Exhibit 10.22
ASSET PURCHASE AGREEMENT
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THIS AGREEMENT IS MADE this 21 day of January, 1998, by and among NES
Michigan Acquisition Corp., a Delaware corporation ("Purchaser"), Grand Hi-
Reach, Inc., a Michigan corporation ("Seller"), and Xxxxx Xxxxx ("Shareholder").
In consideration of the mutual covenants, agreements and warranties herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
DEFINITIONS
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The following terms shall have the meanings set forth herein for the
purposes of the transactions described in this Agreement:
"Acquired Assets" shall have the meaning given to it in Section 1.1.
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"Agreement" shall mean this Asset Purchase Agreement, including all
Exhibits and Schedules hereto.
"Applicable Law" shall mean any federal, state, local or other law,
statute, regulation, rule, policy, guideline, ordinance (zoning or otherwise),
by-law, order, judgment, decree or restriction of any kind (including, without
limitation, any environmental law) applicable to or binding on Purchaser,
Seller, Shareholder, the Business, the Xxxxx Center Property or any of the
Acquired Assets.
"Assumed Obligations" shall have the meaning given to it in Section 1.4.
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"Assumed Warranties" shall mean the warranties of Seller outstanding on the
Closing Date for used equipment previously sold by it and not covered by a
manufacturer's warranty.
"Base Amount" shall mean $5,747,000.
"Book Value" shall mean net book value (ie. book value of Acquired Assets
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less book value of Assumed Obligations of all Acquired Assets determined in
accordance with GAAP, consistently applied.
"Bulk Sales Laws" shall mean the laws of any jurisdiction relating to bulk
sales or transfers that are applicable to the sale of the Acquired Assets
hereunder.
"Business" shall mean the business and operations of Seller, wherever
conducted.
"Xxxxx Center Property" shall mean the real property and improvements
commonly known as 000 000xx Xxxxxx, Xxxxx Xxxxxx, Xxxxxxxx.
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"Closing" shall mean the consummation of the transactions contemplated
herein in accordance with Section 10 hereof.
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"Closing Date" shall mean the date on which the Closing occurs or is to
occur.
"Closing Statement" shall have the meaning given it in Section 2.3.
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"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Contract" shall mean any contract, lease, commitment, sales order,
purchase order, indenture, mortgage, note, bond, instrument, license or other
agreement relating to the Business including, without limitation, any Purchase
Order or Customer Contract.
"Customer Contract" shall have the meaning set forth in Section 1.2(b).
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"Disbursement Date" shall have the meaning given to it in Section 2.1(b).
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"Encumbrance" shall mean any encumbrance or restriction of any kind,
including, without limitation, any pledge, security interest, lien, charge,
encumbrance, mortgage, hypothecation, trust deed, easement, lease, sublease,
claim, right of way, covenant, option, condition, right of first refusal or
restriction (whether on sale, transfer, disposition or otherwise, whether
imposed by agreement, law or otherwise and whether of record or otherwise).
"Environmental Law" shall mean any law, statute, regulation, rule, order,
consent decree, settlement agreement or governmental requirement which relates
to or otherwise imposes liability or standards of conduct concerning discharges,
releases or threatened releases of noises, odors or any pollutants, contaminants
or hazardous or toxic wastes, substances or materials into ambient air, water or
land, or otherwise relating to the manufacture, processing, generation,
distribution, use, treatment, storage, disposal, cleanup, transport or handling
of pollutants, contaminants or hazardous or toxic wastes, substances or
materials, including (but not limited to) the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, the Resource
Conservation and Recovery Act of 1976, as amended, any other so-called
"Superfund" or "Superlien" law, the Toxic Substances Control Act, or any other
similar Federal, state or local statutes.
"Environmental Permit" shall mean any Permit required by or pursuant to any
applicable Environmental Law.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"Excluded Assets" shall have the meaning given to it in Section 1.3.
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"Fleet" shall have the meaning given it in Section 1.1(a).
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"GAAP" shall mean the U.S. generally accepted accounting principles at the
time in effect, consistently applied for the periods in question.
"General Holdback" shall mean five percent (5%) of the Purchase Price.
"Inventory" shall have the meaning given to it in Section 1.1(b).
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"Losses" shall mean all liabilities, losses, costs, fines, damages,
penalties or expenses (including, without limitation, reasonable attorneys' fees
and costs of investigation and litigation).
"Management Non-Competition Agreement" shall mean the non-competition
agreement in the form of Exhibit C hereto.
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"Other Contracts" shall have the meaning given to it in Section 1.2(c)
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"Permits" shall have the meaning given to it in Section 1.2(d).
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"Purchase Orders" shall have the meaning given to it in Section 1.2(a).
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"Purchase Price" shall mean $9,600,000, subject to adjustment as provided
in Section 2.
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"Real Property" shall mean the Xxxxx Center Property and Wixom Property.
"Seller's Plans" shall have the meaning given to it in Section 3.13(a).
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"Shareholder Non-Competition Payment" shall mean $150,000.
"Tax Authority" shall mean any governmental agency having jurisdiction over
the payment of Taxes by Seller and shall include, without limitation, the
Michigan Department of Revenue.
"Tax Certificates" shall mean certificates issued by the Michigan
Department of Revenue either certifying that no Taxes are due, through and
including the Closing Date, from Seller, or setting forth the amount of Taxes
that are due from Seller through and including the Closing Date.
"Taxes" shall mean all taxes, including, without limitation, income, gross
receipts, net proceeds, ad valorem, turnover, real and personal property
(tangible and intangible), sales, use, franchise, excise, value added, stamp,
leasing, lease, user, transfer, fuel, excess profits, occupational and interest
equalization, windfall profits, payroll, severance and employees' income
withholding and Social Security taxes imposed by the United States or by any
state, municipality, subdivision or instrumentality of the United States or by
any other Tax Authority, including all applicable penalties and interest.
"To the knowledge of" shall mean to the knowledge of the party in question
after reasonable due investigation.
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"Wixom Property" shall mean the real property and improvements commonly
known as 48596 Xxxxxxx, Xxxxx, Xxxxxxxx 00000.
SECTION 1. Purchase and Sale; Liabilities
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1.1 Acquired Assets. At the Closing, Seller shall sell, assign, transfer
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and deliver to Purchaser, and Purchaser shall purchase, acquire and take
assignment and delivery of, all of the assets of Seller, wherever located
(collectively, the "Acquired Assets"), except for the Excluded Assets. The
Acquired Assets include, without limitation, the following:
(a) All new or used machinery, equipment, vehicles (including, without
limitation, automobiles, trucks, tractors and trailers and title to
equipment that may be subject to a capital or finance lease naming Seller
as lessee) that are leased by Seller to its customers in the ordinary
course of business including, without limitation, those items set forth on
Schedule 1.1 (the "Fleet");
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(b) All new or used machinery, equipment, vehicles (including, without
limitation, automobiles, trucks, tractors and trailers), attachments or
spare parts held for sale or resale by Seller (the "Inventory");
(c) All accounts receivables, trade receivables, notes receivables and
other receivables arising out of the operation of the Business on or before
the Closing Date;
(d) All cash, certificates of deposit, bank deposits and other cash
equivalents, together with all accrued but unpaid interest thereon, and
including any security deposit under any Customer Contract;
(e) All patents, patent registrations or applications, copyrights,
copyright registrations or applications, trademarks, trademark registration
or applications, tradenames, trade secrets, inventions, processes, designs,
know-how, formulae and all phone numbers and facsimile numbers for the Real
Property, including, without limitation, the name "Grand Hi-Reach";
(f) All confidential information, price lists, marketing information,
advertising materials, historical and financial records and files, and
other proprietary information and all environmental control, monitoring and
test records;
(g) All sales, rental, and maintenance records for each item of the
Fleet and otherwise, customer lists and files (including customer credit
and collection information and customer addresses), historical records and
files and other proprietary information;
(h) All warranties, indemnities or other rights relating to the Acquired
Assets;
(i) All goodwill, if any, related to or used in connection with the
Business; and
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(j) All other assets, tangible or intangible, of Seller relating to or
used in connection with the Business (except for the Excluded Assets),
including, without limitation, furniture, tools and shop equipment.
1.2 Assignment of Contracts, Leases and Other Assets. At the Closing,
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Seller shall assign and transfer to Purchaser, effective as of the Closing Date,
all of Seller's right, title and interest in and to, and Purchaser will take
assignment of the following (and all of the following shall be deemed included
in the term "Acquired Assets"):
(a) All open purchase orders, contracts, leases and agreements for the
purchase or lease of goods or materials by Seller and set forth on Schedule
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1.2 (a) attached hereto (the "Purchase Orders");
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(b) All open leases, contracts and agreements for the lease, service or
sale of units of the Fleet and other goods and services with customers and
any deposits under such leases, contracts and agreements (the "Customer
Contracts");
(c) All Contracts with suppliers related to the Fleet and other
Contracts listed on Schedule 1.2(c) (the "Other Contracts") and all such
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other Contracts as shall be entered into between the date hereof and the
Closing Date which fall into the categories set forth in clauses (a) or (b)
above or in this clause (c) and have been entered into in the ordinary
course of business or such other Contracts which shall be expressly
designated in writing by Purchaser prior to the Closing; and
(d) All permits, licenses, consents, approvals, certificates, variances
or other authorizations required in connection with the operation of the
Business under any Applicable Law (the "Permits").
1.3 Excluded Assets. The following assets of Seller (collectively, the
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"Excluded Assets") shall be retained by Seller and are not being sold or
assigned to Purchaser hereunder:
(a) The Xxxxx Center Property;
(b) One (1) Chevy Blazer Asset No. 20875, one (1) Chevy Suburban, Asset
No. 43198, one (1) Utility Trailer, Asset No. 01374 and one (1) 1996
Polaris 4 Xxxxxxx, Asset No. 2935958;
(c) All corporate seals, articles of incorporation, minute books, stock
books, tax returns or similar records pertaining to the corporate
organization of Seller; and
(d) life insurance policies on Xxxxx Xxxxx.
1.4 Assumed Obligations. At the Closing, Purchaser shall assume, and
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agree to pay, perform, fulfill and discharge, from and after the Closing Date,
the obligations of Seller (the "Assumed Obligations") that are required to be
performed, and which accrue, after the Closing Date under (a) the Purchase
Orders, Customer Contracts or Other Contracts (excluding indemnities,
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warranties, services, breach of contract claims or other obligations relating to
goods sold or leased on or before the Closing Date or to matters occurring or
which should have occurred on or before the Closing Date), except where the
consent of a third party is required for the assignment of such order or
contract and such consent has not been obtained and Seller has failed to provide
Purchaser the practical benefit of such order or contract and (b) the terms of
the Assumed Warranties, provided, that, Purchaser shall have no obligation under
this Section 1.4(b) for any warranty claim under the Assumed Warranties asserted
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(i) in violation of the applicable warranty requirements or (ii) for the first
time on or after 180 days from the Closing Date.
1.5 No Other Liabilities Assumed. Anything in this Agreement to the
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contrary notwithstanding, neither Purchaser nor any of its affiliates shall
assume, and shall not be deemed to have assumed, any debt, claim, obligation or
other liability of Seller, Shareholder or any of their respective affiliates
whatsoever other than as specifically set forth in Section 1.4. Without
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limiting the generality of the foregoing exclusion, Purchaser is assuming no
obligation for, and shall have no responsibility with respect to, any such
party's accounts payable, warranty obligations, taxes, labilities under
Environmental Laws or liabilities to or with respect to employees or under or
with respect to any employee benefit plan, policy, program or arrangement.
Purchaser shall be under no obligation to hire any of Seller's employees,
including, without limitation, any obligation for employment compensation,
benefits or severance.
SECTION 2. Purchase Price and Payment.
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2.1 Payment of Purchase Price.
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(a) On the Closing Date, Purchaser shall pay Seller an amount equal
to the Purchase Price less the General Holdback and the Shareholder Non-
Competition Payment.
(b) On the Disbursement Date (as defined below), (i) if the Book
Value stated in the Closing Statement exceeds the Base Amount, Purchaser
shall pay to Seller the General Holdback (less amounts retained by
Purchaser to satisfy claims pursuant to Section 12 or paid or payable by
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Purchaser to a Tax Authority on Seller's account) and the amount by which
the Book Value stated in the Closing Statement exceeds the Base Amount,
or (ii) if Base Amount exceeds the Book Value stated in the Closing
Statement, Purchaser shall pay Seller the General Holdback less (A) the
amount by which the Base Amount exceeds the Book Value stated in the
Closing Statement and (B) amounts retained by Purchaser to satisfy claims
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pursuant to Section 12 or paid or payable by Purchaser to a Tax Authority
on Seller's account. If the General Hold back is not sufficient to cover
the amount, if any, by which the Base Amount exceeds the Book Value stated
in the Closing Statement, Seller shall pay to Purchaser the amount of such
deficiency on the date that the Book Value is determined in accordance
with this Agreement. Neither party shall be required to make any payment
of any amount subject to arbitration pursuant to Section 2.2 until the
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conclusion of such arbitration. The "Disbursement Date" shall mean the
later of (i) the 120th day after the Closing Date, and (ii) the date
Purchaser receives either a Tax Certificate showing that no Taxes are due
from Seller or appropriate release documents from the proper Tax
Authorities.
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2.2 Shareholder Non-Competition Payment. On the Closing Date, Purchaser
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shall pay the Shareholder Non-Competition Payment to the Shareholder on behalf
of the Shareholder and the Company.
2.3 Closing Statement.
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(a) Within 90 days after the Closing Date, Purchaser shall prepare
and deliver to Seller a detailed statement (the "Closing Statement") setting
forth the Book Value of the Acquired Assets. The Closing Statement shall be
prepared at Purchaser's expense in accordance with GAAP and in a manner
consistent with Seller's past practices and the terms of this Agreement. Upon
Purchaser's request, Seller shall make available to Purchaser and its
accountants such documents as Purchaser may reasonably request in connection
with the preparation of the Closing Statement.
(b) Within thirty (30) days after receipt of the Closing Statement,
Seller shall deliver to Purchaser a written statement describing its objections,
if any, thereto. Unless Seller so objects within such period, the Closing
Statement shall become final and binding upon all parties. If Seller objects
within such period, such objection shall be resolved by Coopers & Xxxxxxx,
Chicago office which shall be instructed to resolve such dispute within thirty
(30) days. The resolution of disputes by the arbitrating accounting firm so
selected shall be set forth in writing and shall be conclusive and binding upon
the parties and the Closing Statement shall become final and binding upon the
date of such resolution. The fees and expenses of such accounting firm shall be
paid one-half by Purchaser and one-half by Seller.
(c) The parties shall prorate the personal property tax assessed on
the Acquired Assets by the state of Michigan or any locality with respect to the
1998 calendar year. Seller is responsible for that portion of the 1998 personal
property tax multiplied by a fraction, the numerator of which is the number days
in 1998 that Seller owned the Acquired Assets and the denominator of which is
365. Purchaser shall be responsible for the remainder of such tax.
2.4 Allocation of Purchase Price. Purchaser and Seller shall allocate
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the Purchase Price as set forth on Schedule 2.4 hereto. Such allocation is
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intended to comply with the requirements of Section 1060 of the Code. Seller
and Purchaser shall file Form 8594 with their respective Tax Returns
consistently with such allocation. Purchaser and Seller shall treat and report
the transaction contemplated by this Agreement in all respects consistently for
purposes of any federal, state or local tax, including, without limitation, the
calculation of gain, loss and basis with reference to the Purchase Price
allocation made pursuant to this Section 2.4. The parties hereto shall not take
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any actions or positions inconsistent with the obligations set forth herein.
2.5 Manner of Payments. All payments required by this Section 2 shall be
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by wire transfer of same day funds to an account designated by the party
entitled to payment.
2.6 Procedures for Assets not Transferable. If any of the contracts or
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agreements or any other property or rights included in the Acquired Assets are
not assignable or transferable without the consent of a third party, Seller
shall diligently use all commercially reasonable efforts to obtain such consents
prior to the Closing Date and Purchaser shall use all commercially reasonable
efforts to assist in that endeavor. If any such consent cannot be obtained
prior to the Closing Date and the
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Closing occurs, this Agreement and the related instruments of transfer shall not
constitute an assignment or transfer thereof, and Purchaser shall not assume
Seller's obligations with respect thereto, but Seller shall diligently use all
commercially reasonable efforts to obtain such consent as soon as possible after
the Closing Date or otherwise obtain for Purchaser the practical benefit of such
property or rights and Purchaser shall use all commercially reasonable efforts
to assist in that endeavor. Purchaser shall perform the Assumed Obligations
pertaining to any contract or agreement for which Seller obtains a consent to
transfer or otherwise obtains the practical benefit for Purchaser.
SECTION 3. Representations and Warranties of Seller and Shareholder. Each of
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Seller and Shareholder, being obligated jointly and severally, represent and
warrant to Purchaser as follows:
3.1 Due Incorporation. Seller is a corporation duly organized, validly
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existing and in good standing under the laws of Michigan with all requisite
corporate power and authority to own, lease and operate the Acquired Assets.
Seller is duly organized and in good standing as a foreign corporation
authorized to do business in each jurisdiction where the failure to be qualified
would have a material adverse effect on the Business or the Acquired Assets.
Shareholder is the only shareholder of Seller.
3.2 Due Authorization. Seller and Shareholder have full power and
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authority to enter into this Agreement and to carry out the transactions
contemplated herein. The execution, delivery and performance of this Agreement
has been duly authorized by all necessary corporate and shareholder action on
the part of Seller. This Agreement has been duly and validly executed and
delivered by Seller and Shareholder, and constitutes the legal, valid and
binding obligation of each of them, enforceable against each of them in
accordance with its terms. The execution, delivery and performance by Seller
and Shareholder of this Agreement and all other instruments, agreements,
certificates and documents contemplated hereby (a) except as set forth on
Schedule 3.2, do not violate or constitute a default under any Applicable Law or
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any Contract to which Seller or Shareholder is a party, or by which any of them
or any of the Acquired Assets are bound; or (b) except as set forth on Schedule
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3.2, will not result in the creation of any Encumbrance upon the Acquired
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Assets, or permit the acceleration of the maturity of the indebtedness of Seller
relating to, or indebtedness secured by, the Acquired Assets. Except as set
forth on Schedule 3.2, no notice to, filing with, authorization of, exemption
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by, or consent of any person or entity is required in order for Seller or
Shareholder to consummate the transactions contemplated hereby.
3.3 No Adverse Change. Since August 31, 1997, there has not been (a) any
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material adverse change in the financial condition, results of operations,
properties or prospects of the Business, (b) except as set forth on Schedule
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3.3(b), any material loss or damage or other adverse change to any of the
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Acquired Assets; (c) any sale, transfer or disposition of the Acquired Assets,
other than sales or leases of Inventory in the ordinary course of business; (d)
any Encumbrance placed on any of the Acquired Assets; or (e) any changes in the
accounting systems, policies or practices of the Business.
3.4 Title to Assets. Seller has good and valid title to the Acquired
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Assets, subject to the Encumbrances set forth on Schedule 3.4. At and as of the
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Closing, Seller shall convey the Acquired Assets (and, with respect to Acquired
Assets subject to capital leases or finance leases, cause to be conveyed) to
Purchaser by bills of sale, documents of title and instruments of assignment and
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transfer effective to vest in Purchaser good and valid record, beneficial and
marketable title to all of the Acquired Assets, free and clear of any
Encumbrance. The Acquired Assets and the Excluded Assets constitute all assets
necessary for the conduct of the Business, as currently operated. Schedule 3.4
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sets forth the location of each unit of the Fleet.
3.5 Taxes. All Taxes of Seller have been properly determined in
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accordance with applicable rules and regulations and have been timely paid in
full. Seller has duly and timely filed all Tax Returns of every nature required
to be filed by it, in every jurisdiction in which the same may have been so
required, and has paid all Taxes disclosed on such returns. All Taxes that
Seller is required by law to withhold or collect, including, without limitation,
sales and use taxes, and amounts required to be withheld for Taxes of employees,
have been duly withheld or collected and, to the extent required, have been paid
over to the proper governmental authorities.
3.6 Contracts. Schedule 3.6 sets forth a true and correct copy of the
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equipment lease form and equipment sale form used with such customers (which
form varies from customer to customer only as to type of equipment, name of
customer, term and price).
3.7 No Defaults or Violations. Seller has not materially breached any
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provision of, nor is in material default under the terms of, any Contract to
which it is a party or by which it or the Acquired Assets are bound (including,
without limitation, the Purchase Orders, Customer Contracts and Other
Contracts), and, to the knowledge of Seller, no other party to any such Contract
is in breach or default either in the payment of money or any other material
respect. Neither Seller, the Acquired Assets nor the Business is in any
material violation or default of, or with respect to, any Applicable Law, and no
notice from any governmental agency has been served upon Seller claiming any
violation of any Applicable Law or asserting any assessment or penalty which
would have a material adverse effect on the Acquired Assets. No condition or
set of facts exists which, with notice, lapse of time or both, would constitute
a breach of the representations and warranties in this Section 3.
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3.8 Certain Environmental Matters. Except as disclosed on Schedule 3.8
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attached hereto: (a) Seller has obtained all Environmental Permits required for
the operation of the Business or the Acquired Assets and such Environmental
Permits are valid and in full force and effect; (b) neither the Business, any of
the Acquired Assets nor the Real Property violate any applicable Environmental
Law or Environmental Permit in effect as of the date hereof and, to the
knowledge of Seller and Shareholder, no condition or event has occurred which,
with notice, lapse of time or both, would constitute any such violation; (c)
neither the Seller nor, to the knowledge of Seller and Shareholder, any other
person has stored or used any pollutants, contaminants or hazardous or toxic
wastes, substances or materials on or at the Real Property; (d) Seller has not
received notice from any person advising that any of the Real Property or
Acquired Assets or the operation of the Business violates any Environmental Law
or any Environmental Permit or that any Seller is responsible (or potentially
responsible) for the cleanup of any pollutants, contaminants or hazardous or
toxic wastes, substances or materials at, on or beneath the Real Property or at,
on or beneath any land
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adjacent thereto or any other property and, to the knowledge of Seller and
Shareholder, no such notice is threatened; (e) Seller and Shareholder are not
aware of any fact or circumstance that would give rise to any claim, suit,
proceeding or investigation related to the manufacture, distribution, use,
treatment, storage, disposal, discharge or release of any industrial, toxic or
hazardous substance or waste in connection with the Business, the Acquired
Assets or the Real Property; (f) neither Seller nor, to the knowledge of Seller
and Shareholder, any other person has buried, dumped, disposed, spilled or
released any pollutants, contaminants or hazardous or toxic wastes, substances
or materials on, beneath or about the Property or any property adjacent thereto
or any other property; (g) neither the Real Property nor any land adjacent
thereto has been used for the disposal, processing or treatment of waste or as a
dump site; and (h) no storage tanks are or, to the knowledge of Seller and
Shareholder, have been on, at or under the Real Property. Seller has timely
filed all reports required to be filed with respect to the Real Property, the
Acquired Assets and the operation of the Business and has generated and
maintained all required data, documentation and records under any applicable
Environmental Laws and Environmental Permits with respect thereto.
3.9 Permits. Seller holds all of the Permits described on Schedule 3.9
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attached hereto (each of which is in full force and effect), and no other
Permits are currently necessary for the lawful operation of the Business or the
Acquired Assets. Seller has not received notice of revocation or modification
of any Permit.
3.10 Litigation. Except as set forth on Schedule 3.10, there are no
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actions, suits, proceedings or governmental investigations pending or, to the
knowledge of Seller and Shareholder, threatened against or affecting Seller,
Shareholder, the Business, any of the Acquired Assets, the Xxxxx Center
Property, the Wixom Property or relating to the transactions contemplated by
this Agreement. Seller is not subject to any order, judgment, decree,
stipulation or consent of or with any governmental agency that has or may have a
material adverse effect on the Acquired Assets or the transactions contemplated
by this Agreement.
3.11 Insurance Policies. Schedule 3.11 attached hereto contains an
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accurate and complete list of all insurance carried by Seller with respect to
the Business and the Acquired Assets. Except as set forth on Schedule 3.11, no
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claims have been made against such insurance in the three (3) year period prior
to the date hereof. All such insurance is in full force and effect and all
premiums due to date have been paid.
3.12 Customers. No customer to which Seller has sold or leased units of
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the Fleet or rendered services during the past twelve (12) months has, during
the past twelve (12) months, discontinued or materially limited its leases or
purchases from the Business. Seller has not received any notice and has no
knowledge that any customer intends to terminate or materially reduce its leases
or purchases from the Business in the future. There is no Customer or group of
related Customers who accounted for more than 5% of the revenues of the Business
during the past twelve (12) months. The Business is conducted from no locations
other than the Xxxxx Center Property and the Wixom Property.
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3.13 Employee Benefit Plans and Employment Agreements.
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(a) Schedule 3.13 is a list of all employee contracts, and
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employee benefit plans, programs, policies and arrangements (including all
collective bargaining, stock purchase, stock option, employment,
compensation, deferred compensation, pension, retirement, severance,
termination, separation, vacation, sickness, health, welfare and bonus
plans, arrangements, and agreements) whether or not such contracts, plans,
policies or arrangements constitute "employee benefit plans" within the
meaning of Section 3(3) of ERISA under or with respect to which Seller has
any obligation or liability that relates to the Business (collectively, the
"SELLER'S PLANS").
(b) Seller has provided access to Purchaser of true and correct
copies of each of Seller's Plans and all contracts relating thereto, or to
the funding thereof, including, without limitation, all trust agreements,
insurance contracts, administration contracts, investment management
agreements, subscription and participation agreements, and recordkeeping
agreements, each as in effect on the date hereof, and an accurate
description of any Seller's Plans that are not in written form. To the
extent applicable, a true and correct copy of the most recent annual
report, actuarial report, summary plan description, and Internal Revenue
Service determination letter with respect to each of Seller's Plans has
been supplied to Purchaser by Seller and there have been no material
changes in the financial condition of any of Seller's Plans from that
stated in the applicable annual reports and actuarial reports supplied.
(c) With respect to each of Seller's Plans and except as set forth
on Schedule 3.13:
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(i) no such Seller's Plan is a multiemployer plan (as defined in
Section 3(37) of ERISA) or is subject to title IV of ERISA;
(ii) to Seller's knowledge, each such Seller's Plan complies and has
been administered in form and in operation in all material
respects with all applicable requirements of law, including, to
the extent applicable, sections 401(a) and 501(a) of the Code;
to Seller's knowledge, no event has occurred which will or could
cause any such Seller's Plan to fail to comply with such
requirements and there have been no amendments to such plans
which are employee benefit pension plans (as defined in Section
3(2) of ERISA) which are not the subject of a favorable
determination letter issued with respect thereto by the Internal
Revenue Service;
(iii) to Seller's knowledge, there are no actions, suits or claims
(other than routine claims for benefits) pending or threatened
involving any
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such Seller's Plan or the assets thereof and no facts exist
which could give rise to any such actions, suits or claims
(other than routine claims for benefits);
(iv) to Seller's knowledge, there have been no "prohibited
transactions" (as described in section 406 of ERISA or section
4975 of the Code) with respect to any of Seller's Plans and
Seller has not engaged in any prohibited transaction, which
could reasonably be expected to have a material adverse effect
on Seller;
(v) Seller does not have any liability or contingent liability for
providing, under any of Seller's Plans or otherwise, any post-
retirement medical or life insurance benefits, other than
statutory liability for providing group health plan continuation
coverage under Part 6 of Title I of ERISA and Section 4980B of
the Code, which could reasonably be expected to have a material
adverse effect on Seller; and
(vi) there have been no acts or omissions by Seller which have given
rise to or may give rise to fines, penalties, taxes or related
charges under section 502 of ERISA or Chapters 43, 47, 68 or 100
of the Code for which Purchaser may be liable on account of the
execution of this Agreement or the consummation of the
transaction contemplated hereby, which could reasonably be
expected to have a material adverse effect on Seller.
3.14 Employees. Schedule 3.14 contains a true, complete and
--------- -------------
accurate list of the names, titles, annual compensation and all current bonuses
for each employee of the Seller who has an annual base salary of $25,000 or
more. Except as disclosed on Schedule 3.14, there is no, and during the past
-------------
two years there has been no, labor strike, picketing, dispute, slow-down, work
stoppage, union organization effort, grievance filing or proceeding, or other
labor difficulty actually pending or, to the knowledge of Seller and
Shareholder, threatened against or involving the Seller. Except as set forth in
Schedule 3.14, Seller is not a party to any collective bargaining agreement
-------------
pertaining to the conduct of the Business and no such agreement determines the
terms and conditions of the employment of employees of the Business. Except as
set forth in Schedule 3.14 no collective bargaining agent has been certified as
-------------
a representative of any of employees of the Business and no representation
campaign or election is now in progress with respect to any employees of the
Business. Seller is in compliance with its obligations, if any, pursuant to the
Worker Adjustment and Retraining Notification Act of 1988 ("WARN ACT") and all
other obligations, if any, arising under any other applicable Law relating to
the termination of employees of the Business. Except as set forth on Schedule
--------
3.14, Seller has not received notice that any key employee of the Business
----
intends to terminate his employment with Seller or would not be willing to work
for Purchaser.
3.15 Seller's Warranties. Schedule 3.15 contains a list of each
------------------- -------------
express warranty, if any, given by Seller on units of the Fleet sold or leased
or services performed by Seller, that is outstanding on the Closing Date.
Seller has provided Purchaser with access to a true and complete copy of each
such warranty.
12
3.16 Manufacturers' Warranties. Schedule 3.16 contains a list of
------------------------- -------------
each express warranty, if any, given by any manufacturer with respect to any of
the Acquired Assets, that is outstanding on the Closing Date. Seller has
provided Purchaser with access to a true and complete copy of each such warranty
and, to the extent assignable, each such warranty shall be assigned to Purchaser
at Closing, at no additional cost to Purchaser.
3.17 Brokers. No broker or finder has acted for Seller in
-------
connection with this Agreement or the transactions contemplated hereby and no
broker or finder is entitled to any brokerage or finder's fee, by virtue of an
agreement with Seller or Shareholder.
3.18 No Other Agreement. Neither Seller nor Shareholder has any
------------------
contract, agreement, arrangement or understanding with respect to the sale or
other disposition of any of the Acquired Assets or capital stock of Seller,
except as set forth in this Agreement.
3.19 Assumed Warranties. Each of the Assumed Warranties has a
------------------
warranty duration period of no greater than six months from the date of sale by
Seller. The Assumed Warranties provide for the repair of any mechanical
breakdown of equipment sold, except that caused by operator abuse or neglect.
Aggregate claims against warranties given by Seller on sales of used equipment
similar to the coverage afforded and equipment covered by the Assumed Warranties
have not exceeded the following amounts for the following calendar years: 1997-
$5,000; 1996 - $5,000; 1995 -$5,000; 1994 - $5,000; and 1993 - $5,000. There is
currently no claim pending or threatened on any of the Assumed Warranties. To
the knowledge of Seller and Shareholder, there exists no defect or other matter
with respect to the used equipment covered by the Assumed Warranties that could
reasonably be expected to result in a material claim thereunder.
3.20 Accuracy of Statements. Neither this Agreement nor any
----------------------
statement, list, certificate or other information furnished or to be furnished
by or on behalf of Seller or Shareholder to Purchaser in connection with this
Agreement or any of the transactions contemplated hereby contains any untrue
statement of a material fact regarding Seller, Shareholder, the Acquired Assets
or the Business or omits to state a material fact necessary to make the
statements regarding Seller, Shareholder, the Acquired Assets or the Business
contained herein or therein, in light of the circumstances in which they are
made, not misleading.
Each of the foregoing representations and warranties shall be deemed remade by
Seller and Shareholder, jointly and severally, on the Closing Date. No
investigation or due diligence by Purchaser shall limit, modify or negate any of
the foregoing representations and warranties.
13
SECTION 4. Representations and Warranties of Purchaser. Purchaser represents
-------------------------------------------
and warrants to Seller and Shareholder as follows:
4.1 Due Incorporation. Purchaser is a corporation duly organized,
-----------------
validly existing and in good standing under the laws of the State of Delaware
with all requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted.
4.2 Due Authorization. Purchaser has full power and authority to
-----------------
enter into this Agreement and to carry out its obligations under this Agreement.
The execution, delivery and performance of this Agreement by Purchaser has been
duly authorized by all necessary corporate action on the part of Purchaser.
This Agreement has been duly executed and delivered by Purchaser and constitutes
the legal, valid and binding obligation of Purchaser, enforceable against
Purchaser in accordance with its terms. The execution and delivery of this
Agreement does not, and the consummation of the transactions contemplated hereby
will not, violate or constitute a default under any Applicable Law or any
Contract to which Purchaser is a party. Except as set forth on Schedule 4.2, no
------------
notice to, filing with, authorization of, exemption by or consent of any person
or entity is required in order for Purchaser to consummate the transactions
contemplated hereby, except as shall have been obtained on or prior to the
Closing Date.
4.3 Litigation. Except as set forth on Schedule 4.3, there are no
---------- ------------
actions, suits, proceedings or governmental investigations pending or, to the
knowledge of Purchaser, threatened against or affecting Purchaser relating to
the transactions contemplated by this Agreement. Purchaser is not subject to
any order, judgment, decree, stipulation or consent of or with any governmental
agency that has or may have a material adverse effect on the transactions
contemplated by this Agreement.
4.4 Brokers. No broker or finder has acted for Purchaser in
-------
connection with this Agreement or the transactions contemplated hereby and no
broker or finder is entitled to any brokerage or finder's fee, by virtue of an
agreement with Purchaser.
Each of the foregoing representations and warranties shall be deemed remade by
Purchaser on the Closing Date.
SECTION 5. Covenants of Seller and Shareholder.
-----------------------------------
Seller and Shareholder each agree that:
5.1 Implementing Agreement. Seller and Shareholder shall each
----------------------
take all reasonably necessary action to fulfill their respective obligations
under this Agreement and to consummate the transactions contemplated herein.
5.2 Access to Information. Seller and Shareholder shall each
---------------------
ensure Purchaser and Purchaser's representatives access during normal business
hours to all the Acquired Assets (wherever located) and the facilities,
properties, books, contracts, commitments and records of Seller. Seller's
officers and employees shall be available as Purchaser shall reasonably request.
Purchaser and its
14
representatives shall be furnished with information concerning the Business as
Purchaser shall reasonably request.
5.3 Ordinary Course. Seller shall (a) operate the Business only
---------------
in the usual, regular and ordinary course and manner consistent with past custom
and practice, (b) not incur any indebtedness other than to finance its working
capital needs in the ordinary course of business, (c) pay all accounts payable,
purchase inventory, collect all accounts receivable, and make capital
expenditures in the ordinary course of business consistent with past custom and
practice, (d) use all commercially reasonable efforts to maintain its business
and employees, customers, assets and operations as an ongoing business in
accordance with past custom and practice, and (e) not enter into any agreements
with respect to the foregoing.
5.4 Consents and Approvals. At its own cost, Seller shall make
----------------------
all filings, applications, statements and reports to all Governmental
Authorities that are required to be made prior to the Closing Date pursuant to
any Applicable Law in connection with this Agreement and the transactions
contemplated hereby. Seller shall use all commercially reasonable efforts to
obtain all necessary consents and approvals to consummate the transactions
contemplated hereby. At Purchaser's request and expense, Seller shall enforce,
to the extent possible, any warranty pertaining to the Acquired Assets that has
not been assigned to Purchaser. Shareholder shall execute and deliver all
landlord lien waiver documentation required for the Xxxxx Center Property by
Purchasers lender.
5.5 Compliance with Laws. Seller shall duly comply with all
--------------------
Applicable Laws.
5.6 No Modifications. Seller shall not modify, amend or otherwise
----------------
alter or change any of the material terms or provisions of any Purchase Orders,
Customer Contracts or Other Contracts.
5.7 State Tax Notification Requirements. Promptly after the
-----------------------------------
Closing, Seller shall:
(a) request from the Michigan Department of Revenue the statement
or certificate described in the Michigan Sales and Use Tax Act and request
the Michigan Department of Revenue to make a determination as to whether
Seller owes any tax, penalty or interest under the Michigan Sales and Use
Tax Act; and
(b) comply with the requirements of any similar provision under the
laws of any other state that may be applicable to the transaction
contemplated this Agreement.
5.8 Approval of Certain Contracts. Without the prior consent of
-----------------------------
Purchaser, Seller shall not enter into any new contract relating to or binding
the Acquired Assets outside of the ordinary course of business.
SECTION 6. Covenants of Purchaser.
----------------------
Purchaser agrees that from the date hereof to the Closing Date, Purchaser
shall make all filings, applications, statements and reports to all Governmental
Authorities that are required to be made prior to the Closing Date by or on
behalf of Purchaser pursuant to any applicable statute, rule or regulation in
connection with this Agreement and the transactions contemplated hereby.
15
Purchaser shall use its reasonable commercial efforts to obtain all necessary
consents and approvals to consummate the transactions contemplated hereby.
SECTION 7. Purchaser's Conditions Precedent.
--------------------------------
The obligations of Purchaser under Section 2 of this Agreement are, at
---------
the option of Purchaser, subject to satisfaction of the following conditions
precedent on or before the Closing Date (any of which may be waived by
Purchaser):
7.1 Warranties True as of Both Present Date and Closing Date. The
--------------------------------------------------------
representations and warranties of Seller and Shareholder contained herein shall
be true on and as of the date of this Agreement, and shall also be true on and
as of the Closing Date with the same force and effect as though made on and as
of the Closing Date, and an executive officer of Seller shall deliver to
Purchaser a certification of the same.
7.2 Compliance with Agreements and Covenants; Certificate. Seller
-----------------------------------------------------
and Shareholder shall have performed all of their respective obligations and
agreements and complied with all of their respective covenants contained in this
Agreement required to be performed and complied with on or prior to the Closing
Date; and shall have delivered to Purchaser a certificate, dated as of the
Closing Date, signed by Shareholder and an executive officer of Seller,
certifying compliance with Section 7.1 and this Section 7.2.
----------- -----------
7.3 Consents and Approvals. Consents and approvals in writing
----------------------
reasonably satisfactory to Purchaser shall have been received by Seller from (a)
each party to any of the Assumed Obligations whose consent and approval is
required for the transfer and assignment to Purchaser of such Assumed
Obligations, (b) any governmental agency whose consent and approval is required
for the consummation of the transactions contemplated hereby, including, without
limitation the transfer and assignment of the Permits to Purchaser, and (c) any
lenders, lessors or other persons whose consent or approval is required for the
consummation of the transactions contemplated hereby.
7.4 No Material Change. Neither the Business, the results of
------------------
operations thereof or the properties or prospects thereof, nor any of the
Acquired Assets shall have been materially and adversely affected as of the
Closing Date in any way and no event shall have occurred which, in the judgment
of Purchaser, may have a material adverse effect on the Business or the
prospects thereof.
7.5 Actions or Proceedings. No action, proceeding or claim shall
----------------------
have been instituted or threatened which would enjoin, restrain or prohibit, or
might result in damages in respect of, and no court order shall have been
entered which enjoins, restrains or prohibits, the consummation of the
transactions contemplated by this Agreement.
7.6 Due Diligence Review. Purchaser and its employees, agents,
--------------------
investment advisors and accounting and legal representatives shall have
completed their business and legal due diligence review of Seller and all
aspects of the Business and the Acquired Assets, and the results of such review
shall be satisfactory to Purchaser in its sole discretion.
16
7.7 Release of Encumbrances on Acquired Assets. All Encumbrances
------------------------------------------
on the Acquired Assets shall have been released and Seller shall have delivered
evidence thereof acceptable to Purchaser in its sole discretion.
7.8 Opinion of Counsel. Purchaser shall have received
------------------
an opinion, dated the Closing Date, of Miller, Johnson, Xxxxx and Xxxxxxxxx,
counsel for Seller, addressing the matters at the second and third sentences of
Section 3.2.
-----------
7.9 Seller's Authority Documents. Seller shall have delivered to
----------------------------
Purchaser: (a) a copy of the articles of incorporation of Seller certified as
of a recent date by the Michigan Department of Consumer and Industry Services
Corporation, Securities and Land Development Bureau, (b) a copy of the by-laws
of Seller, certified as of the Closing Date by the Secretary of Seller as true
and complete; and (c) a certificate of the Secretary of Seller, dated the
Closing Date, certifying a copy of the resolutions duly adopted by the Board of
Directors and the Shareholders approving this Agreement and the transactions
contemplated hereby as true and complete, as not having been amended or
supplemented and as being in full force and effect on the Closing Date.
7.10 Approvals. The Board of Directors of Purchaser shall have
---------
approved the transactions contemplated by this Agreement.
7.11 Lease of Real Property. Shareholder shall have executed and
----------------------
delivered to Purchaser the lease of the Xxxxx Center Property, in the form of
Exhibit A attached hereto. Purchaser shall have entered into a lease for the
---------
Wixom Property on terms acceptable to it.
7.12 Employment Agreement. Purchaser and Shareholder shall have
--------------------
entered into an Employment Agreement in the form of Exhibit B attached hereto.
----------
7.13 Covenant Not to Compete. Purchaser and Xxxxx Xxxxx shall have
-----------------------
entered the Management Non-Competition Agreement.
7.14 Satisfaction of Liabilities. All liabilities and obligations of
---------------------------
the Seller (other than Assumed Obligations) shall have been paid in full and
Seller shall provide evidence reasonable satisfactory to Purchaser of such
satisfaction.
7.15 Other Documents and Agreements. Purchaser shall have
------------------------------
received from Seller appropriate bills of sale and instruments of assignment and
such other documents and agreements necessary to convey the Acquired Assets to
Purchaser in accordance with the terms of this Agreement in such forms as are
reasonably satisfactory to Purchaser and its counsel. Purchaser shall have
received from Seller title certificates for each vehicle or other certificated
asset included within the Acquired Assets and executed originals or duplicate
originals of each Purchase Order and Customer Contract.
SECTION 8. Seller's Conditions Precedent.
-----------------------------
17
The obligations of Seller and Shareholder under Section 2 of this
---------
Agreement are, at the option of Seller, subject to the satisfaction of the
following conditions precedent on or before the Closing Date (any of which may
be waived by Seller):
8.1 Warranties True as of Both Present Date and Closing Date. The
--------------------------------------------------------
representations and warranties of Purchaser contained herein shall be true on
and as of the date of this Agreement, and shall also be true on and as of the
Closing Date with the same force and effect as though made by Purchaser on and
as of the Closing Date.
8.2 Compliance with Agreements and Covenants; Certificate. Purchaser
-----------------------------------------------------
shall have performed all obligations and agreements and complied with all
covenants contained in this Agreement to be performed and complied with on or
prior to the Closing Date; and Purchaser shall have delivered to Seller and
Shareholder a certificate, dated as of the Closing Date, of an executive officer
of Purchaser, certifying compliance with Section 8.1 and this Section 8.2.
----------- -----------
8.3 Actions or Proceedings. No action, proceeding or claim shall
----------------------
have been instituted or threatened which would enjoin, restrain or prohibit, or
might result in substantial damages in respect of, and no court order shall have
been entered which enjoins, restrains or prohibits, the consummation of the
transactions contemplated by this Agreement.
8.4 Opinion of Counsel. Seller and Shareholder shall have
------------------
received an opinion, dated the Closing Date, of Xxxxx, Xxxxx & Xxxxx, counsel
for Purchaser, addressing the matters at the second and third sentences of
Section 4.2.
-----------
8.5 Closing Deliveries. Purchaser shall deliver to Seller
------------------
appropriate instruments of assumption and other documents necessary to assume
the Assumed Obligations in accordance with the terms of this Agreement in such
forms as are reasonably satisfactory to Seller and their counsel. Purchaser
shall make the payments required in Section 2 above.
---------
8.6 Lease of Real Property. Purchaser shall have executed the lease
----------------------
of the Xxxxx Center Property, in the form of Exhibit A attached hereto.
---------
8.7 Employment Agreement. Purchaser and Shareholder shall have
--------------------
entered into an Employment Agreement in the form of Exhibit B attached hereto.
----------
8.8 Purchaser's Authority Documents. Purchaser shall have delivered
-------------------------------
to Seller: (a) a copy of the articles of incorporation of Purchaser certified as
of a recent date by the Secretary of State of Michigan, (b) a copy of the by-
laws of Purchaser, certified as of the Closing Date by the Secretary of
Purchaser, and a certification of the Secretary, certifying a copy of the
resolutions duly adopted by the Board of Directors approving this Agreement and
the transactions contemplated hereby as true and complete, as not having been
amended or supplemented and as being in full force and effect on the Closing
Date.
18
SECTION 9. Employees and Benefits.
----------------------
Purchaser shall be under no obligation to hire any of the employees of
Seller and shall not assume any obligations with respect to such employees,
including, without limitation, any obligations for employment compensation,
benefits or severance.
SECTION 10. Closing.
-------
The Closing shall take place at the offices of Xxxxx, Xxxxx & Xxxxx, 000
Xxxxx XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx at 10:00 A.M. on January __, 1998, or at
such other place or on such later date to which the parties hereto shall agree.
SECTION 11. Termination.
-----------
This Agreement may be terminated as follows: (a) with the mutual consent
of Seller and Purchaser; (b) by Purchaser, if any of the conditions provided in
Section 7 shall not have been satisfied on or prior to the date specified for
---------
fulfillment thereof, and Purchaser shall not have waived, in writing, such
failure of satisfaction and the Closing shall have occurred; (c) by Seller, if
any of the conditions provided in Section 8 shall not have been satisfied on or
---------
prior to the date specified for fulfillment thereof, and Seller shall not have
waived, in writing, such failure of satisfaction and the Closing shall have
occurred; or (d) on January 15, 1998, if the Closing shall not have taken place
before such date. In the event of any termination pursuant to this Section 11
----------
(other than pursuant to clause (a) or (d) above), written notice setting forth
the reasons thereof shall forthwith be given by Purchaser, if it is the
terminating party, to Seller, or by Seller, if it is the terminating party, to
Purchaser. No termination of this Agreement shall relieve a party of any breach
of this Agreement by it prior to the termination.
SECTION 12. Survival and Indemnification.
----------------------------
12.1 Survival. The representations and warranties of the parties
--------
hereto contained herein or in any other certificate or other writing delivered
pursuant hereto shall survive the Closing until the second anniversary of the
Closing Date; provided, that, the representations and warranties of Seller
contained at Sections 3.2, 3.4, 3.5 and 3.8 will not be subject to such time
------------ --- --- ---
limitation and shall not expire.
12.2 Indemnification by Seller and Shareholder. Seller and
-----------------------------------------
Shareholder, each being obligated jointly and severally, agree to indemnify
Purchaser and each of its affiliates against, and agree to hold it and them
harmless from, any Losses incurred or suffered by Purchaser or any of its
affiliates arising out of any of the following: (a) any breach of or inaccuracy
in any representation or warranty made by Seller or Shareholder pursuant to this
Agreement, and any breach of or failure by Seller or Shareholder to perform any
covenant or obligation of either Seller or Shareholder set out in this
Agreement; (b) any debt, claim, obligation or other liability of Seller or any
of its affiliates other than the Assumed Obligations; (c) any claim relating to
the Business or any of the Acquired Assets (including, without limitation, any
claim based in warranty, contract, tort or strict liability) arising from events
occurring on or before the Closing Date; (d) any claim (i) by any Tax Authority
regarding any Taxes incurred on or prior to the Closing Date in connection with
the Business or the
19
Acquired Assets or (ii) pursuant to the Bulk Sales Laws of any jurisdiction
regarding transactions contemplated by this Agreement; (e) any obligation or
other liability with respect to any violation by Shareholder or Seller of any
Applicable Law in effect on the date hereof or any condition existing on the
Real Property on the date hereof; or (f) any claims by or liabilities with
respect to any employee of any Seller regarding his or her employment or
termination of employment with Seller. Recovery will be permitted under clause
(a) above only for claims that individually exceed $5,000 and only if the
aggregate of all such claims exceed $50,000. Recovery will be permitted for the
entire amount of each claim in excess of $5,000 once the aggregate of all such
claims exceed $50,000. The liability of Seller and Shareholder under clause (a)
above will be limited to the Purchase Price.
12.3 Indemnification by Purchaser. Purchaser agrees to indemnify
----------------------------
Seller, Shareholder and each of their respective affiliates against, and agrees
to hold it and them harmless from, any Losses incurred or suffered by Seller,
Shareholder or any of their respective affiliates arising out of any of the
following: (a) any breach of or any inaccuracy in any representation or
warranty made by Purchaser pursuant to this Agreement, and any breach of or
failure by Purchaser to perform any covenant or obligation of Purchaser set out
in this Agreement; (b) the Assumed Obligations; or (c) the use or ownership of
any of the Acquired Assets after the Closing Date to the extent such Losses
arise in connection with and relate to periods commencing after the Closing
Date.
12.4 Notice of Claims; Assumption of Defense. The indemnified
---------------------------------------
party shall give prompt notice to the indemnifying party, in accordance with the
terms of Section 14.2, of the assertion of any claim, or the commencement of any
------------
suit, action or proceeding in respect of which indemnity may be sought
hereunder, specifying with reasonable particularity the basis therefor and
giving the indemnifying party such information with respect thereto as the
indemnifying party may reasonably request (but the giving of such notice shall
not be a condition precedent to indemnification hereunder). The indemnifying
party may, at its own expense, (a) participate in and (b) upon notice to the
indemnified party and the indemnifying party's written agreement that the
indemnified party is entitled to indemnification pursuant to Section 12.2 or
------------
Section 12.3 for Losses arising out of such claim, suit, action or proceeding,
------------
at any time during the course of any such claim, suit, action or proceeding,
assume the defense thereof; provided that (y) the indemnifying party's counsel
--------
is reasonably satisfactory to the indemnified party and (z) the indemnifying
party shall thereafter consult with the indemnified party upon the indemnified
party's reasonable request for such consultation from time to time with respect
to such claim, suit, action or proceeding. If the indemnifying party assumes
such defense, the indemnified party shall have the right (but not the duty) to
participate in the defense thereof and to employ counsel, at its own expense,
separate from the counsel employed by the indemnifying party. Whether or not
the indemnifying party chooses to defend or prosecute any such claim, suit,
action or proceeding, all of the parties hereto shall cooperate in the defense
or prosecution thereof.
12.5 Settlement or Compromise. Any settlement or compromise made
------------------------
or caused to be made by the indemnified party or the indemnifying party, as the
case may be, of any such claim, suit, action or proceeding of the kind referred
to in Section 12.4 shall also be binding upon the indemnifying party or the
------------
indemnified party, as the case may be, in the same manner as if a final judgment
or decree had been entered by a court of competent jurisdiction in the amount of
such
20
settlement or compromise. No party shall settle or compromise any claim, suit,
action or proceeding without the prior written consent of the other party, which
shall not be unreasonably withheld.
12.6 Failure of Indemnifying Party to Act. In the event that the
------------------------------------
indemnifying party elects not to assume the defense of any claim, suit, action
or proceeding, such election shall not relieve the indemnifying party of its
obligations hereunder.
SECTION 13. Non-Competition and Confidentiality Agreement.
----------------------------------------------
13.1 Non-Competition Agreement. For a period of five (5) years
-------------------------
after the Closing Date (the "Non-Competition Period"), each of Seller and
Shareholder shall not, within, or within a 250 mile radius of the municipal
boundary of Xxxxx Center, Michigan, Wixom, Michigan or any location from which
Purchaser or its affiliates conduct business on the date hereof (the "Restricted
Area"), directly or indirectly, own, control, manage, participate in, assist,
invest in or permit their names to be used by any person or entity that engages
in or owns, controls, manages, participates in, assists or invests in any
business substantially similar to the Business as conducted at any time during
the three (3) year period prior to the Closing Date (the "Services").
Notwithstanding the foregoing, being a passive owner of not more than 5% of the
outstanding securities of any class of a publicly traded entity engaged in the
provision of the Services in the Restricted Area shall not constitute a
violation of this Section 13.1.
------------
13.2 Non-Solicitation. During the Non-Competition Period, neither
----------------
Seller, Shareholder nor any of their affiliates will, directly or indirectly,
offer employment to or hire any employee of Purchaser.
13.3 Confidentiality. Except as may be required by a governmental
---------------
agency, Seller and Shareholder shall keep confidential all non-public
information concerning the Acquired Assets and not disclose the same to any
other person or entity, or use the same in any way.
13.4 Maximum Duration, Scope. If, at the time of enforcement of this
-----------------------
Section 13, a court shall hold that the duration, scope, area or other
----------
restrictions stated herein are unreasonable under circumstances then existing,
the parties agree that the maximum duration, scope, area or other restrictions
reasonable under such circumstances shall be substituted for the stated
duration, scope, area or other restrictions and that the provision at issue be
revised, as of the date of this Agreement, to the minimum extent necessary to
effect such substitution.
13.5 Specific Performance. Each of Seller and Shareholder agree that
--------------------
if either of them breach any of the provisions of this Section 13, money damages
----------
would be inadequate and Purchaser would have no adequate remedy at law.
Accordingly, each of Seller and Shareholder agree that Purchaser shall have the
right, in addition to any other rights and remedies existing in its favor, to an
action for specific performance, injunctive or other equitable relief in order
to enforce or prevent any violations (whether anticipatory, continuing or
future) of the provisions of this Section 13 without the necessity of proving
----------
actual damages or posting bond. In the event of a breach or violation of any of
the provisions of this Section 13, the running of the Non-Competition Period
----------
(but not of Seller's and Shareholder's obligations under this Section 13) shall
----------
be suspended with respect to Seller and Shareholder during the continuance of
any actual breach or violation. In connection
21
with Purchaser's application for such specific performance, injunctive or other
equitable relief, each of Seller and Shareholder hereby waive the claim or
defense that Purchaser possesses an adequate remedy at law or that bond must be
posted.
SECTION 14. Miscellaneous.
-------------
14.1 Expenses. Each party hereto shall bear its own expenses with
--------
respect to this transaction. Seller and Purchaser shall equally split all taxes
(other than Seller's income taxes) required to be paid in connection with the
transfer and assignment of the Acquired Assets.
14.2 Notices. Any notice, request, instruction or other document
-------
to be given hereunder by a party hereto shall be in writing and shall be deemed
to have been given or delivered, (a) when received if given in person, (b) on
the date of transmission if sent by telex, telecopy or other wire transmission
(receipt confirmed), (c) one (1) day after being sent by reputable overnight
courier, or (d) three (3) days after being deposited in the U.S. mail, certified
or registered mail, postage prepaid. All notices shall be addressed as set forth
below.
If to Seller or Shareholder addressed as follows:
Grand Hi-Reach, Inc.
c/o Xxxxx Xxxxx
0000 Xxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxx 00000
with a copy to:
Miller, Johnson, Xxxxx & Xxxxxxxxx, P.L.C.
000 Xxxxxx Xxxxxx, X.X.
Xxxxx 000
Xxxxx Xxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxxx Xxxxxx, Esq.
Facsimile: (000) 000-0000
If to Purchaser, addressed as follows:
NES Michigan Acquisition Corp.
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxxx, Xxxxx & Xxxxx
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx, Esq.
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Facsimile: (000) 000-0000
or to such other individual or address as a party hereto may designate for
itself by notice given as herein provided.
14.3 Waivers. No waiver by a party of any condition or breach
-------
of any provision of this Agreement shall be effective unless in writing, and no
waiver in any one or more instances shall be deemed to be a further or
continuing waiver of any such condition or breach in other instances or a waiver
of any other condition or breach of any other provision.
14.4 Counterparts. This Agreement may be executed simultaneously in
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Executed signatures may
be delivered by facsimile transmission.
14.5 Construction. The Article and Section headings are for
------------
convenience only and shall not be deemed part of this Agreement. Each party and
its counsel have reviewed this Agreement. The language of this Agreement shall
be construed according to its fair meaning. Any rule of construction resolving
ambiguities against the drafting party shall not apply in the interpretation of
this Agreement.
14.6 Applicable Law. This Agreement shall be governed by and construed
--------------
and enforced in accordance with the internal laws, and not the laws of
conflicts, of the State of Illinois.
14.7 Assignment. This Agreement shall be binding upon and inure to the
----------
benefit of the parties hereto and their respective heirs, personal
representatives, successors and assigns; provided, however, that no assignment
-------- -------
shall be made hereof without the prior written consent of the non-assigning
party, except that Purchaser may assign its rights hereunder to any of its
affiliates or to any lender.
14.8 Other Instruments. After the Closing Date, Seller shall execute
-----------------
and deliver to Purchaser such other documents, releases, assignments and other
instruments as may be reasonably required by Purchaser to further effect the
transfer and assignment to Purchaser of, and to vest fully in Purchaser title
to, each of the Acquired Assets.
14.9 Third Party Beneficiaries. This Agreement is not intended to
-------------------------
confer upon any person or entity, other than the parties hereto, any rights or
remedies hereunder.
14.10 Forum. Each party hereto agrees that any suit, action or
-----
proceeding brought by any party against any other party to this Agreement in
connection with or arising out of this Agreement shall be brought solely in the
Federal Courts of the Northern District of Illinois or, if such court lacks
jurisdiction, in the Circuit Court of Xxxx County, Illinois. Each party hereby
waives any defense or claim of lack of venue, lack of jurisdiction or forum non-
convenience in connection with the foregoing.
14.11 Records. After the Closing, Seller shall make available to
-------
Purchaser, as requested by Purchaser, its agents and representatives or any Tax
Authority or governmental agency, all
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information, records or documents relating to the Business or the Acquired
Assets and retained by Seller and shall preserve all such information, records
and documents until six years after the Closing.
14.12 Entire Understanding. This Agreement sets forth the entire
--------------------
agreement and understanding of the parties hereto in respect to the transactions
contemplated hereby and supersedes all prior agreements, arrangements and
understandings relating to the subject matter hereof. This Agreement may be
amended, modified or supplemented only in writing signed by the parties hereto.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered on the date first above written.
NES MICHIGAN ACQUISITION CORP.
By: /s/ Xxxx X. Xxxxxxxxx
--------------------------------------
Xxxx X. Xxxxxxxxx
Vice President
GRAND HI-REACH, INC.
By: /s/ Xxxxx Xxxxx
---------------------------------------
Xxxxx Xxxxx
President
/s/ Xxxxx Xxxxx
-------------------------------------------
XXXXX XXXXX, individually
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