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EXHIBIT 99.1
INVESTMENT AGREEMENT
DATED APRIL 28, 1999
AMONG
ASC HOLDINGS LLC,
KOJAIAN HOLDINGS LLC
AND
JPE, INC.
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INDEX
RECITALS..........................................................................................................1
1. Definitions.....................................................................................2
2. Buyer Subscription of Shares...................................................................11
2.1 Issuance, Purchase and Sale of Common Shares...................................................11
2.2. Issuance, Purchase and Sale of Preferred Shares................................................11
2.3 Buyer Apportionment............................................................................11
3. Shareholder Warrants...........................................................................11
3.1 Issuance of Warrants...........................................................................11
3.2 Target EBITDA Adjustment.......................................................................13
3.3 Final Actual EBITDA Determination..............................................................13
4. Adjustments Based on Bank Group Discharge......................................................14
4.1 Bank Group Subscription of Shares..............................................................14
4.2 Bank Group Warrants............................................................................15
4.3 Buyer Subscription Adjustment..................................................................15
5. Payment of Debt................................................................................15
6. Actions to be Taken at the Closing and Thereafter..............................................16
6.1 Closing Date...................................................................................16
6.2 Actions to be Taken at the Closing on the Delivery Date........................................16
6.3 Actions to be Taken on the Record Date.........................................................19
6.4 Actions to be Taken on the Delivery Date.......................................................19
7. Buyer's Representations and Warranties.........................................................19
7.1 Organization; Power and Authority..............................................................19
7.2 Authorization; Due Execution; No Conflicts.....................................................19
7.3 Brokers........................................................................................20
7.4 Ownership of Buyer.............................................................................20
7.5 Survival.......................................................................................20
8. JPE's Representations and Warranties...........................................................20
8.1 Organization; Power and Authority; Authorization; Due Execution; No Conflicts..................20
8.2 Title..........................................................................................21
8.3 Properties and Improvements....................................................................21
8.4 Assets.........................................................................................22
8.5 Claims; Litigation; Compliance with Laws; Approvals............................................24
8.6 Agreements; Contracts; Warranties..............................................................24
8.7 Proprietary Rights.............................................................................25
8.8 Employees; Employee Benefits...................................................................26
8.9 Insurance......................................................................................28
8.10 Net Sales......................................................................................29
8.11 Financial Statements...........................................................................29
8.12 Undisclosed Liabilities........................................................................29
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8.13 Tax Matters....................................................................................29
8.14 Absence of Changes or Events...................................................................31
8.15 Creditors......................................................................................31
8.16 Environmental and Occupational Matters.........................................................32
8.17 Subsidiaries...................................................................................33
8.18 Capitalization.................................................................................33
8.19 Bank Accounts..................................................................................34
8.20 Guaranties.....................................................................................34
8.21 Related Parties................................................................................34
8.22 Accounts Receivable; Working Capital...........................................................34
8.23 Brokers........................................................................................34
8.24 Flips..........................................................................................35
8.25 Construction Liens.............................................................................35
8.26 Letters of Credit..............................................................................35
8.27 Business Names.................................................................................35
8.28 SEC Statements, Reports and Documents..........................................................35
8.29 Shares.........................................................................................36
8.30 Intercompany Debt..............................................................................36
8.31 Certain Former Subsidiaries....................................................................37
8.32 Disclosure.....................................................................................37
8.33 Survival.......................................................................................37
9. Covenants Pending the Closing and Delivery Date................................................37
9.1 Conduct Through the Closing Date...............................................................37
9.2 Approvals and Consents.........................................................................38
9.3 Advice of Changes..............................................................................39
9.4 Notice of Litigation...........................................................................39
9.5 Access to Properties and Records; Inspection...................................................39
9.6 Environmental Inspection.......................................................................39
9.7 Preferred Shares...............................................................................40
9.8 Other Actions..................................................................................40
10. Title..........................................................................................40
10.1 Title Commitment, Survey and Zoning............................................................40
10.2 Objections to Title............................................................................41
11. Conditions Precedent to the Obligation of the Parties to Close.................................41
11.1 Buyer's Conditions Precedent...................................................................41
11.2 JPE's Conditions Precedent.....................................................................43
11.3 Mutual Conditions Precedent....................................................................44
12. Default; Termination of Agreement..............................................................44
12.1 Termination....................................................................................44
12.2 Good Faith Costs...............................................................................45
12.3 Break-Up Fee...................................................................................45
12.4 Equitable Remedies.............................................................................46
12.5 No Shop........................................................................................46
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13. Miscellaneous..................................................................................47
13.1 Notices........................................................................................47
13.2 No Waiver......................................................................................48
13.3 Successors and Assigns.........................................................................48
13.4 Severability...................................................................................48
13.5 Entire Agreement; Amendment....................................................................49
13.6 Cost of Litigation.............................................................................49
13.7 Interpretation.................................................................................49
13.8 Counterparts...................................................................................49
13.9 Applicable Law; Venue..........................................................................49
13.10 Expenses.......................................................................................49
13.11 Further Assurances.............................................................................50
14. Transaction Fee................................................................................50
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EXHIBITS
Exhibit A - Warrant
Exhibit B - Resolutions
Exhibit C - Employment Agreement
Exhibit D - Legal Opinion (▇▇▇▇▇▇ ▇▇▇▇▇▇▇ PLLC)
Exhibit E - Legal Opinion (▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇)
SCHEDULES
Schedule 3.2 - Target EBITDA
Schedule 5 - Debt
Schedule 7.3 - Brokers (ASC)
Schedule 8.1(c) - Debt Not Accelerated
Schedule 8.2(a) - Fee Properties
Schedule 8.2(b) - Leasehold Properties
Schedule 8.2(c) - Option Properties
Schedule 8.3 - Properties and Improvements
Schedule 8.3(e) - Approvals
Schedule 8.4(a) - Assets (Operating Condition)
Schedule 8.4(b) - Assets (Ownership)
Schedule 8.4(e) - Non-Real Estate Assets
Schedule 8.5(a) - Claims; Litigation
Schedule 8.5(b) - Investigations; Orders; Basis for Litigation
Schedule 8.6(a) - Agreements; Contracts; Warranties
Schedule 8.6(e) - Correspondence/Memoranda (General Motors/Ford/DaimlerChrysler)
Schedule 8.7 - Proprietary Rights
Schedule 8.8(a) - Employees
Schedule 8.8(b) - Employee Benefits
Schedule 8.9 - Insurance
Schedule 8.10 - Net Sales
Schedule 8.11 - Most Recent Financial Statements
Schedule 8.12 - Undisclosed Liabilities
Schedule 8.13 - Taxes Schedule 8.14 - Changes
Schedule 8.16 - Environmental Matters
Schedule 8.17 - Subsidiaries
Schedule 8.18(a) - Capitalization
Schedule 8.18(b) - Agreements regarding Capital Stock
Schedule 8.19 - Bank Accounts
Schedule 8.20 - Guaranties
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Schedule 8.22 - Accounts Receivable
Schedule 8.23 - Brokers (Buyer)
Schedule 8.25 - Construction Liens
Schedule 8.27 - Business Names
Schedule 8.28 - SEC
Schedule 8.29 - Issued and Outstanding Shares Following the Closing
Schedule 8.30 - Intercompany Debt
Schedule 9.6(b) - Environmental Inspections
Schedule 10.1 - Title Commitments, Survey and Zoning
Schedule 15 - Directors' and Officers' Liability Insurance
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INVESTMENT AGREEMENT
THIS INVESTMENT AGREEMENT (this "Agreement") is made this 28th day of
April, 1999, among (i) JPE, Inc., a Michigan corporation ("JPE"), and (ii) ASC
Holdings LLC, a Michigan limited liability company ("ASC"), and Kojaian Holdings
LLC, a Michigan limited liability company ("Kojaian") (ASC and Kojaian,
together, "Buyer"). All capitalized terms used in this Agreement are either
defined or referenced in Section 1 below.
RECITALS
A. JPE and the Subsidiaries are in the business of, among other things,
developing, manufacturing, marketing and selling automotive components and parts
to original equipment manufacturers and the after market.
B. Buyer desires to invest in companies in the business of JPE and the
Subsidiaries.
C. Each of Buyer and JPE desire that Buyer invest in JPE by subscribing
for and purchasing 9,441,420 newly issued Common Shares and 1,560,000 newly
issued Preferred Shares (subject to certain adjustments) on the terms and
conditions provided in this Agreement.
D. In connection with Buyer's investment in JPE, each of JPE and Buyer
desire that JPE issue to the holders of the common shares of capital stock of
JPE on the Record Date, Warrants to purchase, on an aggregate basis, up to
345,163.50 Preferred Shares on the terms and conditions provided in this
Agreement.
E. In connection with Buyer's investment in JPE, each of JPE and Buyer
desire that JPE, Buyer and the Bank Group enter into one or more agreements by
which, among other things, some or all of the proceeds of Buyer's investment in
JPE be used (with certain other funds) in the complete and final payment of the
Debt on such terms and conditions as provided in such agreement (collectively,
the "Bank Agreement").
F. In connection with Buyer's investment in JPE, the parties have
agreed to take certain other actions, all as described in this Agreement and in
the Related Agreements.
G. The Board of Directors of JPE and the members of each of ASC and
Kojaian have approved the Transaction upon the terms of this Agreement.
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NOW, THEREFORE, the parties agree as follows:
1. Definitions. As used in this Agreement:
"Accountants" is defined in Section 3.3(b) of this Agreement.
"Accounts Receivable" means all accounts and notes receivable of the
JPE Companies determined in accordance with GAAP and reflected on the books and
records of the JPE Companies.
"Actual EBITDA" is defined in Section 3.3(a) of this Agreement.
"Adjusted Target EBITDA" is defined in Section 3.2 of this
Agreement.
"Affiliated Group" means any affiliated group as that term is
defined in Code ss.1504(a) or any similar group.
"Aggregate Warrants Exercise Price" is defined in Section 3.1(a)(i)
of this Agreement.
"Agreement" means this Investment Agreement.
"Alternative Acquisition" means any tender or exchange offer, any
proposal for a merger, consolidation or other business combination with any JPE
Company, any proposal or offer to acquire in any manner an equity interest of
50% or more in any JPE Company, or any proposal or offer to acquire 50% or more
of the business or Assets of any JPE Company by a party other than Buyer.
"Approvals" means all zoning approvals and permits, environmental
approvals, Environmental Permits, wetlands approvals, utility service and
capacity permits, building permits and all other permits, licenses, approvals
and authorizations required to allow the use of each Property in the manner
currently used by JPE and the applicable Subsidiary.
"ASC" is defined in the introductory paragraph of this Agreement.
"ASC Owners" is defined in Section 7.4(a) of this Agreement.
"Assets" means all of the assets of the JPE Companies, including
Inventory, Accounts Receivable, Properties, Proprietary Rights and all other
real, personal and intangible property of the JPE Companies, whether owned,
leased or otherwise held by the JPE Companies.
"Bank Agreement" is defined in Recital E of this Agreement.
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"Bank Discharge" is defined in Section 4.1 of this Agreement.
"Bank Group" means all of the holders of the Debt (including, but
not limited to GMACBC and all holders of the Debt for which Comerica Bank acts
as agent); provided, however, that the "Bank Group" shall exclude GMACBC for all
purposes under Section 4 of this Agreement.
"Bank Group Subscription" is defined in Section 4.1 of this
Agreement.
"Bankruptcy Courts" means those federal bankruptcy courts possessing
jurisdiction In the Matter of Plastic Trim, Inc., Case No. 98-56104, and In the
Matter of Starboard Industries, Inc., Case No. 98-56099.
"Buyer" is defined in the introductory paragraph of this Agreement.
"Buyer's Consultant" is defined in Section 9.6(a) of this Agreement.
"Buyer's Due Diligence Investigation" is defined in Section 9.5 of
this Agreement.
"Champion Costs" is defined in the definition of Working Capital.
"Closing" means the consummation of this Transaction (other than the
transactions to occur on the Record Date or the Delivery Date).
"Closing Date" is the date on which the Closing takes place.
"Closing Financial Statements" is defined in Section 8.11 of this
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended (or any
successor thereto).
"Common Shares" means the shares of JPE common capital stock.
"Common Shares Subscription Price" is defined in Section 2.1 of this
Agreement.
"Debt" means the total outstanding debt obligations of the JPE
Companies (whether or not accelerated) for borrowed money including but not
limited to principal, accrued interest, prepayment penalties and charges and
other amounts due and owing in respect thereof; all such debt obligations are
set forth on Schedule 5 to this Agreement.
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"Deferred Intercompany Transaction" has the meaning set forth in
Treasury Regulation ss.1.1502-13 of the Treasury Regulations in effect before
July 12, 1995.
"Delivery Date" means the day after the Record Date.
"Divested Subsidiaries" is defined in Section 8.30 of this
Agreement.
"Divestitures" is defined in Section 8.31 of this Agreement.
"EBITDA" means for any period, the consolidated net income (loss) of
the JPE Companies for such period determined in accordance with GAAP
consistently applied and following all accounting principles, practices and
methods (to the extent in compliance with GAAP) set forth in the audited
financial statements of the JPE Companies consistently applied, plus, without
duplication, all amounts deducted in determining such net income on account of
(1) interest expense, (2) income tax expense or any expense for income taxes for
any other party other than the JPE Companies, (3) depreciation and amortization
expense, (4) any amounts paid or accrued by JPE with respect to the Champion
Costs to the extent the Champion Costs are included in the calculation of the
net income of the JPE Companies, (5) any management or consulting fees paid to
Buyer, any affiliate of or entity related to Buyer, in excess of the sum of (a)
$250,000, per year, plus (b) two percent (2%) of EBITDA (calculated first
without this item) in excess of $32 million for the EBITDA Period, (6) all
Transaction Costs to the extent included in the calculation of the net income of
the JPE Companies, (7) write-offs of goodwill in excess of normal amortization,
(8) net changes in the aggregate Asset values resulting from purchase accounting
for the Transaction that would otherwise negatively affect the calculation of
EBITDA, (9) any costs attributed to employee benefit plans to the extent arising
from the fact that such plans are part of a controlled group in respect of
employees other than those of the JPE Companies, and (10) any amount paid to The
Bank of Nova Scotia pursuant to the guarantee of JPE set forth on Schedule 8.12.
"EBITDA Dispute" is defined in Section 3.3(b) of this Agreement.
"EBITDA Period" is defined in Section 3.1(a)(ii) of this Agreement.
"Eidswick" is defined in Section 3.3 of this Agreement.
"Eidswick's Indemnifiable Claims" is defined in Section 3.3(g) of
this Agreement.
"Employment Agreement" is defined in Section 6.2(h) of this
Agreement.
"Employment Releases" is defined in Section 6.2(e) of this
Agreement.
"Environmental Information" is defined in Section 8.16(d) of this
Agreement.
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"Environmental Inspection" is defined in Section 9.6(a) of this
Agreement.
"Environmental Laws" means any Law that relates to pollution (or the
clean up of the environment), or the protection of air, surface water,
groundwater, drinking water, land (surface or subsurface), human health, the
environment or any other natural resource or the use, storage, recycling,
treatment, generation, processing, handling, production or disposal of Hazardous
Materials, including any such Laws enacted by the State in which JPE and each
Subsidiary currently or historically has conducted business or owned, leased or
otherwise operated property and regulations thereunder, together with all
applicable federal Laws, including, but not limited to, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, 42
USC ss.ss.9601 et seq. and 40 CFR ss.ss.302.1 et seq., and other regulations
thereunder; the Federal Clean Air Act, as amended, 42 USC ss.ss.7401 et seq.,
and regulations thereunder; the Resource Conservation and Recovery Act, 42 USC
ss.ss.6901 et seq., as amended, and regulations thereunder; and the Federal
Water Pollution Control Act, 33 USC ss.ss.1251 et seq., as amended, and
regulations thereunder.
"Environmental Permits" is defined in Section 8.16(g) of this
Agreement.
"Environmental Report" is defined in Section 9.6(b) of this
Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"Exchange Act" is defined in Section 8.28 of this Agreement.
"Fairness Opinion" is defined in Section 11.2(d) of this Agreement.
"Fee Properties" is defined in Section 8.2 of this Agreement.
"Fees and Costs" means reasonable legal (including attorneys' and
legal assistants') fees, disbursements and costs; reasonable fees, disbursements
and costs of third party consultants and experts; court costs; and similar
expenses, costs and items.
"Final Actual EBITDA" is defined in Section 3.3(e) of this
Agreement.
"Financial Statements" is defined in Section 8.11 of this Agreement.
"GAAP" means generally accepted accounting principles, consistently
applied.
"GMACBC" means GMAC Business Credit, LLC.
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"Hazardous Materials" means asbestos-containing materials, mono- and
polychlorinated biphenyls, urea formaldehyde products, radon, radioactive
materials, any "hazardous substance", "hazardous waste", "pollutant", "toxic
pollutant", "oil" or "contaminant" as such terms are used in, or defined
pursuant to any Environmental Law, and any other substance, waste, pollutant,
contaminant or material, including petroleum products and derivatives, the use,
transport, disposal, storage, treatment, recycling, handling, discharge,
Release, threatened Release, discharge or emission of which is regulated or
governed now or in the future by any Environmental Law.
"IAF" is defined in Section 8.30 to this Agreement.
"Intercompany Transaction" has the meaning set forth in Treasury
Regulation ss.1.1502-13 in effect on or after July 12,
1995.
"Inventory" means all inventory existing on the Closing Date,
wherever located, including, but not limited to, finished goods,
work-in-process, supplies, raw materials, scrap, containers, consigned
inventory, central, shared or common inventory, parts, spares, warehoused
inventories and inventories covered by purchase orders.
"JPE" is defined in the introductory paragraph of this Agreement.
"JPE Determination" is defined in Section 3.3(a) to this Agreement.
"JPE Canada" is defined in Section 8.30 of this Agreement.
"JPE Company" means JPE or any Subsidiary.
"JPE Companies" means JPE and all the Subsidiaries.
"JPE Reports" is defined in Section 8.28 of this Agreement.
"Kojaian" is defined in the introductory paragraph of this
Agreement.
"Kojaian Owners" is defined in Section 7.4(b) of this Agreement.
"Laws" means all applicable federal, State, county, municipal and
local (1) Constitutions, statutes, laws, rules, regulations, codes and
ordinances (including zoning and other rules and regulations and building and
other codes) and (2) case law, court or administrative orders, judgments or
decrees, binding opinions of an attorney general and common law and equitable
decisions and doctrines.
"Leasehold Properties" is defined in Section 8.2 of this Agreement.
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"Letter of Intent" means the Letter of Intent between Buyer and JPE
dated February 18-19, 1999, as amended by a letter agreement dated April 1-2,
1999, and any further amendments thereto.
"MBCA" means the Michigan Business Corporation Act.
"Marketable Title" shall be determined by the applicable title
standards adopted by the authority of the State bar in which the applicable
Property is located and applicable Law.
"Material Contracts" means (1) all of the agreements set forth on
Schedule 8.6 and (2) any agreements or commitments (including, but not limited
to, credit agreements, debt instruments, letters of credit, supply agreements,
distribution agreements, confidentiality agreements, purchase orders, production
agreements, employment agreements, licenses, leases, mortgages, deeds of trusts,
purchase agreements, sale agreements, indemnification agreements, service
agreements, rental agreements, vendor agreements, customer agreements, software
agreements and all other agreements and commitments (whether written or
otherwise), to which any JPE Company is a party pursuant to which any party to
such agreement or commitment is required to spend more than $50,000 in the
aggregate in any twelve month period.
"Most Recent Balance Sheets" means the balance sheets contained
within the Most Recent Financial Statements.
"Most Recent Financial Statements" means, as of the date of this
Agreement, the Financial Statements for the period ended March 31, 1999, and, as
of the Closing Date, also includes the Closing Financial Statements.
"Other Documents" is defined in Section 8.32 of this Agreement.
"Permitted Land Exceptions" is defined in Section 10.1(a) of this
Agreement.
"Plans" is defined in Section 8.8(b)(i) of this Agreement
"Plastic Trim" means Plastic Trim, Inc., an Ohio corporation.
"Preferred Shares" means the shares of preferred capital stock of
JPE, each share possessing all rights and privileges (including voting,
distribution and dividend rights) equal to 50 Common Shares, all as provided by
the Resolutions.
"Preferred Shares Subscription Price" is defined in Section 2.2 of
this Agreement.
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"Properties" means all of the real properties, and improvements
thereon and fixtures, equipment and other personal property attached thereto,
owned, leased, occupied or used by each of the JPE Companies, and all real
properties that any JPE Company has the right to acquire pursuant to a purchase
agreement, option agreement or otherwise, including land and all manufacturing,
engineering, warehouse, office and other facilities located thereon; and water,
improvements, soil and vegetation on and under, and the air over, the surface of
the Properties, together with:
(a) all easements, permits, licenses, utility agreements and rights
of way appurtenant thereto, and air, mineral and riparian rights and all
tenements, hereditaments, privileges and appurtenances thereto belonging or in
any way appertaining thereto;
(b) any land lying in the bed of any street, road or avenue, open or
proposed, at front of or adjoining the Properties to the centerline thereof and
any unpaid award for damage to the Properties by reason of grade of any street;
(c) all leases to tenants and security deposits held in connection
therewith; and
(d) all plans and specifications for improvements thereto and any
contracts, warranties and guaranties, if any, with regard thereto.
"Proprietary Rights" means all the intellectual property rights
(including rights to know-how, inventions, trade secrets, confidential business
information, ideas, formulas, techniques, processes, industrial and utility
models, technologies, compositions, technical data, industrial models,
engineering and production processes and techniques, patents, patent
applications, mask works, names, marks, symbols, trademarks, trade names,
service marks, copyrights and logos) owned, licensed or used by or connected
with any of the JPE Companies.
"Record Date" means the fifteenth day following the date of the
Closing (or, if such day is a holiday in the State of Michigan or a day on which
banks are authorized to close, then such date shall be the next day which in the
State of Michigan is not a holiday or on which banks are authorized to close).
"Related Agreements" means all written agreements, other than this
Agreement, that are executed and delivered by Buyer or JPE pursuant to this
Agreement or in connection with this Transaction, regardless of whether such
other agreements are expressly referred to in this Agreement.
"Release" means spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, disposal,
depositing and placing of any
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Hazardous Material, including the abandonment or discarding of barrels,
containers and other closed receptacles containing any Hazardous Material.
"Resolutions" is defined in Section 9.7 of this Agreement.
"SEC" is defined in Section 8.28 of this Agreement.
"Security Interest" means any interest in personal or real property
or fixture that secures payment or performance of an obligation.
"Shareholders" means the holders of the common shares of JPE on the
Record Date.
"Shares" are the shares of capital stock of JPE of all classes.
"Starboard" means Starboard Industries, Inc., a Michigan
corporation.
"Subscribed Shares" means all of the Common Shares and Preferred
Shares to be purchased by Buyer pursuant to Section 2 of this Agreement.
"Subscribed Common Shares" means all of the Common Shares to be
purchased by Buyer pursuant to Section 2.1 of this Agreement.
"Subscribed Preferred Shares" means all of the Preferred Shares to
be purchased by Buyer pursuant to Section 2.2 of this Agreement.
"Subscription Price" means the Common Shares Subscription Price plus
the Preferred Shares Subscription Price.
"Subsidiaries" means Plastic Trim; Starboard; SAC Corporation, a
Michigan corporation; Dayton Parts, Inc., a Michigan corporation; JPE Finishing,
Inc., an Ohio corporation; API/JPE, Inc., a Missouri corporation; Brake, Axle
and Tandem Company Canada Inc., a Canadian corporation; Fastener Acquisition,
Inc., a Michigan corporation; JPE Canada Inc., a Canadian corporation, and all
other direct or indirect subsidiaries of JPE.
"Target EBITDA" is defined in Section 3.1(a)(ii)(A).
"Tax" means any federal, State, local or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code ss.59A),
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
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estimated, intangibles, documentary or other tax of any kind whatsoever,
including any interest, penalty, or addition thereto, whether disputed or not,
and shall include any transferee liability in respect of any and all of the
above.
"Tax Authority" includes the Internal Revenue Service and any
federal, State, county, municipal, local, foreign or other governmental
authority (domestic or foreign) responsible for the administration of any Tax.
"Tax Return" means any return, declaration, report, claim for
refund, or information return or statement, including any schedule or attachment
thereto, and including any amendment thereof required to be filed with, or where
none is required to be filed with a Tax Authority, the statement or other
document issued by, a Tax Authority in connection with, any Tax.
"Title Company" is defined in Section 10.1(a) of this Agreement.
"Transaction" is the subscription of the Subscribed Shares by Buyer
and all related transactions as provided for and contemplated by this Agreement
and the Related Agreements.
"Transaction Costs" means all fees, expenses and charges (including
Fees and Costs) accrued or incurred, paid or unpaid, by the JPE Companies,
without duplication, in connection with or related to the Transaction, including
such fees, expenses and charges to (a) CIBC ▇▇▇▇▇▇▇▇▇▇▇ Corp. and ▇▇▇▇▇ & Co.,
(b) bankruptcy counsel in connection with the bankruptcies of Plastic Trim and
Starboard, (c) counsel of the Bank Group required by the Bank Group to be paid
by JPE, (d) members of the Bank Group incurred in connection with any prepayment
penalty or acceleration costs or expenses in connection with the payment of the
Debt pursuant to Section 5 of this Agreement, and (e) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ PLLC and
other counsel engaged by JPE.
"Treasury Regulation" means any regulation promulgated under the
Code.
"Underground Storage Tank" means any container and any related
piping and material handling equipment of which any portion is located below the
level of the soil at any Property that contains or stores (or was or is intended
to contain or store) Hazardous Materials, unless all containers, piping and
related material handling equipment is fully exposed and located in the basement
of a building at such Property.
"Underlying Documents" is defined in Section 10.1(a) of this
Agreement.
"Warrant Exercise Period" is defined in Section 3.1(c) of this
Agreement.
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"Warrants" is defined in Section 3.1 of this Agreement.
"Working Capital" means, in connection with the JPE Companies, on a
consolidated net basis, immediately before the closing (1) an amount equal to
the difference between consolidated current Assets minus consolidated current
liabilities plus (2) $70 million. Current liabilities for purposes of Working
Capital shall include (a) the Debt minus the Bank Discharge, (b) the Transaction
Costs not paid prior to the Closing and not otherwise included in current
liabilities, (c) $500,000 to satisfy the contingent obligations of JPE with
respect to Champion Plastics, Inc. (the "Champion Costs"), and (d) the amount of
the guarantee of JPE to The Bank of Nova Scotia unless such guarantee is
discharged prior to the Closing.
2. Buyer Subscription of Shares.
2.1 Issuance, Purchase and Sale of Common Shares. Subject to the
terms and conditions of this Agreement, at the Closing, in accordance with
Section 2.3 below, Buyer shall subscribe for and purchase, and JPE shall issue,
sell, convey and deliver to Buyer, a total of 9,441,420 Common Shares for an
aggregate purchase price of $1,986,725.83 (the "Common Shares Subscription
Price"). Notwithstanding the foregoing, the effective date of the subscription
set forth in this Section 2.1 shall be the Delivery Date and Buyer shall not be
a Shareholder on the Record Date.
2.2. Issuance, Purchase and Sale of Preferred Shares. Subject to
the terms and conditions of this Agreement, at the Closing, in accordance with
Section 2.3 below, Buyer shall subscribe and purchase, and JPE shall issue,
sell, convey and deliver to Buyer, 1,560,000 Preferred Shares for an aggregate
purchase price of $16,413,274.17 (the "Preferred Shares Subscription Price").
2.3 Buyer Apportionment. Each of ASC and Kojaian shall subscribe
for 50% of each class of the Subscribed Shares and deliver 50% of the
Subscription Price.
3. Shareholder Warrants.
3.1 Issuance of Warrants. Subject to the terms and conditions of
this Agreement, on the Record Date, JPE shall (through a dividend) issue to each
Shareholder warrants in the form of Exhibit A to this Agreement (the "Warrants")
granting each such Shareholder the right to purchase Preferred Shares of JPE as
set forth below.
(a)(i) On the Record Date, JPE shall issue (through a dividend) to
the Shareholders (as a whole) Warrants to purchase an aggregate of 345,163.50
Preferred Shares for an aggregate purchase price of $3,450,000 (the "Aggregate
Warrants Exercise Price").
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(ii) Notwithstanding the foregoing, the Aggregate Warrants Exercise
Price is subject to the following adjustments:
(A) In the event that the Final Actual EBITDA of the JPE Companies
is in excess of $34.3 million (the "Target EBITDA") for the two year
period following the Closing (the "EBITDA Period"), then the Aggregate
Warrants Exercise Price shall be reduced by $1.00 for each $2.00
increment by which the Target EBITDA is exceeded.
(B) In the event that during the period from the Closing Date to
the date on which the Shareholders receive notice of the Final Actual
EBITDA, one or more of the JPE Companies expend funds on remediation in
connection with any environmental condition at one or more of the
Properties (whether or not such condition would constitute a breach of
Section 8.16 below), including any remediation required by, pursuant to
or in connection with any Environmental Law, then the Aggregate
Warrants Exercise Price shall be increased by $.75 for each $1.00 of
direct and indirect costs, expenses and fees (including Fees and Costs)
in excess of $250,000 that are spent by the JPE Companies on such
remediation, provided that in no event shall the Aggregate Warrants
Exercise Price be increased by more than $1,000,000 pursuant to this
Section 3.1(a)(ii)(B).
(C) In the event that the Bank Group receives Warrants pursuant to
Section 4.2 below, the Aggregate Warrants Exercise Price shall be the
aggregate exercise price for all of the Warrants in the aggregate
issued to the Shareholders pursuant to Section 3.1 and the Bank Group
pursuant to Section 4.2 below, and, therefore, the exercise price for
any individual Warrant shall be determined by dividing the Aggregate
Warrants Exercise Price (including any adjustments pursuant to this
Section 3.1(a) and Section 3.2 below), by the aggregate number of
Warrants issued to the Shareholders and the Bank Group.
(b) If required by applicable Law, Buyer will effect a registration of
the Preferred Shares to be issued pursuant to the Warrants under applicable
securities Laws prior to the expiration of the EBITDA Period.
(c) The Warrants shall only be exercisable for the ninety (90) day
period beginning on the date on which JPE provides the Shareholders notice of
the Final Actual EBITDA after the JPE Determination (the "Warrant Exercise
Period").
(d) Each Shareholder shall receive the number of Warrants equal to such
Shareholder's pro rata percentage of his or her ownership of the Shares on the
Record Date.
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3.2 Target EBITDA Adjustment. The Target EBITDA shall be
equitably adjusted in the event of the occurrence after the Closing of any of
the following events: (a) a material disposition of Assets, or a business, of
any of the JPE Companies (whether by asset sale, stock sale, investment
agreement, merger or otherwise) to a third party, (b) a material acquisition of
the assets or a business (whether by asset purchase, stock purchase, investment
agreement, merger or otherwise) of a business or an entity (other than a JPE
Company), (c) capital expenditures exceeding $11.5 million in the aggregate by
the JPE Companies and (d) the transfer of some or all of the Proprietary Rights
of any JPE Company to Buyer and the concurrent or subsequent payment of
licensing fees by such JPE Company to Buyer (the Target EBITDA, after adjustment
under this Section 3.2, the "Adjusted Target EBITDA"). The Target EBITDA was
calculated in accordance with Schedule 3.2 to this Agreement.
3.3 Final Actual EBITDA Determination.
(a) As soon as practical following the EBITDA Period, the EBITDA
for the EBITDA Period (the "Actual EBITDA") and the Adjusted Target EBITDA shall
be determined by JPE's certified public accountants after consultation with
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ or, in the event of his death or disability at the time,
PricewaterhouseCoopers (Eidswick or PricewaterhouseCoopers, "Eidswick"). As soon
as practicable, JPE shall provide Eidswick with JPE's analysis and determination
of the Actual EBITDA and the Adjusted Target EBITDA (the "JPE Determination").
The JPE Determination shall be fully binding and conclusive twenty (20) days
after delivery of the JPE Determination to Eidswick unless the provisions of
Section 3.3(b) below apply. Eidswick shall be given full access to all
information and documentation under JPE's control regarding the calculation of
the JPE Determination as Eidswick reasonably requests.
(b) In the event that Eidswick provides JPE with written notice
of a good faith objection to the JPE Determination specifying the details of the
objection within twenty (20) days of JPE providing notice to Eidswick of the JPE
Determination, which objection, if accepted, would adjust the Actual EBITDA or
the Adjusted Target EBITDA by an amount equal to 10% of the amount set forth in
the JPE Determination (an "EBITDA Dispute"), such EBITDA Dispute shall be
submitted for a final binding resolution to a nationally-recognized firm of
certified public accountants (the "Accountants") mutually acceptable to JPE and
Eidswick.
(c) In the event Eidswick and JPE are unable to agree on the
Accountants pursuant to Section 3.2(b) above, each of Eidswick and JPE shall
choose one nationally-recognized firm of certified public accountants (other
than PricewaterhouseCoopers or Ernst & Young LLP), and such firms shall choose a
third nationally-recognized firm of certified public accountants (other than
PricewaterhouseCoopers or Ernst & Young LLP) to whom the EBITDA Dispute shall be
submitted. In the event either party fails to select such a
nationally-recognized firm of certified public accountants within twenty (20)
days of the delivery of Eidswick's notice of objection, then the matter shall be
resolved by such accountants selected by the other party. In
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the event that both parties select accountants and such accountants are, within
twenty (20) days of selection, unable to agree on the Accountants to whom the
dispute shall be submitted, the Accountants shall be selected by the President
of the American Arbitration Association (who, under no circumstance, shall
choose PricewaterhouseCoopers or Ernst & Young LLP).
(d) The Accountants (whether selected pursuant to Section 3.2(b)
or 3.2(c) above) shall resolve the EBITDA Dispute by determining the Actual
EBITDA and the Adjusted Target EBITDA within sixty (60) days of submission, all
in accordance with this Agreement and GAAP.
(e) The JPE Determination (in the event such determination is
binding pursuant to Section 3.3(b) above) or the decision of the Accountants (in
the event that an EBITDA Dispute is resolved pursuant to Section 3.3(d) above)
(the applicable calculation, the "Final Actual EBITDA"), (i) shall be binding on
and non-appealable and incontestable by JPE, Buyer and Eidswick; (ii) shall not
be subject to collateral attack for any reason absent manifest error, perjury or
misconduct and (iii) shall have the same effect as an arbitration pursuant to
Michigan Compiled Law ss.600.5001. A judgment of any Michigan Circuit Court may
be rendered upon the final determination of the Final Actual EBITDA and Adjusted
Target EBITDA made pursuant to this Section 3.3.
(f) JPE shall pay Eidswick and the Accountants all reasonable
fees, costs and expenses incurred in connection with this Section 3.3.
(g) JPE shall indemnify and hold Eidswick harmless against any
damages, penalties, fines, liabilities, claims, losses and expenses (including
Fees and Costs) that may be incurred by Eidswick in connection with Eidswick's
performance of Eidswick's obligations under this Section 3.3 ("Eidswick's
Indemnifiable Claims"); provided, however, that JPE shall have no such
obligations under this Section 3.3(g) in the event Eidswick's Indemnifiable
Claims arise from Eidswick's purposeful malfeasance, recklessness or gross
negligence.
4. Adjustments Based on Bank Group Discharge.
4.1 Bank Group Subscription of Shares. Subject to the terms and
conditions of this Agreement, if the Bank Group, pursuant to a binding Bank
Agreement fully executed and delivered prior to or at the Closing, forgives,
extinguishes, releases and discharges an amount of the Debt that would otherwise
be due and outstanding without payment by JPE (a "Bank Discharge") equal to
$17.0 million, at the Closing, JPE shall issue, sell, convey and deliver to the
Bank Group 23,010.90 Preferred Shares for an aggregate purchase price of $1,000
pursuant to a subscription agreement reasonably acceptable to Buyer, JPE and the
Bank Group (the "Bank Group Subscription"). If the Bank Group Discharge is for
an amount less than $12 million, the Bank Group shall receive no Preferred
Shares pursuant to this Section 4.1. If the Bank Discharge is for an amount
above $12 million, the Bank Group Subscription shall be for the
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number of Preferred Shares equal to (a) a number that is equal to the amount of
dollars the Bank Discharge exceeds $12 million multiplied by (b) a fraction, the
numerator of which is 23,010.90 and the denominator of which is 5.0 million.
4.2 Bank Group Warrants. If the Bank Group Discharge is for an
amount equal to $17.0 million, JPE shall issue to the Bank Group (for no other
consideration) Warrants granting the Bank Group the right to purchase up to
86,290.88 Preferred Shares. If the Bank Group Discharge is for an amount no more
than $12 million, the Bank Group shall receive no Warrants pursuant to this
Section 4.2. If the Bank Group Discharge is for an amount above $12 million, the
Bank Group shall receive (for no other consideration) Warrants granting the Bank
Group the right to purchase the number of Preferred Shares equal to (a) a number
that is the number of dollars the Bank Discharge exceeds $12 million multiplied
by (b) a fraction, the numerator of which is 86,290.88 and the denominator of
which is 5.0 million. The exercise price for the Warrants granted to the Bank
Group pursuant to this Section 4.2 shall be calculated as set forth in Section
3.1(a)(ii)(C) above.
4.3 Buyer Subscription Adjustment. If the Bank Group subscribes
for 23,010.90 Preferred Shares pursuant to Section 4.1 above, the number of
Preferred Shares to be subscribed for by Buyer, and issued, sold, conveyed and
delivered pursuant to Section 2.2 above by JPE to Buyer, at the Closing, shall
be increased by 437,207.10 Preferred Shares (for an aggregate total of
1,997,207.12 Preferred Shares issued to Buyer) with no adjustment to the
Preferred Shares Subscription Price. If the Bank Group subscribes for no
Preferred Shares pursuant to Section 4.1 above, the number of Preferred Shares
to be subscribed for by Buyer, and issued, sold, conveyed and delivered pursuant
to Section 2.2 by JPE to Buyer, shall remain as set forth in Section 2.2 (i.e.,
1,560,000 Preferred Shares) with no adjustment to the Preferred Shares
Subscription Price. If the Bank Group subscribes for one or more Preferred
Shares, the number of Preferred Shares to be subscribed for by Buyer, and
issued, sold, conveyed and delivered pursuant to Section 2.2 by JPE to Buyer
shall be increased (with no adjustment to the Preferred Shares Subscription
Price) by the product of (a) nineteen (19) multiplied by (b) the number of
Preferred Shares subscribed for by the Bank Group pursuant to Section 4.1 above.
5. Payment of Debt. At the Closing, JPE shall, pursuant to the Bank
Agreement, pay-off the Debt (minus the Bank Discharge) pursuant to written
"pay-off" letters and instructions from the Bank Group in form reasonably
acceptable to Buyer, stating the amounts necessary to fully repay the Bank Group
for such Debt as of the Closing Date and to receive a final binding
extinguishment, release and discharge of all indebtedness, obligations and
liabilities of, and connected to, the Debt (including the Bank Discharge),
including all mortgages, deeds of trust, Security Interests, pledges, charges,
liens, encumbrances, claims and any other restrictions of any kind or nature on
the Assets of each JPE Company, as of the Closing (including all prepayment
penalties and charges).
6. Actions to be Taken at the Closing and Thereafter.
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6.1 Closing Date. The Closing shall take place at the offices of
Buyer's counsel at 10:00 a.m. on April 30, 1999 or such prior business day as is
designated by Buyer by five days' notice to JPE. If any of the conditions
precedent to Buyer's obligation to close this Transaction set forth in Sections
11.1 and 11.3 below are not satisfied on the scheduled Closing Date and Buyer
does not wish to waive such condition, Buyer may, at its sole discretion, on at
least 24 hours' notice to JPE, reschedule the Closing for another date (which
must be a business day) not later than June 30, 1999; Buyer shall have the
ability to reset the Closing Date pursuant to this sentence as often as it deems
necessary.
6.2 Actions to be Taken at the Closing .
(a) At the Closing, JPE shall deliver to Buyer certificates for
the Subscribed Preferred Shares, together with such other documents as Buyer may
reasonably request in order to issue to Buyer or evidence the issuance to Buyer
of full title to such Subscribed Preferred Shares, free and clear of any lien,
Security Interest, pledge, charge, encumbrance or restriction of any kind or
nature.
(b) At the Closing, JPE shall deliver to the Bank Group (if
applicable) the number of Warrants as provided in Section 4 above, free and
clear of any liens, Security Interests, pledges, charges, encumbrances or
restrictions of any kind or nature other than as provided in the Warrants.
(c) At the Closing, JPE shall deliver to Buyer the following
documents:
(1) Certified resolutions of its Board of Directors
authorizing the execution, delivery and consummation of this
Agreement and each Related Agreement to which JPE is a party.
(2) A certificate executed by an officer of JPE, dated as of
the Closing Date and in form and substance reasonably acceptable to
Buyer, certifying as to JPE's compliance as of the Closing Date with
each of its agreements, representations, warranties and covenants
under this Agreement and the Related Agreements to which JPE is a
party.
(3) With respect to each JPE Company, a copy of its Articles
of Incorporation (certified by an appropriate State official as of a
date within thirty (30) days of the Closing Date), Bylaws and
documents (each certified by an appropriate State official as of the
Closing Date or, if dated before the Closing Date, updated by
facsimile on the Closing Date) showing that it is duly incorporated
and is in good standing in its State of incorporation and is
qualified
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to do business in and in good standing in each jurisdiction in which
such qualification and good standing is necessary under applicable
Law.
(4) A certificate of the Secretary or an Assistant Secretary
of JPE attesting as to the incumbency of each officer who executes
this Agreement or a Related Agreement.
(5) The written resignations (effective as of the end of
business on the Closing Date) of such officers and directors of each
JPE Company as may be required by Buyer at least three (3) business
days before the Closing Date, or documentation and indemnities in
form and substance satisfactorily to Buyer as to the removal,
consistent with law, of any non-resigning officer or director so
required.
(6) Such additional information and materials as Buyer may
have reasonably requested.
(d) At the Closing, each of ASC and Kojaian shall deliver to JPE the
following documents:
(1) Certified resolutions of its members authorizing the
execution and delivery of this Agreement and each Related Agreement
to which it is a party.
(2) A copy of its Articles of Organization (certified by an
appropriate State official as of a date within thirty (30) days of
the Closing Date), and its Operating Agreement and documents (each
certified by an appropriate State official as of the Closing Date
or, if dated before the Closing Date, updated by facsimile on the
Closing Date) showing that it is duly incorporated and in good
standing in the State of Michigan and is qualified to do business in
the State of Michigan.
(3) A certificate of its Secretary or an Assistant Secretary
attesting as to the incumbency of each member or authorized person
who executes this Agreement or a Related Agreement on its behalf.
(4) Evidence of the complete payment, satisfactory release
and discharge of the Debt pursuant to Section 5 above.
(5) Such additional documents, information and materials as
JPE may reasonably request.
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(e) At the Closing, JPE shall provide Buyer with evidence
satisfactory to Buyer that (1) the stock option agreements and employment and
consulting agreements between JPE (and each Subsidiary (if applicable)) and each
of ▇▇▇▇▇▇▇ Chrysler, President and Chief Executive Officer of JPE, and ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, Chairman of JPE, have been terminated and rendered null and void and
that a release has been executed between JPE (and each Subsidiary (if
applicable)) and Buyer, on the one hand, and each of ▇▇▇▇▇▇▇ Chrysler and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, on the other hand, releasing both JPE (and each Subsidiary (if
applicable)) and Buyer from any liabilities or obligations stemming from the
termination of the employment and consulting agreements and stock option
agreements, in form satisfactory to Buyer in its sole discretion (the
"Employment Releases").
(f) At the Closing, Buyer shall pay the Subscription Price by
immediately available funds wired in accordance with wire instructions provided
by JPE.
(g) At the Closing, JPE and Buyer shall execute and deliver such
other documents and certificates as are required by the terms of this Agreement
(including the conditions precedent set forth in Section 11 below) and the
Related Agreements (including all governmental and third party consents or as
may be reasonably requested by the other party).
(h) At the Closing, ▇▇▇▇▇▇▇ Chrysler and Buyer shall enter into
an employment agreement in the form of Exhibit C to this Agreement (the
"Employment Agreement").
(i) At the Closing, Buyer shall provide JPE evidence that upon
Closing financing is available to the JPE Companies in an amount no less than
$51.6 million; provided, however, that such financing may be subject to the
satisfaction of the conditions precedent in Sections 11.1 and 11.3 below and the
conditions precedent required by the lenders of such financing.
(j) At the Closing, (i) JPE shall deliver to the Bank Group
certificates for the Preferred Shares subscribed for pursuant to Section 4.1
above, together with such other documents as the Bank Group may reasonably
request in order to issue to the Bank Group or evidence the issuance to the Bank
Group of full title to such Preferred Shares, free and clear of any lien,
Security Interest, pledge charges encumbrance or restriction of any kind or
nature and (ii) the Bank Group shall deliver to JPE $1,000 as payment for such
Preferred Shares.
6.3 Actions to be Taken As of the Record Date. As of the Record
Date, JPE shall issue to the Shareholders (as a dividend) the number of Warrants
as provided in Section 3 above, free and clear of any liens, Security Interests,
pledges, charges, encumbrances or restrictions of any kind or nature other than
as provided in the Warrants.
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6.4 Actions to be Taken on the Delivery Date. On the Delivery
Date, JPE shall deliver certificates for the Subscribed Common Shares, together
with such other documents as Buyer may reasonably request in order to issue to
Buyer or evidence the issuance to Buyer of full title to such Subscribed Common
Shares, free and clear of any lien, Security Interest, pledge, charge,
encumbrance or restriction of any kind or nature.
7. Buyer's Representations and Warranties. Buyer represents and
warrants to JPE as follows, as of the date of this Agreement and as of the
Closing Date:
7.1 Organization; Power and Authority. Each of ASC and Kojaian is
a limited liability company duly organized, validly existing and in good
standing under the Laws of the State of Michigan, and has the limited liability
company power and authority to enter into this Agreement and the Related
Agreements and to consummate the Transaction.
7.2 Authorization; Due Execution; No Conflicts.
(a) This Agreement and each Related Agreement has been duly
authorized by all necessary action on the part of each of ASC and Kojaian. Upon
the execution and delivery by ASC and Kojaian of this Agreement and the Related
Agreements (as applicable), this Agreement and the Related Agreements (as
applicable) shall each constitute the legal, valid and binding obligation of
each of ASC and Kojaian, enforceable against each in accordance with its terms.
(b) The execution, delivery and performance of this Agreement and
the Related Agreements by each of ASC and Kojaian shall not (1) constitute a
breach or violation of (A) either ASC's or Kojaian's Articles of Organization or
Operating Agreement, (B) any Law or (C) any material agreement, indenture, deed
of trust, mortgage, loan agreement or other material instrument to which either
ASC or Kojaian is a party or to which either is bound; or (2) constitute a
violation of any order, judgment, opinion of an attorney general or decree to
which either ASC or Kojaian is a party or by which either of their assets are
bound or affected.
7.3 Brokers. Except as set forth on Schedule 7.3 to this
Agreement, Buyer (1) has not dealt with any broker or finder in connection with
this Transaction; (2) has not caused or created any liability to any broker or
finder in connection with this Transaction; and (3) is not aware of any claim
from any third party that it is entitled to brokerage, finders or other similar
fees in connection with this Transaction.
7.4 Ownership of Buyer.
(a) ASC is wholly owned by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇ (the "ASC Owners").
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(b) Kojaian is wholly owned by ▇▇▇▇ ▇▇▇▇▇▇▇ and C. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ (the "Kojaian Owners").
(c) Subject to the terms and conditions of this Agreement, upon
the consummation of the Transaction, each of ASC and Kojaian (or their
applicable successors or assigns pursuant to Section 13.3 below) shall own 50%
of each class of the Subscribed Shares.
(d) No shareholders or similar agreement exists between or among
ASC, Kojaian, the ASC Owners and/or the Kojaian Owners whereby either ASC and/or
the ASC Owners, on the one hand, or Kojaian and/or the Kojaian Owners, on the
other hand, have the right to designate, elect or appoint a majority of the
members of the JPE Board of Directors.
7.5 Survival. The representations and warranties set forth in
Section 7 shall expire after the consummation of the Closing.
8. JPE's Representations and Warranties. JPE represents and warrants to
Buyer as follows, as of the date of this Agreement and as of the Closing Date:
8.1 Organization; Power and Authority; Authorization; Due
Execution; No Conflicts.
(a) Each JPE Company (1) is a corporation duly incorporated,
validly existing and in good standing under the Laws of the State of its
incorporation, and (2) has the corporate power and authority to (A) own, operate
and lease the Assets it owns, operates and leases, (B) carry on its business as
it is now being conducted, (C) enter into this Agreement and the Related
Agreements to which it is a party and (D) consummate the Transaction. JPE has
delivered to Buyer true and correct copies of the corporate charter and Bylaws
of each JPE Company.
(b) This Agreement and each Related Agreement to which JPE is a
party has been duly authorized by all necessary corporate action on JPE's part.
Upon the execution and delivery of this Agreement and the Related Agreements,
this Agreement and each Related Agreement shall constitute the legal, valid and
binding obligation of JPE, enforceable against JPE, in accordance with their
respective terms.
(c) JPE's execution, delivery and performance of this Agreement
and the Related Agreements shall not (1) constitute a breach or violation of (A)
the corporate charter or Bylaws of any JPE Company, (B) any Law or (C) assuming
the satisfaction of the conditions in Section 11 below, any Material Contract;
(2) assuming the satisfaction of the conditions in Section 11 below, constitute
a violation of any order, opinion of an attorney general, judgment or decree to
which any JPE Company is a party or by which the Assets of any JPE Company is
bound or affected; (3) except as set forth on Schedule 8.1(c), result in the
acceleration of any material Debt owed by any JPE Company that will not be
discharged, released, paid-off,
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forgiven or extinguished pursuant to Section 5 above; or (4) result in the
creation of any lien, charge or encumbrance upon the currently outstanding
shares of any JPE Company, the Subscribed Shares, the Warrants or the Assets of
any JPE Company.
8.2 Title. JPE and each Subsidiary (as applicable) has and up
until the consummation of the Closing shall have (a) except as described on
Schedule 8.2(a) to this Agreement, good and Marketable Title in fee simple
(subject only to the Permitted Land Exceptions) to those Properties identified
and legally described on Schedule 8.2(a) to this Agreement (the "Fee
Properties"), and (b) a valid leasehold interest in and right to occupy and use
those Properties identified and legally described on Schedule 8.2(b) to this
Agreement (the "Leasehold Properties"). No JPE Company possesses a valid and
enforceable right to acquire under option (including, without limitation,
pursuant to an option contract, right of first refusal, land contract, contract
to deed and/or trust agreement) any real property.
8.3 Properties and Improvements.
(a) Schedules 8.2(a)-(b) to this Agreement fully, accurately and
completely (1) list the addresses of all real estate of all of the Properties,
and (2) identify (A) the JPE Company with an interest in such Property and the
nature of such interest (e.g., fee simple or leasehold); (B) in the case of
Leasehold Properties, the document(s) or instrument(s) pursuant to which those
interests were created; and (C) in brief summary form, the applicable JPE
Company's current use and plans (if any) for each Property.
(b) Except as set forth on Schedules 8.2(a)-(b), no JPE Company
owns, leases, occupies, uses or has any other right to or interest in any real
property.
(c) Schedules 8.2(a)-(b) fully, accurately and completely set
forth all material leases, subleases, licenses, concessions, rights of use or
occupancy, options, rights of first refusal or other agreements (written or
otherwise) granted to any party or parties with respect to any portion of any
Property.
(d) Except as provided on Schedules 8.2(a)-(b) or the Permitted
Land Exceptions, no party has title to, any interest in or any right to use or
occupy any Property or any material portion of any Property.
(e) With respect to the Properties and the business of the JPE
Companies at each Property:
(1) The applicable JPE Company has received all material
Approvals that are required to conduct the business of the
respective JPE Company (or such other parties) at each Property, and
each such Property has been operated and maintained in accordance
with applicable Law and all subject Approvals in all
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material respects. To the knowledge of each JPE Company, there are
no proceedings pending or threatened which may result in the
limitation, termination, cancellation or suspension, or any adverse
modification of, any Approvals. JPE and each Subsidiary (as
applicable) has filed all material registrations, reports and other
documents required by federal, State, county, municipal and local
authorities and regulating bodies in connection with its business.
(2) To the knowledge of each JPE Company, the consummation of
this Transaction will not invalidate any of the Approvals or require
submission of any modifications of any such Approvals, and will not
impair any pending Approvals or appeals thereof. To the knowledge of
each JPE Company, there is no Law, restriction or moratorium
imposed, enacted or, threatened or proposed by any federal, State or
local government or agency, the effect of which would impair any JPE
Company's ability to maintain or obtain, after the consummation of
the Transaction, any Approvals necessary for the conduct of the
business of the respective JPE Company's business as currently
conducted at such Property.
(3) A true and complete summary of all necessary Approvals
(indicating whether each such Approval has been obtained or is
applied for) is set forth on Schedule 8.3(e) to this Agreement.
8.4 Assets.
(a) Except as set forth on Schedule 8.4(a) to this Agreement, all
material Assets of the JPE Companies are in operating condition, subject only to
ordinary wear and tear, and fit for their intended purpose.
(b) Except as set forth on Schedule 8.4(b) to this Agreement, (1)
all of the material Assets are owned by a JPE Company, free and clear of all
liens, encumbrances, Security Interests, claims, pledges, charges or
restrictions of any kind or nature, (2) except as set forth on Schedule 8.4(b)
or Schedule 8.6 to this Agreement, none of the material Assets are subject to a
lease and (3) no JPE Company holds any material Assets on consignment.
(c) All items that comprise Inventory of each JPE Company have
been manufactured or purchased for sale or use in the ordinary course of
business. The quantity of each item of Inventory and the mix of such items
included in the Most Recent Financial Statements for each JPE Company are
sufficient, appropriate and adequate to permit operation of such on a stand
alone basis and as otherwise presently proposed to be operated following the
Closing and in a manner consistent with past practice and present conduct. The
raw materials and work-in-process of each JPE Company are useable in the
ordinary course of business in the production or completion of the finished
goods included in the Assets. The finished goods included in the Assets (other
than slow moving and obsolete inventory to the extent reserved for
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in the books of the respective JPE Company) are fit for the ordinary purposes
for which such finished goods are used and are saleable in the ordinary course
of business within a reasonable period of time and at such JPE Company's current
selling prices for non-Affiliated transactions. Each JPE Company has provided
for adequate reserves in accordance with GAAP with respect to slow moving and
obsolete Inventory.
(d) All actual costs of items comprising the Inventory of each
JPE Company have been established by each JPE Company in the ordinary course and
in accordance with GAAP, and such prices have not been increased in
contemplation of the Transaction and are the same as would exist if this
Agreement was not contemplated nor to be entered into.
(e) With regard to each JPE Company, the tangible non-real estate
Assets (together with the buildings and improvements on the Properties) are
suitable for the purposes for which they are presently used and have the
capacity on the Closing Date to permit the manufacture of all products presently
manufactured by such JPE Company in accordance with (i) the total overall annual
and seasonal operating levels of such JPE Company for 1999 and (ii) except as
set forth on Schedule 8.4(e) to this Agreement, the current specifications as of
the date of this Agreement and as of the Closing Date required by current
customers of such JPE Company, and to the knowledge of each JPE Company, there
is no material expenditure presently required in order to maintain such
condition and state of repair or replace any such Assets.
8.5 Claims; Litigation; Compliance with Laws; Approvals.
(a) There has not been asserted any (and, to the knowledge of
each JPE Company, there are no) claims of any nature against any JPE Company
that exceed $100,000 in the aggregate or $25,000 in a single instance, including
claims arising out of or in connection with the operation of its business or the
Assets except as set forth in Schedule 8.5(a) to this Agreement.
(b) Except as set forth on Schedule 8.5(b) to this Agreement, (1)
no JPE Company is: (A) a party to any litigation, arbitration proceeding or
administrative investigation, and none is pending or, to the knowledge of the
JPE Companies, threatened against any JPE Company or (B) subject to any
outstanding order, writ, injunction or decree of any court, government or
governmental authority or arbitration against or affecting it; and (2) to the
knowledge of each JPE Company, there is not any basis for any material
litigation, proceeding or investigation of the nature described in clause (1)(A)
above.
(c) Except as set forth on Schedule 8.16 to this Agreement, no
JPE Company is in material violation of, and JPE's actions in the consummation
of the Transaction will not materially violate or infringe, (i) any Law
(including any Law relating to zoning, land use, employment, employment
practices, the environment, occupational safety or health) or (ii) any
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right or concession, copyright, trademark, trade name, patent, know-how or other
proprietary or intellectual property right of others.
8.6 Agreements; Contracts; Warranties.
(a) Set forth on Schedule 8.6 to this Agreement are each of the
agreements and commitments of any nature (including, but not limited to, credit
agreements, debt instruments, letters of credit, supply agreements, distribution
agreements, confidentiality agreements, purchase orders, production agreements,
employment agreements, licenses, leases, mortgages, deeds of trusts, purchase
agreements, sale agreements, indemnification agreements, service agreements,
rental agreements, vendor agreements, customer agreements, software agreements
and all other agreements and commitments (whether written or otherwise)), to
which any JPE Company is a party (i) involving any material long-term agreement
or commitment with the customers of any JPE Company or (ii) that is or will be
required to be filed with or disclosed to the SEC pursuant to the Exchange Act.
(b) With respect to the Material Contracts, except as set forth
on Schedule 8.6 to this Agreement:
(l) No JPE Company, or to the knowledge of each JPE Company
no third party to any Material Contract, has breached or is in
default of such Material Contracts nor has such breach or default
been asserted by any party, and there has not occurred any event
which, with the passage of time or giving of notice (or both), would
constitute such a breach or default.
(2) Each Material Contract shall remain in full force and
effect (without imposition of any restriction, adverse condition,
limitation, cost or penalty to any JPE Company or Buyer)
notwithstanding the Transaction (except for those Material Contracts
terminated or modified pursuant to this Agreement including as a
result of the payment of the Debt).
(3) Each JPE Company has satisfied all of its material
obligations (to the extent that such obligations can be determined)
as of the date of this Agreement under each Material Contract and
each JPE Company shall satisfy all remaining obligations under each
Material Contract to the extent such obligations are required to be
satisfied prior to the Closing Date except for those objections
which cannot be so satisfied pursuant to the terms of the
Forbearance Agreement or due to the binding orders of the Bankruptcy
Courts.
(4) No JPE Company or any third party to any Material
Contract has repudiated any provision of any Material Contract.
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(c) JPE has provided to Buyer true and a complete copy of each
written instrument or document, and a true and complete written summary of each
unwritten understanding, that is identified on Schedule 8.6.
(d) JPE has provided to Buyer true and correct sample forms of
customer warranties and purchase orders that are representative of those used by
each JPE Company within the past year.
(e) JPE acknowledges that it has entered into certain
correspondence and memoranda with General Motors Corporation, Ford Motor Company
and DaimlerChrysler regarding the terms of the sale of certain JPE Companies'
products to such corporations, the material terms of which are set forth on
Schedule 8.6(e) to this Agreement.
8.7 Proprietary Rights. All of the Proprietary Rights are listed
or described on Schedule 8.7 to this Agreement and, except as disclosed in
Schedule 8.7, are the sole and exclusive property of JPE or a Subsidiary (as
identified on Schedule 8.7). The Proprietary Rights owned or licensed by each
JPE Company are sufficient to conduct its business as presently conducted.
Except as disclosed on Schedule 8.7, the Proprietary Rights have not been
hypothecated, assigned or licensed, in whole or in part, to any person or
entity, do not infringe upon or violate the rights of any person or entity. To
the knowledge of each JPE Company, no JPE Company has at any time taken, or
permitted to be taken, any action, or permitted any use, or is aware of any such
action or use by any third party, with respect to the Proprietary Rights, that
would jeopardize the applicable ownership and right to use of the Proprietary
Rights by any JPE Company (as applicable). To the knowledge of each JPE Company,
no person or entity is infringing or violating the Proprietary Rights of any JPE
Company except as disclosed on Schedule 8.7.
8.8 Employees; Employee Benefits.
(a) Employees. Except as set forth on Schedule 8.8(a) of this
Agreement:
(i) No employee of any JPE Company has any understanding or
agreement (written or otherwise) with any JPE Company.
(ii) No JPE Company has any collective bargaining or union
contracts or agreements. To the knowledge of each JPE Company there
have not been any unfair labor practice complaints, labor
difficulties or work stoppages, or threats thereof, affecting any
JPE Company's unions, employees or activities.
(iii) There is no union campaign presently being conducted to
solicit employees to authorize a union to request a national labor
relations board certification election with respect to the employees
of any JPE Company.
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(iv) There are no independent contractual arrangements
between any JPE Company and any officer or director of any JPE
Company.
(v) No JPE Company has entered into a service, leasing or
licensing agreement for professional services which requires an
annual payment of more than $50,000 per individual; and any
individuals providing such services pursuant to any such arrangement
listed on Schedule 8.8(a) are independent contractors and duly
licensed (if required) in the State in which they perform such
services.
(b) Employee Benefits.
(i) Set forth on Schedule 8.8(b) to this Agreement is a
complete list of each employee pension, profit sharing, stock bonus,
stock option, bonus, incentive, defined contribution, deferred
compensation, hospitalization, medical, insurance, severance or
other plan, fund, program or policy providing employee benefits
maintained or contributed to by any JPE Company, including any
entity, which, with any JPE Company, is described in Code ss.414(b),
(c), or (m), in which any employees or former employees of any JPE
Company have participated or under which any of them has accrued and
remains entitled to any benefits (the "Plans"); and JPE has provided
Buyer copies of all such written Plans (or descriptions thereof if
the Plan is unwritten) and all related documents, including any
trust agreements, insurance contracts or other funding medium
related to any of the Plans. JPE has also provided Buyer with the
most recent actuarial valuation report with respect to any of the
Plans for which such report has been prepared, the most recent asset
valuation report(s) with respect to each of the Plans which has
assets, the most recent and prior annual report (Form 5500) filed
with respect for each of the Plans for which such report must be
filed, and the most recent favorable IRS determination letter
received with respect to each of the Plans that is intended to be
qualified under ss.401(a) or ss.403(b) of the Code, or trust
intended to be exempt under ss.501(a) or ss.501(c)(9) of the Code.
(ii) Except as set forth in Section 8.8(b), no JPE Company,
including any entity which, with any JPE Company is described in
Code ss.414(b), (c), or (m), has made any commitment or taken any
action to adopt or establish any additional employee benefit plan(s)
within the meaning of ss.3(3) of ERISA or to materially increase the
benefits under any of the Plans.
(iii) Except as set forth in Section 8.8(b), all such Plans
which are subject to ERISA and/or the Code, comply in form and have
been and are operated in substantial compliance with all applicable
provisions of ERISA and/or the Code, and all governmental filings
required to be made during the prior three
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fiscal years of the Plans and participant notices relating to the
Plans have been timely filed and/or distributed.
(iv) No JPE Company is a contributing employer to any
multi-employer plan within the meaning of ss.4001(a)(3) of ERISA,
and no withdrawal liability has been incurred by or asserted against
any JPE Company or any entity which, with any JPE Company, is
described in Code ss.414(b), (c), or (m), with respect to a
multi-employer plan in which employees of any JPE Company
participate.
(v) Except as set forth in Schedule 8.8(b), (A) for each
Plan and attendant trust that is intended to satisfy the provisions
of ss.401(a) and ss.501(a) of the Code, the JPE Company sponsoring
the Plan has obtained a favorable determination letter from the IRS
to such effect; (B) none of the determination letters have been
revoked by the IRS, nor has the IRS given any written notice to any
JPE Company that it intends to revoke any such determination letter;
(C) no material liability under Title IV or ss.302 of ERISA has been
incurred by any JPE Company or by any entity which, with any JPE
Company, is described in Code ss.414(b), (c), or (m), that has not
been satisfied in full; (D) no reportable event within the meaning
of ss.4043 of ERISA or non-exempt prohibited transaction within the
meaning of ss.406 of ERISA has occurred with respect to any Plan and
no Tax has been imposed pursuant to ss.4975 of the Code in respect
thereof; (E) there are no outstanding liabilities of any of the
Plans (including unfunded benefit liabilities as defined in
ss.4001(a)(18) of ERISA under any single employer pension plan),
other than liabilities for administrative fees and benefits to be
paid in the ordinary course to participants in the Plans or their
beneficiaries in accordance with the terms thereof, and the
consummation of this Transaction shall not give rise to any such
liabilities; (F) there are no pending, threatened or anticipated
claims involving any of the Plans; (G) no fiduciary of any of the
Plans has any liability for breach of fiduciary duty or any other
failure to act or comply in connection with the administration of or
investment of the assets of any of the Plans; and (H) all
contributions required to be made to any of the Plans and all
premiums for insurance coverage for each of the three previous
fiscal years of the Plans ended before the date of this Agreement
have been timely paid in full, including any premiums to be paid to
the Pension Benefit Guaranty Corporation.
(vi) None of the Plans provides, or has any obligation or
commitment to provide, health benefits to any current or former
employees, or dependents thereof, of any JPE Company beyond their
retirement or other termination of service, other than coverage
mandated by Part 6 of Subtitle B of Title I of ERISA.
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(vii) No amounts payable under the Plans is likely to fail to
be deductible for federal income Tax purposes by virtue of ss.280G
of the Code.
8.9 Insurance. Set forth on Schedule 8.9 to this Agreement is a
true and complete list of all policies of fire, liability, workers' compensation
and other forms of insurance owned or held by each JPE Company (including
coverages), and JPE has delivered to Buyer true and complete summaries of all
such policies. All such policies are in full force and effect, all premiums with
respect thereto covering all periods up to and including the Closing Date have
been paid, and, except as set forth on Schedule 8.9, no notice of cancellation
or termination has been received with respect to any such policy. Such policies
(a) are sufficient for compliance with all requirements of Law and all
agreements to which the applicable JPE Company is a party; (b) are valid,
outstanding and enforceable policies; (c) shall remain in full force and effect
through the Closing Date without the payment of additional premiums (except for
policies for which monthly payments are required); and (d) except as provided on
Schedule 8.9 shall not in any way be affected by, or terminate or lapse by
reason of, the Transaction. Set forth on Schedule 8.9 are all risks that any JPE
Company has designated as being self-insured or partially funded.
8.10 Net Sales. The monthly net sales of each JPE Company from
March 1, 1998 through March 31, 1999 are set forth on Schedule 8.10 to this
Agreement. Buyer's representatives shall have the right, during business hours
and upon at least 24 hours notice, to examine the books and records of each JPE
Company to verify net sales after April 1, 1999. Before the Closing, JPE shall
furnish Buyer with an updated Schedule 8.10 updating, through the most recent
practicable date preceding the Closing Date, the monthly net sales of each JPE
Company.
8.11 Financial Statements. JPE has delivered to Buyer complete
copies of the financial statements of each JPE Company for the three years ended
December 31, 1996, 1997 and 1998, respectively, with the corresponding
accountants' reports, including balance sheets and accompanying statements of
profit and loss, and for the three months ended March 31, 1999 (collectively,
the "Financial Statements"). Before the Closing, JPE shall furnish Buyer with
financial statements updating, through the end of the month preceding the
Closing Date (the "Closing Financial Statements"). Each of the Financial
Statements reflects, and the Closing Financial Statements shall fairly reflect
in all material respects, the financial condition, results of operations as of
such dates and for the period then ended, and all of such statements were
prepared in accordance with GAAP assuming JPE is a going concern (except, with
respect to interim financial statements, for normal, year-end adjustments and
the absence of footnotes). Attached as Schedule 8.11 to this Agreement are the
Most Recent Financial Statements (which shall be updated with the Closing
Financial Statements prior to the Closing Date).
8.12 Undisclosed Liabilities. Subject to all items disclosed in
this Agreement, set forth on Schedule 8.12 of this Agreement or that are
included in the calculation of Working
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Capital, to the knowledge of each JPE Company, no JPE Company has any liability
or obligation of any kind (contingent or otherwise) not reflected on the Most
Recent Financial Statements or has occurred in the ordinary course of business
since the date of the Most Recent Financial Statements. Subject to all items
disclosed in this Agreement or that are included in the calculation of Working
Capital, to the knowledge of each JPE Company, there is no basis for the
assertion of any claim or liability against any JPE Company that is not fully
reserved against in the Most Recent Financial Statements or has occurred in the
ordinary course of business since the date of the Most Recent Financial
Statements.
8.13 Tax Matters.
(a) Except as set forth on Schedule 8.13 to this Agreement, each
JPE Company has duly and timely filed all Tax Returns that it was (or will be)
required to file up to and including the Closing Date (including extensions of
time to file). Except as set forth on Schedule 8.13, all such Tax Returns were
true, correct and complete in all material respects. Each JPE Company has timely
paid all owed Taxes (whether or not shown on any Tax Return) in full. Except as
set forth on Schedule 8.13, no JPE Company currently is the beneficiary of any
extension of time within which to file any Tax Return. With respect to each JPE
Company, no claim has ever been made by a Tax Authority in a jurisdiction where
such JPE Company does not file Tax Returns that such JPE Company may be subject
to taxation by that jurisdiction. There are no Security Interests on any of the
Assets that arose in connection with any failure (or alleged failure) to pay any
Tax.
(b) Each JPE Company has (and will have through the Closing Date)
withheld and paid all Taxes required to have been (or to be) withheld and paid
in connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder or other third party, and has otherwise
complied with all applicable Laws relating thereto.
(c) Except as set forth to the contrary on Schedule 8.13, no
director or officer (or employee responsible for Tax matters) of any JPE Company
has been provided notice that any Tax Authority shall propose, assert or assess
any additional Taxes for any period for which Tax Returns have been filed. There
is no audit, dispute, claim or other proceeding concerning any Tax or Tax Return
of any JPE Company either (1) raised by any Tax Authority or (2) as to which any
director and officer (or employee responsible for Tax matters) of JPE has or
should have knowledge. JPE has provided to Buyer copies of all federal, State,
county, municipal, local and foreign income Tax Returns with respect to any JPE
Company for taxable periods ended on or after December 31, 1992, and has
identified those Tax Returns that currently are the subject of an audit (if any)
by a Tax Authority. JPE has delivered to ASC true, correct and complete copies
of all Tax Returns, examination reports, and statements of deficiencies assessed
against or agreed to by or with respect to any JPE Company since December 31,
1992.
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(d) No JPE Company has waived any statute of limitations
regarding Taxes or agreed to any extension of time with regard to a Tax
assessment or deficiency. Each JPE Company has disclosed on its respective
federal income Tax Returns all positions taken therein that could give rise to a
substantial understatement penalty within the meaning of Code ss. 6662.
(e) No JPE Company (1) has filed a consent under Code ss.341(f)
concerning collapsible corporations; (2) has failed to make any payments, is
obligated to make any payments, or is a party to any agreement that under
certain circumstances could obligate it to make any payments that shall not be
deductible under Code ss.280G; (3) has been a United States real property
holding corporation within the meaning of Code ss.897(c)(2) during the
applicable period specified in Code ss.897(c)(1)(A)(ii); (4) except as set forth
on Schedule 8.13, is (nor it has ever been) a party to any Tax allocation,
sharing indemnity or similar contract or arrangement or assumed the Tax
liability of any other person under contract or other arrangement; (5) except as
set forth on Schedule 8.13, has granted a power of attorney with respect to any
matter relating to Taxes; (6) has participated in an international boycott under
Code ss.999; (7) except as set forth on Schedule 8.13, has agreed, or is
required to make, any adjustment under Code ss.481 by reason of a change in
accounting method or otherwise; (8) is a party to any safe harbor lease within
the meaning of Code ss.168(f)(8), as in effect prior to amendment by the Tax
Equity and Responsibility Act of 1982; (9) has had any permanent establishments
in any foreign country, as defined in any applicable treaty or convention
between the United States and each foreign countries; or (10) is a party to any
joint venture, partnership or other arrangement or contract that could be
treated as a partnership for federal income Tax purposes. Except as set forth in
Schedule 8.13, no JPE Company (A) has been a member of an Affiliated Group
filing a consolidated federal income Tax Return or (B) has any liability for the
Taxes of any person under Treasury Regulation ss.1.1502-6 (or any similar
provision of State, local, or foreign Law), as a transferee or successor, by
contract, or otherwise.
(f) Set forth on Schedule 8.13 is the following information with
respect to each JPE Company as of December 31, 1998: (1) the basis of its
Assets; (2) the amount of any net operating loss, net capital loss, unused
foreign or other Tax credit, excess charitable contribution deductions, and any
other Tax elections and any other Tax attributes of JPE; (3) the amount of any
deferred gain or loss allocable to such JPE Company arising out of any Deferred
Intercompany Transaction; and (4) the amount of any gain or loss allocable to
such JPE Company arising out of any Intercompany Transaction. Except as
disclosed on Schedule 8.13, no JPE Company has a net operating loss or other Tax
attributes presently subject to limitation under Code ▇▇.▇▇. 382, 383, or 384 or
their underlying Treasury Regulations.
(g) The unpaid Taxes of each JPE Company (1) do not, as of March
31, 1999, exceed the reserve for Tax liability for such JPE Company (other than
any reserve for deferred Taxes established to reflect timing differences between
book and Tax income) set forth on the face of the Most Recent Balance Sheets
(rather than in any notes thereto) and (2) will not exceed
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such reserve as adjusted for the passage of time through the Closing Date in
accordance with the past custom and practice of such JPE Company in filing its
Tax Returns.
8.14 Absence of Changes or Events. Except as disclosed on Schedule
8.14 to this Agreement, each JPE Company has operated its business only in the
ordinary course and there has not been, since January 1, 1999, (a) any material
adverse change in the financial condition, results of operation or business of
any JPE Company; (b) any damage, destruction or loss, regardless of whether
covered by insurance, that materially and adversely affects any JPE Company's
Assets; or (c) any entry into or commitment to a transaction material to any JPE
Company's business.
8.15 Creditors.
(a) Set forth on Schedule 5 is a true, accurate and complete
statement of the Debt.
(b) JPE has provided to Buyer all material information regarding
all of the creditors of each JPE Company as of March 31, 1999 and the amounts
owed to each such creditor.
8.16 Environmental and Occupational Matters.
Except as set forth on Schedule 8.16 to this Agreement:
(a) There are no Hazardous Materials or Underground Storage Tanks
present at any Property, other than those quantities of such Hazardous Materials
as occur naturally in the native and uncontaminated natural soils and waters at
such Property, that would require investigations, studies, sampling, testing,
removal, response, remediation or clean-up with respect to any Hazardous
Materials pursuant to any Environmental Laws. To the knowledge of each JPE
Company, no JPE Company has (and no JPE Company has any knowledge that any prior
owner of any Property or any existing or prior tenant, sub-tenant or occupant of
any Property or any other person or entity, or their respective contractors,
agents, employees or invitees has) ever generated, used, stored, treated,
transferred, transported, processed, manufactured, refined, handled, produced,
arranged to dispose or disposed of Hazardous Materials at, from or affecting
such Property in any manner that violates any Environmental Law or would give
rise to any obligation or liability under any Environmental Law. No JPE Company
has or possesses knowledge that any other person or entity: (1) caused or
permitted any Property to be used to generate, manufacture, refine, transport,
treat, dispose of, transfer, produce or process Hazardous Materials in any
manner that was in violation of any Environmental Law or that gives rise to any
obligation or liability under any Environmental Law or (2) caused or permitted
any Release or threatened Release of Hazardous Materials at, from or affecting
any Property owned or operated by any JPE Company which, directly or indirectly,
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caused or contributed to (A) pollution or contamination or (B) the presence of
Hazardous Materials at or about any Property in violation of any Environmental
Law or in a manner that gives rise to any obligation or liability under any
Environmental Law.
(b) To the knowledge of each JPE Company, no JPE Company has
received any notice, claim or allegation of any violation, and to the knowledge
of each JPE Company, there are no existing material violations of any
Environmental Law at any Property. To the knowledge of the JPE Companies, there
are no actions commenced or threatened by any person or entity for or related to
or arising out of non-compliance with Environmental Laws that apply to any
Property, activities at such Property or Hazardous Materials at, from or
affecting such Property.
(c) The development, use and operation of all real property
previously used, owned, operated or developed by each JPE Company or any
subsidiary previously owned by JPE and all activities conducted thereon, have
been in compliance with all applicable Environmental Laws.
(d) JPE has provided Buyer with true and complete copies of all:
(1) Environmental Reports and other environmental or worker safety or
health-related data, information, correspondence, audits and other documents
(collectively, the "Environmental Information") regarding the Properties or
JPE's or the JPE Companies' operations thereat in their possession or control;
and (2) all Environmental Information relevant to any other property ever owned,
leased or operated by JPE or a JPE Company in the JPE Companies' possession or
control.
(e) To the knowledge of any JPE Company, neither JPE nor any JPE
Company, nor any person to which they are a successor, has ever disposed of
Hazardous Materials in a manner that has or will give rise to any damage,
liability, claim, loss or expense in connection with the Release or threatened
Release of such Hazardous Materials.
(g) Each JPE Company has obtained and is in material compliance
with all permits, licenses and other approvals required under any Environmental
Law (the "Environmental Permits"). To the extent required prior to the Closing
Date, each JPE Company has made timely and complete application for the renewal,
extension, or reissuance of all Environmental Permits, and no JPE Company has
obtained information which would lead it to believe that any such Environmental
Permits may not be renewed, extended or reissued in due course and as requested
without the imposition of cost or penalty.
8.17 Subsidiaries. Except for the entities set forth on Schedule
8.17 to this Agreement, JPE does not own (and has not owned since JPE has been
incorporated) any equity interest, directly or indirectly, in any corporation,
joint venture, partnership, limited liability
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company, firm, association, business or other entity. Set forth on Schedule 8.17
is the current status of each entity (in connection with JPE) listed therein.
8.18 Capitalization.
(a) Set forth on Schedule 8.18(a) to this Agreement is a correct
and complete description of the capitalization of each JPE Company. All of the
issued and outstanding capital stock of each JPE Company is validly issued,
fully paid, nonassessable and free of preemptive rights.
(b) Except for this Agreement and as set forth on Schedule
8.18(b) to this Agreement, there are no (1) options, warrants or other rights,
agreements, arrangements or commitments of any character to which any JPE
Company is a party relating to the issued or unissued capital stock of any JPE
Company or obligating any JPE Company to grant, issue or sell any shares of
stock or other equity interest in itself or any JPE Company; (2) agreements,
arrangements or commitments of any character (contingent or otherwise) pursuant
to which any person is or may be entitled to receive any payment based on
revenues or earnings of any JPE Company; or (3) voting trusts, proxies or other
agreements or understandings to which any shareholder of any JPE Company or any
JPE Company is a party or by which any shareholder of any JPE Company or any JPE
Company is bound with respect to the voting of shares of any JPE Company.
8.19 Bank Accounts. Set forth on Schedule 8.19 to this Agreement
is a full and complete list of all of the bank accounts and the names of the
persons authorized to draw thereon of each JPE Company.
8.20 Guaranties. Except as set forth on Schedule 8.20 to this
Agreement, no JPE Company has guaranteed any debt or obligation of any entity or
individual other than a JPE Company and none of the debts, liabilities or
obligations of any JPE Company are guaranteed by any third parties.
8.21 Related Parties. There are no written or other legally
binding contractual relationships between any JPE Company and any family member
of any officer or director of any JPE Company.
8.22 Accounts Receivable; Working Capital.
(a) Set forth on Schedule 8.22 to this Agreement is a list of the
Accounts Receivable of each JPE Company as of March 31, 1999, and all such
amounts listed as Accounts Receivable are accurate in all respects and
determined in accordance with GAAP. All Accounts Receivable arose in the
ordinary course of business and are valid and collectible in the ordinary course
net of reserves, subject to no counterclaims or setoffs (except for those of
original
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equipment manufacturers pursuant to standard contractual terms), at the
aggregate recorded amount thereof as set forth on the records of each JPE
Company and the Most Recent Balance Sheets.
(b) JPE acknowledges that the Subscription Price was determined,
in part, by JPE's representation that the JPE Companies shall have (on a
consolidated basis) Working Capital of at least $35 million immediately prior to
the Closing.
8.23 Brokers. Except as set forth on Schedule 8.23 to this
Agreement:
(a) No JPE Company (1) has dealt with any broker or finder in
connection with this Transaction; (2) has caused or created any liability to any
broker or finder in connection with this Transaction; or (3) is aware of any
claim from any third party that it is entitled to brokerage, finders or other
similar fees in connection with this Transaction.
(b) No JPE Company is aware of any broker or finder which was
instrumental or had any part in bringing about this Transaction.
8.24 Flips. No intercompany transactions including JPE or any
Subsidiary or between Subsidiaries and no related party transactions between any
shareholder or any affiliate thereof increased the recorded net book value of
any asset of JPE or any Subsidiary (including in anticipation of, or in
connection with, this Transaction).
8.25 Construction Liens. Except as set forth on Schedule 8.25 to
this Agreement, there are no claims of, or amounts due and owing to, any
laborers, materialmen, subcontractors, suppliers or the like which could give
rise to a construction lien or similar lien. No materials incorporated into the
Properties or the improvements thereon are subject to any Security Interest,
except for any Security Interest that may arise in connection with a recorded
mortgage.
8.26 Letters of Credit. No JPE Company has issued any letter of
credit benefiting any third party that shall remain outstanding as of the
Closing Date.
8.27 Business Names. Schedule 8.27 sets forth all names
(registered or otherwise) by which each JPE Company (including unincorporated
divisions) currently conducts (or in the past has conducted) its business and
operations, including names used with governmental agencies, suppliers,
customers, the public and otherwise.
8.28 SEC Statements, Reports and Documents. Except as set forth on
Schedule 8.28 to this Agreement, JPE has timely filed all required forms,
reports, statements and documents with the Securities and Exchange Commission
(the "SEC") since the date JPE became a reporting company under the Securities
Exchange Act of 1934, as amended (the
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"Exchange Act"). JPE has delivered or made available to counsel for Buyer: (a)
its Annual Reports on Form 10-K for the fiscal years ended December 31, 1995,
1996, 1997 and 1998, respectively; (b) its Quarterly Reports on Form 10-Q for
the fiscal quarters ended June 30, 1997 and 1998, and September 30, 1997 and
1998 and March 31, 1997 and 1998; (c) all proxy statements relating to JPE's
meetings of stockholders (whether annual or special) held since December 31,
1996, (d) all other forms, reports, statements and documents filed or required
to be filed by it with the SEC since December 31, 1997, and (e) all amendments
and supplements to all such reports and registration statements filed by JPE
with the SEC (collectively, the "JPE Reports"). As of their respective dates,
the JPE Reports complied in all material respects with all applicable
requirements of the Exchange Act and the rules and regulations promulgated
thereunder, and did not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The financial statements (including any related notes) of JPE
included in the JPE Reports fairly reflects in all material respects the
financial condition and results of operations of JPE as of such dates and for
the period then ended, and all of such statements were prepared in accordance
with GAAP assuming JPE is a going concern, subject, in the case of unaudited
interim consolidated financial statements, to (i) the absence of certain notes
thereto and (ii) normal year end adjustments. JPE has heretofore furnished or
made available to Buyer a correct and complete copy of any amendments or
modifications, which have not yet been filed with the SEC but which are required
to be filed, to agreements, documents or other instruments which previously had
been filed by JPE with the SEC pursuant to the Securities Act or the Exchange
Act.
8.29 Shares.
(a) Upon Buyer's payment of the Subscription Price, the
Subscribed Preferred Shares purchased therewith will be duly authorized, validly
issued, fully paid and nonassessable. Immediately following the Closing, there
will be, with regard to JPE, issued and outstanding the number of Common Shares
and Preferred Shares (including the Subscribed Preferred Shares and the Bank
Group Subscription) set forth on Schedule 8.29 and no other capital stock (of
any class) of JPE shall be outstanding.
(b) On the Delivery Date, the Subscribed Common Shares will be
duly authorized, validly issued, fully paid and nonassessable. Immediately
following the delivery of the Subscribed Common Shares, there will be, with
regard to JPE, issued and outstanding the number of Common Shares and Preferred
Shares (including the Subscribed Shares and the Bank Group Subscription) set
forth on Schedule 8.29 and no other capital stock (of any class) of JPE shall be
outstanding.
(c) Upon consummation of the Transaction, Buyer shall own all
of the Subscribed Preferred Shares, free and clear of any lien, claim, Security
Interest, pledge, charge, encumbrance or restriction of any kind or nature.
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8.30 Intercompany Debt. Set forth on Schedule 8.30 to this
Agreement are all of the outstanding intercompany debt obligations (whether or
not evidenced by promissory notes or other similar instruments) among the JPE
Companies. Except as set forth on Schedule 8.30, no indebtedness of any kind is
owed (a) by any JPE Company to Industrial & Automotive Fasteners, Inc., a
Michigan corporation ("IAF"), or JPE Canada Inc., a Canadian corporation ("JPE
Canada") (IAF, JPE Canada, any Subsidiaries that have divested all or
substantially all of their assets and any former subsidiaries of any JPE
Company, collectively, the "Divested Subsidiaries"), or any other Divested
Subsidiary or (b) by any Divested Subsidiary to any JPE Company.
8.31 Certain Former Subsidiaries. JPE has consummated the sale of
all of the capital stock of IAF to ▇▇▇▇▇▇▇ Acquisition Company, a Delaware
corporation, and (b) the assets of JPE Canada to The Ventra Group, Inc., a
Canadian corporation (collectively, the "Divestitures"). JPE has provided Buyer
with all material documentation evidencing the Divestitures.
8.32 Disclosure. To the knowledge of each JPE Company, no
statement, representation or warranty made by JPE in this Agreement, any other
document, letter or brochure relating to JPE and provided to Buyer (the "Other
Documents") or any Related Agreement, and none of the Schedules, Exhibits or
attachments to this Agreement, the Other Documents or any Related Agreement,
contains any untrue statement of any material fact or omits a material fact
necessary to make the statements contained in this Agreement, the Other
Documents, the Related Agreements or such Schedules, Exhibits or attachments, in
light of the circumstances in which they were made, not misleading.
8.33 Survival. The representations and warranties set forth in
this Section 8 shall not survive after the Closing Date, except Section 8.29,
which shall not survive after the Delivery Date.
9. Covenants Pending the Closing and Delivery Date.
9.1 Conduct Through the Closing Date. Except, in the case of
Plastic Trim and Starboard, as required by the respective Bankruptcy Courts or
any binding order, decree or "Plan of Reorganization" issued or approved by such
Bankruptcy Courts, and except as restricted pursuant to terms and conditions of
the current (or any subsequent or amended) Forbearance Agreement entered into
between the Bank Group (other than GMACBC) and JPE or as otherwise contemplated
by this Agreement, prior to the Closing Date, JPE shall (except as otherwise
consented to in writing by Buyer):
(a) Operate JPE (and cause the Subsidiaries to operate) in the
ordinary course as historically conducted.
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(b) Not enter into any transaction, take any action, or fail
to take any action, which would result in, or could reasonably be expected to
result in, any of JPE's representations, warranties, disclosures or agreements
in this Agreement or the Related Agreements or the Exhibits or Schedules to this
Agreement and the Related Agreements or in connection with the consummation of
the Transaction, to not be true and complete immediately after the occurrence of
the Transaction. Without limiting JPE's obligations under this Section 9.1(b)
but subject to the limitations set forth in Section 9.1(a) above, JPE shall (or
shall cause the Subsidiaries to): (1) maintain and preserve the Properties; (2)
not modify, amend or terminate any of the documents, instruments or agreements
set forth on Schedule 8.3(a) or Schedule 8.3(e); (3) not enter into any
documents, instruments or agreements that would alter or modify its rights with
respect to any Property; (4) own and operate each Property in a manner
consistent with its past course of business and in a commercially reasonable
manner; (5) maintain the JPE Companies' non-real estate Assets in good operating
condition, subject to ordinary wear and tear; (6) maintain all present insurance
in force; and (7) comply with the provisions of all agreements, Material
Agreements and Laws applicable to each JPE Company and its Assets.
(c) Except with regard to the Employment Agreement, the
Employment Releases or as otherwise contemplated by this Agreement, not allow
any JPE Company to enter into any agreement, contract, purchase or sale other
than in the ordinary course of its business, including any agreement that would
dispose of or encumber any of the Assets other than in the ordinary course of
business. No JPE Company shall increase or become committed (or agree to become
committed to in the future) to an increase in the compensation of any employee
except as otherwise required by a contractual obligation existing prior to April
16, 1999.
(d) Furnish weekly reports to Buyer showing the net dollar
volume of the JPE Companies' sales during such week and costs of sales during
such week. The reports may be conveyed to Buyer initially by telephone with a
written report delivered to Buyer within five days after the end of each such
week.
(e) Use its best efforts to preserve the present business
organization and goodwill of each JPE Company intact, including (i) employees,
officers and directors and (ii) the present business relationships and goodwill
with customers, suppliers, subcontractors, engineers, architects, media,
governmental contacts and others having dealings affecting the business of the
JPE Companies.
(f) Cause each JPE Company to pay all costs, expenses,
liabilities and obligations in the ordinary course when due, regardless of
whether any such items are to be reimbursed by Buyer under this Agreement.
(g) Except as required by this Agreement, not alter the
capitalization of any JPE Company as set forth on Schedules 8.18(a)-(b).
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9.2 Approvals and Consents. JPE shall obtain, in writing, all
necessary corporate, shareholder, governmental and third party approvals and
consents required in order to authorize and approve this Agreement and the
Related Agreements and to consummate the subscription and delivery of the
Subscribed Shares to Buyer and the Transaction pursuant to this Agreement,
including the approval of the Transaction from the Bankruptcy Courts pursuant to
binding Confirmation Orders. JPE shall pay all costs and expenses related to
obtaining such approvals with respect to its business and operations.
9.3 Advice of Changes. Between the date of this Agreement and
the Closing Date, JPE shall promptly notify Buyer in writing (including revised,
amended or updated Schedules or Exhibits to this Agreement) of any fact which,
if existing or known at the date of this Agreement, would have been required to
be set forth in this Agreement or disclosed pursuant to this Agreement or a
Related Agreement or which would affect or change any of the information set
forth in the Exhibits or Schedules of this Agreement or any Related Agreement.
Any such updates shall be subject to Section 11.1(b) below.
9.4 Notice of Litigation. Each of Buyer and JPE shall promptly
notify the other party in writing if it receives any notice, or otherwise
becomes aware, of any action or proceeding instituted or threatened before any
court or governmental agency by any third party to restrain or prohibit, or
obtain substantial damages with respect to this Agreement, any Related Agreement
or the consummation of the Transaction.
9.5 Access to Properties and Records; Inspection. From the
date of this Agreement through the Closing Date, JPE shall provide (or caused to
be provided) to Buyer and its counsel, accountants and other representatives,
agents and consultants full access, during normal business hours, to all of the
personnel and Assets of the JPE Companies (including the Properties, Inventory,
financial and operating data, books, Tax Returns, contracts, commitments and
records of each JPE Company) including such access as is needed to conduct a
physical inspection, including, but not limited to, an Environmental Inspection
of the Assets satisfactory to Buyer (collectively, "Buyer's Due Diligence
Investigation").
9.6 Environmental Inspection.
(a) Between the date of this Agreement and the Closing, Buyer
may have an independent environmental consultant ("Buyer's Consultant") perform
an environmental inspection and audit of one or more of the Properties (together
with any already undertaken environmental inspections, the "Environmental
Inspection"). The Environmental Inspection shall be conducted in a manner that
does not unreasonably interfere with the operation of the business of the JPE
Companies nor does material damage to the Properties. Prior to conducting an
inspection other than a traditional "Phase I" environmental audit, Buyer's
Consultant shall first prepare a work plan describing the proposed Environmental
Inspection. JPE shall have the right to review and comment on Buyer's
Consultant's work plan five business days before it is implemented. JPE shall
have the right
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to review and comment on Buyer's Consultant's work plan five business days it
is implemented. JPE shall have the right to split samples with Buyer or Buyer's
Consultant.
(b) Prior to the Closing Date, the results of the
Environmental Inspection shall be (1) shared between Buyer and JPE and (2)
treated as privileged and confidential as shall the documents constituting and
the documents used in or for the Environmental Inspection (the "Environmental
Report"); provided that the Environmental Report may be disclosed as required by
Law or as requested by Buyer's attorneys, consultants and advisors, lenders (and
its lenders' advisors). Buyer shall promptly restore any disturbance to the
Property which results from the Environmental Inspection to the same or
reasonably similar predisturbed condition and shall, in compliance with
Environmental Laws, promptly dispose at an appropriate off-site location all
waste materials generated on such Property due to the performance of the
Environmental Inspection.
(c) In addition to and notwithstanding the foregoing, prior to
the Closing Date, JPE and Buyer, at JPE's sole cost and expense, shall engage
Superior Property Services Group to conduct a Phase I or Phase II Environmental
Inspection (as set forth on Schedule 9.6(b) to this Agreement) of the Properties
set forth on Schedule 9.6(b). The results of such Phase I and Phase II
Environmental Inspections shall be subject to Section 9.6(b) above.
9.7 Preferred Shares. Prior to the Closing Date, JPE shall
authorize the issuance of Preferred Shares, in accordance with resolutions duly
adopted by JPE in the form of Exhibit B to this Agreement (the "Resolutions"),
with all of the rights and privileges as described in the Resolutions.
9.8 Other Actions. Buyer and JPE shall take all such other and
further actions, consistent with this Agreement and the Related Agreements, as
the other may reasonably request.
10. Title.
10.1 Title Commitment, Survey and Zoning. As evidence of title
to the Fee Properties and the Leasehold Properties identified by Buyer, JPE
shall furnish to Buyer, at JPE's cost (including premiums), with a copy to
Buyer's attorneys, as soon as possible:
(a) A commitment from a title insurance company approved by Buyer
(the "Title Company") to issue to the applicable JPE Company, at or as soon as
possible after Closing, an ALTA owner's title insurance policy, without standard
exceptions and with such endorsements as Buyer may require (including, without
limitation, a survey endorsement, a "same as" endorsement, a non-imputation
endorsement, "fairway" endorsement, zoning endorsement and a contiguity
endorsement, with the arbitration provisions and creditor's rights provisions
deleted), in the amount provided for each Property as set forth on Schedule 10.1
to
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this Agreement, insuring title to the Properties with the appurtenant easements
to be vested in JPE in good and marketable condition, free and clear of any
liens and encumbrances except easements, restrictions, covenants and agreements
of record which shall not, in Buyer's sole and absolute discretion, be
inconsistent with or make unduly expensive or burdensome the JPE Companies' use
of the Properties subsequent to the Closing (the "Permitted Land Exceptions").
The commitment for title insurance shall be accompanied by readable copies of
all documents cited as exceptions to title therein (the "Underlying Documents"),
which shall be certified by the Title Company as true, correct and complete
copies of the Underlying Documents.
(b) A current boundary survey of each Property certified to the
respective JPE Company, Buyer and the Title Company (and such other persons as
Buyer may require) by a registered land surveyor or engineer containing legal
descriptions of such Property in form and content sufficient to permit deletion
of the standard title exceptions with respect to such Properties and showing (1)
all adjacent and interior public streets and roadways, (2) the exact location of
all access roads, and entry buildings and points of all utilities to the
Property, (3) the exact location of all buildings and improvements, and (4) the
exact location of all recorded or visible easements on or servicing the
Property. The surveys shall certify to the respective JPE Company, Buyer, the
Title Company, and such other persons or entities as Buyer may desire that no
portion of any Property lies within a federally designated flood plain; and that
there are no encroachments either onto or off of the Properties, except as
shown. The legal description of the Properties set forth in the commitment or
commitments for title insurance that JPE is required to furnish under Section
10(a) shall conform exactly to the legal descriptions set forth in the survey
required under this Section 10(b).
10.2 Objections to Title. If objection to the title to any
Property is made by Buyer, based upon a written opinion of Buyer's attorney, as
soon as possible after the date of receipt of all of the commitment, the
Underlying Documents, and the survey provided pursuant to Section 10.1, that the
title is not in the condition required for performance under this Agreement, JPE
shall have ten days from the time that it is notified in writing of the
particular defect claimed to provide Buyer with a revised title commitment
evidencing that such defect has been remedied and/or insured over in a manner
satisfactory to Buyer. If JPE is unable to obtain such revised title commitment
within such ten day period, Buyer shall have the option to (1) proceed with this
Transaction, in which event the subject Property shall be transferred to an
entity not owned by JPE or any Subsidiary at no cost or penalty to Buyer and the
Subscription Price shall be reduced by the amount set forth on Schedule 10.1 to
this Agreement as the assumed value of such Property; (2) terminate this
Agreement pursuant to Section 12.1 below; or (3) waive such defect and proceed
to Closing.
11. Conditions Precedent to the Obligation of the Parties to Close.
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11.1 Buyer's Conditions Precedent. Buyer's obligations under this
Agreement are subject to the satisfaction at or before the Closing Date of each
of the following conditions (the fulfillment of any of which may be waived in
writing by Buyer):
(a) All terms, covenants and conditions of this Agreement and the
Related Agreements to be complied with or performed by JPE prior to or on the
Closing Date shall have been complied with and performed by JPE, including JPE's
timely taking of all actions and delivery of all documents required to be taken
and delivered by them under this Agreement and the Related Agreements.
(b) All representations, warranties, disclosures and statements
of JPE contained in this Agreement, the Related Agreements and the Other
Documents shall be true and complete as of the date of this Agreement and the
Closing Date. Any amendments to the Exhibits and Schedules to this Agreement and
the Related Agreements which JPE proposes to deliver after the date of this
Agreement shall be satisfactory to Buyer, in its sole discretion.
(c) JPE shall have furnished to Buyer an opinion of ▇▇▇▇▇▇
▇▇▇▇▇▇▇ PLLC, dated as of the Closing Date, in form of Exhibit D to this
Agreement.
(d) Since the date of this Agreement, there shall not have been
any material adverse change in the financial condition or business of any JPE
Company, or in the condition of the Assets of any JPE Company, or any event
which may, in the future, cause such a change.
(e) JPE shall have delivered to Buyer the commitment or
commitments for title insurance and the boundary surveys required pursuant to
Section 9 above, showing title to the Properties to be in the condition required
under this Agreement for the performance of this Agreement and the Title Company
shall have extended the effective date of such commitment or commitments to the
Closing Date and shall be irrevocably committed to issue its title insurance
policy or policies pursuant to such commitment or commitments without any
exception for "defects, liens, encumbrances, adverse claims or any other
matters, if any, created, first appearing in the public records or attaching
subsequent to the effective date but prior to the date the proposed insured
acquires for value of record the estate or interest covered by the title
commitment" or similar "gap" exception.
(f) JPE and Buyer shall have received in writing (1) all
approvals and consents necessary to authorize, approve and consummate this
Agreement, the Related Agreements and the Transaction as provided in Section
9.2, (2) the Confirmation Orders and approval of the Bankruptcy Courts in
accordance with the current terms of the Plan of Reorganizations applicable to
Plastic Trim and Starboard (and any changes thereto shall be acceptable to Buyer
in its sole discretion) and (3) any third party consents necessary to maintain
the Material Contracts set forth on Schedule 8.6 after the consummation of this
Transaction.
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(g) No employment or consulting (or similar) agreement and no
stock option nor similar agreement shall exist between any JPE Company and
either ▇▇▇▇▇▇▇ Chrysler or ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇; and JPE shall have entered into a
binding Employment Release with each of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ Chrysler.
(h) Buyer, JPE and the Bank Group shall have entered into a Bank
Agreement providing for the full satisfaction, discharge, release and pay-off of
the Debt.
(i) Buyer shall have arranged for JPE to have obtained financing
following the Closing in an amount no less than $51.6 million; provided,
however, that such financing may be subject to the satisfaction of the
conditions precedent in this Section 11.1 and 11.3 below and those conditions
precedent required by the lenders to such financing.
(j) JPE shall have at least $35 million in Working Capital on the
Closing Date.
(k) JPE shall have duly adopted the Resolutions and such
Resolutions shall be fully authorized and in effect as of the Closing Date.
(l) Buyer shall be satisfied, in its sole discretion, with the
results of Buyer's Due Diligence Investigation.
(m) JPE shall have delivered to ASC a copy of the Minutes of its
Board of Directors Meeting in which it received the Fairness Opinion.
(n) ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇ and C.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ shall have been elected to the Board of Directors of JPE,
effective as of the end of business on the Closing Date.
11.2 JPE's Conditions Precedent. JPE's obligations under this
Agreement are subject to the satisfaction at, or prior to, the Closing Date of
the following conditions precedent (the fulfillment of any of which may be
waived in writing by JPE):
(a) All terms, covenants and conditions of this Agreement and the
Related Agreements to be complied with or performed by Buyer prior to or on the
Closing Date shall have been fully complied with and performed by Buyer,
including Buyer's timely taking of all actions and delivery of all documents
required to be taken and delivered by it under this Agreement and the Related
Agreements.
(b) The representations, warranties, disclosures and statements
of Buyer contained in this Agreement and the Related Agreements shall be true
and complete as of the date of this Agreement and on the Closing Date.
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(c) Buyer shall have furnished to JPE an opinion of ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇ dated the Closing Date, in form of Exhibit E to this
Agreement.
(d) The Board of Directors of JPE shall have received the
analysis prepared by and the "fairness opinion" of ▇▇▇▇▇ & Co. to the effect
that, as of the Closing Date (based upon and subject to the factors and
assumptions set forth therein) the Transaction is fair from a financial point of
view to the Shareholders (the "Fairness Opinion").
(e) Buyer shall provide JPE evidence that upon Closing financing
is available to the JPE Companies in an amount no less than $51.6 million;
provided, however, that such financing may be subject to the satisfaction of the
conditions precedent in Sections 11.1 above and 11.3 below and those conditions
precedent required by such lenders.
11.3 Mutual Conditions Precedent. Each party's obligations under
this Agreement are subject to the satisfaction at, or prior to, the Closing Date
of the following mutual conditions precedent (the fulfillment of which may be
waived in writing by the parties):
(a) No litigation or administrative proceeding or other civil or
criminal proceedings shall have been commenced or threatened to challenge the
right of any party to consummate the Transaction contemplated under this
Agreement and the Related Agreements.
(b) The terms of this Agreement and the Transaction shall be
approved by the Bankruptcy Courts pursuant to binding Confirmation Orders to the
extent required to consummate the Transaction under applicable Law.
(c) The Exhibits and the Schedules to this Agreement not attached
to this Agreement upon its execution by the parties shall be delivered prior to
the Closing Date in a form approved by the Buyer and JPE, which approval shall
not be unreasonably withheld.
12. Default; Termination of Agreement.
12.1 Termination. This Agreement may be terminated at any time
before the Closing as follows:
(a) At the election of Buyer, by notice to JPE at any time if any
of Buyer's conditions precedent to Closing, as specified in Section 11.1 or 11.3
above, has not been satisfied as of the Closing Date or has at any time become
incapable of being satisfied by the Closing Date.
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(b) At the election of JPE, by notice to Buyer, if any of JPE's
conditions precedent to Closing, as specified in Section 11.2 or 11.3 above, has
not been satisfied as of the Closing Date or has at any time become incapable of
being satisfied by the Closing Date.
(c) At the election of JPE, by notice to Buyer, if JPE has
entered into an agreement or commitment to engage in an Alternative Acquisition
in accordance with Section 12.5 below as evidenced by the execution of a
definitive agreement with respect thereto.
(d) If this Agreement terminates in accordance with this Section
12.1, it shall be null and void and have no further force or effect; provided,
however, that Sections 12.2, 12.3 and 13.10 below shall remain fully binding.
The parties' rights under this Section 12.1 are cumulative and are in addition
to the other rights and remedies available to them under Sections 12.2, 12.3,
12.4 and 12.5 below, any other provision of this Agreement, the Related
Agreements and any other agreement or applicable Law.
12.2 Good Faith Costs. If Buyer terminates this Agreement pursuant
to Section 12.1(a) above due to the failure of the satisfaction of one or more
conditions precedent under Section 11.1 (other than Section 11.1(i) above) or
Section 11.3(c) above and JPE has failed to satisfy such condition precedent
within five (5) days after delivery by Buyer to JPE of notice of the lack of
satisfaction of such condition precedent, Buyer shall be entitled to payment
from the JPE Companies (or their successors and assigns) of its out-of-pocket
costs and expenses incurred in connection with proceeding with this Transaction
(including Fees and Expenses and costs involved in Buyer's Due Diligence
Investigation, and the entering, performing and executing this Agreement)
beginning on February 18, 1999; provided, however, that Buyer shall not be
entitled to such costs in excess of $300,000. Buyer's rights under this Section
12.2 are cumulative and are in addition to the other rights and remedies
available to it under Section 12.1 above and Sections 12.3 and 12.4 below, any
other provision of this Agreement and the Related Agreements, and any other
agreement or applicable Law.
12.3 Break-Up Fee. If, under any circumstance other than the
failure of Buyer to fulfill the conditions precedent under Section 11.2 above,
the Transaction contemplated by this Agreement is not consummated and JPE or its
shareholders enters into an agreement or commitment to engage in an Alternative
Acquisition on or prior to the one year anniversary of this Agreement which is
thereafter consummated, the JPE Companies (or their successors) shall pay Buyer
a fee of $500,000.00, less 50% of any costs paid to Buyer pursuant to Section
12.2 above. Buyer's rights under this Section 12.3 are cumulative and are in
addition to the rights and remedies available to it under Sections 12.1, and
12.2 above, Section 12.4 below, any other provision of this Agreement and the
Related Agreements, and any other agreement or applicable Law.
12.4 Equitable Remedies. The obligations of Buyer, on the one
hand, and JPE, on the other hand, under this Agreement are of a special and
unique character and the failure to
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perform such obligations under this Agreement by Buyer, on the one hand, or
JPE, on the other hand, shall cause irreparable injury to the other party, the
amount of which would be extremely difficult, if not impossible, to estimate or
determine and which may not be adequately compensable by monetary damages alone.
Therefore, any injured party shall be entitled, as a matter of course, to an
injunction, restraining order, writ of mandamus or other equitable relief from
any court of competent jurisdiction, including specific performance, restraining
any violation or threatened violation of any term of this Agreement or any
Related Agreement, or requiring compliance with or performance of any
obligations under this Agreement, or requiring compliance with or performance of
any obligations under this Agreement or such Related Agreement, by the violating
party or parties, or such other persons as a court of competent jurisdiction may
order. The parties' rights under this Section 12.4 are cumulative and are in
addition to the rights and remedies otherwise available to them under Sections
12.1, 12.2 and 12.3 above and Section 12.5 below, any other provision of this
Agreement and the Related Agreements, and any other agreement or applicable Law.
12.5 No Shop. For a period beginning with the date of this
Agreement and ending on the Closing Date, no JPE Company shall (and each JPE
Company shall prohibit its respective representatives, officers, directors,
employees, attorneys or agents from), directly or indirectly, initiate, solicit,
encourage, participate in, negotiate, or provide any information to any person
or entity concerning, or taking any action to facilitate the making of, any
offer or proposal which constitutes or is reasonably likely to constitute an
Alternative Acquisition or any inquiry with respect thereto. Notwithstanding the
foregoing, JPE may provide access and furnish information concerning its
businesses, Properties or Assets to any corporation, partnership, person or
other entity or group pursuant to an appropriate confidentiality agreement, and
may negotiate and participate in discussions and negotiations with such entity
or group concerning an Alternative Acquisition (a) if such entity or group has
submitted a bona fide written proposal for an Alternative Acquisition to the
Board of Directors of JPE relating to any such transaction and (b) if, in the
good faith determination of the Board of Directors of JPE, the failure to
provide such information or access or to engage in such discussions or
negotiations would be inconsistent with their fiduciary duties under applicable
Law, after consultation with ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ PLLC. Each JPE Company shall
promptly notify Buyer of any inquiry or proposal for an Alternative Acquisition
(including, without limitation, the terms and conditions thereof and the
identity of the person making it) and will provide Buyer with a copy of any
written proposal for an Alternative Acquisition. Notwithstanding the foregoing,
nothing in this Section 12.5 shall be construed to limit the obligations of
Starboard or Plastic Trim in connection with its respective pending bankruptcy
proceeding. Any violation of this Section 12.5 by any JPE Company shall entitle
Buyer to damages and remedies under Sections 12.2, 12.3 and 12.4 above in
addition to any other rights and remedies available to Buyer under this
Agreement and the Related Agreements, and any other agreement or applicable Law.
13. Miscellaneous.
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13.1 Notices. Any notice required or permitted to be given under
this Agreement must be sent by (a) recognized overnight courier (such as
Airborne or Federal Express), (b) by certified or registered mail, postage
prepaid or (c) by facsimile, with confirmation of transmission by the sender's
machine, followed by further notice under (a) or (b) above the following
business day, as follows:
(a) to Buyer: ASC Holdings LLC
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and to: Kojaian Holdings LLC
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: C. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ASC Holdings LLC
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and to: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: G. ▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) to JPE: JPE, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ Chrysler
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ PLLC
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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Attn: ▇▇▇▇▇▇▇ ▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Notice shall be considered given (i) the next business day upon sending by a
recognized overnight carrier, (ii) three business days after deposit with
certified or registered mail or (iii) the next business day upon transmission by
facsimile.
Addresses for notices may be changed by notice given pursuant to this Section
13.1.
13.2 No Waiver. No waiver of any breach of any provision of this
Agreement or a Related Agreement shall be deemed a waiver of any preceding or
succeeding breach or of any other provision of this Agreement or a Related
Agreement. No extension of time for performance of any obligations or acts under
this Agreement or a Related Agreement shall be deemed an extension of the time
for performance of any other obligations or acts under this Agreement or a
Related Agreement.
13.3 Successors and Assigns. This Agreement shall bind and inure
to the benefit of the parties and their successors and assigns; provided that
(a) JPE shall not assign (including by operation of law) this Agreement, any
Related Agreement or any rights under this Agreement or any Related Agreement to
any other person and (b) each of ASC and Kojaian shall have the right to assign
(including by operation of law) this Agreement and the Related Agreements only
to (i) any direct or indirect wholly-owned subsidiary of ASC or Kojaian (as
applicable), (ii) to any entity wholly owned by the ASC Owners or Kojaian Owners
(as applicable), (iii) individually to the ASC Owners and Kojaian Owners (as
applicable) or (iv) any combination of clauses (i) - (iii).
13.4 Severability. The provisions of this Agreement shall be
deemed severable, and if any provision or part of this Agreement is held
illegal, void or invalid under applicable Law, such provision or part may be
construed or deemed changed by a court of competent jurisdiction to the extent
reasonably necessary to make the provision or part, as so construed or changed,
legal, valid and binding. If any provision of this Agreement is held illegal,
void or invalid in its entirety, the remaining provisions of this Agreement
shall not in any way be affected or impaired but shall remain binding in
accordance with their terms.
13.5 Entire Agreement; Amendment. This Agreement and the Related
Agreements, including the Schedules and the Exhibits to this Agreement and the
Related Agreements, contain the entire agreement of the parties with respect to
the purchase and sale of the Shares and the remainder of the other Transaction,
and no representations made by any party may be relied on unless set forth in
this Agreement or the Related Agreements (including the Exhibits and Schedules
to this Agreement and the Related Agreements). This Agreement may be altered or
amended only by an instrument in writing, duly executed by ASC, Kojaian and JPE.
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This Agreement and the Related Agreements supercede and render null and void the
Letter of Intent.
13.6 Cost of Litigation. If any party breaches this Agreement or
any Related Agreement and if counsel is employed to enforce this Agreement or a
Related Agreement, the successful party shall be entitled to Fees and Costs
associated with such enforcement.
13.7 Interpretation. This Agreement and the Related Agreements are
being entered into among competent and experienced business persons, represented
by counsel, and have been reviewed by the parties and their counsel. Therefore,
any ambiguous language in this Agreement or any Related Agreement shall not
necessarily be construed against any particular party as the drafter of such
language.
13.8 Counterparts. This Agreement may be executed in any number of
counterparts (by facsimile transmission or otherwise), each of which when so
executed shall be deemed an original, but all of such counterparts together
shall constitute one and the same instrument.
13.9 Applicable Law; Venue. This Agreement shall be construed in
accordance with and governed by the laws of the State of Michigan without regard
to principles of conflicts of law. The parties acknowledge that the United
States District Court for the Eastern District of Michigan or the Circuit Court
for the County of Washtenaw shall have exclusive jurisdiction over any case or
controversy arising out of or relating to this Agreement and the Related
Agreements and that all litigation arising out of or relating to this Agreement
and the Related Agreements shall be commenced in the United States District
Court for the Eastern District of Michigan or in the Washtenaw County Circuit
Court.
13.10 Expenses. Except as otherwise provided in this Agreement or
the Related Agreements, each party shall bear its own expenses in connection
with the Transaction, including costs and expenses of its or his respective
attorneys, accountants, consultants and other professionals.
13.11 Further Assurances. If at any time after the execution of
this Agreement, Buyer or JPE reasonably considers or is advised that any further
actions, assignments or assurances on its or his part are necessary or desirable
to carry out the intent and accomplish the purposes of this Agreement and the
Related Agreements, it shall, at its own expense, take such actions, execute and
make all such assignments and assurances and do all things necessary or
appropriate to carry out the intent and accomplish the purposes of this
Agreement and the Related Agreements.
14. Transaction Fee. In addition to all other rights and remedies
afforded to Buyer, in the event the Final Actual EBITDA fails to exceed $34.3
million (subject to the equitable
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adjustments set forth in Section 3.2(c) above), JPE shall pay a fee to Buyer,
equal to fifty percent (50%) of the difference between $34.3 million minus the
Final Actual EBITDA; provided, however, that such fee shall in no event exceed
$1,150,000.
15. Post-Closing Covenants. Until the third anniversary of the Closing
Date, (a) JPE shall maintain the existing provisions of its Articles of
Incorporation and Bylaws regarding the indemnification of the directors and
officers of JPE and (b) JPE shall obtain and maintain directors' and officers'
liability insurance covering past and current officers and directors in
accordance with Schedule 15 to this Agreement.
(SIGNATURES ON THE FOLLOWING PAGES)
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IN WITNESS WHEREOF, the parties have executed this Agreement on the
date set forth in the introductory paragraph of this Agreement.
ASC HOLDINGS LLC.,
a Michigan limited liability company
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------------
Title: President and Chief Executive Officer
--------------------------------------------
KOJAIAN HOLDINGS LLC.,
a Michigan limited liability company
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------------
Title: Vice President
-----------------------------------
JPE, INC.,
a Michigan corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. Chrysler
--------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. Chrysler
-----------------------------------
Title: President
-----------------------------------
(SIGNATURES CONTINUED ON FOLLOWING PAGE)
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/s/ ▇▇▇▇▇▇▇ ▇. Chrysler
-------------------------------------------
▇▇▇▇▇▇▇ Chrysler,
for the sole purpose of agreeing to fully
cooperate with the JPE Companies in
connection with Sections 6.2(e) and 11.1(g)
above.
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
for the sole purpose of agreeing to fully
cooperate with the JPE Companies in
connection with Sections 6.2(e) and 11.1(g)
above.
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