UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 31, 1996
SECOM GENERAL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 0-14299 87-0410875
(State or other jurisdiction of (Commission (IRS Employer
incorporation or organization) File Number) Identification No.)
46035 GRAND RIVER AVENUE, NOVI, MICHIGAN 48374
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (810)-305-9410
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Item 2. Acquisition or Disposition of Assets.
(a) On October 31, 1996, Milford Manufacturing Corp. ("MMC" or the
"Company"), a wholly-owned subsidiary of Secom General Corporation
("Secom") consummated the acquisition of certain manufacturing assets and
operations of VarityKelsey-Hayes Corporation's ("Varity") Milford, Michigan
facility pursuant to an Acquisition Agreement (the "Agreement") between it
and Varity. Assets acquired by MMC include (1) a 70,000 square foot
industrial building located on approximately 6.6 acres, and (2) machinery,
equipment and related tooling necessary for the manufacture of various
machined brake valve body parts. The Agreement requires MMC to pay Varity
total consideration of approximately $4.5 million, as follows: (1) $1.2
million paid to Varity by MMC at closing, (2) approximately $900,000 to be
paid in November 1996 for inventory, certain production tooling-in-
progress, and for the buy-out of two machines under an operating lease with
a finance company, (3) the assumption by MMC of approximately $2 million of
certain retiree health care obligations for the active employees at the
facility as of the closing date, and (4) the assumption by MMC of up to
$350,000 related to the Milford union employee pension fund. The Company
paid the cash at closing from funds available under an existing Secom
revolving bank line of credit with First Chicago/NBD.
(b) Prior to the acquisition, the assets were used to manufacture brake
fluid valve parts for various VarityKelsey-Hayes facilities. Secom intends
to continue this activity using the machinery and equipment acquired in the
transaction. In connection with the Agreement, MMC has entered into a five-
year supply agreement with Varity wherein MMC will supply brake fluid valve
parts to various VarityKelsey-Hayes facilities.
Item 7. Financial Statements and Exhibits.
(a) Financial statements of businesses acquired.
It is impracticable for Secom to provide the required financial statements
for the acquired business as of the date of this Report because the
information is not yet available. Financial statements as specified by
section 210.3.05(b) will be filed in an amended 8-K filing no later than 60
days after this Report has been filed.
(b) Pro forma financial information.
It is impracticable for Secom to provide the required pro forma financial
information for the acquired business as of the date of this Report because
the information is not yet available. Pro forma financial information will
be filed in an amended 8-K filing no later than 60 days after this Report
has been filed.
(c) Exhibits.
2.1 Acquisition Agreement
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SECOM GENERAL CORPORATION
-------------------------
(Registrant)
Date November 15, 1996 /s/ DAVID J. MARCZAK
---------------------------- --------------------------
(Signature)
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EXHIBIT INDEX
Exhibit
Number Description Page No.
- ------- ----------- --------
2.1 Acquisition Agreement dated October 31, 1996
between Milford Acquisition, Inc. (n/k/a
Milford Manufacturing Corp.) and Kelsey-Hayes
Company, d/b/a Varity Kelsey-Hayes
E-1
Exhibit 2.1
ACQUISITION AGREEMENT
THIS ACQUISITION AGREEMENT (the "Agreement") is made this 31st day of
October, 1996, by and between KELSEY-HAYES COMPANY, d/b/a VARITY KELSEY-
HAYES, a corporation incorporated under the laws of the State of Delaware
with its principal place of business at 12025 Tech Center Drive, Livonia,
Michigan 48150 (hereinafter referred to as "Seller"), and MILFORD
ACQUISITION, INC., a company incorporated under the laws of the State of
Michigan, with a place of business at 401 S. Woodward, Suite 400,
Birmingham, Michigan 48009 (hereinafter referred to as "Buyer").
Recitals:
A. Seller is engaged, at its Milford, Michigan facility, in the
manufacture and sale of machined fluid valve products for use in the
production of fluid valve bodies ("Machined Fluid Valve Business").
B. Upon the terms and subject to the conditions set forth in this
Agreement, Seller desires to sell to the Buyer and Buyer desires to
purchase from Seller various assets associated with Seller's Machined Fluid
Valve Business;
Therefore, in consideration of the mutual promises and mutual
covenants contained in the Agreement and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, Seller and Buyer agree as follows:
1 Acquisition of Assets.
1.1 Purchase and Sales of Assets. Upon the terms and subject to the
conditions hereof, at the Closing Date (as defined in Section 3.1), Seller
hereby sells, conveys, transfers, assigns and delivers to Buyer, and Buyer
hereby buys and acquires from Seller, all of Seller's right, title and
interest in and to the Machined Fluid Valve Assets (as defined in Section
1.2).
1.2 Definition of Machined Fluid Valve Assets. For purposes of this
Agreement, and except as provided in Section 1.4 below, the "Machined Fluid
Valve Assets" means and includes the assets, properties and rights of
Seller which, as of the Closing Date, Seller owns or has a right to use and
are used exclusively in the Machined Fluid Valve Business. The Machined
Fluid Valve Assets include the following:
1.2.1 Real property. All real property as listed in Schedule
1.2.1 (the "Real Property"), being the complete Milford facility and
related real estate (i.e. contiguous parking lots, etc.).
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1.2.2 Tangible Personal Property. All machinery, equipment,
tools, dies, molds, jigs, patterns, gauges, leasehold improvements and
other tangible personal property listed in Schedule 1.2.2, (the
"Equipment") but not including the "Wayne Warehouse Equipment" listed in
Schedule 1.4.5, together with, to the extent transferable, all express and
implied warranties by manufacturers or sellers of the Equipment and all
maintenance records, brochures, catalogues and other documents relating to
the Equipment or to their installation or functioning. Although listed on
Schedule 1.4.5, there is no guarantee by Seller that any of the "Idle
Equipment" is at the Milford facility and any "Idle Equipment" which is not
located at the Milford facility is not included in the Machined Fluid Valve
Assets.
1.2.3 Inventories. All inventories of raw materials, operating
supplies, packaging materials, component parts, replacement and spare
parts, work in process and finished goods (the "Inventories").
1.2.4 Prepaid Items. [Intentionally omitted.]
1.2.5 Purchase Contracts. All of Seller's rights in and to
contracts made or orders given by Seller relating to the purchase of
materials, parts, supplies and commodities for use in the Machined Fluid
Valve Business (the "Purchase Contracts") listed in Schedule 1.2.5.
1.2.6 Sales Contracts. All of Seller's rights in and to
contracts made or orders given to Seller for the sale of machined fluid
valve products in the conduct of the Machined Fluid Valve Business (the
"Sales Contracts") listed in Schedule 1.2.6.
1.2.7 Other Contracts. All of Seller's rights in and to those
contracts, licenses or other agreements listed on Schedule 1.2.7 to which
Seller is a party and entered into for the benefit of the Machined Fluid
Valve Business (the "Other Contracts," and all the Purchase Contracts,
Sales Contracts and Other Contracts hereinafter collectively referred to as
the "Assigned Contracts").
1.2.8 Permits. All permits, approvals and qualifications which
have been issued to Seller by any state or local governmental agency and
relate to the conduct of the Machined Fluid Valve Business listed in
Schedule 1.2.8.
1.2.9 Personal Property Leases. Subject to the provisions of
Section 1.3, Seller shall assign to Buyer all leases for machinery,
equipment and other tangible personal property leased from third persons
and used exclusively in the Machined Fluid Valve Business and listed on
Schedule 1.2.9 (the "Personal Property Leases"). It is hereby acknowledged
and agreed that the lease for the two (2) Mitsubishi M-H5OC CNC Machining
Centers (serial #'s H50C012 and CH2155) (the Mitsubishi Centers) with
Finova Capital Corporation will not be assigned to the Buyer since
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consent for the assignment was not obtained. The Seller agrees to purchase
the Mitsubishi Centers from the lessor for approximately Three Hundred
Fifty-seven Thousand ($357,000.00) Dollars. Buyer agrees to pay to Seller,
within two (2) days, the amount required to purchase the Mitsubishi Centers
from the lessor upon Seller presenting a Bill of Sale or other reasonable
evidence to Buyer that the Mitsubishi Centers have been purchased and can
be transferred to Buyer free of liens and encumbrances. In the event that
the Buyer fails to pay the above amount to Seller within two (2) business
days, the Seller may offset said amount against any indebtedness from
Seller to Buyer now owing or subsequently arising under this Agreement, the
Machined Valve Product Supply Agreement or otherwise.
1.2.10 Benefit Plans. All of Seller's right, title and interest
in the pension and welfare benefit plans, as set forth in Schedule 1.2.10,
including, without limitation, all plan documents, trust documents and
insurance policies relating thereto, and all papers, documents and records
relating thereto, and all assets thereof.
1.2.11 Books and Records. Books and records, files and other
documents (including such items recorded on computer storage media) used
exclusively in the ongoing operation of the Machined Fluid Valve Business
and access to all other books, records, files and other documents which may
be necessary to such ongoing operations for the purpose of copying such
materials on reasonable notice to Seller by Buyer.
1.3 Consents to Assignments. Other provisions hereof notwithstanding,
this Agreement will not be deemed an assignment or transfer, or an
attempted assignment or transfer, of any right or privilege if such
assignment or transfer would constitute a breach or violation of
any contract, lease, permit or license under state, federal or local
law. To the extent that any consent, approval or waiver is required
for Seller's transfer of any right or interest to Buyer in respect of any
Machined Fluid Valve Assets, Seller will use its best efforts to obtain
such consent, approval and/or waiver and Buyer agrees to cooperate with
Seller and provide information and/or documentation as may be reasonably
necessary to obtain such consent, approval and/or waiver. If such consent,
approval and/or waiver is not obtained, Seller shall cooperate with Buyer
in any reasonable arrangement designed to provide for Buyer the benefits of
such contract, lease, permit or license. It is hereby acknowledged and
agreed that the consent to the assignment of the lease with Finova Capital
Corporation more fully described in Section 1.2.9 has not been received and
the parties agree to the arrangement set forth in Section 1.2.9.
1.4 Excluded Assets. Other provisions hereof notwithstanding, Seller
will not sell to Buyer and Seller will retain as its own property each and
all of the following assets, properties and rights related to the Machined
Fluid Valve
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Business, which hereby are excluded from the Machined Fluid Valve Assets:
1.4.1 Cash and Cash Equivalents. All cash, bank deposits and
certificates of deposit.
1.4.2 Accounts Receivable. All accounts receivable of Seller
(the "Accounts Receivable"). For purposes of this Section 1.4.2, the
Accounts Receivable shall relate to all machined fluid valve products
shipped by Seller on or before 12:00 midnight on the Closing Date.
1.4.3 The Kelsey-Hayes Name and Trademark. The expressions
"Kelsey-Hayes" and "Varity Kelsey-Hayes" and any variations thereof,
whether used as a trade name, trademark or otherwise, along with any other
trade names or assumed names of the Seller.
1.4.4 Corporate and Business Records. All corporate documents
and records, including, without limitation, minute books, stock records,
certificates, all tax records and any records relating to any asset
retained by Seller and any liability or obligation of Seller, which Buyer
is not required to assume hereunder (the "Books and Records").
1.4.5 Wayne Warehouse Equipment. Except as provided in Section
3.4.9, the dial machines and all tooling and machinery related thereto
currently located at the Wayne Warehouse and listed in Schedule 1.4.5 (the
"Wayne Warehouse Equipment").
1.4.6 Prepaid Items. All of Seller's right, title and interest
in and to expenses and charges prepaid by Seller for the benefit of the
Machined Fluid Valve Business, including, without limitation, advances,
deposits (for utilities or otherwise) and prepaid rent.
2 Consideration for Machined Fluid Valve Assets.
2.1 Purchase Price. Upon the terms and subject to the conditions of
this Agreement, in consideration for the Machined Fluid Valve Assets, Buyer
will (a) pay to Seller the sum of One Million Two Hundred Thousand
($1,200,000.00) Dollars in United States currency (the "Purchase Price"),
(b) the sum of Thirty-five Thousand ($35,000.00) Dollars set forth in
Section 2.2.4, and the reimbursement for capital expenditures set forth in
Section 2.2.4, and any reimbursement for inventory in Section 4.1.8, and
(c) assume the Assumed Liabilities (as hereafter defined).
2.1.1 Payment of Purchase Price. The Purchase Price and the
Thirty-five Thousand ($35,000.00) Dollars set forth in Section 2.2.4 shall
be paid at Closing by wire transfer of immediately available funds to the
account of Seller at:
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Comerica Bank
Detroit, Michigan
2.1.2 Purchase Price Allocation. Seller and Buyer agree that the
Purchase Price shall be allocated among the Machined Fluid Valve Assets,
tangible and intangible, and the Supply Agreement on the basis of an
allocation (the "Allocation") determined by mutual agreement of Seller and
Buyer. The Allocation shall, on delivery, become part of this Agreement for
all purposes. Seller and Buyer agree to report, pursuant to Section 1060 of
the Internal Revenue Code and the regulations promulgated thereunder, if
and when required, the Allocation of the Purchase Price, as adjusted, among
the Machined Fluid Valve Assets in a manner entirely consistent with such
Allocation in the preparation and filing of all Returns (including IRS
Form 8594).
2.2 Assumption of Liabilities. On the terms and subject to the
conditions of this Agreement, Buyer shall assume as of the Closing Date,
and shall thereafter pay, perform and discharge those liabilities and
obligations specifically identified in this Section 2.2 (the "Assumed
Liabilities"):
2.2.1 Real Properties. Seller's obligations and liabilities
relating to the real properties listed in Schedule 1.2.1, provided that
utility charges, prepaid charges and real property taxes will be pro-rated
to the Closing Date.
2.2.2 Assigned Contracts. All of Seller's obligations and
liabilities arising after the Closing Date under the Assigned Contracts.
2.2.3 Personal Property Leases. Seller's obligations and
liabilities arising after the Closing Date under and related to the
Personal Property Leases.
2.2.4 Capital Expenditures. Anything to the contrary herein
notwithstanding, the Buyer hereby assumes all obligations and liabilities
in their entirety under purchase orders for the purchase of capital
equipment related to or used in the Machined Fluid Valve Business. All
capital equipment necessary to implement the EBC5-H and the ZWAL Projects
(whether or not included in the Capital Equipment Requests "CER's" for
those Projects) are the responsibility of the Buyer and all expenditures
previously made by Seller for such capital equipment for those Projects
shall be reimbursed to Seller by Buyer in its entirety by November 15,
1996. It is acknowledged that the capital expenditure which will be
reimbursed by buyer for the EBC5-H Project is currently in excess of Sixty-
six Thousand ($66,000.00) Dollars. In addition, Buyer shall pay to Seller,
at Closing, the sum of Thirty-five Thousand ($35,000) Dollars to reimburse
Seller for expenditures by Seller for miscellaneous
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capital projects undertaken in the period preceding the Closing Date, e.g.,
the Milford saw and Grant Durban Dial Machine purchases. Notwithstanding
the above, Seller will be responsible, at its sole cost and expense, to
purchase any tooling required for the ZWAL (approximately One Hundred Five
Thousand [$105,000.00] Dollars) and EBC5-H (approximately Ninety-five
Thousand [$95,000.00] Dollars) Projects. Such tooling will be the sole and
exclusive property of Seller.
2.2.5 Accounts Payable. All trade accounts payable which occur
in the usual and ordinary course of the Machined Fluid Valve Business after
the Closing Date and all trade accounts payable for goods or services
ordered but not received as of 12:00 midnight on the Closing Date, relating
to the Machined Fluid Valve Business.
2.2.6 Post-Retirement Health Benefits. The contingent liability
for retiree health benefits for all Transferred Employees (hereinafter
"Transferred Employees" as that term is defined under Section 8.3) who have
not retired or elected to retire, in accordance with Seller's retirement
policy, as of the Closing Date. Seller shall be liable only for retiree
health benefits for salaried and hourly employees employed at its Milford,
Michigan facility who have retired or elected to retire, in accordance with
Seller's retirement policy, on or before the Closing Date and who are
eligible for retiree health benefits as of that date.
2.2.7 Employee Matters; Collective Bargaining Agreement. Except
as otherwise provided in this Agreement, all claims, causes of action,
judgments, damages, penalties and liabilities related to the Transferred
Employees, arising after the Closing Date, and all duties and obligations
related to the Transferred Employees arising after the Closing Date,
including but not limited to obligations arising under the collective
bargaining agreement executed on March 21, 1994 by the International Union,
United Automobile, Aerospace and Agricultural Implement Workers of America
("UAW") and its Local 985, and Seller ("Collective Bargaining Agreement"),
which Collective Bargaining Agreement as it relates to the Transferred
Employees, will be assigned by Seller and assumed by Buyer for obligations
arising after the Closing Date. Without limiting the foregoing, Buyer shall
assume, be responsible and liable for, and pay any amounts owing as a
result of: (i) any long term and short disability benefits provided to the
Active Employees, after the Closing Date; and (ii) Accidental Death and
Dismemberment insurance and benefits for the Active Employees, after the
Closing Date; and (iii) all life insurance and survivor income benefits for
the Active Employees, after the Closing Date; (iv) all holiday pay and
vacation pay owing and/or accrued for the Transferred Employees and (v) all
grievances related to the Transferred Employees, whether filed prior to or
subsequent to the Closing Date. All grievances filed prior to the Closing
Date are listed on Schedule 2.2.7. Buyer shall assume, be responsible and
liable for, and pay
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in its entirety the Cost of Living Adjustment ("COLA") payment due in
January, 1997. Under no circumstances shall the COLA payment be prorated
between the parties.
2.2.8 Benefit Plans. Buyer will succeed Seller as employer-
sponsor of all pension and welfare benefit plans listed in Schedules 1.2.10
and shall assume all of the duties and obligations as employer-sponsor of
such plans, including but not limited to the obligation to make all
required contributions.
2.2.9 Workers Compensation. Buyer is obligated for workers
compensation claims as more fully described in Section 3.4.6 hereof.
2.2.10 Grievances. Buyer's obligations for grievances as more
fully described in Section 2.2.7 hereof.
2.3 Retained Liabilities. Buyer shall not assume or be liable for any
liabilities or obligations of the Seller, whenever arising and whether
primary or secondary, direct or indirect, absolute or contingent,
contractual, tortuous or otherwise, other than those specifically
identified or described in this Agreement (all such liabilities and
obligations of Seller other than those specifically assumed by Buyer
identified or described in this Agreement are hereinafter collectively
referred to as the "Retained Liabilities").
3 Closing and Closing Date.
3.1 Closing and Closing Date. Subject to the satisfaction of the
terms and conditions of this Agreement, the transactions herein
contemplated and required by this Agreement will be completed and closed by
Seller and Buyer at a meeting ("Closing") at the offices of Seller on
October 31, 1996, or at such other date, time or place as may be agreed
upon by the Buyer and Seller (the "Closing Date").
3.2 Buyer's Obligation. On the Closing Date, in addition to any other
documents specifically required to be delivered or acts required to be
performed by Buyer pursuant to this Agreement, Buyer will deliver to
Seller, at Buyer's expense, in proper form for recording (if recording
thereof is required):
3.2.1 By wire transfer the Purchase Price to Seller's bank
account set forth in Section 2.1.1;
3.2.2 an agreement of assumption (the "Assumption Agreement") in
the form appended as Schedule 3.2.2 under the terms of which Buyer assumes
Seller's liabilities and obligations pursuant to Section 2.2.
3.2.3 a certificate of good standing under the laws of the State
of Michigan;
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3.2.4 an opinion of Buyer's counsel, Hardy, Lewis & Page, P.C.,
pursuant to Section 7.1;
3.2.5 an agreement to recognize the UAW as the collective
bargaining agent for the Transferred Employees and to assume the
obligations of Seller (described in this Agreement) under the Collective
Bargaining Agreement as it relates to the Transferred Employees in the form
appended as Schedule 3.2.5;
3.2.6 a Machined Valve Products Supply Agreement in the form
appended as Schedule 3.2.6; and
3.2.7 all other documents and agreements required to be
delivered by Buyer as a condition to Closing.
3.3 Seller's Obligations. On the Closing Date, in addition to any
other documents specifically required to be delivered or acts required to
be performed by Seller pursuant to this Agreement, Seller will deliver to
Buyer, at Seller's expense, in proper form for recording (if recording
thereof is required):
3.3.1 a fully executed warranty deed to the real property
described in Schedule 1.2.1 in the form appended as Schedule 3.3.1
conveying marketable title;
3.3.2 a fully executed Warranty Bill of Sale for the Equipment
in the form appended as Schedule 3.3.2;
3.3.3 a fully executed Assignment in the form appended as
Schedule 3.3.3 conveying and assigning to Buyer all of Seller's right,
title and interest in and to the Assigned Contracts and Personal Property
Leases;
3.3.4 a certificate of good standing under the laws of the State
of Delaware;
3.3.5 an opinion of Seller's counsel, Butzel Long pursuant to
Section 6.1;
3.3.6 evidence satisfactory to the Buyer of the third party
consents contemplated by Section 1.3;
3.3.7 a Machined Valve Product Supply Agreement in the form
appended as Schedule 3.2.6;
3.3.8 all other documents and agreements required to be
delivered by Seller as a condition to Closing.
3.4 Additional Obligations. The Parties agree to the following:
3.4.1 Property taxes. All real and personal property taxes and
assessments paid or payable by Seller in connection with the Machined Fluid
Valve Assets shall be prorated
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between Buyer and Seller so that Seller shall be liable for and pay for
taxes and assessments assessed for the period ending on and including the
Closing Date, and Buyer shall be liable for and pay for any such taxes and
assessments assessed for the period after the Closing Date, and each party
shall reimburse the other party promptly upon demand for any amount due the
other party pursuant to this Section 3.4.1. Nothing contained herein shall
prohibit Buyer from timely appealing any tax assessment or challenging the
valuation of the Real Property or Personal Property, provided any tax
reduction shall be similarly prorated between Buyer and Seller.
3.4.2 Transfer Taxes, Etc. All sales, filing, and similar taxes
and fees, and all stamp taxes, registration taxes, duties other charges
arising from or associated with the sale and transfer of the Machined Fluid
Valve Assets as contemplated herein shall be borne by Seller. Seller shall
prepare and file the required returns and other required documents with
respect to the taxes and fees required to be paid by it pursuant to the
preceding sentence and shall promptly provide Buyer with copies of such
returns and other documents with evidence of the payment of such taxes and
fees.
3.4.3 Access. For a period of five (5) years after the Closing,
Buyer will afford to Seller and its accountants and attorneys reasonable
access to the books and records which Seller delivers to Buyer hereunder,
and will permit Seller to make extracts and copies therefrom for any proper
purpose. For a period of five (5) years after the Closing, Seller will
afford to Buyer and its accountants and attorneys reasonable access to the
books and records which Buyer retains pursuant to Section 1.4.4 and will
permit Buyer to make extracts and copies therefrom for any proper purpose.
Nothing contained herein shall limit the access of Seller to the Machined
Fluid Valve Assets under Section 8.10 and Buyer shall agree to provide
reasonable access to the books and records necessary for Seller's
remediation of the Real Property.
3.4.4 Trade Name. After the Closing, Buyer will not use any of
Seller's trade names, "Kelsey-Hayes," "Varity Kelsey-Hayes" and any
variations thereof, nor any of Seller's trademarks and will remove from any
land and buildings acquired hereunder any signs bearing any such names and
shall remove such names and trademarks from all products and packaging
material and will not use or apply the names or trademarks to any product,
packaging or otherwise.
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3.4.5 Hourly Pension Plan. Seller currently maintains the
Kelsey-Hayes Company Milford Hourly Pension Plan (the "Plan") pursuant to
the Collective Bargaining Agreement. Buyer will succeed Seller as employer-
sponsor of the Plan. Buyer and Seller shall contribute a sufficient amount
to fund the Plan on a "going concern basis" as of October 31, 1996
("Pension Contribution"). Buyer shall be responsible to contribute the sum
of Three Hundred Fifty Thousand ($350,000) Dollars to the Plan and Seller
shall contribute the balance of the Pension Contribution. The Pension
Contribution shall be calculated by Towers Perrin as soon after the Closing
Date as is reasonably possible and the Seller's portion shall be paid by
Seller to the Plan promptly thereafter. Buyer shall assume and perform all
of the duties and obligations as employer-sponsor of the Plan after the
Closing Date.
3.4.6 Workers' Compensation Claims. Seller shall retain
liability for all workers' compensation claims pending as of the Closing
Date and all workers' compensation claims attributable to all employees not
currently pending but which solely relate to any event, facts or
circumstances which occur on or before the Closing Date, and provided the
claim is filed within thirty (30) days of the Closing Date. Buyer shall be
solely liable for all workers' compensation claims filed after the Closing
Date by any of the Active Employees (for purposes of this Agreement the
term "Active Employees" shall include all Transferred Employees except
those on lay off, short term or long term disability, workers compensation
or personal medical as of the Closing Date or thereafter) which relate to
any event, facts or circumstances which occur after the Closing Date and
all claims filed by any Active Employees more than thirty (30) days after
the Closing Date. The liability for any occupational disability claims with
a date of incident or origin that pre-dates the Closing Date, but which
involve ongoing trauma which occurs after the Closing Date and which claim
is filed after the Closing Date shall be the sole responsibility of the
Buyer. Seller shall be responsible for any re-opened claims which are filed
within thirty (30) days of the Closing Date relating solely to a previous
injury which was covered by workers compensation, which covered injury
occurred prior to the Closing Date, and provided that written notice of
such re-opened claim is given to Seller within thirty (30) days of the
Closing Date. Notwithstanding anything to the contrary contained in this
Agreement the Seller shall have no liability for any claim filed more than
thirty (30) days after the Closing Date whether or not the date of incident
or origin pre-dates the Closing Date and Seller shall have no
responsibility for any re-opened claims filed more than thirty (30) days
after the Closing Date for Active Employees. Seller shall remain
responsible for Transferred Employees who do not become Active Employees.
Seller shall retain all files and records (employment, personnel, medical,
payroll, etc.) relating to all employees other than the Active Employees.
Buyer, at its sole cost and expense, shall retain and maintain all files
and records (employment,
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personnel, medical, payroll, etc.) for all Active Employees including those
employees currently receiving workers compensation benefits. Buyer shall
manage all workers compensation claims pending as of the Closing Date and
all workers compensation claims relating to any event, facts or
circumstances occurring prior to the Closing Date and filed within thirty
(30) days of the Closing Date, and shall retain all files regarding such
claims until April 30, 1997. Buyer shall provide complete access to Seller
to the Machined Fluid Valve Assets and any and all records relating thereto
or to any employees and employee files and records, whether Transferred
Employees or not, for purposes of investigating workers' compensation
claims and shall actively assist Seller in its investigation and litigation
of all workers' compensation claims. Buyer further agrees, in compliance
with the Union Contract, to provide employment for any and all Transferred
Employees who are currently on workers' compensation disability upon
receiving medical documentation of the ability to perform work that can be
made available, and is within the employees' physical limitations. The
Buyer agrees to actively cooperate with designated rehabilitation
specialists engaged to assist said employees in returning to active
employment.
3.4.7 Information Systems. For a period not to exceed four (4)
months after the Closing Date, Buyer may use the Seller's "Information
Systems" in order to conduct the Machined Fluid Valve Business. The use of
such Information Systems shall be at no cost to Buyer. The Information
Systems shall be provided to Buyer at the design level that Seller is
currently providing to its plants generally. All design changes and
upgrades will be paid for by Buyer at the time of the change or
upgrade if used by Buyer. The parties acknowledge that access to the
Information Systems will be terminated as of February 28, 1997 and under no
circumstances and in no event shall the Information Systems be available to
Buyer after February 28, 1997.
3.4.8 Laid Off and Disabled Employees. The Seller shall retain
liability for medical and other benefits for all employees who are on "Lay
Off" status as of the Closing Date. A list of all such laid off employees
is set forth in Schedule 3.4.8. Furthermore, the Seller shall also retain
liability for the payment of medical and other benefits for employees on
long term and short term disability and personal medical and workers
compensation as of the Closing Date. A list of the employees on long term
and short term disability is set forth on Schedule 3.4.8. The parties agree
that the Buyer shall cooperate in all reasonable respects with Seller to
have all employees, who are either laid off or on disability as of the
Closing Date, return to full employment with Buyer as expeditiously as
possible. Such employment shall be made available upon receiving medical
documentation of the ability of any disabled employee to perform work that
is, or can be, made available, and is within the employee's physical
limitations. The Buyer agrees to actively cooperate with designated
rehabilitation specialists engaged to assist said employees in returning to
active employment. All
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employment of laid-off and disabled employees shall be provided in
accordance with the Union Contract, if applicable.
3.4.9 Wayne Warehouse Equipment. The parties acknowledge that
the Wayne Warehouse Equipment is currently the subject of litigation
between the Seller and a third party. The Seller agrees to transfer to
Buyer all right, title and interest in the Wayne Warehouse Equipment within
one (1) year from the Closing Date or earlier if reasonably possible. The
Wayne Warehouse Equipment shall be provided to Buyer "AS IS" and "WHERE IS"
and without any express or implied warranty of any kind whatsoever, except
for a warranty of title. The parties acknowledge that certain items of the
Wayne Warehouse Equipment are rusted and may need repairs and/or
replacement. There is no guarantee by Seller that there is any specific
tooling included with the Wayne Warehouse Equipment, nor is Seller
representing that any tooling which is ultimately transferred will be
sufficient to operate any of the Wayne Warehouse Equipment. Seller shall
provide a Bill of Sale to Buyer, without warranty, to effectuate the
transfer. Notwithstanding anything contained herein to the contrary, Buyer
shall have no right to any proceeds received by Seller in connection with
the above-stated litigation.
4 Representations and Warranties of Seller.
4.1 Representations and Warranties. Seller hereby makes the following
representations and warranties to Buyer as of the date hereof:
4.1.1 Corporate Organization. Seller is a corporation duly
organized and validly existing and in good standing under the laws of the
State of Delaware, and has all requisite power and authority (corporate and
other) to own, lease and operate its properties and assets and to carry on
the Machined Fluid Valve Business in the manner such business is conducted
by it. Seller is duly qualified to do business and in good standing in the
State of Michigan.
4.1.2 Authority. Seller has full power and authority (corporate
and other) to execute, deliver and perform this Agreement and the
transactions contemplated hereby, and the execution, delivery and
performance of this Agreement has been duly authorized and approved by all
necessary corporate action, and this Agreement constitutes a valid and
binding agreement of Seller.
4.1.3 No Conflict. Seller's execution and delivery of this
Agreement and performance of its obligations hereunder (i) are not in
violation or breach of, and will not conflict with or constitute a default
under, any of the terms of the certificate of incorporation or by-laws
other governing documents of Seller or any note, debt instrument, security
agreement, lease, deed of trust or mortgage, or any other contract,
agreement or commitment binding upon Seller or any of the Machined Fluid
Valve Assets, and
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(ii) will not conflict with or violate any applicable law, rule,
regulation, judgment, order or decree of any government, governmental
instrumentality or court having jurisdiction over Seller, or any of the
Machined Fluid Valve Assets.
4.1.4 Financial Projections. All projections and pro forma
financial information contained in any materials furnished by or on behalf
of Seller to Buyer are based on good faith estimates and assumptions by the
management of Seller, it being recognized by Buyer that projections as to
future events are not to be viewed as fact and that actual results during
the periods covered by any such projections may differ from the projected
results and the differences may be material. Seller's management believes
that the assumptions on which such projections and pro-forma financial
information are based on reasonable assumptions.
4.1.5 Financial Statements. [Intentionally omitted.]
4.1.6 Title to Real and Personal Property. Seller has and will
transfer to the Buyer good and marketable title to the Machined Fluid Valve
Assets, free and clear of all mortgages, easements, leases, agreements,
restrictions, security interests, pledges, liens or encumbrances of any
kind, or any conditional sale agreement or other title retention agreement.
To the best knowledge of Seller, no building or improvement on the Real
Property encroaches on any easement or property owned by another and no
building or improvement of another encroaches on the Real Property or any
easement the benefit of which runs to Seller. To the best knowledge of
Seller, Seller is not in violation of any zoning regulation, building
restriction, restrictive covenant, ordinance or other law, order,
regulation or requirement relating to the Real Property. Neither the whole
nor any portion thereof is subject, directly or indirectly, to any
governmental decree or order to be sold, or is being condemned,
expropriated or otherwise taken by any public authority, nor to the best of
Seller's knowledge and belief are there any existing facts or conditions
which might give rise to any such condemnation, expropriation or taking.
The Machined Fluid Valve Business is carried on exclusively by Seller and
not through any subsidiary or affiliate of Seller.
4.1.7 Condition of Real and Personal Property. Subject to the
provisions of Section 8.10, substantially all of the real and personal
property used in the Machined Fluid Valve Business is in good condition and
repair, normal wear and tear excepted. Under no circumstances does Seller
have any obligation under this provision or otherwise to improve the
condition of the real and personal property from the condition of such real
and personal property at the time of the due diligence inspection by Buyer
prior to the Closing Date. To the best knowledge of Seller, all buildings
and improvements being purchased hereunder are structurally sound and not
in need of repairs, and are adequately
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serviced by all utilities necessary for the effective operation of the
Machined Fluid Valve Business as presently conducted.
4.1.8 Inventories. All of Seller's Inventories described in
Section 1.2.3, whether finished goods, work in process, raw materials or
indirect factory supplies, are all items of a quality usable in the
operation of the Machined Fluid Valve Business or salable to customers in
the ordinary course of the Machined Fluid Valve Business. In the event that
the value of the Inventories either exceeds or is less than Five Hundred
Fifty Thousand ($550,000.00) Dollars, then the Purchase Price shall be
adjusted accordingly. The actual value of the Inventories shall be based
upon a physical inventory of the Inventories conducted by representatives
of the Seller and Buyer on November 1, 1996 ("Physical Inventory"). Such
inventory shall be valued in a manner consistent with Seller's previous
valuations of its inventory. If the value of the Inventories is less than
Five Hundred Fifty Thousand ($550,000.00) Dollars, the Seller shall, no
later than thirty (30) days from the completion of the Physical Inventory,
pay the difference between the actual value of the Inventories and Five
Hundred Fifty Thousand ($550,000.00) Dollars to Buyer. If the value of the
Inventories exceeds Five Hundred Fifty Thousand ($550,000.00) Dollars, the
Buyer shall, no later than thirty (30) days from the completion of the
Physical Inventory, pay the difference between the actual value of the
Inventories and Five Hundred Fifty Thousand ($550,000.00) Dollars to
Seller.
4.1.9 Litigation. To the best of Seller's knowledge and except
as listed in Schedule 4.19, there is no suit, action, proceeding or
investigation, by any federal, state or municipal, administrative agency,
court or other governmental body, pending or threatened, which if decided
adversely to Seller, would have a material adverse affect on the Machined
Fluid Valve Assets or the Machined Fluid Valve Business. To the best of
Seller's knowledge, there is no outstanding judgment, order, injunction,
or decree of any court, administrative agency or governmental body against
or affecting the Machined Fluid Valve Business or the Machined Fluid Valve
Assets.
4.1.10 Tax Matters. "Tax" or "Taxes" means any federal, state,
local or foreign income, business, environmental, gross receipts, ad
valorem, alternative or add-on minimum tax, profits, franchise, license,
transfer, sales, use, value added, payroll, employment, withholding,
property (real or personal), excise and similar taxes (including interest,
penalties or additions to such taxes and any interest in respect of such
penalties or additions).
(a) With respect to Taxes, (i) all returns that are required
to be filed by Seller with respect to the Machined Fluid Valve Assets or
the Machined Fluid Valve Business have been timely and duly filed and are
complete and accurate in all material aspects, (ii) all Taxes due on or
before the Closing
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Date, and all Taxes due with respect to the returns referred to in clause
(i) have been timely paid in full, (iii) the returns referred to in clause
(i) have been examined by the Internal Revenue Service or the appropriate
state, local or foreign taxing authority (or if they have not been examined
no notice of such examination has been given to Seller) or the period for
assessment of the Taxes in respect of which such returns were required to
be filed has expired, (iv) all deficiencies asserted or assessments made as
a result of such examinations have been timely paid in full, (v) no issues
that have been raised by the relevant taxing authority in connection with
the examination of any of the returns referred to in clause (i) are
currently pending, (vi) no waivers of statutes of limitation have been
given by or requested with respect to any Taxes of Seller.
(b) There are no liens or security interests in any of the
Machined Fluid Valve Assets that arose in connection with any failure (or
alleged failure) to pay any Taxes other than liens for current taxes not
yet due and payable and assessments not in default.
(c) All Taxes related to the Machined Fluid Valve Assets
which Seller is required by law to withhold or collect have been duly
withheld or collected, and have been timely paid to the proper authorities
to the extent due and payable.
4.1.10 Assigned Contracts. Each of the Assigned Contracts is in
full force and effect and neither Seller nor, to Seller's knowledge, any
other party is in default under any of the Assigned Contracts. No party to
any Assigned Contract is an affiliate of Seller and no Assigned Contract
was entered into on other than an arm's length basis. Seller has not
assigned any of its rights under any of the Assigned Contracts to any
person or entity.
4.1.11 Personal Property Leases. Schedule 1.2.9 sets forth a
complete list of the Personal Property Leases being assigned under the
terms of this Agreement. Each of the Personal Property Leases are in full
force and effect and neither Seller nor, to Seller's knowledge, any other
party is in default under any of the Personal Property Lease. No party to
any Personal Property Lease is an affiliate of Seller and no Personal
Property Leases was entered into on other than an arm's length basis.
Seller has not assigned any of its rights under any of the Personal
Property Leases to any person or entity.
4.1.12 Compliance with Laws. To the best of Seller's knowledge,
Seller has all franchises, licenses, permits, consents, authorizations,
approvals, material certificates of regulatory, administrative and other
governmental agencies or bodies necessary for Seller's conduct of the
Machined Fluid Valve Business. Subject to the provisions of Section 8.10,
Seller's conduct of the Machined Fluid Valve Business complies in all
material respects with all applicable laws, ordinances, rules,
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regulations, orders and decrees and Seller has received no notice from any
governmental agency or authority that the conduct of the Machined Fluid
Valve Business is in violation of any such law, ordinance, rule,
regulation, order or decree.
4.1.13 Employee Benefit Plans. To the best of Seller's knowledge
each of the Benefit Plans disclosed in the schedules delivered pursuant to
Section 1.2.10 hereof has been duly adopted as required and operated in
material compliance with its provisions and is in material compliance with
all applicable requirements of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA") and the Internal Revenue Code of 1986 (the
"Code"), including the timely adoption of necessary amendments and
submissions thereof to the Internal Revenue Service, where required. To the
best of Seller's knowledge, and except as set forth on Schedule 4.1.14, the
Seller has timely complied with all material reporting and disclosure
requirements applicable to each of the Benefit Plans under ERISA and the
Code; to the best of Seller's knowledge, the Seller has not materially
breached any of the fiduciary responsibility provisions of Title 1 of ERISA
nor engaged in any transaction prohibited under Section 406 or 407 of ERISA
or Section 4975 of the Code. To the best of Seller's knowledge, with
respect to each Benefit Plan subject to the provisions of Title IV of
ERISA: (i) no reportable event (within the meaning of Section 4043[b] of
ERISA) has occurred; (ii) there exists no condition or fact specified in
Section 4042(c) of ERISA which could result in the termination of any such
Benefit Plan by the PBGC or the appointment of a trustee to administer any
such Benefit Plan; and (iii) except for premiums due in the ordinary
course, with respect to any such Benefit Plan, to the best of Seller's
knowledge, Seller has not incurred and does not expect (assuming continued
operation of the Benefit Plan in accordance with past practice) to incur
any liability to the PBGC.
4.1.14 Advisor Fees. Coopers & Lybrand L.L.P. has been retained
by the Seller as its advisor in the sale of the Machined Fluid Valve
Assets. The payment of any commission or any other fee due to Coopers &
Lybrand L.L.P. upon consummation of the transaction contemplated by this
Agreement shall be the sole responsibility of the Seller. Seller further
represents and warrants that no other broker, advisor or finder has been
involved with this transaction.
4.1.15 Absence of Certain Changes or Events. Since the date of
the most recently supplied financial statements (March 31, 1996), Seller
has conducted the Machined Fluid Valve Business in the ordinary and usual
course and has maintained Seller's records and books of account relating to
the Machined Fluid Valve Business in a manner that fairly and accurately
reflects Seller's transactions, assets and liabilities in accordance with
standard accounting practices consistently applied, and, there has been no
material adverse change in the
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condition of the Machined Fluid Valve Business, financial or otherwise, or
in the Machined Fluid Valve Assets.
4.1.17 Accuracy of Statements. To the best knowledge of Seller,
no representation or warranty made by Seller in this Agreement or any
schedule or other agreement to be furnished to Buyer pursuant to this
Agreement contains or will contain any untrue statement of a material fact
or admits or will admit to state a material fact necessary to make the
statements not misleading. The representations and warranties of Seller
shall be deemed to be made as of the date of this Agreement and again as of
the Closing Date.
5 Representations and Warranties of Buyer.
5.1 Representations and Warranties. Buyer hereby makes the following
representations and warranties to Seller as of the date hereof:
5.1.1 Corporate Organization. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Michigan.
5.1.2 Authority. Buyer has full power and authority (corporate
and other) to execute, deliver and perform this Agreement and the
transactions contemplated hereby, and the execution, delivery and
performance of this Agreement has been duly authorized and approved by all
necessary corporate action, and this Agreement constitutes a valid and
binding Agreement of Buyer.
5.1.3 No Conflict. Buyer's execution and delivery of this
Agreement and performance of its obligations hereunder (i) are not in
violation or breach of, and will not conflict with or constitute a default
under, any of the terms of the articles of incorporation or by-laws, or
other governing documents of Buyer or any note, debt instrument, security
agreement, lease, deed of trust or mortgage, or any other contract,
agreement or commitment binding upon Buyer or any of its assets or
properties, and (ii) will not conflict with or violate any applicable law,
rule, regulation, judgment, order or decree of any government, governmental
instrumentality or court having jurisdiction over Buyer, or any of its
assets or properties.
5.1.4 Brokers' Fees. No investment banker, broker, finder or
other intermediary has been retained by or is authorized to act on behalf
of Buyer who might be entitled to any fee or commission upon consummation
of the transactions contemplated by this Agreement.
5.1.5 Buyer's Capacity. Buyer has the financial and other
capacity necessary to enable it to satisfy its obligations under this
Agreement and the documents and instruments
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to be executed and delivered pursuant hereto and to consummate the
transactions contemplated hereby and at Closing will not be insolvent.
5.1.6 Accuracy of Statements. To the best knowledge of Buyer, no
representation or warranty made by Buyer in this Agreement or any schedule
or agreement to be furnished herewith contains or will contain any untrue
statement of a material fact or admits or will admit to state a material
fact necessary to make the statements not misleading. The representations
and warranties of Buyer shall be deemed to be made as of the date of this
Agreement and again as of the Closing Date.
6 Conditions Precedent to Buyer's Obligations.
Buyer's obligations to be performed at the Closing shall be subject to
the satisfaction as of or prior to the Closing of each of the following
conditions (unless waived in writing by Buyer):
6.1 Seller's Counsel Opinion. Buyer shall have received from Butzel
Long, counsel for Seller, or any other counsel designated by Seller and
reasonably satisfactory to Buyer, an opinion, dated the Closing Date, in
form and substance reasonably satisfactory to Buyer's counsel, to the
effect that:
6.1.1 Seller is a corporation organized and validly existing and
in good standing under the laws of the State of Delaware.
6.1.2 Seller has the corporate power to execute and deliver this
Agreement and to consummate the transactions contemplated hereby, and all
corporate action by Seller required to authorize and consummate the
transactions contemplated hereby has been taken.
6.1.3 This Agreement has been duly authorized, executed and
delivered by Seller, and (assuming due and valid authorization, execution
and delivery thereof by Buyer) constitutes a valid and legally binding
agreement of Seller, subject to enforcement, bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles.
6.2 Release of Liens. The Machined Fluid Valve Assets shall be
delivered to the Buyer free and clear of all liens and encumbrances.
6.3 Performance of Agreement. All covenants, conditions and other
obligations under this Agreement which are to be performed or complied with
by Seller on or prior to the Closing Date shall have been fully performed
or complied with in all material respects on or prior to the Closing Date,
including,
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without limitation, the delivery of the fully executed instruments and
documents in accordance with Section 3.3
6.4 No Adverse Proceeding. There shall be no pending or threatened
claim, action, litigation or proceeding against Seller, Buyer or the
Machined Fluid Valve Assets for the purpose of enjoining or preventing the
consummation of this Agreement or otherwise claiming that this Agreement or
the consummation hereof is illegal.
6.5 Machined Valve Products Supply Agreement. Seller shall have
executed and delivered the Machined Valve Products Supply Agreement.
7 Conditions Precedent to Seller's Obligations.
Seller's obligations to be performed at the Closing shall be subject
to the satisfaction as of or prior to the Closing of each of the following
conditions (unless waived in writing by Seller):
7.1 Buyer's Counsel Opinion. Seller shall have received from Hardy,
Lewis & Page, P.C., counsel for Buyer, or any other counsel designated by
Buyer and reasonably satisfactory to Seller, an opinion, dated the Closing
Date, in form and substance reasonably satisfactory to Seller's counsel, to
the effect that:
7.1.1 Buyer is a corporation organized, validly existing and in
good standing under the laws of the State of Michigan.
7.1.2 Buyer has the corporate power to execute and deliver this
Agreement and to consummate the transactions contemplated hereby, and all
corporate action by Buyer required to authorize and consummate the
transactions contemplated hereby has been taken.
7.1.3 This Agreement has been duly authorized, executed and
delivered by Buyer, and (assuming due and valid authorization, execution
and delivery thereof by Seller) constitutes a valid and legally binding
agreement of Buyer, subject to enforcement, bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles.
7.2 Performance of Agreement. All covenants, conditions and other
obligations under this Agreement which are to be performed or complied with
by Buyer on or prior to the Closing Date shall have been fully performed or
complied with in all material respects on or prior to the Closing Date,
including, without limitation, the delivery of the fully executed
instruments and documents in accordance with Section 3.2.
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7.3 No Adverse Proceeding. There shall be no pending or threatened
claim, action, litigation or proceeding against Seller, Buyer or the
Machined Fluid Valve Assets for the purpose of enjoining or preventing the
consummation of this Agreement or otherwise claiming that this Agreement or
the consummation hereof is illegal.
7.4 Machined Valve Products Supply Agreement. Buyer shall have
executed and delivered the Machined Valve Products Supply Agreement.
8 Covenants.
8.1 Confidentiality. Each of Seller and Buyer shall use all
reasonable efforts to preserve the confidentiality of all proprietary or
confidential information obtained with respect to the other party hereto or
the Machined Fluid Valve Business; provided that this Section 8.1 shall not
apply to any information to the extent that (i) the disclosure of such
information to a third party is reasonably required in connection with the
fulfillment of a party's obligations under this Agreement, and such third
party shall enter into an agreement to keep such information confidential,
(ii) such information shall become generally known to the public through no
violation of Sections 8.1 or 8.7 of this Agreement, (iii) such information
was known to the disclosing party prior to its receipt from the other party
to this Agreement; provided, however, that Seller will not disclose such
information after the Closing on such basis, (iv) the disclosure of such
information is required by a court of competent jurisdiction or by law or
(v) any disclosures that Buyer may elect to make after the Closing about
the Machined Fluid Valve Assets.
8.2 Injunctive Relief. The Seller and Buyer hereto acknowledge and
agree that the remedy at law for any breach of any of their respective
obligations under Section 3.4.4 or Section 8.1 hereof would be inadequate,
and agree and consent that temporary and permanent injunctive relief may be
granted in a proceeding which may be brought to enforce any provision of
Section 3.4.4 or Section 8.1 without the necessity of proof of actual
damage.
8.3 Employee Matters. Buyer shall recognize the UAW as the collective
bargaining agent for the active and inactive hourly employees of the
Machined Fluid Valve Business. All such hourly employees, together with all
salaried employees hired by Buyer, are listed in Schedule 8.3 ("Transferred
Employees"). Except as otherwise provided in this Agreement, Seller shall
retain all liability for (i) amounts owing or benefits accruing to
Transferred Employees prior to the Closing Date and (ii) liability arising
out of or in connection with the employment of the Transferred Employees
prior to the Closing Date, and Seller shall indemnify and hold harmless
Buyer with respect thereto under the indemnification procedures set forth
in Section 9 hereof. Buyer
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shall be liable for (i) amounts owing or benefits accruing to Transferred
Employees after the Closing Date and (ii) liability arising out of or in
connection with the employment of the Transferred Employees after the
Closing Date, and Buyer shall indemnify and hold harmless Seller with
respect thereto under the indemnification procedures set forth in Section 9
hereof. In addition to the Transferred Employees, the parties agree that
Seller shall be authorized, for a period of thirty (30) days, to solicit,
hire and discuss possible employment with Mr. E. Kakoczki (Wixom), Ms. L.
Wayman (Fowlerville) and Mr. G. Shimco (Fowlerville). Except as set forth
above, the Buyer shall not solicit, hire or discuss possible employment
with, any of Seller's other employees without obtaining the prior consent
of Seller.
8.4 Third Party Consents. Prior to the Closing, each of Seller and
Buyer shall use all reasonable efforts to obtain the agreements,
authorizations, consents, orders and approvals of federal, state and local
regulatory bodies and officials, courts and other third parties that may be
or become necessary for the performance of their respective obligations
pursuant to this Agreement and the consummation of the transactions
contemplated by this Agreement and shall cooperate fully with each other in
seeking promptly to obtain such agreements, authorizations, consents,
orders and approvals as may be necessary for the performance of their
respective obligations pursuant to this Agreement. Neither Seller nor Buyer
shall not take any action that is likely to have the effect of delaying,
impairing or impeding the receipt of any required agreements or approvals
and shall use all reasonable efforts to secure such agreements or approvals
as promptly as possible.
8.5 Satisfaction of Conditions. Buyer and Seller each agree to use
all reasonable efforts to cause the conditions to the Closing to be
satisfied as of or prior to the Closing Date.
8.6 Further Action. Buyer and Seller shall execute such other
documents and take such further action, at or after the Closing, as may be
reasonably required or desirable to carry out the provisions of this
Agreement and the transactions contemplated by this Agreement. Upon the
terms and subject to the conditions of this Agreement, Buyer and Seller
shall take, or cause to be taken, all actions and to do, or cause to be
done, all other things necessary, proper or advisable to consummate and
make effective as promptly as practicable the transactions contemplated by
this Agreement, to satisfy the conditions to this Agreement and to obtain
in a timely manner all necessary waivers, consents and approvals and to
effect all necessary registrations and filings. Additionally, after the
Closing, Buyer promptly will transfer and deliver to Seller any cash,
checks, drafts or other payments which Buyer may receive in respect of any
Accounts Receivable.
8.7 Announcements. Except as and to the extent required by applicable
law, neither Buyer nor Seller shall make any public announcements in
respect of this Agreement or the transactions
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contemplated by this Agreement or otherwise communicate with any third
party, including, without limitation, news media, without prior written
consent of the other party which consent shall not be unreasonably
withheld, and Buyer and Seller shall cooperate as to the timing and
contents of any such announcement.
8.8 Product Returns and Adjustments. Seller shall retain all
obligations under written or implied warranties to repair or replace
defective machine fluid valve products which were manufactured by Seller,
and Seller shall indemnify and hold harmless Buyer with respect thereto
under the indemnification procedures set forth in Section 9. Buyer shall
have all obligations under written or implied warranties to repair or
replace defective machined fluid valve products which are manufactured by
the Buyer, and Buyer shall indemnify and hold harmless Seller with respect
thereto under the indemnification procedures set forth in Section 9.
8.9 Products Liability. Seller shall retain all liability including
personal injury and property damage (whether based on "strict liability"
laws or otherwise), arising out of or in connection with any machined fluid
valve products manufactured by Seller, and Seller shall indemnify and hold
harmless Buyer with respect thereto under the indemnification procedures
set forth in Section 9. Buyer shall have all liability including personal
injury and property damage (whether based on "strict liability" laws or
otherwise), arising out of or in connection with any machined fluid valve
products manufactured by the Buyer, and Buyer shall indemnify and hold
harmless Seller with respect thereto under the indemnification procedures
set forth in Section 9. The parties acknowledge that Buyer shall have no
responsibility or liability related to the specifications or design of the
machined fluid valve products.
8.10 Environmental Matters. This paragraph 8.10 shall constitute the
entire agreement of the parties with respect to environmental matters and
shall control in the event of conflict with any other term, provision or
agreement, whether written or oral.
8.10.1 As used herein, the term "Environmental Law" shall mean
any federal, state or local law, statute, ordinance, rule or regulation
which governs the protection of human health or the environment,
remediation of the environment or solid or hazardous waste handling or
disposal practices, including but not limited to the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"), 42
U.S.C. 6901 et seq.; the Resource Conservation and Recovery Act ("RCRA"),
42 U.S.C. 9601, et seq.; and the Michigan Natural Resources and
Environmental Protection Act ("NREPA"), MCL 324.2010 et seq.
8.10.2 As used herein, the term "Pre-existing Contamination"
shall mean any contamination of the soil, subsurface soil or surface water
or subsurface water which
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existed or occurred prior to the Closing Date, or any condition, whether on
or off site which is related to, migrated from or is associated with such
contamination caused by Seller. In determining whether a condition
discovered after Closing is Pre-existing Contamination, Seller and Buyer
agree that the following documents shall be probative of the conditions
which existed at the time of Closing, but shall not preclude the offering
or admissibility of additional evidence in any proceeding.
a. "Site Assessment Report", dated August 16, 1993, prepared by
Techna Corporation, and
b. "Site Investigation Report", dated June 17, 1994, prepared by
Techna Corporation (two volumes).
8.10.3 Buyer and Seller acknowledge that contamination of soil
and groundwater has been identified at the Real Property, and that such
conditions as defined by the Site Assessment Report and Site Investigation
Report referenced in 8.10.2 constitute Preexisting Contamination as that
term is defined above. It is the intention of both Seller and Buyer that
Seller shall retain any and all liability imposed by any Environmental Law
for Pre-existing Contamination and further that Buyer and Seller agree that
any release or similar action caused by Buyer or its agents which result in
or exacerbate any contamination are the responsibility of Buyer.
8.10.4 Seller hereby agrees to remediate the Pre-existing
Contamination to the industrial criteria specified in Part 201 of NREPA, or
to any less stringent criteria in effect at the time of closure, provided
that such criteria does not require a change in use of the Real Property
from the current industrial use. Seller shall diligently pursue a closure
certification for all Site conditions from the Michigan Department of
Environmental Quality ("MDEQ"). It shall be Seller's responsibility to
comply with any due care requirements imposed by Section 20107a of NREPA
(MCL 324.20107a) related to Pre-existing Contamination. Buyer shall be
responsible for any due care activities required by Section 201017a of
NREPA which would result from Buyer's change in use of the Real
Property.
8.10.5 Seller represents that to the best of its knowledge
underground storage tanks previously existed at the Real Property and that
the tanks were removed according to applicable law and that no
contamination or release attributable to the tanks was identified. Seller
represents that to the best of its knowledge the tanks were used to store
mineral spirits and no other materials and that there have been no other
uses of the underground storage tanks and no other underground storage
tanks on the Real Property.
8.10.6 During remediation of the Real Property, Buyer shall
allow Seller access to any and all areas of the Property necessary to
complete remediation activities
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("Activities"). Seller agrees to conduct the Activities in a manner which
disrupts the operations of Buyer as little as possible, however, Buyer
acknowledges that some disruption of operations may occur. Buyer shall also
grant such access as is necessary for the completion, verification and/or
confirmation of the Activities to the MDEQ and to Seller's authorized
employees and contractors. Buyer shall cooperate with Seller in any
reasonable manner to assist in the completion of the Activities. The terms
of this Section 8.10.6 shall run with the land pursuant to Section
21310a(2) of NREPA [MCL 324.21310a(2)]. Buyer also agrees to execute such
restrictive covenants as may be required by the closure at the time the
final closure is requested from MDEQ.
8.10.7 Seller represents that, except for the conditions at the
Real Property outlined in the documents referred to in section 8.10.2
above, and to the best of its knowledge, after due inquiry, there are no
notices, citations, summons, orders issued, no complaint filed, no penalty
assessed, and no investigation is pending or threatened by any agency with
jurisdiction or by any third party, which has not, as of the date of
Closing, been cured, resolved or paid, with respect either to the Real
Property or to off site waste disposal, storage, treatment, recycling or
transportation. Seller has not received any notice that it is considered a
potentially responsible party with respect to the Real Property or waste
generated from the Real Property. Seller further represents that, to the
best of its knowledge, its operations have at all times been conducted in a
manner consistent with all applicable Environmental Laws.
8.10.8 Seller shall defend, indemnify and hold harmless Buyer
from and against any and all damage, loss, claims, injury, fines,
penalties, judgments, causes of action, costs and expenses (including
reasonable attorneys and consultants fees) arising from or occasioned by
the Pre-existing Contamination except as defined in 8.10.3. Buyer shall
provide written notice to Seller of any demand, claim, assessment or
action, including any investigation by any governmental agency or authority
within five (5) business days after receipt by Buyer, and shall give Seller
the opportunity to defend and discharge the claim, notice, demand or
assessment at Seller's expense. Any actions taken by Seller to defend or
otherwise discharge such a claim shall be made in good faith with as much
diligence as if Seller were acting only on its own behalf and shall be
subject to reservation of Seller's rights and shall not constitute any
waiver of Seller's rights. In the event that Seller refuses to diligently
undertake the defense or discharge of such a claim, then Buyer shall have
the right to take such action as it deems necessary to protect itself and
shall thereafter be entitled to indemnity by the Seller. The terms of this
Section 8.10.8 shall be assignable to subsequent transferees or lenders by
Buyer upon obtaining the written consent of Seller, which consent shall not
be unreasonably withheld.
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8.10.9 Buyer acknowledges, warrants and agrees that on and after
the Closing Date, Buyer and any related parties (other than a trespasser),
will comply with all Environmental Laws applicable to its or their use of,
operation at or occupancy of, the Assets (including the Real Property and
any current or future buildings, facilities, structures, parking lots, and
storage areas thereon); and that except as otherwise specifically provided
in this Section, the sole legal and financial responsibility for compliance
with all Environmental Laws applicable to Buyer's use of, operations at or
occupancy of the Assets, including the Real Property, or operations of the
Business will be that of Buyer. Buyer shall defend, indemnify and hold
Seller harmless from and against any and all damage, loss, claims, injury,
fines, penalties, judgments, causes of action, costs and expenses
(including reasonable attorneys and consultants fees) arising therefrom.
8.10.10 During the remediation of the Real Property and the
Activities, Seller shall be provided exclusive possession, use, and access
to the area identified as "Remediation Area" located on the Real Property
and found on Schedule 8.10.10.
8.10.11 Buyer shall provide, at Buyer's sole cost, all utilities
(including, but not limited to, electricity, water and sewage) for the
Activities at the Real Property.
8.10.12 Nothing in this Agreement shall impose upon the Seller
the legal status of an owner and/or operator of any portion of the Real
Property after the Closing Date, for any purpose.
8.10.13 Seller shall, at all times, retain ownership of all
equipment and materials brought onto the Real Property for the Activities.
Buyer shall maintain reasonable security for the Real Property, including
the remediation system area to ensure that the materials and equipment used
in connection with the Activities are protected from damage or loss.
8.11 Storage of Seller's Personal Property. Buyer agrees, without cost
to Seller, to store for Seller at the Milford facility any laboratory
tables and any other personal property transferred from Romulus to Milford
on an interim basis in August, 1996 and any other personal property of
Seller which is not included as part of the Machined Fluid Valve Assets,
from the Closing Date until January 31, 1997. The property to be stored at
the Milford facility for Seller shall include the property listed on
Schedule 8.11.
8.12 Post Closing Medical Benefits. The parties acknowledge that as of
the Closing Date, the Active Employees shall cease to be employees of the
Seller and become employees of the Buyer. Buyer shall use its best efforts
to obtain HMO and indemnity plan coverage for Buyer's active hourly-paid
employees following the Closing Date that is substantially the same as the
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hospital, medical, surgical and related coverage provided to such employees
by Seller. In the event that Buyer is unable to provide such coverage as of
the Closing Date, Seller shall provide such employees with coverage under
Seller's existing HMO arrangement and indemnity plan until Buyer makes
appropriate arrangements, but not later than January 31, 1997. Buyer shall
reimburse Seller for the cost of HMO coverage after the Closing Date by
paying Seller the applicable HMO premium for each individual in the HMO
program plus an administrative charge equal to two percent (2%) of such
premium. Buyer shall reimburse Seller for the cost of indemnity plan
coverage after the Closing Date by paying Seller an amount equal to the
applicable Consolidated Omnibus Redemption Act ("COBRA") premium for each
covered individual. When Seller ceases to provide indemnity coverage as
provided above, Seller shall determine the actual cost that it incurred to
provide benefits under its indemnity plan to Buyer's hourly-paid employees
subsequent to the Closing Date. If such cost exceeds the amount of payments
made by Buyer to Seller based on COBRA premiums, Buyer shall pay an amount
equal to the difference to Seller. If such cost is less than the amount of
payments made by Buyer to Seller based on COBRA premiums, Seller shall pay
Buyer an amount equal to the difference. Seller shall have the right to set
off any such payment due to Seller from Buyer against any amounts owed by
Seller to Buyer. In the event that Buyer has not provided its hourly-paid
employees with comparable HMO and indemnity coverage as provided above by
January 31, 1997, Seller shall cease providing the coverages described
above to Buyer's hourly-paid employees on that date. In the event that any
such employees elect COBRA continuation coverage after January 31, 1997,
Buyer shall reimburse Seller for the amount by which the actual cost of
providing benefits to such COBRA recipients exceeds the aggregate amount of
COBRA premiums received by Seller for coverage after January 31, 1997.
Seller, at its option, shall be entitled to set off any such reimbursement
from Seller against payments otherwise due from Seller to Buyer.
9 Damages and Indemnification.
9.1 Indemnity by Seller. Seller shall defend, indemnify, and hold
harmless Buyer and Buyer's affiliates, and their respective directors,
officers, employees, shareholders, representatives, and agents, against and
with respect to any and all losses, costs, damages, assessments,
administrative fines or penalties, liability, obligations, claims or
expenses (including reasonable professional fees and similar expenses)
(collectively, the "Losses") from, resulting by reason of or arising in
connection with: (a) any and all liabilities of Seller of any nature,
whether accrued, absolute, contingent, or otherwise, other than the Assumed
Liabilities or any other liabilities assumed under the terms of this
Agreement; or (b) any inaccuracy in or breach of any of the
representations, covenants, warranties or agreements made or to be
performed by Seller pursuant to this Agreement or any breach thereof
arising from a claim asserted by a third party.
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9.2 Indemnity by Buyer. Buyer shall defend, indemnify, and hold
harmless Seller and Seller's affiliates, and their respective directors,
officers, employees, shareholders, representatives, and agents, against and
with respect to any and all losses, costs, damages, assessments,
administrative fines or penalties, liability, obligations, claims or
expenses (including reasonable professional fees and similar expenses)
(collectively, the "Losses") from, resulting by reason of or arising in
connection with: (a) any inaccuracy in or breach of any of the
representations, covenants, warranties or agreements made or to be
performed by Buyer pursuant to this Agreement or any breach thereof arising
from a claim asserted by a third party, or (b) any claim or demand made or
liability asserted against Seller due to Buyer's failure or alleged failure
to pay, perform or discharge any Assumed Liability or any other obligations
of Buyer under this Agreement.
9.3 UCC Bulk Sales Indemnification. Buyer hereby waives Seller's
compliance with the Uniform Commercial Code provisions of Michigan law
regarding bulk transfers. Other provisions hereof notwithstanding, Seller
will indemnify and hold Buyer harmless from all Losses attributable to
Seller's failure to comply with any provision of such laws in respect of
the Machined Fluid Valve Assets sold to Buyer hereunder.
9.4 Indemnification Notice. The party seeking indemnification under
this Section 9 agrees to give prompt notice to the party against whom
indemnity may be sought (the "Indemnifying Party") of the assertion of any
claim or the commencement of any suit, action or proceeding in respect of
which indemnity may be sought under this section; provided, however, that
in the event such notice is not given or is delayed and the Indemnifying
Party is not prejudiced thereby, the Indemnified Party's rights hereunder
shall not be affected. The Indemnified Party shall have the right, at the
Indemnifying Party's expense (limited only to the extent that any and all
costs incurred by the Indemnified Party, including attorneys' fees, shall
be reasonable), to control the defense and the Indemnified Party shall not
settle the matter without the consent of the Indemnifying Party, which
consent shall not be unreasonably withheld. The Indemnifying Party shall
have the right to participate in such defense by notice to the Indemnified
Party. If upon the Indemnified Party's consent, the Indemnifying Party
assumes such defense, the Indemnifying Party shall not settle the matter
without the consent of the Indemnified Party, which consent shall not be
unreasonably withheld.
10 Miscellaneous.
10.1 Assignment. This Agreement shall not be assignable by either
party, except (a) by operation of law, or by Buyer to any corporation,
person or persons controlling, controlled by or under
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common control with Buyer, but no such assignment by Buyer shall relieve it
of its obligations hereunder.
10.2 Notices. All notices, consents, approvals or other notifications
required or permitted to be sent by one party to the other party hereunder
shall be in writing and shall be deemed served upon the other party if
delivered by hand, by recognized overnight courier service, or sent by
registered or certified mail, postage prepaid, addressed to such other
party at the address set forth below, or the last address of such party as
shall have been communicated to the other party:
Kelsey-Hayes Company 12025 Tech Center Drive
Livonia, MI 48150
Attn: Legal Department
also,
Michael F. Golab, Esq.
Butzel Long
32200 Telegraph Road, #200
Birmingham, MI 48025-2457
Milford Acquisition, Inc.
401 S. Woodward, Suite 400
Birmingham, Michigan 48009
Attn: Robert Clemente
also,
Anthony Vespa
Hardy, Lewis & Page, P.C.
401 S. Woodward, Suite 400
Birmingham, Michigan 48009
10.3 Survival of Representations and Warranties. The representations
and warranties contained herein or in any schedule or other document
attached hereto shall be deemed representations and warranties of the party
by whom or on whose behalf the same are delivered and all representations
and warranties made by such party to this Agreement shall survive the
Closing for a period not to exceed two (2) years, except for the
representations and warranties contained in Section 8.10, which shall
survive Closing for a period not to exceed ten (10) years.
10.4 Severability. If, for any reason, any provision of this Agreement
shall be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any of the
other provisions of this Agreement, but this Agreement shall be construed
as if such invalid, illegal or unenforceable provision had never been
contained herein.
10.5 Governing Law. This Agreement shall be construed and enforced in
accordance with and governed by the laws of the State
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of Michigan, except where the laws of some other jurisdiction mandatorily
apply.
10.6 Entire Agreement. This Agreement and Machined Valve Products
Supply Agreement together with the Schedules hereto, embodies the entire
agreement and understanding between the parties hereto and supersede all
prior agreements and understandings relating to the subject matter hereof.
10.7 Waiver. Neither this Agreement nor any terms hereof may be
changed, waived, modified, discharged or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of such
charge, waiver, modification, discharge or termination is sought. No waiver
of any right or remedy in respect of any occurrence or event on one
occasion shall be deemed a waiver of such right or remedy in respect of such
occurrence or event on any other occasion unless specifically provided for
in writing executed by the party to be so bound.
10.8 Cooperation. Seller and Buyer shall fully cooperate with one
another and shall provide to each other any assistance reasonably required
to complete the transactions contemplated by this agreement.
10.9 Headings. The headings in this Agreement are for purposes of
reference only, and shall not limit or otherwise affect the meaning
thereof.
10.10 Execution. This Agreement may be executed simultaneously in
several counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
10.11 Agreement Preparation. This Agreement has been prepared through
the combined efforts of the parties and their counsel and is not to be
construed more or less favorably against either party.
10.12 Arbitration. Any dispute arising out of this Agreement or the
transactions contemplated hereby shall be settled by arbitration in
accordance with the Commercial Arbitration Rules of the American
Arbitration Association in the Detroit metropolitan area and judgment upon
the award rendered by the arbitrator may be entered in any court having
jurisdiction thereof. The parties acknowledge that time is of the essence
in connection with resolving any dispute and that the parties will
cooperate with each other to promptly arbitrate any such matters. The
arbitrator shall award the prevailing party all costs, attorney fees, and
other out-of-pocket expenses relating to the dispute incurred by such
party.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
KELSEY-HAYES COMPANY MILFORD ACQUISITION, INC.
By: /s/ Bruce Harvey By: /s/ David J. Marczak
---------------- --------------------
BRUCE HARVEY DAVID J. MARCZAK
Its: Vice-President, Its: Chief Financial Officer
Operational Audit
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