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EXHIBIT 10.10
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
AMONG
XXXXXXX XXXXX CORPORATION,
CERTAIN SHAREHOLDERS OF
XXXXXXX XXXXX CORPORATION,
BMG-MI, INC.
AND
L-E ACQUISITION, INC.,
A CORPORATION WHOLLY-OWNED BY
BMG-MI, INC.
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of November 14, 1996, by and
between Xxxxxxx Xxxxx Corporation ("Xxxxxxx"), a Michigan corporation, BMG-MI,
Inc. ("Parent"), a Michigan corporation, L-E Acquisition, Inc. ("Newco"), a
Michigan corporation, the parties named as Shareholders on the signature page
of this Agreement (the "Shareholders"), and X. Xxxxxxx Xxxxxxxxx, as
Shareholders' Agent.
WHEREAS, the Shareholders own all or substantially all of the
outstanding shares of Class A common stock and Class B common stock of Xxxxxxx;
WHEREAS, all of the outstanding shares of capital stock of Parent
are owned directly or indirectly by certain individual shareholders affiliated
with The Oxford Investment Group, Inc. ("Oxford"), and all of the outstanding
shares of capital stock of Newco are owned by Parent; and
WHEREAS, the respective Boards of Directors of each of the
Constituent Corporations deem it advisable and generally to the welfare and
advantage of each, and of all the several and respective holders of their
shares, for Newco to be merged into Xxxxxxx and for all the stock of Xxxxxxx
then outstanding to be converted in the merger into preferred stock of the
Surviving Corporation (as defined below) Parent, pursuant to this Agreement and
the applicable laws of the State of Michigan, in a reorganization as defined by
Sections 368(a)(1)(E) of the United States Internal Revenue Code of 1986, as
amended.
Certain terms used herein are defined, for all purposes of this
Agreement, in Article VIII.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements, provisions and covenants herein contained, and intending to be
legally bound, the parties hereby agree as follows:
I. THE PLAN OF MERGER
1.01 Merger, Surviving Corporation, Directors and Officers.
Pursuant to the Michigan Business Corporation Act (the "MBCA"), Newco shall be
merged with and into Xxxxxxx. Xxxxxxx shall be the surviving corporation after
the merger. Newco and Xxxxxxx, in their capacities as parties to the merger,
are hereinafter sometimes called the "Constituent Corporations," and Xxxxxxx in
its capacity as such surviving corporation is hereinafter sometimes called the
"Surviving Corporation." The directors of Newco immediately prior to the
Effective Date shall be the initial directors of the Surviving Corporation,
each to hold office in accordance with the Articles of Incorporation and Bylaws
of the Surviving Corporation, and the officers of Newco immediately prior to
the Effective Date shall be the initial officers of the Surviving Corporation,
in each case until their respective successors are duly elected or appointed
and qualified.
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1.02 Articles of Incorporation. The articles of incorporation
of Newco as in effect on the Effective Date shall from and after the Effective
Date be the Articles of Incorporation of the Surviving Corporation, until
amended as provided by law.
1.03 Bylaws. The bylaws of Newco as in effect on the Effective
Date shall from and after the Effective Date be the bylaws of the Surviving
Corporation, until amended as provided therein or by law.
1.04 The Closing; Effective Date.
(a) The Closing. Delivery of the various instruments and
documents which this Agreement contemplates shall be delivered prior to or on
the Effective Date and shall constitute the Closing. The parties intend that
the Closing shall take place at the offices of Xxxxxx Xxxxxxx PLLC, 0000 Xxxxx
Xxxxxxxx Xxxxxx, Xxxxxxxxxx Xxxxx, Xxxxxxxx at 10:00 a.m. Eastern Standard time
on December 31, 1996, but not later than January 17, 1997, or at such other
time or place or on such other date as shall be mutually agreed by the
Shareholders' Agent and Parent. The date when the Closing takes place is
herein called the "Closing Date."
(b) Michigan Filing. If this Agreement has been approved
by the shareholders of Newco and Xxxxxxx as required by Section 703a of the
MBCA, and if all of the conditions precedent to the obligations of each of the
parties hereto, as hereinafter set forth, shall have been satisfied or waived,
a certificate of merger complying in form and substance with Section 707 of the
MBCA shall be delivered to the office of the Michigan Department of Consumer
and Industry Services for filing on the Closing Date.
(c) Effective Date. The merger contemplated hereby (the
"Merger") shall become effective at 11:59 p.m., Eastern Standard time, on the
date on which the filing referred to in Section 1.04(b) is completed. The date
upon which the merger becomes effective is herein referred to as the "Effective
Date."
1.05 Status and conversion of shares.
(a) Xxxxxxx common stock. Each share of Xxxxxxx Class A
common stock and Class B common stock outstanding on the Effective Date (except
shares held in the treasury of Xxxxxxx, which shall be canceled) shall be
converted by the merger into .116452 shares of fully paid and non-assessable
Series A Preferred Stock of the Surviving Corporation ("Series A Preferred
Stock") and .020578 shares of fully paid and non-assessable Series B Preferred
Stock of the Surviving Corporation ("Series B Preferred Stock" and together
with the Series A Preferred Stock the "Preferred Stock"). The relative rights,
preferences and limitations of the Series A and Series B Preferred Stock shall
be as set forth in Exhibit A hereto. Notwithstanding the foregoing, no
fractional shares of Series A or Series B Preferred Stock or certificates
therefor or scrip shall be issued in the Merger, but in lieu thereof each
record holder of Xxxxxxx Class A common stock or
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Class B common stock who would otherwise be entitled to a fraction of a share
of Preferred Stock shall be paid by Newco an amount in cash equal to (i) such
fraction times (ii) $100.00.
(b) Common stock of Newco. Each share of common stock of
Newco, whether issued or unissued, outstanding or held as treasury stock, shall
be converted by the merger into one share of fully paid and non-assessable
common stock of the Surviving Corporation.
(c) Surrender of Xxxxxxx stock certificates. After the
Effective Date, each holder of an outstanding certificate or certificates
theretofore representing shares of Xxxxxxx Class A common stock or Class B
common stock shall surrender such certificate or certificates to the Surviving
Corporation or its designated agent and shall receive in exchange therefor
(subject to Section 1.06) certificates representing the number of shares of
Preferred Stock into which the shares of Xxxxxxx Class A common stock or Class
B common stock theretofore represented by such surrendered certificate or
certificates have been converted in the merger. Until so surrendered, each
outstanding certificate theretofore representing shares of Xxxxxxx Class A
common stock or Class B common stock shall be deemed for all purposes, other
than the payment of dividends or other distributions, if any, to holders of
Preferred Stock, to represent the number of whole shares of Preferred Stock
into which the shares of Xxxxxxx Class A common stock or Class B common stock
theretofore represented by such certificate or certificates have been
converted. No dividend or other distribution, if any, payable to holders of
record of shares of Preferred Stock shall be paid to the holders of such
outstanding certificates theretofore representing shares of Xxxxxxx Class A
common stock or Class B common stock; provided, however, that upon surrender of
such outstanding certificates there shall be paid to the record holders of the
certificates issued in exchange therefor the amount, without interest thereon,
of dividends and other distributions, if any, which theretofore has been
declared and become payable with respect to the number of shares of Preferred
Stock represented thereby.
1.06 Escrow; Post-Closing Adjustment.
(a) On the Effective Date, the certificates evidencing an
aggregate of $13,000,000 (to the nearest whole share) of the Series A Preferred
Stock, with the Series A Preferred Stock valued at $100 per share for such
purposes, into which each Shareholder's Class A common stock and Class B common
stock of Xxxxxxx has been converted in the Merger (the "Escrow Shares"), shall
be delivered by the Surviving Corporation to Citizens Bank, as escrow agent
(the "Escrow Agent") under an Escrow Agreement among the Surviving Corporation,
the Shareholders' Agent and the Escrow Agent in the form annexed hereto as
Exhibit B (the "Escrow Agreement"). Each of the Xxxxxxx shareholders shall
deposit his pro-rata share of the Escrow Shares (rounded to the nearest whole
number) determined by multiplying 130,000 times a fraction the numerator of
which is the number of shares of Series A Preferred Stock issuable to such
shareholder under Section 1.05(a) and the denominator of which is the total
number of shares of Series A Preferred Stock issuable pursuant to the Merger.
The Escrow Shares shall be held in escrow under the Escrow Agreement and shall
be distributed to the Shareholders, or returned to Parent or the Surviving
Corporation, pursuant to the terms of the Escrow Agreement.
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(b) The "Shareholders' Equity Adjustment Amount" shall be
determined by subtracting (i) $42.6 million from (ii) Lobdell's shareholders'
equity as of the Closing Date. If the Shareholders' Equity Adjustment Amount
is a negative number, the Escrow Agent shall return to the Surviving
Corporation that number of shares of Preferred Stock (to the nearest whole
share) equal in value to such difference, with the Preferred Stock to be valued
for such purpose at $100.00 per share. The Shareholders, Xxxxxxx, Parent and
Newco agree that to the extent that there is any limitation in the deductions
allowed to either Xxxxxxx or the Surviving Corporation, to the extent of any
"excess parachute payments" (as defined under Section 280G of the Code), the
amount of such limitation shall also result in an adjustment hereunder and the
Escrow Agent shall return to the Surviving Corporation that number of shares of
Preferred Stock (to the nearest whole share) equal in value to such limitation,
with the Preferred Stock to be valued for such purpose at $100.00 per share.
(c) In order to determine the Shareholders' Equity
Adjustment Amount, the Surviving Corporation shall cause Price Waterhouse LLP
to prepare, and to deliver to the Surviving Corporation and the Shareholders'
Agent not later than forty-five days after the Closing Date, an audited
consolidated balance sheet of Xxxxxxx as of the Closing Date (the "Closing Date
Balance Sheet"), prepared in accordance with GAAP applied on a basis consistent
with the 1995 Company Balance Sheet and in accordance with the Agreed
Accounting Principles annexed hereto as Exhibit C. The date when such delivery
is completed is herein called the "Balance Sheet Delivery Date."
(d) Not later than 30 days after the Balance Sheet
Delivery Date, the Shareholders' Agent shall notify Parent and the Surviving
Corporation, and Parent and the Surviving Corporation shall notify the
Shareholders' Agent, of agreement or disagreement that Lobdell's shareholders'
equity as of the Closing Date was as shown on the Closing Date Balance Sheet.
If no such notice is delivered, the party from which such notice was due shall
be deemed to have agreed with the Closing Date Balance Sheet and any related
Shareholders' Equity Adjustment Amount. Parent, the Surviving Corporation and
the Shareholders' Agent shall attempt to resolve any such disagreement on a
mutually acceptable basis. To the extent that any such disagreement is not so
resolved within 40 days after the Balance Sheet Delivery Date, the questions
giving rise to such disagreement shall be submitted as soon as practicable
(and, in any event, not later than 60 days after the Balance Sheet Delivery
Date) to Coopers & Xxxxxxx (Detroit office) (the "Reviewing Accountants") for
final determination of Lobdell's shareholders' equity as of the Closing Date.
The Reviewing Accountants shall receive such submissions from the Shareholders'
Agent, Parent, the Surviving Corporation or other persons, hear such testimony,
make such independent investigation, and otherwise follow such positions as the
Reviewing Accountants deem appropriate in their sole discretion. The Reviewing
Accountants shall finally determine the amount of Lobdell's shareholders'
equity as of the Closing Date as soon as practicable, and such determination
shall be binding upon Parent, the Surviving Corporation and the Shareholders
for all purposes of this Agreement and the Escrow Agreement.
(e) Subject to Section 7.02, the Surviving Corporation
shall pay the cost of the preparation and audit of the Closing Date Balance
Sheet and one-half of such cost shall be
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considered the expenses of Xxxxxxx for purposes of Sections 5.02(z) and 7.02.
The Shareholders and the Surviving Corporation shall each pay one-half of the
fees and expenses of the Reviewing Accountants in connection with such
determination. Other expenses incurred in connection with such determination
shall be borne by the party or parties incurring such expenses.
(f) The procedures and determination specified in this
Section 1.06 shall be the sole and the exclusive remedy available to Parent,
the Surviving Corporation and the Shareholders with respect to the
calculations, valuations and determinations in connection with the adjustments
provided for in this Section 1.06, but shall not in any way affect or impair
Parent's or the Surviving Corporation's rights and remedies in respect of
Xxxxxxx or the Shareholders' covenants, representations or warranties.
1.07 Effects of merger. Upon the merger becoming effective,
the Constituent Corporations shall be a single corporation which shall be the
Surviving Corporation. The separate existence of the Constituent Corporations
shall cease, except that of the Surviving Corporation. The title to all real
estate and other property and rights owned by each of the Constituent
Corporations shall be vested in the Surviving Corporation without reversion or
impairment. The Surviving Corporation may use the corporate name and the
assumed names of either or both of the Constituent Corporations, upon complying
with Section 217 of the MBCA. The Surviving Corporation shall have all
liabilities of each of the Constituent Corporations. A proceeding pending
against either of the Constituent Corporations may be continued as if the
merger did not occur or the Surviving Corporation may be substituted in the
proceeding for either of the Constituent Corporations.
II. CONDITIONS TO OBLIGATIONS TO CLOSE
2.01 Conditions to the Obligations of Parent and Newco. The
obligations of Parent and Newco to consummate the Merger and to take the other
actions to be taken by Parent and Newco at or after the Closing pursuant to
this Agreement, is subject to the satisfaction, prior to or on the Closing
Date, of the following conditions precedent:
(a) Accuracy of Representations and Warranties;
Performance of Covenants. The representations and warranties of the
Shareholders in Section 5.01 and the Shareholders and Xxxxxxx in Section 5.02
shall have been true in all material respects when made and, in addition, shall
be true in all material respects on and as of the Closing Date with the same
force and effect as though made on and as of the Closing Date, except as
affected by transactions contemplated hereby and except to the extent that any
such representations and warranties are made as of another date as set forth in
the applicable representation or warranty, in which case such representations
and warranties shall have been true in all material respects as of such other
date. The covenants of the Shareholders and Xxxxxxx in Article III shall have
been performed and complied with in all material respects. Parent and Newco
shall have received a certificate dated the Closing Date signed on behalf of
each Shareholder by the Shareholders' Agent and on behalf of Xxxxxxx by its
President certifying, in such
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detail as Parent or Newco may reasonably request, to the satisfaction of the
conditions in this Section 2.01(a).
(b) Litigation. No action, suit or proceeding shall be
pending before any court, agency, department or commission wherein an
unfavorable injunction, judgment, order, decree, ruling or charge would (i)
prevent consummation of the Merger or any of the other transactions
contemplated by this Agreement, (ii) cause the Merger or any of such
transactions to be rescinded after their consummation, (iii) adversely affect
Lobdell's right to own its properties and to conduct its business, or (iv)
impose limitations on the ability of the Parent to exercise full ownership of
the Surviving Corporation after the Merger contemplated hereby and thereby to
control the assets and business of the Surviving Corporation. No such
injunction, judgment, order, decree or ruling shall be in effect, whether or
not final or appealable. No person shall have notified Parent, Xxxxxxx or the
Shareholders' Agent that such person intends to institute any such action, suit
or proceeding.
(c) Material Adverse Change. Since the date of this
Agreement Xxxxxxx shall not have suffered any change in its condition
(financial or otherwise) or in its assets, liabilities or business, except
changes which have not, individually or in the aggregate, had a Material
Adverse Effect.
(d) Legal Opinion. Parent shall have received from Xxxx
Xxxxx Xxxx & XxXxxx, counsel for Xxxxxxx and the Shareholders, an opinion dated
the Closing Date, in form and substance reasonably satisfactory to Parent and
its counsel.
(e) Corporate action. The Merger contemplated hereby
shall have been duly approved by the shareholders of Xxxxxxx as required by the
MBCA.
(f) Dissenters. The shares of Xxxxxxx Class A common
stock and Class B common stock held by persons who dissent from the Merger
contemplated hereby and demand payment in cash for such shares shall not exceed
3% of the total number of shares of such Class A common stock and Class B
common stock, in the aggregate, outstanding on the Closing Date.
(g) Governmental consents and similar matters. All
authorizations, consents and approvals of Governmental Bodies necessary or
advisable, including those relating to any applicable securities or blue sky
laws and regulations, or necessary or advisable in order to satisfy the
conditions in Sections 2.01(a) and 2.01(b) shall have been obtained and
executed copies thereof delivered to Parent. All applicable waiting periods,
and any extensions thereof, under the Xxxx-Xxxxx-Xxxxxx Act, if applicable,
shall have expired or otherwise have been terminated.
(h) Good Standing. Parent shall have received
certificates from appropriate authorities as to the good standing of Xxxxxxx
and each of the Subsidiaries in its jurisdiction of incorporation.
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(i) Approvals. Parent and Xxxxxxx, respectively, shall
have obtained any and all consents or waivers from other parties to licenses,
franchises, permits, indentures, agreements and other instruments that are
required for the consummation of the transactions contemplated by this
Agreement to occur on or after the Closing Date without any termination,
violation or breach thereof or default (or event which, with notice or lapse of
time or both, would constitute a default) occurring thereunder which would have
a Material Adverse Effect.
(j) Resignations and Release. Parent shall have
received, in form and substance reasonably satisfactory to Parent and its
counsel, (i) resignations from all the officers and directors of Xxxxxxx and
any trustee under any of Lobdell's employee benefit plans who is not an
employee of Xxxxxxx or a third party which is independent of Xxxxxxx and (ii)
general releases of all claims which the officers and directors of Xxxxxxx may
have against Xxxxxxx, except for accrued employee benefits and current salary
and such claims as may be disclosed in Section 2.01(j) of the Disclosure
Schedule.
(k) Real Property. The Survey and the title insurance
commitments required by Section 3.18 shall have been delivered to Parent.
(l) The covenants of the Shareholders and Xxxxxxx in, and
the events described by, Sections 3.21, 3.22, 3.23, 3.24 and 3.25 shall have
been performed and complied with to the satisfaction of Parent.
2.02 Conditions to the Obligation of Xxxxxxx and the
Shareholders. The obligations of Xxxxxxx and the Shareholders to consummate
the Merger contemplated hereby and to take the other actions to be taken by
Xxxxxxx and the Shareholders at or after the Closing pursuant to this Agreement
is subject to the satisfaction, prior to or on the Closing Date, of the
following conditions precedent:
(a) Accuracy of Representations and Warranties;
Performance of Covenants. The representations and warranties of Parent and
Newco in Section 5.03 shall have been true in all material respects when made
and, in addition, shall be true in all material respects on and as of the
Closing Date with the same force and effect as though made on and as of the
Closing Date, except as affected by transactions contemplated hereby and except
to the extent that any such representations and warranties are made as of
another date as set forth in the applicable representation or warranty, in
which case such representations and warranties shall have been true in all
material respects as of such other date. The covenants of Parent and Newco in
Article III shall have been performed and complied with in all material
respects. The Shareholders' Agent shall have received a certificate dated the
Closing Date signed by Parent certifying, in such detail as the Shareholders'
Agent may reasonably request, to the satisfaction of the conditions in this
Section 2.02(a).
(b) Litigation. No action, suit or proceeding shall be
pending before any court, agency, department or commission wherein an
unfavorable injunction, judgment, order, decree,
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ruling or charge would (i) prevent consummation of the merger or any of the
other transactions contemplated by this Agreement, (ii) cause the Merger or any
of such transactions to be rescinded after their consummation, or (iii)
adversely affect any Shareholder's right to own Preferred Stock. No such
injunction, judgment, order, decree or ruling shall be in effect, whether or
not final or appealable. No person shall have notified Oxford, Parent, Xxxxxxx
or any Shareholder that such person intends to institute any such action, suit
or proceeding.
(c) Legal Opinion. The Shareholders' Agent shall have
received from Xxxxxx Xxxxxxx PLLC, counsel for Parent and Newco, an opinion
dated the Closing Date, in form and substance reasonably satisfactory to
Shareholder's Agent and his counsel.
III. PRE-CLOSING COVENANTS
Until the Closing:
3.01 Best Efforts to Close. Parent, Newco, Xxxxxxx and the
Shareholders shall use their respective best efforts to take all actions
necessary or advisable in order to consummate and make effective the
transactions contemplated by this Agreement (including satisfaction, but not
waiver, of the closing conditions set forth in Article II). Prior to the
Closing Date, Xxxxxxx and the Shareholders shall give any notices to third
parties, and shall use their respective best efforts to obtain any third-party
consents and approvals, as may be required in order to enable them to perform
their respective obligations under this Agreement, keeping Parent apprised of
the status of all discussions with such third parties. To the extent that any
notices to, filings with or authorizations, consents or approvals from any
Governmental Bodies are necessary or advisable in connection with such
transactions, Parent, Newco, Xxxxxxx and the Shareholders shall give any such
notices, make any such filings and use their respective best efforts to obtain
any such authorizations, consents and approvals. If the Xxxx-Xxxxx-Xxxxxx Act
is applicable to such transactions, Parent, Newco, Xxxxxxx and the Shareholders
shall make all filings and provide all documents and information to
Governmental Bodies which are required by said Act and use their respective
best efforts to obtain an early termination of the applicable waiting period
under said Act.
3.02 Access to Premises and Information. Xxxxxxx shall permit
Parent and its authorized representatives to have reasonable access to the
premises, officers, directors, employees and books and records of Xxxxxxx as
Parent or Newco may request, all as provided by, and subject to the terms and
conditions of, the Confidentiality Agreement. No investigation or inquiry made
by Parent or Newco pursuant to this Section 3.02, or made heretofore, and
nothing contained in the Descriptive Memorandum concerning Xxxxxxx provided to
Parent by the Business Advisory Services division of Xxxxxxx Xxxxx, shall in
any way enlarge, diminish or otherwise affect the representations and
warranties made by the Shareholders in this Agreement.
3.03 Exclusivity. None of the Shareholders shall, and Xxxxxxx,
its directors, officers or agents shall not, (i) other than as contemplated by
this Agreement, solicit, initiate or encourage
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the submission of any proposal or offer from any person relating to the
acquisition of any capital stock or other voting securities, or any substantial
portion of the assets of, Xxxxxxx (including any acquisition structured as a
merger, consolidation or share exchange) ("Acquisition Proposal") or (ii)
participate in any discussions or negotiations regarding, furnish any
information with respect to, assist or participate in, facilitate, agree to,
approve or recommend any effort or attempt by any person relating to any
Acquisition Proposal, except to the extent otherwise required by the fiduciary
duties of directors of Xxxxxxx. None of the Shareholders shall vote their
shares of Xxxxxxx capital stock in favor of any Acquisition Proposal and
neither Xxxxxxx nor any of the Shareholders shall directly or indirectly agree
to approve or recommend any Acquisition Proposal. The Shareholders shall
notify Parent immediately if any person makes any Acquisition Proposal or any
inquiry or contact with respect to any Acquisition Proposal.
3.04 Charter or bylaw amendment. Xxxxxxx shall not amend its
articles of incorporation or bylaws.
3.05 Sale of securities. Xxxxxxx shall not authorize for
issuance, issue, sell, deliver or agree or commit to issue, sell or deliver
(whether through the issuance or granting of options, warrants, commitments,
subscriptions, rights to purchase or otherwise) any Xxxxxxx stock of any class
or securities convertible into shares of Xxxxxxx stock of any class, except
pursuant to agreements existing on the date of this Agreement and listed in
Section 3.05 of the Disclosure Schedule.
3.06 Splits, dividends, redemptions, etc. Xxxxxxx shall not
split, combine or reclassify any shares of its capital stock, declare, set
aside or pay any dividend or other distribution (whether in cash, stock or
property or any combination thereof) in respect of its capital stock (except
for the cash dividends of $0.03 per share declared on November 5, 1996), or
redeem or otherwise acquire any shares of capital stock of Xxxxxxx (except as
may be required by the redemption agreement between Xxxxxxx and the Estate of
Xxxxxxxxx X. Xxxxxxxxx referred to in the Disclosure Schedule as contemplated
by Section 3.22 hereof).
3.07 Debt. Xxxxxxx shall not (i) create, incur or assume any
long-term debt (including obligations in respect of capital leases) or increase
by more than $250,000 any existing debt to any financial institution; (ii) make
any unscheduled principal repayments of any debt; (iii) enter into any
agreements requiring the maintenance of a specific net worth; (iv) assume,
guarantee, endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligation of any other individual, firm or
corporation, or (v) make any loans, advances or capital contributions to, or
investments in, any other individual, firm or corporation.
3.08 Employment, etc. Xxxxxxx shall not (i) terminate the
employment of any officer or significant employee of Xxxxxxx; (ii) enter into
any employment agreement; (iii) pay or agree to pay any bonuses not required by
agreements in existence on the date of this Agreement, or make or agree to make
any increase in the rate of wages, salaries or other remuneration of any of its
officers or salaried employees, other than in the Ordinary Course of Business;
(iv) pay or agree to pay any
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pension, retirement allowance or other employee benefit not required by any
existing plan, agreement or arrangement to any such director, officer or
employee, whether past or present; or (v) commit itself to any additional
pension, profit-sharing, bonus, incentive, deferred compensation, stock
purchase, stock option, stock appreciation right, group insurance, severance
pay, retirement or other employee benefit plan, agreement or arrangement, or to
any employment or consulting agreement with or for the benefit of any person,
or terminate or amend any of such plans or any of such agreements in existence
on the date of this Agreement.
3.09 Sale or encumbrance of assets. Xxxxxxx shall not sell,
transfer, mortgage or otherwise dispose of, or encumber, or agree to sell,
transfer, mortgage or otherwise dispose of or encumber, any properties, real,
personal or mixed, except in the Ordinary Course of Business and which are not,
individually or in the aggregate, material to the business of Xxxxxxx.
3.10 Material contracts. Except in the Ordinary Course of
Business, Xxxxxxx shall not (i) enter into any other material obligation,
agreement, commitment or contract, or make any further additions to its
property or further purchases of machinery or equipment, except agreements,
commitments or contracts for the purchase, sale or lease of goods or services
consistent with past practice and not in excess of current requirements, (ii)
modify or change any contract, purchase order, license, agreement, lease or
undertaking referred to in the Disclosure Schedule or (iii) otherwise make any
material change in the conduct of its business or operations.
3.11 Maintenance of business. Xxxxxxx shall use its best
efforts to keep available the services of its officers and employees and
maintain satisfactory relationships with licensors, suppliers, distributors,
customers and others having business relations with Xxxxxxx, maintain all of
its properties and assets in proper repair, order and condition, and maintain
insurance upon all of its properties and assets and with respect to the conduct
of its business in amounts and kinds comparable to that in effect on the date
of this Agreement.
3.12 Compliance with agreements. Xxxxxxx shall comply with,
and shall not default in the payment of its obligations under, or in the
performance of any material covenant or obligation to be performed by it
pursuant to, any material contract, lease, agreement, plan or arrangement,
regardless of Xxxxxxx'x ordinary and usual course of business.
3.13 Books and records; legal compliance. Xxxxxxx shall
maintain its books, accounts and records in the usual, regular and ordinary
manner, on a basis consistent with prior years. Xxxxxxx shall comply in all
material respects with all laws applicable to it and to the conduct of its
business, the enforcement of which, if Xxxxxxx was not in compliance, would
have a Material Adverse Effect.
3.14 Permits, etc. Xxxxxxx shall keep and maintain in full
force and effect all approvals, authorizations, consents, licenses, operating
authorities, certificates of public convenience, orders and other permits whose
loss, individually or in the aggregate, would have a Material Adverse Effect;
shall continue its business pursuant to such approvals, authorizations,
consents, licenses, operating authorities, certificates of public convenience,
orders and other permits;
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and shall take all steps necessary to meet requirements on pending applications
for such approvals, authorizations, consents, licenses, operating authorities,
certificates of public convenience, orders and permits.
3.15 Capital expenditures, loans and other transactions.
Xxxxxxx shall not (i) cancel any debts or waive any claims or rights, except in
the Ordinary Course of Business; (ii) make any capital expenditures or
commitments exceeding $50,000 in any one instance or $250,000 in the aggregate;
or (iii) make any loan to, or enter into any business transaction, agreement,
arrangement or understanding of any other nature with, any officer or director
or any associate of any such officer or director except as disclosed in Section
3.15 of the Disclosure Schedule.
3.16 Transactions with Affiliates. Xxxxxxx shall not engage in
any transaction with any of its shareholders or Affiliates, except as
consistent with past practices or as disclosed in Section 3.16 of the
Disclosure Schedule.
3.17 Operation and Preservation of Business. Xxxxxxx shall
not, without the prior written consent of Parent, engage in or permit any
practice, transaction or act (i) outside the Ordinary Course of Business or
(ii) which, if it had otherwise been engaged in or permitted, would have
rendered untrue any of the representations and warranties of the Shareholders
and Xxxxxxx contained in Section 5.02. The Shareholders' Agent shall promptly
notify Parent of the occurrence of any matter or event which, to his knowledge,
is material to the business, operations, properties, assets or financial
condition of Xxxxxxx.
3.18 Title to Real Property. Xxxxxxx shall obtain the
following to be delivered to Parent and Newco not less than fifteen (15) days
prior to Closing:
(a) with respect to each parcel of real estate that
Xxxxxxx owns (as disclosed in the Disclosure Schedule), a commitment from a
title insurer satisfactory to Parent for an ALTA Owner's Policy of Title
Insurance Form B-1987 (or an equivalent policy acceptable to Parent with
respect to real property located in a state in which an ALTA Owner's Policy of
Title Insurance Form B-1987 is not available), in such amount as Parent may
determine to be the fair market value of such real property (including all
improvements located thereon), insuring title to such real property to be in
Xxxxxxx as of the Closing subject only to Permitted Liens and Exceptions;
(b) with respect to each parcel of real estate that
Xxxxxxx leases or subleases, a commitment from a title insurer satisfactory to
Parent for an ALTA Leasehold Owner's Policy of Title Insurance-1987 (or an
equivalent policy acceptable to Parent with respect to real property located in
a state in which an ALTA Leasehold Owner's Policy of Title Insurance-1987 is
not available) in such amount as Parent may determine to be the fair market
value of such leasehold or subleasehold estate, insuring title to such estate
to be in Xxxxxxx as of the Closing subject only to Permitted Liens and
Exceptions; and
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(c) with respect to each parcel of real estate that
Xxxxxxx owns, leases or subleases, and as to which a title insurance commitment
is to be procured pursuant to this Section 3.18, a current survey ("Survey") of
such parcel (i) certified to Parent, (ii) prepared by a licensed surveyor,
(iii) conforming to current ALTA Minimum Detail Requirements for Land Title
Surveys, (iv) disclosing the location of all improvements, easements, party
walls, sidewalks, roadways, utility lines and other matters shown customarily
on such surveys and (v) showing access affirmatively to public streets and
roads. The Survey shall not disclose any survey defect or encroachment from or
onto the real property which has not been cured or insured over prior to the
Closing.
(d) Each title insurance commitment delivered pursuant to
Sections 3.18(a) or 3.18(b) shall be for a policy which (i) insures title to
the real property and all recorded easements benefitting such real property,
(ii) contains an "extended coverage endorsement" insuring over the general
exceptions contained customarily in such policies, (iii) contains an ALTA
Zoning Endorsement 3.1 (or equivalent), (iv) contains an endorsement insuring
that the real property described in the policy is the same real estate as shown
on the Survey delivered with respect to such property, (v) contains an
endorsement insuring that each street adjacent to the real property is a public
street and that there is direct and unencumbered pedestrian and vehicular
access to such street from the real property, (vi) contains an inflation
endorsement providing for annual adjustments in the amount of coverage
corresponding to the annual percentage increase, if any, in the United States
Department of Commerce Composite Construction Cost Index (with the Base Year
being the calendar year immediately before the year in which this Agreement is
executed), (vii) if the real property consists of more than one record parcel,
contains a "contiguity" endorsement insuring that all of the record parcels are
contiguous to one another, and (viii) contains a "non-imputation" endorsement
to the effect that title defects known to the officers, directors and
shareholders of the owner prior to the Closing shall not be deemed "facts known
to the insured" for purposes of the policy.
3.19 Corporate action.
(a) Action by Xxxxxxx and the Shareholders. Xxxxxxx
shall take all corporate action necessary to consummate the transactions
contemplated by this Agreement. As soon as practicable after the execution and
delivery of this Agreement, Xxxxxxx shall call a meeting of the holders of its
Class A common stock and Class B common stock for the purpose of considering
and acting upon the Merger contemplated hereby, or alternatively obtain an
effective consent resolution. Such meeting shall be duly convened and held,
after notice thereof duly given, and at such meeting a vote of such holders
upon the Merger contemplated hereby shall be taken, all in accordance with the
MBCA. At such meeting all of the shares of Xxxxxxx capital stock held by the
Shareholders shall be voted in favor of the Merger, which shall be sufficient
to approve the Merger under the MBCA and none of the Shareholders shall attempt
to exercise any dissenters' rights with respect to such merger under the MBCA.
(b) Action by Parent and Newco. As soon as practicable
after the execution and delivery of this Agreement, Newco shall call a meeting
of the holders of its outstanding common
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stock for the purpose of considering and acting upon the merger contemplated
hereby. Such meeting shall be duly convened and held, after notice thereof
duly given, and at such meeting a vote of such holders upon the Merger
contemplated hereby shall be taken, all in accordance with the MBCA. At such
meeting all of the shares of such common stock held by Parent shall be voted in
favor of the Merger. In lieu of such meeting, Newco may act by the written
consent of its stockholders as provided by the MBCA, and in that event Parent
shall unconditionally execute and deliver such consent.
3.20 Deposit. On the day when this Agreement is fully executed
and delivered by all of the parties hereto, Parent shall pay to Xxxxx Xxxxxxxx
Xxxxxxxxxx P.L.C., for the benefit of the Shareholders' Agent, a deposit of
$100,000. Such deposit shall be held by Xxxxx Xxxxxxxx Xxxxxxxxxx P.L.C., for
the benefit of the Shareholders' Agent until the Effective Date or, if the
Merger contemplated hereby does not become effective, until the date when this
Agreement is terminated. If this Agreement is terminated by the Shareholders
pursuant to Section 7.09(a)(4), the Shareholders' Agent shall distribute such
amount among the Shareholders in proportion to their holdings of Xxxxxxx
capital stock (without regard to whether such stock is Class A common stock or
Class B common stock). If this Agreement is terminated by Parent, Newco or the
Shareholders pursuant to clauses (1), (2), (3), (5) or (6) of Section 7.09(a),
or if the Merger becomes effective, the Shareholders' Agent shall return said
amount to Parent.
3.21 Disclosure Schedule. (A) Xxxxxxx shall, within twenty
(20) business days of the date hereof, furnish to Parent a Disclosure Schedule
as required by Section 5.02 of this Agreement. Within twenty (20) business
days of the date of receipt of the Disclosure Schedule, Parent or Newco may
elect to terminate this Agreement, without liability or expense, by giving
notice to Xxxxxxx of its election to terminate pursuant to Section 7.09(a)(6)
of this Agreement. In the event Parent or Newco elects to terminate this
Agreement pursuant to Section 7.09(a)(6), the deposit of Parent, delivered in
accordance with Section 3.20, shall be immediately refunded to it. (B) The
decision of Parent or Newco not to terminate this Agreement after receipt of
the Disclosure Schedule shall in no way limit, modify or restrict the right of
Parent or Newco to assert any claim for indemnification pursuant to Section
6.02 of this Agreement. (C) Xxxxxxx shall promptly disclose to Parent or Newco
any information contained in its representations, warranties or the Disclosure
Schedule which, because of an event occurring after the date hereof, is
incomplete or is no longer correct as of all times after the date hereof until
the Closing Date; provided, however, that none of such disclosures shall be
deemed to modify, amend, or supplement the representations and warranties of
Xxxxxxx or the Shareholders, or the Disclosure Schedule hereto for purposes of
Section 5.02 hereof, unless Parent or Newco shall have consented thereto in
writing.
3.22 Estate of Xxxxxxxxx X. Xxxxxxxxx Redemption Agreement.
Xxxxxxx and the Estate of Xxxxxxxxx X. Xxxxxxxxx (the "Estate") entered into a
Redemption Agreement on December 15, 1988, as amended (the "Redemption
Agreement"), wherein Xxxxxxx agreed to redeem in cash at the time specified in
the Redemption Agreement certain Class A voting common stock and Class B
non-voting common stock of Xxxxxxx owned by the Estate. Xxxxxxx shall enter
into a First Amendment to the Redemption Agreement to cause the redemption by
Xxxxxxx on the Closing Date of that
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number of shares of Class A and Class B common stock of Xxxxxxx which may be
redeemed, consistent with the value of such shares as set forth in Section
1.05, for an aggregate purchase price not in excess of $1.6 Million and
providing that, upon completion of the Merger, the Redemption Agreement as
amended shall terminate and Xxxxxxx shall be released and discharged from any
further obligation thereunder.
3.23 Xxxxxxx Stock Options. At or immediately prior to the
Effective Date, each outstanding employee stock option to purchase shares of
Class A common stock and Class B common stock of Xxxxxxx (an "Option") granted
under (i) the Xxxxxxx-Xxxxx Manufacturing Company 1990 Stock Incentive Plan, as
amended (the "1990 Option Plan"), and (ii) any other stock option plan or
arrangement of Xxxxxxx or any Subsidiary (such plans or arrangements, together
with the 1990 Option Plan, are hereinafter collectively referred to as the
"Option Plans"), shall be canceled, and each holder of any such Option, whether
or not then vested or exercisable, shall be paid by Xxxxxxx, at or immediately
prior to the Effective Date for each such Option, in consideration therefor an
amount in cash determined by multiplying (i) the excess, if any, of $13.64 per
share of Class A common stock and Class B common stock over the applicable
exercise price of such Option by (ii) the number of shares of Class A common
stock and Class B common stock such holder could have purchased (assuming full
vesting of all Options) had such holder exercised such Option in full
immediately prior to the Effective Date. In addition, each holder of such
Options shall be entitled to receive the "cash payment rights" granted in
conjunction with such Options, which in aggregate will not exceed $502,923,
including payments currently due to Mr. Xxxxxx. The amount of payment relating
to the Options and any cash payment right is set forth in Section 3.23 of the
Disclosure Schedule. Xxxxxxx shall use all reasonable efforts to effectuate
the foregoing, including without limitation amending the Option Plans and
obtaining any necessary consents from Option holders; provided, however, that
prior to the Closing Date, the Board of Directors of Xxxxxxx shall adopt such
resolutions or take such other actions as are permitted and required to adjust,
effective immediately prior to the Effective Date, the terms of each
outstanding Option under the 1990 Option Plan as to which any such consent is
not obtained prior to the Effective Date to provide that such Option shall be
converted into the right, upon exercise of such Option at any time after the
Effective Date, to receive an amount in cash equal to $13.64 for each share of
Class A common stock and Class B common stock subject to such Option, plus the
amount of the applicable cash payment rights, or, alternatively, upon the
surrender and cancellation of such Option at any time after the Effective Date
to receive an amount in cash determined by multiplying (i) the excess, if any,
of $13.64 per share of Class A common stock and Class B common stock over the
applicable exercise price of such Option by (ii) the number of shares of Class
A common stock and Class B common stock subject to such Option, plus the amount
of the applicable cash payment rights, in either case without interest or any
other adjustment thereto.
3.24 Xxxxxx Payment. Xxxxxxx shall have entered into an
agreement with Xxxxxxx Xxxxxx ("Xxxxxx") whereby Xxxxxx has (i) resigned any
and all positions he holds with Xxxxxxx, whether as a director, officer,
employee or trustee, (ii) released any and all claims he has against Xxxxxxx or
any of the Subsidiaries, other than claims for accrued employment benefits, and
(iii) providing for termination of his SERP which shall be replaced with an
annuity. The cost of settling
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or terminating the SERP or any payment with respect to the purchase of an
annuity for Xxxx Xxxxxx shall be a cost for which the Surviving Corporation
shall be considered to have suffered an Adverse Consequence for which
indemnification is required. The actual amount of any such Adverse Consequence
shall be paid to the Surviving Corporation from the Escrow Shares without
reduction, notwithstanding the provisions of Section 6.02. The agreement shall
provide a maximum compensation payment to Xxxxxx of not more than $1 Million
and shall be acceptable in all respects to the Parent.
3.25 Minority Shareholder Redemption. Xxxxxxx shall enter into
redemption agreements with certain of the minority shareholders of the Class A
common stock and Class B common stock of Xxxxxxx, each of whom is identified in
Section 3.25 of the Disclosure Schedule with the applicable number of shares
and amount of the redemption payment set forth opposite each shareholder's
name, to redeem shares of Class A common stock and Class B common stock for an
aggregate amount not in excess of $597,191.
IV. P0ST-CLOSING COVENANTS
After the Closing:
4.01 Further Assurances. Xxxxxxx, the Shareholders and Parent
shall take all action and execute all documents, instruments or conveyances of
any kind which may be requested by any party to this Agreement, in order to
carry out any of the provisions hereof and to consummate the Merger and the
other transactions contemplated hereby, all at the sole cost and expense of the
requesting party (unless the requesting party is or would be entitled to
indemnification therefor under Article VI). The Shareholders' Agent, or any
Shareholder, shall be entitled, subject to Section 4.04, to inspect and copy,
during normal business hours and upon reasonable notice, the books and records
of the Surviving Corporation solely with respect to the fulfillment of any
post-closing obligations of Shareholders under this Agreement or for tax
purposes, and neither Parent nor the Surviving Corporation shall destroy or
otherwise dispose of any of such materials before December 31, 2000 without
first notifying the Shareholders' Agent and, if so requested by the
Shareholders' Agent, delivering such materials to the Shareholders' Agent.
4.02 Transition. The Shareholders shall take any reasonable
action requested by Parent or Newco that is designed or intended to have the
effect of encouraging any lessor, licensor, customer, supplier or other
business associate of Xxxxxxx to maintain the same business relationships with
the Surviving Corporation after the Closing as it maintained with Xxxxxxx prior
to the Closing.
4.03 Litigation Support. In the event and for so long as
Xxxxxxx, Parent or any Shareholder is contesting or defending against any
action, suit, proceeding, hearing, investigation, charge, complaint, claim or
demand in connection with (i) any transaction contemplated by this Agreement or
(ii) any fact, situation, circumstance, status, condition, activity, practice,
plan, occurrence, event, incident, action, failure to act or transaction
relating to Xxxxxxx and occurring on
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or prior to the Closing Date involving Newco, Parent, Xxxxxxx or the
Shareholders, respectively, the Surviving Corporation, Parent and the
Shareholders shall cooperate with the contesting or defending party and such
party's counsel in such contest or defense, shall make available their
personnel, and shall provide such testimony and access to their books and
records as shall be necessary or advisable in connection with such contest or
defense, all at the sole cost and expense of the contesting or defending party
(unless the contesting or defending party is entitled to indemnification
therefor under Article VI).
4.04 Confidentiality. Each Shareholder shall treat as
confidential all of the Confidential Information, shall not use any of the
Confidential Information except in connection with this Agreement, and shall
deliver promptly to Parent or destroy, at the request of Parent, all tangible
embodiments, including all copies thereof, of the Confidential Information
which are within the possession or control of such Shareholder. If any
Shareholder is requested or required (by oral question or request for
information or documents in any legal proceeding, interrogatory, subpoena,
civil investigative demand or similar process) to disclose any Confidential
Information, such Shareholder shall immediately notify Parent of such request
or requirement so that Parent or Newco may seek an appropriate protective order
or waive compliance with the provisions of this Section 4.04. If, in the
absence of such a protective order or waiver, any of the Shareholders is, on
the advice of counsel, compelled to disclose any Confidential Information to
any tribunal or else be liable for contempt, such Shareholder may disclose such
Confidential Information to such tribunal; provided, however, that the
disclosing Shareholder shall use such Shareholder's best efforts to obtain, at
the request and expense of Parent, an order or other assurance that
confidential treatment will be accorded to such portion of the Confidential
Information required to be disclosed as Parent shall designate.
4.05 The Preferred Stock. Each certificate representing any of
the Preferred Stock will bear legends substantially in the following forms:
The authorized capital stock of the Surviving Corporation consists of
common stock and preferred stock. Upon request, the Surviving Corporation
will provide to any shareholder without charge a full statement of the
designations, relative rights, preferences and limitations of the shares of
each class authorized to be issued.
The issuance of the shares represented by this certificate has not been
registered under the Securities Act of 1933. Such shares may not be
transferred except in compliance with said Act, with the Articles of
Incorporation of the Surviving Corporation and the Agreement and Plan of Merger
dated as of November 14, 1996 to which the issuer and certain shareholders of
Xxxxxxx Xxxxx Corporation, among others, are parties.
Each holder of such a certificate who wishes to transfer
any of the Preferred Stock represented thereby first must furnish the Surviving
Corporation with (i) an opinion satisfactory in form and substance to the
Surviving Corporation, from counsel satisfactory to the Surviving Corporation,
to the effect that such holder may transfer such shares without registration
under the
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Securities Act and (ii) an undertaking executed by the desired transferee, in
form and substance satisfactory to the Surviving Corporation, agreeing to be
bound by the restrictions on transfer contained herein.
No holder shall transfer, sell or assign any Preferred
Stock prior to February 1, 1999, except transfers or assignments to an inter
vivos trust or by bequest. After February 1, 1999, each holder of Preferred
Stock who proposes to sell, transfer or assign (other than a transfer to an
inter vivos trust or transfer by gift or bequest) any Preferred Stock shall
first give written notice to the Surviving Corporation of the proposed
transfer, stating the name of the proposed purchaser, the number of shares to
be transferred, the price per share, and all of the other material terms of the
proposed transfer. For thirty days after such notice, the Surviving
Corporation shall have a first option to purchase all (but not less than all)
of the Preferred Stock to be transferred, at the price of the proposed transfer
and on the other material terms of the proposed transfer. If the Surviving
Corporation fails to purchase all such shares, they may be transferred to the
purchaser designated in such notice, at the price and on the terms described in
such notice, within fifteen days after the expiration of the thirty-day option
period. After the expiration of such fifteen-day period, no Preferred Stock
may be transferred to any person without again complying with this Section
4.05. The closing of any sale of Preferred Stock to the Surviving Corporation
pursuant to this Section 4.05 shall take place at the principal business office
of the Surviving Corporation. Upon tender of the purchase price, the holder of
such Preferred Stock shall endorse and deliver to the Surviving Corporation all
certificates representing the purchased shares, together with all other
documents that may be necessary or desirable to accomplish a complete transfer
of such shares. If such holder fails to deliver any certificate, notice, or
other document required by this Section 4.05, the Surviving Corporation may set
aside the purchase price, to be held for such holder without interest and
without any fiduciary obligation, and such holder shall have no further rights
with respect to the shares to be purchased, including but not limited to the
right to receive any distribution with respect to such shares.
4.06 Parent Agreement to Exchange Shares.
(a) (i) For the purposes of this Section 4.06, the term
"Initial Public Offering" shall mean the first offering of the common stock
of the Parent (the "Parent Common Stock") to the public which is (X)
exclusively for cash consideration, (Y) subject to an effective
registration statement filed with the Securities and Exchange Commission
under the Securities Act of 1933, as amended, and (Z) underwritten on a
firm commitment basis by one or more underwriters. The Initial Public
Offering will be deemed to have commenced when such registration statement
first becomes effective.
(ii) The term "Initial Public Offering Price" shall mean
the price per share to the public of Parent Common Stock specified in the
prospectus included as part of the registration statement referred to above
at the time such registration statement first becomes effective.
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(iii) The term "Exchange Ratio" shall mean a number equal
to (X) the redemption value of a share of the Series A Preferred Stock,
divided by (Y) the Initial Public Offering Price.
(b) The Parent or the Surviving Corporation shall give
written notice to each registered holder of the Series A Preferred Stock not
later than thirty (30) days following the Initial Public Offering. During the
period beginning on the 60th day after the effective date of the Initial Public
Offering and ending at the end of the 30th day thereafter, each holder of
Series A Preferred Stock may elect in writing (the "Exchange Notice") to
exchange up to 50% or some lesser portion of his shares of Series A Preferred
Stock (the "Election Amount") for a number of shares of Parent Common Stock (or
any other class of capital stock into which such common shares have been
converted pursuant to any reclassification or reorganization) equal to (i) the
Election Amount, multiplied by (ii) the Exchange Ratio; provided, however,
that, in the aggregate, holders of Series A Preferred Stock may not receive
more than 25.0% of the number of shares of Parent Common Stock registered
pursuant to the Initial Public Offering (the "Maximum Exchange Amount"). If
the holders of Series A Preferred Stock make elections that would result in
such holders collectively exceeding the Maximum Exchange Amount, each holder of
Series A Preferred Stock making such an election will receive shares of Parent
Common Stock equal to the number resulting from multiplying his Election Amount
by the Exchange Ratio, then multiplying that result by a fraction, the
denominator of which is the total number of shares of Parent Common Stock which
has been requested as a result of the Exchange Notices and the numerator of
which is the Maximum Exchange Amount. Any holder of Series A Preferred Stock
who does not make an election to exchange his Series A Preferred Stock as
provided herein shall cease to have any rights thereafter to exchange such
shares and the Parent shall have no responsibility or liability to any such
holder with respect to any such exchange.
(c) Before any holder of Series A Preferred Stock shall
be entitled to exchange such stock for shares of Parent Common Stock, he shall
(i) surrender the certificate or certificates for his shares of Series A
Preferred Stock, duly endorsed for transfer, with signatures guaranteed by a
national or state bank, and (ii) give written instructions to the Parent (in
such form as the Parent may reasonably request) that he elects to convert the
same and shall state therein the name or names in which he wishes the
certificate or certificates for shares of Parent Common Stock to be issued.
The Parent shall, as soon as practicable thereafter, issue and deliver to such
holder of Series A Preferred Stock, a certificate or certificates for the whole
number of shares of Parent Common Stock to which he shall be entitled.
(d) The exchange set forth in this Section 4.06 shall be
deemed to have been made immediately prior to the close of business on the date
of surrender of the shares of Series A Preferred Stock to be exchanged, and
the person or persons entitled to receive the shares of Parent Common Stock
issuable upon such exchange shall be treated for all purposes as the record
holder or holders of such shares of Parent Common Stock on such date. The
conversion may, at the option of any holder tendering shares of Series A
Preferred Stock for exchange, be conditioned upon the closing with the
underwriters of the sale of securities pursuant to the Initial Public Offering,
in which
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event the person(s) entitled to receive the Parent Common Stock upon exchange
of the Series A Preferred Stock shall not be deemed to have exchanged such
Series A Preferred Stock until immediately prior to the day of closing of such
sale of securities.
(e) No fractional share shall be issued upon the exchange
of any share or shares of Series A Preferred Stock. All shares of Parent
Common Stock (including fractions thereof) issuable upon exchange of more than
one share of Series A Preferred Stock by a holder thereof shall be aggregated
for purposes of determining whether the exchange would result in the issuance
of any fractional share. If, after the aforementioned aggregation, the
exchange would result in the issuance of a fraction of a share of Common Stock,
the Company shall, in lieu of issuing any fractional share, pay the holder
otherwise entitled to such fraction a sum in cash equal to the market value of
such fraction on the date of exchange, based on the Initial Public Offering
Price.
V. REPRESENTATIONS AND WARRANTIES
5.01 Representations and warranties of the Shareholders
severally and not jointly. Each Shareholder, severally and not jointly,
represents and warrants to Parent as follows:
(a) Ownership of shares. Each Shareholder owns of record
the number of shares of Xxxxxxx'x Class A common stock and Class B common stock
and is a resident of the state set forth opposite the name of such Shareholder
on Exhibit D annexed hereto. The shares of Xxxxxxx capital stock referred to
in Exhibit D opposite the name of each Shareholder have been duly authorized
and validly issued, are fully paid and nonassessable, and are not subject to
any liens, charges, encumbrances or restrictions on transfer other than those
imposed by applicable securities laws or by this Agreement or as disclosed in
the Disclosure Schedule. Such Shareholder does not own of record or
beneficially any options, warrants or other rights to acquire any equity
securities of Xxxxxxx except as otherwise disclosed in the Disclosure Schedule.
(b) Due Authorization of Agreement; No Conflict With
Other Instruments. Such Shareholder has full power and authority and has taken
all necessary action to execute, deliver and consummate this Agreement and to
perform all the terms and conditions hereof to be performed by such
Shareholder. This Agreement is a valid and binding obligation of such
Shareholder enforceable against such Shareholder in accordance with its terms,
except as the enforceability hereof may be limited by bankruptcy, insolvency or
other laws of general application relating to or affecting the enforcement of
creditors' rights or by general principles of equity limiting the availability
of equitable remedies. Except as disclosed in the Disclosure Schedule, the
execution and delivery by such Shareholder of this Agreement, the consummation
by such Shareholder of the transactions which this Agreement contemplates will
be consummated by such Shareholder, and such Shareholder's fulfillment of and
compliance with the terms and provisions hereof applicable to such Shareholder,
do not and will not (i) violate any law applicable to such Shareholder, (ii)
conflict with, result in a
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breach of or constitute a default under Xxxxxxx'x articles of incorporation or
bylaws, (iii) conflict with, result in a breach of, constitute a default under
or accelerate or permit the acceleration of the performance required by, any
agreement or instrument to which Xxxxxxx or such Shareholder is a party or by
which Xxxxxxx or such Shareholder is bound, (iv) result in the creation of any
lien, charge or encumbrance upon any of the assets of Xxxxxxx under any such
agreement or instrument or (v) terminate or give any party thereto the right to
terminate any such agreement or instrument.
5.02 Representations and Warranties of Xxxxxxx and the
Shareholders jointly and severally. Xxxxxxx and the Shareholders, jointly and
severally, represent and warrant to Parent and Newco as follows, except for
specific references to the written disclosure schedule delivered pursuant to
Section 3.21 of this Agreement by Xxxxxxx and the Shareholders to Parent and
Newco, that is arranged in paragraphs corresponding to the paragraphs contained
in this Section 5.02 and other applicable Sections of this Agreement (the
"Disclosure Schedule"):
(a) Incorporation, Qualification, etc. Xxxxxxx is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Michigan, with all necessary corporate power to own and
lease its properties and to carry on its business as and where such properties
are now owned or leased and such business is now being carried on. Xxxxxxx is
duly qualified to do business as a foreign corporation and is in good standing
in the State of Indiana, and in each other jurisdiction where the failure so to
qualify would have a Material Adverse Effect. The copies of Xxxxxxx'x Articles
of Incorporation and Bylaws and the articles of incorporation and bylaws, or
equivalent organizational documents, of each Subsidiary (the "Subsidiary
Documents") which have previously been delivered to Parent, are complete and
correct. Xxxxxxx'x Articles of Incorporation and Bylaws and the Subsidiary
Documents have not been amended during 1996.
(b) Due Authorization of Agreement; No Conflict With
Other Instruments. Xxxxxxx has all necessary corporate power and authority to
execute and deliver this Agreement and to perform its obligations under this
Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement by Xxxxxxx and the consummation by
Xxxxxxx of the transactions contemplated by this Agreement have been duly and
validly authorized by all necessary corporate action, and no other corporate
proceedings on the part of Xxxxxxx are necessary to authorize this Agreement or
to consummate the transactions so contemplated (other than the approval of this
Agreement by the holders of at least a majority of the outstanding shares of
Class A and Class B common stock of Xxxxxxx entitled to vote in accordance with
the MBCA and Xxxxxxx'x Articles of Incorporation and Bylaws). The Board of
Directors of Xxxxxxx has determined that it is advisable and in the best
interest of the Xxxxxxx shareholders for Xxxxxxx to enter into a business
combination with Newco upon the terms and subject to the conditions of this
Agreement, and has unanimously recommended that the Xxxxxxx shareholders
approve and adopt this Agreement and the Merger. This Agreement has been duly
and validly executed and delivered by Xxxxxxx and, assuming the due
authorization, execution and delivery by Parent and Newco constitutes a legal,
valid and binding obligation of Xxxxxxx enforceable against Xxxxxxx in
accordance with its terms, except as the enforceability hereof may be limited
by bankruptcy, insolvency or other laws of general application relating to or
affecting the enforcement of creditors' rights or by general principles of
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equity limiting the availability of equitable remedies. Except as disclosed in
the Disclosure Schedule, the execution and delivery by Xxxxxxx of this
Agreement, the consummation by Xxxxxxx of the transactions which this Agreement
contemplates will be consummated by Xxxxxxx, and Xxxxxxx'x fulfillment of and
compliance with the terms and provisions hereof applicable to Xxxxxxx, do not
and will not (i) violate any law applicable to Xxxxxxx, (ii) conflict with,
result in a breach of or constitute a default under Xxxxxxx'x articles of
incorporation or bylaws, (iii) conflict with, result in a breach of, constitute
a default under or accelerate or permit the acceleration of the performance
required by, any agreement or instrument to which Xxxxxxx is a party or by
which Xxxxxxx is bound, (iv) result in the creation of any lien, charge or
encumbrance upon any of the assets of Xxxxxxx under any such agreement or
instrument or (v) terminate or give any party thereto the right to terminate
any such agreement or instrument.
(c) Capitalization; Subsidiaries and Affiliates.
(1) The entire authorized capital stock of Xxxxxxx
consists of 540,000 shares of Class A voting common stock and 5,400,000
shares of Class B non-voting common stock, of which 478,255 shares of Class
A common stock and 3,567,735 shares of Class B common stock are issued and
outstanding. The persons named in Exhibit D attached hereto are all of the
shareholders of Xxxxxxx and each is the record owner of the number of
shares of Xxxxxxx'x Class A common stock and Class B common stock as set
forth in Exhibit D. The shares set forth in Exhibit D represent all of the
issued and outstanding equity securities of Xxxxxxx. The shares of Xxxxxxx
stock referred to in Exhibit D have been duly authorized and validly
issued, are fully paid and nonassessable, and are not subject to any liens,
charges, encumbrances or restrictions on transfer other than those imposed
by applicable securities laws or by this Agreement or as disclosed in the
Disclosure Schedule. Each shareholder listed in Exhibit D is a resident of
the state set forth opposite such shareholder's name on Exhibit D. If not
appended to this Agreement at the time of execution, Exhibit D shall be
delivered to the Parent not later than the date on which the Disclosure
Schedule is required to be delivered to the Parent pursuant to Section
3.21. Except as disclosed in the Disclosure Schedule, there are no
outstanding securities convertible or exchangeable into equity securities
of Xxxxxxx and there are no options, contracts, warrants or rights,
contractual or otherwise, outstanding for the purchase or other acquisition
from Xxxxxxx by any person of any equity securities of Xxxxxxx.
(2) Set forth in the Disclosure Schedule is a list of all
of Xxxxxxx'x Subsidiaries, together with the jurisdiction of incorporation
or organization of each Subsidiary, the authorized capitalization of each
Subsidiary and the percentage of each Subsidiary's outstanding capital
stock or membership interests owned by Xxxxxxx or another Subsidiary. Each
Subsidiary is a corporation or limited liability company duly organized,
validly existing and in good standing under the laws of the jurisdiction of
its incorporation or organization (as set forth in the Disclosure
Schedule), with all necessary corporate power to own and lease its
properties and to carry on its business as and where such properties are
now owned or leased and such business is now being conducted. Each
Subsidiary is duly qualified to do business as a foreign
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corporation and is in good standing in the jurisdictions listed in the
Disclosure Schedule, which are all the jurisdictions where the failure so
to qualify would have a Material Adverse Effect. All of the outstanding
shares of capital stock, or membership interests, of each Subsidiary have
been duly authorized and validly issued, are fully paid and nonassessable,
and are owned, of record and beneficially, by Xxxxxxx or another
Subsidiary, free and clear of all liens, encumbrances, equities, options or
claims whatsoever. No shares of capital stock or membership interests of
any Subsidiary are reserved for issuance and there are no outstanding
options, warrants, rights, subscriptions, claims of any character,
agreements, obligations, convertible or exchangeable securities or other
commitments, contingent or otherwise, relating to the capital stock or
membership interests of any Subsidiary, pursuant to which any Subsidiary is
or may become obligated to issue or exchange any membership interests or
shares of capital stock. Neither Xxxxxxx nor any Subsidiary owns, directly
or indirectly, any capital stock or other equity or ownership or
proprietary interest in any corporation, partnership, association, trust,
joint venture or other entity except as set forth in the Disclosure
Schedule.
(d) Financial Information. The consolidated balance
sheets of Xxxxxxx and its Subsidiaries at December 31, 1994 and 1995 and the
related consolidated statements of income, changes in shareholders' equity and
cash flows for the years then ended, as certified by Xxxxxxx Xxxxxx & Xxxxxx
P.L.C., independent certified public accountants, and the notes thereto, copies
of which have been furnished to Parent, (i) are correct and complete in all
material respects, (ii) have been prepared in accordance with generally
accepted accounting principles consistently applied and (iii) present fairly,
in all material respects, the consolidated financial position of Xxxxxxx and
its Subsidiaries at those dates and the consolidated results of its operations
and cash flows for the years then ended. The Current Financial Information is
correct and complete, has been prepared in accordance with generally accepted
accounting principles applied consistently with those applied in the
preparation of such audited financial statements, fairly presents the results
of the operations of Xxxxxxx and its Subsidiaries during the periods covered
thereby and the financial condition of Xxxxxxx and its Subsidiaries at the end
of each such period, subject to normal audit adjustments which are not expected
to be material in amount. The Current Financial Information has been reviewed
by Xxxxxxx Xxxxxx & Xxxxxx P.L.C., and reflects any recommendations made by
Xxxxxxx Xxxxxx & Xxxxxx P.L.C. in such reviews. Such audited financial
statements and the Current Financial Information (x) reflect as liabilities the
arrangements with Xxxxxxx Xxxxx Capital Corporation, and the Saturn tooling
contract, which are off-balance sheet tooling contracts for the benefit of Ford
Motor Company and Saturn Corporation and are not expected to result in net
outflows of cash from Xxxxxxx, (y) do not reflect as an asset the alternative
minimum tax credits which Xxxxxxx has available for carryforward to future
years, and (z) reflect FAS 106 estimated costs without any offset for the tax
deductibility of any such costs which are actually incurred in the future.
(e) Liabilities. Except for liabilities arising under
this Agreement or disclosed in the Disclosure Schedule, there are no material
liabilities of any nature of Xxxxxxx or its Subsidiaries, whether or not
accrued or contingent and whether or not determined or determinable, including,
without limitation, Tax liabilities due or to become due and contingent
liabilities for the
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performance of any obligation by other persons, other than liabilities set
forth or reflected in the 1995 Company Balance Sheet or the Current Financial
Information or non-material liabilities incurred since December 31, 1995 in the
Ordinary Course of Business and not reflected on the Company Balance Sheet or
Current Financial Information whose existence would not cause or constitute a
breach of Section 5.02(r) if incurred after December 31, 1995. Neither Xxxxxxx
nor any of its Subsidiaries is currently indebted and immediately after the
Closing, neither Xxxxxxx nor any of its Subsidiaries will be indebted to any
shareholder of Xxxxxxx, or any other officer or director of Xxxxxxx or any
Subsidiary, or any member of their respective families, except for normal
compensation and vacation pay and except as disclosed in the Disclosure
Schedule.
(f) Taxes. All Taxes required to be withheld by or on
behalf of Xxxxxxx and its Subsidiaries have been withheld and either paid to
the proper Governmental Bodies or set aside for such payment. Xxxxxxx and its
Subsidiaries have properly completed and filed when due, and in the manner
prescribed by law, all Tax returns which they have been legally required to
file and have paid when due all such Taxes. Neither Xxxxxxx nor any of its
Subsidiaries have any liability for any other Taxes, whether fixed, accrued or
contingent, except for Taxes whose payment is not yet due and for which
adequate reserves or accruals are maintained or established, and except as
disclosed in the Disclosure Schedule. The accruals and reserves for Taxes
(including deferred taxes) reflected in the 1995 Company Balance Sheet and
Current Financial Information are adequate to cover all Taxes required to be
accrued through the date thereof (including interest and penalties, if any,
thereon and Taxes being contested) in accordance with generally accepted
accounting principles. The Federal income tax returns of Xxxxxxx and its
Subsidiaries for each year to and including the year ended December 31, 1991
have been examined by the Internal Revenue Service and any asserted
deficiencies as a result of such examinations have been fully paid. There are
no outstanding deficiencies asserted or assessments made of Taxes and there are
no outstanding liens for Taxes except for statutory liens for current Taxes not
yet due or delinquent, and there is no audit threatened or currently in
progress with respect to any Tax return of Xxxxxxx or any of its Subsidiaries.
Neither Xxxxxxx nor any of its Subsidiaries is presently the beneficiary of any
waiver of any statute of limitations or any extension of time with respect to
Taxes.
Except as disclosed in the Disclosure Schedule (which
disclosure shall not be deemed to modify or supplement this representation and
warranty but rather shall be utilized for purposes of Section 1.06(b)), there
is no contract, agreement plan or arrangement, including but not limited to the
provisions of the Agreement, covering any employee or former employee of
Xxxxxxx or any of its Subsidiaries that, individually or collectively, could
give rise to the payment of any amount that would not be deductible pursuant to
Section 280G or subject to the excise tax pursuant to Section 4999 of the Code;
neither Xxxxxxx nor any of its Subsidiaries is a party to or bound by any tax
indemnity, tax sharing or tax allocation agreements. Neither Xxxxxxx nor any
of its Subsidiaries has filed any consent agreement under Section 341(f) of the
Code or agreed to have Section 341(f)(2) of the Code apply to any disposition
of a subsection (f) asset (as defined in Section 341(f)(4) of the Code) owned
by Xxxxxxx or any of its Subsidiaries and except for the group of which Xxxxxxx
and the Subsidiaries are now presently members, neither Xxxxxxx nor any of its
Subsidiaries has ever
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been a member of an affiliated group of corporations within the meaning of
Section 1504 of the Code.
(g) Title to Properties; Liens; Condition of Properties.
(1) All of the real property owned by Xxxxxxx and
each of its Subsidiaries, including legal descriptions thereof, and all
leases by Xxxxxxx and each of its Subsidiaries of real or material personal
property, are disclosed in the Disclosure Schedule. Except as otherwise
disclosed in the Disclosure Schedule and except for Permitted Liens,
Xxxxxxx and each of its Subsidiaries has good and marketable title in fee
simple to all such real property, with permanent and adequate rights of
egress and ingress, and all such leases are valid and existing and no
default by Xxxxxxx or any of its Subsidiaries exists under any thereof.
Except as disclosed in the Disclosure Schedule, the Shareholders have no
knowledge of any default by any third party under such leases. Xxxxxxx and
each of its Subsidiaries owns all other property and assets reflected in
the 1995 Company Balance Sheet and Current Financial Information except
personal property transferred, conveyed or otherwise disposed of in the
Ordinary Course of Business since December 31, 1995 and reflected in the
Current Financial Information. None of such real or personal property, and
none of such leasehold interests, is subject to any mortgage, pledge, lien,
conditional sale agreement, security title, encumbrance or other charge or
restriction upon its use or disposition except as disclosed in the
Disclosure Schedule and except Permitted Liens. There are no outstanding
options or rights in any person to acquire any of such real, leased or
other property or assets or any interest therein, except, with respect to
such personal property, for contracts of sale or lease entered into in the
Ordinary Course of Business.
(2) Neither Xxxxxxx nor any of its Subsidiaries
occupies or uses, and they do not anticipate the use of, any property of
others except under valid and enforceable leases, contracts or other
arrangements. All buildings, machinery and equipment of Xxxxxxx and each of
its Subsidiaries are in operating condition and in a good state of repair
and have been well maintained, and (except as disclosed in the Disclosure
Schedule) substantially conform with all applicable ordinances, regulations
and zoning or other laws (including but not limited to laws, regulations
and ordinances relating to environmental protection or health and safety)
and do not encroach on property of others, and such machinery and equipment
is in good working order. As of the date hereof there is no pending or to
the knowledge of the Shareholders, Xxxxxxx or any of its Subsidiaries
threatened change of any such ordinance, regulation or zoning or other law
which might have a Material Adverse Effect and there is no pending or
threatened condemnation of any of Xxxxxxx'x or its Subsidiaries' real or
material personal properties.
(h) Inventories. The inventories of Xxxxxxx and its
Subsidiaries shown on the 1995 Company Balance Sheet and in the Current
Financial Information consisted and will consist of items of a quality and
quantity usable or saleable in the Ordinary Course of Business, except for
obsolete items and items of below-standard quality with a recorded value
written down to realizable market value or for which adequate reserves are
provided. The values at which inventories are carried on the 1995 Company
Balance Sheet and in the Current Financial Information and on the
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26
books of Xxxxxxx and its Subsidiaries at the Closing Date reflected and will
reflect the present valuation policy of Xxxxxxx and its Subsidiaries of valuing
inventory (other than "roll and hold" materials) at the lower of cost (on a
last-in, first-out basis) or estimated realizable amounts, all in accordance
with generally accepted accounting principles consistently applied.
(i) Intellectual Property. The Disclosure Schedule sets
forth and completely identifies and describes all patents, patent applications,
trademarks, service marks, trade names, copyrights and all applications,
registrations and renewals in connection therewith and all licenses,
sublicenses or other agreements pertaining to any of the foregoing to which
Xxxxxxx or any of its Subsidiaries is a party. Xxxxxxx and each of its
Subsidiaries owns or has the valid right to use all Intellectual Property
necessary for the conduct of its business as presently conducted. No
proceeding charging Xxxxxxx or any of its Subsidiaries with infringement of any
Intellectual Property has been filed or is threatened to be filed, and neither
Xxxxxxx nor any of its Subsidiaries has knowledge (i) of any unexpired patent
with claims relating to products of Xxxxxxx or any of its Subsidiaries or to
any apparatus, methods or designs employed by Xxxxxxx or any of its
Subsidiaries in manufacturing such products or (ii) of any patent or
application therefor or invention which would in Xxxxxxx'x opinion adversely
affect any such product, apparatus, method or design.
(j) Environmental Matters. Except as disclosed in the
Disclosure Schedule:
(1) Neither Xxxxxxx nor any of its Subsidiaries
is in violation of any judgment, decree, order, arbitration award, law,
rule, regulation, license, permit or other authorization pertaining to
environmental matters or pollution or contamination of any type, including,
without limitation, those arising under the Resource Conservation and
Recovery Act, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, the Superfund Amendments and
Reauthorization Act of 1986, the Federal Water Pollution Control Act, the
Federal Clean Air Act or the Toxic Substances Control Act or any federal,
state or local health, safety or environmental law ("Environmental Law"),
including those otherwise relating to the manufacture, generation,
processing, use, distribution, treatment, storage, disposal,
transportation, or handling of toxic or hazardous substances, solid or
hazardous waste, or other pollutants or contaminants.
(2) Neither Xxxxxxx nor any of its Subsidiaries has
received notice and neither Xxxxxxx nor any of its Subsidiaries has
knowledge that Xxxxxxx or any of its Subsidiaries is a potentially
responsible party under any Environmental Law.
(k) Labor and Employment Matters.
(1) The Disclosure Schedule lists the name, date of
hire and/or appointment and current annual salary, commission rate,
allowance or wage rate payable by Xxxxxxx and each of its Subsidiaries,
along with any arrangement to increase such annual salary, commission rate,
allowance or wage rate, with estimated annual or prior year data where
current annual data is unknown or unobtainable, of (i) each present officer
or director of Xxxxxxx, and
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each of its Subsidiaries regardless of the level of his or her compensation,
and (ii) each employee of Xxxxxxx and each of its Subsidiaries whose
compensation is expected to exceed $75,000 during 1996, together with a
statement of the full amount paid or payable to each such person for services
rendered during 1995 and the nature of the services rendered.
(2) Except as disclosed in the Disclosure Schedule:
(A) Neither Xxxxxxx nor any of its
Subsidiaries is a party to any collective bargaining agreement or
other contract or agreement with any labor organization or other
representative of any of the employees of Xxxxxxx or any of its
Subsidiaries nor is any such contract or agreement presently being
negotiated;
(B) Neither Xxxxxxx nor any of its
Subsidiaries is a party to any employment agreement or consulting
agreement with any person or entity, nor is any such contract or
agreement presently being negotiated; and there is no unfair labor
practice charge or complaint pending or, to the knowledge of any
Shareholder or Xxxxxxx, threatened against or otherwise affecting
Xxxxxxx or any of its Subsidiaries;
(C) no action, suit, complaint, charge,
arbitration, inquiry, proceeding or investigation, by or before any
court, governmental agency, administrative agency or commission,
brought by or on behalf of any employee, prospective employee, former
employee, retiree, labor organization or other representative of the
employees of Xxxxxxx or any of its Subsidiaries, is pending or, to the
knowledge of Xxxxxxx, threatened against Xxxxxxx or any of its
Subsidiaries and no grievance is pending or, to the knowledge of
Xxxxxxx, threatened;
(D) Neither Xxxxxxx nor any of its
Subsidiaries is a party to or otherwise bound by any consent decree
with, or citation by, any government agency relating to employees or
employment practices, wages, hours, and terms and conditions of
employment;
(E) Xxxxxxx and each of its Subsidiaries has
paid in full to, or accrued in its financial books and records, all
wages, salaries, commissions, bonuses, and other compensation due to
all employees of Xxxxxxx and each of its Subsidiaries or otherwise
arising under any policy, practice, agreement, plan, program, statute
or other law; neither Xxxxxxx nor any of its Subsidiaries is liable
for any severance pay or other payments to any employee or former
employee arising from Xxxxxxx'x or any of its Subsidiaries'
termination of such employment prior to the Closing Date; and neither
Xxxxxxx nor any of its Subsidiaries will have any liability under any
benefit or severance policy, practice, agreement, plan or program
which exists or arises, or may be deemed to exist or arise, under any
applicable law or otherwise, as a result of or in connection with the
transactions contemplated by this Agreement or as a result of the
termination
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by Xxxxxxx or any of its Subsidiaries of any persons employed by
Xxxxxxx or any of its Subsidiaries prior to the Closing Date;
(F) Neither Xxxxxxx nor any of its
Subsidiaries has closed any plant or facility, effectuated any layoffs
of employees or implemented any general early retirement or separation
program within the past five years, nor has Xxxxxxx or any of its
Subsidiaries planned or announced any such action or program for the
future, and Xxxxxxx and each of its Subsidiaries is in compliance with
its obligations pursuant to the Worker Adjustment and Retraining
Notification Act of 1988 and all other notification and bargaining
obligations arising under any collective bargaining agreement, statute
or otherwise;
(G) Notwithstanding that the Surviving
Corporation may elect to enter into employment agreements with certain
employees of Xxxxxxx or its Subsidiaries, neither Parent, the
Surviving Corporation nor Xxxxxxx will incur any liability resulting
from the termination by Xxxxxxx or any of its Subsidiaries of any
employment agreement between Xxxxxxx, any of its Subsidiaries and an
employee of Xxxxxxx or any of its Subsidiaries on or prior to the
Closing Date; and
(H) Since January 1, 1991 there have not
been any strikes, lockouts, demands for union recognition or
certification, formal or informal attempts to organize employees of
Xxxxxxx or any of its Subsidiaries into a union, or charges or claims
by any person that either Xxxxxxx or any of its Subsidiaries has
discriminated against any of its employees on the basis of race, sex,
age, religion, handicapped status or any other reason.
(l) Employee Benefit Plans.
(1) The Disclosure Schedule discloses each plan,
fund or program, and each "employee benefit plan" as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), which provides medical, health, hospitalization, life,
disability or other insurance, vacation, deferred compensation, pension,
bonus or other employee benefits to present or former employees of Xxxxxxx
and each of its Subsidiaries and which is or was maintained or sponsored by
Xxxxxxx or any of its Subsidiaries or to which Xxxxxxx or any of its
Subsidiaries contributes or has or had an obligation to contribute, now or
at any time during the five-year period ending on the Closing Date (the
"Benefit Plans"). Each Benefit Plan (and each related trust and insurance
contract) complies in all material respects with all applicable laws, and
Xxxxxxx has made or will make all contributions due thereunder prior to or
as of the Closing Date. Neither Xxxxxxx nor any affiliated entity under
common control with Xxxxxxx and each of its Subsidiaries has ever
contributed to, or been under any obligation to contribute to, any
multiemployer plan as defined in Section 3(37) of ERISA. With respect to
each Benefit Plan that is intended to qualify under Section 401(a) of the
Code, (i) a favorable
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determination letter has been received covering the period from its
adoption through the Closing Date, or an application for such qualification
for such period has been made, (ii) neither Xxxxxxx nor any of its
Subsidiaries has received notice that the Internal Revenue Service has
rejected such application or denied such qualification and (iii) Xxxxxxx
does not know of any fact or circumstance which would adversely affect such
determination letter or application for qualification.
(2) Except as set forth in the Disclosure
Schedule, (i) there has been no termination (whether partial or otherwise)
of any "employee pension benefit plan" (as defined in Section 3(2) of
ERISA) under which Xxxxxxx (or any person or entity which is or was under
common control with Xxxxxxx within the meaning of ERISA Section 4001), has
or had any obligation to make a contribution; (ii) no proceedings to
terminate any such plan have been initiated, and no event described in
ERISA Sections 4062, 4063 or 4069 has occurred or will occur with respect
to any such plan, any of which resulted or could result at any time within
five years of the Closing Date in an insufficiency of such plan's assets
necessary to satisfy all benefit liabilities under such plan (within the
meaning of ERISA Section 4041(b)); and (iii) Xxxxxxx has delivered to
Parent true and complete copies of the following: the current plan
document (including a written description of all oral plans), any
amendments thereto, and the related summary plan description, if any; each
trust or custodial agreement and each deposit administration, group
annuity, insurance or other funding agreement associated with each such
plan, for the last three plan years, the financial information or reports
(including any FASB required reports, if applicable), valuation reports,
and/or actuarial reports relating to each such plan; all Internal Revenue
Service and other governmental agency rulings relating thereto, and all
applications for such rulings; and all filing and reports (including the
Annual Report Form 5500 series, if applicable) filed with any governmental
agency at any time during the three year period ending on the Closing Date,
along with all schedules and reports filed therewith.
(3) (i) Neither any such plan nor any other
person or entity has engaged in a "prohibited transaction" (as defined in
ERISA Section 406 or Code Section 4975) with respect to such plan, for
which no individual or class exemption exists; (ii) each such plan which is
a "group health plan" (as defined in Code Section 5000(b)(1)) has complied
and will comply at all times (whether before, on, or after the Closing
Date) in all respects with the applicable requirements of ERISA Sections
601 and 602, Code Section 162(k) (through December 31, 1988) and Code
Section 4980B (commencing on January 1, 1989); (iii) all disclosures to
employees and all filings and other reports relating to each such plan and
required (under ERISA, the Code, other applicable law, including federal
and state securities laws, and all regulations thereunder) to have been
made or filed on or before the Closing Date have been or will be duly and
timely made or filed by that date; (iv) there is no litigation, disputed
claim (other than routine claims for benefits), governmental proceeding,
audit, inquiry or investigation pending or, to the knowledge of Xxxxxxx
threatened with respect to any such plan, its related assets or trusts,
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30
or any fiduciary, administrator or sponsor of such plan; (v) no event has
occurred and no condition exists relating to any such plan that would
subject Xxxxxxx, any of its Subsidiaries, Parent or the Surviving
Corporation to any tax under Code Sections 4972 or 4979, or to any
liability under ERISA Section 502; (vi) to the extent applicable, no such
plan has experienced any "accumulated funding deficiency" (as defined in
Code Section 412), whether or not waived, at any time;
(4) With respect to each plan which is subject
to Title IV of ERISA: (i) such plan's assets are sufficient to satisfy all
benefit liabilities (within the meaning of ERISA Section 4041(b)) under
such plan, such that the termination of or withdrawal from the plan
(whether partial or otherwise) at any time before the Closing Date would
not subject Xxxxxxx, any of its Subsidiaries, Parent or the Surviving
Corporation to any liability to the Pension Benefit Guaranty Corporation or
any other person or entity; (ii) to the knowledge of Xxxxxxx, no events
have occurred or are expected to occur with respect to any such plan that
would result in a material decrease in the net fair market value of such
plan's assets or a material increase in the net present value of benefit
liabilities under such plan; (iii) no such plan has been terminated, nor
have any proceedings been initiated to terminate or reorganize any such
plan (whether partially or otherwise); (iv) no event described in ERISA
Section 4043 has occurred, whether or not such event must be reported to
any governmental agency; and (v) there has been no amendment to any such
plan which required or could require Xxxxxxx, any of its Subsidiaries,
Parent or the Surviving Corporation to provide security to such plan under
Code Section 401(a)(29).
(5) with respect to each plan which is an
"employee welfare benefit plan" (as defined in ERISA Section 3(1)) that
provides benefits to or on behalf of any person following retirement or
other termination of employment (other than to the extent required by Code
Section 4980B): (i) there is no "disqualified benefit" (as defined in Code
Section 4976(b)) that would subject Xxxxxxx, any of its Subsidiaries,
Parent or the Surviving Corporation to any tax under Code Section 4976(a);
and (ii) under the terms of each such plan, the benefits provided to such
retired or terminated persons under the plan may be modified or terminated
by Xxxxxxx, Parent or the Surviving Corporation at any time on or after the
Closing Date.
(m) Customers and Suppliers. The Disclosure Schedule
discloses each of the customers and suppliers of Xxxxxxx and each of its
Subsidiaries whose purchases from or sales to Xxxxxxx and any of its
Subsidiaries constituted five percent or more of Xxxxxxx'x consolidated net
sales or net purchases, respectively, of products or services during the year
ended December 31, 1995 and during the first nine months of the year ending
December 31, 1996, showing, with respect to each, the name, dollar volume and
nature of the relationship (including the principal categories of products or
services bought or sold). Except as disclosed in the Disclosure Schedule,
neither Xxxxxxx nor any of its Subsidiaries has received, since December 31,
1995, written notice of intent to terminate any material contract or agreement
for the purchase of the products of Xxxxxxx or any
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31
of its Subsidiaries nor does Xxxxxxx have any knowledge of any circumstances
which are likely to result in Xxxxxxx'x five largest customers (based upon
sales in Xxxxxxx'x last fiscal year) materially decreasing their purchases of
Xxxxxxx'x products during the twelve months immediately following the Closing
Date.
(n) Insurance. Xxxxxxx and each of its Subsidiaries
maintains policies of insurance with coverages and limits customary in its
respective business, has not received notice of default under or cancellation
of any of such policies nor is it in default under any such policies, and has
paid or will pay all premiums due thereon covering all periods up to and
including the Closing Date. No coverage under any such insurance policies is
being disputed, and all claims which Xxxxxxx or any of its Subsidiaries
currently has under such insurance policies have been filed in a timely
fashion. To the knowledge of any Shareholder or Xxxxxxx, no accident, loss or
other event or circumstance has occurred in connection with the business and
affairs of Xxxxxxx or any of its Subsidiaries that might result in any material
premium adjustment or any material adverse modification of any policy terms or
conditions with respect to any insurance policies in effect on the date of this
Agreement. Neither Xxxxxxx nor any of its Subsidiaries has received any notice
or other communication from any of its insurance brokers or carriers that such
broker or carrier will not be willing or able to renew such insurance coverage
on substantially similar terms and at substantially equivalent premiums as are
currently in effect.
(o) Contracts, Agreements and Plans. Except for this
Agreement and the contracts, agreements, plans and commitments which are
disclosed in the Disclosure Schedule, neither Xxxxxxx nor any of its
Subsidiaries is a party to or subject to any of the following ("Material
Contracts"):
(1) Any management or employment contract or
contract for personal services between Xxxxxxx or any of its Subsidiaries
and any officer, consultant, agent, director or employee which is not by
its terms terminable at will without penalty, or any contract under which
any person (other than sales personnel) receives commissions in varying
amounts depending on sales or other activities;
(2) Any plan, contract or arrangement under
which Xxxxxxx or any of its Subsidiaries provides or may provide insurance
for or a loan to and any other agreement with any officer, shareholder,
consultant, agent, director, employee or member of their families;
(3) Any contract or agreement between Xxxxxxx
or any of its Subsidiaries and any labor union;
(4) Any contract, commitment or agreement which
involves capital expenditures or other similar purchases or sales by
Xxxxxxx or any of its Subsidiaries after January 1, 1997 of more than
$250,000 or which together with all other such contracts in the aggregate
involve capital expenditures by Xxxxxxx or any of its Subsidiaries after
January 1, 1997 of more than $2 million;
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(5) Any contract or agreement containing
covenants by Xxxxxxx or any of its Subsidiaries or any of their employees
not to compete in any line of business with any person other than Xxxxxxx
or any of its Subsidiaries, or not to disclose to any person other than
Xxxxxxx or any of its Subsidiaries any Confidential Information, or to
render services to any person other than Xxxxxxx or any of its
Subsidiaries;
(6) Any contract under which Xxxxxxx or any of
its Subsidiaries has outstanding indebtedness for borrowed money or has the
right to borrow money, or any conditional sales contracts, chattel
mortgages, equipment lease agreements or other security arrangements with
respect to personal property with an obligation in excess of $25,000
annually;
(7) Any tax sharing agreements or any licenses
with respect to Intellectual Property; or
(8) Any other contract or agreement of Xxxxxxx
or any of its Subsidiaries not made in the Ordinary Course of Business or,
to the knowledge of Xxxxxxx, in violation of any law, including any
contract involving an obligation in excess of $25,000 annually.
Copies of the written Material Contracts have been made
available to Parent prior to the Closing Date and such copies are true and
correct copies of such Material Contracts. All of the Material Contracts are
valid and legally binding obligations of Xxxxxxx or one of its Subsidiaries
enforceable against it in accordance with their respective terms, subject to
the qualifications that such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally, by general equitable principles
(regardless of whether such enforceability is considered in a proceeding in
equity or at law) or by an implied covenant of good faith and fair dealing, and
are in full force and effect. Except as disclosed in the Disclosure Schedule,
neither Xxxxxxx nor any of its Subsidiaries is in default in the payment or
performance of its obligations under any Material Contract and there is no
express provision in any Material Contract as the result of which the rights of
Xxxxxxx or any of its Subsidiaries under such Material Contract will be
materially impaired by the transactions provided for in this Agreement. To the
knowledge of any Shareholder, no party with whom Xxxxxxx or any of its
Subsidiaries has a contractual relationship under a Material Contract is in
default in the payment of any obligation involving $15,000 or more under, or in
the performance of any material covenant or obligation to be performed by such
party under, such Material Contract.
(p) Compliance with Law. The business of Xxxxxxx and
each of its Subsidiaries has been conducted in all material respects in
compliance with all applicable laws, ordinances and regulations. Xxxxxxx and
each of its Subsidiaries has all permits from any Governmental Bodies necessary
to conduct its business as presently conducted.
(q) Litigation. Except as disclosed in the Disclosure
Schedule, on the date of this Agreement there are no actions, suits or legal or
administrative proceedings, whether or not covered by insurance, instituted or
pending or, to the knowledge of Xxxxxxx, threatened against Xxxxxxx or
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any of its Subsidiaries which, if adversely determined, would individually or
in the aggregate have a Material Adverse Effect.
(r) Absence of Material Changes. Except for this
Agreement or as otherwise disclosed in the Disclosure Schedule, without the
approval of Parent neither Xxxxxxx nor any of its Subsidiaries has since
January 1, 1996:
(1) issued or sold any of its bonds, debentures,
notes or other securities or issued, sold or granted any option, warrant
or right to purchase any thereof, or borrowed any money from any Person or
guaranteed the payment or performance of any obligation of any Person;
(2) except in the Ordinary Course of Business,
sold, leased, disposed of, mortgaged, pledged or subjected to any lien or
encumbrance (other than Permitted Liens), or waived any substantial rights
relating to, any of its material property or assets, tangible or
intangible;
(3) suffered any damage, destruction or loss
(whether or not covered by insurance) which had or could have a Material
Adverse Effect;
(4) except in the Ordinary Course of Business,
terminated or amended or suffered the termination or amendment of or failed
to perform all its obligations or suffered or permitted any default to
exist under any Material Contract;
(5) suffered any change in its condition
(financial or otherwise) or in its assets, liabilities or business, except
changes which have not, individually or in the aggregate, had a Material
Adverse Effect;
(6) changed its accounting principles or its
accounting methods or practices followed, including any change in
depreciation or amortization policies or rates;
(7) to the date of this Agreement, declared any
dividends or paid any distribution in respect of its capital stock, or
redeemed, retired, purchased or otherwise acquired any such capital stock;
(8) entered into any contract or commitment to
purchase or make any capital expenditure in excess of $250,000;
(9) to the date of this Agreement, experienced
any "extraordinary loss" as such term is defined in Section I-17 of the
current text of Accounting Statements of the Financial Accounting Standards
Board, whether or not such loss was covered by insurance; or
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(10) engaged in any merger with or into another
person, a consolidation with another person or any acquisition (by
purchase, merger, consolidation, stock acquisition or otherwise) of
substantially all the assets of another person.
(s) Liability for Finder's Fees. No liability for
brokerage fees, finder's fees, agent's commissions or other similar forms of
compensation in connection with this Agreement or any transaction contemplated
hereby has been incurred by Xxxxxxx except with respect to the fee payable to
Xxxxxxx Xxxxx.
(t) Investment. Each Shareholder (i) understands that
the Preferred Stock has not been, and will not be, registered under the
Securities Act or under any state securities law, that no federal or state
agency has reviewed or passed upon the fairness of the terms of the Merger or
the merits or risks of an investment in the Preferred Stock and that the
Preferred Stock is being offered and sold in reliance upon federal and state
exemptions for transactions not involving any public offering, (ii) is
acquiring Preferred Stock for investment purposes only and not with a view to
the distribution thereof, (iii) is a sophisticated investor with knowledge and
experience in business and financial matters as to be capable of evaluating the
merits and risks of the Merger and of an investment in the Preferred Stock,
(iv) has received sufficient information concerning Parent and Newco and has
had the opportunity to obtain additional information as desired in order to
evaluate the merits and the risks inherent in holding Preferred Stock, (v) is
able to bear the economic risk and lack of liquidity inherent in holding
Preferred Stock, (vi) is an accredited investor within the meaning of the
regulations under the Securities Act and (vii) understands that the right to
transfer the Preferred Stock is restricted pursuant to the terms of this
Agreement and the Articles of Incorporation of the Surviving Corporation.
(u) Bank Accounts and Powers of Attorney. The Disclosure
Schedule lists (i) the name of each bank in which Xxxxxxx or any of its
Subsidiaries has an account or safe deposit box, the names of all persons
authorized to draw on such accounts or to have access to such safe deposit
boxes, and any contract, instrument, agreement, license, arrangement,
commitment or understanding relating to such accounts and safe deposit boxes,
and (ii) the names of all persons holding powers of attorney for Xxxxxxx or any
of its Subsidiaries and a statement of the terms of each such power of
attorney.
(v) Absence of Certain Payments. Neither Xxxxxxx nor any
of its Subsidiaries nor any director, officer, agent, employee, consultant or
other person associated with or acting on behalf of Xxxxxxx or any of its
Subsidiaries, has (i) used any corporate funds for contributions, gifts,
entertainment or other expenses relating to political activity, in violation of
the laws of the United States or any jurisdiction of the United States, or in
violation of the laws of any other jurisdiction, (ii) made any direct or
indirect payments to government officials or others from corporate funds, or
established or maintained any unrecorded funds, in violation of the laws of the
United States or any jurisdiction of the United States, or in violation of the
laws of any other jurisdiction, (iii) violated any provisions of the Foreign
Corrupt Practices Act of 1977, or any rules or regulations promulgated
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thereunder, or (iv) violated any of the anti-boycott provisions of 15 C.F.R.
369, or any rules or regulations promulgated thereunder.
(w) OSHA. All of Xxxxxxx'x and each of its Subsidiaries'
facilities are maintained and operated in material compliance with OSHA and any
similar state statute and the rules and regulations promulgated thereunder.
Except as disclosed in the Disclosure Schedule, neither Xxxxxxx nor any of its
Subsidiaries is and has not been since January 1, 1991 subject to an
investigation by the Department of Labor, litigation over compliance with such
rules and regulations or any fine, penalty or citation, relating to or arising
out of a violation or alleged violation of OSHA or any similar state statute
and such rules and regulations.
(x) Change of Control Payments. Except as disclosed in
the Disclosure Schedule, neither Xxxxxxx nor any of its Subsidiaries have any
plans, programs or agreements to which it is a party, or to which it is
subject, pursuant to which payments may be required or acceleration of benefits
may be required upon a change of control of Xxxxxxx.
(y) Accounts Receivable. The accounts receivable of
Xxxxxxx and each of its Subsidiaries as set forth on the 1995 Company Balance
Sheet or arising since the date thereof are valid and genuine; have arisen
solely out of bona fide sales and deliveries of goods, performance of services
and other business transactions in the ordinary course of business consistent
with past practice; are, to the knowledge of Xxxxxxx, not subject to valid
defenses, set-offs or counterclaims; and to the knowledge of Xxxxxxx are
collectible within 90 days after billing at the full recorded amount thereof
less, in the case of accounts receivable appearing on the 1995 Company Balance
Sheet, the recorded allowance for collection losses on the 1995 Company Balance
Sheet or on the Current Financial Information. The allowance for collection
losses on the 1995 Company Balance Sheet or on the Current Financial
Information has been determined in accordance with generally accepted
accounting principles consistent with past practice.
(z) Transaction Expenses. All of the transaction expenses as
contemplated by Section 7.02 incurred prior to Closing by Shareholders or
Xxxxxxx (whether paid or not) in connection with the transactions contemplated
by this Agreement, which have been paid by Xxxxxxx or are payable by Xxxxxxx do
not exceed $2.0 Million. Neither the Shareholders nor Xxxxxxx have incurred
any other expenses related to or required for the consummation of the
transactions contemplated by this Agreement (including by way of example
expenses relating to legal, accounting, environmental, property survey and
appraisal services obtained by Xxxxxxx and financial adviser services) which
have been paid by Xxxxxxx or are payable by Xxxxxxx.
(aa) Additional Payments. The aggregate option "cash payment
rights," as described in Section 3.23 do not exceed $502,969. The aggregate
payments to Xxxxxxx X. Xxxxxx, as described in Section 3.24, do not exceed $1
Million. The aggregate payments to be made to certain minority shareholders,
as described in Section 3.25, do not exceed $597,191.
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5.03 Representations and Warranties of Parent and Newco.
Parent and Newco represent and warrant to the Shareholders as follows:
(a) Incorporation, qualification, etc. Each of Parent
and Newco is a corporation duly organized, validly existing and in good
standing under the laws of Michigan, with all necessary power to own and lease
its properties and to carry on its business as and where such properties are
now owned or leased and such business is now being carried on. The articles of
incorporation and bylaws of Parent and Newco, which have previously been
delivered or will be delivered to the Shareholders' Agent prior to the Closing
Date, are or will be when delivered complete and correct. As of the date
hereof, 100 shares of Newco common stock are issued and outstanding.
(b) Due Authorization of Agreement; No Conflict With
Other Instruments. Parent and Newco have full power and authority and have
taken all necessary action to execute, deliver and consummate this Agreement
and to perform all the terms and conditions hereof to be performed by Parent
and Newco, respectively, except that the corporate action referred to in
Section 3.19(b) has not yet been taken. When such corporate action has been
taken, this Agreement will be a valid and binding obligation of Parent and
Newco, enforceable against Parent and Newco in accordance with its terms,
except as the enforceability hereof may be limited by bankruptcy, insolvency or
other laws of general application relating to or affecting the enforcement of
creditors' rights or by general principles of equity limiting the availability
of equitable remedies. The execution and delivery by Parent and Newco of this
Agreement, the consummation by Parent and Newco of the transactions which this
Agreement contemplates will be consummated by Parent and Newco, and Parent's
and Newco's fulfillment of and compliance with the terms and provisions hereof
applicable to Parent and Newco, do not and will not (i) violate any law
applicable to Parent or Newco, or (ii) conflict with, result in a breach of,
constitute a default under or accelerate or permit the acceleration of the
performance required by, any agreement or instrument to which Parent or Newco
is a party or by which Parent or Newco is bound.
(c) The Preferred Stock. The Preferred Stock, when
issued and delivered pursuant to this Agreement, will be duly authorized and
validly issued, fully paid and nonassessable, and not subject to any liens,
charges, encumbrances or restrictions on transfer other than those imposed by
applicable securities laws or by this Agreement.
(d) Liability for Finder's Fees. No liability for
brokerage fees, finder's fees, agent's commissions or other similar forms of
compensation in connection with this Agreement or any transaction contemplated
hereby has been incurred by Parent or Newco.
VI. REMEDIES FOR BREACHES OF THIS AGREEMENT
6.01 Survival of Representations, Warranties and Covenants.
The representations and warranties made by the Shareholders and Xxxxxxx in this
Agreement or in any Schedule, Exhibit, certificate or other document delivered
by or on behalf of the Shareholders or Xxxxxxx pursuant to
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this Agreement shall be deemed to be continuing and shall survive for a period
of three years from the Closing Date, unless a specific claim in writing with
respect to any such representation and warranty shall have been made, or an
action at law or in equity shall have been commenced or filed, prior to such
expiration date, in which case such period shall be extended; provided however,
that the representations and warranties of the Shareholders and Xxxxxxx set
forth in:
(a) Section 5.01, the first sentence of Section 5.02(a),
and Sections 5.02(b), 5.02(c) and 5.02(g)(1) shall survive indefinitely; and
(b) Section 5.02(f) shall survive for the longer of the
applicable statute of limitations under which claims may be asserted against
Xxxxxxx or three years from the Closing Date.
6.02 Indemnification Provisions for Benefit of Parent and the
Surviving Corporation. If there is any breach or inaccuracy of any of the
representations, warranties or covenants of any Shareholder or Xxxxxxx
contained herein or in any Schedule, Exhibit, certificate or other document
delivered by or on behalf of the Shareholders or Xxxxxxx pursuant to this
Agreement, or if any third party alleges facts that, if true, would mean that
such a breach or inaccuracy existed, and provided that within the applicable
time periods specified in Section 6.01 Parent or the Surviving Corporation
delivers to the Shareholders' Agent pursuant to Section 6.04 a claim for
indemnification with respect to such alleged breach or inaccuracy, then the
shareholders of Xxxxxxx as to whom such claim may then be brought pursuant to
Section 6.01 (either severally or jointly and severally, as provided in Section
7.10(b)), shall indemnify Parent, the Surviving Corporation and their
Affiliates and each of their respective officers, directors, employees, agents,
successors and permitted assigns from and against all Adverse Consequences that
they have suffered or may suffer caused by, resulting from, arising out of or
relating to such breach or inaccuracy through and after the date of such claim;
provided however, that (i) the Shareholders shall not have any obligation to
indemnify any person under this Section 6.02 unless the amount of Adverse
Consequences suffered by such person by reason of all such breaches or
inaccuracies exceeds $50,000 in the aggregate, at which point the Shareholders
shall be obligated to indemnify such person from and against all such Adverse
Consequences, without any deductible amount, and (ii) in no event shall the
Shareholders have any obligation to indemnify such persons under this Section
6.02 for an amount, in the aggregate in excess of $13 million with respect to
claims for indemnification made during the first eighteen months following the
Closing Date and, with respect to claims made after the expiration of such
18-month period, such amount shall be reduced to $6.5 million.
6.03 Indemnification Provisions for Benefit of the
Shareholders. If there is any breach or inaccuracy of any of the
representations, warranties or covenants of Parent or Newco contained herein or
in any Schedule, Exhibit, certificate or other document delivered by or on
behalf of Parent or Newco pursuant to this Agreement, or if any third party
alleges facts that, if true, would mean that such a breach or inaccuracy
existed, then Parent or Newco shall indemnify the Shareholders and their
respective successors and permitted assigns from and against all Adverse
Consequences that they have suffered or may suffer caused by, resulting from,
arising out of or relating to such breach or inaccuracy through and after the
date of such claim; provided however, that (i) Parent or Newco shall
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not have any obligation to indemnify the Shareholders under this Section 6.03
unless the amount of Adverse Consequences suffered by the Shareholders by
reason of all such breaches or inaccuracies exceeds $50,000 in the aggregate,
at which point Parent or Newco shall be obligated to indemnify the Shareholders
from and against all such Adverse Consequences, without any deductible amount,
and (ii) in no event shall Parent or Newco have any obligation to indemnify the
Shareholders under this Section 6.03 for an amount, in the aggregate in excess
of $13 million with respect to claims for indemnification made during the first
eighteen months following the Closing Date and, with respect to claims made
after the expiration of such 18-month period, such amount shall be reduced to
$6.5 million.
6.04 Notice of Claim for Indemnification. No claim for
indemnification hereunder shall be valid unless notice of such claim is
delivered to Parent (in the case of a claim by any Shareholder) or to the
Shareholders' Agent (in the case of a claim by Parent or the Surviving
Corporation) within the period during which the representation, warranty or
covenant upon which such claim is based survives pursuant to Section 6.01. Any
such notice shall set forth in reasonable detail, to the extent known by the
person giving such notice, the facts on which such claim is based and the
estimated amount of Adverse Consequences resulting therefrom.
6.05 Matters Involving Third Parties.
(a) If Parent or the Surviving Corporation or any
Shareholder receives notice or acquires knowledge of any matter which may give
rise to a claim by another person and which may then result in a claim for
indemnification under this Article VI, then (i) if such notice or knowledge is
received or acquired by Parent or the Surviving Corporation, Parent or the
Surviving Corporation shall promptly notify the Shareholders' Agent thereof,
and (ii) if such notice or knowledge is received or acquired by any
Shareholder, such Shareholder shall promptly notify Parent or the Surviving
Corporation and the Shareholders' Agent thereof; except that no delay in giving
such notice shall diminish any obligation under this Article VI to provide
indemnification unless (and then solely to the extent) the party from whom such
indemnification is sought is prejudiced.
(b) Any party from whom such indemnification is sought
(the "Indemnifying Party") shall have the right to defend, at the Indemnifying
Party's cost, risk and expense, the party seeking such indemnification (the
"Indemnified Party") against any such claim by another person (the "Third Party
Claim") with counsel of the Indemnifying Party's choice (subject to the
Indemnified Party's written consent) reasonably satisfactory to the Indemnified
Party so long as (i) within 15 days after the Indemnified Party has given
notice of the Third Party Claim to the Indemnifying Party, the Indemnifying
Party notifies the Indemnified Party that the Indemnifying Party will indemnify
the Indemnified Party from and against all Adverse Consequences the Indemnified
Party may suffer caused by, resulting from, arising out of or relating to such
Third Party Claim, (ii) the Indemnifying Party provides the Indemnified Party
with evidence reasonably satisfactory to the Indemnified Party that the
Indemnifying Party has the financial resources necessary to defend against the
Third Party Claim and fulfill its indemnification obligations thereunder, (iii)
the Third Party Claim seeks only money damages and not an injunction or other
equitable relief, (iv) settlement of,
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or an adverse judgment with respect to, the Third Party Claim is not, in the
good faith judgment of the Indemnified Party, likely to establish a precedent,
custom or practice adverse to the continuing business interests of the
Indemnified Party, and (v) the Indemnifying Party conducts the defense of the
Third Party Claim actively and diligently.
(c) So long as the Indemnifying Party is conducting the
defense of the Third Party Claim in accordance with Section 6.05(b), (i) the
Indemnified Party may retain separate co-counsel at its sole cost and expense
and participate in the defense of the Third Party Claim, (ii) the Indemnified
Party shall not consent to the entry of any judgment or enter into any
settlement with respect to the Third Party Claim without the prior consent of
the Indemnifying Party, and (iii) the Indemnifying Party shall not consent to
the entry of any judgment or enter into any settlement with respect to the
Third Party Claim without the prior consent of the Indemnified Party.
(d) If any of the conditions specified in Section 6.05(b)
is or becomes unsatisfied, however, (i) the Indemnified Party may defend
against, and consent to the entry of any judgment or enter into any settlement
with respect to, the Third Party Claim in any manner it may deem advisable (and
the Indemnified Party need not consult with, or obtain any consent from, any
Indemnifying Party in connection therewith), (ii) the Indemnifying Parties
shall reimburse the Indemnified Party promptly and periodically for the costs
of defending against the Third Party Claim (including attorneys' and
accountants' fees and expenses), and (iii) the Indemnifying Party shall remain
responsible for any Adverse Consequences the Indemnified Party may suffer
caused by, resulting from, arising out of or relating to such Third Party Claim
to the extent provided in this Article VI.
6.06 Claims Against Escrow Fund and Shareholders. Any
liability of the Shareholders to Parent, or the Surviving Corporation or any
other person pursuant to Section 6.02 shall be satisfied first from the assets
held by the Escrow Agent pursuant to the Escrow Agreement, and only if such
assets are exhausted without fully satisfying such liability, or if the Escrow
Agreement has terminated, shall any attempt be made by Parent or the Surviving
Corporation to satisfy such liability from any other source. Any liability of
the Shareholders to Parent or the Surviving Corporation or any other person
pursuant to Section 6.02, after the assets held by the Escrow Agent are
exhausted or the Escrow Agreement is terminated, shall be satisfied by the
Shareholders by means of the return of that number of shares of Series A
Preferred Stock equal to the number determined by dividing the aggregate dollar
amount of the Adverse Consequences incurred by Parent, the Surviving
Corporation or any person pursuant to Section 6.02 by $100.00. Any such shares
of Series A Preferred Stock delivered to the Surviving Corporation shall be
canceled.
6.07 Other Indemnification Provisions. The indemnification
provisions in this Article VI are in lieu of any statutory, equitable or common
law remedy any party may have for breach of representation, warranty or
covenant, except for any claims relating to fraudulent misrepresentation and
any injunctive relief or specific performance available to such party for any
breach of Articles III, IV, VI or VII. No Shareholder shall make any claim for
indemnification against Xxxxxxx by reason of the fact that such Shareholder was
a director, officer, employee or agent of Xxxxxxx or was serving at the request
of Xxxxxxx as a partner, trustee, director, officer, employee or agent of
another
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entity (whether such claim is for judgments, damages, penalties, fines, costs,
amounts paid in settlement, losses, expenses or otherwise and whether such
claim is pursuant to any statute, charter document, bylaw, agreement or
otherwise) with respect to any action, suit, proceeding, complaint, claim or
demand brought by Parent or the Surviving Corporation against such Shareholder.
VII. MISCELLANEOUS
7.01 Further Assurances. On and after the Closing Date, the
Shareholders, Xxxxxxx, Parent and Newco shall take all appropriate action and
execute all documents, instruments or conveyances of any kind which may be
necessary or advisable to carry out any of the provisions hereof and to
consummate the transactions contemplated hereby.
7.02 Expenses.
(a) Except as otherwise provided in Section 1.06(e) or
Section 7.02(b), each party hereto shall bear all expenses incurred by such
party in connection with the negotiation, preparation, execution and
performance of this Agreement, except that Xxxxxxx shall bear and pay (i) the
fees and expenses of Xxxxxxx Xxxxx, Xxxx Xxxxx Xxxx & XxXxxx, Xxxxx Xxxxxxxx
Xxxxxxxxxx P.L.C., and Xxxxxxx Xxxxxx & Xxxxxx, P.L.C., (ii) the fees and
expenses relating to the title insurance and Survey required by Section 3.18,
(iii) one-half of any filing fees paid by Xxxxxxx and Parent in connection with
any filings by them under the Xxxx-Xxxxx-Xxxxxx Act in connection with the
transactions contemplated hereby, and (iv) all other expenses relating to
actions taken by Xxxxxxx, whether at the request of the Shareholders or
otherwise, which are required by this Agreement; provided that the total amount
of such expenses borne by Xxxxxxx shall not exceed $2,000,000.
(b) Xxxxxxx shall pay Parent a fee of $5,000,000 plus
actual out-of-pocket expenses of Parent relating to the transactions
contemplated by this Agreement (including, but not limited to, fees and
expenses of Parent's counsel and financial advisers) upon the (i) withdrawal,
modification or change by the Board of Directors of Xxxxxxx of its
recommendation or approval of the Merger in a manner adverse to Parent (ii)
upon the recommendation by the Board of Directors of Xxxxxxx to the
shareholders of Xxxxxxx of an Acquisition Proposal, or (iii) unless this
Agreement has been terminated by Parent or Newco, the consummation of any other
Acquisition Proposal except as contemplated by this Agreement within twelve
(12) months of the date hereof.
7.03 Press Releases and Public Announcements. Except as
otherwise required by law or by applicable rules of any securities exchange or
association of securities dealers, prior to or after the Closing no party to
this Agreement shall issue any press release, make any public announcement or
otherwise disclose any information for the purpose of publication by any print,
broadcast or other public media, relating to the transactions contemplated by
this Agreement, without the prior approval of Parent and the Shareholders'
Agent.
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7.04 Notices. All notices, demands, claims, requests,
undertakings, consents, opinions and other communications which may or are
required to be given hereunder or with respect hereto shall be in writing,
shall be given either by personal delivery or by mail, facsimile transmission,
telegraph, telex or similar means of communication, and shall be deemed to have
been given or made when personally delivered, when delivered to the telegraph
or telephone company, charges prepaid, and otherwise when received, addressed
to the respective parties as follows:
(a) If to Parent or Newco:
BMG-MI, Inc.
0000 Xxxxx Xxxxxxxx, Xxx. 000
Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxxx, President
With copy to:
Xxxxxx Xxxxxxx PLLC
0000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000
Attention: Xxx X. Xxxxxxxxxxx, Xx., Esq.
or to such other address as Parent or Newco may from time to time designate by
notice to Xxxxxxx and the Shareholders' Agent with respect to future notices,
demands and other communications to Parent or Newco;
(b) if to the Shareholders' Agent or any Shareholder:
X. Xxxxxxx Xxxxxxxxx, Shareholders' Agent
000 Xxxxxxxx Xxxxx
X.X. Xxx 000
Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000-0000
With copy to:
Xxxxx X. Xxxx, Esq.
Xxxx Xxxxx Xxxx & XxXxxx
0000 X Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
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and to:
Xxxx Xxxxx, Esq.
Xxxxx Xxxxxxxx Xxxxxxxxxx P.L.C.
000 X. Xxxxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
or to such other address as any Shareholder or the Shareholders' Agent may from
time to time designate by notice to Xxxxxxx, Parent and Newco with respect to
future notices, demands and other communications to such Shareholder or the
Shareholders' Agent, respectively; and
(c) if to Xxxxxxx:
Xxxxxxx Xxxxx Corporation
0000 Xxxx Xxxxxxxx Xxxxxx
X.X. Xxx 000
Xxxx, Xxxxxxxx 00000
With copy to:
Xxxxx X. Xxxx, Esq.
Xxxx Xxxxx Xxxx & XxXxxx
0000 X Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
and to:
Xxxx Xxxxx, Esq.
Xxxxx Xxxxxxxx Xxxxxxxxxx P.L.C.
000 X. Xxxxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
or to such other address as Xxxxxxx may from time to time designate by notice
to Parent, Newco and the Shareholders' Agent with respect to future notices,
demands and other communications to Xxxxxxx.
7.05 No Third-Party Beneficiaries. This Agreement shall not
confer any rights or remedies upon any person other than the parties to this
Agreement and their respective successors and permitted assigns. All
discussions and negotiations by Parent, Newco, or any person on behalf of
Parent or Newco, with any person pertaining to the subject matter of this
Agreement shall not be deemed to be on behalf of any person in his individual
capacity or as a representative or agent for Oxford, but rather shall be deemed
to be solely on behalf of Parent or Newco.
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7.06 Governing law; jurisdiction.
(a) Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Michigan without
giving effect to any choice or conflict of law provision or rule (whether of
the State of Michigan or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Michigan.
(b) Submission to Jurisdiction. Parent, Newco, Xxxxxxx,
each Shareholder and the Shareholders' Agent submit to the jurisdiction of any
state court sitting in Oakland County or Bay County, Michigan, in any action or
proceeding arising out of or relating to this Agreement and agree that all
claims in respect of the action or proceeding shall be heard and determined
exclusively in any such court. Parent, Newco, Xxxxxxx, each Shareholder and
the Shareholders' Agent waive any defense of inconvenient forum to the
maintenance of any action or proceeding so brought and waive any bond, surety,
or other security that might be required of any other party with respect
thereto. Each Shareholder appoints the Shareholders' Agent as such
Shareholder's agent to receive on such Shareholder's behalf service of copies
of the summons and complaint and any other process that might be served in such
action or proceeding.
7.07 Amendments and Waivers. No amendment of any provision of
this Agreement, and no postponement or waiver of any such provision or of any
default, misrepresentation, or breach of warranty or covenant hereunder,
whether intentional or not, shall be valid unless such amendment, postponement
or waiver is in writing and signed by or on behalf of Parent, Newco, Xxxxxxx
and the Shareholders acting through the Shareholders' Agent. No such
amendment, postponement or waiver shall be deemed to extend to any prior or
subsequent matter, whether or not similar to the subject-matter of such
amendment, postponement or waiver. No failure or delay on the part of Parent,
Newco, Xxxxxxx, the Shareholders or the Shareholders' Agent in exercising any
right, power or privilege under this Agreement shall operate as a waiver
thereof nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.
7.08 Succession and Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties named herein and their
respective successors and permitted assigns. No party may assign this
Agreement or any of such party's rights, interests or obligations hereunder
without the prior approval of the other parties hereto, except that all (but
not less than all) of the rights, interests and obligations of any Shareholder
may be assigned pursuant to the will of such Shareholder or the laws of
intestate succession, and except that Parent may (i) assign any or all of its
rights and interests hereunder to one or more of its Affiliates and (ii)
designate one or more of its Affiliates to perform its obligations hereunder
(other than its obligations with respect to the Preferred Stock); except that
in any event Parent shall remain responsible for the performance, by itself or
its assignee, of all of its obligations hereunder.
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7.09 Termination.
(a) Termination of Agreement. Parent or the
Shareholders, acting by the Shareholders' Agent, may terminate this Agreement
as provided below in this Section 7.09(a):
(1) the Shareholders and Parent may terminate this
Agreement by mutual consent at any time prior to the Closing;
(2) either the Shareholders or Parent may terminate
this Agreement if a court of competent jurisdiction or Governmental
Body shall have issued an order, decree or ruling or taken any other
action, in each case permanently restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement and such
order, decree, ruling or other action shall have become final and
nonappealable;
(3) Parent may terminate this Agreement if on the
Closing Date any of the conditions specified in Section 2.01 shall not
have been satisfied and such failure of condition shall not have been
waived by Parent;
(4) the Shareholders, acting by the Shareholders'
Agent, may terminate this Agreement if on the Closing Date any of the
conditions specified in Section 2.02 shall not have been satisfied and
such failure of condition shall not have been waived by the
Shareholders; or
(5) either the Shareholders or Parent may terminate
this Agreement if the Closing has not taken place by February 17, 1997
for any reason other than as specified above in clauses (3) and (4) of
this Section 7.09(a).
(6) either Parent or Newco may terminate this
Agreement if, in its sole discretion, it determines that the
Disclosure Schedule is not acceptable and provides such notice in
accordance with Section 3.21.
(b) Effect of Termination. If this Agreement is terminated
pursuant to Section 7.09(a), all rights and obligations of the parties
hereunder shall terminate without any liability of any party to any other party
(except as set forth in Section 7.02 and except for any liability of any party
then in breach). In addition, it is expressly agreed and understood that
nothing in this Agreement shall preclude any party from seeking any remedies
available to it, involving the payment of monetary damages or any equitable
remedy, in the event of any breach or violation of any provision of this
Agreement by the other party (whether or not the Agreement is terminated as a
result of such breach or violation).
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7.10 Matters of Construction, Interpretation and the Like.
(a) Construction. Parent, Newco, Xxxxxxx and the
Shareholders have participated jointly in the negotiation and drafting of this
Agreement. If an ambiguity or question of intent or interpretation arises,
this Agreement shall be construed as if drafted jointly by all the parties
hereto and no presumption or burden of proof shall arise favoring or
disfavoring any party because of the authorship of any of the provisions of
this Agreement. Any reference to any law shall be deemed also to refer to all
rules, regulations, orders or decrees promulgated thereunder, unless the
context requires otherwise. The word "including" shall mean including without
limitation. Each representation, warranty and covenant contained herein shall
have independent significance. If Parent or the Shareholders breach in any
respect any representation, warranty, covenant or other obligation contained
herein or created hereby, the fact that there exists another representation,
warranty covenant or obligation relating to the same subject matter (regardless
of the relative levels of specificity) which has not been breached shall not
detract from or mitigate the consequences of such breach. The rights and
remedies expressly specified in this Agreement are cumulative and are not
exclusive of any rights or remedies which any party would otherwise have. The
Exhibits specified in this Agreement are incorporated herein by reference and
made a part hereof. The article and section headings hereof are for
convenience only and shall not affect the meaning or interpretation of this
Agreement.
(b) Nature of the Shareholders' Obligations. The
representations and warranties of each Shareholder in Section 5.01 are several
and not joint, so that if any Shareholder breaches such representations or
warranties, no other Shareholder will be responsible to Parent or any other
party hereto for the consequences of such breach by the breaching Shareholder.
The remainder of the obligations of the shareholders of Xxxxxxx and Xxxxxxx
created by this Agreement are joint and several obligations, so that each party
will be responsible to Parent and the other parties hereto to the extent
provided in Article VI for all Adverse Consequences which Parent or such other
parties may suffer as a result of any breach of such obligations.
(c) Severability. The invalidity or
unenforceability of one or more of the provisions of this Agreement in any
situation in any jurisdiction shall not affect the validity or enforceability
of any other provision hereof or the validity or enforceability of the
offending provision in any other situation or jurisdiction.
(d) Entire Agreement; Counterparts. This Agreement
(including the Confidentiality Agreement and the other documents referred to
herein) constitutes the entire agreement among the parties and supersedes any
prior understandings, agreements or representations by or among the parties,
written or oral, to the extent they relate to the subject matter hereof. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original but all of which together shall constitute one and the same
instrument. It shall not be necessary in making proof of this Agreement to
produce or account for more than one such counterpart.
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7.11 Agency. Each shareholder of Xxxxxxx hereby
irrevocably appoints X. Xxxxxxx Xxxxxxxxx as the agent of such Shareholder for
all purposes relating to or in connection with any transaction contemplated by
or relating to this Agreement and to be carried out prior to, at or after the
Closing (including, without limitation, approving any modifications or
amendments to this Agreement and the appointment of the Escrow Agent and
execution and delivery of the Escrow Agreement), and each shareholder of
Xxxxxxx hereby authorizes Parent, Newco and Xxxxxxx to rely upon the agency
created hereby and releases Parent, Newco and Xxxxxxx from any and all
liability to such shareholder of whatever nature arising out of or relating to
such agency, to the same extent as though any act committed or omitted by X.
Xxxxxxx Xxxxxxxxx pursuant to such agency had been committed or omitted by such
shareholder.
7.12 Shareholder Signatures. The shareholders of Xxxxxxx
shall join and execute this Agreement and agree to all of the terms and
provisions hereof by means of separate signature pages. Such signature pages
shall also include the agreement of each shareholder to vote his or her shares
in favor of the Merger and shall provide for the consent of each shareholder to
the Merger.
7.13 Valuation. The parties hereto determine and agree
that the aggregate fair market value of the Class A and Class B common stock of
Xxxxxxx to be surrendered by the shareholders of Xxxxxxx in this transaction is
not less than the face amount of the Preferred Stock to be issued in exchange
therefor pursuant to this Agreement and that they shall treat the transaction
in all respects consistent with this determination and agreement.
VIII. DEFINITIONS
The terms defined in this Article VIII shall, for all purposes
of this Agreement, have the meanings specified or referred to in this Article
VIII.
"Acquisition Proposal" is defined in Section 3.03.
"Adverse Consequences" means all actions, suits, proceedings,
hearings, investigations, charges, complaints, claims, demands, injunctions,
judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs,
amounts paid in settlement, Liabilities, obligations, Taxes, liens, losses,
expenses, and fees, including court costs and attorneys' and accountants' fees
and expenses.
"Affiliate" has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Securities Exchange Act of 1934.
"Agreement" or "this Agreement" means this instrument as
originally executed and delivered, or, if amended or supplemented, as so
amended or supplemented.
"Balance Sheet Delivery Date" is defined in Section 1.06(c).
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"Benefit Plans" is defined in Section 5.02(l).
"Closing" is defined in Section 1.04(a).
"Closing Date" means the date on which the Closing is
completed.
"Closing Date Balance Sheet" is defined in Section 1.06(c).
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidential Information" means any information related to
the business and affairs of Xxxxxxx that is not already generally available to
the public.
"Confidentiality Agreement" means the letter agreement between
Xxxxxxx and Oxford.
"Constituent Corporations" is defined in Section 1.01.
"Current Financial Information" means the unaudited interim
financial statements prepared by Xxxxxxx for the first three quarters of 1996
and for the month of October, 1996, which have been furnished by Xxxxxxx to
Parent.
"Disclosure Schedule" means the written materials furnished to
Parent by Xxxxxxx or the Shareholders which are specifically designated as the
"Disclosure Schedule" and attached to this Agreement, or other written
materials furnished in accordance with Section 3.21 of this Agreement which are
specifically identified as the "Disclosure Schedule."
"Effective Date" is defined in Section 1.04(c).
"Environmental Law" is defined in Section 5.02(j).
"ERISA" means the Employment Retirement Income Security Act of
1974, as amended, and the rules and regulations promulgated thereunder.
"Escrow Agent" means at any particular time the person serving
as the escrow agent under the Escrow Agreement.
"Escrow Agreement" means the agreement of that name between
the Shareholders' Agent, the Surviving Corporation and the Escrow Agent, in the
form annexed hereto as Exhibit B.
"Escrow Shares" is defined in Section 1.06.
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"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Financial Accounting Standards
Board, applied on a consistent basis with past practices.
"Governmental Body" means any United States, state, county,
city, municipal, regional or local organ of government within the United
States, including all courts, boards and agencies of any thereof.
"Xxxx-Xxxxx-Xxxxxx" Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended.
"Indemnified Party" is defined in Section 6.05(b).
"Indemnifying Party" is defined in Section 6.05(b).
"Intellectual Property" means:
(a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof,
(b) all trademarks, service marks, trade dress,
logos, trade names, and corporate names, together with all translations,
adaptations, derivations, and combinations thereof and including all goodwill
associated therewith, and all applications, registrations, and renewals in
connection therewith,
(c) all copyrightable works, all copyrights, and all
applications, registrations, and renewals in connection therewith,
(d) all mask works and all applications,
registrations, and renewals in connection therewith
(e) all trade secrets and confidential business
information (including ideas, research and development, know-how, formulas,
compositions, manufacturing and production processes and techniques, technical
data, designs, drawings, specifications, customer and supplier lists, pricing
and cost information, and business and marketing plans and proposals),
(f) all computer software (including data and
related documentation),
(g) all other proprietary rights, and
(h) all copies and tangible embodiments thereof (in
whatever form or medium).
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"Knowledge," whether or not capitalized, means actual
knowledge after due inquiry, which (i) in the case of Xxxxxxx means knowledge
of any officer or director of Xxxxxxx Xxxxx Corporation, (ii) in the case of
any Shareholder means knowledge of such Shareholder, and (iii) in the case of
Parent means knowledge of Xxxxxx Xxxxxx or Xxx Xxxxxx.
"Law," whether or not capitalized, means statutes, rules,
regulations, codes, plans, injunctions, judgments, orders, decrees and rulings
of any Governmental Body.
"Liability," whether or not capitalized, means any liability
(whether known or unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or unliquidated,
and whether due or to become due), including any liability for Taxes.
"Xxxxxxx" means Xxxxxxx Xxxxx Corporation, a Michigan
corporation.
"Material Adverse Effect" means any change, effect or
circumstance that, individually or when taken together with all other such
changes, effects or circumstances that have occurred prior to the date of
determination of the occurrence of the Material Adverse Effect, (i) is or is
reasonably likely to be materially adverse to the business, assets (including
intangible assets), financial condition or results of operations of Xxxxxxx
taken as a whole, or (ii) will or is reasonably likely to prevent the
consummation of the transactions contemplated by this Agreement.
"Material Contracts" is defined in Section 5.02(o).
"MBCA" means the Michigan Business Corporation Act.
"Xxxxxxx Xxxxx" means Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx,
Inc.
"Newco" means L-E Acquisition, Inc., a Michigan corporation.
"1995 Company Balance Sheet" means the audited consolidated
balance sheet of Xxxxxxx at December 31, 1995 referred to in Section 5.02(d),
together with the related notes.
"Ordinary Course of Business," whether or not capitalized,
means the ordinary course of business of Xxxxxxx consistent with Lobdell's past
custom and practice.
"OSHA" means the Occupational Safety and Health Act of 1970,
as amended.
"Oxford" means The Oxford Investment Group, Inc., a Michigan
corporation.
"Parent" means BMG-MI, Inc., a Michigan corporation.
"Permitted Liens and Exceptions" means as of any given time.
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(1) liens and charges for then current state, county,
city, school or other municipal taxes, levies or assessments not then due and
payable or which remain payable without interest or penalty,
(2) easements, rights of way, title exceptions and
reservations, restrictions, zoning ordinances and other encumbrances which do
not adversely affect the use of the properties subject thereto by Xxxxxxx in
the Ordinary Course of Business,
(3) obligations and duties of Xxxxxxx, not
interfering with the Ordinary Course of Business, as tenant or subtenant under
any leases of real or personal property wherever situated, and
(4) customary and immaterial exceptions and
exclusions from any title insurance policy obtained pursuant to Section 3.05.
"Person," whether or not capitalized, means an individual,
corporation, partnership, limited liability company or partnership,
unincorporated organization, voluntary association, joint stock company, trust,
joint venture or Governmental Body.
"Reviewing Accountants" is defined in Section 1.06(d).
"Securities Act" means the Securities Act of 1933, as amended.
"Series A Preferred Stock" means the Series A Preferred Stock
of the Surviving Corporation.
"Series B Preferred Stock" means the Series B Preferred Stock
of the Surviving Corporation.
"Shareholders" means the persons designated as Shareholders on
the signature page of this Agreement.
"Shareholders' Agent" means X. Xxxxxxx Xxxxxxxxx, acting as
agent for the Shareholders pursuant to Section 7.11.
"Shareholders' Equity Adjustment Amount" is defined in Section
1.06(b).
"Subsidiaries" means the corporations or limited liability
companies in which Xxxxxxx or another Subsidiary owns at least a majority of
the outstanding voting stock or membership interests.
"Subsidiary Documents" has the meaning set forth in Section
5.02(a).
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"Survey" has the meaning set forth in Section 3.18(c).
"Surviving Corporation" is defined in Section 1.01.
"Tax" and "Taxes" means any federal, state, local, or foreign
income, gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under
Code Sec. 59A), customs duties, capital stock, franchise, profits, withholding,
social security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or
add-on minimum, estimated, or other tax of any kind whatsoever, including any
interest, penalty, or addition thereto, whether disputed or not.
"Third-Party Claim" has the meaning set forth in Section
6.05(b).
[This space intentionally left blank.]
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WITNESS the due execution of this Agreement and Plan of Merger
as of the day and year first above written.
BMG-MI, Inc. XXXXXXX XXXXX CORPORATION
By: By
--------------------------- ----------------------------------------
Xxxxxx Xxxxxx, President X. Xxxxxxx Xxxxxxxxx
Chairman of Chief Executive Officer
L-E ACQUISITION, INC.
By:
--------------------------- ------------------------------------------
Xxxxxx Xxxxxx, President X. Xxxxxxx Xxxxxxxxx, as
Shareholders' Agent
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SHAREHOLDER
SIGNATURE PAGE
TO
AGREEMENT AND PLAN OF MERGER
The undersigned hereby execute the Agreement and Plan of Merger (the
"Merger Agreement") dated as of November 14, 1996, by and between Xxxxxxx Xxxxx
Corporation, a Michigan corporation, BMG-MI, Inc., a Michigan corporation, L-E
Acquisition, Inc., a Michigan corporation, the parties named as Shareholders on
the signature page of the Merger Agreement, and X. Xxxxxxx Xxxxxxxxx, as
Shareholders' Agent.
1. The undersigned hereby agree to all of the terms and provisions of
the Merger Agreement and join and execute the Merger Agreement and hereby
authorize this Signature Page to be attached thereto.
2. The undersigned hereby agree to vote any and all shares of capital
stock of Xxxxxxx Xxxxx Corporation ("Xxxxxxx") held by the undersigned in favor
of the merger contemplated by the Merger Agreement and in favor of the Merger
Agreement, at any meeting of the shareholders of Xxxxxxx that may be called for
purposes of such approvals or otherwise, if such approvals are not obtained
through effective shareholder consents.
3. The undersigned hereby waive notice of and the holding of a
special meeting of the shareholders of Xxxxxxx to consider and act upon the
approval of the Merger Agreement and, in accordance with Section 407 of the
Michigan Business Corporation Act and the Articles of Incorporation of Xxxxxxx,
hereby adopt and approve the Merger Agreement and any and all transactions
necessary, desirable or convenient to effect and complete the merger pursuant
to the Merger Agreement.
Date:
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