acknowledges that
DMR prepares cash flow statements on a quarterly basis only, any
other provision of this Agreement to the contrary
notwithstanding.
9.4. Non-Violative Agreement. Neither the execution and delivery of
this Agreement or the Attendant Documents to which DMR is or
will be a party nor the consummation of the transactions
contemplated in this Agreement and the Attendant Documents will
conflict with, result in the breach or violation of or
constitute a default under the terms, conditions or provisions
of DMR's Articles of Incorporation or Bylaws, both as amended,
or any other agreement or instrument to which DMR is a party, or
by which DMR may be bound or to which DMR may be subject.
9.5. Brokerage or Finder's Fee. DMR has not engaged any broker or
finder or incurred any liability for any brokerage fees,
commissions or finder's fees in connection with the transactions
contemplated in this Agreement.
9.6. Disclosure. No representation or warranty by DMR contained in
this Agreement and no statement contained in any of the
Attendant Documents to which DMR is or will be a party or any
other certificate or instrument furnished or to be furnished
pursuant to this Agreement or in connection with the
transactions contemplated in this Agreement contains or will
contain any untrue statement of a material fact, or omits or
will omit to state a material fact, necessary in order to make
any of the statements not misleading.
9.7. Xxxx-Xxxxx-Xxxxxx Compliance. Pursuant to 16 CFR ss.802.20, no
notification filing is required pursuant to the
Xxxx-Xxxxx-Xxxxxx Anti-Trust Improvements Act of 1976 in
connection with the transactions contemplated in this Agreement.
9.8. Knowledge. One or more of the persons listed on the attached
Schedule 17.11(a) could reasonably be expected to have
sufficient knowledge regarding the facts, matters and
circumstances underlying each of the representations and
warranties set forth in this Section 9 so as to be capable of
ascertaining whether or not they are completely accurate. DMR
has had access to, and have had sufficient time to review and
consider, the Xxxxxxx Reports and all due diligence materials
provided or otherwise made available to DMR or its
representatives by or on behalf of Xxxxxxx. DMR has been
afforded an opportunity to ask questions of and receive answers
from representatives of Xxxxxxx concerning the terms and
conditions of the transactions and matters described in the
Xxxxxxx Reports or such due diligence materials and to obtain
any additional information as DMR has identified in such
documents that DMR has requested.
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21
10. REPRESENTATIONS AND WARRANTIES OF XXXXXXX. Xxxxxxx hereby
represents, warrants and covenants the following to DMR (for the
purposes of the remainder of this Section 10 only, "Xxxxxxx"
refers to Xxxxxxx and each of its subsidiaries, collectively,
and "BFSC" refers to Xxxxxxx Financial Services Corporation,
alone):
10.1. Good Standing and Authority. BFSC is a corporation
duly organized, validly existing and in good standing
under the laws of the State of Michigan. BFSC is duly
qualified to do business as a foreign corporation and
is in good standing in each jurisdiction in which it
is required to be so qualified, except where the
failure to be so qualified, individually or in the
aggregate, would not have a Material Adverse Effect
on Xxxxxxx. All such jurisdictions are listed on the
attached Schedule 10.1. BFSC has the corporate power
and authority to enter into this Agreement and the
Attendant Documents to which it is or will be a party
and to consummate the transactions contemplated in
this Agreement and the Attendant Documents. This
Agreement and all of the Attendant Documents to which
BFSC is or will be a party, and the consummation of
the transactions contemplated in this Agreement, have
been duly authorized and approved by all necessary
and proper corporate action on the part of BFSC. This
Agreement, and all of the Attendant Documents to
which BFSC is or will be a party, when executed and
delivered, will constitute legal, valid and binding
obligations of BFSC, enforceable against BFSC in
accordance with their respective terms, subject to
BFSC's Board of Directors approving this Agreement in
accordance with applicable law.
10.2. Consents, Approvals and Authorizations. Except for
(i) [intentionally omitted], (ii) [intentionally
omitted], (iii) [intentionally omitted], (iv)
[intentionally omitted], and (v) the obtainment of
those Consents listed on the attached Schedule 10.2,
no Consent is required on the part of Xxxxxxx in
connection with the valid execution and delivery of
this Agreement and the Attendant Documents to which
BFSC is or will be a party or the consummation of the
transactions contemplated in this Agreement and the
Attendant Documents which, if not obtained or made,
will result in a breach or violation of an agreement,
lease, indenture or other instrument, or a judgment,
decree, order, award, law, rule or regulation
applicable to or affecting Xxxxxxx, the Xxxxxxx
Business or Xxxxxxx'x properties, except where the
failure to obtain the same, individually or in the
aggregate, would not have a Material Adverse Effect
on Xxxxxxx. All Consents listed on the attached
Schedule 10.2 have been obtained and remain in full
force and effect and all statutory waiting periods in
respect thereof have expired.
10.3. [intentionally omitted]
10.4. [intentionally omitted]
10.5. [intentionally omitted]
10.6. [intentionally omitted]
10.7. [intentionally omitted]
10.8. [intentionally omitted]
10.9. [intentionally omitted]
-20-
22
10.10. [intentionally omitted]
10.11. [intentionally omitted]
10.12. [intentionally omitted]
10.13. [intentionally omitted]
10.14. [intentionally omitted]
10.15. Financial Information. Set forth on the attached
Schedule 10.15 are: (i) the audited consolidated
balance sheet of BFSC and its subsidiaries as of
September 30, 1998 and the related statements of
income and expenses, retained earnings and cash flow,
and notes thereto, for the year then ended, certified
by BFSC's regularly engaged certified public
accountants (collectively, the "1998 Xxxxxxx
Financial Statements"); and (ii) the unaudited,
consolidated balance sheets of BFSC and its
subsidiaries as of October 31, 1998, November 30,
1998, December 31, 1998, January 31, 1999, February
28, 1999, March 31, 1999, April 30, 1999, and May 31,
1999 and the related statements of income and
expenses, retained earnings and cash flow for the
months then ended (collectively, the "Subsequent
Monthly Xxxxxxx Financial Statements", and together
with the 0000 Xxxxxxx Financial Statements, the
"Xxxxxxx Financial Statements"). All of the Xxxxxxx
Financial Statements (i) are true, correct and
complete in all material respects; (ii) have been
prepared in accordance with generally accepted
accounting principles applied consistently with all
corresponding prior fiscal periods of BFSC and its
subsidiaries; and (iii) fairly present the financial
condition, results of operation and cash flows of
BFSC and its subsidiaries as of the dates and for the
periods indicated; subject, in the case of the
Subsequent Monthly Xxxxxxx Financial Statements only,
to normal year-end adjustments consistent with past
practices and the absence of footnotes (the "Missing
Xxxxxxx Adjustments/Footnotes"). Except to the extent
disclosed on the attached Schedule 10.15, the Missing
Xxxxxxx Adjustments/Footnotes, if presented in the
Subsequent Monthly Xxxxxxx Financial Statements,
would not differ materially from those included in
the 0000 Xxxxxxx Financial Statements. The Xxxxxxx
Financial Statements make substantially full and
adequate provision for all obligations, liabilities
or commitments, whether fixed or contingent, and
doubtful accounts receivable of BFSC and its
subsidiaries. DMR, DMRFS and H&W acknowledge that
BFSC prepares cash flow statements on a quarterly
basis only, any other provision of this Agreement to
the contrary notwithstanding.
10.16. [intentionally omitted]
10.17. [intentionally omitted]
10.18. Non-Violative Agreement. Neither the execution and
delivery of this Agreement or the Attendant Documents
to which BFSC is or will be a party nor the
consummation of the transactions contemplated in this
Agreement and the Attendant Documents will conflict
with, result in the breach or violation of or
constitute a default under the terms, conditions or
provisions of BFSC's Articles of Incorporation or
Bylaws, both as amended, or any other agreement or
instrument to which Xxxxxxx is a party, or by which
Xxxxxxx may be bound or to which Xxxxxxx may be
subject.
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23
10.19. Brokerage or Finder's Fee. Xxxxxxx has not engaged
any broker or finder or incurred any liability for
any brokerage fees, commissions or finder's fees in
connection with the transactions contemplated in this
Agreement.
10.20. Disclosure. No representation or warranty by Xxxxxxx
contained in this Agreement and no statement
contained in any of the Attendant Documents to which
BFSC is or will be a party or any other certificate
or instrument furnished or to be furnished pursuant
to this Agreement or in connection with the
transactions contemplated in this Agreement contains
or will contain any untrue statement of a material
fact, or omits or will omit to state a material fact,
necessary in order to make any of the statements not
misleading.
10.21. [intentionally omitted]
10.22. [intentionally omitted]
10.23. [intentionally omitted]
10.24. [intentionally omitted]
10.25. [intentionally omitted]
10.26. Knowledge. One or more of the persons listed on the
attached Schedule 17.11(b) could reasonably be
expected to have sufficient knowledge regarding the
facts, matters and circumstances underlying each of
the representations and warranties set forth in this
Section 10 so as to be capable of ascertaining
whether or not they are completely accurate. Xxxxxxx
has had access to, and has had sufficient time to
review and consider, all due diligence materials
provided or otherwise made available to Xxxxxxx or
its representatives by or on behalf of DMR. Xxxxxxx
has been afforded an opportunity to ask questions of
and receive answers from representatives of DMR
concerning the terms and conditions of the
transactions and matters described in such due
diligence materials and to obtain any additional
information as DMR or Xxxxxxx have identified in such
documents that DMR or Xxxxxxx have requested.
10.27. Consideration Shares. Subject to obtaining the
Consents referenced in Section 10.2 above, and
assuming performance by DMR, DMRFS and H&W of their
obligations under this Agreement, as of the date of
issuance, all of the shares of Xxxxxxx Common Stock
to be issued pursuant to this Agreement will have
been duly authorized, will be validly issued, will be
fully paid and non-assessable, and will have been
issued by BFSC without violating any applicable laws,
rules, orders, judgments, decrees or other
requirements imposed by any governmental authority.
10.28. Reports and Financial Statements. Since November,
1997, BFSC has filed with the SEC all forms,
statements, reports and documents (including all
exhibits, post effective amendments and supplements
thereto) required to be filed by it under each of the
'33 Act, the '34 Act and the respective rules and
regulations thereunder, all of which, as amended if
applicable, complied when filed in all material
respects with all applicable requirements o the
appropriate act and the rules and regulations
thereunder. No subsidiary of BFSC is required to file
any form, report or other document with the SEC. BFSC
has previously made available to DMR, DMRFS and H&W,
via its XXXXX filings where available, copies
(including all exhibits, post effective amendments
and supplements
-22-
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thereto) of its (a) Annual Reports on Form 10K for
the year ended September 30, 1998, as filed with the
SEC, and (b) all other reports, including quarterly
reports, and registration statements filed by BFSC
with the SEC since November, 1997 (the documents
referred to in clauses (a) and (b) are collectively
referred to as the Xxxxxxx SEC Reports"). As of the
date of this Agreement, the Xxxxxxx SEC Reports taken
as a whole do not contain any untrue statement of a
material fact or omit to state a material fact
required to be stated therein or necessary to make
the statements therein, in the light of the
circumstances under which they were made, not
misleading.
11. ADDITIONAL AGREEMENTS.
11.1. Regulatory and Other Matters.
(a) [intentionally omitted]
(b) The Parties shall cooperate with each other
and use commercially reasonable efforts to
prepare and file promptly all necessary
documentation to effect or obtain as
promptly as practicable all Consents
described, in the case of DMR, DMRFS and
H&W, in Sections 7.2, 8.2 and 9.2 above, and
in the case of Xxxxxxx, in Section 10.2
above, and the Parties shall keep each other
apprised of the status of matters relating
to completion of the transactions
contemplated herein.
(c) If and to the extent required by applicable
law, at any time after the Closing Date,
DMRFS and DMR (and each Recipient (defined
in Section 15.7(a) below)) shall, on
Xxxxxxx'x request, reasonably cooperate with
the Regulator (defined below) and Xxxxxxx,
and cause their respective affiliates to
reasonably cooperate with the Regulator and
Xxxxxxx, in connection with Xxxxxxx'x
efforts to establish a thrift, bank or other
regulated financial institution, and shall
promptly prepare and file, and shall cause
their respective affiliates to promptly
prepare and file, any and all information
filings with the Regulator (i) which (A) are
required as a result of or in connection
with the transactions contemplated in this
Agreement, or (B) are required on the part
of DMR, DMRFS, any Recipient, or any of
their affiliates in connection with
Xxxxxxx'x efforts to establish a thrift,
bank or other regulated financial
institution, and (ii) which are specifically
requested by Xxxxxxx. If and to the extent
required by applicable law, after the
Closing Date, Xxxxxxx shall use commercially
reasonable efforts to cause its affiliates
(other than DMR, DMRFS and the Recipients)
to reasonably cooperate with the Regulator
with respect to, and to prepare and file any
and all information filings with the
Regulator which are required as a result of
or in connection with, the transactions
contemplated in this Agreement or Xxxxxxx'x
efforts to establish a thrift, bank or other
regulated financial institution; provided,
however, that nothing in this Section
11.1(c) shall in any way obligate Xxxxxxx to
proceed with the establishment of a thrift,
bank or other regulated financial
institution. For purposes of this Agreement,
the term "Regulator" means the Office of
Thrift Supervision or other applicable
governmental agency or other body having
regulatory authority over thrifts, banks or
other regulated financial institutions.
11.2. [intentionally omitted]
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25
11.3. [intentionally omitted]
11.4. [intentionally omitted]
11.5. [intentionally omitted]
11.6. Tax Matters. Xxxxxxx shall use commercially
reasonable efforts to cause the historic business of
H&W to be continued or a significant portion of the
historic business assets of H&W to be used in a trade
or business, in a manner sufficient to comply with
the continuity of business enterprise requirements
set forth in Treasury Regulation 1.368-1(d) under
Section 368 of the Code.
11.7. Employee Benefits, Insurance and Related Matters.
Effective as of the Closing Date, DMR shall cause all
employees of H&W to be fully vested in their total
account balance under the Detroit Mortgage and Realty
Company and Subsidiaries' Employees' Profit Sharing
Plan (the "401(k) Plan"). Each employee of H&W
("Employee") who has one or more loans outstanding
from the 401(k) Plan shall be permitted to continue
repayment of such loans in accordance with the loan
terms until the earliest of the date such Employee
fails to make any loan repayment properly and timely,
the date such Employee's employment with H&W or
Xxxxxxx (or any successor thereto) terminates, the
date as of which there is otherwise a default with
respect to such loan or the date as of which the
401(k) Plan terminates. DMR shall cause to be
prepared and executed any plan amendments and shall
take all other actions necessary to provide for the
foregoing vesting and loan repayment. DMR shall
retain, bear and discharge all liabilities, and
purchaser shall not assume any liability whatsoever,
with respect to DMR's and DMRFS's employee benefit
plans. DMR and its and DMRFS's employee benefit plans
that are welfare plans shall retain, bear and
discharge all liabilities with respect to (i) the
provision of retiree and all other post employment
benefits (including COBRA) and (ii) all incurred but
not reported claims under the employee benefit plans
provided to DMR's and DMRFS's employees prior to the
Closing Date.
12. SURVIVAL. The representations and warranties set forth in the
following Sections shall survive for the time periods indicated:
Section Time Period
7.1 (first, fourth, indefinitely
fifth and sixth sentences
only), 7.19, 7.22, 7.26
7.15, 7.18, 7.20, 7.25 through the Second
Quarter Filing Date
(defined below)
7.1 (except for the first, one (1) year after
fourth, fifth and sixth the Closing Date
sentences), 7.2
8.1 (first, fourth, fifth indefinitely
and sixth sentences only),
8.5, 8.19, 8.21, 8.22, 8.26
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26
8.3, 8.4, 8.7, 8.9, 8.11, through the Second
8.13. 8.15, 8.16, 8.18, Quarter Filing Date
8.20, 8.24, 8.25
8.6, 8.8, 8.10, 8.14 the applicable
statute of
limitations period,
or, if there is no
such applicable
period, three (3)
years after the
Closing Date
8.1 (except for the first, one (1) year after
fourth, fifth and sixth the Closing Date
sentences), 8.2, 8.12, 8.17
9.1 (first, fourth, fifth indefinitely
and sixth sentences only),
9.5, 9.7, 9.8
9.3, 9.4, 9.6 through the Second
Quarter Filing Date
(defined below)
9.1 (except for the first, one (1) year after
fourth, fifth and sixth the Closing Date
sentences), 9.2
10.1 (first, fourth, fifth indefinitely
and sixth sentences only),
10.19, 10.26, 10.27
10.15, 10.18, 10.20 through the Second
Quarter Filing Date
10.1 (except for the first, one (1) year after
fourth, fifth and sixth the Closing Date
sentences), 10.2
For the purposes of this Agreement, the term "Second Quarter
Filing Date" means the date on which Xxxxxxx files a 10-Q or a
10-K, as is appropriate pursuant to the '34 Act, for its
second (2nd) complete fiscal quarter following the Closing
Date. By way of example only, and assuming that the Closing
Date is July 31, 1999, the Second Quarter Filing Date would be
the date on which Xxxxxxx files a 10-Q for its fiscal quarter
ending March 31, 2000.
13. CONDITIONS TO CLOSING
13.1. [intentionally omitted]
13.2. [intentionally omitted]
13.3. [intentionally omitted]
14. CLOSING
14.1. Closing. The date on which the Closing the closing
(the "Closing") of the transactions contemplated in
this Agreement occurs is referred to in this
Agreement as the "Closing Date."
-25-
27
14.2. Documents to Be Delivered at Closing by DMR. In connection with
the Closing, DMR, DMRFS and H&W have properly executed (if
necessary) and delivered to Xxxxxxx, or cause to be executed and
delivered to Xxxxxxx, the following:
(a) Covenants Not to Compete (the "Covenants"), executed
by each of DMR, DMRFS and Xxxxxx X. Xxxxxxxxx in
favor of Xxxxxxx and H&W, the terms of which shall be
mutually acceptable to the parties involved.
(b) [intentionally omitted]
(c) [intentionally omitted]
(d) A Shareholders Agreement (the "Shareholders
Agreement"), the form of which is attached to this
Agreement as Exhibit "D".
(e) An opinion of Timmis & Xxxxx, L.L.P., counsel to DMR,
DMRFS and H&W, addressed to Xxxxxxx and H&W, the form
of which shall be reasonably acceptable to DMR's
counsel, Xxxxxxx and Xxxxxxx'x counsel.
(f) Copies of DMR's, DMRFS's and H&W's Articles of
Incorporation, certified by the Michigan Department
of Consumer and Industry Services, and Certificates
of Good Standing (or analogous documents) for DMR,
DMRFS and H&W issued by the Michigan Department of
Consumer and Industry Services and each and every
other state in which H&W is authorized to do
business. All such documents shall be dated not
earlier then ten (10) days prior to the Closing Date.
(g) A copy of DMR's, DMRFS's and H&W's respective bylaws
and a copy of the resolutions of DMR's and DMRFS's
respective Boards of Directors approving the
transactions contemplated in this Agreement, and a
certificate, executed by an officer of DMR and of
DMRFS, to the effect that, as of the Closing Date,
such bylaws and minutes or resolutions are true,
complete and correct, have not be altered or repealed
and are in full force and effect.
(h) One or more properly completed assignments separate
from certificate in respect of all of the H&W Shares,
in form and content reasonably acceptable to Xxxxxxx
(collectively, the "Assignments"), a fully completed
and executed Lockup Agreement (the "Lockup
Agreement"), the form of which is attached to this
Agreement as Exhibit "A" and all of the H&W Shares;
provided, however, that the H&W Shares shall be
deemed to be transferred as of July 2, 1999.
(i) Verification, reasonably acceptable to Xxxxxxx, that
the licenses (or re-licenses) and Consents described
in Section 11.1(b) above have been obtained.
(j) [intentionally omitted]
14.3. Documents to be Delivered at Closing by Xxxxxxx. At the Closing,
Xxxxxxx shall properly execute (if necessary) and deliver to
DMRFS or other indicated person or entity, as the case may be,
or cause to be executed and delivered to DMRFS or other
indicated person or entity, as the case may be, the following:
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(a) The shares of Xxxxxxx Common Stock
contemplated in Section 6.1 above.
(b) The Covenants.
(c) [intentionally omitted]
(d) The Shareholders Agreement.
(e) An opinion of Jaffe, Raitt, Heuer & Xxxxx,
Professional Corporation, counsel to
Xxxxxxx, addressed to DMR, the form of
which shall be reasonably acceptable to
Xxxxxxx'x counsel, DMR and DMR's counsel.
(f) Copies of Xxxxxxx'x Articles of
Incorporation, certified by the Michigan
Department of Consumer and Industry
Services, and Certificates of Good
Standing for Xxxxxxx issued by the
Michigan Department of Consumer and
Industry Services. All such documents
shall be dated not earlier then ten (10)
days prior to the Closing Date.
(g) A copy of Xxxxxxx'x bylaws and a copy of
the resolutions of its Board of Directors
approving the transactions contemplated in
this Agreement, and a certificate,
executed by an officer of Xxxxxxx, to the
effect that, as of the Closing Date, such
bylaws and minutes or resolutions are
true, complete and correct, have not be
altered or repealed and are in full force
and effect.
(h) [intentionally omitted]
(i) [intentionally omitted]
15. INDEMNIFICATION
15.1. Indemnification of Xxxxxxx. DMR and DMRFS hereby
agree to jointly and severally indemnify, defend and
hold harmless Xxxxxxx, H&W, and their respective
officers, directors, shareholders, employees,
independent contractors, agents, successors and
assigns (collectively, the "Xxxxxxx Parties") from
and against any and all liabilities, losses, costs or
expenses which any of the Xxxxxxx Parties may suffer
or for which any of the Xxxxxxx Parties may become
liable and which are based on, are the result of,
arise out of or are otherwise related to any of the
following:
(a) any inaccuracy or misrepresentation, or
breach of any representation or warranty of
DMR, DMRFS or H&W contained in this
Agreement, any of the Attendant Documents or
any certificate, schedule, list or other
instrument to be furnished by DMR, DMRFS or
H&W to, or which DMR, DMRFS or H&W cause to
be furnished to, Xxxxxxx pursuant to this
Agreement or any of the Attendant Documents;
provided, however, that no Xxxxxxx Party
shall be entitled to claim indemnification
under this Section 15.1(a) based on a breach
of any representation or warranty in Section
8.16 above if the basis of such breach is
the express subject matter of another
representation or warranty set forth
elsewhere in Sections 7 or 8 above,
respectively, and the basis for the breach
of Section 8.16 above does not also
constitute a breach of such other
representation or warranty;
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29
(b) any breach or failure of DMR, DMRFS or H&W
to perform any covenant or agreement
required to be performed by any of them
pursuant to this Agreement or any of the
Attendant Documents;
(c) the assertion of any claim, cause of action
or similar right by any actual or alleged
shareholder of H&W, or any person holding or
allegedly holding an option or otherwise
having a right to purchase or acquire shares
of the capital stock of H&W, against any of
the Xxxxxxx Parties, asserting that he, she
or it has an actual or contingent equity
interest in H&W;
(d) the assertion of any claim, cause of action
or similar right that Xxxxxxx is liable for
the debts, liabilities and obligations of
H&W on a "piercing the corporate veil"
theory, in light of DMR's and DMRFS's
failure to follow corporate formalities with
respect to such subsidiaries prior to the
Closing Date;
(e) any delinquencies prior to the Closing Date
with respect to H&W's loan servicing
portfolio, other than loss of servicing
income resulting from any such
delinquencies;
(f) any and all Taxes for which DMR, DMRFS or
H&W is liable in respect of any period of
time prior to the Closing Date and which
were to have been paid prior to the Closing
Date (other than those which have been
accrued as liabilities on the H&W Financial
Statements), and any and all interest, fines
or other charges or amounts assessed in
connection with any failure to pay any Taxes
for which DMR, DMRFS or H&W is or is
potentially responsible in respect of any
period of time prior to the Closing Date and
which were to have been paid prior to the
Closing Date;
(g) [intentionally omitted]; or
(h) any and all actions, suits, proceedings,
demands, assessments, judgments, costs and
expenses, including reasonable attorneys'
and consultants' fees (collectively,
"Related Expenses"), incident to any of the
foregoing.
15.2. Indemnification of DMR. Xxxxxxx hereby agrees to
indemnify, defend and hold harmless DMR and its
successors and assigns (collectively, the "DMR
Parties") from and against any and all liabilities,
losses, costs or expenses which any of the DMR
Parties may suffer or for which any of the DMR
Parties may become liable and which are based on, the
result of, arise out of or are otherwise related to
any of the following:
(a) any inaccuracy or misrepresentation in, or
breach of any representation or warranty of
Xxxxxxx contained in this Agreement, any of
the Attendant Documents or any certificate,
schedule, list or other instrument to be
furnished by Xxxxxxx to DMR pursuant to this
Agreement or any of the Attendant Documents;
provided, however, that no DMR Party shall
be entitled to claim indemnification under
this Section 15.2(a) based on a breach of
any representation or warranty in Section
10.16 above if the basis of such breach is
the express subject matter of another
representation or warranty set forth
elsewhere in Section 10 above, and the basis
for the breach of Section 10.16 above does
not also constitute a breach of such other
representation or warranty;
-28-
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(b) any breach or failure of Xxxxxxx to perform
any covenant or agreement required to be
performed by Xxxxxxx pursuant to this
Agreement or any of the Attendant Documents;
and
(c) any and all Related Expenses incident to any
of the foregoing.
15.3. Assignment of Claims. Each Party agrees that on
satisfaction of the obligation to indemnify under
this Section 15, and in consideration of such
obligation, it will assign to the Party or Parties
making such payment or giving such credit any and all
claims, causes of action and demands of whatever kind
and nature which such indemnified Party may have
against any person, firm or other entity giving rise
to such indemnified loss, and to reasonably cooperate
in any efforts to recover therefrom.
15.4. [intentionally omitted]
15.5. Remedies Exclusive. Except for specific performance,
injunctive relief, recoveries for claims of fraud
and/or claims under federal or state securities laws,
indemnification pursuant to this Section 15 shall be
the sole remedy available to the Parties for the
indemnifiable subject matters. No provision of this
Agreement shall constitute a waiver by any Party of
any claims under the federal or state securities laws
which he, she or it may have in respect of the
transactions contemplated in this Agreement.
15.6. [intentionally omitted]
15.7. No Distribution of Shares and Related Matters.
(a) Any provision of this Agreement to the
contrary notwithstanding, in no event shall
DMR or DMRFS distribute (whether in
liquidation and dissolution or otherwise),
assign, convey or otherwise transfer, in any
manner whatsoever, to any or all of its
shareholders, all of any portion of the
shares of Xxxxxxx Common Stock issued or to
be issued to DMRFS pursuant to this
Agreement, unless (i) each shareholder
actually receiving any such shares (each, a
"Recipient") agrees, in a writing reasonably
acceptable to Xxxxxxx, to be bound by and
subject to the terms of this Agreement, the
Shareholders Agreement and the Lockup
Agreement (collectively, the "Material
Agreements"), as and to the same extent as
DMRFS (provided, however, that each
Recipient other than DMR shall be liable
under this Agreement only in respect of
Section 11.1(c) above); (ii) DMR and DMRFS
shall remain liable under and subject to the
Material Agreements; and (iii) each
Recipient other than DMR executes and
delivers to Xxxxxxx and H&W a limited,
durable power of attorney, which shall be
reasonably acceptable to Xxxxxxx in form and
content, appointing one of the shareholders
of DMR (who shall be reasonably acceptable
to Xxxxxxx, except that in the case of the
liquidation and dissolution of DMR, the
trustee of the liquidating trust may be
named instead) as his, her or its
attorney-in-fact (which attorney-in-fact
shall be the same for all Recipients) (the
"Shareholder Representative"), to take any
and all actions, to make any and all
decisions, and to execute and any all
documents, required under, contemplated in,
or which are or become necessary, proper,
convenient or desirable in connection with,
the Material Agreements, for and on behalf
of such Recipient. In that event:
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(i) For all purposes relevant to the
Material Agreements, Xxxxxxx, H&W, and
all other parties to any of the
Material Agreements may deal
exclusively with the Shareholder
Representative, and shall have no
obligation whatsoever to deal with any
Recipient, with respect to all matters
in respect of any of the Material
Agreements;
(ii) Any and all rights which a Recipient
may be entitled to exercise under or
in connection with any of the Material
Agreements must be exercised by the
Shareholder Representative, on behalf
of all of the Recipients, acting as a
collective group; and
(iii) [intentionally omitted]
Except to the extent expressly contemplated
in the Shareholders Agreement and the Lockup
Agreement, the interests, rights and
obligations of the Recipients under the
Material Agreements may not be transferred
except by will, the laws of descent and
distribution or by other operation of law,
any other provision of this Agreement to the
contrary notwithstanding.
(b) Notwithstanding Section 15.7(a) above,
Xxxxxxx will not require shareholders of DMR
other than those identified on the attached
Schedule 15.7(b)-1 to agree to be bound by
and subject to the Shareholders Agreement
(but any shareholder may do so, if he, she
or it so desires), but all shareholders must
agree to be bound by and subject to this
Agreement and the Lockup Agreement, as
provided in Section 15.7(a) above. As a
condition precedent to the distribution of
any of the shares of Xxxxxxx Common Stock
issued or to be issued to DMRFS pursuant to
this Agreement, each of the shareholders
identified on the attached Schedule
15.7(b)-1 shall have executed the
Shareholders Agreement. DMR hereby covenants
and agrees that if any of the shares of
Xxxxxxx Common Stock issued or to be issued
to DMRFS pursuant to this Agreement are
distributed to its shareholders as provided
above, each of the shareholders identified
on the attached Schedule 15.7(b)-2 will
receive the number of shares of Xxxxxxx
Common Stock identified opposite his, her or
its name on the attached Schedule 15.7(b)-2.
15.8. No Right of Contribution. DMR and DMRFS shall not
have, and they hereby waive, any right of
contribution or similar right against H&W in respect
of this Agreement or any of the Attendant Documents.
16. [intentionally omitted]
17. MISCELLANEOUS
17.1. [intentionally omitted]
17.2. Expenses; Broker Fees.
(a) Expenses. Except to the extent expressly as
provided elsewhere in this Agreement,
Xxxxxxx shall be responsible for and shall
pay all legal fees, accounting fees, due
diligence costs and other expenses incurred
by it in connection with the negotiation and
preparation of this Agreement, and the
consummation of the transactions
contemplated in this Agreement and the
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32
Attendant Documents. Except to the extent
expressly provided elsewhere in this
Agreement, DMR shall be responsible for and
shall pay all legal fees, accounting fees,
due diligence costs and other expenses
incurred by DMRFS, H&W or it, or for which
DMRFS, H&W or it is responsible, in
connection with the negotiation and
preparation of this Agreement, the
preparation and filing of any and all
information filings with the Regulator which
are required of it as a result of or in
connection with the transactions
contemplated in this Agreement, or the
consummation of the transactions
contemplated in this Agreement and the
Attendant Documents, and DMR shall reimburse
H&W for all such fees, costs and expenses.
(b) Exceptions. Notwithstanding Section 17.2(a)
above:
(i) DMR shall be responsible for and shall
pay the first Twenty Five Thousand
Dollars ($25,000) in legal fees
Xxxxxxx incurs in connection with (A)
the negotiation and the preparation of
this Agreement and the Attendant
Documents, (B) the negotiation and the
preparation of the loan documents
being prepared in connection with the
financing of the transactions
contemplated in this Agreement (the
"Loan Documents"), and (C) the
consummation of the transactions
contemplated in this Agreement, the
Attendant Documents and the Loan
Documents.
(ii) DMR shall be responsible for and shall
pay (and to the extent paid by H&W,
shall reimburse H&W for) all fees and
other amounts due McDonald Investments
Inc. in connection with the
transactions contemplated in this
Agreement.
(iii) [intentionally omitted]
17.3. Notices. Any notice, election, demand, request,
consent, approval, concurrence or other communication
(collectively, a "notice") given or made under any
provision of this Agreement shall be deemed to have
been sufficiently given or made for all purposes only
if it is in writing and it is: (a) delivered
personally to the party to whom it is directed; (b)
sent by first class mail or overnight express mail,
postage and charges prepaid, addressed to the party
to whom it is directed, at his, her or its address
set forth below; or (c) telecopied to the party to
whom it is directed, at his, her or its address set
forth below:
If to DMR or DMRFS: With a required copy to:
Detroit Mortgage and Realty Company Timmis & Xxxxx, L.L.P.
00000 Xxxxxxxx Xxxxx Xxxx 000 Xxxxx Xxxxxx
Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000 Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxxx Attn: Xxxxx X. Xxxxxxx III
FAX (000) 000-0000 FAX (000) 000-0000
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33
If to Xxxxxxx or H&W: With a required copy to:
Xxxxxxx Financial Services Jaffe, Raitt, Heuer & Xxxxx,
Corporation Professional Corporation
000 Xxxx Xxxxx Xxxxxx, Xxxxx 000 Xxx Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, Xxxxxxxx 00000 Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxxx Attention: Xxxxx Sugar
FAX (000) 000-0000 FAX (000) 000-0000
Unless any other provision of this Agreement
expressly provides to the contrary, any notice:
(i) given or made in the manner indicated
in Section 17.3(a) above shall be
deemed to have been given or made on
the day on which such notice was
actually delivered to an adult
residing or employed at the address of
the intended recipient, but if such
day was not a business day, such
notice shall be deemed to have been
given or made on the first business
day following such day;
(ii) given or made in the manner indicated
in this Section 17.3(b) shall be
deemed to have been given or made on
the third (3rd) business day after the
day on which it was deposited in a
regularly maintained receptacle for
the deposit of the United States'
mail, or in the case of overnight
express mail, on the business day
immediately following the day on which
it was deposited in a regularly
maintained receptacle for the deposit
of overnight express mail, provided
that the notice is subsequently
delivered by the U.S. Post Office or
the courier service to the designated
address in the ordinary course of
business; and
(iii) given or made in the manner indicated
in this Section 17.3(c) above shall be
deemed to have been given or made on
receipt by the transmitting party of
printed confirmation that the
transmission was received, provided
that if the transmission occurs after
4:30 p.m. EST or EDT (as appropriate)
or on a non-business day, the notice
shall be deemed to have been given or
made on the first business day to
follow such transmission.
Notwithstanding the immediately preceding sentence,
if the intended recipient actually receives a notice
before the date on which such notice is deemed to
have been given or made, as specified above, the date
of actual receipt shall be the date on which such
notice is deemed to have been given or made for the
purposes of this Agreement.
17.4. Change of Address. Any Party may change his, her or
its address for purposes of this Agreement by giving
all of the Parties notice of such change in the
manner provided in Section 17.3 above.
17.5. Headings. The headings contained in this Agreement
are for reference purposes only and shall not in any
way affect the meaning or interpretation of this
Agreement.
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34
17.6. Construction. This Agreement has been executed in,
and shall be construed and enforced in accordance
with the laws of, the State of Michigan, without
regard to its conflicts of law principles.
17.7. No Assignment; Benefit. Subject to Section 15.7
above, no Party may assign its rights and obligations
under this Agreement without the prior written
consent of the other Parties. Subject to the
foregoing, this Agreement shall be binding on and
inure to the benefit of the Parties and their
respective successors and assigns.
17.8. Entire Agreement. This Agreement, including the
Exhibits and the Schedules attached or to be attached
to it, is and shall be deemed to be the complete and
final expression of the agreement between the Parties
as to the matters contained in and related to this
Agreement and supersedes any previous agreements
between the Parties pertaining to such matters,
except to the extent expressly provided in Section
17.1 above.
17.9. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an
original and all of which together shall be
considered one and the same agreement. Photostatic or
facsimile reproductions of this Agreement may be made
and relied upon to the same extent as originals.
17.10. Waiver. The waiver by any Party of any provision of
this Agreement or any breach of any such provision
shall not operate or be construed as a waiver of any
subsequent or similar breach. Any waiver of any such
provision or any such breach must be in writing.
17.11. Knowledge or Awareness.
(a) For purposes of this Agreement, to the
extent any of the representations or
warranties of DMR or DMRFS in this Agreement
are expressed in terms of its or their
"knowledge" or "awareness" (or other terms
of similar meaning), such qualifications
shall refer to those facts of which any of
the persons identified on the attached
Schedule 17.11(a) have actual knowledge, and
to those facts which any of such persons
reasonably should be expected to know, had
any of them conducted a reasonable
investigation into the matter. To the extent
Xxxxxxx has actual knowledge of a fact
(other than facts relative to those matters
disclosed on the attached Schedule 17.11(a))
that would constitute a breach by DMR or
DMRFS under this Agreement and it closes
under this Agreement, the Xxxxxxx Parties
shall be precluded from making any claim
based on such fact.
(b) For purposes of this Agreement, to the
extent any of the representations of Xxxxxxx
(or any of its subsidiaries) in this
Agreement are expressed in terms of its
"knowledge" or "awareness" (or other terms
of similar meaning), such qualifications
shall refer to those facts of which any of
the persons identified on the attached
Schedule 17.11(b) have actual knowledge, and
to those facts which any of such persons
reasonably should be expected to know, had
any of them conducted a reasonable
investigation in the matter. To the extent
DMR, DMRFS or H&W has actual knowledge of a
fact (other than facts relative to those
matters disclosed on the attached Schedule
17.11(b)) that would constitute a breach by
Xxxxxxx (or any of its subsidiaries) under
this Agreement and
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35
DMR closes under this Agreement, the DMR
Parties shall be precluded from making any
claim based on such fact.
17.12. Amendment. This Agreement may only be amended by
written agreement executed by all of the Parties.
17.13. Further Assurances. From time to time after the
Closing Date, at Xxxxxxx'x or H&W's request and
without further consideration, DMR shall execute and
deliver or cause to be executed and delivered such
further instruments of conveyance, assignment and
transfer and shall take such other action as Xxxxxxx
or H&W may reasonably request in order more
effectively to convey, transfer, reduce to possession
or record title to any of the assets of H&W or the
H&W Shares acquired pursuant to this Agreement. On
Xxxxxxx'x or H&W's request, DMR shall cooperate and
use its best efforts to have DMR's, DMRFS's and H&W's
current and former, officers, directors,
shareholders, employees and agents cooperate with
Xxxxxxx and H&W on or after the Closing Date by
furnishing information, evidence, testimony and other
assistance in connection with any actions,
proceedings, arrangements or disputes involving
Xxxxxxx or H&W and which are based on contracts,
leases, arrangements or acts of DMR, DMRFS or H&W
which were in effect or occurred on or prior to the
Closing Date.
17.14. Schedules and Exhibits.
(a) [intentionally omitted]
(b) Any provision of this Agreement to the
contrary notwithstanding, and despite any
"as of" date or similar qualifier set forth
on any Schedule to this Agreement, the
information set forth in such Schedule, when
finalized in accordance with Section
17.14(a) above, shall be as of the date of
this Agreement, unless an alternative date
is expressly set forth in this Agreement.
17.15. [intentionally omitted]
[the remainder of this page intentionally left blank]
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36
IN WITNESS WHEREOF, the undersigned have caused this Reorganization
Agreement to be executed as of June 30, 1999.
XXXXXXX FINANCIAL SERVICES
CORPORATION, a Michigan corporation
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------------
Its: Chief Executive Officer
-----------------------------------------
DETROIT MORTGAGE AND REALTY
COMPANY, a Michigan corporation
By: /s/ Xxxxxx X. Xxxxxxxxx
-----------------------------------------
Its: Chairman
-----------------------------------------
DMR FINANCIAL SERVICES, INC.,
a Michigan corporation
By: /s/ Xxxx X. Xxxxxxx
-----------------------------------------
Its: President and CEO
-----------------------------------------
XXXXXXX & XXXXXXX MORTGAGE ASSOCIATES, INC.,
a Michigan corporation
By: /s/ Xxxx X. Xxxxxxx
-----------------------------------------
Its: Vice President
-----------------------------------------
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