STOCK PURCHASE AGREEMENT
By and Among
NOBLE INTERNATIONAL, LTD.,
XXXXXXX X. REASON, INDIVIDUALLY AND AS TRUSTEE
OF HIS REVOCABLE LIVING TRUST DATED APRIL 9, 1979,
and
THE XXXXXXX X. REASON IRREVOCABLE TRUST
FOR THE BENEFIT OF XXXXXXXX XXXXXXX AND
XXXXX XXXXXX DATED OCTOBER 12, 1992
and
MONROE ENGINEERING PRODUCTS, INC.
and
XXXXXX X. XXXXXXXXXXX
-------------------------
Dated January 1, 1996
-------------------------
TABLE OF CONTENTS
Page
Recitals......................................................................1
1. SALE OF SHARES AND REAL ESTATE.......................................... 1
1.1 Terms of the Sale of Shares.................................... 1
1.2 Terms of Sale of Real Estate................................... 6
1.3 Distribution to Sellers........................................ 7
2. CLOSING AND CLOSING DATE................................................ 8
3. INDIVIDUAL REPRESENTATIONS AND WARRANTIES OF SELLERS.................... 8
3.1 Authority...................................................... 8
3.2 Title.......................................................... 9
3.3 Shareholder Meeting............................................ 9
3.4 Employment and Deferred Compensation Agreement................. 9
4. JOINT REPRESENTATIONS AND WARRANTIES OF MONROE
AND REASON.............................................................. 9
4.1 Organization and Standing...................................... 10
4.2 Authorized Capital............................................. 10
4.3 Corporate Action............................................... 11
4.4 Financial Statement; Liabilities............................... 11
4.5 Title to Monroe Assets......................................... 12
4.6 Condition of Assets............................................ 13
4.7 Inventories.................................................... 13
4.8 Accounts Receivable............................................ 13
4.9 Accounts Payable............................................... 14
4.10 Products....................................................... 14
4.11 Litigation and Investigations.................................. 15
4.12 Taxes.......................................................... 16
4.13 Labor Relation................................................. 16
4.14 Insurance Coverage............................................. 17
4.15 Leases, Contracts and Other Commitments........................ 17
4.16 Business Restrictions.......................................... 18
4.17 No Material Adverse Change..................................... 19
4.18 Fees and Commission............................................ 20
4.19 Environmental Matters.......................................... 20
4.20 ............................................................... 23
4.21 No Misstatement or Omission.................................... 23
4.22 Disclosure Schedules........................................... 23
4.23 Intangible Personal Property................................... 24
4.24 Employee Benefit Plans......................................... 25
5. REPRESENTATIONS AND WARRANTIES OF NOBLE................................. 26
5.1 Organization and Standing...................................... 26
5.2 Corporate Action............................................... 26
5.3 Fees and Commissions........................................... 27
5.4 No Misstatement or Omission.................................... 27
5.5 Authority of Skandalaris....................................... 27
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6. CERTAIN UNDERSTANDINGS AND AGREEMENTS.................................. 28
6.1 Conduct of Monroe's Business.................................. 28
6.2 Advice of Adverse Change...................................... 31
6.3 Access........................................................ 31
6.4 Capital Stock................................................. 33
6.5 Monroe Board Activity......................................... 33
6.6 Effective Notice.............................................. 33
6.7 Stock Rights.................................................. 33
6.8 Mutual Purpose................................................ 33
6.9 Covenants Regarding Continuing Operations
of Monroe..................................................... 34
7. CONDITIONS TO SELLERS' OBLIGATIONS..................................... 38
7.1 Performance by Noble.......................................... 38
7.2 Absence of Litigation......................................... 39
7.3 Other Documents............................................... 39
7.4 Opinion of Counsel............................................ 39
8. CONDITIONS TO NOBLE'S OBLIGATIONS...................................... 40
8.1 Performance by Monroe and Sellers............................. 40
8.2 Resignations.................................................. 40
8.3 Opinion of Counsel............................................ 41
8.4 Absence of Litigation......................................... 41
8.5 Casualty Loss................................................. 41
8.6 Due Diligence................................................. 42
8.7 Employment and Deferred Compensation
Agreement..................................................... 42
8.8 Other Documents............................................... 42
8.9 338(h)(10) Election........................................... 43
8.10 Consents...................................................... 43
9. INDEMNITIES............................................................ 44
9.1 By Sellers.................................................... 44
9.2 By Noble...................................................... 45
9.3 Survival...................................................... 45
9.4 Claims Procedure.............................................. 46
10. TERMINATION............................................................ 50
11. ASSIGNMENT............................................................. 50
12. MISCELLANEOUS.......................................................... 50
12.1 Amendment..................................................... 50
12.2 Notices....................................................... 51
12.3 Counterparts.................................................. 52
12.4 Construction.................................................. 52
12.5 Disclosure Schedules.......................................... 53
12.6 Announcements................................................. 53
DOCUMENT EXHIBITS:
A1- Irrevocable Trust Promissory Note
A2- Reason Promissory Note
ii
A3- Guaranty of Xxxxxx X. Xxxxxxxxxxx
B1- Offer to Purchase Real Estate
B2- Land Contract
B3- Guaranty of Land Contract
C - Seller List
D - Employment and Deferred Compensation Agreement
E - Pledge Agreement
DISCLOSURE SCHEDULES
4.3 Articles and Bylaws of Monroe
4.4 Financial Statements
4.11 Litigation and Investigations
4.13 Employee Census
4.14 Insurance Coverage
4.15 Leases, Contracts and other Commitments
4.19 Environmental Matters
4.23 Intangible Personal Property
4.24 Employee Benefit Plans
iii
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made
effective as of this 1st day of January, 1996, by and among NOBLE INTERNATIONAL,
LTD., a Michigan corporation ("Noble"), XXXXXXX X. REASON, INDIVIDUALLY AND AS
TRUSTEE OF HIS REVOCABLE LIVING TRUST DATED APRIL 9, 1979 and THE XXXXXXX X.
REASON IRREVOCABLE TRUST FOR THE BENEFIT OF XXXXXXXX XXXXXXX AND XXXXX XXXXXX
DATED OCTOBER 12, 1992 (collectively referred to herein as the "Sellers"), who
own all of the issued and outstanding stock of Monroe Engineering Products,
Inc., and MONROE ENGINEERING PRODUCTS, INC., a Michigan corporation ("Monroe"),
and XXXXXX X. XXXXXXXXXXX ("Skandalaris").
Noble desires to acquire and the Sellers desire to sell all of
the issued and outstanding shares in Monroe pursuant to the terms and conditions
of this Agreement (the "Sale") subject to the representations, warranties,
covenants and conditions contained herein.
1. SALE OF SHARES AND REAL ESTATE.
1.1 Terms of the Sale of Shares. Subject to the terms
and conditions of this Agreement, Noble shall purchase and the Sellers shall
sell all of the shares of Monroe owned by Sellers, pursuant to the following
terms:
(a) At the Closing as hereinafter defined the Trustee
of the Xxxxxxx X. Reason Irrevocable Trust for the Benefit of
Xxxxxxxx Xxxxxxx and Xxxxx Xxxxxx dated October 12, 1992 (the
"Irrevocable Trust") shall endorse and deliver Certificate
Number 11 representing 592 shares
of Series A Non-Voting Stock in Monroe to Noble. The
consideration for the sale of the Irrevocable Trust's shares
(the "Trust Consideration") shall be Two Million Two Hundred
Thirty-One Thousand and 00/100 Dollars ($2,231,000.00)
payable, subject to the terms and conditions of this
Agreement, as follows:
(i) (A) On or before April 30, 1996, Noble
shall pay to the Irrevocable Trust the sum of Five
Hundred Seventy-Seven Thousand and 00/100 Dollars
($577,000.00), payable in cash in the form of a
cashier's check or wire transfer;
(B) On or before June 15, 1996,
Noble shall pay to the Irrevocable Trust the sum of
Five Hundred Seventy-Seven Thousand and 00/100
Dollars ($577,000.00) ("June 15 Irrevocable Trust
Payment"), payable in cash in the form of a
cashier's check or wire transfer;
(C) On or before December 23, 1996,
Noble shall pay to the Irrevocable Trust the sum of
Fie Hundred Seventy-Seven Thousand and 00/100 Dollars
($577,000.00) ("December 23 Irrevocable Trust
Payment"), payable in cash in the form of a cashier's
check or wire transfer;
(D) On or before April 30, 1997,
Noble shall pay to the Irrevocable Trust the sum of
Five Hundred Thousand and 00/100 Dollars
($500,000.00)
2
("1997 Payment"), payable in the form of a
cashier's check or wire transfer;
(ii) The payments to be made to the Irrevocable
Trust pursuant to Section 1.1(a)(i) above shall be
made pursuant to a Promissory Note ("Irrevocable
Trust Note"), substantially in the form of Exhibit
A-1 attached hereto, in the face amount of Two
Million Two Hundred Thirty-One Thousand and 00/100
Dollars ($2,231,000.00);
(iii) The Irrevocable Trust Note shall be without
interest, provided however, in the event of default,
which is not cured within the applicable cure period,
the Irrevocable Trust Note shall bear interest at two
percent (2%) above the prime rate of interest of
Comerica Bank then in effect;
(iv) The Irrevocable Trust Note shall be secured
as follows:
(A) The June 15 Irrevocable Trust
Payment shall be secured by the pledge of shares
being acquired by Noble in Monroe;
(B) The December 23 Irrevocable
Trust Payment shall be secured by a letter of credit
from Comerica Bank (drawn under the Uniform Customs
and Practices Act), in form and substance acceptable
to the Irrevocable Trust;
(C) The 1997 Payment shall be
secured by
3
the Personal Guaranty of Xxxxxx X. Xxxxxxxxxxx, in
substantially the form of Exhibit A-3, attached
hereto.
(b) At the Closing, as hereinafter defined, Xxxxxxx
X. Reason, Individually and as Trustee of the Xxxxxxx X.
Reason Revocable Living Trust dated April 9, 1979, ("Reason")
shall endorse and deliver Certificate Number 10 representing
944 shares of Series B Voting stock and Certificate Number 12
representing 314 shares of Series A Non-Voting stock in Monroe
to Noble. The consideration for the sale of Reason's shares
(the "Sale Consideration") shall be Four Million One Hundred
Nineteen Thousand and 00/100 Dollars ($4,119,000.00), payable
subject to the terms and conditions of this Agreement, as
follows:
(i) (A) On or before April 30, 1996, Noble
shall pay to Reason the sum of One Million Nine
Hundred Twenty-Three Thousand and 00/100 Dollars
($1,923,000.00), payable in cash in the form of a
cashier's check or wire transfer;
(B) On or before June 15, 1996, Noble
shall pay to Reason the sum of One Million Nine
Hundred Twenty-Three Thousand and 00/100 Dollars
($1,923,000.00) ("June 15 Reason Payment"), payable
in cash in the form of a cashier's check or wire
transfer;
4
(C) On or before December 23, 1996,
Noble shall pay to Reason the sum of Two Hundred
Seventy-Three Thousand and 00/100 Dollars
($273,000.00) ("December 23 Reason Payment"), payable
in cash in the form of a cashier's check or wire
transfer;
(ii) The payments to be made to Reason pursuant
to Section 1.1(b)(i) above shall be made pursuant to
a promissory note (the "Reason Note"), substantially
in the form of Exhibit A-2, attached hereto, in the
face amount of Four Million One Hundred Nineteen
Thousand and 00/100 Dollars ($4,119,000.00);
(iii) The Reason Note shall be without interest,
provided, however, in the event of a default, which
is not cured within the cure period, the Reason Note
shall bear interest at two (2%) percent above the
prime rate of interest of Comerica Bank then in
effect; and
(iv) The Reason Note shall be secured as follows:
(A) The June 15 Reason Payment shall
be secured by the pledge of shares being acquired by
Noble in Monroe;
(B) The December 23 Reason Payment
shall be secured by the letter of credit from
Comerica
5
Bank (drawn under the Uniform Customs and Practices
Act) ("Letter of Credit"), in form and substance
acceptable to Reason, as described in Section
1.1(b)(iv)(B) above.
(c) (i) The pledge of shares shall automatically
terminate upon the Irrevocable Trust's receipt of the June 15
Irrevocable Trust Payment and Reason's receipt of the June 15
Reason payment.
(ii) The aforementioned Letter of Credit shall
also secure the payment of a certain Bonus to Reason
pursuant to the Employment and Deferred Compensation
Agreement which is described in Section 3.4 of this
Agreement.
(d) For purposes of this Agreement, the Irrevocable
Trust Note and the Reason Note are sometimes collectively
referred to as "Notes."
1.2 Terms of Sale of Real Estate. In addition to the purchase
of shares of Monroe by Noble, Monroe shall acquire the real property owned by
Reason and presently utilized by Monroe, commonly known as 8643 M-119, and
located in the Township of Little Traverse, County of Emmet, State of Michigan
(the "Property") pursuant to an Offer to Purchase Real Estate in substantially
the form of the Offer to Purchase Real Estate attached hereto as Exhibit B-1 and
containing the following terms:
(a) Monroe is purchasing the Property from Reason "as
is";
6
(b) On or before April 30, 1996 ("Land Contract
Closing Date"), Reason, as the Land Contract Vendor, and
Monroe, as the Land Contract Vendee, shall execute a Land
Contract in the amount of Five Hundred Thousand and 00/100
($500,000.00) Dollars, for a two (2) year term, substantially
in the form of the Land Contract attached hereto as Exhibit
B-2 (the "Land Contract");
(c) All prorations shall be on a "due date" basis
made on the Land Contract Closing Date and Reason shall
provide an Owners Policy of title insurance from Northern
Title Company in the face amount of Two Hundred Thousand and
00/100 ($200,000.00) Dollars, the title policy may contain
only the standard exceptions and be on the standard form];
(d) At the Land Contract Closing Date, Reason shall
execute a Warranty Deed for the property to be held in escrow
by Stone, Biber & X'Xxxxx, P.C. pursuant to the terms of the
Land Contract.
(e) At the Land Contract Closing Date, Xxxxxx X.
Xxxxxxxxxxx ("Skandalaris"), a shareholder, director and the
Treasurer of Noble, shall execute a Guaranty of the Land
Contract in substantially the form of the Guaranty of Land
Contract attached hereto as Exhibit B-3.
1.3 Distribution to Sellers. Monroe and/or Noble acknowledge
that there will be a distribution to Sellers, in the amount of One Million One
Hundred Twenty-Four Thousand One Hundred
7
Six and 70/100 Dollars ($1,124,106.70) ("Sum"), subsequent to the date of this
Agreement. This Sum represents the total accrued Subchapter "S" Distribution to
which Sellers were entitled from 1995.
2. CLOSING AND CLOSING DATE
The closing of the transactions contemplated by this
Agreement ("Closing") shall take place at 10:00 a.m., local time, on January 2,
1996 ("Closing Date") at the offices of Stone, Biber & X'Xxxxx, P.C., 0000 Xxxx
Xxxxxx Xxxxx, Xxxxx 000, Xxxx, Xxxxxxxx 00000, or at such other time, place and
date as shall be mutually agreed on by Noble and the Sellers. At the Closing,
the parties shall deliver to each other the certificates, opinions, undertakings
and other documents required by this Agreement.
3. INDIVIDUAL REPRESENTATIONS AND WARRANTIES OF SELLERS. Each
Seller represents and warrants to Noble as follows:
3.1 Authority. He or it has full power and authority to
execute this Agreement and consummate the transactions contemplated hereby, and
this Agreement is binding upon such Seller and is enforceable in accordance with
its terms. The execution and delivery of this Agreement, consummation of the
transactions contemplated hereby and compliance with the terms of this Agreement
do not and will not conflict with the terms of any agreement or other instrument
to which such Seller is a party or by which such Seller or any of his or its
property is bound, and to such Seller's knowledge, do not and will not conflict
with any existing applicable law, rule, regulation, judgment, order or decree of
any
8
government, governmental instrumentality or court, domestic or foreign, having
jurisdiction over such Seller, or any of his or its property.
3.2 Title. Each Seller has good and marketable title to all of
the shares of Monroe Common Stock ("Monroe Common Stock") listed on Exhibit C as
owned by such Seller, free and clear of all liens (including tax liens),
forfeitures, pledges, penalties, charges, encumbrances, buy-sell agreements,
rights of first refusal, equities or claims or rights of others whatsoever.
Collectively, the Monroe Common Stock owned by such Sellers is all of the
outstanding capital stock of Monroe and has been validly issued, is fully paid
and is nonassessable.
3.3 Shareholder Meeting. Each of the Sellers will use his or
its best efforts to complete the transactions contemplated by this Agreement and
will cause all of the shares of Monroe capital stock controlled by such Sellers
to be voted in favor of the transactions contemplated by this Agreement at any
meeting of the shareholders of Monroe in which such matter is presented or
execute a consent resolution to the extent such matter is presented to the
shareholders of Monroe in such manner.
3.4 Employment and Deferred Compensation Agreement. Reason
will enter into an employment and deferred compensation agreement with Monroe
substantially in the form of Exhibit D attached hereto.
4. JOINT REPRESENTATIONS AND WARRANTIES OF MONROE AND REASON.
Monroe and Reason, jointly and severally, represent,
9
warrant, and covenant to Noble that, except to the extent as may be set forth in
a written disclosure schedule attached hereto ("Disclosure Schedule"), each of
the following statements is true and correct as of the date of this Agreement
and as of the Closing Date:
4.1 Organization and Standing. Monroe is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Michigan. Monroe has all requisite corporate power and authority and all
licenses, franchises, permits and authorizations to own and lease its properties
and assets and to carry on its business as and where presently conducted.
4.2 Authorized Capital. The authorized capital stock of Monroe
consists entirely of 2,400 shares of Series A Non-Voting Common and 2,600 shares
of Series B Voting Common, of which 906 shares of Series A Non-Voting Common and
944 shares of Series B Voting Common have been issued and are outstanding, and
no shares of either series are held in Monroe's treasury. All of the outstanding
shares of Monroe capital stock have been validly issued, are fully paid and
nonassessable. There are no outstanding subscriptions, options, convertible
securities or other agreements or commitments relating to the capital stock of
Monroe. Set forth on Exhibit C is a complete and accurate list of the Monroe
Common Stock owned by each Seller and their respective stock certificate numbers
related thereto (the "Seller List"). Sellers shall cause Monroe to provide Noble
with an amended Seller List whenever there
10
are any additions, deletions or other changes prior to the Closing Date to the
original list set forth on Exhibit C.
4.3 Corporate Action. Disclosure Schedule 4.3 attached hereto
consists of copies of Monroe's Articles of Incorporation as amended and Monroe's
Bylaws. Neither the execution and delivery of this Agreement by Sellers, nor
compliance with its terms, will result in the breach or violation of the
Articles of Incorporation or Bylaws of Monroe, or of any agreement, indenture,
mortgage, lease or other obligation or instrument, or any judgment, order or
decree or result in the acceleration of or requirement to prepay any
indebtedness of Monroe for borrowed money or otherwise pursuant to undertakings
to which Monroe is a party or to which Monroe or any of the Monroe Assets, as
defined below, may otherwise be bound. To the best of Reason and Monroe's actual
knowledge without inquiry, the Corporation has been operated by Reason legally
and in compliance with all conditions and requirements of all applicable zoning
laws, federal, state and local statutes, ordinances, rules, regulations,
permits, policies guidelines, orders, franchises, authorizations and consents.
4.4 Financial Statement; Liabilities. Disclosure Schedule 4.4
attached hereto consists of copies of Monroe's audited Financial Statements as
at and for the year ended December 31, 1995, with the report thereon of Xxxx and
Xxxxxx, certified public accountants (the "Financial Statements"). The Financial
Statements (i) have been prepared in accordance with generally accepted
accounting principles applied on a basis consistent with preceding
11
years, (ii) fairly present the financial position of Monroe, and the results of
operations as at and for the periods then ended, and (iii) disclose all
liabilities and obligations of Monroe as of the date of the balance sheet
contained therein, as required by generally accepted accounting principles.
Sellers shall provide copies of any other financial reports or statements
whether audited or unaudited for periods subsequent to those set forth in the
Financial Statements when and as such reports or statements are prepared. Such
additional statements and reports shall be considered a part of the Financial
Statements.
The December 31, 1995 balance sheet of Monroe reflects all of
the assets and properties, real and personal, used by Monroe in its business or
otherwise held by Monroe, except for (i) assets acquired or disposed of in the
ordinary course of business since December 31, 1995; and (ii) assets not
required under generally accepted accounting principles to be reflected thereon
(collectively, the "Monroe Assets").
4.5 Title to Monroe Assets. Except as specifically set forth
in the Financial Statements, Monroe owns, free and clear of all liens and
encumbrances, the Monroe Assets, including, without limitation, licenses,
equipment, trade fixtures, lease rights, leasehold improvements and inventory,
free and clear of any mortgage, pledge, lien, conditional sale agreement,
encumbrance, restriction or charge of any kind. Reason owns free and clear of
all liens and encumbrances the Property subject to the Offer to Purchase
attached hereto as Exhibit D, including, without
12
limitation, licenses, equipment, trade fixtures, lease rights, and leasehold
improvements, free and clear of any mortgage, pledge, lien, conditional sale
agreement, encumbrance, restriction or charge of any kind.
4.6 Condition of Assets. All buildings, equipment, machinery,
vehicles, furniture, fixtures and leasehold improvements, including those in
which Monroe has a leasehold interest, owned or used by Monroe in its business
and which are material to the operation thereof are now and on the Closing Date
will be (a) in Monroe or Reason's, as the case may be, possession and (b) in
good, useable condition and repair, ordinary wear and tear excepted.
4.7 Inventories. The inventories of Monroe (whether finished,
work in process or raw materials) shown on the Financial Statements or
thereafter acquired are all items of a quality usable or saleable in the
ordinary and usual course of Monroe's business, and are merchantable and fit for
the particular purpose for which they are intended; except for inventory items
which are obsolete or not usable or saleable in the ordinary course of business
which have been written down or adequate reserves or allowances therefor have
been provided as shown in the Financial Statements. The values at which
inventories are carried reflect the inventory valuation policy of Monroe which
is consistent with generally accepted accounting principles applied on a
consistent basis.
4.8 Accounts Receivable. All of the accounts receivable of
Monroe shown on its Financial Statements or thereafter acquired
13
arose and are collectible in the ordinary and usual course of business of
Monroe, except that accounts receivable, the collection of which are doubtful or
which are subject to a defense or set-off, have been written down to an amount
not in excess of realizable market value or adequate reserves or allowances
thereof have been provided. The values at which accounts receivable are carried
reflect the accounts receivable policy of Monroe, which is consistent with
Monroe's past practices and is in accordance with generally accepted accounting
principles applied on a consistent basis.
4.9 Accounts Payable. The accounts and notes payable and
accrued expenses reflected in the balance sheets constituting a part of the
Financial Statements, and the accounts and notes payable and accrued expenses
incurred by Monroe subsequent to the date thereof, are, in their entirety, valid
claims that arose in the ordinary course of business. Since December 31, 1995
the accounts and notes payable and accrued expenses of Monroe have been
maintained on a current basis, and Monroe will pay its accounts and notes
payable on a current basis through the date of the Closing.
4.10 Products. All products heretofore sold by Monroe and all
inventories of Monroe were manufactured or developed in good and workmanlike
fashion. There have been no warranty or product liability claims made against
Monroe, and Monroe has not incurred warranty costs, which individually exceed
One Thousand Dollars ($1,000.00), whether or not covered by insurance, and, to
the best knowledge of Sellers, there are no facts which give rise
14
to any such claims. As used herein, "Warranty Costs" shall mean the costs and
expenses of servicing, repairing and/or replacing, or allowances for service,
repair or replacement, of defective or allegedly defective or improperly
selected or worn products or parts or components thereof manufactured or sold by
Monroe, together with such legal liability, if any, as may exist in connection
with sales of products, whether such costs and expenses relate to or arise out
of claims or causes of action which assert causes sounding in tort, contract or
warranty, or any combination of the foregoing. To the knowledge of Reason and
Monroe, there are no defects in the design or construction or manufacture of the
products currently sold by Monroe in the conduct of its business which would
adversely affect the performance and quality of such products.
4.11 Litigation and Investigations. Except as disclosed in
Disclosure Schedule 4.11 attached hereto, there are no actions, suits,
proceedings or investigations pending (or, if filed, then served) or, to the
knowledge of Reason and Monroe threatened against Monroe or with respect to any
current or former assets, business or properties of Monroe, nor are there any
judgments, decrees, orders, rulings, writs or injunctions specifically referring
to Monroe (either by reason of adherence or default) may have, individually or
in the aggregate, a material adverse affect on the business, properties, assets
or financial condition of Monroe, taken as a whole, or relate in any respect to
the transactions contemplated by this Agreement. Neither Reason or
15
Monroe has actual knowledge of any other facts or circumstances which may result
in any future civil, administrative or criminal proceedings against Monroe.
4.12 Taxes. All tax returns including without limitation,
income, sales, single business, payroll, withholding and personal property tax
returns required to be filed by Monroe on or prior to the Closing Date with the
United States or any state or any other governmental agency or authority have
been duly prepared and filed and were true, correct and complete. All such taxes
due by reason of the operations conducted by Monroe or the Sellers prior to the
Closing Date have been paid by Monroe or Sellers. Except as otherwise disclosed
on Disclosure Schedule 4.11, Reason has no knowledge of any pending examination
or proceeding by any authority or agency relating to the assessment or
collection of any such taxes, interest or penalties thereon, nor does Reason
know of any basis for any such assessment.
4.13 Labor Relation. Monroe is not a party to any collective
bargaining agreement or other contract or understanding with any labor or
employees' union, and there are no disputes, claims or grievances involving
employees of Monroe or by others concerning employment with Monroe threatened,
pending against or otherwise affecting Monroe. Monroe is not a party to any
pending unfair labor practice charge nor does there exist any facts which would
provide a basis for the filing of such a charge. Disclosure Schedule 4.13
attached hereto contains a list of all of the employees of Monroe, together with
a statement of the current
16
annual or weekly compensation thereof and any bonus or other benefits payable
thereto.
4.14 Insurance Coverage. Monroe presently maintains liability,
casualty, property loss and other insurance coverage upon its properties and
with respect to the conduct of its business. Disclosure Schedule 4.14 attached
hereto sets forth a complete and correct list of: (i) all insurance policies
maintained by Monroe, identifying the insurance company, type of coverage and
annual premium for each, along with true and complete copies of the actual
policy or policies, and (ii) three years of loss experience history. Such
policies are in full force and effect, and all premiums due thereon prior to or
on the Closing Date have been paid or accrued. Monroe has complied in all
respects with the provisions of such policies.
4.15 Leases, Contracts and Other Commitments. Disclosure
Schedule 4.15 attached hereto lists and contains true and complete copies of the
following contracts and commitments of Monroe that are in effect as of the date
this Agreement is executed and that will remain in effect on the Closing Date:
(a) all lease agreements, as amended, pertaining to
the business of Monroe including the execution date and all of the parties with
respect to each lease and the location of the property relating to each lease;
(b) all material contracts or commitments for the
performance or receipt of services or for the purchase, sale, lease, license,
use or acquisition of real or personal property of
17
any kind or character, except for (i) purchase orders for inventory which are in
the ordinary course of Monroe's business as customarily conducted, (ii) other
purchase orders for furniture, fixtures or equipment which, in the aggregate,
involve less than $25,000 and (iii) contracts terminable at will by Monroe upon
thirty (30) days notice;
(c) all written employment contracts and consulting
agreements;
(d) all written agreements with sales agents,
purchasing agents, distributors, dealers and representatives;
(e) all other leases and subleases of any property,
real or personal, with respect to which Monroe is either lessor or lessee;
(f) all loan or credit agreements and any agreements
of guarantee, indemnity or suretyship; and
(g) any other agreement which is material to the
operation of Monroe's business. Monroe is not in material default under any and
all contracts and other commitments to which it is a party or by which it is
bound, which would have a material adverse effect upon the financial condition
of Monroe.
4.16 Business Restrictions. Monroe is not restricted from
conducting its business in any location by agreement or court decree. Monroe
does not have any problem in obtaining in a timely manner and at market prices
any and all materials, supplies and equipment used in its business, and Sellers
have no reason to believe that Monroe's business may, as a result of the
transactions
18
contemplated by this Agreement or otherwise, have problems with respect to the
availability of such materials, supplies and equipment. Monroe does not have any
obligation outside of the ordinary course of business to accept any returns from
or make allowances to any customers with respect to its business. Monroe has not
granted any power of attorney (revocable or irrevocable) with respect to its
business to any person, firm or corporation for any purpose whatsoever.
4.17 No Material Adverse Change. Since December 31, 1995,
there has been no material adverse change in the business, operations,
prospects, properties or financial condition of Monroe, or any circumstance
which, by reason of passage of time or otherwise, may reasonably be expected to
result in any such material adverse change. Since December 31, 1995, Monroe has
not:
(a) sold, transferred or canceled any lease, license,
patent, trademark, trade name or other intangible asset, or canceled any
receivables, debts or claims, which has resulted in a material adverse change to
Monroe;
(b) loaned or borrowed any money or mortgaged,
pledged or subjected to any lien, charge or other encumbrance in favor of any
other party any of its assets, tangible or intangible;
(c) incurred or agreed to incur any liabilities or
obligations under leases or other commitments that have had or will have a
material adverse effect on Monroe's business, assets or financial condition;
(d) except to the extent disclosed on the Financial
19
Statements and as allowed under Section 1.3, paid any bonuses to, or increased
or provided for any increase in the compensation (contingent or otherwise) of
any officer, director or key employee, or in the pension, profit sharing,
deferred compensation, insurance, medical or similar benefits paid or payable to
or for any such officer or employee;
(e) suffered any labor trouble or any damage,
destruction or loss (whether or not covered by insurance) which in either case
may hereafter have a material adverse effect on its business, assets, financial
condition or earnings; or
(f) except to the extent disclosed on the Financial
Statements and as allowed under Section 1.3, paid any dividend or made any
distribution as such to Sellers.
4.18 Fees and Commission. Neither Monroe nor any Seller has
agreed to pay or become liable to pay any broker's, finder's or originator's
fees or commission by reason of services alleged to have been rendered for or at
the instance of any Seller in connection with this Agreement and the
transactions contemplated hereby.
4.19 Environmental Matters. Except as disclosed in Disclosure
Schedule 4.19 attached hereto:
(a) To the best of the knowledge and without inquiry
of Reason and Monroe, their properties are currently in compliance with all
federal or state hazardous waste laws;
(b) All underground storage tanks or containers of
any nature located on the properties of Monroe or Reason or located
20
on such properties and subsequently removed or filled are shown on Disclosure
Schedule 4.19;
(c) To the best of the knowledge without inquiry of
Reason and Monroe, there are no polychlorinated biphenyls (PCBs) located upon or
in the properties of Monroe or Reason, including but not limited to any
electrical transformers, flares and light fixtures with bomb blasts, cooling
oils, or any other similar equipment or device of any nature;
(d) To the best of the knowledge without inquiry of
Reason and Monroe, there are no conditions likely to exist in the foreseeable
future which would require or are likely to require clean up, removal, remedial
action, or other responsive action pursuant to any federal, state or local
environmental laws by Sellers or Monroe, or which would subject Noble or Monroe
to damages, penalties, injunctive relief or clean up costs under any such
environmental laws;
(e) To the best of the knowledge without inquiry of
Reason and Monroe, no permits, licenses or approvals are required under any
federal, state or local environmental laws relative to the properties of Monroe
or Reason;
(f) The properties of Monroe and Reason are not
subject to any judgment, decrees, order or citation which relates to or arises
out of a violation of any federal, state or local environmental laws, or that
requires Monroe or Reason to clean up, remove or take remedial action or other
responsive action pursuant to any federal, state or local environmental laws;
21
(g) Neither Monroe nor Reason are currently a party
to any litigation or administrative proceeding by a private party, governmental
body or agency, which asserts that Monroe has violated or is violating any
federal, state or local environmental law, or which asserts that Monroe or
Reason is required to clean up, remove, take remedial action or other responsive
action pursuant to any federal, state or local environmental law;
(h) Reason has no actual knowledge of any litigation
or administrative proceedings threatened against Monroe or Reason, by any
private party, governmental body or agency which asserts that any of them have
violated or is violating any federal, state, or local environmental law, or
which asserts that any of them is required to clean up, remove, take remedial
action or other responsive action pursuant to any federal, state or local
environmental law;
(i) There are not now, nor, to the best of the actual
knowledge of Reason and Monroe, has there ever been any substances classified as
hazardous, or toxic under any federal, state or local environmental law, stored,
deposited, treated, recycled or disposed of on, under, or at the properties of
Monroe and Reason; and
(j) For the purpose of this Agreement and all related
documentation, the term "federal or state hazardous waste laws" shall mean all
federal and state laws including statutes, regulations, rules and other
governmental restrictions and requirements, relating to environmental pollution,
contamination or
22
other impairment of any nature, any hazardous or other toxic substances of any
nature, whether liquid, solid and/or gaseous, including smoke, vapor, fumes,
soot, acids, alkalis, chemical, wastes, by-products, and recycled materials.
These Environmental Laws shall include but not be limited to the Federal Solid
Waste Disposal Act, the Federal Clean Air Act, the Federal Clean Water Act, the
Federal Resource Conservation and Recovery Act of 1976, the Federal
Comprehensive Environmental Responsibility Cleanup and Liability Act of 1980,
regulations of the Environmental Protection Agency, regulations of the Nuclear
Regulatory Agency, regulations of any state department of natural resources or
state environmental protection agency now or at any time hereafter in effect and
local health department ordinances.
4.20 [Reserved]
4.21 No Misstatement or Omission. No representation or
warranty by any Seller or by Sellers jointly and severally in this Agreement,
and no Exhibit, Disclosure Schedule or certificate furnished or to be furnished
by Sellers pursuant hereto contains or will contain any untrue statement of a
material fact, or omits or will omit to state a material fact required to be
stated therein or necessary to make the statements contained therein not
misleading. Any fact disclosed to Noble on any Disclosure Schedule hereto shall
be deemed to be disclosed for purposes of all other Disclosure Schedules hereto.
4.22 Disclosure Schedules. Sellers will supplement each
Disclosure Schedule as required to reflect changes or additions to
23
the information contained therein and required to be disclosed to Noble
hereunder immediately upon the occurrence of such changes or additions. Further,
the parties hereto agree that Sellers shall have until March 30, 1996 in order
to finalize all of the Disclosure Schedules.
4.23 Intangible Personal Property. Disclosure Schedule 4.23
attached hereto lists a description of the material items of intangible personal
property owned by, or used in the business of, Monroe, including, but not
limited to: (i) all patents, patent applications, registered tradenames,
registered trademarks, registered service marks, copyright registrations, all
applications for any of the foregoing, and any other tradenames, trademarks, or
service marks currently used in the business of Monroe; and (ii) a true and
correct list of all licenses or similar agreements to which Monroe is a party
either as a licensee or licensor of any such intangible personal property (the
intangible personal property described in (i) and (ii) being referred to herein,
collectively, as the "Patent and Trademark Rights"). Except as disclosed in
Disclosure Schedule 4.23:
(a) Monroe is the owner of all right, title and
interest in and to each such registered Patent and Trademark Rights, free and
clear of all Encumbrances;
(b) No officer, director or stockholder, or, to
Reason's or Monroe's knowledge, stockholder or employee of Monroe, nor, to
Reason's or Monroe's knowledge, any spouse, child or other
24
relative or affiliate thereof, owns directly or indirectly, in whole or in part,
any of the Patent and Trademark Rights;
(c) No actions or other judicial or adversary
proceedings nor any adverse claims concerning any of the Patent and Trademark
Rights have been initiated or made or, to Reason's or Monroe's knowledge,
threatened;
(d) Monroe has the right and authority to use the
Patent and Trademark Rights in connection with the conduct of its business in
the manner presently conducted;
(e) There are no outstanding, nor, to Reason's actual
knowledge, any threatened, disputes or other disagreements with respect to any
licenses or similar agreements or arrangements described in Disclosure Schedule
4.23; and
(f) Monroe has not received notice that the conduct
of the business of Monroe as now conducted conflicts with any patents,
trademarks, tradenames or service marks or copyrights of others in any way
which, individually or in the aggregate, would have a material adverse effect.
4.24 Employee Benefit Plans.
(a) Disclosure Schedule 4.24 contains a list of all
employee benefit plans as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974 ("ERISA") and other retirement, profit-sharing,
deferred compensation, severance, bonus, stock option, stock purchase and
employee benefit plans and arrangements (individually, a "Plan," and,
collectively, the "Plans") which Monroe or any other trade or business under
common
25
control with Monroe [within the meaning of Section 414(b), (c), (m) or (o) of
the Internal Revenue Code of 1986, as amended (the "Code")] sponsors, maintains
or contributes to, setting forth the names and addresses of the Plans'
administrators, their trustees and related trust agreements and insurance
contracts (including all amendments and supplements thereto).
(b) Except as described in Disclosure Schedule 4.24
neither Monroe nor any other trade or business under common control with Monroe
[within the meaning of Sections 414(b), (c), (m) or (o) of the Code] sponsors,
maintains or contributes to an Plan that provides retiree medical or retiree
life insurance coverage to former employees of Monroe.
5. REPRESENTATIONS AND WARRANTIES OF NOBLE. Noble represents,
warrants and covenants to Monroe and Sellers as follows and Skandalaris
represents, warrants and covenants to Monroe and Sellers as it relates to
Section 5.5 as follows:
5.1 Organization and Standing. Noble is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Michigan.
5.2 Corporate Action. Noble has full corporate power and
authority to enter into this Agreement and to carry out the transactions
contemplated hereby, and all corporate proceedings required to be taken by or on
its part to authorize the execution, delivery and performance of this Agreement
have been duly and properly taken. The execution and delivery of this Agreement
by Noble and compliance by it with its terms, will not result in any
26
breach or violation of its Articles of Incorporation or Bylaws, or of any
agreement, instrument, judgment or decree to which Noble is a party or may
otherwise be subject.
5.3 Fees and Commissions. Except for a fee which may be due to
River Capital, Inc. which Noble agrees to pay, Noble has not agreed to pay or
become liable to pay any broker's, finder's or originator's fees or commission
by reason of services alleged to have been rendered in connection with this
Agreement and the transactions contemplated hereby.
5.4 No Misstatement or Omission. No representation or warranty
by Noble in this Agreement, and no Exhibit, Disclosure Schedule or certificate
furnished or to be furnished by Noble pursuant hereto contains or will contain
any untrue statement of a material fact, or omits or will omit to state a
material fact required to be stated therein or necessary to make the statements
contained therein not misleading.
5.5 Authority of Skandalaris. Skandalaris has full power and
authority to execute this Agreement and consummate the transactions contemplated
hereby applicable to Skandalaris, and this Agreement is binding upon Skandalaris
and as it relates to Skandalaris, is enforceable in accordance with its terms.
The execution and delivery of this Agreement, consummation of the transactions
contemplated hereby and compliance with the terms of this Agreement applicable
to Skandalaris do not and will not conflict with the terms of any agreement or
other instrument to which Skandalaris is a party or by which Skandalaris or any
of his
27
property is bound, and to Skandalaris's knowledge, do not and will not conflict
with any existing applicable law, rule, regulation, judgment, order or decree of
any government, governmental instrumentality or court, domestic or foreign,
having jurisdiction over Skandalaris, or any of his property.
6. CERTAIN UNDERSTANDINGS AND AGREEMENTS.
6.1 Conduct of Monroe's Business. From and after the date
hereof and until the Closing Date, Sellers shall cause Monroe to use all
reasonable efforts to conduct its business in substantially the same manner as
heretofore conducted and maintain its business organizations intact, retain its
present employees and preserve the confidence of its suppliers, representatives
and customers. From and after the date hereof, Sellers shall cause Monroe to
not, without the prior written consent of Noble:
(i) enter into any contract of employment
with any person providing for annual compensation in
excess of $20,000.00 (other than employees paid on an
hourly basis), or grant any increase in the rate of
pay, salaries, or other compensation of any of its
officers, directors or employees, or grant any
increase in the other benefits to which such officers
and employees are presently entitled, or grant or pay
any bonus to any of such officers or employees except
for salary increases or bonuses to employees other
than directors or officers not in
28
excess of 5% of their present base level of
compensation;
(ii) amend or modify any employee benefit plan in
any manner whatsoever, including any change that
would affect the assets, liabilities or benefits
under the plans;
(iii) except as provided in Section 1.3, declare,
set aside or pay any dividend or make any
distribution, in respect of its common stock, or
authorize, effect, recommend or propose to the
shareholders of Monroe, any merger, consolidation,
acquisition of assets, disposition of assets, change
in capitalization or any comparable event (other than
the transactions contemplated in this Agreement) or
any amendment to the Articles of Incorporation or
Bylaws of Monroe as in effect on the date hereof;
(iv) incur any capital expenditures in excess of
$10,000.00 in the aggregate or enter into any
contracts or commitments for such capital
expenditures; or execute any lease for realty or
personalty, except for renewal of current leases;
(v) increase the percentage or rate of
commissions or other payments made to sales agents,
distributors, dealers and representatives; (vi)
borrow any money from any party or make
29
any loans to or borrowings from the shareholders of
Monroe;
(vii) sell, mortgage, encumber or lease (as
lessor or lessee) any properties or assets, except
for sales of inventory in the ordinary course and
renewals of current leases;
(viii) fail to maintain such liability, casualty,
property loss and other such insurance coverage upon
its properties and with respect to the conduct of its
business, in such amounts, with such insurance
carriers and to such extent and covering such risks
as are maintained on the date hereof;
(ix) fail to maintain insurance covering all its
assets and properties which are material to its
business, fail to collect all insurance proceeds
related to a casualty loss, or fail to maintain its
books of account and records in the usual and regular
manner and in accordance with principles and
practices consistent with prior years;
(x) fail to pay and perform in its ordinary
course any and all liabilities and obligations as the
same mature and become due, or cause or permit any
default by Monroe to exist or occur or any penalties
to be imposed as a consequence thereof under any of
its material contracts or commitments;
30
(xi) suffer or permit any default by Monroe or
any event which, with the passage of time or the
giving of notice, or both, may become a default by
Monroe under any material contract, agreement or
understanding; or
(xii) take any action or omit to take any action
which will affect the accuracy, on and as of the
Closing Date, of the representations and warranties
contained herein.
6.2 Advice of Adverse Change. From and after the execution of
this Agreement until the Closing Date, Sellers will promptly notify Noble in
writing of any event which is likely to result in any adverse change in the
business, prospects, assets or financial condition or any adverse change in the
earnings of Monroe, and any other event that would, with the passage of time or
otherwise, impair or otherwise affect the accuracy of any of the representations
and warranties contained herein on and as of the Closing Date.
6.3 Access.
(a) From and after the date hereof, Monroe will
permit Noble's authorized officers, employees, attorneys, accountants and other
representatives to have reasonable access to the property, records and documents
of Monroe, including, but not limited to, the corporate financial records,
papers, tax returns, properties and facilities of Monroe, and discuss the
business and financial affairs and prospects of Monroe with such third persons,
31
including, but not limited to the directors, officers, employees, attorneys and
accountants of Monroe, as Noble considers necessary or appropriate for all
relevant purposes of investigation, analysis, and legal or regulatory approvals
as deemed necessary by Noble or its advisors.
(b) Upon termination of this Agreement, the rights of
access provided in the immediately preceding paragraph will terminate and Noble
agrees that, upon request by Monroe, it will return or destroy all copies of all
documentary information received from Monroe and all documents prepared by them
(or their representatives) which disclose such information.
(c) It is expected that, in connection with the
proposed transaction, Monroe will furnish Noble with confidential information
concerning the business and financial condition of Monroe. Noble and its
affiliates will use its best efforts to keep confidential all such information.
Upon termination of this Agreement, Noble will maintain and will cause its
officers, employees, attorneys, accountants and other representatives to
maintain the confidentiality of such information for three (3) years from the
date of such termination and will not use such information for any purpose;
provided, that nothing herein will prevent the disclosure or use of any
information that (i) is required to be disclosed pursuant to the order of a
court of competent jurisdiction, or in the defense of Noble in any litigation to
which it may be a party; (ii) was already in Noble's possession prior to its
disclosure by Monroe; (iii) was generally
32
known to the public; (iv) became known to the public through no fault of Noble;
or (v) was disclosed to the party receiving the information by a third party not
bound by an obligation of confidentiality.
6.4 Capital Stock. Monroe shall not, without Noble's prior
written consent, amend its Articles of Incorporation or Bylaws; make any change
in its authorized, issued or outstanding capital stock or other equity security;
or enter into any agreement, call or commitment which would obligate Monroe to
issue, sell, pledge, purchase or acquire any of its capital stock or change the
number of outstanding shares thereof.
6.5 Monroe Board Activity. The Board of Directors of Monroe
have approved the execution of this Agreement by Monroe.
6.6 Effective Notice. The availability and actual delivery of
information about Monroe or Noble shall not affect the representations,
warranties or covenants set forth in this Agreement, unless specifically
provided for herein.
6.7 Stock Rights. Monroe has not granted any stock options,
stock appreciation rights, stock split or stock dividend agreements to any party
and will not make any such agreements prior to the Closing Date.
6.8 Mutual Purpose. No party hereto shall do anything which
would impair, impede or be detrimental to the consummation of the transaction
contemplated in this Agreement, except to the extent required by law or by the
fiduciary duties of the Monroe or Noble Board of Directors to their
shareholders. The officers or
33
directors of Monroe following execution hereof, shall not solicit, encourage or
authorize any person to solicit, directly or indirectly, inquiries, discussions
or proposals for, or enter into any discussions or agreements with any other
person relating to, a merger, consolidation, tender offer, acquisition or
similar transaction concerning the assets or securities of Monroe, or furnish or
cause to be furnished to any person, other than the other party, any non-public
information to be used by such person or any other person for the purpose of
evaluating or determining whether to make or pursue any such inquiries,
discussions or proposals, except to the extent required by law or by fiduciary
obligations. Monroe will notify Noble immediately of the details of any interest
from any person with respect to the foregoing of which they become aware.
6.9 Covenants Regarding Continuing Operations of Monroe. After
the Closing, and so long as any portion of the principal or default interest of
the Notes remains unpaid, Monroe, shall comply with the following, unless
otherwise consented to in writing by Reason:
(a) Financial Statements required to be given to Comerica
Bank, as senior lender, or any substitute senior lender, shall be given to
Reason within five (5) days after they are received or available to Monroe.
(b) Monroe shall not declare and/or issue any dividends, nor
distribute cash (other than as required under Section 1.3) or any other property
in respect of any of its stock.
34
(c) Monroe shall not establish any new employee benefit plans,
including but not limited to, any pension, profit sharing, stock ownership or
deferred compensation plan which requires Monroe to fund the same; nor shall it
amend any such existing plan or arrangement if it causes Monroe's funding
obligations with respect thereto to increase, unless such amendment shall be
required to comply with any law governing the administration and/or
qualification of such plan or arrangement or to terminate same.
(d) Monroe shall use its best efforts to preserve and keep in
full force and effect all licenses and permits necessary to the proper conduct
of its business.
(e) Monroe shall maintain insurance coverage by financially
sound and reputable insurers in such forms and amounts and against such risks as
are customary for corporations engaged in the same or similar business and
owning and operating similar properties.
(f) Monroe and/or Noble shall promptly pay and discharge all
taxes, assessments and other charges or levies imposed upon Monroe or the
Property or upon or in respect of all or any part of the properties or business
of Monroe or the Property, provided, however, that Monroe and/or Noble may in
good faith contest any such taxes, assessments and other charges and levies and,
in the event of any such contest, may permit such taxes, assessments, charges
and levies to remain unpaid during the period of such contest and any appeal
therefrom.
(g) Monroe shall promptly comply with all laws,
35
ordinances or governmental rules and regulations to which it is subject, the
violation of which would materially and adversely affect the properties and
business prospects, profits or financial condition of Monroe or which would
result in any lien or charge upon any property of Monroe, except for those which
the Company is not in compliance with prior to the Closing Date but as to which
it will use its best efforts to comply with.
(h) Monroe and/or Noble shall maintain, preserve and keep its
properties which are used or useful in the conduct of its business (whether
owned in fee or a leasehold interest) in good repair and working order subject
to reasonable wear and tear and from time to time will make all reasonably
necessary repairs, replacements, renewals and additions consistent with Monroe's
business plan.
(i) Except for purchase money security interests and the
interest of Comerica Bank, as senior lender, or any substitute senior lender,
Monroe and/or Noble shall not create or incur or suffer to be incurred or to
exist any mortgage, pledge, security interest, encumbrance, lien or charge of
any kind on its property or assets whether now owned or hereafter acquired, or
upon any income, profits or other proceeds therefrom which would have a material
adverse effect upon the properties and business prospects, profits or financial
condition of Monroe.
(j) Monroe shall not enter into or be a party to any
transaction with any affiliate of Noble except in the ordinary course of and
pursuant to the reasonable requirements of its
36
business and upon fair and reasonable terms that are no less favorable to Monroe
than would obtain in a comparable arm's length transaction with a person not an
affiliate of Noble. "Affiliate" means a shareholder or a director of Monroe or
Noble, or a member of a shareholder in Noble's immediate family, a company
controlled by Monroe or Noble, a company that controls Monroe or Noble or a
company under common control with Monroe or Noble.
(k) Monroe shall keep proper books of records and accounts, in
which full and correct entries will be made of all dealings or transactions of
or in relation to the business and affairs of Monroe, in accordance with
generally accepted accounting principles consistently maintained and applied.
Monroe shall provide Reason with any data or information relating to Monroe and
its business with reasonable promptness, if such data or other information is
related to the full and timely payment required under the Notes, and Monroe
shall permit Reason to visit and inspect, under Monroe's guidance and at
reasonable hours, any of the properties of Monroe, to examine all of its books
of account, records, reports and other papers, and to make copies and extracts
therefrom and to discuss its respective affairs, finances and accounts with
Monroe's officers, employees and accountants. By this provision, Monroe and
Noble authorize their officers, employees and accountants to discuss the
finances and affairs of Monroe with Reason.
In the event that Monroe and/or Noble fail to comply with any
of the foregoing provisions of this Section 6.9 and such
37
failure continues for a period of five (5) days after receipt of a written
notice from Reason of such failure, such failure shall constitute a default, and
one of Reason's remedies shall be the right to immediately seek an injunction to
enforce such provisions, in addition to all other rights Reason may have at law
or equity. The parties recognize that a default by Monroe and/or Noble will
cause Reason irreparable damage for which money damages are not adequate.
7. CONDITIONS TO SELLERS' OBLIGATIONS. The obligation of the
Sellers to complete on the Closing Date the consummation of the sale as
contemplated herein is subject to the satisfaction of each of the conditions
identified in this Section 7.
7.1 Performance by Noble. On and as of the Closing Date, all
of the representations and warranties of Noble and Skandalaris set forth in
Section 5 hereof shall be true and correct in all material respects, except for
changes that have occurred in the ordinary course of Noble's business and
consistent with past practices or which are expressly permitted or contemplated
by this Agreement (for this purpose substituting the Closing Date for the date
of this Agreement wherever a representation or warranty shall have been made
with reference to the date of this Agreement), and Noble shall have performed
all of the agreements and covenants required by this Agreement to be performed
by it prior to or at the Closing Date. Noble shall have delivered to Sellers a
certificate dated the Closing Date and in form and substance reasonably
satisfactory to Sellers and their counsel, reaffirming such
38
representations and warranties as of the Closing Date and certifying to the
fulfillment of such agreements and covenants.
7.2 Absence of Litigation. No action, suit or proceeding shall
have been instituted or threatened seeking to enjoin or restrain or which would
materially adversely affect the transactions contemplated hereby.
7.3 Other Documents. On the Closing Date, there shall have
been executed and delivered to Reason (i) a Pledge Agreement, in substantially
the form of Exhibit E attached hereto, with respect to all of the stock
certificates of Monroe, which stock certificates will be reissued at Closing in
the name of Noble, along with an Assignment of Stock in Blank signed by Noble;
(ii) the Irrevocable Trust Note and the Reason Note, in substantially the form
of Exhibits A-1 and A-2, respectively, attached hereto; (iii) the Guaranty of
the 1997 Payment in substantially the form of Exhibit A-3 attached hereto; (iv)
a Land Contract for the purchase of the Property by Monroe in substantially the
form of Exhibit B1 attached hereto; (v) a Guaranty of Land Contract in
substantially the form of Exhibit B2 attached hereto; (vi) a Letter of Credit
from Comerica Bank securing the payment of the December 23 Irrevocable Trust
Payment, the December 23 Reason Payment, and the payment of the Bonus pursuant
to the Employment and Deferred Compensation Agreement; and (vii) an Employment
and Deferred Compensation Agreement in substantially the form of Exhibit D
attached hereto.
7.4 Opinion of Counsel. On the Closing Date, Noble
39
shall have delivered to Sellers the written opinion of Xxxx X. Xxxxx, Esq.,
counsel for Noble dated as of the Closing Date, that is, in form and substance,
reasonably satisfactory to Sellers and their legal counsel.
8. CONDITIONS TO NOBLE'S OBLIGATIONS. The obligation of Noble
to complete on the Closing Date the consummation of the purchase and sale
transactions contemplated herein is subject to the satisfaction of each of the
conditions identified in this Section 8.
8.1 Performance by Monroe and Sellers. On and as of the
Closing Date, all of the representations and warranties of Monroe and Sellers
set forth in Sections 3 and 4 hereof shall be true and correct in all material
respects, except for changes which are expressly permitted by this Agreement
(for this purpose substituting the Closing Date for the date of this Agreement
wherever a representation or warranty shall have been made with reference to the
date of this Agreement), and each of the Sellers shall have performed all of the
agreements and covenants required by this Agreement to be performed by all of
them prior to or at the Closing Date. Each of Monroe and Sellers shall have
delivered to Noble a certificate dated as of the Closing Date and in form and
substance reasonably satisfactory to Noble and its counsel, reaffirming such
representations and warranties as of the Closing Date and certifying to the
fulfillment of such agreements and covenants.
8.2 Resignations. Reason and Xxxxx X. Xxxxx shall have
40
tendered their resignations as officers and directors along with an appropriate
release, effective as of the Closing Date.
8.3 Opinion of Counsel. On the Closing Date, Sellers shall
have delivered to Noble the written opinion of Stone, Biber & X'Xxxxx, P.C.,
counsel for Monroe and Sellers, dated the Closing Date, that is, in form and
substance, reasonably satisfactory to Noble and its legal counsel.
8.4 Absence of Litigation. No action, suit or proceeding shall
have been instituted which has resulted in temporary or preliminary injunctive
relief of a continuing nature preventing the consummation of the transactions
contemplated hereby, or which, in the opinion of Noble's counsel, is not fully
covered by insurance maintained by Monroe, the result of which will have an
adverse effect on the business, operations, prospects, assets or financial
condition of Monroe or the transactions contemplated hereby. No labor dispute
shall have occurred, and no unfair labor practice charge shall have been filed
which would adversely affect the business, operations, prospects, assets or
financial condition of Monroe or the transactions contemplated hereby.
8.5 Casualty Loss. No casualty losses shall have occurred to
the Assets of Monroe or the Property which would have a material adverse affect
on the ability of Monroe to operate its business as presently conducted or would
otherwise deprive Noble of the benefits of the transactions contemplated hereby.
Noble may waive this condition and require Sellers to cause that any
41
insurance proceeds payable by reason of such occurrence be assigned to Noble and
received by it.
8.6 Due Diligence. (i) Noble, in its sole discretion, shall
not have become aware of any event, occurrence, fact, matter or information
which Noble determines has or may have an adverse effect on the business,
operations, prospects, assets or financial condition of Monroe or the
transactions contemplated by this Agreement, (ii) Noble shall have determined
that the information disclosed on, in or pursuant to any Disclosure Schedule or
supplement thereto is acceptable to Noble in all respects (provided such
information shall be deemed acceptable to Noble unless it notifies Monroe to the
contrary within three (3) days after a Disclosure Schedule or supplement thereto
is delivered to it but in no event later than the Closing Date) and (iii) no
material adverse change in the business, operations, prospects, assets or
financial condition of Monroe shall have occurred since December 31, 1995.
8.7 Employment and Deferred Compensation Agreement. As of the
Closing Date, there shall have been executed and delivered to Noble an
Employment and Deferred Compensation Agreement between Monroe and Xxxxxxx X.
Reason substantially in the form of Exhibit D attached hereto.
8.8 Other Documents. On the Closing Date, there shall have
been executed and delivered to Reason (i) a Pledge Agreement, in substantially
the form of Exhibit E attached hereto, with respect to all of the stock
certificates of Monroe, which stock certificates will be reissued at Closing in
the name of Noble,
42
along with an Assignment of Stock in Blank signed by Noble; (ii) the Irrevocable
Trust Note and the Reason Note, in substantially the form of Exhibits A-1 and
A-2, respectively, attached hereto; (iii) the Guaranty of the 1997 Payment in
substantially the form of Exhibit A-3 attached hereto; (iv) a Land Contract for
the purchase of the Property by Monroe in substantially the form of Exhibit B1
attached hereto; (v) a Guaranty of Land Contract in substantially the form of
Exhibit B2 attached hereto; (vi) a Letter of Credit from Comerica Bank securing
the payment of the December 23 Irrevocable Trust Payment, the December 23 Reason
Payment and the payment of the Bonus pursuant to the Employment and Deferred
Compensation Agreement; and (vii) an Employment and Deferred Compensation
Agreement in substantially the form of Exhibit D attached hereto.
8.9 338(h)(10) Election. Sellers and Noble shall execute an
election under Internal Revenue Code Section 338(h)(10) and the regulations
thereunder to have the acquisition of the Monroe Common Stock treated for
purposes of federal income taxation as an asset acquisition, and agree to
execute any Internal Revenue Service forms required for such election. The
parties agree to work together in good faith to establish a reasonable
allocation of the purchase price for the Monroe Common Stock to Monroe's assets.
Each of the parties will report the purchase and sale in accordance with the
allocations agreed to by the parties for all federal, state and local tax
purposes.
8.10 Consents. To the extent that this Agreement or any
43
transactions hereunder violate any documents or agreements described in Section
4.3 or require the consent of any governmental agency or other person, such
consents shall have been obtained by Sellers.
9. INDEMNITIES.
9.1 By Sellers. (a) Sellers agree to indemnify and hold Noble
and Monroe harmless from and against any and all liabilities, losses, damages,
costs and expenses, (including reasonable counsel fees) incurred or sustained by
them because of any inaccuracy in, or breach or violation of, the
representations and warranties made by Sellers and the covenants undertaken by
them.
(b) For purposes of this Section 9.1, any liabilities incurred
by Noble or Monroe for which the Sellers have indemnified them under this
Section 9.1 shall first reduce the remaining unpaid amounts of the Notes pro
rata as to the Sellers' respective Stock ownership of the Monroe Common Stock
prior to Closing and then shall be payable by the Sellers pro rata directly to
Noble or Monroe.
(c) Sellers shall not be liable under this Section 9.1 unless
the losses, liabilities, damages, costs and expenses identified in this
Subsection 9.1 exceed, in the aggregate, $100,000 (the "Threshold Amount"), in
which event Noble and/or Monroe shall be entitled to recovery of all such
losses, liabilities, damages, costs and expenses up to an aggregate amount
("Cap") not exceeding the outstanding amount of the Notes. Such Cap shall be
reduced as the Notes are paid. Notwithstanding the
44
preceding sentence, any losses, liabilities, damages, costs or expenses
sustained as a result of a breach of (i) Section 4.8 or 4.10 shall not be
subject to the Threshold Amount or (ii) Sections 3.2, 4.5 and 4.12 shall not be
subject to the Cap.
9.2 By Noble. Noble agrees to indemnify and hold Sellers
harmless from and against any and all liabilities, losses, damages, costs and
expenses (including reasonable counsel fees) incurred or sustained by Sellers
because of any material inaccuracy in, or breach or violation of, the
representations, warranties and covenants made by Noble.
9.3 Survival. Each and every representation, warranty and
covenant of the parties shall survive until December 23, 1996, after which they
shall terminate and be of no further force and effect, and any suit, proceeding,
claim for indemnity or other action by any party against another based on an
alleged breach of any representation, warranty or covenant contained herein must
be filed, brought or made in writing prior to December 23, 1996. Notwithstanding
the foregoing, the representations, warranties and covenants contained in
Sections 3.1, 3.2, 4.1, 4.2, 4.3 and 4.5 shall not be limited by the preceding
sentence and shall survive the Closing and the warranties and covenants
contained in Sections 4.12 and 6.9 shall survive the Closing for any applicable
statute of limitations period, except as otherwise specifically provided in such
Sections. Further, the terms of the Land Contract, Guaranty of Land Contract,
the Irrevocable Trust Note, Guaranty of 1997 Payment, and the Employment and
Deferred Compensation Agreement
45
which continue beyond December 23, 1996 shall survive in accordance with the
respective agreements' terms.
9.4 Claims Procedure. If any action, claim or demand shall be
brought or asserted against any party in respect of which indemnity may be
sought pursuant to this Section, the party seeking indemnification
("Indemnitee") shall promptly notify the parties from whom indemnification is to
be sought (collectively, the "Indemnitor"), stating the amount claimed to be due
and payable, the basis of the claim as alleged by any claimant and the provision
or provisions of this Agreement under which such claim for indemnity is
asserted. Prior to sending such notice, if such claim has been made by a third
party but has not resulted in an action, suit, proceeding or investigation
before a court or other governmental body, the Indemnitee may resolve the third
party's claim in a reasonable manner, and, in turn, seek indemnification from
the Indemnitor. Any notice hereunder shall be accompanied by copies of any
documents relied on by any claimant and furnished to the Indemnitee. Within
thirty (30) calendar days after receipt of such notice, the Indemnitor shall by
written notice either (i) concede liability in whole as to the amount claimed in
such notice; (ii) deny liability in whole as to such amount; or (iii) concede
liability in part and deny liability as to the remainder.
In the case of claims by third parties resulting in an action,
suit, proceeding or investigation before a court or other governmental body, the
Indemnitor, in the written notice, shall also indicate whether it shall assume
the defense thereof with
46
counsel reasonably acceptable to the Indemnitee. Provided that the notice
required hereunder is properly given, failure by the Indemnitor to concede
liability for a third party claim for which a party is entitled to indemnity
under this Agreement shall cause the indemnity obligations of the Indemnitor to
extend to whatever outcome results from such third party claim. Any settlement
or compromise of a claim shall be agreed upon by all parties. If the Indemnitee
declines to accept a bona fide offer of settlement which is recommended by the
Indemnitor, the maximum liability of the Indemnitor shall not exceed that amount
which it would have been liable for had such settlement been accepted. If the
Indemnitor declines to accept a bona fide offer of settlement recommended by the
Indemnitee, the Indemnitor shall be liable for whatever outcome results from
such third party claim.
In the case of non-third party claims (or claims that were
originally third party claims but resolved as described in the first paragraph
of this Section 9.4 and for which a party, in turn, seek indemnification), if
the Indemnitor fails to deny liability within the thirty (30) calendar day
period, the Indemnitee may offset the claim from any obligations owing by such
party to the Indemnitor ("Obligations").
If the Indemnitor and the Indemnitee cannot agree as to the
disposition of the claim, the unresolved matter shall be resolved by arbitration
if a request for arbitration, as provided herein, is given. Arbitration shall be
initiated by one party's making a written demand on the other party and
simultaneously
47
filing copies of the demand, together with the required fees, with the Detroit
Regional Office of the American Arbitration Association ("AAA"). Within fifteen
(15) days after receipt of such demand, each party shall designate one
arbitrator. These two arbitrators shall, within fifteen (15) days after their
appointment, select a third arbitrator, who shall be experienced in the subject
areas of corporate law and mergers and acquisitions. In the event that the first
two arbitrators are unable to agree upon the third arbitrator, then the
arbitrators shall apply to the AAA to designate and appoint a person who meets
these criteria as the third arbitrator. In the event the party upon whom the
original arbitration demand was served shall fail to designate its arbitrator,
the arbitrator designated by the party requesting arbitration shall act as the
sole arbitrator and shall be deemed to be the single, mutually approved
arbitrator to resolve the matter. Final arbitration of the dispute shall occur
within six (6) months of the giving of notice of arbitration.
The place of arbitration shall be Southfield, Michigan.
Arbitration shall be conducted under the auspices of the AAA, and the AAA Rules
shall govern all proceedings unless otherwise provided herein. In case of
conflict between the AAA Rules and this Agreement, the provisions of this
Agreement shall govern. The arbitrators sole power shall be to interpret the
provisions of this Agreement and they shall have no power to change or modify
any provision of this Agreement.
48
The parties shall have the right to discovery in accordance
with the Federal Rules of Civil Procedure except that discovery may commence
immediately upon the service of the demand for arbitration and except that
discovery shall be limited to document requests and depositions of not more than
two (2) people per party, and must occur within three (3) months of the date of
service of notice of the complaining party. A party's unreasonable refusal to
cooperate in discovery shall be deemed to be refusal to proceed with
arbitration, and, until the arbitration panel is complete, the parties may
enforce their rights (including the right of discovery) in the circuit courts of
the State of Michigan. Such enforcement in the courts shall not constitute a
waiver of a party's right to arbitration. Upon appointment of the arbitration
panel, the arbitrators shall have the power to enforce the parties' discovery
rights. It is expressly agreed that material subject to discovery shall include
written documents that must be created from information that currently exists
only in machine-readable form.
The parties expressly covenant and agree to be bound by the
decision of the arbitration panel and accept any such decision as the final
determination of the matter in dispute. A judgment of any Michigan Circuit Court
may be rendered upon any award made pursuant to this Agreement.
The non-prevailing party in the arbitration, i.e., the one who
receives less than 80% of the amount it claims it is entitled to, shall pay the
pro rata amount of the prevailing party's costs, fees, and expenses, including
attorney's fees, with
49
reference to the actual award to the prevailing party and the total claim of the
prevailing party.
The provisions of this Agreement shall be construed in favor
of arbitration.
10. TERMINATION. This Agreement may be terminated without
liability to any party hereto (a) at any time by mutual written agreement of
Sellers and Noble, (b) by Noble if any of the conditions set forth in Section 8
shall not be fulfilled for reasons beyond the reasonable control of Sellers and
are not waived by Noble, (c) by Sellers if any of the conditions set forth in
Section 7 shall not be fulfilled for reasons beyond the reasonable control of
Noble and are not waived by Sellers, or (d) by either party after April 30, 1996
if the Closing has not occurred by that date through no fault of the terminating
party. If Sellers or Noble waive in writing compliance with any such condition
to their respective obligations, the right to terminate provided herein shall no
longer exist with respect to that particular condition.
11. ASSIGNMENT. This Agreement shall be binding upon and inure
to the benefit of, and be enforceable by, the parties hereto and their
respective successors and assigns, provided that this Agreement shall not be
assignable by any party without the prior written consent of the others, other
than by operation of law.
12. MISCELLANEOUS.
12.1 Amendment. This Agreement sets forth the entire agreement
and understanding of the parties hereto with respect to
50
the subject matter hereof. No representation, inducement, agreement, promise or
understanding altering, modifying, taking from or adding to the terms and
conditions hereof shall have any force and effect unless the same is in writing
and validly executed by the parties hereto.
12.2 Notices. All notices or other communications required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given if sent by nationally recognized courier service, facsimile with a hard
copy by registered or certified mail, postage prepaid and return receipt
requested, addressed as follows:
(a) If to Noble, to:
00 Xxxxxxxxxx Xxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxxxx
If to Skandalaris, to:
Xxxxxx X. Xxxxxxxxxxx
c/o Noble International, Ltd.
00 Xxxxxxxxxx Xxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000
In either case, with a copy to:
Xxxx Xxxxx, Esq.
00 Xxxxxxxxxx Xxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000
51
(b) If to Sellers, to:
Xxxxxxx X. Reason, as Trustee of the
Xxxxxxx X. Reason Agreement of Trust
dated April 9, 1979
0000 Xxxxx Xxxxx Xxxx., Xxx. X-0
Xxxxxxxx Xxxxx, Xxxxxxx 00000
And
The Xxxxxxx X. Reason Irrevocable Trust
0000 Xxxx Xxxxxx Xx., Xxxxx 000
Xxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxx
with a copy to:
Xxxxx X. Xxxxx, Esq.
Stone, Biber & X'Xxxxx, P.C.
0000 Xxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxx, Xxxxxxxx 00000
The addresses so indicated for any party may be changed by similar written
notice.
12.3 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be treated as an original but all of
which, collectively, shall constitute a single instrument.
12.4 Construction. This Agreement shall be construed in
accordance with the laws of the State of Michigan without regard to its rules
regarding choice of law. The titles of the Sections have been inserted as a
matter of convenience and reference only and shall not control or affect the
meaning or construction of this Agreement. Wherever any words are used in this
Agreement in the masculine gender, they shall be construed as though they also
were used in the feminine gender in all cases where they would so apply.
52
12.5 Disclosure Schedules. The Disclosure Schedules required
to be submitted under this Agreement to Noble shall (i) be identified as
Disclosure Schedules, (ii) refer to the Section or Sections of this Agreement
pursuant to which the Disclosure Schedule is responsive, and (iii) be dated and
signed by both an officer of Monroe and a Seller.
12.6 Announcements. Each of the parties shall consult with the
other parties with respect to issuing any press release or otherwise making
public statements with respect to any of the transactions contemplated by this
Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written
NOBLE INTERNATIONAL, LTD.
WITNESS:
/s/ Xxxxxxx Xxxxxxxxx By: /s/ Xxxx X. Xxxxx
--------------------------- ---------------------------
Its: President
MONROE ENGINEERING PRODUCTS,
INC.
/s/ Xxxxxxx Xxxxxxxxx By: /s/ Xxxxxxx X. Reason
--------------------------- ----------------------------
Its: President
/s/ Xxxxxxx Xxxxxxxxx /s/ Xxxxxxx X. Reason
--------------------------- --------------------------------
Xxxxxxx X. Reason, Individually
and as Trustee of the Xxxxxxx
X. Reason Trust Agreement dated
April 9, 1979
[signatures continued on next page]
53
/s/ Xxxxx X. Xxxxx
-------------------------- ------------------------------
Xxxxxxx Xxxxxxxxx Xxxxx X. Xxxxx, as Trustee of
the Xxxxxxx X. Reason
Irrevocable Trust for the
Benefit of Xxxxxxxx Xxxxxxx
and Xxxxx Xxxxxx dated
October 12, 1992
/s/ Xxxxxx X. Xxxxxxxxxxx
-------------------------- ------------------------------
Xxxxxxx Xxxxxxxxx Xxxxxx X. Xxxxxxxxxxx
54
