EXHIBIT 10.10
THIS FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT (the "Amendment"), is
entered into as of this 26th day of June, 1998, by and among Inmold, Inc., an
Indiana corporation (the "Purchaser"), Seville Plastics, Inc., a Michigan
corporation ("Seville"), and the following individual (the "Selling
Shareholder"): Xxxxxx X. Xxxxxxxx. Certain capitalized terms used in this
Agreement are defined on Exhibit A.
RECITALS
WHEREAS, the parties have previously entered into a Stock Purchase
Agreement dated March 17, 1998; and
WHEREAS, the parties have agreed to amend the Agreement in certain respects.
NOW, THEREFORE, in consideration of the mutual promises contained herein,
the parties agree as follows:
1. Section 1.2 of the Stock Purchase Agreement previously entered into
shall be amended to read as follows:
1.2 Purchase Price, Payment of Purchase Price. In consideration for the
purchase of the Shares and for the Non-competition Agreements be
entered into between Seville and the Selling Shareholder, Purchaser
agrees to the following:
(a) The aggregate purchase price payable by the Purchaser for the Shares
("the Purchase Price") shall be $475,000
(b) The Purchase Price shall be paid as follows:
(i) The downpayment to be paid at Closing shall be $190,000, reduced
by the Valuation Adjustment, if any, determined pursuant to
Paragraph 1.2(b)(iii), below; provided, however, the downpayment,
including the $25,000 deposit previously made, shall not be less
than $75,000.
(ii) Prior to Closing, the Purchaser shall obtain a new appraisal for
the machinery and equipment owned by Seville Plastics, Inc.,
which appraisal shall be from an entity acceptable to a lending
institution acceptable to the Purchaser. Seville shall have the
right to approve the appraiser obtained by Purchaser.
(ii) The parties shall review the value of the new appraisal by
comparing it to the Haron Machinery appraisal of $365,000.00
(liquidation value). The reduction in appraised value, if any,
from the new appraisal shall reduce the downpayment from the
previous $190,000.00 on a dollar for dollar basis. For example,
a $50,000.00 reduction in the liquidation value from the new
appraisal shall result in a $50,000.00 reduction in the
downpayment amount (but not an adjustment in the Purchase Price).
The adjustment in the
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downpayment resulting from the differences in the appraisals in
hereinafter referred to as the "Valuation Adjustment."
(c) The balance of the Purchase Price minus the reduction in the down
payment as a result of the Valuation Adjustment, if any, shall be paid
in equal installments over a period of three years. These payments
shall bear interest at the rate of eight (8%) percent per annum.
Payments shall be made monthly commencing one month after the date of
closing for a period of twelve (12) months. Commencing with the period
ending one year after the date of closing quarterly payments shall be
due until all principal and accrued interest is paid for this portion
of the purchase price.
(d) In addition, the Seller shall receive, and the Purchaser shall receive
credit toward the Purchase Price, annual payments for every month
after the Closing, commencing on the first day of the month after the
date of closing, equal to twenty-five (25%) percent of the net profit
of Seville Plastics, Inc., in excess of $15,000.00 per month. For
example, in the event that Seville Plastics for a twelve-month (12)
period of timne has a net profit of $60,000.00 per month, on a
cumulative basis over that period, the Selling Shareholder would be
entitled to twenty-five (25%) percent of $60,000.00, or $15,000.00
Said amounts paid under this paragraph shall reduce amounts due and
owing under paragraph (e) herein.
(e) Commencing at the end of the fifth (5th) year after Closing, and in
the event that there is a balance owing on the purchase price of
$475,000.00 of principal, then in that event, one-third (1/3) of all
principal due and owing the Selling Shareholder shall be paid at the
end of year five, one-third (1/3) shall be paid at the end of year
six; and one-third (1/3) shall be paid at the end of year seven after
the date of Closing. Interest shall not be due or payable on any
amounts due under this paragraph. Paragraphs (c) and (d) of the
Purchase Agreement will remain in full force and effect as is stated
in full herein.
(e) The parties acknowledge that the $25,000 amount deposited with Xxxxx,
Xxxx, Xxxxxx & Xxxxxxx, PLLC shall be considered a non-refundable
depost, which shall be paid to Purchaser if the transaction failures
to close for any reason other than a breach by Seller or a failure of
Seller to obtain Seville's release from Seville's obligations under
(i) the First of America Bank loan with respect to the real estate,
which has been guaranteed by Seville, and (ii) the Loan Agreement
between the Oakland County Local Development Corporation, Seville and
the Selling Shareholder for a certain SBA loan on the real estate, on
which Seville is a co-obligor.
(f) The parties reaffirm the provisions of Paragraph 1.2(c) and 1.2(d) of
the original Stock Purchase Agreement in their entirety, and
redesignate them as
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Paragraph 1.2(g) and 1.2(h)
IN WITNESS WHEREOF, the parties have caused this First Amendment to Stock
Purchaser Agreement to be executed and delivered this_____day of June, 1998.
"PURCHASER" INMOLD, INC., an Indiana Corporation
BY: [Illegible]
---------------------------------
"SEVILLE" SEVILLE PLASTICS, INC., a Michigan
Corporation
BY: /s/ Xxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxx X. Xxxxxxxx
"SELLING SHAREHOLDER" /s/ Xxxxxx X. Xxxxxxxx
----------------------------------
Xxxxxx X. Xxxxxxxx
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-----------------------------------
STOCK PURCHASE AGREEMENT
among:
INMOLD, INC.
an Indiana corporation;
SEVILLE PLASTICS, INC.
a Michigan corporation;
and
XXXXXX X. XXXXXXXX
--------------------------
Dated as of March 17, 1998
--------------------------
-----------------------------------
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is entered into as of
March ___, 1998, by and among Inmold, Inc., an Indiana corporation (the
"Purchaser"), Seville Plastics, Inc., a Michigan Corporation ("Seville"), and
the following individual (the "Selling Shareholder"): Xxxxxx X. Xxxxxxxx.
Certain capitalized terms used in this Agreement are defined on Exhibit A.
RECITALS
A. The Selling Shareholder owns shares of the common stock of Seville (the
"Shares"), which constitute all of the outstanding capital stock of Seville.
B. The Selling Shareholders wish to sell the Shares to the Purchaser on the
terms set forth in this Agreement.
AGREEMENT
The Purchaser, Seville and the Selling Shareholders, intending to be
legally bound, agree as follows:
SECTION 1. SALE AND PURCHASE OF SHARES; RELATED TRANSACTIONS
1.1 Sale and Purchase of Shares. On the terms and subject to the conditions
of this Agreement, at the Closing the Selling Shareholder shall sell, assign,
transfer and deliver the Shares to the Purchaser, and the Purchaser shall
purchase the Shares from the Selling Shareholder.
1.2 Purchase Price. In consideration for the purchase of the Shares and for
the Noncompetition Agreements to be entered into between Seville and the selling
Shareholder, Purchaser agrees to the following:
(a) The aggregate purchase price payable by the Purchaser for the
Shares (the "Purchase Price") shall be $475,000.00. To the extent that the book
value of the Corporation from and after the November 30, 1997 financial
statement improves, the parties agree to negotiate an equitable increase in the
purchase price.
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(b) The Selling Shareholder shall be paid forty percent (40%) of
the Purchase Price at the Closing by certified check or wire transfer. The
remaining sixty (60%) percent of the Purchase Price shall be paid in equal
installments over a period of three years. All payments received after the down
payment shall bear interest at the rate of 8 % per annum. Payments shall be made
monthly commencing one month after the date of closing for a period of twelve
months. Commencing with the period ending one year after the date of closing
quarterly payments shall be due until all principal and accrued interest is
paid. Notwithstanding anything to the contrary contained herein, the complete
purchase price shall be paid within three years from the date of closing. A good
faith deposit of Twenty-Five Thousand ($25,000.00) dollars shall be deposited
with Seller's attorney as escrow agent upon execution of this Agreement. The
purchase price shall be guaranteed by Seville. The Selling Shareholder shall be
entitled to a second lien on all assets of Seville Plastics, Inc. other than
equipment purchased after the Closing Date, in order to support the guaranty.
(c) The parties acknowledge that there is an item entitled "total
long term liability" in the amount of $181,612.87 listed on the balance sheet as
of 11/30/1997. The parties further acknowledge that the entity to whom this is
paid is commonly known as the Rochester entity. The parties agree that the
Rochester liability shall be paid by the Company over a period not to exceed 60
months. No payments will be made for the first twelve months after the closing.
Beginning in the month thirteen, there will be 48 equal monthly payments of
principal. This liability shall not bear interest until the end of the 48th
month after closing. Commencing with the first day of the first day of the 49th
month after the closing, interest on any unpaid balance shall bear interest at
the rate of 5 % per annum and said interest shall be paid in addition to any
principal payments on a monthly basis.
(d) Purchaser, Inmold, Inc., hereby guarantees all payments
required under 1.2(c) and the employment letter between Seville, Inc. and
Purchaser dated as of the closing date of the proposed transaction.
1.3 Closing.
(a) The closing of the sale of the Shares to the Purchaser (the
"Closing") shall take place at the offices of Xxxxxxxx X. Xxxxx, 0000 Xxxxxxx
Xxxx Xxxx, Xxxxx 000, Xxxx Xxxxxxxxxx, Xxxxxxxx 00000 on or before April 16,
1998 (the "Closing Date")
(b) At the Closing:
(i) The Selling Shareholder shall deliver to the Purchaser the
stock certificates representing ownership of the Shares, duly endorsed for
transfer, free and clear of all Encumbrances, dated as of the Closing Date.
(ii) The Purchaser will pay to the Selling Shareholder the amounts
payable pursuant to Section 1.2(b).
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(iii) The Selling Shareholder shall execute and deliver to the
Purchaser and Seller, Seville, a Noncompetition Agreement in substantially the
form of Exhibit B;
(iv) The Selling Shareholder, Purchaser and Seville shall execute
and deliver to each other a General Release in substantially the form of Exhibit
C.
(v) Seville and the Selling Shareholder shall execute and
deliver to the Purchaser a certificate in substantially the form of Exhibit D
(the "Closing Certificate") setting forth Seville's and the Selling
Shareholder's representations and warranties that (A) each of the
representations and warranties made by Seville and the Selling Shareholder in
this Agreement was accurate in all respects as of the date of this Agreement,
(B) except as expressly set forth in the Closing Certificate, each of the
representations and warranties made by Seville and the Selling Shareholder in
this Agreement is accurate in all respects as of the Closing Date as if made on
the Closing Date, and (C) except as expressly set forth in the Closing
Certificate, each of the conditions set forth in Sections 6.4, 6.5, 6.9 and 6.
10 has been satisfied in all respects.
(vi) The parties have entered into a lease between Seville
Plastics, Inc. and Xxxxxx X. Xxxxxxxx for the real property upon which the
current operations of Seville are conducted, substantially in the form of
Exhibit 1.3(vi), providing for a triple net lease, for a five-year term, with a
rental of $9,200 for years 1 and 2, and a rental of $9,700 for years 3, 4 and 5.
(vii) The parties have entered into an employment letter
acceptable to both parties with respect to the employment of Xxxxxx X.
Xxxxxxxx, substantially in the form of Exhibit 1.3(vii).
(viii) The parties have entered into an equipment lease for certain
equipment owned by Xxxxxx X. Xxxxxxxx and currently being used by Seville
Plastics for a term of two years at a rate of $2,000 per month, on terms
acceptable to both parties.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF SEVILLE AND SELLING
SHAREHOLDER
Seville and Selling Shareholder jointly and severally represent and
warrant, to and for the benefit of the Indemnitees, as follows:
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2.1 Due Organization; No Subsidiaries; Etc.
(a) Seville is a corporation duly organized, validly existing
and in good standing under the laws of the State of Michigan and has all
necessary power and authority:
(i) to conduct its business in the manner in which its
business is currently being conducted and in the manner in which its
business is proposed to be conducted;
(ii) to own and use its assets in the manner in which its
assets are currently owned and used and in the manner in which its assets
are proposed to be owned and used; and
(iii) to perform its obligations under all Seville
Contracts.
(b) Seville has no subsidiaries, and has never owned,
beneficially or otherwise any shares or other securities of, or any direct or
indirect interest of any nature in, any entity, except shares constituting not
more than 1% of any public company.
(c) Seville is not required to be qualified, authorized,
registered or licensed to do business as a foreign corporation in any
jurisdiction other than the state of Michigan.
(d) Neither Seville nor any of its shareholders has, since
January 1, 1995, approved, or commenced any proceeding or made any election
contemplating, the dissolution or liquidation of Seville or the winding up or
liquidation of Seville's business or affairs.
2.2 Articles of Incorporation and Bylaws; Records.
(a) Seville has delivered or will deliver in form acceptable to
Purchaser accurate, complete and current copies of:
(i) Seville's articles of incorporation and bylaws,
including all amendments thereto, certified by the State of Michigan;
(ii) the stock records of Seville; and
(iii) the minutes and other records of the meetings and
other proceedings (including any actions taken by written consent or otherwise
without a meeting) of the
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shareholders of Seville, the board of directors of Seville and all committees of
the board of directors.
There have been no meetings or other proceedings of the shareholders, the board
of directors or any committee of the board of directors that are not full
reflected in such minutes or other records, which would have a material adverse
impact on the Company or Buyer.
(b) There has not been any violation of any of the provisions of
Seville's articles of incorporation or bylaws or of any resolution adopted by
Seville's shareholders, the board of directors or any committee of the board of
directors; and no event has occurred , and no condition or circumstance exists,
that would (with or without notice or lapse of time) constitute or result
directly or indirectly in such a violation.
2.3 Capitalization, etc.
(a) The authorized capital stock of Seville consists of 50,000
shares of common stock, without par value, of which 15,000 shares (constituting
all of the Shares) have been issued and are outstanding;
(b) The Selling Shareholder has, and the Purchaser will acquire
at the Closing, good and valid title to the Shares free and clear of any
Encumbrances. Of the Shares:
(i) Xxxxxx X. Xxxxxxxx owns, beneficially and of record
15,000 shares;
(c) All of the Shares (i) have been duly authorized and validly
issued, (ii) are fully paid and non-assessable, and (iii) have been issued in
full compliance with all applicable securities laws and other applicable laws,
rules and regulations. None of the Shares is subject to any repurchase option or
restriction on transfer (other than restrictions on transfer imposed by virtue
of applicable federal and state securities laws). The Selling Shareholder has
delivered to the Purchaser accurate and complete copies of the stock
certificates evidencing the Shares.
(d) Except as set forth in part 2.3(d) of the Disclosure
Schedule, there is no:
(i) outstanding subscription, option, call, warrant or
right (whether or not currently exercisable) to acquire any shares of the
capital stock or other securities of Seville;
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(ii) outstanding security, instrument or obligation that
is or may become convertible into or exchangeable for any shares of the capital
stock or other securities of Seville.
(iii) condition or circumstance that may directly or
indirectly give rise to or provide a basis for a claim by any Person to the
effect that such Person is entitled to acquire or receive any shares of capital
stock or other securities of Seville.
2.4 Financial Statements.
(a) Seville has delivered to the Purchaser the following
financial statements and notes (collectively), the "Seville Financial
Statements"):
(i) the unaudited interim Balance sheets of Seville as of
January 31, 1998, and the related interim unaudited statement of operations
for the three months then ended;
(ii) the compiled balance sheet of Seville as of November
30, 1997 (the "Unaudited Balance Sheet"), and the related compiled statements of
operations, changes in stockholders' equity and cash flows of Seville for the
twelve months ended, together with the notes thereto.
(b) All of the Seville Financial Statements are accurate and
complete in all respects. The financial statements and notes referred to in
Section 2.4(a)(i) and 2.4(a)(ii) present fairly the financial position of
Seville as of the date of said balance sheets and the results of operations,
changes in stockholders' equity and cash flows of Seville for the periods then
ended. The Seville Financial Statements have been prepared in accordance with
generally accepted accounting principles ("GAAP"), applied on a consistent basis
throughout the periods covered.
2.5 Absence of Changes. Except as set forth in Part 2.5 of the
Disclosure Schedule, since November 30, 1997:
(a) there has not been any material adverse change in Seville's
business, condition, assets, liabilities, intellectual property rights,
operations, financial performance or net income except as disclosed in the
Seville Financial Statements.
(b) there has not been any material loss, damage or destruction
to, or any interruption in the use of, any of Seville's assets (whether or not
covered by insurance);
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(c) Seville has not (i) declared, accrued, set aside or paid any
dividend or made any other distribution in respect of any shares of capital
stock, or (ii) repurchased, redeemed or otherwise reacquired any shares of
capital stock or other securities;
(d) Seville has not sold, issued or authorized the issuance of
(i) any shares of capital stock or any other securities (ii) any call,
option, warrant or right to acquire, or otherwise relating to, any capital
stock or any other security or (iii) any instrument convertible into or
exchangeable for any capital stock or other security;
(e) Seville has not amended its articles of incorporation or
bylaws and has not effected or been a party to any Acquisition Transaction,
recapitalization, reclassification of shares, stock split, reverse stock
split or similar transaction;
(f) Seville has not purchased or otherwise acquired any asset
from any other Person, other than in the ordinary course of business and
consistent with Seville's past practices;
(g) except as stated on Schedule 2.5 Seville has not leased or
licensed any asset from any other Person;
(h) except as stated on Schedule 2.5 Seville has not made any
capital expenditure in excess of $10,000;
(i) Seville has not sold or otherwise transferred any asset to
any other Person other than in the ordinary course of business and
consistent with Seville's past practices;
(j) except as stated on Schedule 2.5 Seville has not written off
as uncollectible, or established any extraordinary reserve with respect to, any
account receivable or other indebtedness;
(k) except as stated on Schedule 2.5 Seville has not pledged
or hypothecated any of its assets or otherwise permitted any of its assets to
become subject to any Encumbrance;
(l) Seville has not made any loan or advance
to any other Person;
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(m) Seville has not (i) established or adopted any Employee
Benefit Plan, or (ii) paid any bonus or made any profit-sharing or similar
payment to, or increased the amount of the wages, salary, commissions,
fringe benefits or other compensation or remuneration payable to, any of
its directors, officers or employees;
(n) Seville has not forgiven any debt or otherwise released or
waived any right or claim;
(o) Seville has not changed any of its methods of accounting or
accounting practices in any respect;
(p) Seville has not entered into any transaction or taken any
other action outside the ordinary course of business or inconsistent with
Seville's past practices; and
(q) Seville has not agreed or committed to take any of the
actions referred to in clauses "(c)" through "(p)" above.
2.6 Title to Assets; Condition of Assets.
(a) Seville owns, and has good, valid and marketable title to:
(i) all assets reflected in Unaudited Interim Balance
Sheet (except for inventory sold by Seville since November 30, 1997 and
receivables realized in the ordinary course of business and consistent with
Seville's past practices); and
(ii) all assets acquired by Seville since November 30,
1997 (except for inventory sold by Seville since November 30, 1997 in the
ordinary course of business and consistent with Seville's past practices).
(iii) All other assets reflected in Seville's financial
records or lists of equipment are owned by Seville.
(b) Each molding machine owned by Seville:
(i) is structurally sound, free of defects and
deficiencies and in good condition and repair (ordinary wear and tear
excepted). The parties agree that any repairs to molding machines beyond
normal wear and tear and general maintenance for the period 135 days after
the closing which exceed thirty thousand ($30,000.00) dollars in the
aggregate shall be considered Indemnity Claims under Section 9.2;
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(ii) complies in all respects with, and is being operated
and otherwise used in full compliance with, all applicable law,
rules and regulations, except where the failure to be in compliance
would not have a material adverse effect on Seville's business,
condition, assets, liabilities, operations, financial performance,
or net income (or on any aspect or portion thereof).
(c) Except as set forth in Part 2.6(c) of the Disclosure
Schedule, all of said assets are owned by Seville free and clear of any
Encumbrances.
2.7 Bank Accounts. Part 2.7 of the Disclosure Schedule accurately
sets forth as of November 30, 1997, with respect to each account maintained by
or for the benefit of Seville at any bank or other financial institution: (a)
the name of the institution at which such account is maintained; (b) the account
number of such account; and (c) the current balance in such account.
2.8 Receivables; Major Customers.
(a) Part 2.8(a) of the Disclosure Schedule provides an accurate
and complete breakdown and aging of all accounts receivable, notes receivable
and other receivables of Seville as of December 31, 1997.
(b) Except as set forth in Part 2.8(b) of the Disclosure
Schedule, all existing accounts receivable of Seville (including those accounts
receivable reflected on the Unaudited Interim Balance Sheet that have not yet
been collected and those accounts receivable that have arisen since December 31,
1997 and have not yet been collected):
(i) represent valid obligations of customers of Seville
arising from bonafide transactions entered into in the ordinary course of
business; and
(ii) are current and will generally be collected in full
(without any counterclaim or setoff) within 90 days.
All existing accounts receivable as stated are net of reserve to be
collected as stated in Paragraph (b)(ii) hereof. In the event collection is not
realized in an amount at least equal to the net amount within 90 days after
closing, the account receivable may be offset against the promissory note, in
inverse order of maturity. In such event the account receivable shall be
assigned to the Selling Shareholder, free and clear of all encumbrances.
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2.9 Inventory. Part 2.9 of the Disclosure Schedule provides an
accurate and complete breakdown of all inventory (including raw materials, work
in process and finished goods) of Seville as of November 30, 1997. All of
Seville's existing inventory (including all inventory that is reflected on the
Unaudited Balance Sheet and that has not been disposed of by Seville since
November 30, 1997):
(a) is of such quantity as to be usable and saleable by Seville
in the ordinary course of business and consistent with Seville's past practices
except obsolete inventory recorded at nominal value on the Balance Sheet; and
(b) have been priced at the lower of cost or market value using
the "last-in, first-out" method.
The inventory levels maintained by Seville are not excessive in light of
Seville's normal operating requirements, are adequate for the conduct of
Seville's operations in the ordinary course of business and consistent with
Seville's past practices.
2.10 Real Property. Seville does not own any real property or any
interest in real property, except for the leaseholds created under the real
property leases identified in Part 2.12(a) of the Disclosure Schedule.
2.11 Proprietary Assets.
(a) Part 2. 1 1 (a) of the Disclosure Schedule sets forth each
Proprietary Asset that is owned by or licensed to Seville or that is otherwise
used or useful in connection with Seville's business.
(b) Seville is not infringing, and has not at any time infringed
or received any notice or other communication (in writing or otherwise) of any
actual, alleged, possible or potential infringement of, any proprietary Asset
owned or used by any other Person. To the best knowledge of Seville and the
Selling Shareholders, no other Person is infringing, and no Proprietary Asset
owned or used by any other Person infringes or conflicts with, any Proprietary
Asset owned or used by Seville.
2.12 Contracts.
(a) Part 2.12(a) of the Disclosure Schedule identifies each
Seville Contract, except for any Excluded Contract. Seville has delivered to the
Purchaser accurate and
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complete copies of all Seville Contracts identified in Part 2.12(a) of the
Disclosure Schedule, including all amendments thereto.
(b) To the Selling Shareholder's knowledge each Seville Contract
is valid and in full force and effect, and is enforceable by Seville in
accordance with its terms.
(c) Except as set forth in Part 2.12(c) of the Disclosure
Schedule:
(i) Seville is not in violation, breach or default under
any Seville Contract;
(ii) no event occurred, and no circumstance or condition
exists, that might (with or without notice or lapse of time) (A) result in a
violation or breach of any of the provisions of any Seville Contract, (B) give
any Person the right to declare a default or exercise any remedy under any
Seville Contract, (C) give any Person the right to accelerate the maturity or
performance of any Seville Contract, or (D) give any Person the right to cancel,
terminate or modify any Seville Contract; and
(iii) Seville has not received any notice or other
communication (in writing or otherwise) regarding any actual, alleged, possible
or potential violation of breach of, or default under, any Seville Contract.
(d) The performance of the Seville Contracts will not result in
any violation of or failure to comply with any law, rule or regulation.
(e) Except as set forth in Schedule 2.12, no Person is
renegotiating, or has the right to renegotiate, any amount paid or payable to
Seville under any Seville Contract or any other term or provision of any Seville
Contract, except under the ordinary course of business.
2.13 Liabilities. Except as set forth in Schedule 2.13, Seville has no
Liabilities, except for:
(a) liabilities identified as such in the "liabilities" column
of the Seville financial statements;
(b) accounts payable (of the type required to be reflected as
current liabilities in the "liabilities" column of a balance sheet prepared in
accordance with GAAP) incurred by
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Seville in the ordinary course of business and consistent with Seville's past
practices since November 30, 1997; and
(c) Seville's obligations under the Contracts listed in Part
2.12(a) of the Disclosure Schedule.
2.14 Compliance With Legal Requirements.
(a) To Selling Shareholder's knowledge, except as set forth in
Part 2.14(a) of the Disclosure Schedule:
(i) Seville is in full compliance with each law, rule or
regulation that is applicable to it or to the conduct of its business or
the ownership or use of its assets, except where the failure to be in
compliance would not have a material adverse effect on Seville's business,
condition, assets, liabilities, operations, financial performance or net
income (or on any aspect or portion thereof);
(ii) no event has occurred, and no condition or
circumstance exists, that would (with or without notice or lapse of time)
constitute or result directly or indirectly in a violation by Seville of,
or a failure on the part of Seville to comply with, any law, rule or
regulation, except where the failure to be in compliance would not have a
material adverse effect on Seville's business, condition, assets,
liabilities, operations, financial performance, or net income (or on any
aspect or portion thereof); and
(iii) Seville has not since January 1, 1995 received any
notice or other communication (in writing or otherwise) from any
governmental body regarding (i) any actual, alleged, possible or potential
violation of, or failure to comply with, any law, rule or regulation, or
(ii) any actual, alleged, possible or potential obligation on the part of
any of Seville to undertake, or to bear all or any portion of the cost of,
any cleanup or any remedial, corrective or response action of any nature.
2.15 Governmental Authorizations.
(a) Seville has delivered to the Purchaser accurate and complete
copies of each Governmental Authorizations that is held by Seville and each
other Governmental Authorization that, to the best knowledge of Seville and the
Selling Shareholders, is held by any of Seville's employees and relates to or is
useful in connection with Seville's business,
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including all renewals thereof and all amendments thereto. Each such
Governmental Authorization is valid and in MI force and effect.
(b) Except as set forth in Part 2.15(b) of the Disclosure
Schedule:
(i) Since January 1, 1995 Seville and its employees are
and have at all times been, in full compliance with all of the terms and
requirements of each Governmental Authorization identified in Section
2.15(a), except where the failure to be in compliance would not have a
material adverse effect on Seville's business, condition, assets,
liabilities, operations, financial performance, or net income (or on any
aspect or portion thereof);
(ii) Since January 1, 1995 no event has occurred, and no
condition or circumstances exists, that might (with or without notice or
lapse of time) (A) constitute or result directly or indirectly in a
violation of or a failure to comply with any term or requirement of any
Governmental Authorization identified in Section 2.15(a), except where the
violation or failure to be in compliance would not have a material adverse
effect on Seville's business, condition, assets, liabilities, operations,
financial performance or net income (or on any aspect or portion thereof),
or (B) result directly or indirectly in the revocation, withdrawal,
suspension, cancellation, termination or modification of any Governmental
Authorization identified in Section 2.15(a);
(iii) Seville has not, since January 1, 1995, received,
and, to the best knowledge of Seville and the Selling Shareholder, no
employee of Seville has, since January 1, 1995, received, any notice or
other communication(in writing or otherwise) from any governmental body
regarding (A) any actual, alleged, possible or potential violation of or
failure to comply with any term or requirement of any Governmental
Authorization, or (B) any actual, proposed, possible or potential
revocation, withdrawal, suspension, cancellation, termination or
modification of any Governmental Authorization.
2.16 Tax Matters. Except as provided in Schedule 2.16, Seville has filed
all federal and Michigan Tax Returns and all other state and foreign Tax Returns
required to be filed, and has paid all Taxes required to be paid in respect of
all periods for which returns have been made or are due, and has established an
adequate accrual or reserve for the payment of all Taxes payable in respect of
the period subsequent to the last of said periods required to be so accrued and
reserved, and has no liability for Taxes in excess of the amount so paid or
accruals or reserves so established. Seville is neither delinquent in the
payment of any Tax nor in the
13
filing of any Tax Return, and no deficiencies for any Tax have been threatened,
claimed, proposed or assessed. Since January 1, 1995, none of Seville's United
States, state or foreign Tax Returns have been audited by the Internal Revenue
Service ("IRS") or comparable state or foreign agencies.
2.17 Employee and Labor Matters.
(a) Part 2.17(a) of the Disclosure Schedule accurately sets
forth, with respect to each employee of Seville (including any employee of
Seville who is on a leave of absence or on layoff status):
(i) the name of such employee;
(ii) such employee's title;
(iii) the aggregate dollar amount of the compensation
(including wages, salary, commissions, director's fees, fringe benefits,
bonuses, profit-sharing payments and other payments or benefits of any
type) received by such employee from Seville with respect to services
performed in 1996 and 1997; and
(iv) such employee's annualized compensation as of the
date of this Agreement;
(b) Part 2.17(b) of the Disclosure Schedule accurately
identifies each former employee of Seville who is receiving or is scheduled to
receive (or whose spouse or other dependent is receiving or is scheduled to
receive) any benefits (whether from Seville or otherwise) relating to such
former employee's employment with Seville; and Part 2.17(b) of the Disclosure
Schedule accurately describes such benefits.
(c) Except as set forth in Part 2.17(c) of the Disclosure
Schedule, Seville is not a party to or bound by, and has never been a party to
or bound by, any employment agreement or any union contract, collective
bargaining agreement or similar Contract.
(d) The employment of each of Seville's employees is terminable
by Seville at will. Seville has delivered to the Purchaser accurate and complete
copies of all employee manuals and handbooks, disclosure materials, policy
statements and other materials relating to the employment of the current
employees of Seville.
(e) To the best knowledge of the Selling Shareholder:
14
(i) no management or key production employee of Seville
intends to terminate his employment with Seville;
(ii) no employee of Seville has since September 1, 1997
received an offer to join a business that may be competitive with Seville's
business; and
(iii) no employee of Seville is a party to or is bound by
any confidentiality agreement, noncompetition agreement or other Contract
(with any Person) that may have an adverse effect on (A) the performance by
such employee of any of its duties or responsibilities as an employee of
Seville, or (B) Seville's business or operations.
(f) To the knowledge of the Selling Shareholder, since January
1, 1995: Seville has not engaged and has never been engaged in any unfair labor
practice of any nature; there has not been any slowdown, work stoppage, labor
dispute or union organizing activity, or any similar activity or dispute,
affecting Seville or any of its employees. There is not now pending, and no
Person has threatened to commence, any such slowdown, work stoppage, labor
dispute or union organizing activity or any similar activity or dispute.
2.18 Benefit Plans; ERISA
(a) Part 2.18(a) of the Disclosure Schedule identifies and
provides an accurate and complete description of each Current Benefit Plan and
each Past Benefit Plan in effect at any time since January 1, 1995. Since
January 1, 1995 Seville has never established, adopted, maintained, sponsored,
contributed to, participated in or incurred any Liability with respect to any
Employee Benefit Plan, except for the Plans identified in Part 2.18(a) of the
Disclosure Schedule; and since January 1, 1995 Seville has not provided or made
available any fringe benefit or other benefit of any nature to any of its
employees, except as set forth in Part 2.18(a) of the Disclosure Schedule.
(b) No Seville Plan: (i) provides or provided any benefit
guaranteed by the Pension Benefit Guaranty Corporation; (ii) is or was a
"multiemployer plan" as defined in Section 4001(a)(3) of ERISA; or (iii) is or
was subject to the minimum funding standards of Section 412 of the Code or
Section 302 of ERISA.
There is no other control group employer, as that term is used within the
meaning of Section 4.14 of the Code, who has not complied with all requirements
of ERISA.
15
(c) Seville has delivered to the Purchaser, with respect to
Seville Plan:
(i) an accurate and complete copy of such Seville and all
amendments thereto;
(ii) an accurate and complete copy of each Contract
(including any trust agreement, funding agreement, service provider agreement,
insurance agreement, investment management agreement or recordkeeping agreement)
relating to such Seville plan;
(iii) an accurate and complete copy of any description,
summary, notification, report or other document that has been furnished to any
employee of Seville with respect to such Seville Plan;
(iv) an accurate and complete copy of any form, report,
registration statement or other document that has been filed with or submitted
to any governmental body with respect to such Seville Plan; and
(v) an accurate and complete copy of any determination
letter, notice or other document that has been issued by, or that has been
received by Seville from, any governmental body with respect to such Seville
Plan.
(d) Each Current Benefit Plan is being operated and administered
in full compliance with the provisions thereof, and each Seville Plan has at all
times been operated and administered in full compliance with the provisions
thereof. Each contribution or other payment that is required to have been
accrued or made under or with respect to any Seville Plan has been duly accrued
and made on a timely basis.
(e) Each Current Benefit Plan complies and is being operated and
administered in full compliance with, and each Seville Plan has at all times
complied and been operated and administered in full compliance with, all
applicable reporting, disclosure and other requirements of ERISA and the Code
and all other applicable legal requirements. Since January 1, 1995 Seville has
not incurred any Liability to the Internal Revenue Service or any other
governmental body with respect to any Seville Plan; and no event has occurred,
and no condition or circumstance exists, that might (with or without notice or
lapse of time) give rise directly or indirectly to any such Liability. Since
January 1, 1995 Seville, and any Person that is or was an administrator or
fiduciary of any Seville Plan (or that acts or has acted as an agent of Seville
or any such administrator or fiduciary), has not engaged in any transaction or
has otherwise acted or failed to act in a manner that has subjected or may
subject Seville to any Liability for breach of any fiduciary duty or any other
duty. Since January 1, 1995 no Seville
16
Plan, and no Person that is or was an administrator or fiduciary of any Seville
Plan (or that acts or has acted as an agent of any such administrator or
fiduciary):
(i) has engaged in a "prohibited transaction" within the
meaning of Section 406 of ERISA or Section 4975 of the Code;
(ii) has failed to perform any of the responsibilities or
obligations imposed upon fiduciaries under Title I of ERISA; or
(iii) has taken any action that (A) may subject such
Seville Plan or such Person to any Tax, penalty or Liability relating to any
"prohibited transaction," or (B) may directly or indirectly give rise to or
serve as a basis for the assertion (by any employee or by any other Person) of
any claim under, on behalf of or with respect to such Seville Plan.
(f) To the Selling Shareholder's knowledge, no inaccurate or
misleading representation, statement or other communication has been made or
directed (in writing or otherwise) to any current or former employee of any of
Seville (i) with respect to such employee's participation, eligibility for
benefits, vesting, benefit accrual or coverage under any Seville Plan or with
respect to any other matter relating to any Seville Plan, or (ii) with respect
to any proposal or intention on the part of Seville to establish or sponsor any
Employee Benefit Plan or to provide or make available any fringe benefit or
other benefit of any nature.
2.19 Environmental Matters. Seville is in compliance in all material
respects with all applicable Environmental Laws, which compliance includes the
possession by Seville of all permits and other Governmental Authorizations
required under applicable Environmental Laws, and compliance with the terms and
conditions thereof. Seville has not received any notice or other communication
(in writing or otherwise), whether from a governmental body, citizens group,
employee or otherwise, that alleges that Seville is not in compliance with any
Environmental Law. To the best of the knowledge of Seville or the Selling
Shareholder, no current or prior owner of any property leased or controlled by
Seville has received any notice or other communication (in writing or
otherwise), whether from a government body, citizens group, employee or
otherwise, that alleges that such current or prior owner or Seville is not in
compliance with any Environmental Law. All Governmental Authorizations currently
held by Seville pursuant to Environmental Laws are identified in Section 2.15(a)
2.20 Sale of Products; Performance of Services.
Since January 1, 1995, to the knowledge of the Selling Shareholder:
17
(a) Each product that has been sold by Seville to any Person
conformed and complied in all respects with the terms and requirements of any
applicable warranty or other Contract;
(b) No product manufactured or sold by Seville has been the
subject of any recall or other similar action;
(c) Except as set forth in Part 2.20(d) of the Disclosure
Schedule, no customer or other Person has, since January 1, 1995, ever asserted
or threatened to assert any claim against Seville (i) under or based upon any
warranty provided by or on behalf of Seville, or (ii) under or based upon any
other warranty relating to any product sold by Seville or any services performed
by Seville.
2.21 Insurance.
(a) Part 2.21(a) of the Disclosure Schedule accurately sets
forth, with respect to each insurance policy maintained by or at the expense of,
or for the direct or indirect benefit of, Seville:
(i) the name of the insurance carrier that issued such
policy and the policy number of such policy ;
(ii) a description of the coverage provided by such
policy;
(iii) the annual premium payable with respect to such
policy, and the cash value (if any) of such policy; and
(iv) a description of any claims pending, and any claims
that have been asserted since January 1, 1995 with respect to such policy.
Seville has delivered to the Purchaser accurate and complete copies of all of
the insurance policies identified in Part 2.21(a) of the Disclosure Schedule
(including all renewals thereof and endorsements thereto).
(b) Each of the policies identified in Part 2.21(a) of the
Disclosure Schedule is valid, enforceable and in full force and effect to the
best of the Seller's. knowledge. To the Selling Shareholder's knowledge, all of
the information contained in the applications submitted in connection with said
policies was (at the times said applications were submitted) accurate
18
and complete. All premiums and other amounts owing with respect to said policies
have been paid in full.
(c) Except as set forth in Part 2.21(c) of the Disclosure
Schedule, there is no pending claim under or based upon any of the policies
identified in Part 2.21(a) of the Disclosure Schedule; and no event has
occurred, and no condition or circumstance exists, that would to the knowledge
of the Selling Shareholder (with or without notice or lapse of time) directly or
indirectly give rise to or serve as a basis for any such claim.
2.22 Related Party Transactions. Except as set forth in Part 2.22 of the
Disclosure Schedule: since January 1, 1995,
(a) no Related Party has, and no Related Party had any direct or
indirect interest of any nature in any asset used or otherwise relating to the
business of Seville;
(b) no Related Party is, or has been indebted to Seville;
(c) since incorporation, no Related Party has entered into or
has had any direct or indirect financial interest in, any Contract, transaction
or business dealing of any nature involving Seville;
(d) no Related Party is competing, or has at any time since
incorporation competed directly or indirectly, with Seville in any market
served by Seville;
(e) no Related Party has any claim or right against Seville
which is not released by the execution of the Mutual Release; and
(f) no event has occurred, and no condition or circumstance
exists, that might (with or without notice or lapse of time) directly or
indirectly give rise to or serve as a basis for any claim or right in favor of
any Related party against Seville.
2.23 Proceedings; Orders.
(a) Except as set forth in Part 2.23(a) of the Disclosure
Schedule, there is no pending Proceeding, and no Person has threatened in
writing to commence any Proceeding:
(i) that involves Seville or that otherwise relates to or
might affect Seville's business or any of the assets owned or used by
Seville (whether or not Seville is named as a party thereto); or
19
(ii) that challenges, or that may have the effect of
preventing, delaying, making illegal or otherwise interfering with, any of
the Transactions.
Except as set forth in Part 2.23(a) of the Disclosure Schedule, no claim,
dispute or other condition or circumstance exists, that might directly or
indirectly give rise to or serve as a basis for the commencement of any such
Proceeding.
(b) Seville has delivered to the Purchaser accurate and complete
copies of all pleadings, correspondence and other written materials to which
Seville has access that relate to the Proceedings identified in Part 2.23(a) of
the Disclosure Schedule.
(c) There is no Order to which Seville, or any of the assets
owned or used by Seville, is subject; and the Selling Shareholder is not subject
to any Order that relates to Seville's business or to any of the assets owned or
used by Seville.
(d) To the best knowledge of Seville and the Selling
Shareholder, no officer or employee of Seville is subject to any Order that
prohibits such officer or employee from engaging in or continuing any conduct,
activity or practice relating to Seville's business.
(e) There is no proposed Order that, if issued or otherwise put
into effect, (i) may have a material adverse effect on Seville's business,
condition, assets, liabilities, operations, financial performance, net income or
prospects (or on any aspect or portion thereof) or on the ability of Seville or
the Selling Shareholder to comply with or perform any covenant or obligation
under any of the Transactional Agreements, or (ii) may have the effect of
preventing, delaying, making illegal or otherwise interfering with any of the
Transactions.
2.24 Authority; Binding Nature of Agreements.
(a) Seville has the absolute and unrestricted right, power and
authority to enter into and to perform its obligations under this Agreement; and
the execution, delivery and performance by Seville of this Agreement have been
duly authorized by all necessary action on the part of Seville and its
stockholder, board of directors, and officers. This Agreement constitutes the
legal, valid and binding obligation of Seville, enforceable against Seville in
accordance with its terms, subject to (i) laws of general application relating
to bankruptcy, insolvency and the relief of debtors, and (ii) rules of law
governing specific performance, injunctive relief and other equitable remedies.
(b) The Selling Shareholder has the absolute and unrestricted
right, power and capacity to enter into and to perform such Selling
Shareholder's obligations under each of
20
the Transactional Agreements to which such Selling Shareholder is or may become
a party. This Agreement constitutes the legal, valid and binding obligation of
the Selling Shareholder, enforceable against the Selling Shareholder in
accordance with its terms, subject to (i) laws of general application relating
to bankruptcy, insolvency and the relief of debtors, and (ii) rules of law
governing specific performance injunctive relief and other equitable remedies.
Upon the execution of each of the other Transactional Agreements at the Closing,
each of such Transactional Agreements will constitute the legal, valid and
binding obligation of the Selling Shareholder who is a party thereto, and will
be enforceable against the Selling Shareholder in accordance with its terms,
subject to (i) laws of general application relating to bankruptcy, insolvency
and the relief of debtors, and (ii) rules of law governing specific performance,
injunctive relief and other equitable remedies.
2.25 Non-Contravention; Consents. Except as set forth in Xxx 2.25 of the
Disclosure Schedule, neither the execution and delivery of any of the
Transactional Agreements, nor the consummation or performance of any of the
Transactions, will directly or indirectly (with or without notice or lapse of
time):
(a) contravene, conflict with or result in a violation of (i)
any of the provisions of Seville's articles of incorporation or bylaws, or (ii)
any resolution adopted by Seville's shareholder, Seville's board of directors or
any committee of Seville's board of directors;
(b) contravene, conflict with or result in a violation of any
law, rule or regulation or any Order to which Seville or the Selling
Shareholder, or any of the assets owned or used by Seville is subject;
(c) Contravene, conflict with or result in a violation of any
of the terms or requirements of, or give any governmental body the right to
revoke, withdraw, suspend, cancel, terminate or modify, any Governmental
Authorization that is held by Seville or any of its employees or that otherwise
relates to Seville's business or to any of the assets owned or used by Seville;
(d) contravene, conflict with or result in a violation or
breach, or result in a default under, any provision of any Seville Contract;
(e) give any Person the right to (i) declare a default or
exercise any remedy under any Seville Contract, (ii) accelerate the maturity or
performance of any Seville Contract, or (iii) cancel, terminate or modify any
Seville Contract; or
21
(f) result in the imposition or creation of any Encumbrance
upon or with respect to any asset owned or used by Seville.
Except as set forth in Part 2.25 of the Disclosure Schedule, neither Seville nor
the Selling Shareholder was, is or will be required to make any filing with or
give any notice to, or to obtain any Consent from, any Person in connection with
the execution and delivery of any of the Transactional Agreements or the
consummation or performance of any of the Transactions except with respect to
certain debt instruments of Seville which are to be discharged and released at
closing.
2.26 Brokers. Neither Seville nor the Selling Shareholder has agreed or
become obligated to pay, or has taken any action that would result in any Person
claiming to be entitled to receive, any brokerage commission, finder's fee or
similar commission or fee in connection with any of the Transactions.
2.27 Selling Shareholder
(a) The Selling Shareholder has the capacity and financial
capability to comply with and perform all of such Selling Shareholder's
covenants and obligations under each of the Transactional Agreements to which
such Selling Shareholder is or may become a party.
(b) The Selling Shareholder:
(i) has not, since January 1, 1995, taken or been the
subject of any action that may have an adverse effect on the Selling
Shareholder's ability to comply with or perform any of the Selling Shareholder's
covenants or obligations under any of the Transactional Agreements; or
(ii) is not subject to any Order that may have an adverse
effect on the Selling Shareholder's ability to comply with or perform any of the
Selling Shareholder's covenants or obligations under any of the Transactional
Agreements.
(c) There is no Proceeding pending, and no Person has threatened in
writing to commence any Proceeding, that may have an adverse effect on the
ability of the Selling Shareholder to comply with or perform any of the Selling
Shareholder's covenants or obligations under any of the Transactional Agreement.
To Seller's knowledge, no event has
22
occurred, and no claim, dispute or other condition or circumstance exists, that
might directly or indirectly give rise to or serve as a basis for the
commencement of any such proceeding.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PURCHASER
The Purchaser represents and warrants, to and for the benefit of the
Selling Shareholder, as follows:
3.1 Acquisition of Shares. The Purchaser is not acquiring the Shares
with the current intention of making a public distribution thereof.
3.2 Authority; Binding Nature of Agreement.
(a) The Purchaser has the absolute and unrestricted right,
power, authority and financial ability to enter into and perform its obligations
under this Agreement;
(b) The execution, delivery and performance of this Agreement
by the Purchaser has been duly authorized by all necessary action on the party
of the Purchaser and its board of directors; and
(c) This Agreement constitutes the legal, valid and binding
obligation of the Purchaser, enforceable against the Purchaser in accordance
with its terms, subject to (i) laws of general application relating to
bankruptcy, insolvency and the relief of debtors, and (ii) rules of law
governing specific performance, injunctive relief and other equitable remedies.
3.3 Brokers. The Purchaser has not agreed or become obligated to pay,
or has not taken any action that might result in any Person claiming to be
entitled to receive, any brokerage commission, finder's fee or similar
commission or fee in connection with any of the Transactions.
3.4 Non-Contravention; Consents. Neither the execution and delivery of
any of the Transactional Agreements, nor the consummation or performance of any
of the Transactions, will directly or indirectly (with or without notice or
lapse of time):
(a) contravene, conflict with or result in a violation of (i)
any of the provisions of Purchaser's articles of incorporation or bylaws, or
(ii) any resolution adopted by Purchaser's shareholders, its board of directors
or any committee of its board of directors;
23
(b) contravene, conflict with or result in a violation of any
law, rule or regulation or any Order to which Purchaser is subject;
(d) contravene, conflict with or result in a violation or breach,
or result in a default under, any provision of any contract or agreement by
which Purchaser is bound;
Except as set forth in Part 3.4 of the Disclosure Schedule, Purchaser will not
be required to make any filing with or give any notice to, or to obtain any
Consent from, any Person in connection with the execution and delivery of any of
the Transactional Agreements or the consummation or performance of any of the
Transactions.
3.5 Purchaser.
(a) Purchaser has the capacity and financial capability to
comply with and perform all of its covenants and obligations under each of the
Transactional Agreements to which Purchaser is or may become a party.
(b) The Purchaser is not subject to any Order that may have
an adverse effect on Purchaser's ability to comply with or perform any of
Purchaser's covenants or obligations under any of the Transactional Agreements.
(c) There is no Proceeding pending, and no Person has
threatened in writing to commence any Proceeding, that may have an adverse
effect on the ability of the Purchaser to comply with or perform any of
Purchaser's covenants or obligations under any of the Transactional Agreement.
To Purchaser's knowledge, no event has occurred, and no claim, dispute or other
condition or circumstance exists, that might directly or indirectly give rise to
or serve as a basis for the commencement of any such proceeding.
SECTION 4. PRE-CLOSING COVENANTS OF SEVILLE AND SELLING SHAREHOLDER
4.1 Access and Investigation. Seville and the Selling Shareholder
shall ensure that, at all times prior to Closing:
(a) Seville and its Representatives provide the Purchaser and
its Representatives with free and complete access to Seville's Representatives,
personnel and assets and to all existing books, records, Tax Returns, work
papers and other documents and information relating to the Seville;
24
(b) Seville and its Representatives provide the Purchaser and
its Representative with such copies of existing books, records, Tax Returns,
work papers and other documents and information relating to Seville as the
Purchaser may request in good faith; and
(c) Seville and its Representatives compile and provide the
Purchaser and its Representatives with such additional financial, operating and
other data and information regarding Seville as the Purchaser may request on
good faith.
4.2 Operation of Business. Seville and the Selling Shareholder shall
ensure that, during the Pre-Closing Period:
(a) none of the Selling Shareholders directly or indirectly
sells or otherwise transfers, or offers, agrees or commits (in writing or
otherwise) to sell or otherwise transfer, any of the Shares or any
interest in or right relating to any of the Shares;
(b) the Selling Shareholder does not permit, and the Selling
Shareholder does not offer, agree or commit (in writing or otherwise) to
permit, any of the Shares to become subject, directly or indirectly, to
any Encumbrance;
(c) Seville conducts its operations exclusively in the
ordinary course of business and in the same manner as such operations have
been conducted prior to the date of this Agreement.
(d) Seville uses its best efforts to preserve intact its
current business organization, keeps available the services of its current
officers and employees and maintains its relations and good will with all
suppliers, customers, landlords, creditors, licensors, licensees, employees and
other Persons having business relationships with Seville;
(e) Seville keeps in full force all insurance policies
identified in Part 2.21(a) of the Disclosure Schedule;
(f) Seville does not sell or otherwise issue any shares of
capital stock or any other securities:
(g) Seville does not amend its articles of incorporation or
bylaws, and does not effect or become a party to any Acquisition Transaction,
recapitalization, reclassification of shares, stock split, reverse stock split
or similar transaction;
25
(h) Seville does not make any capital expenditure, except for
capital expenditures that are made in the ordinary course of business and
consistent with Seville's practices and that, when added to all other capital
expenditures made on behalf of Seville during the Pre-Closing Period, do not
exceed $10,000 in the aggregate;
(i) Seville does not enter into or permit any of the assets
owned or used by Seville to become bound by any Contract, except for any
Excluded Contract;
(j) Seville does not incur, assume or otherwise become subject
to any Liability, except for current liabilities (of the type required to
be reflected in the "liabilities" column of a balance sheet prepared in
accordance with GAAP) incurred in the ordinary course of business and
consistent with Seville's past practices;
(k) Seville does not establish or adopt any Employee Benefit
Plan, and does not pay any bonus or make any profit sharing or similar
payment to, or increase the amount of the wages, salary, commissions,
fringe benefits or other compensation or remuneration payable to, any of
its directors, officers or employees;
(l) Seville does not change any of its methods of accounting
or accounting practice in any respect;
(m) Seville does not make any Tax election;
(n) Seville does not commence any Proceeding;
(o) Seville does not enter into any transaction or take any
other action of the type referred to in Section 2.5;
(p) Seville does not enter into any transaction or take any
other action outside the ordinary course of business or inconsistent with
Seville's past practices;
(q) Seville does not enter into any transaction or take any
other action that constitutes a breach of any representation or warranty
made by Seville or any the Selling Shareholder in this Agreement or in the
Closing Certificate; and
(r) Seville does not agree, commit or offer (in writing or
otherwise), and does not attempt, to take any of the actions described in
clauses, "(g)" through "(s)" of this Section 4.2.
26
4.3 Notification; Updates to Disclosure Schedule.
(a) During the Pre-Closing Period, Seville and the Selling
shareholder shall promptly notify the Purchase in writing of:
(i) the discovery by Seville or the Selling Shareholder
of any event, condition, fact or circumstance that occurred or existed on or
prior to the date of this Agreement and that caused or constitutes a breach of
any representation or warranty made by Seville or the Selling Shareholder in
this Agreement;
(ii) any event, condition, fact or circumstance that
occurs, arise or exists after the date of this Agreement and that would cause or
constitute a breach of any representation or warranty made by Seville or the
Selling Shareholder in this Agreement if (A) such representation or warranty had
been made as of the time of the occurrence, existence or discovery of such
event, condition, fact or circumstance, or (B) such event, condition, fact or
circumstance had occurred, arisen or existed on or prior to the date of this
Agreement;
(iii) any breach of any covenant or obligation of Seville
or of the Selling Shareholder; and
(iv) any event, condition, fact or circumstance that may
make the timely satisfaction of any of the conditions set forth in Section 6 or
Section 7 impossible or unlikely.
(b) If any event, condition, fact or circumstance that is
required to be disclosed pursuant to Section 4.3(a) requires any change in the
Disclosure Schedule, or if any such event, condition, fact or circumstance would
require such a change assuming the Disclosure Schedule were dated as of the date
of the occurrence, existence or discovery of such event, condition, fact or
circumstance, then Seville and the Selling Shareholder shall promptly deliver to
the Purchaser an update to the Disclosure Schedule specifying such change. All
such updates shall be deemed to supplement or amend the Disclosure Schedule for
the purpose of (i) determining the accuracy of any of the representations and
warranties made by Seville or the Selling Shareholder in this Agreement or in
the Closing Certificate, but shall not be considered in (ii) determining whether
any of the conditions set forth in Section 6 has been satisfied.
4.4 Filing and Consents. As promptly as practicable after the
execution of this Agreement, Seville and the Selling Shareholder (a) shall make
all filings (if any) and give all notices (if any) required to be made and given
by such party in connection with the Transactions, and (b) shall use his or her
or its best efforts to obtain each Consent (if any)
27
required to be obtained (pursuant to any applicable legal requirement or
Contract, or otherwise) by such party in connection with the Transactions.
Seville shall promptly deliver to Purchaser a copy of each such filing made,
each such notice given and each such Consent obtained by Seville during the
Pre-closing Period.
4.5 Best Efforts. During the Pre-Closing Period, Seville and the
Selling Shareholder shall use their best efforts to cause the conditions set
forth in Sections 6 and 7.5 to be satisfied on a timely basis. Seville and the
Selling Shareholder and Purchaser shall use their best efforts to consummate the
Transactions on or prior to ten days after Purchaser's financial representatives
complete the inspection and review of Seville's books, records and equipment,
but in no event after April 16, 1998.
4.6 Confidentiality. Seville and the Selling Shareholder shall ensure
that, during the Pre-Closing Period:
(a) The Selling Shareholder and Seville and its
Representatives keep strictly confidential the existence and terms of this
Agreement.
(b) neither Seville nor any of its Representatives issues or
disseminates any press release or other publicity or otherwise makes any
disclosure of any nature (to any of Seville's suppliers, customers,
landlords, creditors or employees or to any other Person) regarding any of
the Transactions, except to the extent that Seville is required to make
any such disclosure regarding the Transactions; and
(c) if Seville is required by law to make any disclosure
regarding the Transactions, Seville advises the Purchaser, at least five
business days before making such disclosure, of the nature and content of
the intended disclosure.
SECTION 5. PRE-CLOSING COVENANTS OF PURCHASER
5.1 Filing and Consents. As promptly as practicable after the
execution of this Agreement, Purchaser (a) shall make all filings (if any) and
give all notices (if any) required to be made and given by such party in
connection with the Transactions, and (b) shall use the best efforts to obtain
each Consent (if any) required to be obtained (pursuant to any applicable legal
requirement or Contract, or otherwise) by such party in connection with the
Transactions. Seville shall promptly deliver to Purchaser a copy of each such
filing made, each such notice given and each such Consent obtained by Seville
during the Pre-Closing Period.
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5.2 Best Efforts. During the Pre-Closing Period, the Purchaser shall
use its best efforts to cause the conditions set forth in Section 7 to be
satisfied. Purchaser shall use its best efforts to consummate the Transactions
on or prior to April 30, 1998.
SECTION 6. CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATION TO CLOSE
The Purchaser's obligation to purchase the Shares and to take the
other actions required to be taken by Purchaser at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by the Purchaser, in whole or in part, in accordance
with Section 10.12):
6.1 [INTENTIONALLY LEFT BLANK]
6.2 Accuracy of Representations. Each of the representations and
warranties made by Seville and the Selling Shareholder in this Agreement shall
have been accurate in all materials respects (except that those representations
and warranties already qualified as to materiality shall be true in all
respects) as of the date of this Agreement, and shall be accurate in all
materials respects (except that those representations and warranties already
qualified as to materiality shall be true in all respects) as of the Closing
Date as if made at the Closing Date, without giving effect to any update to the
Disclosure Schedule.
6.3 Performance of Obligations. Each covenant or obligation that
Seville or any of the Selling Shareholder is required to comply with or to
perform at or prior to the Closing shall have been duly complied with and
performed in all materials respects.
6.4 Approvals and Consents. All Consents required to be obtained in
connection with the Transactions (including the Consents identified in Part
2.25 of the Disclosure Schedule) shall have been obtained and shall be in full
force and effect.
6.5 No Material Adverse Change. There shall have been no material
adverse change in Seville's business, condition, assets, liabilities,
operations, financial performance, net income or prospects (or in any aspect or
portion thereof) since the date of this Agreement.
6.6 Resignation of Directors. Purchaser shall have received the written
resignation, effective as of the Closing, of each director and officer of
Seville.
6.7 Acceptance of Employment Offers. The Selling Shareholder shall
have accepted Purchaser's offer of employment with Seville effective after the
Closing.
29
6.8 Additional Documents. Purchaser shall have received the following
documents:
(a) an opinion letter from Seller's Counsel, dated the Closing
Date, in the form of Exhibit E;
(b) a Noncompetition Agreement executed by the Selling
Shareholder pursuant to Section 1.3(b)(vi);
(c) a General Release executed by the Selling Shareholder
pursuant to Section 1.3(b)(vii);
(d) a Closing Certificate executed by the Selling Shareholder
pursuant to Section 1.3(b)(vii);
(e) a lease between Seville, Inc. and the selling shareholder
in the form of Exhibit _;
(f) a two-year lease between Xxxxxx X. Xxxxxxxx as lessor and
Seville Plastics, Inc., the lessee, with respect to a Cincinnati molding
machine currently owned by Rochester Plastics and used by Seville Plastics in
its operations.
(g) such other documents as the Purchaser may request in good
faith for the purpose of (i) evidencing the accuracy of any representation or
warranty made by Seville or the Selling Shareholder, (ii) evidencing the
compliance by Seville or the Selling Shareholder with, or the performance by
Seville or the Selling Shareholder of, any covenant or obligation set forth in
this Agreement, (iii) evidencing the satisfaction of any condition set forth in
this Section 6, or (iv) otherwise facilitating the consummation or performance
of any of the Transactions.
(h) Purchaser shall have received evidence satisfactory to
Purchaser of the termination or other arrangement acceptable to Purchaser in its
sole and exclusive discretion, of the lien of the Small Business Administration
and/or First of America which affect any of the equipment or assets of Seville,
Inc. Such termination must be satisfactory on or at the date of closing.
6.9 No Proceedings. Since the date of this Agreement, there shall not
have been commenced or threatened against the Purchaser, or against any Person
affiliated with the
30
Purchaser, any Proceeding (a) involving any challenge to, or seeking damages or
other relief in connection with, any of the Transactions, or (b) that may have
the effect of preventing, delaying, making illegal or otherwise interfering with
any of the Transactions.
6.10 No Claim Regarding Stock Ownership or Sale Proceeds. No person
shall have made or threatened any claim asserting that such Person (a) may be
the holder or the beneficial owner of, or may have the right to acquire or to
obtain beneficial ownership of, any capital stock or other securities of
Seville, or (b) may be entitled to all or any portion of the Purchase Price.
6.11 No Prohibition. Neither the consummation nor the performance of any
of the Transactions will, directly or indirectly (with or without notice or
lapse of time), contravene or conflict with or result in a violation of any
applicable law, rule or regulation.
6.12 Legal Fees. The legal fees and expenses incurred by Seville and the
Selling Shareholder in connection with the negotiation, execution and delivery
of the Agreement and the Transaction Agreements and the consummation of the
transactions contemplated thereunder shall have been paid by Seville on or prior
to the Closing.
SECTION 7. CONDITIONS PRECEDENT TO SELLING SHAREHOLDER'S OBLIGATION TO CLOSE
The Selling Shareholder's obligation to sell the Shares and to take the
other actions required to be taken by the Selling Shareholders at the Closing is
subject to the satisfaction, at or prior to the Closing, of each of the
following conditions (any of which may be waived by the Selling Shareholder, in
whole or in part, in accordance with Section 10.12):
7.1 Accuracy of Representations. Each of the representations and
warranties made by the Purchaser in this Agreement and the schedules attached
hereto shall have been accurate in all material respects (except that those
representations and warranties already qualified as to materiality shall be true
in all respects) as of the date of this Agreement and shall be accurate in all
material respects (except that those representations and warranties already
qualified as to materiality shall be true in all respects) as of the Closing
Date as if made at the Closing Date.
7.2 Performance of Obligations. All of the other covenants and
obligations the Purchase is required to comply with or to perform pursuant to
this Agreement at or prior to Closing shall have been complied with and
performed in all materials respects.
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7.3. Employment. Purchaser shall have delivered to Xxxxxx X. Xxxxxxxx a
letter offering employment with Seville after the Closing in the form of
Exhibit_.
7.4 Real Property Lease. The parties have entered into a real property
lease for the property currently used to operate Seville Plastics, Inc.
operations in Rochester Hills, Michigan.
7.5 Equipment Lease. The parties have entered into a certain equipment
lease for equipment currently owned by Xxxxxx X. Xxxxxxxx and used by Seville
Plastics, Inc. in its operations, for a period of two years for a rental
acceptable to both parties.
7.6 No Injunction. There shall not be in effect any injunction that
shall have been entered by a court of competent jurisdiction since the date of
this Agreement and that prohibits the sale of the Shares by the Selling
Shareholders to the Purchaser.
7.7 Assumption of First of America Debt. Purchaser shall have either
assumed or paid in full all of the principal and accrued interest due and
payable to First of America Bank from Selling Shareholder and/or Seville, which
debt encumbers the assets of Seville. In the event of assumption of said debt,
Purchaser must obtain a full release of the Selling Shareholder and the consent
of First of America Bank.
SECTION 8. TERMINATION
8.1 Termination Events. This Agreement may be terminated prior to the
Closing:
(a) by the Purchaser if (i) there is a material breach of any
covenant or obligation of Seville or the Selling Shareholder, or (ii) the
Purchaser reasonably determines that the timely satisfaction of any condition
set forth in Section 6 has become impossible or impractical (other than as a
result of any failure on the part of the Purchaser comply with or perform its
covenants and obligations under this Agreement);
(b) by the Selling Shareholder if (i) there is a material
breach of any covenant or obligation of the Purchaser, or (ii) the Selling
Shareholder reasonably determines that the timely satisfaction of any condition
set forth in Section 7 has become impossible or impractical (other than as a
result of any failure on the part of Seville or the Selling Shareholder to
comply with or perform any covenant or obligation set forth in this Agreement);
32
(c) by the Purchaser or the Selling Shareholder if the Closing
has not taken place on or before April 16, 1998, other than by reason of a
party's breach of this Agreement, or
(d) by the mutual consent of the Purchaser and the Selling
Shareholder.
8.2 Termination Procedures. If the Purchaser wishes to terminate this
Agreement pursuant to Section 8.1(a), 8.1(b) or Section 8.1(c), the
Purchaser shall deliver to the Selling Shareholder a written notice stating that
the Purchaser is terminating this Agreement and setting forth a brief
description of the basis on which the Purchaser is terminating this Agreement.
If the Selling Shareholder wishes to terminate this Agreement pursuant to
Section 8.1(b) or 8.1(c), the Selling Shareholder shall deliver to the
Purchaser a written notice stating that the Selling Shareholder is terminating
this Agreement and setting forth a brief description of the basis on which the
Selling Shareholder is terminating this Agreement.
8.3 Effect of Termination. If this Agreement is terminated pursuant to
Section 8.1, all further obligations of the parties under this Agreement shall
terminate; provided, however, that:
(a) no party shall be relieved of any obligation or other
Liability arising from any breach by such party of any provision of this
Agreement; and
(b) the parties shall, in all events, remain bound by and
continue to be subject to the provisions set forth in Section 10.
8.4 Nonexclusivity of Termination Rights. The termination rights
provided in Section 8.1 shall not be deemed to be exclusive. Accordingly, the
exercise by any party of its right to terminate this Agreement pursuant to
Section 8.1 shall not be deemed to be an election of remedies and shall not be
deemed to prejudice, or to constitute or operate as a waiver of, any other right
or remedy that such party may be entitled to exercises (whether under this
Agreement, under any other Contract, under any statute , rule or other law or
regulation, at common law, in equity or otherwise).
33
SECTION 9. INDEMNIFICATION, ETC.
9.1 Survival of Representations.
(a) The representations and warranties made by Seville and the
Selling Shareholder in this Agreement (including without limitation the
representations and warranties set forth in Section 2), and the representations
and warranties set forth in the Closing Certificate, shall survive the Closing
and shall expire On the third anniversary of the Closing Date; provided,
however, that if, at any time prior to the third anniversary of the Closing
Date, any Indemnitee (acting in good faith) delivers to any of the Selling
Shareholders a written notice alleging the existence of an inaccuracy in or
other breach of any of such representations and warranties and asserting a claim
for recovery under Section 9.2 based on such alleged inaccuracy or other breach,
then the claim asserted in such notice shall survive the third anniversary of
the Closing until such time as such claim is fully and finally resolved.
(b) For the purposes of this Agreement, each statement or other
item of information set forth in the Disclosure Schedule or in any update to
the Disclosure Schedule shall be deemed to be a representation and warranty
made by Seville and the Selling Shareholder in this Agreement.
9.2 Indemnification by Selling Shareholder
(a) Subject to Section 9.3 the Selling Shareholder shall hold
harmless and indemnify each of the Indemnitees from and against, and shall
compensate and reimburse each of the Indemnitees for, any Damages which are
directly or indirectly suffered or incurred by any of the Indemnitees and which
arise directly or indirectly from or as a direct or indirect result of, or are
directly or indirectly connected with:
(i) any breach of any representation or warranty made by
Seville or the Selling Shareholder in this Agreement or in the Closing
Certificate;
(ii) any breach of any representation, warranty,
statement, information or provision contained in the Disclosure Schedule or in
any other document delivered or otherwise made available to the Purchaser or any
of its Representatives by or on behalf of Seville or any of Seville's
Representatives;
(iii) any breach of any obligation of the Selling
Shareholder under Sections 6.2, 6.3, 6.4, 6.6, 6.7 and 6.8, Section 9 or
Section 10;
34
(iv) any Proceeding relating directly or indirectly to
any breach, alleged breach, Liability or matter of the type referred to in
clause "(i)", "(i)," "(ii)," "(iii)."
(b) In addition, the Seller Shareholder shall also hold harmless
and indemnify each of the Indemnitees from and against, and shall compensate and
reimburse each of the Indemnitees for, any Damages which are directly or
indirectly suffered or incurred by any of the Indemnitees and which arise
directly or indirectly from or as a direct or indirect result of, or are
directly or indirectly connected with any breach of any covenant or obligation
of Seville
9.3 Maximum Liability of Selling Shareholder
The aggregate amount of all claims subject to indemnification
hereunder by the Seller Shareholder shall not exceed $200,000.00.
9.4 No Contribution. The Selling Shareholder waives, and acknowledges
and agrees that the Selling Shareholder shall not have and shall not exercise or
assert or attempt to exercise or assert, any right of contribution or right of
indemnity or any other right or remedy against Seville in connection with any
indemnification obligation or any other Liability to which such Selling
Shareholder may become subject under any of the Transactional Agreements or
otherwise in connection with any of the Transactions.
9.5 Exclusivity of Indemnification Remedies. The indemnification
remedies and other remedies provided in this Section 9 shall be deemed to be
exclusive.
9.6 Defense of Third Party Claim. In the event of the assertion or
commencement by any Person of any claim or Proceeding (whether against Seville,
against any other Indemnitee or against any other Person) with respect to which
the Selling Shareholder may become obligated to indemnify, hold harmless,
compensate or reimburse any Indemnitee pursuant to this Section 9, the Purchaser
shall with counsel acceptable to Purchaser notify the Selling Shareholder, and
the Selling Shareholder shall have the right, at its election, to assume the
defense of such claim or Proceeding at the sole expense of the Selling
Shareholder. If the Selling Shareholder assumes the defense of any such claim or
Proceeding:
(a) the Selling Shareholder shall proceed to defend such claim
or Proceeding in a diligent manner with counsel reasonably satisfactory to the
Purchaser;
35
(b) the Purchaser shall make available to the Selling
Shareholder any documents and materials in the possession of the Purchaser that
may be necessary to the defense of such claim or Proceeding.
(c) the Selling Shareholder shall keep the Purchaser informed
of all material developments and events relating to such claim or Proceeding;
(d) the Purchaser shall have the right to participate in the
defense of such claim or Proceeding at its own expense;
(e) Selling Shareholder may settle, adjust or compromise such
claim (i) without the consent of Purchaser if neither Seville nor Purchaser
thereby incur any obligation not discharged by the Selling Shareholder, or (ii)
otherwise with the reasonable consent of Purchaser.
If the Selling Shareholder declines to assume the defense of any such claim or
Proceeding (or if, after initially designating the Selling Shareholder to assume
such defense, the Purchaser elects to assume such defense), the Purchaser may
proceed with the defense of such claim or Proceeding on its own. If the
Purchaser so proceeds with the defense of any such claim or Proceeding on its
own:
(i) all expenses relating to the defense of such claim
or Proceeding shall be considered claims for which indemnity is owed under
Section 9.2;
(ii) the Selling Shareholder shall make available to the
Purchaser any documents and materials in the possession or control of any of the
Selling Shareholder that may be necessary to the defense of such claim or
Proceeding;
(iii) the Purchaser shall keep the Selling Shareholder
informed of all material developments and events relating to such claim or
Proceeding; and
(iv) the Purchaser shall have the right to settle, adjust
or compromise such claim or Proceeding with the consent of the Selling
Shareholders; provided, however, that the Selling Shareholder shall not
unreasonably withhold such consent.
9.9 Exercise of Remedies by Indemnitees Other Than Purchaser. No
Indemnitee (other than the Purchaser or any successor thereto or assign thereof)
shall be permitted to assert any indemnification claim or exercise any other
remedy under this
36
Agreement unless the Purchaser (or any successor thereto or assign thereof)
shall have consented to the assertion of such indemnification claim or the
exercise of such other remedy.
SECTION 10. INDEMNITY CLAIMS BY PURCHASER
(a) Notice of Claim. If any matter shall arise which, in the opinion of
Purchaser, constitutes or may give rise to loss subject to indemnification by
Seller as provided herein (an "Indemnity Claim"), Purchaser shall give prompt
written notice (a "Notice of Claim") of such Indemnity Claim to Seller, setting
forth the relevant facts and circumstances of such Indemnity Claim in reasonable
detail and the amount of indemnity sought from Seller with respect thereto, and
shall give continuing notice promptly thereafter as to developments coming to
Purchaser's attention materially affecting any matter relating to such Indemnity
Claim.
(b) Mitigation of Loss. Purchaser shall use its best efforts to
mitigate its Net Economic Loss in connection with any Indemnity Claim, to the
same extent as would a reasonable and prudent person to whom no indemnity were
available.
(c) Limitation of Seller's Liability. Notwithstanding any provision of
this Agreement to the contrary, except in the case of actual common law fraud on
the part of Seller, Seller's liability to Purchaser after the Closing shall be
limited as follows:
(i) Failure to Mitigate and Notify. Seller shall not have any
liability with respect to any Net Economic Loss to the extent
arising from (i) Purchaser's failure to take, or cause to be taken,
such action as may be reasonably necessary under the circumstances
to protect its interests and the interests of Seller or otherwise
to mitigate the amount of such Net Economic Loss, or (ii)
Purchaser's failure to provide Seller with prompt and continuing
notice as provided in subsection (a) of Section 10 hereof.
(ii) Deductible Losses. Seller shall not have any liability for any
Net Economic Loss otherwise indemnifiable hereunder to the extent of the first
$25,000, on a cumulative aggregate basis, of loss otherwise indemnifiable
hereunder; provided, that this limitation shall not be applicable to the
obligation of Seller to repurchase uncollectible Receivables as provided in
Section 10 hereof or to claims for excess repair costs under Section 10 hereof.
(d) Matters Disclosed Prior to Closing. . Seller shall not have
liability after the Closing for any loss otherwise indemnifiable hereunder
arising out of any matter disclosed in all material respects in this Agreement
(including the Exhibits hereto) or which has been disclosed in all materials
respects to Purchaser in writing prior to completion of the Closing,
37
receipt of which writing has been acknowledged by Purchaser or its counsel prior
to completion of the Closing.
Section 10. Payment of Indemnity Obligations. To the extent that the
Seller Shareholder is determined to have any liability to any Indemnitee
hereunder, such liability shall be discharged only as follows(subject to the
limitations of this Agreement, including the maximum indemnity obligation of
$200,000 provided under Section 9.3):
(a) such amounts shall first be set off against the Rochester Debt
under Section 1.2(c), to be applied against the installments payable on such
Debt, in inverse order of maturity, to the extent of the Rochester debt;
(b) any remaining liability shall be set off against the amounts coming
due to the Selling Shareholder for the purchase price under Section 1.2(b), to
be applied against the installments payable thereunder, in inverse order or
maturity, to the extent of the purchase price obligation; and
(c) any remaining liability shall be paid promptly by the Selling
Shareholder at Purchaser's written request.
SECTION 11. MISCELLANEOUS PROVISION
11.1 Further Assurances. Each party hereto shall execute and/or cause to
be delivered to each other party hereto such instruments and other documents,
and shall take such other actions, as such other party may reasonably request
(prior to, at or after the Closing) for the purpose of carrying out or
evidencing any of the Transactions.
11.2 Fees and Expenses. Subject to Sections 9 and 6.12, each party to
this Agreement shall bear and pay all fees, costs and expenses (including legal
fees and accounting fees) that have been incurred or that are incurred in the
future by such party in connection with the transactions contemplated by this
Agreement.
11.3 Attorneys' Fees. If any legal action or other legal proceeding
relating to any of the Transactional Agreements or the enforcement of any
provision of any of the Transactional Agreements is brought against any party
hereto, the prevailing party shall be entitled to recover reasonable attorneys'
fees, costs and disbursements (in addition to any other relief to which the
prevailing arty may be entitled).
38
11.4 Notices. Any notice or other communication required or permitted to
be delivered to any party under this Agreement shall be in writing and shall be
deemed properly delivered, given and received when delivered (by hand, by
registered mail, by courier or express delivery service) to the address set
forth beneath the name of such party below (or to such other address as such
party shall have specified in a written notice given to the other parties
hereto):
if to Seville:
Seville Plastics, Inc.
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxxx Xxxxx, XX 00000
Attention: President
if to Selling Shareholder:
Xxxxxx X. Xxxxxxxx
0000 Xxxxxxxx
Xxxxxxxxx Xxxxx, XX
with a copy to:
Xxxxxx X. Xxxxx, Xx., Esq.
XXXXX, XXXX, XXXXXX & XXXXXXX
000 Xxxx Xxxx Xxxx Xxxx
Xxxxx 000
Xxxxxxxxxx Xxxxx, XX 00000
if to Purchaser:
Inmold, Inc.
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxxx Xxxxx, XX 00000
Attention: President
Telecopier: 000 000-0000
39
with a copy to:
Xxxxxxxx X. Xxxxx, Esq.
XXXXXXXX X. XXXXX, P.C.
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 000
Xxxx Xxxxxxxxxx, Xx 00000
Telecopier: 000 000-0000
11.5 Publicity. Without limiting the generality of anything contained in
Section 4.6, on and at all times after the Closing Date:
(a) for one year after the closing no press release or other
publicity concerning any of the Transactions shall be issued or other wish
disseminated by or on behalf of the Selling Stockholder, and the Selling
Stockholder shall continue to keep the existence and terms of this Agreement and
the other Transactional Agreements strictly confidential; and
(b) the Selling Shareholder shall keep strictly confidential, and
shall not use or disclose to any other Person, any non-public document or other
information in such Selling Shareholder's possession that relates directly or
indirectly to the business of Seville, the Purchaser or any affiliate of the
Purchaser.
11.6 Time of the Essence. Time is of the essence of this Agreement.
11.7 Headings. The underlined headings contained in this Agreement are for
convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
11.8 Counterparts. This Agreement may be executed in several counterparts,
each of which shall constitute an original and all of which, when taken
together, shall constitute one agreement.
11.9 Governing Law; Venue.
(a) This Agreement shall be construed in accordance with, and
governed in all respects by, the internal laws of the State of Michigan (without
giving effect to principles of conflicts of laws).
40
(b) Any legal action or other legal proceeding relating to this
Agreement or the enforcement of any provision of this Agreement may be brought
or otherwise commenced in any state or federal court located in the County of
Oakland, Michigan. Each party to this Agreement:
(i) expressly and irrevocably consents and submits to the
jurisdiction of each state and federal court located in the County of Oakland,
Michigan (and each appellate court located in the State of Michigan) in
connection with any such legal proceeding;
(ii) agrees that each state and federal court located in the
County of Oakland, Michigan shall be deemed to be a convenient forum; and
(iii) agrees not to assert (by way of motion, as a defense or
otherwise), in any such legal proceeding commenced in any state or federal court
located in the County of Oakland, Michigan, any claim that such party is not
subject personally to the jurisdiction of such court, that such legal proceeding
has been brought in an inconvenient forum, that the venue of such proceeding is
improper or that this Agreement or the subject matter of this Agreement may not
be enforced in or by such court.
11.10 Successors and Assigns. This Agreement shall be binding upon:
Seville and its successors and assigns (if any); the Selling Shareholder and its
personal representatives, executors, administrators, estates, heirs, successors
and assigns (if any): and the Purchaser and its successors and assigns (if any).
This Agreement shall inure to the benefit of: Seville; the Selling Shareholder;
the Purchaser; the other Indemnitees (subject to Section 9.9); and the
respective successors and assigns (if any) of the foregoing. The Purchaser may
freely assign any or all of its rights under this Agreement (including its
indemnification rights under Section 9), in whole or in part, to any other
Person without obtaining the consent or approval of any other party hereto or of
any other Person.
11.11 Remedies Cumulative; Specific Performance. The rights and remedies
of the parties hereto shall be cumulative (and not alternative) except as to
Section 9. The Selling Shareholder and Purchaser agree that: in the event of any
breach or threatened breach by such Selling Shareholder or Purchaser of any
covenant, obligation or other provision set forth in this Agreement, the non-
breaching party shall be entitled (in addition to any other remedy that may be
available to it) to (i) a decree or order of specific performance or mandamus
to enforce the observance and performance of such covenant, obligation or other
provision, and (ii) an injunction restraining such breach or threatened breach.
and
11.12 Waiver.
41
(a) No failure on the part of any Person to exercise any power,
right, privilege or remedy under this Agreement, and no delay on the part of any
Person in exercising any power, right, privilege or remedy under this Agreement,
shall operate as a waiver of such power, right, privilege or remedy; and no
single or partial exercise of any such power, right, privilege or remedy shall
preclude any other or further exercise thereof or of any other power, right,
privilege or remedy.
(b) No Person shall be deemed to have waived any claim arising out
of this Agreement, or any power, right, privilege or remedy under this
Agreement, unless the waiver of such claim, power, right, privilege or remedy is
expressly set forth in a written instrument duly executed and delivered on
behalf of such Person; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.
11.13 Amendments. This Agreement may not be amended, modified, altered or
supplemented other than by means of a written instrument duly executed and
delivered on behalf of the Purchaser, Seville and the Selling Shareholder.
11.14 Severability. In the event that any provision of this Agreement, or
the application of any such provision to any Person or set of circumstances,
shall be determined to be invalid, unlawful, void or unenforceable to any
extent, the remainder of this Agreement, and the application of such provision
to Persons or circumstances other than those as to which it is determined to be
invalid, unlawful, void or unenforceable, shall not be impaired or otherwise
affected and shall continue to be valid and enforceable to the fullest extent
permitted by law.
11.15 Parties in Interest. None of the provisions of this Agreement is
intended to provide any rights or remedies to any Person other than the parties
hereto and their respective successors and assigns (if any).
11.16 Entire Agreement. The Transactional Agreements set forth the entire
understandings of the parties relating to the subject matter thereof and
supersede all prior agreements and understandings among or between any of the
parties relating to the subject matter thereof.
11.17 Construction.
(a) For purposes of this Agreement, whenever the context requires:
the singular number shall include the plural, and vice versa; the masculine
gender shall include the
42
feminine and neuter genders; the feminine gender shall include the masculine and
neuter genders; and the neuter gender shall include the masculine and feminine
genders.
(b) As used in this Agreement, the words "include" and
"including," and variations thereof, shall not be deemed to be terms of
limitation, rather shall be deemed to be followed by the words "without
limitation."
(c) Except as otherwise indicated, all references in this
Agreement to "Sections" and "Exhibits" are intended to refer to Sections of this
Agreement and Exhibits to this Agreement.
The parties hereto have caused this Agreement to be executed and delivered
this 17th day of March, 1998.
"PURCHASER": INMOLD, INC., an Indiana Corporation
By:
-------------------------------
"SEVILLE": SEVILLE PLASTICS, INC., a Michigan corporation
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------
Xxxxxx X. Xxxxxxxx
"SELLING SHAREHOLDER": /s/ Xxxxxx X. Xxxxxxxx
-------------------------------
43
3/17/98
44
MASTER AMENDMENT TO STOCK PURCHASE AGREEMENT
AND ANCILLARY AGREEMENTS
THIS MASTER AMENDMENT TO STOCK PURCHASE AGREEMENT ("this Amendment") is
made and entered into this 8th day of March, 1999, by and between XXXXXX X.
XXXXXXXX ("Seller"), SEVILLE PLASTICS, INC., ("Seville"), and INMOLD, INC.,
("Buyer"), and amends a certain Stock Purchase Agreement dated March 17, 1998
(the "SPA"), by and among Seller, Seville and Buyer, and certain other
agreements executed in connection with the closing of the SPA on August 27,1998
(collectively, the "Ancillary Agreements").
Statement of Purpose
The parties entered into the SPA on March 17, 1998, and executed the
Ancillary Agreements on August 27, 1998. The Ancillary Agreements included,
without limitation, the Non-Competition Agreement, the Real Property Lease, the
Equipment Lease, and the Employment Letter. The parties have had certain
discussions concerning possible modification of the obligations of Buyer and
Seville under the SPA and Ancillary Agreements. In that connection, the Buyer
has made certain allegations of breach of representation and warranty under the
terms of the SPA on the part of Buyer. The parties desire to amend the SPA and
the Ancillary Agreements in certain respects, and to settle in a final way any
dispute between them pertaining to Buyer's purchase of the outstanding stock of
Seville, as set forth below.
NOW,THEREFORE, in consideration of the forgoing, the parties agree as
follows:
1. Modification of Stock Purchase Price and Payment Terms. Paragraph
1.2(b) of the Stock Purchase Agreement is hereby amended to provide
that the purchase price of the stock shall be $475,000, payable as
follows:
(a) the sum of $25,000 was paid at the Closing, and Seller
acknowledges receipt of such amount;
(b) the sum of $50,000 will be paid on March 15,1999;
(c) the balance of $400,000 shall be paid in 20 equal installments of
$22,500, representing principal and interest at the rate of 4%
per annum, the first installment being due on July 1, and the
succeeding installments being due on October 1, January 1 and
April 1, of each year until fully paid, and the last installment
being due on April 1, 2004.
2. Purchase of Equipment. On June 1, 1999, Seville shall purchase, and
Seller shall sell to Seville, the plastic injection molding machine
now being leased to Seville under the Equipment Rental Agreement. The
purchase price shall be $30,000, which shall be paid in full on or
before June 1, 1999, by cashiers check. At that time, Seller shall
execute a Xxxx of Sale for the machine, the Rental Agreement shall be
terminated by mutual agreement of the parties, and any sums of rent
then due under the Rental Agreement shall be forgiven by Seller.
3. Modification of Rochester Debt/Preferred Stock Obligation. Pursuant
to Section 1.2(b) of the Stock Purchase Agreement and a certain side
Agreement dated as of the Closing, Seller and Rochester Plastics
modified a certain debt owed to Rochester such as to capitalize it
into preferred stock, with a concurrent obligation on the part of
Seville to redeem that preferred stock. The parties confirm that the
recapitalization of the Rochester Debt into preferred stock is hereby
void, and that the Rochester Debt is hereby modified to provide that
so long as all other obligations of Buyer and Seville to Seller under
the SPA, the Ancillary Agreement and this Amendment are fully and
promptly performed, then the Rochester Debt shall be canceled upon
fulfillment of all such obligations
4. Modification to Employment Letter. The parties agree that Seller's
employment with Seville is being terminated effective upon signature.
In that connection, Seville shall pay Seller's salary and employee
benefits through March 15, 1999. All arrearages in such benefits
shall be paid no later than April 1, 1999. Seville acknowledges that
as of the date hereof, it is in arrears in two life insurance
payments for Seller's life insurance in the total amount of
approximately $1574, which shall be paid on or before April 1, 1999.
After the Closing, Seville shall continue to carry Seller on its
policy of health insurance at Seville's cost, and shall continue to
pay, as and when due, all amounts coming due under Seller's existing
life insurance policy, which currently is in the amount of
approximately $774 per month. Seville's obligations under this
paragraph shall end on August 31, 2000.
5. Real Estate Lease. (a) Seville and Buyer acknowledge that Seville has
not yet paid real estate taxes pursuant to the real property lease,
in the
amount of approximately $18,000. Seville agrees that it will pay such
taxes, together with all interest and penalties, on or before July 1,
1999, or earlier if Seller's existing mortgage lender(s) threaten to
declare a default under such mortgage based on failure to pay such
taxes. To the extent that such lenders pay such taxes on behalf of
Seller and charge Seller any interest or penalties, Seville shall pay
such penalties.
(b) Seller acknowledges that Seville plans to close operations at its
existing facilities for a limited period of time in order to make
certain business changes. Seville and Buyer hereby assure Seller of
their intentions to continue to perform all payment and other
obligations under the Real Property Lease despite such temporary
vacancy. Seller agrees that, so long as Seville and Buyer continue to
perform their respective obligations under the Real Property Lease,
it will not declare a default as a result of Seller's vacating the
premises. Seller may declare such a default in the event that
Seller's mortgage lender declares a default on that basis.
6. Buyer Guarantee. Buyer hereby guarantees the full and prompt payment,
when due, of all obligations of Seville to Seller under this
Amendment, and confirms its existing guaranty of the obligations of
Seville under the SPA and the Ancillary Agreements.
7. Release of Security Interest. Seller hereby releases his security
interest in various assets of Seville granted pursuant to the
Security Agreement, which is one of the Ancillary Agreements. To the
extent that the Equipment Lease is deemed a financing lease, Seller
does not release its security interest in the Equipment, but will
release such security interest upon prompt payment of the purchase
price under Paragraph 2 hereof.
8. Attorneys Fees. On April 1, 1999, Buyer shall pay to Seller the sum
of $27,500 in consideration of attorneys fees that Seller has
previously expended. This amount shall not be credited against the
purchase price
9. Default. In the event that Seville or Buyer fail to pay or perform
any of the obligations under any of this Agreement, the SPA or any of
the Ancillary Agreements, which failure continues for a period of 30
days after receipt of written notice from Seller, Seller may, at its
option, take the following actions, in addition to any other remedies
it may have at law or equity:
(i) Declare immediately due and payable all payments under
this Amendment, the SPA and the Ancillary Agreements,
including the entire balance of the Rochester Debt;
(ii) Enforce the guaranty of Buyer as to all such accelerated
debt;
(iii) Declare a default under the Equipment Lease and the
Real Property Lease
(iv) Obtain all attorneys fees and other costs of collection
for any obligation of Buyer or Seville under this
Amendment, the SPA and the Ancillary Agreements.
10. Mutual Release. Seller, Seville, and Buyer hereby release each other
from and against and all claims, causes of action, actions or damages
occurring prior to the date hereof by reason of any action they have
taken or any breach of the SPA or the Ancillary Agreements occurring
prior to the date hereof.
11. Release of Representations and Warranties. Seller and Seville agree
that, effective immediately, Seller shall have no further obligations
to either of them by reason of any breach of any obligation, duty of
indemnification, or representation or warranty under the SPA or any
Ancillary Agreement, including failure to collect any receivable due
to Seville.
12. Modification of Non-Competition Agreement. The Non-Competition
Agreement is hereby modified to provide that, during the period of
Non-competition, Seller shall be obligated not to solicit business
from any customer of Seville, or any entity that has been a customer
of Seville at any time since January 1, 1997.
13. Further Documents. The parties agree that they will cooperate with
each other in executing such other documents and instruments as each
of them shall reasonably request in order to effect the full intents
and purposes of this Amendment, including, for example, UCC
termination statements.
14. Effective Date. The Purchase Agreement shall be effective on and as
of March 8, 1999, contemporaneously with signature of this Amendment.
IN WITNESS WHEREOF, the parties have executed and delivered this Amendment
this _______ day of March, 1999.
INMOLD, INC.
By /s/ Xxxx X. Xxxxxx
---------------------------
Xxxx X. Xxxxxx
Chief Financial Officer
SEVILLE PLASTICS, INC.
By /s/ Xxxx X. Xxxxxx
----------------------------
Xxxx X. Xxxxxx
Chief Financial Officer
/s/ Xxxxxx X. Xxxxxxxx
----------------------------
Xxxxxx X. Xxxxxxxx
ROCHESTER PLASTICS, INC.
By /s/ Xxxxxx X. Xxxxxxxx
----------------------------
Xxxxxx X. Xxxxxxxx
Vice President
