EXHIBIT 2
AGREEMENT AND PLAN OF MERGER
SEMCO Energy, Inc. ("SEMCO")
SEMCO Consultants, Inc. ("Newco")
Oilfield Materials Consultants, Inc. ("Company")
and
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("Shareholder").
October 30, 1998
ARTICLE I
Plan of Merger
ARTICLE II
Representations and Warranties of the Company
and the Shareholder
ARTICLE III
Representations and Warranties of SEMCO
ARTICLE IV Covenants of the Company
ARTICLE V
Covenants of SEMCO
ARTICLE VI
SEMCO Shares and Registrations
ARTICLE VII
Conditions to Obligations of SEMCO and Newco
ARTICLE VIII
Conditions to Obligations of the Company
ARTICLE IX
Closing: Closing Date
ARTICLE X
Termination
ARTICLE XI
Indemnification
ARTICLE XII
Miscellaneous Provisions
FINALM-1.WPD October 30, 1998
AGREEMENT AND PLAN OF MERGER
This is an Agreement and Plan of Merger (hereinafter,
together with the Exhibits and Schedules hereto the "Agreement")
made and entered into as of October 30, 1998, by and among SEMCO
Energy, Inc., a Michigan corporation ("SEMCO"), SEMCO
Consultants, Inc. a Michigan corporation and a wholly-owned
subsidiary of SEMCO ("Newco"), and Oilfield Materials
Consultants, Inc., a Texas corporation, (the "Company"), and
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("Shareholder"), sometimes referred to
individually as "Party" and collectively as "Parties".
The Boards of Directors of SEMCO and Newco and the
Shareholder and the Board of Directors of the Company, deeming it
advisable for the mutual benefit of SEMCO, Newco and the Company
and their respective shareholders that SEMCO acquire the Company
by the merger of the Company and Newco under the terms and
conditions hereinafter set forth (the "Merger"), have approved
this Agreement and Plan of Merger. It is intended by the Parties
that the transactions hereunder qualify as a tax free
reorganization under Section 368 of the Internal Revenue Code and
be accounted for as a pooling of interests.
NOW, THEREFORE, in consideration of the mutual covenants,
agreements, representations and warranties herein contained, the
Parties hereby agree that the Company and Newco shall be merged
and that the terms and conditions of the Merger and the mode of
carrying the same into effect shall be as follows:
ARTICLE I
Plan of Merger
SECTION 1.1 Actions to be Taken. Upon performance of all of
the covenants and obligations of the Parties contained herein and
upon fulfillment (or waiver) of all of the conditions to the
obligations of the Parties contained herein, at the Effective
Time of the Merger (as hereinafter defined) and pursuant to the
Michigan Business Corporation Act (the "MBCA") and the Texas
Business Corporation Act (the "TBCA"), the following shall occur:
1.1.1 The Company shall be merged with and into Newco,
which shall be the surviving corporation (the "Surviving
Corporation"). The separate existence and corporate organization
of the Company shall cease at the Effective Time of the Merger,
and thereupon the Company and Newco shall be a single
corporation, the name of which shall be Oilfield Materials
Consultants, Inc. Newco, as the Surviving Corporation, shall
succeed, insofar as permitted by law, to all of the rights,
assets, liabilities and obligations of the Company in accordance
with the MBCA and TBCA.
1.1.2 The Articles of Incorporation of Newco shall be and
remain the Articles of Incorporation of the Surviving Corporation
until amended as provided by law.
1.1.3 The Bylaws of Newco shall be and remain the Bylaws of
the Surviving Corporation until amended as provided by law.
1.1.4 Until changed in accordance with the Articles of
Incorporation and Bylaws of the Surviving Corporation, ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ shall be the
directors of the Surviving Corporation.
1.1.5 Until changed in accordance with the Articles of
Incorporation and Bylaws of the Surviving Corporation, the
following persons shall be the officers of the Surviving
Corporation:
Chairman & President ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Vice President & Treasurer ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Secretary ▇▇▇▇▇▇ ▇▇▇▇▇▇
1.1.6 As soon as practicable after the terms and conditions
of this Agreement have been satisfied, and upon consummation of
the closing referred to in Article IX hereof (the "Closing"), a
certificate of merger consistent with this Agreement in the form
prescribed by, and properly executed in accordance with, the MBCA
and articles of merger consistent with this Agreement in the form
prescribed by, and properly executed in accordance with the TBCA,
in form and substance satisfactory to the Parties and providing
for immediate effectiveness of the Merger (the "Certificates of
Merger"), shall be filed with the Administrator, Michigan
Department of Consumer & Industry Services, Corporation,
Securities & Land Development Bureau of the State of Michigan
("Administrator") and the Secretary of State of the State of
Texas. The Merger shall become effective on the date on which
the Certificate of Merger is properly filed pursuant to the MBCA
and the certificate of merger issued in accordance with the TBCA.
As used in this Agreement, the "Effective Time" shall mean such
date.
SECTION 1.2 Common Stock of Surviving Corporation. Following
the Effective Time of the Merger, each of the issued and
outstanding shares of common stock of Newco shall, by virtue of
the Merger and without any action on the part of SEMCO continue
to be outstanding shares of common stock of the Surviving
Corporation. Each share shall be fully paid and non assessable.
SECTION 1.3 Definitions. For purposes of this Agreement,
the following terms shall have the following meanings:
1.3.1 The term "Average Price" shall mean the average
(rounded to the nearest ▇▇▇▇▇) of each "Mid-Price" (as defined
herein) of SEMCO Common Stock during the Trading Period (as
defined herein). The "Trading Period" shall mean the period of
twenty (20) consecutive trading days ending on and including
October 27, 1998; provided, however, that if no trades occur on
any of such trading days, the trading days on which no trades
occur shall be disregarded and a sufficient number of trading
days on which trades did occur and which immediately preceded the
twenty (20) consecutive trading days shall be added to the
Trading Period so that there will be a total of twenty (20)
trading days on which trades occurred. The Mid-Price for those
days shall be employed for the calculations described herein. For
purposes of this Agreement, the term "Mid-Price" on each trading
day shall mean the median between the high and the low trade
prices for all of the stock trades of SEMCO's Common Stock traded
on such trading day as quoted on the National Market System of
the National Association of Securities Dealers Automated
Quotation System. The Parties have computed the Average Price as
$15.547
1.3.2 The term "Number of Outstanding Shares" shall be the
number of issued and outstanding shares of the Company Common
Stock at the Effective Time of the Merger.
1.3.3 The term "SEMCO Common Stock" shall mean the common
stock of SEMCO, $1.00 par value. "SEMCO Shares" and "Number of
SEMCO Shares" shall mean the Nine Hundred Five Thousand Two
Hundred and Two (905,202) shares of SEMCO Common Stock to be
issued in the Merger, which number is the result obtained by
dividing Fourteen Million Seventy-Three Thousand One Hundred
Eighty Dollars ($14,073,180) by the Average Price of $15.547.
SECTION 1.4 Cancellation or Conversion of Company Common
Stock. As of the Effective Time of the Merger, by virtue of the
Merger and without any action on the part of any shareholder:
1.4.1 Treasury Shares. Any share of the Company's common
stock, $1.00 par value ("Company Common Stock"), held in the
treasury of the Company, shall be canceled and retired. No cash,
securities or other consideration shall be paid or delivered in
exchange for such Company Common Stock under this Agreement.
1.4.2 Conversion. At the Effective Time of the Merger, the
Outstanding Common Shares of the Company shall be converted into
Nine Hundred Five Thousand Two Hundred and Two (905,202) shares
of SEMCO Common Stock.
1.4.3 Fractional Shares. No fractional shares of SEMCO
Common Stock shall be issued.
1.4.4 Surrender of Shares. After the Effective Time of the
Merger, each holder of an outstanding certificate or certificates
theretofore representing Outstanding Common Shares of Company
Common Stock converted into SEMCO Common Stock pursuant to
Section 1.4.2 hereof ("Company Stock Certificates"), upon
surrender thereof to SEMCO shall be entitled to receive in
exchange therefor a certificate or certificates representing the
number of whole shares of SEMCO Common Stock into which the
shares of Company Common Stock theretofore represented by such
surrendered certificate or certificates shall have been converted
pursuant to Section 1.4.2 hereof, rounded up to the nearest
integer.
Until so surrendered, each outstanding Company Stock
Certificate shall be deemed for all purposes, other than as
provided below with respect to the payment of dividends or other
distributions, if any, in respect of SEMCO Common Stock, to
represent the number of whole shares of SEMCO Common Stock into
which the shares of Outstanding Common Shares of Company Common
Stock theretofore represented thereby shall have been converted.
SECTION 1.5 Adjustments for SEMCO Stock Splits, Etc. In the
event that, subsequent to the date of this Agreement but prior to
the Effective Time of the Merger, the outstanding shares of SEMCO
Common Stock shall have been increased, decreased, changed into
or exchanged for a different number or kind of shares or
securities and such increase, decrease, change or exchange shall
have been effected through a stock dividend, stock split or
reverse stock split, then an appropriate and proportionate
adjustment shall be made in the manner in which the Number of
SEMCO Shares is calculated hereunder.
SECTION 1.6 Further Assurances. From time to time, on and
after the Effective Time of the Merger, as and when requested by
SEMCO or its successors or assigns, the proper officers and
directors of the Company immediately before the Effective Time of
the Merger shall, at SEMCO's expense, and for and on behalf and
in the name of the Company, or otherwise, execute and deliver all
such deeds, bills of sale, assignments and other instruments and
shall take or cause to be taken such further or other reasonable
actions as SEMCO or their respective successors or assigns may
deem necessary or desirable in order to confirm or record or
otherwise transfer to the Surviving Corporation title to and
possession of all the properties, rights, privileges, powers,
franchises and immunities of the Company and otherwise to
reasonably carry out fully the provisions and purposes of this
Agreement.
ARTICLE II
Representations and Warranties of the Company
and the Shareholder
Other than exceptions set forth in reasonable detail in
Exhibit II hereto and referring to the warranty or warranties to
which the exception relates, the Company and the Shareholder
hereby jointly and severally represent and warrant to, and agree
with, SEMCO and Newco as follows:
SECTION 2.1 Organization. The Company is a corporation,
duly organized, validly existing, and in good standing under the
laws of the State of Texas, and has all requisite corporate power
and authority to own its property and conduct the business in
which it is engaged. The Company has previously delivered to
SEMCO copies of its Articles of Incorporation, Bylaws, corporate
minutes and stock transfer records, none of which has been
amended since the date of such delivery, and all of which are
true, correct and complete.
SECTION 2.2 Capitalization. The Company is authorized to
issue only 1,000 shares of Company Common Stock of $1.00 par
value. No other shares of stock, common, preferred, or
otherwise, are authorized. As of the date hereof, there are 100
shares of Company Common Stock issued and outstanding (the
"Outstanding Common Shares"). The Outstanding Common Shares are
all owned by Shareholder. All of the Outstanding Common Shares
have been fully paid, have been validly issued, and are
non-assessable.
The Company does not have outstanding any options or
warrants to purchase, or contracts to issue, or contracts or any
other rights entitling anyone to acquire shares of its capital
stock of any class or kind, or securities convertible into such
shares. Immediately prior to the Effective Time of the Merger,
the outstanding shares of Company Common Stock shall not exceed
the above-mentioned ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Shares.
At the Closing and at the Effective Time of the Merger, the
Shareholder shall have good and marketable title to the Company
Common Stock, free and clear of all claims, liens and
encumbrances.
SECTION 2.3 Subsidiaries, Etc. The Company has no equity
interest in any corporation, partnership, joint venture or other
entity.
SECTION 2.4 Qualification. To the best knowledge of the
Company and Shareholder, Company is qualified to do business as a
foreign corporation in all jurisdictions in which the nature of
the Company's business, location of its assets, or other factors
require it to be so qualified.
SECTION 2.5 Financial Statements.
2.5.1 The Company has delivered to SEMCO copies of the
balance sheets of the Company as of December 31, 1995, December
31, 1996 and December 31, 1997 and the statements of income and
retained earnings of the Company for the years ending on said
dates audited and certified by ▇▇▇▇▇▇ ▇▇▇▇▇▇, certified public
accountant (the "Annual Statements"), and the Balance Sheet of
the Company as of September 30, 1998, and the statement of income
and retained earnings of the Company for the period ending on
said date reviewed by ▇▇▇▇▇▇ ▇▇▇▇▇▇, certified public accountant
(the "Interim Statements").
The Annual Statements are true, complete and correct and
have been prepared in accordance with generally accepted
accounting principles consistently followed throughout the
periods indicated. The Annual Statements fairly present the
financial condition and assets and liabilities, whether accrued,
absolute, contingent or otherwise, as of the dates indicated and
the results of operation of the Company for the periods then
ended.
The Interim Statements are true, complete and correct, have
been prepared in accordance with generally accepted accounting
principles, consistently followed (subject, however, to normal
year-end adjustments, none of which will be materially adverse,
and to the absence of footnotes), and fairly and accurately
present the financial condition and assets and liabilities,
whether accrued, absolute, contingent or otherwise, of the
Company as of the dates indicated and the results of operations
of the Company for the periods then ended.
SECTION 2.6 Liabilities. Except as and to the extent
reflected or reserved against in the Interim Statement, or
otherwise disclosed herein, the Company had, as of the date of
such Statement, no liabilities, whether accrued, absolute,
contingent, liquidated or unliquidated, or otherwise. As of the
date of this Agreement, the Company is not subject to and does
not have any liabilities, whether accrued, absolute, contingent,
liquidated or unliquidated, or otherwise, except as disclosed in
the Interim Statements and except for such liabilities as have
arisen in the ordinary course of business of the Company since
the date of such Interim Statements, none of which newly arisen
liabilities and obligations have a material adverse effect upon
the Company, its organization, business, properties, or financial
condition.
SECTION 2.7 Real Estate. The Company does not own or have
title to any real estate, and has never owned or had title to any
real estate. The Company does not lease any real estate other
than pursuant to one real estate lease listed on Exhibit 2.7,
Leases and Contracts, a true and correct copy of which has been
delivered to SEMCO (the "Lease"), and, other than pursuant to the
Lease, has not leased any other real estate during the past ten
(10) years. Each of the Company and the other party thereto is
not in default under the Lease, and there are no facts which,
with notice and/or the passage of time, would constitute such a
default. All buildings leased by the Company pursuant to the
Lease are in good condition, normal wear and tear excepted, and
the heating, air conditioning, plumbing and electrical systems of
each such building are in good operating order, ordinary wear and
tear excepted. The Company has not received notice that said
buildings do not comply with municipal, state and federal
statutes, ordinances, rules and regulations applicable to the
construction of the buildings and their actual use, and the
buildings comply with said statutes, ordinances, rules and
regulations. No consent is required under the Lease in
connection with the Merger.
SECTION 2.8 Leased Tangible Personal Property. The Company
does not lease any personal property other than pursuant to (i)
leases in the ordinary course of business which can be terminated
on not more than thirty (30) days notice by the Company without
payment of any penalty or termination payment, and (ii) leases
("Personal Property Leases") which are listed on Exhibit 2.8,
true and correct copies of which have been delivered to SEMCO.
Each of the Company and the other parties thereto is not in
default under any of the Personal Property Leases, and the
Company is not aware of any fact which, with notice and/or
passage of time, would constitute such a default. No consent is
required under the Personal Property Leases in connection with
the Merger.
SECTION 2.9 Assets. The equipment, furniture, computers,
and other tangible personal property (other than inventory)
owned, leased or used by the Company in its business is in good
condition, normal wear and tear excepted, and is in good
operating order. Exhibit 2.9 hereto lists all furniture,
equipment, and other tangible personal property of the Company
(other than inventory and supplies) having an original cost of
$5,000 or more. Exhibit 2.9 also lists all equipment, furniture,
computers and other tangible personal property which (i) is used
by the Company or which is located on the Company's premises and
(ii) which is not owned by the Company, except for items leased
under Leases elsewhere disclosed herein and except for normal
personal property of employees. Except for sales of inventory in
the ordinary course of business, since the date of the Interim
Statement no tangible assets (whatever their original cost) have
been transferred from the Company, whether by sale, dividend or
otherwise.
SECTION 2.10 Intangibles. Exhibit 2.10 is an accurate and
complete list of all intangible personal property owned or used
(whether by license or otherwise) by the Company in its business,
including all distributorship, franchise and license agreements
(whether the Company is the grantor or grantee of such
distributorship, franchise or license), patents, patent
applications, inventions, trademarks, trademark applications,
copyrights and trade names (whether the Company owns such items
or is licensed to use them). The Company is the sole and
exclusive owner of each of said items of intangible personal
property shown as owned by it. Said items represent the only
intangible personal property required by the Company in order to
operate the businesses presently conducted by the Company.
Except as set forth on Exhibit 2.10, there are no pending
claims or demands against the Company with respect to any of such
items of intangible personal property, and no proceedings have
been instituted, are pending, or, to the best knowledge of the
Company and the Shareholder, have been threatened to terminate
or cancel any such agreements or which challenge the right of the
Company with respect to any of such intangible assets; and there
are no facts known to any executive officers or director of the
Company which suggest that any such agreements will not be
renewed at their next expiration date. No part of the business
carried on by the Company, no product of the Company, and none of
the Company's assets infringe or violate the patent, trademark,
trade name, copyright, trade secret or the other rights of any
other person. Except as set forth on Exhibit 2.10, the Company
has the unrestricted right to use, free from any rights or claims
of others, all trade secrets and customer lists which it has used
or which it is now using in connection with the sale of any and
all products or services which have been or are being sold by it.
SECTION 2.11 Accounts Receivable and Inventory.
2.11.1 Accounts. All accounts receivable of the Company
reflected in the Balance Sheets included in the Annual Statements
and in its Interim Statements originated in the ordinary course
of its business, are valid, and are fully collectible and not
subject to any defense, counterclaim or setoff, except and only
to the extent of the reserve against accounts receivable shown on
the Company's Balance Sheets included in such Statements.
2.11.2 Inventory. The Company carries no inventory.
SECTION 2.12 Title to Assets. The Company has good and
marketable title in and to all of its property reflected in the
Interim Statements plus all assets purchased by the Company since
September 30, 1998, less all assets which the Company has
disposed of in the ordinary course of business since such date,
which property in each case is free and clear of any security
interests, consignments, liens, judgments, encumbrances,
restrictions, or claims of any kind except (a) security interests
listed and described on Exhibit 2.12, and (b) liens for current
taxes or assessments not yet due or delinquent.
SECTION 2.13 Contracts.
2.13.1 Contracts. Exhibit 2.13 hereto lists, and the
Company has previously delivered to SEMCO, true and complete
copies of all of the following contracts or other obligations to
which the Company is a party or by which it is bound:
(a) employment agreements and any other contracts or
understandings with or loans to any of the Company's
shareholders, officers, directors, employees,
consultants, salesmen, distributors or sales
representatives, including but not limited to any which
relate to bonuses or deferred compensation;
(b) any employee benefit plan made available by the
Company to any of its employees;
(c) any collective bargaining agreement or other
agreement with any union;
(d) significant outstanding contracts with customers;
(e) any deeds of trust, mortgages, conditional sales
contracts, security agreements, pledge agreements,
trust receipts, or any other agreements or arrangements
whereby any assets of the Company are subject to a
lien, encumbrance, charge or other restriction;
(f) any loan agreements (whether for borrowing or
lending), letters of credit or lines of credit;
(g) any contracts restricting the Company from doing
business in any areas or in any way limiting
competition and any contracts which limit, restrict or
transfer rights to any technology utilized or developed
by the Company or which establish rights of a supplier
or customer to a particular product marketed or being
developed by the Company; for each such contract,
Exhibit 2.13 briefly describes the restrictions or
limitations contained in the contract;
(h) any construction contracts, or contracts for the
purchase of equipment, and any contracts calling for
aggregate payments by the Company in excess of $10,000
in the aggregate and which are not terminable without
cost or liability on notice of thirty (30) days or
less;
(i) any joint venture, partnership or limited
partnership agreement involving the Company;
(j) any indemnification by the Company and any
guarantees by the Company of the obligations of any
other party except those resulting from the endorsement
of customer checks deposited by the Company for
collection;
(k) any license or franchise agreement, either as
licensor or licensee or franchisor or franchisee,
including any such agreements relating to intangible
property, and any distributorship, dealership, or sales
agency agreement.
(l) any insurance policies or contracts;
(m) any other contracts which may have material impact
on the Company's results of operations or financial
condition; and
(n) Any commitments to enter into any of the types of
contracts and obligations referred to in this Section
2.13.
The Company has not received notice of any default under any
such contracts, obligations or commitments, the Company is not in
default under any such contracts, obligations or commitments,
there are no facts which, with notice and/or the passage of time,
would constitute such a default, and no other party thereto is in
default. No consent is required under the contracts, obligations
and commitments referred to in this Section 2.13 in connection
with the Merger.
2.13.2 Purchase Commitments. None of the Company's
purchase commitments is in excess of the normal, ordinary, and
usual requirements of the Company's business or was made at any
price substantially in excess of then-current market price, or
contains terms and conditions significantly more onerous than
those which are usual and customary in the Company's industry.
2.13.3 Bids and Contracts. Exhibit 2.13.3 hereto lists,
and the Company has previously delivered to SEMCO true and
complete copies of all significant outstanding bids, proposals to
perform services for customers, or unfilled orders quoting
prices.
2.13.4 Materially Adverse Contract. The Company is not a
party to or otherwise bound by any contract, agreement, plan,
lease, license, commitment, or undertaking which is materially
adverse, materially onerous, or materially harmful to any aspect
of the Company's business.
SECTION 2.14 Suppliers. Exhibit 2.14 is a list setting
forth all suppliers to the Company who are significant to the
Company, including without limitation (i) all suppliers who have
supplied products and/or services to the Company in the ten (10)
month period beginning January 1, 1998, where the total
consideration payable to the supplier exceeded $10,000, and (ii)
suppliers who are a sole source (i.e., a supplier who could not
be replaced by another supplier) for a special and/or critical
product supplied by them. Exhibit 2.14 also lists all open ended
purchase orders which exist on the date hereof or which will
exist as of the Closing Date. For these purposes, open-ended
purchase orders shall mean purchase orders or other contractual
arrangements providing for extended deliveries by the supplier,
multiple deliveries by the supplier, or which provide for
purchases of quantities significantly in excess of those required
in the normal course of business of the Company.
To the best of the Company's knowledge, none of the
Company's current customers or suppliers intends to terminate or
change significantly its relationship with the Company, whether
as a result of the Merger or otherwise.
SECTION 2.15 Transactions With Directors, Officers,
Employees and Affiliates. There have been no transactions since
January 1, 1996, between the Company and any director, officer,
employee or affiliate (as defined in Rule 405 promulgated by the
SEC) of the Company, except on an arm's length basis in
accordance with normal business practices. Since January 1,
1996, none of the officers, directors, employees or affiliates of
the Company, or any member of the immediate family of any such
per sons, has been a director of officer of, or has had a
material interest in, any firm, corporation, association or
business enterprise which during such period has been a material
supplier, customer or sales agent of the Company or has competed
to a material extent with the Company.
SECTION 2.16 Litigation. There are no legal,
administrative, arbitration or other proceedings or claims
pending or, to the best of the Company's knowledge, threatened
against the Company, nor is the Company subject to any existing
judgments. All of the litigation described in Exhibit 2.16 has
been concluded with respect to the Company. The Company is not
operating under or subject to, or in default with respect to, any
order, writ, injunction or decree of any court or federal, state,
municipal or other governmental department, commission, board,
agency or instrumentality, domestic or foreign.
SECTION 2.17 Insurance. The Company has not received any
notice of cancellation with respect to any insurance policy of
the Company. All premiums due under any such insurance policy
have been paid in full. The Company has timely filed all claims
or timely notified insurance carriers of events or circumstances
giving rise to any claims under such policies.
SECTION 2.18 Authority Relative to Agreement:
Enforceability. Shareholder has the power to approve the Merger
on behalf of the Company. Shareholder will vote his stock in
favor of the Merger.
The execution, delivery and performance of this Agreement
are within the legal capacity and power of the Company; have been
duly authorized by all requisite corporate action on the part of
the Company, other than shareholder approval; require the
approval or consent of no other persons, entities or agencies,
and will neither violate nor constitute a default under, nor
create a lien or breach under, nor result in the acceleration of
performance or right to accelerate performance under (whether or
not after the giving of notice or lapse of time or both), the
terms of the Articles of Incorporation and Bylaws of the Company
or of any agreement, obligation or commitment binding upon the
Company.
This Agreement is a legal, valid and binding obligation of
the Company and the Shareholder enforceable against each of them
in accordance with its terms, except insofar as the enforcement
thereof may be limited by bankruptcy, insolvency, moratorium or
similar laws affecting the enforcement of creditors' rights
generally and subject to equitable principles limiting the
availability of equitable remedies.
SECTION 2.19 Compliance With Applicable Laws; Environmental
Matters.
2.19.1 Laws. The Company, its operations, assets and all
real property ("Company Real Property") now or previously
operated, used or leased by, to or for the Company, including,
without limitation, all real property subject to the Lease, are
in compliance with all federal, state, county, and municipal
laws, ordinances, regulations, rules, reporting requirements,
judgments, orders, decrees and requirements of common law
applicable to the conduct and business of the Company and to the
assets owned, used or occupied by it (collectively referred to
hereinafter as the "General Laws"), including without limitation
all applicable federal, state, county and municipal laws,
ordinances, regulations, rules, reporting requirements,
judgments, orders, decrees and requirements of common law
concerning or relating to the protection of health and the
environment (collectively referred to hereinafter as the
"Environmental Laws"). The Company has not received any notice
of violation, citation, complaint, request for information,
order, directive, compliance schedule or other similar
enforcement order, or any other notice from any administrative or
governmental agency or entity, indicating that either the Company
or the Company Real Property were not or currently are not in
compliance with all Environmental Laws and General Laws.
2.19.2 Environmental Laws. All businesses and operations
of the Company and the Company Real Property are in compliance
with any: (i) judgments, orders, decrees or awards, or
directives, of any court, arbitrator or administrative or
governmental agency or entity concerning compliance with the
Environmental Laws; and (ii) consent decrees, administrative
orders, settlement agreements or other settlement documents
entered into with any administrative or governmental agency or
entity concerning compliance with the Environmental Laws.
2.19.3 Hazardous Materials: Storage Tanks. All assets
owned, leased or licensed by the Company, including without
limitation, the Company Real Property, are free of all materials
designated as hazardous substances, wastes, hazardous materials,
pollutants or contaminants under any Environmental Laws
(collectively, "Hazardous Materials") other than Hazardous
Materials which are properly stored and licensed where required,
and are free of physical conditions which violate any
Environmental Laws. All storage tanks and associated pipes, pumps
and structures (whether above or below ground) located in or on
the Company Real Property are in sound condition, free of
corrosion, meet all design and performance standards required by
all Environmental Laws, and do not now, and did not at any time
in the past, evidence impaired integrity or leakage. No
Hazardous Materials used or generated by the Company or generated
at the Company Real Property have been treated, stored,
transported or disposed of in violation of any Environmental
Laws; and all Hazardous Materials which have been utilized in the
business or operation of the Company or which have been removed,
released, discharged or emitted from the Company Real Property
were and are documented, transported and disposed of in
compliance with all Environmental Laws.
2.19.4 Licenses and Permits. Exhibit 2.19.4 hereto lists
permits, licenses and other authorizations issued by
administrative or governmental agencies or entities under the
General Laws and the Environmental Laws or otherwise required for
the conduct of the Company's business as presently conducted
which are held by the Company or its employees or agents
("Licenses and Permits"). The Licenses and Permits include all
such permits which are necessary to the Company's business and
operations and the Company is and has been in compliance with the
terms and conditions of the Licenses and Permits. Under the
General Laws and the Environmental Laws and the Licenses and
Permits, the consummation of the transactions contemplated by
this Agreement do not and will not: (i) affect the validity of
the Licenses and Permits; or (ii) require the consent of any
governmental authority or third party.
SECTION 2.20 ERISA and Employment Matters.
2.20.1 No employee of the Company has a written or oral
agreement (or an assurance pursuant to any employee manual) which
would preclude the Company from terminating such employee's
employment at any time with no obligation of the Company to make
any payment except wages and accrued benefits to the date of
termination. The Company has not engaged in any discriminatory
hiring or employment practices nor have any employment
discrimination complaints been filed against the Company with any
state or federal agency. The Company has not been threatened by
any former employee with any suit alleging wrongful termination.
The Company has delivered to SEMCO (i) all employment
manuals utilized by the Company within the past three years, (ii)
copies of any determination letters received by the Company from
the Internal Revenue Service or any other governmental authority
with respect to any employee benefit plan, (iii) copies of any
summary plan descriptions or summaries of material modifications
relating to any employee benefit plan (as defined in Section 3(3)
of ERISA) that have been prepared or distributed in the past
three years, and (iv) any annual reports (Form 5500 series) filed
for any employee benefit plan or fringe benefit plan (within the
meaning of Code Section 6039D) for plan years ending in 1997. To
the best knowledge of Company and Shareholder, all such summary
plan descriptions, summaries, and annual reports, were true,
complete and correct, and complied with all requirements
applicable thereto, at the time such documents were distributed
or filed. The current summary plan descriptions comply with all
applicable requirements and properly describe the current
versions of the plans to which they relate.
2.20.2 There are no present or former Company employees,
directors or independent contractors entitled to (i) pension
benefits that are "unfunded" as defined under ERISA or (ii) any
pension benefit or welfare benefit to be paid after termination
of employment other than pursuant to the Company's 401(k) Plan
(the "Plan"). Except with respect to continuation coverage under
group health plans pursuant to Section 4980B ("COBRA") of the
Internal Revenue Code of 1986, as amended (the "Code"), no other
benefits (whether or not pursuant to any plan or benefit
arrangement that is subject to the Employee Retirement Income and
Security Act ("ERISA")) whatsoever are payable to any present or
former Company employees after termination of employment or to
any present or former directors or independent contractors after
cessation of service to the Company (including, but not limited
to, any post-retirement medical or death benefits, any severance
benefits or any disability benefits).
2.20.3 There are no arrangements or contracts with any
director, officer, employee or independent contractor of the
Company that require any deferred compensation to be paid or
provided following termination of services.
2.20.4 Each "employee welfare benefit plan" (as defined in
Section 3(l) of ERISA) of the Company is either funded through
insurance or is unfunded for purposes of ERISA. There are no
reserves, assets, surplus or prepaid premiums on the Company's
Balance Sheet with respect to any such plan, and, the Company
is not in default under any such plan, and all such plans are in
compliance with all applicable laws (including, but not limited
to, ERISA, the Code and the Age Discrimination in Employment Act
of 1967).
2.20.5 Each of any "employee welfare benefit plan" (as
defined above) maintained by the Company, any fiduciary thereof,
and the Company is not subject to any liability (other than
normal liabilities and expenses associated with maintenance of
such plan or arrangement as an ongoing benefit plan or
arrangement) under ERISA or the Code or any other applicable law.
2.20.6 The Plan, any fiduciary thereof and the Company is
not subject to any liability (other than normal liabilities and
expenses associated with maintenance of such plan or arrangement
as an ongoing benefit plan or arrangement) under ERISA or the
Code or any other applicable law, including without limitation,
liability resulting from a partial plan termination or from
prohibited transactions. The Plan has been administered in
compliance with its terms and with the applicable provisions of
ERISA, the Code and all other federal, state and other applicable
laws, rules and regulations (including, without limitation, any
funding, filing, terminating, reporting, disclosure and fiduciary
obligations and any prohibited transaction restrictions). The
Plan is "qualified" within the meaning of Section 401(a) of the
Code, and has from its inception been so qualified, and any trust
created pursuant to the Plan is exempt from federal income tax
under Section 501(a) of the Code. A favorable determination
letter for the Plan has been received from the Internal Revenue
Service.
2.20.7 The Company neither maintains, nor has it ever
maintained or ever been obligated to contribute to, (i) a multi-
employer plan within the meaning of Section 3(37) of ERISA, or
(ii) except for the Plan, and any other employee benefit plan
within the meaning of Section 3(3) of ERISA.
2.20.8 There are and there have been no inquiries,
proceedings, claims or suits pending or, to the best knowledge of
the Company and the Shareholder, threatened by any governmental
agency or authority or by any participant or beneficiary against
the Plan, the assets of the trust under the Plan, the Company,
the plan administrator of the Plan, any fiduciary of the Plan or
any of the Company's "employee welfare benefit plans" (as defined
above) with respect to the operation of the Plan or such benefit
plans.
2.20.9 The consummation of the transactions contemplated by
this Agreement will not, alone or together with any other event,
(i) entitle any employee of the Company to severance pay or any
other payment, or (ii) accelerate the time of payment or vesting,
or increase the amount of, compensation due to any such employee.
2.20.10 The Company has no obligation for (i) any long-term
disability benefits to or for any of the Company's employees who
become disabled prior to the Closing Date (including any
individual who is disabled but has not satisfied any applicable
waiting period) and (ii) any life insurance benefits promised,
due and/or payable to or for any of the Company's employees who
die prior to the Closing Date.
SECTION 2.21 Taxes. All tax and information returns
required to have been filed by the Company have been filed with
the appropriate authority; and all federal, state and local taxes
(including without limitation income, franchise, property, sales,
use, value-added, withholding, excise, capital or other tax
liabilities), charges, assessments, penalties and interest of the
Company ("Tax Liabilities") required to be paid on or before the
date hereof have been paid. Such returns were correct as filed.
No assessments or additional Tax Liabilities have been proposed
or threatened against the Company or any of its assets, and the
Company has not executed any waiver of the statute of limitations
on the assessment or collection of any Tax Liabilities.
The Balance Sheet included in the Interim Statements
includes full and adequate provision for (i) all Tax Liabilities
incurred or accrued as of the date of said Statement, and (ii)
any and all Tax Liabilities which may hereafter be assessed or
imposed on the Company with respect to time periods ending on or
before the date of said Balance Sheet, except for Company's final
franchise tax return, which Company will file prior to the
Closing. Since the date of said Balance Sheet, and through the
Effective Time of the Merger, the Company has not incurred and
will not incur any Tax Liabilities other than in the ordinary
course of business and not in excess of amounts incurred in the
ordinary course in prior periods.
True and complete copies of the Company's federal, state and
local tax returns for the years have been delivered previously by
the Company to SEMCO.
The federal tax returns and state tax returns of the Company
have never been audited by the Internal Revenue Service. There
are no pending investigations of the Company or its tax returns
by any federal, state or local taxing authority, no federal,
state or local tax liens upon any of the Company's assets, and no
presently effective extensions to the limitation periods for the
imposition of tax liability against the Company for any of its
open taxable years.
SECTION 2.22 Business Changes. Except as described on
Exhibit 2.22, since September 30, 1998 there has not been:
2.22.1 any material adverse change in the working capital,
financial condition, assets, liabilities (whether absolute,
accrued, contingent or otherwise), operating profits, business or
prospects of the Company;
2.22.2 any damage, destruction or loss (whether or not
covered by insurance) affecting the Company's business or its
assets;
2.22.3 any increase or decrease in the rates of
compensation payable or to become payable by the Company to any
of its officers, directors or employees over or under the rates
in effect during the year ended December 31, 1997, other than
general increases made in accordance with past practices which
are described on Exhibit 2.22.3; or any declaration, payment,
commitment, or obligation of any kind for the payment by the
Company of any bonus (other than standard year-end bonuses
consistent with past practices which are described on Exhibit
2.22.3 and the withdrawal by Shareholder of an amount which is
equivalent to the income tax on the Company's taxable income
allocated to Shareholder attributable to activities of the
Company for the period from January 1, 1998 to the Closing,
assuming a tax rate of 39.6%), additional salary or compensation,
or retirement, termination or severance benefits to officers,
directors or employees;
2.22.4 any material amendment or termination of any
material contract, lease or license to which the Company is a
party or by which it may be bound, other than in the ordinary
course of business;
2.22.5 any disposition, mortgage, pledge, or subjection to
any lien, claim, charge, option, or encumbrance of any property
or asset of the Company, or any cancellation or compromise of any
debt or claim of the Company other than in the ordinary course of
business;
2.22.6 any labor dispute or threat of a labor dispute or
any attempt or threat of an attempt by a labor union to organize
the Company's employees;
2.22.7 any acquisition by the Company of the assets or
capital stock of another business entity;
2.22.8 any distribution or disposition of the Company's
assets other than in the ordinary course of business;
2.22.9 any termination of any permit or license issued to
the Company or to any of its employees or agents;
2.22.10 any statute, order, judgment, writ, injunction,
decree, permit, rule or regulation of any court or any
governmental or regulatory body adopted or entered or proposed to
be adopted or entered which may adversely affect the property or
business of the Company;
2.22.11 any event or occurrence affecting the Company, its
business or its industry which may cause an adverse change
affecting the Company's sales, profitability or financial
condition; or
2.22.12 any dividend or distribution declared, set aside or
paid in respect of the Company Common Stock or any repurchase by
the Company of shares of Company Common Stock.
SECTION 2.23 Industrial Revenue Bonds. The Company is not
indebted under any industrial revenue bonds.
SECTION 2.24 Asset Sales; Merger. The Company has not,
except for sales of inventory in the ordinary course of business,
sold, transferred or distributed any significant portion of its
assets during the five year period preceding the date hereof nor
has the Company taken any other action which would preclude the
Merger from qualifying as a reorganization within the meaning of
Section 368 of the Code.
SECTION 2.25 Full Disclosure. To the best knowledge of
Company and Shareholder, no representation or warranty made by
the Company or the Shareholder in connection with this
Agreement, no certification furnished or to be furnished to SEMCO
pursuant to this Agreement, and no agreements, instruments or
documents delivered by the Company to SEMCO or its counsel
hereunder, contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact
necessary to make the statements contained herein or therein not
misleading.
SECTION 2.26 "Best Knowledge". As used in this Article II
and elsewhere in this Agreement, "Best Knowledge," or words of
similar import, mean the knowledge a person would have after due
inquiry into the matter in question.
ARTICLE III
Representations and Warranties of SEMCO
SEMCO hereby represents and warrants to, and agrees with,
the Company as follows:
SECTION 3.1 Organization. Each of SEMCO and each "Material
Subsidiary" (as defined herein) is a corporation, duly organized,
validly existing, and in good standing under the laws of the
state of its organization, and has all requisite corporate power
and authority to own its property and conduct the business in
which it is engaged. SEMCO has previously delivered to the
Company copies of its Articles of Incorporation and Bylaws,
neither of which has been amended since the date of such
delivery. For purposes of this Agreement, the term "Material
Subsidiary" shall mean any subsidiary of SEMCO which, as of the
date hereof, constitutes a "significant subsidiary" as defined in
the SEC's Regulation S-X. For purposes of this Agreement, the
term "SEMCO Corporations" shall mean SEMCO and each Material
Subsidiary collectively.
SECTION 3.2 Capitalization. SEMCO is authorized to issue
20,000,000 shares of SEMCO Common Stock, $1 par value, 500,000
shares of Cumulative Preferred Stock, $1 par value and 3,000,000
shares of Preference Stock, $1 par value. As of September 30,
1998, there were 16,383,789 shares of SEMCO Common Stock issued
and outstanding, 500,000 shares of SEMCO Common Stock reserved
for issuance pursuant to stock option plans, stock option
agreements, and the employee stock purchase plan of SEMCO, and no
outstanding rights to purchase any capital stock of SEMCO other
than stock options granted to employees and non-employee
directors of SEMCO.
SECTION 3.3 SEC Filings. During the period from January 1,
1998, through the date hereof, SEMCO has timely filed with the
SEC all reports and statements which it was required to file with
the SEC pursuant to the Securities Exchange Act of 1934 (the
"1934 Act"). None of such reports and statements filed by SEMCO
with the SEC since January 1, 1998 (collectively, the "SEMCO
Reports"), when filed, contained any untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements made therein,
in light of the circumstances under which they were made, not
misleading. SEMCO has delivered to the Company copies of all
statements on Schedule 13D and 13G known to SEMCO which have been
filed with the SEC with respect to the SEMCO Common Stock
pursuant to the 1934 Act.
SECTION 3.4 Authority Relative to Agreement;
Enforceability. The execution, delivery and performance of this
Agreement is within the legal capacity and power of SEMCO and
Newco; have been duly authorized by all requisite corporate
action on the part of SEMCO and Newco; require the approval or
consent of no persons, entities or agencies, other than such
approvals as may be required under the 1933 Act, the 1934 Act and
state securities laws; and will neither violate nor constitute a
default under, nor create a lien or breach under, nor result in
the acceleration of performance or right to accelerate
performance under (whether or not after the giving of notice or
lapse of time or both), the terms of the Articles of
Incorporation and Bylaws of SEMCO or Newco or of any material
agreement, obligation or commitment binding upon the SEMCO
Corporations (other than agreements as to which appropriate
consents, if obtained, shall avoid any defaults). This Agreement
is a legal, valid and binding obligation of SEMCO and Newco
enforceable against SEMCO and Newco in accordance with its terms,
except insofar as the enforcement thereof may be limited by
bankruptcy, insolvency, moratorium or similar laws affecting the
enforcement of creditors' rights generally and subject to
equitable principles limiting the availability of equitable
remedies.
SECTION 3.5 Business Changes. Except as set forth in a
letter delivered by SEMCO to the Company (the "SEMCO Disclosure
Letter") or in the SEMCO Reports since June 30, 1998, there has
not been:
3.5.1 any material adverse change in the consolidated
working capital, financial condition, assets, liabilities
(whether absolute, accrued, contingent or otherwise), or
operating profits, of SEMCO or any material adverse change in the
business of the SEMCO Corporations taken as a whole;
3.5.2 any damage, destruction or loss (whether or not
covered by insurance) materially and adversely affecting the
business of the SEMCO Corporations taken as a whole;
3.5.3 any material amendment or termination of any material
contract, lease or license to which any of the SEMCO Corporations
is a party or by which it may be bound, otherwise than in the
ordinary course of business;
3.5.4 any sale or other disposition of assets outside of
the ordinary course of business by any of the SEMCO Corporations,
other than sales or other dispositions which are not material to
the SEMCO Corporations taken as a whole;
3.5.5 any labor dispute or threat of a labor dispute or any
attempt or threat of an attempt by a labor union to organize
SEMCO's employees;
3.5.6 any dividend or distribution declared, set aside or
paid in respect of the SEMCO Common Stock or any repurchase by
SEMCO of shares of SEMCO Common Stock;
3.5.7 Any material acquisition by SEMCO of the assets or
capital stock of another business entity; or
3.5.8 Any termination of any material permit or material
license issued to SEMCO or to any of its employees or agents upon
which a material portion of SEMCO's business is dependent.
SECTION 3.6 Brokerage. SEMCO has not engaged any broker or
finder to render services in connection with this Agreement.
SECTION 3.7 Financial Statements.
3.7.1 The consolidated financial statements of SEMCO
included within the SEMCO Reports fairly present the consolidated
financial position of SEMCO and the consolidated results of its
operations as at the dates and for the periods to which they
apply; such statements have been prepared in conformity with
generally accepted accounting principles, applied on a consistent
basis throughout the periods involved, and such financial
statements comply with all applicable provisions of Regulation
S-X of the SEC. The interim consolidated financial statements
presented in such Reports include all adjustments (subject only
to normal recurring year-end adjustments) necessary for a fair
presentation of SEMCO's consolidated financial position and
consolidated results of operations as of the dates and for the
periods presented therein.
3.7.2 On September 30, 1998, SEMCO had no material
liabilities (whether absolute, accrued, contingent or otherwise)
which were required to be reflected in and disclosed on its
audited balance sheet as at that date or in the notes thereto
pursuant to Regulation S-X of the SEC or in accordance with
generally accepted accounting principles, consistently applied,
but were not so reflected. Except as set forth in the SEMCO
Disclosure Letter and/or the SEMCO Reports, since September 30,
1998, SEMCO has incurred no material liabilities (whether
absolute, accrued, contingent or otherwise) in addition to those
reflected in or disclosed on such audited balance sheet or the
related notes, except liabilities incurred in the ordinary course
of its business.
3.7.3 SEMCO's books, records and system of internal
accounting controls comply in all material respects with Section
13(b) of the 1934 Act as in effect on the date hereof.
SECTION 3.8 Licenses and Permits. The SEMCO Corporations
and their employees or agents have all material licenses,
permits, orders, approvals and authorizations required for the
conduct of their business as presently conducted. In all
material respects, the SEMCO Corporations are acting within the
terms of such licenses, permits, orders, approvals and
authorizations, and no suspension or cancellation thereof has
been threatened.
SECTION 3.9 Litigation. Except as disclosed in the SEMCO
Reports or the SEMCO Disclosure Letter, (i) there are no legal,
administrative, arbitration or other proceedings or claims
pending or, to the best of SEMCO's knowledge, threatened against
the SEMCO Corporations, nor are the SEMCO Corporations subject to
any existing judgment which would materially affect the
consolidated financial condition or results of operations of
SEMCO; (ii) the SEMCO Corporations have not received any inquiry
from an agency of the federal or of any state or local government
about the transactions contemplated hereby, or about any
violation or possible violation of any law, regulation or
ordinance materially affecting their businesses or assets.
SECTION 3.10 Full Disclosure. No representation or
warranty made by SEMCO in this Agreement or the SEMCO Disclosure
Letter, no certification furnished or to be furnished by SEMCO to
the Company pursuant to this Agreement, and no SEMCO document
delivered by SEMCO to the Company or its counsel hereunder,
contains or will contain any untrue statement of a material fact
or omits or will omit to state a material fact necessary to make
the statements contained herein or therein not misleading.
ARTICLE IV
Covenants of the Company
SECTION 4.1 Ordinary Course of Business. Except as
otherwise consented to in writing by SEMCO during the period
commencing on the date hereof and ending at the Effective Time of
the Merger or as contemplated by this Agreement, the Company will
carry on its business diligently and in the ordinary course and
use its best efforts to preserve its present business
organization intact, keep available the services of its present
employees and executive officers and preserve its present
relationships with persons having business dealings with it.
SECTION 4.2 Restricted Activities and Transactions. Except
as otherwise consented to in writing by SEMCO, from the date
hereof and through the Effective Time of the Merger the Company
will not:
4.2.1 amend its Articles of Incorporation or Bylaws;
4.2.2 issue, sell or deliver, or agree to issue, sell or
deliver, or grant, or declare any stock dividend or stock split
with respect to, any shares of any class of capital stock of the
Company or any securities convertible into any such shares or
convertible into securities in turn so convertible, or any
options, warrants or other rights calling for the issuance, sale
or delivery of any such shares or convertible securities;
4.2.3 mortgage, pledge or ▇▇▇▇▇ ▇ ▇▇▇▇ upon any of its
assets, tangible or intangible;
4.2.4 except in the ordinary course of business (and
consistent with past practice), (i) borrow, or agree to borrow,
any funds or voluntarily incur, assume or become subject to,
whether directly or by way of guarantee or otherwise, any
obligation or liability (absolute or contingent), (ii) cancel or
agree to cancel any material debts or claims, (iii) lease, sell
or transfer, or grant or agree to grant any preferential rights
to lease or acquire, any of its material assets, property or
rights, or (iv) make or permit any substantive amendment or
termination of any material contract, agreement, license or other
right of which it is a party;
4.2.5 enter into or make any change in the Plan, except as
required to conform to applicable law, or materially amend or
terminate any other existing employee benefit plan, or adopt any
new employee benefit plan;
4.2.6 acquire control or ownership of any other
corporation, association, joint venture, partnership, business
trust or other business entity, or acquire control or ownership
of all or a substantial portion of the assets of the foregoing,
or enter into any agreement providing for any of the foregoing;
4.2.7 directly or indirectly solicit, encourage or
authorize any individual, corporation or entity (including with
out limitation its directors, officers, employees, attorneys,
accountants and investment bankers) to directly or indirectly
solicit or encourage any inquiry, proposal, offer or possible
offer from a third party relating to or enter into any agreement
for (i) the purchase of shares of any class of capital stock of
the Company or any securities convertible into any such shares or
convertible into securities in turn so convertible, or the
acquisition of any option, warrant or other right to purchase or
otherwise acquire any such shares or convertible securities, (ii)
a tender or exchange offer for any shares of Company Common
Stock, (iii) a purchase, lease or other acquisition of all or a
substantial portion of the assets of the Company, any product
line or line of business of the Company or any other material
asset of the Company, or (iv) a merger, consolidation or other
combination involving the Company; or provide any individual,
corporation or other entity with information or assistance or
negotiate with any individual, corporation or entity in
furtherance of any such inquiry, proposal, offer or possible
offer. The Company will instruct its agents (including without
limitation its directors, officers, attorneys, accountants and
investment bankers) not to take any action which the Company is
prohibited from taking pursuant to this Section 4.2.7.
4.2.8 except in the ordinary course of business, enter into
or agree to enter into any transaction, or incur or discharge any
obligation or liability, material to the business of the Company;
4.2.9 declare or pay any dividend on its capital stock in
cash, stock or property, or redeem, purchase or otherwise acquire
any shares of Company Common Stock or any options or warrants to
purchase Company Common Stock, except that Shareholder may
withdraw cash from the Company in an amount which is equivalent
to the income tax on the Company's taxable income allocated to
Shareholder attributable to activities of the Company for the
period from January 1, 1998 to the Closing, assuming a tax rate
of 39.6%.
4.2.10 enter into any material licensing arrangement or
other contract;
4.2.11 settle any pending litigation in a manner that is
materially adverse to the Company or commence any material
litigation;
4.2.12 increase the compensation payable to any of its
employees, or accrue or pay any bonuses or other payments other
than regular compensation to any employee or consultant; or
4.2.13 take any action which will prevent any of its
warranties and representations herein from being true in all
material respects as of the Effective Time of the Merger.
SECTION 4.3 No Default or Violation. Except as otherwise
consented to in writing by SEMCO, prior to the Effective Time of
the Merger the Company will use its best efforts not to (i)
violate, or commit a breach of or a default under, any material
contract, obligation or commitment to which it is a party or to
which any of its assets may be subject or (ii) violate any
applicable federal or state statutes, regulations or any
injunctions, orders or judgments binding upon the Company.
SECTION 4.4 Insurance. Except as otherwise consented to in
writing by SEMCO, prior to the Effective Time of the Merger, the
Company will maintain in full force and effect all policies of
insurance in substantially the same amounts and types of coverage
as are presently in effect on the date of this Agreement.
SECTION 4.5 Reports; Taxes. Except as otherwise consented
to in writing by SEMCO, prior to the Effective Time of the
Merger:
4.5.1 the Company will duly and timely (by the due date or
any duly granted extension thereof) file all reports and returns
required to be filed with federal, state and local authorities;
and
4.5.2 unless it is contesting the same in good faith and,
if appropriate, has established reasonable reserves therefor, the
Company will (i) promptly pay all Tax Liabilities indicated by
such returns or otherwise lawfully levied or assessed upon it or
any of its properties and (ii) withhold or collect and pay to the
proper governmental authorities or hold in separate bank accounts
for such payment all taxes and other assessments required by law
to be so withheld or collected.
SECTION 4.6 Advice of Changes. The Company will promptly
advise SEMCO orally and in writing of (i) any event occurring
subsequent to the date of this Agreement and prior to the
Effective Time of the Merger which would render any
representation or warranty of the Company contained in this
Agreement, if made on or as of the date of such event or the
Closing Date, untrue, inaccurate or incomplete in any material
respect and (ii) any material adverse change in the working
capital, financial conditions, assets, liabilities whether
absolute, accrued contingent or otherwise), operating profits,
business or prospects of the Company.
SECTION 4.7 Notification of Takeover Proposal and Other
Matters. The Company shall promptly advise SEMCO orally and in
writing of any "takeover proposal" or of any proposal, or inquiry
reasonably likely to result in a proposal, which the Company has
reason to believe is or may lead to any "takeover proposal." For
purposes of this Agreement, the term "takeover proposal" shall
mean any proposal for a merger or other business combination
involving the Company, or for the acquisition of a substantial
equity interest in the Company, a substantial portion of the
assets of the Company or a product line or line of business of
the Company, other than as contemplated by this Agreement. The
Company shall promptly advise SEMCO orally and in writing of the
receipt by the Company of any notification submitted to the
Company pursuant to any law of any purchase or proposed purchase
of any securities of the Company by any person.
SECTION 4.8 The Company will use its best efforts to obtain
as promptly as possible all necessary approvals, authorizations,
consents, licenses, clearances and orders of governmental and
regulatory authorities required in order for the Company to
perform its obligations hereunder.
SECTION 4.9 Access to Records. SEMCO may, prior to the
Effective Time of the Merger, through its employees, agents and
representatives, make or cause to-be-made a detailed review of
the business and financial condition of the Company and make or
cause to be made such investigation as it deems necessary or
advisable of the properties, assets, businesses, books and
records of the Company. The Company agrees to assist SEMCO in
conducting such review and investigation and will provide, and
will cause its independent public accountants to provide, SEMCO
and its employees, agents and representatives full access to, and
complete information concerning, all aspects of the businesses of
the Company, including its books, records (including tax returns
filed or in preparation), projections, personnel and premises,
the audit work papers and other records of its independent public
accountants and any documents (including any documents filed on a
confidential basis) included in any report filed with any
governmental agency. Neither any investigation by SEMCO nor the
receipt by SEMCO of any data or information from the Company
shall affect the right of SEMCO to terminate this Agreement as
provided in Article X hereof.
SECTION 4.10 Best Efforts. The Company shall use its best
efforts (a) to cause to be fulfilled and satisfied all of the
conditions to the closing to be fulfilled and satisfied by it,
(b) to cause to be performed all of the matters required of it at
or prior to the Closing and (c) to achieve full compliance with
all applicable General Laws. The Company shall use its best
efforts to make all of its warranties and representations
contained in this Agreement (except those representations and
warranties which are expressly limited to a state of facts
existing at a time prior to the Closing) true and correct on all
material respects as at the Closing, with the same effect as if
the same had been made and this Agreement had been dated as at
the Closing.
SECTION 4.11 Maintenance of Assets. The Company shall keep
the property and assets used in its businesses in good order,
repair and operating condition.
SECTION 4.12 Shareholder Meeting. The Company shall call a
special meeting of Shareholder to be held as soon as practicable
for the purpose of voting upon the transactions contemplated by
this Agreement, or shall have Shareholder act by written consent.
In connection with any such meeting or action, the members of the
Board of Directors shall, subject to the exercise of their
fiduciary duties, recommend approval of such transactions.
SECTION 4.13 Merger. The Company shall take all reasonable
steps necessary for the Merger to qualify as a reorganization
within the meaning of Section 368 of the Code and a "Pooling of
Interests" for accounting purposes, and shall omit from taking
any action which will preclude such accounting and/or tax
treatment. With respect to Pooling of Interests accounting
SEMCO's remedy for breach of this covenant shall be limited to
rescission or election not to close, and Company and Shareholder
shall have no liability.
ARTICLE V
Covenants of SEMCO
SECTION 5.1 Best Efforts. Subject to the fiduciary duties
of its Board of Directors, SEMCO shall use its best efforts (a)
to cause to be fulfilled and satisfied all of the conditions to
the Closing to be fulfilled and satisfied by it, and (b) to cause
to be performed all of the matters required of it at or prior to
the Closing. SEMCO shall use its best efforts to make all of its
warranties and representations contained in this Agreement
(except those representations and warranties which are expressly
limited to a state of facts existing at a time prior to the
Closing) true and correct in all material respects as at the
Closing, with the same effect as if the same had been made and
this Agreement had been dated as at the Closing.
SECTION 5.2 Consents, Approvals and Filings. SEMCO will use
its best efforts to obtain as promptly as possible all necessary
approvals, authorizations, consents, licenses, clearances or
orders of governmental and regulatory authorities required in
order for SEMCO to perform its obligations hereunder.
SECTION 5.3 Advice of Changes. SEMCO will promptly advise
the Company orally and in writing of (i) any event occurring
subsequent to the date of this Agreement which would render any
representation or warranty of SEMCO contained in this Agreement,
if made on or as of the date of such Agreement or the Closing
Date, untrue, inaccurate or incomplete in any material respect
and (ii) any material adverse change in the working capital,
financial condition, assets, liabilities (whether absolute,
accrued, contingent or otherwise), operating profits, business or
prospects of SEMCO.
SECTION 5.4 SEC Reports. Between the date hereof and the
Closing Date, SEMCO shall timely file with the SEC (and,
contemporaneously with such filings, shall deliver to the Company
a copy of) all reports and statements required to be filed by
SEMCO under the 1934 Act. None of such reports and statements
shall contain an untrue statement of a material fact or shall
omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
ARTICLE VI
SEMCO Shares and Registrations
SECTION 6.1 Shares Not Registered. The SEMCO Shares to be
issued in the Merger have not been registered under the
Securities Act of 1933 (the "Securities Act") or any state
securities laws.
Such SEMCO Shares have not been registered under the
Securities Act or any state securities laws, including the Texas
Securities Act by reason of their contemplated issuance in a
transaction exempt from the registration requirements of the
Securities Act and the Texas Securities Act. SEMCO's reliance
upon these exemptions is predicated in part upon the
understanding that Shareholder understands and acknowledges that
SEMCO Common Shares will be acquired for Shareholder's own
account, and not with a view to, or for resale in connection with
any distribution or public offering thereof. The SEMCO Common
Shares may not be transferred or resold without (i) registration
under the Securities Act or any applicable state securities laws,
or (ii) an exemption from the registration requirements of the
Securities Act and applicable state securities laws.
SECTION 6.2 Registration Rights Agreement. At the Closing,
SEMCO and Shareholder will enter into a Registration Rights
Agreement substantially in the form of Exhibit VI.
SECTION 6.3 Pooling of Interests Requirement. In no event
will Shareholder be entitled to sell any of the SEMCO Common
Shares prior to SEMCO publishing at least 30 days of combined
earnings of SEMCO and Company. Any such attempted sale will be
null and void and of no effect.
SECTION 6.4 Restrictive Legend. Certificates representing
the SEMCO Common Shares will contain an appropriate legend
referring to the restrictions in this Agreement and the
Registration Rights Agreement.
ARTICLE VII
Conditions to Obligations of SEMCO and Newco
The obligations of SEMCO and Newco under this Agreement to
consummate the Merger shall be subject to the satisfaction, or to
the waiver by them in the manner contemplated by Section 12.2
hereof, on or before the Closing Date, of the following
conditions:
SECTION 7.1 Representations and Warranties True. The
representations and warranties of the Company and the Shareholder
contained in this Agreement shall be in all material respects
true and accurate as of the date when made, and, except as to
representations and warranties which are expressly limited to a
state of facts existing at a time prior to the Closing Date,
shall be in all material respects true and accurate at and as of
the Closing Date as if made on the Closing Date.
SECTION 7.2 Performance of Covenants. The Company and the
Shareholder shall have performed and complied in all material
respects with each and every covenant, agreement and condition
required by this Agreement to be performed or complied with by it
or them prior to or on the Closing Date.
SECTION 7.3 No Governmental or Other Proceeding or
Litigation. No order of any court or administrative agency shall
be in effect which restrains or prohibits any transaction
contemplated hereby or which would limit or affect SEMCO's
ownership of the Company; no suit, action, investigation, inquiry
or proceeding by any governmental body or other person or entity
shall be pending or threatened against SEMCO, Newco or the
Company, which challenges the validity or legality, or seeks to
restrain the consummation, of the transactions contemplated
hereby or which seeks to limit or otherwise effect SEMCO's
ownership of the Company or the Surviving Corporation; and no
written advice shall have been received by SEMCO, Newco, the
Company or their respective counsel from any governmental body,
and remain in effect, stating that an action or proceeding will,
if the Merger is consummated or sought to be consummated, be
filed seeking to invalidate or restrain the Merger or limit or
otherwise affect SEMCO's ownership of the Company or the
Surviving Corporation.
SECTION 7.4 Approvals and Consents. The approval of the
Shareholder and all approvals of applications to public
authorities, Federal, state, or local, if any, and all consents
or approvals of any non-governmental persons, the granting of
which is necessary for the consummation of the Merger or for
preventing the termination or material breach of any real
property lease, or other right, privilege, license or agreement
of SEMCO or the Company which is material to the business of
SEMCO or the Company, or for preventing any material loss or
disadvantage to SEMCO or the Company, by reason of the Merger,
shall have been obtained; and no such consents or approvals shall
have imposed a condition to such consent or approval which in the
opinion of SEMCO is unduly burdensome to the consolidated
financial condition or operations of SEMCO or to the Company's
business.
SECTION 7.5 Opinion of Counsel. SEMCO and Newco shall have
received an opinion of counsel to the Company, dated the Closing
Date and addressed to SEMCO and Newco, substantially in the form
and substance of Exhibit 7.5 hereto.
SECTION 7.6 Certificates. The Company shall have furnished
SEMCO with a certificate of the Company, in form and substance
satisfactory to SEMCO, signed by the Company's President, to the
effect that the Company's representations and warranties
contained in this Agreement are true and correct in all material
respects on and as of the Closing Date as though such
representations and warranties were made at such time (except as
contemplated in Section 7.1 hereof) and that the Company has
performed and complied in all material respects with all terms,
covenants and provisions of this Agreement required to be
performed or complied with by it prior to or on the Closing Date.
SECTION 7.7 The Parties to the Escrow Agent shall have
executed the Escrow Agreement substantially in the form of
Exhibit 7.7.
SECTION 7.8 Resignations. The Company shall have received
resignations (in form and substance satisfactory to SEMCO) from
each of its directors, and each of its officers, in each case
effective as of the Effective Time of the Merger.
SECTION 7.9 Employment Agreement. ▇▇▇▇▇ ▇▇▇▇▇▇ and SEMCO
shall have entered into an Employment Agreement substantially in
the form of Exhibit 7.9.
SECTION 7.10 Registration Rights Agreement. SEMCO and
Shareholder shall have entered into the Registration Rights
Agreement substantially in the form of Exhibit VI.
SECTION 7.11 Closing Documentation. SEMCO shall have
received such additional documentation at the Closing as SEMCO
and its counsel may reasonably require to evidence compliance by
the Company and Shareholder with all of their obligations
hereunder.
SECTION 7.12 Pooling of Interests Accounting. SEMCO shall
have received the opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP to the effect
that the transactions hereunder will be accounted for as a
pooling of interests.
ARTICLE VIII
Conditions to Obligations of the Company and Shareholder
The obligations of the Company under this Agreement to
consummate the Merger shall be subject to the satisfaction, or to
the waiver by it in the manner contemplated by Section 12.12
hereof, on or before the Closing Date of the following
conditions:
SECTION 8.1 Representations and Warranties True. The
representations and warranties of SEMCO contained in this
Agreement shall be in all material respects true and accurate as
of the date when made, and, except as to representations and
warranties which are expressly limited to a state of facts
existing at a time prior to the Closing Date, shall be in all
material respects true and accurate at and as of the Closing Date
as if made on the Closing Date.
SECTION 8.2 Performance of Covenants. SEMCO and Newco
shall have performed and complied in all material respects with
each and every covenant, agreement and condition required by this
Agreement to be performed or complied with by them prior to or on
the Closing Date.
SECTION 8.3 No Governmental or Other Proceedings or
Litigation. No order of any court or administrative agency shall
be in effect which restrains or prohibits any transaction
contemplated hereby or which would limit or affect SEMCO's
ownership of the Company; no suit, action (other than the
exercise of dissenters' rights), investigation, inquiry or
proceeding by any governmental body or other person or entity
shall be pending or threatened against SEMCO, Newco or the
Company, which challenges the validity or legality, or seeks to
restrain the consummation, of the transactions contemplated
hereby or which seeks to limit or otherwise effect SEMCO's
ownership of the Company' and no written advice shall have been
received by SEMCO, Newco, the Company or their respective counsel
from any governmental body, and remain in effect, stating that an
action or proceeding will, if the Merger is consummated or sought
to be consummated, be filed seeking to invalidate or restrain the
Merger or limit or otherwise affect SEMCO's ownership of the
Company.
SECTION 8.4 Approvals and Consents. Newco's shareholder
shall have approved the Merger by the requisite vote under the
MBCA and the Company's Articles of Incorporation, and all
approvals of applications to public authorities, Federal, state
or local, the granting of which is necessary for the consummation
of the Merger, shall have been obtained.
SECTION 8.5 Opinion of Counsel. The Company and shareholder
shall have received an opinion of counsel to SEMCO, dated the
Closing Date and addressed to the Company, substantially in the
form and substance of Exhibit 8.5 hereto.
SECTION 8.6 Certificates. SEMCO and Newco shall have
furnished the Company and Shareholder with certificates of SEMCO
and Newco, respectively, in form and substance satisfactory to
the Company, signed by their respective presidents or executive
vice presidents, to the effect that the respective
representations and warranties of such corporations contained in
this Agreement are true and correct in all material respects on
and as of the Closing Date as though such representations and
warranties were made at such time (except as contemplated in
Section 8.1 hereof) and that such corporations have respectively
performed and complied in all material respects with all terms,
covenants and provisions of this Agreement required to be
performed or complied with by them prior to or on the Closing
Date.
SECTION 8.7 Closing Documentation. The Company and
Shareholder shall have received such additional documentation at
the Closing as the Company and its counsel may reasonably require
to evidence compliance by SEMCO and Newco with all of their
obligations under this Agreement.
SECTION 8.7 Release of Shareholder's Personal Guarantee.
Shareholder shall have received a release by Lone Star Bank, N.A.
of Shareholder's personal guarantee of Shareholder's guaranty
dated March 25, 1998.
ARTICLE IX
Closing: Closing Date
Unless this Agreement shall have been terminated and the
Merger herein contemplated shall have been abandoned pursuant to
a provision of Article X hereof and subject to compliance with
the conditions hereto, a closing (the "Closing") will be held on
November 3, 1998, or on such other date which is mutually
acceptable to SEMCO and the Company at the offices of the
Company's counsel, commencing at 1PM local time. At such time and
place, the documents referred to in Articles I, VII, VIII and IX
hereof will be exchanged by the parties and, immediately
thereafter, the Certificate of Merger and Articles of Merger will
be filed by Newco and the Company with the Administrator of the
State of Michigan and the Secretary of State of the State of
Texas, respectively; provided, however, that if any of the
conditions provided for in Articles VII and VIII hereof shall not
have been met or waived by the date on which the Closing is
otherwise scheduled, then, subject to Article X hereof, the party
to this Agreement which is unable to meet such condition or
conditions shall be entitled (provided that such party is acting
in good faith) to postpone the Closing for a reasonable period of
time by notice to the other parties until such condition or
conditions shall have been met (which such notifying party will
seek to cause to happen at the earliest practicable date) or
waived. The date on which the Closing occurs is hereinafter
referred to as the "Closing Date".
ARTICLE X
Termination
SECTION 10.1 Termination and Abandonment. This Agreement
may be terminated and the Merger may be abandoned before the
Effective Time of the Merger, notwithstanding any approval and
adoption of this Agreement by Shareholder or Newco:
10.1.1 by the mutual consent of SEMCO, Newco and the
Company; or
10.1.2 by SEMCO if Shareholder does not take the actions
required to approve the Merger; or
10.1.3 by SEMCO if there has been a material
misrepresentation or material breach on the part of the Company
in the representations, warranties or covenants of the Company
set forth herein, or if there has been any material failure on
the part of the Company to comply with its obligations hereunder,
or by the Company if there has been a material misrepresentation
or material breach on the part of SEMCO or Newco in the
representations, warranties or covenants of SEMCO or Newco set
forth herein, or if there has been any material failure on the
part of SEMCO or Newco to comply with their obligations
hereunder; or
10.1.4 by either the Company or SEMCO, at their discretion,
if the Merger is not effective by December 31, 1998, except that
a party whose breach of this Agreement has caused a delay in the
consummation of the Merger shall not be entitled to terminate
this Agreement pursuant to this Section 10.1.4.
SECTION 10.2 Termination Procedures. The power of
termination provided for by this Article X will be effective
only after written notice thereof, signed on behalf of the party
for which it is given by its Chairman, President and Chief
Executive Officer in the case of SEMCO, or its President in the
case of the Company, or other duly authorized officer, shall have
been given to the other. If this Agreement is terminated in
accordance with this Article X, then the Merger shall be
abandoned without further action by the Company, SEMCO and Newco.
SECTION 10.3 Liability Upon Termination. In the event of
termination and abandonment of the Merger pursuant to this
Article X, no party hereto shall have any liability or further
obligation to any other party hereto except a party that is in
material breach of its representations, warranties or covenants
hereunder shall be liable for damages incurred by the other
parties hereto to the extent that such damages are proximately
caused by such breach.
ARTICLE XI
Indemnification
SECTION 11.1 Indemnification by the Company and Shareholder.
The Shareholder and, prior to Closing, the Company, each,
jointly and severally, hereby agree that, notwithstanding the
Closing, the delivery of instruments of conveyance, and
regardless of any investigation at any time made by or on behalf
of any party hereto or of any information any party hereto may
have in respect thereof, they, or after Closing, the
Shareholder, will save, indemnify and hold SEMCO and Newco and,
after Closing, the Surviving Corporation, (hereinafter,
collectively, "the Indemnitees") harmless from and against any
and all liabilities, losses, damages, claims, deficiencies, costs
and expenses (including, without limitation, reasonable attorney
fees and other costs and expenses incident to any suit, action or
proceeding) arising out of or resulting from and will pay to the
Indemnitees the amount of damages suffered thereby together with
any amount which they or any of them may pay or become obligated
to pay on account of:
(a) the breach or inaccuracy of any warranty or
representation by the Company and the Shareholder
herein or any misstatement of a fact or facts herein
made by the Company or the Shareholder;
(b) the failure by the Company or the Shareholder to
state or disclose a material fact herein necessary in
order to make the facts herein stated or disclosed not
misleading;
(c) any failure of the Company or the Shareholder to
perform or observe any term, provision, covenant or
condition hereunder on the part of any of them to be
performed or observed;
(d) any act performed, transaction entered into or
state of facts suffered to exist by the Company or the
Shareholder in violation of the terms of this
Agreement;
(e) any failure of the Company and the Shareholder to
perform or observe any material term, provision,
covenant or condition hereunder on the part of the
Company and the Shareholder to be performed or
observed; and
(f) the litigation and any liability arising out of
the incidents described in Exhibit 2.16 and Section
4.14.
In the event of any claim by Indemnitees under this Section
11.1, Indemnitees shall be entitled to exercise all remedies
provided by law and/or equity with respect thereto. In addition,
SEMCO and the Surviving Corporation shall be entitled to offset
the amount of any such claim against any amounts due Shareholder.
Company and Shareholder will have no liability (for
indemnification or otherwise) under this Article XI until the
total of all damages with respect thereto exceeds $25,000, and
then only for the amount by which such damages exceed $25,000.
The maximum liability of the Company and Shareholder under this
Article XI shall not exceed $7,036,590. However, the foregoing
limitations will not apply to any breach of any of Company's or
Shareholder's representations and warranties or covenants of
which Company or Shareholder had knowledge at any time prior to
the date on which such representation and warranty is made or any
intentional breach by either Company or Shareholder of any
covenant or obligation.
If the Closing hereunder is held, the Company and the
Surviving Corporation will have no liability with respect to
indemnification claims by the Indemnitiees. The amounts held in
escrow and the Shareholder shall be responsible for all
indemnification claims.
SECTION 11.2 Escrow. At the Closing, SEMCO and the
Shareholder shall enter into an Escrow with Lone Star Bank, N.A.,
(the "Escrow Agent") pursuant to an Escrow Agreement
substantially in the form of Exhibit 11.2 (with such changes
thereto as the Escrow Agent may reasonably require). Ten Percent
(10%) of the Number of SEMCO Shares to be issued by SEMCO at
Closing pursuant to Section 1.3.3 hereof shall be deposited with
the Escrow Agent at Closing. Said Shares shall be held in escrow
and shall be subject to any claims by SEMCO. On the first
anniversary of the Effective Date of Merger, any amounts
remaining in Escrow shall be distributed, unless subject to any
outstanding claims by SEMCO.
ARTICLE XII
Miscellaneous Provisions
SECTION 12.1 Amendment and Modification. To the fullest
extent permitted by applicable law, this Agreement may be
amended, modified and supplemented with respect to any of the
terms contained herein by an appropriate authorized written
instrument executed at any time prior to the Effective Time of
the Merger.
SECTION 12.2 Waiver of Compliance. To the fullest extent
permitted by law, each of SEMCO, Newco and the Company may, by a
duly authorized instrument in writing extend the time for or
waive the performance of any of the obligations of the other or
waive compliance by the other with any of the covenants, or waive
any of the conditions of its obligations, contained herein. No
such extension of time or waiver shall operate as a waiver of, or
estoppel with respect to, any subsequent or other failure.
SECTION 12.3 Survival of Representations and Warranties. The
respective representations and warranties of each party hereto
contained herein shall not be deemed to be waived or otherwise
affected by any investigation made by the other parties hereto.
The representations and warranties of SEMCO, Newco and the
Company and the Shareholder contained herein or in any document
furnished pursuant hereto shall survive the Merger.
SECTION 12.4 No Third-Party Rights. Except as otherwise
provided in this Agreement, nothing herein expressed or implied
is intended, nor shall be construed, to confer upon or give any
person, firm or corporation, other than SEMCO, Newco, the Company
and their respective security holders, any rights or remedies
under or by reason of this Agreement.
SECTION 12.5 Confidentiality. SEMCO and the Company shall
honor the confidentiality agreements previously delivered by each
such party to the other with respect to matters pertaining to the
Merger.
SECTION 12.6 Notices. All notices, requests, demands and
other communications required or permitted hereunder shall be in
writing and shall be deemed to have been duly given when
delivered by hand or when mailed by registered or certified mail,
postage prepaid, or when given by facsimile transmission
(promptly confirmed in writing), as follows:
(a) If to the Company and the Shareholder:
Oilfield Materials Consultants, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, P.C.
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇.
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
or to such other person as Shareholder shall designate in
writing, such writing to be delivered to SEMCO in the manner
provided in this Section; and
(b) If to SEMCO or Newco:
▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chairman, President & CEO
SEMCO Energy, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇.
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
or to such other person as SEMCO shall designate in writing,
such writing to be delivered to the Company in the manner
provided in this Section.
SECTION 12.7 Assignment. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and
permitted assigns, but neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by
any of the parties hereto without the prior written consent of
the other parties; provided, however, that Newco may assign this
Agreement and its rights, interests and obligations hereunder to
another directly or indirectly wholly-owned subsidiary of SEMCO
without the consent of the Company.
SECTION 12.8 Governing Laws. This Agreement and the legal
relations between the parties hereto shall be governed by and
construed in accordance with the laws of the State of Michigan.
SECTION 12.9 Counterparts. This Agreement may be executed
simultaneously in two or more counterparts and by the different
parties hereto on separate counterparts, each of which shall be
deemed an original, but all of which together shall constitute
one and the same instrument.
SECTION 12.10 Headings and References. The headings of the
Sections and Articles of this Agreement are inserted for
convenience of reference only and shall not constitute a part
hereof. All references herein to Sections and Articles are to
sections and articles of this Agreement, unless otherwise
indicated.
SECTION 12.11 Entire Agreement. This Agreement (including
the Exhibits hereto and the SEMCO Disclosure Letter and the
documents referred to herein, all of which form a part hereof)
and the confidentiality agreements delivered by SEMCO and the
Company to each other contain the entire understanding of the
parties hereto in respect of the subject matter contained herein
and supersede all prior agreements and understandings between the
parties with respect to such subject matter.
SECTION 12.12 Expenses. Whether or not the transactions
contemplated hereby are consummated, each of the parties hereto
shall pay its own expenses incurred in connection with the
authorization, preparation, execution or performance of this
Agreement and all transactions contemplated hereby, including
without limitation all fees and expenses of agents,
representatives, counsel and accountants. It is understood and
agreed that if the Merger is consummated as contemplated hereby,
the expenses incurred by the Company and its Shareholder shall be
the responsibility of the Shareholder, and shall not be borne by
the Company or the Surviving Corporation.
SECTION 12.13 Publicity. Except as otherwise required by
law or the rules of the National Association of Securities
Dealers, Inc., so long as this Agreement is in effect, neither
SEMCO nor the Company shall issue or cause the publication of any
press release with respect to the transactions contemplated by
this Agreement without the consent of the other party, which
consent shall not be unreasonably withheld or delayed.
SECTION 12.14 Joint and Several. All agreements, covenants,
representations, warranties and obligations of the Company and
the Shareholder hereunder shall be joint and several obligations
of the Company and the Shareholder.
SECTION 12.15 Alternative Dispute Resolution Procedures.
Any controversy or claim arising out of or relating to this
Agreement, or the breach hereof, shall first be submitted for
mediation administered by the American Arbitration Association
under its Commercial Mediation Rules, before resorting to
arbitration. Thereafter, any such unresolved controversy or claim
shall be settled by arbitration administered by the American
Arbitration Association in accordance with its Commercial
Arbitration Rules, and judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction
thereof. The arbitration proceedings shall be conducted before a
panel of three neutral arbitrators, all of whom shall be actively
engaged in the practice of law for at least ten years and
experienced in acquisitions and mergers. The arbitration
proceedings shall be conducted in Kansas City, Missouri at the
offices of the American Arbitration Association.
Any provisional remedy which would be available from a court
of law shall be available from the arbitrator pending
arbitration. Either party may make an application to the
arbitrator seeking injunctive relief until such time as the
arbitration award is rendered or the controversy is otherwise
resolved.
The arbitrators shall have the authority to award any remedy
or relief that a court of the state of Missouri could order or
grant, including, without limitation, specific performance of any
obligation created under the agreement, the awarding of punitive
damages, the issuance of an injunction, or the imposition of
sanctions for abuse or frustration of the arbitration process.
Limited civil discovery shall be permitted for the
production of documents and taking of depositions. All discovery
shall be governed by the Federal Rules of Civil Procedure. All
issues regarding discovery requests shall be decided by the
arbitrators.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date and year first
written above.
SEMCO Energy, Inc.
Attest:
/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chairman, President and CEO
SEMCO Consultants, Inc.
Attest:
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Chairman and President
Oilfield Materials Consultants, Inc.
Attest:
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President
Witness: Shareholder:
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