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EXHIBIT 10(l)
EXECUTION COPY
STOCK PURCHASE AGREEMENT
BETWEEN
XXXXXXX GRAND, INDIVIDUALLY AND AS TRUSTEE
OF THE XXXXXXX GRAND REVOCABLE
TRUST DATED JULY 5, 1979 AND THE
XXXXXXX X. GRAND PROPERTY TRUST
DATED JANUARY 22, 1992
AND
NEWCOR, INC.
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STOCK PURCHASE AGREEMENT
TABLE OF CONTENTS
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ARTICLE I
SALE OF DECO SHARES.................................................... 1
1.1 The Sale.................................................... 1
1.2 Estimated Purchase Price.................................... 2
1.3 PostClosing Purchase Price Adjustment....................... 3
1.4 Permitted Distribution...................................... 5
1.5 Additional Permitted Distribution........................... 5
ARTICLE II
THE CLOSING 5
2.1 Time and Place of Closing................................... 5
2.2 Deliveries By Seller........................................ 6
2.3 Deliveries By Buyer......................................... 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER 8
3.1 Corporate Organization, Etc................................. 8
3.2 Capitalization.............................................. 8
3.3 Subsidiaries....................... ....................... 9
3.4 Authority Relative to this Agreement ....................... 9
3.5 Consents and Approvals; No Violations.......................10
3.6 Financial Statements........................................11
3.7 Absence of Certain Changes..................................11
3.8 Compliance with Law.........................................12
3.9 Contracts and Commitments...................................13
3.10 Litigation..................................................14
3.11 Taxes.......................................................14
3.12 Employee Benefit Plans; ERISA...............................16
3.13 Title to Properties.........................................20
3.14 Trademarks, Etc.............................................20
3.15 Insuranc....................................................22
3.16 Environmental Matters.......................................22
3.17 Brokers and Finders.........................................25
3.18 Conflicts of Interest.......................................25
3.19 Liabilities.................................................26
3.20 Suppliers...................................................26
3.21 Inventory...................................................26
3.22 Accounts Receivable.........................................26
3.23 Employee Relations..........................................27
3.24 Certain Payments............................................27
3.25 Books and Records...........................................27
3.26 Disclosure..................................................27
3.27 Real Property and Real Property Leases......................28
3.28 Effect of Transaction.......................................28
3.29 Product Warranty and Product Recalls........................28
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER............................... 29
4.1 Corporate Organization, Etc................................. 29
4.2 Authority Relative to this Agreement........................ 29
4.3 Consents and Approvals; No Violations....................... 30
4.4 Investment Intent........................................... 30
4.5 Brokers and Finders......................................... 30
4.6 Access...................................................... 30
4.7 Buyer's Expertise and Investigation......................... 31
4.8 Litigation.................................................. 32
4.9 MESC Notice................................................. 32
ARTICLE V
COVENANTS OF THE PARTIES.............................................. 32
5.1 Conduct of Business of the Deco Companies................... 33
5.2 Access to Information....................................... 33
5.3 Continued Accuracy of Seller's Representations and
Warranties................................................. 34
5.4 Consents and Approvals...................................... 34
5.5 Filings; Cooperation; Information........................... 35
5.6 Further Assurances.......................................... 35
5.7 Seller Indemnification...................................... 35
5.8 Buyer Indemnification....................................... 36
5.9 Information for Buyer's Statements, Reports,
Applications and SEC Filings............................... 37
5.10 Acquisition Proposal........................................ 38
5.11 Indemnification of Seller for Business Decisions
As An Officer or Director of the Deco Companies............ 39
5.12 Environmental Assessments................................... 40
ARTICLE VI
TAX MATTERS
6.1 Certain Tax Matters......................................... 40
6.2 Tax Matters and Post-Closing Cooperation.................... 41
6.3 Clearance Certificate....................................... 42
6.4 Nonforeign Affidavit........................................ 42
6.5 Transfer Taxes.............................................. 42
6.6 Access to Records Following Closing......................... 42
6.7 Filing of Tax Returns....................................... 43
ARTICLE VII
CONDITIONS TO SELLER'S OBLIGATIONS.................................... 43
7.1 Representations and Warranties True......................... 44
7.2 Performance................................................. 44
7.3 No Injunction or Proceeding................................. 44
7.4 Consents.................................................... 44
7.5 HSR Act..................................................... 44
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7.6 Documents and Certificates.............................. 45
7.7 Counsel Opinion......................................... 45
ARTICLE VIII
CONDITIONS TO BUYER'S OBLIGATIONS.................................. 45
8.1 Representations and Warranties True..................... 45
8.2 Performance............................................. 46
8.3 No Injunction or Proceeding............................. 46
8.4 Consents................................................ 46
8.5 HSR Act................................................. 46
8.6 Closing Certificates.................................... 46
8.7 General Release......................................... 46
8.8 Noncompetition Agreement................................ 47
8.9 Indemnity Escrow Agreement.............................. 47
8.10 Counsel Opinion......................................... 47
8.11 Permitted Distribution.................................. 47
8.12 No Litigation........................................... 47
8.13 No Material Adverse Change.............................. 47
8.14 Financing............................................... 47
ARTICLE IX
TERMINATION........................................................ 47
9.1 Termination............................................. 47
9.2 Procedure and Effect of Termination..................... 48
9.3 Disbursement of Deposit................................. 49
9.4 Payment of Seller Payment by Seller to Buyer............ 50
ARTICLE X
MISCELLANEOUS PROVISIONS........................................... 51
10.1 Certain Definitions..................................... 51
10.2 Amendment and Modification.............................. 57
10.3 Extension; Waiver....................................... 57
10.4 Entire Agreement; Assignment............................ 57
10.5 Severability............................................ 58
10.6 Notices................................................. 58
10.7 Governing Law........................................... 59
10.8 Publicity............................................... 59
10.9 Table of Contents and Headings.......................... 60
10.10 Counterparts............................................ 60
10.11 Expenses................................................ 60
10.12 Exclusion of Warranties and Acknowledgment of Buyer..... 60
10.13 Limited Survival........................................ 61
10.14 Indemnification Procedures and Limitations.............. 62
10.15 Exclusive Remedies...................................... 67
10.16 Incorporation of Exhibits and Schedules................. 67
10.17 Parties................................................. 67
10.18 No Construction Against Drafter......................... 67
10.19 Further Assurances...................................... 67
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10.20 Relationship of the Parties.............................. 68
10.21 Dispute Resolution....................................... 68
10.22 Exclusive Jurisdiction................................... 69
10.23 Time of the Essence...................................... 70
10.24 Disclosures in the Disclosure Schedule................... 70
10.25 Additional Termination Rights............................ 71
EXHIBIT LIST
Exhibit 1.2(a)(i) Indemnity Escrow Agreement
Exhibit 1.2(c) Opening Statement
Exhibit 1.3(b) Agreed-upon Procedure for Final Statement
Exhibit 1.4 Permitted Distribution
Exhibit 2.2(i) Form of Noncompetition Agreement
Exhibit 2.2(j) Form of General Release
Exhibit 5.7(c) Special Indemnity Matters
Exhibit 5.9(b) Certain Items to be Delivered by Seller in connection with
the Closing Date Financing
Exhibit 6.1 Allocation of Purchase Price for Purposes of Section
338(h)(10) of the Code
Exhibit 7.6 Form of Seller's Closing Certificate
Exhibit 7.7 Form of Opinion of Counsel to Buyer
Exhibit 8.6 Form of Buyer's Closing Certificate
Exhibit 8.10 Form of Opinion of Counsel to Seller
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT dated December 9, 1997 (the "Agreement"), is
made between Xxxxxxx Grand, individually and as Trustee of the Xxxxxxx Grand
Revocable Trust dated July 5, 1979 and the Xxxxxxx X. Grand Property Trust
dated January 22, 1992 (individually and jointly and severally in any one or
more combinations, "Seller"), and Newcor, Inc., a Michigan corporation
("Buyer").
RECITALS
A. Seller owns all of the issued and outstanding shares (collectively,
the "Deco Shares") of capital stock of each of Grand Machining Co., a
Michigan corporation ("Deco-Grand"), Deco Technologies, Inc., a Michigan
corporation ("Deco Tech"), and Deco International, Inc., a Michigan corporation
("Deco International"). Deco-Grand, Deco Tech and Deco International are
sometimes referred to herein individually as a Deco Company and sometimes
individually and jointly and severally in any one or more combinations as the
"Deco Companies".
B. Seller desires to sell to Buyer, and Buyer desires to purchase from
Seller, the Deco Shares, upon the terms and conditions set forth in this
Agreement.
C. Not later than December 10, 1997, Buyer will deposit the sum of
$5,000,000 (the "Deposit") into escrow with First of America Bank, N.A. (the
"Deposit Escrow Agent") to be held, administered and disbursed in accordance
with the provisions of this Agreement and the Escrow Agreement (the "Deposit
Escrow Agreement") executed and delivered by Buyer, Seller and the Deposit
Escrow Agent on the date hereof.
Therefore, the parties, intending to be legally bound, agree as follows:
ARTICLE II
SALE OF DECO SHARES
1.1 The Sale. Upon the terms and conditions set forth in this Agreement,
at the Closing (as defined in Section 2.1 below), Seller will sell, assign and
deliver to Buyer, and Buyer will purchase and accept from Seller, the Deco
Shares.
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1.2 Estimated Purchase Price.
(a) Upon the terms and conditions set forth in this Agreement, in
consideration of the sale, assignment and delivery of the Deco Shares,
subject to adjustment after the Closing in accordance with Section 1.3
below, at the Closing Buyer will pay to Seller for the Deco Shares an
amount equal to the Estimated Purchase Price (as defined in subsection
(d) below) as follows:
(i) An amount equal to $1,000,000 shall be deposited by Buyer
in escrow with First of America Bank, N.A. or such other escrow
agent as may be selected by Buyer and Seller (the "Indemnity Escrow
Agent") to be held, administered and disbursed in accordance with
the provisions of an Escrow Agreement in substantially the form
attached hereto as Exhibit 1.2(a)(i) to be executed and delivered
by Seller, Buyer and the Escrow Agent in connection with the
Closing (the "Indemnity Escrow Agreement");
(ii) the Deposit shall be disbursed by the Deposit Escrow
Agent to Seller; and
(iii) the balance of the Estimated Purchase Price (net of the
amounts described in clause (i) and (ii) of this Section 1.2(a))
shall be paid to Seller by certified or cashier check payable to
Seller or by wire transfer of immediately available funds to an
account or accounts designated by Seller prior to the Closing.
(b) Not less than two days prior to the Closing, Seller will prepare
and submit to Buyer a statement (the "Preliminary Statement") setting
forth the estimated Net Book Value (as defined in Section 1.3(a) below)
as of the Closing Date (as defined in Section 2.1 below) (the "Estimated
Net Book Value") (including detail of the components of the Estimated Net
Book Value as they would appear on a combined balance sheet of the Deco
Companies prepared in a manner consistent with the combined unaudited
balance sheets of the Deco Companies as of the Reference Date (as defined
in Section 3.6 below), but giving effect to all of the Adjustments (as
defined in subsection (c) below) irrespective of whether the same have
theretofore been distributed to Seller as part of the Permitted
Distribution (as defined in Section 1.4 below) or otherwise, except that
no effect will be given to the cash, cash equivalents and marketable
securities components of the Adjustment beyond any distributions thereof
made (or declared) at or prior to the delivery of the Preliminary
Statement so long as Seller shall agree in a writing delivered to Buyer
with the Preliminary Statement that no further distributions of cash,
cash equivalents and marketable securities will be made as part of the
Permitted Distribution or otherwise.
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(c) At the Closing, the parties will calculate the difference
between the Estimated Net Book Value and $9,925,800 (the "Opening Net
Book Value"). The Opening Net Book Value represents (i) the Net Book
Value as of March 31, 1997 minus (ii) $12,044,900 (which represents the
net amount of certain adjustments to the assets and liabilities of the
Deco Companies (the "Adjustments") to reflect, among other things, excess
cash and cash equivalents and other non-operating assets and liabilities
on hand with the Deco Companies as of such date) to be distributed by the
Deco Companies at or before the Closing as the Permitted Distribution,
all as set forth on Exhibit 1.2(c) (the "Opening Statement").
(d) If the Estimated Net Book Value exceeds the Opening Net Book
Value, the Base Amount (as defined in subsection (e) below) will be
increased by the amount of such excess. If the Estimated Net Book Value
is less than the Opening Net Book Value, the Base Amount will be
decreased by the amount of such shortfall. As used in this Agreement, the
"Estimated Purchase Price" will mean the Base Amount, as increased or
decreased pursuant to this subsection.
(e) As used in this Agreement, the "Base Amount" will be equal to
$54,825,000.
1.3 Post-Closing Purchase Price Adjustment.
(a) For purposes of this Agreement, the "Net Book Value," as of a
specified date, will mean the amount by which the sum of total assets of
the Deco Companies as of such date exceeds the sum of the total
liabilities of the Deco Companies as of such date, as reflected on the
Opening Statement, the Preliminary Statement or the Final Statement (as
defined in subsection (b) below), as applicable, and as determined in a
manner consistent with the combined unaudited balance sheets of the Deco
Companies as of the Reference Date.
(b) As promptly as practicable following the Closing, but in no
event later than 90 days after the Closing, Seller will prepare and
submit to Buyer a statement (the "Final Statement") setting forth the Net
Book Value as of the Closing Date (the "Final Net Book Value") (including
detail of the components of the Final Net Book Value as they would appear
on a combined balance sheet of the Deco Companies prepared in a manner
consistent with (i) the combined unaudited balance sheets of the Deco
Companies as of the Reference Date, and (ii) the Preliminary Statement,
but giving effect to (x) all Adjustments other than cash, cash
equivalents and marketable securities whether distributed or not pursuant
to Section 1.4 or otherwise and (y) Adjustments to cash, cash equivalents
and marketable securities to the extent actually distributed (or
distribution declared) on or prior to the Closing; and setting forth any
post-Closing adjustment to the purchase price that needs to be made as a
result of any difference between the
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Estimated Net Book Value and the Final Net Book Value. In the
preparation of the Final Statement, Seller shall fully comply with the
agreed-upon procedures described on Exhibit 1.3(b) attached hereto. Buyer
will give Seller access to the books and records of the Deco Companies and
Buyer to the extent requested by Seller for purposes of preparing the
Final Statement and will cause appropriate personnel of the Deco Companies
and Buyer to assist Seller and Seller's Representatives (as defined in
Section 10.1(a) below), at no cost to Seller, in the preparation of the
Final Statement.
(c) To the extent that the Final Net Book Value is greater than the
Estimated Net Book Value, the purchase price for the Deco Shares will be
increased by an amount equal to such excess, as more fully set forth in
this Section 1.3. To the extent that the Final Net Book Value is less
than the Estimated Net Book Value, the purchase price for the Deco Shares
will be reduced by an amount equal to such shortfall, as more fully set
forth in this Section 1.3.
(d) If Buyer disputes the Final Statement prepared by Seller or
Seller's calculation of the Final Net Book Value, as set forth on the
Final Statement, Buyer will notify Seller in writing setting forth its
objections in detail within 30 days after delivery of the Final
Statement. If Buyer does not so notify Seller within such 30-day period,
Buyer will be deemed to have conclusively accepted the Final Statement
and the Final Net Book Value set forth thereon. If Buyer does so notify
Seller, Buyer and Seller will endeavor in good faith to resolve any
dispute over the Final Statement and/or the calculation of the Final Net
Book Value. Each party will cooperate with the other party in the
determination of the Final Net Book Value and any purchase price increase
or decrease to be made after the Closing Date, including allowing the
other party and its Representatives access after the Closing to the books
and records of the Deco Companies. If Buyer and Seller are unable to
resolve any such dispute within 30 days of the delivery of the Final
Statement, such dispute will be submitted to the Detroit office of Ernst
& Young, L.L.P. or such other nationally recognized accounting firm in
the United States as is mutually acceptable to Buyer and Seller (the
"Independent Accounting Firm"), which will resolve all such disputes
within 30 days from their submission. The decision of the Independent
Accounting Firm will be final and binding upon Buyer and Seller. Seller
and Buyer will each be responsible for 50% of the expenses of the
Independent Accounting Firm.
(e) Any purchase price increase or decrease to be made under this
Agreement will (i) include simple interest at the rate of 8-1/2% per
annum from the day after the Closing Date through the date of payment of
any such increase or decrease, and (ii) be paid by the appropriate party,
in cash or by wire transfer of immediately available funds to an account
or
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accounts designated by the receiving party, promptly but in no event
later than ten days following the earlier to occur of the parties'
agreement on any such adjustment or the decision of the Independent
Accounting Firm.
1.4 Permitted Distribution. At or before the Closing, the parties
acknowledge that Seller, to the extent permitted by applicable Governmental
Regulation (as defined in Section 3.5(d) below), will cause the Deco Companies
to declare and make a distribution to Seller of the assets and liabilities that
constitute the Adjustments as more specifically described on Exhibit 1.4 (the
"Permitted Distribution"); provided, however, that the Deco Companies shall not
make or declare any Permitted Distribution (and Seller shall not cause any of
the Deco Companies to make or declare any such distribution) of the cash, cash
equivalent and marketable securities components thereof beyond any such
distributions actually taken into account in preparing the Preliminary
Statement.
1.5 Additional Permitted Distribution. In addition to the Permitted
Distribution, at or before the Closing, the parties acknowledge that Seller, to
the extent permitted by applicable Governmental Regulation, will cause the
Deco Companies to declare and make a distribution to Seller of all obligations
of the Deco Companies to DLJ (as defined in Section 3.17) and the attorneys and
accountants for the Deco Companies (the "Additional Permitted Distribution"),
and no such obligations shall be included in the Preliminary Statement or the
Final Statement to the extent so distributed.
ARTICLE IIII
THE CLOSING
2.1 Time and Place of Closing. Upon the terms and conditions set forth
in this Agreement, the closing of the transactions contemplated by this
Agreement (the "Closing") will take place at the offices of Miller, Canfield,
Paddock and Stone, P.L.C., Bloomfield Hills, Michigan, at 10:00 a.m. (local
time) on a Business Day (as defined in Section 10.1) that is designated by
Buyer so that the Closing will occur contemporaneously with the closing of the
Closing Date Financing (as defined in Section 10.1), but such date (a) shall
not be a date later than the Deadline (as defined below) and (b) shall be a
date after (i) expiration or early termination of the "waiting period" and any
extensions thereof under the HSR Act (as defined in Section 3.5(b) below) and
(ii) if an injunction, court order or other Governmental Regulation enjoining
or restraining consummation of the transactions contemplated by this Agreement
has been obtained, the reversal, lifting or other successful appeal or
resolution of such injunction, order or Governmental Regulation, or at such
other place and on such other date as the parties may mutually agree in
writing. The consummation of the transactions contemplated by this
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Agreement and the Closing will be deemed to take place at 11:59 p.m.
(local time) on the date on which the Closing actually occurs, and such date
will be referred to as the "Closing Date" under this Agreement. For purposes
of this Agreement, "Deadline" shall mean March 31, 1998 or such later date as
the Deadline shall have been extended pursuant to Sections 9.1(d)(i), 9.1(f)(i)
and 9.4(b) hereof.
2.2 Deliveries By Seller. At the Closing, Seller will deliver (or cause
to be delivered) the following to Buyer:
(a) Stock certificates representing the Deco Shares, duly endorsed
in blank or accompanied by stock powers with signatures guaranteed by a
financial institution that is a participant in the Securities Transfer
Agents Medallion Program or the New York Stock Exchange Medallion
Signature Guarantee Program.
(b) The resignations, effective as of the Closing Date, of all
members of the Boards of Directors and officers of the Deco Companies.
(c) The stock books, stock ledgers and minute books of the Deco
Companies.
(d) True and complete copies of the Articles of Incorporation of the
Deco Companies, as certified by the appropriate state official, and
certificates of good standing of the Deco Companies from the appropriate
state official in each state listed in Section 3.1 of the Disclosure
Schedule, which articles (as so certified) and certificates of good
standing are dated not more than thirty (30) days prior to the Closing
Date.
(e) As to each of the Deco Companies, a certificate of Seller
certifying that attached thereto are true and complete copies of the
Bylaws of such company, as amended through the Closing Date and as in
full force and effect on the Closing Date, and that the Articles of
Incorporation of such company, as certified by the appropriate state
official and as delivered at the Closing, have not been amended or
rescinded since the date of such certification and remain in full force
and effect on the Closing Date.
(f) A certificate of Seller dated as of the Closing Date and duly
executed by Seller certifying as to the fulfillment of the conditions set
forth in Sections 8.1 through 8.5 below.
(g) The certificate (duly executed by Seller) contemplated by
Section 8.6 below.
(h) A Noncompetition Agreement in substantially the form attached
hereto as Exhibit 2.2(i) (the "Noncompetition Agreement") duly executed
by Seller.
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(i) A General Release in substantially the form attached hereto as
Exhibit 2.2(j) (the "General Release") duly executed by Seller.
(j) The Indemnity Escrow Agreement duly executed by Seller.
(k) All other documents, instruments and writings required to be
delivered by Seller at or prior to the Closing pursuant to this
Agreement.
2.3 Deliveries By Buyer. At the Closing, Buyer will deliver (or cause to
be delivered) the following to Seller:
(a) The Estimated Purchase Price for the Deco Shares in accordance
with Section 1.2 above).
(b) True and complete copies of the Articles of Incorporation of
Buyer, as certified by the appropriate state official, and a certificate
of good standing of Buyer from the appropriate official of the
jurisdiction of Buyer's incorporation, which articles (as so certified)
and certificate of good standing are dated not more than thirty (30) days
prior to the Closing Date.
(c) A certificate of an officer of Buyer certifying on behalf of
Buyer that attached thereto are true and complete copies of the Bylaws of
Buyer, as amended through the Closing Date and as in full force and
effect on the Closing Date, and that the Articles of Incorporation of
Buyer, as certified by the appropriate state official and as delivered at
the Closing, have not been amended or rescinded since the date of such
certification and remain in full force and effect on the Closing Date.
(d) True and complete copies of corporate resolutions of the Board
of Directors of Buyer authorizing the execution, delivery and performance
of this Agreement and consummation of the transactions contemplated by
this Agreement which resolutions are certified on behalf of Buyer by an
officer of Buyer as being valid and in full force and effect on the
Closing Date.
(e) A certificate of an officer of Buyer dated as of the Closing
Date certifying on behalf of Buyer as to the fulfillment of the
conditions set forth in Sections 7.1 through 7.5 below.
(f) The documents and certificates (duly executed by Buyer if
appropriate) contemplated by Section 7.6 below.
(g) All other documents, instruments and writings required to be
delivered by Buyer at or prior to the Closing pursuant to this Agreement.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
To induce Buyer to execute and deliver this Agreement and to consummate
the transactions contemplated hereby, Seller represents and warrants to Buyer
as follows as of the date of this Agreement as of the Closing Date, each such
representation and warranty being independently material:
3.1 Corporate Organization, Etc. Each of the Deco Companies is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Michigan and has all requisite power and authority
(corporate and other) to conduct its business as it is now being conducted and
to own, lease and operate its property and assets. Each of the Deco Companies
is duly qualified or licensed and is in good standing in each of the
jurisdictions listed on Section 3.1 of the disclosure schedule of Seller
delivered to Buyer on the date hereof (the "Disclosure Schedule") being each
jurisdiction in which the ownership or leasing of property or the conduct of
its business requires such qualification or license, except where the failure
to be so qualified or licensed is not, in the aggregate, has not had, and is
not reasonably likely to have, a Seller Material Adverse Effect. For purposes
of this Agreement, "Seller Material Adverse Effect" means with respect to any
fact, circumstance, occurrence, event, change or development, that such fact,
circumstance, occurrence, event, change or development either alone or together
with other like facts, circumstances, occurrences, events, changes and
developments (a) has, or is reasonably likely to have (at the time in question
or at any time in the future), a material adverse effect on the business,
assets, financial condition or results of operations of the Deco Companies
taken as a whole or (b) has impaired, hindered or adversely affected, or is
reasonably likely to impair, hinder or adversely affect (at the time in
question or at any time in the future), the ability of Seller to execute or
deliver this Agreement or any of the Related Agreements, to perform any of
Seller's material obligations under this Agreement or any of the Related
Agreements or to consummate any of the material transactions contemplated by
this Agreement or any of the Related Agreements, or (c) has adversely affected,
or is reasonably likely to adversely affect (at the time in question or at any
time in the future), the validity or enforceability of any of the material
provisions of this Agreement or any of the Related Agreements against Seller.
Except as set forth on Section 3.1 of the Disclosure Schedule, none of the Deco
Companies has, during the past six (6) years, used or assumed any other names
in connection with their businesses or otherwise. Section 3.1 of the
Disclosure Schedule also contains true and complete copies of the Articles of
Incorporation and Bylaws of each of the Deco Companies.
3.2 Capitalization.
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(a) The authorized capital stock of Deco-Grand consists of 500
common shares, $100 par value, 163.086 shares of which are issued and
outstanding. The authorized capital stock of Deco Tech consists of 60,000
common shares, no par value, 100 shares of which are issued and
outstanding. The authorized capital stock of Deco International consists
of 6,000 common shares, $10 par value, 100 shares of which are issued and
outstanding.
(b) Seller owns (beneficially and of record) all of the issued and
outstanding shares of capital stock of the Deco Companies (consisting
solely of the Deco Shares) free and clear of all Encumbrances (as defined
in Section 10.1), except for those arising in connection with this
Agreement or those arising from applicable securities laws. All of the
issued and outstanding common shares of each of the Deco Companies have
been duly authorized, validly issued and fully paid and are
nonassessable. Upon delivery to Buyer at the Closing, Buyer will obtain
good title to the Deco Shares, free and clear of all Encumbrances, except
those created by Buyer or those arising from applicable securities laws.
(c) There are no outstanding (i) securities convertible into or
exchangeable for any capital stock of any of the Deco Companies, (ii)
options, warrants or other rights to purchase or subscribe for any
capital stock of any of the Deco Companies or (iii) contracts,
commitments, agreements, understandings or arrangements relating to the
issuance of any capital stock of any of the Deco Companies, any such
convertible or exchangeable securities or any such options, warrants or
rights pursuant to which any of the Deco Companies or Seller is subject
or bound.
3.3 Subsidiaries. Except as set forth in Section 3.3 of the Disclosure
Schedule, none of the Deco Companies has any Subsidiaries (as defined in the
next sentence). As used in this Agreement, a "Subsidiary" of any entity means
any other entity in which (other than directors qualifying shares required by
applicable Governmental Regulation) at least a majority of the securities or
other ownership interests of each class having ordinary voting power or
analogous right (other than securities or other ownership interests which have
such power or right only by reason of the happening of a contingency) are
owned, beneficially and of record, by such entity or by one or more of the
other Subsidiaries of such entity or by any combination thereof.
3.4 Authority Relative to this Agreement. Seller has all requisite power,
authority and capacity to execute and deliver this Agreement and each of the
Related Agreements and to consummate the transactions contemplated by this
Agreement and each of the Related Agreements. The execution and delivery
of this Agreement and the Related Agreements and the consummation of the
transactions contemplated by this Agreement and the Related Agreements by
Seller have been duly and validly authorized by all required action on the
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part of Seller (including the trustees and beneficiaries of the related
trusts). This Agreement has been (and when the Related Agreements have been
executed and delivered to Buyer at the Closing each of the Related Agreements
will have been) duly and validly executed and delivered by Seller, and this
Agreement constitutes (and when the Related Agreements are executed and
delivered to Buyer at the Closing each of the Related Agreements will
constitute) a legal, valid and binding agreement of Seller, enforceable against
Seller in accordance with its terms, except as may be limited by applicable
bankruptcy, insolvency, reorganization or other similar laws affecting
creditors' rights generally and by general equitable principles (regardless of
whether considered in a proceeding in equity or at law).
3.5 Consents and Approvals; No Violations. Neither the execution and
delivery of this Agreement or any of the Related Agreements by Seller, nor the
performance of any of Seller's obligations under this Agreement or any of the
Related Agreements, nor the consummation of any of the transactions
contemplated by this Agreement or any of the Related Agreements by Seller will:
(a) Violate any provision of the Articles of Incorporation or Bylaws
of any of the Deco Companies.
(b) Require any consent, waiver, approval, authorization or permit
of, or filing with or notification to (each a "Consent"), any foreign,
federal, state, county, municipal or other government or governmental or
regulatory authority, agency or commission or court of competent
jurisdiction (each, a "Governmental Entity") or any other Person
(including, but not limited to, under any Obligation (as defined in
subsection (c) below), except for filings with the Federal Trade
Commission (the "FTC") and the Antitrust Division of the United States
Department of Justice (the "DOJ") pursuant to the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended, and the rules and
regulations promulgated thereunder (together, the "HSR Act").
(c) Result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to
any right of termination or cancellation) under, any of the terms,
conditions or provisions of any indenture, mortgage, note, bond,
financing commitment, loan agreement, Encumbrance, license, Government
Authorization or other authorization, contract, lease, agreement or other
instrument or obligation (each, an "Obligation") to which any of the Deco
Companies or Seller is a party or by which any of their respective
properties or assets may be bound or give rise to any Encumbrance upon
the Deco Shares or any of the properties or assets of any of the Deco
Companies.
(d) Violate any law, statute, ordinance, rule or regulation or any
order, writ, judgment, injunction, decree or
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award of any Governmental Entity or arbitrator (each, a "Governmental
Regulation") applicable to any of the Deco Companies or Seller.
3.6 Financial Statements. Seller has previously provided to Buyer the
following financial statements (collectively, the "Financial Statements"): for
each of Deco-Grand and Deco Tech the audited balance sheets, the related
statements of income and retained earnings and the related statements of cash
flows (including any related notes thereto) as of and for the fiscal years
ended December 31, 1994, December 31, 1995 and December 31, 1996; and, for the
Deco Companies, the combined unaudited balance sheets as of March 31, 1997 (the
"Reference Date") and September 30, 1997. Except as otherwise set forth in
Section 3.6 of the Disclosure Schedule, the Financial Statements fairly present
in all material respects the financial position, results of operations, changes
in stockholders equity and cash flows of the respective companies as of the
dates or for the periods presented in the Financial Statements in conformity
with generally accepted accounting principles ("GAAP") applied on a consistent
basis during the periods involved.
3.7 Absence of Certain Changes. Except as disclosed in Section 3.7 of the
Disclosure Schedule and as otherwise contemplated by this Agreement, to
Seller's and the Deco Companies' Knowledge (as defined in Section 10.1), since
the Reference Date, none of the following have occurred with respect to the
Deco Companies:
(a) Any damage, destruction or casualty loss that has or constitutes
or is reasonably likely to have or constitute a Seller Material Adverse
Effect.
(b) Conducted their business in any material respect not in the
ordinary course of business consistent with past practice, except in
connection with the transactions contemplated by this Agreement.
(c) Any change in the accounting principles or practices used by
them (except as required by GAAP).
(d) Except in the ordinary course of business consistent with past
practice, sold, transferred or otherwise disposed of any of their
material properties or assets.
(e) Any change or aggregate of changes in the financial condition,
results of operations, business, assets, or liabilities of any of the
Deco Companies that has resulted or constitutes, or would reasonably be
expected to result in or constitute, a Seller Material Adverse Effect.
(f) Any increase in the compensation or rate of compensation or
commission (excluding bonus) payable or to become payable by any of the
Deco Companies to any of their
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directors, officers, salaried employees earning more than $75,000 per
annum, salesmen or agents, other than to Seller, or any General Increase
in the compensation or rate of compensation payable or to become payable
to any of their hourly employees or salaried employees earning $75,000 per
annum or less ("General Increase" for purposes hereof shall mean any
increase applicable to a class or group of employees and does not include
increases granted to individual employees for merit, length of service,
change in position or responsibility or other reasons applicable to
specific employees and not generally to a class or group thereof), or any
aggregate increase in compensation to any directors, officers or salaried
employees, of more than $5,000, or any termination of any key employee or
any employee whose compensation was in excess of $75,000 per annum.
(g) Any one capital expenditure or any series of related capital
expenditures (other than emergency repairs and replacements), the amount
or aggregate amount of which (as the case may be) is in excess of
$300,000.
3.8 Compliance with Law. Except as disclosed in Sections 3.11, 3.12 and
3.16 of the Disclosure Schedule:
(a) The businesses of the Deco Companies are not being conducted in
violation of, and the Deco Companies are now in full compliance with,
their respective Articles of Incorporation, Bylaws and all applicable
Governmental Regulations. No event has occurred or circumstance exists
that (with or without notice or lapse of time) may constitute or result
in a violation by any Deco Company of any Governmental Regulation. The
businesses of the Deco Companies at no time in the past have been
conducted in violation of, and the Deco Companies at all times in the
past have been in full compliance with, their respective Articles of
Incorporation, Bylaws and all applicable Governmental Regulations (except
where any such violation or failure to be in compliance would not give
rise to any liability of any kind (whether known or unknown, matured or
unmatured, asserted or not asserted, liquidated or not liquidated,
accrued, absolute, contingent or otherwise) on any of the Deco
Companies).
(b) The Deco Companies have all Governmental Authorizations (as
defined in Section 10.1) necessary to conduct their businesses as
currently conducted, except where such failure to have such Governmental
Authorizations, in the aggregate, does not have or constitute, and is not
reasonably likely to have or constitute, a Seller Material Adverse
Effect. Each such Governmental Authorization is valid and in full force
and effect.
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3.9 Contracts and Commitments.
(a) Section 3.9 of the Disclosure Schedule sets forth a list of the
following agreements and commitments (if written and if oral a summary of
the material provisions thereof) to which any of the Deco Companies is a
party or by which any of their respective assets are bound (collectively,
the "Contracts"):
(i) Employment, severance or termination agreements and any
post-retirement medical plans or supplemental executive retirement
plans.
(ii) Collective bargaining agreements.
(iii) Agreements which provide for aggregate future payments
by or to any of the Deco Companies of more than $250,000 per year
which are not terminable by such Deco Company on less than 180 or
fewer days' notice without penalty (other than purchase orders
entered into in the ordinary course of business and third party
payor or plan sponsor arrangements).
(iv) Agreements containing covenants limiting the freedom of
any of the Deco Companies to compete with any Person in any line of
business or in any area or territory.
(v) Material leases and licenses of any of the Deco Companies.
(vi) Indentures, mortgages and notes or other debt instruments
evidencing indebtedness for borrowed money to which any of the Deco
Companies is a party.
(vii) each licensing agreement or other contract or commitment
with respect to patents, trademarks, copyrights, or other
Intellectual Property Assets (as defined in Section 3.14),
including agreements with current or former employees, consultants,
or contractors regarding the appropriation or the non-disclosure of
any of the Intellectual Property Assets.
(viii) each joint venture, partnership, and other contract and
commitment (however named) involving a sharing of profits, losses,
costs, or liabilities by any Deco Company with any other Person.
(ix) each warranty, guaranty, and/or other similar undertaking
with respect to contractual performance extended by any Deco
Company.
(b) None of the Deco Companies are in default and, to Seller's and
the Deco Companies' Knowledge, none of the Deco
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Companies has any basis to believe that the other party is in default,
under any of the Contracts and no event has occurred or circumstance
exists that (with or without notice or lapse of time) may contravene,
conflict with, or result in a violation or breach of, or give any Deco
Company or other Person the right to declare a default or exercise
any remedy under, or to accelerate the maturity or performance of, or to
cancel, terminate, or modify, any Contract. Seller has provided to Buyer
true and complete copies of the Contracts.
3.10 Litigation. Except as set forth in Section 3.10 of the Disclosure
Schedule and except with regard to taxes, employee benefits and environmental
matters (which are the subject of other Sections in this Agreement):
(a) There is no Proceeding (as defined in Section 10.1) pending or,
to Seller's and the Deco Companies' Knowledge, threatened against any of
the Deco Companies or Seller before any Governmental Entity or arbitrator
and, to Seller's and the Deco Companies' Knowledge, there is no
reasonable basis for any such Proceeding.
(b) None of the Deco Companies is subject to any outstanding
judgment, order, writ, injunction, decree or award of any Governmental
Entity or arbitrator.
3.11 Taxes.
(a) For purposes of this Agreement:
(i) The term "Taxes" means all federal, state, local, foreign,
and other net income, gross income, gross receipts, profits, goods
and services, social security, sales, use, ad valorem, single
business, transfer, franchise, profits, license, lease, service,
service use, withholding, payroll, employment, excise, franchise,
business license, occupation, real property gains, severance,
stamp, occupation, premium, property, windfall profits, customs,
duties, or other taxes, fees, assessments, environmental,
alternative minimum, windfall and capital taxes, and all other
obligations of the same or a similar nature to any of the
foregoing, together with any interest and any penalties, additions
to tax, or additional amounts with respect thereto, and the term
"Tax" means any one of the foregoing Taxes;
(ii) The term "Return" means all returns, declarations,
reports, statements, schedules, notices, forms or other documents
or information required to be filed in respect of the
determination, assessment, collection or payment of any Tax or in
connection with the administration, implementation or enforcement
of any
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legal requirement relating to any Tax, and the term "Return"
means any one of the foregoing Returns;
(iii) The term "Code" means the Internal Revenue Code of 1986,
as amended. All citations to the Code or to the regulations
promulgated thereunder shall include any amendments or any
substitute successor provisions thereto.
(b) There have been properly completed and filed on a timely basis
and in correct form all Returns required to be filed by the Deco
Companies. As of the time of filing, all Returns correctly reflected
(and all Returns required to be filed by Seller pursuant to Article VI
hereof will correctly reflect at the time of filing) the facts regarding
the income, business, assets, operations, activities, status, or other
matters of each Deco Company or any other information required to be
shown thereon. An extension of time within which to file any Return that
has not been filed has not been requested or granted.
(c) With respect to all amounts in respect of Taxes imposed with
respect to the income or operations of any of the Deco Companies for
which any of the Deco Companies is or could be liable, whether to taxing
authorities (as, for example, under Governmental Regulation) or to other
Persons (as, for example, under tax allocation agreements), with respect
to all taxable periods or portions of periods ending on or before the
Closing Date, all applicable tax laws and agreements have been fully
complied with, and all such amounts of Taxes required to be paid to
taxing authorities or others on or before the date hereof have been paid,
and all such amounts required to be paid by the Closing Date will be paid
on or prior to the Closing Date.
(d) Except as otherwise set forth in Section 3.11 of the Disclosure
Schedule, there exists no proposed Tax assessment against any of the Deco
Companies. All Taxes that any Deco Company is or was legally required to
withhold or collect have been duly withheld or collected and, to the
extent required, have been paid to the proper Governmental Entity or
other Person.
(e) There are no Encumbrances for Taxes (other than for current
Taxes not yet due and payable) on any of the assets or properties of the
Deco Companies.
(f) There is no Tax sharing agreement that will require any payment
by any Deco Company.
(g) Each of the Deco Companies is, and at all times within the ten
(10) year period preceding the Closing Date (or since formation if formed
within such ten (10) year period) has been, an "S Corporation."
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Each of the Deco Companies (i) made an effective, valid and binding S
election pursuant to Section 1362 of the Code, (ii) has since such
election maintained its status as an S Corporation pursuant to Section
1361 of the Code without lapse or interruption, and (iii) has made and
continuously maintained elections similar to the federal S election in
each state or local jurisdiction the Company does business or is required
to file a Return to the extent such states or jurisdictions permit such
elections. None of the Deco Companies will or can be subject to any
built-in gains Tax under Section 1374 of the Code or any similar
corporate level Tax imposed on the Deco Companies by any taxing
authority.
(h) The transaction contemplated herein is not subject to the tax
withholding provisions of Section 3406 of the Code, or of Subchapter A of
Chapter 3 of the Code or of any other provision of Governmental
Regulation.
(i) The Seller is not a Person other than a United States person
within the meaning of the Code.
(j) Except as otherwise set forth in Section 3.11 of the Disclosure
Schedule, there is no pending audit or review by the IRS (as defined in
Section 3.12(b)(viii)) or any other tax authority and none of the Deco
Companies nor Seller has received any written notice of any threatened
audit or review by the IRS or any other tax authority.
(k) To the Knowledge of Seller and the Deco Companies, Seller is
eligible and has the authority to consent to the federal Section
338(h)(10) Election (as defined in Section 6.1) under the Code with
respect to the transactions contemplated in this Agreement.
3.12 Employee Benefit Plans; ERISA.
(a) (i) Section 3.12(a)(i) of the Disclosure Schedule contains an
accurate 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 (5) years by any
of the Deco Companies or any company related by ownership to any of
the Deco Companies within the meaning of Code Section 414(b), (c)
or (m) ("Related Company") or under which any of the Deco Companies
or any Related Company has had any obligations with respect to an
employee of any of the Deco Companies or of a Related Company (the
"Plans").
(ii) None of the Deco Companies or any Related Company
contributes or has any obligation to contribute
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to any "multiemployer plans" within the meaning of 3(37) of ERISA
("Multiemployer Plans").
(b) Seller has delivered to Buyer true and complete copies of the
following:
(i) all documents that set forth the terms of each Plan and of
any related trust, including all amendments, plan descriptions
and/or summary plan descriptions, whether required to be prepared
and distributed to plan participants under ERISA;
(ii) all collective bargaining agreements pursuant to which
contributions have or are being made or obligations incurred for
pension and/or welfare benefits by any of the Deco Companies or any
Related Company;
(iii) all registration statements filed with respect to any
Plan;
(iv) all insurance policies purchased to provide benefits
under any Plan;
(v) all contracts with third party administrators, actuaries,
investment managers, consultants, and other independent contractors
that relate or related to any Plan;
(vi) all notifications to employees of their rights under
ERISA Section 601 et seq. and Code Section 4980B;
(vii) the Form 5500 filed for the three most recent plan years
with respect to each Plan, including all schedules thereto and the
opinions of independent accountants;
(viii) all notices that were given by any of the Deco
Companies, a Related Company or any Plan to the United States
Internal Revenue Service ("IRS"), the United States Pension Benefit
Guaranty Corporation ("PBGC") or the United States Department of
Labor, pursuant to Governmental Regulation, within the four (4)
years preceding the date of this Agreement, and all such notices
that were required to be given by such agencies to any of the Deco
Companies, any Related Company or any Plan, within such time
period;
(ix) the most recent determination letter issued to
any Plan which is intended to be tax-qualified under Code Section
401(a); and
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(x) the Form PBGC-1 for the three most recent plan years with
respect to each Plan that is subject to Title IV of ERISA.
(c) Except as specifically set forth in Section 3.12(c) of the
Disclosure Schedule:
(i) each Plan which is an "employee pension benefit plan,"
within the meaning of Section 3(2) of ERISA, and its related trust
("Pension Plan and Trust") which is intended to be tax qualified
now meets, and since its inception has met, the requirements for
qualification under Sections 401(a) and 401(k) of the Code and is
now, and since its inception has been, exempt from taxation under
Section 501(a) of the Code, and the IRS has issued a current
favorable determination letter with respect to the qualified status
of each Pension Plan and Trust and has not taken any action to
revoke such letter;
(ii) Each of the Deco Companies has performed all obligations
required to be performed by it under the Plans (including, but not
limited to, the making of all contributions), and has made
appropriate entries in its financial records and statements for all
obligations and liabilities under such plans that have accrued but
are not due.
(iii) Each of the Plans has been operated in compliance with
the requirements of all Governmental Regulations applicable to such
Plans, including but not limited to ERISA and the Code;
(iv) None of the Deco Companies nor, to the Seller's and the
Deco Companies' Knowledge, any other "disqualified person" or
"party in interest," within the meanings of Section 4975 of the
Code or Section 3(14) of ERISA, respectively, has engaged in any
"prohibited transaction," as such term is defined in Section 4975
of the Code or Section 406 of ERISA, which could, following the
Closing Date, subject any Plan (or its related trust), Buyer, any
of the Deco Companies, or any officer, director or employee of any
of them, to any Tax or penalty imposed under the Code or ERISA;
(v) there are no Proceedings pending (other than routine
claims for benefits) or, to the Seller's and the Deco Companies'
Knowledge, threatened against any Plan or against the assets of any
Plan;
(vi) each "plan official," within the meaning of Section 412
of ERISA, of each Plan is bonded to the extent required by said
Section 412;
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(vii) no statement, either written or oral, has been made by
any of the Deco Companies to any Person with regard to any Plan
that was not in accordance with the Plan and that could have an
adverse economic consequence to any of the Deco Companies or Buyer
and each Plan can be terminated within sixty (60) days;
(viii) no Proceeding has been initiated to terminate any Plan
and any such termination will not subject any of the Deco Companies
or Buyer to liability to any Person;
(ix) the Deco Companies have no liability to the IRS with
respect to any Plan, including any liability imposed by Chapter 43
of the Code;
(x) no retiree benefits are payable under any "employee
welfare benefit plan," within the meaning of Section 3(1) of ERISA
("Welfare Plan");
(xi) each Welfare Plan which is a group health plan within the
meaning of Section 5000 of the Code complies and in each case has
complied with the applicable requirements of Sections 601 through
608 of ERISA and Sections 162(k) or 4980B of the Code, as
applicable;
(xii) no payment that is owed or may become due to any
director, officer, employee or agent of any of the Deco Companies
will be non-deductible to such Deco Company or subject to Tax under
Sections 280G or 4999 of the Code, nor will any of the Deco
Companies be required to "gross up" or otherwise compensate any
such Person because of the imposition of any excise tax on a
payment to such Person; and
(xiii) the completion of the transactions contemplated in this
Agreement will not result in the payment, vesting or acceleration
of any benefit.
(d) Except as specifically set forth in Section 3.12(d) of the
Disclosure Schedule, with respect to any Plan that is subject to Part 3
of Title I of ERISA, Section 412 of the Code or Title IV of ERISA:
(i) Each of the Deco Companies and each Related Company has
met the minimum funding standard, and has made all contributions
required, under ERISA Section 302 and Code Section 412;
(ii) no accumulated funding deficiency, whether or not waived,
exists with respect to any Plan and no event has occurred or
circumstance exists that may result
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in an accumulated funding deficiency as of the last day of the
current plan year of any such Plan;
(iii) the actuarial report for each Plan fairly represents the
financial condition and the results of operations of each such Plan
in accordance with GAAP;
(iv) since the last valuation date for each Plan, no event has
occurred or circumstance exists that would increase the amount of
benefits under any such Plan or that would cause the excess of plan
assets over benefit liabilities (as defined in ERISA Section 4001)
to decrease, or the amount by which benefit liabilities exceed
assets to increase;
(v) no reportable event (as defined in ERISA Section 4043) has
occurred;
(vi) the Deco Companies do not have any liability to the PBGC
with respect to any Plan and, to Seller's and the Deco Companies'
Knowledge, no facts or circumstances exist that may give rise to
any liability of any of the Deco Companies or Buyer under Title IV
of ERISA;
(vii) none of the Deco Companies nor any Related Company
has ceased operations at any facility or has withdrawn from
any Plan in a manner that would subject any of the Deco Companies
to liability under ERISA Sections 4062(e), 4063 or 4064;
(viii) the PBGC has not instituted proceedings to treat a Plan
as terminated and no event has occurred or circumstance exists that
may constitute grounds under ERISA Section 4042 for the termination
of, or the appointment of a trustee to administer, any Plan.
3.13 Title to Properties. Each of the Deco Companies has good title to
all assets which it purports to own including those which are reflected on the
combined unaudited balance sheets of such Deco Companies as of the Reference
Date included in the Financial Statements (except for assets and properties
sold, consumed or otherwise disposed of by such Deco Company in the ordinary
course of business since the Reference Date) and all assets acquired by such
Deco Company since the Reference Date (except for any such assets sold,
consumed or otherwise disposed of by such Deco Company in the ordinary course
of business). Such assets and properties are owned free and clear of all
Encumbrances, except for (a) liens for current Taxes not yet due and payable or
for Taxes the validity of which is being contested in good faith, and (b)
mechanic's, materialmen's and other similar statutory Encumbrances which have
arisen in the ordinary course of business.
3.14 Trademarks, Etc.
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(a) Except as set forth in Section 3.14(a) of the Disclosure
Schedule, there are no registered or unregistered trademarks, trade
names, service marks, copyrights, patents or applications therefor which
are used by any of the Deco Companies and which are material to the
conduct of the business of any of the Deco Companies as currently
conducted. For purposes of this Agreement, "Intellectual Property
Assets" means and includes: (i) the names Grand Machining Co., Deco
Technologies, Inc. and Deco International, Inc., all fictional business
names, assumed names, trade names, registered and unregistered
trademarks, service marks, and applications; (ii) all patents, patent
applications, and inventions and discoveries that may be patentable
(collectively, "Patents"); (iii) all copyrights in both published works
and unpublished works; and (iv) all know-how, trade secrets, confidential
information, customer lists, software, technical information, data,
process technology, plans, drawings, and blue prints; in each case that
are owned, used, or licensed by any of the Deco Companies as licensee or
licensor.
(b) The Deco Companies own or possess adequate licenses or other
valid rights to use all of the Intellectual Property Assets within the
territory of the Deco Companies' current business. The conduct of the
business of the Deco Companies as now conducted does not conflict with
any trademarks, trade names, service marks, copyrights, patents, trade
secrets or other intellectual property assets of others in any way which
has or constitutes, or is reasonably likely to have or constitute, a
Seller Material Adverse Effect.
(c) With respect to each of the Patents listed in Section 3.14(a) of
the Disclosure Schedule of which the inventor is or was an employee of
the Deco Companies, the Deco Companies, to Seller's and the Deco
Companies' Knowledge, have had all rights thereto, including all
modifications, improvements and extensions thereof, assigned to them by
the inventor of such patent.
(d) To Seller's and the Deco Companies' Knowledge, there are no
United States or other foreign patents or published foreign patent
applications the claims of which prevent, or would reasonably be expected
to prevent, Buyer from operating the Deco Companies as currently operated
or the Deco Companies from continuing to operate as currently operated in
the countries in which they are currently doing business.
(e) The Intellectual Property Assets are all those necessary for the
operation of the Deco Companies' businesses as they are currently
conducted. Except as otherwise set forth in Section 3.14(e) of the
Disclosure Schedule, one or more of the Deco Companies is the owner of
all right, title, and interest in and to each of the material
Intellectual Property Assets, free and clear of all Encumbrances and has
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the right to use without payment to any other Person all of the
Intellectual Property Assets.
3.15 Insurance.
(a) Neither Seller nor any of the Deco Companies has received any
notice that any of the Deco Companies is in default under any insurance
policy with regard to the property, assets, operations or business of the
Deco Companies. There are no pending claims against or under any such
insurance policies made by any of the Deco Companies as to which the
insurers have denied liability.
(b) Section 3.15(b) of the Disclosure Schedule describes:
(i) any material self-insurance arrangement by or affecting
any Deco Company, including any reserves established thereunder;
and
(ii) all material obligations of the Deco Companies to third
parties with respect to insurance (including such obligations under
leases and service agreements) and identifies the policy under
which such coverage is provided.
(c) All policies to which any Deco Company is a party or that
provide coverage to Seller, any Deco Company, or any director or officer
of any Deco Company: (A) are valid, outstanding, and enforceable; (B) are
sufficient for compliance with all Governmental Regulations and Contracts
to which any Deco Company is a party or by which any of them is bound;
(C) will continue in full force and effect immediately following the
consummation of the transactions contemplated in this Agreement unless
Buyer takes some action to discontinue such policies; and (D) do not
provide for any retrospective premium adjustment or other
experienced-based liability on the part of any Deco Company.
3.16 Environmental Matters. Except as set forth in Section 3.16 of the
Disclosure Schedule:
(a) Each of the Deco Companies is, and at all times has been, in
full compliance with, and has not been and is not in violation of or
liable under (whether any such violation or liability is known or
unknown, matured or unmatured, liquidated or not liquidated, asserted or
not asserted absolute, contingent or otherwise), any Environmental Law
(as defined in Section 10.1). Neither Seller nor any of the Deco
Companies has any basis to expect that there exists any, nor has any of
them or any other Person for whose conduct any of them are liable
received any actual or threatened order, notice, or other written
communication from (i) any Governmental Entity or private citizen, or
(ii) the current or
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prior owner or operator of any Facilities (as defined in Section 10.1) of,
any actual or potential violation or failure to comply with any
Environmental Law by Seller, any of the Deco Companies or any other
Person for whose conduct any of them are liable, or of any actual or
threatened obligation of Seller, any of the Deco Companies or
any Person for whose conduct any of them are liable to undertake or bear
the cost of any Environmental, Health, and Safety Liabilities (as defined
in Section 10.1) with respect to any of the Facilities or any other
properties or assets (whether real, personal, or mixed) in which Seller
or any of the Deco Companies has had an interest, or with respect to any
property or Facility at or to which Hazardous Materials were generated,
manufactured, refined, transferred, imported, used, or processed by
Seller, any Deco Company or any other Person for whose conduct any of
them are liable, or from which Hazardous Materials have been transported,
treated, stored, handled, transferred, disposed, recycled, or received.
(b) There are no pending or, to the Knowledge of Seller and the Deco
Companies, threatened claims, Encumbrances, or other restrictions of any
nature, resulting from any Environmental, Health, and Safety Liabilities
or arising under or pursuant to any Environmental Law, with respect to or
affecting any of the properties and assets (whether real, personal, or
mixed) in which Seller or any of the Deco Companies has an interest and
there are, to the Knowledge of Seller and the Deco Companies, no such
pending or threatened claims, Encumbrances or other restrictions with
respect to or affecting any such properties or assets as to which Seller
or any of the Deco Companies formerly had an interest.
(c) Neither Seller nor any of the Deco Companies has any basis to
expect that there exists any, nor has any of them or any other Person for
whose conduct any of them are liable received any citation, directive,
inquiry, notice, order, summons, warning, or other written communication
of any, alleged, actual, or potential violation or failure to comply with
any Environmental Law, or of any alleged, actual, or potential obligation
to undertake or bear the cost of any Environmental, Health, and Safety
Liabilities with respect to any of the Facilities or any other properties
or assets (whether real, personal, or mixed) in which Seller or any of
the Deco Companies had an interest, or with respect to any property or
facility to which Hazardous Materials generated, manufactured, refined,
transferred, imported, used, or processed by Seller, any of the Deco
Companies, or any other Person for whose conduct any of them are liable,
have been transported, treated, stored, handled, transferred, disposed,
recycled, or received.
(d) Neither Seller nor any of the Deco Companies, or any other
Person for whose conduct any of them are liable, has any Environmental,
Health, and Safety Liabilities with respect to
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the Facilities or with respect to any other properties and assets
(whether real, personal, or mixed) in which Seller or any of the Deco
Companies (or any predecessor), has or had an interest, or at any property
geologically or hydrologically adjoining the Facilities or any such other
property or assets.
(e) Seller and the Deco Companies have no liability of any kind
(whether known or unknown, matured or unmatured, liquidated or not
liquidated, asserted or not asserted, absolute, contingent or otherwise),
other than any liability associated with day to day compliance matters
(and the Deco Companies are not in violation of any such matters),
associated in any way with Hazardous Materials present on or in the
Environment at the Facilities or at any geologically or hydrologically
adjoining property, including any Hazardous Materials contained in
barrels, above or underground storage tanks, landfills, land deposits,
dumps, equipment (whether moveable or fixed) or other containers, either
temporary or permanent, and deposited or located in land, water, sumps,
or any other part of the Facilities or such adjoining property, or
incorporated into any structure therein or thereon. None of Seller, any
of the Deco Companies, any other Person for whose conduct any of them are
liable has permitted or conducted, or is aware of, any Hazardous Activity
conducted in violation of any Governmental Regulation with respect to the
Facilities or any other properties or assets (whether real, personal, or
mixed) in which Seller or any Deco Company has or had an interest.
(f) There has been no Release (other than Releases authorized under
Environmental Law) or, to the Knowledge of Seller and the Deco Companies,
Threat of Release (as defined in Section 10.1) (other than a Threat of
Release authorized under Environmental Law), of any Hazardous Materials
at or from any properties or assets in which Seller or any of the Deco
Companies has an interest (or, in the case of any properties or assets in
which Seller or any of the Deco Companies has had an interest at any time
in the past, any such Release or Threat of Release at any time while
Seller or any of the Deco Companies had such interest). To the Knowledge
of Seller and the Deco Companies, there has been no Release (other than
Releases authorized under Environmental Law) or a Threat of the Release
(other than Threats of Release authorized under Environmental Law) of any
Hazardous Materials from any properties or assets in which Seller or any
of the Deco Companies has or had an interest where any Hazardous
Materials were generated, manufactured, refined, transferred, produced,
imported, used, or processed, or from or by any other properties and
assets (whether real, personal, or mixed) in which Seller or any of the
Deco Companies has or had an interest, or any geologically or
hydrologically adjoining property, whether by Seller, any of the Deco
Companies or any other Person.
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(g) Seller has delivered to Buyer true and complete copies and
results of any reports, studies, analyses, tests, or monitoring possessed
or initiated by Seller or any of the Deco Companies pertaining to
Hazardous Materials or Hazardous Activities in, on, or under the
Facilities, or concerning compliance by Seller, any of the Deco
Companies, or any other Person for whose conduct they are liable, with
Environmental Laws.
(h) None of the Deco Companies have, and as of the Closing Date none
of the Deco Companies will have, any liability (whether known or unknown,
matured or unmatured, liquidated or not liquidated, asserted or not
asserted, absolute, contingent or otherwise) as to any then existing
facts, circumstances or conditions under any of the environmental
indemnity or similar provisions of any leases of any of the Facilities.
3.17 Brokers and Finders. None of Seller, any of the Deco Companies or
any of their respective Representatives has employed any investment banker,
broker or finder or incurred any liability for any investment banking fees,
brokerage fees, commissions or finders' fees in connection with any of the
transactions contemplated by this Agreement, except for the fees and expenses
payable to Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation ("DLJ") for
investment banking services, which will be paid by Seller.
3.18 Conflicts of Interest. Except as set forth in Section 3.18 of the
Disclosure Schedule or specifically identified in the Financial Statements
(including any of the notes thereto), none of Seller, any officer or director
of the Deco Companies, or any entity controlled by any of the foregoing nor any
Related Person:
(a) Owns, directly or indirectly, any interest in (excepting not
more than 2% stockholdings for investment purposes in securities of
publicly-held and traded companies), or is an officer, director, employee
or consultant of, any corporation, firm, association or other business
entity or organization which is, or is engaged in business as, a
competitor, lessor, lessee, franchisee or supplier of any of the Deco
Companies;
(b) Owns, directly or indirectly, in whole or in part, any tangible
or intangible property which any of the Deco Companies uses in the
conduct of its business;
(c) Has any claim or right against any of the Deco Companies;
(d) Is owed any money or is party to any contract or commitment with
any of the Deco Companies; or
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(e) Owes any money to any of the Deco Companies.
3.19 Liabilities. Except as set forth in Sections 3.6, 3.7 (items 1 and
2 only), 3.9 (but only to the extent that any such liabilities or obligations
under the agreements listed in such Section are not past due and do not involve
any breach of such agreements or any violation of Governmental Regulation),
3.11, 3.12, 3.16, 3.19 and 3.29 of the Disclosure Schedule, the Deco Companies
have no liabilities or obligations, whether known or unknown, matured or
unmatured, asserted or not asserted, liquidated or not liquidated, accrued,
absolute, contingent or otherwise, except (a) to the extent reflected or
reserved for on the latest of the Financial Statements or as will otherwise be
reflected or reserved for in the Preliminary Statement or the Final Statement
and (b) current liabilities incurred in the ordinary course of business since
the date of the latest Financial Statements and not required to be reflected on
a balance sheet of the Deco Companies in accordance with GAAP (none of which
involve or will involve any breach of any Contract or any violation of any
Governmental Regulation).
3.20 Suppliers. Section 3.20 of the Disclosure Schedule lists, by dollar
volume, the ten (10) largest suppliers of the Deco Companies as of January 8,
1997. To the Seller's and the Deco Companies' Knowledge, the relationships of
the Deco Companies with such suppliers are good commercial working
relationships and Seller and the Deco Companies have not received any notice
which would reasonably cause Seller or any of the Deco Companies to believe
that any Person listed in Section 3.20 of the Disclosure Schedule has
threatened to cancel or otherwise terminate or materially change the
relationship of such Person with the Deco Companies whether as a result of the
transactions contemplated by this Agreement or otherwise.
3.21 Inventory. All items which comprise inventory of the Deco Companies
set forth in the Financial Statements and to be set forth in the Preliminary
Statement and the Final Statement have been (or will have been in the case of
the Preliminary Statement and the Final Statement) purchased or manufactured in
the ordinary course of business and are (or will be) valued therein in
accordance with GAAP, applied on a consistent basis during the periods involved.
3.22 Accounts Receivable. The accounts receivable of the Deco Companies
reflected in the Financial Statements and to be reflected in the Preliminary
Statement and the Final Statement represent bona fide claims for sales or other
charges arising in the ordinary course of business in accordance with the Deco
Companies' normal credit policies. Unless paid prior to the Closing Date, the
accounts receivable reflected in the Financial Statements and to be reflected
in the Preliminary Statement and the Closing Statement are and will be as of
the Closing Date current and collectible net of the respective reserves shown
thereon (which reserves are and will be adequate and calculated consistent with
past practice). Subject to such reserves, each of the accounts receivable
either
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has been or will be collected in full, without any set-off, after normal
collection practices of the Deco Companies (and without the necessity of the
institution of legal proceedings). There is no contest, claim, or right of
set-off, under any contract with any obligor of an accounts receivable relating
to the amount or validity of such accounts receivable. In the event that Buyer
or any of the Deco Companies make a claim for indemnification against
Seller under this Section 3.22 in respect of any accounts receivable of the
Deco Companies then the related Deco Company will, as a condition to making
such claim and being entitled to indemnification therefor (except to the extent
any provision of such account receivable or the underlying agreement do not
expressly permit transfer), transfer (without recourse) to Seller any such
accounts receivable after Seller has paid to Buyer or the Deco Company, as
applicable, the full amount of the Losses (as defined in Section 10.1) claimed
by them as to such accounts receivable.
3.23 Employee Relations. The Deco Companies have approximately 500
employees. Except as set forth in Section 3.23 of the Disclosure Schedule, no
union or other collective bargaining unit has been certified or recognized by
the Deco Companies as representing any of the Deco Companies' employees and,
except as set forth in Section 3.23 of the Disclosure Schedule, to Seller's and
the Deco Companies' Knowledge, no union organizing efforts with regard to any
of the Deco Companies' employees have been conducted within the last two years
or are now being conducted. To Seller's and the Deco Companies' Knowledge, the
Deco Companies' relationships with their employees are good.
3.24 Certain Payments. No Deco Company or director, officer, agent, or
employee of any Deco Company, or to Seller's and the Deco Companies' Knowledge,
any other Person associated with or acting for or on behalf of any Deco
Company, has directly or indirectly (a) made any contribution, gift, bribe,
rebate, payoff, influence payment, kickback, or other payment to any Person,
private or public, regardless of form, whether in money, property, or services
(i) to obtain favorable treatment in securing business, (ii) to pay for
favorable treatment for business secured, (iii) to obtain special concessions
or for special concessions already obtained, for or in respect of any Deco
Company or Related Person of Seller, (iv) in violation of any Governmental
Regulation, or (v) in violation of any supplier or customer policy as to which
Seller or any of the Deco Companies has Knowledge, or (b) established or
maintained any fund or asset that has not been recorded in the books and
records of the Deco Companies.
3.25 Books and Records. The books of account, minute books, stock record
books, and other records of the Deco Companies, all of which have been made
available to Buyer, are complete and correct in all material respects and have
been maintained in a manner consistent with the requirements of Section
13(b)(2) of the Securities Exchange Act of 1934 (the "Exchange Act")
(regardless of whether or not the Deco Companies are subject to that Section),
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including the maintenance of an adequate system of internal controls.
3.26 Disclosure. No representation or warranty of Seller in this
Agreement and no statement in the Disclosure Schedule omits to state a material
fact necessary to make the statements herein or therein, in light of the
circumstances in which they were made, not misleading.
3.27 Real Property and Real Property Leases. Section 3.27 of the
Disclosure Schedule contains a true and complete list of (a) all real property
owned by the Deco Companies, (b) all real estate leases to which any of the
Deco Companies is a party, and (c) all other material interests, if any, in
real property owned or claimed by the Deco Companies. The Deco Companies have
all material easements and rights, including parking rights and easements for
power lines, water lines, roadways and other access, necessary to conduct the
businesses they now conduct and enjoy peaceful and undisturbed possession of
all properties occupied by them. Neither the whole nor any portion of any real
property owned, occupied or leased to or by the Deco Companies has been, in the
last six (6) years, rezoned or condemned or otherwise taken by any Governmental
Entity and, to the Knowledge of Seller and the Deco Companies, no such zoning,
condemnation or other taking is threatened or contemplated. None of the real
properties owned, occupied or leased to or by the Deco Companies, or the
occupancy or operation thereof, constitutes a nuisance or violation of any law
or any building, zoning or other ordinance, code or regulation or any private
or public covenant or restriction, and no written notice from any Governmental
Entity or other Person has been received by Seller or the Deco Companies
claiming any outstanding violation of any such law, ordinance, code,
regulation, covenant or restriction, or requiring or calling attention to the
need for any material amount of work, repairs, construction, alterations or
installations on or in connection with any of such properties which has not
been complied with. All leases of real property to which any of the Deco
Companies is a party are valid, binding and in full force and effect, and there
exists no material default thereunder by the Deco Companies or, to the
Knowledge of Seller and the Deco Companies, any other party thereto, nor any
events which with notice or lapse of time, or both, would constitute a material
default by the Deco Companies thereunder, and all rents and other amounts
heretofore payable under such leases have been paid in full. Notwithstanding
anything to the contrary contained in this Section 3.27, Seller makes no
representation or warranty in this Section 3.27 regarding compliance with any
Environmental Law or Occupational Safety and Health Law; such compliance is
addressed in Section 3.16.
3.28 Effect of Transaction. No Person having a material business
relationship with the Deco Companies has informed Seller or any of the Deco
Companies that such Person intends to change in any material respect such
relationship because of the transactions contemplated by this Agreement or
otherwise.
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3.29 Product Warranty and Product Recalls. Except as set forth in Section
3.29 of the Disclosure Schedule, none of the Deco Companies has any liabilities
or obligations of any kind (whether known or unknown, matured or unmatured,
liquidated or not liquidated, asserted or not asserted, absolute, contingent or
otherwise) for any Product Recall or for breach of warranty (express or
implied), negligence, strict liability, failure to warn or any other such
liabilities or obligations under any product liability theory whatsoever with
respect to any products manufactured or sold at any time on or prior to the
Closing Date and there is no basis for any of such liabilities or obligations.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as follows:
4.1 Corporate Organization, Etc. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to conduct
its business as it is now being conducted and to own, lease and operate its
property and assets. For purposes of this Agreement, "Buyer Material Adverse
Effect" means with respect to any fact, circumstance, occurrence, event, change
or development that such fact, circumstance, occurrence, event, change or
development either alone or together with other like facts, circumstances,
occurrences, events or developments (a) has, or is reasonably likely to have
(at the time in question or at any time in the future), a material adverse
effect on the business, assets, financial condition or results of operations of
Buyer, or (b) has impaired, hindered or adversely affected, or is reasonably
likely to (at the time in question or at any time in the future) impair, hinder
or adversely affect, the ability of Buyer to execute or deliver this Agreement
or any of the Related Agreements, to perform any of Buyer's material
obligations under this Agreement or any of the Related Agreements, or to
consummate any of the material transactions contemplated by this Agreement or
any of the Related Agreements, or (c) has adversely affected, or is reasonably
likely (at the time in question or at any time in the future) to adversely
affect, the validity or enforceability of any of the material provisions of
this Agreement or any of the Related Agreements against Buyer.
4.2 Authority Relative to this Agreement. Buyer has all requisite power
and authority (corporate and other) to execute and deliver this Agreement and
each of the Related Agreements and to consummate the transactions contemplated
by this Agreement and each of the Related Agreements. The execution and
delivery of this Agreement and the Related Agreements and the consummation of
the transactions contemplated by this Agreement and the Related Agreements by
Buyer have been duly and validly authorized by all required corporate action on
the part of Buyer. This Agreement has
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been (and when executed by Buyer and delivered to Seller at the Closing the
Related Agreements will have been) duly and validly executed and delivered by
Buyer and constitutes (and each of the Related Agreements when executed by
Buyer and delivered to Seller at the Closing will constitute) the legal, valid
and binding agreement of Buyer, enforceable against Buyer in accordance with
its terms, except as may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws affecting creditors' rights generally and
by general equitable principles (regardless of whether considered in a
proceeding in equity or at law).
4.3 Consents and Approvals; No Violations. Neither the execution and
delivery of this Agreement or any of the Related Agreements by Buyer, nor the
performance of any of Buyer's obligations under this Agreement or any of the
Related Agreements, nor the consummation of any of the transactions
contemplated by this Agreement or any of the Related Agreements by Buyer will:
(a) Violate any provision of the Articles of Incorporation or Bylaws
of Buyer.
(b) Require any Consent of any Governmental Entity or any other
Person (including under any Obligation), except for filings with the FTC
and the DOJ pursuant to the HSR Act.
(c) Result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to
any right of termination or cancellation) under, any of the terms,
conditions or provisions of any Obligation to which Buyer is a party or
by which Buyer or any of its property or assets may be bound.
(d) Violate any Governmental Regulation applicable to Buyer.
4.4 Investment Intent. Buyer is acquiring the Deco Shares for its own
account, for investment purposes and not with a view to, or for sale in
connection with, any resale or other distribution thereof, nor with any present
intention of distributing or selling the Deco Shares. Buyer acknowledges and
agrees that the Deco Shares cannot be sold, transferred, offered for sale,
pledged, hypothecated or otherwise disposed of, and Buyer will not sell,
transfer, offer for sale, pledge, hypothecate or otherwise dispose of any of
the Deco Shares, without registration under the Securities Act of 1933, as
amended, and any applicable state securities laws, except pursuant to an
exemption from such registration under such Act and laws.
4.5 Brokers and Finders. Neither Buyer nor any of its Representatives
has employed any investment banker, broker or finder or incurred any liability
for any investment banking fees, brokerage fees, commissions or finders' fees
in connection with any of the transactions contemplated by this Agreement.
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4.6 Access. On and prior to the date of this Agreement, Seller caused,
and Buyer acknowledges that Seller caused, Representatives of Seller and the
Deco Companies to give Buyer and its Representatives full access to, and to
furnish them with all information and documentation regarding, Seller, the Deco
Companies, the business of the Deco Companies, the Deco Shares, this Agreement
and the transactions contemplated by this Agreement, including all of the
facilities, assets, properties, books, leases, agreements, commitments,
Contracts, records and personnel of the Deco Companies which Buyer considers
necessary or advisable to enable it to make a decision concerning its purchase
of the Deco Shares and all other information as Buyer requested, so that Buyer
had a full opportunity to review the business, financial, accounting and legal
matters relating to all of the foregoing.
4.7 Buyer's Expertise and Investigation.
(a) Buyer is an informed and sophisticated purchaser, possesses such
knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of its investment under this
Agreement and has engaged legal and other advisors, experienced in the
evaluation and purchase of companies such as the Deco Companies.
(b) Buyer has undertaken such investigation as it deems necessary or
appropriate to enable it to make an informed and intelligent decision
with regard to this Agreement and the transactions contemplated by this
Agreement.
(c) Buyer acknowledges and agrees that, in entering into this
Agreement, in acquiring the Deco Shares and in consummating the other
transactions contemplated by this Agreement:
(i) Buyer has relied and will rely solely upon its own
investigation and analysis and the representations, warranties and
covenants contained in this Agreement (and, without limiting the
generality of the foregoing, not on any of the information learned
or provided in connection with any presentation made by management
or other Representatives of any of the Deco Companies or Seller,
contained in any document provided to it, including the
Confidential Information Memorandum of Spring 1997 (the
"Memorandum"), or otherwise).
(ii) Neither Seller nor any of the Deco Companies (nor any of
their respective Representatives) has made any representation or
warranty except as expressly set forth in Article III of this
Agreement (including in any other document, including the
Memorandum).
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Notwithstanding anything to the contrary contained herein, the representations
and warranties of Buyer in Sections 4.6 and 4.7 shall not modify in any manner
the representations and warranties of Seller in Article III of this Agreement
or Buyer's reliance thereon.
4.8 Litigation. There is no action, suit or proceeding pending or, to
Buyer's Knowledge, threatened against Buyer before any Governmental Entity
which is reasonably likely to have a Buyer Material Adverse Effect.
4.9 MESC Notice. At least two Business Days prior to the date of this
Agreement, Buyer has received from Seller a true and complete copy of MESC Form
1027 entitled "Business Transferor's Notice to Transferee of Unemployment Tax
Liability and Rate".
ARTICLE V
COVENANTS OF THE PARTIES
5.1 Conduct of Business of the Deco Companies. Except as expressly
contemplated by this Agreement, or with the prior written consent of Buyer,
during the period from the date of this Agreement to the Closing Date:
(a) Seller will use reasonable efforts to cause the Deco Companies
to:
(i) Conduct their respective businesses and operations in the
ordinary course of business consistent with past practice.
(ii) Preserve intact their respective properties, assets and
business organizations.
(iii) Keep available the services of their respective officers
and key employees, in each case in the ordinary course of business
consistent with past practice.
(b) Seller will not permit any of the Deco Companies to take any of
the following actions:
(i) Issue, sell, purchase, redeem or pledge, or authorize the
issuance, sale or pledge of (A) additional shares of capital stock,
or securities convertible into any such shares, or any rights,
warrants or options to acquire any such shares or other convertible
securities or (B) any other securities in respect of, in lieu of,
or in substitution for, the capital stock of any of the Deco
Companies outstanding on the date of this Agreement.
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(ii) Except in the ordinary course of business consistent with
past practice, sell, transfer, mortgage, encumber or otherwise
dispose of any of its material properties or assets.
(iii) Enter into other material agreements, commitments or
contracts, except arrangements, commitments or contracts made in
the ordinary course of business consistent with past practice.
(iv) Change any of the accounting principles or practices used
by it (except as required by GAAP).
(v) Knowingly take any action or fail to take any commercially
reasonable action as would reasonably be expected to result in a
material change in the Net Book Value other than in the ordinary
course of business and other than the Permitted Distribution and
the Additional Permitted Distribution.
(vi) Knowingly take any action or fail to take any
commercially reasonable action which would reasonably be expected
to cause any representation or warranty of Seller to cease to be
true or accurate in any material respect as if then being made or
that could prevent performance of any material covenant or
obligation of the parties hereto or the satisfaction of any
condition to the obligation of the parties hereto set forth in
Articles VII or VIII hereof.
(vii) Agree to take any of the foregoing actions.
5.2 Access to Information.
(a) From the date of this Agreement through and including the
Closing Date, upon reasonable notice, Seller will cause the Deco
Companies to (i) give Buyer and its authorized Representatives reasonable
access to all books, records, offices and other facilities and properties
of the Deco Companies, (ii) permit Buyer to make such inspections of the
foregoing as Buyer may reasonably request and (iii) cause its officers to
furnish Buyer with such financial and operating data and other
information with regard to the business and properties of the Deco
Companies as Buyer may from time to time reasonably request. Any such
access will be provided, and all such inspections will be conducted, at
reasonable times and in such a manner as not to interfere unreasonably
with the operations of the business of the Deco Companies. All such
information and access will be subject to the terms and conditions of the
Confidentiality Agreement dated April 16, 1997 (the "Confidentiality
Agreement") between DLJ, as agent of Seller, and Buyer, which will
survive the execution and delivery of this Agreement.
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(b) After the Closing, upon reasonable notice, Buyer will fully
cooperate with Seller and will give or cause to be given to Seller and
its authorized Representatives, full access to Representatives of the
Deco Companies and Buyer and such information (including the right to
make copies or extracts thereof) relating to the Deco Companies or Buyer
(including properties, books, contracts, financial statements, tax
returns, commitments, files and records) as is reasonably requested for
the preparation or filing of any Return, financial statement or report,
in connection with any response or submission to any taxing authority or
which is otherwise reasonably requested. Any such access will be
provided, and all such inspections will be conducted, at reasonable times
and in such a manner as not to interfere unreasonably with the operations
of the business of the Deco Companies. In addition, after the Closing,
upon the reasonable request of Seller, Buyer will use reasonable efforts
to promptly make available, at no cost to Seller, Representatives of the
Deco Companies and/or Buyer to meet with the IRS, other taxing authority
or other Governmental Entity with regard to any tax dispute, audit,
review or other matter applicable to Seller.
(c) Buyer will retain and use reasonable efforts to preserve, and
make available to Seller and its Representatives, all material
information relating to the Deco Companies and the Deco Shares (including
books, contracts, financial statements, Returns, files and records) for a
period of at least eight (8) years after the Closing Date; provided that
Buyer shall not be required to so retain, preserve and make available
such information if it gives written notice (describing the information
in reasonable detail) to Seller of its intent to dispose of such
information at least thirty (30) days prior to the intended disposition
date and offers to deliver such information to Seller.
5.3 Continued Accuracy of Seller's Representations and Warranties.3
Continued Accuracy of Seller's Representations and Warranties. Between the
date of this Agreement and the Closing Date, Seller will from time to time give
written notice to Buyer of any facts, events, conditions, changes,
circumstances or information occurring or arising from the date of this
Agreement through the Closing Date that cause any representation or warranty
set forth in Article III above to become untrue in any material respect as if
such representation or warranty were then being given by Seller (together, the
"New Facts"). This Section 5.3 is not intended to permit Seller to alter or
amend its representations and warranties made herein or the Disclosure Schedule
and any notices provided pursuant to this Section shall not cure the inaccuracy
thereof as of the date of this Agreement or the Closing Date for any purpose
under this Agreement. The parties expressly intend that Seller shall indemnify
and hold harmless Buyer pursuant to Section 5.7 hereof in respect of the
representations and warranties of Seller set forth herein without giving effect
to the disclosure by Seller to Buyer of any New Facts.
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5.4 Consents and Approvals. Without limiting any party's other
obligations under this Agreement, each party will use reasonable efforts to
obtain as promptly as practicable all Consents required in connection with the
consummation of the transactions contemplated by this Agreement.
5.5 Filings; Cooperation; Information. Promptly after the execution of
this Agreement, each party will prepare and make (or cause to be prepared and
made) all required filings, submissions and notifications under the laws of any
domestic or foreign jurisdictions to the extent necessary to consummate the
transactions contemplated by this Agreement. Each party will promptly consult
with the other party with regard to, and provide any necessary information and
reasonable assistance to the other party and copies of, all filings,
submissions and notifications made and other information supplied by such party
with or to any Governmental Entity in connection with this Agreement or any of
the transactions contemplated by this Agreement. Each party will furnish to all
Governmental Entities such necessary information and reasonable assistance as
the Governmental Entity may reasonably request in connection with the foregoing.
5.6 Further Assurances. Without limiting the generality of Section 10.19
below, and in addition to obligations elsewhere in this Agreement, including
obligations under this Article V, each party will use reasonable efforts to
ensure that all conditions to the other party's obligations to consummate the
transactions contemplated by this Agreement have been satisfied (insofar as
such matters are within such party's control) and to take, or cause to be
taken, all actions, and to do, or cause to be done, all things necessary,
proper or advisable under applicable Governmental Regulations to consummate and
make effective the transactions contemplated by this Agreement in a manner
consistent with applicable law, which efforts will include each party using its
reasonable efforts to lift, prevent or reverse any pending or threatened
preliminary or permanent injunction, order or other Governmental Regulation
that would reasonably be expected to adversely affect the ability of any party
to consummate the transactions contemplated by this Agreement, including any
Governmental Regulation relating to or arising under the HSR Act or other
applicable antitrust laws, and, if issued, to appeal any such Governmental
Regulation through the United States Court of Appeals for the relevant circuit.
5.7 Seller Indemnification. If, but only if, the Closing shall occur, but
subject to the limitations contained in Sections 10.13 and 10.14, Seller will
defend, indemnify and hold harmless Buyer, each of the Deco Companies and their
respective Representatives (other than Seller) from and against all Losses
based upon, arising out of or otherwise in respect of any of the following:
(a) Any breach of, or inaccuracy in, any representation or warranty
made by Seller in Article III of this Agreement (whether at the date of
this Agreement or the Closing Date and
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without giving effect to the disclosure of any New Facts by Seller
pursuant to Section 5.3 hereof).
(b) Any breach by Seller of any covenant, agreement or obligation
of Seller in this Agreement.
(c) Any matter described in Exhibit 5.7(c) hereto.
Notwithstanding Section 5.7 to the contrary, Seller shall have no duty to
indemnify, defend or hold harmless Buyer, any of the Deco Companies or any of
their respective Representatives from or against any Loss arising out of or
related to the presence of Hazardous Materials at any location if Buyer has
become aware of the presence of such Hazardous Materials by voluntary
performing any environmental monitoring, sampling, or other testing after the
Closing Date, including any sampling of air, soil or water. Any environmental
monitoring, sampling, or other testing shall be deemed to have been performed
voluntarily unless Buyer's or any Deco Company's sampling, monitoring or other
testing is pursuant to the requirements of any Environmental Law, Occupational
Safety and Health Law, other Governmental Regulation or requirement of any
Contract. The foregoing is intended only to qualify the obligation of Seller
to indemnify under Section 5.7 hereof and is not intended, and shall not be
deemed, to restrict in any fashion the ability of Buyer or any of the Deco
Companies to conduct such environmental investigations as they deem appropriate
in their discretion. Seller shall not have any obligation to indemnify Buyer,
any of the Deco Companies nor any of their Representatives for Losses in
connection with any Response Activities (as defined below) unless such Response
Activities are required under any Environmental Law, Occupational Health and
Safety Law, other Governmental Regulation or Contract (including any existing
lease of any of the Deco Companies). If Seller has any obligation under this
Agreement to indemnify Buyer, any of the Deco Companies or any of their
respective Representatives from or against any Losses in connection with the
performance of any investigation, clean-up, removal, containment or other
remediation or response actions ("Response Activities"), such indemnifiable
Losses as to such Response Activities shall be limited to those Losses incurred
to meet the least stringent standards or requirements that Buyer or any of the
Deco Companies are required to meet under the applicable Environmental Law,
Occupational Health and Safety Law, Governmental Regulation or Contract (taking
into consideration the zoning of the property and the uses of the resources
thereon at the time the Response Activities are performed).
5.8 Buyer Indemnification. If, but only if, the Closing shall occur, but
subject to the limitations contained in Sections 10.13 and 10.14, Buyer will
defend, indemnify and hold harmless Seller from and against all Losses based
upon, arising out of or otherwise in respect of any of the following:
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(a) any breach of, or inaccuracy in, any representation or warranty
made by Buyer in Article IV of this Agreement (whether at the date of
this Agreement or the Closing Date).
(b) any breach by Buyer of any covenant, agreement or obligation of
Buyer in this Agreement.
(c) any final, nonappealable determination by a court of competent
jurisdiction (or settlement approved in writing by Buyer) that the
payment of the purchase price was invalid or illegal under, in violation
of, or can be set aside or give rise to any award of damages, sanctions
or other liability against Seller under applicable bankruptcy, fraudulent
conveyance or transfer or similar law or the Act (as defined in Section
5.11 hereof) or other applicable law of similar effect as a result of the
Closing Date Financing; provided that the Losses shall be limited to the
amount of the purchase price, if any, that Seller shall be so required to
return or disgorge, the out-of-pocket damages, sanctions or other
liability imposed on Seller and the reasonable expenses incurred by
Seller directly related thereto.
(d) any liability of Seller to any Person (other than the Deco
Companies or another Person that is a party to this Agreement or any
Related Person of Seller) as determined by any final, nonappealable
judgment of a court of competent jurisdiction (or settlement approved in
writing by Buyer) arising in connection with the Closing Date Financing
on account of information provided by or on behalf of Seller pursuant to
Section 5.9 hereof, provided that the responsibility of Buyer to Seller
under this subsection shall not relieve Seller of any liability that
Seller would otherwise have to Buyer under this Agreement, if any, on
account of the same conduct that gives rise to Buyer's responsibility
hereunder, and provided further that the Losses shall be limited to the
direct out-of-pocket payments made by Seller to such Person and
reasonable expenses incurred by Seller directly related thereto. As an
example of the foregoing, if (i) Seller's liability to such Person is
$300,000, (ii) Seller's liability to such Person also constitutes a
violation of Seller's obligations to Buyer hereunder, (iii) the Seller
Total Threshold (as defined in Section 10.14(i)(iii) below) would apply
to such violation, and (iv) Seller has not otherwise breached this
Agreement, Buyer shall indemnify Seller for the entire $300,000 and such
indemnification shall count against the Seller Total Threshold; but if,
in the same circumstances, Seller's liability si $700,000, Buyer shall
indemnify Seller for only $500,000 of such liability, Seller shall pay
the remaining $200,000 and the Seller Total Threshold shall be exhausted.
If, in the situation described in the preceding sentence, Seller's
liability to such Person does not constitute a violation of Seller's
obligations to Buyer hereunder, Buyer shall indemnify Seller for the
entire $300,000 and $700,000,
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respectively, and no such indemnification shall count against the Seller
Total Threshold.
5.9 Information for Buyer's Statements, Reports, Applications and SEC
Filings.
(a) Seller shall, and shall cause the Deco Companies to, and shall use
reasonable efforts to cause the employees, accountants and attorneys of Seller
and the Deco Companies (collectively with Seller and the Deco Companies, the
"Seller Group") to, cooperate in all reasonable respects with Buyer and its
employees, accountants and attorneys by furnishing Buyer with all information
concerning Seller and the Deco Companies which is reasonably available to
Seller or the Deco Companies at no additional expense (unless Buyer agrees to
pay or reimburse Seller or the Deco Companies such expense as applicable)
necessary or reasonably deemed desirable by Buyer (including, without
limitation, all requisite financial statements and schedules which are
reasonably available to Seller or the Deco Companies at no additional expense
unless Buyer agrees to pay or reimburse Seller or the Deco Companies such
expense, as applicable) for inclusion in (i) any statements, reports and
applications to be filed with any Governmental Entity, (ii) the SEC Filings (as
defined in Section 10.1) and (iii) the Debt Offering Documents (as defined in
Section 10.1), in each case, made by Buyer in connection with this Agreement or
the Closing Date Financing (as defined in Section 10.1).
(b) Seller shall, and shall cause the Deco Companies to, and shall use
reasonable efforts to cause the other members of the Seller Group to, comply,
and/or furnish Buyer, its accountants and/or the underwriters for the Closing
Date Financing, with the items reflected on Exhibit 5.9(b) hereto in respect of
the Closing Date Financing.
5.10 Acquisition Proposal. Between the date of this Agreement and the
earlier of the Closing Date or the termination of this Agreement pursuant to
Article IX hereof, Seller shall not sell, transfer, hypothecate or grant any
other Encumbrance upon any of the Deco Shares or agree to do so. In addition,
between the date of this Agreement and the earlier of the Closing Date or the
termination of this Agreement pursuant to Article IX hereof, Seller will not,
and will not authorize or permit any of the Deco Companies or any of the
officers or directors of any of the Deco Companies to, and will not authorize
and will use Seller's reasonable efforts to not permit any investment banker,
financial advisor, attorney, accountant, employee or other representative or
agent retained by Seller or any of the Deco Companies to solicit or encourage
the making of, or agree to or endorse any Acquisition Proposal (as defined
below), or participate in any discussions or negotiations, or provide any other
Person with any nonpublic information, relating to any such proposal, except
that Seller may advise any Person making any such proposal that Seller cannot
discuss the proposal due to the pendency of the transactions contemplated
herein (but without disclosing any of the terms of
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such transactions contemplated herein or the identity of Buyer). Seller will
promptly advise Buyer orally and in writing of any such proposals. Seller
shall, and shall cause the Deco Companies and the officers and directors of the
Deco Companies to, and shall use Seller's reasonable efforts to cause all
investment bankers, financial advisors, attorneys, accountants, employees and
other representatives and agents retained by Seller or any of the Deco
Companies to, immediately cease any existing discussions relating to any
Acquisition Proposals and shall not release any other Person from or waive any
provision of any confidentiality or standstill agreement which relates to any
Acquisition Proposal. As used in this Agreement, "Acquisition Proposal" shall
mean any tender or exchange offer, proposal for a merger, consolidation or
other business combination, liquidation or dissolution involving any of the
Deco Companies or any proposal or offer to acquire in any manner any equity
interest in, or any material portion of the assets (other than in the ordinary
course of business consistent with past practice) of, any of the Deco Companies
other than the transactions contemplated or permitted by this Agreement.
5.11 Indemnification of Seller for Business Decisions As An Officer or
Director of the Deco Companies.
(a) If, but only if, the Closing shall occur, each of the Deco Companies
shall indemnify Xxxxxxx Grand, individually ("Grand"), to the fullest extent
permitted under Section 561 and related provisions of the Michigan Business
Corporation Act (the "Act") against expenses, including attorneys fees,
judgments, penalties, fines, and amounts paid in settlement (provided such
settlement is approved in writing by the applicable Deco Company) actually and
reasonably incurred by Grand in connection with any threatened, pending or
completed action, suit or proceeding commenced against Grand by a Person, other
than any of the Deco Companies, a party to this Agreement or any Person falling
within clause (a), (b), (c) or (d) of the definition of Related Person of Grand
(provided that in the case of clause (d) of such definition excluding Persons
as to which Grand or members of his Family serve solely as officers or
directors if Grand or any members of his Family do not otherwise control such
Person) (each, an "Associated Person"), to the extent that the claim(s) in such
action, suit or proceeding constitute Indemnifiable Claims as defined below.
The provisions of Sections 10.13 and 10.14 shall apply to any such
Indemnifiable Claim.
(b) If, but only if, the Closing shall occur, Buyer shall guarantee
payment of any amounts payable by any of the Deco Companies under Section
5.11(a) above to the extent that the applicable Deco Company fails to promptly
pay any such amount or is otherwise unable to pay such amount.
(c) For the purposes of this Agreement, an "Indemnifiable Claim" means a
claim by a Person other than any of the Deco Companies, a party to this
Agreement or any Associated Person of Grand that meets all of the following
conditions: (i) the claim
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occurs in connection with the fact that Grand was a director or officer of the
Deco Companies but only to the extent that the claim is against Grand for
business decisions (and not for personal actions) made as an officer or
director of the Deco Companies; (ii) Grand establishes that he has satisfied
the standard of conduct required under Section 561 of the Act as a condition to
such indemnification; and (iii) the claim either (x) does not also constitute a
breach of, or inaccuracy in, any representation or warranty of Seller in
Article III hereof or arise from facts or circumstances that constitute a
breach, or inaccuracy in, any such representation or warranty, or (y) the claim
is first made or threatened (and Grand first obtains Knowledge of such claim),
after the expiration of the Applicable Time Period (as defined in Section
10.13), if any, applicable to the representation or warranty in question.
5.12 Environmental Assessments.
(a) Buyer may conduct, or cause to be conducted, at Buyer's expense,
environmental investigations and assessments of the Deco Companies as Buyer may
determine advisable (the "Environmental Assessments"). Buyer shall be granted
access to the Deco Companies current operating facilities at reasonable and
mutually agreeable times, and in performing the Environmental Assessments,
Buyer shall minimize any interference with the use of, or access by any Person
to, the Deco Companies' current operating facilities.
(b) Buyer agrees to restore all areas disturbed by such Environmental
Assessments to a condition at least as good as their previous existing
condition and to indemnify, defend, and hold harmless Seller from any Losses
arising out of or related to the performance of the Environmental Assessments
or the disclosure by Buyer or any of Buyer's Advisors (as defined below) to any
Person of the contents of the Environmental Assessments or any information or
data obtained in the performance of the Environmental Assessments (collectively
"Environmental Assessment Information"), unless such disclosure is authorized
under this Section 5.12(b). Unless the Closing shall occur, Buyer will not
disclose to any Person, other than Buyer's legal and financial advisors,
environmental consultants, officers, directors and employees ("Buyer's
Advisors"), the Environmental Assessment Information unless Buyer is required
by Governmental Regulation to do so, except, however, that, upon request by
Seller, Buyer shall also disclose and provide a copy of the Environmental
Assessment Information to Seller. Buyer shall instruct Buyer's Advisors not to
disclose to any Person other than to others of Buyer's Advisors the
Environmental Assessment Information unless Buyer's Advisors are required to do
so by Governmental Regulation.
ARTICLE VI
TAX MATTERS
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6.1 Certain Tax Matters.
(a) Section 338 Election. Seller and Buyer shall join in an
election to have the provisions of Code Section 338(h)(10) and similar
provisions of federal, state, local or foreign law (where permissible)
("Section 338(h)(10) Elections") apply to the acquisition of the shares
of each of the Deco Companies whereby (i) each of the Deco Companies will
be treated as having sold all of its assets in a single transaction as of
the Closing Date while still an S corporation, (ii) the Deco Companies
will be treated as having distributed the proceeds of such sale to Seller
in complete liquidation and (iii) Seller shall personally report his/its
allocable share of gain from the deemed sale of assets by the Deco
Companies. After the date of this Agreement, neither the Buyer nor
Seller shall take, or fail to take, any action which may cause the
acquisition of the Deco Companies to not be S corporations on the Closing
Date or not be eligible for the Section 338(h)(10) Elections.
(b) Buyer shall be responsible for, and control, the preparation and
filing of any 338(h)(10) Elections. The allocation of purchase price
among the assets of the Deco Companies shall be made in accordance with
Exhibit 6.1 attached hereto. Seller shall execute and return to Buyer
such documents or forms (including Section 338 Forms (as defined below))
as Buyer shall reasonably request or as are required by applicable law
for effective 338(h)(10) Elections. Seller shall execute complete Powers
of Attorney authorizing Buyer to take any and all necessary action to
effectuate the Section 338(h)(10) Elections for each of the Deco
Companies. As used in this Agreement, "Section 338 Forms" shall mean all
returns, documents, statements, and other forms that are required to be
submitted to any federal, state, county or other local taxing authority
in connection with a 338(h)(10) Election, including, without limitation,
any "statement of Section 338 election" and IRS Form 8023 (together with
any schedules or attachments thereto) that are required pursuant to
Treasury Regulations.
6.2 Tax Matters and Post-Closing Cooperation.
(a) Seller shall be responsible for and shall pay any income,
single business, franchise and all other Taxes arising as a result of the
deemed sale of assets of the Deco Companies pursuant to any Section
338(h)(10) Election or any comparable or resulting election under state
or foreign law filed by Buyer and/or Seller as well as any additional Tax
or any Losses incurred or suffered by any of the Deco Companies or Buyer
in connection with the acceleration or trigger of income or deductions of
the Deco Companies as a result of termination of the status of any of the
Deco Companies as S corporations, but only to the extent that the amount
of such Taxes exceeds the amount of such Taxes reserved for as a
liability on the
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Final Statement and that have not been paid to Seller pursuant to Section
6.7.
(b) Seller shall be solely liable and shall pay all Taxes with
respect to the income or operations of the Deco Companies for any tax
period ending on or prior to the Closing Date, including the period
ending on the Closing Date (which includes the gain and corresponding tax
liability resulting from the deemed sale) in accordance with the rules of
Code Section 338(h)(10) and the Treasury Regulations promulgated
thereunder, but only to the extent that the amount of such Taxes exceed
the amount of such Taxes reserved for as a liability on the Final
Statement and that have not been paid to Seller pursuant to Section 6.7.
(c) Seller shall be solely liable for and shall pay all Taxes for
any taxable year or taxable period ending on or before the Closing Date
(including all Taxes treated under Section 6.2(d) as attributable to tax
periods ending on or before the Closing Date) due and payable by any of
the Deco Companies ("Pre-Closing Taxes"), but only to the extent that the
amount of such Taxes exceeds the amount of such Taxes accrued as a
liability on the Final Statement and that have not been paid to Seller
pursuant to Section 6.7.
(d) For purposes of apportioning any Tax (other than a real or
personal property tax) for any period that overlaps (i.e., begins before
and ends after) the Closing Date (a "Straddle Period"), the parties shall
treat the Closing Date as the last day of the period which includes the
Closing Date (i.e. the parties hereto shall "close the books" on such
date"), and the parties hereto will, to the extent permitted by
applicable law, elect with the relevant taxing authorities to treat such
period for all purposes as a taxable period of the Deco Companies, and
such period shall be treated as a "Short Period" for purposes of this
Agreement. In the case of real and personal property Taxes, the parties
shall apportion such Taxes to the relevant periods based on Seller's past
practice in accruing for such items. In any case where applicable law
does not permit the Deco Companies to treat the Closing Date as the last
day of a Short Period, then for purposes of this Agreement, the portion
of such Taxes that is attributable to the operations of the Deco
Companies for such Interim Period (as defined below) shall be (i) in the
case of Taxes that are not based on income or gross receipts, the total
amount of such Taxes attributable to the period in question multiplied by
a fraction, the numerator of which is the number of days in the Interim
Period, and the denominator of which is the total number of days in the
entire period in question, and (ii) in the case of Taxes that are based
on income or gross receipts, the Taxes that would be due with respect to
the Interim Period, if such Interim Period were a Short Period. "Interim
Period" means with respect to any Taxes imposed with respect to the
operations of any of the
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Deco Companies on a periodic basis for which the Closing Date is not the
last day of a Short Period, the period of time beginning on the first day
of the actual taxable period that includes (but does not end on) the
Closing Date and ending on and including the Closing Date.
6.3 Clearance Certificate. As a condition precedent to the consummation
of the transactions contemplated by this Agreement, Seller shall provide Buyer
with a clearance certificate or similar document(s) that may be required by any
state taxing authority in order to relieve Buyer of any obligation to withhold
any portion of the Purchase Price or shall agree in writing to the withholding
of such portion.
6.4 Nonforeign Affidavit. Seller shall furnish Buyer an affidavit,
stating, under penalty of perjury (i) the Sellers' United States taxpayer
identification number and (ii) a sworn statement that Seller is not a foreign
person, pursuant to Section 1445(b)(2) of the Code and as set forth in Treasury
Regulation Section 1.1445-2(b).
6.5 Transfer Taxes. Seller and Buyer shall each bear and pay 50% of
sales, use, transfer, and documentary Taxes and recording and filing fees, if
any, applicable to the transactions effectuated pursuant to the terms of this
Agreement.
6.6 Access to Records Following Closing. Buyer and Seller agree that so
long as any books, records and files retained by Seller relating to the
business of the Deco Companies, or the books, records and files delivered to
the control of Buyer pursuant to this Agreement to the extent they relate to
the operations of the Deco Companies prior to the Closing Date, remain in
existence and available, each party (at its expense) shall have the right upon
prior notice to inspect and to make copies of the same at any time during
business hours for any proper purpose. Buyer and Seller shall use reasonable
efforts not to destroy or allow the destruction of any such books, records and
files without first offering in writing to deliver them to the other.
6.7 Filing of Tax Returns. Seller shall timely prepare and file all
Returns with respect to Pre-Closing Taxes, except Returns for Taxes due or
payable with respect to a Straddle Period. Buyer shall cause the Deco
Companies to timely prepare and file all Returns for Taxes due or payable with
respect to a Straddle Period and to provide Seller copies of any such Tax
Return and a statement certifying the amount of Taxes shown on such Tax Return
that are Pre-Closing Taxes (a "Tax Statement") no later than fifteen (15) days
before the due date for the filing of such Return. Seller and its authorized
representatives shall have the right to review such Returns and Tax Statement.
To the extent that the amount shown as Pre-Closing Taxes on the Tax Statement
exceeds the amount of Pre-Closing Taxes reserved for as a liability on the
Final Statement, Seller shall pay the difference to Buyer within fifteen (15)
days of the end of the above-referenced fifteen (15) day
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period, unless Seller disputes such amount. To the extent that the amount
shown as Pre-Closing Taxes on the Tax Statement is exceeded by the Pre-Closing
Taxes reserved for as a liability on the Final Statement, Buyer shall pay the
difference to Seller within fifteen (15) days. If Seller disputes the amount
shown as Pre-Closing Taxes on the Tax Statement prepared by Buyer, then Seller
and Buyer shall resolve such dispute in the manner set forth in Section 10.21.
6.8 Refunds or Credits. Any Tax refunds or credits with respect to
Pre-Closing Taxes shall be for the account of Seller and any refunds or credits
with respect to other Taxes shall be for the account of Buyer. Buyer shall
cause the Deco Companies promptly to forward to Seller or reimburse Seller for
any such refunds or credits due Seller after receipt thereof by Buyer or the
applicable Deco Company, and Seller shall promptly forward to Buyer or
reimburse Buyer for any refunds or credits due Buyer after receipt thereof by
Seller.
ARTICLE VII
CONDITIONS TO SELLER'S OBLIGATIONS
The obligations of Seller to consummate the transactions contemplated by
this Agreement will be subject to the fulfillment, or written waiver by Seller,
at or prior to the Closing, of each of the following conditions:
7.1 Representations and Warranties True. The representations and
warranties of Buyer contained in this Agreement are true and correct as of the
date of this Agreement and at and as of the Closing Date as though such
representations and warranties were made at and as of the Closing Date, except
to the extent that representations and warranties were made as of a specified
date, including as of the date of this Agreement (and as to such
representations and warranties the same continue on the Closing Date to have
been true as of the specified date). Notwithstanding anything to the contrary
in this Agreement, this Section 7.1 will be deemed to have been satisfied for
all purposes under this Agreement (including Sections 9.1 and 9.4) even if such
representations or warranties are not true and correct unless the failure of
any of the representations or warranties to be so true and correct,
individually or in the aggregate, has or constitutes, or is reasonably likely
to have or constitute, a Buyer Material Adverse Effect.
7.2 Performance. Buyer has performed and complied with all agreements,
obligations and covenants required by this Agreement to be performed or
complied with by it at or prior to the Closing. Notwithstanding anything to
the contrary in this Agreement, this Section 7.2 will be deemed to have been
satisfied for all purposes under this Agreement (including Sections 9.1 and
9.4) even if such agreements, obligations and covenants have not been so
performed or complied with unless the failure to have been performed or
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complied with, individually or in the aggregate, has or constitutes, or is
reasonably likely to have or constitute, a Buyer Material Adverse Effect.
7.3 No Injunction or Proceeding. Except with regard to the HSR Act which
will be governed by Section 7.5 below, no Governmental Regulation (including
any injunction or other court order) has been enacted, entered, promulgated or
enforced which remains in effect and which prohibits, restricts or enjoins the
consummation of the transactions contemplated by this Agreement; provided that
upon the reversal, lifting or other successful appeal or resolution of such
Governmental Regulation, the condition set forth in this Section will be
deemed fulfilled.
7.4 Consents. Except with regard to the HSR Act which will be governed
by Section 7.5 below, all Consents of Governmental Entities or other Persons
necessary for consummation of the transactions contemplated by this Agreement
have been obtained, other than those which, if not obtained, would not have or
constitute, and would not reasonably be expected to have or constitute, a Buyer
Material Adverse Effect.
7.5 HSR Act. All required waiting periods applicable to this
Agreement and the transactions contemplated by this Agreement under the HSR Act
have expired or been terminated without there being in effect a Governmental
Regulation enjoining or restraining consummation of such transactions; provided
that upon the reversal, lifting or other successful appeal or resolution of
such Governmental Regulation, the condition set forth in this Section will be
deemed fulfilled.
7.6 Documents and Certificates. Buyer has furnished Seller with a
certificate of Buyer to evidence satisfaction of the conditions set forth in
Sections 7.1, 7.2, 7.3 and 7.4 hereof in the form attached hereto as Exhibit
7.6.
7.7 Counsel Opinion. Buyer shall have furnished to Seller an opinion of
Miller, Canfield, Paddock and Stone, P.L.C., counsel to Buyer, in substantially
the form attached hereto as Exhibit 7.7.
7.8 Closing Documents. Buyer shall have delivered to Seller the other
certificates, instruments and documents contemplated by Section 2.3(b)-(d)
hereof.
ARTICLE VIII
CONDITIONS TO BUYER'S OBLIGATIONS
The obligations of Buyer to consummate the transactions contemplated by
this Agreement will be subject to the fulfillment, or written waiver by Buyer,
at or prior to the Closing, of each of the following conditions:
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8.1 Representations and Warranties True. The representations and
warranties of Seller contained in this Agreement are true and correct as of the
date of this Agreement and at and as of the Closing Date (without giving
effect to the disclosure by Seller of any New Facts) as though such
representations and warranties were made at and as of the Closing Date, except
to the extent that representations and warranties were made as of a specified
date, including as of the date of this Agreement (and as to such
representations and warranties the same continue on the Closing Date to have
been true as of the specified date). Notwithstanding anything to the contrary
in this Agreement, this Section 8.1 will be deemed to have been satisfied for
all purposes under this Agreement (including Sections 9.1 and 9.3) even if such
representations or warranties (other than those relating to the ownership of
all of the issued and outstanding capital stock of the Deco Companies by Seller
and the ownership thereof by Buyer after the Closing free and clear of all
Encumbrances and other than the absence of any other outstanding securities
that are convertible into or exchangeable for, or other rights to acquire, any
capital stock of the Deco Companies) are not true and correct unless the
failure of any of such representations or warranties (other than those relating
to the ownership of all of the issued and outstanding capital stock of the Deco
Companies by Seller and the ownership thereof by Buyer after the Closing free
and clear of all Encumbrances and other than the absence of any other
outstanding securities that are convertible into or exchangeable for, or other
rights to acquire, any capital stock of the Deco Companies) to be so true and
correct, individually or in the aggregate, has or constitutes, or would
reasonably be likely to have or constitute, a Seller Material Adverse Effect;
provided, however, that the parties acknowledge and agree that any breach of,
or inaccuracy in, any representation or warranty of Seller in Article III of
this Agreement (whether at the date of this Agreement or the Closing Date and
without giving effect to the disclosure by Seller of any New Facts) shall be
subject to the indemnification provisions of Section 5.7 hereof.
8.2 Performance. Seller has performed and complied with all agreements,
obligations, and covenants required by this Agreement to be performed or
complied with by it at or prior to the Closing. Notwithstanding anything to
the contrary in this Agreement, this Section 8.2 will be deemed to have been
satisfied for all purposes under this Agreement (including Sections 9.1 and
9.3) even if any such agreements, obligations, and covenants have not been so
performed or complied with unless the failure to have been performed or
complied with, individually or in the aggregate, has or constitutes, or is
reasonably likely to have or constitute, a Seller Material Adverse Effect;
provided, however, that the parties acknowledge and agree that any breach of
any such agreements, obligations or covenants shall be subject to the
indemnification provisions of Section 5.7 hereof.
8.3 No Injunction or Proceeding. Except with regard to the HSR Act
which will be governed by Section 8.5 below, no
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Governmental Regulation (including any injunction or other court order) has
been enacted, entered, promulgated or enforced which remains in effect and
which prohibits, restricts or enjoins the consummation of the transactions
contemplated by this Agreement; provided that upon the reversal, lifting or
other successful appeal or resolution of such Governmental Regulation, the
condition set forth in this Section will be deemed fulfilled.
8.4 Consents. Except with regard to the HSR Act which will
be governed by Section 8.5 below, all Consents of Governmental Entities or
other Persons necessary for consummation of the transactions contemplated by
this Agreement have been obtained, other than those which, if not obtained,
would not have or constitute, and would not reasonably be expected to have or
constitute, a Seller Material Adverse Effect.
8.5 HSR Act. All required waiting periods applicable to this
Agreement and the transactions contemplated by this Agreement under the HSR Act
have expired or been terminated without there being in effect a Governmental
Regulation enjoining or restraining consummation of such transactions; provided
that upon the reversal, lifting or other successful appeal or resolution of
such Governmental Regulation, the condition set forth in this Section will be
deemed fulfilled.
8.6 Closing Certificates. Seller has furnished Buyer with a certificate
of Seller (duly executed by Seller) to evidence satisfaction of the conditions
set forth in Sections 8.1, 8.2, 8.3, 8.4, 8.11, 8.12 and 8.13 hereof in the
form attached hereto as Exhibit 8.6.
8.7 General Release. Seller shall have executed and delivered to Buyer
the General Release.
8.8 Noncompetition Agreement. Seller shall have executed and delivered
to Buyer the Noncompetition Agreement.
8.9 Indemnity Escrow Agreement. Seller shall have executed and delivered
to Buyer the Indemnity Escrow Agreement.
8.10 Counsel Opinion. Seller shall have furnished to Buyer an opinion of
Honigman, Miller, Xxxxxxxx and Xxxx, counsel to Seller, in substantially the
form attached hereto as Exhibit 8.10.
8.11 Permitted Distribution. Subject to the exclusion of cash, cash
equivalents and marketable securities pursuant to Section 1.2 hereof, the
Permitted Distribution and the Additional Permitted Distribution shall have
been completed.
8.12 No Litigation. No Proceeding shall have been instituted by any
Person (other than Buyer or a Related Person to Buyer) before any
Governmental Entity, or instituted by any Governmental Entity, to restrain or
prevent the carrying out of the transactions contemplated by this Agreement or
which would reasonably be
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expected to affect the right of Buyer to own, operate or control the Deco
Shares or materially adversely affect the businesses or assets of the Deco
Companies after the Closing Date or which would reasonably be expected to
result in damages in connection therewith of $1,000,000 or more.
8.13 No Material Adverse Change. There shall not have occurred after
the date of this Agreement (whether or not a New Fact) any fact,
circumstance, event, development, change or occurrence which, individually or
in the aggregate with all other facts, circumstances, events, developments,
changes and occurrences, which has or constitutes, or is reasonably expected to
have or constitute, a Seller Material Adverse Effect.
8.14 Financing. The Closing Date Financing shall have been consummated
on terms and conditions satisfactory to Buyer.
8.15 Closing Documents. Seller shall have delivered to Buyer the other
certificates, instruments and documents contemplated by Section 2.2(a) - (e)
hereof.
ARTICLE IX
TERMINATION
9.1 Termination. This Agreement may be terminated at any time prior
to the Closing in accordance with any one or more of the following:
(a) By mutual written consent of Seller and Buyer.
(b) By Seller or Buyer at any time after the Deadline if, through no
fault of the party seeking termination, the Closing has not occurred.
(c) By Seller or Buyer, if any Governmental Entity has issued an
order, decree, ruling or Governmental Regulation or taken other action
restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement and such order, decree, ruling,
Governmental Regulation or other action has become final and
nonappealable.
(d) By Buyer, if there has been a breach by Seller of any agreement,
covenant or obligation contained in this Agreement or any breach of, or
inaccuracy in, any representation or warranty of Seller contained in
Article III of this Agreement, in all cases which (i) is not curable or
is not cured within thirty (30) days after receipt of written notice
thereof by Seller (provided that in such case the Deadline shall be
extended up to the end of such thirty (30) day period if and as requested
by Seller), and (ii) individually or in the aggregate with all other
breaches of, or inaccuracies in, agreements, covenants, obligations,
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representations and warranties of Seller contained in this Agreement and
all New Facts, has or constitutes, or is reasonably likely to have or
constitute, a Seller Material Adverse Effect.
(e) By Buyer, if Seller gives notice to Buyer of any New Facts in
accordance with the provisions of Section 5.3, or Buyer otherwise becomes
aware of any New Facts, and such New Facts, individually or in the
aggregate with all other New Facts and all breaches of, and inaccuracies
in, agreements, covenants, obligations, representations and warranties of
Seller contained in this Agreement, have or constitute, or are reasonably
likely to have or constitute, a Seller Material Adverse Effect.
(f) By Seller, if there has been a breach by Buyer of any agreement,
covenant or obligation contained in this Agreement or any breach of, or
inaccuracy in any representation or warranty of Buyer contained in
Article IV of this Agreement, in all cases which (i) is not curable or is
not cured within thirty (30) days after receipt of written notice thereof
by Buyer (provided that the Deadline shall be extended up to the end of
such thirty (30) day period if and as requested by Buyer), and (ii)
individually or in the aggregate with all other breaches of, or
inaccuracies in, agreements, covenants, obligations, representations and
warranties of Buyer contained in this Agreement, has or constitutes, or
is reasonably likely to have or constitute, a Buyer Material Adverse
Effect.
9.2 Procedure and Effect of Termination.2 Procedure and Effect of
Termination. If this Agreement and the transactions contemplated by this
Agreement are terminated pursuant to Section 9.1 above, written notice of such
termination will forthwith be given to the other party and this Agreement
(other than Sections 5.12(b), 9.2, 9.3, 9.4 and 9.5 and Article X, which will
continue notwithstanding any such termination) will terminate and the
transactions contemplated by this Agreement will be abandoned, without further
action by the parties. If this Agreement is terminated as provided in this
Section:
(a) All information received by Buyer in connection with this
Agreement, the businesses of the Deco Companies, the Deco Companies, the
Deco Shares or any of the transactions contemplated by this Agreement
will be held subject to and in accordance with the terms of the
Confidentiality Agreement, which agreement will continue notwithstanding
the termination of this Agreement.
(b) All filings, applications and other submissions made pursuant to
Section 5.5 above will, to the extent practicable, be withdrawn from the
Governmental Entity or other Person to which made.
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(c) No party (or any such party's Representatives, affiliates, any
trustee of any party in his or her capacity as trustee and any
beneficiary or trustee of any party in his or her individual capacity or
any of such party's directors, officers, employees, shareholders,
affiliates, successors or permitted assigns) will have any liability or
obligation to any other party under this Agreement, except (i) pursuant
to the Confidentiality Agreement and (ii) as provided in Sections 9.3,
9.4 and 9.5 below, as applicable.
9.3 Disbursement of Deposit. In the event that all of the following are
true:
(a) the Closing shall not occur on or prior to the Deadline; and
(b) there shall not have occurred any of the circumstances that give rise
to the right of Buyer to terminate this Agreement under Sections 9.1(c), 9.1(d)
or 9.1(e) hereof whether or not Buyer has exercised such right on or prior to
the Deadline; and
(c) each of the conditions to Buyer's obligations to close the
transactions contemplated hereby set forth in Article VIII, other than Sections
8.11 and 8.14, shall have been satisfied (which in the case of Sections 8.6,
8.10 and 8.15 shall be satisfied by the tender of the required items to Buyer)
on or prior to the Deadline;
(d) if the condition to Buyer's obligations to close the transactions
contemplated hereby set forth in Section 8.11 shall not have been satisfied on
or prior to the Deadline, and Seller shall have provided Buyer with reasonable
evidence to the effect that the Permitted Distribution and the Additional
Distribution would have been completed not later than immediately prior to the
consummation of the Closing; and
(e) if the condition to Buyer's obligations to close the transactions
contemplated hereby set forth in Section 8.14 shall either (i) have been
satisfied on or prior to the Deadline or (2) have not been satisfied on or
prior to the Deadline, and the breach by Seller, if any, of its covenants in
Section 5.9(b) shall not be a substantial factor in such failure of such
condition;
then and only then Seller shall be entitled to the Deposit as a termination fee
and liquidated damages and Seller and Buyer shall jointly instruct the Deposit
Escrow Agent to disburse the Deposit to Seller.
9.4 Payment of Seller Payment by Seller to Buyer. In the event that all
of the following are true:
(a) the Closing shall not occur on or prior to the Deadline;
(b) any of the following shall be true: (i) Seller shall refuse or fail to
participate in the scheduled Closing
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notwithstanding that the conditions to Seller's obligations to close the
transactions contemplated hereby set forth in Article VII, other than the
obligation of Buyer to deliver the Estimated Purchase Price, shall have been
satisfied (which in the case of Sections 7.6, 7.7, or 7.8 shall be satisfied by
the tender of the required items to Seller); (ii) Seller shall have willfully
failed to deliver the Preliminary Statement as contemplated in Section 1.2(b);
(iii) Seller shall have breached Sections 1.4, 2.2(a), (h), (i) or (j); or (iv)
Seller shall have willfully breached Sections 5.2(a) or 5.9(b) of this
Agreement and shall not have cured any such breach within thirty (30) days
after receipt of notice thereof (and the Deadline shall be extended up to the
end of such thirty (30) day period if and as requested by Seller); and
(c) Buyer shall provide Seller a letter from the managing underwriter,
principal lender or principal note holder associated with the Closing Date
Financing, or shall provide other reasonable evidence, to the effect that the
Closing Date Financing would have been consummated (with net proceeds in an
amount sufficient to pay the Estimated Purchase Price), or Buyer otherwise
would have had sufficient funding to pay the Estimated Purchase Price, in each
case except for the existence of a Seller Material Adverse Effect or any of the
matters referred to in clause (b) above;
then and only then Seller shall pay to Buyer upon demand the sum of $5,000,000
(the "Seller Payment") as a termination fee and liquidated damages. Any
payment by Seller pursuant to this Section shall be made in immediately
available funds by wire transfer to an account or accounts designated by Buyer.
Buyer shall also be entitled to a return of the Deposit and Seller and Buyer
shall jointly instruct the Deposit Escrow Agent to disburse the Deposit to
Buyer.
9.5 Waiver of Other Remedies.
(a) In the event that the Closing does not occur for any reason other than
as specified in Sections 9.3 or 9.4, then neither party shall have any
liability to any other party except that Buyer shall be entitled to the return
of the Deposit and upon termination of this Agreement Buyer and Seller shall
thereupon jointly instruct the Escrow Agent to disburse the Deposit to Buyer.
(b) The remedy and recourse of Seller to the Deposit as provided in
Section 9.3, the remedy and recourse of Buyer to the Seller Payment and the
return of the Deposit as provided in Section 9.4, and the return of the Deposit
to Buyer as contemplated in Section 9.5 in all other events that the Closing
does not occur, shall in each such case be the sole and exclusive remedy and
recourse by the parties against each other in the event that the Closing shall
not occur for any reason, whether for any breach of this Agreement or
otherwise, and each of the parties hereby expressly waives any and all other
rights and remedies that they may otherwise have under this Agreement or
applicable law, except for claims based on Section 5.12(b), fraud and under the
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Confidentiality Agreement. By way of clarification, the provisions of Sections
5.7 and 5.8 shall in no event apply in the event that the Closing does not
occur for any reason.
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1 Certain Definitions.
(a) As used in this Agreement, the "Representatives" of any Person
will mean, as appropriate, the affiliates, subsidiaries, officers,
directors, employees, consultants, shareholders, representatives,
counsel, accountants, agents, trustees, beneficiaries, successors and
assigns of such Person.
(b) As used in this Agreement, the Deco Companies will be deemed to
have received "notice" of a fact or circumstance if Xxxxxxx Grand or any
officer, director or general manager of any of the Deco Companies, has
received a written communication stating such fact or circumstance.
(c) As used in this Agreement, the term "including" means including,
without limitation.
(d) As used in this Agreement, the phrase "transactions contemplated
in this Agreement" and similar phrases do not include the Closing Date
Financing.
(e) As used in this Agreement, the following terms shall have
the following respective meanings:
"Agreement" means this Stock Purchase Agreement and the Disclosure
Schedule.
"Business Day" means a day that is not a Saturday, Sunday or
national holiday upon which banks in the State of Michigan are generally
open to conduct a commercial banking business.
"Closing Date Financing" means certain debt financing contemplated
by the Buyer, a portion of the proceeds of which will be used to pay the
purchase price of the Deco Shares.
"Debt Offering Documents" means each offering circular or memorandum
and registration statement (including any preliminary or final prospects
contained therein) relating to the Closing Date Financing.
"Encumbrance" means any charge, claim, community property interest,
condition, equitable interest, lien, option, pledge, security interest,
mortgage, right of first refusal, proxy, voting agreement or trust, or
restriction of any kind,
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including any restriction on use, voting, transfer, receipt of income, or
exercise of any other attribute of ownership.
"Environment" means soil, land surface or subsurface strata, surface
waters (including navigable waters, ocean waters, streams, ponds,
drainage basins, and wetlands), groundwaters, drinking water supply,
stream sediments, ambient air (including indoor air), plant and animal
life, and any other environmental medium or natural resource.
"Environmental, Health, and Safety Liabilities" means any cost,
damages, expense, liability, regulatory noncompliance responsibility or
any Loss arising from a violation or failure to perform a Response
Activity under Environmental Law or Occupational Safety and Health Law
and consisting of or relating to:
(a) any environmental or occupational health and safety matters or
conditions (including, but not limited to, on-site or off-site
contamination and regulation of chemical substances or products);
(b) fines, penalties, judgments, awards, settlements, legal or
administrative proceedings, damages, losses, claims, demands and
response, investigative, remedial, or inspection costs and expenses
arising under Environmental Law or Occupational Safety and Health Law;
(c) financial responsibility under Environmental Law or Occupational
Safety and Health Law for cleanup costs or corrective action, including
any investigation, cleanup, removal, containment, or other remediation or
response actions ("Cleanup") required by applicable Environmental Law or
Occupational Safety and Health Law and for any natural resource damages;
or
(d) any other compliance, corrective, investigative, or remedial
measures required under Environmental Law or Occupational Safety and
Health Law.
The terms "removal," "remedial," and "response action," include the types
of activities covered by the United States Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq., as
amended ("CERCLA").
"Environmental Law" means any Governmental Regulation that requires
or relates to:
(a) advising appropriate authorities, employees, and the public of
intended or actual releases of pollutants or hazardous substances or
materials, violations of discharge limits that could have significant
impact on the Environment;
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(b) preventing or reducing to acceptable levels the release of
pollutants or hazardous substances or materials into the Environment;
(c) reducing the quantities, preventing the release, or minimizing
the hazardous characteristics of wastes that are generated;
(d) protecting resources, species, or ecological amenities;
(e) reducing to acceptable levels the risks inherent in the
transportation of hazardous substances, pollutants, oil, or other
potentially harmful substances;
(f) cleaning up pollutants that have been released, preventing the
threat of release, or paying the costs of such clean up or prevention; or
(g) making responsible parties pay private parties, or groups of
them, for damages done to their health or the Environment for
contamination, or permitting self-appointed representatives of the public
interest to recover for injuries done to the Environment.
"Facilities" means any real property, leaseholds, or other interests
currently or formerly owned or operated by any of the Deco Companies and
any buildings, plants, structures, or equipment (including motor
vehicles, tank cars, and rolling stock) currently or formerly owned or
operated by any of the Deco Companies.
"Governmental Authorization" means any approval, consent, license,
permit, waiver, or other authorization issued, granted, given, or
otherwise made available by or under the authority of any Governmental
Entity or pursuant to any Governmental Regulation.
"Hazardous Activity" means the distribution, generation, handling,
importing, management, manufacturing, processing, production, refinement,
Release, storage, transfer, transportation, treatment, or use (including
any withdrawal or other use of groundwater) of Hazardous Materials in,
on, under, about, or from the Facilities or any part thereof into the
Environment.
"Hazardous Materials" means any waste or other substance that is
listed, defined, designated, or classified as, or otherwise determined to
be, hazardous, radioactive, or toxic or a pollutant or a contaminant
under or pursuant to any Environmental Law, including any admixture or
solution thereof, and specifically including petroleum and all
derivatives thereof or synthetic substitutes therefor and asbestos or
asbestos-containing materials.
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"Knowledge" means, in the case of an individual, that such an
individual will be deemed to have "Knowledge" of a particular fact or
other matter if:
(a) such individual is actually aware of such fact or other matter;
or
(b) a prudent individual could be expected to discover or otherwise
become aware of such fact or other matter in the course of conducting a
reasonable investigation concerning the existence of such fact or other
matter.
The Deco Companies will be deemed to have "Knowledge" of a
particular fact or other matter if Xxxxxxx Grand, Xxxxx Xxxx or Xxx
Xxxxxx has Knowledge of such fact or other matter and Seller will be
deemed to have "Knowledge" of a particular fact or other matter if
Xxxxxxx Grand has Knowledge of such fact or matter.
Buyer will be deemed to have "Knowledge" of a particular fact or
other matter if Xxxx Xxxxxxxxx or Xxxx Xxxxxx has Knowledge of such fact
or other matter.
"Losses" means all liabilities, damages (compensatory,
consequential, incidental, natural resource and other, but excluding
punitive and exemplary damages except to the extent the same are an
element of damages awarded to a third party for which the party seeking
indemnification is otherwise responsible), losses, penalties, fines,
deficiency, forfeitures, assessments, claims, suits, proceedings,
investigations, actions, demands, judgments, awards, settlements,
arbitrations, diminution in value, response costs, costs of cleanup,
containment and remediation, and other costs and expenses, including
amounts paid in settlement, court costs, reasonable attorneys' fees, and
consultants' and experts' fees; provided, however, that "Losses" shall
not include any multiplier to be used to reflect the methodology used to
establish the purchase price. For purposes of clarity, the parties
acknowledge that the term "Losses" is not limited to matters asserted by
third parties, but also include Losses incurred or sustained in the
absence of third party claims.
"Occupational Safety and Health Law" means any Government Regulation
designed to provide safe and healthful working conditions and to reduce
occupational safety and health hazards.
"Person" means any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company,
joint venture, estate, trust, association, organization, labor union, or
other entity or Governmental Entity.
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"Proceeding" means any claim, action, arbitration, audit, hearing,
investigation, litigation, or suit (whether civil, criminal,
administrative, investigative, or informal) commenced, brought,
conducted, or heard by or before, or otherwise involving, any
Governmental Entity or arbitrator; provided, that investigations and
informal Proceedings shall not constitute Proceedings unless Seller or
any of the Deco Companies has Knowledge of such Proceedings.
"Product Recall" means any systematic effort by Buyer, any of the
Deco Companies, a customer or a Governmental Entity (provided, that in
the case of Buyer, any of the Deco Companies or a customer such effort is
pursuant to any Governmental Regulation or in connection with any
arrangement with or involving a Governmental Entity) to remedy a breach
of warranty of any of the Deco Companies or as required in order to
comply with any Governmental Regulations.
"Related Agreement" means the General Release, the Escrow Agreement,
the Noncompetition Agreement and, in the case of Seller, also includes
the stock certificates and stock powers executed and delivered by Seller
pursuant to Section 2.2 hereof.
"Related Person" means with respect to a particular individual:
(a) each other member of such individual's Family;
(b) any Person that is directly or indirectly controlled by such
individual or one or more members of such individual's Family;
(c) any Person in which such individual or members of such
individual's Family hold (individually or in the aggregate) a Material
Interest; and
(d) any Person with respect to which such individual or one or more
members of such individual's Family serves as a director, officer,
partner, executor, or trustee (or in a similar capacity).
With respect to a specified Person other than an individual:
(i) any Person that directly or indirectly controls, is directly or
indirectly controlled by, or is directly or indirectly under common
control with such specified Person;
(ii) any Person that holds a Material Interest in such specified
Person;
(iii) each Person that serves as a director, officer, partner,
executor, or trustee of such specified Person (or in a similar capacity);
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(iv) any Person in which such specified Person holds a Material
Interest;
(v) any Person with respect to which such specified Person serves as
a general partner or a trustee (or in a similar capacity); and
(vi) any Related Person of any individual described in clause (ii)
or (iii).
For purposes of this definition, (a) the "Family" of an individual
includes (i) the individual, (ii) the individual's spouse, (iii) any
other natural person who is related to the individual or the individual's
spouse within the second degree, and (iv) any other natural person who
resides with such individual, and (b) "Material Interest" means direct or
indirect beneficial ownership (as defined in Rule 13d-3 under the
Exchange Act) of voting securities or other voting interests representing
at least 50% of the outstanding voting power of a Person or equity
securities or other equity interests representing at least 50% of the
outstanding equity securities or equity interests in a Person.
"Release" means any spilling, leaking, pumping, pouring, emitting,
emptying, injecting, discharging, depositing, escaping, leaching,
dumping, or other releasing into the Environment, whether intentional or
unintentional.
"SEC Filing" means any statement or report filed or to be filed by
Buyer with the Securities and Exchange Commission (the "SEC") under the
Exchange Act and the rules and regulations of the SEC thereunder relating
to this Agreement, the Closing Date Financing and/or the transactions
contemplated hereby and/or thereby.
"Threat of Release" means a condition or event giving rise to a
substantial likelihood of a Release and with respect to which condition
or event there exists a duty under any Environmental Law to take action
in order to prevent or mitigate damage to the Environment that may result
from such Release.
10.2 Amendment and Modification. No amendment or modification or
addition to this Agreement will be valid or effective unless the same
is in writing, expressly refers to this Agreement and is signed by the party
against which it is to be enforced.
10.3 Extension; Waiver. The party entitled to the benefit of any
respective term or provision of this Agreement may, by written
instrument signed by such party which expressly refers to this Agreement (and
such extension and waiver), (a) extend the time for the performance of any of
the obligations or other acts of the other party to this Agreement, (b) waive
any inaccuracies in the
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representations and warranties contained in this Agreement or (c) waive
compliance with any obligation, covenant, agreement or condition contained in
this Agreement. Any agreement on the part of any party to any such extension
or waiver will be valid only if set forth in an instrument in writing signed on
behalf of the party agreeing to such extended or waived term or provision. A
waiver or failure to enforce any of the terms or conditions of this Agreement
will not in any way affect, limit or waive any party's rights to enforce strict
compliance thereafter with every other term and condition of this
Agreement.
10.4 Entire Agreement; Assignment. This Agreement and the Related
Agreements constitute the exclusive, final and entire agreement between the
parties with regard to the subject matter of this Agreement and supersede all
other contemporaneous and prior agreements, understandings and information,
whether written or oral, express or implied, between the parties with regard to
the subject matter of this Agreement, including all information contained in
the Memorandum; provided that this Agreement does not supersede the
Confidentiality Agreement, which remains in full force and effect until
consummation of the Closing. Prior to Closing, neither this Agreement nor any
of the rights, interests or obligations under this Agreement may be assigned by
any party without the prior written consent of the other party, except that the
death of Xxxxxxx Grand shall not cause this Agreement to terminate. After the
Closing, any party may assign all or any portion of this Agreement or its
rights, interests or obligations hereunder to any other Person except that no
such assignment shall relieve such party of its obligations hereunder. This
Agreement will be binding upon and inure to the benefit of the parties named in
this Agreement and their respective successors and permitted assigns.
10.5 Severability. The provisions of this Agreement will be deemed
severable, and if any provision of this Agreement is determined to be illegal
or invalid under applicable Governmental Regulation, such provision may be
changed to the extent reasonably necessary to make the provision, as so
changed, legal, valid and binding. If any provision of this Agreement is
determined to be illegal or invalid in its entirety, such illegality or
invalidity will have no effect on the other provisions of this Agreement, which
will remain valid, operative and enforceable.
10.6 Notices.6 Notices. Any notice or other communication required or
permitted to be given under this Agreement will be sufficient if it is in
writing and delivered personally, telecopied or mailed, certified, registered
or first-class mail, or recognized overnight courier, postage prepaid, and will
be deemed given when so delivered personally or telecopied, or, if mailed by
certified, registered or first-class mail, three days after the date of
mailing, or, if mailed by recognized overnight courier, one day after the date
of mailing, as follows (or as otherwise specified by any party by notice to the
other party in accordance with this
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Section, provided that change of address notices will be effective only upon
receipt thereof):
(a) If to Seller on or before the Closing Date, to:
Xxxxxxx Grand
0000 Xxxxxxxx Xxxxxxx
Xxxxx Xxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
If to Seller after the Closing Date, to:
Xxxxxxx Grand
0000 Xxx Xxxxxx
Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
in each case with a copy to:
Xxxxxxxx Xxxxxx Xxxxxxxx and Xxxx
0000 Xxxxx Xxxxxxxx Xxxxxxxx
Xxxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxx Xxxxxx Xxxxxxxx, Esq.
(b) If to Buyer, to;
Newcor, Inc.
0000 X. Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000-0000
Telecopy: (000) 000-0000
Attention: President and Chief Executive Officer
with a copy to:
Miller, Canfield, Paddock and Stone, P.L.C.
000 Xxxx Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx, Esq.
10.7 7 Governing Law. The laws of the State of Michigan will govern
this Agreement, its construction and the determination of any rights, duties or
remedies of the parties arising out of or relating to this Agreement,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws of such State.
10.8 Publicity.
(a) Seller will not make, before or after the Closing, any public
statement or announcement with regard to this Agreement or the
transactions contemplated by this Agreement without the approval of
Buyer.
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(b) Without limiting Buyer's obligations under the Confidentiality
Agreement, which will remain in full force and effect until the
consummation of the Closing, Buyer will not make, prior to the Closing,
any public statement or announcement with regard to this Agreement or the
transactions contemplated by this Agreement without the approval of
Seller except in connection with the Debt Offering Documents and SEC
Filings and except as Buyer in good faith determines to be required under
any Governmental Regulation or the rules of any national stock exchange
or automated quotation system where any of Buyer's securities may be
listed or admitted for quotation. Before making any public statement or
announcement after the Closing, Buyer will use good faith efforts to
consult with Seller with regard to any such statement or announcement,
but, Buyer will be free to make any statement or announcement, as it
deems appropriate. Buyer will not make any public statement or
announcement at any time which indicates the amount of the consideration
paid for the Deco Shares or any other economic term relating to any of
the transactions contemplated by this Agreement or any agreement or
document executed or delivered in connection with this Agreement except
in connection with the Debt Offering Documents and SEC Filings and except
as Buyer in good faith determines to be required under any Governmental
Regulation or the rules of any national stock exchange or automated
quotation system where any of Buyer's securities may be listed or
admitted for quotation.
(c) Notwithstanding anything to the contrary in this Agreement and
without limiting the generality of the Confidentiality Agreement, which
remains in full force and effect until consummation of the Closing, Buyer
will keep confidential for the benefit of Seller, before and after the
Closing, all books, records, data and other information provided to or
obtained by Buyer in connection with this Agreement to the extent that
such information relates to Seller or any of Seller's Representatives and
not to any of the Deco Companies or the Business and will not disclose
any such information without Seller's prior written consent except in
connection with the Debt Offering Documents and SEC Filings, except as
Buyer in good faith determines to be required under any Governmental
Regulation or the rules of any national stock exchange or automated
quotation system where any of Buyer's securities may be listed or
admitted for quotation, and except as required in connection with the
resolution of any dispute between the parties.
10.9 Table of Contents and Headings. The table of contents and headings
in this Agreement are inserted for convenience of reference only and are not
intended to be part, or to affect the meaning or interpretation, of this
Agreement.
10.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original,
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and all of which together will constitute one and the same instrument.
10.11 Expenses. Whether or not the transactions contemplated by this
Agreement are consummated, except as provided in this Agreement, each party
will pay its own expenses in connection with the negotiation, execution and
performance of this Agreement, the transactions contemplated by this Agreement
and all things required to be done in connection with this Agreement, including
attorneys' fees, brokerage or financial advisor fees, filing fees and
accounting fees. Seller agrees that the Deco Companies shall not pay any
costs, expenses or compensation to DLJ or the attorneys or accountants of the
Deco Companies in connection with the transactions contemplated hereby (and
instead all such expenses, costs and compensation shall be distributed to
Seller as part of the Additional Permitted Distribution and shall be paid and
borne by Seller). The Deco Companies may bear and pay other costs and expenses
of the transactions contemplated hereby, provided such costs and expenses are
not capitalized by the Deco Companies and to the extent not paid prior to the
Closing are accrued as liabilities on the Final Statement (and otherwise Seller
shall bear and pay such costs and expenses).
10.12 Exclusion of Warranties and Acknowledgment of Buyer.
Notwithstanding anything to the contrary in this Agreement, but subject to the
last sentence in Section 10.15, Buyer acknowledges and agrees that Seller makes
no representation or warranty express or implied, oral or written, and will not
be responsible to Buyer, any of the Deco Companies or any of their respective
Representatives for any inaccuracy in or breach of any such representation or
warranty express or implied, oral or written, other than those representations
and warranties expressly set forth in Article III, and Buyer, on behalf of
itself, the Deco Companies and their respective Representatives, acknowledges
that it has not and will not rely on any representation or warranty other than
those expressly set forth in Article III above.
10.13 Limited Survival.
(a) All representations, warranties, covenants and agreements of the
parties contained in this Agreement will survive the execution and
delivery of this Agreement and the Closing and shall be fully effective
and enforceable for the Applicable Time Period. For purposes of this
Agreement, the "Applicable Time Period" shall mean the period ending as
follows:
(i) Except as provided below in this Section 10.13(a) and in Section
10.13(b), all representations, warranties, covenants, agreements and
obligations of Seller or Buyer in this Agreement (and the related
indemnification provisions in Sections 5.7 and 5.8) will survive until
the date that is 24 months after the Closing Date.
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(ii) Article X, the indemnification obligations in Sections 5.7(c)
with respect to items listed in paragraphs 1, 2, 3, 4, 5 and 8 of Exhibit
5.7(c), 5.8(c), 5.8(d) and 5.11, the representations and warranties
contained in Sections 3.1, 3.2, 3.4, 3.5(a), 3.13, 4.1, 4.2, 4.3(a), 4.4,
and 4.7 and the related indemnification provisions in Sections 5.7 and
5.8, will survive the Closing for an unlimited period of time.
(iii) Except as provided in Section 10.13(b), the representations
and warranties contained in Sections 3.11 and 3.12, and the covenants in
Article VI shall survive the Closing until the expiration of the statute
of limitations relating to any possible claim by any other Person
(including, but not limited to any Tax authority) that would constitute a
breach of, or inaccuracy in, any such representation, warranty or
covenant (it being the intention of the parties that such
representations, warranties and covenants (and the related
indemnification provisions in Sections 5.7 and 5.8) survive the Closing
until such time as no Loss can be suffered by any of the Deco Companies,
Buyer or their respective Representatives or Seller, as applicable, for
any breach thereof or inaccuracy therein).
(iv) Except as provided in Section 10.13(b), the representations and
warranties contained in Section 3.16 (and the related indemnification
provisions in Section 5.7) and the indemnity obligations of Seller in
Section 5.7(c) as to items listed in paragraphs 6 and 7 of Exhibit 5.7(c)
shall survive the Closing until the date that is 36 months after the
Closing Date.
(b) Any claim for indemnification under this Agreement made pursuant to
Section 10.14(a) below on or prior to the expiration of the Applicable Time
Period shall survive until resolved or finally determined pursuant to this
Agreement.
(c) The rights of indemnification and other remedies based on such
representations, warranties, covenants and obligations will not be affected by
any investigation conducted with respect to, or any Knowledge acquired (or
capable of being acquired), at any time, whether before or after execution and
delivery of this Agreement or the Closing Date, with respect to the accuracy or
inaccuracy of or compliance with any such representations, warranties,
covenants and obligations. All such representations and warranties are
contractual provisions, entitling the party suffering Losses based on the
breach thereof, or inaccuracy therein, to indemnification in accordance with
the terms of this Agreement without necessity of reliance thereon. The waiver
of any condition based on the accuracy of any representation or warranty, or on
the performance of or compliance with any covenant or obligation, will not
affect the right to indemnification or other remedy based on such
representations, warranties, covenants and obligations.
10.14 Indemnification Procedures and Limitations.
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(a) The parties acknowledge that the only indemnification obligations that
will exist in connection with this Agreement or any of the transactions
contemplated by this Agreement will be the obligations in Sections 5.7, 5.8 and
5.11 of this Agreement. Whenever any claim is made for indemnification under
Section 5.7, 5.8 or 5.11 of this Agreement, the Person claiming such
indemnification (the "Indemnified Party") will give written notice to the party
against whom indemnification is sought (the "Indemnitor") (each an "Indemnified
Claim"); provided that if the Indemnified Party receives a complaint, petition
or any other pleading in connection with an Indemnified Claim which requires
the filing of an answer or other responsive pleading, it will furnish the
Indemnitor with a copy of such pleading as soon as reasonably practicable after
receipt and determination by the Indemnified Party that it will seek
indemnification in respect thereof, but the failure to do so shall not affect
the Indemnitor's obligations hereunder except to the extent of prejudice. Such
notice will describe the Indemnified Claim in reasonable detail and will
indicate the amount (to the extent feasible) of the Loss that has been or may
be suffered by the Indemnified Party, which estimate will not be binding.
(b) The parties will cooperate with each other in all reasonable respects
in the defense (or settlement) of Indemnified Claims under this Agreement. The
Indemnitor shall be entitled to participate in the defense of any Indemnified
Claim involving any third party (each a "Third-Party Claim") and, if it so
elects, to assume the defense of the Third-Party Claim, with counsel reasonably
satisfactory to the Indemnified Party. After written notice from the
Indemnitor to the Indemnified Party of such election to assume the defense, the
Indemnitor will not, so long as the Indemnitor diligently conducts such
defense, be liable to the Indemnified Party for any other expenses subsequently
incurred by the Indemnified Party in connection with the defense of the
Third-Party Claim other than costs and expenses of the Indemnified Party
incurred at the request of the Indemnitor. The assumption of the defense of
such Third-Party Claim will be deemed an admission by the Indemnitor that it is
liable to the Indemnified Party for indemnification in respect of such
Third-Party Claim. If the Indemnitor chooses to assume the defense of any
Third-Party Claim, the Indemnified Party will make available to the Indemnitor
any books, records or other documents within its control that are reasonable or
appropriate for such defense. The parties will cooperate with each other in
all reasonable respects to determine as soon as reasonably practicable whether
and to the extent a claim is indemnifiable hereunder. Notwithstanding anything
to the contrary contained in this Agreement, in the case of a Third-Party
Claim, (i) the Indemnitor shall be entitled to participate in (but not control)
the defense of such claim irrespective of whether it elects to assume the
defense thereof as provided above, (ii) the Indemnified Party agrees (and, in
the case where the Buyer is the Indemnified Party, to cause the Deco Companies)
to make available to the Indemnitor any books, records or other documents
within its control as the Indemnitor shall reasonably request and (iii) the
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Indemnitor shall have the right at any time if it so elects to assume the
defense of the Third-Party Claim.
(c) The Indemnitor may, at its election and following its admission that
it is liable for such Third-Party Claim and its assumption of the defense
thereof, settle or compromise any Third-Party Claim but the Indemnitor may not
settle or compromise such Third Party Claim without the prior written consent
of the Indemnified Party (which consent shall not be unreasonably withheld)
unless (i) the sole relief provided is the payment of monetary damages and the
Indemnitor pays such monetary damages in full, (ii) there is no finding or
admission of any violation of any Governmental Regulation or any violation of
the rights of any Person and no effect on any other claims that may be made
against the Indemnified Party and (iii) the settlement or compromise includes
the unconditional release of the Indemnified Party from such Third Party Claim.
(d) The Indemnified Party may not settle or compromise any Third-Party
Claim without the prior written consent of the Indemnitor (which consent may
not be unreasonably withheld), unless the Indemnitor has elected not to assume
the defense of the Third-Party Claim, has failed to notify the Indemnified
Party within 30 days after receiving written notice of such Third-Party Claim
(or sooner if the nature of the asserted liability so requires) of its election
to assume the defense of such Third-Party Claim, or has failed or refused to
assist the Indemnified Party in the defense of such Third-Party Claim.
Notwithstanding anything to the contrary contained in this Agreement, any
settlement or compromise of any Third-Party Claim by an Indemnified Party
without the prior written consent of the Indemnitor shall not be binding upon
the Indemnitor as to whether the Indemnitor is required to provide
indemnification under this Agreement or as to the amount thereof.
(e) Notwithstanding anything to the contrary contained in this Agreement,
if (i) any Third-Party Claim is reasonably likely to result in an injunction or
other equitable remedies against Buyer, or any of the Deco Companies that is
reasonably likely to have significant consequences to the Deco Companies taken
as a whole or to Buyer, (ii) any Third-Party Claim is reasonably likely to
result in Losses which, taken with other Indemnified Claims by Buyer any of the
Deco Companies or their Representatives, would not be fully indemnified
hereunder as a result of Seller's financial condition or the Cap (as defined in
Section 10.14(i)(v) below), (iii) with respect to such Third-Party Claim there
exists any material conflict of interest between Seller and Buyer or there are
material defenses available to Buyer, a Deco Company or any of their
Representatives (other than Seller), as applicable, that are not available to
Seller or may not be asserted by Seller on such Person's behalf, (iv) any Third
Party Claim is reasonably likely to have a material adverse effect on the
operations, assets, properties, prospects, financial condition or results of
operations of Buyer and the Deco Companies taken as a whole, (v) such Third-
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Party Claim relates to Taxes (unless the claim relates to Taxes for
any period other than a Straddle Period and the resolution of the claim will
not affect Taxes for any other period), or (vi) Seller fails, either before or
after assuming the defense of the Third Party Claim, to diligently defend such
Third-Party Claim, then in any such event, at Buyer's election (which election
shall be made by Buyer as promptly as practicable under the circumstances),
Seller shall not have the right to assume or control the defense of any such
Third-Party Claim.
(f) Notwithstanding anything to the contrary contained herein, Buyer
and/or a Deco Company (at the election of Buyer), shall have the sole right, at
the election of Buyer (which election shall be made by Buyer as promptly as
practicable under the circumstances), to control the defense of any Third-Party
Claim against Buyer, any of the Deco Companies or any of their respective
Representatives (other than Seller) relating to any claim that would constitute
any breach of, or inaccuracy in, any of the representations and warranties of
Seller contained in Section 3.16, any disclosures contained in Section 3.16 of
the Disclosure Schedule, any matter revealed in any of the Environmental
Assessments, or any New Facts related to any of the foregoing, and, without
limiting the generality of the foregoing, to control any Response Activities.
(g) Intentionally omitted.
(h) The parties will use reasonable, good faith efforts to agree on
whether indemnifiable Losses exist and, if so, the amount. Any amounts
determined to be owed will be paid within 30 days of such determination.
(i) Notwithstanding anything to the contrary in this Agreement, the
following limitations will apply with regard to Losses for which Seller or
Buyer would otherwise have indemnification obligations under this Agreement:
(i) Seller will not have any liability, obligation or responsibility
to the extent that the aggregate of all Losses (other than Environmental
Losses (as defined in Section 10.14(i)(ii) below)) of Buyer, the Deco
Companies and their respective Representatives (other than Seller) is
less than or equal to (x) Five Hundred Thousand Dollars ($500,000) less
(y) the amount of Environmental Losses that are subject to Environmental
Loss Threshold(s) (the "Seller General Threshold").
(ii) Seller will not have any liability, obligation or
responsibility to the extent that the aggregate of all Environmental
Losses of Buyer, the Deco Companies and their respective Representatives
(other than Seller) attributable to a single occurrence is less than or
equal to $100,000 (the "Seller Environmental Threshold"); provided that
Seller shall not be entitled to apply more than one (1) Seller
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Environmental Threshold to Environmental Losses attributable to any
single occurrence or more than five (5) Seller Environmental Thresholds
to all Environmental Losses. For purposes of determining Environmental
Losses against which Environmental Thresholds are to be applied,
Environmental Losses shall be determined in the order that Buyer first
becomes aware of the existence of the occurrence giving rise to the
Environmental Loss. For purposes of this Agreement, "Environmental
Losses" means Losses based upon, arising out of, or otherwise in respect
of any breach of, or inaccuracy in, any of the representations or
warranties of Seller in Section 3.16 hereof or any of the items listed in
paragraphs 6 or 7 of Exhibit 5.7(c). All Environmental Losses shall be
deemed for all purposes to be attributable to a single occurrence unless
they are the result of separate nonrecurring sets of facts, circumstances
or conditions.
(iii) Notwithstanding anything to the contrary in Sections
10.14(i)(i) and (ii) above, Seller shall not be entitled to apply any
Losses to any Seller Environmental Threshold or Seller General Threshold
to the extent that the aggregate of all Losses to be applied against such
thresholds exceeds Five Hundred Thousand Dollars ($500,000) (the "Seller
Total Threshold"). For purposes of determining the amount of Losses to
be applied against the Seller Total Threshold, Losses shall first be
applied against the Seller General Threshold.
For example, if Buyer has non-Environmental Losses of $250,000 and
Environmental Losses of $120,000, $200,000 and $50,000 attributable to
three (3) separate occurrences then the entire $250,000 of the
non-Environmental Losses and $100,000 of each of the first two (2)
Environmental Losses and the entire $50,000 of the third Environmental
Loss would be applied against the Seller General Threshold (thereby
exhausting it and the Seller Total Threshold) and Seller would pay to
Buyer the balance of the $20,000 and $100,000 of the first two (2)
Environmental Losses since they exceed the separate Environmental
Thresholds applicable to those Losses. The Environmental Thresholds
would likewise then be exhausted because the Seller Total Threshold is
exhausted.
(iv) Buyer will not have any liability, obligation or responsibility
to the extent that the aggregate of all Losses of Seller is less than or
equal to Five Hundred Thousand Dollars ($500,000) (the "Buyer
Threshold").
(v) Neither Seller nor Buyer (nor Buyer and the Deco Companies in
the case of Section 5.11) will have any liability, obligation or
responsibility for Losses of the other party, to the extent that the
aggregate of all Losses exceeds Ten Million Dollars ($10,000,000) (the
"Cap").
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(j) Notwithstanding anything to the contrary contained in this Agreement,
none of the Seller General Threshold, the Seller Environmental Threshold(s),
the Seller Total Threshold, the Buyer Threshold or the Cap shall apply to any
of the Excluded Items. For purposes hereof, "Excluded Items" means:
(i) In the case of Seller, the obligations of Seller to pay to Buyer
any adjustment to the purchase price pursuant to Section 1.3 hereof, the
obligations of Seller to indemnify Buyer, the Deco Companies and their
Representatives under Sections 5.7(a) or 5.7(b) for breach of, or
inaccuracy in, Section 3.11 or Article VI hereof, and the obligations of
Seller to indemnify Buyer, the Deco Companies and their Representatives
under Section 5.7(c) for the items listed in paragraphs 1, 2, 3, 4, 5 and
8 of Exhibit 5.7(c) hereof;
(ii) In the case of Buyer, the obligations of Buyer to pay the
Estimated Purchase Price at Closing pursuant to Section 1.2 or any
adjustment pursuant to Section 1.3 hereof, the obligations of Buyer to
indemnify Seller under Section 5.8(b) for breach by Buyer of Article VI,
and the obligations of Buyer to indemnify Seller under Sections 5.8(c)
and 5.8(d); and
(iii) In the case of Buyer or Seller, claims based on fraud.
(k) Notwithstanding anything to the contrary contained in this Agreement,
the Buyer Threshold shall not apply to Buyer's or any of the Deco Companies'
obligations in Section 5.11 but the Cap (applied in the aggregate
together with all other Losses that Buyer and/or the Deco Companies may be
responsible for) shall apply to such obligations.
(l) All amounts paid by Buyer or Seller, as the case may be, under Section
5.7 or 5.8 hereof, shall be treated, to the extent permitted by Tax law, as
adjustments to the Purchase Price for all Tax purposes.
10.15 Exclusive Remedies. To the fullest extent permitted by applicable
law, the indemnification provisions provided for in Sections 5.7 and 5.8 will
be the exclusive remedy for any inaccuracy in, or any breach of, any
representation, warranty, covenant or agreement contained in this Agreement
except for claims based on fraud. For purposes of clarification, nothing in
this Agreement is intended nor shall be construed as limiting in any fashion
any rights or remedies of any party hereto for breach by another party of any
of the Related Agreements.
10.16 Incorporation of Exhibits and Schedules. All Exhibits referred to
in this Agreement are specifically incorporated into this Agreement by
reference. Capitalized terms not otherwise defined in the Exhibits to this
Agreement will have the meanings given to them in this Agreement.
Notwithstanding anything to the
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contrary in this Agreement, matters reflected in any Exhibit to this Agreement
or in the Disclosure Schedule are not necessarily limited to matters required
to be reflected in any such Exhibit or Disclosure Schedule, any such additional
matters are set forth for informational purposes and do not necessarily include
other matters of a similar nature and inclusion of any matter in any Exhibit or
Schedule to this Agreement will not be considered an admission that such matter
is or may be "material" for purposes of this Agreement or otherwise.
10.17 Parties. With the exception of the parties to this Agreement and
their respective successors and permitted assigns and other Persons expressly
stated to be receiving the benefit of any indemnification provision of this
Agreement, there will exist no right of any Person to claim a beneficial
interest in this Agreement or any rights or remedies occurring by virtue of
this Agreement.
10.18 No Construction Against Drafter. This Agreement is being entered
into between competent Persons who are experienced in business and represented
by counsel, and has been reviewed by the parties and their counsel. Therefore,
any ambiguous language in this Agreement will not necessarily be construed
against any particular party as the drafter of such language.
10.19 Further Assurances. From time to time after the date of this
Agreement, without further consideration, the parties will cooperate with each
other and will execute and deliver such documents to the other party as such
other party may reasonably request to carry out the transactions contemplated
by this Agreement.
10.20 Relationship of the Parties. Nothing in this Agreement will be
deemed to create a partnership, joint venture or employment relationship
between the parties.
10.21 Dispute Resolution.
10.21.1 Arbitration. All disputes and controversies of every kind and
nature between the parties hereto arising out of or in connection with this
Agreement (including, without limitation, Sections 5.7, 5.8 and 5.11) shall be
submitted to arbitration pursuant to the following procedures:
(i) Except as modified hereby, the arbitration shall be
governed by the Commercial Arbitration Rules of the American Arbitration
Association ("AAA") including the Supplementary Procedures for Large
Complex Disputes. After a dispute or controversy arises, any party may,
in a written notice delivered to the other party, demand such
arbitration. Such notice shall designate the name of the arbitrator (who
shall be an impartial person) appointed by such party demanding
arbitration, together with a statement of the matter in controversy in
reasonable detail.
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(ii) Within thirty (30) days after receipt of such demand, the other
party shall, in a written notice delivered to the other party, name such
party's arbitrator (who shall be an impartial person). If such party
fails to name an arbitrator, then the second arbitrator shall be named by
the AAA. The two arbitrators so selected shall name a third arbitrator
(who shall be an impartial person) within thirty (30) days, or in lieu of
such agreement on a third arbitrator by the two arbitrators so appointed,
the third arbitrator shall be appointed by the AAA. If any arbitrator
appointed hereunder shall die, resign, refuse, or become unable to act
before an arbitration decision is rendered, then the vacancy shall be
filled by the methods set forth in this Section for the original
appointment of such arbitrator.
(iii) Except as provided in Section 10.21.2, each party shall bear
its own arbitration costs and expenses. The arbitration hearing shall be
held in Oakland County, Michigan at a location designated by a majority
of the arbitrators. The substantive laws of the State of Michigan
(excluding conflict of laws provisions) and the Federal Arbitration Act
shall apply.
(iv) An award rendered by a majority of the arbitrators appointed
pursuant hereto shall be final and binding on all parties to the
Proceeding, shall resolve the question of costs of the arbitrators, legal
fees and expenses and all related matters, and judgment on such award may
be entered and enforced by either party in any court of competent
jurisdiction.
(v) The arbitrators may by an interim or final award grant
injunctive relief.
(vi) Except as provided in Section 10.21.2, the parties stipulate
that the provisions of this Section shall be a complete defense to any
Proceeding instituted in any federal, state or local court or before any
administrative tribunal with respect to any controversy or dispute
arising out of this Agreement. The arbitration provisions hereof shall,
with respect to such controversy or dispute, survive the termination or
expiration of this Agreement.
The parties hereto and the arbitrators may not disclose the existence or
results of any arbitration hereunder without the prior written consent of the
other party; nor will any party hereto disclose to any third party any
confidential information disclosed by any other party hereto in the course of
an arbitration hereunder without the prior written consent of such other party.
Notwithstanding the foregoing, a party may disclose the existence or results
of an arbitration hereunder, and any such confidential information (a) to their
respective counsel and other advisors with a need to know such information in
connection with such arbitration proceedings, (b) as required to be disclosed
by deposition,
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subpoena or other court or governmental action, (c) in connection with their
respective obligations under the Exchange Act and the rules and regulations
promulgated thereunder, (d) in connection with registration of offerings of
securities under the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder, or (e) otherwise required to be disclosed
under applicable law.
10.21.2 Emergency Relief. Notwithstanding anything in this Section
10.21 to the contrary and subject to the provisions of Section 10.22, any party
may seek from a court any provisional remedy or injunctive relief that may be
necessary to protect any rights or property of such party pending the
establishment of the arbitral tribunal or its determination of the merits of
the controversy.
10.22 Exclusive Jurisdiction.
(a) Subject to Section 10.21, each party hereto hereby irrevocably
submits to the jurisdiction of the United States District Court for the
Eastern District of Michigan and, if such court does not have
jurisdiction, of the courts of the State of Michigan in Oakland County,
for the purposes of any action arising out of this Agreement, or the
subject matter hereof or thereof, brought by any other party.
(b) Subject to Section 10.21, to the extent permitted by applicable
law, each party hereby waives and agrees not to assert, by way of motion,
as a defense or otherwise in any such action, any claim (i) that it is
not subject to the jurisdiction of the above-named courts, (ii) that the
action is brought in an inconvenient forum, (iii) that it is immune from
any legal process with respect to itself or its property, (iv) that the
venue of the suit, action or proceeding is improper or (v) that this
Agreement or the subject matter hereof or thereof may not be enforced in
or by such courts.
10.23 Time of the Essence. With regard to all dates and time periods set
forth or referred to in this Agreement, time is of the essence.
10.24 Disclosures in the Disclosure Schedule. The disclosures in the
Disclosure Schedule relate only to the particular representation and warranty
in the section or subsection of this Agreement to which they expressly relate
and not to any other representation or warranty in this Agreement. In the
event of any inconsistency between the statements in the body of this Agreement
and those in the Disclosure Schedule (other than an exception expressly set
forth as such in the Disclosure Schedule with respect to a specifically
identified representation and warranty) the statements in the body of this
Agreement will control.
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10.25 Additional Termination Rights. Notwithstanding anything to the
contrary in this Agreement, in the event the Deposit is not paid by Buyer to
the Deposit Escrow Agent by 5:00 p.m., Eastern Standard Time, on December 10,
1997, this Agreement and the Deposit Escrow Agreement shall, effective
immediately upon written notice from Seller to Buyer, be null and void ab
initio.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed and delivered on the date first above written.
SELLER:
/s/ Xxxxxxx Grand
----------------------------------
Xxxxxxx Grand, individually and as
Trustee of the Xxxxxxx Grand
Revocable Trust dated July 5, 1979
and the Xxxxxxx X. Grand Property
Trust dated January 22, 1992
BUYER:
NEWCOR, INC.
By: /s/ W. Xxxx Xxxxxxxxx
-------------------------------
Its: President
-------------------------------
For purposes of Section 5.11 only:
GRAND MACHINING CO.
By: /s/ Xxxxxxx Grand
----------------------------
Its: President
-----------------------
DECO TECHNOLOGIES, INC.
By: /s/ Xxxxxxx Grand
----------------------------
Its: President
-----------------------
DECO INTERNATIONAL, INC.
By: /s/ Xxxxxxx Grand
-----------------------------
Its: President
-----------------------
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