STOCK PURCHASE AGREEMENT
DATED AS OF JUNE 29, 1999
FOR THE PURCHASE OF THE COMMON STOCK OF
WAMAR PRODUCTS, INC.
BETWEEN
CLARION PLASTICS TECHNOLOGIES, INC.
BUYER
AND
SHAREHOLDERS OF WAMAR PRODUCTS, INC.
SELLERS
AND
CLARION TECHNOLOGIES, INC.,
AS AN ADDITIONAL PARTY
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement"), dated as of June 29,
1999, is entered into by and among Clarion Plastics Technologies, Inc., an Ohio
corporation (the "Buyer"), on the one hand, and Xxxxx X. Xxxxxx, Xxxxxxxx
Xxxxxx, Xxxxxxx X. Xxxxxx and Xxxxx X. Xxxxxx (individually, "Seller", and
collectively, "Sellers") on the other hand with respect to all of the
outstanding shares of the capital stock of WAMAR PRODUCTS, INC., a Michigan
corporation ("Company"). Clarion Technologies, Inc., a Delaware corporation
("Parent") joins as an additional party hereto.
A. The parties hereto wish to provide for the terms and conditions
upon which the Buyer will acquire from the Sellers all of the issued and
outstanding shares of capital stock of the Company in exchange for shares of the
common stock, $.001 par value of the Parent ("Parent Common Stock") and cash.
B. The Sellers own all of the issued and outstanding shares of
capital stock of the Company.
C. The parties hereto wish to make certain representations,
warranties, covenants and agreements in connection with the purchase of all of
the issued and outstanding capital stock of the Company and also to prescribe
various conditions to such transaction.
D. Concurrently herewith, Buyer has entered into a stock purchase
agreement with Xxxxx X. Xxxxxx pursuant to which Buyer has agreed to purchase
and Xxxxx X. Xxxxxx has agreed to exchange all of the outstanding common stock
of Wamar Tool & Machine, Inc. solely for Parent common stock (the "Wamar Tool
Agreement").
E. At Closing the parties shall enter into a "Lease" and "Option and
Put Agreement for Real Property" which contains certain lease and purchase and
sale rights with Xxxxxxxxx, L.L.C. relating to the real estate where Company and
Wamar Tool & Machine, Inc. currently conduct their business.
Accordingly, and in consideration of the representations, warranties,
covenants, agreements and conditions herein contained, the parties hereto agree
as follows:
1. EXCHANGE OF STOCK.
1.1. SHARES TO BE ACQUIRED.
---------------------
Upon satisfaction of all conditions to the obligations of the parties
contained herein (other than such conditions as shall have been waived in
accordance with the terms hereof), each Seller will sell, transfer, assign and
deliver to Buyer (except that the Company common stock of Xxxxx X. Xxxxxx and
Xxxxxxxx Xxxxxx is held in the Xxxxx X. Xxxxxx Trust and the Xxxxxxxx Xxxxxx
Trust, respectively, both being revocable estate planning trusts. Xxxxx X.
Xxxxxx and Xxxxxxxx Xxxxxx agree to cause Trustees of such Trusts to convey the
Company common stock titled in those respective Trusts in accordance herewith),
1
and Buyer will acquire from each such Seller, at the Closing, the number of
shares of common stock of the Company (the "Company Common Stock"), set forth on
Exhibit 1.1 attached hereto (the "Shares"), representing all of the issued and
outstanding capital stock of the Company.
1.2. ACQUISITION PRICE.
-----------------
Parent will, in full payment for the Shares to be acquired from all of
the Sellers pursuant to this Agreement, deliver the following at the Closing:
(a) stock certificates aggregating 200,000 shares of Parent
Common Stock (the "Parent Shares") in amounts pro rata based upon the
number of Shares held by each of the Sellers as set forth on Exhibit
1.1 attached hereto; and
(b) an aggregate of Seven Million Dollars ($7,000,000) in
amounts pro rata based upon the number of Shares held by each of the
Sellers as set forth on Exhibit 1.1 attached hereto.
1.3. GENERAL HOLDBACK.
----------------
(a) The Sellers agree that Buyer shall withhold the sum of Two
Hundred Thousand Dollars ($200,000) of the cash portion of the Acquisition Price
for a period of one (1) year from the Closing Date to verify the accuracy of the
representations and warranties of the Sellers set forth in Section 2 and the
performance of the obligations under Article 8 of this Agreement (the "General
Holdback"). The parties hereto also agree that such General Holdback shall be
subject to a right of offset by Buyer for any claims or liability due to Buyer
under the Wamar Tool Agreement or any claims or liability due to Company under
the "Lease" or the "Option and Put for Real Property" all as referred to herein.
(b) Within twelve (12) months following the Closing, Buyer shall
prepare a statement of adjustments to the Acquisition Price ("Statement of
Adjustments"). Prior to Closing, the Buyer and Seller shall mutually agree on a
form for requesting approval or disapproval of such claims. Buyer shall deliver
a copy of the proposed Statement of Adjustments to Xxxxx Xxxxxx as
representative of the Sellers ("Representative"), who shall have a reasonable
period not to exceed forty-five (45) days to review and verify the Statement of
Adjustments (the "Review Period"). Representative shall respond to Buyer in
writing with respect to any objections.
(c) The Buyer and the Sellers will in good faith negotiate to resolve
any dispute between them with respect to the General Holdback promptly and
amicably and without resort to any legal process. If the Sellers and Buyer
cannot agree, then, unless otherwise mutually agreed, the dispute will be
submitted to nonbinding mediation in Grand Rapids, Michigan. The parties will
jointly appoint a mutually acceptable independent mediator, which mediator shall
have thirty (30) days following the appointment to resolve such dispute. If not
resolved thereby, the parties shall then have the right to pursue any other
remedies set forth herein, under Michigan law or in equity.
2
(d) Buyer shall pay to Seller (or agree to an appropriate joint
disbursement instruction if the General Holdback is then held in escrow), pro
rata based on the relative stock ownership of the Company Common Stock held by
each of the Sellers set forth on Exhibit 1.1 attached hereto, the balance of the
General Holdback less the adjustments under Section 1.3(a) which shall have been
mutually agreed upon by Buyer and Representative after any objection by
Representative to the Buyer's Statement of Adjustments, which payment shall be
made within not less than fifteen (15) months after the Closing Date. If the
General Holdback is insufficient to cover the adjustments under Section 1.3(a)
as determined in accordance herewith, then Sellers shall pay Buyer the amount of
such difference within ten (10) days after the amount of the adjustments shall
have been finally determined.
(e) At Seller's election, the General Holdback shall be held by
Michigan National Bank as an independent escrow agent under the terms and
conditions of an Escrow Agreement mutually agreed by Seller, Buyer and Michigan
National Bank. Sellers shall pay all banks fees therefor. Interest earned on
such escrowed funds shall be payable to the party receiving the funds as
provided hereunder.
1.4 LIMITATION OF LIABILITY.
-----------------------
The liability of Sellers under this Agreement with respect to any
breach or failure of representations or warranties under Article 2 hereof, shall
be subject to the following special rules and limitations:
(a) Liability of Sellers for breach or failure resulting in liability
shall be limited to the sum of all items or claims thereof in excess of
Seventy-Five Thousand Dollars ($75,000) as so finally determined under the
Agreement (the "Basket"). For this purpose, the accounting adjustments set forth
on Exhibit 4.11 shall not be counted as adjustments toward the $75,000 Basket
described herein.
(b) Notwithstanding the above, but subject to Section 1.4(c) below,
the maximum liability of Sellers under Article 2 and/or Article 8 of this
Agreement arising from a breach of representations and warranties shall be
limited to the amount of Five Hundred Thousand Dollars ($500,000), chargeable
first against the General Holdback as described above. To the extent there is
liability under Article 2 and/or Article 8 in excess of such General Holdback
after the application of the preceding rule, then Sellers shall reimburse Buyer
for such excess liability up to the maximum amount of the $500,000 limitation
described herein.
(c) The collective liability for breach of the representations and
warranties as set forth above shall be further limited by an aggregate amount of
Five Hundred Thousand Dollars ($500,000), such aggregate limitation to be
reduced by the sum of any amount of any breach or claim of a violation of any
representation and warranty under the terms and conditions of (i) the Stock
Purchase Agreement between Wamar Tool & Machine, Inc., Clarion Plastics
Technologies, Inc., Clarion Technologies, Inc., and the respective shareholders
of Wamar Tool & Machine, Inc., dated June 28, 1999, (ii) the Lease between
3
Company and Xxxxxxxxx, L.L.C. dated as of the Closing and (iii) the Option and
Put For Real Property dated as of the Closing between Company and Xxxxxxxxx,
L.L.C.
1.5. CLOSING.
-------
Unless this Agreement has been terminated and the transactions
contemplated have been abandoned pursuant to Article 7 hereof, a closing (the
"Closing") will be held on August 2, 1999 at 1:00 p.m., Grand Rapids, Michigan
local time or at such other time as the parties may agree upon (the "Closing
Date"); provided, however, that if any of the conditions provided for in
Articles 5 and 6 hereof have not been satisfied or waived by such date, then the
party to this Agreement which is unable to satisfy such condition or conditions,
despite the best efforts of such party, will be entitled to postpone the Closing
by notice to the other parties until such condition or conditions will have been
satisfied (which such notifying party will seek to cause to happen at the
earliest practicable date) or waived, but in no event will the Closing occur
later than August 6, 1999 (the "Termination Date"). The Closing will be held at
the offices of XxXxxxx & Xxxxx, P.L.C. in Grand Rapids, Michigan or such other
place as the parties may agree, at such time as the parties may agree, at which
time and place the documents and instruments necessary or appropriate to effect
the transactions contemplated herein will be exchanged by the parties.
1.6. EFFECTIVE DATE.
--------------
The effective date of this Agreement for financial accounting and tax
purposes shall be May 30, 1999 ("Effective Date").
2. REPRESENTATIONS AND WARRANTIES OF SELLERS.
For the purposes of these representations and warranties the following
definitions shall apply:
"Sellers knowledge" or "knowledge" shall mean (i) the actual knowledge
of the person making the representation and warranty, but without any
investigation or inquiry, and (ii) knowledge which such person would ordinarily
have if such person exercised customary and reasonable diligence in his or her
capacity as a Shareholder of the Company, and with respect to Xxxxx X. Xxxxxx,
as an Officer and Director of the Company.
"Material Adverse Effect" with respect to the Company means an
individual or cumulative adverse change in or effect on the business, customers,
customer relations, operations, properties, working capital condition (financial
or otherwise), assets, properties or liabilities of the Company which is
reasonably expected in the foreseeable future to be materially adverse to the
business, properties, working capital condition (financial or otherwise),
assets, or liabilities of the Company or would prevent the Company or the
Sellers from consummating the transactions contemplated hereby.
Subject to the limitations of Sections 1.3 and 1.4 above, Sellers
individually and severally, but not jointly, hereby represent and warrant to the
Buyer and Parent as follows:
4
2.1. DISCLOSURE SCHEDULE.
-------------------
The disclosure schedule dated the date hereof shall be delivered by
Sellers to the Buyer and Parent within two (2) weeks of the date of execution of
this Agreement (the "Disclosure Schedule"). The Disclosure Schedule is divided
into sections which correspond to the sections of this Article 2. The Disclosure
Schedule is true, accurate and complete. Nothing in the Disclosure Schedule will
be deemed adequate to disclose an exception to a representation or warranty made
herein, however, unless the Disclosure Schedule identifies the exception with
reasonable particularity and describes the relevant facts in reasonable detail.
2.2. CORPORATE ORGANIZATION.
----------------------
The Company is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Michigan with corporate power and
authority to carry on its business as it is now being conducted and to own,
operate and lease its properties and assets, and to the knowledge of Sellers is
duly qualified or licensed to do business as a foreign corporation in good
standing in every other jurisdiction in which the character or location of the
properties and assets owned, leased or operated by it or the conduct of its
business requires such qualification or licensing except in such jurisdictions
in which the failure to be so qualified or licensed and in good standing would
not have a Material Adverse Effect. The Disclosure Schedule contains a list of
all jurisdictions in which the Company is qualified or licensed to do business.
The Company does not own (and has not at any time during the five (5) years
preceding the date set forth above owned) of record or beneficially any
outstanding equity securities or other ownership interest in any corporation,
partnership or other legal entity.
2.3. CAPITALIZATION.
--------------
The authorized capital stock of the Company is set forth in the
Disclosure Schedule. The Shares, as set forth in the Disclosure Schedule,
represent all of the issued and outstanding capital stock of the Company. All
issued and outstanding shares of capital stock are duly authorized, validly
issued, fully paid and non-assessable and are without, and were not issued in
violation of, preemptive rights. The Shares are free and clear of all
Encumbrances, and, except as set forth on the Disclosure Schedule, there are no
agreements relating to any of the Sellers' ownership of such Shares. Upon the
consummation of the transactions contemplated hereby, the Buyer will acquire
good and marketable title to the Shares free and clear of all Encumbrances.
There are no issued and outstanding options, warrants, rights, conversion
privileges, securities, contracts, commitments, understandings or arrangements
by which the Company is bound to issue any additional shares of its capital
stock, equity securities or options or warrants to purchase shares of its
capital stock or any securities convertible into or exchangeable for such
shares, securities or rights. For purposes of this Agreement, "Encumbrances"
means pledges, liens, security interests, restrictions, claims or charges of any
kind.
2.4. AUTHORIZATION.
-------------
Each of the Sellers has full power and authority to enter into this
Agreement and to carry out the transactions contemplated hereby (including,
5
without limitation, the power to sell, transfer and convey the Shares). None of
the Sellers is a resident of any state that has enacted community property
statutes nor is any of the Sellers subject to any community property statutes.
Each Seller has the legal capacity to enter into this Agreement and to carry out
the transactions contemplated herein, including, without limitation, the legal
capacity to execute, deliver and perform the agreements or contracts, if any,
required by this Agreement to be executed and delivered by any of them,
including, without limitation, the Lease and Option and Put for Real Property
(the "Closing Agreements"). This Agreement has been duly and validly executed by
each of the Sellers and is the valid and binding legal obligation of each of the
Sellers enforceable against each of them in accordance with its terms, except as
may be limited by (i) any applicable bankruptcy, reorganization, arrangement,
winding-up, solvency, moratorium, fraudulent conveyance, or other similar laws
now or in the future in effect relating to creditors' rights generally, and (ii)
the effects of general principles of equity (regardless of whether considered in
a proceeding at equity or at law), including, without limitation, the possible
unavailability of specific performance, injunctive relief, appointment of a
receiver or any other equitable remedy. At Closing, the Closing Agreements will
be duly and validly executed by each of the Sellers and will constitute valid
and binding legal obligations of each of the Sellers enforceable against each of
the Sellers in accordance with their respective terms, except as may be limited
by (i) any applicable bankruptcy, reorganization, arrangement, winding-up,
solvency, moratorium, fraudulent conveyance, or other similar laws now or in the
future in effect relating to creditors' rights generally, and (ii) the effects
of general principles of equity (regardless of whether considered in a
proceeding at equity or at law), including, without limitation, the possible
unavailability of specific performance, injunctive relief, appointment of a
receiver or any other equitable remedy.
2.5. NON-CONTRAVENTION.
-----------------
Except as set forth in the Disclosure Schedule, neither the execution,
delivery and performance of this Agreement nor the consummation of the
transactions contemplated herein will: (i) violate or be in conflict with any
provision of the articles of incorporation or bylaws of the Company; (ii) be in
conflict with, or constitute a default, however defined (or an event which, with
the giving of due notice or lapse of time, or both, would constitute such a
default), under, or cause or permit the acceleration of the maturity of, or give
rise to any right of termination, cancellation, imposition of fees or penalties
under any debt, note, bond, lease, mortgage, indenture, license, obligation,
contract, commitment, franchise, permit, instrument or other agreement or
obligation to which the Company or a Seller is a party or by which the Company
or a Seller is or may be bound; or (iii) to the knowledge of Sellers, violate
any Law of any Authority. "Laws" means any statute, treaty, law, judgment, writ,
injunction, decision, decree, order, regulation, ordinance or other similar
authoritative matters. "Authority" or "Authorities" means any foreign, federal,
state or local governmental or quasi-governmental, administrative, regulatory or
judicial court, department, commission, agency, board, bureau, instrumentality
or other authority.
2.6. CONSENTS AND APPROVALS.
----------------------
Except as set forth in the Disclosure Schedule, with respect to the
Company and each Seller, no Consent from any individual or entity, including,
without limitation, any Authority, is required in connection with the execution,
delivery or performance of this Agreement by the Company or any Seller or the
6
consummation by the Company or any Seller of the transactions contemplated
herein. "Consent" means any consent, approval, order or authorization of or
from, or registration, notification, declaration or filing with any individual
or entity, including, without limitation, any Authority.
2.7. FINANCIAL STATEMENTS.
--------------------
Buyer acknowledges that it has received complete copies of all of the
Company's balance sheets as of December 31, 1998 and 1997, statements of income
for the fiscal years then ended, all such financial statements having been
prepared by the Company's management and that none of such financial statements
have been audited, as well as an unaudited balance sheet as of March 27, 1999
and unaudited statements of income, for the period ended March 27, 1999
(collectively the "Financial Statements") and have had full opportunity to
review and ask questions of the same. Except as disclosed therein or in the
Disclosure Schedule, to the knowledge of Sellers, the Financial Statements: (i)
are in accordance with the books and records of the Company and have been
prepared in conformity with generally accepted accounting principles ("GAAP")
consistently applied for all periods (except as stated therein or in the notes
thereto); (ii) there are no unbooked Liabilities; and (iii) are true, complete
and accurate in all material respects and fairly present the financial position
of the Company as of the respective dates thereof, and the income or loss for
the periods then ended. The representations herein are qualified and limited in
their entirety with respect to any matters contrary to the above that Buyer or
Buyer's representatives acquire knowledge of by virtue of their audit of
Company's books and records. The balance sheet as of March 27, 1999 is
hereinafter referred to as the "Most Recent Balance Sheet" and the statement of
income for the period ending March 27, 1999 is hereinafter referred to as the
"Most Recent Income Statement".
2.8. ABSENCE OF UNDISCLOSED LIABILITIES.
----------------------------------
There are no Liabilities of the Company including Liabilities which may
become known or which arise only after the Closing and which result from acts,
omissions or occurrences of the Sellers or the Company prior to the Closing
other than: (i) Liabilities and obligations which are fully reflected or
reserved for in the Most Recent Balance Sheet; (ii) Liabilities for express
executory obligations to be performed after the Closing under the contracts
described in Sections 2.13 and 2.14 of the Disclosure Schedule; and (iii)
Liabilities incurred by the Company in the ordinary course of business since the
Most Recent Balance Sheet. "Liability" or "Liabilities" means any liabilities,
obligations or claims of any kind whatsoever whether absolute, accrued or
unaccrued, fixed or contingent, matured or unmatured, asserted or unasserted,
known or unknown, direct or indirect, contingent or otherwise and whether due or
to become due, including, without limitation, any foreign or domestic tax
liabilities or deferred tax liabilities incurred in respect of or measured by
the Company's income, or any other debts, liabilities or obligations relating to
or arising out of any act, omission, transaction, circumstance, sale of goods or
services, state of facts or other condition which occurred or existed on or
before the date hereof, whether or not known, due or payable. To the knowledge
of Sellers, the Company is not subject to any obligation or requirement to
provide funds to, or make any investment (in the form of a loan, capital
contribution or otherwise) in, any person or entity.
7
2.9. ABSENCE OF CERTAIN CHANGES.
--------------------------
To the knowledge of Sellers, except as set forth in the Disclosure
Schedule, since the date of the Most Recent Balance Sheet, the Company has owned
and operated its assets, properties and business in the ordinary course of
business and consistent with past practice. Buyer or Buyer's representatives
have had an opportunity and will again be given an opportunity prior to closing
to review the sales, expense, and other business records of the Company, and to
ask questions or make inquiries of Sellers of same, from the Effective Date to
Closing to verify the accuracy of this representation and warranty.
2.10. ASSETS; NET WORTH.
-----------------
(a) The Company owns no real property.
(b) To the knowledge of Sellers, except as set forth in the
Disclosure Schedule, all real properties owned and leased by the
Company are free from any structural defects, in good operating
condition and repair, with no material maintenance, repair or
replacement having been deferred or neglected, suitable for the
intended use and free from other Material defects. To the knowledge of
Sellers, except as set forth in the Disclosure Schedule, each such real
property and its present use conform in all respects to all
occupational, safety or health, zoning, planning, subdivision, platting
and similar Laws. To the knowledge of Sellers, except as set forth in
the Disclosure Schedule, all public utilities necessary for the use and
operation of any facilities on the aforesaid real properties are
available for use or access at such properties and there is no legal or
physical impairment to free ingress or egress from any of such
facilities or real properties. Neither the Company nor any Seller is a
foreign person, as the term foreign person is defined in Section
1445(f)(3) of the Internal Revenue Code of 1986, as amended (the
"Code").
(c) Except as set forth in the Disclosure Schedule, the
Company has good and marketable title to all of its assets and
properties whether or not reflected in the Most Recent Balance Sheet or
acquired after the date thereof, free and clear of any Lien, other than
Permitted Liens. "Liens" means any pledge, lien, security interest,
conditional or installment sales agreement, encumbrance or claim.
"Permitted Liens" means (i) liens securing specific Liabilities shown
on the Most Recent Balance Sheet with respect to which no breach,
violation or default exists; (ii) mechanics', carriers', workers' or
other like liens arising in the ordinary course of business; (iii)
minor imperfections of title which do not individually or in the
aggregate, impair the continued use and operation of the assets and
fixtures to which they relate in the operation of the Company as
currently conducted; and (iv) liens for current taxes not yet due and
payable.
(d) Except as set forth in the Disclosure Schedule, to the
knowledge of Sellers, the machinery, equipment, vehicles and other
personal property used by the Company (whether or not reflected on the
Most Recent Balance Sheet or acquired after the date thereof) are in
good operating condition and repair and fit for the intended purposes
thereof, and no substantial maintenance, replacement or substantial
8
repair has been deferred or neglected, taking into account the age and
usage of such machinery, equipment, vehicles, and other personal
property.
(e) To the knowledge of Sellers, the Company owns or leases
all of the assets and properties, and is a party to all licenses and
other agreements, presently used or necessary to carry on the business
or operations of the Company as presently conducted; (ii) the Company
does not own or lease any assets or properties that are not used in the
ordinary course of the Company's business; and (iii) all leasehold
interests relating to real property, machinery, equipment, vehicles and
other personal property are valid and in full force and effect and
enforceable in accordance with their terms and there does not exist any
violation, breach, or default thereof or thereunder.
(f) Upon the Closing of the transactions contemplated by
this Agreement, no Seller will have any claim against any of the assets
of the Company, Buyer or Parent as a result of any buy-sell, tax
sharing or other similar agreement among the Sellers (except that
Company shall be obligated to make the distributions to Sellers of the
assets and insurance policies described in the Letter of Intent).
(g) Upon the Closing of the transactions contemplated by
this Agreement, the net worth of the Company shall be at least equal to
the amount of Four Million Two Hundred Twenty Thousand Dollars
($4,220,000), taking into account all adjustments allowed as set forth
in Exhibit 4.11 hereof, and using generally accepted accounting
principles consistently applied. For this purpose, the net worth of the
Company shall be considered in the aggregate with the net worth of
Wamar Tool & Machine, Inc.
2.11. INVENTORIES.
-----------
To the knowledge of Sellers, except as set forth in the Disclosure
Schedule, all work in process as of the date of the Most Recent Balance Sheet
is, and as of the Closing Date will be, valued at cost. To the knowledge of
Sellers, except as set forth in the Disclosure Schedule, all inventory of the
Company, whether reflected in the Most Recent Balance Sheet or otherwise, (i)
consists of a quality and quantity useable and salable in the ordinary course of
business, and (ii) the present quantities of all inventory of the Company are
reasonable in the present circumstances for the business as currently conducted
or as proposed to be conducted. The representation and warranty is qualified by
the fact that Buyers' auditors will take prior to closing a complete and full
inventory and Sellers shall have full and complete opportunity to review and ask
questions of Buyers of the same. Sellers shall review such inventories in detail
with Buyer as Buyer reasonably requests.
2.12. TRADE ACCOUNTS RECEIVABLE; NOTES RECEIVABLE AND PAYABLES.
--------------------------------------------------------
To the knowledge of Sellers:
(a) The most recent Balance Sheet reflects all of the
receivables, if any, of the Company and Buyer shall have full
9
opportunity to review the business records of Company, audit the same
and ask questions of Sellers regarding the same prior to Closing. To
the knowledge of Sellers, except as set forth on the Disclosure
Schedule, (i) the Company has good right, title and interest in and to
all trade accounts receivable and notes receivable reflected in the
Most Recent Balance Sheet and those acquired and generated since the
date of the Most Recent Balance Sheet (except for those paid since the
date of the Most Recent Balance Sheet) (the "Account Receivables");
(ii) none of such Account Receivables is subject to any Lien, other
than Permitted Liens; (iii) all of the Account Receivables owing to the
Company constitute valid and enforceable claims arising from bona fide
transactions in the ordinary course of business, and there are no known
material claims, refusals to pay or other rights of set-off against any
thereof; and (iv) the aging schedule of the Account Receivables of the
Company attached to the Disclosure Schedule is complete and accurate in
all material respects and Buyers have had opportunity to audit the
same. Sellers hereby covenant and agree to review the detailed accounts
receivable
(b) To the knowledge of Sellers:
(i) all trade accounts payable and notes payable of
the Company are reflected in the Most Recent Balance Sheet and
those acquired and generated since the date of the Most Recent
Balance Sheet (except for those paid since the date of the
Most Recent Balance Sheet) (the "Accounts Payables"); and
(ii) all such Accounts Payables arose from bona
fide transactions in the ordinary course of the Company's
business.
2.13. SCHEDULES; NO CONTRACT DEFAULTS.
-------------------------------
(a) The Disclosure Schedule contains an accurate and
complete list and description of all real property in which the Company
has a leasehold or other interest or which is used by the Company in
connection with the operation of its business, together with a copy of
each such lease and any amendments.
(b) To the knowledge of Sellers, the Company's business
records accurately reflect in all material respects (and Buyers
acknowledge that they have had opportunity to review the same as part
of their audit prior to closing):
(i) All machinery, tools, equipment, motor vehicles,
rolling stock and other tangible personal property (other than
inventory and supplies), owned, leased or used by the Company,
and all leases, Liens, restrictions, covenants and conditions
relating thereto (except for small tools and equipment which
are expensed as part of Company's business practices.)
(ii) All contracts, agreements and commitments,
whether or not fully performed, in respect of the issuance,
sale or transfer of the capital stock, bonds, options,
warrants or other securities of the Company or pursuant to
which the Company has acquired any substantial portion of its
business or assets.
10
(iii) All contracts, agreements, commitments or
understandings that restrict the Company from carrying on its
businesses or any part thereof anywhere in the world or from
competing in any line of business with any person or entity.
(iv) All material purchase or sale contracts or
agreements for purchases or sales.
(v) All collective bargaining agreements,
employment and consulting agreements, executive compensation
plans, bonus plans, deferred compensation agreements, employee
pension plans or retirement plans, employee stock options or
stock purchase plans, group life, health and accident
insurance and other employee benefit plans, agreements,
arrangements or commitments, whether or not legally binding,
including, without limitation, holiday, vacation and other
bonus practices, to which the Company is a party or is bound
or which relate to the operation of the Company's business.
(vi) All contracts, commitments, agreements and
arrangements with any "disqualified individual" (as defined in
Section 280G(c) of the Code) which contains any severance or
termination pay liabilities which would result in a
disallowance of the deduction for any "excess parachute
payment" (as defined in Section 280G(b)(1) of the Code) under
Section 280G of the Code.
(vii) The names and current annual salary rates of
all persons (including independent commission agents) whose
annual compensation (direct or indirect) from the Company is
currently at the rate of more than Fifty Thousand Dollars
($50,000) per annum.
(viii) The names of all of the Company's directors
and officers.
(ix) All material written contracts, agreements and
commitments, and tooling purchase orders, relating to the sale
of the Company's products, including, without limitation, any
sales representative, distributor or reseller agreements (the
"Sales Agreements").
(x) The severance arrangement between the Company
and Xxxxx Xxxxxxxxx, Vice President and General Manager of the
Company, effective December 21, 1998.
(xi) The social security numbers and addresses of
each of the Sellers.
(xii) All material contracts, agreements and
commitments, whether or not fully performed, relating to or
arising out of the business of the Company and not otherwise
disclosed pursuant to this Section 2.13.
(c) To the knowledge of Sellers, (i) all material contracts,
agreements, leases, licenses and commitments (the "Assumed Contracts")
referred to or which may be required to be listed on Sections 2.13 and
2.14 of the Disclosure Schedule (other than those which have been fully
11
performed) are valid and binding, enforceable in accordance with their
respective terms, and are in full force and effect; (ii) the Company is
not in breach, violation or default, however defined, in the
performance of any of its material obligations under any Assumed
Contract, and no facts or circumstances exist which, whether with the
giving of due notice, lapse of time, or both, would constitute such a
material breach, violation or default thereunder or thereof; and (iii)
no other parties thereto are in breach, violation or default, however
defined, thereunder or thereof, and no facts or circumstances exist
which, whether with the giving of due notice, lapse of time, or both,
would constitute such a breach, violation or default thereunder or
thereof. True and complete copies of all material Assumed Contracts
(together with any and all amendments thereto) have been supplied to
Buyer. Buyer acknowledges it has had full access thereto for purposes
of its audit and other due diligence.
2.14. INTELLECTUAL PROPERTY RIGHTS.
----------------------------
(a) The Company owns no (i) patents, patent applications
(collectively the "Patents"), (ii) copyrights, copyright applications
(the "Copyrights"), (iii) tradenames, registered and common law
trademarks, trademark applications (the "Trademarks"), (iv) service
marks, service xxxx applications (the "Service Marks"), and (v)
computer programs and other computer software, trade secrets, plans and
specifications, inventions, know-how, technology, proprietary processes
and formulae (the "Trade Secrets") which are necessary or used in
connection with the conduct of the business of the Company (the
Patents, Copyrights, Trademarks, Service Marks and Trade Secrets are
collectively referred to as "Intellectual Property Rights"). All issued
Patents and registered Copyrights, Trademarks and Service Marks are
collectively referred to as the "Registered Intellectual Property
Rights." To the knowledge of Sellers, the Company does not need to own
any Intellectual Property Rights to conduct the Company's business as
presently conducted.
(b) To the knowledge of Sellers, the Company is not
obligated or under any Liability whatsoever to make any payments by way
of royalties, fees or otherwise to any owner of, licensor of, or other
claimant to, any Intellectual Property Rights or Third Party
Intellectual Property Rights.
(c) To the knowledge of Sellers, no employee, contractor or
consultant of the Company has entered into any agreement which
restricts or limits in any way the scope or type of work in which such
employee, contractor or consultant may be engaged or requires such
employee, contractor or consultant to transfer, assign or disclose
information concerning such employee's, contractor's or consultant's
work to anyone other than the Company.
2.15. LITIGATION.
----------
There is no legal, administrative, arbitration, or other proceeding,
suit, claim or action of any nature or investigation, review or audit of any
kind (including, without limitation, a proceeding, suit, claim or action, or an
investigation, review or audit, involving any Environmental Law or matter),
12
judgment, decree, decision, injunction, writ or order pending, noticed,
scheduled or, to the knowledge of Sellers, threatened by or against or involving
the Company or its assets, properties or business or the Company's directors,
officers, agents or employees (but only in their capacity as such), whether at
law or in equity, before or by any person or entity or Authority, or which
questions or challenges the validity of this Agreement or any action taken or to
be taken by the parties hereto pursuant to this Agreement or in connection with
the transactions contemplated herein.
2.16. TAX MATTERS.
-----------
Except as set forth in the Disclosure Schedule, the Sellers hereby
represent and warrant the following with respect to the Company:
(a) The Sellers will be responsible for and will pay all
Taxes attributable to or arising from the business and operations of
the Company conducted on or before the Effective Date and will be
responsible for their own and the Company's income and franchise Taxes,
if any, arising from the transactions contemplated by this Agreement,
provided, however, the Michigan Single Business Tax shall be accrued
and paid by Company as an operating expense.
(b) There have been properly completed and duly filed on a
timely basis and in correct form, all Tax Returns required to be filed
on or prior to the date hereof by the Company or the Sellers with
respect to Taxes of the Company. As of the time of filing, the
foregoing Tax Returns correctly reflected the facts regarding the
income, business, assets, operations, activities, status or other
matters of the Company or any other information required to be shown
thereon. There is no omission, deficiency, error, misstatement or
misrepresentation, whether innocent, intentional or fraudulent, in any
Tax Return filed by the Company for any period. Any Tax Returns filed
after the date hereof, but on or before the Closing Date, will conform
with the provisions of this subsection 2.16(b).
(c) With respect to all amounts in respect of Taxes imposed
upon the Company or the Sellers, or for which the Company or the
Sellers are or could be liable, whether to taxing Authorities (as, for
example, under Law) or to other persons or entities (as, for example,
under tax allocation agreements), with respect to all taxable periods
or portions of periods ending on or before the Closing Date, all
applicable Tax Laws and agreements have been or will be fully complied
with, and all such amounts of Taxes required to be paid by the Company
or the Sellers to taxing Authorities or others on or before the date
hereof have been duly paid or will be paid on or before the Closing
Date. There are no Liens for such Taxes upon any property or assets of
the Company. The Company has withheld and remitted all amounts required
to be withheld and remitted by it in respect of Taxes.
(d) Except as set forth in the Disclosure Schedule, neither
the federal Tax Returns of the Company (and of the Sellers to the
extent the operations of the Company are reflected in the Sellers' Tax
Returns) nor any state or local Tax Return of the Company, have been
13
examined by the Internal Revenue Service or any similar state or local
Authority, and, except to the extent shown therein, all deficiencies
asserted as a result of such examinations have been paid or finally
settled and no issue has been raised by the Internal Revenue Service or
any similar state or local Authority in any such examination which, by
application of similar principles, reasonably could be expected to
result in a proposed deficiency for any other period not so examined.
Except as set forth in the Disclosure Schedule, all deficiencies and
assessments of Taxes of the Company (or any of the Sellers to the
extent attributable to the business or operations of the Company)
resulting from an examination of any Tax Returns by any Authority have
been paid and there are no pending examinations currently being made by
any Authority nor has there been any written or oral notification to
the Company or any Seller of any intention to make an examination of
any Taxes by any Authority. Except as set forth in the Disclosure
Schedule, there are no outstanding agreements or waivers extending the
statutory period of limitations applicable to any Tax Return for any
period.
(e) For purposes of computing Taxes and the filing of Tax
Returns, the Company has not failed to treat as "employees" any
individual providing services to the Company who would be classified as
an "employee" under the applicable rules or regulations of any
Authority with respect to such classification.
For purposes of this Agreement, the term "Taxes" means all federal,
state, local, foreign and other net income, gross income, gross
receipts, sales, use, ad valorem, transfer, franchise, profits,
license, lease, service, service use, withholding, payroll, employment,
excise, severance, stamp, occupation, premium, real or personal
property, windfall profits, customs, duties or other taxes, fees,
assessments, charges or levies or any kind whatever, together with any
interest and any penalties, additions to tax or additional amounts with
respect thereto, and the term "Tax" means any one of the foregoing
Taxes. In addition, the term "Tax Returns" means all returns,
declarations, reports, statements and other documents required to be
filed with any Authority in respect of Taxes, and the term "Tax Return"
means any one of the foregoing Tax Returns.
2.17. BENEFIT PLANS.
-------------
Other than as set forth in the Disclosure Schedule, neither the Company
nor any affiliate of the Company sponsors, maintains, contributes to or is
required to contribute to any pension, welfare, incentive, perquisite, paid time
off, severance or other benefit plan, policy, practice or agreement subject to
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). To
the knowledge of Sellers, there are no facts or circumstances which could,
directly or indirectly, subject the Buyer or any of its affiliates to any
Liability of any nature with respect to any pension, welfare, incentive,
perquisite, paid time off, severance or other benefit plan, policy, practice or
agreement sponsored, maintained or contributed to by the Company or any
affiliate, to which the Company or any affiliate is a party or with respect to
which the Company or any affiliate could have any liability.
14
2.18. LABOR MATTERS.
-------------
Except as set forth in the Disclosure Schedule, to the knowledge of
Sellers:
(a) the Company is and has been in compliance in all
material respects with all applicable Laws respecting employment and
employment practices, terms and conditions of employment and wages and
hours, including, without limitation, any such Laws respecting
employment discrimination and occupational safety and health
requirements, and has not and is not engaged in any unfair labor
practice;
(b) there is no unfair labor practice complaint against the
Company pending or threatened before the National Labor Relations Board
or any other comparable Authority;
(c) there is no labor strike, dispute, slowdown or stoppage
actually pending or threatened against or directly affecting the
Company;
(d) no labor representation question exists respecting the
employees of the Company and there is not pending or threatened any
activity intended or likely to result in a labor representation vote
respecting the employees of the Company;
(e) no grievance or any arbitration proceeding arising out
of or under collective bargaining agreements is pending and no claims
exist or have been threatened;
(f) no collective bargaining agreement is binding and in
force against the Company or currently being negotiated by the Company;
(g) the Company has not experienced any significant work
stoppage or other significant labor difficulty;
(h) the Company is not delinquent in payments to any persons
for any wages, salaries, commissions, bonuses or other direct or
indirect compensation for any services performed by them or amounts
required to be reimbursed to such persons, including, without
limitation, any amounts due under any Pension Plan, Welfare Plan or
Compensation Plan; and
(i) upon termination of the employment of any person,
neither the Company, the Buyer, or any subsidiary or affiliate of the
Buyer will, by reason of anything done at or prior to or as of the
Closing Date, be liable to any of such persons for so-called "severance
pay" or any other payments, except for the agreement with Xxxxx
Xxxxxxxxx referred to in Section 2.13(b)(ix).
2.19. PERMITS AND OTHER OPERATING RIGHTS.
----------------------------------
Except as set forth in the Disclosure Schedule, to the knowledge of
Sellers, (i) the Company does not require the Consent of any Authority to permit
it to operate in the manner in which its business is presently being operated;
and (ii) the Company possesses all permits, licenses and other authorizations
from all Authorities necessary to permit it to operate its business in the
15
manner in which it presently is conducted and the consummation of the
transactions contemplated by this Agreement will not prevent the Company from
being able to continue to use such permits and operating rights.
2.20. COMPLIANCE WITH LAW.
-------------------
To the knowledge of Sellers, the Company has not previously failed and
is not currently failing to comply with any applicable Laws relating to the
business of the Company or the operation of its assets, including, without
limitation, any import, export and immigration laws. There are no proceedings
and no proceedings are pending or to the Sellers' knowledge threatened, nor has
any officer of the Company or any of the Sellers received any written notice
regarding any violation of any Law.
2.21. ENVIRONMENTAL MATTERS.
---------------------
Except as set forth in the Disclosure Schedule:
(a) The Company, any subsidiary or former subsidiary of the
Company, any previous owner, tenant, occupant or user of any property
owned or leased by or to the Company or by or to any subsidiary or
former subsidiary (the "Properties") have complied in all material
respects with all law relating to any Environmentally Regulated
Materials and have complied in all material respects with all
Environmental and Occupational Safety and Health Law.
(b) No enforcement, investigation, cleanup, removal,
remediation or response or other governmental or regulatory actions
have been asserted or threatened (A) with respect to operations
conducted by the Company on the Properties or, (B) with respect to the
Properties themselves or, (C) against the Company or any subsidiary or
former subsidiary with respect to or in any way regarding the
Properties pursuant to any Environmental and Occupational Safety and
Health Laws.
(c) No claims or settlements relating to or arising out of
Environmental and Occupational Safety and Health Laws or
Environmentally Regulated Materials, have been made or, to the
knowledge of the Sellers, been threatened by any third party, including
any Authority, nor, to the knowledge of the Sellers, does there exist
any basis for any such claim (any such enforcement, investigation,
cleanup, removal, remediation or response, other governmental or
regulatory action, claim or settlement is herein referred to as an
"Environmental Claim") against the Company or any subsidiary or former
subsidiaries with respect to the Properties or operations conducted
thereon, or with respect to the Properties or the operations thereon.
(d) To the knowledge of Sellers, with regard to the Company
and the Properties, there are no past or present events, conditions,
circumstances, activities, practices, incidents, actions or plans which
may interfere with or prevent compliance or continued compliance with
Environmental and Occupational Health and Safety Laws, as in effect on
the Closing Date.
16
(e) For purposes of this Agreement, "Environmental and
Occupational Safety and Health Law" means any common law or duty, case
law or other Law, that (i) regulates, creates standards for or imposes
liability or standards of conduct concerning any element, compound,
pollutant, contaminant, or toxic or hazardous substance, material or
waste, or any mixture thereof, or relates in any way to emissions or
releases into the environment or ambient environmental conditions, or
conduct affecting such matters, or (ii) is designed to provide safe and
healthful working conditions or reduce occupational safety and health
hazards. Such laws shall include, but not be limited to, the National
Environmental Policy Act, 42 U.S.C. xx.xx. 4321 et seq., the
Comprehensive Environmental Response, Compensation, and Liability Act,
42 U.S.C. xx.xx. 9601 et seq., the Resource Conservation and Recovery
Act, 42 U.S.C. xx.xx. 6901 et seq., the Federal Water Pollution Control
Act, 33 U.S.C. xx.xx. 1251 et seq., the Federal Clean Air Act, 42
U.S.C. xx.xx. 7401 et seq., the Toxic Substances Control Act, 15 U.S.C.
xx.xx. 2601 et seq., the Emergency Planning and Community Right to Know
Act, 42 U.S.C. ss. 11011, the Hazard Communication Act, 29 U.S.C.
xx.xx. 651 et seq., the Occupational Safety and Health Act, 29 U.S.C.
xx.xx. 651 et seq., the Federal Insecticide, Fungicide and Rodenticide
Act, 7 U.S.C. ss. 136, and any case law interpretations, amendments or
restatements thereof, or similar enactments thereto, as is now or at
any time hereafter may be in effect, as well as their international,
state and local counterparts. For purposes of this Agreement,
"Environmentally Regulated Materials" means any element, compound,
pollutant, contaminant, substance, material or waste, or any mixture
thereof, designated, listed, referenced, regulated or identified
pursuant to any Environmental and Occupational Safety and Health Law.
2.22. INSURANCE.
---------
The Company's normal business records reflect accurately in all
material respects all policies of fire and other casualty, auto, liability,
general liability, theft, life, workers' compensation, health, directors and
officers, business interruption and other forms of insurance owned or held by
the Company, and copies of all such policies have been provided or made
available to Buyer or Buyer's representatives. With respect to each such
insurance policy to the knowledge of Sellers: (i) the policy is legal, valid,
binding, enforceable, and in full force and effect in all material respects;
(ii) neither the Company nor any other party to the policy is in material breach
or default (including with respect to the payment of premiums or the giving of
notices), and no event has occurred which, with notice or the lapse of time,
would constitute such a material breach or default, or permit termination,
modification, or acceleration, under the policy; and (iii) no party to the
policy has repudiated any material provision thereof. The Disclosure Schedule
describes any material self-insurance arrangements affecting the Company. Buyers
acknowledge that they will review such insurance policies and matters as part of
their audit and have had fully and complete access to Company's books and
records regarding the same.
2.23. BANK ACCOUNTS.
-------------
The Disclosure Schedule contains a list of the names of all financial
institutions, investment banking and brokerage houses, and other similar
institutions at which the Company maintains accounts, deposits, safe deposit
boxes of any nature, and the names of all persons authorized to draw thereon or
17
make withdrawals therefrom; and the names of all persons, if any, holding tax or
other powers of attorney from the Company and a summary of the terms thereof.
2.24. ABSENCE OF CERTAIN BUSINESS PRACTICES.
-------------------------------------
None of the Sellers, and to the knowledge of Sellers, no director,
officer, employee or agent of the Company, nor any other person acting on behalf
of the Company or the Sellers, has, directly or indirectly, within the past five
(5) years given or agreed to give any illegal gift or similar benefit to any
customer, supplier, governmental employee or other person who is or may be in a
position to help or hinder the business of the Company (or assist the Company in
connection with any actual or proposed transaction) which might subject the
Company, the Sellers or Buyer to any damage or penalty in any civil, criminal or
governmental litigation proceeding, or (ii) if not given in the past, might have
had an adverse effect on the assets, business or operations of the Company as
reflected in the Financial Statements.
2.25. ORDERS, COMMITMENTS AND RETURNS.
-------------------------------
Except as set forth in the Disclosure Schedule, to the knowledge of
Sellers, all accepted and unfulfilled orders for the sale of products with a
customer and the performance of services entered into by the Company and all
outstanding contracts or commitments for the purchase of supplies, materials and
services were made in bona fide transactions in the ordinary course of business.
Except as set forth in the Disclosure Schedule, to the knowledge of Sellers,
there are no material claims against the Company to return products by reason of
alleged over-shipments, defective products or otherwise, or of products in the
hands of customers, retailers or distributors under an understanding that such
products would be returnable.
2.26. PRODUCTS AND WARRANTIES.
-----------------------
To the knowledge of Sellers, each product manufactured, sold, leased,
or delivered by the Company has been in conformity in all Material respects with
all applicable contractual commitments and all express and implied warranties,
and meets or exceeds the standards required by all Laws now in effect and
neither the Company nor the Sellers know of any pending legislation, ordinance
or regulation, which if adopted, would have a Material Adverse Effect upon the
products sold by the Company. To the knowledge of Sellers, the Company does not
have any Liability (and there is no basis for any present or any future action,
suit, proceeding, hearing, investigation, charge, complaint, claim, or demand
against any of it giving rise to any Liability) for replacement or repair of any
product manufactured, sold, leased, or delivered by the Company or other damages
in connection therewith other than may occur in the ordinary course of business.
To the knowledge of Sellers, no product manufactured, sold, leased, or delivered
by the Company is subject to any guaranty, warranty, or other indemnity beyond
the applicable standard terms and conditions of sale or lease. To the knowledge
of Sellers, the Disclosure Schedule includes copies of the standard terms and
conditions of sale or lease for the Company (containing applicable guaranty,
warranty, and indemnity provisions).
18
2.27. PRODUCT LIABILITY; AUTO LIABILITY AND WORKERS' COMPENSATION.
-----------------------------------------------------------
To the knowledge of Sellers, the Company does not have any Liability
(and there is no basis for any present or any future action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand against any of them
giving rise to any Liability) arising out of: (i) any injury to individuals or
property as a result of the ownership, possession, or use of any product
manufactured, sold, leased, or delivered by the Company; or (ii) any injury to
individuals or property as a result of the ownership or lease by the Company of
any automobile. Except as set forth in the Disclosure Schedule, to the knowledge
of Sellers, there are no open workers' compensation claims against the Company.
2.28. CUSTOMER.
--------
Except as set forth in the Disclosure Schedule, the Sellers have no
knowledge that the Company has received any notice (written or oral) that any
material customer of the Company will terminate its relationship with the
Company or, as the case may be, significantly decrease its business with the
Company, as a result of the transactions contemplated by this Agreement or for
any other reason.
2.29. TRANSACTIONS WITH CERTAIN PERSONS.
---------------------------------
Except as set forth in the Disclosure Schedule, during the past three
(3) years, the Company has not, directly or indirectly, purchased, leased or
otherwise acquired any property or obtained any services from, or sold, leased
or otherwise disposed of any property or furnished any services to, or otherwise
dealt with, in the ordinary course of business or otherwise, (i) any Seller or
(ii) any affiliate or associate of the Sellers or any officer, director, member,
shareholder, or partner of any affiliate or associate of either of the Sellers
(except with respect to compensation in the ordinary course of business for
services rendered as an officer, director or employee of the Company). The
Company does not owe any amount to, or have any agreement or contract with or
commitment to, any of its officers, directors, shareholders, employees or
consultants or any affiliate or associate thereof (other than compensation for
current services not yet due and payable and reimbursement of expenses arising
in the ordinary course of business), and none of such persons owes any amount to
the Company.
2.30. BOOKS AND RECORDS.
-----------------
The books of account, minute books, stock record books, and other
records of the Company, all of which have been made available to the Buyer, are
complete and correct in all material respects and have been maintained in
accordance with reasonable business practices. The minute books of the Company
contain accurate and complete records of all formal meetings held of, and
corporate action taken by, the shareholders, the Board of Directors, and
committees of the Board of Directors of the Company. At the Closing, all of
those books and records will be in the possession of the Company.
19
2.31. BUSINESS GENERALLY.
------------------
Except as set forth in the Disclosure Schedule, to the knowledge of
Sellers, there has been no event, transaction or information which has come to
the attention of the Sellers as of the date of this Agreement which, as it
relates directly to the business of the Company, would, individually or in the
aggregate, reasonably be expected in the foreseeable future to have a Material
Adverse Effect on the Company.
2.32. BROKERS.
-------
Except as set forth in the Disclosure Schedule, neither the Company,
the Sellers nor any of its directors, officers or employees has employed any
broker, finder, or financial advisor or incurred any liability for any brokerage
fee or commission, finder's fee or financial advisory fee, in connection with
the transactions contemplated hereby, nor is there any basis known to the
Sellers for any such fee or commission to be claimed by any person or entity.
2.33. AUTHORITY TO TRANSFER SHARES.
----------------------------
Each Seller has full legal right, power and authority to sell,
transfer, assign and deliver the Shares to the Buyer at Closing and delivery of
the Shares at Closing will transfer to the Buyer valid legal and beneficial
ownership thereto free and clear of all Encumbrances.
2.34. ACCESS TO INFORMATION; FULL KNOWLEDGE.
-------------------------------------
(a) The Parent Shares to be received by the Sellers pursuant
to this Agreement are being acquired for each of the Sellers own
account, for investment purposes only and not with a view to any public
resale, public distribution or public offering thereof within the
meaning of the Securities Act of 1933, as amended (the "1933 Act") or
any state securities or Blue Sky law and such Parent Shares will not be
sold or otherwise disposed of except in compliance with the 1933 Act,
or in reliance upon an exemption therefrom and in compliance with any
state securities or Blue Sky laws. The Parent Shares have not been
registered under the 1933 Act or any state securities or Blue Sky law.
(b) The Sellers agree that each of them, either alone or
with a representative, have such knowledge and experience in financial
and business matters that the Sellers are capable of evaluating the
merits and risks of the prospective investment in the Parent Shares and
are able to bear the economic consequences thereof. In making the
decision to invest in the Parent Shares, each of the Sellers have
relied upon independent investigations made by them and, to the extent
believed by the Sellers to be appropriate, Sellers' representatives,
including each of the Seller's own professional, tax and other
advisors.
(c) The Sellers and their representatives have been given a
full opportunity to examine all documents and to ask questions of, and
to receive answers from Buyer and its representatives concerning the
terms of the transfer of the Shares to Buyer, the Sellers' investment
20
in the Parent Shares and the business of Buyer and Parent and such
other information as each of the Sellers desires in order to evaluate
an investment in the Parent Shares, and all such questions have been
answered to the full satisfaction of the Sellers. The Sellers have
evaluated the merits and risks of an investment in the Parent Shares
and have determined that the Parent Shares are a suitable investment
for the Sellers in light of each of the Sellers' overall financial
condition and prospects. Each of the Sellers have been furnished with
all publicly available information about Buyer's and Parent's assets,
operations, and business activities which the Sellers have requested
and which the Sellers consider necessary or relevant to enable each of
the Sellers to make a prudent decision about the sale of the Shares to
Buyer and the Sellers acquisition of the Parent Shares. The Sellers'
acknowledge that they have reviewed the following reports filed by
Parent with the Securities and Exchange Commission during the past
twelve (12) months pursuant to Section 13(a) of the Securities Exchange
Act of 1934: Annual Report on Form 10-KSB for the year ended December
31, 1998, Quarterly Reports on Form 10-QSB for the quarters ending June
30, 1998, September 30, 1998 and March 31, 1999 and Current Report on
Form 8-K filed with the Securities and Exchange Commission on May 13,
1999.
(d) The Sellers have not relied upon any representation or
warranty from Buyer, Parent or any of their directors, officers,
employees, agents, affiliates or representatives, with respect to the
value of the Parent Shares, other than as set forth in the publicly
available information described in this Section 2.34 and as set forth
in Section 3.6. Buyer and Parent have not made any representation,
warranty, acknowledgment or covenant, in writing or otherwise, to the
Sellers regarding the value of the Parent Shares or the tax
consequences, if any, of the sale of the Shares or of the resale of the
Parent Shares by the Sellers other than as set forth in Section 3.6.
Each of the Sellers has been advised, and are aware, that the market
prices of shares of stock of publicly traded companies fluctuate and
that there can be no assurance as to the future performance of any
given securities, including shares of Parent Common Stock.
(e) The Sellers acknowledge that the Shares are personal to
each of the Sellers and may not be transferred or assigned. Each Seller
has consented to the placing of the following legend on the
certificates for the Parent Shares.
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND
MAY BE SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED ONLY
IF A REGISTRATION STATEMENT DESCRIBING SUCH PROPOSED
TRANSACTION IS IN EFFECT PURSUANT TO THE PROVISIONS OF THAT
ACT OR IF, IN THE OPINION OF COUNSEL, WHICH OPINION AND
COUNSEL SHALL BE SATISFACTORY TO THE ISSUER OF THESE SHARES
AND ITS COUNSEL, AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THAT ACT IS AVAILABLE.
21
(f) The Parent hereby covenants to use its best efforts to
file with the Securities and Exchange Commission on a timely basis all
information that the Securities and Exchange Commission may require and
take all actions that may be required as a condition to the
availability of Rule 144 under the 1933 Act (or any successor exemptive
rule in effect) with respect to the Parent Shares. This covenant will
survive Closing for a period of two (2) years.
2.35. ACCURACY OF INFORMATION.
-----------------------
To the knowledge of Sellers, no representation or warranty made by the
Sellers in this Agreement, the Disclosure Schedule, or in any agreement,
instrument, document, certificate, statement or letter furnished to the Buyer at
or prior to the Closing by or on behalf of the Company or the Sellers in
connection with any of the transactions contemplated by this Agreement contains
any untrue statement of material fact or omits to state a material fact
necessary in order to make the statements herein or therein not misleading in
light of the circumstances in which they are made, and all of the foregoing
completely and correctly present the information required or purported to be set
forth herein or therein. To the knowledge of Sellers, there is no material fact
as of the date hereof which has not been disclosed to the Buyer to which the
Sellers have knowledge related to the Company, its operations, properties,
financial condition or prospects which has a Material Adverse Effect or, to the
knowledge of the Sellers, in the foreseeable future may have a Material Adverse
Effect on the Company.
22
3. REPRESENTATIONS AND WARRANTIES OF THE BUYER AND PARENT
The Buyer and Parent represent and warrant to the Sellers as follows:
3.1. CORPORATE ORGANIZATION.
----------------------
The Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the State of Ohio. The Parent is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.
3.2. AUTHORIZATION.
-------------
The Buyer and Parent have full corporate power and authority to enter
into this Agreement and to carry out the transactions contemplated herein. The
Board of Directors of both the Buyer and Parent have taken all action required
by law, their certificate or articles of incorporation and bylaws or otherwise
to authorize the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated herein and no action of the
stockholders of the Buyer or Parent is required. This Agreement is the valid and
binding legal obligation of the Buyer and Parent enforceable against the Buyer
and Parent in accordance with its terms.
3.3. NON-CONTRAVENTION.
-----------------
Neither the execution, delivery and performance of this Agreement nor
the consummation of the transactions contemplated herein will: (i) violate any
provision of the certificate or articles of incorporation or bylaws of the Buyer
or Parent; or (ii) except for such violations, conflicts, defaults,
accelerations, terminations, cancellations, impositions of fees or penalties,
mortgages, pledges, and Liens which would not, individually or in the aggregate,
have a Material Adverse Effect on the Buyer or Parent, (A) violate, be in
conflict with, or constitute a default, however defined (or an event which, with
the giving of due notice or lapse of time, or both, would constitute such a
default), under, or cause or permit the acceleration of the maturity of, or give
rise to, any right of termination, cancellation, imposition of fees or penalties
under, any debt, note, bond, lease, mortgage, indenture, license, obligation,
contract, commitment, franchise, permit, instrument or other agreement or
obligation to which the Buyer or Parent is a party or by which the Buyer or
Parent or any of their respective properties or assets is or may be bound
(unless with respect to which defaults or other rights, requisite waivers or
consents shall have been obtained at or prior to the Closing) or (B) result in
the creation or imposition of any Lien, except Permitted Liens, upon any
property or assets of the Buyer or Parent under any debt, obligation, contract,
agreement or commitment to which the Buyer or Parent is a party or by which the
Buyer or Parent or any of their respective assets or properties is or may be
bound; or (iii) violate any Law.
3.4. CONSENTS AND APPROVALS.
----------------------
No Consent is required by any person or entity, including, without
limitation, any Authority, in connection with the execution, delivery and
performance by the Buyer or Parent of this Agreement, or the consummation of the
transactions contemplated herein, other than any Consent which, if not made or
23
obtained, will not, individually or in the aggregate, have a material adverse
effect on the business of the Buyer or Parent taken as a whole.
3.5. ISSUANCE OF PARENT COMMON STOCK.
-------------------------------
The Parent Shares to be issued to the Sellers, upon delivery to the
Sellers and receipt of the certificates for the Shares by the Buyer, will be
validly issued, fully paid and nonassessable. Parent has all requisite power and
authority to issue, sell and deliver the Parent Shares in accordance with and
upon the terms and conditions set forth herein; and all corporate action
required to be taken by Parent for the due and proper authorization, issuance,
sale and delivery of the Parent Shares has been validly and sufficiently taken.
Upon delivery of the Shares by the Sellers to the Buyer, the Parent Shares will
be, upon issuance and delivery thereof, duly authorized, validly issued, fully
paid and nonassessable.
3.6 BUSINESS GENERALLY.
------------------
Buyer is experienced in business and employs people knowledgeable in
the Company's industry generally and the type of Company's business
specifically, and such persons have made full investigation (including
preparation of an appropriate business plan), regarding the purchase of the
stock of Company and the industry in which Company conducts its business. Buyer
acknowledges that Sellers have not reviewed Buyer's business plan and make no
representation or warranty with respect thereto.
4. COVENANTS OF THE PARTIES
4.1. CONDUCT OF BUSINESS OF THE COMPANY.
----------------------------------
Except as contemplated by this Agreement, during the period from the
date of this Agreement to the Closing Date, the Sellers will cause the Company
to conduct its business and operations according to its ordinary and usual
course of business, to preserve substantially intact its business organizations
and to preserve its current relationships with customers, employees, suppliers
and other persons with which it has significant business relations.
(a) adopt any amendment to its articles of incorporation or
bylaws;
(b) issue, reissue, sell, deliver or pledge or authorize or
propose the issuance, reissuance, sale, delivery or pledge of shares of
capital stock of any class, or debt or other securities convertible
into capital stock of any class, or any rights, warrants or options to
acquire any convertible securities or capital stock;
(c) adjust, split, combine, subdivide, reclassify or redeem,
purchase or otherwise acquire, or propose to redeem or purchase or
otherwise acquire, any shares of its capital stock, or any of its other
securities;
(d) (i) excluding regularly scheduled principal payments,
create, incur, assume or repay any long-term debt (including
obligations in respect of capital leases), or, except in the ordinary
24
course of business, create, incur, assume, repay, maintain or permit to
exist any short-term debt; or (ii) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently
or otherwise) for the obligations of any other person;
(e) excluding the distribution to the Sellers of (i) the
declared dividend amount of Three Hundred Twenty-Nine Thousand Dollars
($329,000), (ii) the declaration of a dividend in an amount equal to
forty-five percent (45%) of the Company's taxable income from March 27,
1999 to the Effective Date, which amount is to pay Sellers' income
taxes on the Company income, (iii) the cash surrender value of the life
insurance policy on Xxxxx X. Xxxxxx, and (iv) the Internal Revenue
Service Section 444 deposit, declare, set aside or pay any dividend or
other distribution (whether in cash, stock or property or any
combination thereof) in respect of its capital stock, redeem or
otherwise acquire any shares of its capital stock;
(f) other than in the ordinary course of business, increase
in any manner the compensation of any of its directors, officers or
other employees, except that Xxxxx X. Xxxxxx shall be paid an
annualized salary of One Hundred Fifty Thousand Dollars ($150,000) from
April 1, 1999 until Closing;
(g) (i) sell, transfer, or otherwise dispose of, or agree to
sell, transfer, or otherwise dispose of, any properties or assets,
real, personal or mixed, (other than inventory in the ordinary course
of business) or (ii) mortgage or encumber any properties or assets,
real, personal or mixed;
(h) permit any of its current insurance policies to be
canceled or terminated, unless replacement policies with equal or
greater coverage are in full force and effect;
(i) enter into other agreements, commitments or contracts
not in the ordinary course of business or in excess of current
requirements;
(j) make or enter into any commitment of the Company for
capital expenditures for additions to property, plant, equipment or
intangible capital assets; or
(k) pay, lend or advance any amount to, or sell, transfer or
lease any of the Company's properties or assets (real, personal or
mixed, tangible or intangible) to, or enter into any agreement or
arrangement with, any of its officers, directors, shareholders or
employees or any affiliate or associate of any of its officers,
directors, shareholders or employees;
(l) terminate, enter into or amend in any material respect
any contract, agreement, lease, license or commitment identified in the
Disclosure Schedule, or take any action or omit to take any action
which will cause a breach, violation or default (however defined) under
any such items, except in the ordinary course of business and
consistent with past practice; or
(m) acquire any of the business or assets of any other
person or entity;
25
(n) agree in writing or otherwise to take any of the
foregoing actions.
4.2. NO SOLICITATION OF ALTERNATE TRANSACTION.
----------------------------------------
From the date of this Agreement until Closing or termination as
provided in Article 7 hereof, the Sellers will not, and will ensure that the
Company, its directors, officers and employees, independent contractors,
consultants, counsel, accountants, investment advisors and other representatives
and agents will not, directly or indirectly, solicit or entertain offers from,
negotiate with, provide any nonpublic information to, enter into any agreement
with, or in any manner encourage, discuss, accept or consider any proposal of,
any third party relating to the acquisition of the Company, its assets or
business, in whole or in part. The Company will promptly inform the Buyer of any
written inquiry (including the terms thereof and the identity of the third party
making such inquiry) which it may receive in respect of the above and furnish to
the Buyer a copy of any such written inquiry.
4.3. FULL ACCESS TO BUYER.
--------------------
Throughout the period prior to Closing, the Company and the Sellers
will cause the Company to afford to Buyer and its directors, officers,
employees, counsel, accountants, investment advisors and other authorized
representatives and agents, access to the facilities, properties, books and
records of the Company in order that Buyer may have full opportunity to make
such investigations as it desires to make of the affairs of the Company. The
Company will furnish such additional financial and operating data and other
information as Buyer will, from time to time, reasonably request, including,
without limitation, access to the working papers of its independent certified
public accountants; provided, however, that any such investigation shall not
affect or otherwise diminish or obviate in any respect any of the
representations and warranties of the Sellers herein.
4.4. CONFIDENTIALITY OF INFORMATION.
------------------------------
After the Closing, each of the Sellers will hold in confidence all
Intellectual Property Rights, trade secrets and other confidential or
proprietary documents and information related to the Company or Buyer and will
refrain from disclosing or using any such confidential information for such
Seller's own benefit (other than with respect to any decisions of Sellers
whether to hold or sell the Parent Shares to be received hereunder), or to or
for the benefit of any third party. This obligation of confidentiality and
non-use will not apply, or will cease to apply, to such information which is in
the public domain as of the Closing Date or subsequently comes into the public
domain through a source other than the Sellers, or which is required to be
disclosed by order of any court or governmental agency of competent
jurisdiction.
4.5. FILINGS; CONSENTS; REMOVAL OF OBJECTIONS.
----------------------------------------
Subject to the terms and conditions herein provided, the parties hereto
will use their best efforts to take or cause to be taken all actions and do or
cause to be done all things necessary, proper or advisable under applicable Laws
to consummate and make effective, as soon as reasonably practicable, the
transactions contemplated hereby, including, without limitation, obtaining all
26
Consents of any person or entity, whether private or governmental, required in
connection with the consummation of the transactions contemplated herein. In
furtherance, and not in limitation of the foregoing, it is the intent of the
parties to consummate the transactions contemplated herein at the earliest
practicable time, and they respectively agree to exert their best efforts to
that end, including, without limitation: (i) the removal or satisfaction, if
possible, of any objections to the validity or legality of the transactions
contemplated herein; and (ii) the satisfaction of the conditions to consummation
of the transactions contemplated hereby.
4.6. FURTHER ASSURANCES; COOPERATION; NOTIFICATION.
---------------------------------------------
(a) Each party hereto will, before, at and after Closing,
execute and deliver such instruments and take such other actions as the
other party or parties, as the case may be, may reasonably require in
order to carry out the intent of this Agreement. Without limiting the
generality of the foregoing, at any time after the Closing, at the
request of Buyer and without further consideration, the Company and
Sellers will execute and deliver such instruments of sale, transfer,
conveyance, assignment and confirmation and take such action as Buyer
may reasonably deem necessary or desirable in order to more effectively
consummate the transactions contemplated hereby and to vest in the
Buyer good and marketable title to the Shares without further cost or
expense to the Buyer.
(b) The Sellers will cause the Company to cooperate with
Buyer to promptly develop plans for the management of the business
after the Closing, including, without limitation, plans relating to
productivity, marketing, operations and improvements, and the Company
will further cooperate with Buyer to provide for the implementation of
such plans as soon as practicable after the Closing. Subject to
applicable Law, the Sellers will confer on a regular and reasonable
basis with one or more representatives of Buyer to report on material
operational matters and the general status of ongoing operations. This
obligation of Sellers shall terminate at Closing.
(c) At all times from the date hereof until the Closing,
each party will promptly notify the other in writing of the occurrence
of any event which it reasonably believes will or may result in a
failure by such party to satisfy the conditions specified in this
Article 4.
4.7. DISCLOSURE OF DEVELOPMENTS.
--------------------------
During the period prior to Closing, the Sellers will promptly notify
the Buyer of any event or development of which they acquire knowledge, which, if
existing or occurring at or prior to the date of this Agreement, would have been
required to be set forth or described in the Disclosure Schedule or which is
necessary to correct any information in the Disclosure Schedule or in any
representation and warranty of the Sellers which has been rendered inaccurate by
reason of such event or development.
4.8. PRESS RELEASES AND ANNOUNCEMENTS.
--------------------------------
Buyer and the Sellers agree that the existence, nature and terms and
conditions of this Agreement and discussions between the parties regarding the
27
transactions contemplated hereby will be treated as confidential by the parties.
Accordingly, each party agrees that it will not make any public comment
concerning or announcement of the transactions contemplated hereby prior to
Closing and will take reasonable steps to restrict knowledge of the transactions
contemplated hereby to those who need to know. Notwithstanding the foregoing,
the parties acknowledge and agree that as a public company, Parent is subject to
certain disclosure requirements under applicable securities laws. For this
reason, Parent reserves the right to disclose the existence of and the status of
negotiations at any time prior to Closing if it determines that the securities
laws or the rules of any stock exchange require such disclosure; provided that
each party will notify the other parties if it intends to make such a
disclosure. Following the Closing, Parent and Buyer may make any and all such
disclosures of the terms of this Agreement and the transactions contemplated
hereby as they deem appropriate.
4.9. TAX MATTERS.
-----------
(a) Except for the election required under Section 4.9(h),
no new elections with respect to Taxes, or any changes in current
elections with respect to Taxes, will be made after the date of this
Agreement.
(b) The Sellers will, on the date hereof, provide the Buyer
with any clearance certificates or similar documents which may be
required by any state taxing authority in order to relieve the Buyer of
any obligation to withhold any portion of the Acquisition Price or to
assume any Liability with respect to sales taxes attributable to
operations of the Company prior to the Effective Date.
(c) The Sellers and the Buyer will: (i) each provide the
other, and the Buyer will cause the Company to provide the Sellers,
with such assistance as may reasonably be requested by any of them in
connection with the preparation of any Tax Return, audit or other
examination by any taxing authority or judicial or administrative
proceedings relating to liability for Taxes; (ii) each retain and
provide the other, and the Buyer will cause the Company to retain and
provide the Sellers, with any records or other information which may be
relevant to such Tax Return, audit or examination, proceeding or
determination; and (iii) each provide the other with any final
determination of any such audit or examination, proceeding or
determination that affects any amount required to be shown on any Tax
Return of the other for any period.
(d) Without limiting the generality of the foregoing, the
Buyer will retain, and will cause the Company to retain, and the
Sellers will retain, until the applicable statutes of limitations
(including any extensions) have expired, copies of all Tax Returns,
supporting work schedules and other records or information which are
relevant to such returns for all tax periods or portions thereof ending
before or including the date hereof and will not destroy or otherwise
dispose of any such records without first providing the other party
with a reasonable opportunity to review and copy the same. The Sellers
will request that records in the possession of their accountants be
retained by them for the customary retention period established by the
firm (but in no event less than ten (10) years) and that such records
be made available to the Buyer upon its request.
28
(e) Except as provided hereinbelow, the Company and the
Sellers will exercise complete control over the handling, disposition
and settlement of any governmental inquiry, examination or proceeding
(at their sole cost and expense) that could result in a determination
with respect to Taxes due or payable by the Buyer or the Company for
which the Sellers may be liable, or against which the Sellers may be
required to indemnify the Buyer or the Company pursuant to this
Agreement. The Sellers will promptly notify the Buyer if, in connection
with any such inquiry, examination or proceeding, any government
authority proposes in writing to make any assessment or adjustment with
respect to items of Taxes of the Company, which assessments or
adjustments could affect the Company following the date hereof, and
will consult with the Buyer with respect to any such proposed
assessment or adjustment. The Buyer will notify Sellers in writing
promptly upon learning of any such inquiry, examination or proceeding.
The Sellers will not enter into any settlement or litigation with
respect to an inquiry, examination or proceeding without the prior
written consent of the Buyer, which consent will not be unreasonably
withheld. In the event the Sellers are not diligent or reasonable in
their handling, disposition or settlement of any such governmental
inquiry, examination or proceeding, Buyer will have the right, at
Sellers' expense, to pursue any and all remedies and actions available
to it relating to such governmental inquiry, examination or proceeding
and Sellers will no longer exercise any control over such governmental
inquiry, examination or proceeding.
(f) Each Party will pay its own sales, use, transfer or
documentary taxes and recording and filing fees applicable to the
transactions contemplated by this Agreement.
(g) The Buyer and the Company will file and control any Tax
Returns required to be filed by the Company for periods beginning on or
after the Effective Date. The Sellers agree that they will provide, and
will cause their accountants and other representatives to provide, to
the Buyer on a timely basis the information, including, but not limited
to, all work papers and records relating to the Company, that it or the
accountants or other representatives have within their control and that
may be reasonably necessary or related to: (i) the preparation of any
and all Tax Returns, information returns and reports required to be
filed by the Buyer or the Company with governmental agencies; and (ii)
audits or other tax determinations or proceedings by or before such
agencies, such information to be provided in the form in which it has
in the past been maintained by the Company, the Sellers, their
respective accountants or other representatives.
(h) The parties shall cause the Company to make all
appropriate elections under Subchapter S of the Internal Revenue Code
and related regulations so that for income tax purposes the taxable
income and the books and records of the Company are closed as of the
Effective Date, with all income prior thereto allocated to Sellers and
all income thereafter allocated to Buyer.
4.10. NON-COMPETITION COVENANT.
------------------------
(a) Xxxxx X. Xxxxxx ("Xxxxxx") agrees that from the date
hereof and for the period ending July 31, 2004 (the "Restricted
Period"), Xxxxxx will not, for himself or on behalf of any person,
29
partnership, trust, corporation or other entity, other than the
Company, either as an employee, officer, director, partner,
shareholder, consultant or independent contractor, directly or
indirectly:
(i) act, manage, consult, advise, or in any other
capacity whatsoever own, manage, or in any way "participate"
in the operation of any business competitive with the business
of the Company. For purposes of this subparagraph, the term
"participate" shall mean, in addition to the capacities listed
above, to carry on, or otherwise be engaged, or concerned or
interested in, or act as a consultant or advisor to, either
solely or jointly, or together with or as an employee, manager
or agent for any other person;
(ii) engage in any business substantially similar
to that carried on by the Company as of the date hereof within
those areas in the United States and foreign countries in
which the Company is doing business as of the date hereof or
in which, at this time, the Company contemplates doing
business;
(iii) engage in providing products or services or
offering to provide products or services of the kind provided
by the Company as of the date hereof for those customers of
the Company for whom the Company: (A) is engaged in providing
products or services as of the date hereof, or (B) has either
provided products or services within the twelve (12) month
period prior to the date hereof, or (C) has contacted, prior
to or as of the date hereof, for the purpose of offering to
provide products or services (all of which are hereinafter
referred to as the "Customers");
(iv) solicit or attempt to solicit the Customers
for the purposes of providing or offering to provide any
products or services of a type which the Company provides or
contemplates providing as of the date hereof, on behalf of
those Customers, whether directly or through any other
persons, partnerships, corporations or other entities; or
(v) solicit, interfere with or endeavor to entice
away from the Company any employee of the Company.
(b) Ownership by Xxxxxx, as a passive investment without any
management role or other active involvement, of less than five percent
(5%) of the outstanding shares of any company listed on a United States
stock exchange or publicly traded in the over-the-counter market will
not constitute a breach of this Section 4.10.
4.11 ACCOUNTING ACCRUALS.
-------------------
Buyer and Seller hereby consent and agree to the expense
accruals adjusting the net worth of the Company as described on Exhibit 4.11.
They further agree to review, adjust and agree to any additional or new expense
accrual as of Closing, and that none of the expense accruals as so agreed shall
be a claim against Sellers for any breach of a representation or warranty
30
hereunder, or an adjustment to the purchase price for the Company Common Stock
being purchased hereunder.
5. CONDITIONS TO THE BUYER'S OBLIGATIONS.
Notwithstanding any other provision of this Agreement to the contrary,
the obligation of the Buyer to effect the transactions contemplated herein will
be subject to the satisfaction at or prior to the Closing of each of the
following conditions:
5.1. REPRESENTATIONS AND WARRANTIES TRUE.
-----------------------------------
The representations and warranties of the Sellers contained in this
Agreement, including, without limitation, in the Disclosure Schedule initially
delivered to the Buyer, will be in all material respects true, complete and
accurate as of the date when made and at and as of the Closing as though such
representations and warranties were made at and as of such time, except insofar
as the representations and warranties relate expressly and solely to a
particular date or period, in which case they shall be true and correct in all
material respects at the Closing with respect to such date or period.
5.2. PERFORMANCE.
-----------
The Sellers will have performed and complied in all material respects
with all agreements, covenants, obligations and conditions required by this
Agreement to be performed or complied with by the Sellers on or prior to the
Closing.
5.3. REQUIRED APPROVALS AND CONSENTS.
-------------------------------
All action required by Law and otherwise to be taken by the Sellers to
authorize the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will have been duly and
validly taken. All Consents of or from all Authorities required hereunder to
consummate the transactions contemplated herein, will have been delivered, made
or obtained, and the Buyer will have received copies thereof.
5.4. ADVERSE CHANGES.
---------------
No material adverse change shall have occurred in the business,
financial condition, prospects, assets or operations of the Company since the
Most Recent Balance Sheet.
5.5. NO PROCEEDING OR LITIGATION.
---------------------------
No suit, action, investigation, inquiry or other proceeding by any
Authority or other person or entity will have been instituted or threatened
which delays or questions the validity or legality of the transactions
contemplated hereby or which, if successfully asserted, would individually or in
the aggregate, otherwise have a Material Adverse Effect on the Company's
business, financial condition, prospects, assets or operations.
31
5.6. LEGISLATION.
-----------
No Law shall have been enacted which prohibits, restricts or delays the
consummation of the transactions contemplated hereby or any of the conditions to
the consummation of such transaction.
5.7. ACCEPTANCE BY COUNSEL TO THE BUYER.
----------------------------------
The form and substance of all documents to be delivered at Closing
hereunder will be reasonably acceptable to the Buyer and Xxxxxxxxxxx Xxxxx &
Xxxxxxxx, counsel to Buyer and Parent.
5.8. CERTIFICATES.
------------
The Buyer will have received such certificates of Sellers, in a form
and substance reasonably satisfactory to the Buyer, dated the Closing Date, to
evidence compliance with the conditions set forth in this Article 5 and such
other matters as may be reasonably requested by the Buyer.
5.9. NO OUTSTANDING EQUITY INTERESTS.
-------------------------------
The Sellers will have caused the Company to terminate all outstanding
stock options, warrants, convertible securities and other rights to acquire
capital stock of the Company.
5.10. DUE DILIGENCE.
-------------
The Buyer will have received all information requested by it pursuant
to Section 4.3 of this Agreement, and shall be fully satisfied, determined in
its absolute sole discretion, with the results of its due diligence conducted of
Company, including, without limitation, review of Buyer's Phase I environmental
report and Buyer's other all environmental investigation.
5.11. ASSIGNMENT OF INVENTIONS.
------------------------
The Sellers and each employee of the Company will have assigned all of
their inventions, trade secrets and know-how relating to the Company's business,
to the Company, in a form and substance satisfactory to the Buyer.
5.12. DELIVERY OF COMPANY STOCK CERTIFICATES.
--------------------------------------
The Buyer will have received from each Seller certificates representing
the Shares, properly endorsed for transfer, with signature guaranteed if so
requested by the Buyer.
32
5.13. APPROPRIATE DOCUMENTATION.
-------------------------
Buyer will have received, in a form and substance reasonably
satisfactory to Buyer, dated the Closing Date, all certificates and other
documents, instruments and writings to evidence the fulfillment of the
conditions set forth in this Article 5 as Buyer may reasonably request.
5.14. FINANCIAL STATEMENTS.
--------------------
Buyer shall have received the Financial Statements of the Company
referred to in Section 2.7 of this Agreement as being deliverable after the date
hereof and before the Closing.
5.15. FINANCING.
---------
Buyer shall have received assurances of financing for the stock
purchase satisfactory to Buyer.
5.16. LEASE AND OPTION AND PUT FOR REAL PROPERTY.
------------------------------------------
The Company and Xxxxxxxxx, L.L.C. shall have executed and delivered
to the Buyer the "Lease" and "Option and Put for Real Property" in the forms of
Exhibits 5.16.1. and 5.16.2.
5.17. ABSENCE OF CERTAIN CHANGES.
--------------------------
Except as set forth in the Disclosure Schedule, since the date of the
Most Recent Balance Sheet, the Company has owned and operated its assets,
properties and business in the ordinary course of business and consistent with
past practice. Without limiting the generality of the foregoing,
(a) the Company has not experienced any change which has had
a Material Adverse Effect on the Company or experienced any event or
failed to take any action which reasonably could be expected to result
in a Material Adverse Effect on the Company;
(b) the Company has not suffered any material loss, damage,
destruction of property or assets or other casualty to property or
assets (whether or not covered by insurance);
(c) the Company has not suffered any loss of officers,
directors, employees, dealers, distributors, independent contractors,
customers or suppliers which had or may reasonably be expected to
result in a Material Adverse Effect on the Company; and
(d) no event has taken place which if consummated following
the date hereof would constitute a violation of Section 4.1 hereof.
33
5.18. CUSTOMER.
--------
Company shall not have received any notice (written or oral) that any
material customer of the Company will terminate its relationship with the
Company or, as the case may be, significantly decrease its business with the
Company, as a result of the transactions contemplated by this Agreement or for
any other reason.
5.19. CONDUCT OF BUSINESS OF THE COMPANY.
----------------------------------
During the period from the date of this Agreement to the Closing Date,
the Buyer shall have been satisfied in their sole and absolute discretion that
Sellers have caused the Company to conduct its business and operations according
to its ordinary and usual course of business, to preserve substantially intact
its business organizations and to preserve its current relationships with
customers, employees, suppliers and other persons with which it has significant
business relations, and that there are no breaches any the obligations under
Section 4.1 hereof.
5.20 ACCRUALS.
--------
Sellers and Buyer shall have agreed in writing as to the appropriate
accounting expense accruals described in Section 4.11.
6. CONDITIONS TO OBLIGATIONS OF THE SELLERS.
Notwithstanding anything in this Agreement to the contrary, the
obligations of the Sellers to effect the transactions contemplated herein will
be subject to the satisfaction at or prior to the Closing of each of the
following conditions:
6.1. REPRESENTATIONS AND WARRANTIES TRUE.
-----------------------------------
The representations and warranties of the Buyer and Parent contained in
this Agreement will be in all material respects true, complete and accurate as
of the date when made and at and as of the Closing, as though such
representations and warranties were made at and as of such time, except for
changes permitted or contemplated in this Agreement, and except insofar as the
representations and warranties relate expressly and solely to a particular date
or period, in which case they will be true and correct in all material respects
at the Closing with respect to such date or period.
6.2. PERFORMANCE.
-----------
The Buyer and Parent will have performed and complied in all material
respects with all agreements, covenants, obligations and conditions required by
this Agreement to be performed or complied with by the Buyer and the Parent at
or prior to the Closing.
34
6.3. CORPORATE APPROVALS.
-------------------
All action required to be taken by the Board of Directors of both the
Buyer and Parent to authorize the execution, delivery and performance of this
Agreement by the Buyer and Parent and the consummation of the transactions
contemplated hereby will have been duly and validly taken.
6.4. ADVERSE CHANGES.
---------------
No material adverse change shall have occurred in the business,
financial condition, prospects, assets or operations of the Buyer or Parent
since the date of this Agreement.
6.5. NO PROCEEDING OR LITIGATION.
---------------------------
No suit, action, investigation, inquiry or other proceeding by any
Authority or other person or entity will have been instituted or threatened
which delays or questions the validity or legality of the transactions
contemplated hereby.
6.6. OPINION OF SELLERS' TAX COUNSEL.
-------------------------------
The Sellers will have received an opinion from XxXxxxx & Xxxxx, P.L.C.,
tax counsel to Sellers, dated the Closing Date, regarding the tax consequences
of the transactions contemplated herein reasonably satisfactory to Sellers.
6.7. ACCEPTANCE BY COUNSEL.
---------------------
The form and substance of all documents to be delivered to Sellers at
Closing hereunder will be reasonably acceptable to XxXxxxx & Bowie, P.L.C.,
counsel to the Sellers.
6.8. CERTIFICATES.
------------
The Buyer will have furnished to the Sellers such certificates and
other documents, instruments and writings to evidence the fulfillment of the
conditions set forth in this Article 6 as the Sellers may reasonably request.
6.9. RECEIPT OF ACQUISITION PRICE.
----------------------------
The Buyer shall have delivered to the Sellers the following:
(a) certificates for 200,000 of the Parent Shares; and
(b) Seven Million Dollars ($7,000,000) by wire transfer,
subject to retention of a General Holdback by Buyer, or at the election
of Sellers, the deposit of such General Holdback with Michigan National
Bank, as set forth in Section 1.3 hereof.
35
6.10. COMPANY DISTRIBUTIONS.
---------------------
The Company shall have distributed to Seller the dividends, life
insurance and tax deposit described in Section 4.1(e).
6.11. ACCRUALS.
--------
Sellers and Buyers shall have agreed in writing as to the appropriate
accounting expense accruals described in Section 4.11.
6.12. MARKET VALUE OF PARENT SHARES.
-----------------------------
The Parent Shares to be delivered to Sellers will have a minimum value
reasonably acceptable to Sellers at the Closing Date.
6.13. LEASE AND OPTION AND PUT FOR REAL PROPERTY.
------------------------------------------
The Company and Xxxxxxxxx, L.L.C. shall have executed and delivered to
the Sellers the "Lease" and "Option and Put for Real Property" in the forms of
Exhibits 5.16.1 and 5.16.2 hereto.
7. TERMINATION AND ABANDONMENT.
7.1. TERMINATION BY MUTUAL CONSENT.
-----------------------------
This Agreement may be terminated at any time prior to the Closing by
the written consent of the Sellers and the Buyer.
7.2. TERMINATION BY EITHER THE SELLERS OR BUYER.
------------------------------------------
This Agreement may be terminated by either the Sellers or Buyer if
(a) the Closing has not been consummated by 5:00 p.m.
(Michigan time) on August 6, 1999 (provided that the right to terminate
this Agreement under this Section 7.2(a) will not be available to any
party whose failure to fulfill any obligation under this Agreement has
been the cause of or resulted in the failure of the Closing to occur on
or before such date); or
(b) any court of competent jurisdiction in the United States
or some other governmental body or regulatory authority will have
issued an order, decree or ruling or taken any other action permanently
restraining, enjoining or otherwise prohibiting the Closing or
permitting consummation of the Closing only subject to a condition or
restriction unacceptable to Buyer and such order, decree, ruling or
other action will have become final and nonappealable.
36
7.3. TERMINATION BY BUYER.
--------------------
This Agreement may be terminated at any time prior to the Closing Date
by Buyer, if:
(a) any of the Sellers have failed to comply in any material
respect with any of the covenants, conditions or agreements contained
in this Agreement required to be performed or complied with by the
Sellers prior to the Closing Date; or
(b) any representation or warranty of any of the Sellers
contained in this Agreement is or becomes untrue or incorrect in a
material way (except for changes permitted by this Agreement and those
representations which address matters only as of a particular date that
remain true and correct as of such date).
(c) Buyer is not fully satisfied (in its sole discretion)
with the results of its due diligence conducted under this Agreement,
including, without limitation, its Phase I Environmental Report or
other environmental investigation, and its inspection of the condition
of the "Premises" subject to the "Lease."
7.4. TERMINATION BY THE SELLERS.
--------------------------
This Agreement may be terminated prior to the Closing Date by action of
the Sellers, if:
(a) the Buyer has failed to comply in any material respect
with any of the covenants, conditions or agreements contained in this
Agreement required to be performed on or complied with by the Buyer
prior to the Closing Date;
(b) any representation or warranty of the Buyer or Parent
contained in this Agreement is or becomes untrue or incorrect in a
material way (except for changes permitted by this Agreement and those
representations which address matters as of a particular date that
remain true and correct as of such date).
(c) Sellers are not satisfied (in their sole discretion)
with the result of their due diligence of Buyer or Parent conducted
under this Agreement.
7.5. PROCEDURE AND EFFECT OF TERMINATION.
-----------------------------------
In the event of termination of this Agreement and abandonment of the
transactions contemplated hereby by the Sellers or Buyer pursuant to this
Article 7, written notice must be given to all other parties and this Agreement
will terminate (other than Sections 4.2, 4.4, 4.8, 8.2, 8.3, 9.1, 9.2, 9.3 and
9.13) and the transactions contemplated hereby will be abandoned, without
further action by any of the parties hereto. If this Agreement is terminated as
provided herein:
(a) Upon request therefor, each of the parties hereto will
redeliver all documents, workpapers and other material of the other
parties relating to the transactions contemplated hereby, whether
obtained before or after the execution hereof, to the party furnishing
the same;
37
(b) No party will have any further obligation to the other
party to this Agreement pursuant to the terms of this Agreement except
for liability of any breach of this Agreement; and
(c) All filings, applications and other submissions made
pursuant to the terms of this Agreement will, to the extent
practicable, be withdrawn from the agency or other person to which
made.
8. SURVIVAL; INDEMNIFICATION; RELEASE.
8.1. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS;
------------------------------------------------------
INVESTIGATION.
-------------
All representations and warranties, covenants and agreements contained
herein and in the exhibits hereto will survive the Closing for a period of two
(2) years after Closing, except that matters relating to Sections 2.16 and 2.17
shall continue until the expiration of the applicable statute of limitation
provided by applicable Law, and any matter with respect to Section 2.21 shall
survive after Closing for a period of five (5) years.
8.2. INDEMNIFICATION BY THE BUYER.
----------------------------
The Buyer agrees to indemnify, defend and hold the Sellers harmless
from and against any and all losses, liabilities, obligations, demands,
judgments, settlements, damages (but excluding consequential damages, lost
profits or punitive damages) or expense (including, but not limited to,
interest, penalties, fees and reasonable professional fees and expenses) and
against all claims in respect thereof (including, without limitation, amounts
paid in settlement and costs of investigation) or diminution in value, whether
or not involving a third-party claim (collectively, "Sellers' Loss" or "Sellers'
Losses" to which the Sellers may suffer or incur, directly or indirectly, as a
result from or in connection with:
(a) any untrue representation of, or breach of warranty by,
the Buyer in any part of this Agreement;
(b) the breach of or nonfulfillment of any covenant,
agreement or undertaking of Buyer in this Agreement; and
(c) any obligation for Taxes attributable to income of the
Company for any period (or portion thereof) following the Effective
Date.
8.3. INDEMNIFICATION BY THE SELLERS.
------------------------------
The Sellers agree to indemnify Buyer and its subsidiaries and
affiliates (including the Company following Closing) and each of their
respective shareholders, officers, directors, employees, subsidiaries and
affiliates (collectively the "Buyer Indemnified Parties") against all losses,
liabilities, obligations, demands, judgments, settlements, damages (but
excluding any claims for consequential damages, lost profits or punitive damages
suffered directly by Buyer as opposed to consequential damages, lost profits or
punitive damages paid by Buyer to a third party), Taxes, or expenses (including,
but not limited to, interest, penalties, fees, and reasonable professional fees
38
and expenses) and against all claims in respect thereof (including, without
limitation, amounts paid in settlement and costs of investigation) or diminution
in value, whether or not involving a third-party claim (herein referred to
collectively as "Buyer's Losses" or individually as a "Buyer's Loss") to which
the Buyer Indemnified Parties may become subject to or which they may suffer or
incur, directly or indirectly, as a result from or in connection with:
(a) any untrue representation of or breach of warranty, by
the Sellers in any part of this Agreement;
(b) the breach of or nonfulfillment of any covenant,
agreement or undertaking of the Sellers in this Agreement;
(c) any obligation for Taxes of the Sellers or the Company
for any period (or portion thereof) prior to the Effective Date;
8.4. CLAIMS FOR INDEMNIFICATION.
--------------------------
(a) GENERAL. The parties intend that all indemnification
claims be made as promptly as practicable by the party seeking
indemnification (the "Indemnified Party"). Whenever any claim shall
arise for indemnification hereunder the Indemnified Party shall
promptly notify the party from whom indemnification is sought (the
"Indemnifying Party") of the claim and, when known, the facts
constituting the basis for such claim (the "Notice"). The failure so to
notify the Indemnifying Party shall not relieve the Indemnifying Party
of any liability that it may have to the Indemnified Party except to
the extent the Indemnifying Party demonstrates that the defense of such
action is materially prejudiced thereby. For purposes of this
Agreement, the date the Notice is first mailed or otherwise released
for dispatch to the Indemnifying Party is hereinafter referred to as
the "Notice Delivery Date."
(b) CLAIMS BY THIRD PARTIES. With respect to claims made by
third parties, the Indemnifying Party shall be entitled to assume
control of the defense of such action or claim with counsel reasonably
satisfactory to the Indemnified Party; provided, however, that:
(i) the Indemnified Party shall be entitled to
participate in the defense of such claim and to employ counsel
at its own expense to assist in the handling of such claim;
(ii) no Indemnifying Party shall consent to (A) the
entry of any judgment or enter into any settlement that does
not include as an unconditional term thereof the giving by
each claimant or plaintiff to each Indemnified Party of a
release from all liability in respect of such claim or (B) if,
pursuant to or as a result of such consent or settlement,
injunctive or other equitable relief would be imposed against
the Indemnified Party or such judgment or settlement could
materially interfere with the business, operations or assets
of the Indemnified Party; and
39
(iii) if the Indemnifying Party does not assume
control of the defense of such claim in accordance with the
foregoing provisions within ten (10) business days after the
Notice Delivery Date, the Indemnified Party shall have the
right to defend such claim in such manner as it may deem
appropriate at the cost and expense of the Indemnifying Party,
and the Indemnifying Party will promptly reimburse the
Indemnified Party therefore in accordance with this Article 8;
provided that the Indemnified Party shall not be entitled to
consent to the entry of any judgment or enter into any
settlement of such claim that does not include as an
unconditional term thereof the giving by each claimant or
plaintiff to each Indemnifying Party of a release from all
liability in respect of such claim without the prior written
consent of the Indemnifying Party if, pursuant to or as a
result of such consent or settlement, injunctive or other
equitable relief would be imposed against the Indemnifying
Party or such judgment or settlement could materially
interfere with the business, operations or assets of the
Indemnifying Party.
(c) REMEDIES CUMULATIVE. The remedies provided herein shall
be cumulative and shall not preclude assertion by any party of any
rights or the seeking of any other remedies against any other party.
8.5. RELEASE OF PRIOR CLAIMS.
-----------------------
The Sellers hereby release the Company, Buyer and their respective
subsidiaries, officers, directors, shareholders, employees and affiliates
(collectively, the "Released Parties") of and from any and all claims,
complaints, causes of action or demands of whatever kind, known or unknown
(collectively, the "Claims"), which either of the Sellers has or may have
against the Released Parties for any actions, conduct, decisions, behavior or
events relating to or arising out of either of the Sellers' status or
relationship as an employee, officer, director or shareholder of the Company.
The Sellers understand that this release extends to, but is not limited to,
Claims for breach of contract, breach of any express or implied promise,
retaliation, breach of public policy, negligence, intentional infliction of
emotional distress, defamation or any other tortious conduct or any Claims under
the federal or state securities laws.
9. MISCELLANEOUS PROVISIONS.
9.1. EXPENSES.
--------
The Buyer shall bear its own costs and expenses, and Company shall bear
the costs and expenses of Sellers (provided that such costs and expenses do not
exceed Thirty Thousand Dollars ($30,000)), relating to the transactions
contemplated hereby, including, without limitation, fees and expenses of legal
counsel, accountants, investment bankers, brokers or finders, printers, copiers,
consultants or other representatives for the services used, hired or connected
with the transactions contemplated hereby.
40
9.2. AMENDMENT AND MODIFICATION.
--------------------------
Subject to applicable Law, this Agreement may be amended or modified by
the parties hereto at any time prior to the Closing with respect to any of the
terms contained herein; provided, however, that all such amendments and
modifications must be in writing duly executed by all of the parties hereto.
9.3. WAIVER OF COMPLIANCE; CONSENTS.
------------------------------
Any failure of a party to comply with any obligation, covenant,
agreement or condition herein may be expressly waived in writing by the party
entitled hereby to such compliance, but such waiver or failure to insist upon
strict compliance with such obligation, covenant, agreement or condition shall
not operate as a waiver of, or estoppel with respect to, any subsequent or other
failure. No single or partial exercise of a right or remedy will preclude any
other or further exercise thereof or of any other right or remedy hereunder.
Whenever this Agreement requires or permits the consent by or on behalf of a
party, such consent will be given in writing in the same manner as for waivers
of compliance.
9.4. NO THIRD PARTY BENEFICIARIES.
----------------------------
Nothing in this Agreement will entitle any person or entity (other than
a party hereto and his, her or its respective successors and assigns permitted
hereby) to any claim, cause of action, remedy or right of any kind.
9.5. NOTICES.
-------
All notices, requests, demands and other communications required or
permitted hereunder must be made in writing and will be deemed to have been duly
given and effective: (i) on the date of delivery, if delivered personally; (ii)
on the earlier of the fourth (4th) day after mailing or the date of the return
receipt acknowledgment, if mailed, postage prepaid, by certified or registered
mail, return receipt requested; or (iii) on the date of transmission, if sent by
facsimile, telecopy, telegraph, telex or other similar telegraphic
communications equipment:
If to the Sellers: Xxxxx X. Xxxxxx
0000 Xxxxxx, X.X.
Xxxxx Xxxxxx, Xxxxxxxx 00000
with a copy to: XxXxxxx & Xxxxx, P.L.C.
0000 Xxxxxx Xxxxxx Xxxxx
00 Xxxxxx Xxx., X.X.
X.X. Xxx 000
Xxxxx Xxxxxx, Xxxxxxxx 00000-0000
Attn: Xxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
41
or to such other person or address as the Sellers furnish to the Buyer in
writing in accordance with this subsection.
If to Buyer: Clarion Plastics Technologies, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx Xxxxxxx
Facsimile: (000) 000-0000
with copies to: Clarion Technologies, Inc.
0000 X. Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxx X. Xxxxxxxxxx
Facsimile: (000) 000-0000
Xxxxxxxxxxx Xxxxx & Xxxxxxxx
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx Xxxxxx Xxxxxxx, Esq.
Facsimile: (000) 000-0000
or to such other person or address as Buyer furnishes to the other parties
hereto in writing in accordance with this subsection.
9.6. ASSIGNMENT.
----------
This Agreement and all of the provisions hereof will be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns, but neither this Agreement nor any of the rights,
interests or obligations hereunder will be assigned (whether voluntarily,
involuntarily, by operation of law or otherwise) by any of the parties hereto
without the prior written consent of the other parties, provided, however, that
the Buyer may assign its rights (but not its obligations) under this Agreement,
in whole or in any part, and from time to time, to a wholly owned, direct or
indirect, subsidiary of Buyer or to Parent.
9.7. GOVERNING LAW.
-------------
This Agreement and the legal relations among the parties hereto will be
governed by and construed in accordance with the internal substantive laws of
the State of Michigan (without regard to the laws of conflict that might
otherwise apply) as to all matters, including without limitation, matters of
validity, construction, effect, performance and remedies.
42
9.8. COUNTERPARTS.
------------
This Agreement may be executed simultaneously in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9.9. HEADINGS.
--------
The table of contents and the headings of the sections and subsections
of this Agreement are inserted for convenience only and shall not constitute a
part hereof.
9.10. ENTIRE AGREEMENT.
----------------
This Agreement, the Disclosure Schedule, the Confidentiality Agreements
dated May 6, 1999, copies of which are attached hereto as Exhibit 9.12 (the
"Confidentiality Agreements") and the exhibits and other writings referred to in
this Agreement, in the Disclosure Schedule or in the Confidentiality Agreements
or any such exhibit or other writing are part of this Agreement, together they
embody the entire agreement and understanding of the parties hereto in respect
of the transactions contemplated by this Agreement and together they are
referred to as the "Agreement". There are no restrictions, promises, warranties,
agreements, covenants or undertakings, other than those expressly set forth or
referred to in this Agreement. This Agreement supersedes all other prior
agreements and understandings between the parties with respect to the
transaction or transactions contemplated by this Agreement, including, but not
limited to, the letter of intent dated May 6, 1999. Provisions of this Agreement
will be interpreted to be valid and enforceable under applicable Law to the
extent that such interpretation does not materially alter this Agreement;
provided, however, that if any such provision shall become invalid or
unenforceable under applicable Law such provision will be stricken to the extent
necessary and the remainder of such provisions and the remainder of this
Agreement will continue in full force and effect.
9.11. INJUNCTIVE RELIEF.
-----------------
It is expressly agreed among the parties hereto that monetary damages
would be inadequate to compensate a party hereto for any breach by any other
party of its covenants and agreements in Sections 4.2, 4.4, 4.8 and 4.10 hereof.
Accordingly, the parties agree and acknowledge that any such violation or
threatened violation will cause irreparable injury to the other and that, in
addition to any other remedies which may be available, such party will be
entitled to injunctive relief against the threatened breach of Sections 4.2,
4.4, 4.8 and 4.10 hereof or the continuation of any such breach without the
necessity or proving actual damages and may seek to specifically enforce the
terms thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
"SELLERS"
43
----------------------------------------
XXXXX X. XXXXXX
----------------------------------------
XXXXXXXX XXXXXX
----------------------------------------
XXXXXXX X. XXXXXX
----------------------------------------
XXXXX X. XXXXXX
"BUYER"
CLARION PLASTICS
TECHNOLOGIES, INC.,
an Ohio corporation
By:
------------------------------------
Xxxxxxx Xxxxxxx, Chief Executive
Officer
"PARENT"
CLARION TECHNOLOGIES, INC.,
a Delaware corporation
By:
------------------------------------
Xxxx X. Xxxxxxxxxx, Chief Executive
Officer
44
