Exhibit 2.(i)
ASSET PURCHASE AGREEMENT
BETWEEN
SUB-SURFACE CONSTRUCTION CO.
and
XXXXXXX XXXXX
and
SEMCO ENERGY CONSTRUCTION CO.
______________________
Dated August 9, 1997
1. Assets Purchased. . . . . . . . . . . . . . . . . . 3
2. Liabilities Assumed. . . . . . . . . . . . . . . . 5
3. Purchase Price for Purchased Assets. . . . . . . . 5
4. Related Agreements. . . . . . . . . . . . . . . . . 6
5. Delivery Free of Encumbrances. . . . . . . . . . . 7
6. Preclosing Actions. . . . . . . . . . . . . . . . . 7
7. Conditions Precedent to Buyer's Obligations. . . . 9
8. Conditions Precedent to Seller Parties'
Obligations. . . . . . . . . . . . . . . . . . . . 11
9. Closing Matters. . . . . . . . . . . . . . . . . . 12
10. Seller Parties' Representations and Warranties. . . 13
11. Buyer's Representations and Warranties. . . . . . . 26
12. Employees. . . . . . . . . . . . . . . . . . . . . 27
13. Postclosing Receipts. . . . . . . . . . . . . . . . 29
14. Indemnification. . . . . . . . . . . . . . . . . . 29
15. Expenses. . . . . . . . . . . . . . . . . . . . . . 32
16. Risk of Loss. . . . . . . . . . . . . . . . . . . . 32
17. Seller's Name. . . . . . . . . . . . . . . . . . . 32
18. Termination. . . . . . . . . . . . . . . . . . . . 33
19. Miscellaneous Provisions. . . . . . . . . . . . . . 33
ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made on August 9, 1997, between
Sub-Surface Construction Company, a Michigan corporation with its
principal place of business at 0000 Xxxxxxxx Xxxx Xxxxx, Xxxxxxxx
Xxxx, Xxxxxxxx ("Seller"); Xx. Xxxxxxx Xxxxx, whose address is
Norton Shores, Michigan ("Kniff"); and SEMCO Energy Construction
Co., a Michigan corporation ("Buyer"). Seller and Kniff are
sometimes referred to together as "Seller Parties".
BACKGROUND
A. Seller is engaged in the construction business
("Business") at the locations shown on Schedule 10.32 (the
"Premises"). Buyer desires to purchase, and Seller desires
to sell to Buyer, the Purchased Assets (as defined in
Section 1) on the terms and subject to the conditions of
this Agreement. As part of this transaction (i) Union
Equipment, Inc., a Michigan corporation ("Union
Equipment") and Southeastern Utility Company, Inc., a
Michigan Corporation ("Southeastern Utility"), both of the
same address as Seller, have agreed to sell to Buyer the
leased equipment used by Seller in the Business ("Leased
Equipment") pursuant to those certain Leased Equipment
Purchase Agreements of even date herewith, and (ii)
Comstock Properties, Inc., a Michigan corporation
("Comstock"), Union Equipment, Southeastern Utility and
U.P. Investments, L.L.C., a Michigan Limited Liability
Company ("UP") have agreed to lease to Buyer the real
property used by Seller in the Business ("Leased
Premises"). Xxxxxxxx, Union Equipment, Southeastern
Utility and UP are sometimes referred to as "Lessors".
X. Xxxxxxx Kniff is the sole shareholder of Seller. As a
condition to Buyer's willingness to purchase the Purchased
Assets from Seller, Kniff has agreed to provide certain
consulting services to Buyer pursuant to a Consulting
Agreement substantially in the form attached as Exhibit A
(the "Consulting Agreement").
C. As a condition to Buyer's willingness to purchase the
Purchased Assets from Seller, Kniff and certain other
parties have agreed not to compete with Buyer in the
conduct of the Business as provided in noncompetition
agreements in substantially the form attached as Exhibit B
(the "Noncompetition Agreements").
D. Also as a condition to Buyer's willingness to purchase the
Purchased Assets from Seller, Kniff and certain other
parties have agreed to provide a Release substantially in
the form attached as Exhibit C.
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AGREEMENTS
NOW, THEREFORE, in consideration of the Background and the
terms and conditions set forth in this Agreement, each of the
Seller Parties and Buyer agree as follows:
1. Assets Purchased.
At the Closing, Seller shall sell, assign, convey,
transfer, set over, and deliver to Buyer effective as of
the close of business on July 31, 1997, ("Effective Date")
all of the assets, rights, and interests of every
conceivable kind or character whatsoever, whether tangible
or intangible, that on the Closing Date are owned by
Seller or in which Seller has an interest of any kind
(excluding, however, those assets specifically identified
on attached Schedule 1). These include, without
limitation, the following, (collectively, the "Purchased
Assets"):
1.1 All equipment (as defined in the Uniform Commercial Code
of the State of Michigan, Act No. 174 of Michigan Public
Acts of 1962, as amended (the "UCC")), and, to the extent
not otherwise constituting equipment as defined above, all
other items of tangible personal property, in each case
whether or not capitalized on Seller's books (including,
without limitation, the items listed on Schedule 1.1) (the
"Personal Property").
1.2 All items possibly classified as "inventory".
1.3 All accounts, chattel paper, documents, and instruments
(all as defined in the UCC), including all accrued
interest receivable and also any security Seller holds for
the payment thereof (including, without limitation, the
items described on Schedule 1.3) as of the Effective Date
(the "Receivables") and all of Seller's general
intangibles (as defined in the UCC) and, to the extent not
otherwise constituting general intangibles as defined
above, any interest of Seller in any and all claims by
Seller against any other person, whether now accrued or
later to accrue, contingent or otherwise, known or
unknown, including, but not limited to, all rights under
express or implied warranties from suppliers (except as
they may pertain to Seller's liabilities other than
Assumed Liabilities), claims for collection or indemnity,
claims in bankruptcy, and choses in action.
1.4 All cash, cash equivalents, and amounts held on deposit in
all savings, checking, money market, investment, and other
similar accounts (including, without limitation, the
accounts listed on Schedule 1.4).
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1.5 All Seller's right, title, benefit, and interest in and to
inventions, discoveries, improvements, designs,
prototypes, trade secrets, manufacturing and engineering
drawings, process sheets, specifications, bills of
material, formulae and secret and confidential processes,
know-how, technology, and other industrial property
(whether patentable or unpatentable) (the "Intellectual
Property") to the extent not otherwise included in this
Section 1 (including, without limitation, the items listed
on Schedule 1.5).
1.6 The full benefit of (a) any and all contracts between
Seller and its customers covering the rendition by Seller
of Business service by Seller and including all deposits,
progress payments, and credits (including, without
limitation, those items listed on Schedule 1.6); (b) the
purchase orders listed on Schedule 1.6 placed by Seller
prior to the Effective Date that have not been completely
performed before the Effective Date, covering Seller's
purchase of inventory, supplies, or materials in the
ordinary course of business; (c) the leases of personal
property and other agreements listed in Schedule 1.6; and
(d) all policies of insurance and rights to make claims
and other rights thereunder listed on Schedule 10.31 (the
"Contracts and Commitments").
1.7 All records and lists that pertain directly or indirectly,
in whole or in part, to any one or more of the following:
the Seller's customers, suppliers, advertising,
promotional material, sales, services, delivery, internal
organization, employees, and/or operations.
1.8 All security deposits, prepaid expenses, and similar items
reflected in the latest of the Financial Statements of
Seller referred to in Section 10.7, in the amount accrued
as of the Effective Date.
1.9 All transferable local, state, and federal franchises,
licenses, bonds, permits, and similar items pertaining to
the Business and/or the Purchased Assets (including,
without limitation, the items described in Schedule 10.6)
(the "Permits").
1.10 The Business conducted by Seller as a going concern,
including any and all goodwill, telephone and FAX numbers,
yellow-page advertisements, and Seller's right to use the
name Sub-Surface Construction Company and all related
names and derivations.
1.11 Buyer agrees to adopt the Sub-Surface Construction Company
Profit-Sharing Retirement Plan ("the Profit-Sharing Plan")
and Trust Agreement ("the Profit-Sharing Trust") and
assume the role of plan sponsor, and to adopt and continue
those benefit plans and obligations described in Schedule
10.12. Buyer retains the right to modify all benefit
plans to provide substantially equivalent benefits under
substitute plans. The Trustees and all other plan
officials shall resign at Closing and shall be replaced by
Buyer.
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Seller shall update all Schedules described in this Section 1 as
of the Closing Date.
2. Liabilities Assumed.
Seller agrees that Buyer assumes no liabilities of Seller,
whether accrued, absolute, contingent, known, unknown, or
otherwise, except for the following, which are referred to
hereinafter collectively as "Assumed Liabilities":
(a) Those trade payables and other liabilities
incurred in the ordinary course of business to be
reflected on the Closing Balance Sheet as of the
Effective Date. The total amount of liabilities
assumed by Buyer under this paragraph 2(a) shall
not exceed $2,750,000.
(b) Any executory obligations of Seller's continued
performance arising in the ordinary course of
business that become performable or payable on or
after the Effective Date under the following:
(i) Contracts and Commitments;
(ii) Those benefit plans described in Schedule
10.12;
(iii) The collective bargaining agreements
specified in Schedule 10.13; and
(iv) The real property leases specified in
Schedule 10.32, as amended in accordance
with Exhibit E .
Without limitation of the foregoing, Buyer does not assume
any of the following:
(i) Any liabilities or obligations of Seller Parties
or predecessors, including, without limitation,
costs of cleanup, containment or other
remediation, arising from or under any
Environmental Law (as defined in Section 10.22)
and arising out of or relating to the operation of
the business of Seller Parties or the ownership,
operation or conditions at any time prior to the
Closing Date of the Leased Premises, Leased
Equipment, Purchased Assets or any other
properties and assets in which Seller Parties or
either of them has had an interest or use of any
kind;
(ii) Liabilities of Seller Parties for Federal Income
Tax, or
(iii) Liabilities of Seller Parties for Michigan Single
Business Tax.
3. Purchase Price for Purchased Assets.
3.1 The Purchase Price.
The purchase price to be paid by Buyer to Seller for the
Purchased Assets (the "Purchase Price") shall, in addition
to the Assumed Liabilities, be $13,400,000.
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3.2 Payment of Purchase Price.
Buyer shall pay the Purchase Price on the Closing Date as
follows:
(a) Buyer shall wire transfer funds in the amount of
$11,860,000 in accordance with Seller's
instructions.
(b) Escrow. Kniff, Buyer and the Escrow Agent shall
enter into an Escrow Agreement substantially in
the form of Exhibit D hereto, and shall place
$1,540,000 into escrow with the Escrow Agent under
the terms of the Escrow Agreement.
3.3 Allocation of Purchase Price.
The Purchase Price shall be allocated among the Purchased
Assets in accordance with the preliminary allocation
shown on attached Schedule 3.3 or such other allocation as
Buyer and Seller may agree upon on or prior to the
completion of the Closing Audit. Buyer and Seller agree
to execute and deliver on or prior to completion of the
Closing Audit duplicate IRS Forms 8594, with an allocation
of the Purchase Price in accordance with this Section 3.3
and otherwise acceptable to Buyer and Seller, and to file
all other returns and reports in a manner consistent with
the allocations in this Section 3.3.
4. Related Agreements.
The agreements described in this Section 4 are sometimes
referred to as the "Related Agreements".
4.1 Consulting Agreement and Noncompetition Agreements.
At the Closing, (a) Kniff shall execute as Utility
Construction Consultants, L.L.C. and deliver to Buyer the
Consulting Agreement substantially in the form of Exhibit
A and (b) Kniff and the following persons shall execute
and deliver to Buyer the Noncompetition Agreements
substantially in the form of Exhibit B:
Xxxxxx Xxxxxx
Xxxxxx Xxxxxxx
4.2 Releases.
At the Closing, Xxxxxxx Xxxxx and the following persons
shall execute and deliver to Buyer the Releases
substantially in the form of Exhibit C:
Xxxxxx X. Xxxxx
Xxxxxx Xxxxxx
Xxxxx Xxxxx
Xxxxxxx Xxxxxxx
4.3 Leases.
At the Closing, Lessors and Buyer shall execute the
Lease Amendments substantially in the form of Exhibit E.
4.4 Leased Equipment.
At the Closing, Union Equipment and Southeastern Utility
shall transfer to Buyer the Leased Equipment as listed on
Schedule 1.11 in accordance with the Leased Equipment
Purchase Agreements.
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5. Delivery Free of Encumbrances.
Seller shall deliver and Kniff shall cause Union Equipment
and Southeastern Utility to deliver good title to the
Purchased Assets and Leased Equipment free and clear of
all mortgages, liens, claims, demands, charges, options,
equity interests, leases, tenancies, easements, pledges,
security interests, and other encumbrances
("Encumbrances").
6. Preclosing Actions.
Before the Closing:
6.1 Conduct of Business.
Seller Parties shall carry on and conduct the Business
only in the ordinary course consistent with past
practices, without any change in the policies, practices,
and methods that Seller pursued before the date of this
Agreement. Seller Parties will use their best efforts to
preserve the Business organization intact; to preserve the
relationships with Seller's customers, suppliers, and
others having business dealings with it; and to preserve
the services of Seller's employees, agents, and
representatives. Without limitation of the foregoing, (a)
Seller Parties shall not undertake any action without the
prior written consent of Buyer that, if taken before the
date of this Agreement, would have been required to be
disclosed on Schedule 10.9; and (b) Seller Parties will
not take action or refrain from taking action that would
result in any change in the Purchased Assets or Assumed
Liabilities, other than in the ordinary course of business
consistent with past practices, and except as provided in
Section 6.4. Seller will consult with Buyer on all
operating matters and accede to Buyer's reasonable
operating instructions in order to provide Buyer with
control of the business prior to the Closing.
6.2 Buyer's Access.
From the date of this Agreement through the Closing,
Seller Parties shall permit Buyer reasonable access to the
Seller and the Business.
6.3 Accuracy of Representations and Warranties and
Satisfaction of Conditions.
Seller Parties will immediately advise Buyer in writing if
(a) any of Seller Parties' representations or warranties
are untrue or incorrect in any material respect or (b)
Seller Parties become aware of the occurrence of any event
or of any state of facts that results in any of the
representations and warranties of Seller Parties being
untrue or incorrect in any material respect as if Seller
Parties were then making them. Seller Parties will not
take any action, or omit to take any action, that would
result in any of Seller Parties' representations and
warranties set forth in this Agreement being untrue or
incorrect as of the Closing Date. Seller Parties will use
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their best efforts to cause all conditions within their
control that are set forth in Section 7 to be satisfied as
promptly as practicable under the circumstances.
6.4 Dividend to Kniff
(a) Seller has declared a dividend payable to Kniff,
on or before November 15, 1997 ("Kniff Dividend"),
of up to the lesser of (i) $3,500,000 or (ii) the
Net Working Capital (as defined below) as of the
Effective Date.
(b) Notwithstanding the provisions of Section 2 of
this Agreement, Buyer shall assume the obligation
to pay the Kniff Dividend which shall be paid out
of the Purchased Assets in accordance with
Sub-Paragraph (e) below.
(c) Seller shall cause Xxxxxx Xxxxxxxx LLP (the
"Closing Auditor") to prepare a Closing Audit
("Closing Audit"), which shall consist of a
balance sheet as of the Effective Date (the
"Closing Balance Sheet"). The Closing Balance
Sheet shall (i) contain line items to the extent
applicable substantially consistent with the line
items in Seller's Balance Sheet dated June 30,
1997 (a true copy of which is contained in
attached Schedule 10.7); and (ii) be prepared in
accordance with GAAP.
(d) In preparing the Closing Audit, the Closing
Auditor shall conduct the examination of Seller in
accordance with generally accepted auditing
standards. The Closing Auditor shall use its best
efforts to complete the Closing Audit not later
than 60 days after the Closing Date. The Closing
Balance Sheet shall be delivered to Buyer and
Seller immediately upon its completion, together
with (i) the Closing Auditor's opinion that the
Closing Balance Sheet was prepared in accordance
with this Section 3.3, (ii) a calculation of the
Net Working Capital, and (iii) the Closing
Auditor's work papers. Seller and Buyer shall
have 15 days after receiving the Closing Balance
Sheet, the calculation of the Net Working Capital,
and the Closing Auditor's work papers to deliver a
written notice to the other of any objections to
the Closing Balance Sheet and the calculation of
the Net Working Capital. Any such notice of
objections shall be in writing and shall state, in
reasonable detail, the basis for each objection
and the amount of adjustment that the party giving
the notice believes is required. If Buyer and
Seller cannot agree with respect to the Closing
Balance Sheet or the calculation of the Net
Working Capital within 15 days after the delivery
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of a notice of objections or such later date as
may be agreed on by Buyer and Seller, the dispute
shall be resolved by arbitration in accordance
with Section 19.8, except that the arbitrator
shall be Xx Xxxxx, the Managing Partner of BDO
Xxxxxxx, Grand Rapids, Michigan, or individuals in
the BDO Xxxxxxx organization appointed by Xx Xxxxx
(the "Independent Accounting Firm"). Any items
not in dispute shall be deemed stipulated by Buyer
and Seller and shall not be determined by the
Independent Accounting Firm. The determination of
the Independent Accounting Firm shall be binding
on and conclusive with regard to the matters it
determines. All costs and expenses relating to
the services provided by the Independent
Accounting Firm shall be paid equally by Buyer and
Seller, notwithstanding the provisions of Section
19.8.
(e) The amount of the Kniff Dividend shall be paid out
of the Purchased Assets within 90 days after the
Closing Date, provided the parties agree on the
calculation of Net Working Capital pursuant to
subparagraph (d) above. If the parties do not
agree on the calculation of Net Working Capital,
the amount of the Kniff Dividend shall be paid out
of the Purchased Assets within 10 days after the
determination by the arbitrator as specified in
subparagraph (d) above.
(f) The term Net Working Capital shall mean an amount
equal to the Current Assets minus the Current
Liabilities reflected on the Closing Balance
Sheet, without the Kniff Dividend being shown as a
Current Liability. By way of example, the Net
Working Capital reflected in the June 30 Balance
Sheet is $3,052,000.
7. Conditions Precedent to Buyer's Obligations.
Buyer's obligation to consummate the transactions
contemplated by this Agreement is subject to the
fulfillment (or waiver by Buyer) before or at the Closing
of each of the following conditions:
7.1 Accuracy of Representations and Warranties.
The representations and warranties of Seller Parties
contained in this Agreement and all related documents
shall be true and correct in all material respects at and
as of the Closing Date as though such representations and
warranties were made on that date, without giving effect
to any supplement or material additional disclosures by
Seller Parties.
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7.2 Performance of Covenants.
The Seller Parties shall have in all respects performed
and complied with all covenants, agreements, and
conditions that this Agreement and all related documents
require to be performed or complied with before or on the
Closing Date. Kniff and the persons set forth in Section
4 shall have executed and delivered the Related
Agreements.
7.3 [Deleted by Parties]
7.4 Permits.
Buyer shall have received all permits that in Buyer's
opinion are necessary to operate the Business after the
Closing.
7.5 No Casualty.
Prior to the Closing Date, Seller shall not have incurred,
or be threatened with, a material liability or casualty
that would materially impair the value of the Purchased
Assets.
7.6 Opinion of Counsel.
Buyer shall have received the favorable opinion of
Seller's counsel dated the Closing Date and in form and
substance satisfactory to Buyer's counsel. The opinion
shall be in substantially the form attached as Exhibit F.
7.7 Transfers of the Leased Equipment.
Instruments and documents of transfer of the Leased
Equipment shall have been executed and delivered to Buyer
in accordance with the Leased Equipment Purchase
Agreements.
7.8 Instruments of Transfer, etc.
Seller shall have delivered to Buyer all bills of sale,
general instruments of transfer, conveyances, assurances,
transfers, assignments, approvals, consents, and any other
instruments and documents containing the usual and
customary covenants and warranties of title that are
consistent with the requirements of Section 5 and the
warranties Seller Parties make in this Agreement and that
shall be convenient, necessary, or reasonably required to
effectively transfer the Purchased Assets to Buyer with
good title, free and clear of all Encumbrances.
7.9 Certificates Regarding Conditions Precedent.
The Seller Parties shall have delivered to Buyer
certificates of the Seller Parties certifying that as of
the Closing Date all of the conditions set forth in
Sections 7.1, 7.2, 7.5, 7.8, 7.10, and 7.12 have been
satisfied.
7.10 No Litigation.
No action, suit, proceeding, or investigation shall have
been instituted, or, to the Best Knowledge of Seller
threatened, before any court or governmental body, or
instituted by any governmental agency, (a) to restrain or
prevent the carrying out of the transactions contemplated
by this Agreement, or (b) that might affect Buyer's right
to own, operate, and control the Purchased Assets after
the Closing Date.
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7.11 Lien Search.
Buyer shall have received UCC lien searches in form and
content satisfactory to Buyer, and any liens on the Leased
Equipment and Purchased Assets shall have been satisfied
and released.
7.12 Consents.
Seller shall have obtained, in writing, all consents
necessary or desirable to consummate or to facilitate
consummation of this Agreement and any related
transactions. The consents shall be delivered to Buyer
before Closing and shall be reasonably acceptable to Buyer
in form and substance. Excluded from this requirement is
consent under Seller's contract with MichCon.
7.13 [Deleted by Parties]
7.14 Conditional Tax Clearance.
Seller shall have provided to Buyer a certificate of
conditional tax clearance from the Revenue Commissioner of
the State of Michigan showing that Seller has filed all
tax returns and reports required to be filed before
Closing and that it has paid all taxes due pursuant to
Section 27a of Act No. 58 of the Michigan Public Acts of
1986, MCLA 205.27a, MSA 7.657(27a).
7.15 MESC Contribution Liability.
Seller shall have provided to Buyer a statement from the
Commissioner of the Michigan Employment Security
Commission certifying the status of Seller's contribution
liability under Section 15(g) of the Michigan Employment
Security Act, MCLA 421.15(g), MSA 17.515[g].
7.16 Other Documents and Instruments.
Buyer shall have received such other documents and
instruments as it has reasonably requested.
7.17 Approvals by Buyer's Counsel.
Buyer's counsel shall reasonably approve all legal matters
and the form and substance of all documents that Buyer or
Seller Parties are to deliver at the Closing.
7.18 Lease Amendment
The Lease Assignments and Amendments shall have been
entered into and delivered.
8. Conditions Precedent to Seller Parties' Obligations.
Seller Parties' obligations to consummate the transactions
contemplated by this Agreement are subject to the
fulfillment (or waiver by Seller) of each of the following
conditions before or at the Closing Date:
8.1 Accuracy of Representations and Warranties.
Buyer's representations and warranties contained in this
Agreement and all related documents shall be true and
correct in any material respect at and as of the Closing
Date as though such representations and warranties were
made at the Closing.
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8.2 Performance of Covenants.
Prior to and at the Closing, Buyer shall have in all
respects performed and complied with its obligations under
all the covenants, agreements, and conditions that this
Agreement and all related documents require.
8.3 Approvals by Seller's Counsel.
Seller's counsel shall reasonably approve all legal
matters and the form and substance of all documents Seller
or Buyer is to deliver at the Closing.
8.4 Other Documents and Instruments.
Seller shall have received such other documents and
instruments as it has reasonably requested.
8.5 Certificates Regarding Conditions Precedent.
The Buyer shall have delivered to Seller Parties
certificates of the Buyer certifying that as of the
Closing Date all of the conditions set forth in Sections
8.1, 8.2 and 8.7 have been satisfied.
8.6 Opinion of Counsel.
Seller shall have received the favorable opinion of
Buyer's counsel dated the Closing Date and in form and
substance satisfactory to Seller's counsel. The opinion
shall be in substantially the form attached as Exhibit G.
8.7 No Litigation.
No action, suit, proceeding, or investigation shall have
been instituted or, to the Best Knowledge of Buyer
threatened, before any court or governmental body, or
instituted by any governmental agency, (a) to restrain or
prevent the carrying out of the transactions contemplated
by this Agreement, or (b) that might affect Buyer's right
to own, operate, and control the Purchased Assets after
the Closing Date.
8.8 Leased Equipment
The closing of the transactions under the Leased Equipment
Purchase Agreements shall heave occurred.
8.9 Lease Amendments
The Lease Assignments and Amendments shall have been
entered into and delivered.
9. Closing Matters.
9.1 Closing.
The closing of the transactions contemplated in this
Agreement (the "Closing") shall take place at the offices
of Miller, Johnson, Xxxxx & Xxxxxxxxx, P.L.C., 000 Xxxxxx
Xxxxx Xxxxxxxx, Xxxxx Xxxxxx, Xxxxxxxx, at 10:00 a.m. on
August 13, 1997 or at such other place and/or on such
other date as the parties may agree on (the "Closing
Date").
9.2 Certain Closing Expenses.
Except for Michigan sales and use taxes, which shall be
paid by Buyer, Seller Parties shall be liable for and
shall pay all federal, state, and local, excise, and
documentary stamp taxes and all other taxes, duties, or
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other like charges properly payable on and in connection
with Seller's conveyance and transfer of the Purchased
Assets to Buyer.
9.3 Further Assurances.
Seller Parties shall cooperate with and assist Buyer with
the transfer of the Purchased Assets under this Agreement
and take all other reasonable actions to assure that the
Business is transferred smoothly to Buyer. From time to
time after the Closing Date, Seller Parties shall, at the
request of Buyer, execute and deliver such additional
conveyances, transfers, documents, instruments,
assignments, applications, certifications, papers, and
other assurances that Buyer requests as necessary,
appropriate, convenient, useful or desirable to
effectively carry out the intent of this Agreement and to
transfer the Purchased Assets to Buyer.
10. Seller Parties' Representations and Warranties.
As of the date of this Agreement and as of the Closing,
the Seller Parties, jointly and severally, represent and
warrant to Buyer, as follows, and acknowledge and confirm,
that Buyer is relying on these representations and
warranties in entering into this Agreement.
10.1 Organization and Standing.
Seller is a corporation duly organized, validly existing,
and in good standing under the laws of the State of
Michigan, and Seller has all requisite power and authority
(corporate and otherwise) to own its properties and
conduct its business as it is now being conducted. The
nature of the business and the character of the properties
Seller owns or leases do not make the licensing or
qualification of Seller as a foreign corporation necessary
under the laws of any other jurisdiction. Except as set
forth in Schedule 10.1, Seller has not used or assumed any
other name in connection with the conduct of its business
during the last five years.
10.2 Authorization.
Seller has all requisite power and authority (corporate
and otherwise), and Kniff has all requisite legal
capacity (a) to execute, deliver, and perform this
Agreement and the Related Agreements to which each is a
party and (b) to consummate the transactions contemplated
under this Agreement and the Related Agreements. Seller
has taken all necessary corporate action (including the
approval of its board of directors and sole shareholder)
to approve the execution, delivery, and performance of
this Agreement and the consummation of the transactions
contemplated in this Agreement. Each of the Seller
Parties has duly executed and delivered this Agreement.
This Agreement is, and the Related Agreements when
executed and delivered by the parties to them will be,
legal, valid, and binding obligations of each of the
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parties to them, enforceable against each of them in
accordance with this Agreement and the Related Agreements'
respective terms.
10.3 Existing Agreements and Governmental Approvals.
(a) Except as set forth on Schedule 10.3, the
execution, delivery, and performance of this
Agreement and the Related Agreements and the
consummation of the transactions contemplated by
them: (i) do not and will not violate any
provisions of law applicable to the Seller
Parties, the Business, or the Purchased Assets;
(ii) do not and will not conflict with, result in
the breach or termination of any provision of, or
constitute a default under (in each case whether
with or without the giving of notice or the lapse
of time or both) Seller's Articles of
Incorporation or Bylaws, or any indenture,
mortgage, lease, deed of trust, or other
instrument, contract, or agreement or any order,
judgment, arbitration award, or decree to which
the Seller Parties or either of them is a party or
by which they or any of their respective assets
and properties are bound (including, without
limitation, the Purchased Assets); and (iii) do
not and will not result in the creation of any
Encumbrance on the Seller Parties' properties,
assets, or Business (including, without
limitation, the Purchased Assets).
(b) Except as set forth on Schedule 10.3, no approval,
authority, or consent of, or filing by, Seller
Parties with, or notification to, any federal,
state, or local court, authority, or governmental
or regulatory body or agency or any other
corporation, partnership, individual, or other
entity is necessary (i) to authorize the execution
and delivery of this Agreement or any of the
Related Agreements by the Seller Parties, (ii) to
authorize the consummation of the transactions
contemplated by this Agreement or any of the
Related Agreements by the Seller Parties, or (iii)
to continue Buyer's use and operation of the
Purchased Assets after the Closing Date.
10.4 No Subsidiaries.
Seller does not have any subsidiaries or directly or
indirectly own any interest or have any investment in any
other corporation, partnership, or other entity.
10.5 No Insolvency.
No insolvency proceeding of any character, including,
without limitation, bankruptcy, receivership,
reorganization, composition, or arrangement with
creditors, voluntary or involuntary, affecting Seller or
any of its assets or properties is pending or, to the Best
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Knowledge of Seller Parties, threatened. Seller Parties
have not taken any action in contemplation of, or that
would constitute the basis for, the institution of any
such insolvency proceedings. For the purposes of this
Agreement, the phrase "Best Knowledge of Seller Parties,"
or words of similar import, mean such knowledge as the
Seller Parties would have after due inquiry into the
matter in question.
10.6 Permits and Licenses.
Seller has all necessary permits, certificates, licenses,
approvals, consents, and other authorizations required to
carry on and conduct the Business and to own, lease, use,
and operate the Purchased Assets at the places and in the
manner in which the Business is conducted, all of which to
the extent transferable shall be transferred or assigned
to Buyer at the Closing, without expense to Buyer. A
complete list of such permits, certificates, licenses,
approvals, consents, and other authorizations is included
in Schedule 10.6. Except as noted on Schedule 10.6, all
such permits, certificates, licenses, approvals, consents
and other authorizations are transferable and will be
transferred to Buyer at Closing.
10.7 Financial Statements.
Seller Parties have delivered to Buyer the financial
statements listed in Schedule 10.7, and Seller Parties
shall deliver, before the Closing, copies of all other
financial statements Seller has prepared for each full
month prior to the Closing (the "Financial Statements").
The Financial Statements have been and will be prepared in
accordance with GAAP, do and will fairly and accurately
present Seller's financial position as of the dates
indicated and the results of its operations as of the
dates indicated and for the periods covered thereby, and
are and will be true and correct in all material respects.
Adequate provision has been and will be timely made in the
Financial Statements for doubtful accounts or other
receivables; sales are stated in the Financial Statements
net of discounts, deductions, amounts in dispute, and
allowances; all Taxes (as defined in Section 10.19(a)) due
or paid are and will be timely reflected in the Financial
Statements; and all Taxes not yet due and payable are and
will be fully accrued or otherwise provided for. Any
items of income or expense that are unusual or of a
nonrecurring nature during any such period or at any such
balance sheet date are and will be separately disclosed in
the Financial Statements. Except as otherwise disclosed
on Schedule 10.7, Seller's books, records, and work papers
are complete and correct; have been maintained on an
accrual basis in accordance with GAAP; and accurately
reflect, and will accurately reflect, the basis for the
financial condition and the results of Seller's operations
that are set forth in the Financial Statements and are to
be set forth in the Preliminary Balance Sheet and the
Closing Balance Sheet.
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10.8 No Undisclosed Liabilities.
Except as otherwise disclosed on Schedule 10.8 or in the
Financial Statements, and to the Best Knowledge of Seller
Parties, Seller does not have any liabilities or
obligations, whether accrued, absolute, contingent, or
otherwise, and there exists no fact or circumstance that
could give rise to any such liabilities or obligations in
the future.
10.9 Conduct of Business.
Except as otherwise disclosed on attached Schedule 10.9,
since December 31, 1996, Seller has not:
(a) Declared or paid any dividend or made any other
payment from capital or surplus or other
distribution of any nature, or directly or
indirectly redeemed, purchased, or otherwise
acquired, recapitalized, or reclassified any of
its capital stock.
(b) Merged or consolidated with any other entity.
(c) Altered or amended its Articles of Incorporation
or Bylaws.
(d) Entered into, materially amended, or terminated
any contract, license, lease, commitment, or
permit, except in the ordinary course of business
consistent with past practices.
(e) Experienced any labor disturbance.
(f) Incurred or become subject to any obligation or
liability (absolute, accrued, contingent, or
otherwise), except (i) in the ordinary course of
business consistent with past practices and (ii)
in connection with the performance of this
Agreement.
(g) Discharged or satisfied any Encumbrance or paid or
satisfied any obligation or liability (absolute,
accrued, contingent, or otherwise) other than (i)
liabilities shown or reflected in Seller's balance
sheet dated December 31, 1996 or (ii) liabilities
incurred since the date of the balance sheet, in
each case only in the ordinary course of business
consistent with past practices and in accordance
with the express terms of such obligation or
liability.
(h) Mortgaged, pledged, or subjected to any
Encumbrance any of the Purchased Assets.
(i) Sold, transferred, or agreed to sell or transfer
any asset, property, or business; canceled or
agreed to cancel any debt or claim; or waived any
right, except in the ordinary course of business
consistent with past practices.
(j) Disposed of or permitted to lapse any Intellectual
Property.
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(k) Granted any increase in employee rates of pay or
any increases in salary payable or to become
payable to any officer, employee, consultant, or
agent, or by means of any bonus or pension plan,
contract, or other commitment increased the
compensation of any officer, director, employee,
consultant, or agent, or hired any new officer,
employee, consultant, or agent.
(l) Made or authorized any capital expenditures for
additions to plant or equipment accounts in excess
of $350,000.
(m) Entered into any transaction (including, without
limitation, any contract or other arrangement
providing for employment, furnishing of services,
rental of real or personal property, or otherwise
requiring payments) with any shareholder, officer,
or director of Seller; any member of their
immediate families; or any of their affiliates.
(n) To the Best Knowledge of Seller Parties,
experienced any material damage, destruction, or
loss (whether or not covered by insurance)
affecting its properties, assets, or Business.
(o) Failed to regularly maintain and repair the
Purchased Assets in the ordinary course of
business consistent with past practices.
(p) Instituted or settled any litigation, action, or
proceeding before any court or governmental body
relating to it or its property.
(q) Made any change in any method of accounting or any
accounting practice or suffered any deterioration
in accounting controls.
(r) Varied, canceled, or allowed to expire any
insurance coverage.
(s) Made any payment or other distribution or
disbursement of moneys or property to or on behalf
of any officer, director, or shareholder of Seller
or any member of the immediate families of the
Seller Parties, or any affiliate, other than for
payment of compensation or reimbursement of
expenses in accordance with past practices.
(t) Entered into any other transaction other than in
the ordinary course of business consistent with
past practices.
(u) Agreed or committed to do any of the foregoing.
10.10 No Adverse Changes.
Except as otherwise disclosed in Schedule 10.10, since
December 31, 1996, to the Best Knowledge of Seller
Parties, there has not been any occurrence, condition, or
development that has adversely affected, or is likely to
adversely affect, Seller, its prospects, its condition
(financial or otherwise), its affairs, its operations, the
Business, or the Purchased Assets.
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10.11 Employees.
There is not now, nor has there been at any time during
the past five years, any strike, lockout, grievance, other
labor dispute, or trouble of any nature pending or to the
Best Knowledge of Seller Parties, threatened against
Seller or that in any manner affects Seller. Seller is
and has been in compliance with all rules regulating
employee wages and hours. On or before the Closing Date,
Seller shall have paid all its accrued obligations
relating to employees (whether arising by operation of
law, by contract, or by past service) or payments to
trusts or other funds, to any governmental agency, or to
any individual employee (or his or her legal
representatives) with respect to unemployment compensation
benefits, profit sharing, retirement benefits, or Social
Security benefits.
10.12 Employee Benefit Plans.
(a) Schedule 10.12 contains a true and complete list
of all plans, contracts, programs, and
arrangements (including, but not limited to,
collective bargaining agreements, pensions,
bonuses, deferred compensation, retirement,
severance, hospitalization, insurance, salary
continuation, and other employee benefit plans,
programs, or arrangements) maintained currently or
at any time within the previous five years by
Seller or under which Seller has had any
obligations with respect to an employee of Seller
(the "Plans"). Each of the following is included
in the list of agreements in Schedule 10.12: all
collective bargaining agreements, employment and
consulting agreements, executive compensation
plans, bonus plans, deferred compensation plans,
employee pension or retirement plans, employee
profit-sharing plans, employee stock purchase and
stock option plans, hospitalization insurance, and
other plans and arrangements providing for
employee benefits to Seller's employees.
(b) Except as specifically set forth in Schedule
10.12, (i) the Sub-Surface Construction Company
Profit Sharing Retirement Plan ("Profit-Sharing
Plan") an employee pension benefit plan, as
defined in Section 3(2) of ERISA, and its related
trust ("Profit-Sharing Plan and Trust") now meet,
and since their inception have met, the
requirements for qualification under Section
401(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), and are now, and since their
inception have been, exempt from taxation under
Section 501(a) of the Code, and the Internal
Revenue Service (the "IRS") has issued a current
favorable determination letter with respect to the
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qualified status of the Profit-Sharing Plan and
Trust and has not taken any action to revoke such
letter; (ii) Seller has performed all obligations
required to be performed by it under the
Profit-Sharing Plan (including, but not limited
to, the making of all contributions) and is not in
default under and has no knowledge of any default
by any other party to the Profit-Sharing Plan;
(iii) Seller is in compliance with the
requirements of all statutes, orders, and
governmental rules and regulations applicable to
such Profit-Sharing Plan, including, but not
limited to, ERISA and the Code; (iv) neither
Seller nor, to Seller Parties' Best Knowledge, any
other disqualified person or party in interest,
within the meaning of Section 4975 of the Code or
Section 3(14) of ERISA, has engaged in any
prohibited transaction, as this term is defined in
Section 4975 of the Code or Section 406 of ERISA,
that could, following the Closing Date, subject
the Profit-Sharing Plan (or its related trust),
Buyer, Seller, or any officer, director, or
employee of Buyer or Seller, to any tax or penalty
imposed under the Code or ERISA; (v) there are no
actions or claims pending (other than routine
claims for benefits) or, to Seller Parties' Best
Knowledge, threatened against the Profit-Sharing
Plan or against the assets of the Profit-Sharing
Plan; (vi) the Profit-Sharing Plan is not subject
to Part 3 of Title I of ERISA, Section 412 of the
Code, or Title IV of ERISA; (vii) the
Profit-Sharing Plan's plan official, as defined in
Section 412 of ERISA, is bonded to the extent
required by Section 412; (viii) no proceeding has
been initiated to terminate the Profit-Sharing
Plan, and any such termination will not subject
Seller or Buyer to liability to any person; (ix)
the Profit-Sharing Plan is not a multiemployer
plan, as defined in Section 3(37) of ERISA; (x) no
retiree benefits are payable under any employee
welfare benefit plan ("Welfare Plan"), as this
term is defined in Section 3(1) of ERISA; and (xi)
the Blue Cross-Blue Shield Health Plan is a group
health plan within the meaning of Section 5000 of
the Code, and complies with and in each case has
complied with the applicable requirements of
Sections 601 through 608 of ERISA, Section 162(k)
of the Code (through December 31, 1996), and
Section 4980B of the Code (commencing January 1,
1997).
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10.13 Certain Employees.
(a) Schedule 10.13 contains a true and complete list
of the following: the names, positions, and
compensation of the present directors, officers,
and key employees and superintendents of the
Seller. Except as listed in Schedule 10.13, all
Seller's non-bargaining unit employees are
employees-at-will and may be terminated at any
time by Seller for any lawful reason or for no
reason, and are not entitled to employment by
virtue of any oral or written contract, employer
policy, or otherwise.
(b) Except as set forth in Schedule 10.12, no retired
employees of Seller are receiving or are entitled
to receive any payments or health or other
benefits from Seller.
10.14 Contracts.
Except for the Contracts and Commitments listed on
Schedule 1.6, or as otherwise listed on Schedule 10.14,
Seller is not a party to nor bound by any agreement or
commitment that affects the Business, the Purchased
Assets, or the Assumed Liabilities. To the Best Knowledge
of Seller Parties, all Contracts and Commitments are valid
and binding obligations of the parties thereto in
accordance with their respective terms. No default or
alleged default exists on the part of Seller, nor, to the
Best Knowledge of Seller Parties, on the part of any other
party, under any of the Contracts and Commitments. True
and complete copies of all Contracts and Commitments have
been delivered to Buyer.
10.15 Title to Purchased Assets.
Seller is the sole and absolute owner of the Purchased
Assets and has good title to all of the Purchased Assets,
free and clear of any and all Encumbrances. Schedule
10.15 lists or describes all property used in the conduct
of the Business and/or situated on the Premises that is
owned by or an interest in which is claimed by any other
person (whether a customer, supplier, or other person) and
for which Seller is responsible, together with copies of
all related agreements. All such property is situated on
the Premises and is in such condition that upon return to
its owner, Buyer will not be liable in any amount to the
owner.
10.16 Condition of Purchased Assets.
All the Purchased Assets are in good working order and
repair. Each item is situated at the Premises and is fit
for its intended purpose, with no material defects.
10.17 Receivables.
The Receivables are good and valid xxxxxxxx arising from
bona fide services or other transactions in the ordinary
course of business, and are collectible in the ordinary
course of business.
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10.18 Sufficiency of Purchased Assets.
The Purchased Assets, the Leased Equipment and the Leased
Premises constitute all the property and assets, real,
personal, and mixed, tangible and intangible (including,
without limitation, contract rights), that are used or are
useful in, or are necessary for the conduct of, the
Business in accordance with present practices.
10.19 Taxes.
(a) For the purposes of this Agreement, Tax or Taxes
shall mean all federal, state, county, local, and
other taxes (including, without limitation, income
taxes; premium taxes; single-business taxes;
excise taxes; sales taxes; use taxes; value-added
taxes; gross receipts taxes; franchise taxes; ad
valorem taxes; real estate taxes; severance taxes;
capital levy taxes; transfer taxes; stamp taxes;
employment, unemployment, and payroll-related
taxes; withholding taxes; and governmental charges
and assessments), and include interest, additions
to tax, and penalties.
(b) Except as otherwise disclosed on Schedule 10.19,
Seller has filed on a timely basis all Tax returns
it is required to file under federal, state, or
local law and has paid or established an adequate
reserve with respect to all Taxes for the periods
covered by such returns; no agreements have been
made by or on behalf of Seller for any waiver or
for the extension of any statute of limitations
governing the time of assessment or collection of
any Taxes; Seller and its officers have received
no notice of any pending or threatened audit by
the IRS or any state or local agency related to
Seller's Tax returns or Tax liability for any
period, and no claim for assessment or collection
of Taxes has been asserted against Seller; and
there are no federal, state, or local tax liens
outstanding against any of Seller's assets
(including, without limitation, the Purchased
Assets) or the Business.
(c) [Deleted by Parties]
(d) [Deleted by Parties]
(e) [Deleted by Parties]
(f) The information contained on the Michigan
Employment Security Commission Form 1027, Business
Transferor's Notice to Transferee of Unemployment
Tax Liability and Rate, is correct and complete.
(g) Seller has paid all taxes due the State of
Michigan and all amounts due the Michigan
Employment Security Commission, except for the
current 1997 tax year and as accrued in the
ordinary course of business as of July 31, 1997.
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10.20 Litigation.
Except as disclosed in Schedule 10.8, there are no claims,
disputes, actions, suits, proceedings, or investigations
pending or, to the Best Knowledge of the Seller Parties,
threatened against or affecting Seller, the Business, or
the Purchased Assets, including, without limitation, any
such involving employees of Seller.
10.21 Construction Contracts.
No defect or deficiency exists in any of the work
performed by Seller under its construction contracts that
could give rise to any liabilities or claims for breach of
warranty, breach of contract, or similar liabilities or
claims.
10.22 Environmental Matters.
(a) The following terms used in this Section 10.22
have the meanings set forth below:
(i) Environmental Laws means the (A) Toxic
Substances Control Act, 15 USC 2601 et
seq.; (B) National Historic Preservation
Act, 16 USC 470 et seq.; (C) Coastal Zone
Management Act of 1972, 16 USC 1451 et
seq.; (D) Rivers and Harbors Appropriation
Act of 1899, 33 USC 401 et seq.; (E) Clean
Water Act, 33 USC 1251 et seq.; (F) Flood
Disaster Protection Act of 1973, 42 USC
4001 et seq.; (G) National Environmental
Policy Act of 1969, 42 USC 4321 et seq.;
(H) Resource Conservation and Recovery Act
of 1976 (RCRA), 42 USC 6901 et seq.; (I)
Clean Air Act, 42 USC 7401 et seq.; (J)
Comprehensive Environmental Response,
Compensation, and Liability Act (CERCLA),
42 USC 9601 et seq.; (K) Hazardous
Materials Transportation Act, 49 USC 1801
et seq.; (L) Safe Drinking Water Act, 42
USC 300f et seq.; (M) Emergency Planning
and Community Right-to-Know Act of 1986,
42 USC 11001 et seq.; (N) Federal
Insecticide, Fungicide, and Rodenticide
Act, 7 USC 136 et seq.; (O) Occupational
Safety and Health Act, 29 USC 651 et seq.;
and all other federal, state, county,
municipal and local, foreign, and other
statutes, laws, regulations, and
ordinances that relate to or deal with
protection of human health or the
environment, all as may be amended from
time to time, including, without
limitation, the Michigan Natural Resources
& Environmental Protection Act, MCLA e
324.101, et seq.
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(ii) Hazardous Substance(s) means (A) any
flammable or combustible substance,
explosive, radioactive material, hazardous
substance or waste, toxic substance,
pollutant, contaminant, or any related
materials or substances identified in or
regulated by any of the Environmental
Laws; and (B) asbestos, polychlorinated
biphenyls (PCBs), urea formaldehyde,
chemicals and chemical wastes, explosives,
known carcinogens, petroleum products and
by-products (including fractions thereof),
and radon.
(iii) Property means any parcel of real estate
now or previously owned, leased, or
operated by Seller or in which Seller has
or had any interest, including the
Premises.
(b) Except as described or referenced in Schedule
10.22: (i) To the Best Knowledge of Seller
Parties, Seller is now and has at all times been
in material full compliance with all Environmental
Laws; (ii) To the Best Knowledge of Seller
Parties, there are no substances or conditions in
or on the Property that may support a claim or
cause of action against Seller or Buyer under any
Environmental Laws; (iii) there are not, and never
have been, any underground storage tanks located
in or under the Property; (iv)To the Best
Knowledge of Seller Parties, neither Seller nor
its directors, officers, employees, or agents have
generated or transported any Hazardous Substances
at any time that have been transported to or
disposed of in any landfill or other facility
where the transportation or disposal could create
liability to any unit of government or any third
party.
(c) To the Best Knowledge of Seller Parties and
except as otherwise disclosed in Schedule 22, no
activity has been undertaken on the Property that
would cause or contribute to (i) the Property
becoming a treatment, storage or disposal facility
within the meaning of any Environmental Laws; (ii)
a release or threatened release of any Hazardous
Substances; or (iii) the discharge of pollutants
or effluents into any water source or system or
into the air, or the dredging or filling of any
waters, where such action would require a permit
under any Environmental Laws. To the Best
Knowledge of Seller Parties, Seller has obtained
all permits required by all applicable
Environmental Laws, and all such permits are in
full force and effect.
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(d) Seller Parties have disclosed and delivered to
Buyer all environmental reports and investigations
that any of them has in their possession with
respect to the Property.
(e) Buyer and Seller acknowledge that during Buyer's
investigation of the Xxxxxxxx Park site, a release
of toluene, ethylbenzene, xylene and lead was
discovered to be in excess of acceptable levels,
as more fully set forth in the July 1997 Phase I
and Phase II Environmental Site Assessments of
said site, prepared by Horizon Environmental Corp.
and the subsequent reports of Prein & Newhof.
Seller Parties agree to investigate the nature and
extent of the release and to remediate said
release to closure under applicable Environmental
Law, at Kniff's expense. Buyer and Seller Parties
shall cooperate in the filing of a Baseline
Environmental Assessment with the Michigan
Department of Environmental Quality covering the
Xxxxxxxx Park Property within a reasonable time
after Closing and at Buyer's expense.
10.23 Compliance with Laws.
At all times prior to the Closing Date to the Best
Knowledge of Seller Parties, Seller has complied in all
material respects with all laws, orders, regulations,
rules, decrees, and ordinances affecting to any extent or
in any manner any aspects of the Business or the Purchased
Assets.
10.24 Suppliers and Customers.
(a) A complete and accurate list of all suppliers or
vendors of products or services to Seller in
connection with the Business (other than legal or
accounting services) and the address of each
supplier or vendor is set forth in Schedule 10.24.
The names of any suppliers of goods or services
with respect to which practical alternative
sources of supply are not available on comparable
terms and conditions are separately listed in
Schedule 10.24.
(b) A complete and accurate list of each of Seller's
customers, the address of each customer, and the
amount each customer purchased from Seller during
the last fiscal year is set forth in Schedule
10.24.
(c) Seller Parties have no information that might
reasonably indicate that any customer or supplier
of Seller intends to cease purchasing from,
selling to, or dealing with Seller. No
information has been brought to the attention of
Seller Parties that might reasonably lead any of
them to believe that any customer or supplier
intends to alter, in any material respect, the
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amount of its purchases or sales or the extent of
its dealings with Seller, or would alter in any
material respect its purchases from, sales to, or
dealings with Buyer in the event that the
transactions contemplated by this Agreement are
consummated.
10.25 Progress Payments.
Attached Schedule 10.25 contains a true and complete list
and description of all security deposits, progress
payments, and the like that Seller has received relating
in any way to any purchase orders, leases, construction
contracts or other agreements that are part of the
Purchased Assets.
10.26 [Deleted by Parties]
10.27 No Brokers.
Seller has not engaged, and is not responsible for any
payment to, any finder, broker, or consultant in
connection with the transactions contemplated by this
Agreement.
10.28 Insider Transactions.
A complete and accurate list and brief description of all
contracts or other transactions involving Seller in which
any officer, director, employee, member or shareholder of
Seller, Xxxxxxxx, Union Equipment, UP or Southeastern
Utility, or any member of their immediate families, or any
affiliate has any interest is set forth in Schedule 10.28.
10.29 Bank Accounts.
Schedule 1.4 contains a true and complete list of the
names and locations of all banks or other financial
institutions that are depositories of funds of Seller, the
names of all persons authorized to draw or sign checks or
drafts on such accounts, the number of such accounts, and
the names and locations of any institutions in which
Seller has safe-deposit boxes and the names of the
individuals having access to those boxes.
10.30 Intellectual Property.
Schedule 10.30 lists all Intellectual Property of the
Seller that Seller directly or indirectly owns, licenses,
uses, requires for use, or controls in whole or in part
and all licenses and other agreements allowing Seller to
use the intellectual property of third parties. Seller
does not own, directly or indirectly, or use any patents,
copyrights, trademarks, or service marks in the Business.
Except as set forth in Schedule 10.30, Seller is the sole
and exclusive owner of the Intellectual Property, free and
clear of all Encumbrances. None of the Seller's
Intellectual Property infringes on any other person's
intellectual property, and, to the Best Knowledge of the
Seller Parties, no activity of any other person infringes
on any of the Intellectual Property. To the Best
Knowledge of Seller Parties, the Seller has been and is
now conducting the Business in a manner that has not been
-25-
and is not now in violation of any other person's
intellectual property, and Seller does not require a
license or other proprietary right to so operate the
Business. Seller's drawings, specifications, bills of
material, trade secrets, "know-how," and like data are in
such form and of such quality that they can, following the
Closing Date, be used in providing the services previously
provided by Seller so that such services meet applicable
specifications and conform with the quality standards
Seller previously met or was required to meet.
10.31 Insurance.
All insurance policies covering Seller's real and personal
property or providing for business interruption, personal
and product liability coverage, and other insurance are
described in Schedule 10.31 (which specifies the insurer,
policy number, type of insurance, and any pending claims).
Such insurance is in amounts Seller deems sufficient with
respect to its assets, properties, business, operations,
products, and services as the same are presently owned or
conducted, and all such policies are in full force and
effect and the premiums have been paid. There are no
claims, actions, suits, or proceedings arising out of or
based on any of these insurance policies, and no basis for
any such claim, action, suit, or proceeding exists.
Seller is not in default with respect to any provisions
contained in any such insurance policies and has not
failed to give any notice or present any claim under any
such insurance policy in due and timely fashion.
10.32 Leased Premises
Schedule 10.32 is a list of the Leased Premises which
comprise all leased real property used for the conduct of
the business.
11. Buyer's Representations and Warranties.
Buyer represents and warrants to Seller that:
11.1 Organization and Standing.
Buyer is a corporation duly organized and validly existing
under the laws of the State of Michigan, and Buyer has all
the requisite power and authority (corporate and
otherwise) to own its properties and to conduct its
business as it is now being conducted. Buyer is a wholly
owned subsidiary of SEMCO Energy, Inc., a Michigan
corporation, and was formed for the purpose of acquiring
the assets and business of Seller.
11.2 Authorization.
Buyer has taken all necessary corporate action (a) to duly
approve the execution, delivery, and performance of this
Agreement and (b) to consummate any related transactions.
Buyer has duly executed and delivered this Agreement.
This Agreement is the legal, valid, and binding obligation
of Buyer, enforceable against Buyer in accordance with its
terms.
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11.3 Existing Agreements and Governmental Approvals.
(a) The execution, delivery, and performance of this
Agreement and the consummation of the transactions
contemplated by them: (i) do not and will not
violate any provisions of the law applicable to
Buyer; (ii) do not and will not conflict with,
result in the breach or termination of any
provision of, or constitute a default under (in
each case whether with or without the giving of
notice or the lapse of time, or both) Buyer's
Articles of Incorporation or Bylaws or any
indenture, mortgage, lease, deed of trust, or
other instrument, contract, or agreement or any
order, judgment, arbitration award, or decree to
which Buyer is a party or by which it or any of
its assets and properties are bound; and (iii) do
not and will not result in the creation of any
Encumbrance on any of the Buyer's properties,
assets, or business.
(b) Except as set forth on Schedule 11.3, no approval,
authority, or consent of, or filing by Buyer with,
or notification to, any federal, state, or local
court, authority, or governmental or regulatory
body or agency or any other corporation,
partnership, individual, or other entity is
necessary (i) to authorize Buyer's execution and
delivery of this Agreement or (ii) to authorize
Buyer's consummation of the transactions
contemplated by this Agreement.
11.4 No Brokers.
Buyer has not engaged, and is not responsible for any
payment to, any finder, broker, or consultant in
connection with the transactions contemplated by this
Agreement.
12. Employees.
(a) Seller has furnished Buyer with a complete list of
all employees of Seller and the salaries and other
compensation payable to each. Buyer shall offer
employment to all current employees of Seller with
wages, salaries and benefits substantially similar
as those paid to them by Seller immediately prior
to Closing. Seller shall cooperate and encourage
such employees to accept employment with Buyer.
Buyer shall be responsible and liable for only the
salary, wages, bonuses, commissions, accrued
vacations, or sick-leave time and any other
compensation or benefits specifically assumed
hereunder as Assumed Liabilities. Nothing herein
shall be deemed to require Buyer to employ any
such person for any period of time. Such
employment shall be at-will and in accordance with
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the collective bargaining agreements below.
Seller Parties shall be responsible for any of the
following as they may exist as of the Effective
Date with respect to Seller's employees: any
actions or causes of action, including, but not
limited to, unemployment compensation claims and
worker's compensation claims and claims for race,
age, and sex discrimination and sexual harassment.
(b) Buyer shall adopt/assume the terms and provisions
of the following collective bargaining agreements
to which Seller is currently bound:
-- Agreement between the Michigan Distributor
Contractors Association and State of
Michigan Laborer's District Council for
1995 through 1998;
-- Agreement between Michigan Distributor
Contractors Association and International
Union of Operating Engineers, Local No.
324, 324-A, 324-B and 324-C, AFL-CIO for
May 1, 1995 through April 30, 1998;
-- Agreement between Michigan Distributor
Contractors Association and United
Association of Journeymen and Apprentices
of the Plumbing and Pipefitting Industry
of the United States and Canada (AFL-CIO)
for 1995 through 1998.
Buyer will forever indemnify, protect, save and
hold harmless Seller against and in respect to any
and all liabilities, costs and expenses
(including, but not limited to, reasonable
attorneys' fees) incurred by Seller, as a
consequence of any alleged breach by Buyer of any
of Buyer's obligations contained in the
above-designated collective bargaining agreements after
Closing.
Nothing in this Section or elsewhere in this Agreement is
intended to create any rights in any person other than a
party to this Agreement.
Buyer shall assume all liability and forever protect and
hold harmless Seller against and in respect to any and all
liabilities, costs and expenses (including, but not
limited to, reasonable attorneys' fees) incurred by Seller
as a result of any alleged breach by Buyer of any of
Buyer's obligations under the WARN Act or any similar
state statute to the extent required after Closing.
Seller Parties shall retain all such liability for and
forever protect and hold harmless Buyer against and in
respect to any and all liabilities, costs and expenses
(including, but not limited to, reasonable attorneys'
fees) incurred by Buyer as a result of any alleged breach
by Seller Parties or either of them of any of Seller
Parties' obligations under the WARN Act or any similar
state statute to the extent required before Closing.
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13. Postclosing Receipts.
After the Closing, Seller will immediately notify and
transfer to Buyer any payments or other receipts it
receives with respect to any of the Purchased Assets
except for any Excluded Assets as shown on Schedule 1.
Pending any such transfer, Seller will segregate any such
payments from its other assets and will clearly xxxx or
designate them as the property of Buyer.
14. Indemnification.
14.1 Seller Parties, jointly and severally, shall defend,
indemnify, and hold harmless Buyer, SEMCO Energy, Inc. and
their affiliates and their directors, officers,
shareholders, successors, and assigns from and against any
and all costs, losses, claims, suits, actions,
assessments, diminution in value, liabilities, fines,
penalties, damages (compensatory, consequential, and
other), and expenses (including reasonable legal fees) in
connection with or resulting from:
a. All debts, liabilities, and obligations of Seller,
whether accrued, absolute, contingent, known,
unknown, or otherwise, but excluding any Assumed
Liabilities and the Kniff Dividend.
b. Any material inaccuracy in any representation or
material breach of any warranty of Seller Parties
contained in this Agreement or any Related
Agreement.
c. Any material failure by Seller Parties to perform
or observe in full, or to have performed or
observed in full, any covenant, agreement, or
condition to be performed or observed by the
Seller Parties under this Agreement or any Related
Agreement.
d. Any liabilities or obligations of Seller Parties
or predecessors, including, without limitation,
reasonable costs of cleanup, containment or other
remediation, arising from or under any
Environmental Law (as defined in Section 10.22)
and arising out of or relating to the operation of
the business of Seller Parties or the ownership,
operation or conditions at any time prior to the
Closing Date of the Leased Premises, Leased
Equipment, Purchased Assets or any other
properties and assets in which Seller Parties or
either of them has had an interest or use of any
kind.
e. Federal Income Tax.
f. Michigan Single Business Tax.
14.2 Seller Parties will have no liability under this Section
14, other than with respect to Sections 10.19 and 10.22
unless on or before two years after Closing Buyer notifies
Seller Parties of a claim specifying the factual basis of
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that claim in reasonable detail to the extent then known
by Buyer. A claim with respect to Section 10.19 may be
made at any time until the applicable statute of
limitations has run. A claim with respect to Section
10.22 may be made on or before five (5) years after
Closing.
14.3 Seller Parties will have no liability under this Section
14 until the total of all damages with respect to such
matters exceeds $25,000 and then only for the amount by
which such damages exceed $25,000. Seller Parties shall
have no liability in excess of $1,540,000 under this
Section 14.
14.4 Upon notice to Seller Parties specifying in reasonable
detail the basis for such set-off, and subject to the
provisions of Sections 14.5 and 14.6, Buyer may set off
any amount to which it may be entitled under this Section
14 against amounts otherwise payable under the Consulting
Agreement and Noncompetition Agreement with Xxxxxxx Xxxxx
or may give notice of a Claim in such amount under the
Escrow Agreement. Neither the exercise of nor the failure
to exercise such right of set-off or to give a notice of a
Claim under the Escrow Agreement will constitute an
election of remedies or limit Buyer in any manner in the
enforcement of any other remedies that may be available to
it.
14.5 Procedure For Indemnification--Third Party Claims
(a) If Buyer is entitled to indemnification under this
Section 14, Buyer shall, with reasonable
promptness after obtaining knowledge of the claim,
provide Seller Parties with written notice of any
third party action, suit, proceeding, claim,
demand or assessment that may be subject to the
indemnification provisions of this Section 14
(collectively, "Third Party Claims"), including,
in reasonable detail, the basis for the claim, the
nature of the Damages and a good faith estimate of
the amount of Damages. The Seller Parties shall
have Thirty (30) days after their receipt of the
notice of Third Party Claims to notify Buyer in
writing whether the Seller Partes agree that the
Third Party Claim is subject to indemnification
under this Section 14 and, if so, whether the Seller
Parties elect to undertake, conduct and control,
through legal counsel of their choice, which legal
counsel shall be subject to the consent of the
Buyer, which consent shall not be unreasonably
withheld, and at their sole risk and expense, the
good faith settlement or defense of the Third
Party Claim.
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(b) If within Fifteen (15) days after their receipt of
the notice of Third Party Claim, the Seller
Partners notify Buyer that they elect to undertake
the good faith settlement or defense of the Third
Party Claim, Buyer shall cooperate reasonably with
the Seller Parties in connection therewith
including, without limitation, by making available
to the Seller Partners all relevant information
material to the defense of the Third Party Claim.
Buyer shall be entitled to participate in the
settlement or defense of the Third Party Claim
through legal counsel chosen by Buyer, at its
expense, and to approve any proposed settlement
that would impose any obligation or duty on Buyer,
which approval may, in the sole discretion of the
Seller Parties, be withheld. So long as the
Seller Parties are contesting the Third Party
Claim in good faith and with reasonable diligence,
Buyer shall not pay or settle the Third Party
Claim. Notwithstanding the foregoing, Buyer shall
have the right to pay or settle any Third Party
Claim at any time, provided that in such event it
waives any right to indemnification therefor by
the Seller Parties.
(c) If Seller Parties do not provide notice that they
elect to undertake the good faith settlement or
defense of the Third Party Claim, or if the Seller
Parties fail to contest the Third Party Claim or
undertake or approve settlement, in good faith and
with reasonable diligence, Buyer shall thereafter
have the right to contest, settle or compromise
the Third Party Claim at its exclusive discretion,
at the risk and expense of the Seller Parties, and
the Seller Parties will thereby waive any claim,
defense or argument that Buyer's settlement or
defense of such Third Party Claim is in any respect
inadequate or unreasonable.
A party's failure to give timely notice will not
constitute a defense, in part or in whole, to any claim
for indemnification by such party, except if, and only to
the extent that, such failure results in any material
prejudice to the Seller Parties.
14.6 Procedure for Indemnification - Non-Third Party Claims.
As to any other claim, the following procedures shall be
followed:
(a) Buyer shall, with reasonable promptness, deliver
to the Seller Parties written notice of all claims
for indemnification under this Section 14, other
than Third Party Claims, including, in reasonable
detail, the basis for the claim, the nature of
Damages and a good faith estimate of the amount of
Damages.
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(b) The Seller Parties shall have Thirty (30) days
after their receipt of the claim notice to notify
Buyer in writing whether the Seller Parties accept
liability for all or any part of the Damages
described in the claim notice. If the Seller
Parties do not so notify Buyer, Buyer shall be
deemed to accept liability for all the Damages
described in the claim notice.
(c) A party's failure to give timely notice will not
constitute a defense, in part or in whole, to any
claim for indemnification by such party, except
if, and only to the extent that, such failure
results in any material prejudice to the
indemnifying party.
15. Expenses.
Each of the parties shall pay all of the costs that it
incurs incident to the preparation, execution, and
delivery of this Agreement and the performance of any
related obligations, whether or not the transactions
contemplated by this Agreement shall be consummated,
except that all such costs and all liabilities of Seller
other than the Assumed Liabilities, including, without
limitation, tax liabilities, shall be paid out of the
proceeds of the Purchase Price and shall not be paid out
of the Purchased Assets, except for legal and accounting
fees of up to $50,000 in the aggregate. All costs and
expenses of the environmental investigation and
remediation work at Seller's Xxxxxxxx Park site shall be
paid by Kniff, not paid out of the Purchased Assets.
16. Risk of Loss
The risk of loss of or damage to the Purchased Assets from
fire or other casualty or cause shall be on Seller at all
times up to the Closing, and it shall be the
responsibility of Seller to repair, or cause to be
repaired, and to restore the property to the condition it
was before the loss or damage.
17. Seller's Name.
From and after the Closing Date, Buyer shall have the
right to use in or in connection with the conduct of any
business (whether carried on by it directly or through any
related corporation) the name "Sub-Surface Construction
Company " ("Name"); any part or portion of the Name,
either alone or in combination with one or more other
words; or any variation of the Name. Seller Parties
warrant to Buyer that they have taken all necessary action
to protect the Name in the State of Michigan and agree to
take or cause to be taken any and all steps or actions
that shall be or become permissible, proper, or convenient
to enable or permit Buyer to use the Name, or any part or
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portion of the Name, either alone or in combination with
one or more other words. It is contemplated that on or as
soon as practicable after the Closing Date, Seller will
change its name. After the Closing Date, Seller Parties
agree that they will not use the Name either directly or
indirectly, either alone or in combination with one or
more other words, in or in connection with any business,
activities, or operations that Seller Parties or either of
them directly or indirectly carry on or conduct.
18. Termination.
18.1 This Agreement may be terminated at any time before the
Closing Date as follows:
(a) By Buyer and Seller Parties in a written
instrument.
(b) By either Buyer or Seller Parties if the Closing
does not occur on the Closing Date.
(c) By Buyer or Seller Parties if there has been a
material breach of any of the representations or
warranties set forth in this Agreement on the part
of the other, and this breach by its nature cannot
be cured before the Closing.
(d) By Buyer or Seller Parties if there has been a
breach of any of the covenants or agreements set
forth in this Agreement on the part of the other,
and this breach is not cured within 10 business
days after the breaching party or parties receive
written notice of the breach from the other party.
18.2 If terminated as provided in Section 18.1, this Agreement
shall forthwith become void and have no effect, except for
Sections 18.3 and 19, and except that no party shall be
relieved or released from any liabilities or damages
arising out of the party's breach of any provision of this
Agreement.
18.3 Buyer, on the one hand, and the Seller Parties jointly and
severally, on the other hand, warrant and agree that if
this Agreement is terminated pursuant to Section 18.1,
each party will not, during the one-year period following
the termination, directly or indirectly solicit any
employee of the other party to leave the other party's
employment.
19. Miscellaneous Provisions.
19.1 REPRESENTATIONS AND WARRANTIES.
Except with respect to the representations and warranties
of Seller Parties under Sections 10.19 and 10.22, all
representations, warranties, and agreements made by the
parties pursuant to this Agreement shall survive for a
period of two years following the consummation of the
transactions contemplated by this Agreement. The
representations and warranties of Seller Parties under
Section 10.19 shall survive until the applicable statute
of limitations shall have run and under Section 10.22
shall survive for five (5) years.
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19.2 NOTICES.
All notices, demands, and requests required or permitted
to be given under the provisions of this Agreement shall
be in writing and shall be deemed given (a) when
personally delivered or sent by facsimile transmission to
the party to be given the notice or other communication or
(b) on the business day following the day such notice or
other communication is sent by overnight courier to the
following:
if to Seller Parties: Xx. Xxxxxxx Xxxxx
0000 Xxxxxxxx
Xxxxxx Xxxxxx, Xxxxxxxx 00000
("Kniff")
with a copy to: Xxxx X. XxXxxx
Miller, Johnson, Xxxxx & Xxxxxxxxx, P.L.C.
000 Xxxxxx Xxxxx Xxxxxxxx
Xxxxx Xxxxxx, Xxxxxxxx 00000
Facsimile No.: (000) 000-0000
if to Buyer: SEMCO Energy Construction Co.
000 Xxxxx Xx.
Xxxx Xxxxx, Xxxxxxxx ("SEMCO")
Attention: President
Facsimile No.: 000-000-0000
with a copy to: Xxxxxx X. Xxxxxxx
Attorney at Law
000 Xxxx 00xx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000-0000
Facsimile No.: (000) 000-0000
or to such other address or facsimile number that the
parties may designate in writing.
19.3 Assignment.
Neither the Seller Parties nor Buyer shall assign this
Agreement, or any interest in it, without the prior
written consent of the other, except that Buyer may assign
any or all of its rights under this Agreement to any
affiliate without Seller Parties' consent.
19.4 Parties in Interest.
This Agreement shall inure to the benefit of, and be
binding on, the named parties and their respective
successors and permitted assigns, but not any other
person.
19.5 Choice of Law.
This Agreement shall be governed, construed, and enforced
in accordance with the laws of the State of Michigan.
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19.6 Counterparts.
This Agreement may be signed in any number of counterparts
with the same effect as if the signature on each
counterpart were on the same instrument.
19.7 Entire Agreement.
This Agreement and all related documents, schedules,
exhibits, or certificates represent the entire
understanding and agreement between the parties with
respect to the subject matter and supersede all prior
agreements or negotiations between the parties. This
Agreement may be amended, supplemented, or changed only by
an agreement in writing that makes specific reference to
this Agreement or the agreements delivered pursuant to it
and that is signed by the party against whom enforcement
of any such amendment, supplement, or modification is
sought.
19.8 Arbitration.
(a) Any dispute, controversy, or claim arising out of
or relating to this Agreement or relating to the
breach, termination, or invalidity of this
Agreement, whether arising in contract, tort, or
otherwise, shall at the request of any party be
resolved in binding arbitration. Any arbitration
shall proceed in accordance with Title 9 of the
United States Code, as it may be amended or
recodified from time to time ("Title 9"), and the
current Commercial Arbitration Rules (the
"Arbitration Rules") of the American Arbitration
Association ("AAA") to the extent that Title 9 and
the Arbitration Rules do not conflict with any
provision of this Section 19.8.
(b) No provision of or the exercise of any rights
under this Section 19.8 shall limit the right of
any party to seek and obtain provisional or
ancillary remedies (such as injunctive relief,
attachment, or the appointment of a receiver) from
any court having jurisdiction before, during, or
after the pendency of an arbitration proceeding
under this Section. The institution and
maintenance of any such action or proceeding shall
not constitute a waiver of the right of any party
(including the party taking the action or
instituting the proceeding) to submit a dispute,
controversy, or claim to arbitration under this
Section.
(c) Any award, order, or judgment made pursuant to
arbitration shall be deemed final and may be
entered in any court having jurisdiction over the
enforcement of the award, order, or judgment.
Each party agrees to submit to the jurisdiction of
any court for purposes of the enforcement of the
award, order, or judgment.
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(d) The arbitration shall be held before one
arbitrator knowledgeable in the general subject
matter of the dispute, controversy, or claim and
selected by AAA in accordance with the Arbitration
Rules, except that any arbitration in which the
disputed, controverted, or claimed amount (as
reflected on the demand for arbitration, as the
same may be amended) exceeds $1,000,000.00 shall
be held before three arbitrators, one arbitrator
being selected by Buyer, one by the Seller
Parties, and the third by the other two from a panel of
persons identified by AAA who are knowledgeable in the
general subject matter of the dispute, controversy, or
claim.
(e) The arbitration shall be held at the office of AAA
located in Southfield, Michigan (as the same may
be from time to time relocated), or at another
place the parties agree on.
(f) In any arbitration proceeding under this Section
19.8, subject to the award of the arbitrator(s),
each party shall pay all its own expenses, an
equal share of the fees and expenses of the
arbitrator, and, if applicable, the fees and
expenses of its own appointed arbitrator. The
arbitrator(s) shall have the power to award
recovery of costs and fees (including reasonable
attorney fees, administrative and AAA fees, and
arbitrators' fees) among the parties as the
arbitrators determine to be equitable under the
circumstances.
(g) The interpretation and construction of this
Section 19.8, including, but not limited to, its
validity and enforceability, shall be governed by
Title 9 of the U.S. Code, notwithstanding the
choice of law set forth in Section 19.5 of this
Agreement.
20. Right of First Refusal
For a period of four years from the Closing, Kniff shall
have a Right of First Refusal to repurchase the Purchased
Assets if Buyer determines to sell the Purchased Assets to
a third party. This Right of First Refusal shall not apply
to mergers or other combinations or to transfers to
affiliates of Buyer.
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The parties have executed this Agreement on the date set
forth on the first page of this Agreement.
WITNESSES:
SELLER
Xxxx X. XxXxxx By Xxxxxxx Xxxxx
Its: President
_____________________________
SELLER's SOLE SHAREHOLDER
Xxxx X. XxXxxx Xxxxxxx Xxxxx
_____________________________
BUYER
Attest: A.R. Xxxxxxx By L. L. Xxxxxxx
Its: President
_____________________________
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