U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-SB
Amendedment No. ___
General Form for Registration of Securities of
Small Business Issuers
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
Inmold, Inc.
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(Name of Small Business Issuer in its charter)
Indiana 38-3881342
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
755 West Big Beaver Road, Suite 312
Troy, Michigan 48084
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Issuer's telephone number (248) 362-0500
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, Par Value .00001
.................................................................
(Title of class)
.................................................................
(Title of class)
<PAGE>
Item 1: Description of Business
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(A) Description of Inmold, Inc.
InMold, Inc. (the "Company") was organized as a C corporation under
Indiana law on January 10, 1997. It became a publicly-held corporation
through an arrangement and reorganization (exchange of stock)
transaction by which the shareholders of Sanders Confectionery
Products, Inc. ("SCP"), a Michigan C corporation, exchanged sixteen
(16%) percent of their SCP holdings for shares of the common equity of
the Company then held by SCP, on a two-for-one basis.
The first step of the transaction was the purchase of 4,000,000 shares
of the Company's common equity at par ($0.00001 per share) by Filipp
J. Kreissl and John M. Sanders, two officers of SCP, and their
immediate contribution of these shares to the capital of SCP. The
purpose, among others, was to provide shares for the arrangement and
reorganization (exchange of stock) transaction.
This was followed by the approval of the transaction by the SCP
shareholders at a special meeting called for that purpose on April 9,
1997 and approval by the Circuit Court of Oakland County, Michigan on
April 23, 1997.
The transaction is more fully described in the Proxy Statement
attached to this Form 10SB as Exhibit 99.05.
The only continuing affiliation between the Company and SCP is
represented by the latter's ownership of a minimal amount (1.5%) of
the Company's issued and outstanding shares of common equity.
Inmold, Inc. is a holding company controlling two (2) companies in the
plastics injection molding industry GP Plastics, Inc. and Seville
Plastics, Inc. These companies are suppliers of molded plastic parts
for the automotive industry. Inmold has no predecessors nor has there
been any bankruptcy, receivership or similar proceeding involving the
Company or its subsidiaries.
Inmold, Inc.'s principal customers are General Motors Corporation and
DaimlerChrysler Corporation. Approximately ninety-five percent (95%)
of the Company's business is done with General Motors (51%) and
DaimlerChrysler (44%). (Exhibits 10.01 and 10.02)
Inmold competes with a large number of companies in the plastics
injection molding business. The Company holds a credible competitive
position, because of its design and engineering capabilities and its
ability to respond quickly to customer requirements.
Inmold's administrative services are provided by three individuals
whose compensation is provided by the Company. Its GP Plastics
subsidiary has approximately 135 employees, all of whom are full-time.
The Seville Plastics, Inc. subsidiary has approximately 20 employees,
all of whom are full-time. The Company and its subsidiaries currently
have no labor contracts with any other organization. There are no
union workers employed at any of the facilities owned and operated by
the Company or its subsidiaries, and all employment is considered at-
will employment.
To date, no significant time has been spent on basic or pure research
and development. The Company's primary focus has been to design,
engineer and manufacture specific products, largely in the conversion
of metals to plastics.
Finally, there is no existing need for government approval of
principal products and services and there is no material effect
arising from existing or probable governmental regulations on the
business.
(B) Description of Inmold's subsidiaries
Inmold, Inc. acquired 97.25% of the issued and outstanding stock of GP
Plastics, Inc., a Michigan corporation, in September, 1997 (Exhibit
2). Since that time, GP Plastics, Inc. has been rated by Daimler-
Chrysler in the top ten percent (10%) of all its suppliers based on
performance measurements. In addition, it has received the prestigious
Gold Pentastar award from DaimlerChrysler.
<PAGE>
Inmold's subsidiary GP Plastics, Inc. is presently a Tier 1 supplier
to both General Motors and DaimlerChrysler, shipping parts for plants
in the United States, Canada, Mexico, Brazil and Austria.
A Tier 1 supplier is one which sells directly to the automotive
companies (e.g. DaimlerChrysler, Ford or General Motors). A Tier 2
supplier is one which sells to the Tier 1 suppliers.
GP Plastics, Inc. spent approximately $140,000 in the investigation,
identification and remediation of a limited area of soil
contamination, in cooperation with the Michigan Department of
Environmental Quality.
The Company's Seville Plastics, Inc. subsidiary sells largely to Tier
2 customers. Fisher Dynamics is Seville's present principal customer.
Fisher Dynamics is a Tier 2 supplier selling the Company's products to
Lear Corporation, a Tier 1 supplier. Present volume of sales to Fisher
Dynamics is approximately $600,000 per year, though new business in
the amount of $450,000 per year is expected to go into production
between September and November, 1999.
(C) Production
Shipments of an innovative plastic steering column bracket for the
DaimlerChrysler mini-van line began in May, 1998. It was designed,
engineered and produced by GP Plastics, Inc. in conjunction with
DaimlerChrysler Engineering and DuPont Automotive. A joint patent is
being applied for by DaimlerChrysler and Inmold. This new steering
column bracket was recognized as the "Most Innovative Use of Plastics"
of the year in the chassis/hardware/assembly category by the Society
of Plastic Engineers in November, 1998, with the national award going
jointly to Inmold, DaimlerChrysler and DuPont. (Exhibit 99.08)
The raw materials used by Inmold's subsidiaries consist largely of
resins used in the injection molding process. These resins are
readily available from many sources. Currently, DuPont and Atrex are
principal suppliers of resins to the Company.
(D) Patents held by the Company
While Inmold, Inc. holds no patents in its own name, its subsidiaries
hold the following patents:
Manifold United States patent registered in the name of Al-
Ko Enterprises, Inc. d/b/a A.E.P. Technologies,
Inc. This intellectual property asset was acquired
by the Company's subsidiary, GP Plastics, Inc.
through its acquisition of AL-Ko Enterprises, Inc.
in April, 1996.
Bicycle Wheel United States Patent No. 4,588,542 granted to Owen
Assembly A. Pierce on May 13, 1986 and assigned to GP
Plastics, Inc. The patent expires on May 13, 2003.
<PAGE>
Bicycle Wheel Canada Patent No. 1185641 granted to Owen A.
Assembly Pierce on May 13, 1986 and assigned to GP
Plastics, Inc. The patent expires on April 16,
2002.
In addition, Inmold, Inc. executed an agreement with
DaimlerChrysler for joint ownership of a patent on the Plastic
Steering Column Bracket. The United States patent was applied for
on May 20, 1998 with S.N. 09/082,215. The Patent is currently
pending. (Exhibit 10.03)
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations FY 1998
Sales of manufactured products (aside from tooling) reached $8,405,780
in the fiscal year ended May 31, 1998. Sales of tooling, manufactured
by others and billed to the Company's OEM customers, totaled
$1,007,635.
The eight-month fiscal year ended May 31, 1998 was the first period of
operations for the Company, commencing October 1, 1997 upon the
completion of the acquisition of its first operating subsidiary, G P
Plastics, Inc. The latter's sales were the Company's only revenues.
The recorded product sales, $8,405,780, represented an increase of
20.9% over the sales achieved by G P Plastics, Inc. in the comparable
eight months in the prior year; that is, October 1, 1996 through May
31, 1997.
The prior year's eight-month product sales, $6,954,002, were affected
by Individual general motors plant strikes in the fall of 1996 and the
spring of 1997. Management estimates that these strikes cost the
company approximately $360,000 in sales. Adjusted for these lost
sales, the year-to-year increase would have been 14.9% rather than the
20.9% cited above.
This gain of nearly 15.0% can be attributed largely to two factors.
First, Increased production of general motors' ck light trucks,
mini-vans and sports Utility vehicles, prior to the scheduled
phase-out of this line, resulted in Stronger sales of the company's
assist handles.
Of more significant ongoing impact was the start of shipments of the
innovative Plastic steering column support brackets for chrysler's
three mini-vans which Began on a limited basis in may, 1998. These
shipments, which were anticipated to reach approximately $100,000 in
sales per week, are expected to continue at least through the 2005
model year.
<PAGE>
In contrast to the increased product sales cited above, shipments of
the Company's assist handles to the general motors ck assembly plants
were reduced by approximately $35,000 per week subsequent to may 31,
1998 as the customer began its phase-out of the ck truck program. The
last step of the phase-out, at a rate of approximately $85,000 in
weekly sales, was scheduled to be completed by the end of the 1999
calendar year.
Management expects that much of this loss of sales to general motors'
ck truck Program will be made up in the 2000 fiscal year by the
introduction of new Products currently covered by purchase orders or
undergoing development.
For the following years, the company is engaged in the design,
engineering and Prototyping of extensions of the steering column
support bracket concept, Including related parts, to additional
daimlerchrysler platforms. While there Can be no assurance that these
new engineered products, with estimated total Annual sales of
approximately $28,000,000, will ultimately result in purchase Orders,
management anticipates that the first of these new parts will be
Scheduled for production in or about june, 2000.
The manufacturing cost of sales for production parts (aside from
tooling) in the Eight-month fiscal year ended may 31, 1998 was 79.9%,
a decrease from 81.3% for G p plastics, inc. For the comparable eight
months of the prior year. The Cost-of-sales for tooling varied only
slightly from year-to-year, with minimal Impact on net income.
Manufacturing expense, other than materials, dropped from 37.0% of
sales in the Prior year to 32.2% of sales in the 1998 fiscal year, a
significant improvement Driven largely by better utilization of labor
and the effect of increased sales Without a commensurate increase in
fixed costs. Material expense actually Increased from 44.3% to 47.7%,
reflecting the need to out-source production of a Portion of the
assist handles because of certain, short-term equipment capacity
Restraints.
Selling, general and administrative expense increased from $1,085,944
in the Prior, eight-month period for g p plastics, inc. To $1,310,134
in the Eight-month fiscal year ended may 31, 1998. Significant
increases were Incurred in commissions (related to sales), payroll
costs, including the Employment of rick bessette as general manager
for g p plastics, inc., And in Outside services.
Interest expense increased to $444,529, or 4.7% of the company's total
sales including tooling), from $248,113, or 3.3% of total sales in the
prior Eight-month period. Contributing to this increase was the
interest expense on a $1,200,000 mortgage loan from nbd bank (now bank
one) which enabled g p Plastics, inc. To purchase the manufacturing
facility which it had previously Rented. In addition, the company
incurred interest expense on two $500,000 Loans made to g p plastics,
inc. By horizon bidco of jackson, michigan, and Capital bidco of
lansing, michigan, respectively, which were made early in Fiscal 1988
to fund certain fixed asset and product development requirements.
Because, on a consolidated basis, the company has estimated net
operating loss Carryforward in excess of $3,000,000 for financial
reporting and tax reporting Purposes, it is management's position that
no taxes will be due for fiscal 1998. No provision, therefore, has
been made for federal income taxes.
Net income for the eight-month fiscal year ended may 31, 1998 was
$204,150, an Increase of 36% over the $150,442 recorded by g p
plastics, inc. In the Comparable eight-month period of the prior year.
The gain in manufacturing Gross profit arising from increased sales
was substantially off-set by the Higher interest payments and selling
and administrative expenses described Above.
Operations in fiscal 1998 were not materially affected by inflationary
factors With respect to costs of supplies and services nor by pricing
changes. Management does not anticipate that such factors will
influence operating Results in fiscal 1999 or fiscal 2000.
Liquidity and Capital Resources
Cash provided by operating activities in the eight-month fiscal year
ended may 31, 1998 was $645,543. This figure reflected net income of
$204,150, non-cash Charges for depreciation and amortization in the
amount of $295,719, and Increases in accounts payable and in withheld
and accrued payroll taxes in the Amounts of $357,214 and $381,664
respectively. Significant off-setting factors Were an increase of
$466,472 in inventories and $114,656 in accounts receivable as the
company's revenues increased.
Net current assets, or working capital, showed a deficit of $918,417
exclusive Of the company's revolving line of credit with c.i.t.
group/credit finance, Incmanagement expects that this deficit will
narrow with the company's rising Sales and profitability, as well as
from an anticipated refinancing program warranted by the company's
improving financial condition.
With the purchase of the g p plastics, inc. Manufacturing facility
completed in January, 1998, capital expenditures contemplated by the
company at the end of Fiscal 1998 for the next year included
approximately $260,000 for improvements To the facility, $300,000 to
up-grade systems and related equipment, $150,000 For auxiliary
manufacturing equipment and $750,000 to pay off the cost of two
700-ton presses and related equipment.
Management expects that these capital expenditure requirements will be
met Through a combination of cash flow from operations, additional
debt/equity Financing from its mezzanine funding sources, and from
debt funding secured by specific equipment.
<PAGE>
The operating needs of the g p plastics, inc. Subsidiary have been met
since September, 1996 by debt financing provided by cit group/credit
finance, inc., And by nbd bank (now bank one); by debt/equity
financing from horizon bidco and capital bidco, two mezzanine funding
sources in michigan; and by cash from Operations. (exhibits 10.04,
10.05, 10.06, 10.08 and 10.09)
(1) nbd bank is a participant in the funding provided by cit
group/credit Finance, inc. It also provided a $1,200,000 mortgage
loan to enable g p Plastics, inc. To purchase its manufacturing
facility from two (2) individuals In january, 1998.
The acquisition of seville plastics, inc. Included funding by
crestmark bank to Replace seville's existing lender. The loan is
secured by seville's assets and Guaranteed by the company. (exhibit
10.07 and 10.10)
The operating cash requirements of the company's subsidiaries for the
next Twelve (12) months will be provided largely from operations. No
material Additional financing is expected to be required for operation
of the Subsidiaries during that period.
The company expects to finance any additional acquisitions with a
combination of Cash and equity. Cash requirements will be sought from
debt sources, secured by The assets of the acquired companies. The
company's equity will be used in such A manner that projected earnings
will increase at a greater rate than dilution Of the shareholder's
equity.
Plan of Operation
The company believes that it has sufficient under-utilized
manufacturing Capacity to accommodate any new business acquired by its
subsidiaries during the next twelve (12) months.
The operating plan of the subsidiaries for the next twelve (12) months
does not Contemplate significant changes in the present number of
employees.
The company's consolidated projections represent only the operations
of its Present subsidiaries. These projections are subject to
variances in sales, Market share, designing and engineering changes of
its two (2) principal Customers, general motors corporation and
daimlerchrysler.
It is also the company's plan to seek out and negotiate the purchase
of Additional plastics injection molding companies, largely in
southeastern Michigan, in conjunction with the indigenous growth of
its present subsidiaries. This objective cannot be quantified, though
two (2) elements will be material to The program:
(1) The recognition accorded to the Company's capabilities through
the S.P.E award for the steering column bracket, [See Item 1,
(c)], and the potential extension of this new product to
additional vehicle platforms
(2) The engagement of GMA Capital, L.L.P. and First of Michigan
Corporation as investment and acquisition advisors. (Exhibits
99.09 and 99.10)
(i) The Company does not presently have purchase commitments for
any such additional acquisitions.
The company also has an interest in developing other forms of business
Combinations. In this connection, subsequent to the end of fiscal
1998, it Entered into two joint venture agreements with a principal of
Design Engineering Services, inc. Of bingham farms, michigan.
(i) Inmold Lukmani Design Technologies, Inc. ("ILD"). Fifty-one
percent of ILD stock is owned by Nasser Lukmani and
forty-nine percent by the Company. ILD expands the
opportunities for design and engineering services to the
automotive industry for the Company It is anticipated that
ILD will be certified as a minority business (Exhibit 10.15)
(ii) Inmold Lukmani Manufacturing Company, Inc. ("ILMC"). The
stock ownership of ILMC is identical to that of ILD, and it
also anticipates certification as a minority business. ILMC
will be engaged in plastics injection molding. (Exhibit
10.16)
The company's research and development activities during the next
twelve months will focus on the design and engineering involved in the
conversion of additional products from metal to plastic and on part
integration designed to Reduce cost and weight and to simplify
assembly operations in the automotive Industry.
Year 2000
The Company is currently working on its Year 2000 issues. At the
balance sheet date, the Company was in the awareness and assessment
phases of its Year 2000 project. Mission critical equipment for both
information technology and non-information technology will be
identified and tested for Year 2000 compliance. Those systems that are
not Year 2000 compliant will either be repaired or replaced so that
they will be compliant. Total estimated cost of the Company's Year
2000 compliance efforts is $75,000, none of which has been incurred or
accrued as of the balance sheet date. The Company anticipates its Year
2000 compliance project will be in the final testing phase at June 30,
1999.
Risks and Uncertainties in the Future
Certain statements contained in this Form 10SB, that are not
historical facts, are forward-looking statements made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act
of 1995. These forward-looking statements address activities or events
that the Company expects will or may occur in the future. The Company
cautions that a number of important factors could cause actual results
to differ materially from those expressed in any forward-looking
statements, whether written or oral, made by or on behalf of the
Company. Such factors include, but are not limited to, competitive
pricing pressures, inflation, work stoppages within the industry,
consolidations among the automotive suppliers, supply constraints,
interest rate changes, access to capital, general economic conditions,
the effect of technological difficulties including those arising from
the completion of Y2K conversion activities, and the effect of
adoption of new accounting pronouncements. Consequently, all of the
forward-looking statements made are qualified by these and other
factors, risks and uncertainties. Investors are also directed to
consider other risks and uncertainties discussed in documents filed by
the Company with the Securities and Exchange Commission.
Item 3: Description of Property
(A) Inmold, Inc.'s Office Facilities:
Inmold, Inc. has office facilities in the Top of Troy office building,
755 W. Big Beaver Road, Suite 312, Troy, Michigan 48084.
Inmold, Inc. owns no property apart from that owned by its operating
subsidiary, GP Plastics, Inc., described below. The appraised value of
that property represents approximately 17% of the consolidated assets
of the Company and its subsidiaries.
(B) GP Plastics, Inc.'s Facilities:
<PAGE>
GP Plastics, Inc. owns its manufacturing facility, consisting of two
(2) buildings totaling approximately 46,000 square feet situated on
7.35 acres of land. The building were constructed in 1969 and 1974
respectively and are in good condition. The addresses, 3870 and 3910
Industrial Drive, Rochester Hills, Michigan 48309, are in a small
industrial park.
GP Plastics, Inc. also owns a one-half interest in an additional 2.28
acres of vacant land immediately adjacent to its principal property.
The other two quarter interests are held by unrelated parties.
The principal property is subject to a mortgage securing a $1,200.000
loan with NBD Bank executed in January , 1998. The principal balance
of the mortgage loan, which is guaranteed by the Company, was
$1,133,333 on February 28, 1999.
The mortgage loan carries an annual interest rate of 3 1/2% over the
NBD Bank's prime rate and is being amortized through January 5, 2003.
The balance due at maturity is $806,666. A premium is required for a
prepayment calculated at the present value of interest that would have
accrued on the amount prepaid at the excess of the note rate over the
Treasury rate.
GP Plastics, Inc. is currently renovating its facilities to provide
for up-dated quality control, purchasing and production planning and
control facilities, including an MRP system. The $150,000 cost is
being funded by present lenders and from operations.
(C) Seville Plastics, Inc.'s Facilities:
Seville Plastics, Inc. rents its manufacturing facility, consisting of
two buildings totaling approximately 21,000 square feet on two acres
of land directly across the street from the GP Plastics, Inc.
facility. The buildings were constructed in 1968 and 1971 respectively
and are in good condition. The address for Seville is 3925 Industrial
Drive, Rochester Hills, MI 48309. (Exhibit 10.11)
The manufacturing facility occupied by the Seville Plastics, Inc.
subsidiary is subject to a lease with the former owner of Seville as
landlord. Principal terms and conditions of the lease are as follows:
Lessor: Gerald M. and Norma Pederson
<PAGE>
Lessee: Seville Plastics, Inc.
Guarantor: Inmold, Inc.
Term: August 1, 1998 through July 31, 2005
Rent: $ 9,200.00 per month, effective August 1, 1998
$ 9,700.00 per month, effective August 1, 2001
$10,200.00 per month, effective August 1, 2003
Additional
Rent: Lessee shall pay real estate and personal property
taxes, all repair and maintenance expense, and
insurance expense.
Environmental: Lessee shall conduct a baseline assessment prior to
expiration of the lease term and execute any required
remediation.
In the opinion of management, all of the properties of Inmold, Inc. and its
subsidiaries are adequately insured.
Item 4: Security Ownership of Beneficial Owners and Management
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The following information is furnished for any person (including any
"group") that is known to the Company to be the beneficial owner
of more than 5%.
________________________________________________________________.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
(2) (3) (4)
Names and Address Amount and Nature Percent
Title of Class of Beneficial Owner of Beneficial Owner of Class
- -------------- ------------------- ------------------- --------
Common Owen A. Pierce 649,341 11.6
Stock 5375 Orion Road
Rochester, MI 48306
Margaret S. Kreissl 715,880 12.9
Revocable Trust
4230 Orchard Way
Bloomfield Hills, MI
48301
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
John M. Sanders 595,087/1/ 10.7
18349 W. 13 Mile
Apt. 34
Southfield, MI 48076
John F. Horner 458,011 8.3
4809 Foxcraft
Troy, MI 48098
The following information is furnished for any person that is known to the
Company to be an officer or director.
Owen A. Pierce 649,341 11.6
Director Emeritus
5375 Orion Road
Rochester, MI 48306
John M. Sanders 595,087/2/ 10.7
Secretary and Director
</TABLE>
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/1/424,487 of these shares are held in the 1993 Trust for John M. Sanders,
James A. Williams, Esq., Trustee, 280 N. Old Woodward, Suite 300, Birmingham, MI
48009. This is a discretionary trust with no provision for termination. James A.
Williams has absolute discretionary powers in all matters, including voting
rights.
/2/424,487 of these shares are held in the 1993 Trust for John M. Sanders,
James A. Williams, Esq., Trustee, 280 N. Old Woodward, Suite 300, Birmingham, MI
48009. This is a discretionary trust with no provision for termination. James A.
Williams has absolute discretionary powers in all matters, including voting
rights.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
18349 W. 13 Mile
Apt. 34
Southfield, MI 48076
John F. Horner 458,011 8.3
Vice President,
Treasurer and Director
4809 Foxcraft
Troy, MI 48098
David C. Shifflet 158,011 2.8
Vice President and
Director
23585 Hagen Road
Macomb Township, MI 48042
Mayer Morganroth 92,000 1.7
Director
3000 Town Center
Suite 1500
Southfield, MI 48034
Philip B. Fischer 28,000 0.5
Director
255 E. Brown Street
Suite 110
Birmingham, MI 48009
J. Will Paull 2,000 0.1
Director
860 Woodridge Hills Dr.
Brighton, MI 48116
Rick D. Bessette 0 0
Vice President
160 Brookwood Drive
Lake Orion, MI 48362
David S. Eberly 0 0
Director
3621 Berkshire
Bloomfield Hills, MI 48301
John R. Edman 0 0
Director
1931 Boulder Drive
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Ann Arbor, MI 48104
Filipp J. Kreissl 0 0
Interim Chairman of the Board
and President and Director
4230 Orchard Way
Bloomfield Hills, MI 48301
Directors and Executive
Officers as a group (12) 1,982,244 35.7
</TABLE>
No arrangement which may result in a change in control of the Company
exists at this time.
In addition, no beneficial owners have a right to acquire additional
shares within 60 days from options, warrants, rights, conversion
privilege or similar obligations.
Footnote: The 1993 Trust for John M. Sanders is a discretionary trust
with no provision for termination. The Trustee named in the
chart, James A. Williams, has absolute discretionary powers
in all matters, including voting rights.
<PAGE>
Item 5. The Executive Officers and Directors of Inmold, Inc. are as
follows:
Rick D. Bessette, 35 Vice President
David S. Eberly, 35 Director (term expires in 1999).
Director since 1998.
John R. Edman, 71 Director (term expires in 1999).
Director since 1998.
Philip B. Fischer, 62 Director (term expires in 1999).
Director since 1997.
John F. Horner, 48 Vice President, Treasurer and
Director (term expires in 1999)
Director since 1998.
Filipp J. Kreissl, 77 Interim Chairman of the Board and
President and Director
(term expires in 1999). Director
since 1997.
Mayer Morganroth, 67 Director (term expires in 1999).
Director since 1998.
J. Will Paul, 76 Director (term expires in 1999).
Director since 1997.
Owen A. Pierce, 80 Director Emeritus
John M. Sanders, 73 Secretary and Director (term
expires in 1999).
Director since 1997.
David C. Shifflett, 46 Vice President and Director
(term expires in 1999)
Director since 1998.
Filipp J. Kreissl is a graduate of Northwestern University. He joined
the Detroit Controls division of American Standard, Inc. in 1941,
latterly becoming President of Detroit Controls. Subsequently, he
owned and operated several automotive supplier companies. From 1975
until 1980, he was occupied as principal owner and President of KWD
Group, Inc., a management firm specializing in management for severely
distressed companies. Since 1986, he has served as President and
Treasurer of Sanders Confectionery Products, Inc. He has been interim
President and a Director of G P Plastics, Inc. since 1996. Mr. Kreissl
holds his positions on an interim basis pending the selection and
employment of a new chairman, president and chief executive officer.
The search was undertaken following the determination that Mr. Kreissl
had developed acute leukemia.
<PAGE>
Mayer Morganroth is a graduate of Michigan State University and
Detroit College of Law and was admitted to the Michigan Bar in 1955.
He is admitted to practice before the Second, Fourth, Sixth, and
Eighth Circuits of the U.S. Court of Appeals and the U.S. Supreme
Court. He is a member of the Association of Trial Lawyers of America;
U. S. Supreme Court Historical Society; and American Judicature
Society.
J. Will Paull attended the Detroit Institute of Technology and the
Detroit College of Law. He was President of Associated Financial
Planning Corporation from 1960 until 1984. Subsequently, he served as
Chairman, President, Chief Executive Officer and a Director of
Associated Mariner Financial Group, Inc., a publicly-owned financial
services holding company. He is presently President and Chief
Executive Officer of Associated Financial Planning Corporation.
Owen A. Pierce attended Ferris State College as an electrical
engineering student. In 1946, he took a position as Plant
Superintendent with General Machine & Tool Co. He was a founder of GP
Plastics, Inc. in 1965 and has been an owner and officer of the
company since that time. He was elected President of the company in
1974 and currently serves as a Director and as Chairman of the Board
of Directors.
John M. Sanders is a graduate of Amherst College. Mr. Sanders was
elected President of Fred Sanders in 1963 and subsequently Chairman of
the Board. He has been Chairman of the Board and Secretary of Sanders
Confectionery Products, Inc. since 1986.
David C. Shifflet is a graduate of Fraser High School in Michigan. He
earned a four year scholarship to Western Michigan University in
industrial arts. In 1977, he became one of three owners of the company
which became A.E.P. Technologies, Inc. in 1987. He served as President
of A.E.P. Technologies, Inc. until its acquisition by G P Plastics,
Inc. in 1996. He has been a Director of G P Plastics, Inc. since 1996.
He holds 11 patents for devices in industrial products.
It should be noted that the aforementioned executive officers are the
only significant employees who can be identified at this time. There
are no family relationships among the directors, executive officers,
or persons nominated or chosen by Inmold, Inc. for those respective
positions.
Finally, there have been no bankruptcy proceedings, convictions,
injunctions, restrictions or violations during the past five years
which would affect the business, securities or banking activities of
the directors, executive officers, promoters or control persons of the
Company.
<PAGE>
Item 6. Executive Compensation
Filipp J. Kreissl, Interim President and CEO of the Company, received
base compensation of $120,500 in 1998 with no bonus or other
compensation.
Mr. Kreissl was the only executive officer of the company who was paid
$100,000 Or more in the 12 months ending may 31, 1998 by either the
company or its Subsidiaries or a combination of these entities. No
directors received Compensation during the period from either the
company or its subsidiaries or a Combination of these entities.
During the fiscal year 1998, no stock options or free-standing SAR
grants were made to named executive officers. In addition, no
long-term incentive plan awards were made to named executive officers
in the 1998 fiscal year.
With regard to the Directors, the Company has no current arrangement
for compensation. The Company provided no compensation to Directors
for their services in the 1998 fiscal year, nor does the Company have
any employment contract, termination arrangement or change-in-control
arrangement with any of the above-named executive officers.
Item 7. Certain Relationships and Related Transactions
The Company has also executed a financial advisory contract with GMA
Capital, L.L.P. to assist the Company in financing and acquisition
activities. The contract requires payments of $10,000 per month, with
provision for success fees, and can be terminated without notice.
David S. Eberly, a Director of the Company, is also a principal and
director of GMA Capital, L.L.P. (Exhibit 99.09)
The services provided by GMA Capital, L.L.P. have included negotiation
and closing of subordinated debt financing from Horizon Bidco, Capital
Bidco, Bank One and Crestmark Bank. The firm identified and analyzed
potential acquisitions for the Company, none of which have been closed
as yet, and also assisted in the development of the Company's joint
ventures, InMold Lukmani Design Technologies, Inc. and InMold Lukmani
Manufacturing Company, Inc. GMA Capital, L.L.P. has also participated
more recently in contacts with broker/dealers and potential market
makers for the Company's common stock, as well as in search activities
for a new chairman, president and chief executive officer.
The contract with gma capital, l.l.p. was negotiated between mr.
Kreissl and mr. Eberly, as a principal of that firm, in october, 1998,
prior to mr. Eberly's Election to the company's board of directors.
Accordingly, mr. Eberly did not Participate in board action on this
matter.
The company did not consult with other potential financial advisors in
this Instance. Based, however, on prior relationships with both gma
capital, l.l.p. And other financial advisors (e.g. first of michigan
corporation and river Capital), management believes that the contract
terms are as favorable as could Be obtained from non-affiliated
parties.
The Company has no parent company, nor does it have any transactions
or arrangements with a promoter.
Item 8. Description of Securities
With regard to common and preferred stock, the company is not offering
common equity, nor is the Company offering preferred stock. The
Company is not offering debt securities.
<PAGE>
PART II.
Item 1. Market Price of and Dividends on the Registrant's Common Equity
and Other Shareholder Matters
The common shares are to be listed on the NASDAQ Bulletin Board for
over-the-counter trading under the symbol MOLD. There is no public
trading as yet.
None of the Company's common equity is subject to outstanding options
or warrants to purchase, or securities convertible into common equity
of the registrant, with the following exceptions:
(1) Horizon Bidco and Capital Bidco, debt/equity mezzanine lenders to
the Company's G P Plastics, Inc. subsidiary, each have been
granted an option to purchase 75,000 shares of the Company's
common equity at $0.10 per share, in whole or in part, at any
time prior to August 1, 2004. For 60 days after August 1, 2002 or
after pre-payment of the loan in its entirety, the lender may
require the Company to repurchase the shares at $2.10 per share.
(Exhibits 10.12 and 10.13)
(2) Rick D. Bessette, general manager for G P Plastics, Inc. and Vice
President of the Company, has been granted an option to purchase
50,000 shares of the Company's common equity at 50% of the market
price at the time of the purchase at any time between April 1,
1999 and November 12, 2003, as a part of his employment
understanding. (Exhibit 10.14)
(3) In connection with the execution of joint venture agreements with
respect to InMold Lukmani Design Technologies, Inc. and InMold
Lukmani Manufacturing Company, Inc. (see Management's Discussion
for FY 1998 contained in this Form 10SB filing and Exhibits 10.15
and 10.16 attached hereto), the Company granted a stock option to
Nasser Lukmani, Sheryar Durrani and Richard Matsu (together
"Optionees") on March 3, 1999. Under the terms of the stock
option, the Optionees can purchase 250,000 shares of the
Company's common equity (to be shared among them on a pro-rata
basis) at the lower of one ($1.00) dollar per share or the
closing price of the shares on the sixtieth day after the shares
first trade on any national stock exchange or securities
exchange. The option can be exercised, in whole or in part,
during a ten-year period commencing March 3, 1999; it vests at a
rate of twenty (20%) percent annually from the same date. The
Company may terminate the unvested portion of the option if it
terminates its service agreements with Lukmani Design
Technologies, Inc. and Design Engineering Services, Inc. (Exhibit
10.15)
The registrant has no present plan to publicly offer its common equity
in such a manner as to have a material effect on the market price of
the equity. Holders of the Company's common equity hold in aggregate
2,799,377 shares which can be sold pursuant to Rule 144 of the
Securities Act. The Company has approximately 2,900 holders of its
only class of common stock.
The Company has paid no cash dividends on its only class of common
equity. Dividends on the Company's common stock are payable to the
full extent permitted under the laws of the State of Indiana, except
when currently the Company is or would thereby be rendered insolvent.
Dividends may be declared or paid and distributions may be made only
out of surplus (as then defined under the Indiana Business Corporation
Law). No additional restrictions are anticipated in the future, so
long as the condition of the affairs of the Company shall render
payment of dividends advisable in the opinion of the Board of
Directors.
<PAGE>
Item 2. Legal Proceedings.
Registrant did not use either Alternative 2 or Alternative 3 of this
form, therefore, this section and the information requested hereunder
by Item 103 of Regulation S-B is inapplicable.
Item 3. Changes in and Disagreements with Accountants
There has been no resignation or refusal to stand for re-election or
dismissal of the Company's principal independent accountant or a
significant subsidiary's independent accountant on whom the principal
accountant expressed reliance.
For its initial audit, the Company selected Walsh, Cenko & Haynes,
P.C. as its principal independent accountant in October, 1998. The
same firm was appointed as the principal independent accountant for G
P Plastics, Inc., the Company's only present significant subsidiary.
It had also been the principal independent accountant for Al-Ko
Enterprises, Inc., d/b/a A.E.P. Technologies, Inc. before its
acquisition by G P Plastics, Inc. in 1996.
Item 4. Recent Sales of Unregistered Securities
The following information pertains to the first sale of unregistered
securities:
(1) Pursuant to Securities Act of 1933, Section 3(a)(10), 4,000,000
shares of the Company's common equity were sold on April 1, 1997.
(2) There was no public offering or underwriter. The securities were
sold privately to Filipp J. Kreissl and John M. Sanders for the
sole purpose of contribution of those shares as capital to
Sanders Confectionary Products, Inc. as the first step in a
transaction by which most of these shares were to be exchanged
with the security holders of Sanders Confectionery Products, Inc.
for 16% of their holdings in that company.
(3) The securities were sold at par ($.00001 per share) with the
proceeds being used for the general purpose of the Company, which
at that time had no operating subsidiaries.
The following information pertains to the second sale of unregistered
securities:
(1) Pursuant to Securities Act of 1933, Section 4(a)(2), 90,000
shares of the Company's common equity were sold on April 1, 1997.
(2) There was no public offering or underwriter. The securities were
sold privately to the Daniel Spencer Hoops Irrevocable Living
Trust dated April 14, 1992.
(3) The securities were sold at par ($.00001 per share) with the
<PAGE>
proceeds being used for the general purposes of the Company, which at
that time had no operating subsidiaries.
The following information pertains to the third sale of unregistered
securities:
(1) Pursuant to Securities Act of 1933, Section 4(a)(2), 1,000,000
shares of the Company's common equity were exchanged in an
acquisition agreement dated May 22, 1997.
(2) There was no public offering or underwriter. The securities were
issued to the holders of all the common equity of G P Plastics,
Inc., a Michigan corporation, in exchange for all of said common
equity.
(3) The transaction involved the exchange of 1,000,000 shares of the
Company's common equity for 43,610 shares of the common equity of
G P Plastics, Inc. (Approximately a 22.93:1 ratio). The exchange
effected an acquisition of a business with income-producing
assets for the Company.
The following information pertains to the fourth sale of unregistered
securities:
(1) Pursuant to _______________________, 396,000 shares of the
Company's common equity were issued on March 25, 1999.
(2) There was no public offering or underwriter. The securities were
issued privately to Sanders Confectionery Products, Inc. to
reimburse that company for its use of common shares of the
company then owned by it as a contribution to members of
management of the Company's G P Plastics, Inc. subsidiary to
recognize their special services to the Company with respect to
refinancing and physical consolidation related to its subsidiary.
(3) The securities were valued at par ($.00001 per share) for this
transaction, since no alternative basis for valuation had been
established.
The following information pertains to the fifth sale of unregistered
securities:
(1) Pursuant to ___________________, 25,000 shares of the Company's
common equity were issued on March 25, 1999.
(2) There was no public offering or underwriter. The securities were
issued privately to Rick Adams, in recognition of his services as
a sales representative for the Company.
(3) The securities were valued at par ($.00001 per share) for this
transaction, since no alternative basis for valuation had been
established.
The following information pertains to the sixth sale of unregistered
securities:
(1) Pursuant to ___________________, 30,500 shares of the Company's
common equity were issued on March 25, 1999.
(2) There was no public offering or underwriter. The securities were
issued privately to Demo Stavros, in recognition of his services
as a consultant in connection with the Company's QS 9000
certification.
(3) The securities were valued at par ($.00001 per share) for this
transaction, since no alternative basis for valuation had been
established.
Preferred Stock
The Company has not issued preferred stock. Its financial statements
reflect redeemable preferred stock issued in 1996 through 1998 by its
GP Plastics, Inc. subsidiary in connection with certain of its trade
and other obligations. Said redeemable preferred stock was valued at
two thousand ($2,000.00) dollars per share. Details are provided in
the Company's audited financial statements included in this Form 10-SB
filing.
<PAGE>
INMOLD INC.
CONSOLIDATED STATEMENT OF INCOME
Three Months Ended February 28, 1999
<TABLE>
<CAPTION>
SALES
<S> <C> <C>
Product Sales 3,634,957
Tooling sales 0
-----------
Total Sales 3,634,957
COST OF SALES
Material 1,638,538
Tooling Cost 0
Direct labor expense 244,824
Manufacturing expense 838,994
-----------
Total Cost of Sales 2,722,356
-----------
GROSS PROFIT 912,601
ADMINISTRATIVE AND SELLING EXPENSE 568,085
-----------
OPERATING PROFIT 344,516
OTHER (INCOME) EXPENSE
Interest Expense 186,352
Miscellaneous (Income) Expense 8,318
-----------
Total Other Income (Expense) 194,670
-----------
NET INCOME BEFORE PROVISION
FOR INCOME TAXES 149,846
INCOME TAX PROVISION 0
NET INCOME 149,846
-----------
Basic earnings per share $0.027
Diluted Earnings per share $0.025
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
INMOLD, INC.
CONSOLIDATED STATEMENT OF INCOME
Nine Months Ended February 28, 1999
<TABLE>
<CAPTION>
SALES
<S> <C> <C>
Product Sales 10,422,602
Tooling sales 0
-----------
Total Sales 10,422,602
COST OF SALES
Material 4,821,712
Tooling Cost 0
Direct labor expense 703,108
Manufacturing expense 2,306,690
-----------
Total Cost of Sales 7,831,510
-----------
GROSS PROFIT 2,591,092
ADMINISTRATIVE AND SELLING EXPENSE 1,591,559
-----------
OPERATING PROFIT 999,533
OTHER (INCOME) EXPENSE
Interest Expense 554,899
Miscellaneous (income) Expense 1,716
-----------
Total Other Income (Expense) 556,615
-----------
NET INCOME BEFORE PROVISION
FOR INCOME TAXES 442,918
INCOME TAX PROVISION 0
NET INCOME 442,918
===========
Basic earnings per Share $0.80
Diluted earnings per share $0.074
See accompanying disclosure
</TABLE>
<PAGE>
INMOLD INC.
CONSOLIDATED BALANCE SHEET
February 28, 1999
<TABLE>
<CAPTION>
CURRENT ASSETS
<S> <C> <C>
Cash 144,598
Accounts receivable - trade, net 2,608,167
Accounts receivable - other 325,837
Inventories 762,405
Prepaid job costs 63,771
-----------
Total Current Assets 3,904,778
PROPERTY AND EQUIPMENT, NET 5,110,462
OTHER ASSETS
Organizational costs 290,430
Goodwill, net 613,819
Financing costs, net 305,274
Deposits 49,318
-----------
Total Other Assets 1,258,841
-----------
TOTAL ASSETS 10,274,081
CURRENT LIABILITIES
Current portion of notes payable 1,030,147
Accounts payable - trade 1,743,311
Withheld and accrued payroll taxes 340,631
Accrued expenses 371,299
Unearned revenue - tooling 119,751
-----------
Total Current Liabilities 3,605,139
OTHER CURRENT LIABILITIES
Revolving bank line of credit 2,564,519
NOTES PAYABLE
CIT - Term Loan 858,692
NSD Bank - Mortgage 1,133,333
Crestmark Bank 697,173
Other Notes Payable 1,475,188
Less Current Portion (1,030,147)
------------
Total Notes Payable 3,134,239
STOCKHOLDERS' EQUITY
Common stock 51
Preferred stock 2,099,846
Retained Earnings - prior years (1,572,631)
Retained Earnings - current year 442,918
-----------
Total Stockholders' Equity 970,184
-----------
TOTAL LIABILITIES
AND STOCKHOLDERS' EQUITY 10,274,081
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INMOLD, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Nine Months Ended February 28, 1999
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net Income 442,918
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 254,383
Changes in assets and liabilities
(Increase) in accounts receivable (1,019,439)
Decrease in prepaid job costs 17,642
Decrease in inventories 231,116
(Decrease in accounts payable (2,789)
(Decrease in witheld and accrued (247,210)
payroll taxes
Increase in accrued expenses 20,251 (746,046)
------------ -----------
Net Cash Provided by Operating Activities (303,128)
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES
Purchase of property and equipment (542,864)
Decrease in deposits 25,470
Goodwill expenditures (12,919)
Increase in prepaid financing (58,500)
Increase in organizational costs (130,000)
------------ -----------
Net Cash (Used) in Investing Activities (718,813)
CASH FLOW PROVIDED BY (USED IN) FINANCING ACTIVITIES
Net Proceeds from long-term obligations, 1,077,754
less principal payments
Redemptions of preferred stock (57,235)
------------
Net Cash Provided By Financing Activities 1,020,519
-----------
Net Decrease in Cash (1,422)
Cash at beginning of period 146,020
-----------
Cash at end of period 144,598
===========
</TABLE>
INMOLD, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For The Nine Months Ended February 28, 1999
NOTE 1 - BASIS OF PRESENTATION
The financial information included herein is unaudited. In addition, the
financial information does not include all disclosures required under
generally accepted accounting principles, because certain note information
which was included in the Company's audited consolidated financial
statement for the fiscal year ended May 31, 1998 has not been included in
this report. The information included herein, however, reflects all
adjustments which, in the opinion of management, are necessary in order to
make these financial statements not misleading and a fair statement of the
results of operations for the interim period.
NOTE 2 - EARINGS PER SHARE
Basic earnings per share excludes dilution and is computed by dividing net
income available to common stockholders by the weighted average number of
shares outstanding for the period.
Diluted earnings per share reflects the potential dilution that could occur
if warrants and stock options are exercised and converted into common stock
that then share in the earnings of the Company. The Company has issued two
stock options and warrants as follows:
(1) Horizon Bidco and Capital Bidco, debt/equity lenders to the Company's
G P Plastics, Inc. subsidiary, each have been granted an option to
purchase 75,000 shares of the Company's common equity at $0.10 per
share, in whole or in part, at any time prior to August 1, 2004. For
60 days after August 1, 2002 or after pre-payment of the loan in its
entirety, the lender may require the Company to repurchase the shares
at $2.10 per share. (Exhibits 10.2 and 10.13)
(2) Rick D. Besset, general manager for G P Plastics, Inc. and Vice
President of the Company, has been granted an option to purchase
50,000 shares of the Company's common equity at 50% of the market
price at the time of the purchase at any time between April 1, 1999
and November 12, 2003, as a part of his employment understanding.
(Exhibit 10.14)
NOTE 3 - INCOME TAXES
Because, on a consolidated basis, the Company has estimated net operating
loss carry forward in excess of $3,000,000 for financial reporting and tax
reporting purposes, it is management's position that no taxes will be due
for fiscal 1999. No provision, therefore, has been made for federal income
taxes.
NOTE 4 - SUBSEQUENT EVENTS
On April 9, 1999, V. Allen Koch ("Koch") filed a lawsuit against G P
Plastics, Inc. the principal subsidiary of the Company, in the Circuit
Court for the County of Macomb, Michigan, Case No. 99-144-ack. Certain
officers of the Company or its G P Plastics, Inc. subsidiary, Owen A
Pierce, Filipp J. Kreissl; David C. Shifflett and John M. Sanders were also
named as defendants. In the lawsuit, Koch as asserted certain causes of
action against the defendants for breach of contract related to the sale of
A.E.P. Plastics, Inc., of which he was the principal owner, the G P
plastics, Inc in 1996. Koch seeks damages in excess of $1,000,000.
The defendants dispute these claims by Koch, which they believe to be
without merit, and have indicated that they intend to defend the lawsuit
vigorously. The claims in this lawsuit are similar to those filed
previously in Dallas, Texas. The prior case was dismissed due to lack of
subject matter jurisdiction.
In addition, the Company's subsidiaries are defendants in a small number of
claims and lawsuits arising in the ordinary course of business. In the
opinion of management, these matters are of such nature or involve such
amounts as would not have a material effect of the financial statements of
the Company if decided adversely.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations - Nine Month Interim Period Ended Feb. 28, 1999
Sales of manufactured product (aside from tooling) for both the nine months
and The quarter ended february 28, 1999 showed a very material increase
over Comparable periods in fiscal 1998.
Sales of $10,422,602 for the nine months reflected an increase over the
prior Year's period of 17.9% when measured on the basis of daily sales.
When adjusted For the general motors strikes affecting both years, the
increase was a more Dramatic 26.6%.
The pattern was much the same for the quarter ended february 28, wherein
the Increase on a daily sales basis was 26.9% . Neither period was affected
by Customer work stoppages.
These results were realized despite the first step in general motors'
phase-out Of its ck truck program which eliminated approximately $8,000 in
daily sales for The company.
Off-setting this drop-off were two new product developments. In june, 1998,
the Company's assist handles were extended to general motors' s-10 truck
program. These shipments are expected to continue at least through the
summer of 2000 at A sales rate of approximately $8,000 per day.
The second new product factor was the shipment of the innovative plastic
Steering column support bracket for the three daimlerchrysler mini-vans for
the Entire nine-month period in fiscal 1999. These shipments at a daily
sales rate Close to $20,000 began in may, 1998. They are expected to
continue at least Through the 2005 model year.
These latter shipments represented a material change in the nature of the
Company's business, as they were the first step toward very significant
Additional opportunities with daimlerchrysler in the area of conversion of
metal Parts to engineered plastic parts.
Cost of sales showed a continuing improvement during both periods, dropping
to 75.0% in contrast to 79.9% in fiscal 1998. While material costs held
steady Against the prior year, significant improvements were made in other
Manufacturing costs, particularly in the utilization of indirect labor.
Those Costs dropped from approximately 33.0% of sales in fiscal 1998 to
29.0%, Reflecting as well the impact of increasing sales on the company's
fixed costs.
Partially off-setting the improvement in the company's manufacturing costs
were Increases in selling and administrative expense and in interest costs.
In the First instance, commissions on the increased sales, employment of a
general Manager for g p plastics, inc. And outside services were
contributing factors.
As to interest expense, the increases were due to additional borrowings
Completed in the course of fiscal 1998 which were effective through the
entire Periods in fiscal 1999. One such borrowing was mortgage loan in the
amount of $1,200,000 from nbd bank (now bank one) which enabled the company
to purchase Its manufacturing facility. In addition, the company borrowed a
total of $1,000,000 from the two michigan bidco organizations in the summer
of 1997, Largely to fund fixed asset additions and product development
costs.
Net income for the quarter and the nine-month period ended february 28,
1999 was $149,846 and $442,918 respectively, in contrast to $204,150 in the
eight-month Fiscal year ended may 31, 1998. The strong increase in sales
and the reduced Manufacturing expense cited above were the principal
factors in the improved Operations.
Because of subsequently discovered negative information not previously
disclosed By its owner, the company's acquisition of seville plastics, inc.
Was rescinded By the company and renegotiated. The revised terms and
conditions of the Purchase are those disclosed in exhibits 10.10 and 10.11.
Since the Renegotiated transaction was not closed until March 31, 1999, the
company's Results of operations and financial condition were not affected
in the nine Months or in the quarter ended february 28, 1999.
Liquidity and Capital Resources
Cash provided by operating activities in the nine months ended february 28,
1999 Was a $503,128 deficit. Net income of $442,918 and non-cash charges to
Depreciation and amortization in the amount of $254,383 were more than
off-set By an increase of $1,019,439 in accounts receivable and a decrease
of $247,210 In withheld and accrued payroll taxes. The sharp increase in
accounts Receivable was largely a reflection of the company's increasing
sales, much of Which came from shipments of the innovative steering column
support bracket to Daimlerchrysler at a rate of approximately $100,000 per
week.
Net current assets, exclusive of the company's revolving line of credit,
Improved significantly from a deficit of $918,447 to a positive $299,639,
Reflecting the gains in net income and cash provided from a term loan in
the Amount of $714,000 (exhibit 10.06) executed with crestmark bank and
secured by The company's two, new 700-ton presses purchased for the
steering column bracket Program.
Acquisitions
1. Sanders Confectionery Products, Inc. was not acquired by the Company.
Its participation in the arrangement and reorganization (exchange of
stock) transaction through which the Company became publicly-held is
fully described in the Proxy Statement provided to the shareholders of
Sanders Confectionery Products, Inc. (Exhibit 99.05) and in Item 4 of
the 10-SB filing. Its only residual relationship with the Company is
represented by its present ownership of 1.5% of the outstanding shares
of the Company's common equity.
2. The Company acquired its G P Plastics, Inc. subsidiary at the end of
September, 1997 solely through an exchange of stock in which each
share of the common equity of G P Plastics, Inc. was exchanged for
22.93052 shares of the common equity of the Company. There was no cash
consideration in the transaction. The Company acquired 97.25% of the
issued and outstanding shares of G P Plastics, Inc. in September,
1997. The remaining shares were exchanged in August and September,
1999. (Exhibit 2 attached to the 10-SB filing)
3. The Company initially closed on an acquisition agreement with its
Seville Plastics, Inc. subsidiary on August 28, 1998, as disclosed
under Subsequent Events in the Auditors Report (Note 10) for the
fiscal year ended May 31, 1998.
Because of information subsequently discovered and not previously disclosed
by the owner of Seville Plastics, Inc., the acquisition agreement was
rescinded by the Company and re-negotiated. The revised agreement became
effective on April 30, 1999 and contained the following major terms and
conditions (Exhibit 10.10 attached to the 10-SB filing):
1. One hundred (100%) percent of the issued and outstanding shares of the
common equity of Seville Plastics, Inc. was purchased for $475,000 in
cash, to be paid as follows:
(a) $25,000 previously paid.
(b) $50,000 to be paid on March 15, 1999.
(c) The balance to be paid in twenty (20) equal, quarterly
installments of $22,500, including interest at 4% per annum,
commencing July 1, 1999.
2. The Company to purchase a certain plastic injection molding machine
from the seller for $30,000, to be paid on or before June 1, 1999.
3. A certain obligation of Seville Plastics, Inc. to an entity controlled
by its owner in the amount of $181,613 will be cancelled upon
satisfactory completion of all terms of the purchase agreement.
4. Employment of the owner of Seville Plastics, Inc. to be terminated
upon execution of the revised agreement.
5. Execution by Seville Plastics, Inc. of a seven-year real estate lease
of its facilities with the former owner of Seville, with average
monthly rent of $9,628 over the term of the lease.
Ownership / Relationship of Entities
- ----------------------------------------
Initial Entities
- -----------------
A. Sanders Confectionery Products, Inc. (SCP)
----------------------------------------------
Organized on August 6, 1986 to acquire a 111-year-old business. No material
assets or operations since May 20, 1988. Never became a reporting company.
Approximately 3,000 shareholders. Principal shareholders:
F. J. Kreissl and Family 13.0%
J. M. Sanders and Family 12.0%
B. InMold, Inc. (before initial exchange)
--------------------------------------
Organized January 10, 1997 to acquire plastic injection molding companies.
No material assets or operations at inception. Initial shareholders:
F. J. Kreissl and Family 49.0%
J. M. Sanders 49.0%
D. Hoops Revocable Trust 2.0%
Exchange Transaction
- ---------------------
Step 1. Simultaneously with their purchase of 4,000,000 shares of InMold, Inc.
(98.0%), F. J. Kreissl and J. M. Sanders contributed all of these
shares to the capital of SCP. The purpose, among others, was to
provide for an arrangement and reorganization (exchange of stock)
transaction.
Step 2. Approval by the SCP shareholders (April 9, 1997) and the Circuit Court
of Oakland County (April 23, 1997) of the transaction by which the SCP
shareholders exchanged 16.0% of their SCP holdings for shares of
InMold, Inc. on a two-for-one basis. The transaction also
contemplated, but did not assure, the acquisition of G P Plastics,
Inc. by InMold, Inc.
B. InMold, Inc. (after initial exchange)
-----------------------------------------
Shareholders:
F. J. Kreissl and Family 18.5%
J. M. Sanders and Family 18.4%
Other SCP shareholders 52.2%
SCP 10.9%
Additional Entities
- --------------------
C. G P Plastics, Inc. (before acquisition)
--------------------------------------------
Organized in 1965.
Engaged in plastic injection molding of parts for the automotive industry.
Shareholders:
* O. A. Pierce 48.2%
* J. F. Horner 15.0%
* D. C. Shifflett 15.0%
F. Johnson 9.1%
J. P. Schmidt 7.7%
J. H. Moreau 2.3%
V. Flood 2.3%
B. Hammond 0.4%
* Executive officers of G P Plastics, Inc.
D. Seville Plastics, Inc. (before acquisition)
-----------------------------------------------
Organized in _________.
Engaged in plastic injection molding of parts for the automotive industry.
Shareholders:
G. M. Pederson 100.0%
<PAGE>
Acquisitions
- ------------
Step 3. InMold, Inc. authorized the issue of 1,000,000 shares of its common
equity for the acquisition of G P Plastics, Inc. solely through an
exchange of stock. In September, 1997, the exchange of 97.25% of the
issued and outstanding shares of G P Plastics, Inc.was approved by six
of its shareholders for 972,483 shares of The common equity of InMold,
Inc. The remaining 2.75% of the Shares were exchanged in August and
September, 1999 for 27,517 shares of InMold, Inc.
The Company acquired G P Plastics as the first step in its business
strategy; that is, the acquisition of a family of privately-held
plastic injection molding companies servicing the automotive industry.
The acquisition also provided InMold, Inc. with its first
income-producing assets.
Step 4. InMold, Inc., through a re-negotiated agreement with the sole owner of
Seville Plastics, Inc., acquired all of the issued and outstanding
shares of the common equity of Seville on April 30, 1999 for $475,000
in cash. Payments were scheduled over a period of five years.
Seville Plastics, Inc. was acquired to provide InMold with an increase
in both manufacturing capacity and flexibility. The Seville facility
is an immediate neighbor to the G P Plastics, Inc. facility.
At the conclusion of the two acquisition transactions, the ownership
of the common equity of the entities was as follows:
G P Plastics, Inc. 100% of the shares are owned
by InMold, Inc.
Seville Plastics, Inc. 100% of the shares are owned
by InMold, Inc.
<PAGE>
InMold, Inc.
F. J. Kreissl and Family 14.9%
J. M. Sanders and Family 13.3%
O. A. Pierce 9.1%
J. F. Horner 8.3%
D. C. Shifflett 2.8%
Other former G P shareholders 7.6%
Other GP-related parties 3.1%
Other SCP shareholders 39.4%
SCP 1.5%
Year 2000
The Company is currently working on its Year 2000 issues. At the balance
sheet date, the Company was in the awareness and assessment phases of its
Year 2000 project. Mission critical equipment for both information
technology and non-information technology will be identified and tested for
Year 2000 compliance. Those systems that are not Year 2000 compliant will
either be repaired or replaced so that they will be compliant. Total
estimated cost of the Company's Year 2000 compliance efforts is $75,000,
none of which has been incurred or accrued as of the balance sheet date.
The Company anticipates its Year 2000 compliance project will be in the
final testing phase at June 30, 1999.
Risks and Uncertainties in the Future
Certain statements contained in this Form 10SB, that are not historical
facts, are forward-looking statements made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements address activities or events that the Company
expects will or may occur in the future. The Company cautions that a number
of important factors could cause actual results to differ materially from
those expressed in any forward-looking statements, whether written or oral,
made by or on behalf of the Company. Such factors include, but are not
limited to, competitive pricing pressures, inflation, work stoppages within
the industry, consolidations among the automotive suppliers, supply
constraints, interest rate changes, access to capital, general economic
conditions, the effect of technological difficulties including those
arising from the completion of Y2K conversion activities, and the effect of
adoption of new accounting pronouncements. Consequently, all of the
forward-looking statements made are qualified by these and other factors,
risks and uncertainties. Investors are also directed to consider other
risks and uncertainties discussed in documents filed by the Company with
the Securities and Exchange Commission.
<PAGE>
INMOLD, INC.
CONSOLIDATED FINANCIAL STATEMENTS
WITH INDEPENDENT AUDITORS' REPORT
AND SUPPLEMENTARY INFORMATION
MAY 31, 1998
Walsh Cenko & Haynes, P.C.
Certified Public Accountants
Bloomfield Hills, Michigan
<PAGE>
CONTENTS
INDEPENDENT AUDITORS' REPORT
CONSOLIDATED BALANCE SHEET
CONSOLIDATED STATEMENT OF INCOME
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
CONSOLIDATED STATEMENT OF CASH FLOWS
SUPPLEMENTARY INFORMATION
SCHEDULE I - MANUFACTURING EXPENSES
SCHEDULE II - ADMINISTRATIVE AND SELLING
EXPENSES
SCHEDULE III - CONSOLIDATING BALANCE SHEET
SCHEDULE IV - CONSOLIDATING STATEMENT OF INCOME
<PAGE>
860 West Long Lake Road, Suite 300
Bloomfield Hills, Michigan 48302
Walsh Cenko & Haynes, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
Members
American Institute of CPAs
Division for CPA Firms:
Private Companies Practice Section
SEC Practice Section
------
Michigan Association of CPAs
Telephone (248) 644-5233
Facsimile (248) 644-5405
WandC CPAS @aol.com
<PAGE>
To the Board of Directors and Stockholders
Inmold, Inc.
We have audited the accompanying consolidated balance sheet of Inmold, Inc. (an
Indiana Corporation) and Subsidiaries as of May 31, 1998, and the related
consolidated statements of income, stockholders' equity and cash flows for the
eight months then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to in the first
paragraph present fairly, in all material respects, the financial position of
Inmold, Inc. and Subsidiaries as of May 31, 1998, and the results of its
operations and its cash flows for the eight months then ended in conformity with
generally accepted accounting principles.
<PAGE>
Independent Auditors' Report - continued
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The information in Schedules I through IV are
presented for the purposes of additional analysis and is not a required part of
the basic consolidated financial statements. Such information has been subjected
to the auditing procedures applied in the audit of the basic consolidated
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic consolidated financial statements taken as a
whole.
December 11, 1998
<PAGE>
INMOLD, INC.
CONSOLIDATED BALANCE SHEET
May 31, 1998
(SEE INDEPENDENT AUDITORS' REPORT)
ASSETS
<TABLE>
<CAPTION>
CURRENT ASSETS
<S> <C> <C>
Cash (including cash in escrow of $115,175) $ 146,020
Accounts receivable (net of allowance
for doubtful accounts of $30,000) 1,779,044
Officers receivable 39,692
Loans receivable - related parties 95,829
Inventories
Raw materials 417,199
Work in process 46,826
Finished goods 529,496
Prepaid job costs 81,413
-----------
Total Current Assets $ 3,135,519
PROPERTY AND EQUIPMENT
Machinery and equipment 4,748,405
Furniture and fixtures 247,568
Computer hardware and software 291,844
Vehicles 81,729
Tooling 175,076
Building and improvements 2,425,231
-----------
Total 7,969,853
Less accumulated depreciation (3,147,872)
-----------
Net Book Value 4,821,981
OTHER ASSETS
Organizational costs 160,430
Goodwill (net of amortization
of $24,819) 600,900
Financing costs (net of
amortization of $17,811) 246,774
Cash surrender value - officers
life insurance (net of loans
of $109,629) 16,008
Deposits 58,780
-----------
Total Other Assets 1,082,892
-----------
TOTAL ASSETS $ 9,040,392
===========
</TABLE>
<PAGE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
CURRENT LIABILITIES
<S> <C> <C>
Current portion of notes payable $ 1,249,196
Accounts payable - trade 1,746,100
Withheld and accrued payroll taxes 587,841
Accrued expenses
Commissions 96,670
Interest 354
Insurance 75,543
Michigan Single Business Tax 83,752
Property taxes 36,960
Payroll 33,265
Vacation 48,575
Unearned revenue - tooling 95,680 4,053,936
-----------
Revolving line of credit 1,611,920
----------
Total Current Liabilities 5,665,856
LONG-TERM DEBT
Notes payable, net of current
portion 2,790,035
STOCKHOLDERS' EQUITY
Common stock - par value $.00001 per share;
authorized 100,000,000 shares, issued
and outstanding 5,090,000 shares $ 51
Preferred stock - Inmold, Inc., par value
$.00001 per share; authorized
5,000,000 shares -
Preferred stock - GP Plastics, Inc.,
par value $2,000 per share; authorized
2,000 shares, issued and outstanding
1,078.5405 shares 2,157,081
Accumulated deficit (1,572,631)
-----------
Total Stockholders' Equity 584,501
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 9,040,392
===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS
2
<PAGE>
<TABLE>
<CAPTION>
INMOLD, INC.
CONSOLIDATING BALANCE SHEET
MAY 31, 1998
(SEE INDEPENDENT AUDITORS' REPORT)
ASSETS
Consolidation
Consolidated Adjustments
GP Plastics, Inc. and And Consolidated
AEP Technologies, Inc. Inmold, Inc. Eliminations Totals
------------------------ -------------- --------------- --------------
<S> <C> <C> <C> <C>
CURRENT ASSETS
Cash $ 168,195 $ ( 22,175) $ $ 146,020
Accounts receivable-trade, net 1,779,044 -- -- 1,779,044
Officers receivable 39,692 -- -- 39,692
Loans receivable -- 95,829 -- 95,829
Intercompany receivable/payable 362,075 ( 362,075) -- --
Inventories 993,521 -- -- 993,521
Prepaid job costs 81,413 -- -- 81,413
------------------------ -------------- --------------- --------------
Total current assets 3,423,940 ( 288,421) -- ( 3,135,519)
PROPERTY AND EQUIPMENT, NET 4,821,981 -- -- 4,821,981
OTHER ASSETS
Organizational costs -- 160,430 -- 160,430
Goodwill, net 600,900 -- -- 600,900
Financing costs, net 206,774 40,000 -- 246,774
Cash value life insurance, net of loans 16,008 -- -- 16,008
Deposits 33,780 25,000 -- 58,780
------------------------ -------------- --------------- --------------
Total other assets 857,462 225,430 -- 1,082,892
------------------------ -------------- --------------- --------------
TOTAL ASSETS $ 9,103,383 $ (62,991) $ -- $ 9,040,392
------------------------ -------------- --------------- --------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of notes payable $ 1,249,196 $ -- $ -- 1,249,196
Accounts payable - trade 1,746,100 -- -- 1,746,100
Withheld and accrued payroll taxes 419,635 168,206 -- 587,841
Accrued expenses 375,119 -- -- 375,119
Unearned revenue - tooling 95,680 -- -- 95,680
Revolving bank line of credit 1,611,920 -- -- 1,611,920
------------------------ -------------- --------------- --------------
Total current liabilities 5,497,650 168,206 -- 5,665,856
NOTES PAYABLE, NET OF CURRENT PORTION 2,790,035 -- -- 2,790,035
STOCKHOLDERS' EQUITY -- -- --
Common stock 123,499 -- ( 123,448) 51
Preferred stock 2,157,081 -- -- 2,157,081
Accumulated deficit ( 1,464,882) ( 231,197) 123,448 ( 1,572,631)
------------------------ -------------- --------------- --------------
Total stockholders' equity 815,698 ( 231,197) -- 584,501
------------------------ -------------- --------------- --------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 9,103,383 $ ( 62, 991) $ -- $ 9,040,392
------------------------ -------------- --------------- --------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INMOLD, INC.
CONSOLIDATING STATEMENT OF INCOME
FOR THE EIGHT MONTHS ENDED MAY 31, 1998
(SEE INDEPENDENT AUDITORS' REPORT)
ASSETS
Consolidation
Consolidated Adjustments
GP Plastics, Inc. and And Consolidated
AEP Technologies, Inc. Inmold, Inc. Eliminations Totals
------------------------ -------------- --------------- --------------
<S> <C> <C> <C> <C>
SALES $ 9,413,405 $ 226,000 $ (226,000) $ 9,413,405
COST OF SALES 7,462,309 -- -- 7,462,309
------------------------ -------------- --------------- --------------
Gross Profit 1,951,096 226,000 (226,000) 1,951,096
ADMINISTRATIVE AND
SELLING EXPENSES 1,201,264 334,870 (226,000) 1,310,134
------------------------ -------------- --------------- --------------
Operating profit (loss) 749,832 (108,870) -- 640,962
OTHER EXPENSE (436,812) -- -- (436,812)
------------------------ -------------- --------------- --------------
NET INCOME BEFORE PROVISION
FOR INCOME TAXES 313,020 (108,870) -- 204,150
INCOME TAX PROVISION -- -- -- --
------------------------ -------------- --------------- --------------
NET INCOME $ 313,020 $ (108,870) $ -- $ 204,150
------------------------ -------------- --------------- --------------
</TABLE>
<PAGE>
INMOLD, INC.
CONSOLIDATED STATEMENT OF INCOME
For the Eight Months Ended May 31, 1998
(SEE INDEPENDENT AUDITORS' REPORT)
<TABLE>
<CAPTION>
SALES
<S> <C> <C>
Trade sales $ 8,405,770
Tooling sales 1,004,635
-----------
Total Sales 9,413,405
COST OF SALES
Beginning inventory 537,098
Material purchases 4,007,678
Tooling cost 750,017
Direct wages 619,081
Manufacturing expenses
(Schedule I) 2,514,147
Freight 27,809
-----------
Total 8,455,830
Less, ending inventory 993,521
-----------
Total Cost of Sales 7,462,309
-----------
Gross Profit 1,951,096
ADMINISTRATIVE AND SELLING
EXPENSES (Schedule II) 1,310,134
-----------
Operating Profit 640,962
OTHER INCOME (EXPENSE)
Amortization - goodwill (27,711)
Interest income 8,337
Interest expense (444,529)
Gain on sale of equipment 25,000
Miscellaneous income 2,091
-----------
Total Other (Expense) (436,812)
-----------
NET INCOME BEFORE PROVISION
FOR INCOME TAXES 204,150
INCOME TAX PROVISION -
NET INCOME $ 204,150
===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS
<PAGE>
<TABLE>
<CAPTION>
INMOLD, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
For The Eight Months Ended May 31, 1998
(SEE INDEPENDENT AUDITORS' REPORT)
GP PLASTICS,INC. INMOLD, INC.
PREFERRED COMMON
<S> <C> <C> <C> <C> <C>
NUMBER NUMBER RETAINED
OF OF EARNINGS
SHARES AMOUNT SHARES AMOUNT DEFICIT
BALANCE OCTOBER 1, 1997 518.09 $ 1,036,163 5,090,000 $ 51 $(l,776,701)
NEWLY ISSUED SHARES 617.14 1,234,279 - - -
REDEMPTIONS ( 56.68) ( 113,361) - - -
NET INCOME - - - - 204,150
BALANCE MAY 31, 1998 1,078.55 $ 2,157,081 5,090,000 $ 51 $(1,572,631)
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS
</TABLE>
<TABLE>
<CAPTION>
INMOLD, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Eight Months Ended May 31, 1998
(SEE INDEPENDENT AUDITORS' REPORT)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 204,150
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation and amortization $ 295,719
(Gain) on sale of equipment (25,000)
Decrease in cash value of life insurance 2,261
Changes in assets and liabilities
(Increase) in accounts receivable (114,656)
Decrease in prepaid job costs 16,416
(Increase) in inventories (466,472)
Increase in accounts payable 357,214
Increase in withheld and
accrued payroll taxes 381,664
Decrease in accrued expenses (5,753) 441,393
Net Cash Provided by Operating Activities 645,543
CASH FLOWS PROVIDED BY (USED IN)
INVESTING ACTIVITIES
Purchase of property and equipment (1,137,406)
Loans to officers (86,659)
Repayment of officer loans 69,006
Increase in deposits (58,380)
Goodwill expenditures (41,850)
Cash proceeds from the sale of equipment 25,000
Increase in prepaid financing (143,096)
Net Cash (Used) in
Investing Activities (1,373,385)
CASH FLOW PROVIDED BY (USED IN)
FINANCING ACTIVITIES
Proceeds from long-term obligations 1,040,000
Proceeds from revolving line of credit 9,719,800
Redemptions of preferred stock (113,361)
Principal payments on debt obligations (9,772,577)
Net Cash Provided By
Financing Activities 873,862
</TABLE>
5
<PAGE>
Net Increase in Cash 146,020
Cash at beginning of period -
Cash at end of period $ 146,020
==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS
6
<PAGE>
INMOLD, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS - Continued
For the Eight Ended May 31, 1998
(SEE INDEPENDENT AUDITORS' REPORT)
SUPPLEMENTAL DISCLOSURES
CASH ACTIVITIES -
Cash paid during the year
for interest $ 444,529
===========
NON CASH ACTIVITIES -
Financing building acquisition
with mortgage $ 1,200,000
===========
Redeemable preferred stock
issued in connection
with building acquisition $ 481,000
===========
Redeemable preferred stock
issued in exchange
for common stock $ 395,000
===========
Former stockholder receivable
applied to building acquisition $ 138,000
===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS
7
<PAGE>
INMOLD, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
May 31, 1998
(SEE INDEPENDENT AUDITORS' REPORT)
NATURE OF BUSINESS
The Company generates substantially all revenue and earnings from injection
molding of plastic parts used primarily in the automotive industry.
A material part of the Company's revenues were derived from two major customers,
General Motors Corporation and Chrysler Corporation (now Daimler Chrysler).
These customers accounted for 90% of the Company's sales for the eight months
ended May 31, 1998.
The percentage of sales attributable to each was as follows C
General Motors Corporation 65%
Chrysler Corporation 25%
Although the Company is directly affected by the economic well being of the
automotive industry, including the customers referred to above, management does
not believe significant credit risk exists at May 31, 1998. Consistent with
industry practice, the Company does not require collateral to reduce such credit
risk. The Company has not experienced significant losses related to these
receivables.
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of significant accounting policies applied in the preparation of the
accompanying financial statements follows C
Basis of Consolidation
The attached consolidated financial statements include the accounts of Inmold,
Inc. and its fully-owned subsidiary G.P. Plastics, Inc. and its fully-owned
subsidiary AL-KO Enterprises, Inc. d/b/a A.E.P. Technologies, Inc. All
intercompany transactions and balances have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
8
<PAGE>
Actual results could differ from those estimates.
Allowance for Doubtful Accounts
The Company provides an allowance for uncollectible accounts based upon prior
experience and managements assessment of collectibility of existing specific
accounts.
9
<PAGE>
INMOLD, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
May 31, 1998
(SEE INDEPENDENT AUDITORS' REPORT)
Inventories
Raw material inventories are valued at the lower of cost or market, cost being
determined using the first-in, first-out method. Work in process and finished
goods are valued at standard cost.
Property and Equipment
Property and equipment are stated at cost. Major renewals and improvements are
charged to the property accounts, while replacements, maintenance and repairs
which do not improve or extend the lives of the respective assets are expensed
currently.
Depreciation is provided for in amounts sufficient to relate the cost of
property and equipment to operations over their estimated service lives (ranging
from 3 to 40 years) using straight line and accelerated cost recovery methods.
Organizational Costs
Organizational costs represent legal and other costs incurred in the
organization of the parent company, Inmold, Inc. Once the accumulation of the
costs is completed in the year ending May 31, 1999, the total will be amortized
utilizing the straight-line method over forty years.
Goodwill
Goodwill represents cost relating to the acquisition of AL-KO Enterprises, Inc.
d/b/a A.E.P. Technologies, Inc., over the fair value of their net assets at the
date of acquisition. The Company has included the following types of cost in
computing goodwill - commissions, restructuring of financing, issuance of
preferred stock moving operations of subsidiary to a single location and
restructuring issued common stock. Management has determined that it is
impractical to separate these costs and report them as separate capitalized
costs in the financial statements and has therefore elected to include all costs
in the computation of goodwill. The goodwill is being amortized utilizing the
straight-line method over a forty year period
10
<PAGE>
INMOLD, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
May 31, 1998
(SEE INDEPENDENT AUDITORS' REPORT)
beginning October 1, 1996.
Financing Costs
Financing costs represent the fees incurred to secure additional financing.
These costs are being amortized over the corresponding five year term of the
loan.
11
<PAGE>
INMOLD, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
May 31, 1998
(SEE INDEPENDENT AUDITORS' REPORT)
NOTE 2 - CREDIT RISK FROM CASH DEPOSITS
The Company maintains its cash balance in three financial institutions located
in Michigan. The balances are insured by the Federal Deposit Corporation up to
$100,000 per financial institution. At May 31, 1998, the Company's uninsured
cash balances totaled $15,175.
NOTE 3 - CASH IN ESCROW
Cash at a certain financial institution is being held in escrow for the purpose
of funding estimated environmental remediation costs (See Note 13).
NOTE 4 - DEBT OBLIGATIONS
The Company has a revolving line of credit with CIT Group/Credit Financing, Inc.
Allowable borrowing is based on 85% of eligible accounts receivable, as defined,
and 50% of raw material and finished goods inventory. Advances on the credit
line are payable on demand and bear interest at 3.75% over prime (8.5% at May
31, 1998). The credit line is secured by substantially all assets and is
personally guaranteed by a principal stockholder.
The following summarizes the Company's further long-term debt obligations at May
31, 1998 C
Note payable CIT Group/Credit Financing, Inc. bears interest at 3.75% over prime
(8.5% at May 31, 1998), is payable in monthly installments of $18,705 plus
interest and matures August, 2001. The note is secured by substantially all
assets of the Company. $ 834,405
Loan payable NBD bears interest at 3.5% over prime (8.5% at May 31, 1998), is
payable in monthly installments of $6,667 plus interest and matures January,
2003. The note is secured by substantially all assets of the Company 185,472
Notes payable BIDCOs - term, bear interest at 4% over prime (minimum 13.5%),
12
<PAGE>
INMOLD, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
May 31, 1998
(SEE INDEPENDENT AUDITORS' REPORT)
are payable in monthly installments of $20,400 including interest and mature in
June and July 2002. The notes are secured by substantially all assets of the
Company with subordination after CIT and NBD. 1,016,361
Notes payable BIDCOs are due in February, 1999, bear interest at 4% over prime
(minimum 13.5%), are secured by substantially all assets of the Company with
subordination after CIT and NED. 340,000
Note payable DuPont is non interest bearing, requires repayment by $0.33 per
pound of plastic materials purchased for a specific job and is unsecured. The
total debt is expected to be paid off in 2001. 634,226
Notes payable equipment bear interest at 8.75% and 14.8%, respectively, are
payable in monthly installments aggregating $1,722 including interest and mature
in August 1999 and January 2000, respectively. The notes are secured by certain
equipment with a cost of $59,475. 28,767
$4,039,231
Current Portion 1,249,196
$2,790,035
==========
BIDCO Additional Provisions The notes payable BIDCOs contain additional
provisions for revenue participation and options to purchase Inmold, Inc. stock.
The revenue participation requires additional payment to the BIDCOs when annual
sales exceed $12,000,000. Payments are to be paid quarterly at rates of 1.5% of
annual sales between $12,000,000 and $15,500,000 and 2.5% of sales over
$15,500,000.
The BIDCOs have options to purchase 150,000 shares of Inmold, Inc. stock for
$0.10 per share. Within 60 days from the maturity of the loans, the BIDCOs may
require Inmold, Inc. to redeem the shares for $2.00 per share. No options have
been exercised as of this report date.
The anticipated aggregate maturities on existing debt obligations, for the next
five years are as follows
13
<PAGE>
<TABLE>
<CAPTION>
INMOLD, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
May 31, 1998 (SEE INDEPENDENT AUDITORS' REPORT)
Years Ended
May 31, Amount
<S> <C>
1999 $1,249,196
2000 743,832
2001 764,343
2002 525,195
2003 756,665
$4,039,231
==========
</TABLE>
The Company has obtained waivers to the balance sheet date from CIT Group and
NBD, and through the report date from the BIDCOs, for covenant violations that
occurred during the eight months ended May 31, 1998.
NOTE 6 - LEASE COMMITMENTS
Through January 1, 1998, the Company leased its facilities under an operating
lease with an entity related through common ownership. The lease required
monthly lease payments of $14,832, plus taxes and insurance. Total rent expense
for the eight months ended May 31, 1998 was $45,682. On January 5, 1998 the
Company purchased the leased building.
NOTE 7 - DEFERRED COMPENSATION PLAN
The Company has a defined contribution deferred compensation plan covering all
full-time employees of the Company who have one year of service and have
attained the age of 21. Contributions to the plan are determined each year by
the Board of Directors. No contributions have been paid or accrued during the
current year.
NOTE 8 - INCOME TAXES
The Company and its subsidiaries have not filed federal income tax returns
14
<PAGE>
INMOLD, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
May 31, 1998
(SEE INDEPENDENT AUDITORS' REPORT)
for the tax years ended September 30, 1996 and 1997. On a consolidated basis,
the Company has an estimated net operating loss carryforward in excess of
$3,000,000 for financial reporting and tax reporting purposes to offset future
income through 2010. Also available are $24,304 of tax credit carryforwards to
offset future income taxes for financial reporting and federal tax reporting
purposes. The tax returns for September 30, 1998 are on extension. The Company
anticipates bringing its tax filings current within the next fiscal year.
The amount of annual limitation on the usage of the net operating losses under
Internal Revenue Code Section 382 has not been determined; however, it is
managements position that no taxes will be due for the tax years ended September
30, 1996, 1997 or 1998; therefore, no tax provision is made in these financial
statements.
15
<PAGE>
INMOLD, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
May 31, 1998
(SEE INDEPENDENT AUDITORS' REPORT)
NOTE 9 - REDEEMABLE PREFERRED STOCK
The Company's subsidiary, GP Plastics, Inc., has issued preferred stock to
certain of its creditors for trade payables and a certain stockholder of the
Company for cash and the acquisition of the building in which the Company is now
operating. All of the outstanding preferred stock is subject to redemption
agreements. Various redemptions at face value are required in the next 42
months, subject to GP Plastics, Inc. attaining a minimum tangible net worth of
$400,000 as determined by certain loan agreements. Even though the Company has
made arrangements to redeem certain preferred stock, the Company maintains
control over the timing and amounts of the redemption payments to these
stockholders.
Generally, the preferred stock has between 8% and 10% per annum cumulative
dividend requirements. As of this report date, no dividends have been declared
or paid on the outstanding preferred stock issue. Cumulative dividends
approximate $160,000 at May 31, 1998.
Preferred stock holdings owned by related parties are as follows C
<TABLE>
<CAPTION>
NUMBER OF SHARES
<S> <C>
Chairman of the Board
in his capacity as a
trade creditor 303.556
Former stockholder of
G.P. Plastics 399.822
TOTAL 703.378
=======
</TABLE>
NOTE 10 - SUBSEQUENT EVENTS
Purchase of Seville Plastics, Inc.
16
<PAGE>
INMOLD, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
May 31, 1998
(SEE INDEPENDENT AUDITORS' REPORT)
On August 28, 1998, the Company closed on its purchase of 100% of the
outstanding common stock of Seville Plastics, Inc. (Seville) of Rochester Hills,
Michigan. The purchase was for $475,000, of which $25,000 was paid at closing,
and an additional $50,000 due upon the meeting of certain conditions by Seville.
The balance payable bears interest at 8% per annum, and is subject to certain
terms and conditions as contained in the agreement. The entire balance is to be
paid within seven years of the due date of closing.
17
<PAGE>
INMOLD, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
May 31, 1998
(SEE INDEPENDENT AUDITORS' REPORT)
In connection with the purchase of Seville's stock, Seville executed a seven
year lease for real property owned by its former sole stockholder. Monthly
rental payments on this lease average $9,628 per month over its term. Seville
also executed a two year equipment lease with a company owned by the former
stockholder. Required payments are $2,000 per month through July, 2000. Both
leases require Seville to pay all taxes, insurance and maintenance on the
associated properties.
The Company has also guaranteed payments of the following obligations of
Seville:
Redemptions of Seville preferred stock in the amount of $181,613 payable in 48
monthly installments of $3,784 commencing September 1, 1999.
A line of credit with Greenfield Commercial Credit, L.L.C. up to $350,000. Both
of these obligations are secured by all of Seville's assets.
Since November, 1997, the Company has sourced some of its production to Seville
for reasons of capacity constraint.
Authorized Preferred Stock and Issuances of Additional Shares
Subsequent to the balance sheet date GP Plastics, Inc., the Company's wholly
owned subsidiary, initiated action to increase its authorized shares of
preferred stock from 1,000 to 2,000 shares.
The above action was taken to accommodate a contemplated issuance of additional
redeemable preferred stock. Subsequent to the balance sheet date, additional
redeemable preferred stock was issued to a trade creditor. The increase to
authorized preferred stock and issuance of additional shares have been given
effect to in the Company's balance sheet as of May 31, 1998 and the statement of
stockholders, equity for the eight months then ended.
NOTE 11 - STOCK OPTIONS
In addition to the stock options that have been granted to the BIDCOs (see
18
<PAGE>
INMOLD, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
May 31, 1998
(SEE INDEPENDENT AUDITORS' REPORT)
Note 4), the Company has granted an option to an officer, as part of his
employment package, to purchase 50,000 shares of common stock at 50% of its
market price at the time of purchase; at any time between April 1, 1999 and
November 12, 2003.
19
<PAGE>
INMOLD, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
May 31, 1998
(SEE INDEPENDENT AUDITORS' REPORT)
NOTE 12 - ENVIRONMENTAL ISSUES
In the course of negotiating the purchase of the land and building that it
occupies, the Company identified a limited area of soil and ground water
contamination. The Company's engineering consultant, Lakeshore Engineering
Services, Inc. (Lakeshore), prepared a remediation plan that has been approved
by the Michigan Department of Environmental Quality (MDEQ), with estimated costs
of $89,887. Funding for the project was provided for in an escrow account with
NED Bank (see Note 3). In consultation with Lakeshore, management does not
anticipate any additional liability in excess of the amounts escrowed.
NOTE 13 - YEAR 2000 COMPLIANCE ISSUES
The Company is currently working on its Year 2000 issues. At the balance sheet
date, the Company was in the awareness and assessment phases of its Year 2000
project. Mission critical equipment for both information technology and non
information technology will be identified and tested for Year 2000 compliance.
Those systems that are not Year 2000 compliant will either be repaired or
replaced so that they will be compliant. Total estimated cost of the Company's
Year 2000 compliance efforts is $75,000, none of which has been incurred or
accrued as of the balance sheet date. The Company anticipates its Year 2000
compliance project will be in the final testing phase at June 30, 1999.
20
<PAGE>
SUPPLEMENTARY INFORMATION
<PAGE>
Schedule I
INMOLD, INC.
CONSOLIDATED SCHEDULE OF MANUFACTURING EXPENSES
For the Eight Months Ended May 31, 1998
(SEE INDEPENDENT AUDITORS' REPORT)
<TABLE>
<CAPTION>
<S> <C>
Indirect labor $ 747,499
Production administration wages 367,052
Vacation payroll 109,345
Depreciation:
Machinery and equipment 214,231
Furniture and fixtures 6,015
Building 24,501
Factory supplies 75,581
Insurance:
Employee health 121,072
General 23,906
Workers compensation 75,885
Protective clothing 12,466
Rent 45,682
Repairs and maintenance:
Building 22,419
Machinery and equipment 80,897
Tools and fixtures 102,301
Quality control expenses 12,789
Taxes:
Payroll 184,047
Property 67,296
Truck expenses 5,234
Utilities:
Electricity 178,908
Gas and water 16,251
Waste removal 8,903
Other manufacturing expenses 11,867
Total Manufacturing Expenses $ 2,514,147
============
</TABLE>
22
<PAGE>
Schedule II
INMOLD, INC.
CONSOLIDATED SCHEDULE OF ADMINISTRATIVE AND SELLING EXPENSES
For the Eight Months Ended May 31, 1998
(SEE INDEPENDENT AUDITORS' REPORT)
<TABLE>
<CAPTION>
<S> <C>
Administration wages $ 527,494
Taxes - Payroll 48,067
Employee benefits 6,029
Health Insurance 57,934
Contract labor - Quality Control 40,932
Commissions 252,713
Computer supplies and expense 24,425
Consulting fees 145,539
Depreciation 23,259
Legal 2,126
Accounting 38,868
Office supplies and expense 43,821
Officers life insurance 20,324
Postage 2,198
Royalties 1,009
Telephone 16,584
Travel and entertainment 23,267
Vehicle expenses 35,545
Total Administrative and
Selling Expenses $ 1,310,134
============
</TABLE>
23
<PAGE>
Signatures
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
InMold, Inc.
(Registrant)
June 8, 1999
Date.
/s/ Jack Sanders
By
(Signature)*
*Print name and title of the signing officer uner his signature.
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. EXHIBIT NAME SEC EXHIBIT NO.
- ----------- ------------ ---------------
1. Certificate of Incorporation Ex-99.01
2. Certificate of Existence Ex-99.02
3. Certificate of Assumed Name Ex-99.03
4. Articles of Incorporation Ex-3.01
5. By-Laws Ex-3.02
6. Notice of Special Meeting of Shareholders Ex-99.04
7. Proxy Statement Ex-99.05
8. Affidavit of Vote Ex-99.06
9. Court Order Approving Reorganization,
Arrangement/Exchange of Stock Transactions Ex-99.07
10. Press Release, Steering Column Bracket Ex-99.08
11. General Motors Blanket Purchase Order Ex-10.01
12. DaimlerChrysler Blanket Purchase Order Ex-10.02
13. Plastic Steering Column Support Patent
Registration Ex-10.03
14. GMA Capital, L.L.P. Engagement Letter Ex-99.09
15. First of Michigan Corporation Engagement
Letter Ex-99.10
16. C.I.T. Group Loan and Security Agreement Ex-10.04
17. NBD Bank Real Estate Term Loan Agreement Ex-10.05
18. Crestmark Bank Loan and Security Agreement
(GP Plastics, Inc.) Ex-10.06
19. Crestmark Bank Loan and Security Agreement
(Seville Plastics, Inc.) Ex-10.07
20. Horizon Bidco Business Loan Agreement Ex-10.08
21. Capital Bidco Loan Agreement Ex-10.09
22. Seville Plastics, Inc. Purchase Agreement
with First Amendment and Master Amendment Ex-10.10
23. Seville Plastics, Inc. Commercial Property
Lease Ex-10.11
24. Horizon Bidco Stock Option Ex-10.12
25. Capital Bidco Stock Option Ex-10.13
26. Rick D. Bessette Stock Option Ex-10.14
27. InMold Lukmani Design Technologies, Inc.
Agreement Ex-10.15
28. InMold Lukmani Manufacturing Company, Inc.
Agreement Ex-10.16
29. Agreement and Plan of Reorganization by and
between InMold, Inc., GP Plastics, Inc.
and Shareholders Ex-2
<PAGE>
EXHIBIT 2
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT ("Agreement") is entered into by and between INMOLD, INC. an
Indiana corporation ("Inmold, Inc."), GP PLASTICS, INC., a Michigan corporation
("GP"), and the persons listed in Exhibit 1 hereto, who are holders of all
outstanding shares of GP's common stock (collectively referred to herein as the
"Shareholders" or individually as a "Shareholder").
WHEREAS, GP has both common and preferred classes of capital stock
authorized,
WHEREAS, the Shareholders constitute the holders of all of the shares of
outstanding common stock of GP and wish to exchange, all of their GP shares
solely for 1,000,000 restricted shares of the voting stock of Inmold, Inc., in a
transaction taxable to the GP Shareholders, and
WHEREAS, Inmold, Inc. has agreed to exchange 1,000,000 restricted shares of
its voting stock with the Shareholders for all of the outstanding GP common
stock owned by the Shareholders.
WITNESSETH:
NOW THEREFORE, in consideration of the premises and of the mutual covenants
and conditions herein contained, the parties hertby agree as follows:
1 . Plan of Reorganization. The Shareholders are the owners of all
issued and outstanding common stock of GP totaling 43,610 shares, par value $
1.00 per share (the "GP Shares"). It is the intention of the parties hereto that
all of the GP Shares shall be acquired for investment by Inmold, Inc. solely in
exchange for 1,000,000 shares of its restricted voting common stock, par value
$.00001 per share (the "Inmold, Inc. Shares").
2. The Transaction.
2.01 Plan of Exchange. On the terms and subject to the conditions
set forth in this Agreement, each of the Shareholders hereby severally agrees to
assign, transfer and deliver to Inmold, Inc. at the Closing, free and clear any
and all liens, pledges, encumbrances, charges, restrictions or claims of any
kind, nature or description, the number of GP Shares set forth after each
respective Shareholder's name on Exhibit 1, in the aggregate constituting all of
the issued and outstanding shares of common stock of GP, and Inmold, Inc. agrees
to acquire said GP Shares on said date by issuing and delivering in exchange
therefor an aggregate of 1,000,000 restricted Shares, so that each GP Share
outstanding in the hands of the Shareholders immediately prior to the Closing
shall be converted into its pro-rata share of 1,000,000 Imold, Inc. restricted
Shares. No fractional shares of Inmold, Inc. Shares shall be issued in
connection with the exchange transaction, but in lieu thereof anyone entitled to
a fractional interest in such lnmold, Inc. Shares arising from the
exchange/organization shall be issued the aggregate number of Inmold, Inc.
Shares issuable to said Shareholder at the Closing, rounded to the nearest whole
Inmold, Inc. Share. The schedule set forth in Exhibit 1 shows the number of the
Inmold, Inc. Shares which are to be issued to each of the Shareholders.
1
<PAGE>
2.02 Closing and Delivery of Shares. The exchange of the GP
Shares for the Inmold, Inc. Shares (the "Closing") shall take place at the
office of Hoops, Hoops & Hoops, P.L.C., 31555 W. Fourteen Mile, Suite 315,
Farmington Hills, Michigan, 48334 at 11:00 a.m. on or before June 13, 1997, or
at such other place or such other time as may be agreed upon by the parties
hereto (the "Closing Date"). At the Closing, the Shareholders will deliver
certificates for all of the GP Shares, duly endorsed and with all necessary
transfer tax and other revenue stamps affixed thereto by Inmold, Inc., which
will be acquired at each Shareholder's expense, in order to make Inmold, Inc.
the sole owner thereof, free and clear of all claims and encumbrances. Delivery
of restricted certificates for the Inmold, Inc. Shares will be made to the
Shareholders as set forth in Exhibit 1. The Shareholders hereby irrevocably
designate, empower, authorize, nominate, constitute, and appoint Owen Pierce to
act at the Closing as their agent and attorney in fact coupled with an interest
in their GP Shares to be exchanged, in order to accept delivery of the
certificates of Inmold, Inc. Shares to be issued in their respective names, and
to give a good and sufficient receipt and acquittance for the same, and in
connection therewith to make delivery of their GP Shares to Inmold, Inc.
2.03 Unused.
2.04 Closing Events. At the Closing, each of the respective parties
hereto shall execute, acknowledge and deliver (or shall cause to be executed,
acknowledged and delivered) any and all certificates, opinions, financial
statements, schedules, agreements, resolutions, rulings or other instruments
required by this Agreement to be so delivered at or prior to the Closing,
together with such other items as may be reasonably requested by the parties
hereto and their respective legal counsel in order to effectuate or evidence the
transaction contemplated hereby.
2.05 Shareholder Consents. By their signatures hereto, all
Shareholders of GP and Inmold, Inc. shall be deemed to have voted to approve
the arrangement and reorganization (exchange of stock), transaction, i.e. the
exchange of 3,911,122 free trading shares of Inmold, Inc. common stock with the
holders of all outstanding shares of the common stock of Sanders Confectionery
Products, Inc. "SCP") for 7,822,244 shares of SCP's common stock held by them
on a 1 share of lnmold, Inc. for 2 shares of SCP basis and the balance of the
arrangement and reorganization (exchange of stock) transaction whereby Inmold,
Inc. will acquire all of the outstanding common stock of GP in exchange for
1,000,000 shares of Inmold, Inc.'s restricted common stock under this Agreement
and the fairness thereof By their exchanges, SCP Shareholders shall likewise be
deemed to have consented to the arrangement and reorganization (exchange of
stock) transaction by favorable Shareholder Vote at a Special Meeting for
Shareholders, conducted on April 9, 1997.
3. Termination.
3.01 This Agreement may be terminated by action of the Board of
Directors of Inmold, Inc. or the Board of Directors of GP at any time prior to
the Closing Date if:
(a) There shall be any actual or threatened action or proceeding by or
before any court or any other governmental body which shall seek to
restrain, prohibit or invalidate the transactions contemplated by this
Agreement and which, in the
2
<PAGE>
judgment of such Board of Directors made in good faith and based upon
the advice of legal counsel, makes it inadvisable to proceed with the
transactions contemplated by this Agreement; or the Oakland County,
Michigan, Circuit Court fails to approve the fairness of Inmold,
Inc.'s 3,911,122 shares of common stock in exchange for SCP's
7,822,244 shares of common stock in the arrangement and reorganization
(exchange of stock) transaction under this Agreement which has been
approved by vote of a majority in number of SCP shareholders holding
at least 3/4 in value of the outstanding shares of SCP's common stock
at the time of the Closing hereunder; or
(b) the Closing shall not have occurred prior to July 1, 1997, or such
later date as shall have been approved by the Board of Directors of
both Inmold, Inc. and GP.
In the event of termination pursuant to this Section 3.01, no obligation, right
or liability shall arise hereunder and each party shall bear all of the expenses
incurred by them in connection with the negotiation, drafting and execution of
this Agreement and the consummation of the transactions herein contemplated.
3.02 This Agreement may be terminated at any time prior to the Closing
Date by action of the Board of Directors of Inmold,Inc. if:
(a) GP or the Shareholders shall fail to comply in any material
respect with any of its or their conditions or agreements contained in
this Agreement or if any of the representations or warranties of GP or
the Shareholders contained herein shall be inaccurate in any material
respect; or
(b) there shall have been any material change after December 27, 1996
in the assets, properties, business or financial condition of GP taken
as a whole which could have a materially adverse effect on the value
of the business of GP as a whole, except for any changes disclosed in
the Exhibits hereto.
If this Agreement is terminated pursuant to this Section 3.02, this Agreement
shall be of no further force or effect, no obligation, right or liability shall
arise hereunder, and GP shall bear its own costs as well as the legal,
accounting, printing and other costs incurred by Inmold, Inc. in connection with
the negotiation, preparation and execution of this Agreement and the
transactions herein contemplated.
3.03 This Agreement may be terminated at any time prior to the
Closing Date by action of the Board of Directors of GP if.
(a) Inmold, Inc. shall fail to comply in any material respect with any
of its covenants or agreements contained in this Agreement or if any
of the representations or warranties of Inmold, Inc. contained herein
shall be inaccurate in any material respect; or
3
<PAGE>
(b) there shall have been any material change after December 27, 1996
in the assets, properties, business or financial condition of Inmold,
Inc. taken as a whole which could have a materially adverse effect on
the value of the business of Inmold, Inc. taken as a whole, except any
changes disclosed in the Exhibits hereto.
If this Agreement is terminated pursuant to this Section 3.03, this Agreement
shall be of no further force or effect, no obligation, right or liability shall
arise hereunder, and Inmold, Inc. shall bear its own costs, as well as the
legal, accounting, printing and other costs incurred by GP in connection with
the negotiation, preparation and execution of this Agreement and the
transactions herein contemplated.
4. Representations and Warranties of GP. GP represents and warrants to
Inmold, Inc. that:
4.01 Organization, Standing, Qualification, etc. GP is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Michigan and has all requisite corporate power and is duly authorized,
qualified, franchised and licensed under all applicable laws, regulations,
ordinances and orders of public authorities to own its properties and assets and
to carry on its business as it is presently being conducted. GP is qualified to
do business in the State of Michigan, but otherwise the nature, of GP's business
and the ownership of its properties do not require it to become qualified in any
other state as a foreign corporation.
4.02 GP's Capitalization. The authorized capital stock of GP consists
of 50,000 shares of common stock, par value $ 1.00 per share, of which 43,610
shares are validly issued, fully paid, nonassessable and outstanding, and 1,000
shares of Class A, nonvoting (except as to matters affecting such Class), 6%
preferred stock, of which 673.063 shares are validly issued, fully paid,
nonaccessable and outstanding. No dividends or distributions can be declared or
paid on the common stock while any dividends are due and unpaid on the preferred
stock. All outstanding shares are duly authorized, fully paid, validly issued
and nonassessable in accordance with applicable law. No dividends or other
distributions of the assets of GP have ever been declared or paid on the common
stock of GP.
The preferred stock has been issued to the holders of debt of GP,
without modification of other rights of those creditors. When all of the debt
for which particular shares have been issued is paid, plus accrued dividends
thereon, the shares should be considered to have been redeemed.
4.03. Articles of Incorporation and By-Laws. The complete Articles of
Incorporation and By-Laws of GP, which will be in effect on the Closing Date,
are attached hereto as Exhibit 4.03.
4.04. Financial Statements.
(a) Attached hereto as Exhibit 4.04 is the unaudited balance sheet of
GP as of February 28, 1997 and the unaudited statement of operation
and change in
4
<PAGE>
financial position for the 5 month period then ended, including the
notes thereto (collectively referred to as the GP Financial
Statements").
(b) All such GP Financial Statements have been prepared in accordance
with generally accepted accounting principles consistently applied
throughout the period involved and are true, complete and correct as
of the date of any of such balance sheet. Except as and to the extent
reflected or reserved against therein, GP did not have any liabilities
or obligations (absolute or contingent) which were not, but should
have been reflected in a balance sheet or the notes thereto prepared
in accordance with generally accepted accounting principles, and all
assets reflected therein are properly reported and present fairly the
value of the assets of GP in accordance with generally accepted
accounting principles. The statement of operations presents fairly the
results of operations of GP for the period indicated. Such statement
of changes in financial position presents fairly the information which
should be presented therein, in accordance with generally accepted
accounting principles.
(c) The books and records, financial and others, of GP are in all
material respects complete and correct and have been maintained in
accordance with good business and accounting practice.
(d) No relevant reports concerning GP are required under the
Securities and Exchange Act of 1934, because it has no class of
securities registered under that Act.
(e) The fair market value of the assets of GP exceeds the amount of
its liabilities as of the date hereof.
4.05 Authorization. This Agreement and the issuance of the GP Shares
have each been duly authorized, executed and delivered by GP, and constitutes a
legal, valid and binding obligation of GP enforceable in accordance with its
terms. No consent of any federal, state, municipal or other governmental
authority is required by GP for the execution, delivery or performance of this
Agreement by GP . No consent of any party to any contract or agreement to which
GP is a party or to which any of the property and assets of GP are subject is
required for the execution, delivery or performance of this Agreement, with the
exception of the requirements under the loan and security agreement between GP
and The CIT Group/Credit Finance, Inc. (the "CIT Agreement"), a copy of which is
attached as Exhibit 4.05 hereto.
4.06 Litigation and Threats Thereof. Except as described in Exhibit
4.06, there is no action, suit proceeding, or investigation pending, at law or
in equity, or to the knowledge of GP's management, threatened against or
affecting GP before or in any court, either state or Federal, public board, or
body which calls into question the creation, organization or existence of GP,
the validity of this Agreement or the authority of GP to execute, deliver and
carry out the terms of the Agreement or which judgment, order or finding can
reasonably be expected to have a material adverse effect on the condition
(financial or otherwise) of GP. GP has no knowledge of
5
<PAGE>
any material default on its part with respect to any judgment, order, writ,
injunction, decree, award, rule or regulation of any court, arbitrator or
governmental agency or instrumentality.
4.07 Subsidiaries. GP does not own, directly or indirectly, any
interest or investment, whether equity or debt, in any corporation , business,
trust or other entity.
4.08 Compliance with Law and Other Instruments. Except as set forth in
Exhibit 4.08, GP is not in violation or material default of any term of its
Articles of Incorporation or By-Laws, or of any agreement, contract, commitment,
instrument, indenture, judgment, decree or court or administrative orders,
applicable to it and has timely filed all reports, tax returns and any other
documents required by it to be filed with any governmental agency or anyone
else. The execution, delivery and performance of this Agreement and the taking
of action contemplated hereby will not result in any violation of or be in
conflict with or constitute a default under (a) the Articles of Incorporation or
By-Laws of GP, or (b) any material agreement or instrument to which GP or any
consolidated subsidiary is a party or by which it is bound with the exception of
the CIT Agreement, or (c) any material judgment, decree or order to which GP is
subject, or result in the creation of any material lien, charge or encumbrance
on any of the properties of GP.
4.09 Contracts and Commitments.
(a) Except as set forth in Exhibit 4.09, there are no material
contracts, agreements, franchises, license agreements or other
commitments to which GP is a party or by which it or any of its
properties are bound;
(b) GP is not a party to any contract, agreement, other commitment or
instrument or subject to any charter or other corporate restriction or
any judgment, order, writ, injunction, decree or award which
materially and adversely affects, or in the future may (as far as GP
can foresee) materially and adversely affect, the business,
operations, properties, assets or condition of GP;
(c) Except as set forth in Exhibit 4.09 or as reflected in the most
recent GP balance sheet included in the GP Financial Statements, GP is
not a party to any material, oral or written (i) contract for the
employment of any officer or employee which is not terminable on 30
days' (or less) notice, (ii) profit sharing, bonus, deferred
compensation, stock option, severance pay, pension or retirement plan,
agreement or arrangement, (iii) agreement, contract or indenture
relating to the borrowing of money with the exception of the CIT
Agreement (see Exhibit 4.09), (iv) guaranty of any obligation, other
than one on which GP is a primary obligor, for the borrowing of money
or otherwise, excluding endorsements made for collection and other
guaranties of obligations, which, in the aggregate do not exceed
$10,000, (v) consulting or other similar contract with an unexpired
term of more than one year or providing for payments in excess of
$10,000 in the aggregate, (vi) collective bargaining agreement, (vii)
agreement with any present or former shareholder, officer or director
of GP, or (viii) consent, agreement or other commitment involving
payments by it of more than $10,000 in the aggregate.
6
<PAGE>
4.10 Liabilities. Except as set forth in Exhibit 4.10 or as disclosed
or provided for in the GP Financial Statements, to the best of its knowledge
after due inquiry, has no debt, obligation or liability of any nature, whether
accrued, absolute, contingent or otherwise, whether due or to become due to any
person or entity, including any of its officers, directors, or shareholders, in
excess of $10,000.
4.11 Title and Related Matters. GP has good and marketable title to
all of its properties, interests in properties and assets, real and personal,
which are reflected in the latest balance sheet included in the GP Financial
Statements or acquired after that date (except properties, interests in
properties and assets sold or otherwise disposed of after such date in the
ordinary course of business), free and clear of all mortgages, liens, pledges,
charges or encumbrances except: (i) statutory liens or claims not yet
delinquent, (ii) such imperfections of title and easements and/or after acquired
property liens or contractual commitments or restrictions or power of attorney
as do not and will not materially detract from or interfere with the present or
proposed use of the properties subject thereto or affected thereby, or otherwise
materially impair present and future business operations of such properties and
the combined business after the acquisition under this Agreement, (iii) as
described in the GP Financial Statements or (iv) as described in Section 4.09.
GP owns free and clear of any liens, claims, encumbrances, royalty interests or
other restrictions or limitations of any nature whatsoever, any and all
procedures, techniques, business plans, processes or other information utilized
in the conduct of GP's business or operations, whether or not reported in the
most recent balance sheet included in the GP Financial Statements. The plans,
structures, equipment and other assets of GP that are necessary to the operation
of its business are in good operating condition and repair.
4.12 Access to Properties and Records. Prior to the Closing Date, GP
will afford to the officers and authorized representatives of Inmold, Inc. full
access to the properties, books and records of GP in order that Inmold, Inc. may
have full opportunity to make such reasonable investigation as it shall desire
to make of the affairs of GP, and GP will furnish Inmold, Inc. with such
additional financial and operating data and other information as to the business
and properties of GP as Inmold, Inc. shall, from time to time, reasonably
request including, without limitation, financial statements of GP as published
from time to time.
4.13 Directors and Officers. The Board of Directors and principal
officers of GP as of the Closing Date, shall be those persons identified in
Exhibit 4.13 hereto.
4.14 Tax Returns. Except as set forth in Exhibit 4.14, within the
times and in the manner prescribed by law, GP has filed all federal, state and
local tax returns required by law and has paid all taxes, assessments and
penalties due and payable. All taxes and governmental charges levied or assessed
against the property or the business of GP have been paid or are being paid
under agreements with the particular tax collection agency, other than taxes or
charges the payment of which are not yet due or which, if due, are not yet
delinquent or are being contested in good faith or have not been finally
determined.
4.15 Prior Sales. Attached hereto as Exhibit 4.15 is a true, correct
and complete statement, which is dated not more than ten (10) days prior to the
date of this Agreement, setting forth the names and addresses of the purchasers
of any securities of GP that have been privately
7
<PAGE>
offered and sold by GP within two years prior to the date of the statement, the
prices paid by those purchasers and a brief description of the facts upon which
GP relied in claiming an exemption from the registration requirements under the
state and federal securities laws in connection, with those sales.
4.16 Compliance with Laws and Regulations. GP has complied with all
applicable statutes and regulations of any federal, state or other applicable
jurisdiction or agency thereof, except to the extent that noncompliance would
not materially and adversely affect the business, operations, properties, assets
or condition of GP or would result in any material liability.
4.17 Material Contract Defaults. Except as set forth in Exhibit 4.17,
neither GP nor any other party is in default in any material respect under the
terms of any outstanding contract, agreement, lease or other commitment which is
material to the business, operations , properties or assets or the condition of
GP, and there is no event of default or event which, with notice of lapse of
time or both, would constitute a default in any material respect under any such
contract, agreement, lease or other commitment in respect of which it has not
taken adequate steps to prevent such a default from occurring.
4.18 Absence of Certain Changes or Events. Since the date of the GP
Financial Statements furnished to Inmold, Inc., and except as set forth in or
permitted by this Agreement and the Exhibits hereto, there has not been, with
respect to GP:
(a) Any change in the business, operations, method of management or
accounting, or financial condition or the manner of conducting the
business of GP other than changes in the ordinary course of business,
none of which has had a material adverse effect on such business,
operations or financial condition, taken as a whole;
(b) Any damage, destruction or loss (whether or not covered by
insurance) materially and adversely affecting the assets, business,
operations or condition of GP;
(c) Any declaration, setting aside or payment of any dividend or other
distribution in respect of the shares of GP of any class, or any
direct or indirect redemption, purchase or other acquisition of any
shares of any class of GP with the exception of redeemable preferred
stock referred to in Exhibit 4.02;
(d) Any material increase in the direct or indirect compensation or
other benefits payable or to become payable by GP to any of its
officers, directors, employees or agents over the respective rates and
amounts set forth in the GP Financial Statements;
(e) Any sale, lease, abandonment or other disposition by GP of any
real property otherwise than in the ordinary course of business , or
any sale, assignment, transfer, license or other disposition by GP of
any tangible or intangible asset;
(f) Any option, warrant or right to purchase, or other right to
acquire shares of any class of GP granted to any person;
8
<PAGE>
(g) Any employment, bonus or deferred compensation agreement entered
into between GP and any of its directors, officers or other employees
or consultants;
(h) Any issuance of shares of GP beyond the shares then issued and
outstanding;
(i) Any indebtedness incurred by GP for borrowed money not now repaid,
or any commitment to borrow money entered into by GP; Any amendment of
the Articles of Incorporation or By-Laws of GP;
(k) Any material obligation or liability, absolute or contingent, paid
or incurred, except current liabilities in the ordinary course of
business and costs incurred in connection with this transaction,
except for finder's fees shown on an attached Schedule.
(l) Any material obligation or liability, absolute or contingent, paid
except liabilities reflected in or shown on the GP balance sheet as of
February 28, 1997, and current liabilities incurred since that date in
the ordinary course of business or in connection with this
transaction;
(m) Any sale or transfer, or any agreement, arrangement or option for
the sale or transfer, of any of its assets, property or rights having
an aggregate value of $10,000 or more (other than in the ordinary
course of business); or
(n) Any other material transaction.
Notwithstanding the foregoing, any and all of the foregoing changes or events
shall be permitted upon the written consent of Inmold, Inc. by action of its
Board of Directors, evidenced by the delivery by Inmold, Inc. to GP of a
certified copy of resolutions of such Board specifying the change or event
consented to by Inmold, Inc.
The GP Financial Statements and the notes thereto cover all lost and unjust
enrichment, as well as contract liabilities, including without limitation
restitutionary, quasi contract and equitable liabilities, which exist as of the
date hereof, regardless of when the causes of action accrued.
4.19 Action Prior to Closing. From and after the date of this
Agreement until the Closing Date, GP will:
(a) carry on its business in substantially the same manner as it has
heretofore;
(b) maintain and keep its properties in as good repair and condition
as at present, except for depreciation due to ordinary wear and tear
and damage due to casualty;
(c) maintain in full force and effect insurance comparable in amount
and in scope of coverage to that now maintained by it;
9
<PAGE>
(d) perform in all material respects all of its obligations under
material contracts, leases and documents relating to or affecting its
assets, properties and business;
(e) use its best efforts to maintain and preserve its business
organization intact, to retain its key employees and to maintain its
relationship with its material customers; and
(f) fully comply with and perform in a material respects all
obligations and duties imposed upon it by all federal and state laws
and all rules, regulations and orders imposed by federal or state
governmental authorities.
5. Investment Intent; Continuity of Business Enterprise. Inmold, Inc. is
acquiring the GP shares hereunder for investment and not with a view to the
distribution thereof or in connection with the underwriting of such a
distribution, and Inmold, Inc. has no commitment or present intention to
liquidate GP or sell or otherwise dispose of a material portion of GP business
or assets following the consummation of the transactions contemplated hereby.
5.A. Representations and Warranties of Inmold, Inc. Inmold, Inc. is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Indiana and has all requisite corporate power and authority to
own its properties and assets and to carry on its business as it is presently
being conducted.
5.01 Inmold, Inc.'s Capitalization. The authorized capital stock of Inmold,
Inc. consists of 100,000,000 shares of common stock, par value $.00001 per share
("Inmold, Inc. Shares"), of which 4,000,000 Inmold, Inc. Shares are issued and
outstanding, and 5,000,000 shares of "blank check" preferred stock, par value
$.00001 per share, of which no shares are issued or outstanding. All outstanding
shares of common stock are duly authorized, fully paid, validly issued and
nonassessable in accordance with applicable law. No dividends or other
distribution of the assets of Inmold, Inc. have ever been declared or paid on
the capital stock of Inmold, Inc. Except for the transactions contemplated by
this Agreement, there are no outstanding warrants, options, preemptive rights or
rights to subscribe for or purchase any shares of Inmold, Inc.'s capital stock
or any outstanding securities that are convertible into Shares of Inmold, Inc.'s
capital stock, except for a certain agreement between GP and Precision Masters,
Inc. The Inmold, Inc. Shares have been duly authorized and, when issued to the
Shareholders on the Closing Date will be validly issued, fully paid and
nonassessable.
5.02 Financial Statements and Reports. Inmold, Inc., being newly organized,
has no substantial assets (other than $40 from sale of 4,000,000 shares of
common stock and no liabilities). Attached hereto as Exhibit 5.02 are an
unaudited pro forma financial statement of Inmold, Inc. dated March 1, 1997 (the
"Inmold, Inc. Financial Statements"). The Inmold, Inc, Financial Statements have
been prepared on an unaudited basis in accordance with generally accepted
accounting principles consistently applied and fairly present the financial
condition of Inmold, Inc. as of the respective dates for the respective periods
indicated. Since the date of the
10
<PAGE>
Inmold, Inc. Financial Statements, the existence or standing of Inmold, Inc. has
not been adversely affected by any occurrence or development known to Inmold,
Inc. and there has no material adverse change in the financial condition.
5.03 Authorization. The Board of Directors of Inmold, Inc. has approved
this Agreement and the transactions contemplated hereby, and has authorized the
execution and delivery of this Agreement by Inmold, Inc. Inmold, Inc. has full
power, authority and legal right to enter into this Agreement and to consummate
the transactions contemplated hereby and this Agreement constitutes a legal,
valid and binding obligation of Inmold, Inc. enforceable in accordance with its
terms.
5.04 Litigation. There is no action, suit, proceeding, or investigation
pending, at law, or in equity, or to the knowledge of Inmold, Inc.'s management,
threatened, against or affecting Inmold, Inc. before or in any court, either
state or Federal, public board, or body which calls into question the creation,
organization or existence of Inmold, Inc., the validity of this Agreement or the
authority of Inmold, Inc. to execute, deliver and carry out the terms of the
Agreement or which judgment, order or finding can reasonably be expected to have
a material adverse effect on the condition (financial or otherwise) of Inmold,
Inc.
5.05 Subsidiaries. Inmold. Inc. owns no subsidiaries.
5.06 Compliance with Law and Other Instruments. Inmold, Inc. is not in
violation or default of any terms in its Articles of Incorporation or By-Laws,
or of any agreement, contract, commitment, instrument, indenture, judgment,
decree or order, applicable to it and has timely filed all reports and any other
documents required by it to be filed with any governmental agency. The
execution, delivery and performance of this Agreement and the taking of action
contemplated hereby will not result in any violation of or be in conflict with
or constitute a default under any such terms, or result in the creation of any
mortgage, lien, change or encumbrance upon any of the properties or assets of
Inmold, Inc.
5.07 Contracts and Commitments. Inmold, Inc. is not a party to any material
contract or commitment, except for this Agreement and all agreements, expressly
referred to herein, in the Inmold, Inc. Financial Statements or in any Exhibit
to this Agreement.
5.08 Liabilities. Except as set forth in Exhibit 5.02 or in the Inmold,
Inc. Financial Statements, Inmold, Inc., to the best of its knowledge, after due
inquiry, has no debt, obligation or liability of any nature, whether accrued,
absolute, contingent or otherwise, whether due or to become due to any person or
entity, including any of its officers, directors, or shareholders, in excess of
$10,000.
5.09 Inmold, Inc. Tax Returns. Within the times and in the manner
prescribed by law, Inmold, Inc., being newly organized, has not yet been
obligated to file any federal, state or local tax returns or been required by
law to pay any taxes, assessments and penalties.
5.10 Brokers. Neither Inmold, Inc. nor any officer or director of Inmold,
Inc. has employed any broker, finder or agent or has agreed to pay or has
otherwise incurred any
11
<PAGE>
brokerage fee, finder's fee or commission with respect to the transactions
contemplated by this Agreement.
5.11 Prohibited Acts. Prior to the Closing Date, Inmold, Inc. shall not do
any of the following acts without the prior written consent of GP: (a) declare
or pay any dividends or other distributions on its stock or purchase or redeem
any of its stock; (b) issue any stock or other securities; including any right
or option to purchase or otherwise acquire any of its stock, or issue any notes
or other evidences of indebtedness not in the usual course of business; or (c)
make capital expenditures in excess of an aggregate of $10,000.
5.12 Additional Warranties. Inmold, Inc. further represents and warrants
that all disclosures made in the Exhibits attached hereunder are true on and as
of the Closing Date, as though such representations and warranties had been made
at and as of such time. Sale of 4,000,000 shares of Inmold, Inc. common stock to
John M. Sanders/Filipp J. Kreissl was exempt from registration as a private
placement sale to accredited investors under section 4(2) and Regulation D under
the Securities Act of 1933, as amended (the "1933 Act") and the Michigan Uniform
Securities Act ("MUSA"). Contribution of those shares to SCP's capital was
exempt from registration as a no sale transaction. Exchange of 3,911,122 of
those shares for 7,822,244 outstanding shares of SCP common stock was exempt
under section 3(a)(10) of the 1933 Act and as a no sale and a reorganization,
arrangement under MUSA. Sale of 1,000,000 Inmold, Inc. shares exchanged for all
outstanding shares of common stock will be exempt under section 4(2) and
Regulation D of the 1933 Act.
6. Representations and Warranties of Shareholders. Each Shareholder
represents and warrants that:
6.01 Ownership of GP Shares. Each Shareholder is the sole owner of the GP
Shares set forth in Exhibit 1 as being owned by him, her or it and those shares
are free from any claim, lien or other encumbrance.
(a) Each Shareholder has been informed and agrees that the issuance of the
Inmold, Inc. shares hereunder to him, her or it is being made without
registration and are being acquired by him, her or it for investment only
and not for distribution and that they are restricted securities under
Regulation D under the 1933 Act, Sections 402(b)(a) and (21) of the
Michigan Uniform Securities Act, as amended ("MUSA"), or any other
appropriate state securities laws and that the Inmold, Inc. Shares issued
to him, her or it hereunder may not be sold or transferred without
registration under the 1933 Act and MUSA or other appropriate securities
laws or a written legal opinion of counsel to Inmold, Inc., unless an
exemption from such registration is confirmed to be available by a written
legal opinion of counsel to Inmold, Inc.
(b) Each Shareholder has been provided with copies of the Inmold, Inc.
Financial Statements.
(c) Each Shareholder has been provided with the opportunity to ask
questions of, and receive answers from Inmold, Inc. and its officers,
employees and agents concerning
12
<PAGE>
Inmold, Inc. and terms and conditions of the issuance of the Inmold, Inc.
Shares and of prior private offers and sales of Immold, Inc . Shares, has
received satisfactory answers to any of those questions and has no further
questions at this time.
(d) Each Shareholder understands that, prior to the Closing, Inmold, Inc.
has been a non-operating company. Each Shareholder, therefore, understands
that his, her or its investment in the Inmold, Inc. Shares and Inmold, Inc.
is speculative and may remain so for an indefinite period and acknowledges
that he, she or it is able to bear the economic risk of his, her or its
investment in the Inmold, Inc. Shares should it be determined ultimately to
be worthless, and has such knowledge and experience in financial or
business matters that he, she or it is capable of evaluating the merits and
risks of his, her or its investment in the Inmold, Inc. Shares and Inmold,
Inc.
(e) Each Shareholder has executed and delivered to Inmold, Inc. an
Investment Letter acknowledging the representations set forth in above
among others, and each Shareholder further represents and warrants that the
statements made therein are true and correct.
(f) Each Shareholder has answered, executed and delivered an Offeree
Questionnaire in a form acceptable to Inmold, Inc. regarding certain
personal information with respect to such Shareholder and further
represents and warrants that the statements made therein are true and
correct.
6.02 Authorization. The execution of this Agreement has been duly
authorized by each Shareholder and this Agreement is binding upon each
Shareholder in accordance with its terms.
7. Conditions to Closing.
7.01 Conditions Precedent to Shareholders' Obligations. The obligations of
the Shareholders under this Agreement are subject to the satisfaction, at or
before the Closing of each of the following conditions precedent:
(a) Representations and Warranties. The representations and warranties made
by Inmold, Inc. herein shall be true on and as of the Closing Date, as
though such representations and warranties had been made at and as of such
time.
(b) Performance. Inmold, Inc. shall have performed and complied with all
agreements and conditions contained herein required to be performed or
complied with by it prior to or at the Closing.
(c) Consent. Inmold, Inc. shall have secured all permits, consents and
authorizations that are known to Inmold, Inc. to be necessary to consummate
this Agreement and to issue the Inmold, Inc. Shares to be issued to the
Shareholders.
(d) Compliance Certificate. At the Closing, Inmold, Inc. shall have
delivered to Shareholders or their representative an Officer's Compliance
Certificate executed by its President to the effect that the
representations and warranties of Inmold, Inc. are true and
13
<PAGE>
accurate as of the Closing Date and that all conditions specified in
Sections 7.01(a) and (e), inclusive, and 7.01(h) have been fulfilled.
(e) Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated by this Agreement and all
documents and instruments incident to such transactions shall be
satisfactory in substance and form to Shareholders and counsel to the
Shareholders, and Shareholders and counsel to the Shareholders shall have
received all such counterpart originals or certified or other copies of
such documents as Shareholders or such counsel may reasonably request.
(f) No Material Adverse Change. Prior to the Closing Date, there shall not
have occurred any material adverse change in the financial condition,
business and operations of Inmold, Inc., nor shall any event have occurred
which, with the lapse of time or the giving of notice, may cause or create
any material adverse change in the financial condition, business or
operations of Inmold, Inc.
(g) Opinion of Counsel to Inmold, Inc. GP shall receive an opinion dated
the Closing Date from counsel to Inmold, Inc. satisfactory to GP, to the
effect that:
(i) Inmold, Inc. is a corporation validly existing and in good
standing under the laws of the state of Indiana and has all the requisite
corporate power to own, lease and operate its assets and carry on its
business as now being conducted in any jurisdiction in which it is now
conducting business.
(ii) The Inmold, Inc. Shares to be exchanged for the GP Shares at the
Closing will be duly authorized, legally issued, fully paid and non-
assessable.
(iii) The Execution and delivery by Inmold, Inc. of this Agreement and
the consummation of the transactions contemplated hereby will not conflict
with or result in the breach of any provision of Inmold, Inc.'s Articles of
Incorporation or By-Laws or constitute default or give rise to right of
termination, cancellation or acceleration under any of the terms,
conditions or provisions of any known mortgage, indenture, license
agreement or obligation or violate any court order, writ, injunction or
decree applicable to Inmold, Inc. or any of its properties or assets of
which counsel has knowledge after making inquiry of the principal executive
officers with respect thereto.
(iv) Based solely on a review of the Articles of Incorporation, By-
Laws, corporate minutes and stock record books of Inmold, Inc., (i) the
authorized capital stock of Inmold, Inc. is as set forth in Section 5.01,
and the shares of Inmold, Inc. stock referred to in Section 5.01 constitute
all of the issued and outstanding shares of capital stock of Inmold, Inc.;
(ii) the outstanding shares of Inmold, Inc. capital stock are validly
issued, fully paid and non-assessable and are not subject to any
pre-emptive rights of any shareholder of Inmold, Inc.; and (iii) there are
no outstanding subscriptions, options, rights, warrants, convertible
securities, or other agreements or commitments known to such counsel
obligating Inmold, Inc. to issue or transfer from treasury any additional
shares of its capital stock of any class;
14
<PAGE>
(v) This Agreement has been duly and validly authorized, executed and
delivered and constitutes the legal and binding obligation of Inmold, Inc.,
except as limited by bankruptcy and insolvency laws and by other laws
affecting the rights of creditors generally; and
(vi) Aside from the action dealing with approving the arrangement and
reorganization (exchange of stock) transaction and the acquisition under
this Agreement in Oakland County Circuit Court, such counsel does not know
of any suit, action, arbitration, or legal, administrative or other
proceeding or governmental investigation pending or threatened against or
affecting Inmold, Inc. or its business or properties or financial or other
condition.
(h) Opinion of Counsel to GP. Inmold, Inc. shall receive an opinion dated
the Closing Date from counsel to GP, comparable to that required under
Paragraph 7.01(g).
7.02 Conditions Precedent to Inmold, Inc.'s Obligations. The obligations of
Inmold, Inc. hereunder are subject to the satisfaction, at or before the
Closing, of each of the following conditions precedent:
(a) Representations and Warranties. The representations and warranties made
by GP and the Shareholders herein shall be true on and as of the Closing
Date as though such representations and warranties had been made at and as
of such time.
(b) Concerted Action. This Agreement shall be executed by each of the
Shareholders and each of the Shareholders should have performed his, her or
its obligations hereunder.
(c) The obligations of Inmold, Inc. shall also be subject to the conditions
set forth in Section 7.01 herein by GP.
8.00 Miscellaneous.
8.01. Survival of Agreements. All covenants, agreements, representations
and warranties made herein shall survive execution and delivery of this
Agreement and the Closing hereunder.
8.02. Modifications, Waiver. No modification or waiver of any provision of
this Agreement or consent to any departure therefrom shall be effective unless
in writing and approved by all of the parties hereto.
8.03. Entire Agreement. This Agreement contains the entire agreement between
the parties with respect to the Transactions contemplated hereby, and supersedes
all negotiations, agreements, representations, warranties, commitments, whether
in writing or oral, prior to the date hereof
15
<PAGE>
8.04. Successors and Assigns. All of the terms of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
successors and assigns of the parties hereto.
8.05. Execution and Counterparts. This Agreement may be executed in any
number of counterparts, each of which when so executed and delivered shall be
deemed an original , and such counterparts together shall constitute one
instrument. Each party shall receive a duplicate original of the counterpart
copy or copies executed by it.
8.06. Governing, Law and Forum. This Agreement shall be governed by the
laws of the State of Michigan without regard to its principles of conflicts of
laws.
8.07 Severability. In the event any portion of this Agreement or the
application of such provision to any part shall be held by a court of competent
jurisdiction to be contrary to law, the remaining provisions of this Agreement
shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
persons thereunto duly authorized as of the 22nd day of May,1997.
GP PLASTICS, INC. INMOLD, INC.
By:/s/ Owen A. Pierce By:/s/ John M. Sanders
-------------------------------- --------------------------
Owen A. Pierce John M. Sanders
Its: Chairman of the Board Its: Acting President
Address: Address:
3910 Industrial Drive 901 Wilshire Drive, Suite 360
Rochester Hills, Michigan 48309 Troy, Michigan 48084
Confirmed as to SCP shareholder consent in Section 2.05 of the Agreement.
SANDERS CONFECTIONERY PRODUCTS, INC.
By: /s/ Filipp J. Kreissl
---------------------------------
Filipp J. Kreissl
President
16
<PAGE>
Shareholders of GP Plastics Inc. and the number of shares of GP Plastic, Inc.'s
common stock owned on the date of this agreement are set forth below each
person's signature hereto, including any stock options or rights thereto:
/s/ Owen A. Pierce
- ------------------- ---------------------------
Owen A. Pierce Berda Hammond
5375 Orion Road 1890 E. Long Lake Road
Rochester, Michigan 48306 Troy, Michigan 48098
Common Shares Owned 21,000 Common Shares Owned 200
Option or Rights Owned 0 Option or Rights Owned 0
- ---------------------------
John F. Horner
4809 Foxcroft
Troy, Michigan 48098
Common Shares Owned 6,542
Option or Rights Owned 0
- ---------------------------
David C. Shifflett
23585 Hagen Road
Macomb Township, Michigan 48042
Common Shares Owned 6,542
Option or Rights Owned 0
- ---------------------------
Joseph P. Schmidt
226 Norcliff Drive
Bloomfield Hills, Michigan 48302
Common Shares Owned 3,360
Option or Rights Owned 0
- ---------------------------
Frances Johnson
c/o Eugene Casey, C.P.A.
32985 Hamilton Court, #132
P.O. Box 2008
Farmington Hills, Michigan 48333
Common Shares Owned 3,966
Option or Rights Owned 0
17
<PAGE>
Shareholders of GP Plastics Inc. and the number of shares of GP Plastic, Inc.'s
common stock owned on the date of this agreement are set forth below each
person's signature hereto, including any stock options or rights thereto:
- ---------------------------------- --------------------------
Owen A. Pierce Berda Hammond
5375 Orion Road 1890 E. Long Lake Road
Rochester, Michigan 48306 Troy, Michigan 48098
Common Shares Owned_______________ Common Shares Owned________
Option or Rights Owned____________ Option or Rights Owned_____
/s/ John F. Horner
- ----------------------------------
John F. Horner
4809 Foxcroft
Troy, Michigan 48098
Common Shares Owned_______________
Option or Rights Owned____________
- ----------------------------------
David C. Shifflett
23585 Hagen Road
Macomb Township, Michigan 48042
Common Shares Owned_______________
Option or Rights Owned____________
- ----------------------------------
Joseph P. Schmidt
226 Norcliff Drive
Bloomfield Hills, Michigan 48302
Common Shares Owned_______________
Option or Rights Owned____________
- ----------------------------------
Frances Johnson
c/o Eugene Casey, C.P.A.
32985 Hamilton Court, #132
P.O. Box 2008
Farmington Hills, Michigan 48333
Common Shares Owned_______________
Option or Rights Owned____________
18
<PAGE>
Shareholders of GP Plastics Inc. and the number of shares of GP Plastic, Inc.'s
Common stock owned on the date of this agreement are set forth below each
person's signature hereto including any stock options or rights thereto;
- ---------------------------------- -----------------------------
Owen A. Pierce Breda Hammond
5375 Orion Road 1890 E. Long Lake Road
Rochester, Michigan 48306 Troy, Michigan 49099
Common Shares Owned 21,000 Common Shares Owned 200
Option or Rights Owned 0 Option or Rights Owned 0
- ----------------------------------
John F. Horner
4809 Foxcroft
Troy, Michigan 48098
Common Shares Owned 6,542
Options or Rights Owned 0
/s/ David C. Shifflett
- ----------------------------------
David C. Shifflett
23585 Hagen Road
Macomb Township, Michigan 48042
Common Shares Owned 6,542
Option or Rights Owned 0
- ----------------------------------
Joseph P. Schmidt
226 Norcliff Drive
Bloomfield Hills, Michigan 48302
Common Shares Owned 3,360
Option or Rights Owned 0
- ----------------------------------
Frances Johnson
c/o Eugene Casey, C.P.A.
32985 Hamilton Court, #132
P.O. Box 2008
Famington Hills, Michigan 48333
Common Shares Owned 3,966
Option or Rights Owned 0
19
<PAGE>
Shareholders of GP Plastics Inc. and the number of shares of GP Plastic,Inc.
common stock, owned on the date of this agreement are set forth below each
person's signature hereto, including any stock options or rights thereto:
- ---------------------------------- ---------------------------
Owen A. Pierce Berda Hammond
5375 Orion Road 1890 E. Long Lake Road
Rochester, Michigan 48306 Troy, Michigan 48098
Common Shares Owned 21,000 Common Shares Owned 200
Option or Rights Owned 0 Option or Rights Owned 0
- ----------------------------------
John F. Horner
4809 Foxcroft
Troy, Michigan 48098
Common Shares Owned 6,542
Option or Rights Owned 0
- ----------------------------------
David C. Shiffiett
23585 Hagen Road
Macomb Township, Michigan 48042
Common Shares Owned 6,542
Option or Rights Owned 0
/s/ Joseph P. Schmidt
- ----------------------------------
Joseph P. Schmidt
226 Norcliff Drive
Bloomfield Hills, Michigan 48302
Common Shares Owned 3,360
Option or Rights Owned 0
- ----------------------------------
Frances Johnson
c/o Eugene Casey, C.P.A.
32985 Hamilton Court #137
P.O. Box 2008
Farmingham Hills, Michigan 48333
Common Shares Owned 3,966
Option Or Rights Owned 0
20
<PAGE>
Shareholders of GP Plastics Tnc. and the number of shares of GP Plastic, Inc.'s
common stock owned on the date of this agreement are set forth below each
person's signature hereto, including any stock options or rights thereto:
- ---------------------------------- ---------------------------
Owen A. Pierce Berda Hammond
5375 Orion Road 1890 E. Long Lake Road
Rochester, Michigan 48306 Troy, Michigan 48098
Common Shares Owned 21,000 Common Shares Owned 200
Option or Rights Owned 0 Option or Rights Owned 0
- ----------------------------------
John F. Horner
4809 Foxcroft
Troy, Michigan 48098
Common Shares Owned 6,542
Option or Fights Owned 0
- ----------------------------------
David C. Shifflett
23585 Hagen Road
Macomb Township, Michigan 48042
Common Shares Owned 6,542
Option or Rights Owned 0
- ----------------------------------
Joseph P. Schmidt
226 Norcliff Drive
Bloomfield Hills, Michigan 48302
Common Shares Owned 3,360
Option or Rights Owned 0
/s/ Eugene J. Casey For Frances Johnson
- ----------------------------------
Frances Johnson
c/o Eugene Casey, C.P.A.
32985 Hamilton Court, #132
P.O. Box 2008
Farmington Hills, Michigan 48333
Common Shares Owned 3,966
Option or Rights Owned 0
21
<PAGE>
/s/ Joseph H. Moreau
- ----------------------------------
Joseph H. Moreau
29302 New Bradford
Farmington Hills, Michigan 48337
Common Shares Owned 1,000
Option or Rights Owned 0
- ----------------------------------
Virginia Flood
3025 Los Altos Drive, Apt.11
Belleair Bluffs, Florida 34640
Common Shares Owned 1,000
Option or Rights Owned 0
22
<PAGE>
EXHIBIT 1
SHAREHOLDERS OF GP PLASTICS INC.
Names of Each Common Number of GP Inmold, Inc.
Shareholder Common Shares Common Shares
to Be Received
- --------------------------------------------------------------------------------
Owen A. Pierce 21,000 481,541
John F. Horner 6,542 150,011
David C. Shifflett 6,542 150,011
Joseph P. Schmidt 3,360 77,047
Frances Johnson 3,966 90,942
Joseph H. Moreau 13000 22,931
Virginia Flood 1,000 22,931
Berda Hammond 200 4,586
TOTAL 43,610 1,000,000
<PAGE>
EXHIBIT 3.01 (a)
INMOLD, INC. SHAREHOLDER VOTE
APPROVING THE STOCK DIVDEND/EXCHANGE
TRANSACTION AND THE FAIRNESS THEREOF
The undersigned, being the holder of all outstanding capital stock of
Imnold, Inc. on the date hereof, hereby acknowledges that the Board of Directors
of this Corporation and its Shareholders in Sanders Confectionery Products, Inc.
vs. Houttekier, Case No. 97-536279-CZ in the Oakland County, Michigan Circuit
Court have approved the arrangement and reorganization (exchange of stock)
transaction calling for the exchange of 3,911,122 free trading shares of Inmold,
Inc. common stock owned by this Corporation with the holders of all outstanding
shares of the common stock of this Corporation in the amount of 7,822,244
outstanding shares of SCP's common stock on the basis of I share of Inmold, Inc.
for 2 shares of SCP and the additional terms of the Transaction contemplating
that Inmold, Inc. will attempt to acquire all of the outstanding capital stock
of GP Plastics, Inc. in exchange for 1,000,000 newly issued shares of Inmold,
Inc.'s restricted common stock.
SANDERS CONFECTIONERY
PRODUCTS, INC.
April 10, 1997
By: John M. Sanders
-----------------------------
John M. Sanders
Chairman of the Board
<PAGE>
EXHIBIT 4.02
LIST OF GP CAPITAL STOCK ISSUANCES
The following is a list of GP Common and Preferred Stock Issuances in
the 3-year period ending on the closing date of this Transaction:
<TABLE>
<CAPTION>
Exemption under
which Stock was
Issued and Copy of
Name and address of Description of Any Special
Shareholder and Class of Stock Consideration Date of Agreement on Sales
Time of Sale Issued Paid Issuance Within Past 3 Years
- ------------ ------ ---- -------- -------------------
<S> <C> <C> <C> <C>
John F. Horner Common Loan to GP 11/22/96 Section 4(2) of the Securities
4809 Foxcroft 6,542 Shares Act of 1933 (Section4(2)
Troy, MI 48098
David C. Shifflett Common Exchange for 11/22/96 Section4(2)
23585 Hagen Road 6,542 Shares A.E.P. Stock 03/13/96
Macomb Township, MI
48042
Joseph P. Schmidt Common Loan to GP 11/22/96 Section4(2)
226 Norcliff Drive 4,360 Shares
Bloomfield Hills, MI 48302
Joseph H. Moreau Common Bonus from 01/16/97 Section4(2)
29302 New Bradford 1,000 Shares Joseph P. Schmidt
Farmington Hills, MI 48327
Redeemable Preferred Stock
- -------------------------
See attached list and
description in Conversion of 09/13/96 Section4(2)
Exhibit 4.09(a) Accounts Payable
In List Attached
Hereto
</TABLE>
21
<PAGE>
PREFERRED STOCK ISSUED
Jed Mold $ 333,000
Precision Masters 108,000
PPG, Inc. 96,700
B. Schulman 145,680
Joe Schmidt 266,099
Kay Graphics 38,934
Stanco 41,077
V. Allen Koch 244,636
----------
$1,274,126
<PAGE>
<TABLE>
<CAPTION>
Provision For: $2,000,000 in obligations
1,000 authorized shares
$2,000 per share
Amount of Number
Creditor Obligation Of Shares Notes
--------------- ---------- ----------- ---------------------------------------
<S> <C> <C> <C>
1. Jed Mold, Inc. $ 50,000 25.0000 Redeemable 45 days after Close.
50,000 25.0000 Redeemable 90 days after Close.
100,000 50.0000 Redeemable 6 months after Close.
133,000 66.5000 18 monthly payments of $7,388.89,
starting 7 months after Close.
2. Precision Masters $ 40,000 20.0000 Redeemable 30 days after Close.
Inc.
68,000 34.0000 Redeemable one year after Close.
Also has provision to convert
to public equity.
3. PPG Industries, Inc. $ 96,700 48.3500 30 monthly payments at $4,000.00
starting 13 months after Close.
4. A. Schulman, Inc. $ 72,840 36.4200 Redeemable 6 months after Close.
72,840 36.4200 36 monthly payments at $2,023.33
starting 7 months after Close.
5. Joe Schmidt Sales $ 30,000 15.0000 Redeemable 60 days after Close.
30,000 15.0000 Redeemable 120 days after Close.
206,099 103.0495 36 monthly payments at $5,725.00
starting 6 months after Close.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Amount of Number
Creditor Obligation Of Shares Notes
--------------- ---------- ----------- ---------------------------------------
<S> <C> <C> <C>
6. Kay Automotive $ 38,934 19.4670 4 monthly payments of $5,988.89
Graphics starting 1 month after Close. Fifth
and final payment of balance by
January 15, 1997.
7. Stanco Metal $ 20,539 10.2695 Redeemable 6 months after Close.
Products
20,538 10.2690 24 monthly payments of $855.77
starting 7 months after Close.
9. V. Allen Koch $ 244,636 122.318 Monthly payments of $17,500
starting October 15, 1996.
</TABLE>
<PAGE>
EXHIBIT 4.03
ARTICLES OF INCORPORATION
OF GP
-----
22
<PAGE>
STATE OF MICHIGAN
CORPORATION AND SECURITIES COMMISSION
LANSING, MICHIGAN
DO NOT WRITE IN SPACE BELOW - FOR COMMISSION USE
Compared by:
Date Received: [illegible]
April 6, 1965
Date: FILED
April 8, 1965 April 8, 1965
[illegible]
Examiner:
[illegible]
ARTICLES OF INCORPORATION
These Articles of Incorporation are signed and acknowledged by the incorporators
for the purpose of forming a corporation for profit under the provisions of Act
No. 827 of the Public Acts of 1981, as amended, as follows:
ARTICLE I.
The name of the corporation is G-P PLASTICS, INC.
ARTICLE II.
The purpose or purposes for which the corporation is formed are as follows:
To manufacture objects by injection molding, extrusion, and all
other means of fabricating from plastic materials; to buy, alter,
sell, rent, store, trade, manfacture, and otherwise deal in all
forms of tangible personal property; to design, engineer, create,
and manufacture all forms of machinery and equipment; and
in general to carry on any business in connection therewith and incident thereto
not forbidden by the laws of the State of Michigan and with all the powers
conferred upon corporations by the laws of the State of Michigan.
ARTICLE III.
Location of the first registered office is:
1615 Kingsmere Circle Rochester Oakland Michigan
- --------------------------------------------------------------------------------
(No.) (Street) (City) (County) (Zip Code)
Postoffice address of the first registered office is:
1615 Kingsmere Circle Rochester Oakland County Michigan
- --------------------------------------------------------------------------------
(No. and Street or P.O. Box) (City) (Zip Code)
ARTICLE IV.
The name of the first resident agent is Gerald D. Gilmore
-----------------------------------------
<PAGE>
ARTICLE V.
The total authorized capital stock is
Preferred shs. None Par Value $ per share
(1)
Common shs. 50,000 Par Value $ 1.00
Book Value $________________
per share
Preferred None Price fixed for sale $__________
and for shs. of (2) no par value
Common None Book Value $____________________
per share
Price fixed for sale $__________
(3) A statement of all or any of the designations and the powers, preferences
and rights, and the qualifications, limitations or restrictions thereof is as
follows:
None
ARTICLE VI.
The names and places of residence or business of each of the incorporators and
the number and class of shares subscribed for by each are as follow: (Statute
requires one or more incorporators)
<TABLE>
<CAPTION>
Number of Shares
Name Residence or Business Address
(No.) (Street) (City) (State) Par Stock Non-Par Stock
Common Preferred Common Preferred
<S> <C> <C> <C> <C> <C>
Gerald D. Gilmore, 1615 Kingsmere, Rochester, Mich. 10,000
Owen Pierce, 45951 12 1/2 Mile, Walled Lake, Mich. 7,000
Albert Wohlart, 25355 Samoset, Southfield, Mich. 5,000
Vardon D. Pance, 619 E. Bloomfield, Royal Oak, Mich. 5,000
Frank S. Iaquinto, 7655 Fielding, Detroit, Mich. 5,000
Alex Sares 16255 Andover, Fraser, Mich. 1,500
Robert J. Adler, 3050 Minerva, Ferndale, Mich. 1,500
</TABLE>
ARTICLE VII.
The names and addresses of the first board of directors are as follows:
(Statute requires at lease three directors)
Name Residence or Business Address
(No.) (Street) (City) (State)
Gerald D. Gilmore 1615 Kingsmere Circle Rochester, Michigan
Owen Pierce 45951 12 1/2 Mile Walled Lake, Michigan
Vardon D. Pance 619 E. Bloomfield Royal Oak, Michigan
ARTICLE VIII.
The term of the corporate existence is perpetual.
If term is for a limited number of seats, then state the numbers of years
instead of perpetual.
<PAGE>
ARTICLE IX.
OPTIONAL. (Please delete Article IX if not applicable.)
Whenever a compromise or arrangement or any plan of reorganization of this
corporation is proposed between this corporation and its creditors or any class
of them and/or between this corporation and its shareholders or any class of
them, any court of equity jursidiction within the state of Michigan, may on the
application of any receiver or receivers appointed for this corporation, order a
meeting of the creditors or class creditors, and/or the shareholders or class of
shareholders, as the case may be, to be affected by the proposed compromise or
arrangement or reorganization, to be summoned in such manner as said court
directs. If a majority in number representing three-fourths in value of the
creditors or class of creditors, and/or of the shareholders or class of
shareholders, as the case may be to be affected by the propose compromise or
arrangement or reorganization, agree to any compromise or arrangement or to any
reorganization of this corporation as a consequence to such compromise or
arrangement, said compromise or arrangement and said reorganization shall, if
sanctioned by the court to which the said application has been made, be binding
on all the creditors or class of creditors, and/or on all the shareholders or
class of shareholders, as the case may be, and also on this corporation.
ARTICLE X.
(Here insert any desired additional provisions authorized by the Act).
None
We, the incorporators, sign out names this 2nd day of April 1965
(All parties appearing under Article VI. are required to sign in this space)
Gerald D. Gilmore: /s/ Gerald D. Gilmore
- ----------------------------------------------------------------------------
Owen Pierce: /s/ Owen Pierce
- ----------------------------------------------------------------------------
Albert Wohlart: /s/ Albert Wohlart
- ----------------------------------------------------------------------------
Vardon D. Pance: /s/ Vardon D. Pance
- ----------------------------------------------------------------------------
Frank S. Iaquinta: /s/ Frank S. Iaquinta
- ----------------------------------------------------------------------------
Alex Sares: /s/ Alex Sares
- ----------------------------------------------------------------------------
Robert J. Adler: /s/ Robert J. Adler
- ----------------------------------------------------------------------------
STATE OF MICHIGAN_________________} (One or more of the parties signing must
SS ackknowledge before the Notary)
COUNTY OF Wayne }
On the 5th day of April 1965.
before me personally appeared Gerald D. Gilmore
to me known to be the persons described in and who executed the foregoing
instrument, and acknowledge that he executed the same as his free act and deed.
/s/ James H. McCrory
--------------------------------------
(Signature of Notary)
James H. McCrory
--------------------------------------
(Print or type name of Notary)
MAIL THREE SIGNED AND ACKNOWLEDGED Notry Public for Oakland County,
COPIES TO: State of Michigan, acting in
Wayne County.
Michigan Corporation & Securities Commission
My commmission expires March 18, 1968
P.O. Box 595 Lansing, Michigan 48904 (Notarial seal required if
acknowledgement taken out of State)
<PAGE>
MICHIGAN DEPARTMENT OF COMMERCE - CORPORATION AND SECURITIES BUREAU
Date Received Adjusted Pursuant To (For Bureau Use Only)
April 24, 1996 Telephone Authorization
Per Frederick Hoops.
FILED
Name April 30, 1996
Owen A. Pierce
Address Adminstration
3910 Industrial Drive MICHIGAN DEPARTMENT OF
City State Zip Code COMMERCE
Rochester Hills, MI. 48309 EFFECTIVE DATE
Corporation & Securities
Bureau
Document will be returned to the name and address you enter above
CERTIFICATE OF AMENDMENT TO THE ARTICLES OF INCORPORATION
For use by Domestic Profit Corporations
(Please read information and instructions on the last page)
Pursuant to the provisions of Act 284, Public Acts of 1972 (profit
corporations), or Act 162, Public Acts of 1982 (nonprofit corporations), the
undersigned corporation executes the following Certificate:
1. The present name of the corporation is:
G-P Plastics, Inc.
2. The identification number assigned by the Bureau is: 148-466
3. The location of the registered office is:
3910 Industrial Drive, Rochester Hills Michigan 48309
- -------------------------------------------------------------------------------
(Street Address) (City) (Zip Code)
4. Article V of the Articles of Incorporation is hereby amended to read as
----
follows:
See attachment
<PAGE>
5. COMPLETE SECTION (a) IF THE AMENDMENT WAS ADOPTED BY THE UNANIMOUS CONSENT OF
THE INCORPORATOR(S) BEFORE THE FIRST MEETING OF THE BOARD OF DIRECTORS OR
TRUSTEES; OTHERWISE, COMPLETE SECITON (b). DO NOT COMPLETE BOTH.
a. [ ] The foregoing amendment to the Articles of Incorporation was duly
adopted on the________day of
______________________,19________,in accordance with the provisions of
the Act by the unanimous consent of the incorporators(s) before the first
meeting of the Board of Directors or Trustees.
Signed this___________day of_____________,19______________.
- ------------------------------------------- --------------------------------
(Signature) (Signature)
- ------------------------------------------- --------------------------------
(Type or Print Name) (Type or Print Name)
- ------------------------------------------- --------------------------------
(Signature) (Signature)
- ------------------------------------------- --------------------------------
(Type or Print Name) (Type or Print Name)
b. [X] The foregoing amendment to the Articles of Incorporation was duly adopted
on the 7th day of March, 1996. The amendment:(check one of the following)
--- ----- ----
[ ] was duly adopted in accordance with Section 611(2) of the Act
by the vote of the shareholders if a profit corporation, or by
the vote of the shareholders or members if a nonprofit
corporation, or by the vote of directors if a nonprofit
corporation organized on a nonstock directorship basis. The
necessary votes were cast in favor of the amendment.
[ ] was duly adopted by the written consent of all directors
pursuant to Section 525 of the Act and the corporation is a
nonprofit corporation organized on a n onstock directorship
basis.
[ ] was duly adopted by the written consent of the shareholders or
members having not less than the minimum number of votes required
by statute in accordance with Section 407(1) and (2) of the Act
if a nonprofit corporation, or Section 407(1) of the Act if a
profit corporation. Written notice to shareholders who have not
consented in writing has been given. (Note: Written consent by
less than all of the shareholders or members is permitted only if
such provision appears in the Articles of Incorporation.)
[X] was duly adopted by the written consent of all the shareholders
or members entitled to vote in accordance with section 407(3) of
the Act if a nonprofit corporation, or Section 407(2) of the Act
if a profit corporation.
Signed this 7th day of March, 1996
--- ------ ----
By /s/ Owen A. Pierce - President
----------------------------------------------------
(Only Signature of President, Vice President,
Chairperson, or Vice-Chairperson)
Owen A. Pierce President
-----------------------------------------------------
(Type or Print Name) (Type or Print Title)
<PAGE>
ARTICLE V ATTACHMENT
G.P. PLASTICS, INC.
AMENDMENT TO ARTICLES OF INCORPORATION
The total authorized shares:
1. Common Shares 50,000
Preferred Shares 1,000 Class A
2. A statement of all or any of the relative rights, preferences and
limitations of each class is as follows:
(1) Dividends: annual dividends are required to be paid on all shares of
Class A Preferred Stock that are outstanding on the last day of each calendar
quarter in the fiscal year of this Corporation. Such dividends shall be at a
rate equal to: 6% simple per annum of the unpaid and undischarged Redemption
Price, as hereinafter provided, without compounding.
This corporation shall be prohibited from declaring or paying any dividend
on its outstanding common stock at any time when the tangible net worth of this
corporation is not at least $400,000, determined in accordance with generally
accepted accounting principles or shown in the most recent quarterly financial
statements of this corporation, modified for this purpose to equal the aggregate
of this corporation's cash, collectible accounts receivable, inventory (at lower
of cost or market) and fixed assets (at fair market value), less total
liabilities of this corporation.
(2) Voting: shares of Class A Preferred Stock are non-voting as to all
matters that do not affect the legal rights and/or terms of the Class A
Preferred Stock.
1
<PAGE>
(3) Subject to: any rights, terms, and/or conditions concerning dividends
and other liquidating and non-liquidating distributions, interest and costs that
have priority over Class A Preferred Stock, which are attributable to any other
classes of capital stock (other than common stock) and to indebtedness of any
kind of this corporation whether now existing, authorized and/or issued, and/or
existing authorized and/or issued at any time in the future.
(4.) Preferences: no dividends or liquidating or other distributions may be
declared or paid with respect to the common stock, par value of $1.00 per share,
of this corporation, unless and until all regular and liquidating dividends,
including dividends of the Redemption Price required to be declared and paid
(both accrued and cumulated) are paid on all then outstanding shares of Class A
Preferred Stock for the period of time commencing with the first date on which
any shares of Class A Preferred Stock were first issued and outstanding and
ending with the date on which such common stock dividends and/or distributions
are to be so declared and/or paid.
(5) Collateral Nature of Shares and Mandatory Redemption and Voluntary
Purchase:
i. Outstanding shares of Class A Preferred Stock shall be mandatorily
redeemed (in whole or in part) on the record date established by the Board
of Directors of this corporation. Redemption may be of the whole or a
fractional part of each outstanding share of Class A Preferred Stock. Funds
used to pay less than the full Redemption Price, plus all accrued and
cumulated dividends through the date of redemption shall first be applied
to cumulated dividends, then to accrued dividends and finally to the
Redemption Price, effective as of the record date for the redemption.
2
<PAGE>
A. For purposes of this paragraph I. Above, the Redemption Price shall be
the sum of $_________ Per share of Class A Preferred Stock outstanding,
exclusive of the accrued or cumulated dividends, which shall be calculated on
the shares of Class A Preferred Stock being redeemed at the end of the last full
calendar quarter endings, just prior to such record date (after reductions for
previous disputed payments and/or liquidating dividends paid to the holder(s) of
the shares being redeemed by this corporation.
B. Shares of Class A Preferred Stock are being given to holders of
outstanding indebtedness of this corporation with Redemption Prices equal to the
amount of each such indebtedness and without any consideration agreements or
accommodations in exchange therefor on the part of each recipient creditor. Any
payments of the Redemption Price shall apply to reduce that indebtedness and any
payments of that indebtedness through means other than payments of this
Redemption Price shall operate to reduce the Redemption Price on the shares of
the Class A Preferred Stock of that creditor pro rata, The shares of Class A
Preferred Stock shall not be transferrable without the consent of this
corporation and they shall secure the indebtedness of each recipient creditor
that is outstanding on the date of their receipt hereof The holder thereof shall
have no rights to enforce his, her or its security interest therein by
foreclosure or otherwise, except as to dividends duly declared and the
Redemption Price paid thereon. As the indebtedness secured thereby is paid, the
total Redemption Price she be correspondingly reduced. Nothing associated with
receipt and acceptance of the ownership of the shares of Class A Preferred Stock
by any creditor shall limit, waive or infringe in any way upon his, her or its
rights to enforce the indebtedness secured thereby, or any other collateral
therefor on the same basis as if no such stock had been issued, received and
accepted by him, her or it. When the
3
<PAGE>
indebtedness secured by any shares of Class A Preferred Stock has been paid
along with all dividends due thereon, such shares shall be canceled
automatically enforcing his rights as a shareholder.
ii. In addition to the foregoing, the Board of Directors of this
corporation may elect for any reason: (a) to call any and all Shares of Class A
Preferred Stock for mandatory redemption by this corporation at any time,
whether on a pro rata or a non-pro rata basis, with or without fixing a record
date therefor and with or without the consent of the shareholder(s) whose shares
are being redeemed, by paying to the then record holder of the shares being
redeemed the, Redemption Price, plus all accrued and cumulated dividends with
respect thereto; or (b) aside from a mandatory redemption pursuant to such call
described above under sub-paragraph II to purchase any and/or all such shares
voluntarily, either on a pro rata or a non-pro rata basis at any time without
fixing a record date therefor, provided that such purchase and the terms, prices
and conditions there of are consented to by the shareholder(s) whose shares are
being purchased.
iii. Once all of the Redemption Price that is due and all accrued and
cumulated dividends that are due to be declared and paid on outstanding shares
of Class A Preferred Stock being mandatorily redeemed by this corporation have
been paid, the shares shall be deemed to have been retired, canceled and added
back to authorized, but unissued status of Class A Preferred Stock and the
record holders thereof at the date' of retirement shall promptly tender any and
all stock certificates evidencing such shares to this corporation, duly endorsed
to this corporation, with signatures appropriately guaranteed.
4
<PAGE>
Name of person or organization Preparer's name and business
remitting fees: telephone number:
Owen A. Pierce Frederick K. Hoops
- ------------------------------- ----------------------------
(810 )932-2990
- ------------------------------- ----------------------------
INFORMATION AND INSTRUCTIONS
1. The amendment cannot be filed until this form, or a comparable document, is
submitted.
2. Submit one original of this document. Upon filling, the document will be
added to the records of the Corporation and Securities Bureau. The original
will be returned to the address appearing in the box on the front as
evidence of filing.
Since this document will be maintained on optical disk media, it is
important that the filing be legible. Documents with poor black and white
contrast, or otherwise illegible, will be rejected.
3. This document is to be used pursuant to the provisions of sections 631 of
the Act for the purpose of amending the articles of incorporation of a
domestic profit corporation or nonprofit corporation. Do not use this form
for restated articles. A nonprofit corporation is one incorporated to carry
put any lawful purpose or purposes not Involving pecuniary profit or gain
for its directors, officers, shareholders, or members. A 'nonprofit
corporation formed an a nonstock directorship basis, as authorized by
Section 302 of the Act, may or may not have members, but if it has members,
the members are not entitled to vote.
4. Item 2 - Enter the identification number previously assigned by the Bureau.
If this number is unknown, leave it blank.
5. Item 4 - The articles being amended must be set forth in its entirety.
However, if the article being amended is divided into separately
identifiable sections, only the sections being amended need be included.
6. This document is effective on the date endorsed "filed" by the Bureau. A
later effective date, no more than 90 days after the date of delivery, may
be stated as an additional article.
7. If the amendment is adopted before the first meeting of the board of
directors, item 5(a) must be completed and signed in ink by a majority of
the incorporators if more than one listed in Article V of the Articles of
Incorporation If a profit corporation, and all the incorporators if a
nonprofit corporation. If the amendment is otherwise adopted, Item 5(b)
must be completed and signed in ink by the president, vice-president,
chairperson, or vice-chairperson of the corporation.
8. FEES- Make remittance payable to the State of Michigan. Include corporation
name and identification number on check or money order.
NONREFUNDABLE FEE ................................................... $10.00
TOTAL MINIMUM FEE ................................................... $10.00
ADDITIONAL FEES DUE FOR INCREASED AUTHORIZED SHARES OF PROFIT CORPORATIONS ARE:
each additional 20,000 authorized shares or portion thereof .... $30.00
maximum fee for first 10,000,000 authorized shares ........... $5,000.00
each additional 20,000 authorized shares or portion thereof
in excess of 10,000,000 shares ................................ $30.00
maximum fee per filing for authorized shares in excess of
10,000,000 shares ......................................... $200,000.00
9. Mail form and fee to: The office is located at:
Michigan Department of Commerce 6546 Mercantile Way
Corporation and Securities Bureau Lansing, MI 48910
Corporation Division Telephone: (517) 334-6302
P.O. B0X 30054
Lansing, MI 48909-7554
<PAGE>
[SEAL OF THE STATE OF MICHIGAN]
Michigan Department of Commerce
Lansing, Michigan
This is to Certify That
G-P PLASTICS, INC.
was validly incorporated on April 8, 1965, as a Michigan profit corporation, and
said corporation is validly in existence under the laws of this State.
This certificate is issued to attest to the fact that the corporation is in good
standing in this office as of this date and is duly authorized to transact
business or conduct affairs in Michigan and for no other purpose. It is in the
usual form, made by me as the proper officer, and is entitled to have full faith
and credit given it in every court and office within the United States.
In testimony whereof, I have hereunto set
my hand and affixed the Seal of the
Department, in the City of Lansing,
this 14th day of March, 1996.
/s/ Carl L. Tyson, Director
----------------------------------------
SEAL APPEARS ONLY ON ORIGINAL Corporation & Securities Bureau
<PAGE>
EXHIBIT 4.04
FINANCIAL STATEMENTS OF
GP
--
The financial statements of GP as of February 28,1997, are unaudited.
<PAGE>
G P PLASTICS, INC.
INTERIM FINANCIAL STATEMENT
Five Months Ended February 28,1997
SALES 4,330,603
COST OF SALES
Materials 1,992,627
Direct Wages and Benefits 387,569
Manufacturing Overhead 1,185,641
---------
Total Cost of Sales 3,565,837
GROSS PROFIT 764,766
ADMINISTRATION &
SELLING EXPENSE 636,178
-------
INCOME (LOSS) FROM OPERATIONS 128,588
OTHER INCOME (EXPENSE)
Other Income 6,461
Interest Expense (152,329)
---------
Total Other Income (Expense) (145,868)
---------
NET INCOME (LOSS) BEFORE TAXES (17,280)
Provision for Tax -0-
---------
NET INCOME (LOSS) (17,280)
Add-Back Depreciation 161,530
---------
CASH FLOW 144,250
<PAGE>
G P PLASTICS, INC.
BALANCE SHEET
At February 28, 1997
CURRENT ASSETS
Cash 258,371
Accounts Receivable 1,647,443
Inventory 633,403
Pre-Paid Expenses 30,328
Other Current 7,528
---------
Total Current Assets 2,577,073
PROPERTY AND EQUIPMENT
Property and Equipment 4,594,682
Less Accumulated Depreciation (2,833,328)
---------
Total Property and Equipment 1,761,359
OTHER ASSETS
Goodwill 547,670
Other 274,545
-------
Total Other Assets 822,215
---------
TOTAL ASSETS 5,160,662
CURRENT LIABILITIES
Accounts Payable 1,355,399
Accrued Expense 567,577
Current Portion, LTD 244,000
Other Current 365,630
---------
Total Current Liabilities 2,512,606
REVOLVING LINE OF CREDIT 1,981,618
LONG TERM DEBT
Term Loan 804,682
Notes Payable 114,797
-------
Total Long Term Debt 919,479
---------
TOTAL LIABILITIES 5,413,703
STOCKHOLDERS EQUITY
Capital Stock 518,499
Preferred Stock 1,284,126
Retained Earnings (2,055,666)
---------
Stockholders Equity (253,041)
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY 5,160,662
<PAGE>
G P PLASTICS, INC.
September 30, 1996
FINANCIAL STATEMENTS AND
ACCOUNTANT'S REVIEW REPORT
<PAGE>
G P PLASTICS, INC.
TABLE OF CONTENTS
Page
----
Accountant's Review Report............................................... 1
FINANCIAL STATEMENTS:
Consolidated Balance Sheet............................................. 2
Consolidated Statement of Retained Earnings............................ 3
Consolidated Statement of Income....................................... 4
Consolidated Statement of Cash Flows................................... 5
Notes to the Financial Statements...................................... 6
SUPPLEMENTARY INFORMATION:
Schedules of Manufacturing Expenses.................................... 12
Schedules of Administrative and Selling Expenses....................... 13
<PAGE>
[LETTERHEAD OF HESSENAUR & ASSOCIATES, CPA, P.C. APPEARS HERE]
March 21, 1997
Board of Directors
G P Plastics, Inc.
3910 Industrial Drive
Rochester Hills, Michigan 48309
I have reviewed the accompanying consolidated balance sheet of G P Plastics,
Inc. as of September 30, 1996 and related consolidated statements of income,
retained earnings, and cash flows for the year then ended, in accordance with
Statements on Standards for Accounting and Review Services issued by the
American Institute of Certified Public Accountants. All information included in
these financial statements is the representation of management of G P Plastics,
Inc.
A review consists principally of inquiries of Company personnel and analytical
procedures applied to financial data. It is substantially less in scope than an
audit in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, I do not express such an opinion.
Based on my review, I am not aware of any material modifications that should be
made to the financial statements in order for them to be in conformity with
generally accepted accounting principles.
My review was made for the purposes of expressing limited assurance that there
are no material modifications that should be made to the financial statements in
order for them to be in conformity with generally accepted accounting
principles. The information included in the accompanying pages 12 and 13 is
presented only for supplementary analysis purposes. Such information has been
subjected to the inquiry and analytical procedures applied in the review of the
basic financial statements, and I am not aware of any material modifications
that should be made thereto.
/s/ Hessenaur & Associates
HESSENAUR & ASSOCIATES, CPA, P.C.
<PAGE>
G P PLASTICS, INC.
CONSOLIDATED BALANCE SHEET
September 30, 1996
ASSETS
Current Assets:
- ---------------
Cash $ 403,138
Accounts receivable (less allowance
for doubtful accounts of $30,000) 1,140,741
Accounts receivable - officers 48,337
Interest receivable 292
Inventories:
Raw materials 179,504
Work in process 30,905
Finished goods 346,157
Prepaid property taxes 26,912
----------
Total Current Assets $2,175,986
Property and Equipment:
- -----------------------
Machinery and equipment $3,587,790
Furniture and fixtures 420,108
Vehicles 81,729
Tooling 142,592
Leasehold improvements 265,042
----------
Total $4,497,261
Less accumulated depreciation 2,676,097
----------
Net Book Value 1,821,164
Other Assets:
- -------------
Notes receivable (Note 3) $ 138,000
Goodwill 411,541
Cash surrender value officers
life insurance 129,109
Deposits 18,500
----------
Total Other Assets 697,150
----------
$4,694,300
==========
<PAGE>
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities:
- -------------------
Current portion of notes payable $ 229,354
Bank line of credit (Note 4) 1,470,732
Accounts payable, trade 1,509,473
Withheld and accrued payroll taxes 95,851
Accrued:
Commissions 110,343
Interest 113
Insurance 41,986
Michigan Single Business Tax 13,936
Payroll 52,716
Property taxes 143,279
Vacation 18,601
Deferred revenue - tooling 6,127
Reserve for litigation loss (Note 8) 230,000
----------
Total Current Liabilities $3,922,311
Long-term Debt
- --------------
Notes payable,net of current
portion (Note 5) $1,007,751
Stockholders Equity:
- --------------------
Common stock - Authorized 50,000
shares, issued and outstanding,
43,610 shares $ 518,499
Preferred stock (Note 12) 1,284,126
Retained earnings (2,038,387)
----------
Total Stockholders Equity (235,762)
----------
$4,694,300
==========
(See accountant's review report and notes to
the financial statements)
- 2 -
<PAGE>
G P PLASTICS, INC.
CONSOLIDATED STATEMENT OF RETAINED EARNINGS
For the Year Ended September 30, 1996
Balance October 1, 1995 $(1,220,590)
Add: Net (loss) from October 1,
1995 to September 30, 1996 (817,797)
-------------
Balance September 30, 1996 $(2,038,387)
=============
(See accountant's review report and notes to
the financial statements)
- 3 -
<PAGE>
G P PLASTICS, INC.
CONSOLIDATED STATEMENT OF INCOME
For the Year Ended September 30, 1996
Sales
- -----
Trade sales $ 8,313,902
Tooling sales 407,380
-----------
Total Sales $ 8,721,282
Cost of sales:
Beginning inventory $ 460,507
Material purchases 4,538,690
Tooling cost 330,012
Direct wages 558,335
Manufacturing expenses 2,272,194
Freight 115,148
----------
Total $8,274,886
Less, ending inventory 556,566
----------
Total Cost of Sales 7,718,320
-----------
Gross Profit $ 1,002,962
Administrative and Selling Expense 1,507,422
-----------
Operating Profit (Loss) $ (504,460)
Other Income (Expense):
- -----------------------
Interest income $ 24,162
Interest expense (335,674)
Loss on sale of equipment (7,564)
Miscellaneous income 5,739
----------
Total Other Income (Expenses) (313,337)
-----------
Net (Loss) $ (817,797)
===========
(see accountant's review report and notes to
the financial statements)
- 4 -
<PAGE>
G P PLASTICS, INC.
CONSOLIDATED SCHEDULE OF MANUFACTURING EXPENSES
For the Year Ended September 30, 1996
Indirect labor $ 599,427
Production administration wages 211,428
Vacation payroll 63,019
Depreciation:
Machinery and equipment 241,628
Furniture and fixtures 16,313
Leasehold improvements 3,714
Factory supplies 55,819
Insurance:
Employee health 105,450
General 35,980
Workers compensation 57,604
Protective clothing 12,411
Rent 183,822
Repair and maintenance:
Building 25,213
Machinery and equipment 62,332
Tools and fixtures 69,419
Quality control expenses 13,328
Taxes:
Payroll 168,791
Property 74,586
Truck expenses 2,468
Utilities:
Electricity 235,278
Gas and water 13,579
Waste removal 16,199
Other manufacturing expenses 4,086
----------
Total Manufacturing Expenses $2,272,194
==========
(See accountant's review report)
- 12 -
<PAGE>
G P PLASTICS, INC.
CONSOLIDATED SCHEDULE OF ADMINISTRATIVE AND SELLING EXPENSES
For The Year Ended September 30, 1996
<TABLE>
<CAPTION>
<S> <C>
Administration wages $ 597,347
Auto lease 6,653
Bad Debts 21,033
Commissions 314,555
Computer supplies and expenses 22,841
Consulting fees 108,242
Depreciation 18,475
Employee benefits 2,154
Health insurance 51,489
Legal 142,363
Accounting 57,330
Office supplies and expenses 41,732
Officers life insurance 9,899
Postage 4,881
Royalties 2,776
Taxes:
Payroll 36,195
Michigan Single Business 17,398
Telephone 22,360
Travel and entertainment 9,207
Vehicle expenses 20,492
----------
Total Administrative and Selling
Expenses $1,507,422
==========
</TABLE>
(See accountant's review report)
- 13 -
<PAGE>
G P PLASTICS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Year Ended September 30, 1996
INCREASE (DECREASE) IN CASH
<TABLE>
<CAPTION>
<S> <C> <C>
Cash Flows from Operating Activities:
Cash received from customers $ 8,877,735
Cash paid to suppliers and employees (9,281,267)
Interest received 24,719
Interest paid (336,069)
-----------
Net Cash Used by Operating
Activities $ (714,882)
Cash Flows Used in Investing Activities:
Acquisition of fixed assets (130,447)
Proceeds from sale of building 643,000
Acquisition of subsidiary (376,192)
Acquisition of goodwill (411,541)
Decrease in cash surrender value
officers life insurance 11,180
Advances repaid by officer 10,516
Increase in deposits (1,000)
Receipts on note receivable 189,616
-----------
Net Cash Used by Investments (64,868)
Cash Provided by Financing Activities:
Pay off line of credit (1,107,081)
Repayment of long term liabilities (947,891)
Proceeds from new financing 2,593,040
Proceeds from common stock 492,333
-----------
Net Cash Provided by Financing
Activities 1,030,401
-----------
Net Increase in Cash $ 250,651
Cash, Beginning of Period 152,486
-----------
Cash, End of Period $ 403,137
===========
RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Net (loss) $ (817,797)
Adjustments:
Depreciation 280,650
Lose on sale of equipment 7,563
Increase in:
Inventory (96,059)
Decrease in:
Accounts receivable 151,954
Prepaid expenses 132,048
Accounts payable (85,895)
Accrued expenses (287,346)
-----------
Net Cash Used by Operating Activities $ (714,882)
===========
</TABLE>
(See accountant's review report and notes to
the financial statements)
-5-
<PAGE>
GP PLASTICS, INC.
NOTES TO THE FINANCIAL STATEMENTS
September 30, 1996
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Nature of Business
The Company generates substantially all earnings revenue and earnings
from injection molding of plastic parts. The Companys principal
customers are major automotive manufacturing companies in the United
States.
B. Basis of Consolidation
The attached consolidated financial statements include the accounts of
G P Plastics, Inc. and its fully-owned subsidiary AL-KO Enterprises,
Inc. d/b/a A.E.P. Technologies, Inc. The accompanying income statement
includes the results of operations of A.E.P. Technologies, Inc. from
the acquisition date of April 6, 1996 through September 30, 1996. Also
see Note 11 regarding the purchase of A.E.P. Technologies, Inc. during
the current fiscal year.
C. Allowance for Doubtful Accounts
The Company provides an allowance for uncollectible accounts based
upon prior experience and managements assessment of collectibility of
existing specific accounts.
D. Property and Equipment
Property and equipment is stated at cost. Depreciation is provided by
use of the straight-line and accelerated methods over the estimated
useful lives of the related assets.
E. Inventories
Raw material inventories are valued at the lower of cost or market,
cost being determined using the first-in, first-out method. Work in
process and finished goods are valued at standard cost.
F. Goodwill
Goodwill, represents the excess of the cost of acquiring its
subsidiary over the fair value of their net assets at the date of
acquisition and acquiring the related financing. The goodwill is
amortized by the straight line method over a forty year period
starting October 1, 1996.
G. Cash Equivalents
For purposes of the statement of cash flows, all highly liquid debt
instruments with a maturity of three months or less are considered
cash equivalents.
(See accountant's review report)
- 6 -
<PAGE>
G P PLASTICS, INC.
NOTES TO THE FINANCIAL STATEMENTS
September 30, 1996
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
H. Use of Estimates
The Process of preparing financial statements in conformity with
generally accepted accounting principles requires the us of estimates
and assumptions regarding certain types of assets, liabilities, income
and expenses. Such estimates primarily relate to unsettled
transactions and events as of the date of the financial statements.
Accordingly, upon settlement, actual results may differ from estimated
amounts.
NOTE 2 CREDIT RISK FROM CASH DEPOSITS
The Company maintains its cash balance in one financial institution
located in Troy, Michigan. The balances are insured by the Federal
Deposit Corporation up to $100,000. At September 30, 1996, the
Company's uninsured cash balances totaled $539,257.
NOTE 3 NOTES RECEIVABLE
Note receivable officer is unsecured, bears interest at 3.9%, requires
annual payments of interest only and principle is payable October 1,
1997.
NOTE 4 BANK LINE OF CREDIT
The Company has a revolving line of credit with CIT Group/Credit
Financing, Inc. Allowable borrowing is based on 85% of eligible
accounts receivable and 50% of raw material and finished goods
inventory. Advances on the credit line are payable on demand and bear
interest at 3.75% over prime. The credit line is secured by
substantially all assets and is personally guaranteed by the principal
shareholder.
(See accountant's review report)
- 7 -
<PAGE>
G P PLASTICS, INC.
NOTES TO THE FINANCIAL STATEMENTS
September 30, 1996
NOTE 5 - NOTES PAYABLE
Note payable CIT Group/Credit Financing,
Inc. is payable in monthly installments
of $18,705 plus interest at 3.75% over
prime and matures August 2001. The note
is secured by substantially all assets
of Company. $1,122,308
Note payable NBD in secured by a specific
vehicle, bears interest at 8.75% and is
payable in monthly installments $505 including
interest through August of 1999. 15,541
Note payable Life insurance is secured by cash
surrender value of life insurance, bears interest
at 6% and is payable at termination of life
insurance policy. 99,256
-----------
$1,237,105
Current portion 229,354
-----------
$1,007,751
===========
The approximate aggregate maturities of long-term liabilities,
for the next five years, as of September 30, 1996 are as follows:
1997 $ 229,354
1998 229,799
1999 229,780
2000 224,464
2001 224,452
NOTE 6 LEASE COMMITMENTS
The Company leases its facilities under an operating lease which
expired March 1994. A majority shareholder is part owner of the
lessor. The lease requires monthly lease Payments of $14,832, plus
taxes and insurance. The monthly lease payments are scheduled to
increase $250 annually. The Company has two five year renewal options
on this lease, with tile same rent plus scheduled increases as
mentioned above. Renewal options have not been exercised and the
Company continues leasing the facilities on a month by month basis.
Total rent expense for the year ended September 30, 1996 was $190,475.
(See accountant's review report)
- 8 -
<PAGE>
G P PLASTICS, INC.
NOTES TO THE FINANCIAL STATEMENTS
September 30, 1996
NOTE 7 - DEFERRED COMPENSATION PLAN
The Company has a defined contribution deferred compensation plan
Covering all full-time employees of the company who have one year of
service and are age 21 or older. Contributions to the plan are
determined each year by the Board of Directors. No contributions have
been made to the plan, or accrued over the past year.
NOTE 8 - LITIGATION LOSS, CONTINGENCIES
A creditor to a former subsidiary of the Company has filed a claim
against G P Plastics, Inc. for $163,184 plus interest and legal
expenses. A surety bond for $231,345 has been posted by the Company
regarding this litigation. The surety bond is secured by a cash
certificate of deposit owned by the Company. At this time, management
has estimated the loss regarding this litigation to be $230,000. The
company has included in the financial statements a loss on litigation
and a reserve for litigation loss for $230,000. Actual loss could be
greater than this amount, however managements does not expect a
material difference from the reported amount.
NOTE 9 - INCOME TAXES
The Company has $6,151,140 net loss carryforward for financial
reporting purposes to offset future income through 2010. For tax
reporting purposes the Company has $4,327,169 net loss carryforward.
The Company also has $24,304 tax credit carryforwards available to
offset future income taxes for financial reporting and federal tax
reporting purposes.
NOTE 10 - SUPPLEMENTAL DISCLOSURE FOR STATEMENT OF CASH FLOW
The following are noncash investing and financing transactions for the
year ended September 30, 1996:
Common stock exchanged for purchase
of subsidiary $ 103,333
Preferred stock exchanged for
purchase of subsidiary 244,636
Preferred stock exchanged for
Company accounts payable 1,039,490
(See accountant's review report)
- 9 -
<PAGE>
G P PLASTICS, INC.
NOTES TO THE FINANCIAL STATEMENTS
September 30, 1996
NOTE 11 - PURCHASE OF SUBSIDIARY
On April 6, 1996 the Company acquired all the stock of Al-Ko
Enterprises, Inc. d/b/a A.E.P. Technologies, Inc. and the building
occupied by them. A.E.P. Technologies, Inc. is a plastics injection
molding business operating since 1977 and had total sales of
approximately $3,500,000 for the year ended December 31, 1995. The
purchase method was used to account for the business acquisition, and
the following values were assigned to the assets and liabilities
acquired:
Cash $ 3,004
Accounts receivable, net 583,389
Inventory 187,932
Prepaid expenses 7,799
Building 644,742
Property and equipment 895,402
Receivables from officers 39,469
Accounts payable (590,189)
Accrued expenses (29,592)
Line of credit payable (400,985)
Long term liabilities (169,248)
Mortgage payable - building (447,562)
---------
Total Cost $724,161
=========
The purchase Price was funded as follows:
Cash to sellers $155,364
Cash for fees and expenses 220,828
Exchange of common stock 103,333
Issuance of redeemable
preferred stock 244,636
---------
$724,161
=========
The building was sold by the Company on August 30, 1996 for a total
sale price of $643,000.
In July 1996 the operations of A.E.P. Technologies, Inc. were
physically moved to the Companies manufacturing location. The
consolidation was made to provided for cost savings relating to
duplications of two locations and improved efficiencies.
(See accountant's review report)
- 10 -
<PAGE>
G P PLASTICS, INC.
NOTES TO THE FINANCIAL STATEMENTS
September 30, 1996
NOTE 12 - PREFERRED STOCK - REDEEMABLE
In conjunction with the purchase of subsidiary and new financing the
Company entered into various agreements for the issuance and
redemption of preferred stock. All outstanding preferred stock is
subject to redemption agreements. Generally the preferred stock has a
10% per annum dividend requirement, various redemptions at face value
over the next 42 months and redemptions are subject to the Company
having a minimum tangible net worth of $400,000.
(See accountant's review report)
<PAGE>
EXHIBIT 4.04(d)
S.E.C. 1934 ACT REPORTS
OF GP
GP is not a reporting company.
<PAGE>
EXHIBIT 4.05
SECURITY AGREENIENT BETWEEN GP and CIT GROUP/CREDIT FINANCE, INC.
First page of the Security Agreement is attached hereto. The full text is
available from Imnold, Inc.
25
<PAGE>
LOAN AND SECURITY AGREEMENT
This Agreement is between the undersigned Borrower and the undersigned
Lender concerning loans and other credit accommodations to be made by Lender to
Borrower.
SECTION 1. PARTIES
1.1 The "Borrower" is the person, firm, corporation or other entity,
identified as the Borrower in Section 10.6(c) and its successors and assigns. If
more than one Borrower is specified in Section 10.6(c), all references to
Borrower shall mean each of them, jointly and severally, individually and
collectively, and the successors and assigns of each.
1.2 The "Lender" is The CIT Group/Credit Finance, Inc. and its successors
and assigns.
SECTION 2. LOANS AND OTHER CREDIT ACCOMMODATIONS
2.1 Revolving loans. Lender shall, subject to the terms and conditions
contained herein, make revolving loans to Borrower ("Revolving Loans") in
amounts requested. by Borrower from time to time, but not in excess of the Net
Availability existing immediately prior to the making of the requested loan and
provided the requested loan would not cause the outstanding Obligations to
exceed the Maximum Credit.
(a) The "Maximum Credit" is set forth in Section 10.1(a) hereof.
(b) The "Gross Availability" shall be calculated at any time as (i) the
product obtained by multiplying the outstanding amount of Eligible Accounts, net
of all taxes, discounts, allowances and credits given or claimed, by the
Eligible Accounts Percentage set forth in Section 10.1(b),
plus: (ii) the product(s) obtained by multiplying the applicable
Eligible Inventory Percentage(s), if any, set forth in Section 10. I
(b) by the values (as determined by Lender based on the lower of cost
or market) of Eligible Inventory, but the amount so added shall not
exceed any sublimits set forth in Section 10.1(c),
(c) The "Net Availability" shall be calculated at any time as an amount
equal to the Gross Availability minus the aggregate amount of all
then-outstanding Obligations to Lender other than the then outstanding principal
balance of the Tenn Loan, if any.
(d) "Eligible Accounts" are accounts created by Borrower in the ordinary
course of its business which are and remain acceptable to Lender for lending
purposes. General criteria for Eligible Accounts are set forth below but may be
revised from time to time by Lender, in its sole judgment, on fifteen (15) days'
prior written notice to Borrower. Lender shall, in general, deem
<PAGE>
EXHIBIT 4.08
MATERIAL GP DEFAULTS OR VIOLATIONS
The following list includes all material violations or defaults on the part of
GP with respect to its Articles of Incorporation, By-Laws, Agreements,
Contracts, Conunitments, Instruments, Indentures, Judgments, Decrees, Court or
Administrative Orders, Filings of any Report, Tax Return or any other Document:
None
26
<PAGE>
EXHIBIT 4.09(a)
LIST OF MATERIAL CONTRACTS, AGREEMENTS, LICENSES, FRANCHISES
AND OTHER COMMITMENTS OF GP
See financial statements in Exhibit 4.04.
1. A financing arrangement with The CIT Group/Credit Finance, Inc. consisting
of (i) a term loan in the initial amount of $1,156,000, secured by the
fixed assets of GP, and (ii) a working capital line of credit secured by
accounts receivable and inventories. The latter varies in amount, but stood
at approximately $1,100,000 at the closing of the loan on September 13,
1996. Monthly principal payments of $20,000 are being made on the term loan
.
2. GP leases its facilities at 391 0 Industrial Drive in Rochester Hills under
a lease dated March, 1984 and extended for an additional five (5) years in
March, 1994, ending March 31, 1999. Monthly lease payments are $17,290.
3. At the time of the new financing with The CIT Group/Credit Finance, Inc.,
GP negotiated extended term agreements with its creditors covering aged
obligations. These obligations consist of a combination of cash paid at the
time of closing of the new financing and redeemable preferred stock of GP
for the balance. The redeemable preferred stock is redeemable by the
creditors over periods ranging from 12 to 36 months. Payments cannot be
made, however, unless GP's tangible net worth exceeds $400,000.
4. GP has also cast the remaining payments to V. Allen Koch for his majority
holdings of A.E.P. stock, in the amount of $244,000, in the form of
redeemable preferred stock. Redemption payments are spread over a period of
fourteen (14) months, with the same restriction on payments as cited in
paragraph 3 above.
5. GP is also obligated on certain loans involving related parties in the
amount of $275,000. The lenders are Joseph Schmidt and John Horner, both
members of the Board of Directors.
27
<PAGE>
EXIBIT 4.09(c)
LIST OF MATERIAL ORAL OR WRITTEN (i) EMPLOYMENT AGREEMENTS,
(ii) EMPLOYER BENEFIT PLANS, (iii) LOAN AND ASSET RESTRICTION
(E.G. LIEN) AGREEMENTS,
(OTHER THAN WITH CIT, SHOWN IN EXHIBIT 4.09(a) ABOVE),
(iv) GUARANTEES OF $I 0,000 OR MORE, (v) CONSULTING OR SIMILAR CONTRACTS
WITH MORE THAN 1 YEAR TO RUN AND PAYMENTS EXCEEDING $10,000,
(vi) COLLECTIVE BARGAINING AGREEMENTS,
(vii) FORMER SHAREHOLDER, OFFICER OR/AND DIRECTOR AGREEMENTS AND
(viii) CONTRACTUAL OBLIGATIONS FOR OVER $10,000
None
28
<PAGE>
EXHIBIT 4.10
LIABILITIES OF GP
NOT DISCLOSED OR PROVIDED
FOR IN FINANCIAL STATEMENTS
CONTAINED IN EXHIBIT 4.04
Other than liabilities and obligations disclosed in the Financial Statements and
in Exhibits 4.09 and 4.10, GP has knowledge only of an environmental situation
in a very limited area of its property. A plan to eliminate it, using the soil
vapor evaporation process, will be implemented in mid-1997 at a cost which
management of GP does not expected to affect GP's financial condition
materially. The work is being monitored by the Department of Environmental
Quality of the State of Michigan.
29
<PAGE>
EXHIBIT 4.13
OFFICERS AND DIRECTORS
OF GP
Name Title(s)
Owen A. Pierce Director, Chairman of the Board
and Secretary
John F. Horner Director and Treasurer
Filipp J. Kreissl Director
Joseph P. Schmidt Director
David C. Shifflett Director
30
<PAGE>
EXHIBIT 4.14
UNFILED OR UNPAID GP TAX RETURNS AND/OR CHARGES
The following sets forth a list of all unfiled tax returns and/or unpaid
taxes or charges on the part of GP:
All unpaid real estate, Federal, State and local tax obligations are either
not yet due or are subject to arrangements with the respective tax authorities.
31
<PAGE>
EXHIBIT 4.15
PRIVATE SECURITIES SALES
OF GP
WITHIN THE LAST TWO YEARS
Private sales of GP's capital stock in the past two (2) years;
including Preferred Stock:
<TABLE>
<CAPTION>
Type Summary of
of Facts Relied
Exemption on for
Type of Name(s) Date from Exemption
Security of of Price Registration from
Sold Purchaser Purchase Paid per Share Claimed Registration
- ---- --------- -------- -------------- ------- ------------
<S> <C> <C> <C> <C> <C>
Common John F. Horner 11/22/96 Consideration for Section 4(2) of the CFO,
Stock Loan to GP 1933 Act (Section 4(2)) Treasurer &
6,542 Director of GP
Common David C. Shifflett 11/22/96 Exchange for Section 4(2) Director and
Stock 03/13/96 A.E.P. Stock heads GP's
6,542 Marketing
Common Joseph P. Schmidt 11/22/96 Consideration for Section 4(2) Director and
Stock Loan to GP Manufacturers
4,360 Rep for GP
Common Joseph H. Moreau 01/16/97 Gift from Section 4(2) Manufacturers
Stock Joseph P. Schmidt Rep for GP
1,000
Redeemable See Exhibit 4.02 for detail
Preferred Stock
</TABLE>
32
<PAGE>
EXHIBIT 4.17
MATERIAL DEFAULTS IN CONTRACTS
OF GP
Any material default of any contract on the part of GP, which has not been
waived. The following is a summary list thereof. None
33
<PAGE>
SCHEDULE 4.18(k)
GP has not incurred any obligations for finders fees since February 28, 1997.
34
<PAGE>
EXHIBIT 5.02
FINANCIAL STATEMENTS
INMOLD, INC.
Inmold, Inc. has not acquired GP at this time, nor does it have an operating
history. For this reason, it has no financial statements, other than the Balance
Sheet printed below:
INMOLD, INC.
PRO-FORMA BALANCE SHEET
AT MARCH 1, 1997
<TABLE>
<CAPTION>
<S> <C>
CURRENT ASSETS
Cash 40.00
Accounts Receivable
Inventory
Pre-Paid Expenses
Other Current
Total Current Assets 40.00
PROPERTY AND EQUIPMENT
Property and Equipment
Less Accumulated Depreciation
Total Property and Equipment 0.00
OTHER ASSETS 0.00
-----
TOTAL ASSETS 40.00
CURRENT LIABILITIES
Accounts Payable
Accrued Expense
Current Portion, LTD
Total Current Liabilities 0.00
LONG TERM DEBT
Term Loan
Notes Payable
Total long Term Debt 0.00
-----
TOTAL LIABILITIES 0.00
STOCKHOLDERS EQUITY
Common Stock (4,000,000 shares at $0.00001 par value) 40.00
Additional Paid-In Capital 0.00
Retained Earnings 0.00
-----
Stockholders Equity 40.00
-----
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY 40.00
</TABLE>
35
<PAGE>
EXHIBIT 5.06
INMOLD, INC. ARTICLES OF INCORPOPATION AND BY-LAWS
First pages of the Articles of Incorporation and By-Laws are attached hereto.
The full texts are available from Inmold, Inc.
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ARTICLES OF INCORPORATION
OF
INMOLD, INC.
These Articles of Incorporation are signed by the incorporator(s) for the
purpose of forming a profit corporation pursuant to the provisions of the
Indiana Business Corporation Law, as amended as follows:
ARTICLE I
INMOLD, INC.
The name of the Corporation is Inmold, Inc.
ARTICLE II
Purpose and Powers
The purpose or purposes for which the Corporation is organized is to engage
in any activity within the purposes for which corporations may be organized
under the Indiana Business Corporation Law.
Specifically, and not by way of limitation on the foregoing, the nature of
the business, or objects or purposes to be transacted, promoted or carried on
are:
Manufacturing of products of all types and at all locations for sale at
wholesale and at retail.
In furtherance and not in limitation of the general powers conferred by the
laws of the State of Indiana and of the above-stated general objects, it is
hereby expressly provided that the Corporation shall also have the following
powers:
(a) To invest, manufacture, distribute, sell, market, patent and
improve products and processes of any type, for any kind to produce, sell
and use products of any kind and description to buy, purchase, receive,
take by grant, gift, devise, bequest, license, rent, lease, franchise or
otherwise acquire; to own, use hold, alter, maintain, improve, invest in,
employ, or otherwise utilize; to franchise, transfer, license, sell,
convey, generally deal in, rent, or lease, mortgage, exchange and otherwise
trade in and dispose of real property or personal property (of any kind or
description including choses in action) of all kinds or any interest or
right therein, wherever situated, including without limitation properties
located within and without the States of Michigan and Indiana and in any
and all of the states, districts,
<PAGE>
BY-LAWS
OF
INMOLD, INC.
(a Indiana corporation)*
* * *
ARTICLE I
Incorporators and Shareholders
Section 1. ANNUAL MEETING. The annual meeting of the shareholders for the
election of directors and for the transaction of such other business as may
properly come before the meeting shall be held (unless such action is taken by
written consent of the shareholders in lieu of a particular annual meeting) on
the regularly scheduled meeting day which shall be the First Tuesday in April of
each year (or if that day be a legal holiday at the place where such meeting is
to be held, then on the next succeeding business day) at the registered office
of the Corporation at 901 Wilshire Drive, Suite 360, Troy, Michigan 48084, at
10:30 A.M. local time or at such other time on said day at such place, either
within or without the State of Indiana, as the Board of Directors of the
Corporation (hereinafter called the Board) may designate in the notice thereof.
Failure to hold an annual meeting or delay in holding an annual meeting is
governed by the Indiana Business Corporation Law.
Section 2. SPECIAL MEETINGS. Special meetings of the shareholders for any
purpose or purposes, unless otherwise prescribed by statute or by the Articles
of Incorporation of the Corporation, may be called by the chairman of the Board
or by the President, and shall be called by the President or Secretary upon the
order of the Board, or at the request in writing (stating the purpose or
purposes of the proposed meeting) of shareholders owning a majority in amount of
all of the issued and outstanding capital stock of the Corporation and entitled
to vote at such meeting. The time and place, either within or without the State
of Indiana, shall be fixed by the Board unless it shall refuse to so act, in
which case such matters shall be fixed by the Chairman of the Board or President
if the meeting is called by such persons or by the requesting shareholders, if
the meeting is requested by them.
Section 3. NOTICE OF MEETINGS. Except as otherwise required by law, the
Articles of Incorporation of the Corporation or stock exchange rules, written
notice of each annual or special meeting of the shareholders shall be given not
less than ten nor more than 60 days before the date of the meeting to each
shareholder of record entitled to vote at such meeting
- ----------
- - Section citations refer to relevant sections of the Indiana Business
Corporation Law, as amended, and successor legislation. The Sections may not be
the only sections bearing on particular situations.
<PAGE>
STATE OF INDIANA
OFFICE OF THE SECRETARY OF STATE
CERTIFICATE OF INCORPORATION
OF
INMOLD, INC.
I, SUE ANNE GILROY, Secretary of State of Indiana, hereby certify that Articles
of Incorporation of the above corporation have been presented to me at my office
accompanied by the fees prescribed by law; that I have found such Articles
conform to law; all as prescribed by the provisions of the Indiana Business
Corporation Law, as amended.
NOW, THEREFORE, I hereby issue to such corporation this Certificate of
Incorporation, and further certify that its corporate existence will begin
January 10, 1997.
In Witness Whereof, I have hereunto set
my hand and affixed the seal of the
State of Indiana, at the City of
[SEAL STATE OF INDIANA] Indianapolis, this Tenth day of January,
1997.
SUE ANNE GILROY,
SUE ANNE GILROY, Secretary of State
AT
Deputy
<PAGE>
EXHIBIT 5.12
ADDITIONAL WARRANTIES OF INMOLD, INC.
(a) Articles of Incorporation, By-Laws and Certificates of Good Standing of
Imnold, Inc. It has no subsidiaries.
See Exhibit 5.06.
(b) Inmold, Inc. is not a reporting company under the Securities and
Exchange Act of 1934.
(c) Government reports and tax returns not timely filed by Inmold, Inc.
None
(d) Material contracts and commitments of Inmold, Inc..
None, except as disclosed within financial statements under Exhibit 5.02.
(e) Material liabilities of Inmold, Inc. not disclosed or provided for in
financial statements contained in Exhibit 5.02.
None
(f) Officers and Directors of Inmold, Inc. elected or appointed to date:
John M. Sanders Secretary and Director
John F. Horner Treasurer
Filipp J. Kreissl Director
J. Will Paull Director
(g) Private sales of Inmold, Inc. Common stock within the last two years:
4,000,000 shares of common stock sold at $.00001 par value per share to Sanders
Confectionery Products, Inc., a Michigan corporation, on January 20, 1997. The
purchase price of $40 was paid to Inmold, Inc. by Filipp J. Kreissl/John M.
Sanders. 90,000 shares of common stock were also privately placed with the
Daniel Spencer Hoops Irrevocable Trust, dated April 14, 1992 for par value
$.00001 therefor.
(h) Material defaults in contracts to which Inmold, Inc. is a party.
None
37
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EXHIBIT 3.01
ARTICLES OF INCORPORATION
INMOLD, INC.
<PAGE>
TABLE OF CONTENTS
ARTICLE I ..................................................................1
ARTICLE II .................................................................1
ARTICLE III .................................................................6
ARTICLE IV ................................................................12
ARTICLE V ................................................................13
ARTICLE VI ................................................................13
ARTICLE VII ...............................................................19
ARTICLE VIII ...............................................................28
<PAGE>
ARTICLES OF INCORPORATION
OF
INMOLD, INC.
These Articles of Incorporation are signed by the incorporator(s) for
the purpose of forming a profit corporation pursuant to the provisions of the
Indiana Business Corporation Law, as amended as follows:
ARTICLE I
INMOLD, INC,
The name of the Corporation is Inmold, Inc.
ARTICLE II
Purpose and Powers
The purpose or purposes for which the Corporation is organized is to
engage in any activity within the purposes for which corporations may be
organized under the Indiana Business Corporation Law.
Specifically, and not by way of limitation on the foregoing, the
nature of the business, or objects or purposes to be transacted, promoted or
carried on are:
Manufacturing of products of all types and at all locations for sale
at wholesale and at retail.
In furtherance and not in limitation of the general powers conferred
by the laws of the State of Indiana and of the above-stated general objects, it
is hereby expressly provided that the Corporation shall also have the following
powers:
(a) To invest, manufacture, distribute, sell, market, patent and
improve products and processes of any type, for any kind to produce, sell and
use products of any kind and description to buy, purchase, receive, take by
grant, gift, devise, bequest, license, rent, lease, franchise or otherwise
acquire; to own, use hold, alter, maintain, improve, invest in, employ, or
otherwise utilize; to franchise, transfer, license, sell, convey, generally deal
in, rent, or lease, mortgage, exchange and otherwise trade in and dispose of
real property or personal property (of any kind or description including choses
in action) of all kinds or any interest or right therein, wherever situated,
including without limitation properties located within and without the States of
Michigan and Indiana and in any and all of the states, districts,
<PAGE>
All references to Sections in these Articles of Incorporation allude to
the Indiana Business Corporation Law, as amended.
territories or dependencies of the United States and in any and all
foreign countries in accordance with the law thereof, to supervise,
manage and protect such property of the Corporation and any interest
or claim held by it in the same; to have the same insured against fire
and other casualties; to exercise all rights and powers to perform all
transactions and in every respect to deal with such property.
(b) To make loans of money or other property, real or personal
(including choses in action) to, or assume, act as surety for or
guarantee or invest or reinvest the Corporation's funds in the
obligations or liabilities of any person, firm or corporation, either
with or without real or personal property (including choses in action)
as security, and to promote and assist, financially or otherwise, any
banks or other corporations in which it has an interest. The
Corporation may not guarantee or become surety upon a bond or other
undertaking securing the deposit of public moneys.
(c) To enter into, make, perform and carry out contracts
(including insurance contracts on any of its insurable interests) of
every kind and description and for any lawful purpose, with any
person, firm organization, association, corporation (public or
private), syndicate, municipality, county, state, government or
governmental agency or political subdivision.
(d) To make contracts, give guarantees, incur liabilities and
borrow and raise money without limitation in amount at such rates of
interest as the Corporation may determine and to incur other
obligations for liquidated and/or unliquidated amounts and/or
performances, with or without pledge of mortgage upon or security
interest in any or all of its property, real or personal (including
choses in action) or an interest therein, wherever situated, as
security, and from time to time to draw, make, execute, endorse and
issue bonds, debentures, promissory notes, bills of exchange and other
evidences of indebtedness and obligations of this Corporation,
negotiable or non-negotiable, for moneys borrowed, or in payment for
property real or personal (including choses in action), acquired, or
for any other object and purposes of this Corporation or its business,
and to secure the payment of any such obligations by mortgage, pledge,
deed, deed of trust, indenture, agreement or other instrument of
trust, or by other a lien upon, security interests in, assignment of
or agreement in respect to all or any part of the property (real or
personal, including choses in action), rights, privileges or
franchises of this Corporation or an interest therein, wherever
situated, whether or not owned or hereafter to be acquired and to
sell, pledge or otherwise dispose of such bonds or other obligations
of the Corporation for its corporate purposes. The rite of interest on
such bonds or other obligations may be in excess of the legal rate
where set forth in writing.
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This power shall include the power to give guarantees which are
necessary or convenient in the opinion of the Board of Directors to
the conduct, promotion or attainment of the business of any of the
following corporations, whether or not subject to the Indiana Business
Corporation Law, which guarantees shall be considered to be in
furtherance of the corporate purposes of this Corporation;
(i) All of the outstanding stock of which is owned, directly
or indirectly, by the Corporation;
(ii) A corporation which owns, directly or indirectly, all
of the outstanding stock of the Corporation;
(iii) All of the outstanding stock of which is owned,
directly or indirectly, by a corporation; whether or not subject
to the Indiana Business Corporation Law, which owns, directly or
indirectly, all of the outstanding stock of the Corporation.
(e) To own all or a partial equity interest in, manage, organize
or cause to be organized and/or to participate with others in or enter
into under the laws of the States of Michigan and Indiana, or of any
other state, district territory, province or government (domestic or
foreign), any corporation or corporations, limited liability company,
trusts (or partnerships, limited or general, joint ventures or
business associations of any other kinds), to dissolve, wind up,
liquidate, merge or consolidate any such corporation or corporations
(or partnerships, limited or general, joint ventures or business
associations of any other kinds), to dissolve, wind up, liquidate,
merge or consolidate any such corporation or corporations (or
partnerships, limited or general joint ventures or business
associations of any other kind) with the Corporation or any of its
subsidiary corporations or other corporations or corporations (or
partnerships, limited or general, joint ventures, or business
associations of any kind) in which the Corporation or any of its
'affiliates" (as that term is defined in regulations promulgated under
the Securities Act of 1933, as amended) have or do not have any
interest or to cause the same to be dissolved, wound up, liquidated,
merged or consolidated and to participate with others in any
transaction, undertaking or agreement which the participating
corporation would have power to conduct by itself whether or not the
participation involves sharing or delegation of control with or to
others.
(f) In the acquisition of any monies or other property, real or
personal, including any type of securities issued by the Corporation
or any other party, and without limiting the generality of the
foregoing, any shares of capital stock, bonds, debentures or other
evidences of indebtedness or any other rights or privileges of any
kind or character, the Corporation may directly or indirectly issue
and sell or cause to be issued in payment thereof or exchange thereof,
in whole or in part, any type of securities of the Corporation or
another corporation, business trust, partnership, limited or general
or other type of business association, and without limiting the
generality of the foregoing shares of the Corporation's own capital
stock or the bonds, debentures or other evidences of
3
<PAGE>
indebtedness issued by the Corporation, and the Board of Directors of
the Corporation shall have the right to determine the value to be
placed on any such securities, shares, bonds, debentures or other
indebtedness so issued or exchanged.
(g) To purchase, receive, take or otherwise acquire; to own, lend
or otherwise dispose of, to pledge, use or otherwise deal in shares of
its own capital stock, bonds, debentures, securities and other
evidences of indebtedness, from time to time, to such an extent and in
such manner and upon such terms as its Board of Directors shall
determine and as the laws of the States of Indiana may permit.
(h) To conduct and transact its business, carry on its operations
and have offices and exercise powers Granted by the Indiana Business
Corporation Law as then in effect (including without limitation the
holding, purchasing, mortgaging and conveying of real and personal
property of any kind and description, including choses in action) in
any jurisdiction, including the States of Michigan and Indiana, other
states, the District of Columbia, the territories, colonies and
possessions of the United States, and in any foreign countries outside
of the United States.
(i) To sue and be sued in all courts and participate in actions
and proceedings, judicial, administrative, arbitrative or otherwise,
in the same manner as natural persons.
(j) To have a corporate seal, and alter the seal and use it or a
facsimile to be affixed, impressed or reproduced in any other manner.
(k) To adopt, amend or repeal By-Laws, including emergency by-
laws, relating to the business of the Corporation, the conduct of its
affairs, its rights and powers and the rights and powers of its
shareholders, directors or officers.
(l) To elect or appoint officers, employees, agents, attorneys,
accountants and auditors of the Corporation, prescribe their duties,
fix their compensation and the compensation of directors and indemnify
corporate directors, officers, employees, agents, attorneys,
accountants and auditors.
(m) To purchase, sell, pledge, take, receive, subscribe for, or
otherwise acquire, dispose of own, manage the investment in and/or the
business of any business entity or entities in which an investment is
held, hold, vote, employ, sell, lend, lease, exchange, transfer or
otherwise dispose of, mortgage, pledge, use and otherwise deal in and
with, for any lawful consideration or otherwise, all or any lesser
interest in bonds and other obligations, units of interest, shares of
capital stock, or other securities or interests issued by any
corporations, partnerships, associations, business trusts, individuals
or other entities, wheresoever the aforesaid bonds, obligations, units
of interest, shares of capital stock or other securities or interests
are located, wherever the issuers thereof are located, officed,
4
<PAGE>
doing business or organized, and whether engaged in business or
activities of any type that are similar to or different from those of
the Corporation.
(n) To make donations for any of the following: the public
welfare, community fund, or hospital or a charitable, educational,
scientific, civic or sin3ilar purpose, and to provide aid in time of
war or other national emergency.
(o) To pay pensions, establish and carry out pension, profit
sharing, share bonus, share purchase, share option, savings thrift and
other retirement, incentive and benefit plans, trusts and provisions
for any of its directors, officers, agents and employees.
(p) To cease its corporate activities and dissolve.
(q) To tend money to, or guarantee an obligation of, or otherwise
assist an officer or employee of the Corporation or of its subsidiary,
including an officer or employee who is a director of the Corporation
or its subsidiary, when, in the judgment of the Board of Directors,
the loan, guaranty or assistance may reasonably be expected to benefit
the Corporation. The loan, guaranty or assistance may be with or
without interest, and may be unsecured, or secured in such manner as
the board or directors approves, including without limitation, a
pledge of shares or capital stock of the Corporation. Nothing in this
provision shall be deemed to deny, limit or restrict the powers of
guaranty or warranty of the Corporation at common law or under any
statute.
(r) To sell, lease, exchange or otherwise dispose of all or
substantially all, the property and assets of the Corporation in the
usual and regular course of its business as conducted by the
Corporation, and mortgage or pledge any or all property and assets of
the Corporation, whether or not in the usual and regular course of
business, upon such terms and conditions and for a consideration which
may consist in whole or in part of cash or other property, including
shares, bonds or other securities of any other corporation, domestic
or foreign, as authorized by the Corporation's Board of Directors.
Approval of the shareholders of the Corporation is not required.
(s) To have the capacity to act possessed by natural persons.
(t) To act as agent, broker, or members, promoter, associates,
manager, partner, member or co-owner, or representative for any
domestic or foreign corporations, associations, partnerships, business
trusts. individuals or other entities.
(u) To have and exercise all powers to do anything necessary,
suitable, convienient or proper to accomplish or further any one or
all of the objects and
5
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purposes set forth above, or which shall at any time and from time to
time appear to be conducive to or to expedite the interest or benefit
of the Corporation.
The objects and powers specified in any clause of this Article II shall,
except where otherwise expressed in said Article II, be no wise limited or
restricted by reference to or inference from the terms of any other clause of
said Article II, or any other Article in these Articles of Incorporation, but
the objects and powers specified in each of the clauses of said Article II shall
be regarded as independent objects and powers; provided, however, that nothing
herein contained shall be deemed to authorize or permit the Corporation to
engage in any business for which a corporation may be formed under any other
statute of the State of Indiana, unless that statute permits formation under the
Indiana Business Corporation Law as then in effect or to exercise any power or
do any act which a corporation formed under the Indiana Business Corporation Law
as then in effect, may not lawfully engage in, exercise, or do.
ARTICLE III
Capitalization
The total authorized capital stock is:
Preferred Stock 5,000,000 shares, par value $.00001 per share, Common Stock
100,000,000 shares, par value $.00001 per share.
A purchaser from the Corporation of shares of its capital stock is not
liable to the Corporation or its creditors with respect to the shares purchased
except the consideration for which the shares were to be issued.
The Corporation may purchase, hold, sell and transfer its own shares of
capital stock and may use its property or money for that purpose, provided that
when or by so purchasing, the Corporation is not and does not thereby render
itself insolvent based on the then fair value of its assets. One or more classes
or series of capital stock may be made redeemable by resolution of the board of
directors prior to issuance of shares of that class or series. The redemption
may be at the option of the shareholders, another person, the corporation or
upon the occurrence of a designated event. Shares that are reacquired by the
Corporation of any class or series shall revert to authorized but unused status.
A statement of all of the designations, and the relative powers, rights,
preferences, restrictions and limitations of the shares of each class and the
variations in rights, preferences and limitations applicable to each series (and
the authority of the Board of Directors to determine variations for future
series) must be summarized on the front or back of each stock certificate or
each certificate must state conspicuously on its front or back that the
Corporation will furnish the shareholder such information upon written request
without charge. In addition, such matters are set forth as follows:
6
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(1) The Preferred Stock:
(a) Issuance: Shares of the Preferred Stock of the Corporation may be
issued from time to time in one or more series, each of which series shall have
such distinctive designations or title as shall be fixed by the Board of
Directors of the Corporation prior to the issuance of any shares thereof At the
time of such issuance, the provisions of the Indiana Business Corporation Law
shall be complied with, including any governmental filing of any certificates as
to the description of any class and/or series of Preferred Stock. The Board of
Directors of the Corporation is hereby expressly granted authority to fix by
duly adopted resolution or resolutions the designations and the related powers
and preferences, the related, participating, optional or other special rights,
and the related qualifications, limitations or restrictions as authorized or
permitted by the laws of the States of Michigan and Indiana in respect to each
such series of Preferred Stock.
(b) Redemption: The Board of Directors may provide that one or more
series of shares of Preferred Stock shall be redeemable at the option of the
Corporation in cash, its bonds or other property, at such price, within such
periods, and under such conditions as are stated in the resolutions creating
such series. If so provided in the resolution the Corporation may create a
sinking fund for redemption of any series of redeemable shares of Preferred
Stock. The Board of Directors may provide that one or more series of shares of
Preferred Stock, shall be redeemable in whole or in part, at the option of the
shareholder. Subject to restrictions imposed by the Indiana Business Corporation
Law, any such series may be redeemable in cash, bonds of the Corporation or
other property, at such prices, within such periods and under such conditions as
are stated in the resolutions creating such series. The resolutions creating
such series may be amended to delete or change a provision for shares redeemable
at the option of the shareholder only with unanimous approval of the holders of
such shares.
(c) Notice: After written notice of redemption of redeemable shares
has been mailed to the holders thereof and sum sufficient to redeem the shares
has been deposited with a bank or trust company with irrevocable instruction and
authority to pay the redemption price to the holders thereof upon surrender of
certificates therefor, the shares shall not be voted on any matter nor deemed to
be outstanding shares.
(d) Voting: The Board of Directors may provide that one or more series
of Preferred Stock shall vote as a class to authorize any action, including
amendment to these Articles of Incorporation. Such voting as a class shall be in
addition to any other vote required by the Indiana Business Corporation Law.
Where voting as a series is provided in resolution creating a series of
Preferred Stock, it shall be by the proportionate vote provided in such
resolution or, if a proportionate vote is not so provided, then for any action
other than the election of Directors, by a majority of the votes cast by the
holders of shares of such series entitled to vote thereon. Where voting as a
series is required by the Indiana Business Corporation Law to authorize an
action, the action shall be authorized by a majority of the votes cast by the
holders of shares of each such series entitled to vote thereon, unless a greater
vote is required by such resolution or another Section of the Indiana Business
Corporation Law. The voting as a series shall be in
7
<PAGE>
addition to any other vote required by the Indiana Business Corporation Law.
(e) Election of Directors: The resolutions creating one or more series
of Preferred Stock may provide that a shareholder entitled to vote at an
election for directors may vote, in person or by proxy, the number of shares of
the series created by such resolution which are owned by him for as many persons
as there are votes for directors by giving one candidate as many votes as the
number of such directors multiplied by the number of his shares, or by distri-
buting his votes on the same principle among any number of the candidates.
(f) Convertible Preferred Stock. When so provided in the resolutions
creating one or more series of Preferred Stock, and subject to restrictions in
the Indiana Business Corporation Law or its successor provisions, the
Corporation may issue one or more series of Preferred Stock convertible, at the
option of the holder or the Corporation or upon the happening of a specified
event, into shares of any class of authorized shares or into shares of any
series of any class of authorized shares. Authorized shares issued, may be made
so convertible within such period and upon such terms and conditions as
authorized in such resolutions.
(2) The Common Stock:
(a) Dividends and Nonliquidating Distributions: The Board of Directors
may declare and pay ratable dividends or make other distributions in cash, its
bonds or its property, including shares or bonds of other- corporations, on the
outstanding shares of its Common Stock, payable to the full extent permitted
under the laws of the State of Indiana, except when currently the Corporation is
or would thereby be rendered insolvent. Dividends may be declared or paid and
distributions may be made only out of surplus (as then defined under the Indiana
Business Corporation Law). Once declared, holders of Common Stock are entitled
to prompt payment of dividends, without interest, to the extent that surplus
then exists. Dividends in the shares of the Corporation's own capital stock may
be declared and paid pro rata on the outstanding shares of its Common Stock.
(b) Liquidating Distributions: In the event of any distribution of all
of the assets of the Corporation, upon a liquidation, dissolution or winding up
of the Corporation, voluntary or involuntary, after payment of the full
preferential amounts to which the holders of the Preferred Stock shall be
entitled, the holders of the Common Stock shall be ratably entitled to receive
all of the remaining assets of the Corporation in proportion to the number of
shares held by them respectively. If the assets distributable in respect thereof
shall be less than the amount necessary to pay the holders of the Preferred
Stock the full preferential amount thereof, then the entire assets are to be
distributed among the holders of the Preferred Stock, of any and all series then
outstanding, ratably in proportion to the full preferential amounts to which
they are respectively entitled.
(c) Voting: Each holder of the Common Stock shall be entitled to one
vote for each outstanding share of Common Stock held by the holder of record on
the stock transfer
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books of the Corporation.
(3) Shares Deemed Fully Paid and Nonassemble:
All shares of capital stock of the Corporation issued for the consideration
therefor fixed at or prior to the date of issuance thereof by the Board of
Directors of the Corporation, which consideration shall be equal to not less
than the stated value of the shares of stock so issued, if any, shall be deemed
fully paid and nonassessable when the Corporation has received payment of such
consideration, unless the consideration is future services or payment which is
not represented by a promissory note.
At the time of such receipt, the subscriber shall have all the rights and
privileges of a holder of such shares, including registration thereof on the
stock transfer records of the Corporation in such name or names, with such
rights of co-ownership as the subscriber specifies and a stock certificate or
certificates evidencing the shares. Where the consideration is future services
or payment which is not represented by a promissory note, the rights of the
subscriber shall be determined by the subscription agreement and the shares
subscribed for shall be deemed to be nonassessable, but not fully paid until the
Corporation receives such services or payment.
The reasonable charges and expenses of organization or reorganization of
the Corporation, and the reasonable expenses of and compensation for the sale or
underwriting of its shares, may be paid or allowed by the Corporation out of the
consideration received by it in payment for its shares without thereby rendering
the shares either not fully paid or assessable.
(4) Issuance and Cancellation of Shares:
The authorized capital stock may be paid for in cash or in property, labor,
promissory note or past or future services at a just valuation to be fixed by
the Board of Directors and it may be paid for before, concurrently or after its
issuance as determined by the Board of Directors. In the absence of fraud, the
judgment of the shareholders or of the Board of Directors as to the value of the
consideration received for such shares shall be conclusive. Any unissued shares
of any class herein authorized or hereafter increased or created may be issued
from time to time by the Corporation in such manner, amounts and proportions, as
shall be determined from time to time by the Board of Directors and as may be
permitted by law existing at the time of said issuance. All shares of capital
stock which have been reacquired by the Corporation in any manner shall be
cancelled and revert to the status of authorized but unissued shares which may
be reissued under this provision.
(5) No Preemptive Rights:
No holders of capital stock of the Corporation shall have any preemptive
right to subscribe for any unissued shares or treasury shares of capital stock
of the Corporation or any other corporation issued or sold or to be issued or
sold, or to option rights or to securities having conversion or option rights
convertible into or exercisable to obtain capital stock or securities,
9
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rights or obligations of the Corporation or any other corporation, nor any other
form or right to subscribe for any thereof other than such if any, as the Board
of Directors in its discretion, may determine, and any shares of capital stock
of the Corporation or option rights or securities convertible into capital stock
of the Corporation which the Board of Directors may determine to offer for
subscription to the holders of capital stock of the Corporation, may, in its
discretion, be offered to the holders of such capital stock, with discrimination
as between classes and/or series of such capital stock or particular holders of
such capital stock, to the exclusion of any other class or classes or series of
such capital stock or any holder or holders of such capital stock then existing;
furthermore, authorized but previously unissued capital stock of the Corporation
may be issued or sold for cash or other legal consideration authorized under
ARTICLE III (3) or the Indiana Business Corporation Law and success or
legislation to or for the account of employees (including officers and
directors) of the Corporation or any subsidiary in which the Corporation owns
directly or indirectly all or substantially all of the capital stock, or to a
trustee or trustees on behalf of such employees, with payment at such price or
prices and on such terms and conditions as may be determined by the Board of
Directors, without such capital stock first having been offered for subscription
to any holders of the then outstanding capital stock of the Corporation to their
respective shares.
(6) Fractional Sham and Scrip:
Subject in all cases to any limitations in the Indiana Business Corporation
Law as now or hereinafter in effect, the rights of persons entitled to
fractional shares of capital stock shall be as follows:
The Corporation may issue certificates for fractions of a share where
necessary to effect share transfer, share distributions or a reclassification,
merger, consolidation or other form of reorganization, which shall entitle the
holders, in proportion to their fractional holdings, to exercise all rights and
privileges of a holder of shares of stock of the class in which the fractional
share was issued, including without limitation, the right to voting rights
available to such class if any, to receive dividends and to participate in
liquidating distributions.
As an alternative, the Corporation may pay cash the fair value of fractions
of a share as of the time when those entitled to receive the fractions are
determined.
As another alternative, the Corporation may issue scrip in registered or
bearer form over the manual or facsimile signature of an officer of the
Corporation or of its agent, exchangeable as therein provided for full shares,
but such scrip shall not entitle the holder to any right of a shareholder except
as therein provided. The scrip shall be issued subject to the condition that it
becomes void if not exchanged for certificates representing full shares before a
specified date. The scrip may be subject to the condition that the shares for
which the scrip is exchangeable may be sold by the Corporation and the proceeds
thereof distributed to the holders of the scrip, or subject to any other
condition which the Board of Directors may determine.
The Corporation may provide reasonable opportunity for persons entitled to
fractions of a
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share or scrip to sell them or to purchase additional fractions of a share or
scrip needed to acquire a full share.
(7) Warrants, Options, Rights, Convertibles:
The Corporation is hereby expressly authorized and empowered, from time to
time, by resolution of its Board of Directors, to create and issue to any
person, whether or not then a holder of its outstanding capital stock and
whether or not in connection with the issue and sale of any shares of capital
stock, bonds, rights or other securities of the Corporation or of any other
corporation, rights, warrants or options entitling and/or requiring the holders
or owners thereof at their option or at the option of the Corporation or upon
the happening of a specified event to purchase or acquire from the Corporation
or from any other corporation any such shares of any such class or series or any
bonds, rights, options or other securities issued by the Corporation or any
other corporation, whether now or hereafter authorized, such rights, warrants or
options to be evidenced by or in such warrants, convertible warrants,
convertible debentures, bonds or notes, classes of convertible capital stock,
options or other instruments or agreements as shall be approved by the Board of
Directors. The consideration and terms upon which, the time or times, which may
be limited or unlimited in duration, at or within which, and the price or prices
at which any such rights, warrants or options and/or any such shares or other
securities may be purchased or acquired from the Corporation or from any other
corporation upon the exercise or conversion of any such rights, warrants, or
options shall be such as shall be fixed in a resolution or resolutions adopted
by the Board of Directors providing for the creation and issuance of such
rights, warrants or options and as shall be permitted by law. Any and all shares
or securities which may be purchases or acquired or issued upon the exercise or
conversion of any such right, warrant or option shall be deemed fully paid
shares and not liable to any further call or assessment or partly paid and
liable to further call or assessment, as the terms of the rights, warrants or
options shall provide. Except as otherwise provided by law, the Board of
Directors shall have full power and discretion to prescribe and regulate from
time to time the procedure to be followed, and all other matters concerning the
creation, issuance, conversion and exercise of any such rights, warrants and
options and the reservation of shares or other securities for the conversion
and/or exercise thereof, and the issuance of such shares or other securities
upon the conversion or exercise thereof. Authority under this provision shall
not be deemed to authorize creation of any new class of capital stock or to
increase the authorized number of shares in any class of capital stock as set
forth elsewhere in these Articles of Incorporation. Corporations referred to
above may be domestic or foreign. Shares may be converted into bonds only if the
Corporation could, at the time of conversion have purchased, redeemed or
otherwise acquired the shares by issuing the bonds under the restrictions of the
Indiana Business Corporation Law.
(8) Bondholders Rights:
The Board of Directors may confer upon the holders of bonds issued or to be
issued by it rights to inspect the corporate books and records, but without
rights to vote in the election of Directors and on any other matters on winch
shareholders of the Corporation may vote to the extent, in the manner, and
subject to the conditions prescribed in the resolution conferring such
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rights under the terms of any bonds issued or to be issued by the Corporation.
(9) Registered Owners:
The Corporation shall be entitled to treat the person in whose name any
shares of its capital stock are registered on its transfer books as the owner
thereof on the date the Board of Directors authorizes the distributions, for all
purposes, and shall not be bound to recognize any equitable or other claim to,
or interest in, such share on the part of any other person, whether or not the
Corporation shall have notice thereof, save as expressly provided by the laws of
the State of Indiana.
ARTICLE IV
Address of Initial Registered Office, Mailing Address
of Initial Resident
and Name of Initial Re3ident Agent
The address of the initial registered office is:
CT Corporation System
One North Capitol Avenue
Indianapolis,IN 46204
The mailing address of the initial registered office is:
CT Corporation System
One North Capitol Avenue
Indianapolis, IN 46204
The name of the initial resident agent at the registered office is:
The CT Corporation System
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ARTICLE V
Name(s) of Incoporator(s)
The name(s) and address(s) of the incorporator(s) signing these Articles
of Incorporation is (are) as follows:
Frederick H. Hoops, III
HOOPS, HOOPS & HOOPS, P.L.C.
31555 W. 14 Mile Road
Suite3l5
County of Oakland
Fanmington Hills, MI 48334
ARTICLE VI
Additional Provisions
The following additional provisions apply to the Corporation:
(1) Management of the Corporation and Powers of the Board of Directors: All
of the powers of the Corporation insofar as the same may be lawfully vested by
these Articles of incorporation, are hereby vested and conferred upon the Board
of Directors of the Corporation which shall manage its business and affairs. The
number of director positions (but not less than one) may be fixed or varied by
the By-Laws. The By-Laws may provide for classifications of the term of office
of Directors or as to their election by one or more classes or series of shares
of capital stock of the Corporation, provided that at least one fourth of the
Directors must be elected annually.
(3) Additional Powers of the Board of Directors: In furtherance and not by
way of limitation of the powers conferred by statute, the Board of Directors is
expressly authorized from time to time:
(a) Amend the By-Laws: The Board of Directors may make, alter and
repeal the By-Laws of the Corporation, to the extent consistent with the
Indiana Business Corporation Law, or its successor legislation or these
Articles of Incorporation, without any action on the part of the
shareholders, but the By-Laws made by the Board of Directors and the powers
so conferred may be altered or repealed by th e shareholders.
(b) Surplus Capital: To fix, determine and vary the amount to be
maintained as surplus:
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(c) Committees: To designate one or more standing committees, each
committee to consist of one or more of the directors of the Corporation.
The Board of Directors may designate one or more directors as alternate
members of any committee; who may replace any absent or disqualified member
at any meeting of the committee. Any such committee to the extent provided
in a resolution of the Board of Directors, or in the By-Laws of the
Corporation, shall have and may exercise all the powers and authority of t
he Board of Directors in the management of the business and affairs of the
Corporation, and may authorize the seal of the Corporation to be affixed to
all papers which may require it; and may declare a dividend or authorize
the issuance of Common Stock of the Corporation; but no such committee
shall have the power or authority to amend the Articles of Incorporation,
adopt an agreement of merger or consolidation, recommend to the
shareholders the sale, lease or exchange of all or substantially all of the
Corpor ation's property and assets, recommend to the shareholders a
dissolution of the Corporation or a revocation of a dissolution, or amend
the By-Laws of the Corporation, fill vacancies on the Board of Directors or
fix compensation of the Directors serving on the Board of Directors or on
any such committee.
(d) Sell, Lease, Exchange, Assign, Convey or Otherwise Dispose of
Property Not in the Regular Course of Business: When and as authorized by
the shareholders in accordance with the Indiana Business Corporation Law or
its. successor provisions, to sell lease, exchange, assign, convey or
otherwise dispose of all or substantially all of the property (whether real
or personal; including choses in action) and assets of the Corporation with
or without its good will and its corporate franchises, if not in the usual
and regular course of business as conducted by the Corporation, upon such
terms and conditions and for such consideration, which may consist in whole
or in part of cash or property, real or personal including choses in action
and/or shares of stock and/or other securities of any other corporation or
corporations, domestic or foreign, as the Board of Directors shall deem
expedient and for the best interests of the Corporation. The Board of
Directors is required to approve such sale, lease, exchange, assignment,
conveyance or other disposition.
(e) Sell, Lease, Exchange, Assign, Convey or Otherwise Dispose of
Property in the Regular Course of Business: To sell lease, exchange,
assign, convey or otherwise dispose of all or any part of the property
(whether real or personal including choses in action) and assets of the
Corporation, less than the whole or less than substantially the whole
thereof in the usual and regular course of its business as conducted by the
Corporation, upon such terms and conditions and for such consideration;
which may consist in whole or in part of cash or property, real or
personal, including choses in action and shares of stock and/or other
securities of any other corporation or corporations, domestic or foreign as
the Board of Directors shall deem expedient and for the best interests of
the Corporation without the assent of the shareholders in writing or
otherwise.
(f) Mortgages, Pledges and Liens: To authorize and cause to be
executed, without the assent of the shareholders in writing or oth erwise,-
mortgages, pledges and Hen% without limit as to amount, on any or all of
the real and personal property (including choses in action) of the
Corporation whether or not in the usual and regular course of business.
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(g) Reserves: To set apart or abolish out of funds available for
dividends a reserve for any purpose and the following shall not limit the
generality hereof To fix and to vary or abolish the sum to be reserved over
and above the capital stock paid in before declaring any dividends; to fix
the time of declaring and paying any dividend, and, unless otherwise
provided in the Articles of Incorporation or in the By-Laws, to determine
the amount of any dividend. All sums reserved as working capital or
otherwise may be applied from time to time to the reacquisition or purchase
of its bonds or other obligations or shares of its own capital stock or
other property to such extent and in such manner and upon such terms as the
Board of Directors shall dean expedient and the reacquired stock, bonds or
other property may be resold, except that if such stock & has been retired
for the purposes of decreasing the Corporation's authorized capital stock
as provided by law it may not be resold.
(h) Inspections by the Shareholders: To determine whether and to what
extent, and at what time and places and under what conditions and
regulations the accounts and books of the Corporation and the stock ledger
or duplicate stock ledgers, and to make extracts therefrom, to the extent
not governed by statute, or any of them, shall be open to the inspection of
any person acting directly or through his agent or attorney who has been a
shareholder (directly or as a holder of a voting trust certificate
represent ing shares of capital stock of the Corporation) for at least six
months immediately preceding his demand for inspection or any person
thereunto authorized by persons holding at least five percent of all of the
outstanding shares of capital stock of the Corporation, upon at least five
days written demand, and no shareholder shall have any right to inspect any
account, book, stock ledger or duplicate stock ledger, and to make extracts
therefrom or document of the Corporation, except as conferred by the
Indiana Business Corporation Law- and its successor provisions or the
By-Laws or as authorized by the Board of Directors or by a resolution of
the shareholders.
(i) Powers Contained in the By-Laws: To exercise such powers and
authorities as the Corporation may by its By-Laws confer upon the
Board of Directors in addition to the foregoing and to those expressly
conferred upon the Board of Directors by statute.
(3) Time Period for Bringing Actions by or on Behalf of the Corporation or
any Shareholder in Connection with Any Bonus, Stock Option or Similar Plan:
Every right of action by or on behalf of the Corporation or by any shareholder
or shareholders against any past, present or future member of the Board of
Directors, officer or employee of the Corporation arising out of or in
connection with any bonus plan or stock option plan or similar plan for their
benefit, shall, irrespective of the place where action may be brought and
irrespective of the place of residence of any such director, officer or
employee, cease and be barred by the expiration of three years from whichever is
the Later of (a) the date of the act or omission in respect of which such right
of action arises or (b) the first date upon which there has been made generally
available to shareholders an annual report of the Corporation and a. proxy
statement for the annual meeting of shareholders following the issuance of such
annual report, which name] report and proxy statement alone or together set
forth, for the related period the amount of the credits to the reserve for the
purpose of such plans, the aggregate bonus awards, the aggregate number of
shares for which options were granted and the aggregate amount of contingent
credits
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conditionally credited; and any and all right of action by any employee (past,
present or future) against the Corporation arising out of or in connection with
such plans shall, irrespective of the place where action may be brought, cease
and be barred by the expiration of three years from the date of the act or
omission in respect of which such right of action arises.
(4) Amendments: To the extent allowed by the Indiana Business Corporation
Law and its successor legislation; the State of Indiana and the Corporation
reserve the right to amend, alter, change, add to or repeal any provision
contained in these Articles of Incorporation, in the manner now or hereafter
prescribed and/or allowed by statuted and all rights herein conferred upon the
Corporation's shareholders, the Board of Directors, any committee of the Board
of Directors, directors, officers, employees, agents and any other party are
granted subject to this reservoir.
(5) Taking Action Without Meeting; Consent; Number of Shareholders; Action
Requiring Filing of Certificates; Procedure; Consent by All Shareholders
Entitled to Vote: Any action required or permitted by the Indiana Business
Corporation Law to be taken at an annual or special meeting of shareholders may
be taken without a meeting, without prior notice and without a vote, if a
consent in writing, setting forth the action so taken, is signed by the holders
of outstanding shares having at least a majority of the voting power on the
record date for such vote or having such different portions of voting power as
is not less than the minimum number of votes that would be necessary to
authorize or take the action at a meeting at which all shares entitled to vote
on the action were present and voted. The written consents shall bear the date
of signature of each shareholder who signs the consent. No written consents
shall be effective to take the corporate action referred to unless, within 60
days after the record date for-determining shareholders entitled to express
consent to or to dissent from a proposal without a meeting, written consents
signed by a sufficient number of shareholders to take the action are delivered
to the Corporation. Delivery shall be to the Corporation's registered office its
principal place of business, or an officer or agent of the Corporation having
custody of the minutes of the proceedings of its shareholders. Delivery made to
the Corporation's registered office shall be by hand or by certified or
registered mail return receipt requested. Prompt notice of the taking of the
corporate action without a meeting by less than unanimous written consent shall
be given to shareholders who have not consented in writing. If the action
consented to would have required filing of a certificate under any other section
of the Indiana Business Corporation Law, if the action had been voted upon by
shareholders at a meeting of the shareholders, the certificate filed under such
other section shall state, in lieu of any statement required by the section
concerning a vote of shareholders, that both written consent and written notice
have been given as may be required by the Indiana Business Corporation Law.
(6) Removal of a Director or the Entire Board of Directors-. A Director or
the entire Board of Directors may be removed, with or without cause by vote of
the holders of not less then two thirds of the then voting power of the issued
and outstanding capital stock entitled to vote at an election of directors. A
director may be removed from office at any time with ease by the affirmative
vote of a majority of the directors then in office.
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If the Corporation has cumulative voting and less than the entire Board of
Directors is to be removed, no one of the directors may be removed if the votes
cast against his removal would be sufficient to elect him if then cumulatively
voted at an election of the entire Board of Directors, or, if there are classes
of directors, at an election of the class of directors of which he is a part.
This paragraph does not apply to removal by directors.
When holders of a class or series of stock or of bonds are entitled by the
Articles of incorporation to elect one or more directors,, this subsection
applies, with respect to removal of a director so elected to the vote of the
holders of the outstanding shares of the class or series of stock bearing
cumulative voting rights and not to the vote of the outstanding shares as a
whole.
(7) Perpetual Existence: The Corporation shall have perpetual existence.
(8) Shareholder Quorum: Shareholders holding at least a majority of the
voting power are necessary to constitute a quorum of a class or series for all
purposes. The By-Laws of this Corporation as adopted from time to time may by
any number or percentage (not less than thirty percent and not less than the
minimum vote required by the Indiana Business Corporation Law or its successor
legislation or as required by these Articles of Incorporation) of the issued and
outstanding shares of any class or series of capital stock entitled to vote on
any other matter in particular as the minimum to vote required to approve any
such matter in particular at any meeting of shareholders.
(9) Split-up, Divide or Combine the Outstanding and Issued Shares: The
Board of Directors may, from time to time split-up, divide or combine the
outstanding and issued shares of a class or series of any class or series of the
capital stock of the Corporation into a greater or lesser number of shares of
the same class or series with or without increasing or decreasing the stated
capital of the Corporation as of a record date fixed by the Board of Directors
in accordance with the then existing By-Laws of the Corporation.
Where such action has the effect of increasing stated capital the amount of
any such increase shall first be applied to reduce the capital surplus of the
Corporation and any excess amount of increase over the amount of such capital
surplus shall be applied to reduce the earned surplus of the Corporation.
Where such action has the effect of decreasing stated capital all surplus
resulting from such decrease shall be capital surplus of the Corporation.
Where such action combines issued and outstanding shares of the
Corporation's capital stock, shares which as a result cease to be issued and
outstanding shall be deemed to be reacquired and cancelled under Article III (4)
with the result that they shall revert to the status of authorized but unissued
shares, reissuable thereunder.
When a reduction of stated capital has been effected hereunder, the amount
of the reduction shall be disclosed in the next financial statement covering the
period in which the
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reduction is made that is furnished by the Corporation to all of its
shareholders or, if practicable, in the first notice of dividend or share
distribution that is furnished to the holders of each class or series of its
outstanding shares of capital stock between the date of the reduction and the
next such financial, statement, and in any case, within fifteen months after the
date of reduction of stated capital.
(10) Restrictions on the Powers of and Elimination of Board of Directors:
The shareholders may vote from time to time to provide in the By-Laws that there
shall not be a Board of Directors of the Corporation or to restrict the Board of
Directors in its management of the business of the Corporation or to delegate to
one (1) or more shareholders or other persons or part of the management
otherwise within the authority of the Board of Directors to take any particular
action(s). Notice of this provision and any action hereunder by the shareholders
shall be set forth on the back of each outstanding share certificate, that this
provision and any shareholder action hereunder shall be effective as against any
holder of outstanding shares of capital stock of the Corporation who consents in
writing to this provision and any shareholder who takes action hereunder need
not have received a stock certified for the initial shares in the Corporation
that he becomes an owner of which bears a notice of this provision and any
shareholder action hereunder in order for this provision and any such
shareholder action to be effective as against him. No such shareholder action
shall be effective unless and until it is effective against the holder of all
outstanding capital stock of the Corporation. The shareholders may vote from
time to time to modify or reverse any such action on their part in whole or in
part.
(11) Vacancies on Board of Directors: If the Board of Directors is elected
by all of the shareholders voting as single class, a vacancy occurring, in the
Board of Directors may be filled by the affirmative vote of a majority of the
remaining directors though less than a quorum of the Board of Directors.
A directorship to be filled because of an increase in the number of
Directors, or to fill a vacancy, may be filled by the Board of Directors in the
manner provided above for a term of office continuing only until the next
election of Directors by the shareholders.
If because of death, resignation, or other cause, the Corporation has no
Directors in office, an officer, a shareholder, an executor, administrator,
trustee, or guardian of a shareholder, or other fiduciary entrusted with like
responsibility for the person or estate of a shareholder, may call a special
meeting of shareholders in accordance with these Articles of Incorporation or
the By-Laws.
(12) Reorganizations: The Corporation may merge with other corporations and
may exchange shares of its capital stock between both domestic and foreign
corporations under the Indiana Business Corporation Law.
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ARTICLE VII
Fiduciary Duties Potential Liability for Breaches
and Indemnification
The following are general statutory provisions, which permit and/or limit
rights of indemnification in the Corporation under the Indiana Business
Corporation Law:
The Corporation may indemnify an individual made a party to a proceeding
because he is or was a director if (1) he conducted himself in good faith,
(2) he believed his conduct in his official capacity was in the
Corporation's best interest, or in all other cases that his conduct was at
least not opposed to its best interests, and (3) in a criminal proceeding
that he had no reasonable cause to believe his conduct was unlawful. Unless
limited by the Articles of Incorporation, the Corporation must indemnify a
director who prevails in the defense of any proceeding to which he was a
party because he is or was a director, against reasonable expenses incurred
by him in connection with the proceeding
The Corporation may pay for or reimburse reasonable expenses incurred by a
director who is a party to a proceeding in advance of the final disposition
of the proceeding if the director furnishes a written statement of his good
faith belief that he met the required standard of conduct, he furnishes a
written understanding to repay the advance if it is determined that he did
not meet the required standard of conduct, and a determination is made that
the fiats, as then known, would not preclude indemnification.
Unless limited by the Articles of Incorporation, a director who is a party
to a proceeding may apply for indemnification to the court conducting the
proceeding or seek indemnification in another court of competent
jurisdiction. The court may order indemnification if it determines that the
director is entitled to mandatory indemnification, in which case the
Corporation must also pay the director's reasonable expenses, or with
respect to a proceeding by or in the right of the Corporation, the director
is fairly and reasonably entitled to indemnification, in view of all the
relevant circumstances even though he was found liable. In this case the
Corporation need only pay reasonable expenses incurred.
The Corporation may not indemnify a director unless a determination has
been made by the Board of Directors, by a majority vote of a quorum which
does not include directors who are involved in the proceeding; if a quorum
cannot be obtained, by a majority vote of a committee designated by the
board; by special legal counsel or by the shareholders (except for shares
owned. or voted under the control of directors who are a party to the
proceeding), that indemnification is permissible in the circumstances
because he has met the standard of conduct.
Unless limited by the Articles of Incorporation, an officer is entitled to
mandatory
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indemnification and to apply for court ordered indemnification to the same
extent as a director. The Corporation may also indemnify and advance
expenses to an officer, employee, or agent to the same extent as to a
director.
The Corporation has the power to purchase and maintain insurance on behalf
of any person who is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, bust or other enterprise against any liability asserted
against him and incurred by him in that capacity or arising from his state,
as such, whether or not the Corporation would have the power to indemnify
him against such liability under the statutes.
The following provisions of this Article VIII apply to the extent that they
are not limited by the previous provisions of this Article VIII or the Indiana
Business Corporation Law:
(1) Liability of Director for Breach of Fiduciary Duty: A Director is not
personally liable to the Corporation or its shareholders for monetary damages
for a breach of his fiduciary duty. This provision does not eliminate or limit
the liability of a director for any of the following:
(a) A breach of the Director's duty of loyalty to the Corporation or
its shareholders.
(b) Acts or omissions not in good faith or that involve intentional
misconduct or knowing violation of law.
(c) A violation of the Indiana Business Corporation Law, as amended.
(d) A transaction from which the director derived an improper personal
benefit.
(e) An act or emission occurring prior to the date when the provision
becomes effective.
(2) Good Faith, Care and Skill of Directors and Officers; Reliance Upon
Opinion of Counsel and Experts; Time for Commencement of Action
(a) A director or officer she discharge his or her duties as a
director or officer including his or her duties as a member of a committee
in the following manner:
(i) In good faith.
(ii) With the care an ordinarily prudent person in a like
position would exercise under similar circumstances.
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(iii) In a manner he or she reasonably believes to be in the best
interests of the Corporation.
(b) In discharging his or her duties, a director or officer is
entitled to rely on information, opinions, reports, or statements,
including financial statements and other financial data, if prepared or
presented by any of the following:
(i) One or more directors, officers, or employees of the
Corporation, or of a business organization under joint control or
common control whom the director or officer reasonably believes to be
reliable and competent in the matters presented.
(ii) Legal counsel public accountants, engineers, or other
persons as to matters the director or officer reasonably believes are
within the person's professional or expert competence.
(iii) A committee of the board of which he or she is not a member
if the director or officer reasonably believes the committee merits
confidence.
(c) A director or officer is not entitled to rely on the information
set forth in subsection (2) if he or she has knowledge concerning the
matter in question that makes reliance otherwise permitted by subsection
(2) unwarranted.
(d) An action against a director or officer for failure to perform the
duties imposed by this section (2) shall be commenced within 3 years after
the cause of action has accrued, or within 2 years after the time when the
cause of action is discovered or should reasonably have been discovered, by
the complainant whichever occurs first.
(3) Transactions by Interested Officers and Directors Allowed to the Extent
not Precluded by the Indiana Business Corporation Law; Conditions:
(a) A transaction in which a director or officer is determined to have
an interest shall not, because of the interest, be enjoined, set aside, or
give rise to an award of damages or other sanctions, in a proceeding by a
shareholder or by or in the right of the Corporation, if the person
interested in the transaction establishes any of the following:
(i) The transaction was fair to the Corporation at the time
entered into.
(ii) The material facts of the transaction and the director's or
officer's interest were disclosed or known to the board, a committee
of the board, or the independent director or directors, and the board,
committee, or independent director or directors authorized, approved
or ratified the transaction.
(iii) The material facts concerning the transaction and the
director's or officer's interest with respect thereto, if any, were
disclosed or known to the shareholders entitled
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to vote and they authorized, approved or ratified the transaction.
(b) For purposes of subsection (3)(a)(ii), a transaction is authorized
approved, or ratified if it received the affirmative vote of the majority
of the directors on the board or the committee who had no interest in the
transaction, though less than a quorum, or all independent directors who
had no interest in the transaction. The presence of, or a vote cast by, a
director with an interest in the transaction does not affect the validity
of the action taken under subsection (3)(b).
(c) For purposes of subsection (3)(a)(iii), a transaction is
authorized, approved, or ratified if it received the majority of votes cast
by the holders of shares who did not have an interest in the transaction. A
majority of the shares held by shareholders who did not have an interest in
the transaction constitutes a quorum for the purpose of taking action under
subsection (3)(c).
(d) The Board of Directors by affirmative vote of a majority of
directors in office and irrespective of any personal interest of any of
them, may establish reasonable compensation of directors for services to
the Corporation as directors or officers, but approval of the shareholders
is required if the Articles of Incorporation, By-Laws, or other provisions
of the Indiana Business Corporation Law, as amended so provide.
Transactions pertaining to the compensation of directors for services to
the Corporation as directors or officers shall not be enjoined set aside,
or give rise to an award of damages or other sanctions in a proceeding by a
shareholder or by or in the right of the Corporation unless it is shown
that the compensation was unreasonable at the time established.
(4) Loans or Guarantees for Officer or Employees Allowed to the Extent not
Precluded by the Indiana Business Corporation law; Interest; Security; Common
law or Statutory Powers: The Corporation may lend money to, or guarantee an
obligation or otherwise assist an officer or employee of the Corporation or of
its subsidiary, including an officer or employee who is a director of the
Corporation or its subsidiary, when, in the judgment of the Board of Directors,
the loan, guaranty, or assistance may reasonably be expected to benefit the
Corporation, or is pursuant to a plan authorizing loans, guarantees, or
assistance, which plan the Board has reasonably determined will benefit the
Corporation, or is pursuant to a plan authorizing loans, guarantees, or
assistance, which plan the Board has reasonably determined will benefit the
Corporation. The loan, guaranty, or assistance may be with or without interest,
and may be unsecured, or secured in a manner as the Board of Directors approved,
including without limitation, a pledge of shares of stock of the Corporation.
Nothing in this section shall deny, limit, or restrict the powers of guaranty or
warranty of the Corporation at common law or under any statute.
(5) Indemnification for Expenses, Judgments, Fines and Settlements; Pleas
for Nolo Contendere, Effect: The Corporation shall indemnify any person who was
or is a party or is threatened to be made a party to any threatened, pending or
completed action, suit, or proceeding, whether civil, criminal, administrative
or investigative and whether formal or
22
<PAGE>
informal other than an action by or in the right of the Corporation, by reason
of the fact that he or she is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, partner, trustee, employee or agent of another foreign or
domestic corporation, partnership, joint venture, trust or other enterprise,
whether for profit or not, against expenses including attorneys' fees,
judgments, penalties, fines and amounts paid in settlement actually and
reasonably incurred by him or her in connection with such action, suit or
proceeding if the person acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
Corporation or its shareholders, and with respect to any criminal action or
proceeding, if the person had no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit, or proceeding by judgment, order,
settlement, conviction, or upon plea of nolo contenders or its equivalent, does
not, of itself, create a presumption that the person did not act in good faith
and in a manner which he or she reasonably believed to be in or not opposed to
the best interests of the Corporation or its shareholders, or, with respect to
any criminal action or proceeding, that he or she had reasonable cause to
believe that his or her conduct was unlawful.
(6) Indemnification for Expense Incurred for Defense or Settlement of
Litigation; Negligence or Misconduct, Extent of Indemnification: The Corporation
shall indemnify a person who was or is a party or is threatened to be made a
party to a threatened, pending, or completed action or suit by or in the right
of the Corporation to procure a judgment in its favor by reason of the fact that
he or she is or was a director, officer, employee, or agent of the Corporation,
or is or was serving at the request of the Corporation as a director, officer,
partner, trustee, employee, or agent of another foreign or domestic corporation,
partnership, joint venture, trust, or other enterprises whether for profit or
not, against expenses, including attorneys' fees and amounts paid in settlement
actually and reasonably incurred by the person in connection with the action or
suit if the person acted in good faith and in a manner the person reasonably
believed to be in or not opposed to the best interests of the Corporation or its
shareholders. Indemnification shall not be made for a claim, issue, or matter in
which the person has been found liable to the Corporation except to the extent
permissible under the Indiana Business Corporation Law.
(7) Determining Reasonableness of Settlement and Expenses:
(a) An indemnification hereunder, unless ordered by the court shall be
made by the Corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer, employee, or
agent is proper in the circumstances because he or she has met the
applicable standard of conduct set forth hereunder and upon an evaluation
of the reasonableness of expenses and amounts paid in settlement. This
determination and evaluation shall be made in any of the following ways:
(i) By a majority of a quorum of the Board of Directors who are
not parties or threatened to be made parties to the action, suit or
proceeding.
(ii) If a quorum cannot be obtained under subdivision (a), by
majority
23
<PAGE>
vote of a committee duly designated by the Board and consisting solely
of 2 or more directors not at the time parties or threatened to be
made parties to the action, suit, or proceeding.
(iii) By independent legal counsel in a written opinion, which
counsel shall be selected in 1 of the following ways:
(a) By the Board of Directors or its committee in the manner
prescribed in subdivision (i) or (ii).
(b) If a quorum of the Board of Directors cannot be obtained
under subdivision (i) and a commitment cannot be designated under
subdivision (ii), by the Board of Directors.
(iv) By all independent directors who are not parties or
threatened to be made parties to the action, suit, or proceeding.
(v) By the shareholders but shares held by directors, officers,
employees, or agents who are parties or threatened to be made parties
to the action, suit, or proceeding may not be voted.
(b) In the designation of a committee under subdivision
(7)(b) or in the selection of independent legal counsel under
subsection (7)(c)(ii), all directors may participate.
(c) If a person is entitled to indemnification hereunder for
a portion of expenses, including reasonable attorneys' fees,
judgments, penalties, fines, and amounts paid in settlement, but
not for the total amount, the Corporation shall indemnify the
person for the portion of the expenses, judgments, penalties,
fines, or amounts paid in settlement for which the person is
entitled to be indemnified.
(8) Reimbursement of Reasonable Expenses Prior to Final Disposition;
Conditions:
(a) The Corporation may pay or reimburse the reasonable expenses
incurred by a director, officer, employee, or agent who is a party or
threatened to be made a party to an action, suit, or proceeding in advance
of final disposition of the proceeding if all of the following apply:
(i) The person furnishes the Corporation a written affirmation of
his or her good faith belief that he or she has met the applicable
standard of conduct set forth herunder.
(ii) The person furnishes the Corporation a written undertaking,
executed personally or on his or her behalf, to repay the advance if
it is ultimately determined that he or she did not meet the standard
of conduct.
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(iii) A determination is made that the facts then known to those
making the determination would not preclude indemnification.
(b) The undertaking required by subsection (8)(b) must be an unlimited
general obligation of the person but need not be secured.
(9) Application to Court for Indemnification: A director, officer,
employee, or agent of the Corporation who is a party or threatened to be amid
find proceeding may apply for indemnification to the court conducting the
proceeding or to another court of competent jurisdiction. On receipt of an
application the court after giving any notice it considers necessary may order
indemnification if it determines that the person is fairly and reasonably
entitled to indemnification in view of all the relevant circumstances, whether
or not he or she met the applicable standard of conduct set forth herein or was
adjudged liable, but if he or she is adjudged liable, his or her indemnification
is limited to reasonable expenses incurred.
(10) Provision for Indemnification; Extent, Extent; Rights or Other
Persons; Continuation of Rights:
(a) The indemnification or advancement of expenses provided hereunder
is not exclusive of other rights to which a person seeking indemnification
or advancement of expenses may be entitled under the Articles of
Incorporation or the By-Laws of the Corporation or a contractual agreement.
The total amount of expenses advanced or indemnified from all sources
combined shall not exceed the amount of actual expenses incurred by the
person seeking indemnification or advancement of expenses.
(b) The indemnification provided for hereunder continues as to a
person who ceases to be a director, officer, employee or agent and shall
inure to the benefit of the heirs, executors, and administrators of the
person.
(11) Insurance Against Liability: The Corporation shall have power to
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee, or agent of the Corporation, or is or was serving
at the request of the Corporation as a director, officer, partner, trustee,
employee, or agent of another corporation, partnership, joint venture, trust, or
other enterprise against any liability asserted against him or her and incurred
by him or her in any such capacity or arising out of his or her status as such,
whether or not the Corporation would have power to indemnify him or her against
liability hereunder.
(12) Corporation; Construction of References To: For all purposes
hereunder, the term "Corporation" includes all constituent corporations absorbed
in a consolidation or merger and the resulting or surviving corporation, so that
a person who is or was a director, officer, partner, trustee, employee, or agent
of such constituent corporation or is or was serving at the request of the
constituent corporation as. a director, officer, employee or agent of another
foreign or domestic corporation, partnership, joint venture, trust, or other
enterprise whether for profit or not shall stand in the same position under the
provisions of this section with respect to the
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resulting or surviving corporation as the person would if he or she had served
the resulting or surviving corporation in the same capacity.
(13) Definitions:
For all purposes hereunder:
(a) "Fines" shall include any excise taxes assessed on a person with
respect to an employee benefit plan.
(b) "Other enterprises" shall include employee benefit plans.
(c) "Serving at the request of the Corporation" shall include any
service as a director, officer, employee, or agent of the Corporation which
imposes duties on, or involves services by, the director, officer,
employee, or agent with respect to an employee benefit plan, its
participants or its beneficiaries.
(d) A person who acted in good faith and in a manner he or she
reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be considered to have acted
in a manner "not opposed to the best interests of the Cor poration or its
shareholders or members."
(14) General Indemnity Provisions: The Corporation shall indemnify a person
who was or is a party or is threatened to be made a party to a threatened,
pending, or completed action, suit, or proceeding, whether civil, criminal,
administrative, or investigative and whether formal or informal, other than an
action by or in the right of the Corporation, by reason of the fact that he or
she is or was a director, officer, employee, or agent of the Corporation, or is
or was serving at the request of the Corporation as a director, officer,
partner, trustee, employee, or agent of another foreign or domestic corporation,
partnership, joint venture, trust, or other enterprise, whether for profit or
not, against expenses, including attorneys' fees, judgments, penalties, fines,
and amounts paid in settlement actually and reasonably incurred by him or her in
connection with the action, suit, or proceeding, if the person acted in good
faith and in a manner he or she reasonably believed to be in or not opposed to
the best interests of the Corporation or its shareholders, and with respect to a
criminal action or proceeding, if the person had no reasonable cause to believe
his or her conduct was unlawful. The termination of an action, suit, or
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, does not, of itself, create a presumption that the
person did not act in good faith and in a manner which he or she reasonably
believed to be in or not opposed to the best interests of the Corporation or its
shareholders, and, with respect to a criminal action or proceeding, had
reasonable cause to believe that his or her conduct was unlawful.
The Corporation shall indemnify a person who was or is a party to or is
threatened to be made a party to a threatened, pending, or completed action or
suit by or in the right of the Corporation to procure a judgment in its favor by
reason of the fact that he or she is or was a
26
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director, officer, employee, or agent of the Corporation, or is or was serving
at the request of the Corporation as a director, officer, partner, trustee,
employee, or agent of another foreign or domestic corporation, partnership,
joint venture, trust, or other enterprise whether for profit or not, against
expenses, including actual and reasonable attorneys' fees, and amounts paid in
settlement incurred by the person in connection with the action or suit, if the
person acted in good faith and in a manner the person reasonably believed to be
in or not opposed to be the best interests of the Corporation or its
shareholders. However, indemnification shall not be made for a claim, issue, or
matter in which the person has been found liable to the Corporation unless and
only to the went that the court in which the action or suit was brought has
determined upon application that, despite the adjudication of liability but in
view of all circumstances of the case, the person is fairly and reasonably
entitled to indemnification for the purposes which the court considers proper.
To the extent that a director, officer, employee, or agent of the
Corporation has been successful on the merits or otherwise in defense of an
action, suit, or proceeding referred to herein, as amended, or in defense of a
claim, issue, or matter in the action, suit or proceeding, he or she shall be
indemnified against expenses, including actual and reasonable attorneys' fees,
incurred by him or her in connection with the action, suit, or proceeding and an
action, suit or proceeding brought to enforce the mandatory indemnification
provided in this subsection.
An indemnification hereunder, unless ordered by a court shall be made by
the Corporation only as authorized in the specific case upon a determination
that indemnification of the director, officer, employee, or agent is proper in
the circumstances because he or she has met the applicable standard of conduct
set forth hereunder. This determination shall be made in any of the following
ways:
(a) By a majority vote of a quorum of the Board of Directors
consisting of directors who were not parties to the action, suit, or
proceeding.
(b) If the quorum described in subdivision (a) is not obtainable, then
by a majority vote of a committee of directors who are not parties to the
action. The committee shall consist of not less than 2 disinterested
directors.
(c) By independent legal counsel in a written opinion.
(d) By the shareholders.
If a person is entitled to indemnification hereunder for a portion of or
all expenses including attorneys' fees, judgments, penalties, fines and amounts
paid in settlement, but not for the total amount thereof the Corporation may
indemnify the person for the portion of the expenses, judgments, penalties,
fines, or amounts paid in settlement for which the person is entitled to be
indemnified.
Expenses incurred defending a civil or criminal action, suit, or proceeding
described hereunder may be paid by the Corporation in advance of the final
disposition of the action, suit, or
27
<PAGE>
proceeding upon receipt of an undertaking by or on behalf of the director,
officer, employee, or agent to repay the expenses if it is ultimately determined
that the pawn is not entitled to be indemnified by the Corporation. The
undertaking shall be by unlimited general obligation of the person on whose
behalf advances are made, but need not be secured.
The indemnification or advancement of expenses provided hereunder are not
exclusive of other rights to which a person seeking indemnification or
advancement of expenses may be entitled under these Articles of Incorporation or
the By-Laws of this Corporation, or a contractual agreement However, the total
amount of expenses advanced or indemnified from all sources combined shall not
exceed the amount of actual expenses incurred by the person seeking
indemnification or advancement of expenses.
The indemnification provided for hereunder, continues as to a person who
ceases to be a director, officer, employee, or agent and shall inure to the
benefit of the heirs, executors, and administrators of the person.
For purposes of these on provisions, the "Corporation" includes. all
constituent corporations absorbed in a consolidation or merger and the resulting
or moving corporation, so that a person who is or was a director, officer,
employee, or agent of the constituent corporation or is or was serving at the
request of the constituent corporation as a director, officer, partner, trustee,
employee, or agent of another foreign or domestic corporation, partnerships
joint venture, trust, or other enterprise whether for profit or not shall stand
in the same position hereunder with respect to the resulting or surviving
corporation as the person would he or she had served the resulting or surviving
corporation in the same capacity.
For the purposes of these indemnification provisions "other enterprises"
shall include employee benefit plans; "fines" shall include any excise taxes
assessed on a person with respect to an employee benefit plan; and "serving at
the request of the Corporation" shall include any service as a director,
officer, employee, or agent of the Corporation which imposes duties on, or
involves services by, the director, officer, employee, or agent with respect to
an employee benefit plan, its participants or beneficiaries and a person who
acted in good faith and in a manner he or she reasonably believed to be in the
interest of the participants and beneficiaries of an employee benefit plan shall
hereunder be considered to have acted in a manner "not opposed to the best
interests of the corporation or its shareholders."
ARTICLE VIII
Amendment
The Corporation may amend its Articles of Incorporation at any time to add
delete or change a: provision not required by the Indiana Business Corporation
Law to be included therein. The requisite bote for such activities is specified
by the applicable provisions of the Indiana Business Corporation Law then in
effect.
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IN WITNESS WHEREOF, the undersigned the incorporator(s) of the above-named
Corporation, has (have) signed these Articles of Incorporation this 2nd day of
January, 1997.
/s/ Frederick H. Hoops, III
----------------------------------------------
Frederick H. Hoops, III, Incorporator
29
EXHIBIT 3.02
BY-LAWS
OF
INMOLD, INC.
As Adopted on April 10, 1997
As Amended on November 12, 1998
<PAGE>
BY-LAWS
OF
INMOLD, INC.
(a Indiana corporation)*
ARTICLE I
Incorporators and Shareholders
Section 1. ANNUAL MEETING. The annual meeting of the shareholders for the
election of directors and for the transaction of such other business as may
property come before the meeting shall be held (unless such action is taken by
written consent of the shareholders in lieu of a particular annual meeting) on
the regularly scheduled meeting day which shall be the Last Tuesday in October
of each year (or if that day be a legal holiday at the place where such meeting
is to be held, then on the next succeeding business day) at the registered
office of the Corporation at 901 Wilshire Drive, Suite 360, Troy, Michigan
48084, at 10:30 A.M. local time or at such other time on said day at such place,
either within or without the State of Indiana, as the Board of Directors of the
Corporation (hereinafter called the Board) may designate in the notice thereof
Failure to hold an annual meeting or delay in holding an annual meeting is
governed by the Indiana Business Corporation Law. (Amended November 12, 1998)
Section 2. SPECIAL MEETINGS. Special meetings of the shareholders for any
purpose or purposes, unless otherwise prescribed by statute or by the Articles
of Incorporation of the Corporation, may be called by the chairman of the Board
or by the President, and shall be called by the President or Secretary upon the
order of the Board, or at the request in writing (stating the purpose or
purposes of the proposed meeting) of shareholders owning a majority in amount of
9 of the issued and outstanding capital stock of the Corporation and entitled to
vote at such meeting. The time and place, either within or without the State of
Indiana, shall be fixed by the Board unless it shall refuse to so act, in which
case such matters shall be fixed by the Chairman of the Board or President if
the meeting is called by such persons or by the requesting shareholders, if the
meeting is requested by them.
Section 3. NOTICE OF MEETINGS. Except as otherwise required by law, the
Articles of Incorporation of the Corporation or stock exchange rules, written
notice of each annual or special meeting of the shareholders shall be given not
less than ten nor more than 60 days before the date of the meeting to each
shareholder of record entitled to vote at such meeting
____________
- - Section citations refer to relevant sections of the Indiana Business
Corporation Law, as amended, and successor legislation. The Sections may not be
the only sections bearing on particular situations.
<PAGE>
which shall be transmitted to him in accordance with Article VII, Section 8.
Except as otherwise expressly required by law, no publication of any notice of a
meeting of the shareholders shall be required. Every such notice shall state the
place, date and hour of the meeting, and the purpose or purposes for which it
was called. Notice of any meeting need not be given to any shareholder who
attends such meeting in person or by proxy, except where a shareholder attends a
meeting for the express purpose of objecting at the beginning of the meeting, to
the transaction of any business because the meeting is not lawfully called or
convened. When a meeting is adjourned to another time or place, notice need not
be given of the adjourned meeting if the time and place thereof are announced at
the meeting at which the adjournment is taken, and at the adjourned meeting only
such business is transacted as might have been transacted at the original
meeting. If said adjournment is for more than 30 days, or if after said
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each shareholder of record on the new
record date entitled to vote at the meeting. Article VII, Section 7 allows for
waiver of notice otherwise required under this Section.
If action is to be taken in a meeting or by written consent and holders of
securities of the Corporation which are registered under the Securities Exchange
Act of 1934 or any successor federal law (the "Act") are entitled to vote upon
such action and no proxies are to be solicited under the Act, then notice of the
action and an information statement under Regulation 14C under the act shall be
sent or given to such holders at least 20 days prior to the meeting date, if
any, or at least 20 days prior to the earliest date on which the corporate
action may be taken.
Prompt notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given to shareholders who have not
consented in writing.
Section 4. QUORUM. Unless a greater or a lesser quorum is provided in the
Articles of Incorporation of the Corporation; the Indiana Business Corporation
Law, as amended, or elsewhere in these By-Laws, and subject to any minimum vote
requirements under any other Indiana law, at each annual or special meeting of
the shareholders, if shareholders holding not less than a majority of the voting
power of the shares of capital stock of the Corporation issued, outstanding and
entitled to be voted thereat in any class or other aggregation of classes voting
in the aggregate and not by class are present in person or by proxy, they shall
constitute a quorum for the transaction of any form of business, including
without limitation the election of Directors. In the absence of a quorum at any
such meeting or any adjournment or adjournments thereof, no business may be
transacted and a majority in voting interest of those shareholders present in
person or by proxy and entitled to vote thereat or any office entitled to
preside at such meeting may adjourn such meeting from time to time until
shareholders holding the amount of stock requisite for a quorum shall be present
or represented. At any such adjourned meeting at which a quorum may be present
any business may be transacted which might have been transacted at the meeting
as originally called. The shareholders present in person or by proxy at such
meeting may continue to do business until adjournment, notwithstanding the
withdrawal or enough shareholders to leave less than a quorum. See Article VII,
Section 7.
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<PAGE>
If a class or a series of securities is required to vote on a subject, this
section shall govern concerning whether or not a quorum for purposes of the
transaction of business by the class or quorum is present.
Section 5. ADJOURNMENTS. Any shareholders' meeting, annual or special, may
be adjourned from time to time, regardless of whether a quorum was present, by a
vote of a majority of the shares present thereat in person or by proxy. See
Article 1, Section 3.
Section 6. ORGANIZATION. At each meeting of shareholders, one of the
following shall act as chairman of the meeting and preside thereat, in the
following order of precedence:
(a) The Chairman of the Board;
(b) the Vice Chairman;
(c) the President;
(d) any Executive Vice President;
(e) any Vice President, designated in the following order of
precedence by the Board; the Executive Committee or the President
to act as chairman of said meeting and to preside thereat; or
(f) a shareholder of record of the corporation who shall be chosen to
be chairman of such meeting by a majority in voting interest of
the shareholders present in person or by proxy and entitled to
vote thereat.
The Secretary, or, if he shall be absent from such meeting, the person (who
shall be an Assistant Secretary, if an Assistant Secretary shall be present
thereat) whom the chairman of such meeting shall appoint, shall act as secretary
of such meeting and keep the minutes thereof.
Section 7. PROCEDURE. The shareholders shall keep regular minutes of their
proceedings. So far as practicable, the order of business and rules of procedure
at each meeting of the shareholders shall be as follows, but the same may be
limited, modified, expanded and/or changed by the chairman or by vote of a
majority in voting interest of those shareholders present in person or by proxy
at such meeting and entitled to vote thereat: (a) Proof of due notice of
meeting; (b) call or roll-examination of proxies; (c) reading and disposal of
any unapproved minutes; (d) reports of officers and committees; (e) completion
of unfinished business; (f) consideration of new business, including where
applicable, election of directors; and (g) adjournment of meeting.
Section 8. TAKING ACTION WITHOUT MEETING; CONSENT; NUMBER OF SHAREHOLDERS;
ACTION REQUIRING FILING OF CERTIFICATES; PROCEDURE; CONSENT BY ALL SHAREHOLDERS
ENTITLED TO VOTE. Any action required or permitted by the Indiana Business
Corporation Law to be taken at an annual or special meeting of shareholders may
be taken without a meeting, without prior notice, and without a vote, if a
consent
3
<PAGE>
in writing, setting forth the action so taken, is signed by the holders of
outstanding shares holding at least a majority of the voting power on the action
proposed to be taken at a meeting or having not less than the minimum number of
votes that would be necessary to authorize or take the action at a meeting at
which all shares entitled to vote on the action were present and voted. The
written consents shall bear the date of signature of each shareholder who signs
the consent. No written consents shall be effective to take the corporate action
referred to unless, within sixty (60) days after the record date for determining
shareholders entitled to express consent to or to dissent from a proposal
without a meeting, written consents signed by a sufficient number of
shareholders to take the action are delivered to the Corporation. Delivery shall
be to the Corporation's registered office, its principal place of business, or
an officer or agent of the Corporation having custody of the minutes of the
proceedings of its shareholders. Delivery made to the Corporation's registered
office shall be by hand or by certified or registered mail, return receipt
requested. Prompt notice of the taking of the Corporate action without a meeting
by less than unanimous written consent shall be given to shareholders who have
not consented in writing. If the action consented to would have required filing
of a certificate under any other section of the Indiana Business Corporation
Law, if the action had been voted upon by shareholders at a meeting of the
shareholders, the certificate filed under such other section shall state, in
lieu of any statement required by the section concerning a vote of shareholders,
that both written consent and written notice have been given as provided in this
section.
Any action required or permitted by the Indiana Business Corporation Law to
be taken at an annual or special meeting of shareholders may be taken without a
meeting, without prior notice, and without a vote, if before or after the action
A the shareholders entitled to vote consent in writing. If the action consented
to would have required filing of a certificate under any other section of the
Indiana Business Corporation Law if the action had been voted upon by
shareholders at the meeting, the certificate filed under a different section
shall state, in lieu of any statement required by the section concerning a vote
of shareholders, that written consent has been given as provided by section 407
of the Indiana Business Corporation Law.
Section 9. VOTING, PROXIES AND ACTION BY WRITTEN CONSENT. A shareholder
shall at each meeting of the shareholders be entitled to the votes attributed to
his shares under the Articles of Incorporation of the Corporation for shares of
capital stock of the Corporation which have voting power on the matter in
question and which were held by him and registered in his name on the books of
the Corporation on the date fixed pursuant to the provisions of Section 5 of
Article V of these By-Laws as the record date for the determination of
shareholders who shall be entitled to receive notice of, and to vote at, such
meeting. Particular voting rights are dealt with under the section(s) of the
Indiana Business Corporation Law cited at the end of this paragraph. The
Corporation shall not vote shares of its own stock belonging to the Corporation
directly or indirectly. Any vote of the capital stock of the Corporation may be
given either orally or in writing at any meeting of the shareholders by the
shareholder entitled thereto in person or by his proxy appointed by an
instrument in writing signed by such shareholder or his authorized agent or
representative and bearing a date not more than three years prior to the date of
meeting in question (unless otherwise provided in the proxy) which shall be
delivered to the Secretary or an Assistant Secretary or to the Secretary of the
meeting. Attendance at any meeting by a shareholder who may theretofore have
4
<PAGE>
given a proxy (not given more than six months prior to its exercise, unless it
is coupled with an interest or unless the duration is specified therein, which
may not be more than seven years) shall not have the effect of revoking the same
unless he shall in writing so notify the Secretary of the meeting prior to the
voting of the proxy. Except as otherwise provided under the then existing law of
the State of Indiana, in these By-Laws or in the Articles of Incorporation of
this Corporation, at all meetings of shareholders all elections and questions
shall be decided by the vote of a majority in voting interest of the
shareholders present in person or by proxy and entitled to vote thereon. The
vote at any meeting of the shareholders on any question need not be by ballot,
unless so directed by the chairman of the meeting or by any shareholder. On a
vote by ballot, each ballot shall be signed by the shareholder voting, or by his
proxy, if there be such proxy. Copies of proxies that are entirely reproduced
may be exercised in lieu of the original. Proxies may be transmitted by
telegraph, cablegram or other electronics transmission so long as they set forth
or are submitted with sufficient information to establish that they were
authorized by the stockholder(s).
A shareholder entitled to vote at a meeting of shareholders or to express
consent or dissent without a meeting may authorize other persons to act for him
by proxy.
The authority of the holder of a proxy to act is not revoked by the
incompetence or death of the shareholder who executed the proxy unless, before
the authority is exercised, written notice of an adjudication of the
incompetence or death is received by the corporate officer responsible for
maintaining the list of shareholders.
A proxy is revocable at the pleasure of the shareholder executing it,
except where it is entitled "irrevocable proxy" and it states that it is
irrevocable, in which case it is irrevocable if and when it is held by any of
the following or a nominee of any of the following:
(a) A pledgee of or other holder of a security interest in the shares.
(b) A person who has purchased or agreed to purchase the shares.
(c) A creditor of the Corporation who extends or continues credit to
the Corporation in consideration of the proxy.
(d) A person who has contracted to perform services as a director,
officer or employee of the Corporation, if a proxy is required by
the contract of employment.
(e) A person designated by or under an agreement enforceable under the
Indiana Business Corporation Law.
(f) A holder of any other proxy coupled with an interest.
A proxy becomes revocable notwithstanding a provision making it
irrevocable, after the pledge is redeemed or the security interest is
terminated, or the debt of the Corporation is paid, or the period of employment
provided for in the contract of employment has terminated, or the agreement
under the Indiana Business Corporation Law has terminated.
A proxy is revocable, notwithstanding a provision making it irrevocable, by
a purchaser of shares who did not know of existence of the provision unless the
existence of the proxy and its irrevocability are noted conspicuously on the
face or back of the certificate representing the shares.
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Shareholders may take action required or permitted by the Indiana Business
Corporation Law and its successor legislation at an annual or special meeting of
shareholders or otherwise, which they have a right or are permitted to vote upon
by written consent, before or after the action, without prior notice and without
a vote, if such consent is given by the holders of all the outstanding shares of
the class or classes of capital stock with such voting rights or privileges, or
by the holders of such shares having not less than the minimum number of votes
that would be necessary to authorize or take the action at a meeting at which
all such shares were present and voted, provided that such consent shall be
filed with the minutes of proceedings of the shareholders, within sixty (60)
days. (Article VII(6) of the Articles of Incorporation of the Corporation.) See
Article 1, Section 3 regarding notice sometimes required in conjunction with
action by consent.
Section 10. LIST OF SHAREHOLDERS. The officer or agent having charge of the
stock transfer books for shares of the Corporation shall make and certify a
complete list of the shareholders entitled to vote at a shareholders' meeting or
any adjournment thereof. The list shall:
(a) Be arranged alphabetically within each class and series, with the
address of, and the number of shares held by each shareholder;
(b) be produced at the time and place of the meeting;
(c) be subject to inspection by any shareholder during the whole time
of the meeting; and
(d) be prima facie evidence as to who are the shareholders entitled to
examine the list or to vote at the meeting.
If the requirements of this Section have not been complied with, on demand
of a shareholder in person or by proxy, who in good faith challenges the
existence of sufficient votes to carry any action at the meeting, the meeting
shall be adjourned until the requirements are complied with. Failure to comply
with the requirements of this Section does not affect the validity of an action
taken at the meeting before the making of such a demand.
Section 11. INSPECTORS OR ELECTION. The Board, in advance of a
shareholders' meeting may appoint one or more inspectors to act at the meeting
or any adjournment thereof. If inspectors are not so appointed, the person
presiding at a shareholders' meeting may, and on request of a shareholder
entitled to vote thereat shall, appoint one or more inspectors. In case a person
appointed fails to appear or act, the vacancy may be filled by appointment made
by the Board in advance of the meeting or at the meeting by the person presiding
thereat. The requirement of appointing inspectors is waived unless compliance
therewith is requested by a shareholder present in person or by proxy and
entitled to vote at the meeting.
The inspectors shall determine the number of shares outstanding and the
voting power of each, the shares represented at the meeting, the existence of a
quorum, the validity and effect of proxies, and shall receive votes, ballots or
consents, hear and determine challenges and questions arising in connection with
the right to vote, count and tabulate votes, ballots or consents, determine the
result, and do such acts as are proper to conduct the election or vote with
fairness to all shareholders. On request of the person presiding at the meeting
or a shareholder entitled to vote thereat, the inspectors shall make and execute
a written report to the person presiding at the meeting
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of any of the facts found by them and matters determined by them. The report is
prima facie evidence of the facts and of the vote as certified by the
inspectors.
Section 12. MEETING OF INCORPORATORS. The first meeting of this Corporation
shall be called by a notice signed by any incorporator designating the time and
place of the meeting, which place may be either within or without the State of
Indiana. The notice shall state that the purpose of the meeting is to select a
board of directors and may state that an additional purpose of the meeting is to
adopt by-laws. Such notice may be given in the same manner as that for special
meetings of shareholders in Article 1, Section 3. Action by unanimous written
consent filed with the records of the Corporation may be taken by incorporators
in lieu of such first meeting. Article VII, Section 7, governs waiver of such
notice.
Section 13. PREINCORPORATION CONTRACTS. No contract made by the
incorporators for or on behalf of the Corporation which was formed preliminary
to the filing of the Articles of Incorporation shall be deemed to be invalid or
ineffectual because it was made prior to such filing, and all property held by
such incorporators for the benefit of the Corporation shall be deemed to be the
property of the Corporation. See Article V, Section 6.
Section 14. VOTING BY CORPORATIONS, PLEDGEES. (1) Shares standing in the
name of another domestic or foreign corporation, whether or not the corporation
is subject to the Indiana Business Corporation Law, may be voted by an officer
or agent, or by proxy appointed by an officer or agent or by some other person,
who by action of its board or pursuant to its by-laws, shall be appointed to
vote such shares. (2) A shareholder whose shares are pledged is entitled to vote
the shares until they have transferred into the name of the pledgee, or a
nominee of the pledgee.
Section 15. VOTING BY FIDUCIARIES. (1) Shares held by a person in a
representative or fiduciary capacity may be voted by him without a transfer of
the shares into his name.
(2) Shares held jointly by fiduciaries, where the instrument or order
appointing the fiduciaries does not otherwise direct, shall be voted as follows:
(a) If only one fiduciary votes, his act binds all;
(b) if more than one fiduciary votes the shares shall be voted as the
majority of the fiduciaries determines; or
(c) if the fiduciaries are equally divided as to how the shares shall
be voted, a court having jurisdiction, in an action brought by any
of the fiduciaries or by any beneficiary, may appoint an
additional person to act with the fiduciaries in such matter, and
the stock shall be voted by the majority of such fiduciaries and
such additional person.
Section 16. VOTING BY JOINT TENANTS; TENANTS IN COMMON. Shares held by two
or more persons as joint tenants or as tenants in common may be voted at a
meeting of shareholders by any of such persons unless another joint tenant or
tenant in common seeks to vote any of such shares in person or by proxy. In the
latter event, the written agreement, if any, which
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governs the manner in which the shares shall be voted, controls if presented at
the meeting. If no such agreement is presented at the meeting, the majority in
interest of the joint tenants or tenants in common present shall control the
manner of voting. If there is no such majority, the shares, for the purpose of
voting, shall be divided among such joint tenants or tenants in common in
accordance with their interest in the shares.
Section 17. BENEFICIAL OWNERS. The Corporation may establish a procedure by
which the beneficial owner of shares that are registered in the name of a
nominee is recognized by the Corporation as the shareholder. The procedure
established may determine the extent of this recognition.
The procedure may set forth any of the following:
(a) The types of nominees to which it applies.
(b) The rights or privileges that the Corporation recognizes in a
beneficial owner.
(c) The manner in which the procedure is selected by the nominee.
(d) The information that must be provided when the procedure is
selected.
(e) The period for which selection of the procedure is effective.
(f) Other aspects of the rights and duties created.
Section 18. VOTING OF SHARES OWNED BY RELATED CORPORATION PROHIBITED.
Absent an order of a court of competent jurisdictions based upon a determination
that special circumstances exist and the best interests of the Corporation would
be served, the shares of the Corporation shall not be voted on any matter or
considered to be outstanding shares if they are owned, directly or indirectly,
by a second corporation, domestic or foreign, and the Corporation owns, directly
or indirectly, a majority of the shares entitled to vote for Directors of the
second corporation.
Section 19. REDEEMABLE SHARES; VOTING. After written notice of redemption
of redeemable shares has been mailed to the holders thereof and a sum sufficient
to redeem the shares has been deposited with a bank or trust company with
irrevocable instruction and authority to pay the redemption price to the holders
thereof upon surrender of certificates therefor, the shares shall not be voted
on any matter nor deemed to outstanding shares.
Section 20. AGREEMENTS AS TO VOTING RIGHTS. An agreement between two (2) or
more shareholders, if in writing and signed by the parties may provide that in
exercising voting rights, the shares held by them shall be voted as provided in
the agreement, or as they may agree, or as determined in accordance with a
procedure agreed upon by them. A voting agreement executed pursuant to this
Section, whether or not proxies are executed pursuant to the Agreement shall be
specifically enforceable.
Section 21. VOTING TRUSTS; DURATION; PROCEDURE; ISSUANCE OF CERTIFICATES. A
shareholder may confer upon a trustee the right to vote or otherwise represent
his shares for not to exceed ten (10) years, by entering into a written voting
Trust Agreement setting forth the terms and conditions of the voting trust by
filing an executed counterpart of the Agreement
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at the registered office of the Corporation, and by transferring his shares to
the trustee for purposes of the Agreement. After filing of the Agreement,
certificates for shares so transferred shall be surrendered and canceled and new
certificates therefor issued to the trustee stating that they are issued under
the agreement. In the entry of such ownership in the records of the Corporation
that fact shall also be noted, and the trustees may vote the transferred shares
during the term of the agreement. The filed copy of the voting Trust Agreement
is subject to inspection at any reasonable time by a shareholder or a holder of
a beneficial interest in the voting trust, in person or by agent or attorney.
Voting trust certificates shall be issued to evidence beneficial interests in
the voting trust.
Section 22. RESPONSIBILITY OF TRUSTEE VOTING SHARES; MORE THAN ONE TRUSTEE;
MANNER OF VOTING. A trustee who votes shares subject to a voting trust incurs no
responsibility as shareholder, trustee, or otherwise, except for his
malfeasance.
Where two (2) or more persons are designated as voting trustees, and the
right and method of voting shares in their names at a meeting of shareholders
are not fixed by the Agreement appointing the trustees, the right to vote and
the manner of voting the shares at the meeting shall be determined by a majority
of the trustees. If the trustees are equally divided as to how the shares shall
be voted, the vote shall be divided equally among the trustees.
Section 23. EXTENDING DURATION OF VOTING TRUST; PROCEDURE; VALIDITY OF
TRUST UNAFFECTED. At any time within twelve (12) months before expiration of a
voting Trust Agreement as originally fixed or as extended as herein provided,
one (1) or more beneficiaries of the voting trust, by agreement in writing and
with written consent of the voting trustees, may extend the duration of the
voting Trust Agreement with regard to the shares subject to their beneficial
interest for an additional period not exceeding any limitations under the
Indiana Business Corporation Law. The voting trustees, before expiration of the
voting Trust Agreement as originally fixed or as previously extended, shall file
in the registered office of the Corporation an executed counterpart of the
extension agreement and of their consent thereof, and thereupon the duration of
the voting Trust Agreement shall be executed for the period fixed in the
extension agreement. An extension agreement does not affect the rights or
obligations of persons not parties thereto.
The validity of a voting trust or and extension thereof, otherwise lawful,
is not affected during its existence by the fact that by its terms it will or
may last beyond any particular period; but it shall become inoperative at the
end of such period.
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ARTICLE II
Board of Directors
Section 1. GENERAL POWERS. The properties, business and affairs of the
Corporation shall be managed by the Board to the full extent provided by the
then existing law of the State of Indiana, Articles of Incorporation, these
By-Laws, and any other applicable law.
Section 2. NUMBER AND QUALIFICATIONS. Subject to the requirements of the
then existing law of the State of Indiana, the Board may from time to time by
the vote of a majority of the Board determine the number of director positions
on the Board, but in no case shall the number be less than one (1) nor more than
eleven (I 1). Until the Board shall otherwise so determine, the number of
director positions on the Board shall be eleven (I 1). A director need not be a
shareholder of the Corporation. (Amended November 12, 1998)
Section 3. CLASSES, TENURE AND ELECTION OF DIRECTORS. At each annual
meeting of the shareholders for the election of directors (or special meeting of
shareholders in lieu thereto at which a quorum is present, the persons receiving
the greatest number of votes, up to the number of directors to be elected, shall
be the directors. Holders of Common Stock of the Corporation do not possess
cumulative voting rights. (See Article III of the Articles of Incorporation of
the Corporation.)
Upon organization of the Corporation, directors shall be elected by the
incorporators to hold office of a term expiring at the next succeeding annual
meeting. Whenever the holders of any series of Preferred Stock shall be
entitled, voting separately as a class, to elect directors, the initial term of
all directors elected by such holders shall expire at the next succeeding annual
meeting of shareholders. Subject to the foregoing, at each annual meeting of
shareholders the successors to the directors whose terms shall then expire shall
be elected to hold office for a term expiring at the next succeeding annual
meeting. Vacancies that occur prior to the expiration of the then current term
(whether as a result of a newly created director position on the Board or
otherwise), if filled by the Board shall be filled only until the next
succeeding annual meeting. Each of the directors of the Corporation shall hold
office unto the annual meeting of shareholders next after his election and until
his successor shall be elected and qualified or until his earlier death,
resignation or removal.
Section 4. ORGANIZATION, ORDER OF BUSINESS AND PROCEDURE. At each meeting
of the Board, one of the following shall act as chairman of the meeting and
preside thereat, in the following order of precedence:
(a) The Chairman of the Board;
(b) the Vice Chairman;
(c) the President; or
(d) any director chosen by a majority of the directors present
thereat.
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The Secretary, or if he shall be absent from such meeting, the person whom the
chairman of such meeting shall appoint, shall act as secretary of such meeting
and keep the minutes thereof. The order of business and rules of procedure at
each meeting of the Board shall be determined by the chairman of such meeting,
but the same may be changed by the vote of a majority of those directors present
at such meeting. The Board shall keep regular minutes of its proceedings and all
material action shall be reported to the shareholders at the next annual meeting
of shareholders.
Section 5. RESIGNATIONS. Any director may resign at any time by giving
written notice of his resignation to the Corporation through the Board, the
President, Chairman of the Board, the Vice Chairman or the Secretary. Any such
resignation shall take effect at the time specified therein, or if the time when
it shall become effective shall not be specified therein, then it shall take
effect immediately upon its receipt by any of the aforesaid parties. Except as
specified therein, acceptance of such resignation shall not be necessary to make
it effective.
Section 6. VACANCIES. If any vacancies (as a result of death, resignation
or removal) shall occur among the directors, or if the number of directors shall
at any time be increased, the directors in office, although less than a quorum,
may fill the vacancies or newly created directorships by affirmative vote of a
majority of the remaining Directors, or any such vacancies or newly created
directorships may be filled by the shareholders at any meeting thereof. See
Article VII of the Articles of Incorporation of the Corporation. The tenure of
directors elected hereunder shall be as set forth under Article II, Section 3.
If because of death resignation or other cause, the Corporation has no
directors in office, an officer, a shareholder, an executor, administrator,
trustee or guardian of a shareholder, or other fiduciary entrusted with like
responsibility for the person or estate of a shareholder, may call a special
meeting of shareholders in accordance with Article 1, Section 2 of the By-Laws
for the purpose of filling one or more vacancies on the Board.
Section 7. LOCATION OF MEETINGS AND OFFICES. The Board may hold its
meetings and have an office or offices at such place or places within or without
the State of Indiana as the Board may from time to time by resolution determine
or as shall be specified or fixed in the respective notices or waivers of notice
thereof. This Section shall not govern dates, times, places, notices or waivers
of notice in connection with annual meetings of the Board.
Section 8. ANNUAL MEETINGS. Unless the Board shall by resolution otherwise
determine, immediately after each annual election of directors, the Board shall
meet at the place where such election was held within or without the State of
Indiana, for the purpose of organization, election of officers and transaction
of other business. If the Board shall determine that such meeting shall be held
at a different place, date and hour, than that for the shareholders meeting for
the election of directors, notice thereof shall be given in the manner
hereinafter provided for special meetings of the Board. Other than the
foregoing, notice shall not be required for this meeting.
Section 9. REGULAR MEETINGS. Regular meetings of the Board shall be held at
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such times as the Board shall from time to time determine. Notices of regular
meetings need not be given. If any day fixed for a regular meeting shall be a
legal holiday at the place where the meeting is to be held, then the meeting
which would otherwise be held on that day shall be postponed until the same hour
of the next succeeding business day. The Chairman of the Board or the President
may alter the time and place of a Regular Meeting by notice to all directors
then in office.
Section 10. SPECIAL MEETINGS; NOTICE AND WAIVER. Special Meetings of the
Board shall be held whenever called by the Chairman of the Board, the Vice
Chairman, the President or any two of the directors. A notice of each such
special meeting shall be given as hereinafter in this Section provided, which
notice shall specify the place, date and hour of such meeting, but, except as
otherwise expressly provided by law, the business to be transacted at the
special meeting and the purposes thereof need not be stated in such notice.
Notice of each such meeting shall be transmitted to each director in accordance
with Article VII, Section 8 at least two days before the day on which such
meeting is to be held. Notice of any meeting of the Board need not, however, be
given to any director if waived by him in writing in accordance with Article
VII, Section 7 before, during or after such meeting or if he shall be present at
such meeting, except where he attends a meeting for the express purpose of
objecting to the transaction of any business because the meeting is not lawfully
called or convened; and any meeting of the Board shall be a legal meeting
without any notice thereof having been given if all the directors of the
Corporation then in office shall be present thereat.
Section 11. QUORUM AND VOTING. Except as otherwise provided under the then
existing law of the State of Indiana, or in these By-Laws, one-third (1/3), but
not less than two (2) (or one, where only one director is in office and no
vacancies exist as a result of death, resignation or removal), of the directors
shall be present in person at any meeting of the Board in order to constitute a
quorum for the transaction of business at such meeting, and the act of a
majority of the directors present at any such meeting at which a quorum is
present shall be the act of the Board. In the absence of a quorum, a majority of
the directors present thereat may adjourn such meeting from the to time until a
quorum shall be obtained. Except for announcement at the adjourned meeting,
notice of any adjourned meeting need not be given. The directors shall act only
as a board and the individual directors shall have no power as such. (See
Article IX regarding an exception to the quorum requirements for amendments to
the By-Laws.)
A member of the Board may participate in a meeting by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other. Participation in a meeting
pursuant to this subsection constitutes presence in person at the meeting.
Section 12. ACTION OF BOARD OR COMMITTEE BY CONSENT. Any action required,
or permitted to be taken pursuant to authorization voted at a meeting of the
Board or a Committee thereof may be taken without a meeting if, before or after
the action, all members of the Board or of such committee, as the case may be,
consent thereto in writing and such writing is filed with the minutes of
proceedings of the Board or committee. Action by consent may be taken in lieu
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of any annual or special meeting of the Board or committee with the same effect
as a vote thereof for all purposes.
Section 13. COMPENSATION. The Board, by affirmative vote of a majority of
directors in office and irrespective of any personal interest of any of them,
may establish reasonable compensation of directors for services to the
corporation as directors or officers. In this regard the Board may authorize all
the directors to be paid their expenses, if any, of attendance at such meeting
of the Board, and a fixed sum for attendance at such meeting of the Board.
Directors as such shall not receive any stated salary for their services. No
such payment shall preclude any director from serving the Corporation in any
other capacity and receiving compensation therefor over and above that
authorized under this Section. The Board may allow members of the Executive
Committee and/or of other standing or special committees like compensation plus
a stated salary for services as a committee member and expenses of attending
committee meetings.
Section 14. REMOVAL. Pursuant to Article VII, Section (8) of the Articles
of Incorporation of the Corporation, the Board may, at any time, by majority
vote of the directors then if office, remove a director with cause and the
shareholders, acting by vote of not less than two thirds of holders of
outstanding shares of capital stock of the Corporation having the power to vote
to elect directors may remove a director or the entire Board with or without
cause, at any time, by vote of the holders of a majority of the shares entitled
to vote at the election of directors.
Section 15. BONUS PLAN AND STOCK OPTION PLAN. The Board shall have power to
adopt and to repeal from time to time, a bonus plan and a stock option plan for
employees of the Corporation or any subsidiary, including employees who are also
directors of the Corporation or any such subsidiary. Power to construe,
interpret, administer, modify or suspend any such bonus plan and any such stock
option plan may be vested in any standing committee of the Board.
Section 16. TRANSACTIONS WITH CORPORATION. A contract or other transaction
between the Corporation and one or more of its directors or officers, or between
the Corporation and a domestic or foreign corporation, firm or association of
any type or kind in which one or more of its directors or officers are directors
or officers, or are otherwise interested, is not void or voidable solely because
of such common directorship, officership or interest, or solely because such
directors are present at the meeting of the Board or committee thereof which
authorizes or approves the contract or transactior4 or solely because their
votes are counted for such purpose if any of the following conditions is
satisfied: (a) The contract or other transaction is fair and reasonable to the
Corporation when it is authorized, approved or ratified; (b) the material facts
as to his relationship or interest and as to the contract or transaction are
disclosed or known to the Board or committee and the Board or committee
authorized, approves or ratifies the contract or transaction by a vote
sufficient for the purpose without counting the vote of any common or interested
director; or (c) the material facts as to his relationship or interest and as to
the contract or transaction are disclosed or known to the shareholders, and they
authorize, approve or ratify the
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contract or transaction.
When the validity of a contract described above is questioned, the burden
of establishing its validity on any of the grounds prescribed above is upon the
director, officer, corporation, firm or association asserting its validity.
Common or interested directors may be counted in determining the presence
of a quorum at a Board or committee meeting at which a contract or transaction
described above is authorized, approved or ratified.
Section 17. RATIFICATION. Any transaction questioned in any shareholders'
derivative suit on the ground of lack of authority, defective or irregular
execution, adverse interest of director, officer or shareholder, nondisclosure,
miscomputation, or the application of improper principles or practices of
accounting may be ratified before or after judgment, by the Board, or in case
less than a quorum of directors are qualified, by the shareholders; and, if so
ratified, shall have the same force and effect as if the questioned transaction
had been originally duly authorized, and said ratification shall be binding upon
the Corporation and its shareholders and shall constitute a bar to any claim or
execution or any judgment in respect of such questioned transaction.
Section 18. DUTIES AND RELIANCE OF DIRECTORS AND OFFICERS. A director or an
officer shall discharge the duties of his position in good faith and with that
degree of diligence, care and skill which an ordinarily prudent man would
exercise under similar circumstances in a like position. In discharging his
duties, a director or an officer, when acting in good faith, may rely upon the
opinion of counsel for the Corporation, upon the report of an independent
appraiser selected with reasonable care by the Board, or upon financial
statements of the Corporation represented to him to be correct by the president
or the officer of the Corporation having charge of its books of account, or
stated in a written report by an independent public or certified public
accountant or firm of such accountants to reflect fairly the financial condition
of the Corporation.
Section 19. CERTAIN ILLEGAL ACTIONS OF DIRECTORS, COMMITTEES AND
SHAREHOLDERS AND DISSENT THERETO. Directors who vote for, or concur in any of
the following corporate actions are jointly and severally liable to the
Corporation for the benefit of its creditors or shareholders, to the extent of
any legally recoverable injury suffered by such persons as a result of the
action but not to exceed the amount unlawfully paid or distributed:
(a) Declaration of a dividend or other distribution of assets to
shareholders contrary to the law or contrary to any restriction in
the Articles of Incorporation or By-Laws of the Corporation;
(b) purchase of shares of the Corporation contrary to the Indiana
Business Corporation Law or contrary to any restrictions in the
Articles of Incorporation or the By-Laws of the Corporation;.
(c) distribution of assets to shareholders during or after dissolution
of the Corporation without paying, or adequately providing for,
all known debts, obligations and liabilities of the Corporation;
or
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(d) making of a loan to an officer, director or employee of the
Corporation or of a subsidiary thereof contrary to the Indiana
Business Corporation Law.
A director is not liable under this Section if he has complied with Article
II, Section 18.
A shareholder who accepts or receives a dividend or distribution with
knowledge of facts indicating it is not authorized by the Indiana Business
Corporation Law is liable to the Corporation in the amount accepted or received
by him.
A director who is present at a meeting of the Board, or a committee thereof
of which he is a member, at which action on a corporate matter referred to above
is taken, is presumed to have concurred in that action unless his dissent is
entered in the minutes of the meeting or unless he files his written dissent to
the action .With the person acting as secretary of the meeting before or
promptly after the adjournment thereof The right to dissent does not apply to a
director who voted in favor of the action. A director who is absent from a
meeting of the board, or a committee thereof which he is a member, at which any
such action is taken is presumed to have concurred in the action unless he files
his dissent with the Secretary of the Corporation within a reasonable time after
he has knowledge of the action.
ARTICLE III
Committees
Section 1. STANDING AND ADMINISTRATIVE COMMITTEES. The Board may designate
a standing executive committee, and/or one or more other standing committees,
each of which shall have and may exercise the powers of the Board (consisting of
at least one director), in the management of the business and affairs of the
Corporation in respect of the matters hereinafter stated or as otherwise
determined by the Board. These committees shall be the standing committees of
the Corporation.
The President may designate an administration committee to assist the
President and to have the duties hereinafter stated. This committee she not be
governed by these By-Laws as applicable to committees, except under Section 9 of
this Article.
Section 2. OTHER COMMITTEES. The Board may designate one or more other
committees, which shall in each case consist of directors and shall have and may
exercise such powers of the Board for such periods as the Board may determine in
the respective resolutions designating such committees or from time to time. To
the extent appropriate, the provisions of this Article shall govern such
committees unless changed by a majority of all the members of any such
committee, which may fix its rules or procedure, determine its action, fix the
time and place, whether within or without the State of Indiana, of its meetings
and specify what notice thereof, if any, shall be given, unless the Board shall
by resolution otherwise provide. Each member or any such committee shall
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continue to be a member thereof only so long as he remains a director and at the
pleasure of a majority of the Board. Any vacancies on any such committee may be
filled by the Board.
Section 3. ELECTION. The members of any committee shall be elected by the
Board, as above provided at its first meeting after each annual meeting of
shareholders.
Section 4. VACANCIES. Vacancies in any committee shall be filled by the
Board.
Section 5. TENURE. Each member of any committee shall continue until his
successor is duly elected and qualified and at the pleasure of the Board.
Section 6. PROCEDURE AND QUORUM. Each standing committee shall fix its own
rules of procedure and shall meet where and as provided by such rules, but the
presence of a majority of the members thereof shall be necessary to constitute a
quorum and the vote of a majority of the members present at a meeting at which a
quorum and the vote of a majority of the members present at a meeting at which a
quorum is present constitutes the action of the Committee. Each committee she
keep minutes of its meetings.
A member of a committee designated by the Board may participate in a
meeting by means of conference telephone or similar communications equipment by
means of which " persons participating in the meeting can hear each other.
Participation in a meeting pursuant to this subsection constitutes presence in
person at a meeting.
Action of committees by unanimous written consent is governed by Article
II, Section 12.
Section 7. RESIGNATION. Any member of any committee may resign at any time
by delivering a written resignation to the Secretary of the Corporation. Unless
otherwise stated in such notice of resignation, acceptance thereof shall not be
necessary to make it effective; and such resignation shall take effect at the
time specified therein or, in the absence of such specification, it shall take
effect upon receipt thereof by the Secretary. Resignation as a director shall
automatically constitute resignation as a member of all committees.
Section 8. EXECUTIVE COMMITTEE. The executive committee shall consist of
the Chairman of the Board, the Vice Chairman, the President and the Executive
Vice Presidents who by virtue of their offices shall be members and any other
directors appointed by the Board. The Chairman of the Board shall be the
chairman of the committee. During the intervals between meetings of the Board,
the executive committee shall have and may exercise the powers of the Board
including, without limitation, those powers referred to in Article VII, Section
(3)(c) of the Articles of Incorporation of the Corporation in the management of
the business and affairs of the Corporation and including the power to authorize
the seal of the Corporation to be affixed to all papers which may require it.
During the intervals between meetings of the executive committee, the chairman
thereof shall have and may exercise the powers of the executive committee. All
action taken by the chairman during the intervals between meetings of the
executive committee in the exercise of such authority 16
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shall be reported to the executive committee. All actions by the executive
committee and its chairman shall be reported to the Board and shall be subject
to revision by the Board, provided that no acts or rights of third parties shall
be affected thereby.
Section 9. ADMINISTRATION COMMITTEE. The administration committee shall
consist of as many members as are appointed thereto by the President, including
the President who by virtue of his office shall be a member. The officer members
of the administration committee who need not be directors shall be selected by
the President and shall serve during the pleasure of the President. The
President shall be the chairman of the committee. The administration committee
she make recommendations to the President with respect to the banking and
financial activities of the Corporation and shall also make recommendations on
any other matters affecting the business and affairs of the Corporation that may
be referred to it by the President or the executive committee.
Section 10. MEMBERS. Any standing committee may consist of one or more
directors of the Corporation designated by the Board. The Board may designate
one or more directors as alternate members of any committee, who may replace any
absent or disqualified member at any meeting of the committee. In the absence or
disqualification of a member of any committee, the member or members thereof
present at a meeting and not disqualified from voting, whether or not he or they
constitute a quorum, may unanimously appoint another director of the Corporation
to act at the meeting in the place of any such absent or disqualified member.
ARTICLE IV
Officers
Section 1. DESIGNATION. The officers of the Corporation shall be a Chairman
of the Board, a Vice Chairman, a President, one or more Executive Vice
Presidents, one or more Vice Presidents, a Treasurer, a Secretary and a
Comptroller. A person may hold any number of offices, but an officer shall not
execute, acknowledge, or verify an instrument in more than one capacity if the
instrument is required by law, the Articles of Incorporation or By-Laws of the
Corporation to be executed, acknowledged or verified by two or more officers.
Officers need not be directors.
Section 2. ELECTION AND TERM. At its annual meeting after each annual
meeting of shareholders (or special meeting in lieu thereto, the Board shall
elect the officers. The term of each officer shall be until the next annual
meeting of the Board and until his successor is elected and qualified or until
his death, resignation or removal.
Section 3. SUBORDINATE OFFICERS AND AGENTS. The Board and, in the fields of
their jurisdiction, the executive committee and other standing committees, may
from time to time appoint such subordinate officers as they may deem necessary,
who shall hold office for such period, have such authority and perform such
duties as the Board, the executive committee or the other standing committees
respectively may prescribe. The Board, the executive committee and the other
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standing committees may likewise from time to time authorize any officer to
appoint agents and employees and to prescribe their powers and duties.
Section 4. COMPENSATION. The Board shall have power to fix the compensation
of all officers of the Corporation. It may authorize any officer, upon whom the
power of appointing, subordinate officers may have been conferred, to fix the
compensation of such subordinate officers. See Article 11, Section 13 regarding
compensation of officer directors.
Section 5. BONDS, DUTIES AND RELIANCE. The Board may require any officer of
the Corporation to give a bond to the Corporation, conditional upon the faithful
performance of his duties, with one or more sureties and in such amount as may
be satisfactory to the Board. See Article 11, Section 18, regarding protection
of officers relying on certain persons and other matters.
An officer, as between himself and other officers and the Corporation, has
such authority and shall perform such duties in the management of the
Corporation as may be provided in the By-Laws, or as may be determined by
resolution of the Board not inconsistent with the By-Laws.
Section 6. RESIGNATION. Any officer may resign at any time by giving
written notice to the Corporation through the Chairman of the Board, the
President or the Secretary. Unless otherwise stated in such notice of
resignation, acceptance thereof shall not be necessary to make it effective; and
such resignation shall take effect at the time specified therein or, in the
absence of such specification, upon the receipt by any one of the aforesaid
parties.
Section 7. REMOVAL. Except where otherwise expressly provided in a contract
authorized by the Board, any officer elected or appointed by the Board may be
removed by the Board, with or without cause, at any time. Any other officers,
agents or employees of the Corporation may be removed, with or without cause, at
any time by a vote of the Board or by any committee or superior officer
appointing them.
An officer elected by the shareholders may be removed, with or without
cause, only by vote of the shareholders, but his authority as an officer may be
suspended by the Board for cause.
The fact of the election or appointment of an officer does not in and of
itself create contract rights.
Section 8. VACANCIES. A vacancy in any office may be filled for the
unexpired portion of the term by the Board or, where appropriate, by the
executive committee or the other standing committees.
Section 9. CHAIRMAN OF THE BOARD. The Chairman of the Board shall be the
chief executive officer of the Corporation and, subject to the Board and the
standing committees of the Corporation, shall be in general charge of the
affairs of the Corporation. By virtue of his office,
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he shall be chairman of the executive committee of the Corporation. He shall
keep the Board and the executive committee fully informed of the affairs of the
Corporation and shall freely consult them concerning the affairs of the
Corporation in his charge. He shall, in the absence or incapacity of the
President, as determined by the Board or the executive committee (or where no
such other officer exists), perform all the duties and functions and exercise aN
the powers of the President. The Board from time to time may vary, add to and/or
eliminate any and all of the foregoing duties, powers and offices by resolution.
Section 10. VICE CHAIRMAN. The Vice Chairman shall be a member of the
executive committee of the Corporation, by virtue of his office. He shall have
such powers and perform such duties as may be assigned to him by the Board or
the Chairman of the Board. In the absence or disability of the Chairman of the
Board, as determined by the Board or the executive committee (or where no such
officer exists) he shall perform all the duties and functions then required of
and exercise all the powers then possessed by the Chairman of the Board. The
Board from time to time may vary, add to and/or eliminate any and all of the
foregoing duties, powers and offices by resolution.
Section 11. PRESIDENT. The President shall be the chief operating officer
of the Corporation. Subject to the Board, the executive committee and the
Chairman of the Board, to whom he shall report, the President shall be in
general and active charge of the business of the Corporation. He shall, by
virtue of his office, be a member of the executive committee of the Corporation.
In the absence or disability of the Chairman of the Board and the Vice Chairman
as determined by the Board or the executive committee (or where no such officers
exist), he shall perform all duties and functions and exercise all the powers of
the Chairman of the Board and Vice Chairman. He shall have power to sign
certificates and documents referred to under Article VIII. He shall have power
to appoint and remove all agents and employees not appointed or elected by the
Board, He shall perform such other duties as may be assigned him by the Board.
The Board from time to the may vary, add to and/or eliminate any and all of the
foregoing duties, powers and offices by resolution.
Section 12. EXECUTIVE VICE PRESIDENTS. Each Executive Vice President shall
have such powers and perform such duties as may be assigned to him by the Board.
In the absence or disability of the Chairman of the Board, the Vice Chairman and
the President, as determined by the Board or the executive committee (or where
no such officers exist), the then powers, duties and functions of such offices
shall be temporarily performed and exercised by such one or more of the
Executive Vice Presidents as shall be designated by the Board, or, if not
designated by the Board, by the executive committee or, if not designated by the
executive committee, by the Chairman, the Vice Chairman or the President in the
foregoing order or priority.
Section 13. VICE PRESIDENTS. Each Vice President shall have such powers and
perform such duties as may be assigned to him by the Board.
Section 14. TREASURER. The Treasurer shall have custody of all funds and
securities
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of the Corporation. When necessary or proper he shall endorse the collection
checks, drafts, and other instruments for the payment of money and shall deposit
them to the credit of the Corporation in an authorized bank or depositary. He
shall prepare or cause to be prepared financial statements which fairly present
the financial position and results of the operations of the Corporation.
Whenever required by the Board or the executive committee, he shall render an
account of his transactions. He shall enter regularly in the books to be kept by
him a full and accurate account of all money received and paid by him on behalf
of the Corporation. His books and accounts shall at all times during the usual
hours of business be open to the examination of any director at the office of
the Treasurer. He shall perform all acts incident to the position of Treasurer,
subject to the control of the Board and the executive committee.
Section 15. ASSISTANT TREASURERS. The Board or the executive committee may
appoint one or more Assistant Treasurers, each of whom shall have such powers
and perform such duties as may be assigned to him by the Board or the executive
committee.
Section 16. SECRETARY. The Secretary shall keep the seal of the Corporation
and the minutes of all meetings of shareholders and directors and of such
committees as may be directed. He shall attend to the giving of all notices as
directed. He may sign with the Chairman of the Board, the President, an
Executive Vice President or a Vice President all contracts and instruments of
conveyance and when so ordered by the Board or the executive committed or other
properly empowered standing committees, he shall affix the seal of the
Corporation thereto. He shall have charge of such books and papers as the Board,
the executive committee or other properly empowered standing committees may
require. His books and records shall at all times during the usual hours for
business be open to the examination of any director at the office of the
Secretary. He shall submit any reports to the Board, the executive committee or
other properly empowered standing committees that they may request. He, assisted
by any transfer agent(s) and registrar(s) which may be appointed from time to
time by the Corporation, shall keep records of all outstanding capital stock and
other securities issued by the Corporation. In the absence of such appointments,
he shall act as transfer clerk for the Corporation and keep such records without
assistance. He shall perform all acts incident to the office of Secretary,
subject to the control of the Board, the executive committee and other standing
committees.
Section 17. ASSISTANT SECRETARIES. The Board or the executive committee may
appoint one or more Assistant Secretaries each of whom shall have such powers
and perform such duties as may be assigned to him to the Board or the executive
committee.
Section 18. COMPTROLLER. The Comptroller shall be in charge of the accounts
of the Corporation. He shall have such powers and perform such duties as may be
assigned to him by the Board or the executive committee. He shall submit such
reports and records to the Board or the executive committee as may be requested
by them.
Section 19. ASSISTANT COMPTROLLERS. The Board or the executive committee
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may appoint one or more Assistant Comptrollers, each of whom shall have such
powers and perform such duties as may be assigned to him by the Board or the
executive committee.
Section 20. GENERAL COUNSEL. The Corporation may, but need not have a
General Counsel who shall be appointed by the Board and who shall have general
control of all matters of legal import concerning the Corporation. The General
Counsel may consist of a private law firm, an individual private practitioner or
a duly qualified employee of the Corporation.
Section 21. GENERAL MANAGERS. The President may from time to time appoint
General Managers or other officers, agents or employees for the several
divisions and subsidiaries (all such appointees for a subsidiary must be made in
accordance with its corporate powers) of the Corporation. The powers and duties
of each such appointee shall be such as may be determined by the Board or the
executive committee and shall be within the corporate powers of any subsidiary.
ARTICLE V
Shares and Their Transfer, Certificates
for Shares and Bonds and Record Dates
Section 1. CERTIFICATES FOR STOCK. Ever owner of capital stock of the
Corporation shall be entitled to have a certificate or certificates, in such
form or forms as the Board shall prescribe, certifying the number, class and
series, if any, of shares of stock of the Corporation owned by him. The
certificates representing shares of the respective classes and series, if any,
of such stock shall be numbered in the order in which they shall be issued and
shall be signed in the name of the Corporation by a person who was at the time
of signing the Chairman of the Board, the Vice Chairman, the President, any
Executive Vice President or any Vice President and which also may be signed by
another officer of the Corporation; provided however, that where any such
certificate is countersigned (a) by a transfer agent or assistant transfer agent
or (b) by a transfer clerk acting on behalf or the Corporation and a registrar,
the signatures thereon such Chairman of the Board, Vice Chairman, President,
Executive Vice President, Vice President, Secretary, Assistant Secretary,
Treasurer or Assistant Treasurer, may be a facsimile. If an officer of the
Corporation who shall have signed, or whose facsimile signature shall have been
used on any such certificate or certificates shall cease to be such officer or
officers, whether because of death resignation, removal or otherwise, such
certificate or certificates may nevertheless be issued and delivered as though
the person who signed such certificate or certificates or whose facsimile
signature shall have been used thereon had not ceased to be an officer at the
date of issue. A record shall be kept of the respective names and addresses of
the persons, firms or corporations owning the stock represented by certificates
for stock of the Corporation, the number, class and series, if any, of shares
represented by such certificates, respectively, the respective dates of issuance
thereof, and, in case of cancellation, the respective dates of cancellation.
Every certificate surrendered to the Corporation for exchange or transfer shall
first be cancelled, and a new certificate or certificates shall be issued in
exchange for any existing certificate only after such existing certificate shall
have been so cancelled, except in cases provided
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for in Section 4 of this Article V. The Corporation shall be entitled to treat
the holder of record of any share or capital stock as the holder in fact
thereof, and accordingly shall not be bound to recognize any equitable or other
claim to or interest in any such share on the part of any other person, whether
or not it shall have express or other notice thereof, except as required by the
laws of Indiana. See Article VIII, Section 3.
The Corporation shall register a stock certificate presented to it for
transfer if (subject to waiver of (b) by the President or Secretary):
(a) The certificate is properly endorsed by the holder of record or by
his duly authorized attorney;
(b) the signature of such person or persons has been guaranteed by a
commercial bank or trust company located in the continental United
States or a member of any registered national securities exchange
and reasonable assurance is given that such endorsements are
effective;
(c) the Corporation has no notice of any adverse claims or has
discharged any duty to inquire into any such claims; and
(d) there has been compliance with any applicable law relating to the
collection of taxes. See Article V, Section 2.
A certificate representing shares shall state upon its face:
(a) That the Corporation is formed under the laws of the State of
Indiana;
(b) the name of the person to whom issued;
(c) the number and class of shares, and the designation of the series,
if any, which the certificate represents;
A certificate representing shares of Capital Stock shall set forth on its
face or back or state that the Corporation will furnish to a shareholder upon
request and without charge a full statement of the designation, relative rights,
preferences and limitations of the shares of each class authorized to be issued
and where the Corporation is authorized to issue any class or shares in series,
the designation, relative rights, preferences and limitations of each series so
far as the same have been prescribed and the authority of the Board to designate
and prescribe the relative rights, preferences and limitations of other series.
Section 2. TRANSFER OF STOCK. Transfer of shares of the capital stock of
the Corporation shall be made only on the books of the Corporation upon the
direction of the registered holder thereof, or of his attorney thereunto
authorized by written power of attorney duly executed and filed with the
Secretary or with a transfer clerk or a transfer agent appointed as in Section 3
of this Article V provided, upon surrender of the certificate or certificates
for such shares in form required for the Corporation to register a stock
certificate presented to it for transfer under Section 1 of this Article V.
Section 3. TRANSFER AGENT; REGISTRAR; RULES RESPECTING CERTIFICATES. The
Corporation shall comply with Rule 10b-14 under the Securities Exchange
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Act of 1934 and its successor provisions, and to this end it shall maintain one
or more transfer offices or agencies, each in charge of a transfer clerk or a
transfer agent designated by the Board, where the shares of capital stock of the
Corporation shall be transferable. The Corporation may also maintain one or more
registry offices, each in charge of a registrar designated by the Board, where
such shares of capital stock may be registered. The Board may make such rules
and regulations as it may deem expedient concerning the issue, transfer and
registration of stock certificates of the Corporation. The Board may require
some or all certificates for capital stock to bear the signature or signatures
of any or all such transfer agent(s) and registrar(s.)
Section 4. LOST, STOLEN OR DESTROYED CERTIFICATES. The Corporation may
issue a new certificate for shares or fractional shares of the capital stock of
the Corporation in the place of any certificate theretofore issued by it,
alleged to have been lost, stolen or destroyed. Any person claiming a stock
certificate in lieu of one lost, stolen or destroyed shall give the Corporation
an affidavit as to his ownership of the certificate and of the facts which go to
prove its loss, theft or destruction. He shall satisfy any reasonable
requirements imposed by the Board and, if required by the Board, give the
Corporation a bond, in such form and with such surety or sureties as the Board
shall in its uncontrolled discretion determine to be sufficient to indemnify the
Corporation against any claim that may be made against it on account of the
alleged lost, stolen or destroyed certificate, or the issuance of such a new
certificate.
Section 5. RECORD DATES - SHAREHOLDER LIST. In fixing record dates the
Corporation shall comply with the provisions of Rule I Ob-7 and any successor
provisions under the Securities Exchange Act of 1934 where the record date
pertains to securities registered under the Act; the NASD policy requiring ten
(10) days notice in advance of the record date to the Secretary of the Uniform
Practice Committee where the record date pertains to a security traded in the
over-the-counter market; the New York Stock Exchange and American Stock Exchange
policies requiring ten (10) days notice to either of such exchanges in advance
of the record date where the record date pertains to a security traded on either
of such exchanges; and any applicable provisions regarding notice in any
contracts and indentures to which the Corporation is a party. Failure to comply
with such provisions and policies shall not affect the legality of a record date
fixed hereunder.
For the purpose of determining shareholders entitled to notice of and to
vote at a meeting of shareholders or an adjournment of a meeting, the By-Laws
may provide for fixing, or in the absence of a provision the Board may fix a
record date, which shall not precede the date on which the resolution fixing the
record date is adopted by the Board. The date shall not be more than sixty (60)
nor less than ten (10) days before the date of the meeting. If a record date is
not fixed, the record date for determination of shareholders entitled to notice
of or to vote at a meeting of shareholders shall be the close of business on the
day next preceding the day on which notice is given, or if no notice is given,
the day next preceding the day on which the meeting is held. When a
determination of shareholders of record entitled to notice of or to vote at a
meeting of shareholders has been made as provided in this Section, the
determination applies to any adjournment of the meeting, unless the Board fixes
a new record date under this section for the adjourned meeting.
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For the purpose of determining shareholders entitled to express consent to
or to dissent from a proposal without a meeting, the By-Laws may provide for
fixing a record date, which shall not be more than sixty (60) days before
effectuation of the action proposed to be taken. In the absence of a provision,
the Board may fix a record date, which shall not precede the date on which the
resolution fixing the record date is adopted by the Board and shall not be more
than ten (10) days after the Board resolution. If a record date is not fixed and
prior action by the Board is required with respect to the Corporate action to be
taken without a meeting, the record date shall be the close of business on the
day on which the resolution of the Board is adopted. If a record date is not
fixed and prior action by the Board is not required, the record date shall be
the first date on which a signed written consent is delivered to the
Corporation.
For the purpose of determining shareholders entitled to receive payment of
a share dividend or distribution, or allotment of a right, or for the purpose of
any other action, the By-Laws may provide for fixing, or in the absence of a
provision the Board may fix a record date, which shall not precede the date on
which the resolution fixing the record date is adopted by the Board. The date
shall not be more than sixty (60) days before the payment of the share dividend
or distribution or allotment of a right or other action. If a record date is not
fixed, the record date shall be the close of business on the day on which the
resolution of the Board relating to the Corporate action is adopted.
The officer or agent having charge of the stock transfer books for shares
of the Corporation shall make and certify a complete list of the shareholders
entitled to vote at a shareholders' meeting or any adjournment thereof. The list
shall:
(a) Be arranged alphabetically within each class and series, with the
address of, and the number of shares held by, each shareholder.
(b) Be produced at the time and place of the meeting.
(c) Be subject to inspection by any shareholder during the whole time
of the meeting.
(d) Be prima facie evidence as to who are the shareholders entitled to
examine the list or to vote at the meeting.
If the requirements of this section have not been complied with, or demand
of a shareholder in person or by proxy, who in good faith challenges the
existence of sufficient votes to carry any action at the meeting, the meeting
shall be adjourned until the requirements are complied with. Failure to comply
with the requirements of this section does not affect the validity of an action
taken at the meeting before the making of such a demand.
Section 6. SUBSCRIPTIONS FOR SHARES. Unless otherwise provided in the
subscription agreement, subscriptions for shares must be in writing and signed
by the subscriber, whether made before or after the organization of the
Corporation, shall be paid in full at such time, or in such installments and at
such times, as shall be determined by the Board. Any call made by the Board for
the payment on subscriptions shall be uniform as to all shares of the same class
or as to all shares of the same series, as the case may be. In case of default
in the payment of any installment or call when such payment is due, the
Corporation may proceed to collect the amount due in the same
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manner as any debt due the Corporation or it may sell the shares in any
reasonable manner giving twenty (20) days notice by registered or certified
mail, any excess of net proceeds realized over the amount due plus interest
shall be paid to subscriber, it may rescind the subscription and may recover for
breach of contract, the rights and duties set forth in this Section shall be
interpreted as cumulative so far as is consistent with entitling the Corporation
to a full and single recovery of the amount due or its damages. The Corporation
may retain a security interest in any shares as collateral for performance by
the subscriber of his or her obligations under a subscription agreement and
subject to the power of sale or rescission upon default under the Indiana
Business Corporation Law.
Section 7. SIGNATURES ON BONDS. The signatures of officers upon a bond may
be facsimiles.
Section 8. RESTRICTIONS ON TRANSFER. A restriction on the transfer of a
bond or share of a corporation may be imposed either by the Articles of
Incorporation of the Corporation or by the By-Laws or by an agreement among any
number of holders or among such holders and the Corporation. A restriction so
imposed is not binding with respect to bonds, or shares issued before adoption
of the restriction unless the holders thereof are parties to an agreement or
voted in favor of the restriction.
A written restriction on the transfer or restriction of transfer of a bond
or share of the Corporation, if permitted and noted conspicuously on the
instrument, may be enforced against the holder of the restricted instrument or a
successor or transferee of the holder including an executor, administrator,
trustee, guardian or other fiduciary entrusted with like responsibility for the
person or estate of the holder. Unless noted conspicuously on the instrument, a
restriction, even though permitted by law is ineffective except against a person
with actual knowledge of the restriction.
ARTICLE VI
Indemnification
Section 1. PERSONS ENTITLED TO INDEMNIFICATION; STANDARDS OF CONDUCT. To
the extent permitted by Indiana law, the Corporation shall indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of the
Corporation) by reason of the fact that he is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, office, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Corporation or its
shareholders, and with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its
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equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the Corporation or its shareholders, and with
respect to any criminal action or proceeding, had reasonable cause to believe
that his conduct was unlawful.
The Corporation shall indemnify any person who was or is a party to or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Corporation to procure a judgment in its favor by
reason of the fact the he is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation or its shareholders and except that no indemnification shall be made
in respect to any claim, issue or matter as to which such person shall have been
adjudged to be liable for negligence or misconduct in the performance of his
duty to the Corporation unless and only to the extent that the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such expenses which
such court shall deem proper.
To the extent that a director, officer, employee or agent of a corporation
has been successful on the merits or otherwise in defense of any action, suit or
proceeding referred to above, or in defense of any claim, issue or matter
therein, he shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith.
Any indemnification under the above paragraphs (unless ordered by a court)
shall be made by the Corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer, employee or agent
is proper in the circumstances because he has met with the applicable standard
of conduct set forth in such paragraphs. Such determination shall be made in
either of the following ways:
(a) By the Board by a majority of a quorum consisting of directors who
were not parties or threatened to be made parties to such action,
suit or proceeding;
(b) if a quorum cannot be obtained under subsection (a), by majority
vote of a committee duly designated by the Board and consisting
solely of two or more directors not at the time parties or
threatened to be made parties to the action, suit or proceeding.
(c) if such quorum is not obtainable, or, even if obtainable and a
quorum of disinterested directors so directs, by independent legal
counsel in a written opinion who is selected:
(i) by the Board or committee as provided in (a) or (b)
(ii) if quorum cannot be obtained under subsection (a) and a
committee cannot be designated under (b) by the Board or;
(d) by the shareholders. But shares held by directors, officers,
employees or agents who are parties or threatened to be made
parties may not be voted.
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Expenses incurred in defending a civil or criminal action, suit or
proceeding described in the above paragraphs may be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding as
authorized in the manner provided above upon receipt of an undertaking by or on
behalf of the director, officer, employee or agent to repay such amount unless
it shall ultimately be determined that he is entitled to be indemnified by the
Corporation if all of the following are present:
(a) The person furnishes the Corporation a written affirmation of his
or her good faith belief that he or she has met the applicable
standard of conduct set forth herein.
(b) The person furnishes the Corporation a written undertaking,
executed personally on his or her behalf, to repay the advance if
it is ultimately determined that he or she did not meet the
standard of conduct.
(c) A determination is made that the facts then known to those making
the determination would not preclude indemnification under the
act.
A provision made to indemnify directors or officers in any action, suit or
proceeding, whether contained in the Articles of Incorporation, the By-Laws, a
resolution of shareholders or directors, an agreement or otherwise, shall be
invalid only insofar as it is in conflict with this Article. Nothing contained
in this Article shall affect any rights to indemnification to which persons
other than directors and officers may be entitled by contract or otherwise by
law. The indemnification provided in this Article continues as to a person who
has ceased to be a director, officer, employee or agent and shall inure to the
benefit of the heirs, executors and administrators of such person.
The Corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity or arising out of his status as such,
whether or not the Corporation would have power to indemnify him against such
liability under this Article.
For the purposes of this Article, references to the Corporation include all
constituent corporations absorbed in a consolidation or merger and the resulting
or surviving corporation, so that a person who is or was a director, officer,
employee or agent of such constituent corporation or is or was serving at the
request of such constituent corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprises shall stand in the same position under the provisions of this
Section with respect to the resulting or surviving corporation as he would if he
had served the resulting or surviving corporation in the same capacity.
In the event that any conflict arises between the provisions in the
Articles of Incorporation and in the By-Laws on the subject of Indemnification,
the provision in the Articles of Incorporation shall control.
27
<PAGE>
ARTICLE VII
Miscellaneous
Section 1. REGISTERED OFFICE. The registered office of the Corporation in
the State of Indiana and the name of the resident agent in charge thereof shall
be CT Corporation System, One North Capitol Avenue, Indianapolis, IN 46204.
Section 2. PRINCIPAL, BRANCH AND SUBORDINATE OFFICES. The Corporation may
also have principal, branch and subordinate offices other than said registered
office at such place or places, either within or without the State of Indiana,
as the Board may from time to time appoint or as the business of the Corporation
may require. The Corporation's initial principal office shall be located at 901
Wilshire Drive, Suite 360, Troy, Michigan 48084.
Section 3. BOOKS AND RECORDS AND SHAREHOLDER INSPECTION RIGHTS. The
Corporation shall keep books and records of account and minutes of the
proceedings of its shareholders, Board and executive committee, if any. Unless
otherwise provided in the By-Laws, the books, records and minutes may be kept
outside the State of Indiana. The Corporation shall keep at its registered
office, or at the office of its transfer agent or transfer clerk within or
without the State of Indiana, a true copy of its Articles of Incorporation
certified by the Secretary of State of the State of Indiana, together with a
copy of its By-Laws, certified by an officer of the Corporation, all amendments
thereto and a stock ledger or duplicate stock ledger, revised at least annually,
provided that instead of the stock ledger or a duplicate thereof, a statement
may be kept swing out the name of the custodian of such stock ledger or
duplicate thereof and the address where such stock ledger is kept. Such ledger
shall contain records reflecting the names and addresses of all past and current
shareholders, the number, class and series of shares held by each and the dates
when they respectively became and ceased to be holders of record thereof. Any of
such books, records or minutes may be in written form or in any other form
capable of being converted into written form within a reasonable time. The
Corporation shall convert into written form without charge any such record not
in such form, upon written request of a person entitled to inspect them.
Upon written request of a shareholder, the Corporation shall mail to the
shareholder its balance sheet as at the end of the preceding fiscal year; its
statement of income for such fiscal year; and, if prepared by the Corporation,
its statement of source and application of funds for such fiscal year.
A person who is a shareholder of record of the Corporation, who is
qualified to inspect by virtue of the Articles of Incorporation and Section
78.105, upon written demand indicating the purpose and the records desired and
showing that the records sought are directly connected with the purpose, may
examine for any proper purpose in person or by agent or attorney, during usual
business hours, its minutes of shareholders' meetings and register of
shareholders' names, addresses and share holdings and make extracts therefrom,
at the places where they are kept pursuant to the above
28
<PAGE>
requirements.
If the Corporation does not permit an inspection within five business days
after a demand has been received or imposes unreasonable conditions upon the
inspection, upon proof by a shareholder of a proper purpose, a court of
appropriate jurisdiction may compel production for examination by the
shareholder of the books and records of account, minutes and record of
shareholders of the Corporation, and may allow the shareholder to make extracts
therefrom.
A holder of a voting trust certificate representing shares of the
Corporation is deemed a shareholder for the purpose of this Section.
Section 4. DIVIDENDS AND NOTICE THEREOF. Subject to the provisions of the
Indiana Business Corporation Law, the Articles of Incorporation of the
Corporation and these By-Laws, the Board may declare and pay dividends upon the
shares of the Corporation's capital stock out of any form of surplus or in
additional shares of its capital stock, whenever and in such amounts as, in the
opinion of the Board, the condition of the affairs of the Corporation shall
render it advisable.
A share dividend or other distribution of shares of the Corporation shall
be accompanied by a written notice (a) disclosing the amounts by which the
distribution affects stated capital, capital surplus and earned surplus, or (b)
if such amounts are not determinable at the time of the notice, disclosing the
approximate effect of the distribution upon stated capital, capital surplus and
earned surplus and stating that the amounts are not yet determinable.
Section 5. SEAL. The Board shall provide a corporate seal, which shall be
circular in form and shall bear the full name of the Corporation and the words
and figures "Incorporated in Indiana", or words and figures of similar impact.
The seat or a facsimile thereof may be impressed or affixed or reproduced or
other use made thereof by the Secretary, any Assistant Secretary or any other
officer authorized by the Board.
Section 6. FISCAL YEAR The fiscal year of the Corporation shall end on the
last day of May in each year. Such date may be changed for future fiscal years
at any time and from time to time by resolution of the Board. (Amended November
12, 1998)
Section 7. WAIVER OF NOTICE. Whenever any notice whatever is required to be
given by these By-Laws or by the Articles of Incorporation of the Corporation or
by the then existing law of the State of Indiana, a waiver thereof in writing,
signed by the person or persons entitled to said notice, or by his duly
authorized attorney, whether before or after the time stated therein, shall be
deemed equivalent thereto.
When, under the Indiana Business Corporation Law or the Articles of
Incorporation or By-Laws of the Corporation or by the terms of an agreement or
instrument, the Corporation or the Board or any committee thereof may take
action after notice to any person or after lapse of a
29
<PAGE>
prescribed period of time, the action may be taken without notice and without
lapse of the period of time, if at any time before or after the action is
completed the person entitled to notice or to participate in the action to be
taken or, in the case of a shareholder, by his attoney-in-fact, submits a signed
waiver of such requirements.
A shareholder's attendance at a meeting will result in both of the
following:
(a) Waiver of objection to lack of notice or defective notice of the
meeting, unless the shareholder at the beginning of the meeting
objects to holding the meeting or transaction business at the
meeting.
(b) Waiver of objection to consideration of a particular matter at the
meeting that is not within the purpose or purposes described in
the meeting notice, unless the shareholder objects to considering
the matter when it is presented.
Section 8. NOTICE. When a notice or communication is required or permitted
to be given, it shall be given in person or mailed to the person to whom it is
directed at the address designated by him for that purpose, or, if none is
designated, at his last address known to the Corporation. The notice or
communication is given when deposited, with postage thereon prepaid, in a post
office or official depository under the exclusive care and custody of the United
States postal service. The mailing shall be registered, certified or other first
class mail.
Section 9. DISPENSING WITH NOTICE. When a notice or communication is
required to be given to a person by the Indiana Business Corporation Law, by the
Articles of Incorporation or By-Laws of the Corporation, or by the terms of an
agreement or instrument relating to the internal affairs of the Corporation, or
as a condition precedent to taking corporate action, and communication with the
person is then unlawful under a statute of Indiana or the United States or a
rule, regulation, proclamation or order issued under any of those statutes, the
giving of the notice or communication to the person is not required and there is
no duty to apply for a license or other per- mission to do so. An affidavit,
certificate or other instrument which is required to be made or filed as proof
of the giving of a notice or communication required by this Section, if the
notice or communication to any person is dispensed with under this Section,
shall include a statement that the notice or communication was not given to any
person with whom communication is unlawful. The affidavit, certificate or other
instrument is as effective for all purposes as though such notice or
communication had been personally given to the person.
Section 10. ANNUAL REPORT. The Corporation at least once in each fiscal
year shall cause a financial report of the Corporation for the preceding fiscal
year to be made and distributed to each shareholder thereof within 4 months
after the end of the fiscal year. The report shall include the Corporation's
statement of income, its year-end balance sheet and, if prepared by the
Corporation, its statement of source and application of funds and such other
information as may be required by the Indiana Business Corporation Law. Where
one or more classes of securities of the Corporation are traded on an exchange
or in the over-the-counter market, copies of the annual report shall be
furnished to the exchange(s) and the National Association of Securities Dealers,
Inc. as appropriate and to the financial reporting services.
30
<PAGE>
Section 11. DEPOSITS. All funds of the Corporation not otherwise employed
shall be deposited from time to time to the credit of the Corporation or
otherwise as the Board or the President shall direct in such banks, trust
companies or other depositories as the Board may select or as may be selected by
any executive officer, or other officer or agent of the Corporation to whom
power in that respect shall have been delegated by the Board. For the purpose of
deposit and for the purpose of collection for the account of the Corporation,
checks, drafts and other orders for the payment of money which are payable to
the order of the Corporation may be endorsed, assigned and delivered by any
executive officer or other officer or agent of the Corporation as thereunto
authorized from time to time by the Board.
Section 12. PARTICIPATION IN SHAREHOLDERS' MEETING. A shareholder may
participate in a meeting of shareholders by a conference telephone or by other
similar communications equipment through which all persons participating in the
meeting may communicate with the other participants. All participants shall be
advised of the communications equipment and the names of the participants in the
conference shall be divulged to all participants.
Participation in a meeting pursuant to this section constitutes presence in
person at the meeting.
ARTICLE VIII
Special Corporate Acts, Negotiable Instruments
Deeds, Contracts and Proxies
Section 1. EXECUTION OF NEGOTIABLE INSTRUMENTS. All checks, drafts, notes,
bonds, bills of exchange and orders for the payment of money shall, unless
otherwise directed by the Board or unless otherwise required by law, be signed
by any two of the following officers: The Chairman of the Board, President, a
Vice-President, Treasurer, Assistant Treasurer, Secretary, Assistant Secretary,
or Comptroller or Assistant Comptroller. The Board may, however, authorize any
one of such officers to sign checks, drafts and orders for the payment of money,
which are for any amounts in any instance; and may authorize any one of its
officers or employees, other than those named above, or different combinations
of such officers and employees to sign checks, drafts and orders for the payment
of money for any amounts. The Board may authorize the use of facsimile
signatures of any officer or employee in lieu of manual signatures.
Section 2. EXECUTION OF DEEDS, CONTRACTS, ETC. Subject always to the
specific directions of the Board, all deeds and mortgages made by the
Corporation and all other written contracts and agreements to which the
Corporation shall be a party shall be executed in its name by the President or
one of the Vice Presidents, and, when requested, the Secretary or an Assistant
Secretary shall attest to such signatures and affix the corporate seal to the
instruments.
Section 3. ENDORSEMENT OF STOCK CERTIFICATES. Subject always to the
31
<PAGE>
specific directions of the Board, any share or shares of stock issued by any
corporation and owned by the Corporation may, for sale or transfer, be endorsed
in the name of the Corporation by the Chairperson of the Board, Vice-Chairperson
of the Board, President or one of the Vice Presidents and which also may be
signed by another officer of the Corporation, and where required, his signature
may be attested to by the Secretary or an Assistant Secretary who shall affix
the corporate seal. This Section does not govern signatures required in the
initial issuance or the reissuance of the Corporation's own shares, which is
governed by Section I of Article V.
ARTICLE IX
Amendments to By-Laws
These By-Laws may be altered or amended by the affirmative vote of a
majority of the capital stock of the Corporation issued and outstanding and
entitled to vote thereat, at any regular or special meeting of shareholders if
notice of the proposed alteration or amendment be contained in the notice of the
meeting. These By-Laws also may be altered or amended by a resolution adopted by
the affirmative vote of a majority of all directors of the Board then in office
at a regular or special meeting subject to being altered or abolished by an
appropriate vote of the shareholders.
32
EXHIBIT 10.01
<TABLE>
<CAPTION>
GENERAL MOTORS TRUCK GROUP
GENERAL MOTORS CORPORATION
MAIL CODE 483-512-1B5 --------------------------------------
2000 CENTERPOINT PARKWAY PURCHASE ORDER P.O. NO. REV. NO. ISSUE DATE PAGE
PONTIAC, MI 48341-3147 ------------------------------------------
1999 MODEL YEAR 9TCH2 001 03/25/98 1 OF 13
---- ----------------------------------------
SHIP DUNS 006532246
- -----------------------------------------------------------------------------------------------------------------------------------
EFFECTIVE
NET PAYMENT TERMS F.O.B. POINT F.O.B. TERMS Z NUMBER DATE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
25TH PROX OR NONE/25TH PROX ROCHESTER HILLS MI COLLECT 2026 08/01/98
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
REQUIREMENTS CONTRACT
AMENDMENT
PO/REV NOTES: 1999 CARRYOVER. LC/KC 03/24/98.
PO/REV CLAUSES:CAB *************************************************************
PRODUCTION PART APPROVAL PROCESS (PPAP): FOR NORTH AMERICAN
TRUCK PLATFORMS. YOU ARE REQUIRED TO SUBMIT TO THE
SUBMISSION LEVEL SHOWN ON THE "REQUEST FOR PRODUCTION
MATERIAL" LETTER SENT TO YOUR COMPANY.
************************************************************
THIS PURCHASE ORDER/REVISION IS ISSUED TO COVER PRODUCTION
PART REQUIREMENTS WHICH WILL BE SCHEDULED FOR SHIPMENT TO
GENERAL MOTORS ASSEMBLY PLANTS. YOU ARE NOT AUTHORIZED TO
PROCEED WITH ANY TOOLING, WHICH WILL ULTIMATELY BE PAID FOR
AND OWNED BY GENERAL MOTORS TRUCK AND BUS GROUP, UNTIL SUCH
TIME AS A TRUCK AND BUS TOOLING PURCHASE ORDER IS ISSUED. A
REQUEST FOR SAMPLE PARTS WILL BE INITIATED AS A RESULT OF
THIS AWARD. TO THE EXTENT THAT THERE IS ANY DISCREPANCY
BETWEEN SAMPLE DELIVERY DATE AS SET FORTH BY TRUCK AND BUS
SUPPLIER QUALITY ASSURANCE AND THE TOOLING PURCHASE ORDER,
THE SUPPLIER SHOULD IMMEDIATELY CONTACT THE BUYER.
CD4 ALL PRICING UNDER THIS PURCHASE ORDER IS SUBJECT TO
VERIFICATION PURSUANT TO THE SUBMISSION OF THE GENERAL
MOTORS CORPORATION SUPPLIER COST ENGINEERING PIECE COST
BREAKDOWN WORKSHEET WHICH WAS
- --------------------------------------------------------------------------------
1) SELLER AGREES TO SELL AND BUYER AGREES TO PURCHASE AT THE PRICE AND UPON
AND SUBJECT TO THE TERMS AND CONDITIONS ON THE FACE AND REVERSE SIDE
HEREOF, APPROXIMATELY THE PERCENTAGE SHOWN OF THE SELLER'S REQUIREMENTS OF
THE ATTACHED ITEMS FOR THE MODEL YEAR SHOWN.
2) PARTS MUST CONFORM TO GENERAL MOTORS PASSENGER CAR AND TRUCK QUALITY
STANDARDS FOR PURCHASED MATERIAL AS INDICATED IN THE TARGETS FOR EXCELLENCE
HANDBOOK.
3) GENERAL MOTORS OF CANADA, LTD., GENERAL MOTORS DO BRAZIL, LTDA., AND
GENERAL MOTORS DE ARGENTINA, S.A. HAVE THE OPTION OF SPECIFYING AGAINST
THIS PURCHASE ORDER.
4) ORDER AND SCHEDULE RELEASES UNDER THIS PURCHASE ORDER WILL BE ISSUED: 1) AT
MANUFACTURING AND ASSEMBLY PLANTS BY BUYER'S SUPERINTENDENT OR BY THE
SUPERVISOR OF MATERIAL AND PRODUCTION CONTROL; 2) AT HEADQUARTERS BY THE
DIRECTOR, GENERAL MOTORS TRUCK GROUP SUPPLIER MANAGEMENT MATERIAL CONTROL.
5) THIS PURCHASE ORDER NUMBER MUST APPEAR ON ALL INVOICES, PACKAGES,
PACKING SLIPS AND BILLS OF LADING.
6) SELLER'S CAPABILITY TO PARTICIPATE IN ELECTRONIC DATA INTERCHANGE IS A
CONDITION OF DOING BUSINESS WITH GENERAL MOTORS TRUCK GROUP. COMPUTER TO
COMPUTER COMMUNICATIONS WILL BE USED FOR MATERIAL RELEASE SHIPPING
NOTIFICATION AND OTHER REQUIRED BUSINESS INFORMATION.
- --------------------------------------------------------------------------------
/s/ Kim Brycz for
T88 L. CARTER
------------------------------------
ACKNOWLEDGEMENT REQUIRED DATE
IF REQUESTED
GP PLASTICS INC
JOE MOREAU
PO BOX 2210
29600 NORTHWESTERN STE 102
SOUTHFIELD MI 480372210
<PAGE>
<TABLE>
<CAPTION>
GENERAL MOTORS TRUCK GROUP
GENERAL MOTORS CORPORATION
MAIL CODE 483-512-1B5 ------------------------------------------
2000 CENTERPOINT PARKWAY PURCHASE ORDER P.O. NO. REV. NO. ISSUE DATE PAGE
PONTIAC, MI 48341-3147 ------------------------------------------
1999 MODEL YEAR 9TCH2 001 03/25/98 2 OF 13
---- ------------------------------------------
SHIP DUNS 006532246
- -----------------------------------------------------------------------------------------------------------------------------------
EFFECTIVE
NET PAYMENT TERMS F.O.B. POINT F.O.B. TERMS Z NUMBER DATE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
25TH PROX OR NONE/25TH PROX ROCHESTER HILLS MI COLLECT 2026 08/01/98
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
REQUIREMENTS CONTRACT
AMENDMENT
PO/REV CLAUSES:CD4 TO BE SUBMITTED WITH THE COMPLETED QUOTATION REQUEST FORM.
CFL CLAUSE CFL - CORPORATE FORCED LABOR & QUALITY CLAUSE: SELLER
REPRESENTS THAT GOODS PURCHASED UNDER THIS ORDER WERE NOT
PRODUCED WITH FORCED LABOR (AS DEFINED IN 19 U.S.C. 1307)
EITHER BY SELLER OR SELLER'S SUPPLIERS. SELLER SHALL
INDEMNIFY BUYER AGAINST ANY LIABILITY BUYER MAY INCUR IF
THIS REPRESENTATION IS INCORRECT.
SELLER AGREES TO PARTICIPATE IN BUYER'S SUPPLIER QUALITY AND
DEVELOPMENT PROGRAM(S). IN ADDITION, SELLER SHALL COMPLY
WITH ALL QUALITY REQUIREMENTS AND PROCEDURES SPECIFIED BY
BUYER, AS THE SAME MAY BE REVISED FROM TIME TO TIME,
INCLUDING THOSE APPLICABLE TO SELLER AS SET FORTH IN
"QUALITY SYSTEM REQUIREMENTS QS-9000".
GOVERNING LAW: THIS AGREEMENT AND ALL TRANSACTIONS
CONTEMPLATED HEREUNDER SHALL BE GOVERNED, CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
MICHIGAN, UNITED STATES OF AMERICA, BUT NOT INCLUDING THE
UNITED NATIONS CONVENTION ON CONTRACTS FOR INTERNATIONAL
SALES OF GOODS. ANY DISPUTES ARISING UNDER THIS AGREEMENT
SHALL BE SUBJECT TO THE EXCLUSIVE JURISDICTION OF THE
FEDERAL OR STATE COURTS LOCATED IN THE STATE OF MICHIGAN.
SELLER, AND ANY GOODS AND SERVICES SUPPLIED BY SELLER, SHALL
BE YEAR
- --------------------------------------------------------------------------------
1) SELLER AGREES TO SELL AND BUYER AGREES TO PURCHASE AT THE PRICE AND UPON
AND SUBJECT TO THE TERMS AND CONDITIONS ON THE FACE AND REVERSE SIDE
HEREOF, APPROXIMATELY THE PERCENTAGE SHOWN OF THE SELLER'S REQUIREMENTS OF
THE ATTACHED ITEMS FOR THE MODEL YEAR SHOWN.
2) PARTS MUST CONFORM TO GENERAL MOTORS PASSENGER CAR AND TRUCK QUALITY
STANDARDS FOR PURCHASED MATERIAL AS INDICATED IN THE TARGETS FOR EXCELLENCE
HANDBOOK.
3) GENERAL MOTORS OF CANADA, LTD., GENERAL MOTORS DO BRAZIL, LTDA., AND
GENERAL MOTORS DE ARGENTINA, S.A. HAVE THE OPTION OF SPECIFYING AGAINST
THIS PURCHASE ORDER.
4) ORDER AND SCHEDULE RELEASES UNDER THIS PURCHASE ORDER WILL BE ISSUED: 1) AT
MANUFACTURING AND ASSEMBLY PLANTS BY BUYER'S SUPERINTENDENT OR BY THE
SUPERVISOR OF MATERIAL AND PRODUCTION CONTROL; 2) AT HEADQUARTERS BY THE
DIRECTOR, GENERAL MOTORS TRUCK GROUP SUPPLIER MANAGEMENT MATERIAL CONTROL.
5) THIS PURCHASE ORDER NUMBER MUST APPEAR ON ALL INVOICES, PACKAGES, PACKING
SLIPS AND BILLS OF LADING.
6) SELLER'S CAPABILITY TO PARTICIPATE IN ELECTRONIC DATA INTERCHANGE IS A
CONDITION OF DOING BUSINESS WITH GENERAL MOTORS TRUCK GROUP. COMPUTER TO
COMPUTER COMMUNICATIONS WILL BE USED FOR MATERIAL RELEASE SHIPPING
NOTIFICATION AND OTHER REQUIRED BUSINESS INFORMATION.
- --------------------------------------------------------------------------------
T88 L. CARTER
------------------------------------
ACKNOWLEDGEMENT REQUIRED DATE
IF REQUESTED
<PAGE>
<TABLE>
<CAPTION>
GENERAL MOTORS TRUCK GROUP
GENERAL MOTORS CORPORATION
MAIL CODE 483-512-1B5 ------------------------------------------
2000 CENTERPOINT PARKWAY PURCHASE ORDER P.O. NO. REV. NO. ISSUE DATE PAGE
PONTIAC, MI 48341-3147 ------------------------------------------
1999 MODEL YEAR 9TCH2 001 03/25/98 3 OF
13
---- ------------------------------------------
SHIP DUNS 006532246
- -----------------------------------------------------------------------------------------------------------------------------------
EFFECTIVE
NET PAYMENT TERMS F.O.B. POINT F.O.B. TERMS Z NUMBER DATE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
25TH PROX OR NONE/25TH PROX ROCHESTER HILLS MI COLLECT 2026 08/01/98
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
REQUIREMENTS CONTRACT
AMENDMENT
PO/REV CLAUSES:CFL 2000 COMPLIANT AND COMPATIBLE, AND SHALL FUNCTION WITHOUT
ERROR OR FAULT IN THE PROCESSING (INCLUDING, BUT NOT LIMITED
TO CALCULATING, MANAGING, MANIPULATING, COMPARING, AND
SEQUENCING) OF DATE AND DATE-RELATED DATA, FOR THE YEARS
2000 AND BEYOND. AT BUYER'S REQUEST, SELLER SHALL CERTIFY IN
WRITING ITS COMPLIANCE WITH THE FOREGOING.
CTB (RIGHT TO AUDIT):
GM BUYER RESERVES THE RIGHT TO AUDIT ALL PERTINENT DOCUMENTS
RELATING TO THE GOODS OR SERVICES COVERED BY THIS PURCHASE
ORDER AND IF REQUESTED BY BUYER, SELLER SHALL PROVIDE SUCH
DOCUMENTATION PROMPTLY.
C02 CLAUSE C02 - PQS PARTS:
ALL PARTS WITH PQS 15-200 APPEARING IN THE "PQS" FIELD ARE
SUBJECT TO ALL REQUIREMENTS OF GENERAL MOTORS ENGINEERING
STANDARD GM9050P. THIS STANDARD MUST BE ADHERED TO IN THE
PRODUCTION OF THESE FASTENERS.
C40 IF MATH DATA IS TO BE UTILIZED FOR THIS ORDER, C4
COMPLIANCE IS REQUIRED. THE FOLLOWING C4 GUIDELINES SHOULD
BE USED IN CONJUNCTION WITH THE GM SUPPLIER C4 INFORMATION
BOOKLET (GM-1825), AS WELL AS ANY RELATED STATEMENTS OF
WORK, STATEMENTS OF REQUIREMENTS, OR OTHER SPECIFICATIONS
DOCUMENTS GOVERNING THE USE OF C4 AND MATH DATA FOR THIS
ORDER.
BUYER'S PREFERENCE IS TO PROVIDE ALL MATH DATA TRANSMISSIONS
TO
- --------------------------------------------------------------------------------
1) SELLER AGREES TO SELL AND BUYER AGREES TO PURCHASE AT THE PRICE AND UPON
AND SUBJECT TO THE TERMS AND CONDITIONS ON THE FACE AND REVERSE SIDE
HEREOF, APPROXIMATELY THE PERCENTAGE SHOWN OF THE SELLER'S REQUIREMENTS OF
THE ATTACHED ITEMS FOR THE MODEL YEAR SHOWN.
2) PARTS MUST CONFORM TO GENERAL MOTORS PASSENGER CAR AND TRUCK QUALITY
STANDARDS FOR PURCHASED MATERIAL AS INDICATED IN THE TARGETS FOR EXCELLENCE
HANDBOOK.
3) GENERAL MOTORS OF CANADA, LTD., GENERAL MOTORS DO BRAZIL, LTDA., AND
GENERAL MOTORS DE ARGENTINA, S.A. HAVE THE OPTION OF SPECIFYING AGAINST
THIS PURCHASE ORDER.
4) ORDER AND SCHEDULE RELEASES UNDER THIS PURCHASE ORDER WILL BE ISSUED: 1) AT
MANUFACTURING AND ASSEMBLY PLANTS BY BUYER'S SUPERINTENDENT OR BY THE
SUPERVISOR OF MATERIAL AND PRODUCTION CONTROL; 2) AT HEADQUARTERS BY THE
DIRECTOR, GENERAL MOTORS TRUCK GROUP SUPPLIER MANAGEMENT MATERIAL CONTROL
5) THIS PURCHASE ORDER NUMBER MUST APPEAR ON ALL INVOICES, PACKAGES, PACKING
SLIPS AND BILLS OF LADING.
6) SELLER'S CAPABILITY TO PARTICIPATE IN ELECTRONIC DATA INTERCHANGE IS A
CONDITION OF DOING BUSINESS WITH GENERAL MOTORS TRUCK GROUP. COMPUTER TO
COMPUTER COMMUNICATIONS WILL BE USED FOR MATERIAL RELEASE SHIPPING
NOTIFICATION AND OTHER REQUIRED BUSINESS INFORMATION.
- --------------------------------------------------------------------------------
T88 L. CARTER
------------------------------------
ACKNOWLEDGEMENT REQUIRED DATE
IF REQUESTED
<PAGE>
<TABLE>
<CAPTION>
GENERAL MOTORS TRUCK GROUP
GENERAL MOTORS CORPORATION
MAIL CODE 483-512-1B5 ------------------------------------------
2000 CENTERPOINT PARKWAY PURCHASE ORDER P.O. NO. REV. NO. ISSUE DATE PAGE
PONTIAC, MI 48341-3147 ------------------------------------------
1999 MODEL YEAR 9TCH2 001 03/25/98 4 OF 13
---- ------------------------------------------
SHIP DUNS 006532246
- -----------------------------------------------------------------------------------------------------------------------------------
EFFECTIVE
NET PAYMENT TERMS F.O.B. POINT F.O.B. TERMS Z NUMBER DATE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
25TH PROX OR NONE/25TH PROX ROCHESTER HILLS MI COLLECT 2026 08/01/98
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
REQUIREMENTS CONTRACT
AMENDMENT
P0/REV CLAUSES:C40 SELLER IN THE NATIVE FILE FORMAT OF BUYER'S MATH DATA
MASTER. IF NON-STRATEGIC SOFTWARE IS USED, SELLER ASSUMES
ALL COSTS ASSOCIATED WITH ADDITIONAL TRANSLATIONS. IF SELLER
IS TO RETURN ANY MATH DATA, IT MUST BE DATABANKED IN THE
NATIVE FILE FORMAT OF THE MATH DATA MASTER.
SELLER IS RESPONSIBLE FOR THE INSPECTION AND VERIFICATION OF
PARTS TO THE BUYER'S MATH DATA MASTER.
IF PORTABLE MATH DATA MEDIA (MAGNETIC TAPES, CASSETTES, OR
DISKS) ARE USED, SUCH ITEMS AND ANY COPIES BELONG SOLELY TO
BUYER AND MUST BE RETURNED WITHIN 30 DAYS. BUYER'S PORTABLE
MATH DATA MEDIA ARE NOT TO BE USED OR STORED ON SELLER'S
LIBRARIES.
BUYER DEVELOPED PROPRIETARY PRODUCTIVITY TOOLS (SUCH AS
UG/GRIP, USER FUNCTIONS, UNIX SCRIPTS, ETC.), PROVIDED FOR
USE IN CONNECTION WITH THIS ORDER, SHALL NOT BE UTILIZED BY
SELLER FOR ANY PURPOSE(S) OTHER THAN THIS ORDER. ALL COPIES
OF BUYER'S PROPRIETARY PRODUCTIVITY TOOLS ARE TO BE
DESTROYED OR RETURNED TO BUYER UPON REQUEST OR AT COMPLETION
OF THIS ORDER.
C82 PAYMENT IS AUTHORIZED IF SCHEDULED BY GENERAL MOTORS AND
SHIPPED BY THE SUPPLIER PRIOR TO THE CONTRACT EFFECTIVE
DATE.
C95 CLAUSE C95 - SERVICE REQUIREMENTS:
- --------------------------------------------------------------------------------
1) SELLER AGREES TO SELL AND BUYER AGREES TO PURCHASE AT THE PRICE AND UPON
AND SUBJECT TO THE TERMS AND CONDITIONS ON THE FACE AND REVERSE SIDE
HEREOF, APPROXIMATELY THE PERCENTAGE SHOWN OF THE SELLER'S REQUIREMENTS OF
THE ATTACHED ITEMS FOR THE MODEL YEAR SHOWN.
2) PARTS MUST CONFORM TO GENERAL MOTORS PASSENGER CAR AND TRUCK QUALITY
STANDARDS FOR PURCHASED MATERIAL AS INDICATED IN THE TARGETS FOR EXCELLENCE
HANDBOOK.
3) GENERAL MOTORS OF CANADA, LTD., GENERAL MOTORS DO BRAZIL, LTDA., AND
GENERAL MOTORS DE ARGENTINA, S.A. HAVE THE OPTION OF SPECIFYING AGAINST
THIS PURCHASE ORDER.
4) ORDER AND SCHEDULE RELEASES UNDER THIS PURCHASE ORDER WILL BE ISSUED: 1) AT
MANUFACTURING AND ASSEMBLY PLANTS BY BUYER'S SUPERINTENDENT OR BY THE
SUPERVISOR OF MATERIAL AND PRODUCTION CONTROL; 2) AT HEADQUARTERS BY THE
DIRECTOR, GENERAL MOTORS TRUCK GROUP SUPPLIER MANAGEMENT MATERIAL CONTROL.
5) THIS PURCHASE ORDER NUMBER MUST APPEAR ON ALL INVOICES, PACKAGES, PACKING
SLIPS AND BILLS OF LADING.
6) SELLER'S CAPABILITY TO PARTICIPATE IN ELECTRONIC DATA INTERCHANGE IS A
CONDITION OF DOING BUSINESS WITH GENERAL MOTORS TRUCK GROUP. COMPUTER TO
COMPUTER COMMUNICATIONS WILL BE USED FOR MATERIAL RELEASE SHIPPING
NOTIFICATION AND OTHER REQUIRED BUSINESS INFORMATION.
- --------------------------------------------------------------------------------
T88 L. CARTER
------------------------------------
ACKNOWLEDGEMENT REQUIRED DATE
IF REQUESTED
<PAGE>
<TABLE>
<CAPTION>
GENERAL MOTORS TRUCK GROUP
GENERAL MOTORS CORPORATION
MAIL CODE 483-512-1B5 ------------------------------------------
2000 CENTERPOINT PARKWAY PURCHASE ORDER P.O. NO. REV. NO. ISSUE DATE PAGE
PONTIAC, MI 48341-3147 ------------------------------------------
1999 MODEL YEAR 9TCH2 001 03/25/98 5 OF
13
---- ------------------------------------------
SHIP DUNS 006532246
- -----------------------------------------------------------------------------------------------------------------------------------
EFFECTIVE
NET PAYMENT TERMS F.O.B. POINT F.O.B. TERMS Z NUMBER DATE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
25TH PROX OR NONE/25TH PROX ROCHESTER HILLS MI COLLECT 2026 08/01/98
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
REQUIREMENTS CONTRACT
AMENDMENT
PO/REV CLAUSES:C95 IN ACCEPTING A PRODUCTION CONTRACT, SELLER IS RESPONSIBLE
FOR MAINTAINING TOOLS TO DRAWING SPECIFICATIONS AND
PROVIDING, WHEN SCHEDULED, ANY FUTURE SERVICE REQUIREMENTS
FOR CONTRACTED PARTS. TOOLING MUST BE MAINTAINED UNTIL
SELLER RECEIVES WRITTEN NOTICE FROM A GM BUYER AUTHORIZING
THE MOVEMENT OR SCRAP OF TOOLS.
SELLER AGREES TO PROVIDE ALL INFORMATION NECESSARY FOR BUYER
TO COMPLY WITH ALL APPLICABLE LAWS. REGULATIONS AND RELATED
LEGAL REPORTING OBLIGATIONS IN THE COUNTRY(IES) OF
DESTINATION. SELLER AGREES TO PROVIDE ALL DOCUMENTATION
AND/OR ELECTRONIC TRANSACTION RECORDS TO ALLOW BUYER TO MEET
CUSTOMS RELATED OBLIGATIONS. ANY LOCAL CONTENT/ORIGIN
REQUIREMENTS, AND TO OBTAIN ALL TARIFF AND TRADE PROGRAM
DUTY AVOIDANCE(S) AND/OR REFUND BENEFITS, WHERE APPLICABLE.
SELLER AGREES TO COMPLY WITH THE AUTOMOTIVE INDUSTRY ACTION
GROUP'S (AIAG) DOCUMENT AND EDI PROTOCOL AND STANDARDS IN
THEIR SUPPLIER INFORMATION KIT FOR US, CANADA, AND MEXICO
IMPORTS.
SELLER AGREES TO ASSUME, AND TO INDEMNIFY BUYER AGAINST, ANY
AND ALL FINANCIAL RESPONSIBILITY ARISING FROM SELLER'S
FAILURE TO COMPLY WITH THESE REQUIREMENTS AND/OR TO SUPPLY
BUYER WITH THE INFORMATION REQUIRED TO MEET LEGAL REPORTING
OBLIGATIONS, INCLUDING,
- --------------------------------------------------------------------------------
1) SELLER AGREES TO SELL AND BUYER AGREES TO PURCHASE AT THE PRICE AND UPON
AND SUBJECT TO THE TERMS AND CONDITIONS ON THE FACE AND REVERSE SIDE
HEREOF, APPROXIMATELY THE PERCENTAGE SHOWN OF THE SELLER'S REQUIREMENTS OF
THE ATTACHED ITEMS FOR THE MODEL YEAR SHOWN.
2) PARTS MUST CONFORM TO GENERAL MOTORS PASSENGER CAR AND TRUCK QUALITY
STANDARDS FOR PURCHASED MATERIAL AS INDICATED IN THE TARGETS FOR EXCELLENCE
HANDBOOK.
3) GENERAL MOTORS OF CANADA, LTD., GENERAL MOTORS DO BRAZIL, LTDA., AND
GENERAL MOTORS DE ARGENTINA, S.A. HAVE THE OPTION OF SPECIFYING AGAINST
THIS PURCHASE ORDER.
4) ORDER AND SCHEDULE RELEASES UNDER THIS PURCHASE ORDER WILL BE ISSUED: 1) AT
MANUFACTURING AND ASSEMBLY PLANTS BY BUYER'S SUPERINTENDENT OR BY THE
SUPERVISOR OF MATERIAL AND PRODUCTION CONTROL; 2) AT HEADQUARTERS BY THE
DIRECTOR, GENERAL MOTORS TRUCK GROUP SUPPLIER MANAGEMENT MATERIAL CONTROL.
5) THIS PURCHASE ORDER NUMBER MUST APPEAR ON ALL INVOICES, PACKAGES, PACKING
SLIPS AND BILLS OF LADING.
6) SELLER'S CAPABILITY TO PARTICIPATE IN ELECTRONIC DATA INTERCHANGE IS A
CONDITION OF DOING BUSINESS WITH GENERAL MOTORS TRUCK GROUP. COMPUTER TO
COMPUTER COMMUNICATIONS WILL BE USED FOR MATERIAL RELEASE SHIPPING
NOTIFICATION AND OTHER REQUIRED BUSINESS INFORMATION.
- --------------------------------------------------------------------------------
T88 L. CARTER
------------------------------------
ACKNOWLEDGEMENT REQUIRED DATE
IF REQUESTED
<PAGE>
<TABLE>
<CAPTION>
GENERAL MOTORS TRUCK GROUP
GENERAL MOTORS CORPORATION
MAIL CODE 483-512-1B5 ------------------------------------------
2000 CENTERPOINT PARKWAY PURCHASE ORDER P.O. NO. REV. NO. ISSUE DATE PAGE
PONTIAC, MI 48341-3147 ------------------------------------------
1999 MODEL YEAR 9TCH2 001 03/25/98 6 OF 13
---- ------------------------------------------
SHIP DUNS 006532246
- -----------------------------------------------------------------------------------------------------------------------------------
EFFECTIVE
NET PAYMENT TERMS F.O.B. POINT F.O.B. TERMS Z NUMBER DATE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
25TH PROX OR NONE/25TH PROX ROCHESTER HILLS MI COLLECT 2026 08/01/98
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
REQUIREMENTS CONTRACT
AGREEMENT
PO/REV CLAUSES: C95 WITHOUT LIMITATION, AND FINES, PENALTIES, FORFEITURES, OR
COUNSEL FEES INCURRED OR IMPOSED AS A RESULT OF ACTIONS
TAKEN BY THE IMPORTING COUNTRY'S GOVERNMENT.
.
.
..................PREMIUM FREIGHT CLAUSE..................
IF SELLER'S ACTS OR OMISSIONS RESULT IN SELLER'S FAILURE
TO MEET BUYER'S REQUIREMENTS AND BUYER REQUIRES A MORE
EXPEDITIOUS METHOD OF TRANSPORTATION FOR THE GOODS THAN
THE TRANSPORTATION METHOD ORIGINALLY SPECIFIED BY BUYER,
SELLER SHALL SHIP THE GOODS AS EXPEDITIOUSLY AS POSSIBLE
AT SELLER'S SOLE EXPENSE.
99C * * * * * * * * * 1999 CARRYOVER CONTRACT * * * * * * * *
* * * THIS PO ISSUED FOR 1999 CARRYOVER PURPOSES ONLY * *
- --------------------------------------------------------------------------------
1) SELLER AGREES TO SELL AND BUYER AGREES TO PURCHASE AT THE PRICE AND UPON
AND SUBJECT TO THE TERMS AND CONDITIONS ON THE FACE AND REVERSE SIDE
HEREOF, APPROXIMATELY THE PERCENTAGE SHOWN OF THE SELLER'S REQUIREMENTS OF
THE ATTACHED ITEMS FOR THE MODEL YEAR SHOWN.
2) PARTS MUST CONFORM TO GENERAL MOTORS PASSENGER CAR AND TRUCK QUALITY
STANDARDS FOR PURCHASED MATERIAL AS INDICATED IN THE TARGETS FOR EXCELLENCE
HANDBOOK.
3) GENERAL MOTORS OF CANADA, LTD., GENERAL MOTORS DO BRAZIL, LTDA., AND
GENERAL MOTORS DE ARGENTINA, S.A. HAVE THE OPTION OF SPECIFYING AGAINST
THIS PURCHASE ORDER.
4) ORDER AND SCHEDULE RELEASES UNDER THIS PURCHASE ORDER WILL BE ISSUED: 1) AT
MANUFACTURING AND ASSEMBLY PLANTS BY BUYER'S SUPERINTENDENT OR BY THE
SUPERVISOR OF MATERIAL AND PRODUCTION CONTROL; 2) AT HEADQUARTERS BY THE
DIRECTOR, GENERAL MOTORS TRUCK GROUP SUPPLIER MANAGEMENT MATERIAL CONTROL.
5) THIS PURCHASE ORDER NUMBER MUST APPEAR ON ALL INVOICES, PACKAGES, PACKING
SLIPS AND BILLS OF LADING.
6) SELLER'S CAPABILITY TO PARTICIPATE IN ELECTRONIC DATA INTERCHANGE IS A
CONDITION OF DOING BUSINESS WITH GENERAL MOTORS TRUCK GROUP. COMPUTER TO
COMPUTER COMMUNICATIONS WILL BE USED FOR MATERIAL RELEASE SHIPPING
NOTIFICATION AND OTHER REQUIRED BUSINESS INFORMATION.
- --------------------------------------------------------------------------------
T88 L. CARTER
------------------------------------
ACKNOWLEDGEMENT REQUIRED DATE
IF REQUESTED
<PAGE>
<TABLE>
<CAPTION>
GENERAL MOTORS TRUCK
GENERAL MOTORS CORPORATION THIS PURCHASE ORDER
2000 CENTERPOINT PARKWAY NUMBER MUST APPEAR ON
PONTIAC, MI 48341-3147 ALL INVOICES, PACKAGES, PACKING SLIPS,
AND BILLS OF LADING.
----------------------------------------------
PURCHASE ORDER P.O. NO. REV. NO. ISSUE DATE PAGE
----------------------------------------------
VENDOR: 2026 GP PLASTICS INC 1999 MODEL YEAR 9TCH2 001 03/25/98 7 OF 13
BUYER : T88 L. CARTER ---- --------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
R C PQS M T DAILY APRX. PRICES DATES
DRAWING
PART PART E L REQUIRED V I CAPACITY % OF EXPENDABLE CURR EFFECTIVE SAMPLE DATE/
NUMBER DESCRIPTION A A (CODES) S R /HOURS BUS. RETURNABLE UNIT EXPIRATION DATE NUMBER
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
15011453 HANDLE ASM-ASST A 2 N 14250 100 1.19000 USD 08/01/98
24 EACH 07/31/99
15023783
15011454 HANDLE ASM-ASST A 2 N 14250 100 1.9000 USD 08/01/98
24 EACH 07/31/99
15023783
15011455 HANDLE ASM-ASST A 2 N 2550 100 1.19000 USD 08/01/98
24 EACH 07/31/99
15023783
15011459 COVER-ASST HDL A N 45000 100 0.02000 USD 08/01/98
24 EACH 07/31/99
15960673
15023774 HANDLE ASM-W/S A 2 N 8300 100 1.19000 USD 08/01/98
03/13/96
24 EACH 07/31/99
15023776 HANDLE ASM-W/S A 2 N 8300 100 1.19000 USD 08/01/98
15023774 CHART 24 EACH 07/31/99
15023778 HANDLE ASM-W/S A 2 N 8300 100 1.19000 USD 08/01/98
15023774 CHART 24 EACH 07/31/99
15023780 HANDLE ASM-W/S A 2 N 8300 100 1.19000 USD 08/01/98
15023774 CHART 24 EACH 07/31/99
15023782 HANDLE ASM-W/S A 2 N 940 100 1.19000 USD 08/01/98
15023774 CHART 24 EACH 07/31/99
15023783 HANDLE ASM-ASST A 2 N 14250 100 1.19000 USD 08/01/98
03/13/96
24 EACH 07/31/99
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GENERAL MOTORS TRUCK
GENERAL MOTORS CORPORATION THIS PURCHASE ORDER
2000 CENTERPOINT PARKWAY NUMBER MUST APPEAR ON
PONTIAC, MI 48341-3147 ALL INVOICES, PACKAGES, PACKING SLIPS,
AND BILLS OF LADING.
--------------------------------------------
PURCHASE ORDER P.O. NO. REV. NO. ISSUE DATE PAGE
----------------------------------------------
VENDOR: 2026 GP PLASTICS INC 1999 MODEL YEAR 9TCH2 001 03/25/98 8 OF
13
BUYER : T88 L. CARTER ---- ---------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
R C PQS M T DAILY APRX. PRICES DATES
DRAWING
PART PART E L REQUIRED V I CAPACITY % OF EXPENDABLE CURR EFFECTIVE SAMPLE DATE/
NUMBER DESCRIPTION A A (CODES) S R /HOURS BUS. RETURNABLE UNIT EXPIRATION DATE NUMBER
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
15023784 HANDLE ASM-ASST A 2 N 14250 100 1.19000 USD 08/01/98
24 EACH 07/31/99
15023785 HANDLE ASM-ASST A 2 N 2550 100 1.19000 USD 08/01/98
24 EACH 07/31/99
15023786 HANDLE ASM-ASST A 2 N 14250 100 1.19000 USD 08/01/98
24 EACH 07/31/99
15023787 HANDLE ASM-ASST A 2 N 1700 100 1.19000 USD 08/01/98
24 EACH 07/31/99
15028341 HANDLE ASM-ASST A 2 N 4300 100 1.19000 USD 08/01/98
24 EA 07/31/99
15028342 COVER-ASST HDL A N 8200 100 0.02000 USD 08/01/98
24 EA 07/31/99
15028388 HANDLE ASM-ASST A 2 N 4300 100 1.19000 USD 08/01/98
24 EA 07/31/99
15717525 COVER-R/SEAT RS A 2 N 1380 100 0.64322 USD 08/01/98 10/02/95
24 EACH 07/31/99
15717526 COVER-R/SEAT RS A 2 N 1380 100 0.64322 USD 08/01/98
15717525 CHART 24 EACH 07/31/99
15717527 COVER-R/SEAT RS A 2 N 1380 100 0.64322 USD 08/01/98
15717525 CHART 24 EACH 07/31/99
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GENERAL MOTORS TRUCK
GENERAL MOTORS CORPORATION THIS PURCHASE ORDER
2000 CENTERPOINT PARKWAY NUMBER MUST APPEAR ON
PONTIAC, MI 48341-3147 ALL INVOICES, PACKAGES, PACKING SLIPS,
AND BILLS OF LADING.
----------------------------------------------
PURCHASE ORDER P.O. NO. REV. NO. ISSUE DATE PAGE
----------------------------------------------
VENDOR: 2026 GP PLASTICS INC 1999 MODEL YEAR 9TCH2 001 03/25/98 9 OF 13
BUYER : T88 L. CARTER ---- ----------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
R C PQS M T DAILY APRX. PRICES DATES
DRAWING
PART PART E L REQUIRED V I CAPACITY % OF EXPENDABLE CURR EFFECTIVE SAMPLE DATE/
NUMBER DESCRIPTION A A (CODES) S R /HOURS BUS. RETURNABLE UNIT EXPIRATION DATE NUMBER
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
15717528 COVER-R/SEAT RS A 2 N 1380 100 0.64322 USD 08/01/98
15717525 CHART 24 EACH 07/31/99
15717529 COVER-R/SEAT RS A 2 N 1380 100 0.64322 USD 08/01/98
15717525 CHART 24 EACH 07/31/99
15717531 COVER-R/SEAT RS A 2 N 2064 100 0.52508 USD 08/01/98
10/17/95
24 EACH 07/31/99
15717532 COVER-R/SEAT RS A 2 N 2064 100 0.52508 USD 08/01/98
15717531 CHART 24 EACH 07/31/99
15717533 COVER-R/SEAT RS A 2 N 2064 100 0.52508 USD 08/01/98
15717531 CHART 24 EACH 07/31/99
15717534 COVER-R/SEAT RS A 2 N 2064 100 0.52508 USD 08/01/98
15717531 CHART 24 EACH 07/31/99
15717535 COVER-R/SEAT RS A 2 N 2064 100 0.52508 USD 08/01/98
15717531 CHART 24 EACH 07/31/99
15734607 HANDLE ASM-ASST A 2 N 1600 100 2.15640 USD 08/01/98
09/18/95
16 EACH 07/31/99
15734608 HANDLE ASM-ASST A 2 N 1600 100 2.15640 USD 08/01/98
09/18/95
16 EACH 07/31/99
15734609 HANDLE ASM-ASST A 2 N 1600 100 2.15640 USD 08/01/98
15734607 CHART 16 EACH 07/31/99
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GENERAL MOTORS TRUCK
GENERAL MOTORS CORPORATION THIS PURCHASE ORDER
2000 CENTERPOINT PARKWAY NUMBER MUST APPEAR ON
PONTIAC, MI 48341-3147 ALL INVOICES, PACKAGES, PACKING SLIPS,
AND BILLS OF LADING.
----------------------------------------------
PURCHASE ORDER P.O. NO. REV. NO. ISSUE DATE PAGE
----------------------------------------------
VENDOR: 2026 GP PLASTICS INC 1999 MODEL YEAR 9TCH2 001 03/25/98 10 OF 13
BUYER : T88 L. CARTER ---- ----------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
R C PQS M T DAILY APRX. PRICES DATES
DRAWING
PART PART E L REQUIRED V I CAPACITY % OF EXPENDABLE CURR EFFECTIVE SAMPLE DATE/
NUMBER DESCRIPTION A A (CODES) S R /HOURS BUS. RETURNABLE UNIT EXPIRATION DATE NUMBER
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
15734610 HANDLE ASM-ASST A 2 N 1600 100 2.15640 USD 08/01/98
15734608 CHART 16 EACH 07/31/99
15734611 HANDLE ASM-ASST A 2 N 1600 100 2.15640 USD 08/01/98
15734607 CHART 16 EACH 07/31/99
15734612 HANDLE ASM-ASST A 2 N 1600 100 2.15640 USD 08/01/98
15734608 CHART 16 EACH 07/31/99
15734613 HANDLE ASM-ASST A 2 N 1600 100 2.15640 USD 08/01/98
15734607 CHART 16 EACH 07/31/99
15734614 HANDLE ASM-ASST A 2 N 1600 100 2.15640 USD 08/01/98
15734608 CHART 16 EACH 07/31/99
15734615 HANDLE ASM-ASST A 2 N 1600 100 2.15640 USD 08/01/98
15734607 CHART 16 EACH 07/31/99
15734616 HANDLE ASM-ASST A 2 N 1600 100 2.15640 USD 08/01/98
15734608 CHART 16 EACH 07/31/99
15953365 HOOK ASM-COAT A N 3250 100 0.31410 USD 08/01/98
11/09/94
24 EACH 07/31/99
15953366 HOOK ASM-COAT A N 3250 100 0.31410 USD 08/01/98
11/09/94
24 EACH 07/31/99
15953367 HOOK ASM-COAT A N 3250 100 0.31410 USD 08/01/98
15953365 CHART 24 EACH 07/31/99
15953365
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GENERAL MOTORS TRUCK
GENERAL MOTORS CORPORATION THIS PURCHASE ORDER
2000 CENTERPOINT PARKWAY NUMBER MUST APPEAR ON
PONTIAC, MI 48341-3147 ALL INVOICES, PACKAGES, PACKING SLIPS,
AND BILLS OF LADING.
----------------------------------------------
PURCHASE ORDER P.O. NO. REV. NO. ISSUE DATE PAGE
----------------------------------------------
VENDOR: 2026 GP PLASTICS INC 1999 MODEL YEAR 9TCH2 001 03/25/98 11 OF 13
BUYER : T88 L. CARTER ---- ----------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
R C PQS M T DAILY APRX. PRICES DATES
DRAWING
PART PART E L REQUIRED V I CAPACITY % OF EXPENDABLE CURR EFFECTIVE SAMPLE DATE/
NUMBER DESCRIPTION A A (CODES) S R /HOURS BUS. RETURNABLE UNIT EXPIRATION DATE NUMBER
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
15953368 HOOK ASM-COAT A N 3250 100 0.31410 USD 08/01/98
15953366 CHART 24 EACH 07/31/99 15953366
15953369 HOOK ASM-COAT A N 975 100 0.31410 USD 08/01/98
15953365 CHART 24 EACH 07/31/99 15953365
15953370 HOOK ASM-COAT A N 975 100 0.31410 USD 08/01/98
15953366 CHART 24 EACH 07/31/99 15953366
15953371 HOOK ASM-COAT A N 650 100 0.31410 USD 08/01/98
15953365 CHART 24 EACH 07/31/99 15953365
15953372 HOOK ASM-COAT A N 650 100 0.31410 USD 08/01/98
15953366 CHART 24 EACH 07/31/99 15953366
15958802 SPACER-ASST HDL A N 4000 100 0.07000 USD 08/01/98 12/05/94
16 EACH 07/31/99
15960673 COVER-ASST HDL A 2 N 45000 100 0.02000 USD 08/01/98 11/09/94
24 EACH 07/31/99
15960674 COVER-ASST HDL A 2 N 45000 100 0.02000 USD 08/01/98
15960673 CHART 24 EACH 07/31/99
15960675 COVER-ASST HDL A 2 N 45000 100 0.02000 USD 08/01/98
15960673 CHART 24 EACH 07/31/99
15960676 COVER-ASST HDL A 2 N 45000 100 0.02000 USD 08/01/98
15960673 CHART 24 EACH 07/31/99
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GENERAL MOTORS TRUCK
GENERAL MOTORS CORPORATION THIS PURCHASE ORDER
2000 CENTERPOINT PARKWAY NUMBER MUST APPEAR ON
PONTIAC, MI 48341-3147 ALL INVOICES, PACKAGES, PACKING SLIPS,
AND BILLS OF LADING.
----------------------------------------------
PURCHASE ORDER P.O. NO. REV. NO. ISSUE DATE PAGE
----------------------------------------------
VENDOR: 2026 GP PLASTICS INC 1999 MODEL YEAR 9TCH2 001 03/25/98 12 OF 13
BUYER : T88 L. CARTER ---- ----------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
R C PQS M T DAILY APRX. PRICES DATES
DRAWING
PART PART E L REQUIRED V I CAPACITY % OF EXPENDABLE CURR EFFECTIVE SAMPLE DATE/
NUMBER DESCRIPTION A A (CODES) S R /HOURS BUS. RETURNABLE UNIT EXPIRATION DATE NUMBER
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
15960677 COVER-ASST HDL A N 45000 100 0.02000 USD 08/01/98
24 EACH 07/31/99
15960678 COVER-ASST HDL A N 60000 100 0.04000 USD 08/01/98 11/15/94
24 EACH 07/31/99
15960679 COVER-ASST HDL A N 60000 100 0.04000 USD 08/01/98
15960678 CHART 24 EACH 07/31/99
15960680 COVER-ASST HDL A N 60000 100 0.04000 USD 08/01/98
15960678 CHART 24 EACH 07/31/99
15960681 COVER-ASST HDL A N 60000 100 0.04000 USD 08/01/98
15960678 CHART 24 EACH 07/31/99
15975644 HOOK-COAT A N 3250 100 0.31410 USD 08/01/98
24 EACH 07/31/99 15953366
15975669 HOOK-COAT A N 488 100 0.31410 USD 08/01/98
15953365 CHART 24 EACH 07/31/99 15953365
15975697 COVER-W/S SI FR A 2 N 45000 100 0.02000 USD 08/01/98
24 EACH 07/31/99 15960673
15975916 COVER-ASST HDL A N 6000 100 0.04000 USD 08/01/98
24 EACH 07/31/99 15960678
15999202 COVER-ASST HDL A N 2000 100 0.02000 USD 08/01/98
15960673 CHART 16 EACH 07/31/99
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GENERAL MOTORS TRUCK
GENERAL MOTORS CORPORATION THIS PURCHASE ORDER
2000 CENTERPOINT PARKWAY NUMBER MUST APPEAR ON
PONTIAC, MI 48341-3147 ALL INVOICES, PACKAGES, PACKING SLIPS,
AND BILLS OF LADING.
----------------------------------------------
PURCHASE ORDER P.O. NO. REV. NO. ISSUE DATE PAGE
----------------------------------------------
VENDOR: 2026 GP PLASTICS INC 1999 MODEL YEAR 9TCH2 001 03/25/98 13 OF 13
BUYER : T88 L. CARTER ---- ----------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
R C PQS M T DAILY APRX. PRICES DATES DRAWING
PART PART E L REQUIRED V I CAPACITY % OF EXPENDABLE CURR EFFECTIVE SAMPLE DATE/
NUMBER DESCRIPTION A A (CODES) S R /HOURS BUS. RETURNABLE UNIT EXPIRATION DATE NUMBER
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
15999203 COVER-ASST HDL A N 1500 100 0.02000 USD 08/01/98
16 EACH 07/31/99
</TABLE>
<PAGE>
EXHIBIT 10.02
<TABLE>
<CAPTION>
A.E.P. TECHNOLOGIES
Date: 11/03/98 8:06 AM DOCUMENT PROCESSING - DETAIL Page: 2
----------------------------
<S> <C> <C> <C> <C> <C> <C>
SET: 860 PO Change Request PRTNR: CHRY2 CHRYSLER CORP STD-VER: 002003 IC-CTL-NO: 112 FG-CTL-NO: 62
Transaction Set Purp:Change Purchase Order Type: New Order Purchase Order Numbe: 08599054 Change Order Sequence: H (changed 11-3-98
D.P.)
Purchase Order Date: 11/02/98 THIS ORDER INCORPORATES THE TERMS AND CONDITIONS CONTAINED
IN CHRYSLER'S PRODUCTION PURCHASING GENERAL TERMS AND CONDITIONS, FORM NUMBER 84-806-1875 (2/94) REASON FOR AMENDMENT
CN PRC UPDT Entity Identifier Co: Buying Party Currency Code: US Dollar Shipment Method of P: Collect
Origin (Shipping Point): 51825 ROCHESTER HILLS MI Allowance or Charge: Charge special Services Cod: Non-returnable Containers
Allowance or Charge: Charge to be Paid by Customer Allowance or Charge: 092 Allowance or Charge: .0
Description: CLAUSE REFER TO TEXT - CONTAINERS Special Charge Code: Container Service Charge USA/C Terms Type Code: Proximo
Terms Basis Date Cod: Invoice Date Day of Month: 30 Scheduling/Shipping: Ship per Schedule Description: PER WRITTEN RELEASE
</TABLE>
Clause Number 0056
Clause Number 022A
Clause Number 057
Clause Number 078
Clause Number 190
Clause Number 190A
Clause Number 193
Clause Number 211
Clause Number 229
Clause Number 281
Clause Number 2880
Clause Number 291
Clause Number 082X
BLANKET ORDER FOR APPROXIMATELY 65-100% OF OUR FOLLOWING PLANT REQUIREMENTS
BEGINNING 1998 MODEL YEAR AND CONTINUING ON A YEAR TO YEAR BASIS THEREAFTER,
THIS PURCHASE ORDER IS AUTOMATICALLY CANCELLED AT NO COST TO CHRYSLER IF NO
RELEASES ARE ISSUED UNDER THIS ORDER DURING ANY TWELVE-MONTH PERIOD.
<PAGE>
A.E.P. TECHNOLOGIES
Date: 11/03/98 DOCUMENT PROCESSING - DETAIL Page: 3
----------------------------
SET: 860 PO Change Request PRTNR: CHRY2 CHRYSLER CORP STD-VER: 002003
IC-CTL-NO: 112
FG-CTL-NO: 62
Clause Number 005F
TEXT ON PRIOR AMENDMENT
Clause Number 090
TEXT ON PRIOR AMENDMENT
Clause Number 096M
TEXT ON PRIOR AMENDMENT
Clause Number 098A
TEXT ON PRIOR AMENDMENT
Clause Number 409
TEXT ON PRIOR AMENDMENT
Clause Number 680
TEXT ON PRIOR AMENDMENT
Clause Number 699
TEXT ON PRIOR AMENDMENT
Clause Number 720
TEXT ON PRIOR AMENDMENT
Clause Number 005D
(CHRYSLER)(IS NOT)
Clause Number 092
04860376AA / 0.2800/FOR U.S. ONLY EXPENDABLE)
04860376AA / 0.8500/FOR GRAZ ONLY EXPENDABLE)
Clause Number 198
(NONE)
CLAUSE ON FORM NO: 84-806-1824 10-94 OR ON A PRIOR AMENDMENT
Buying Party CHRYSLER CORPORATION Buyer Name or Department: 136505T.M. GEISTER:
2485763655
Selling Party A E P TECHNOLOGIES INC Assigned by Buyer: 51825 3910 INDUSTRIAL
DRIVE ROCHESTER HILLS Michigan 0116-48309
<PAGE>
<TABLE>
<CAPTION>
A.E.P. TECHNOLOGIES
Date: 11/03/98 8:06 AM DOCUMENT PROCESSING - DETAIL Page:
4
----------------------------
<S> <C> <C> <C> <C> <C> <C>
SET: 860 PO Change Request PRTNR: CHRY2 CHRYSLER CORP STD-VER: 002003 IC-CTL-NO: 112 FG-CTL-NO: 62
United States
Ship To PER WRITTEN RELEASE
Party to be billed (AAR Account PER WRITTEN RELEASE
Receiving Location ALL VEHICLE ASSEMBLY PLANTS
Receiving Location ST. LOUIS ASSEMBLY PLANT II - SOUTH
Receiving Location SERVICE PARTS DIVISION
Receiving Location CANADA SERVICE PARTS DIVISION
Party to Recieve Ship Notice A E P TECHNOLOGIES INC Assigned by Buyer: 51825 3910 INDUSTRIAL DRIVE ROCHESTER HILLS Michigan
0116-48309 United States
Manufacturing Plant A E P TECHNOLOGIES INC Assigned by Buyer: 51825 ROCHESTER HILLS Michigan 0116-48309 United States
===================================================================================================================================
Assigned Identificat: 000001 Line Item Change or: Concurrent Item (No Change) Each Unit Price: 6.9656
Buyer's Part Number: 04860376AA Print or Drawing: K Free-form Prod Charstic Cd: General Product Form Desc: BRACKET ASSY
Model year number: 00 : 70709-M00-AG FINISH PER MATERIAL STANDARDS AND B/P CHANGE K 04860376AA
PRCE CHG-A1 PLUS 0 T/C- 3840 /2 Effective: 08/01/99
===================================================================================================================================
Assigned Identificat: 000002 Line Item Change or: Concurrent Item (No Change) Each Unit Price: 6.9656
Buyer's Part Number: 04860376AA Print or Drawing: K Free-form Prod Charstic Cd: Gernal Product Form Desc: BRACKET ASSY
Model year number: 99 : 70709-M00-AG FINISH PER MATERIAL STANDARDS AND B/P CHANGE K 04860376AA
PRCE CHG-A1 PLUS 0 T/C- 3840 /2 Effective: 11/23/98
===================================================================================================================================
Assigned Identificat: 000003 Line Item Change or: Concurrent Item (No Change) Each Unit Price: 6.9656
Buyer's Part Number: 04860376AA Print or Drawing: K Free-form Prod Charstic Cd: Gernal Product Form Desc: BRACKET ASSY
Model year number: M : 70709-M00-AG ABOVE ITEM REFLECTS SERVICE PARTS DIVISION REGMT FINISHED
PER LATEST MATERIAL STANDARDS AND BLUEPRINT CHANGE. 04860376AA PRCE CHG-A1 PLUS 0 Effective 11/23/98
Number of Line Items: 3
</TABLE>
EXHIBIT 10.03
JOINT INVENTORSHIP AGREEMENT
THIS Joint Inventorship Agreement (Agreement) is made on October 24, 1998
(Effective Date) between CHRYSLER CORPORATION, with an office at 1000 Chrysler
Drive, Auburn Hills, Michigan, 48326-2766 (Chrysler) and GP Plastics with an
office at 3910 Industrial Drive, Rochester Hills, Michigan 48309 (GP).
RECITALS:
WHEREAS the Parties cooperated in the development of a plastic steering
column support mounting bracket and such cooperation has resulted in the joint
development of the Invention that may be of patentable nature; and
WHEREAS, the Parties desire to obtain patent protection for the Invention;
NOW, THEREFORE, in consideration of the mutual promises herein, the Parties
agree as follows:
1. DEFINITIONS
1.1 As used in this Agreement, the following terms have the meanings set
forth below:
"Affiliate" shall mean, with respect to any specified Person, a Person that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, the Person specified. For
purposes of this definition, the term "control" and any term derived therefrom
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person, whether through
ownership of voting securities, by contract or otherwise.
"Invention" shall mean the development made jointly by Chrysler and GP
which relates to a plastic steering column support mounting bracket.
-1-
<PAGE>
"Patent" shall mean all U.S. and foreign patent applications and patents
and any other governmental indicia of ownership which may be granted based upon
the Invention.
"Person" shall mean any individual, entity, corporation, partnership,
association, limited liability company, limited liability partnership, joint-
stock company, trust, unincorporated organization or governmental authority.
"Party" shall mean either Chrysler or GP and in the plural shall mean both.
"Subsidiary" shall mean any Person more than 50% of the issued and
outstanding voting capital stock of which is owned, in the aggregate, directly
or indirectly, by a Party.
2. OWNERSHIP
2.1 Joint Ownership The Parties shall each have the right to jointly own
any Patent provided that each Party is willing to share equally in the cost of
obtaining and maintaining the Patent.
2.2 Sole Ownership Should either Party decide not to share, or not continue
to share, equally in the cost of obtaining or maintaining a particular Patent,
it shall not be required to do so but it must timely notify the other Party of
this decision and assign, free of charge, its ownership interest in such Patent,
including all causes of action relating thereto, to the other Party upon the
request of the other Party but shall have for itself, its Affiliates, and its
Subsidiaries a royalty-free, non-exclusiv e, perpetual license to make, have
made, use, offer to sell, sell, and import under such Patent. The other Party
may, however, at its discretion allow such Patent to become abandoned.
2.3 Selection of Counsel The Parties shall cooperate on a reasonable basis
in the selection of legal counsel to obtain, or maintain Patents using the
criteria of skill and cost in making this selection for Patents which each Party
agrees to share the costs involved. In cases where one Party does not agree to
share the cost, the other Party shall have the sole right to select legal
counsel and obtain and maintain the Patent at its discretion.
-2-
<PAGE>
3. LICENSING
3.1 Granting The Parties shall each have the right to independently grant
non-exclusive licenses to third parties under a jointly owned Patent to make,
have made, use, offer to sell, sell, and import under such Patent.
3.2 Royalties The Parties shall share equally in all royalties from the
licensing of any jointly owned Patent but should one Party be the sole owner of
a Patent, the other Party shall not be entitled to share in royalties from the
licensing of such Patent.
4. INFRINGEMENT ACTIONS
4.1 INITIATING ACTION The Parties shall jointly decide whether to bring an
action for infringement of any jointly owned Patent against a third party. If
either Party desires to bring such an action but the other Party does not, the
Party desiring to bring such an action may do so provided that it is able to do
so, and does do so, in its own name without joining the other Party in the
action and shall thereafter have sole control of the action including
settlement, dismissal, and like action terminating events. The other Party shall
not grant a license to such third party after the action is initiated.
4.2 EXPENSES AND RECOVERIES OF ACTION If the Parties decide to jointly
bring an infringement action, they will share equally in all expenses and
recoveries resulting from such action. If one or the other of the Parties does
not join in such action, the non-joining Party shall not be obligated to share
in the expenses of the action or be entitled to share in any recoveries,
including royalties from the licensing of such patent to the third party,
resulting from such action.
4.3 SELECTION OF COUNSEL The Parties shall cooperate on a reasonable basis
in the selection of legal counsel to prosecute an infringement action using the
criteria of skill and cost in making this selection for such action which each
agrees to jointly bring. In cases where one Party does not agree to bring a
joint action, the other Party shall have the sole right to select legal counsel
to prosecute such an action.
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<PAGE>
5. TERM AND TERMINATION
5.1 TERM This Agreement shall terminate upon expiration of the last of any
Patent that falls within this Agreement. If no Patent shall be granted or
pending after five (5) years following the Effective Date of the Agreement, the
Agreement shall terminate.
5.2 EFFECT OF TERMINATION Termination of this Agreement will not release a
Party from any outstanding obligations accruing before the termination or alter
any assignment or license that then exists under this Agreement.
5.3 BREACH In the event that either Party materially breaches this
Agreement, the other Party will have the right to terminate this Agreement after
notice to the breaching Party, unless the breaching Party has cured the breach
within 60 days of notice.
6. ASSIGNMENT
This Agreement is assignable, and must be assigned, along with a Parties'
assignment of all ownership interest and license rights hereunder to a third
party. The Agreement is binding upon and inures to the benefit of the Parties
and their successors and assigns.
7. WAIVER
Neither a failure by a Party to enforce any provision of this Agreement nor
a right that may arise to a Party as a result of a breach of this Agreement by
the other party may be construed as:
a waiver of any right;
having any effect on the validity of any part or the entirety of this
Agreement; or
a prejudice against any party in a subsequent legal action; except that
each party may expressly waive any of its rights under this Agreement by an
appropriate writing that specifically refers to the contractual right that
is being waived. A waiver of a breach of this Agreement is not a waiver of
another breach.
-4-
<PAGE>
8. RECORDAL
Any Party hereto may record this Agreement.
9. NO JOINT VENTURE
This Agreement does not create a partnership, joint venture, or agency
relationship between the Parties. No Party has the power to obligate or bind any
other Party hereto.
10. HEADINGS
The headings are for convenience of reference only and do not affect the
interpretation or scope of this Agreement.
11. SEVERABILITY
If a provision of this Agreement is unenforceable, the remaining provisions
continue in effect.
12. GOVERNING LAW
This Agreement is governed by the laws of the State of Michigan as
though fully performed therein, without reference to its principles of conflict
of laws.
13. MUTUAL COOPERATION
The Parties will cooperate in securing the execution of any documents
required to implement this Agreement and to enforce the rights granted by it.
14. WAIVER OF PUNITIVE DAMAGES AND JURY TRIAL
THE PARTIES TO THIS AGREEMENT EXPRESSLY WAIVE AND FOREGO ANY RIGHT TO
RECOVER PUNITIVE, EXEMPLARY OR SIMILAR DAMAGES IN ANY ARBITRATION, LAWSUIT,
LITIGATION OR PROCEEDING ARISING OUT OF OR RESULTING FROM ANY CONTROVERSY OR
CLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
-5-
<PAGE>
15. NOTICES
All notices, requests, demands and other communications hereunder shall be
in writing and shall be deemed to have been duly given if delivered or mailed,
certified or registered mail, first-class postage paid, return receipt
requested, or any other delivery service with proof of delivery, or if
transmitted by telecopier, confirmation of receipt requested;
if to Chrysler;
Chrysler Corporation
1000 Chrysler Drive
Auburn Hills, Michigan 48326-2766
Attention: Chief Patent Counsel
if to GP Plastics;
GP Plastics
3910 Industrial Drive
Rochester Hills, Michigan 48309
Attention: David Shifflett
Attention:
or to such other address or to such other person as any Party hereto shall have
last designated by notice to the other.
16. NO THIRD PARTY BENEFICIARIES
Except as otherwise provided herein, nothing in this Agreement shall confer
any rights upon any entity not a Party or a successor or permitted assignee of a
Party to this Agreement.
17. COUNTERPARTS
This Agreement may be signed in several counterparts, each of which shall
be deemed an original and all of which together shall constitute one and the
same instrument.
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<PAGE>
18. MERGER AND INTEGRATION
This Agreement constitutes the entire agreement between the Parties. Any
change in this Agreement must be in writing with specific reference to this
Agreement and signed by an authorized representative of each Party. All prior
understandings between the Parties are merged and integrated into this
Agreement.
IN WITNESS WHEREOF, the Parties have signed this Agreement effective
as of the date first written above:
CHRYSLER CORPORATION GP PLASTICS
By: /s/ William J. Coughlin By: /s/ David C. Shifflett
----------------------------- ----------------------------
Name: William J. Coughlin Name: David C. Shifflett
--------------------------- ----------------------------
(Printed) (Printed)
Title: Chief Patent Counsel Title: V.P. Business Development
-------------------------- ---------------------------
Date: 10/24/98 Date: 10/13/98
--------------------------- ----------------------------
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<PAGE>
<TABLE>
<CAPTION>
<S><C>
Patent and TradeMark Office: U.S. DEPARTMENT OF COMMERCE
Under the Paperwork Reduction Act of 1995, no persons are required to respond to
a collection of information. Unless it displays a valid CMB control number.
UTILITY Attorney Docket No. 9 7 - 1 6 3 2 Total Pages 2
PATENT APPLICATION First Named Inventor or Application Identifier
TRANSMITTAL Dennis F. Stedman
(Only for new nonprovisional application under 37 CFR Express Mail Label No. EL019793315US
1.53(b))
Application Elements ADDRESS TO: Assistant Commissioner for Patent
See MPEP chapter 600 concerning utility patent application contents. Box Patent Application
Washington, D.C. 20231
1. _X Fee Transmittal Form 6. - Microfiche Computer Program (Appendix)
(Submit an original, and a duplicate for fee processing)
2. X Specification (Total Pages 12)
(preferred arrangement set forth below)
- -Descriptive title of the invention 7. Nucleotide and/or Amino Acid Sequence
- -Cross References to Related Applications Submission (if applicable, all necessary)
- -Statement Regarding Fed sponsored R&D a. - Computer Readable Copy
- -Reference to Microfiche Appendix b. - Paper Copy (identical to computer copy)
- -Background of the Invention c. - Statement verifying identity of above copies
- -Brief Summary of the Invention
- -Brief Description of the Drawings (if filed)
- -Detailed Description
- -Claim(s) ACCOMPANY APPLICATION PARTS
- -Abstract of the Disclosure
3. X Drawings(s) (35USC 113) [Total Sheets 4] 8. - Assignment Papers (cover sheet & document(s))
4. X Oath or Declaration [Total Pages 2] 9. X 37 CFR 3.73(b) Statement
a. X Newly executed (original or copy) (when there is an assignee X Power of Attorney
b. - Copy from a prior application (37 CFR 1.63(d))
(for continuation/divisional with Box 17 completed) 10. - English Translation Document (if applicable)
(Note Box 5 below)
i. __ DELETION OF INVENTOR(S) 11. X Information Disclosure Statement
Signed statement attached deleting (IDS)/PTO-1449 X Copies of IDS Citations
inventors) named in the prior application
See 37 CFR 1.63(d)(2) and 1.33(b). 12. - Preliminary Amendment
5. _ Incorporation By Reference useable if Box 4b is 13. X Return Receipt Postcard (MPEP 503)
checked) The entire disclosure of the prior (Should be specifically itemized)
application, from which a copy of the oath
or declaration is supplied under Box 4b, is 14. - Small Entity _ Statement filed in prior
considered as being part of the disclosure application, Statement(s) Status still proper
of the accompanying application and is and desired
hereby incorported by references therein.
15. - Certified Copy of Priority Document(s)
16. - Other:_______________________________
_______________________________
</TABLE>
17. If a CONTINUING APPLICATION, Check appropriate box and supply the
requisite information:
__Continuation __ Divisional __ Continuation-in-part (CIP)
of prior application No.:__________________/_______________
18. CORRESPONDENCE ADDRESS
__Customer Number or Bar Code Label or __ Correspondence address below
(insert Customer No. or Attach bar code label here)
NAME Lawrence J. Shurupoff
ADDRESS Chrysler Corporation
800 Chrysler Drive East, CIMS 483-02-19
CITY Auburn Hills STATE MI ZIP CODE 48326-2757
COUNTRY USA TELEPHONE (248) 576-8018 FAX (248) 576-7905
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Patent and Trademark Office: U.S. DEPARTMENT OF COMMERCE
Under the Paperwork Reduction Act of 1995, no persons are required to respond to
a collection of information unless it displays a valid OMB control number.
*Complete if Known
FEE TRANSMITTAL Application Number
Filing Date
First Named Inventor Dennis F. Stedman
Note: Effecbve October 1, 1997. Group Art Unit
Patent fees are subject to annual revision. Examiner Name
TOTAL AMOUNT OF PAYMENT ($)790.00 Attorney Docket No. 97-1632
METHOD OF PAYMENT (check one) FEE CALCULATION (continued)
1. [X] The Commissioner is hereby authorized to charge 3. ADDITIONAL FEES
indicated fees and credit any over payments to:
Deposit Lrg. Ent. Sm.Ent
Account 03-1800 Fee Fee Fee Fee
Number Code ($) Code ($) Fee Description Fee Paid
Deposit
Account Name Chrysler Corporation 105 130 205 65 Surcharge - late filing
or oath ____
127 50 227 25 Surcharge - late provisional ____
[x] Charge Any Additional [ ] Charge the Issue Fee Set filing fee or cover sheet
Fee Required Under in 37 CFR 1.18 at the 139 130 139 130 Non-English specification ____
37 CFR 1.16 and 1.17 Mailing of the Notice of 147 2520 147 2520 For filing a request for ____
Allowance reexamination
112 920* 112 920* Requesting publication of SIR ____
prior to Examiner action
2. [ ] Payment Enclosed: [ ] Check 113 1840* 113 1840* Requesting publication of SIR ____
[ ] Money Order [ ] Other after Examiner action
115 110 215 55 Extension for reply within ____
first month
FEE CALCULATION 116 400 216 200 Extension for reply within ____
second month
1. Filing Fee 117 950 217 475 Extension for reply within ____
third month
Large Entity Small Entity Fee Description Fee Paid 118 1510 218 755 Extension for reply within ____
Fee Fee Fee Fee fourth month
Code ($) Code ($) 128 2060 228 1030 Extension for reply within ____
fifth month
101 790 201 395 Utility filing fee 790.00 119 310 219 155 Notice of Appeal ____
106 330 206 165 Design filing fee ______ 120 310 220 155 Filing a brief in support of an
appeal ____
106 330 206 165 Design filing fee ______ 121 270 221 135 Request for oral hearing ____
107 540 207 270 Plant filing fee ______ 138 1510 138 1510 Petition to institute/public
use proc.. ____
108 790 208 395 Reissue filing fee ______ 140 110 240 55 Petition to revive -
unavoidable ____
114 150 214 75 Provisional Filing Fee 141 1320 240 660 Petition to revive -
unintentional ____
SUBTOTAL (1)($) 790.00 142 1320 242 660 Utility issue fee
(or reissue) ____
2. CLAIMS 143 450 243 225 Design issue fee ____
Extra Fee from Fee Paid 144 670 244 335 Plant issue fee ____
Below 122 130 122 130 Petition to the Commissioner ____
Total Claims 10 -20= O X _______= $ 0.00 123 50 123 50 Petitions related to
provisional app. ____
Independent 1 126 240 126 240 Submission Information ____
Disclosure Statement
Claims - 3 = 0 X ________= $ 0.00 581 40 581 40 Recording each patent
Assignment per property
(times number of properties) ____
Multiple Dependent Claims ______ X ________= _______ 146 790 246 395 Filing a submission after ____
final rejection
Large Entity Small Entity (37 CFR 1.129(a))
Fee Fee Fee Fee Fee Description 149 790 249 395 For each additional ____
invention to be
Code (4\$) Code ($) examined (37 CFR 1.129(b))
103 22 203 11 [ ] Claims in excess of 20
102 82 202 41 [ ] Independent claims in excess
of 3 Other fee (specify)_____________________________________ ____
104 270 204 135 [ ] Multiple dependent claims Other fee (specify)_____________________________________ ____
109 82 209 41 [ ] Reissue independent claims
over original patent
110 22 210 11 [ ] Reissue claims in excess of 20 *Reduced by Basic Filing Fee Paid SUBTOTAL(3) ($) 0. 0 0
and over original patent ______
SUBTOTAL (2) ($) $0.00
____
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SUBMITTED BY Complete (if applicable)
Typed or Reg. Number
Printed Name Lawrence J. Shurupoff 30,219
Signature Date Deposit Account
/s/ Lawrence J. Shurupoff 5/15/98 User ID
---------------------------- ------- 03-1800
</TABLE>
Burden Hour Statement: This form is estimated to take 0.2 hours to complete.
Time will vary depending upon the needs of the individual case. Any comments on
the amount of time you are required to complete this form should be sent to the
Chief Information Office, Patent and Trademark Office Washington, D.C. 20231.
DO NOT SEND FEES OR COMPLETED FORMS TO THIS ADDRESS. SENT TO: Assistant
Commissioner for Patents, Washington, D.C. 20231.
<PAGE>
PLASTIC STEERING COLUMN SUPPORT MOUNTING BRACKET
Field of the Invention
This invention relates generally to steering column Support
structures and more particularly to a plastic steering column support
mounting bracket.
5 Background and Summary of the Invention
When a vehicle is involved in a frontal impact, the steering
column tends to rise. In other words, the steering column, which
normally is inclined upwardly and rearwardly at a predetermined angle,
will rise to a greater angle upon frontal impact. This is caused by the
vehicle engine being thrust rearwardly.
10 The rise in the steering column places the steering wheel/air
bag assembly in an unfavorable position relative to the driver's chest.
When the driver's chest comes into contact with the steering wheel/air
bag assembly, the force against this assembly has a considerable off-
axis bending component which is increased due to the rise in the
steering column. If the rise in the steering column is such that the
15 off-axis component of force on the steering wheel/air bag assembly acts
above the center of mass of the driver's chest, then the driver tends to
move under the steering wheel, creating an even less favorable
situation.
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<PAGE>
In accordance with the present invention, support structure is
provided to insure that there is no appreciable upward rise or tilt of
the steering column upon frontal impact. Preferably the steering column
support structure includes a bracket in the form of a molded plastic
frame having a pair of side braces
5 interconnected by a transverse front brace and a transverse intermediate
brace. An X-shaped truss has first and second legs extending diagonally
between the side braces between the intermediate brace and the rear ends
of the side braces.
Each side brace includes one and preferably two side trusses
located between the intermediate brace and the rear ends of the side
10 braces, and a third side truss between the intermediate brace and the
front brace. Preferably a pair of mounting ears projects from the side
braces for mounting purposes. A plurality of metal fastener inserts may
also be molded into the frame for attachment purposes.
The bracket of this invention also provides the necessary
15 rigidity to prevent undesirable vibration of the steering column
during normal operation of the vehicle.
One object of this invention is to provide a steering column
support structure having the foregoing features and capabilities.
-2-
<PAGE>
Another object is to provide a steering column support structure
which is composed of a bracket in the form of a relatively inexpensive
molded plastic frame that is strong and durable and well adapted to the
accomplishment of its intended function.
5 Other objects, features and advantages of the invention will
become more apparent as the following description proceeds, especially
when considered with the accompanying drawings.
Brief Description of the Drawings
FIG. 1 is a fragmentary perspective view showing the support
10 bracket of this invention in association with the steering column of an
automotive vehicle.
FIG. 2 is a fragmentary perspective view with the steering
column removed to more clearly illustrate the support bracket.
FIG. 3 is an exploded perspective view of the parts of the
structure shown in FIG. 2.
15 FIG. 4 is a fragmentary side view with parts in section and
parts in elevation, showing the attachment of the mounting bracket to
the steering column and to the instrument panel.
FIG. 5 is a view taken on the line 5--5 in FIG. 4.
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<PAGE>
Detailed Description of the Preferred Embodiment
Referring now more particularly to the drawings, the bracket 10
rigidly secures the steering column 12 against vibration during normal
vehicle operation and also prevents the steering column, in a frontal
5 impact, from rising up from the illustrated position (FIGS. 1 and 4).
The steering column 12, as illustrated, is inclined upwardly and
rearwardly at a predetermined angle and includes a steering shaft 14
extending lengthwise within a tubular jacket 16. A steering wheel 17 is
mounted on the upper end of the steering shaft 14. A collar 18 on the
steering column jacket 16 is secured to the instrument panel 20, and the
10 bracket 10 is secured to the instrument panel 20 and to the cowl
plenum 22 of the upper dash panel 24, all as more fully described
hereinafter.
The bracket 10 includes a molded frame made of a suitable
plastic material, preferably nylon reinforced with glass fibers. The
frame has laterally spaced apart side braces 30 and 32, a transverse
front brace 34, a transverse intermediate brace 36, and an X-shaped
15 truss 37 (FIGS. 1-3 and 5).
The side braces 30 and 32 are preferably in the form of
horizontally elongated, vertically disposed panels that flare apart
slightly in a rearward direction. The front brace 34 is in the form of a
bar that extends horizontally and has its opposite ends integrally
molded to the terminal portions 35 at the front
-4-
<PAGE>
ends of the respective side braces. The intermediate brace 36 is in the
form of a vertical panel, the opposite ends of which are integrally
molded to the side braces intermediate the front ends and rear ends
thereof.
The truss 37 has crossing legs 48 and 50 which extend diagonally between
5 the side braces 30 and 32 between the intermediate brace 36 and the
terminal portions 42 at the rear ends of the side braces. The ends of
the leg 48 are integrally molded to the terminal portion 42 at the rear
end of the side brace 30 and to the side brace 32 at approximately the
point where the side brace 32 and the intermediate brace 36 are joined.
The ends of the leg 50 are integrally molded to
10 the terminal portion 42 at the rear end of the side brace 32 and to the
side brace 30 at approximately the point where the side brace 30 and the
intermediate brace 36 are joined. The legs 48 and 50 are molded
integrally at the point of crossing.
The front end portion 54 of each side brace 30, 32 includes a
rectangular box frame 56 (FIG. 5) internally supported by an X-shaped
side truss 58. The
15 box frame 54 has laterally spaced side walls 60 and 62 integrally
connected at the rear to the intermediate brace 36 and at the front to
the terminal portions 35 of the side brace. The X-shaped side truss 58
within each box frame 56 has crossing legs 66 and 68. The legs 66 and 68
are terminally, integrally connected to the side
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<PAGE>
walls 60 and 62 of the box frame 54 at the corner points 70, 72, 74 and
76 and are integrally connected to one another at the point of crossing.
The rear end portion 80 of each of the side braces 30 and 32 is
of a substantially greater vertical dimension than the front end
portions 54 thereof.
5 Each front end portion 80 includes a front rectangular box frame 82
internally supported by an X-shaped side truss 83, and a rear
rectangular box frame 84 internally supported by an X-shaped side truss
85 (FIG. 5). Each box frame 82 has laterally spaced side walls 86 and 88
integrally connected at the front to the intermediate brace 36 and at
the rear to a transverse wall 90 separating the front
10 and rear box frames 82 and 84 in the rear portion of each side brace.
The X-shaped side truss 83 within each box frame 82 has crossing legs 92
and 94. The legs 92 and 94 are terminally, integrally connected to the
side walls 86 and 88 of the box frame 82 at the corner points 95, 96, 97
and 98 and are integrally connected to one another at the point of
crossing. The box frame 84 of each side
15 wall has laterally spaced side walls which are continuations or
extensions of the side walls 86 and 88 of the box frame 82. The side
wall extensions connect at the rear into the terminal portion 42 of each
side frame 36. The X-shaped side truss 85 within each box frame 84 has
crossing legs similar to those of the side trusses 83, which are
terminally, integrally connected to the side wall extensions at the
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<PAGE>
four corner points as was the case with the legs of trusses 83 and
integrally connected to one another at the point of crossing.
The side trusses 58, 83 and 85 provide a light weight construction which is
extremely rigid and resistant to distortion, deformation and twisting.
5 Fastener holders 116(FIG. 5)are molded parts of the bracket 10 connected to
the legs 48 and 50 of the truss 37 and to the intermediate brace 36 and to
each other by webs of plastic framing material 120. Fixedly mounted in each
of these fastener holders is a vertically disposed metal fastener 124
preferably internally threaded to receive threaded bolts 125 (FIG. 4).
10 The front terminal portions 35 of the side braces 36 have vertically
disposed metal fasteners 130 molded therein which are preferably internally
threaded to receive threaded bolts 131.
The rear terminal portions 42 of the side braces 36 have the heads of
horizontally disposed metal fasteners 132 molded therein with the projecting
15 shanks thereof preferably threaded. Ears 134 (FIGS. 2 and 3) project
upwardly and outwardly from the opposite side edge portions of the
intermediate brace 36. The ears 134 may also be considered portions of the
side braces 36 because they are integrally molded as parts thereof as can be
seen in the drawings. Holes 140 in the ears are for receiving bolts 142.
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<PAGE>
The bolts 131 and 142 rigidly secure the bracket 10 to the cowl plenum 22
of the upper dash panel 24. The fasteners 132 secure the rear end portion of the
bracket to the instrument panel 20. Additional fasteners 150 are provided to
secure the collar 18 on the steering column to the instrument panel. Hence, the
5 steering column 12 is rigidly secured to the bracket 10 by means of the
fasteners 132 and 150, and the bracket 10 is rigidly secured to the dash panel
24.
The bolts 125 are provided for connecting the bracket 10 to the bracket 160
which mounts the brake pedal 162. As shown in FIGS. 2-4, the bracket 160 has
laterally spaced side walls 164 supporting a transverse pin 166 on which the
upper
10 end of the brake pedal 162 is pivoted. In the event of a frontal impact, the
engine may be pushed rearwardly and this tends to move the entire brake pedal
assembly to the rear. To permit this, the openings 170 in the top panel 172 of
the bracket 160 for the brake pedal, which receive the bolts 125, are elongated
to permit the bracket 160 to move rearwardly without disturbing the mounting
bracket 10 for
15 the steering column.
-8-
<PAGE>
Claims
1 1. A steering column support bracket, comprising a molded plastic
2 frame including a pair of laterally spaced apart side braces each having
front and
3 rear ends, a front brace interconnecting the front ends of said side
braces, an
4 intermediate brace located between the front and rear ends of said side
braces and
5 connected to said side braces, and an X-shaped truss having first and
second legs
6 extending diagonally between said side braces and between said intermediate
7 brace and the rear ends of said side braces.
1 2. The bracket of claim 1, further comprising a plurality of metal
2 fasteners molded into a rear portion of said frame.
1 3. The bracket of claim 1, wherein each of said side braces
comprises 2 at least one X-shaped side truss.
1 4. The bracket of claim 3, wherein each of said side braces has a
box
2 frame enclosing said at least one X-shaped side truss.
-9-
<PAGE>
1 5. The bracket of Claim 3, wherein each of said side braces
comprises
2 a pair of X-shaped side trusses located between the rear ends of said side
braces
3 and said intermediate brace.
1 6. The bracket of claim 5, wherein each of said side trusses
further
2 comprises a third side truss located between said intermediate brace and
said front
3 brace.
1 7. The bracket of claim 6, further comprising a pair of mounting
ears
2 respectively connected to said pair of side braces.
1 8. The bracket of claim 7, wherein said mounting ears are further
2 connected to said intermediate brace.
1 9. The bracket of claim 8, further comprising a plurality of metal
2 fasteners molded into said frame.
-10-
<PAGE>
1 10. The bracket of claim 9, wherein each of said side braces has a
box
2 frame enclosing each of said X-shaped side trusses.
-11-
<PAGE>
ABSTRACT
A steering column support bracket includes a molded plastic frame having a
pair of laterally spaced apart side braces, a front brace interconnecting the
front ends of the side braces, and an intermediate brace located between the
5 front and rear ends of the side braces. An X-shaped truss has legs extending
diagonally between the side braces and between the intermediate brace and the
rear ends of the side braces.
-12-
<PAGE>
Attorney Docket No. 97-1632
DECLARATION AND POWER OF ATTORNEY FOR PATENT APPLICATION
As below named inventors, We hereby declare that:
Our residences, post office addresses and citizenships are as stated below next
to our names.
We believe we are the original, first and joint inventors of the subject matter
which is claimed and for which a patent is sought on the invention entitled:
PLASTIC STEERING COLUMN SUPPORT MOUNTING BRACKET
the specification of which is attached hereto.
We hereby state that we have reviewed and understand the contents of the
above-identified specification, including the claims, as amended by any
amendment referred to above.
We acknowledge the duty to disclose information which is material to the
examination of this application in accordance with Title 37, Code of Federal
Regulations, Section 1.56 (a).
We hereby declare that all statements made herein of our own knowledge are true
and that all statements made on information and belief are believed to be true;
and further that these statements were made with the knowledge that willful
false statements and the like so made are punishable by fine or imprisonment, or
both, under Section 1001 of Title 18 of the United States Code and that such
willful false statements may jeopardize the validity of the application or any
patent issued thereon.
Power of Attorney: As a named inventor, we hereby appoint the following
attorneys and/or agent(s) to prosecute this application and transact all
business in the Patent and Trademark Office connected therewith:
Lawrence J. Shurupoff, Registration No. 30,219
William J. Coughlin, Registration No. 29,143
Send Correspondence to: Lawrence J. Shurupoff, CIMS 483-02-19
Chrysler Corporation
Chrysler Technology Center
800 Chrysler Drive East
Auburn Hills, Michigan 48326-2757
Direct telephone calls to: Lawrence J. Shurupoff, (248) 576-8018
Full name of Inventor: Dennis F. Stedman
Inventor's Signature: /s/ Dennis F. Stedman Date: 1-30-98
--------------------- --------
Residence: 1610 North Hadley Road, Ortonville, MI 48462
Post office Address: Same as above
Citizenship: United States
<PAGE>
Full name of Inventor: Le M. Tohme
Inventor's Signature: /s/ Le M. Tohme Date: 4-15-98
--------------- ---------
Residence: P. 0. Box 1861, Royal Oak, MI 48068
Post Office Address: Same as above
Citizenship: Lebanon
Full name of Inventor: David Shifflett
Inventor's Signature: /s/ David Shifflett Date: 3-31-98
------------------- ---------
Residence: 23585 Hagen Road, Macomb, MI 48042
Post Office Address: Same as above
Citizenship: United States
<PAGE>
Attorney Docket No.: 97-1632
IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
In Re Application of: D. P. Stedman, E. Tohme, D. Shifflett
For: Plastic Steering Column support Mounting
Bracket
- --------------------------------------------------------------------------------
INFORMATION DISCLOSURE STATEMENT
Commissioner of Patents
and Trademarks
Washington, D.C. 20231
Dear Sir:
In order to comply with 37 CFR Section 1.97 and 1.98, a copy of Form PTO-
1449 and copies of the documents listed on it are attached.
In accordance with MPEP Section 609 and 707.05(b), Applicant respectfully
requests that each document listed be given thorough consideration and that the
Examiner cite each document of record in the prosecution history of the present
application by initialing Form PTO-1449 next to each document. Applicant
requests such initialing even if the Examiner does not consider: (1) a listed
document to be sufficiently pertinent to use in a rejection; (2) a document to
be prior art for any reason; or (3) that the guidelines for citation have been
fully complied with respecting a particular document. Applicant makes this
request so that each document
<PAGE>
Disclosure No. 97-1632
Information Disclosure Statement
Page 2
becomes cited on the face of a patent issuing on the present application.
Applicant submits the present Information Disclosure Statement in
compliance with the duty to disclose information material to patentability under
37 CPR Section 1.56, but by listing such documents Applicant is not admitting
that such documents are necessarily relevant or prior art. Applicant intends no
representation that the listed documents represent the results of a complete
search. Applicant anticipates that the Examiner, in the normal course of
examination, will make an independent search to detemine the best prior art
consistent with 37 CFR Section 1.104(a) and 1.106(b) and, in the course of such
search, will review for relevance every document listed on the attached Form
even if not initialed.
<PAGE>
Disclosure No. 97-1632
Information Disclosure Statement
Page 3
Applicant earnestly solicits early and favorable consideration.
Very truly yours,
/s/Lawrence J. Shurupoff
------------------------
Lawrence J. Shrupoff
Reg. No. 30,219
CHRYSLER CORPORATION
CIMS 483-02-19
800 CHRYSLER DRIVE EAST
AUBURN HILLS, MI 48326-2757
(810) 576-8018
<PAGE>
FORM PTO-1449 U.S. DEPARTMENT OF COMMERCE ATTY.DOCKET APPLICATION NO.
(REV. 8-83) PATENT AND TRADEMARK OFFICE 97-1632
--------------------------------
INFORMATION DISCLOSURE CITATION INVENTOR(S)
(Use several sheets if necessary) D. F. Stedman, E. Tohme,
D. Shiffiett
- ------------------------------------------------------------------------------
FILING DATE GROUP
- ------------------------------------------------------------------------------
U.S. PATENT DOCUMENTS
- ------------------------------------------------------------------------------
*Examiner SUB- FILING DATE
Initial DOCUMENT NUMBER DATE INVENTOR CLASS CLASS If Appropriate
- ------------------------------------------------------------------------------
AA 3 4 1 5 1 4 0 12/10/68 Bien et al 74 492 04/03/67
AB 3 7 8 5 6 7 1 01/15/74 Safewsky 280 87 12/29/7
AC 4 2 4 1 9 3 7 12/30/80 Eggen et al 280 777 03/26/79
AD 4 6 1 6 5 2 2 10/14/86 White et al 74 492 03/08/85
AE 4 6 9 0 4 3 2 09/01/87 Sakamoto et 280 775 10/23/85
al
AF 4 7 3 3 7 3 9 03/29/88 Lorenz et al 180 90 12/02/85
AG 5 0 2 4 1 1 8 06/18/91 Khalifa et al 74 492 01/22/90
AH 5 0 8 2 0 7 8 01/21/92 Umeda et al 180 90 12/21/90
AI 5 0 8 8 5 7 1 02/18/92 Burry et al 180 90 12/17/90
- ------------------------------------------------------------------------------
FOREIGN PATENT DOCUMENTS
- ------------------------------------------------------------------------------
TRANSLATION
-------------------
DOCUMENT NUMBER DATE COUNTRY INVENTOR YES NO
- -------------------------------------------------------------------------------
AJ
AK
AL
AM
- -------------------------------------------------------------------------------
OTHER DOCUMENTS (Including Author, Title, Date, Pertinent Pages, Etc.)
- -------------------------------------------------------------------------------
AN Sub-Assembly Steering Column Brake Pedal-Electrical Box & Brake
SW Brackets, Publication Date 12/21/96
Assemble Brake and Steering Column Bracket Sub Assembly to Vehicle,
Publication Date 12/21/96
Secure Steering Column Support Bracket with Four Nuts, Publication
Date 2/27/97
- -------------------------------------------------------------------------------
EXAMINER DATE CONSIDERED
- -------------------------------------------------------------------------------
*EXAMINER: Initial if reference considered, whether or not citation is in
conformance with MEPEP 609; Draw line through citation if not in conformance and
not considered. Include copy of this form with next communication to applicant.
<PAGE>
FORM PTO-1449 U.S. DEPARTMENT OF COMMERCE ATTY.DOCKET APPLICATION NO.
(REV. 8-83) PATENT AND TRADEMARK OFFICE 97-1632
------------------------------
INFORMATION DISCLOSURE CITATION INVENTOR(S)
(Use several sheets if necessary) D. F. Stedman, E. Tohme,
D. Shifflett
FILING DATE GROUP
- -------------------------------------------------------------------------------
U.S. PATENT DOCUMENTS
- -------------------------------------------------------------------------------
*Examiner SUB FIING DATE
Initial DOCUMENT NUMBER DATE INVENTOR CLASS CLASS If Appropriate
AA 5 1 8 0 1 8 9 01/19/93 Moreno 280 779 09/03/91
AB 5 2 2 8 3 5 9 07/20/93 Thomas 74 492 05/18/92
AC 5 2 5 9 6 4 6 11/09/93 Snyder 280 777 03/20/92
AD 5 2 6 5 4 9 2 11/30/93 Snell 74 493 12/15/92
AE 5 3 0 1 5 6 7 04/12/94 Snell et al 74 493 09/23/92
AF 5 3 5 6 1 7 9 10/18/94 Hildebrandt 280 777 09/13/93
et al
AG 5 3 8 7 0 2 3 02/07/95 Denueau 296 72 04/18/94
AH 5 3 9 0 9 5 6 02/21/95 Thomas 280 777 05/17/94
AI 5 3 3 9 7 0 6 08/23/94 Freeman 74 493 03/26/93
FOREIGN PATENT DOCUMENTS
- -------------------------------------------------------------------------------
TRANSLATION
--------------------
DOCUMENT NUMBER DATE COUNTRY INVENTOR
YES NO
AJ
AK
AL
AM
- -------------------------------------------------------------------------------
OTHER DOCUMENTS (Including Author,Title, Date, Pertinent Pages, Etc.)
- --------------------------------------------------------------------------------
AN
- --------------------------------------------------------------------------------
EXAMINER DATE CONSIDERED
- --------------------------------------------------------------------------------
*EXAMINER: Initial if reference considered, whether or not citation is in
conformance with MEPEP 609; Draw line through citation if not in conformance and
not considered. Include copy of this form with next communication to applicant.
<PAGE>
FORM PTO-1449 U.S. DEPARTMENT OF COMMERCE ATTY.DOCKET APPLICATION NO.
(REV. 8-83) PATENT AND TRADEMARK OFFICE 97-1632
---------------------------------
INFORMATION DISCLOSURE CITATION INVENTOR(S)
(Use several sheets if necessary) D. F. Stedman, E. Tohme,
D. Shiffiett
FILING DATE GROUP
- --------------------------------------------------------------------------------
U.S. PATENT DOCUMENTS
- --------------------------------------------------------------------------------
*Examiner SUB FILING DATE
Initial DOCUMENT NUMBER DATE INVENTOR CLASS CLASS If Appropriate
- ------------------------------------------------------------------------------
AA 5 3 9 0 9 5 5 02/21/95 Kaliszewski 280 777 12/23/93
et al
AB 5 4 1 7 4 5 2 05/23/95 Khalifa et al 280 777 11/01/93
AC 5 4 2 6 9 9 4 06/27/95 Khalia et al 74 493 11/22/93
AD 5 4 5 2 6 2 4 09/26/95 Thomas et al 74 493 03/03/94
AE 5 4 5 2 9 1 6 09/26/95 Beecher et al 280 777 07/21/94
AF 5 4 9 7 6 7 5 03/12/96 Brown et al 74 492 06/06/94
AG 5 4 9 8 0 3 2 03/12/96 Thomas 280 777 05/18/94
AN 5 5 0 9 3 2 5 04/23/96 Thomas 74 493 05/18/94
AI 5 5 3 8 2 8 2 07/23/96 White et al 280 779 10/03/94
- --------------------------------------------------------------------------------
FOREIGN PATENT DOCUMENTS
- --------------------------------------------------------------------------------
TRANSLATION
-------------
DOCUMENT NUMBER DATE COUNTRY INVENTOR
YES NO
- -------------------------------------------------------------------------------
AJ
AK
AL
AM
- --------------------------------------------------------------------------------
OTHER DOCUMENTS (Including Author, Title, Date, Pertinent Pages, Etc.)
- --------------------------------------------------------------------------------
AN
- --------------------------------------------------------------------------------
EXAMINER DATE CONSIDERED
- --------------------------------------------------------------------------------
*EXAMINER: Initial if reference considered, whether or not citation is in
conformance with MEPEP 609; Draw line through citation if not in conformance and
not considered. Include copy of this form with next communication to applicant.
<PAGE>
FORM PTO-1449 U.S. DEPARTMENT OF COMMERCE ATTY.DOCKET APPLICATION NO.
(REV. 8-83) PATENT AND TRADEMARK OFFICE 97-1632
------------------------------
INFORMATION DISCLOSURE CITATION INVENTOR(S)
(Use several sheets if necessary) D. F. Stedman, E. Tohme,
D. Shiffiett
FILING DATE GROUP
- -------------------------------------------------------------------------------
U.S. PATENT DOCUMENTS
- -------------------------------------------------------------------------------
*Examiner SUB- FILING DATE
Initial DOCUMENT NUMBER DATE INVENTOR CLASS CLASS If Appropriate
- -------------------------------------------------------------------------------
AA 5 5 6 4 5 1 5 10/15/96 Schambre 180 90 08/2/95
AB 5 5 6 4 7 6 9 10/15/96 Deneau et al 296 72 12/19/94
AC 5 5 6 6 5 8 5 10/22/96 Snell et al 74 493 05/15/95
AD 5 6 0 6 8 9 2 03/04/97 Hedderly 74 493 03/31/95
AE 5 6 6 4 8 2 3 09/09/97 Misra et al 296 70 09/18/95
AF 5 6 7 3 9 3 8 10/07/97 Kaliszewski 280 777 05/13/96
AG 5 6 7 6 2 1 6 10/14/97 Palma et al 180 90 12/05/95
AH
AI
- --------------------------------------------------------------------------------
FOREIGN PATENT DOCUMENTS
- --------------------------------------------------------------------------------
TRANSLATION
------------
DOCUMENT NUMBER DATE COUNTRY INVENTOR YES NO
- -------------------------------------------------------------------------------
AJ
AK
AL
AM
- --------------------------------------------------------------------------------
OTHER DOCUMENTS (Including Author, Title, Date, Pertinent Pages, Etc.)
- --------------------------------------------------------------------------------
AN
- --------------------------------------------------------------------------------
EXAMINER DATE CONSIDERED
*EXAMINER: Initial if reference considered, whether or not citation is in
conformance with MEPEP 609; Draw line through citation if not in conformance and
not considered. Include copy of this form with next communication to applicant.
<PAGE>
FIG. 1
[STEERING COLUMN ILLUSTRATION]
<PAGE>
FIG. 2
[STEERING COLUMN ILLUSTRATION]
FIG. 3
[STEERING COLUMN ILLUSTRATION]
<PAGE>
FIG. 4
[STEERING COLUMN ILLUSTRATION]
FIG. 5
[STEERING COLUMN ILLUSTRATION
<PAGE>
FIG. 5
[STEERING COLUMN ILLUSTRATION]
FIG. 7
[STEERING COLUMN ILLUSTRATION]
EXHIBIT 10.04
LOANS AND SECURITY AGREEMENT
This Agreement is between the undersigned Borrower and the undersigned Lender
concerning loans and other credit accommodations to be made by Lender to
Borrower.
SECTION 1. PARTIES
1.1 The "Borrower" is the person, firm, corporation or other entity,
identified as the Borrower in Section 10.6(c) and its successors and assigns. If
more than one Borrower is specified in Section 10.6(c), all references to
Borrower shall mean each of them, jointly and severally, individually and
collectively, and the successors and assigns of each.
1.2 The "Lender" is The CIT Group/Credit Finance, Inc. and its successors
and assigns.
SECTION 2. LOANS AND OTHER CREDIT ACCOMMODATIONS
2.1 Revolving Loans. Lender shall, subject to the terms and conditions
contained herein, make revolving loans to Borrower ("Revolving Loans") in
amounts requested by Borrower from time to time, but not in excess of the Net
Availability existing immediately prior to the making of the requested loan and
provided the requested loan would not cause the outstanding Obligations to
exceed the Maximum Credit.
(a) The "Maximum Credit" is set forth in Section 10.1(a) hereof.
(b) The "Gross Availability" shall be calculated at any time as (i) the
product obtained by multiplying the outstanding amount of Eligible Accounts, net
of all taxes, discounts, allowances and credits given or claimed, by the
Eligible Accounts Percentage set fort h in Section 10.1(b),
plus: (ii) the product(s) obtained by multiplying the applicable
Eligible Inventory Percentage(s), if any, set forth in Section 10.1
(b) by the values (as determined by Lender based on the lower of cost
or market) of Eligible Inventory, but the amount so added shall not
exceed any sublimits set forth in Section 10.1(c),
(c) The "Net Availability" shall be calculated at any time as an amount
equal to the Gross Availability minus the aggregate amount of all then-
outstanding Obligations to Lender other than the then outstanding principal
balance of the Term Loan, if any.
(d) "Eligible Accounts" are accounts created by Borrower in the ordinary
course of its business which are and remain acceptable to Lender for lending
purposes. General criteria for Eligible Accounts are set forth below but may be
revised from time to time by Lender, in its sole judgment, on fifteen (15) days'
prior written notice to Borrower. Lender shall, in general, deem
<PAGE>
accounts to be Eligible Accounts if: (1) such accounts arise from bona fide
completed transactions and have not remained unpaid for more than the number of
days after the invoice date set forth in Section 10.1(d); (2) the amounts of the
accounts reported to Lender are absolutely owing to Borrower and do not arise
from sales on consignment, guaranteed sale or other terms under which payment by
the account debtors may be conditional or continent; (3) the account debtor's
chief executive office or principal place of business is located in the United
States; (4) such accounts do not arise from progress billings retainers or bill
and hold sales; (5) there are no contra relationships, setoffs, counterclaims or
disputes existing with respect thereto and there are no other facts existing or
threatened which would impair or delay the collectibility of all or any portion
thereof, (6) the goods giving rise thereto were not at the time of the sale
subject to any liens except those permitted in this Agreement; (7) such accounts
are not accounts with respect to which the account debtor or any officer or
employee thereof is an officer, employee or agent of or is affiliated with
Borrower, directly or indirectly, whether by virtue of family membership,
ownership, control, management or otherwise; (8) such accounts are not accounts
with respect to which the account debtor is the United States or any State or
political subdivision thereof or any department, agency or instrumentality of
the United States, any State or political subdivision, unless there has been
compliance with the Assignment of Claims Act or any similar State or local law,
if applicable; (9) Borrower has delivered to Lender or Lender's representative
such documents as Lender may have requested pursuant to Section 5. 8 hereof in
connection with such accounts and Lender shall have received a verification of
such account, satisfactory to it, if sent to the account debtor or any other
obligor or any bailee pursuant to Section 5.4 hereof, (10) there are no facts
existing or threatened which might result in any adverse change in the account
debtor's financial condition; (11) except for accounts owed by General Motors
Corporation and Chrysler Corporation, which accounts are not limited by this
clause (11), such accounts owed by a single account debtor or its affiliates do
not represent more than twenty (20%) percent of all otherwise Eligible Accounts
(accounts excluded from Eligible Accounts solely by reason of this subsection
(11) shall nevertheless be considered Eligible Accounts to the extent of the
amount of such accounts which does not exceed twenty (20%) percent of all
otherwise Eligible Accounts); (12) such accounts are not owed by an account
debtor who is or whose affiliates are past due upon other accounts owed to
Borrower comprising more than fifty (50%) percent of the accounts of such
account debtor or its affiliates owed to Borrower; (13) such accounts are owed
by account debtors whose total indebtedness to Borrower does not exceed the
amount of any customer credit limits as established, and changed, from time to
time by Lender on notice to Borrower (accounts excluded from Eligible Accounts
solely by reason of this subsection (13) shall nevertheless be considered
Eligible Accounts to the extent the amount of such accounts does not exceed such
customer credit limit); (14) such accounts are owed by account debtors deemed
creditworthy at all times by Lender; and (15) such accounts arise from the sale
of tooling provided the account debtor thereof has accepted the tooling by
written acceptance in form acceptable to Lender and provided further that all
outstanding advances against Borrower's accounts representing the sale of
tooling may not exceed $100,000 at any time.
(e) "Eligible Inventory" is inventory owned by Borrower which is and
remains acceptable to Lender for lending purposes and is located at one of the
addresses set forth in Section 10.6
2
<PAGE>
or processor or located at a location leased by Borrower, unless such bailee,
consignee, processor or landlord, as applicable, delivers to Lender an agreement
in form and substance satisfactory to Lender, together with such Uniform
Commercial Code financing statements as Lender shall require or (ii) inventory
located at a location owned by Borrower which is subject to a mortgage in favor
of any person other than Lender, unless such person delivers to Lender an
agreement in form and substance satisfactory to Lender.
(f) Lender shall have a continuing right to deduct reserves in determining
the Gross Availability ("Reserves"), and to increase and decrease such Reserves
from time to time, if and to the extent that, in Lender's sole judgment, such
Reserves are necessary to protect Lender against any state of facts which does,
or would, with notice or passage of time or both, constitute an Event of Default
or have an adverse effect on any Collateral. Lender may, at its option,
implement Reserves by designating as ineligible a sufficient amount of accounts
or inventory which would otherwise be Eligible Accounts or Eligible Inventory so
as to reduce Gross Availability by the amount of the intended Reserve.
(g) Subject to the terms and conditions hereof, including but not limited
to the existence of sufficient Gross and Net Availability, Borrower agrees to
borrow sufficient amounts from time to time so that the outstanding Revolving
Loan or the Term Loan, shall at all times equal or exceed the principal amount
set forth in Section 10.1(e) as the Minimum Borrowing. Borrower will maintain
Gross Availability or Net Availability at all times in amounts sufficient to
permit Borrower to comply with the Minimum Borrowing requirement. In the event
Borrower does not borrow sufficient amounts to continuously meet or exceed the
Minimum Borrowing requirement, or in the event Borrower fails to maintain Gross
and Net Availability at all times at amounts sufficient to permit Borrower to
comply with the Minimum Borrowing requirement, then, in either of such event(s),
Borrower shall be deemed to have borrowed from Lender such additional sums from
time to time as may be necessary in order for Borrower to continuously meet the
Minimum Borrowing requirement. Such sums shall be added to the principal amount
of the outstanding Revolving Loans for the purpose of computing interest due
under this Agreement. Notwithstanding the provisions of the immediately
preceding sentence, Lender shall have no obligation to disburse to Borrower any
amounts deemed to have been borrowed for purposes of meeting the Minimum
Borrowing requirement unless Borrower has actually requested such disbursement
from Lender and unless the Gross and Net Availability for Borrower is sufficient
to support such disbursement.
2.2 Term Loan. Lender shall, subject to the terms and conditions contained
herein, make a "Term Loan' to Borrower in the amount set forth in Section 10.2.
(a) Borrower shall repay the principal of the Term Loan in Sixty (60)
consecutive equal monthly installments of principal commencing on the first day
of the month after the date of this Agreement, provided that the sixtieth (60)
installment shall be in an amount that will result in the full repayment of the
Term Loan.
3
<PAGE>
(b) In the event the Revolving Loans are terminated or not renewed prior to
the full repayment of the Term Loan, then any outstanding principal balance of
the Term Loan together with any accrued interest thereon shall become due and
payable at Lender's option at the time of such termination or non- renewal.
(c) Interest on the Term Loan shall be billed and paid monthly at the rate
set forth in Section 10.4(a).
2.3 Accommodations.
(a) Lender may, in its sole discretion, issue or cause to be issued, from
time to time at Borrower's request and on terms and conditions and for purposes
satisfactory to Lender, credit accommodations consisting of letters of credit,
bankers' acceptances, merchandise purchase guaranties or other guaranties or
indemnities for Borrower's account ("Accommodations"). Borrower shall execute
and perform additional agreements relating to the Accommodations in form and
substance acceptable to Lender and the issuer of any Accommodations, all of
which shall supplement the rights and remedies granted herein. Any payments made
by Lender or any affiliate of Lender in connection with the Accommodations shall
constitute additional Revolving Loans to Borrower.
(b) In addition to the fees and costs of any issuer in connection with
issuing or administering Accommodations, Borrower shall pay monthly to Lender,
on the first day of each month, a charge on open Accommodations at the rate per
annum set forth in Section 10.3(a) (the "Accommodation Charges").
(c) No Accommodation will be issued unless the full amount of the
Accommodation requested, plus fees and costs for issuance, is less than the Net
Availability existing immediately prior to the issuance of the requested
Accommodation, or if the requested Accommodation would cause the outstanding
Obligations to exceed the Maximum Credit, or cause the open amount of
Accommodations to exceed, at any time, the Accommodation sublimit set forth in
Section 10.3(b).
(d) All indebtedness, liabilities and obligations of any sort whatsoever,
however arising, whether present or future, fixed or contingent, secured or
unsecured, due or to become due, paid or incurred, arising or incurred in
connection with any Accommodation shall be included in the term "Obligations",
as defined herein, and shall include, without limitations (i) all amounts due or
which may become due under any Accommodation; (ii) all amounts charged or
chargeable to Borrower or to Lender by any bank, ot her financial institution or
correspondent bank which opens, issues or is involved with such Accommodations;
(iii) Lender's Accommodation Charges and all fees, costs and other charges of
any issuer of any Accomodation; and (iv) all duties, freight, taxes, costs,
insurance and all such other charges and expenses which may pertain directly or
indirectly to any Obligations or Accommodations or to the goods or documents
relating thereto.
(e) Borrower unconditionally agrees to indemnify and hold Under harmless
from any and all loss, claim or liability (including reasonable attorneys' fees)
arising from any transactions
-4-
<PAGE>
or occurrences relating to any Accommodation established or opened for
Borrower's account, the Collateral relating thereto and any drafts or
acceptances thereunder, including any such loss or claim due to any action taken
by an issuer of any Accommodation. Borrower further agrees to indemnify and hold
Lender harmless for any errors or omissions in connection with the
Accommodations, whether caused by Lender, by the issuer of any Accommodation or
otherwise. Borrower's unconditional obligation to indemnify and hold Lender
harmless under this provision shall not be modified or diminished for any reason
or in any manner whatsoever, except for Lender's wilfull misconduct. Borrower
agrees that any charges made to Lender by any issuer of any Accomodation shall
be conclusive on Borrower and may be charged to Borrower's account.
(f) Lender shall not be responsible for: the conformity of any goods to the
documents presented; the validity or genuineness of any documents; delay,
default, or fraud by the Borrower or shipper and/or anyone else in connection
with the Accommodations or any underlying transaction.
(g) Borrower agrees that any action taken by Lender, if taken in good
faith, or any action taken by an issuer of any Accomodation, under or in
connection with any Accomodation, shall be binding on Borrower and shall not
create any resulting liability to Lender. In furtherance thereof, Lender shall
have the full right and authority to clear and resolve any questions of non-
compliance of documents; to give any instructions as to acceptance or rejection
of any documents or goods; to execute for Borrower's account any and all
applications for steamship or airway guarantees, indemnities or delivery orders;
to grant any extensions of the maturity of, time of payment for, or time of
presentation of, any drafts, acceptances, or documents; and to agree to any
amendments, renewals, extensions, modifications, changes or cancellations of any
of the terms or conditions of any of the applications or Accommodations. All of
the foregoing actions may be taken in Lender's sole name, and the issuer thereof
shall be entitled to comply with and honor any and all such documents or
instruments executed by or received solely from Lender, all without any notice
to or any consent from Borrower. None of the foregoing actions described in this
subsection (g) may be taken by Borrower without Lender's express written
consent.
2.4 Certain Amounts Due Without Demand. Lender may, in its sole discretion,
make or permit Revolving Loans, Accommodations or other Obligations in excess of
the Maximum Credit, Gross or Net Availability or applicable formulas or
sublimits. All or any portion of such excess(es) shall be immediately due and
payable without Lender's demand.
SECTION 3. INTEREST AND FEES
3.1 Interest. (a) Interest on the Revolving Loans and Term Loans shall be
payable by Borrower on the first day of each month, calculated upon the closing
daily balances in the loan account of Borrower for each day during the
immediately preceding month, at the per annum rate set forth as the Interest
Rate in Section 10.4(a). The Interest Rate shall increase or decrease by an
amount equal to each increase or decrease, respectively, in the Prime Rate (as
defined below),
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effective as of the date of each such change. On and after any Event of Default
or termination or non-renewal hereof, interest on all unpaid Obligations shall
accrue at a rate equal to two percent (2%) per annum in excess of the Interest
Rate otherwise payable until such time as all Obligations are indefeasibly paid
in full (notwithstanding entry of any judgment against Borrower or the exercise
of any other right or remedy by Lender), and all such interest shall be payable
on demand. In no event shall charges constituting interest exceed the rate
permitted under any applicable law or regulation, and if any provision of this
Agreement is in contravention of any such law or regulation, such provision
shall be deemed amended to conform thereto.
(b) The "Prime Rate" is the rate of interest publicly announced by Chase
Manhattan Bank in New York, New York, or its successors, and assigns from time
to time as its prime rate (the Prime Rate is not intended to be the lowest rate
of interest charged Chase Manhattan Bank to its borrowers).
3.2 Facility Fee. Borrower shall pay Lender on the date hereof, and on each
anniversary of the date hereof, a Facility Fee in the amount set forth in
Section 10.4(b), which fee for the initial term of this Agreement is fully
earned as of the date hereof.
3.3 Account Servicing Collateral Handling Fee. Borrower shall pay Lender
monthly, on the first day of each month during the initial and each renewal Term
an Account Servicing Fee for the immediately preceding month (or part thereof)
in the amount set forth in Section 10.4(c).
3.4 Unused Line Fee. Borrower shall pay Lender monthly, on the first day of
each month, in arrears, an Unused Line Fee for each month during the initial and
each renewal Term at the rate per annum set forth in Section 10.4(d), calculated
upon the amount, if any, by which the Maximum Credit exceeds the average
outstanding daily principal balance during the preceding month of all Revolving
Loans, Accommodations and any Term Loan.
3.5 Charges to Loan Account. At Lender's option, all payments of principal,
interest, fees, costs, expenses and other charges provided for in this
Agreement, or in any other agreement now or hereafter existing between Lender
and Borrower, may be charged on the date when due, as principal to any loan
account of Borrower maintained by Lender. Interest, fees for Accommodations, the
Unused Line Fee and any other amounts payable by Borrower to Lender based on a
per annum rate shall be calculated on the basi s of actual days elapsed over a
360-day year.
SECTION 4. GRANT OF SECURITY INTEREST
4.1 Grant of Security Interest. To secure the payment and performance in
full of all Obligations, Borrower hereby grants to Lender a continuing security
interest in and lien upon, and a right of setoff against, and Borrower hereby
assigns and pledges to Lender, all of the Collateral, including any Collateral
not deemed eligible for lending purposes.
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4.2 "Obigations" shall mean any and all Revolving Loans, Term Loans,
Accommodations and all other indebtedness, liabilities and obligations of every
kind, nature and description owing by Borrower to Lender and/or its affiliates,
including principal, interest, charges, fees and expenses, however evidenced,
whether as principal, surety, endorser, guarantor or otherwise, whether arising
under this Agreement or otherwise, whether now existing or hereafter arising,
whether arising, before, during or after the initial or any renewal Term or
after the commencement of any case with respect to Borrower under the United
States Bankruptcy Code or any similar statute, whether direct or indirect,
absolute or,contingent, joint or several, due or not due, primary or secondary,
liquidated or unliquidated, secured or unsecured, original, renewed or extended
and whether arising directly or howsoever acquired by Lender including from any
other entity outright, conditionally or as collateral security, by assignment,
merger with any other entity, participations or interests of Lender in the
obligations of Borrower to others, assumption, operation of law, subrogation or
otherwise and shall also include all amounts chargeable to Borrower under this
Agreement or in connection with any of the foregoing.
4.3 "Collateral" shall mean all of the following property of Borrower:
All now owned and hereafter acquired right, title and interest of Borrower
in, to and in respect of all: accounts, interests in goods represented by
accounts, returned, reclaimed or repossessed goods with respect thereto and
rights as an unpaid vendor; contract rights; chattel paper; general intangibles
(including, but not limited to, tax and duty refunds, registered and
unregistered patents, trademarks, service marks, copyrights, trade names,
applications for the foregoing, trade secrets, goodwill, processes, drawings,
blueprints, customer lists, licenses, whether as licensor or licensee, chosen in
action and other claims, and existing and future leasehold interests in
equipment and fixtures); documents; instruments; letters of credit, bankers'
acceptances or guaranties; cash monies, deposits, securities, bank accounts,
deposit accounts, credits and other property now or hereafter held in any
capacity by Lender, its affiliates or any entity which, at any time,
participates in Lender's financing of Borrower or at any other depository or
other institution; agreements or property securing or relating to any of the
items referred to above;
All now owned and hereafter acquired right, title and interest of Borrower
in, to and in respect of goods, including, but not limited to:
All inventory, wherever located, whether now owned or hereafter
acquired, of whatever kind, nature or description, including all raw
materials, work-in-process, finished goods, and materials to be used or
consumed in Borrower's business; and all names or marks affixed to or to be
affixed thereto for purposes of selling same by the seller, manufacturer,
lessor or licensor thereof;
All equipment and fixtures, wherever located, whether now owned or
hereafter acquired, including, without limitations all machinery,
equipment, motor vehicles, furniture and fixtures, and any and all
additions, substitutions, replacements (including spare parts), and
accessions thereof and thereto;
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All consumer goods, farm products, crops, timber, minerals or the like
(including oil and gas), wherever located, whether now owned or hereafter
acquired, of whatever kind, nature or description;
All now owned and hereafter acquired right, title and interests of Borrower
in, to and in respect of any personal property in or upon which Lender has or
may hereafter have a security interest, lien or right of setoff;
All present and future books and records relating to any of the above
including, without limitation, all computer programs, printed output and
computer readable data in the possession or control of the Borrower, any
computer service bureau or other third party;
All products and proceeds of the foregoing in whatever form and wherever
located, including, without limitation, all insurance proceeds and all claims
against third parties for loss or destruction of or damage to any of the
foregoing.
SECTION 5. COLLECTION AND ADMINISTRATION
5.1 Collections. Borrower shall, at Borrower's expense and in the manner
requested by Lender from time to time, direct that remittances and all other
proceeds of accounts and other Collateral shall be sent to a lock box designated
by and/or maintained in the name of Lender, and deposited into a bank account
now or hereafter selected by Lender and maintained in the name of Lender under
arrangements with the depository bank under which all funds deposited to such
bank account are required to be transferred solely to Lender. Borrower shall
bear all risk of loss of any funds deposited into such account. In connection
therewith, Borrower shall execute such lock box and bank account agreements as
Lender shall specify. Any collections or other proceeds received by Borrower
shall be held in trust for Lender and immediately remitted to Lender in kind.
5.2 Payments. All Obligations shall be payable at Lender's office set forth
below or at Lender's bank designated in Section 10.6(b) or at such other bank or
place as Lender may expressly designate from time to time for purposes of this
Section. Lender shall apply all proceeds of accounts or other Collateral
received by Lender and all other payments in respect of the Obligations to the
Revolving Loans whether or not then due or to any other Obligations then due, in
whatever order or manner Lender shall de termine. For purposes of determining
Gross and Net Availability and for the calculation of Minimum Borrowings,
remittances and other payments with respect to the Collateral and Obligations
will be treated as credited to the loan account of Borrower maintained by Lender
and Collateral balances to which they relate, upon the date of Lender's receipt
of advice from Lender's bank that such remittances or other payments have been
credited to Lender's account or in the case of remittances or other payments
received directly in kind by Lender, upon the date of Lender's deposit thereof
at Lender's bank, subject to final payment and collection. In computing interest
charges, the loan account of Borrower maintained by Lender will be credited with
remittances and other payments four (4) Business Days after the day Lender has
received advice of receipt of remittances in Lender's account at Lender's Bank.
For purposes of
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this Agreement, "Business Day" shall mean any day other than a Saturday, Sunday
or any Other day on which banks located in states where Lender has its offices,
are authorized to close.
5.3 Loan Account Statements. Lender shall render to Borrower monthly a loan
account statement. Each statement shall be considered correct and binding, upon
Borrower as an account stated, except to the extent that Lender receives, within
sixty (60) days after the mailing of such statement, written notice from
Borrower of any specific exceptions by Borrower to that statement.
5.4 Direct Collections. Lender may, at any time, whether or not an Event of
Default has occurred, without notice to or assent of Borrower, (a) notify any
account debtor that the accounts and other Collateral which includes a monetary
obligation have been assigned to Leader by Borrower and that payment thereof is
to be made to the order of and directly to Lender, (b) send, or cause to be sent
by its designee, requests (which may identify the sender by a pseudonym) for
verification of accounts and other Collateral directly to any account debtor or
any other obligor or any bailee with respect thereto, and (c) demand, collect or
enforce payment of any accounts or such other Collateral, but without any duty
to do so, and Lender shall not be liable for any failure to collect or enforce
payment thereof. At Lender's request, all invoices and statements sent to any
account debtor, other obligor or bailee, shall state that the accounts and such
other Collateral have been assigned to Lender and are payable directly and only
to Lender.
5.5 Attorney-in-Fact. Borrower hereby appoints Lender and any designee of
Lender as Borrower's attorney-in-fact and authorizes Lender or such designee, at
Borrower's sole expense, to exercise at any times in Lender's or such designee's
discretion all or any of the following powers, which powers of attorney, being
coupled with an interest, shall be irrevocable until all Obligations have been
paid in full: (a) receive, take, endorse, assign, deliver, accept and deposit,
in the name of Under or Borrower, any and all cash, checks, commercial paper,
drafts, remittances and other instruments and documents relating to the
Collateral or the proceeds thereof, (b) transmit to account debtors, other
obligors or any bailees notice of the interest of Lender in the Collateral or
request from account debtors or such other obligors or bailees at any time, in
the name of Borrower or Lender or any designee of Lender, information concerning
the Collateral and any amounts owing with respect thereto, (c) notify account
debtors or other obligors to make payment directly to Lender, or notify bailees
as to the disposition of Collateral, (d) take or bring, in the name of Lender or
Borrower, all steps, actions, suits or proceedings deemed by Lender necessary or
desirable to effect collection of or other realization upon the accounts and
other Collateral, (e) after an Event of Default, change the address for delivery
of mail to Borrower and to receive and open mail addressed to Borrower, (after
an Event of Default, extend the time of payment of, compromise or settle for
cash, credit, return of merchandise, and upon any terms or conditions, any and
all accounts or other Collateral which includes a monetary obligation and
discharge or release the account debtor or other obligor, without affecting any
of the Obligations, and (g) execute in the name of Borrower and file against
Borrower in favor of Lender financing statements or amendments with respect to
the Collateral.
5.6 Liability. Borrower hereby releases and exculpates Lender, its
officers, employees and designees, from any liability arising from any acts
under this Agreement or in furtherance
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thereof, whether as attorney-in-fact or otherwise, whether of omission or
commission, and whether based upon any error of judgment or mistake of law or
fact, except for willful misconduct. In no event will Lender have any liability
to Borrower for lost profits or other special or consequential damages.
5.7 Administration of Accounts. After written notice by Lender to Borrower
and automatically, without notice, after an Event of Default, Borrower shall
not, without the prior written consent of Lender in each instance, (a) grant any
extension of time of payment of any of the accounts or any other Collateral
which includes a monetary obligation, (b) compromise or settle any of the
accounts or any such other Collateral for less than the full amount thereof, (c)
release in whole or in part any account debt or or other person liable for the
payment of any of the accounts or any such other Collateral, or (d) grant any
credits, discounts, allowances, deductions, return authorizations or the like
with respect to any of the accounts or any such other Collateral.
5.8 Documents. At such times as Lender may request and in the manner
specified by Lender, Borrower shall deliver to Lender or Lender's
representative, as Lender shall designate, copies or original invoices,
agreements, proofs of rendition of services and delivery of goods and other
documents evidencing-or relating to the transactions which gave rise to accounts
or other Collateral, together with customer statements, schedules describing the
accounts or other Collateral and/or statements of account and confirmatory
assignments to Lender of the accounts or other Collateral, in form and substance
satisfactory to Lender and duly executed by Borrower. Without limiting the
provisions of Section 5.7, Borrower's granting of credits, discounts,
allowances, deductions, return authorizations or the like will be promptly
reported to Lender in writing. In no event shall any such schedule or
confirmatory assignment (or the absence thereof or omission of any of the
accounts or other Collateral therefrom) limit or in any way be construed as a
waiver, limitation or modification of the security interests or rights of Lender
or the warranties, representations and covenants of Borrower under this
Agreement. Any documents, schedules, invoices or other paper delivered to Lender
by Borrower may be destroyed or otherwise disposed of by Lender six (6) months
after receipt by Lender, unless Borrower requests their return in writing in
advance and makes prior arrangements for their return at Borrower's expense.
5.9 Access. From time to time as requested by Lender, at the sole expense
of Borrower, Lender or its designee shall have access, prior to an Event of
Default during reasonable business hours and on or after an Event of Default at
any time, to all of the premises where Collateral is located for the purposes of
inspecting the Collateral, and all Borrower's books and records, and Borrower
shall permit Lender or its designee to make such copies of such books and
records or extracts therefrom as Lender may request. Without expense to Lender,
Lender may use such of Borrower's personnel, equipment, including computer
equipment, programs, printed output and computer readable media, supplies and
premises for the collection of accounts and realization on other Collateral as
Lender, in its sole discretion, deems appropriate. Borrower hereby irrevocably
authorizes all accountants and third parties to disclose and deliver to Lender
at Borrower's expense all financial information, books and records, work papers,
mana gement reports and other information in their possession regarding
Borrower.
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5.10 Environmental Audits. From time to time, as requested by Lender, at
the sole expense of Borrower, Borrower shall provide Lender, or its designee,
complete access to all of Borrower's facilities for the purpose of conducting an
environmental audit of such facilities as Lender or its designees may deem
necessary. Borrower agrees to cooperate with Lender with respect to any
environmental audit conducted by Lender or its designee pursuant to this Section
5.10.
SECTION 6. ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS
Borrower hereby represents, warrants and covenants to Lender the following,
the truth and accuracy of which, and compliance with which, shall be continuing
conditions of the making of loans or other credit accommodations by Lender to
Borrower:
6.1 Financial an Other Reports. Borrower shall keep and maintain its books
and records in accordance with generally accepted accounting principles,
consistently applied. Borrower shall, at its sole expense, on or before the
fifteenth (15th) day of each month, deliver to Lender: (a) true and complete
monthly agings of its accounts receivable, accounts payable and notes payable;
(b) weekly inventory reports; (c) monthly internally prepared interim financial
statements. Annually, Borrower shall deliver audited financial statements of
Borrower accompanied by the report and opinion thereon of independent certified
public accountants acceptable to Lender, as soon as available, but in no event
later than ninety (90) days after the end of Borrower's fiscal year. All of the
foregoing shall be in such form and together with such information with respect
to the business of Borrower or any guarantor, as Lender may in each case
request.
6.2 Trade Names. Borrower may from time to time render invoices to account
debtors under its trade names set forth in Section 10.6(f) after Lender has
received prior written notice from Borrower of the use of such trade names and
as to which, Borrower agrees that: (a) each trade name does not refer to another
corporation or other legal entity, (b) all accounts and proceeds thereof
(including any returned merchandise) invoiced under any such trade names are
owned exclusively by Borrower and are subject to the security interest of Lender
and the other terms of this Agreement, and (c) all schedules of accounts and
confirmatory assignments including any sales made or services rendered using the
trade name shall show Borrower's name as assignor and Lender is authorized to
receive, endorse and deposit to any loan account of Borrower maintained by
Lender all checks or other remittances made payable to any trade name of
Borrower representing payment with respect to such sales or services.
6.3 Losses. Borrower shall promptly notify Lender in writing of any loss,
damage, investigation, action, suit, proceeding or claim relating to a material
portion of the Collateral or which may result in any material adverse change in
Borrower's business, assets, liabilities or condition, financial or otherwise.
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6.4 Books and Records. Borrower's books and records concerning accounts and
its chief executive office are and shall be maintained only at the address set
forth in Section 10.6(e). Borrower's only other places of business and the only
other locations of Collateral, if any, are and shall be the addresses set forth
in Section 10.6 hereof, except Borrower may chance such locations or open a new
place of business after thirty (30) days prior written notice to Lender. Prior
to any change in location or opening of any new place of business, Borrower
shall execute and deliver or cause to be executed and delivered to Lender such
financing statements, financing documents and security and other agreements as
Lender may reasonably require, including, without limitation, those described in
Section 6.14.
6.5 Title. Borrower has and at all times will continue to have good and
marketable title to all of the Collateral, free and clear of all liens, security
interests, claims or encumbrances of any kind except in favor of Lender and
except, if any, those set forth on Schedule A hereto.
6.6 Disposition of Assets. Borrower shall not directly or indirectly: (a)
sell, lease, transfer, assign, abandon or otherwise dispose of any part of the
Collateral or any material portion of its other assets other than (i) sales of
inventory to buyers in the ordinary course of business and (ii) the sale of
Borrower's real property located in Fraser, Michigan (the "Fraser Property"),
the proceeds of which will be used to satisfy the mortgage on such Fraser
Property and the balance of the proceeds, if any, to pay certain amounts owed to
V. Allen Koch in connection with Borrower's acquisition of the Fraser Property,
or (b) except for the merger of AI-KO Enterprises, Inc. with and into Borrower,
consolidate with or merge with or into any other entity, or permit any other
entity to consolidate with or merge with or into Borrower or (c) form or acquire
any interest in any firm, corporation or other entity.
6.7 Insurance. Borrower shall at all times maintain, with financially sound
and reputable insurers, insurance (including, without limitation, at the option
of Lender, earthquake insurance) with respect to the Collateral and other
assets. All such insurance policies shall be in such form, substance, amounts
and coverage as may be satisfactory to Lender and shall provide for thirty (30)
days' prior written notice to Lender of cancellation or reduction of coverage.
Borrower hereby irrevocably appoints Lender and any designee of Lender as
attorney-in-fact for Borrower to obtain at Borrower's expense, any such
insurance should Borrower fail to do so and, after an Event of Default, to
adjust or settle any claim or other matter under or arising pursuant to such
insurance or to amend or cancel such insurance. Borrower shall deliver to Lender
evidence of such insurance and a lender's loss payable endorsement satisfactory
to Lender as to all existing and future insurance policies with respect to the
Collateral. Bo rrower shall deliver to Lender, in kind, all instruments
representing proceeds of insurance received by Borrower. Lender may apply any
insurance proceeds received at any time to the cost of repairs to or replacement
of any portion of the Collateral and/or, at Lender's option, to payment of or as
security for any of the Obligations, whether or not due, in any order or manner
as Under determines.
6.8 Compliance With Laws. Borrower is and at all times will continue to be
in compliance with the requirements of all material laws, rules, regulations and
orders of any governmental authority relating to its business (including laws,
rules, regulations and orders
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relating to taxes, payment and withholding of payroll taxes, employer and
employee contributions and similar items, securities, employee retirement and
welfare benefits, employee health and safety, or environmental matters) and all
material agreements or other instruments binding on Borrower or its property.
All of Borrower's inventory shall be produced in accordance with the
requirements of the Federal Fair Labor Standards Act of 1938, as amended and all
rules, regulations and rations and orders related thereto. Borrower shall pay
and discharge all tax , assessments Governmental charges against Borrower or any
Collateral prior to the date on which penalties are imposed or liens attach with
respect thereto, unless the same are being contested in good faith and, at
Lender's option, Reserves are established for the amount contested and penalties
which may accrue thereon.
6.9 Accounts. With respect to each account deemed an Eligible Account,
except as reported in writing to Lender, Borrower has no knowledge that any of
the criteria for eligibility are not or are no longer satisfied. As to each
account, except as disclosed in writing to Lender at the time such account
arises (a) each is valid and legally enforceable and represents an undisputed
bona fide indebtedness incurred by the account debtor for the sum reported to
Lender, (b) each arises from an absolute and unconditional sale of goods,
without any right of return or consignment, or from a completed rendition of
services, (c) each is not, at the time such account arises, subject to any
defense, offset, dispute, contra relationship, counterclaim, or any given or
claimed credit, allowance or discount, and (d) all statements made and all
unpaid balances and other information appearing in the invoices, agreements,
proofs of rendition of services and delivery of goods and other documentation
relating to the accounts, and all confirmatory assignments, schedules,
statements of account and books and records with respect thereto, are true and
correct and in all respects what they purport to be.
6.10 Equipment. With respect to Borrower's equipment, Borrower shall keep
the equipment in good order and repair, and in running and marketable condition,
ordinary wear and tear excepted.
6.11 Financial Covenants. Borrower shall at all times maintain working
capital and net worth (each as determined in accordance with generally accepted
accounting principles, in effect on the date hereof, consistently applied) in
the amounts set forth in Section 10.5(a) and (b) and Borrower shall not,
directly or indirectly, expend or commit to expend, for fixed or capital assets
(including capital lease obligations) an amount in excess of the capital
expenditure limit set forth in Section 10.5(c) in any fiscal year of Borrower.
6.12 Affiliated Transactions. Borrower will not, directly or indirectly:
(a) lend or advance money or property to, guarantee or assume indebtedness of,
or invest (by capital contribution of otherwise) in any person, firm,
corporation or other entity; or (b) declare, pay or make any dividend,
redemption or other distribution on account of any shares of any class of stock
of Borrower now or hereafter outstanding, except Borrower may redeem its
Redeemable Preferred Stock in such amounts as agreed (without acceleration or
amendment) if Borrower's tangible net worth is at least $400,000 as determined
in accordance with generally accepted accounting principles consistently applied
and based upon Borrower's most recent quarterly financial
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statements, copies of which have been delivered to Lender; or (c) make any
payment of the principal amount of or interest on any indebtedness owing to any
officer, director, shareholder, or affiliate of Borrower; or (d) make any loans
or advances to any officer, director, employee, shareholder or affiliate of
Borrower, (e) enter into any sale, lease or other transaction with any officer,
director, employee, shareholder or affiliate of Borrower on terms that are less
favorable to Borrower than those which might be obtained at the time from
persons who are not an officer, director, employee, shareholder or affiliate of
Borrower. Tangible net worth for the purpose of this Section 6.12 means the
aggregate of Borrower's cash, collectible accounts receivable, inventory (at
lower of cost or market) and fixed assets (at fair market value), as reduced by
the total liabilities of Borrower.
6.13 Fees and Expenses. Borrower shall pay, on Lender's demand, all costs,
expenses, filing fees and taxes payable in connection with the preparation,
execution, delivery, recording, administration, collection, liquidation,
enforcement and defense of the Obligations, Lender's rights in the Collateral,
this Agreement and all other existing and future agreements or documents
contemplated herein or related hereto, including any amendments, waivers,
supplements or consents which may hereafter be made or entered into in respect
hereof, or in any way involving claims or defense asserted by-Lender or claims
or defense against Lender asserted by Borrower, any guarantor or any third party
directly or indirectly arising out of or related to the relationship between
Borrower and Lender or any guarantor and Lender, including, but not limited to
the following, whether incurred before, during or after the initial or any
renewal Term or after the commencement of any case with respect to Borrower or
any guarantor under the United States Bankruptcy Code or any similar statute:
(a) all costs and expenses of filing or recording (including Uniform Commercial
Code financing statement filing taxes and fees, documentary taxes, intangibles
taxes and mortgage recording taxes and fees, if applicable); (b) all title
insurance and other insurance premiums, appraisal fees, fees incurred in
connection with any environmental report, audit or survey and search fees; (c)
all fees as then in effect relating to the wire transfer of loan proceeds and
other funds and fees then in effect for returned checks and credit reports; (d)
all expenses and costs heretofore and from time to time hereafter incurred by
Lender during the course of periodic field examinations of the Collateral and
Borrower's operations, plus a per them charge at the rate set forth in Section
10.4(e) for Lender's examiners in the field and office; and (e) the costs,fees
and disbursements of in-house and outside counsel to Lender, including but not
limited to such fees and disbursements incurred as a result of litigation
between the parties hereto, any third party and in any appeals arising
therefrom.
6.14 Further Assurances. At the request of Lender, at any time and from
time to time, at Borrower's sole expense, Borrower shall execute and deliver or
cause to be executed and delivered to Lender, such agreements, documents and
instruments, including waivers, consents and subordination agreements from
mortgagees or other holders of security interests or liens, landlords or
bailees, and do or cause to be done such further acts as Lender, in its
discretion, deems necessary or desirable to create, preserve, perfect or
validate any security interest of Lender or the priority thereof in the
Collateral and otherwise to effectuate the provisions and purposes of this
Agreement. Borrower hereby authorizes Lender to file financing statements or
amendments against Borrower in favor of Lender with respect to the Collateral,
without Borrower's signature and to
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file as financing statements any carbon, photographic or other reproductions Of
this Agreement or any financing statements signed by Borrower.
6.15 Revolving Loan. The Revolving Loan will not at any time exceed the net
availability unless Lender has consented.
6.16 Environmental Condition. None of Borrower's properties or assets has
ever been designated or identified in any manner pursuant to any environmental
protection statute as a hazardous waste or hazardous substance disposal site, or
a candidate for closure pursuant to any environmental protection statute. No
lien arising under any environmental protection statute has attached to any
revenues or to any real or personal property owned by Borrower. Borrower has not
received a summons, citation, notice, or directive from the Environmental
Protection Agency or any other federal or state environmental agency any action
or omission by Borrower resulting in the releasing, or otherwise exposing of
hazardous waste or hazardous substances into the environment. Borrower is in
compliance (in all material respects) with all statutes, regulations, ordinances
and other legal requirements pertaining to the production, storage, handling,
treatment, release, transportation or disposal of any hazardous waste or
hazardous substance.
6.17. Sale of Fraser, Michigan Property. All proceeds (after the
satisfaction of the first mortgage indebtedness due Comerica Bank) arising from
the sale of Borrower's real property located in Fraser, Michigan, which Borrower
acquired from AI-KO Enterprises, Inc. d/b/a A.E.P. Technologies, shall be paid
to Borrower and used by Borrower in the ordinary course of its business, whether
such sale occurs before or after the date of this Agreement.
SECTION 7. EVENTS OF DEFAULT AND REMEDIES
7.1 Events of Default. All Obligations shall be immediately due and
payable, without notice or demand, and any provisions of this Agreement as to
future loans and credit accommodations by Lender shall terminate automatically,
upon the termination or non-renewal of this Agreement or, at Lender's option,
upon or at any time after the occurrence or existence of any one or more of the
following "Events of Default":
(a) Borrower fails to pay when due any of the Obligations or fails to
perform any of the terms of this Agreement or any other existing or future
financing, security or other agreement between Borrower and Under or any
affiliate of Lender;
(b) Any representation, warranty or statement of fact made by Borrower
to Lender in this Agreement or any other agreement, schedule, confirmatory
assignment or otherwise, or to any affiliate of Lender, shall prove
inaccurate or misleading;
(c) Any guarantor revokes, terminates or fails to perform any of the
terms of any guaranty, endorsement or other agreement of such party in
favor of Lender or any affiliate of Lender;
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(d) Any judgment or judgments aggregating in excess of $25,000 or any
injunction or attachment is obtained against Borrower or any guarantor
which remains unstayed for a period of ten (10) days or is enforced;
(e) Borrower or any guarantor or a general partner of a guarantor or
Borrower (which is a partnership), being a natural person, dies, or
Borrower or any guarantor which is a partnership or corporation, is
dissolved, or Borrower or any guarantor which is a corporation fails to
maintain its corporate existence in good standing, or the usual business of
Borrower or any guarantor ceases or is suspended ;
(f) Any change in the chief executive officer, chief operating
officer, chief financial officer or controlling ownership of Borrower;
(g) Borrower or any guarantor becomes insolvent, makes an assignment
for the benefit of creditors, makes or sends notice of a bulk transfer or
calls a general meeting of its creditors or principal creditors;
(h) Any petition or application for any relief under the bankruptcy
laws of the United States now or hereafter in effect or under any
insolvency, reorganization, receivership, readjustment of debt, dissolution
or liquidation law or statute of any jurisdiction now or hereafter in
effect (whether at law or in equity) is filed by or against Borrower or any
guarantor;
(i) The indictment or threatened indictment of Borrower or any
guarantor under any criminal statute, or commencement or threatened
commencement of criminal or civil proceedings against Borrower or any
guarantor, pursuant to which statute or proceedings the penalties or
remedies sought or available include forfeiture of any of the property of
Borrower or such guarantor;
(j) Any default or event of default occurs on the part of Borrower
under any agreement, document or instrument to which Borrower is a party or
by which Borrower or any of its property is bound, creating or relating to
any indebtedness of Borrower to any person or entity other than Lender in
an amount exceeding $25,000, if the effect of such default is to
accelerate, or to permit the acceleration of, the maturity of all or any
part of such indebtedness, or all or any part of any such indebtedness
shall be declared to be due and payable or required to be prepaid or any
other reason, in either event prior to the stated maturity thereof.
(k) Lender in good faith believes that either (i) the prospect of
payment or performance of the Obligations is impaired or (ii) the
Collateral is not sufficient to secure fully the Obligations; or
(1) any material change occurs in the nature or conduct of Borrower's
business.
7.2 Remedies. Upon the occurrence of an Event of Default and at any time
thereafter, Lender shall have all rights and remedies provided in this
Agreement, any other agreements
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between Borrower and Lender, the Uniform Commercial Code or other applicable
law, all of which rights and remedies may be exercised without notice to
Borrower, all such notices being hereby waived, except such notice as is
expressly provided for hereunder or is not waivable under applicable law. All
rights and remedies of Lender are cumulative and not exclusive and are
enforceable, in Lender's discretion, alternatively, successively, or
concurrently on any one or more occasions and in any order Lender may determine.
Without limiting the foregoing, Lender may (a) accelerate the payment of all
Obligations and demand immediate payment thereof to Lender, (b) with or without
judicial process or the aid or assistance of others, enter upon any premises on
or in which any of the Collateral may be located and take possession of the
Collateral or complete processing, manufacturing and repair of all or any
portion of the Collateral, (c) require Borrower, at Borrower's expense, to
assemble and make available to Lender any part or all of the Collateral at any
place and time designated by Lender, (d) collect, foreclose, receive,
appropriate, setoff and realize upon any and all Collateral, (e) extend the time
of payment of, compromise or settle for cash, credit, return of merchandise, and
upon any terms or conditions, any and all accounts or other Collateral which
includes a monetary obligation and discharge or release the account debtor or
other obligor, without affecting any of the Obligations, (f) sell, lease,
transfer, assign, deliver or otherwise dispose of any and all Collateral
(including, without limitations entering into contracts with respect thereto, by
public or private sales at any exchange, broker's board, any office of Lender or
elsewhere) at such prices or terms as Lender may deem reasonable, for cash, upon
credit or for future delivery, with the Lender having the right to purchase the
whole or any part of the Collateral at any such public sale, all of the
foregoing being free from any right or equity of redemption of Borrower, which
right or equity of redemption is hereby expressly waived and released by
Borrower. If any of the Collateral is sold or leased by Lender upon credit terms
or for future delivery, the Obligations shall not be reduced as a result thereof
until payment therefor is finally collected by Under. If notice of disposition
of Collateral is required by law,, seven (7) days prior notice by Lender to
Borrower designating the time and place of any public sale or the time after
which any private sale or other intended disposition of Collateral is to be
made, shall be deemed to be reasonable notice thereof and Borrower waives any
other notice. In the event Lender institutes an action to recover any Collateral
or seeks recovery of any Collateral by way of prejudgment remedy, Borrower
waives the posting of any bond which might otherwise be required.
7.3 Application of Proceeds. Lender may apply the cash proceeds of
Collateral actually received by Lender from any sale, lease, foreclosure or
other disposition of the Collateral to payment of any of the Obligations, in
whole or in part (including reasonable attorneys' fees and legal expenses
incurred by Lender with respect thereto or other-wise chargeable to Borrower)
and in such order as Lender may elect, whether or not then due. Borrower shall
remain liable to Lender for the payment of any deficiency together with interest
at the highest rate provided for herein and all costs and expenses of collection
or enforcement, including reasonable attorneys' fees and legal expenses.
7.4 Lender's Cure of Third Party Agreement Default. Lender may, at its
option, cure any default by Borrower under any agreement with a third party or
pay or bond on appeal any judgment entered a against Borrower, discharge taxes,
liens, security interests or other
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encumbrances at any time levied on or existing with respect to the Collateral
and Pay any amount, incur any expense or perform any act which, in Lender's sole
judgment, is necessary or appropriate to preserve, protect, insure, maintain, or
realize upon the Collateral. Lender may charge Borrower's loan account for any
amounts so expended, such amounts to be repayable by Borrower on demand. Lender
shall be under no obligation to effect such cure, payment, bonding or discharge,
and shall not, by doing so, be deemed to have assumed any obligation or
liability of Borrower.
SECTION 8. JURY TRIAL WAIVER; CERTAIN OTHER WAIVERS A CONSENTS
8.1 JURY TRIAL WAIVER. BORROWER AND LENDER EACH WAIVE ALL RIGHTS TO TRIAL
BY JURY IN ANY ACTION OR PROCEEDING INSTITUTED BY EITHER OF THEM AGAINST THE
OTHER WHICH PERTAINS DIRECTLY OR INDIRECTLY TO THIS AGREEMENT, THE OBLIGATIONS,
THE COLLATERAL, ANY ALLEGED TORTUOUS CONDUCT BY BORROWER OR LENDER, OR, IN ANY
WAY, DIRECTLY OR INDIRECTLY, ARISES OUT OF OR RELATES TO THE RELATIONSHIP
BETWEEN BORROWER AND LENDER. IN NO EVENT WILL LENDER BE LIABLE FOR LOST PROFITS
OR OTHER SPECIAL OR CONSEQUENTIAL DAMAGES.
8.2 Counterclaims. Borrower waives all rights to interpose any claims,
deductions, setoffs or counterclaims of any kind, nature or description in any
action or proceeding instituted by Lender with respect to this Agreement, the
Obligations, the Collateral or any matter arising therefrom or relating thereto,
except compulsory counterclaims.
8.3 Jurisdiction . Borrower hereby irrevocably submits and consents to the
nonexclusive jurisdiction of the State and Federal Courts located in the State
in which the office of Lender designated in Section 10.6(a) is located and any
other State where any Collateral is located with respect to any action or
proceeding arising out of this Agreement, the Obligations, the Collateral or any
matter arising therefrom or relating thereto. In any such action or proceeding,
Borrower waives personal service of the summons and complaint or other process
and papers therein and agrees that the service thereof may be made by mail
directed to Borrower at its chief executive office set forth herein or other
address thereof of which Lender has received notice as provided herein, service
to be deemed complete five (5) days after mailing, or as permitted under the
rules of either of said Courts. Any such action or proceeding commenced by
Borrower against Lender will be litigated only in a Federal Court located in the
district, or a State Court in the State and County, in which the office of
Lender designated in Section 10.6(a) is located and Borrower waives any
objection based on forum non conveniens and any objection to venue in connection
therewith.
8.4 No Waiver by Lender. Lender shall not, by any act, delay, omission or
otherwise be deemed to have expressly or impliedly waived any of its rights or
remedies unless such waiver shall be in writing and signed by an authorized
officer of Lender. A waiver by Lender of any right
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or remedy on any one occasion shall not be construed as a bar to or waiver of
any such right or remedy which Lender would otherwise have on any future
occasion, whether similar in kind or otherwise.
SECTION 9. TERM OF AGREEMENT; MISCELLANEOUS
9.1 Term. This Agreement shall only become effective upon execution and
delivery by Borrower and Lender and shall continue in full force and effect for
a term of three (3) years from the date hereof and shall be deemed automatically
renewed for successive terms of two (2) years thereafter unless terminated as of
the end of the initial or any renewal term (each a "Term") by either party
giving the other written notice at least sixty (60) days' prior to the end of
the then-current Term.
9.2 Early Termination. Borrower may also terminate this Agreement by giving
Lender at least thirty (30) days prior written notice at any time upon payment
in full of all of the Obligations as provided herein, including the early
termination fee provided below. Lender shall also have the right to terminate
this Agreement at any time upon or after the occurrence of an Event of Default.
If Lender terminates this Agreement upon or after the occurrence of an Event of
Default, or if Borrower shall terminate this Agreement as permitted herein
effective prior to the end of the then-current Term, in addition to all other
Obligations, Borrower shall pay to Lender, upon the effective date of
termination, in view of the impracticality and extreme difficulty of
ascertaining actual damages and by mutual agreement of the parties as to a
reasonable calculation of Lender's lost profits, an early termination fee equal
to:
(a) fifty percent (50%) of the average monthly interest and fees payable by
Borrower to Lender for the immediately preceding six (6) months or from the date
of this Agreement, whichever is the shorter period (the "Calculation Period"),
multiplied by
(b) either (i) the number of months (or any part thereof) remaining in the
then-current Term, if Borrower's written notice of termination is received by
Lender or termination by Lender is effective more than sixty (60) days prior to
the end of the then-current Term or (ii) the number of months (or any part
thereof) remaining in the then-current Term plus twenty-four (24) if Borrower's
written notice of termination is received by Lender or termination by Lender is
effective within sixty (60) days prior t o the end of the then-current Term.
For purposes of calculating the early termination fee, in no event will the
average monthly interest be less than the interest which would have been payable
if the Revolving Loans had equaled the Minimum Borrowing on each day during the
Calculation Period.
9.3 Additional Costs Collateral. Upon termination of this Agreement by
Borrower, as permitted herein, in addition to payment of all Obligations which
are not contingent, Borrower shall deposit such amount of cash collateral as
Lender determines is necessary to secure Lender from loss, cost, damage or
expense, including reasonable attorneys' fees, in connection with any
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open Accommodations or remittance items or other payments provisionally credited
to the Obligations and/or to which Lender has not yet received final and
indefeasible payment.
9.4 Notices. Except as otherwise provided, all notices, requests and
demands hereunder shall be (a) made to Lender at its address set forth in
Section 10.6(a) and to Borrower at its chief executive office set forth in
Section 10.6(d), or to such other address as either party may designate by
written notice to the other in accordance with this provision, and (b) deemed to
have been given or made: if by hand, immediately upon delivery; if by telex,
telegram or telecopy (fax), immediately upon receipt; if by overnight delivery
service, one day after dispatch; and if, by first class or certified mail, three
(3) days after mailing.
9.5 Severability. If any provision of this Agreement is held to be invalid
or unenforceable, such provision shall not affect this Agreement as a whole, but
this Agreement shall be construed as though it did not contain the particular
provision held to be invalid or unenforceable.
9.6 Entire Agreement: Amendments; Assignments. This Agreement and the
Promissory Note referred to in Section 2.2, if any, contains the entire
agreement of the parties as to the subject matter hereof, all prior commitments,
proposals and negotiations concerning the subject matter hereof being merged
herein. Neither this Agreement nor any provision hereof shall be amended,
modified or discharged orally or by course of conduct, but only by a written
agreement signed by an authorized officer of Lender. This Agreement shall be
binding upon and inure to the benefit of each of the parties hereto and their
respective successors and assigns, except that any obligation of Lender under
this Agreement shall not be assignable nor inure to the successors and assigns
of Borrower.
9.7 Discharge of Borrower. No termination of this Agreement shall relieve
or discharge Borrower of its Obligations, grants of Collateral, duties and
covenants hereunder or otherwise until such time as all Obligations to Lender
have been indefeasibly paid and satisfied in full, including, without
limitation, the continuation and survival in full force and effect of all
security interests and liens of Lender in and upon all then existing and
thereafter-arising or acquired Collateral and all warranties an d waivers of
Borrower.
9.8 Usage. All terms used herein which are defined in the Uniform
Commercial Code shall have the meanings given therein unless otherwise defined
in this Agreement and all references to the singular or plural herein shall also
mean the plural or singular, respectively.
9.9 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State in which the office of Lender set forth in
Section 10.6(a) below is located.
SECTION 10. ADDITIONAL DEFINITIONS AND TERMS
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10.1 (a) Maximum Credit: $3,000,000.00
(b) Gross Availability Formulas:
Eligible Accounts Percentage: 85 %; provided however, if
dilution in the collection of
accounts, determined by
calculations made by Lender
in accordance with its
customary method of making
such calculation, exceeds
four percent (4%), the
Eligible Account Percentage
may be reduced to a percentage
or amount satisfactory to
Lender.
Eligible Inventory Percentages
Finished Goods 50%
Raw Materials 50%
(c) Inventory Sublimit(s): $ 500,000.00 in the aggregate with respect
to all advances against Eligible Inventory,
but not to exceed at any given time 33% of
all outstanding advances against
Borrower's accounts.
(d) Maximum days after Invoice
Date for Eligible Accounts: 90 days
(e) Minimum Borrowing: $1,750,000.00
10.2 Term Loan:
(a) amount $1,156,000.00
(b) amortization: $19,266.27 per month for 59 months
commencing on the first day of the month
after the date of this Agreement and a
final payment of the full unpaid balance
due on the Term Loan on August 1, 2001.
10.3 Accommodations:
(a) Lender's Charge for Accommodations: N/A
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(b) Sublimit for Accommodations: N/A
10.4 Interest, Fees & Charges:
(a) Interest Rate: Prime Rate plus 3.75 % per annum
(b) Facility Fee: $32,500.00 payable in full out of the initial
advances to be made to Borrower hereunder, and
1.00 % of the then Maximum Credit at the first
anniversary of the date (the "Closing Date") of
this Agreement and 1.00% of the then Maximum Credit
at each anniversary of the Closing Date thereafter,
which Facility Fees for the initial Term of this
Agreement shall be fully earned as of the date of
this Agreement and payment thereof secured by the
Collateral.
(c) Account Servicing Fee: N/A
(d) Unused Line Fee: per annum 0.25%
(f) Field Examination per annum $ 650.00
10.5 Financial Covenants:
(a) Working Capital: N/A
(b) Net Worth: N/A
(c) Capital Expenditures: per fiscal year N/A
10.6 (a) Lender's Office: 10 South LaSalle Street
Chicago, Illinois 60603
(b) Lender's Bank: Bank of America Illinois
231 S. LaSalle Street
Chicago, Illinois 60697
(c) Borrower: G-P Plastics, Inc.
(d) Borrower's Chief Executive Office: 3910 Industrial Avenue
Rochester Hills, MI 48309
(e) Locations of Eligible Inventory
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Collateral: (i) 3910 Industrial Avenue
Rochester Hills, MI 48309
(ii) 33957 Riviera Drive
Fraser, MI 48026
(f). Borrower's Other Offices and Locations of
Collateral: NONE
(g) Borrower's Trade Names for
Invoicing: A.E.P. Technologies and
AL-KO Enterprises
IN WITNESS WHEREOF, Borrower and Under have duly executed this Agreement
this 28 day of August, 1996.
LENDER: BORROWER:
THE CIT GROUP/CREDIT G-P PLASTICS, INC.
FINANCE, INC.
By: Robert P. Handler Owen A. Pierce
_________________ __________________
Robert P. Handler,Vice President By: Owen A. Pierce
Title: President
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SCHEDULE A
Permitted Liens
1. G-P Plastics, Inc., as debtor in favor of Cincinnati Milacron,
Cincinnati, OH, as secured party, covering a Cincinnati Milacron CH-
90-R-40mm-12.00, Filing No. 58634B on 7/24/95 with Michigan Secretary
of State.
2. G-P Plastics, Inc., as debtor in favor of General Motors Corporation,
Detroit, MI, as secured party, covering inventory owned by General
Motors Corporation and "tooling", Filing No. 68289B on 3/14/96 with
Michigan Secretary of State.
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EXHIBIT 10.05
REAL ESTATE TERM LOAN AGREEMENT
THIS AGREEMENT is made on January 5, 1998 between G-P PLASTICS, INC., a
Michigan corporation with principal offices at 3910 Industrial Drive, Rochester
Hills, Michigan 48309 (the "Borrower"), and NBD BANK, a Michigan banking
corporation with principal offices at 611 Woodward Avenue, Detroit, Michigan
48226 (the "Bank").
(A) The Borrower has applied to the Bank for a loan to provide funds for
the acquisition of: (1) the real estate described in the attached Exhibit A (the
"Site"); and (2) all buildings, structures, site improvements and other
improvements located on the Site (the "improvements"). The Improvements and the
Site are referred to collectively in this agreement as the "Project."
(B) The Bank wishes to lend the Borrower the sums described below, and the
Borrower wishes to borrow those sums from the Bank, subject to and in accordance
with the terms and conditions of this agreement.
Therefore, the parties agree as follows:
ARTICLE I DESCRIPTION OF LOAN; RESERVE ACCOUNTS; SINKING FUND
1.1 Loan Disbursement. Subject to the terms and conditions of this
agreement, the Bank shall lend to the Borrower, and the Borrower shall borrow
from the Bank, the sum of ONE MILLION TWO HUNDRED THOUSAND DOLLARS ($ 1,200,000)
(the "Loan"). The Borrower acknowledges and agrees that the entire principal
amount of the Loan has been fully advanced to the Borrower as of the date of
this agreement and that no further advances of Loan proceeds are required under
this agreement. $972,000 of the Loan proceeds will be applied to the acquisition
of the project. $128,000 of the Loan proceeds shall be deposited to an account
at the Bank in the name of the Borrower but under the sole dominion and control
of the Bank (the "Construction Escrow") to be disbursed in accordance with
Section 1.3 below to finance construction on the Project. $100,000 of the Loan
Proceeds shall be deposited to an account at the Bank in the name of the
Borrower but under the sole dominion and control of the Bank (the "Environmental
Escrow") to be disbursed in accordance with Section 1.3 below to finance the
environmental remediation of the Project. The Borrower shall repay the Loan to
the Bank (plus interest and other costs and charges that the Bank may incur), as
provided in this agreement, the Note (as defined below) and the other Loan
Documents (as defined below).
1.2 Note. The Borrower's debt to the Bank for its borrowings under the Loan
shall be evidenced by a Mortgage Note executed concurrently (together with all
extensions, renewals, modifications, amendments, and substitutions, the "Note").
1.3 Construction and Environmental Escrows. The Borrower hereby pledges the
Construction Escrow and the Environmental Escrow to the Bank as additional
Collateral for the
<PAGE>
Loan and grants the Bank a security interest in them. From time to time the
Borrower may request that the Bank release funds from the Construction Escrow to
fund construction on the Project and from the Environmental Escrow to fund
environmental remediation of the Project. The Bank shall not be obligated to
release such funds unless and until the Borrower complies with the following
conditions
(A) Compliance With Conditions to Lending. The Borrower shall have complied
with the conditions to lending set forth in Article 4 below.
(B) Request for Advances. The Borrower shall have delivered to the Bank a
request for each advance on forms acceptable to and/or provided by the Bank.
Each request shall indicate the amount of the advance being requested and the
date upon which the advance is desired, which date should be not less than five
(5) business days after the date upon which the Bank receives the request. The
Bank shall not make more than two advances from the Construction Escrow and two
advances from the Environmental Escrow in any calendar month.
(C) Compliance With Michigan Construction Lien Act. In the Bank's opinion
the Borrower shall have (1) fully complied with all provisions of the Michigan
Construction Lien Act, 1980 PA 497, as amended from time to time (the "Act")
with respect to the construction or environmental remediation to be funded with
the advance and (2) before the commencement of any actual physical improvements
(as defined in the Act) in connection with any construction or environmental
remediation, recorded a notice of commencement (as defined in the Act) with
respect to the construction or environmental remediation and delivered a copy of
that notice to the Bank.
(D) Scope of Construction or Environmental Remediation. The Borrower shall
have delivered to the Bank plans and specifications regarding (or such other
evidence as the Bank shall require recording) the scope of the construction or
environmental remediation, all in form and substance satisfactory to the Bank
(such materials being called the "Scope Documents")
(E) Cost Estimate. The Borrower shall have delivered to the Bank an
estimate of the cost of completing the construction or environmental
remediation, based upon the Scope Documents, in form, substance and amount
satisfactory to the Bank (such estimate being called the "Cost Estimate").
(F) Evidence of Compliance with Applicable Laws. The Borrower shall have
delivered to the Bank evidence that the construction or environmental
remediation will comply with (1) all building, use, safety, zoning, subdivision,
air quality, condominium, planning, environmental and all other similar laws,
ordinances, rules, regulations and other requirements of any federal, state,
municipal or other governmental or public authority affecting the construction
or environmental remediation, including the requirements of the ADA and (2) all
covenants, conditions, restrictions and reservations affecting the Site or the
Project
2
<PAGE>
(G) Permits. The Borrower shall have delivered to the Bank copies of all
required permits, licenses, approvals, acceptances a nd authorizations that are
then procurable and that are required for the construction or environmental
remediation
(H) Draw Package. The Borrower shall have delivered to the Bank sworn
statements, a schedule of costs by work trade category, waivers of lien, copies
of all writings relating to the Project received or sent by the designee
identified in the notice of commencement for the construction or environmental
remediation during the period ending with the date of the request for advance,
affidavits and certificates of the Borrower and/or the general contractor
performing the construction or environmental remediation and assurances of
payment acceptable to the Bank of the general contractor, if any, and all trade
contractors, subcontractors and materialmen, which shall cover all work, labor
and materials (including equipment and fixtures of all kinds) done, performed or
furnished for the construction or environmental remediation to the date of the
request.
(I) Inspection. The portion of the construction or environmental
remediation that has been completed at the time of the request for the advance
is subject to inspection by the Bank or its designee.
1.4 Establishment of Reserve Account. Concurrently with the execution of
this agreement, the Borrower will establish a reserve account (the "Reserve
Account") at the Bank. the Reserve Account will be in the name of the Borrower
but under the sole dominion and control of the Bank. The Borrower hereby pledges
the Construction Escrow and the Environmental Escrow to the Bank as additional
Collateral for the Loan and grants the Bank a security interest in them. The
Borrower shall deposit into the Reserve Account, on or before the fifth (5th)
day of each month, beginning February 5, 1998, an amount equal to $18,000. The
Borrower shall not be obligated to deposit further amounts into the Reserve
Account so long as a balance of $200.000 is maintained in that account. Amounts
deposited in the Reserve Account may be used only to pay the claims of the
Borrower's preferred shareholders and related legal expenses and only with the
Bank's permission. Upon the Bank's determination in its sole and unfettered
discretion that all claims and potential claims of preferred shareholders (and
similar claims regardless of whether the claimants are in fact preferred
shareholders) have been satisfied or discharged, the Bank shall, at the
Borrower's request release the balance of the Reserve Account to the Borrower
and the Borrower's obligation to fund the Reserve Account shall cease.
ARTICLE 2 FEES
2.1 Commitment Fee. The Borrower has paid the Bank a commitment fee of
$28,750. The Borrower acknowledges that that fee has been earned by the Bank and
that it is nonrefundable.
2.2 Annual Maintenance Fee. On January 5, 1999 and on the 5th day of each
December thereafter, the Borrower shall pay the Bank a Maintenance Fee of $2,875
to compensate the Bank for the cost of administering the Loan.
3
<PAGE>
2.3 Costs. Expenses, and Attorney's Fees. The Borrower shall pay all the
Bank's out-of-pocket costs and expenses relating to the Loan, including
appraisal fees and title insurance premiums. The Borrower shall also pay the
Bank's reasonable attorney's fees for the Loan (including those of its "in-
house" counsel). Costs, expenses and fees relating to the initial negotiation,
documentation and closing of the Loan, unless previously paid, shall be paid at
closing of the Loan. All other costs, expenses and fees shall be paid to the
Bank within ten (10) days after a request for such payment.
ARTICLE 3 SECURITY
3.1 Description of Security. The Loan and the Note shall be secured and/or
supported by the following:
(A) Mortgage. A first mortgage lien in the Bank's favor on the Project
pursuant to a mortgage in form and substance acceptable to the Bank (as
amended from time to time, the "Mortgage");
(B) [Intentionally Omitted]
(C) Assignment of Rents. All present and future rents, issues and
profits arising out of or relating to all present and future leases
affecting all or any portion of the Project (each, a "Lease"), pursuant to
an assignment of real estate leases and rents in form and substance
acceptable to the Bank (as amended and replaced, the "Assignment");
(D) [Intentionally Omitted]
(E) Guaranties. Joint and several guaranties executed by Fillip
Kreissl, Jack Sanders and David Shifflett (each, a "Guarantor," and,
collectively, the "Guarantors"), pursuant to guaranty agreements in form
and substance acceptable to the Bank (each, as amended and replaced, a
"Guaranty," and collectively, as amended and replaced, the "Guaranties"),
the obligations of each Guarantor under its Guaranty to be limited to the
principal amount of $200,000 plus interest and costs;
(F) Debt Subordination. The subordination of $1,000,000 in debt from
the Borrower to Capital BIDCO and Horizon BIDCO to all debt of the Borrower
to the Bank pursuant to a subordination agreement in form and substance
acceptable to the Bank (as amended and replaced, the "Debt Subordination");
(G) Additional Collateral/Setoff. A continuing security interest in
(1) all securities and other property of the Borrower in the custody,
possession or control of the Bank (other than property held by the Bank
solely in a fiduciary capacity) and (2) all balances of deposit accounts of
the Borrower with the Bank. The Bank shall have the right at any time to
apply its own debt or liability to the Borrower, or to any other party
liable for payment of the borrowings under the
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Loan, in whole or partial payment of such borrowings or other present or
future liabilities of the Borrower to the Bank, without any requirement of
mutual maturity;
(H) Cross-Lien. Any of the Borrower's other property in which the Bank
has a security interest to secure payment of any other present or future
debt, whether absolute, contingent, direct or indirect, including the
Borrower's guaranties of the debts of others.
3.2 Definition of Loan Documents. This agreement, the Note, the Mortgage,
the Assignment, the Guaranties, the Debt Subordination, the Environmental
Certificate (as defined below), and the Bank's commitment letter dated November
10, 1997, accepted by the Borrower on November 14, 1997, (together with all
amendments to, modifications and replacements of and substitutions for those
documents) are sometimes collectively referred to in this agreement as the "Loan
Documents". The terms and conditions of the other Loan Documents are
incorporated into this agreement by this reference.
Term of Loan Documents. The terms and conditions of the Loan Documents
shall remain in full force and effect until the Bank has been paid all sums
due under them.
ARTICLE 4 CONDITIONS
4.1 Conditions for Advances. The Bank shall not be obligated to close the
Loan or advance the Loan proceeds to the Borrower unless the Borrower has
complied with the following requirements and conditions:
(A) Representations and Warranties. All representations and warranties
made by the Borrower, and each Guarantor to the Bank, including those
contained in the Loan Documents, shall be true and correct on and as of the
date of the advance with the same effect as if made on that date;
(B) No Material Change in Financial Condition. There shall have been
no material adverse change in (a) the projected income or expenses of the
Project or (b) the financial condition of the Borrower, any of the
Guarantors, any lessee under any Lease or any guarantor of any Lease;
(C) No Right to Terminate. None of the events described in article 11
of this agreement for which the Bank has the right to terminate this
agreement has occurred;
(D) No Insolvency or Bankruptcy Proceedings. Neither the Borrower, nor
any tenant under any Lease, nor any of the Guarantors, nor any guarantor of
any Lease shall be the subject of any bankruptcy, reorganization or
insolvency proceedings;
(E) No Default Under the Loan Documents. There shall not have occurred
and be continuing any default under any of the Loan Documents or a
violation of any terms of any of the Loan Documents, nor shall there have
occurred an event that with the passage of time, the giving
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of notice, or both, would constitute a default under any of the Loan
Documents or a violation of any terms of any of the Loan Documents;
(F) No Default Under Any Other Loan. There shall not have occurred and
be continuing any default under, or violation of any term of, any other
loan by the Bank to the Borrower or to any Guarantor, nor shall there have
occurred and be continuing an event that with the passage of time, the
giving of notice, or both, would constitute such a default or violation;
(G) Required Documents. The Bank shall have received the following
documents and information, all in form, substance and amount (if
applicable) satisfactory to the Bank:
(1) Loan Documents. Executed copies of all of the Loan Documents and any
other documents required by the Bank, including executed and proposed Leases;
(2) Appraisals. Such appraisals of the Project as the Bank may require;
(3) Financial Statements. Current financial statements for the Borrower,
and each Guarantor.
(4) Evidence of Compliance With Applicable Laws. Evidence of the compliance
of the Project with (a) all building, use, safety, zoning, subdivision, air
quality, condominium, planning, envirnomental and all other similar laws,
ordinances, rules, regulations and other requirements of any federal, state,
municipal or other governmental or public authority affecting the use and/or
occupancy of the Project, including the requirements of the ADA and (ii) all
covenants, conditions, restrictions and reservations affecting the Site or the
Project;
(5) Permits. All required permits, licenses, approvals, acceptances and
authorizations that are then procurable and that are required for the use and/or
occupancy of the Project;
(6) Insurance. Original paid insurance policies as required by the Loan
Documents.
(7) Survey. Within 30 days after closing, furnish a current survey,
certified by a registered land surveyor to the Bank and the title insurer of the
Mortgage, showing (a) the location of all existing Improvements on the Site,
including parking areas, (b) all easements and public utilities (identified by
liber and page of recording), (c) all means of ingress and egress to the Site,
(d) all setback lines, (e) any encroachments either upon the real estate of
others or by others upon the Site, (f) the location and availability of
satisfactory utility services and storm drain and sewer facilities and (g) no
other matter objectionable to the Bank. The Borrower shall from time to time,
when required by the Bank, furnish supplemental surveys of the Site, showing (i)
the location of additional Improvements installed or placed on the Site since
the previous survey was performed and (ii) such other matters as the Bank
requires;
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(8) Mortgage Title Insurance. A paid policy of mortgage title insurance (in
the current standard ALTA form), without exceptions, containing zoning (either
ALTA Form 3.0 or ALTA Form 3.1, as the Bank requires), comprehensive, survey,
access and such other endorsements as the Bank requests, issued by a company
satisfactory to the Bank in the full amount of the Loan. The policy shall insure
that the Bank is a first mortgagee of the Project and that title to the Project
is in the Borrower, free and clear of all easements, restrictions, defects,
liens, claims, charges and encumbrances, except those indicated in the Mortgage
or otherwise approved by the Bank.
(9) Environmental Questionnaire. A completed customer environmental
questionnaire;
(10) Environmental Compliance. Evidence that the Borrower
(a) has conducted and completed all environmental investigations and
studies on or to the Site, including a comprehensive environmental
assessment, as may be required by (i) the Bank, (ii) any governmental
agency or authority or (iii) any statute, regulation, rule, policy or
ordinance, to determine whether the Site has been contaminated with or by
Hazardous Materials (as defined in the Environmental Certificate) and
whether regulated wetlands are present on the Site and
(b) has performed and completed or will perform and complete all
necessary remedial, removal and other actions to the Site so that the Site
conforms to all applicable federal, state and local statutes, ordinances,
rules, regulations, policies, orders and directives which govern or protect
the environment;
(11) Evidence of Due Organization and Good Standing. Evidence of the due
organization and good standing of the Borrower and every other business entity
that is a party to this agreement or any of the other Loan Documents, together
with an executed copy, if and as applicable, of the partnership agreement, the
operating agreement, the articles of incorporation or organization, the bylaws
or any similar agreement for each of those business entities (the
"Organizational Documents");
(12) Evidence of Authority to Enter Into Loan Documents. Evidence that (a)
each party to this agreement or to any of the other Loan Documents is authorized
to enter into the transactions contemplated by this agreement and/or the other
Loan Documents, as the case may be, and (b) the person(s) signing on behalf of
each of those parties is authorized to do so;
(13) Environmental Certificate. A completed environmental certificate (as
amended and replaced from time to time, the "Environmental Certificate");
(14) Legal 0pinion. A written opinion of legal counsel for the Borrower
stating that--
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(a) the Borrower is a duly organized and existing Michigan corporation
(for which the Michigan Department of Commerce has issued a Certificate of
Good Standing within thirty (30) days of the date of the opinion, a
certified copy of which shall be attached to the opinion),
(b) the execution of the Loan Documents by the Borrower is authorized
by all appropriate corporate action of the Borrower,
(c) the execution of the Loan Documents does not contravene (i) the
articles of incorporation or bylaws of the Borrower, or (ii) any
undertaking, contract or restriction known to counsel to which the Borrower
is a party or to which it is subject,
(d) counsel has no knowledge of any material proceedings, legal or
equitable, pending or threatened, (a) against the Borrower, the Site or the
Improvements, (b) that involve the validity or enforceability of the Loan
Documents or (c) that would affect the contemplated use of the Project, and
(e) the Loan Documents are valid and legally binding upon the
Borrower, enforceable in accordance with their terms, except as enforcement
may be limited by any proceedings in bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting generally
the enforcement of creditors'rights and remedies.
(15) Additional Documents. Such additional documents and information as the
Bank may reasonably require.
(H) Closing of CIT Facility. The $3,500,000 financing from CIT
Corporation to the Borrower and the Bank's participation therein shall have
closed to the satisfaction of the Bank (the "CIT Facility").
4.2 Nonliability . So long as the Bank is acting in good faith, the Bank
shall not be liable for any error, omission, irregularity or action taken
regarding any advance under the Loan.
ARTICLE 5 INSURANCE
As long as any part of the Loan remains unpaid, the Borrower shall maintain
for all property covered by the lien of the Mortgage or otherwise securing
repayment and performance of the Loan, a policy or policies of insurance against
fire (and such other hazards and risks customarily covered by the standard form
of extended coverage endorsement available in the state of Michigan, including
risks of malicious mischief and vandalism, and covering all property subject to
the lien of the Mortgage or otherwise securing the Loan), as well as a policy or
policies of insurance for builder's risk (if applicable), public liability,
worker's compensation, federal flood insurance (if required) and such other
insurance as the Bank may, from time to time require, containing as applicable a
standard loss payable and/or mortgagee clause, without contribution, in favor of
the Bank. All policies shall be with companies and in form, amount, and
substance
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satisfactory to the Bank, and shall be noncancelable except upon thirty (30)
days' written notice to the Bank.
ARTICLE 6 AFFIRMATIVE COVENANTS
6.1 The Borrower covenants with the Bank:
(A) Access to the Project. To give the Bank or its designee access to
the Project and a to make available for audit and inspection by the Bank or
its agents all property, equipment, books, contracts, records and other
papers relating to the Project;
(B) Book and Accounts. To keep the books and accounts of all
operations relating to the Project in accordance with generally accepted
accounting principles;
(C) Respond to Inquiries. To respond promptly to any inquiry from the
Bank for information concerning the Project, which information may be
verified by the Bank at the Borrower's expense. Notwithstanding the
foregoing, the Bank shall at all times be entitled to rely upon any
statements or representations made by the Borrower or its agents and the
Borrower shall hold the Bank harmless from and indemnify it against all
losses costs (including reasonable attorney's fees) and damages sustained
by the Bank through any action taken or forbearance granted by the Bank in
reliance on such statements or representations;
(D) Payment of Costs. To pay, when due, all costs, fees and expenses
required or needed to satisfy the conditions of the Loan Documents and the
consummation of the transactions contemplated by the Loan Documents;
(E) Correction of Defects or Variations. Upon the Bank's demand, to
correct any structural defect in the Improvements;
(F) Performance Under Leases. To fully perform all covenants and
obligations under all Leases;
(G) Existence. To maintain its existence and business operations as
presently in effect in accordance with all applicable laws and regulations;
to pay its debts and obligations when due under normal terms; and to pay,
on or before their due date, all taxes, assessments, fees and other
governmental monetary obligations, except as they may be contested in good
faith if they have been properly reflected on its books and, at the Bank's
request, adequate funds or security has been pledged to insure payment;
(H) Financial Records. To maintain proper books and records of
account, in accordance with Generally accepted accounting principles where
applicable, and consistent with financial statements previously submitted
to the Bank;
(I) Notice. To give prompt notice to the Bank of the occurrence of (1)
an Event of Default (as defined below) and/or (2) any other development,
financial or otherwise, that would
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affect the Borrower's, any Guarantor's, any tenant's, or any Lease guarantor's
business, properties or affairs in a materially adverse manner;
(J) To permit the Bank to perform semi-annual collateral audits (the
"NBD Collateral Audits") at the Borrower's expense so long as any funds are
outstanding or available under the CIT Facility. The NBD Collateral Audits
shall be performed during those quarters when such audits are not performed
by CIT. Such information as may be reasonably requested by the Bank's
auditors in order to complete their audit shall be made available to them.
The results of any NBD Collateral Audit shall be provided to CIT.
(K) Required Documents and Financial Statements. To furnish or cause
to be furnished to the Bank:
(1) Within sixty (60) days after each and as of the end of each
fiscal year of the Borrower, its balance sheet and statements of
income, retained earnings and cash flows, compiled by an independent
certified public accountant of recognized standing and certified as
correct and accompanied by a covenant compliance certificate signed by
one of the Borrower's authorized agents;
(2) Within forty-five (45) days after each fiscal quarter of the
Borrower (other than the fourth quarter), its balance sheet as of the
end of that quarter and its statements of income, retained earnings
and cash flows from the beginning of that fiscal year to the end of
that quarter, compiled by an independent certified public accountant
of recognized standing and certified as correct and accompanied by a
covenant compliance certificate signed by one of the Borrower's
authorized agents;
(3) Within fifteen (15) days after each fiscal month of the
Borrower, its balance sheet as of the end of that month and its
statement of income, from the beginning of that fiscal year to the end
of that period, certified as correct by one of the Borrower's
authorized agents;
(4) Within fifteen (15) days after and as of the end of each
calendar year, the signed personal financial statement of each
Guarantor;
(5) Within fifteen (15) days after filing, a signed copy of the
federal income tax return of the each Guarantor, with all exhibits and
schedules;
(6) No later than July 15 and January 15 of each year, real and
personal property tax receipts reflecting taxes due for the preceding
summer and winter, respectively, marked as paid by the appropriate
authority; and
(7) Promptly, such other information or books and records as the
Bank may reasonably request.
ARTICLE 7 NEGATIVE COVENANTS
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7.1 Definitions. As used in this agreement, the following terms shall have
the following respective meanings:
(A) Cash Flow. The term "Cash Flow" means, for any period, net income
for that period, plus, to the extent deducted in determining net income,
interest expense, depreciation, amortization, and other non-cash charges.
(B) Debt Service. The term "Debt Service" means for any period,
principal and interest payments (including those associated with capital or
operating lease obligations) paid or 12 payable during that period.
(C) Subordinated Debt. The term "Subordinated Debt" means debt
subordinated to the Bank in manner and by agreement satisfactory to the
Bank.
(D) Tangible Capital Funds. The term "Tangible Capital Funds" means
the sum of Tangible Net Worth plus Subordinated Debt.
(E) Tangible Net Worth. The term "Tangible Net Worth" means total
assets less intangible assets, preferred stock that is not Qualified
Preferred Stock and total liabilities. Intangible assets include goodwill,
patents, copyrights, mailing lists, catalogues, trademarks, bond discount
and underwriting expenses, organization expenses and all other intangibles.
(F) Qualified Preferred Stock. The term "Qualified Preferred Stock"
means preferred stock of the Borrower under the terms of which no payment
is required until (i) the ratio of the Borrower's Cash Flow to Debt Service
plus payments on account of preferred stock exceeds 1.40 to 1.00 for the
immediately preceding four quarters and (ii) the ratio of the Borrower's
total liabilities to its Tangible Capital Funds minus the principal amount
of any debt then owing but not paid (including amounts owing to preferred
shareholders) does not exceed 3.00 to 1.00.
7.2 Generally Accepted Accounting Principles. Unless otherwise noted, the
financial requirements set forth in these negative covenants shall be computed
in accordance with generally accepted accounting principles applied on a basis
consistent with financial statements previously submitted to the Bank.
7.3 Negative Covenants. The Borrower shall not, without the prior written
consent of the Bank, do or permit to be done any of the following:
(A) No Encumbrance or Conveyance. Convey, transfer. lease or encumber
all or any portion of the Site or the Project.
(B) No Modification of Leases. Modify any Lease.
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(C) No Encumbering of Personal Property. Assign, transfer, dispose of
or encumber any personal property or equipment covered by the Loan
Documents, except in the ordinary course of the Borrower's business or as
permitted by the Loan Documents.
(D) No Transfer of Beneficial Interest. Convey, assign or transfer any
beneficial interest in the Project or any right to manage or receive any of
the rents, contract payments, income, profits or proceeds of or relating to
the Project.
(E) No Remodeling, or Reconstruction. Remodel, add to, reconstruct,
improve or demolish any part of the Project or any existing improvement on
the Site without the Bank's permission.
(F) No Variation in Use. Permit the Project to be used for any purpose
other than that for which it was originally intended.
(G) No Conditional Sales Contracts. Purchase or install any materials,
equipment, fixtures or any other part of the Improvements, or any articles
of personal property placed in the Improvements, under any conditional
sales contract, security agreement or other arrangement under which the
seller (1) reserves or purports to reserve either title to, or the right to
remove or to repossess, the items sold or (2) may consider the items sold
to be personal property after their incorporation into the Improvements.
(H) No Liens. Create or permit to exist any lien on any of its
property, real or personal, except: (1) existing liens disclosed to the
Bank in writing; (2) liens incurred in the ordinary course of business
securing current nondelinquent liabilities for taxes, worker's
compensation, unemployment insurance, social security and pension
liabilities; (3) liens for taxes being contested in good faith; and (4)
liens created pursuant to article 3 of this agreement.
(I) Tangible Capital Funds. Permit its Tangible Capital Funds to be
less than $225,000 on or after March 31, 1998, increasing on the last day
of each month thereafter by 100% of net income for that month until the
ratio of the Borrower's total liabilities to its Tangible Capital Funds is
3.00 to 1.00 or less.
(J) Debt Service Coverage. For the fiscal four quarter period ending
on the last day of the fiscal quarter immediately preceding the date of
determination, permit the ratio of its Cash flow to its Debt Service to be
less than 1.25 to 1.00.
(K) No Dividends. Acquire or retire any of its shares of capital
stock, or declare or pay dividends or make any other distributions upon any
of its shares of capital stock, except (1) dividends payable in its capital
stock or (2) if the Borrower is a Subchapter S corporation, dividends
payable to its shareholders sufficient in amount to pay their income-tax
obligations related to the Borrower's taxable income.
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(L) No Sale of Shares. Issue, sell or otherwise dispose of any shares
of its capital stock or other securities or any rights, warrants or options
to purchase or acquire any such shares or securities.
(M) No Debt. Incur, or permit to remain outstanding, debt for borrowed
money or installment obligations, except debt not to exceed $3,500,000 to
CIT Corporation, any debt to the Bank, debt reflected in the latest
financial statement of the Borrower furnished to the Bank prior to
execution of this agreement and not to be paid with proceeds of borrowings
under the Loan. For purposes of this covenant, the sale of any accounts
receivable shall be deemed the incurring of debt for borrowed money.
(N) No Guaranties. Guaranty or otherwise become or remain secondarily
liable on the undertaking of another, except for endorsement for deposit
and collection in the ordinary course of business.
(O) No Advances and Investments. Purchase or acquire any securities
of, or make any loans or advances to, or investments in, any person, firm
or corporation, except obligations of the United States Government, open
market commercial paper rated one of the top two ratings by a rating agency
of recognized standing or certificates of deposit in insured financial
institutions.
(P) No Leases. Contract for or assume in any manner lease obligations
as lessee.
(Q) Limit on Compensation. Pay Inmold, Inc. or pay or award salary,
bonus, dividends, or compensation of any kind to any officer of the
Borrower, in any one fiscal quarter, in an aggregate amount in excess of
five percent (5%) of the Borrower's gross revenues for that quarter.
(R) Modification of Organizational Documents. Amend or modify any of
the Organizational Documents.
ARTICLE 8 REPRESENTATIONS AND WARRANTIES
8.1 In addition to any other representations and warranties made in the
other Loan Documents, the Borrower makes the following representations and
warranties to the Bank:
(A) Fee Simple Title. The Borrower has good and marketable fee simple
title to the Site, free from all liens and encumbrances except those
permitted under the Mortgage.
(B) Performance Under Leases. The Borrower has fully performed all
covenants and obligations to be performed by the Borrower under all Leases.
(C) Accuracy of Financial Statements. All financial statements
delivered to the Bank are true and correct in all material respects and
have been prepared in accordance with generally accepted accounting
principles. No materially adverse change in the financial
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condition of the Borrower, in it business or in its property has occurred since
the date of each Financial statement.
(D) No Suits or Proceedings. There are no suits or proceedings, legal
or equitable, pending or threatened: (1) against or that affect the
Borrower, any of the Guarantors, the Site or the Improvements; (2) that
involve the validity or enforceability of any of the Loan Documents; or (3)
that involve any risk of a judgment or liability which, if satisfied, would
have a materially adverse effect on (a) the financial condition, business
or properties of the Borrower or any Guarantor, (b) the priority of the
lien of the Mortgage or (c) the contemplated use of the Project.
(E) Enforceability of the Loan Documents. When executed and delivered,
the Loan Documents will be valid, legally binding on the person(s) and/or
entity(ies) executing them and enforceable in accordance with their terms.
The consummation of the transactions contemplated by the Loan Documents
does not conflict with or result in (1) the breach of any valid regulation,
order, writ, injunction, judgment or decree of any court or of any
governmental or municipal instrumentality or (2) the breach of or default
un der any agreement or other instrument to which the Borrower is a party,
by which it is bound, or to which it is subject.
(F) Availability of Access and Utilities. The Project has adequate
rights of access to public ways. Water, sanitary sewer, storm drain
facilities and all other public utilities that are necessary or convenient
to the full use and enjoyment of the Project are available to and installed
at the Project.
(G) Permits. Licenses. Authorizations, and Approvals. The Borrower has
obtained all required permits, licenses, approvals and authorizations for
the use and/or occupancy of the Project, including those required by any
federal, state or local authority charged with the enforcement of
environmental laws and regulations, including wetlands laws. The Borrower
has to date fully complied with: (1) all building, use, safety, zoning,
subdivision, air quality, condominium, planning and all other similar laws,
ordinances, rules, regulations and requirements of all federal, state,
municipal and other governmental or public authorities, including public
utilities, pertaining to the use and/or occupancy of the Project, including
the requirements of the ADA; and (2) all covenants, conditions,
restrictions and reservations affecting the Site or the Project. After
execution of this agreement, the Borrower shall maintain all permits,
licenses, approvals and authorizations required for the use and/or
occupancy of the Project and shall continue to comply with (a) all
building, use, safety, zoning, subdivision, environmental, air quality,
condominium, planning and all other similar laws, ordinances, rules,
regulations and requirements pertaining to the Project, including
requirements of the ADA, and (b) all covenants, conditions, restrictions
and reservations affecting, the Site or the Project.
(H) No Encumbrances. The Improvements are located entirely on the Site
and do not unlawfully encroach on any easement, right-of-way or land of
others, nor do the Improvements violate any setback lines or applicable
building restrictions, use restrictions or other restrictions or
regulations.
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(I) No Default Under the Loan Documents. There is no default under, or
violation of any of the terms of, any of the Loan Documents, nor do
circumstances exist that with the passage of time, the giving of notice, or
both, would constitute such a default.
(J) Legal Organization of Business. The Borrower is a legally
organized and existing Michigan corporation, with a current Certificate of
Good Standing attached either to this agreement or to the opinion of legal
counsel submitted to the Bank contemporaneously with the execution of this
agreement.
ARTICLE 9 EVENTS OF DEFAULT
9.1 If any of the following events occurs (in the singular, "Event of
Default," and in the plural, "Events of Default"), the Borrower shall be in
default under this agreement and the other Loan Documents:
(A) Failure to Pay. The Borrower or any Guarantor fails to pay when
due any amount payable under this agreement, the Note, any Guaranty or any
agreement or instrument evidencing debt to any creditor; or
(B) Failure to Comply With Provisions of the Loan Documents. There is
a violation of, or a failure to observe or perform according to, any term
contained in any of the Loan Documents, or a default occurs under the terms
of any of the Loan Documents; or
(C) Unenforceabilitv of Loan Documents. Any of the Loan Documents
becomes totally or partially unenforceable; or
(D) Misrepresentation or Breach of Warranty. The Borrower, any
Guarantor [or any Pledgor] (1) makes any materially incorrect or misleading
representation, warranty or certificate to the Bank or (2) makes any
materially incorrect or misleading representation in any financial
statement or other information delivered to the Bank; or
(E) Cross-Default. The Borrower or any Guarantor defaults under the
terms of any agreement or instrument relating to any debt for borrowed
money (other than the debt evidenced by the Note) such that the creditor
declares the debt due before its maturity; or
(F) Liens. A lien for the performance of work or the supplying of
materials is perfected against the Project and remains unsatisfied or
unbonded either (1) at the time of any request for advance or (2) for a
period of thirty (30) days after the date of filing or recording; or
(G) Assignment. The Borrower assigns this agreement or any advance or
right to receive an advance under this agreement without the Bank's prior
written consent; or
(H) Denial of Access or Information. Any employee, agent or assignee
of the Bank is denied any information regarding the Project or is denied
access to the Project; or
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(I) [Intentionally Omitted]
(J) Enjoined From Conducting Business. The Borrower or any Guarantor
is enjoined, restrained or in any way prevented by court order from
conducting all or a substantial part of its business, or any proceeding
seeking to enjoin, restrain or in any way prevent the Borrower or any
Guarantor from conducting all or a substantial part of its business is
commenced; or
(K) Forfeiture of Collateral. Formal charges are filed against the
Borrower, any Guarantor under any federal, state or municipal statute. law
or ordinance for which forfeiture of any property serving as collateral for
the Loan is a potential penalty, or any collateral for the Loan is in fact
so seized or forfeited; or
(L) Reportable Event. There occurs a "reportable event" (as defined in
the Employee Retirement Income Security Act of 1974 as amended) that would
permit the Pension Benefit Guaranty Corporation to terminate any employee
benefit plan of the Borrower or any affiliate of the Borrower; or
(M) Insolvency. The Borrower or any Guarantor becomes insolvent or
unable to pay its debts as they become due; or
(N) Consent to Insolvency Proceedings. The Borrower or any Guarantor
(1) makes an assignment for the benefit of creditors, (2) consents to the
appointment of a custodian, receiver or trustee for itself or for a
substantial part of its assets or (3) commences, or consents to the
commencement or continuation of, any proceeding under any bankruptcy,
reorganization, liquidation, insolvency or similar laws of any
jurisdiction; or
(O) Appointment of Custodian, Receiver or Trustee. A custodian,
receiver or trustee is appointed for the Borrower or any Guarantor or for a
substantial part of its assets without its consent and is not removed
within sixty (60) days after such appointment; or
(P) Commencement of Bankruptcy Proceedings. Proceedings are commenced
against the Borrower or any Guarantor under any bankruptcy, reorganization,
liquidation or similar laws of any jurisdiction and such proceedings remain
undismissed for sixty (60) days after commencement; or
(Q) Entry of Judgment or Enforcement Thereof. Any judgment is entered
against the Borrower or any Guarantor, or any attachment, levy or
garnishment is issued against any property of the Borrower or of any
Guarantor; or
(R) Death. Any Guarantor dies; or
(S) Change of Business. The Borrower or any Guarantor, without the
Bank's written consent, (1) is dissolved, (2) merges or consolidates with
any third party, (3) leases, sells or otherwise conveys a material part of
its assets or business outside the ordinary course of its
16
<PAGE>
business, (4) leases, purchases or otherwise acquires a material part of
the assets of any business entity outside the ordinary course of business
or (5) agrees to do any of the foregoing; or
(T) Substantial Change in Financial Condition. There is a substantial
change in the existing or prospective financial condition of the Borrower
or any Guarantor which the Bank in good faith determines to be materially
adverse; or
(U) [Intentionally Omitted]
9.2 Notice and Opportunity to Cure. Notwithstanding the provisions of
section 9.1 above, the Bank shall:
(A) notify the Borrower in writing of its intent to accelerate the
Loan or to exercise any remedies available to it under this agreement or
any of the other Loan Documents because of the occurrence of an Event of
Default, and
(B) allow the Borrower (i) five (5) days after receipt of that notice
to cure the Event of Default giving rise to the notice if that Event of
Default can be cured by the payment of money, or (ii) thirty (30) days
after receipt of that notice to cure the Event of Default giving rise to
the notice if that Event of Default cannot be cured by the payment of
money; provided, however , that the requirement by the Bank to give the
Borrower notice and an opportunity to cure as above provided shall not
apply (i) to an Event of Default or Events of Default under subsections
(E), (F), (G), (H), (J), (K), (L), (N), (0), (P), (Q), (R) or (S) of
section 9.1; or (ii) if the Bank, during the preceding twelve (12) month
period, has given another notice to the Borrower under this section of its
intent to accelerate the Loan or to exercise any remedy available to it.
ARTICLE 10 REMEDIES UPON DEFAULT
10.1 The following remedies shall be available to the Bank upon the
occurrence of an Event of Default and failure to cure that default within the
applicable cure period, if any:
(A) Acceleration. The Bank may, at its option, without prior demand or
notice to the Borrower, declare the entire unpaid principal balance of the
Note and the Loan, plus all accrued and unpaid interest, to be immediately
due and payable.
(B) Bank's Right to Take Possession of the Project. The Bank may, as
an alternative to other methods of summary execution, but without waiving
such other methods (and particularly its rights as a mortgagee under the
Mortgage): (1) take possession of the Project (in person, by agent, or by
court-appointed receiver); and (2) take all steps (in person, by agent, or
by court-appointed receiver) that the Bank deems appropriate to secure and
protect the Project. All sums expended by the Bank for these p urposes
shall be deemed to have been paid to the Borrower and shall be secured by
the Mortgage and the other Loan Documents.
17
<PAGE>
(C) Cumulative Remedies. The Bank may avail itself of any and all
remedies available to it in equity, at law or under this agreement or any
of the other Loan Documents. All remedies shall be cumulative and none
shall be exclusive of any other. Further, and not in limitation of the
foregoing, the Bank may: (1) terminate this agreement and demand full
payment of the Loan and any other indebtedness of the Borrower to the Bank
under the Loan Documents; or (2) utilize any remedy available to it under
the terms and provisions of the Loan Documents. Any requirement of
reasonable notice shall be met if the Banks sends the notice to the
Borrower at least seven (7) days prior to the date of sale, disposition or
other event giving rise to the required notice. The Bank is authorized to
cause all or any part of the collateral for the Loan to be transferred to
or registered in its name or in the name of any other person or business
entity, with or without designation of the capacity of that nominee. The
Borrower is liable for any deficiency remaining after disposition of any
collateral for the Loan. The Borrower is liable to the Bank for all
reasonable costs and expenses of every kind incurred in the making or
collection of the Loans, including, without limitation, reasonable
attorney's fees (including the "in-house" counsel fees) and court costs.
These costs and expenses shall include, without limitation, any costs or
expenses incurred by the Bank in any bankruptcy, reorganization, insolvency
or other similar proceeding.
ARTICLE 11 CASUALTIES AND EMINENT DOMAIN
11.1 Damage to the Project. If there is any loss or damage to the Project
because of fire or other casualty, the Bank may elect to do either of the
following in its sole discretion:
(A) Termination of this Agreement. If, (1) when the loss or damage
occurs, the Borrower is in default under the Loan Documents, or if
circumstances exist that with the passage of time, the giving of notice, or
both, would constitute such a default, or (2) because of the loss or
damage, any Lease, purchase contract or other agreement relating to the
sale or occupancy of any portion of the Project is canceled, terminated or
amended in a way that is unsatisfactory to the Bank, the Bank may terminate
this agreement. Such termination shall not affect the validity of the Note
or any security for the Loan. If the Bank elects to terminate this
agreement, the Bank shall collect all proceeds of insurance relating to the
loss or damage and the Borrower shall assist the Bank in this regard. The
Bank she apply those proceeds first toward reimbursement of the Bank for
all costs and expenses it may incur in collecting the proceeds, including
reasonable attorneys' fees, and then toward payment of the Loan, plus
accrued interest. If the proceeds of insurance are insufficient to pay the
Loan plus accrued interest in full after application of such proceeds as
provided above, the Bank may declare the Note to be immediately due and
payable and avail itself of a remedies as for a default under this
agreement or any of the other Loan Documents. If any proceeds of insura nce
remain after applying them as provided above, those excess proceeds shall
be paid to the Borrower by the Bank.
(B) Repairing, Restoring or Rebuilding the Project. Instead of
terminating this agreement as provided in subsection (A) above, the Bank
may elect to allow the Borrower if, (1) when the loss or damage occurs, the
Borrower is not in default under any, of the Loan Documents, nor do
circumstances exist that with the passage of time, the giving of notice, or
18
<PAGE>
both, would constitute such a default, and (2) no Lease, purchase contract
or other agreement relating to the sale or occupancy of any portion of the
Project, because of the loss or damage, is canceled, terminated or amended
in a way that is unsatisfactory to the Bank, then the Bank shall allow the
Borrower, subject to the terms described below, to repair, restore or
rebuild the Project, and if the casualty occurred during any construction,
to permit the Borrower to proceed with construction. Notwithstanding the
foregoing, after the loss or damage has occurred the Borrower shall, in
addition to complying with any other requirements imposed by the Loan
Documents:
(1) diligently proceed to settle with insurers all claims
relating to the loss or damage and cause the proceeds to be deposited
with the Bank;
(2) if there is a delay in settling with insurers or collecting
proceeds of insurance, deposit with the Bank an amount deemed
sufficient by the Bank to repair, restore or rebuild the Project to
the same state of completion as existed before the loss or damage
occurred;
(3) deposit with the Bank such additional sums as the Bank may
prescribe to assure that the repairs to or the rebuilding or
restoration of the Project to the same state of completion as existed
before the loss or damage will be accomplished;
(4) neither be in default under any of the Loan Documents at any
time after the original loss or damage has occurred, nor permit any
circumstances to exist that, with the passage of time, or the giving
of notice, or both, would constitute a default under any of the Loan
Documents, nor permit any Lease, sales contract or other agreement
relating to the sale or occupancy of any portion of the Project to be
canceled, terminated or amended in a way that is unsatisfactory to the
Bank;
(5) comply with such additional terms and conditions for the
repairing, rebuilding or restoring of the Project as the Bank, in its
sole discretion, may prescribe.
When the Project is repaired, rebuilt or restored to the same state of
completion as existed before the loss or damage occurred, both parties shall
then carry out the terms of this agreement as if no loss or damage had occurred
and aN funds remaining on deposit with the Bank pursuant to this subsection (B),
including insurance proceeds, shall be disbursed to the Borrower. If the
Borrower fails, at any time, in the Bank's determination, to comply with any of
the terms and conditions of this subsection (B) regarding the rebuilding,
restoring or repairing of the Project, the Bank may elect to terminate this
agreement as provided in subsection (A) above and proceed as provided in
subsection (A).
11.2 Eminent Domain.
(A) Termination. If any one of the following events occurs, the Bank
may terminate this agreement:
(1) The entire Project is taken or condemned; or
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<PAGE>
(2) A portion of the Project is taken or condemned, and that
taking or condemnation, in the Bank's opinion, will limit or impair
the Borrower's ability or capacity to satisfy its present or future
obligations relating to the Project; or
(3) The taking or condemnation causes any Lease, purchase
contract or other agreement relating to the sale or occupancy of all
or any portion of the Project to be canceled or terminated or to be
amended in a way that is unsatisfactory to the Bank.
(B) Effect of Termination. The termination of this agreement under
this section shall not affect the validity of the Note or any security for
the Loan, plus interest. The Bank may demand full payment of the Loan, plus
accrued interest, and of all other indebtedness of the Borrower to the Bank
under the Loan Documents and it may avail itself of all remedies as for a
default under this agreement or any of the other Loan Documents. The right
to terminate this agreement as provided in this section shall be in
addition to, and not in derogation of, any other rights or remedies of the
Bank under this agreement or under the other Loan Documents, including the
right, as provided in the Mortgage, to receive payment of any award or
other payment relating to the taking or condemnation and to apply that
award or payment to the alteration, restoration or rebuilding of the
Project or to payment of the Loan, plus accrued interest.
(C) Alteration. Restoring or Rebuilding the Project. Alternatively,
instead of terminating this agreement as provided in subsection (A) above,
the Bank may, at its option, allow the Borrower to alter, restore or
rebuild the Project after a condemnation, whether partial or total. If the
Borrower is so permitted to after, restore or rebuild the Project after a
condemnation, the Borrower shall, in addition to complying with any other
requirements imposed by the Loan Documents, cause the condemnation award to
be dealt with, and fulfill the conditions/requirements as described in
subsections (B) (1), (B) (2), (B) (3), (B) (4) and (B) (5) of section 11.1,
as if the proceeds of the condemnation award were insurance proceeds
relating to a fire or other casualty.
ARTICLE 12 MISCELLANEOUS
12.1 Waiver. No waiver by the Bank at any time of a term or condition of
this agreement or of any of the other Loan Documents shall be construed as a
waiver of any other term or condition, nor shall a waiver of any term or
condition be construed as a right to a subsequent waiver of the same term or
condition. The failure by the Bank to insist on the Borrower's Performance of
the terms and conditions of the Loan Documents, whether on one or more
occasions, shall not be construed as a waiver or relinquishment by the Bank of
any rights it has under the Loan Documents. Nor shall such failure be construed
as proh ibiting the Bank from insisting on the Borrower's strict compliance with
the terms and conditions of the Loan Documents at a later time.
20
<PAGE>
12.2 Waiver in Writing Only. No provision of this agreement shall be
amended, waived or modified except by an instrument in writing signed by both
the Bank and the Borrower.
12.3 Severability. Unenforceability for any reason of any provision of this
agreement shall not limit or impair the operation or validity of any other
provision of this agreement or of any of the other Loan Documents.
12.4 The Bank's Payment of the Borrower's Obligations. If, in the Bank's
opinion, its position under the Loan Documents may be prejudiced or impaired by
the Borrower's failure to perform, or by the Borrower's unreasonable delay in
performing, its obligations under this agreement or the other Loan Documents
(including the payment of any prior charge upon the Project or any other charge
payable by the Borrower, whether or not related to the Project), the Bank may
pay or otherwise satisfy such obligations of the Borrower. Any payment or cost
relating to such satisfaction, including a reasonable attorney's fee, may be
charged to the proceeds of the Loan as any other advance can be charged, and
will be deemed to be made pursuant to this agreement and not in modification of
it.
12.5 Notices. Notice or demand from one party to the other relating to the
Loan shall be effective if made in writing and delivered to the recipient's
address set forth below by any of the following means: (A) hand delivery; (B)
registered or certified mail, postage prepaid, with return receipt requested;
(C) first class or express mail, postage prepaid; or (D) Federal Express or
other nationally recognized overnight courier service. Regardless of the means
of delivery used, any notice or demand relating to the Loan shall be directed to
the following addresses:
To the Bank: NBD Bank
Attn: Jim Woffington
28660 Northwestern Hwy
Southfield, Michigan 48034
To the Borrower: G-P Plastics, Inc.
Attn: John Horner
Chief Financial Officer
3910 Industrial Drive
Rochester Hills, Michigan 48039
AND:
G-P Plastics, Inc.
Attn: Filipp Kreissl
755 West Big Beaver Rd.
Suite 312
Troy, Michigan 48084
W/COPY TO:
21
<PAGE>
Laurence H. Smith
7115 Orchard Lake Rd.
Suite 500
W. Bloomfield, Michigan 48322
Any notice or demand made according to this section shall be deemed delivered:
(1) upon receipt if delivered by hand; (2) three (3) business days after mailing
if mailed by first class, registered, or certified mail; or (3) one (1) business
day after mailing or deposit with a nationally recognized overnight courier
service if delivered by express mail or nationally recognized overnight courier.
12.6 Time of the Essence. Time is of the essence for all purposes of this
agreement.
12.7 Michigan Law. The Loan is made and accepted in Michigan and this
agreement and all the other Loan Documents shall be construed in accordance with
the laws of Michigan.
12.8 Successors and Assigns. This agreement shall be binding upon and inure
to the benefit of the Borrower, the Bank and their heirs, successors and
assigns.
12.9 Conflicting Terms. If there is any conflict between any provision or
condition contained in this agreement and any provision or condition contained
in any of the other Loan Documents, the provision or condition contained in this
agreement shall control.
12.10 No Third-Party Beneficiary. The terms and conditions of this
agreement are for the benefit of the Borrower and the Bank only. No other party
shall have any right to rely on or derive any benefit from this agreement, nor
shall any third party be deemed a third-party beneficiary under this agreement.
12.11 Entire Agreement. Except as otherwise expressly provided in this
agreement, this agreement supersedes all prior agreements between the Bank and
the Borrower relating to the subject matter of this agreement and constitutes
the entire agreement of the Borrower and the Bank relating to its subject
matter.
12.12 Section Headings. Section headings are for convenience of reference
only and shall not affect the interpretation of the terms and conditions of this
agreement.
12.13 Assignment. The Borrower's rights under this agreement and the other
Loan Documents may not be assigned and any purported asignment in violation of
this provision shall vest no rights in the purported assignee. The Bank may at
any time assign its rights under this agreement or any of the other Loan
Documents.
12.14 Supremacy. To the extent that any Loan Document conflicts with the
terms of this agreement, the terms of this agreement shall control.
22
<PAGE>
12.15 Waiver of Jury Trial. The Bank and the Borrower, after consulting or
having had the opportunity to consult with counsel, knowingly, voluntarily and
intentionally waive any right either of them may have to a trial by jury in any
litigation based upon or arising out of this Agreement, any of the other Loan
Documents any of the transactions contemplated by any of the Loan Documents, or
any course of conduct, dealing, statements (whether oral or written), or actions
of either of them. Neither the Bank nor the Borrower shall seek to consolidate,
by counterclaim or otherwise, any such action in which a jury trial has been
waived with any other action in which a jury trial cannot be or has not been
waived. These provisions shall not be deemed to have been modified in any
respect or relinquished by either the Bank or the Borrower except by a written
instrument executed by both of them.
23
<PAGE>
EXECUTED on the date first written above.
BORROWER: BANK:
G-P PLASTICS, INC. NBD BANK
By: /s/ John Horner By: /s/ John Wolfington
----------------------- ----------------------
Its: Treasurer Its: Vice President
----------------------- ----------------------
And: And:
---------------------- ----------------------
Its: Its:
---------------------- ----------------------
24
<PAGE>
EXHIBIT A
Legal Description
Land located in the City of Rochester Hills,
County of Oakland, State of Michigan:
Part of the West 1/2 of Southwest 1/4 of Section 30, Town 3 North, Range 11 East
Avon Township (Now the City of Rochester Hills), Oakiand County, Michigan:
Beginning at point distant South 00 degrees 34 minutes 30 seconds West 380.75
feet and North 87 degrees 46 minutes 00 seconds East 435.60 feet from the West
1/4 corner; thence North 380.00 feet; thence North 87 degrees 46 minutes 00
seconds East 839.56 feet; thence South 01 degrees 0.4 minutes 25 seconds East,
379.79 feet; thence South 87 degrees 46 minutes 00 seconds West, 846.74 feet to
beginning. Subject to an Easement for purposes of ingress and ingress in common
with certain designated others over the South 30 feet thereof, also subject to
and together with an Easement over the South 60 feet of the North 410 feet of
the West 1/2 of the Southwest fractional 1/4 of Section 30, for purposes of
ingress and egress in common with certain designated others.. (the 'Premises")
Commonly known as: 3910 Industrial
Tax Parcel Identification No. 15-30-301-009
<PAGE>
FEDERAL EMERGENCY MANAGEMENT AGENCY O.M.B. No. 3067-0264
STANDARD FLOOD-HAZRD DETERMINATION Expires April 30, 1998
SECTION I-LOAN INFORMATION
1. LENDER NAME AND ADDRESS 2. COLLATERAL (Building/Mobile Home
Personal Property)
PROPERTY ADDRESS
(Legal Description may be attached)
NBD BANK-COMMERCIAL LENDING PLASTICS, G P
28660 NORTHWESTERN HWY 3910 INDUSTRIAL DR
SOUTHFIELD, MI 48034 ROCHESTER HILLS, MI 48309-3117
Req. by: JAMES L WOLFINGTON Legal Description:
FZI CLIENT ID: NBDCL034
Parcel, Tax Id.Plat Map:
3.LENDER ID. NO. 4. LOAN IDENTIFIER 5. AMOUNT OF FLOOD
INSURANCE REQUIRED
N/A $
SECTION II
A.NATIONAL FLOOD INSURANCE PROGRAM (NFIP) COMMUNITY JURISDICTION
NFIP Community County(ies) State NFIP Community
Name Number
ROCHESTER HILLS (WAS OAKLAND MI 260471
B.NATIOAL FLOOD INSURANCE PROGRAM (NFIP) DATA AFFECTING BUILDING/MOBILE HOME
NFIP Map Number or NFIP Map LOMA/LOMR Flood Zone No NFIP
Community-Panel Panel Map
Number (Community Effective/
name, if not the Revised Date
same as "A")
2604710015B 09/02/94 ---- ----- C
YES DATE
C. FEDERAL FLOOD INSURANCE AVAILABILITY (Check all that apply)
[X] Federal Flood insurance is available (community participates in NFIP)
[X] Regular Program [ ] Emergency Program of NFIP
[ ] Federal Flood insurance is not available because community is not
participating in the NFIP
[ ] Building/Mobile home is in a Coastal Barrier Resources Area (CBRA).
Federal Flood insurance may not be available
CBRA designation date:__________________________
D. DETERMINATION
IS BUILDING/MOBILE HOME IN SPECIAL FLOOD HAZARD AREA
(ZONES BEGINNING WITH LETTERS "A" OR "V")? [ ] YES [X] NO if neither, see
comments
If yes, flood insurance is required by the Flood Disaster Protection Act of
l973. See comments for further explanation
If no, flood insurance is not required by the Flood Disaster Protection Act of
1973.
E. COMMENTS (Optional):
REM # CERTIFICATE # RUSH LIFE OF LOAN MSA CENSUS TRACT:
0276 97110859186 Yes
County Code: State Code:
This determination is based on examining the NFIP map, any Federal Emergency
Management Agency revisions to it, and any other information needed to locate
the building/mobile home on the NFIP map.
F. PREPARER'S INFORMATION
NAME,ADDRESS,TELEPHONE NUMBER (If other than Lender) DATE OF DETERMINATION
Flood Zones, Inc.
Executive Plaza Office Building 11/06/97
14205 Burnet Rd., Suite 110
Austin, TX 78728 (800) 362-0866 FAX (800) 344-9139
EXHIBIT 10.06
EQUIPMENT TERM NOTE
Principal Amount: Troy, Michigan
$712,000
Due Date: February 1, 2003 Dated: February 11, 1999
FOR VALUE RECEIVED, the undersigned (hereinafter referred to as
"Borrower"), promises to pay to the order of Crestmark Bank (hereinafter
referred to as "Crestmark"), at its offices located at 850 East Long Lake Road,
Troy, Michigan 48098, or at such other place as Crestmark may designate in
writing, the principal sum of SEVEN HUNDRED TWELVE THOUSAND AND NO/100
($712,000) DOLLARS, plus interest as hereinafter provided, in lawful money of
the United States of America, plus all other indebtedness, fees and expenses
owing from Borrower to Crestmark (collectively, the "Indebtedness").
The unpaid principal balance outstanding from time to time under this Note
shall bear interest on a basis of a year of 360 days for the actual number of
days the principal is outstanding at an interest rate of ELEVEN (11%) PERCENT
(the "Effective Interest Rate").
This Note shall be repaid by consecutive equal monthly installments of
principal and interest in the amount of EIGHTEEN THOUSAND SEVEN HUNDRED FORTY
THREE AND NO/100 ($18,743) DOLLARS each, all such installment payments
commencing on the first (1st) day of March, 1999 and continuing on the first
(1st) day of each month thereafter up to and until February 1, 2003, when the
unpaid principal balance and all accrued interest thereon shall be due and
payable in full, or such earlier date upon which the indebtedness is due and
payable as a result of acceleration or otherwise (the earlier of such date being
the "Due Date").
The Money Advance and all interest due and payable hereunder shall be
charged to a Loan Account in Borrower's name on Crestmark's books, and Crestmark
shall debit to such account the amount of the Money Advance and all interest
when made or owing and credit to such account the amount of each repayment
hereunder. Crestmark shall render Borrower, from time to time a statement of
account setting forth the Borrower's loan balance in said Loan Account which
shall be presumed to be correct and accepted by and binding upon Borrower,
unless Crestmark receives a written statement of exceptions within ten (10)
Business Days after such statement has been rendered to Borrower. Such statement
of account shall be prima facie evidence of the loan and advance owing to
Crestmark by Borrower hereunder, together with interest accrued thereon and all
expenses to date.
Any payment made by mail will be deemed tendered and received only upon
actual receipt, (time being of the essence), at the address of Crestmark
designated for such payment. Borrower hereby expressly assumes all risk of loss
or liability resulting from non-delivery or delay in delivery of any payment
transmitted by mail or in any other manner. No delay or failure of Crestmark in
exercising any right, remedy, power or privilege hereunder shall affect such
right, remedy, power or privilege, nor shall any single or partial exercise
thereof preclude the exercise of any other right, remedy, power or privilege.
No delay or failure of Crestmark at any time to demand strict adherence to
the terms of this Note shall be deemed to constitute a course of conduct
inconsistent with Crestmark's right at any time, before or after any event of
default, to demand strict adherence to the terms of this Note.
Borrower has paid or will contemporaneously pay to Crestmark a
non-refundable commitment fee in the aggregate amount of SEVEN THOUSAND ONE
HUNDRED TWENTY AND NO/100 ($7,120) DOLLARS for the extension of the loan, which
fee has been fully earned by Crestmark.
Borrower may prepay this Note in full or in part at any time, but only upon
the simultaneous payment of the following prepayment fee: (i) prior to February
1, 2000, the prepayment tee is THIRTY FIVE THOUSAND SIX HUNDRED AND NO/100
($35,600) DOLLARS, (ii) on or after February 1, 2000, but prior to February 1,
2001, the prepayment fee is TWENTY ONE THOUSAND THREE HUNDRED SIXTY AND NO/100
($21,360), and (iii) on or after February 1, 2001, but prior to February 1,
2002, the prepayment fee is SEVEN THOUSAND ONE HUNDRED TWENTY AND NO/100
($7,120) DOLLARS.
Nothing herein contained, nor any transaction relating thereto, or hereto,
shall be construed or so operate as to require the Borrower to pay, or be
charged, interest at a greater rate than the maximum allowed by the applicable
law relating to this Note. Should any interest or other charges, charged, paid
or payable by the Borrower in connection with this Note, or any other document
delivered in connection herewith, result in the charging, compensation, payment
or earning of interest in excess of the maximum allowed by the applicable law as
aforesaid, then any and all such excess shall be and the same is hereby waived
by the holder, and any and all such excess paid shall be automatically credited
against and in reduction of the principal due under this Note.
<PAGE>
The occurrence of any of the following events and the continuance thereof
for five (5) days after Borrower's receipt Of written notice of the event will,
for purposes of this Note, constitute a "Default":
(a) Failure by the Borrower to pay any amount owing on the
Indebtedness when due whether by maturity, acceleration or otherwise.
(b) Any failure by the Borrower or any guarantor of all or any part of
the Indebtedness to comply with any of the terms, provisions, warranties or
covenants of this Note, the Security Agreement or any other agreement or
commitment between the Borrower or any guarantor and Crestmark.
(c) Institution of remedial proceedings or other exercise of rights
and remedies by the holder of any mortgage, security interest or other lien
against the Collateral or any portion thereof.
(d) The insolvency of the Borrower or any guarantor or the admission
in writing of the Borrower's or any guarantor's inability to pay debts as
they mature.
(e) Any statement, representation or information made or furnished by
or on behalf of the Borrower or any guarantor to Crestmark in connection
with or to induce Crestmark to provide any of the Indebtedness shall prove
to be false or materially misleading when made or furnished.
(f) Institution of bankruptcy, reorganization, - insolvency or other
similar proceedings by or against the Borrower or any guarantor.
(g) The Collateral suffers any loss, theft, substantial damage or
destruction, or any judgment or lien is issued or filed against the
Collateral.
(h) Sale or other disposition by the Borrower or any guarantor of any
substantial portion of assets or property or the dissolution, merger,
consolidation, termination of existence, insolvency, business failure or
assignment for the benefit of creditors of or by the Borrower or any
guarantor.
(i) If there is any failure by the Borrower or any guarantor to pay
when due any indebtedness (other than to Crestmark) or in the observance or
performance of any term, covenant or condition in any document evidencing,
securing or relating to such indebtedness.
(j) There is a substantial change in the existing or prospective
financial condition or worth of the Borrower, any guarantor or the
Collateral, which Crestmark in good faith determines to be materially
adverse.
Upon the occurrence of a Default, Crestmark has the option to declare all
or part of the indebtedness (including this Note) immediately due and payable.
During any period of Default, the outstanding amount of the Indebtedness will
bear interest at a rate which is equal to Six (6'k) PERCENT per annum greater
than the Effective Interest Rate otherwise charged hereunder (the "Default
Rate"). If this Note is not paid at maturity (whether by acceleration or
otherwise), Crestmark shall have all of the rights and remedies provided at law
or equity or by agreement, including, without limit, the right to sell or
liquidate all or any part of the Collateral or offset or apply against the
Indebtedness any account balance or other deposit. The remedies of Crestmark are
cumulative and not exclusive. if any required installment is not paid within ten
(10) days from the date same is due, then, at the option of Crestmark, in
addition to all other sums due hereunder, including the Default Rate, a late
charge of not more than FIVE CENTS ($.05) for each dollar of the installment so
overdue may be charged in order to compensate Crestmark for additional costs and
expenses which will be incurred by Crestmark as a result of such late payment.
Borrower hereby grants to Crestmark a security interest in Crestmark's own
indebtedness or liability to Borrower, if any, however evidenced, including a
security interest in all of Borrower's bank deposits, instruments, negotiable
documents and chattel paper which at any time are in the possession or control
of Crestmark, as further security for repayment of the indebtedness of the
Borrower; and the Borrower hereby grants to Crestmark all rights and privileges
afforded a secured party under the Michigan Uniform Commercial Code.
All payments other than scheduled payments paid hereunder shall, at the
option of Crestmark, first be applied against accrued interest, and the balance
against principal. Acceptance by Crestmark of any payment in an amount less than
the amount then due shall be deemed an acceptance on account only, and the
failure to pay the entire amount then due shall be and continue to be a Default,
and at any time thereafter and until the entire amount then due has been paid,
Crestmark shall be entitled to exercise any and all rights Crestmark possesses.
Borrower hereby waives presentment for payment, demand, notice of
non-payment, notice of protest and protest of this Note, diligence in collection
or bringing suit. The liability of Borrower shall be absolute and unconditional,
without regard to the liability of any other party hereto.
<PAGE>
This Note is executed pursuant to and secured by a Security Agreement dated
of even date herewith as the same may be amended, modified or altered from time
to time (the 11 Security Agreement" ) and the Collateral therein defined and
described. Reference is hereby made to said Security Agreement for additional
terms relating to the transaction giving rise to this instrument, the security
given for this instrument and additional terms and conditions under which this
instrument matures, accelerates or may be prepaid.
ADDRESS: BORROWER:
3910 Industrial Drive G-P Plastics, Inc.,
Rochester Hills, Michigan 48309 a Michigan Corporation
By: Copy
------------------------------
Its: President
Tax ID Number:_______________
<PAGE>
SECURITY AGREEMENT
This Agreement is made this 11th day of February, 1999 by and between
Crestmark Bank, whose address is 850 East Long Lake Road, Troy, Michigan 48098
(hereinafter referred to as "Bank") and G-P Plastics, Inc., a Michigan
corporation, whose address is 3910 Industrial Drive, Rochester Hills, Michigan
48309 (hereinafter defined and referred to as "Borrower").
BACKGROUND:
WHEREAS, Borrower has requested a term loan from Bank evidenced by a
Equipment Term Note in the original principal amount of $712,000 dated of even
date herewith (the " Note" ) and secured by this Agreement, including all
extensions, modifications, alterations, and amendments thereof; and
NOW, THEREFORE, for and in consideration hereof, the parties hereto agree
as follows:
1. GRANT OF SECURITY INTEREST: Borrower hereby grants to Bank a
continuing security interest in the "Collateral" described in Paragraph 2
below to secure the repayment of all indebtedness owed by Borrower to Bank,
however incurred or evidenced, whether primary, secondary, 'contingent or
otherwise, including without limitation, all indebtedness under the Note
(collectively, the "Indebtedness") plus all interest, costs, expenses, and
reasonable attorneys, fees, which may be incurred by Bank in the
disbursement, administration, and collection of said Indebtedness, and in
the protection, maintenance, and liquidation of the Collateral. This
Agreement shall be effective and continue in effect so as long as any of
the indebtedness of Borrower to Bank is outstanding and unpaid. Borrower
will not sell, assign, transfer, pledge or otherwise dispose of or encumber
any Collateral without the prior written consent of Bank.
2. COLLATERAL: The "Collateral" covered by this Agreement is two
Cincinnati Milacron 700 ton injection molding machines, as described and
set forth more fully on the attached Exhibit A, including all present and
future attachments and accessories thereto and replacements and additions
thereto and proceeds of all of the foregoing, including amounts payable
under any insurance policy.
3. PERFECTION OF SECURITY INTEREST: Borrower shall execute and deliver
to Bank, concurrently with Borrower's execution of this Agreement and at
any time or times hereafter at the request of Bank (and pay the cost of
filing or recording same in all public offices deemed necessary by Bank)
all financing statements, assignments, certificates of title, notices and
all other documents that Bank may reasonably request, in form satisfactory
to Bank, to perfect and maintain the perfection of Bank's security
interests in the Collateral. Borrower shall also make appropriate entries
on its books and records disclosing Bank's security interests in the
Collateral.
4. WARRANTIES: Borrower warrants and agrees that while any of the
Indebtedness remains unperformed and unpaid: (a) Borrower has full legal
title to the Collateral and is the lawful owner of the Collateral with an
unqualified right to subject the Collateral to the security interest herein
granted to Bank; (b) Bank's security interest in the Collateral is a first
priority security interest, and except as set forth in paragraph 9, there
are no financing statements covering any of the Collateral in any public
office; (c) the Collateral is located in the State of Michigan at the
address of Borrower set forth above, and Borrower's business location shall
not be changed, nor the Collateral moved outside of Michigan, without the
prior written consent of Bank, and Borrower further warrants that the
Collateral, wherever located, is covered by this Agreement; (d) Borrower
shall at all times maintain the Collateral in first class condition and
repair; (e) Borrower will not change its name, form of business entity, or
address without giving at least fifteen (15) business days prior written
notice to the effective date of such change, and Borrower agrees that all
documents, instruments and agreements demanded by Bank in response to such
change shall be prepared, filed and recorded at Borrower's expense prior to
the effective date of such change; (f) the Collateral will not be used for
any unlawful purpose; (g) the execution and delivery of this Agreement and
any instruments evidencing indebtedness will not violate or constitute a
breach of Borrower's Articles of Incorporation, By-Laws or any agreement or
restrict ion of any type whatsoever to which Borrower is a party or is
subject; (h) all financial
<PAGE>
statements and information relating to Borrower delivered or to be
delivered by Borrower to Bank are true and correct and, to the best of
Borrower's knowledge, prepared in accordance with generally accepted
accounting principles, and there has been no material adverse change in the
financial condition of Borrower since the submission of any such financial
information to Bank; (i) there are no actions or proceedings which are
threatened or pending against Borrower which might result in any material
adverse change in Borrower's financial condition or which might materially
affect any of Borrower's assets or the Collateral; and (j) Borrower has
duly filed all federal, state, and other governmental tax returns which
Borrower is required by law to file, and all such taxes required to be paid
have been paid in full. Borrower will reimburse, indemnify and hold Bank
harmless from and against any and all claims, expenses and costs, including
reasonable attorneys' fees, arising from or related to any breach of these
warranties.
5. INSURANCE, TAXES, ETC.: Borrower shall (a) pay all taxes, levies,
assessments, judgments and charges of any kind upon or relating to the
Collateral, to Borrower's business, and to Borrower's ownership or use of
any of its assets, income or gross receipts; (b) at its own expense, keep
and maintain the Collateral fully insured against loss or damage by fire,
theft, explosion and other risks in such amounts, with such companies,
under such policies and in such form as shall be satisfactory to Bank,
'which policies shall expressly provide that loss thereunder shall be
payable to Bank as its interest may appear (and Bank shall have a security
interest in the proceeds of such insurance and may apply any such proceeds
which may be received by it toward payment of Borrower's Indebtedness,
whether or not due, in such order of application as Bank may determine);
(c) maintain at its own expense public liability and property damage
insurance in such amounts with such companies, under such policies and in
such form as shall be reasonably satisfactory to Bank; and, upon Bank's
request, shall furnish Bank with such policies and evidence of payment of
premiums thereon. If Borrower at any time hereafter should fail to obtain
or maintain any of the policies required above or pay a premium in whole or
in part relating thereto, or shall fail to pay any such tax, assessment,
levy, or charge or to discharge any such lien or encumbrance, then Bank,
without waiving or releasing any obligation or default of Borrower
hereunder, may at any time hereafter (but shall be under no obligation to
do so) make such payment or obtain such discharge or obtain and maintain
such policies of insurance and pay such premiums, and take such action with
respect thereto as Bank deems advisable. All sums so disbursed by Bank,
including reasonable attorneys' fees, court costs, expenses, and other
charges relating thereto, shall be part of Borrower's Indebtedness secured
hereby, and payable on demand.
6. INFORMATION: Borrower shall permit Bank or its agents to inspect
the Collateral and to observe the Collateral in operation. Borrower shall
also furnish and deliver to Bank annual audited financial statements,
balance sheets, and profits and loss statements prepared by a certified
public accountant acceptable to Bank. Such reports shall set forth in
detail Borrower's true condition as of the end of each of Borrower's fiscal
years no later than ninety (90) days after the end of each fiscal year.
Borrower shall also furnish Bank with any and all other information
concerning its affairs, the Collateral and its assets as Bank may request
from time to time.
7. DEFAULT: The occurrence of any of the following events and the
continuation thereof for five (5) days after Borrower's receipt of written
notice of such event will, for purposes of this Agreement, constitute a
"Default": (a) failure by the Borrower to pay any amount owing on the
Indebtedness when due whether by maturity, acceleration or otherwise; (b)
any failure by the Borrower or any guarantor of all or any part of the
Indebtedness to comply with any of the terms, provisions, warranties or
covenants of this Agreement, the Note or any other agreement or commitment
between the Borrower or any guarantor and Crestmark; (c) institution of
remedial proceedings or other exercise of rights and remedies by the holder
of any mortgage, security interest or other lien against the Collateral or
any portion thereof; (d) the insolvency of the Borrower or any guarantor or
the admission in writing of the Borrower's or any guarantor's inability to
pay debts as they mature; (e) any statement, representation or information
made or furnished by or on behalf of the Borrower or any guarantor to
Crestmark in connection with or to induce Crestmark to provide any of the
Indebtedness shall prove to be false or materially misleading when made or
furnished; (f) institution of bankruptcy, reorganization, insolvency or
other similar proceedings by or against the Borrower or any guarantor; (g)
"the Collateral
2
<PAGE>
suffers any loss, theft, substantial damage or destruction, or any judgment
or lien is issued or filed against the Collateral; (h) sale or other
disposition by the Borrower or any guarantor of any substantial portion of
assets or property, or the dissolution, merger, consolidation, termination
of existence, insolvency, business failure or assignment for the benefit of
creditors of or by the Borrower or any guarantor; (i) if there is any
failure by the Borrower or any guarantor to pay when due any indebtedness
(other than to Crestmark) or in the observance or performance of any term,
covenant or condition in any document evidencing, securing or relating to
such indebtedness; (j) There is a substantial change in the existing or
prospective financial condition or worth of the Borrower, any guarantor or
the Collateral, which Crestmark in good faith determines to be materially
adverse.
8. REMEDIES UPON DEFAULT: Upon the occurrence of a Default, the Note
and all other Indebtedness may (notwithstanding any provisions thereof) at
the option of Bank, in whole or in part, and without demand or notice of
any kind, be declared, and thereupon will immediately become due and
payable. At such time, Bank may exercise, from time to time, any rights and
remedies available to it under the Note, this Agreement, and applicable
law, including, without limitation, the rights and remedies of a secured
party under the Michigan Uniform Commercial Code. Borrower agrees, in case
of Default, to immediately assemble, at its expense, all the Collateral at
a convenient place acceptable to Bank and to pay all costs of Bank of
collection and enforcement of the Note and of all other Indebtedness,
including reasonable attorneys' fees and legal expenses, and including
participation in Bankruptcy proceedings, and all expenses of any repairs to
any realty or other property to which any of the Collateral may be affixed.
BORROWER FURTHER AGREES THAT BANK SHALL, IN THE EVENT OF ANY DEFAULT,
HAVE THE RIGHT TO PEACEFULLY RETAKE ANY OF THE COLLATERAL, BORROWER WAIVES
ANY RIGHT IT MAY HAVE, IN SUCH INSTANCE, TO A JUDICIAL HEARING PRIOR TO
SUCH RETAKING.
9. PERMITTED ENCUMBRANCES: Notwithstanding anything contained in this
Agreement to the contrary, Capital City Financial Group shall be permitted
a junior security interest in the Collateral provided such interest is
expressly and fully subordinate to the interest of Bank pursuant to the
terms and conditions of a Subordination Agreement.
10. GENERAL: Time shall be deemed of the very essence in this
Agreement. Except as otherwise defined in this Agreement, all terms in this
Agreement shall have the meanings provided by the Michigan Uniform
Commercial Code. Bank shall be deemed to have exercised reasonable care in
the custody and preservation of any Collateral in its possession if it
takes any action Borrower requests in writing, but failure of Bank to
comply with any such request shall not of itself be deemed a failure to
exercise reasonable care, and failure of Bank to preserve or protect any
rights with respect to such Collateral against any prior parties or to do
any act with respect to the preservation of such Collateral not so
requested by Borrower shall not be deemed a failure to exercise reasonable
care in the custody and preservation of such Collateral. Any delay on the
part of Bank in exercising any power, privilege or right hereunder, or
under any other instrument executed by Borrower to Bank in connection
herewith shall not operate as a waiver thereof, and no single or partial
exercise thereof, or the exercise of any other power, privilege or right
shall preclude other or further exercise thereof, or the exercise of any
other power, privilege or right. The waiver by Bank of any Default by
Borrower shall not constitute a waiver of any subsequent defaults, but
shall be restricted to the Default so waived. If any part of this Agreement
shall be contrary to any law which Bank might seek to apply or enforce, or
should otherwise be defective, the other provisions of this Agreement shall
not be affected thereby, but shall continue in full force and effect. All
rights, remedies and powers of Bank hereunder are irrevocable and
cumulative, and not alternative or exclusive, and shall be in addition to
all rights, remedies and powers given hereunder or in or by any other
instruments or by the Michigan Uniform Commercial Code, or any laws now
existing or hereafter enacted.
This Agreement has been delivered in Michigan, and shall be construed
in accordance with the laws of the State of Michigan. Whenever possible
each provision of this Agreement shall be interpreted in such manner as to
be effective and valid under applicable law, but if any provision of this
Agreement shall be prohibited by or invalid under applicable law, such
3
<PAGE>
provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement. The rights and privileges of Bank
hereunder shall inure to the benefit of its successors and assigns and this
Agreement shall be binding on all heirs, executors, administrators, assigns
and successors of Borrower.
11. SURVIVAL AND CONTINUATION: All representations, warranties,
covenants, indemnifications, consents and agreements contained in this
Agreement and/or any of the agreements executed in connection with the
equipment term loan shall survive the execution of this Agreement, the and
any investigations by Crestmark and shall be, and continue at all times
while any Indebtedness is outstanding, to be true and accurate. Borrower
shall immediately notify Crestmark, in writing, if any of the foregoing are
or have become untrue.
12. COUNTERPARTS: This Agreement may be executed in several
counterparts, and each executed counterpart shall constitute an original
instrument, but such counterparts shall together constitute but one and the
same instrument.
13. ENTIRE AGREEMENT: Borrower acknowledges that this is the entire
Agreement between the parties except to the extent that writings signed by
the party to be charged are incorporated herein by reference either in this
Agreement or in such writings, and Borrower acknowledges receipt of a true
and complete copy of this Agreement.
IN WITNESS WHEREOF, the parties hereto execute this Agreement on the
date and year first written above.
"BORROWER"
G-P Plastics, Inc.,
a Michigan corporation
By: ???
----------------------------
Its: Treasurer
"BANK"
Crestmark Bank,
a Michigan banking corporation
By: Tobin G. Dahm
---------------------------
Tobin G. Dahm
Its: Vice President
4
<PAGE>
EXHIBIT A
WILLIAMS & LIPTON COMPANY
APPRAISAL OF:
FAIR MARKET AUCTION
DESCRIPTION VALUE VALUE
MACHINERY & EQUIPMENT
2 CINCINNATI-MILACRON MODEL 700-110,
700-TON X 11O-OUNCE CAPACITY
COMPUTERIZED HYDRAULIC RECIPROCATING
SCREW PLASTIC INJECTION MOLDING
MACHINES (RETROFITTED & REBUILT (1997/98)
S/N'S 4007N70/74-15 (1974)-1155-SCS-4226-Al (1997)
4007W70-74-11(1974)4007W-74-98 (1998)
- REBUILT & RETROFIT BY (MPMR) MICHIGAN
PLASTIC MACHINE REBUILDERS, INC.
- BOTH MACHINES ORIGINALLY (1974)
(FISHER BODY - GIMC TAGS)
- HYDRAULIC CLAMP ACTION,
APPROXIMATELY 57" CLAMP ACTION STROKE, 13" SCREW STROKE
- FAUVER ONE SHOT LUBRICATION SYSTEM
- 32" X 32" DISTANCE BETWEEN TIE BARS
- FLOOR PAD CUSHIONS
- FILTERS
- CORE PULL - KNOCKOUTS
- TRANSFORMERS
- NEW WIRING
- SOLID CONTROLS INC. (SCI) MODEL
SCOREMASTER MACHINE MOUNTED
COMPUTERIZED ELECTRICAL CONTROLLER
SYSTEM
- PRODUCTION PROCESS INC. PRODUCTION
CYCLE CONTROLLER
- HYDRAULCS
- MOTORS & CONTROLS
- (2) CONAIR AUTOMATIC VACUUM HOPPERS
LOADER SYSTEMS WITH HOPPER
S/N'S N0T AVAILABLE
- HOSE
- MOTORS CONTROLS
CONTINUED ON NEXT PAGE
<PAGE>
CORPORATE
GUARANTY
DATED: February 11, 1999
PARTICULAR TERMS - DEFINITIONS
As used in this Guaranty, the following terms and expressions have the
respective meanings indicated opposite each of them:
Guarantor:
Name: Inmold, Inc.,
an Indiana corporation
Address: 3910 Industrial Drive
Rochester Hills, Michigan 48309
Bank:
Name: Crestmark Bank, a Michigan bank
Address: 850 East Long Lake Road
Troy, Michigan 48098
Borrower:
Name: G-P Plastics, Inc.,
a Michigan corporation
Address: 3910 Industrial Drive
Rochester Hills, Michigan 48309
Note:
Type: Equipment Term Note
Amount: $712,000.00
Date: Dated of even date herewith, including any extensions,
renewals, amendments or modifications thereof
Collateral: As defined in the Security Agreement
THIS GUARANTY, above-dated, by Guarantor to Bank is made to induce Bank to
make a $712,000 equipment term loan evidenced by the Note to Borrower and
because Guarantor, which is the sole shareholder of Borrower, has determined
that executing and delivering this Guaranty is in the Guarantor's best interest
and is to the financial benefit of Guarantor, and for other good and valuable
consideration, the receipt of which is hereby acknowledged.
THE GUARANTOR AGREES AS FOLLOWS:
1. Considieration/Nature of Guaranty: In consideration of and in order to
induce Bank to make the loan evidenced by the Note to Borrower and other good
and valuable consideration, the receipt of which is hereby acknowledged,
Guarantor hereby absolutely, irrevocably and unconditionally guaranties to Bank:
(a) the full, prompt and unconditional payment, and not just the collectability
of all indebtedness owed from Borrower to Bank, including, without limitation,
all principal, interest and fees under the Note and all expenses and
reimbursements under the Security Agreement (collectively, the "Indebtedness"),
and (b) the punctual and faithful performance and observation by Borrower of all
duties, agreements, covenants, representations and obligations of Borrower
contained in the Loan Documents (as defined in paragraph 3 below), including but
not by way of limitation, the truth and accuracy of all representations and
warranties therein set forth.
2. Absolute Obliqation, This Guaranty is an absolute, continuing,
unconditional, and irrevocable guaranty and Guarantor shall not be relieved from
any obligations hereunder until such time as this Guaranty has been terminated
in accordance with Paragraph 12 herein. The obligations of Guarantor shall
continue notwithstanding any defect in the genuineness,
<PAGE>
validity, regularity or enforceability of the Indebtedness or the Loan
Documents, or any other circumstances whether or not referred to herein, which
might otherwise constitute a legal or equitable discharge or defense of a surety
or guarantor.
3. The Loan Documents: The Note and Security Agreement and all other
related instruments' documents and writings executed in connection with the loan
(sometimes hereinafter collectively referred to as the "Loan Documents") are
hereby incorporated into and made a part of this Guaranty by reference thereto,
with the same force and effect as if fully set forth herein.
4. Continuation of Liability: The liability and obligations of Guarantor
shall in no way be affected, impaired, diminished or released by: (a) any
amendment, amendment and restatement, alteration, extension, consolidation,
renewal, waiver, indulgence, extension of time regarding performance or other
modification of the Indebtedness or the Loan Documents; (b) any settlement or
compromise in connection with the Loan Documents or Indebtedness; (c) any
subordination of payments under the Indebtedness or the Loan Documents to any
other debt or claim; (d) any substitution, exchange, release or other
disposition of all or any part of the Indebtedness or the Loan Documents; (e)
any failure, delay, neglect, or omission to act by Bank in connection with the
Indebtedness, the Loan Documents or the Collateral; (f) any advances for the
purpose of performing any covenant or agreement of Borrower, or curing any
breach or event of default in the Loan Documents; (g) the filing by or against
Borrower or the discharge or release of any obligations of Borrower or of any
other person now or hereafter liable on the Indebtedness by reason of
bankruptcy, insolvency, reorganization or other debtor's relief afforded
Borrower pursuant to the present or future provisions of the Bankruptcy Code or
any other state or federal statute or by the decision of any court; or (h) any
other matter whether similar or dissimilar to the foregoing.
5. Waivers: Guarantor unconditionally, absolutely and irrevocably waives
each and every defense which under principles of guaranty or suretyship law
would otherwise operate to impair or diminish the liability of Guarantor for the
Indebtedness. without limiting the generality of the foregoing waiver, Guarantor
agrees that none of the following acts, omissions or occurrences shall diminish
or impair the liability of Guarantor in any respect and Guarantor waives: (a)
notice of acceptance of this Guaranty and of creations of Indebtedness of
Borrower to Bank; (b) presentment and demand for payment of any Indebtedness of
Borrower; (c) protest, notice of protest, and notice of dishonor or default with
respect to any of the Indebtedness or the Loan Documents; (d) all other notices
to which Guarantor might otherwise be entitled; (e) any demand for payment under
this Guaranty; (f) any defense arising by reason of any disability or any other
defense of Borrower; and (g) any right or claim of right to cause a marshaling
of Borrower's assets, and it is agreed that Bank shall be under no duty to
marshal the assets of Borrower for Guarantor's benefit or any third party. No
notice to or demand on Guarantor shall be deemed to be a waiver of the
obligation of Guarantor or of the right of Bank to take further action without
notice or demand as provided herein. No modification or waiver of the provisions
of this Guaranty shall be effective unless in writing and no waiver shall be
applicable except in the specific instance for which it is given.
6. Immediate Liability/Exercise of Rights By Bank: This is an irrevocable,
unconditional and absolute guaranty of payment and performance and Guarantor
agrees that the liability of Guarantor on this Guaranty shall be immediate and
shall not be contingent upon (i) the exercise or enforcement by Bank of whatever
remedies it may have against Borrower, any other guarantor, or any other person
or entity, or (ii) the enforcement of any lien or realization upon any security
or Collateral Bank may at any time possess. At the election of Bank, any one or
more successive and/or concurrent actions may be brought hereon against
Guarantor, either in the same action, if any, brought against Borrower, or in
separate actions, as often as Bank, in its sole discretion, may deem advisable.
No election to proceed in one form of action or proceeding, or against any
party, or on any obligation, shall constitute a waiver of Bank's right to
proceed in any other form of action or proceeding or against other parties
unless Bank has expressly waived such right in writing. Specifically, but
without limiting. the generality of the foregoing, no action or proceeding by
Bank against Borrower, under any document or instrument evidencing or securing
the Indebtedness, or this
-2-
<PAGE>
Guaranty, including but not by way of limitation, the Loan Documents shall serve
to diminish the liability of Guarantor, except to the extent Bank realized
payment by such action or proceeding. Receipt by Bank of payment or payments
with knowledge of the breach of any provision of the Loan Documents shall not be
deemed a waiver of such breach. All rights, powers and remedies of Bank
hereunder and under any other agreement now or at any time hereafter in force
between Bank and Guarantor shall be cumulative and not alternative and shall be
in addition to all rights, powers and remedies given to Bank by law.
7. Subodination/subrogation: In the event that Guarantor shall advance or
become obligated to pay any sums to Borrower, or in the event that for any
reason Borrower or any subsequent owner of any Collateral is now or shall
hereafter become indebted to Guarantor, the amount of such indebtedness shall at
all times be subordinate as to lien, time of payment and all other respects, to
the amounts owing to Bank by Borrower. Furthermore, until the Indebtedness is
paid in full, Guarantor hereby absolutely, irrevocably and unconditionally
waives all rights Guarantor may have, at law or in equity to seek or claim
subrogation (including any right of subrogation hereafter arising against
Borrower resulting from a right of contribution from any other Guarantor)
contribution, indemnification, or any other form of reimbursement from Borrower
or from any other Guarantor by virtue of any payment(s) made to Bank under this
Guaranty or otherwise. Interest will accrue from the date(s) the payment(s) upon
the indebtedness was originally made. Guarantor agrees to indemnify and hold
Bank harmless from and against any and all claims, actions, damages, costs, fees
and expenses including, without limitation, reasonable attorney fees incurred by
Bank in connection with Guarantor's exercise of any right of subrogation,
contribution, indemnification or recourse with respect to this Guaranty, and
also with respect to Bank's defending any preference or, fraudulent conveyance
claim or action brought against Bank in any bankruptcy proceeding concerning
Borrower or any Guarantor. Bank has no duty to enforce or protect any rights
which the undersigned may have against Borrower or any other Person and
Guarantor assumes full responsibility for enforcing and protecting these rights.
8. Representations and Warranties/Notice/Financial Statements: Guarantor
represents, warrants and covenants to Bank that, as of the date of this
Guaranty: (a) the fair salable value of Guarantor's assets exceeds its
liabilities; (b) Guarantor is meeting its current liabilities as they mature;
(c) any financial statements of Guarantor furnished Bank are true and correct
and include all contingent liabilities of Guarantor; (d) since the date of any
financial statements furnished to Bank, no material adverse change has occurred
in the financial condition of Guarantor; (e) there are no pending or threatened
material court or administrative proceedings or undischarged judgments against
Guarantor, and no federal or state tax liens have been filed or threatened
against Guarantor ' nor is Guarantor in default or claimed default under any
agreement for borrowed money. Guarantor agrees to immediately give Bank written
notice of any material adverse change in its financial condition, including but
not limited to litigation commenced, tax liens filed, default claimed under
indebtedness for borrowed money or bankruptcy proceedings commenced by or
against Guarantor. Guarantor shall deliver, timely to Bank, its annual financial
statements for the preceding fiscal year; and at such reasonable times as Bank
requests shall furnish its current financial statements to Bank. Guarantor is
fully aware of the financial condition of Borrower. Guarantor delivers this
Guaranty based solely upon its own independent investigation and in no part upon
any representation or statement of Bank with respect thereto. Guarantor is in a
position to and hereby assumes full responsibility for obtaining any additional
information concerning Borrower's financial condition as Guarantor may deem
material to its obligations hereunder; and Guarantor is not relying upon, nor
expecting, Bank to furnish it any information in Bank's possession concerning
Borrower's financial condition.
9. Expenses/Preferential Payments: Guarantor further agrees to pay all
expenses incurred by Bank in connection with the enforcement of Bank's rights
under the Loan Documents, this Guaranty, the collection of the Indebtedness or
in the event Bank is a party to any litigation because of the existence of the
Indebtedness, the Loan Documents or this Guaranty, as well as court costs,
collection charges and reasonable attorney fees and disbursements. Guarantor
further agrees that to the extent Borrower makes a payment or payments to Bank,
which payment or payments or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set
-3-
<PAGE>
aside and/or required to be repaid to a trustee, receiver or any other party
under any bankruptcy act, state or federal law, common law or equitable cause,
then to the extent of such payment or repayment, the obligation or part thereof
intended to be satisfied shall be revived and continued in full force and effect
as if said payment had not been made.
10. Transfer of Assets: Guarantor further agrees that until Borrower's
Indebtedness to Bank is paid in full, Guarantor will not, without Bank's prior
written consent, make any voluntary transfer of any of Guarantor's assets which
would have the effect of materially diminishing Guarantor's present net worth.
11. Assignability/Binding Effect: This Guaranty shall be assignable by Bank
without notice to Guarantor and shall inure to the benefit of Bank and to any
subsequent successors and assigns. Each reference herein to Bank shall be deemed
to include its successors and assigns, in whose favor the provisions of this
Guaranty shall also run. In the event of the death of Guarantor, this Guaranty
shall continue in effect against the estate of said Guarantor. The pronouns and
relative words herein used shall be read as if written in the plural, feminine,
masculine or neuter form so as to appropriately refer to the parties designated.
12. Termination. Notwithstanding anything contained herein to the contrary,
the liability of Guarantor shall be terminated only in the event that (i)
Borrower shall pay to Bank in full the Indebtedness and (ii) the Loan Agreement
is terminated. The revocation, termination, discharge or release, for any
reason, of a guaranty of the Indebtedness by or on behalf of another guarantor,
or by the executors or administrators of any deceased guarantor, will not affect
Guarantor's continuing liability under this Guaranty.
13. Severability: If any provision of this Guaranty is in conflict with any
statute or rule of law or is otherwise unenforceable for any reason, then that
provision shall be deemed null and void to the extent of the conflict or
unenforceability and shall be deemed severable, but shall not invalidate any
other provision of this Guaranty.
14. Governing Law: This Guaranty shall be governed by and construed in
accordance with the internal laws of the State of Michigan, without regard to
any choice of law principles which would otherwise require the application of
the law of any other jurisdiction.
15. Jurisdiction: GUARANTOR HEREBY WAIVES ANY PLEA OF JURISDICTION OR VENUE
ON THE GROUND THAT SUCH GUARANTOR IS NOT A RESIDENT OF OAKLAND COUNTY, MICHIGAN,
AND HEREBY SPECIFICALLY AUTHORIZES ANY ACTION BROUGHT To ENFORCE GUARANTOR'S
OBLIGATIONS TO THE BANK TO BE INSTITUTED AND PROSECUTED IN EITHER THE CIRCUIT
COURT OF OAKLAND COUNTY OR A DISTRICT COURT WITHIN THE BOUNDARIES OF OAKLAND
COUNTY, AS APPROPRIATE, OR IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN
DISTRICT OF MICHIGAN AT THE ELECTION OF THE BANK, AND GUARANTOR HEREBY SUBMITS
TO THE JURISDICTION OF SUCH COURT.
16. Waiver of Jury Trial: GUARANTOR ACKNOWLEDGES THAT THE RIGHT TO TRIAL BY
JURY IS A CONSTITUTIONAL RIGHT, BUT THAT IT MAY BE WAIVED. GUARANTOR, AFTER
CONSULTING WITH, OR HAVING THE OPPORTUNITY TO CONSULT WITH COUNSEL OF ITS
CHOICE, KNOWINGLY WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION
REGARDING THE PERFORMANCE OR ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS
GUARANTY, THE INDEBTEDNESS OR THE COLLATERAL DOCUMENTS.
17. Counterparts. This Guaranty may be executed in several counterparts,
and each executed counterpart shall constitute an original instrument, but such
counterparts shall together constitute but one and the same instrument.
18. Complete Agreement: This Guaranty is intended by Guarantor to be the
final, complete and exclusive expression of the agreement between Guarantor and
Bank with respect to the subject matter of this Guaranty. Guarantor acknowledges
and agrees with Bank that this Guaranty cannot be modified or amended in any
respect except by an additional writing signed by both Guarantor and Bank.
-4-
<PAGE>
IN WITNESS WHEREOF, Guarantor hereto has executed this Guaranty as of the
day and year first above written.
WITNESSES: GUARANTOR:
Tobin G. Dahm Inmold, Inc.,
- ---------------------------- an Indian corporation
Tobin G. Dahm
By: John ??
--------------------------
Its:
--------------------------
Guarantor's Tax Identification Number:___________________
-5-
EXHIBIT 10.07
LOAN AND SECURITY AGREEMENT
Crestmark: Crestmark Bank,
a Michigan banking corporation
Borrower: Seville Plastics, Inc.
a Michigan corporation
Type/Amount: Line of Credit Loan ($350,000)
Date: April ___, 1999
<PAGE>
LOAN ND SECURITY AGREEMENT
This Agreement is made this ___ day of April, 1999 by and between Crestmark
Bank, a Michigan banking corporation, whose address is 850 East Long Lake Road,
Troy, Michigan 48096 ("Crestmark") and Seville Plastics, Inc., whose address is
3909 Industrial Drive, Rochester Hills, Michigan 48309("Borrower").
W I T N E S S E T H
WHEREAS, Borrower desires to borrow, from time to time, certain sums of
money from Crestmark on the terms and conditions as hereinafter set forth;
WHEREAS, Crestmark is willing to lend such sums to Borrower, provided
Borrower complies with all terms and conditions hereinafter set forth; and
WHEREAS, the repayment of the Loan will be secured by all assets of the
Borrower.
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter contained, and in reliance upon the representations and warranties
hereinafter contained, and subject to the terms and conditions hereinafter
contained, it is hereby agreed between the parties as follows:
1. DEFINITIONS:
In this Agreement and in the Collateral Documents (unless the context
thereof requires a contrary definition or unless the word is defined therein, in
which case, the definitions shall be cumulative and not exclusive), the
following words, phrases, and expressions have the respective meanings
attributed to them, to be equally applicable to both the singular and plural
forms, unless the plural form is the term so defined.
1.1 "Account Receivable" or "Account" has the meaning ascribed to such
terms under the Uniform Commercial Code, and, without limiting the foregoing,
will also mean and include any and all other forms of obligations now owned or
hereafter arising or acquired by Borrower evidencing any obligation for payment
for goods of any kind, nature, or description sold or leased or services
rendered, and all proceeds of any of the foregoing.
1.2 "Account Debtor" means any party liable to Borrower for the payment of
an Account.
1.3 "Agreement" means this Loan and Security Agreement, and all amendments,
modifications, extensions and renewals hereof.
1.4 "Borrower" means as defined in the preamble to this Agreement.
1.5 "Business Days" means each weekday on which Crestmark is open during
Crestmark's normal course of business.
1.6 "Collateral" means any and all of the following now or hereafter owned
by Borrower, wherever located, including but not by way of limitation,:
(a) all Accounts Receivable and/or Accounts, cash, documents, chattel
paper, certificates of deposit, instruments, contract rights, general
intangibles, goodwill, patents, tradenames, trademarks, copyrights,
licenses, brands, trade secrets, customer lists, route lists, computer
software, report catalogs, choses in action, notes, drafts, acceptances,
tax refunds, claims under chapter 5 of the Bankruptcy Code, judgments, sums
due and any other form of obligation requiring the payment of money to
Borrower, and any claim by Borrower for any of the foregoing;
(b) all Inventory, goods, merchandise, products, supplies,
commodities, raw materials, finished goods and work in process;
(c) all Equipment, including all machinery, furniture, fixtures, trade
fixtures, tools, dies, leasehold improvements, furnishings,
<PAGE>
trucks, cars and other titled vehicles and all repossessions and returns of
any of the foregoing;
(d) all other property (real, personal, tangible, intangible, or any
combination thereof) of Borrower, including, monies, deposit, accounts,
claims and credit balances;
(e) all property, collateral or security described in the Collateral
Documents;
(f) all accessions, accessories, parts, attachments, additions,
substitutions and replacements of any of the foregoing, used or intended
for use in connection with any of the foregoing; and
(g) all proceeds, products, proceeds of insurance, proceeds of eminent
domain proceedings and condemnation awards arising from or relating to all
of the foregoing, now or hereafter owned or claimed by Borrower or others
pledging same to Crestmark pursuant hereto or pursuant to the Collateral
Documents.
It is expressly agreed by Borrower and Crestmark that the foregoing description
is meant to cover all of Borrower's assets.
1.7 "Collateral Documents" means any and all documents, instruments, notes,
agreements, and written memoranda, referred to in this Agreement or executed in
connection herewith or therewith, now or hereafter existing, and specifically,
but not by way of limitation, the Note and those documents identified in Section
6.
1.8 "Consistent Basis" means, in reference to the application of Generally
Accepted Accounting Principles, that the accounting principles observed in the
current period are comparable in all material respects to those applied in the
preceding periods.
1.9 "Crestmark" means as defined in the preamble to this Agreement.
1.10 "Default" means and exists upon the occurrence of any breach,
omission, violation, misstatement, non-observance or non-performance by Borrower
or Guarantor of any representation, warranty, covenant, term, condition,
obligation, provision or undertaking under this Agreement or any of the
Collateral Documents, including, but not limited to, Borrower's failure to pay
any Indebtedness immediately on demand by Crestmark.
1.11 "Eligible Account Receivable" means the face value stated on each
Account of Borrower arising in the ordinary course of business and represented
by an invoice of Borrower, which invoice is due and owing to Borrower, is free
of any dispute and which invoice must have all conditions precedent thereto
completely fulfilled. Excluded from an Eligible Account Receivable is any
Account which meets any of the following:
(a) any Account that is unpaid more than ninety (90) days after the
date of the invoice; and
(b) any Account which does not comply with the warranties set forth in
Section 7.10; and
(c) any Account in which the Account Debtor is a parent, subsidiary or
affiliate of Borrower, including, any Account from either Guarantor; and
(d) all Accounts due from any one Account Debtor which Crestmark
determines to be in excess of an acceptable percentage of the total
outstanding Accounts of Borrower; and
(e) all Accounts due from any Account Debtor from whom ten (10%)
percent or more of the total accounts of said Account Debtor remain unpaid
more than ninety (90) days after the date of the invoice; and
(f) any Account in which the Account Debtor is the United States
government, any state of the United States, any city, town, or
<PAGE>
municipality, or any foreign government, non-United States company, or a
United States company located outside of the United States; and
(g) any Account arising as a result of a sale to the Account Debtor on
a bill-and-hold, guaranteed sale, C.O.D., sale-and-return,
sale-on-approval, consignment or any other situation where payment by the
account debtor may be conditional; and
(h) any Account which is a contra account or any Account from an
Account Debtor who is also Borrower's creditor or supplier, to the extent
of the amount owing by Borrower to the Account Debtor; and
(i) any Account representing tooling;
(j) any Account or Account Debtor that is unacceptable to Crestmark in
its sole discretion.
1.12 "Eligible inventory" means Inventory of the Borrower which meets the
following criteria in the sole discretion of Crestmark:
(a) Ownership: it is owned by Borrower free of all encumbrances and
security interests, and is not Inventory subject to a purchase money
security interest or Inventory held by Borrower on consignment; and
(b) Other Financing: No financing statement is on file covering it or
its products or proceeds, except in favor of Crestmark, and Crestmark has
received a Landlord's Consent, satisfactory to Crestmark, from the owner of
the premises where the Inventory is located; and
(c) Documents: If it is represented or covered by documents of title,
Borrower is the owner of the documents free of all encumbrances and
security interests; and
(d) Condition: It is in good condition and in case of goods held for
sale, it is new and unused and saleable in the ordinary course of business
(except as Crestmark may otherwise consent in writing). Any inventory held
for over twelve (12) months will automatically be deemed not in good
condition; and
(e) Location: It is located at Borrower's address set forth above
(f) Type: It is raw material, or finished goods;
(g) Value: It is valued at the lower of cost or market value; and
(h) Discretion: It is Inventory that is acceptable to Crestmark in its
sole discretion.
1.13 "Equipment" has the meaning ascribed to such term under the Uniform
Commercial Code, and without limiting the foregoing, also means and includes all
goods, equipment, computers, furniture, fixtures, trade fixtures, leasehold
improvements, machinery, tools, contrivances and other items of personal
property (other than inventory) of every kind and description, and wheresoever
located, together with all additions, attachments, accessions, parts,
replacements, substitutions and renewals thereof or therefore, and all proceeds
of any of the foregoing, now owned or hereafter acquired by any party, person or
entity pledging same to Crestmark.
1.14 "Generally Accepted Accounting Principles" means those principles set
forth in Opinion of the Accounting Principles Board of the American Institute of
Certified Public Accountants and the Financial Accounting Standards Board, or
which have other substantial authoritative support and are applicable in the
circumstances as of the date of the report.
1.15 "Guarantor" means G.P. Plastics, Inc. and Inmold, Inc., each
individually and together collectively.
1.16 "Indebtedness" means and includes by way of example, but not by
<PAGE>
way of limitation:
(a) the Loan, and all loans, indebtedness, expenses and liabilities of
Borrower and/or Guarantor to Crestmark whether arising under this
Agreement, any of the Collateral Documents, or any other agreement of
whatsoever kind, nature and description, primary or secondary, direct,
absolute or contingent, due or to become due, and whether now existing or
hereafter arising and howsoever evidenced or acquired, and whether joint,
several, or joint and several; and
(b) all present and future Money Advances made by Crestmark in
connection with the Loan or any loan and the Collateral Documents, or
otherwise, and whether made at Crestmark's option or otherwise, and the
Loan, the Note and all notes now or hereafter executed or existing in
connection herewith, and interest accrued thereon, from time to time; and
(c) all future advances made by Crestmark for the protection or
preservation of Crestmark's rights and interests in the Collateral, or
arising under this Agreement or the Collateral Documents, including, but
not by way of limitation, advances for taxes, levies, assessments,
insurance or maintenance of the Collateral, and reasonable attorneys fees;
and
(d) all costs and expenses, including without limitation reasonable
attorneys' fees, incurred by Crestmark in connection with or arising out of
the protection, enforcement or collection of the Indebtedness or expenses
incurred in answering general legal issues involving the Borrower; and
(e) all costs and expenses incurred by Crestmark in connection with,
or arising out of, the sale, disposition, liquidation or other realization
(including, but not by way of limitation, the taking, retaking or holding,
and all proceedings (judicial or otherwise)) of the Collateral, including,
without limitation, reasonable attorneys' fees.
1.17 "Inventory" has the meaning ascribed to such term under the Uniform
Commercial Code, and without limiting the foregoing, also means and includes all
goods, merchandise, products and commodities, held, acquired or processed by
Borrower and intended for sale or lease, and all raw materials, goods in process
and finished goods and supplies of every nature used or usable in connection
with the processing, shipping and sale thereof, regardless of where the same may
be situated, kept or stored, and whether now owned or hereafter acquired by
Borrower, and all of the proceeds of any of the foregoing.
1.18 "Line of Credit Loan Base" means an amount which is the lesser of:
(a) THREE HUNDRED FIFTY THOUSAND AND NO/100 ($350,000) DOLLARS, OR
(b) the aggregate of:
(i) EIGHTY FIVE (85*) PERCENT of Eligible Accounts Receivable;
plus
(ii) the Borrowing Base (as hereinafter defined); plus
(iii) the lesser of:
(1) SEVENTY FIVE THOUSAND AND NO/100 ($75,000.00) DOLLARS;
or
(2) The Inventory Advance Rate multiplied by the dollar
value of Eligible Inventory;
The inventory advance rate is FIFTY PERCENT (50%) as of the date hereof,
but commencing on May 1, 1999 and continuing on the first day of each month
thereafter the inventory advance rate will decrease by ONE PERCENT (1%) per
month down to a minimum of THIRTY PERCENT (30%) (the "Inventory Advance Rate")
<PAGE>
The borrowing base as of the date of this Agreement is ONE HUNDRED TWENTY
TWO THOUSAND TWO HUNDRED EIGHTY FIVE AND 25/100 ($122,285.25) DOLLARS, and the
borrowing base shall hereafter be reduced by TWO THOUSAND SEVEN HUNDRED TWENTY
NINE AND NO/100 ($2729.00) DOLLARS each month commencing on May 15, 1999 and
continuing on the fifteenth day of each month thereafter while the Loan is
outstanding (the "Borrowing Base"). If the Small Business Administration
releases its liens on both 1973 Van Dorn Molding Machines, the Borrowing Base
will receive a one time increase of EIGHT THOUSAND SEVEN HUNDRED FOURTEEN AND
75/100 ($8714.75) DOLLARS.
The Line of Credit Loan Base shall be computed daily. Ineligible Accounts
Receivable are to be determined once per month based on the most recent Accounts
Receivable Aging Report and Payable Report. Ineligible Inventory is to be
determined once per month based on the most recent monthly Inventory listing or
at such other times as Crestmark reasonably deems necessary.
1.19 "Loan" means the Line of Credit Loan as hereinafter set forth in
Section 2, any Money Advances made thereunder, and the Note, collectively.
1.20 "Money Advance" means a loan or disbursement of money by Crestmark, or
any other advance of credit by Crestmark, including, but not limited to, amounts
for the payment of interest, fees and expenses of Borrower under the Loan or any
loan.
1.21 "Note" means the Promissory Note (Line of credit) and any other note
executed by Borrower evidencing the Loan or a loan, including all renewals,
extensions, amendments, modifications, restatements, roll-overs or substitutions
thereof, from time to time.
1.22 "Permitted Encumbrance" means and include any of the existing
agreements and obligations set forth or described on Exhibit "A" attached hereto
and made a part hereof, if any, without increase, amendment, modification,
extension thereto, or refinancing thereof. If Exhibit "A" is left blank, no
Permitted Encumbrances exist.
1.23 "Person" means, by way of example but not by way of limitation, an
individual, partnership, limited partnership, corporation, limited liability
company, trust, unincorporated organization, entity, government, governmental
agency or governmental subdivision.
1.24 "Uniform Commercial Code" means Act 174 of the Michigan Public Acts
1962, as amended, and except as otherwise expressly provided herein all other
terms used herein, but not defined herein, have the meanings assigned to them in
Article 9, or absent definition in Article 9, in any other Article of the
Uniform Commercial Code.
1.25 "Wall Street Journal Prime Rate" means that rate of interest reported
daily in the Wall Street Journal as the Prime Rate, as such rate may vary from
time to time.
1.26 Accounting Terms: Any accounting terms used in this Agreement unless
otherwise indicated, have the meanings customarily given to them in accordance
with CAAP.
2. LOAN COMMITMENT:
Subject to the terms and conditions contained herein, and upon the
condition that no Default exists, Crestmark agrees that it will make Money
Advances under the Loan pursuant to the following commitment:
2.1 Line of Credit Loan Commitment:
(a) Use of Proceeds: Borrower agrees to use the proceeds of the Loan,
which is due and payable on demand, to (i) payoff, in full, all of
Borrower's indebtedness with Greenfield Commercial Credit, LLC; and (ii)
the balance, if any, to be used solely as working capital.
<PAGE>
(b) Repayment: Interest on the Note will be paid monthly. Principal
and expenses will be repaid from time to time from funds in the lockbox and
cash collateral account. Provided no Default exists, the interest rate will
be at a per annum rate equal to the Wall Street Journal Prime Rate plus Two
(2%) Percent; during the existence of a Default, the interest rate will be
the wall Street Journal Prime Rate plus Eight (8%) percent (the "Default
Interest Rate").
(c) Commitment to Lend: Subject to the terms and conditions contained
in this Agreement, and upon the condition that no Default exists,
including, but not limited to, the fact that demand has not been made by'
Crestmark, and further provided all conditions precedent have been met as
of the date of any request for a Money Advance hereunder, Crestmark agrees
that it will, from time to time, make Money Advances to Borrower pursuant
to the terms of this Agreement.
(d) Maximum Commitment: Notwithstanding the loan commitment made in
Section 2.1(c), at no time will the aggregate of all Money Advances
outstanding exceed the Line of Credit Loan Base. Any Money Advances
outstanding in excess of the Line of Credit Loan Base must be immediately
repaid to Crestmark by Borrower.
2.2 Commitment Fee: Borrower has paid or will pay to Crestmark a
non-refundable Commitment Fee in the aggregate amount of THREE THOUSAND FIVE
HUNDRED AND NO/100 DOLLARS ($3500) for the extension of the Loan, which fee has
been fully earned by Crestmark.
2.3 Monthly Service Fee: Borrower will pay to Crestmark a monthly service
charge of FORTY FIVE ONE HUNDREDTHS OF ONE(.45%) PERCENT of the monthly average
Indebtedness outstanding from the preceding month as a service fee (the "Service
Feel") commencing on the tenth (10th) day of May, 1999 and continuing on the
tenth (10th ) day of each month thereafter until Borrower has no Indebtedness
outstanding and this Agreement is terminated as provided herein.
2.4 Exit Fee: Borrower will pay Crestmark an exit fee as set forth more
fully in the Note.
2.5 Reserves Against Availability: Crestmark, in its sole discretion, may
establish reserves against the advances which Borrower is otherwise entitled to
borrow under this Agreement in such amounts as Crestmark, in its sole discretion
deems necessary or appropriate.
3. LOAN ACCOUNT:
3.1 Debits to Loan Account: All Indebtedness under this Agreement will be
charged to a loan account ("Loan Account") in Borrower's name on Crestmark's
books. Crestmark will render to Borrower, a monthly statement of the Loan
Account, which will be deemed to be correct and accepted by and binding upon
Borrower and Guarantor, unless Crestmark receives a written statement of
exception within ten (10) Business Days of mailing such statement. Crestmark
will debit the Loan Account the amount of each Money Advance or expense when
made or incurred.
3.2 Credits to Loan Account: After allowing two Business Days for
collection of checks and other credit instruments (and subject to final
collection), Crestmark will credit Borrower's Loan Account the net amount of
cash received by Crestmark; provided, however, Crestmark will give Borrower
immediate credit on such funds for calculating availability under the Line of
Credit Loan Base. If any check or other credit instrument for which Crestmark
has given the Borrower credit is not paid, any credit so given will be reversed,
and the Indebtedness restored. Crestmark will have the right, in its sole
discretion, to extend the holding periods set forth above based upon concerns
about the receipt of good funds.
<PAGE>
4. EVIDENCE OF INDEBTEDNESS:
Borrower will execute a Promissory Note (Line of Credit) in the principal
amount of THREE HUNDRED FIFTY THOUSAND AND NO/100 ($350,000) DOLLARS, evidencing
the maximum amount provided for under the Loan.
5. GRANT OF SECURITY INTEREST:
5.1 Grant of Security Interest: Borrower grants to Crestmark a continuing
security interest in and first lien on the Collateral, now existing or hereafter
arising, and all proceeds and products thereof, as security for the timely
repayment of all Indebtedness, as herein provided for, or as provided for in the
Collateral Documents. Borrower acknowledges that nothing contained in this
Agreement will be (i) construed as an agreement by Crestmark to resort to or
look to a particular type of the Collateral as security for the repayment of the
Indebtedness or (ii) deemed to limit or reduce any security interest in or lien
upon any portion of the Collateral for the Indebtedness. While this Agreement is
in effect, Borrower will not sell any Collateral, provided, however, Borrower
may sell Inventory in the ordinary course of business.
5.2 Perfection of Security Interest: Borrower will execute and deliver to
Crestmark, concurrently with Borrower's execution of this Agreement and at any
time or times hereafter at the request of Crestmark (and pay the cost of filing
or recording same in all public offices deemed necessary by Crestmark) all
financing statements, assignments, certificates of title, applications for
vehicle titles, affidavits, reports, notices, schedules of Accounts,
designations of Inventory, letters of authority and all other documents that
Crestmark may reasonably request, in form satisfactory to Crestmark, to perfect
and maintain the perfection of Crestmark's security interests in the Collateral.
Borrower will also make appropriate entries on its books and records disclosing
Crestmark's security interests in the Collateral.
5.3 Borrower Remains Liable: Anything contained herein to the contrary
notwithstanding, (a) Borrower will remain liable for all damages, obligations,
and liabilities under the contracts and agreements included in the Collateral to
perform all of its duties and obligations to the same extent as if this
Agreement had not been executed, (b) the exercise by Crestmark of any of its
rights under this Agreement or the Collateral Documents will not release the
Borrower from any of its duties or obligations under the contracts and
agreements included in the Collateral and (c) Crestmark will have no obligation
or liability under the contracts and agreements included in the Collateral, nor
will Crestmark be obligated to perform any of the obligations or duties of
Borrower thereunder or to take any action to collect or enforce any claim for
payment. Borrower will pay all taxes, levies, assessments and charges of any
kind upon or related to the Collateral, Borrower's business, income, revenues
and assets.
6. COLLATERAL DOCUMENTS:
Borrower and others herein required have also executed and delivered to
Crestmark the following documents, which are part of the Collateral Documents:
6.1 Financing Statements: A Uniform Commercial Code Financing Statement
executed by Borrower and satisfactory to Crestmark, sufficient to perfect a
valid and enforceable security interest and lien of the first priority, in and
to the Collateral.
6.2 Guaranty: An unlimited Guaranty of all Indebtedness executed by each
Guarantor dated of even date herewith.
6.3 Landlord's Consent: A Landlord's Consent executed by Borrower and
Borrower's landlord covering the premises leased by Borrower in form and
substance satisfactory to Crestmark.
6.4 Resolutions: Certified Corporate Resolutions authorizing the Borrower
to enter into the Loan Agreement and the Collateral Documents.
<PAGE>
Certified Corporate Resolutions authorizing each Guarantor to execute each
Corporate Guaranty.
7. REPRESENTATIONS AND WARRANTIES:
Borrower represents and warrants to Crestmark that:
7.1 Organization and Authority: Borrower is a corporation, duly organized
and in good standing under the laws of the State of Michigan and has the
corporate power and authority to own its assets and transact its business. The
Person executing this Agreement has full power and complete authority to execute
this Agreement and all Collateral Documents on behalf of Borrower.
7.2 Transactions Legal and Authorized: The Execution, delivery and
performance of this Agreement, the Collateral Documents and the other
instruments and documents related thereto have been duly authorized by
appropriate corporate action of Borrower, and the execution, delivery and
performance of this Agreement, the Collateral Documents and other instruments
related thereto are not in contravention of Borrower's Articles of Incorporation
or By-Laws, or of the terms of any contract, indenture, agreement or undertaking
to which Borrower is a party or by which it is bound.
7.3 Enforceability of Obligations: Borrower's Indebtedness to Crestmark,
this Agreement and all Collateral Documents have been duly executed, are valid,
binding upon, in full force and effect and fully enforceable against Borrower,
Guarantor or any other party thereto in accordance with their respective terms.
7.4 Permissions: Borrower has all requisite permissions, licenses,
registrations and permits required to conduct its business under the laws of the
United States as well as the laws of any state or any foreign country in which
it conducts business. The foregoing constitute all of the authorizations
required by any Person for the operation of Borrower's business in the same
manner as presently conducted, and as proposed to be conducted or conducted from
and after the date hereof. All of the foregoing have been validly issued and are
in full force and effect. To the best of the knowledge and belief of Borrower,
after due investigation, no event has occurred which permits, or after notice or
lapse of time, or both, would permit, revocation or termination of any of the
foregoing or which materially and adversely affects, or in the future may (so
far as Borrower can now reasonably foresee) materially and adversely affect, the
rights of Borrower.
7.5 Litigation: No litigation or other proceeding before any court or
administrative agency, domestic or foreign, is pending, or threatened.
Furthermore, Borrower is not in default with respect to any order, writ,
injunction, decree or demand of any court or federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
which might have consequences which would impair the business or properties of
Borrower.
7.6 Financial Statements/Report/Certificates:
(a) Existing Financial Information/No Adverse Changes: The financial
statements furnished to Crestmark are true and correct and have been
prepared in accordance with Generally Accepted Accounting Principles
applied on a Consistent Basis throughout the periods involved. The balance
sheet fairly presents the condition of Borrower as of the date thereof, and
the profit and loss statement fairly presents the results of operations.
There have been no material adverse changes in the condition of Borrower,
financial or otherwise subsequent to the date of the most recent financial
statement furnished to Crestmark.
(b) Future Financial information. All financial information,
statements, reports and certificates required by this Agreement including,
but not by way of limitation, by section 10 hereof, will be true and
accurate.
7.7 Ownership of Collateral; No Liens: Borrower is the owner of and has
good and indefeasible title to all of the Collateral. The Collateral is
<PAGE>
not subject to any liens, purchase options, mortgages, Pledges, encumbrances,
claims (legal or equitable), or charges of any kind except Permitted
Encumbrances. As of the date hereof, Borrower has not sold any Collateral except
in the ordinary course of business. All Collateral is, and will be located at
Borrower's address specified above, unless disclosed to Crestmark from time to
time in writing, prior to being moved. Crestmark's security interest in the
Collateral is a first priority security interest, and Borrower will defend and
indemnify Crestmark against the claims and demands of all other persons claiming
an interest in the Collateral.
7.8 Location of Collateral: All of the Collateral is located in Michigan at
the address of Borrower set forth above, and Borrower will not move the
Collateral outside of Michigan without the prior written consent of Crestmark.
Borrower will not change its name, adopt an assumed name, or move its chief
executive office without giving Crestmark at least thirty (30) days prior
written notice.
7.9 Tax Returns/Taxes: Borrower has filed all federal, state, local and
foreign tax returns which are required to be filed and has paid all taxes,
withholdings, assessments and other government charges which have become due.
Borrower does not know of any proposed material additional tax assessment
against it, or any of its properties, or any basis therefore.
7.10 Accounts Receivable: With respect to Accounts Receivable, Borrower,
based upon its information, knowledge and belief, represents and warrants as of
the date hereof, and as of the date of each request for a Money Advance, and so
long as this Agreement is in effect that:
(a) Each Account Receivable represents a bona fide existing, valid and
legally enforceable indebtedness of the Account Debtor named therein,
payable in the amount, time and manner stated in the invoice therefor;
(b) Each Account Receivable and invoice represents a bona fide account
due in the ordinary course of Borrower's business and Borrower further
represents that the kind, quality and quantity of the goods or services
described therein have been completely delivered or performed and, at time
of delivery or performance, have been accepted by the Account Debtor and
for which proper receipts have been received by, and all in the possession
of Borrower;
(c) Each Account Receivable is free from any claim for credit,
deduction, allowance, dispute, defense, set-off or counter-claim except
discount for prompt payment, and the same is valid and enforceable
according to its terms in the full amount stated;
(d) Each Account Receivable is not subject to an interest, security
interest or claim of interest, by any party not a party to this Agreement;
(e) Borrower has not received any complaint by the Account Debtor as
to Account Debtor's liability for payment, nor has there been any
notification received by Borrower of any returns of the goods or services
giving rise to each Account Receivable;
(f) Borrower has no knowledge of the insolvency of an Account Debtor
or of any action or proceeding by or against an Account Debtor under any
federal or state debtor's relief statute; and
(g) Each Account Receivable is assignable by law and also by the terms
of the contract or agreement giving rise thereto.
7.11 Eligible Inventory: Each item of Eligible Inventory, as of the date of
each request for a Money Advance with respect thereto, meets the criteria set
forth in Section 1.12.
7.12 Non-Reliance: Crestmark has not undertaken to advise Borrower with
respect to the adequacy of the financial accommodations herein set forth, but
the financial accommodations are solely the decision of Crestmark as to the type
and amount of credit Crestmark is willing to extend and
<PAGE>
Borrower has made the decision, exclusive of any statements of Crestmark, or any
of its officers or employees, to accept the same without inducement and/or
reliance upon Crestmark and/or any of its officers and employees.
7.13 Indebtedness: On the date hereof, Borrower does not have any
indebtedness for borrowed money, except such indebtedness giving rise to a
Permitted Encumbrance or Subordinated Debt, to any Person that will not be paid
off by the use of he proceeds of the Loan, except for the Loan, and Borrower has
no commitment, understanding, agreement or arrangement to incur any such
indebtedness, except that which is a Permitted Encumbrance.
7.14 Full Disclosure: Neither this Agreement nor any written statement
furnished by or on behalf of Borrower to Crestmark in connection with the
negotiation or the making of the Loan contemplated hereby, taken as a whole,
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements contained therein or herein not
misleading. There is no fact relating to Borrower or its business which Borrower
has not disclosed to Crestmark in writing, which materially and adversely
affects, or as far as Borrower can now foresee, will materially and adversely
affect any of the properties, business, prospects, profits or conditions
(financial or otherwise) of Borrower, or the ability of Borrower to consummate
the transactions or perform its obligations contemplated by or provided for in
this Agreement.
7.15 Solvency: The Borrower is solvent, able to pay its debts as they
mature, does not have unreasonably small capital and has assets the fair market
value of which exceeds its liabilities. The Borrower will not be rendered
insolvent, undercapitalized or unable to pay maturing debts as a result of the
execution of this Agreement or the Collateral Documents.
7.16 Bankruptcy: The Borrower is not the subject of any bankruptcy,
reorganization, arrangement, insolvency or other similar proceeding.
7.17 Casualty Loan or Judgment: The Collateral has not suffered any loss,
substantial damage, or destruction and no attachment, lien, levy, garnishment or
commencement of any related proceeding has occurred against the Collateral.
7.18 No Material Adverse Change: No material adverse change has occurred in
the existing or prospective financial condition, business, assets or liabilities
of the Borrower.
7.19 Year 2000: Borrower has completed a Year 2000 assessment and a Year
2000 corrective plan, and completely and accurately completed all questionnaires
supplied by Crestmark regarding Year 2000 issues. Copies of all of the foregoing
will be delivered to Crestmark upon request. Borrower has eliminated all Year
2000 problems that could have a material adverse effect, individually or in the
aggregate, on the business or financial condition of Borrower.
8. AFFIRMATIVE COVENANTS.
Borrower covenants and agrees, that so long as any Money Advances are
outstanding or commitments therefore exist under this Agreement and until all
Indebtedness due Crestmark is paid in full, Borrower will:
8.1 Payments on Indebtedness: Pay all Indebtedness when due, including the
principal amount of each Money Advance and accrued interest thereon, in
accordance with the terms of the Note and this Loan Agreement, whether by
acceleration or otherwise. Furthermore, Borrower will not have any Money
Advances outstanding under the Loan contrary to any provisions, limitations or
restrictions of the Loan Agreement or the Collateral Documents, including, but
not limited to, any Money Advances in excess of the Line of Credit Loan Base
which are not immediately repaid to Crestmark.
8.2 Performance of Obligations: Perform or cause to be performed, all of
the terms, conditions, obligations and covenants of Borrower or any other Person
as required by this Agreement, the Collateral Documents or any other agreement,
note or other document executed between Crestmark and
<PAGE>
Borrower and/or another Person, whether now existing or hereafter created and
take all action (or not fail to take any action or suffer or permit any
omission) necessary to maintain the representations and warranties made as true
and accurate.
8.3 Maintenance of Existence: Maintain its corporate existence and all
rights, licenses, leases, agreements and franchises helpful in continuing the
operation of its business in the same manner as of the date of execution hereof.
8.4 Information: Furnish promptly and in a form satisfactory to Crestmark,
such information as Crestmark may request, from to time, and to permit a
representative of Crestmark access to any of its premises, computer systems and
financial records.
8.5 Notification of Disputes: Notify Crestmark promptly of any claim
adverse to, litigation, or administrative or tax proceeding, or other action
threatened or instituted against Borrower or any property of Borrower or any
other material matter which is not fully covered by insurance which could
adversely impair Borrower's financial condition or its ability to conduct its
business including, but not limited to, any inquiry or proceedings initiated by
any state, federal or foreign regulatory agency. For the purposes of this
Agreement, any single such claim, litigation, proceeding, matter, action or
inquiry in which the sum in dispute is Ten Thousand ($10,000.00) Dollars, or all
such claims, litigation, proceedings, matters, actions or inquiries in which the
aggregate sums in dispute are Ten Thousand ($10,000.00) Dollars or more, will be
deemed to be material and adverse.
8.6 Payment of Taxes: Pay when due all taxes, assessments, and other
governmental charges to which Borrower or it's property is or will be subject
before such charges become delinquent, except that no such charge need be paid
so long as its validity or amount is being contested in good faith by
appropriate proceedings and Borrower has established a cash reserve with respect
thereto; provided, however, that any such tax, assessment, or charge shall be
paid forthwith (under protest) upon the filing of any lien securing the same,
commencement of levy, other form of execution, or any other collection action.
Borrower shall, in any case involving a contested payment due from Borrower in
excess of Five Thousand ($5,000.00) Dollars, give written notice thereof to
Crestmark.
8.7 Payment of Expenses: Pay, on demand, all pre-closing expenses incurred
by Crestmark in consummating this Agreement and the Collateral Documents,
including reasonable attorneys' fees. Pay the Service Fee on the date when due
and any and all post-closing expenses, on demand, that may arise or relate to
this Agreement, the Collateral. Documents or the Borrower, including reasonable
attorneys' fees.
8.8 Insurance: Maintain and/or cause any other Person pledging any of the
Collateral to maintain with respect to the Collateral pledged by such Person
insurance in such form and amount as is satisfactory to Crestmark, with loss
payable clauses in favor of Crestmark and providing that any losses under the
policies shall be payable to Crestmark. If Borrower fails to obtain or maintain
any required policies, then Crestmark, without waiving any Default by Borrower
relating thereto, may (but without any obligation) at any time thereafter make
such payment or obtain such coverage and take such other actions as Crestmark
deems advisable. Borrower shall not take out separate insurance concurrent in
form or contributing in the event of a loss. Borrower shall also maintain
insurance pursuant to all applicable Worker's Compensation laws, and liability
insurance for damage to persons. All such insurance shall be in such form, with
such companies and in such amounts as shall be acceptable to Crestmark and each
policy shall provide that the insurance company will provide at least thirty
(30) days notice to Crestmark prior to any cancellation or material alteration
or amendment of any policy. In the event any proceeds shall be payable to
Borrower, or otherwise become available, as a result of a casualty to any
Collateral, all such proceeds shall be the property of Crestmark, immediately
turned over to Crestmark and applied to the Indebtedness due Crestmark.
8.9 Compliance with Law: Continue at all times to comply with all laws,
ordinances, regulations or requirements of any governmental authority relating
to Borrower's business, property or affairs, including, without
<PAGE>
limitation, all environmental laws and the Fair Labor Standards Act of 1938, 29
U.S.C. 200, et seq., as amended from time to time.
8.10 Continuation of Business: Maintain and conduct its business in
substantially the same manner as such business is now or has heretofore been
carried on.
8.11 Preservation of Collateral: Maintain the Collateral and every part
thereof, in good repair, working order and condition and, from time to time,
make all repairs, renewals, replacements, additions, improvements and perform
such other maintenance on the Collateral so that at all times the efficiency and
operation of the Collateral shall be fully preserved and maintained. With
respect to Accounts, Borrower shall pursue collections diligently and present
evidence thereof to Crestmark, if requested. Borrower shall, upon request,
immediately deliver to Crestmark evidence of ownership and/or certificates of
title relative to the Collateral and shall place on or otherwise identify the
Collateral with such marks or other methods of identification sufficient to give
notice of Borrower's ownership thereof.
8.12 Dominion of Funds:
(a) The Loan shall be on dominion of funds. Borrower shall direct all
Account Debtors to mail all payments due Borrower to a post office box
owned by Crestmark at a bank acceptable to Crestmark ("Lockbox Bank"). The
Lockbox Bank shall periodically pick up, open and process the contents of
the envelopes mailed to the post office box. All payments shall be
deposited into a cash collateral account owned by Crestmark ("CCA");
Borrower shall have no right to withdraw any funds from the CCA, all of
Borrower's funds therein belong to Crestmark. All other documents included
in the envelopes shall be delivered to Borrower. Crestmark shall deduct the
funds deposited into the CCA and apply the same toward payment of the
Indebtedness, whether or not then due, in such order of application as
Crestmark shall determine. Borrower grants Crestmark and its
representatives an irrevocable power of attorney, coupled with an interest,
to endorse any checks or items, in Borrower's name, delivered or required
to be delivered to the post office box. If, notwithstanding Crestmark's
instructions to an Account Debtor, Borrower receives payments directly from
an Account Debtor, Borrower agrees not to commingle such remittances with
any of its other funds or property, and will hold the funds separate and
apart from its own funds or property, in trust for Crestmark, and
immediately deliver same to the post office box in the form received.
Crestmark shall process the envelope and its contents as if same had been
mailed directly to the post office box by the Account Debtor. Any Account
Debtors that remit payments to Borrower electronically shall be instructed
to remit funds to the CCA. If Borrower receives any funds into its
operating account via electronic transfer, it will immediately wire those
funds to the CCA.
(b) Whenever Borrower requests a Money Advance, it shall furnish to
Crestmark a Borrowing Certificate, which shall be in form and substance
acceptable to Crestmark. This Borrowing Certificate shall reflect the Line
of Credit Loan Base and the Loan Account under the Loan as of the activity
date of the report. All activity occurring since the last Borrowing
Certificate and the request for the Money Advance will be supported by
documentation and verification that is acceptable to Crestmark in its sole
discretion--by way of illustration, but not limitation, such supporting
documentation might include: sales journals, copies of invoices, copies of
delivery evidence, cash receipts journals, copies evidencing all changes to
inventory accounts (if applicable) and such other documentation as more
fully set forth in Section 10 of this Agreement. A Borrowing Certificate is
required at least once a week, but can be submitted more frequently.
(c) Borrower shall promptly notify Crestmark of any invoices which
have been rejected by any Account Debtor, which shall thereupon be
eliminated as an Eligible Account Receivable.
(d) Immediately upon learning thereof, Borrower shall inform Crestmark
in writing of the rejection of goods or services by any Account Debtor,
delays in delivery of goods, non-performance of contracts or services, and
of any assertion or threatened assertion of any claims, offsets or
counterclaims by Account Debtors.
<PAGE>
(e) Borrower shall furnish to, and inform Crestmark of, all material
or adverse information relating to the financial condition Of any Account
Debtor, immediately upon Borrower's learning thereof.
(f) Borrower acknowledges that the maintenance of the CCA pursuant to
this section is solely for Crestmark's convenience in facilitating its own
operations pursuant hereto, and that Borrower has not and shall not have
any right, title, or interest in said CCA or in the amounts deposited
therein at any time thereof.
(g) Borrower shall reimburse Crestmark for any and all charges and
expenses relating to the lockbox and the CCA.
(h) Deposits in the CCA are owned by Crestmark and shall constitute
payment on the Indebtedness when so applied by Crestmark as provided above.
Crestmark shall have no duty as to the collection or protection of checks
or instruments or the proceeds thereof, nor as to the preservation of any
rights pertaining thereto, beyond avoiding gross negligence or fraud in the
custody and preservation of items in the possession of Crestmark.
8.13 Opening Accounts: Upon request by Crestmark, Borrower shall open and
maintain its corporate accounts with Crestmark.
8.14 Notice of Default: Immediately upon becoming aware of any Default
under this Agreement, give written notice thereof to Crestmark, specifying the
nature and period of existence thereof, and what action Borrower is taking or
proposes to take with respect thereto, but such notice shall not cure the
existence of a Default or prohibit Crestmark from exercising its remedies
hereunder.
8.15 Financial Information/Reports: Within the time periods specified and
if no time period is specified, five (5) Business Days shall be deemed the time
period, deliver to Crestmark, all financial information, reports, certificates,
notices and other information herein required of Borrower, pursuant to any
provision of this Agreement or the Collateral Documents.
8.16 Verification of Accounts: Always allow Crestmark or any of its
officers, employees and agents, including Financial Control Systems, to contact
Account Debtors, in the name of Crestmark, Financial Control Systems or in the
name of Borrower, to verify the validity, amount or any other matter relating to
any Account or Collateral. Crestmark may choose to verify the Collateral and
Accounts by mail, telephone, fax or any other manner it chooses and in any
frequency Crestmark elects.
9. NEGATIVE COVENANTS:
Borrower covenants and agrees, that so long as any Money Advances are
outstanding or commitments therefore exist under this Agreement, and until all
Indebtedness due Crestmark is paid in full, it will not:
9.1 Acquisitions/Merger: Purchase or acquire obligations or stock of, or
any other interest in, any Person, or purchase all or substantially all of the
assets of any Person without the prior written consent of Crestmark.
9.2 Negative Pledge: Create, assume or otherwise suffer to exist any
mortgage, pledge or other encumbrance, or claim therefore, upon any of its
property (tangible, intangible, personal, real) or Collateral, now owned or
hereafter acquired, or increase, modify, amend, change or alter any
indebtedness, or security interest securing any such indebtedness, giving rise
to a Permitted Encumbrance, if any.
9.3 Dividends: Declare or pay any dividend, or make any other distribution
of, or with regard to, its capital stock or other equity security, or purchase
or retire any of its capital stock or other equity security. Provided, however,
with respect to any year in which Borrower is taxed by the Internal Revenue
Service as an "S" corporation, Borrower may make a distribution of profits to
its shareholders in an amount not to exceed
<PAGE>
the sum necessary to enable its shareholders to pay their personal state and
federal taxes directly attributable to the profits earned by Borrower for the
year.
9.4 Loans/Liabilities: Make a loan, or incur or assume any obligations or
liability as lender, guarantor, surety, indemnitor or otherwise with respect to
any indebtedness or other obligation of any Person.
9.5 Disposition of Assets: Voluntarily or involuntarily sell, convey, lease
or otherwise dispose of any portion of the Collateral, its Properties, or
assets, not in the ordinary course of business without the prior written consent
of Crestmark.
9.6 Capital Assets: Become obligated for the purchase or lease of real
property or other capital assets, in addition to any such arrangement now in
effect, the purchase price of which or annual rental of which, is or will be in
excess of Fifty Thousand ($50,000) Dollars in any consecutive twelve (12) month
period without the prior written consent of Crestmark.
9.7 Distributions: Make, directly or indirectly, any disbursements, loans,
advances or distributions, in money or otherwise, other than customary salary
and bonuses, to any stockholders, officers or directors.
9.8 Transactions with Affiliates/No Subsidiaries: Enter into any
transaction with any stockholders of Borrower or such stockholders, affiliates,
except on terms not less favorable than would be usual and customary in similar
transactions between persons or entities dealing at arm's length. Borrower does
not have and will not organize or acquire any subsidiaries.
9.9 Management Services: Enter into any contract for personal services or
obtaining management or special consulting or advisory services other than in
the ordinary course of business.
9.10 Other Obligations: Incur any other additional obligations by way of
loans from any other Person, without the prior written consent of Crestmark, but
no obligation of Crestmark to consent thereto shall be implied herefrom.
9.11 Redemption/Issuance: Release, redeem, retire, purchase or otherwise
acquire, directly or indirectly, any of its capital stock or other equity
security without the prior written consent of Crestmark.
9.12 Default in Payment of Other Debt: Default in the payment of any
indebtedness owed to any Person for borrowed money.
9.13 Judgment: Suffer or permit any judgment, decree or order not fully
covered by insurance to be entered by a court of competent jurisdiction against
Borrower or Guarantor or permit or suffer any writ or warrant of attachment or
any similar process to be filed against Borrower or Guarantor or against any
property or asset of Borrower or Guarantor.
10. BOOKS/RECORDS/FINANCIAL REPORTS/CERTIFICATES:
Borrower covenants and agrees, that so long as any Money Advances are
outstanding or commitments therefore exist under this Agreement, and until all
Indebtedness due Crestmark is paid in full, it will keep proper books of
accounts in a manner satisfactory to Crestmark. Crestmark shall have the right,
at any time, to verify any of the Collateral, documentation or books, whether
such documentation is furnished weekly, monthly or annually in whatever manner
and in whatever frequency it deems necessary, including through telephone
contact with customers or vendors.
10.1 Borrowing Certificates: Borrower will also furnish to Crestmark a
Borrowing Certificate, in form satisfactory to Crestmark, may be submitted daily
to Crestmark, but in all events, shall be submitted at least on a weekly basis.
The Borrowing Certificate shall be supported by invoices, a sales journal, cash
receipts journal, inventory sold and purchased journal, evidence of delivery of
goods, proof of shipment, proof of performance of services, time sheets or any
other documentation Crestmark requests in its
<PAGE>
sole discretion. With each Borrowing Certificate, Borrower will also submit to
Crestmark an updated Inventory certification listing Borrower's Inventory by
catalog and location as of the date of the report. By signing the Borrowing
Certificate, Borrower is reaffirming that no Default exists under this Agreement
and/or under any Collateral Documents an of the data of the requested borrowing.
10.2 Monthly Statements: Borrower and Inmold, Inc. will also furnish to
Crestmark monthly management prepared financial statements, balance sheets, and
profit and loss statements for the month then ended, certified to by the chief
executive or chief financial officer of Borrower. Such reports shall set forth
the financial affairs and true condition of Borrower for each month and shall be
delivered to Crestmark no later than thirty (30) days after the end of each
month. In addition, Borrower shall furnish to Crestmark the following certified
to by the chief executive or chief financial officer of Borrower within the time
periods set forth:
(a) Accounts Receivable Reports: Monthly detailed Accounts Receivable
Aging Reports no later than fifteen (15) days after the end of each month;
and
(b) Accounts Payable Reports: Monthly detailed Accounts Payable Aging
Reports no later than fifteen (15) days after the end of each month; and
10.3 Field Examinations: Borrower will also permit Crestmark to perform
quarterly field examinations of Borrower's assets and liabilities, to be
performed by Crestmark's inspector, whether a Crestmark officer or an
independent party, with fees and expenses thereof to be paid by Borrower. The
information compiled by the field examination is for Crestmark's internal use,
and Crestmark has no obligation to share the field examination, in whole or in
part, with Borrower.
10.4 Annual Statements/Projections: Borrower will also furnish and deliver
to Crestmark annual consolidating audited financial statements of Inmold, Inc.
and its subsidiaries prepared by a certified public accountant acceptable to
Crestmark. Such reports shall set forth in detail Borrower's true condition as
of the end of each of Borrower's fiscal years no later than ninety (90) days
after the end of each of Borrower's fiscal years.
10.5 Officer's Certificates: Borrower will deliver to Crestmark with each
set of financial statements delivered pursuant to Sections 10.2 and 10.3, a
certificate signed by the President, or the chief executive or chief financial
officer of Borrower (if not the President), setting forth:
(a) the information (including detailed calculations) required in
order to establish whether Borrower was in compliance with the financial
requirements set forth in this Agreement during and as of the end of the
period covered by the financial statement then being furnished; and
(b) that the signer has reviewed all of the relevant terms of this
Agreement and has made, or has caused to be made, under his or her
supervision, a review of the transactions and conditions of Borrower from
the beginning of the accounting period covered by the financial statements
being delivered therewith to the date of the certificate, and that such
review has not disclosed the existence during such period of any Default.
10.6 Inspection of Books and Records: At any reasonable time and from time
to time, Borrower will permit Crestmark or its agents to inspect and examine
Borrower's books, records and papers. Crestmark shall have the right to make
copies and abstracts thereof. Borrower will also make its officers, accountants
and consultants available to discuss Borrower's business, operations and
financial condition.
10.7 Tax Returns: Guarantor and Borrower shall each provide Crestmark with
current annual tax returns prior to April 15 of each year or if an extension is
filed, at the earlier of (a) the filing thereof or (b) the extension deadline.
<PAGE>
11. REMEDIES UPON DEFAULT:
Upon the occurrence of any Default, Crestmark can charge the Default
Interest Rate on the Note, and Crestmark has the following rights and remedies,
provided further that the rights or remedies contained herein or otherwise
available shall be cumulative and not exclusive, together with any and all other
rights and remedies which may be available, whether, contained in this
Agreement, the Collateral Documents, or available by virtue of law or equity,
including the Uniform Commercial Code and any action by Crestmark shall not
serve to release or discharge any other security, property or Collateral held by
Crestmark in connection with this transaction.
11.1 Acceleration: Crestmark can accelerate all or part of the Indebtedness
without notice or demand, and declare such amount to be immediately be due and
payable, without presentation, notice or demand, notwithstanding the maturity or
due date, if any, therein to the contrary, all of which are expressly waived by
Borrower and Guarantor.
11.2 Access to Premises/Repossession of Collateral: Crestmark or any of its
agents or representatives shall have the right to enter the premises of Borrower
or any other place(s) where the books, records and Collateral of Borrower may
then be kept and maintained, and remove all such books, records and Collateral
for such time as Crestmark may desire in order to effectively collect and
liquidate the Collateral. All expenses relating thereto, including moving
expenses, the leasing of additional facilities and the hiring of security guards
shall be borne by Borrower. Upon request by Crestmark, Borrower shall assemble
the Collateral and make it available to Crestmark at a time and place to be
designated by Crestmark which is reasonably convenient to Crestmark and
Borrower; Borrower shall fully cooperate with all of Crestmark's efforts to
preserve the Collateral and will take such actions to preserve the Collateral as
Crestmark may direct. Borrower also agrees that Crestmark shall also have the
right to peacefully retake the Collateral, and Borrower waives any right it may
have in such instances, to a judicial hearing prior to such retaking.
11.3 Disposition of the Collateral: Crestmark or any of its agents or
representatives shall have the right to sell and deliver the Collateral at a
public or private sale (by way of one or more contracts or transactions), by way
of parcels or in bulk, for cash, credit or otherwise, at such prices and upon
such terms as Crestmark or its agents deem advisable. Crestmark shall have no
obligation to preserve any rights to the Collateral or marshal any Collateral
for the benefit of any Person, including Guarantor.
11.4 Waivers: To the extent permitted by applicable law, Borrower agrees to
waive and does hereby absolutely and irrevocably waive and relinquish the
benefits and advantages of any valuation, stay, appraisement, extension or
redemption laws now or hereafter existing which, but for this provision, might
be applicable to any sale made under the judgment, order or decree of any court,
or otherwise, based on any note contemplated hereby, or on any claim for
interest on such notes, or any security interest set forth in this Agreement.
11.5 Appointment of Receiver: Crestmark shall be entitled, to the extent
provided by law, to the appointment of a receiver of the business and premises
of Borrower, and of the rents and profits derived therefrom, and all Collateral.
This appointment shall be in addition to any other rights, relief or remedies
afforded Crestmark. Such receiver, in addition to any other rights to which he
shall be entitled, shall be authorized to sell any and all property of Borrower
for the benefit of Crestmark pursuant to provisions of Michigan law and the
Uniform Commercial Code of Michigan. In the event of any deficiency, Borrower
and Guarantor shall remain liable therefor.
11.6 Injunctions: Borrower and Guarantor acknowledge that upon the
occurrence of a Default, no remedy at law will provide adequate relief to
Crestmark; therefore, Borrower agrees that Crestmark shall be entitled to
temporary and permanent injunctive, or other equitable relief in any such case
without proving actual damages, it being acknowledged that the nature of
Borrower's business dictates such relief is necessary in order to preserve the
Collateral and rights of Crestmark.
<PAGE>
11.7 Expenses: Borrower shall pay to Crestmark, on demand, any and all
expenses, including reasonable attorneys' fees and collection expenses, incurred
or paid by Crestmark in protecting or enforcing its rights under this Agreement,
the Collateral Documents or pursuant to any other document or agreement relating
to the Loan. Crestmark shall apply the net proceeds of any sale, disposition or
holding of Collateral, after deducting all costs and expenses of every kind
incurred arising from the retaking, holding, preparing for sale, selling,
leasing or collecting or in any way relating to the rights of Crestmark
hereunder, to the payment of any portion of the Indebtedness, in whole or in
part, whether due or not due, absolute or contingent, making proper rebate for
interest or discount on items not then due, and only after so applying such net
proceeds and ascertainment by Crestmark of any other amounts required by any
existing or future provision of law, need Crestmark account to Borrower for
surplus, if any. Borrower shall remain liable to Crestmark for the payment of
any deficiency of any Indebtedness, together with interest thereon, until paid.
Crestmark shall not be required to proceed against any other party, or against
any other security for any Indebtedness or pursue any other right or remedy
hereunder, or under any other instrument or agreement, but all such rights and
remedies shall be cumulative and in addition to all other rights and remedies of
Crestmark.
11.8 Enforcement of Rights: Crestmark shall be entitled to enforce its
rights hereunder and to avail itself of its security interests in the
Collateral, simultaneously or successively, in such order and priority as
Crestmark shall determine. All rights, remedies and security interests in the
Collateral shall continue in full force and effect until all Indebtedness of
Borrower and Guarantor shall be satisfied in full, and no single action or
actions shall be deemed an election of remedies.
11.9 Right of Offset: Crestmark or its assigns shall have the right of
offset against any funds (i) of Borrower or Guarantor on deposit with or in the
possession of Crestmark, (ii) of Borrower or Guarantor on deposit in any account
of Borrower established pursuant to this Agreement or the Collateral Documents.
11.10 Accounts and/or Accounts Receivable:
(a) Crestmark shall have the right to notify any and all Account
Debtors to make payment directly to Crestmark.
(b) Crestmark shall have the right in its own name or in the name of
Borrower:
(i) to demand, collect, receive payment of, receipt for and give
discharges and releases, upon payment of all or any of the Accounts
and any monies due or to become due in respect 'thereof and to notify
all Account Debtors of the Default and to direct all Account Debtors
to pay Crestmark directly; and
(ii) to reasonably settle, compromise, compound, or adjust all or
any of the Accounts which are legitimately in dispute; and
(iii) to commence and prosecute any and all suits, actions, or
proceedings in law or in equity in any court of competent jurisdiction
to collect or otherwise realize on all or any of the Accounts or to
enforce any rights in respect thereof; and
(iv) to reasonably settle, compromise, compound, adjust or defend
any actions, suits, or proceedings relating or pertaining to all or
any of the Accounts; and
(v) to file any claim or take any other action or proceeding
which Crestmark may deem necessary or appropriate to protect and
preserve and realize upon the security interest of Crestmark in the
Accounts and the proceeds thereof; and
(vi) generally to sell, assign, transfer, pledge, make any
agreement with respect to or otherwise reasonably deal with all or any
of the Accounts as fully and completely as though Crestmark were the
absolute owner thereof for all purposes. Borrower hereby waives any
statutory rule or constitutional restriction, prohibition, or
procedure in connection with the
<PAGE>
rights granted Crestmark in this subsection and gives Crestmark the
right to peaceful repossession of the Collateral without hearing or
court order.
11.11 Application of Proceeds: The proceeds of any sale or other
disposition of the Collateral shall be applied by Crestmark, first upon all
expenses authorized by this Agreement, the Collateral Documents or by law,
including reasonable attorney's fees incurred by Crestmark; the balance of the
proceeds of such sale or other disposition shall be applied to the payment of
the Indebtedness, first to interest, then to principal, then to other
Indebtedness, and the surplus, if any, shall be paid over to the Borrower or to
such other Person or Persons as may be entitled thereto under applicable law.
The Borrower and Guarantor shall remain liable for any deficiency, which the
Borrower or Guarantor shall pay to Crestmark immediately upon demand.
Nothing herein contained shall be construed to make Crestmark an agent
or trustee of Borrower or guarantor for any purpose whatsoever, and
Crestmark shall not be responsible or liable for any shortage, discrepancy,
damage, loss or destruction of any part of the Collateral wherever the same
may be located and regardless of the cause thereof (except to the extent it
is determined by final judicial decision that Crestmark's act or omission
constituted gross negligence or willful misconduct). Crestmark will not,
under, circumstances or in any event whatsoever, have any liability for any
error or omission or delay of any kind occurring in the settlement,
collection or payment of any of the Accounts, liquidation of the Collateral
or any instrument received in payment thereof or for any damage resulting
therefrom (except to the extent it is determined by a final judicial
decision that Crestmark's error, omission or delay constituted gross
negligence or willful misconduct). Crestmark does not, by anything herein
or in any assignment or otherwise, assume any of the Borrower's or
Guarantor's obligations under any contract or agreement assigned to
Crestmark, and Crestmark shall not be responsible in any way for the
performance by the Borrower or Guarantor of any kind of the terms and
conditions thereof.
12. NOTICE:
Any notice served to or upon Borrower shall be given to Borrower for all
purpose by being sent certified mail, return receipt requested, postage prepaid,
or other expedited mail service, addressed to Borrower at the address
hereinabove set forth, or at such other address as shall be designated by
Borrower to Crestmark in writing, and any such notice shall be given to
Crestmark, for all purposes, by being sent certified mail, return receipt
requested, postage prepaid, or other expedited mail service, to 850 East Long
Lake Road, Troy, Michigan 48098 Michigan, or' at such other address as Crestmark
may designate to Borrower in writing.
13. TERMINATION:
Crestmark may terminate this Agreement and its obligations hereunder upon
demand, at its sole discretion and absent the existence of a Default. All of
Borrower's and Guarantor's obligations, duties, promises, covenants,
representations or warranties under this Agreement and Borrower's and
Guarantor's obligations, duties, promises, covenants, representations or
warranties under the Collateral Documents, shall continue and remain in full
force and effect until (i) the Indebtedness is irrevocably paid in full in cash
and (ii) Borrower receives written notification of the termination of Loan from
Crestmark. Upon demand, the Indebtedness, the Note, Money Advances, Loan, and
all other obligations due Crestmark from Borrower, shall then be immediately due
and payable, regardless of any date, if any, to the contrary, plus the interest
accrued thereon until payment in full.
14. MISCELLANEOUS:
14.1 Binding Effect: This Agreement shall be binding upon and shall inure
to the benefit of Borrower and Crestmark, and their respective successors and
assigns, provided that the foregoing shall not authorize any assignment by
Borrower of its rights or duties hereunder, which assignment,
<PAGE>
in whole or in part, by Borrower shall not be permissible.
14.2 Delay/Waiver: No delay or failure of Crestmark in exercising any
right, remedy, power or privilege hereunder shall affect such right, remedy,
power or privilege, nor shall any single or partial exercise thereof preclude
the exercise of any other right, remedy, power or privilege. No delay or failure
of Crestmark at any time to demand strict adherence to the terms of this
Agreement shall be deemed to constitute a course of conduct inconsistent with
Crestmark's right at any time to demand strict adherence to the terms of this
Agreement or the Collateral Documents.
14.3 Incorporation by Reference: The Collateral Documents are incorporated
herein by reference, and in the event any provision thereof is inconsistent with
the provisions of this Agreement, then this Agreement shall be deemed paramount
unless the rights and remedies of Crestmark would be adversely affected or
diminished thereby.
14.4 Applicable Law: This Agreement and the Collateral Documents shall be
interpreted, and the rights of the parties hereunder shall be determined, under
the laws of the State of Michigan.
14.5 Further Assurances: Borrower, from time to time, upon written request
of Crestmark, will make, execute, acknowledge and deliver all such further and
additional instruments and take all such further action as may be required, to
carry out the intent and purpose of this Agreement and to provide for the
payment of the Loan, note(s), borrowings and Money Advances, according to the
intent and purpose herein and therein expressed.
14.6 Hold Harmless/Indemnity: Borrower hereby assumes responsibility and
liability for, and hereby holds harmless and indemnifies Crestmark from and
against, any and all liabilities, demands, obligations, injuries, costs, damages
(direct, indirect or consequential), awards, loss of interest, principal, or any
portion of the Indebtedness, charges, expenses, payments of monies and
reasonable attorney fees, incurred or suffered, directly or indirectly, by
Crestmark and/or asserted against Crestmark by any Person whatsoever, including
Borrower or Guarantor, which arise in whole or in part out of this Agreement, or
the Collateral Documents, or the relationship herein set forth or the exercise
of any right or remedy including the realization, disposition or sale of the
Collateral, or any portion thereof, or the exercise of any right in connection
therewith even if the above are caused by the sole action, inaction, omission or
negligence of Crestmark, but Borrower or Guarantor shall not be liable if the
damages result solely from the fraud or gross negligence of Crestmark.
14.7 Limitation of Liability: Neither Crestmark nor any of its affiliates,
directors, officers, agents, attorneys or employees shall be liable to Borrower,
Guarantor or any of Borrower's affiliates for any action taken, or omitted to be
taken, by it or them or any of them under this Agreement or any of the
Collateral Documents or in connection herewith or therewith, except that no
person shall be relieved of any liability imposed by law for gross negligence or
fraud. Except for claims of gross negligence or fraud, no claim may be made by
Borrower, Guarantor or by any of Borrower's affiliates, directors, officers,
agents, attorneys or employees, for any special, indirect or punitive damages in
respect of any breach or wrongful conduct (whether the claim is based on
contract or tort or duty imposed by law) arising out of or related to this
Agreement or any other Collateral Documents, or the transactions contemplated
hereby or thereby, or any act, omission or event occurring in connection
herewith or therewith. Except for claims of gross negligence or fraud, Borrower,
on its behalf and on behalf of its affiliates, and Guarantor hereby waive,
release and agree not to sue upon any claim for any such damages, whether or not
accrued, and whether or not known or suspected to exist in its favor.
14.8 Survival and Continuation: All representations, warranties, covenants,
indemnifications, consents and agreements contained in this Agreement and/or any
of the Collateral Documents shall survive the execution of this Agreement, the
Collateral Documents and any investigations by Crestmark and shall be, and
continue at all times while any Indebtedness is outstanding, to be true and
accurate. Borrower shall immediately notify Crestmark, in writing, if any of the
foregoing are or have become untrue.
<PAGE>
14.9 Complete Agreement: This Agreement incorporates and/or contains the
entire agreement of the parties hereto and none of the parties shall be bound by
anything not expressed in writing.
14.10 Severability: If any provision of this Agreement is in conflict with
any statute or rule of law or is otherwise unenforceable for any reason, then
that provision shall be deemed null and void to the extent of the conflict or
unenforceability and shall be deemed severable. The offending provision shall
not invalidate any other provision of this Agreement.
14.11 Amendment: This Agreement and the Collateral Documents may only be
amended, modified or extended by written instrument executed by Crestmark and
Borrower.
14.12 Duplicate Originals: Two or more duplicate originals of this
Agreement may be signed by the parties, each of which shall be an original but
all of which together shall constitute one and the same instrument.
14.13 Time of Essence: Time shall be of the essence in this Agreement.
14.14 Reinstatement: Borrower further agrees that to the extent Borrower
makes a payment or payments to Crestmark, which payment or payments or any part
thereof are subsequently invalidated, declared to be fraudulent or preferential,
set aside and/or required to be repaid to a trustee, receiver or any other party
under any bankruptcy act, state or federal law, common law or equitable cause,
then to the extent of such payment or repayment, the obligation or part thereof
intended to be satisfied shall be revived and continued in full force and effect
as if said payment had not been made.
14.15 Payable an Demand: The Loan is payable on demand. Nothing contained
in this Agreement or the Collateral Documents, including, but not limited to,
the reference to a Default, shall be construed to prevent Crestmark from making
demand, without notice and without reason, for immediate payment of all or any
part of the Loan whether or not a Default has occurred. Demand for repayment of
the Loan by Crestmark can be made at any time or times.
14.16 CONSENT TO JURISDICTION: BORROWER AND GUARANTOR HEREBY WAIVE ANY PLEA
OF JURISDICTION OR VENUE ON THE GROUNDS THAT BORROWER OR GUARANTOR ARE NOT
RESIDENTS OF OAKLAND COUNTY, MICHIGAN, AND HEREBY SPECIFICALLY AUTHORIZE, AT THE
OPTION OF CRESTMARK, ANY ACTION BROUGHT TO ENFORCE BORROWER'S AND/OR GUARANTOR'S
OBLIGATIONS TO CRESTMARK TO BE INSTITUTED AND PROSECUTED IN EITHER THE CIRCUIT
COURT OF OAKLAND 'COUNTY, MICHIGAN, OR IN THE UNITED STATES DISTRICT COURT FOR
THE EASTERN DISTRICT OF MICHIGAN, AT THE' OPTION OF CRESTMARK, AND BORROWER AND
GUARANTOR HEREBY SUBMIT TO THE JURISDICTION OF SUCH COURT.
14.17 Release of Claims Against Crestmark: in consideration of Crestmark's
making the Loan described in this Agreement, Borrower and the Guarantor do each
hereby release and discharge Crestmark of and from any and all claims, harm,
injury, and damage of any and every kind, known or unknown, legal or equitable,
which Borrower or Guarantor have against Crestmark from the date of Borrower's
first contact with Crestmark up to the date of this Agreement. Borrower and the
Guarantor confirm to Crestmark that they have reviewed the effect of this
release with competent legal counsel of their choice, or have been afforded the
opportunity to do so, prior to execution of this Agreement and the Collateral
Documents and each acknowledges and agree that Crestmark is relying upon this
release in extending the Loan to Borrower.
14.18 Waiver of Jury Trial: BORROWER AND GUARANTOR DO EACH KNOWINGLY AND
VOLUNTARILY AND INTELLIGENTLY WAIVE THEIR CONSTITUTIONAL RIGHT TO A TRIAL BY
JURY WITH RESPECT TO ANY CLAIM, DISPUTE, CONFLICT OR CONTENTION, IF ANY, AS MAY
ARISE UNDER THIS AGREEMENT OR UNDER THE COLLATERAL DOCUMENTS, AND AGREE THAT ANY
LITIGATION BETWEEN THE PARTIES CONCERNING THIS AGREEMENT AND THE COLLATERAL
DOCUMENTS SHALL BE HEARD BY A COURT OF COMPETENT JURISDICTION SITTING WITHOUT A
JURY. BORROWER AND GUARANTOR HEREBY, CONFIRM TO CRESTMARK THAT THEY HAVE
REVIEWED THE EFFECT OF THIS WAIVER OF JURY TRIAL WITH
<PAGE>
COMPETENT LEGAL COUNSEL OF THEIR CHOICE, OR HAVE BEEN AFFORDED THE OPPORTUNITY
TO DO SO, PRIOR TO SIGNING THIS AGREEMENT AND THE COLLATERAL DOCUMENTS AND EACH
ACKNOWLEDGE AND AGREE THAT CRESTMARK IS -RELYING UPON THIS WAIVER IN EXTENDING
THE LOAN TO BORROWER.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day
and year first appearing above.
CRESTMARK: BORROWER:
Crestmark Bank, Seville Plastics, Inc.
a Michigan banking Corporation a Michigan corporation
By: Tobin G. Dahm By: Filipp Kreissl
--------------------------- ------------------------
Tobin G. Dahm Filipp Kreissl
Its: Vice President Its: Chairman
<PAGE>
AGREEMENT OF GUARANTOR
By executing this Agreement Guarantor: (1) acknowledges and agrees that the
Guarantor has completely read and understands this Agreement; (2) consents to
all of the provisions of this Agreement relating to Borrower; (3) acknowledges
and agrees that the Guaranty executed and delivered by the undersigned shall
continue in full force and effect; (4) acknowledges receipt of good and lawful
consideration for the execution of the guaranty agreement; (5) agrees promptly
to furnish the financial statements and information required by this Agreement;
(6) agrees to all of those portions of this Agreement which apply to Guarantor;
(7) acknowledges and agrees that this Agreement has been freely executed without
duress and after an opportunity was provided to Guarantor for review of this
Agreement and the guaranty agreement by competent legal counsel of Guarantor's
choice; and (8) acknowledges that Bank has provided Guarantor with a copy of
this Agreement, the guaranty agreement and the other Collateral Documents.
GUARANTOR:
G.P. Plantics, Inc.
a Michigan corporation
/s/ Filipp Kreissl
--------------------------
BY: Filipp Kreissl
Its: Chairman
Inmold, Inc.
an Indiana corporation
/s/ Filipp Kreissl
--------------------------
BY: Filipp Kreissl
Its: Chairman
<PAGE>
EXHIBIT A
PERMITTED EMCUMBRANCES
1. That certain financing statement filed March 5, 1999 with the Michigan
Secretary of State, showing Borrower as debtor and the U.S. Small Business
Administration as secured party relating to two 1973 Van Dorn Molding Machines.
<PAGE>
PROMISSORY NOTE
(LINE OF CREDIT)
Principal Amount: Troy, Michigan
$350,000
Due Date: ON DEMAND Dated: April 6, 1999
FOR VALUE RECEIVED, the undersigned, (hereinafter referred to as
"Borrower") promises to pay ON DEMAND to the order of Crestmark Bank, a Michigan
banking corporation (hereinafter referred to as "Crestmark"), at its offices
located at 850 East Long Lake Road, Troy, Michigan 48098, or at such other place
as Crestmark may designate in writing, the principal sum of up to THREE HUNDRED
FIFTY THOUSAND AND NO/100 ($350,000) DOLLARS, plus interest and other charges as
hereinafter provided, in lawful money of the United States.
The unpaid principal balance outstanding from time to time under this Note
shall bear interest on the basis of a year of 360 days for the actual number of
days the principal is outstanding, at a rate of interest (the "Effective
Interest Rate") which is equal to TWO PERCENT (2%) per annum in excess of the
Wall Street Journal Prime Rate (the "Index") as such index may vary from time to
time (but not in excess of the maximum rate permitted by law). The term "Wall
Street Journal Prime Rate" as used herein shall mean that rate of interest
reported daily in the Wall Street Journal as the Prime Rate, as such rate may
vary from time to time. Borrower understands and agrees that the Effective
Interest Rate payable to Crestmark under this Note shall be determined by
reference to the Index and not by reference to the actual rate of interest
charged by Crestmark or any other bank to any particular (borrowers). If the
Index shall be decreased or increased, then the Effective Interest Rate under
this Note shall be decreased or increased by a like amount effective the day of
each increase or decrease in the Index.
Interest on amounts disbursed and outstanding from time to time shall be
paid monthly, in arrears, commencing on the tenth (10th) day of May, 1999, and
continuing on the tenth (10th) day of each month thereafter for as long as any
Indebtedness remains outstanding. Payments due and payable on a day on which
Crestmark is not open for business are due on the next succeeding business day.
Principal and all other Indebtedness shall be repaid from Account collections
and any other funds of Borrower deposited in the lockbox and cash collateral
account in accordance with the terms of the Dominion of Funds section of the
Loan Agreement (as hereinafter defined), but in all events, all outstanding
Indebtedness shall be due and payable on demand.
All Money Advances, accrued interest thereon and expenses due hereunder
and/or under the Loan Agreement shall be charged to a Loan Account in Borrower's
name on Crestmark's books, and Crestmark shall debit to such account the amount
of each loan or advance when made and credit to such account the amount of each
repayment as provided for in the Loan Agreement. Crestmark shall render Borrower
from time to time a statement of account setting forth the Borrower's loan
balance in said Loan Account which statement shall be deemed to be correct and
accepted by and binding upon Borrower, unless Crestmark receives a written
statement of exceptions within ten (10) Business Days after such statement has
been rendered to Borrower. Such statement of account shall be prima facie
evidence of the Money Advances, accrued interest thereon and expenses due
hereunder and/or under the Loan Agreement and owing to Crestmark by Borrower.
This Note is a Note under which Money Advances, repayment and readvances
may be made from time to time. Money Advances and readvances shall be made in
accordance with the provisions of the Loan Agreement at the sole discretion of
Crestmark. If, and in the event at any time(s) prior to demand, Borrower repays
all Money Advances outstanding hereunder and all interest accrued thereon, a
readvance hereunder shall automatically reinstate this Note and its terms.
Any payment made by mail will be deemed tendered and received only upon
actual receipt, promptly on the date due for each such payment as herein
required (time being of the essence), at the address of Crestmark designated for
such payment whether or not Crestmark has authorized payment by mail or
<PAGE>
any other manner. Borrower hereby expressly assumes all risk of loss or
liability resulting from non-delivery or delay in delivery of any payment
transmitted by mail or in any other manner.
No delay or failure of Crestmark in exercising any right, remedy, power or
privilege hereunder shall affect such right, remedy, power or privilege, nor
shall any single or partial exercise thereof preclude the exercise of any other
right, remedy, power or privilege. No delay or failure of Crestmark at any time
to demand strict adherence to the terms of this Note shall be deemed to
constitute a course of conduct inconsistent with Crestmark's right at any time
to demand strict adherence to the terms of this Note.
If Crestmark has not demanded payment on this Note, and Borrower elects to
pay this Note, in full or in part, by refinancing with a source of funds other
than Borrower's operations, Borrower may do so, but only upon the simultaneous
payment of the following exit fee (i) prior to may 1, 2000 the exit fee is
SEVENTEEN THOUSAND FIVE HUNDRED AND NO/100 ($17,500) DOLLARS, (ii) on and after
May 1, 2000, but prior to May 1, 2001, the exit fee is TEN THOUSAND FIVE HUNDRED
AND NO/100 ($10,500) DOLLARS. Notwithstanding the foregoing, if Crestmark is a
participating lender in the re-financing of G.P. Plastics, Inc., a sister
company of Borrower, the foregoing exit fees will be waived. No partial
prepayment shall affect the obligation of 'the Borrower to continue the regular
payments hereinbefore mentioned.
Nothing herein contained, nor any transaction relating thereto, or hereto,
shall be construed or operate to require Borrower to pay, or be charged,
interest at a rate greater than the maximum allowed by law. Should any interest
charged, paid or payable by Borrower in connection with this Note or any other
document delivered in connection herewith, result in the charging, payment or
earning of interest in excess of the maximum allowed by law, then any and all
such excess shall be and the same is hereby waived by Crestmark, and any and all
such excess paid shall be automatically credited against and in reduction of the
principal due under this Note.
Upon the occurrence of a Default as set forth in the Loan Agreement, which
includes failure to pay the Indebtedness on demand, Crestmark may declare all or
part of the Indebtedness, including, without limitation, the principal balance
and all accrued interest, to be immediately due an payable, together with (to
the extent permitted under applicable law) the costs, expenses, attorney's fees,
and outside consultants, fees reasonably incurred by Crestmark in collecting or
enforcing payment. During any period of a Default, the outstanding amount of the
Indebtedness shall bear interest at a rate which is equal to SIX PERCENT (6%)
per annum greater than the Effective Interest Rate otherwise charged hereunder
(the "Default Rate") Furthermore, upon the occurrence of a Default, Crestmark
has all of the rights and remedies provided at law or equity or by agreement,
including, without limit, those under the Loan Agreement. These remedies are
cumulative and not exclusive. If any required installment is not paid within ten
(10) days from the date same is due, then, at the option of Crestmark, in
addition to all other sums due hereunder, including the Default Rate, a late
charge of not more than FIVE CENTS ($.05) for each dollar of the installment so
overdue may be charged in order to compensate Crestmark for additional costs and
expenses which will be incurred by Crestmark as a result of such late payment.
Borrower acknowledges that this Note matures upon issuance and that
Crestmark, at any time, without notice and with or without reason, may demand
that this Note be immediately paid in full or in part. The demand nature of this
Note shall not be modified by reference to a Default in this Note or in the Loan
Agreement or Collateral Documents. For purposes of this Note, to the extent
there is reference to a Default such reference is for the purpose of permitting
Crestmark to accelerate the Indebtedness not on a demand basis and/or to receive
interest at the Default Rate provided in this Note or in the document evidencing
the relevant Indebtedness. It is expressly agreed that Crestmark may exercise
its demand rights under this Note whether or not a Default has occurred.
Crestmark, with or without reason and without notice, may from time to time make
demand for partial payments under this Note and these demands shall not preclude
Crestmark from demanding at any time that this Note be immediately paid in full.
All payments under this Note shall be in immediately available United States
funds, without setoff or counterclaim. Crestmark shall have the right to collect
and apply any
<PAGE>
payments due under this Note by directly deducting, applying, off setting or
debiting any funds in the commercial account ("CCA") established in the Dominion
of Funds section of the Loan Agreement.
Borrower hereby grants to Crestmark a security interest in Crestmark's own
indebtedness or liability to Borrower, if any, however evidenced, including a
security interest in all of Borrower's bank deposits, instruments, negotiable
documents and chattel paper which at any time are in the possession or control
of Crestmark as further security for repayment of the Indebtedness of the
Borrower.
All payments hereunder shall, at option of Crestmark, first be applied
against all expenses of Crestmark, then accrued interest, and the balance
against principal. Acceptance by Crestmark of any payment in an amount less than
the amount then due shall be deemed an acceptance on account only, and the
failure to pay the entire amount then due shall be and continue to be a Default,
and at any time thereafter and until the entire amount then due has been paid,
Crestmark shall be entitled to exercise any and all rights it possesses.
Borrower hereby waives presentment for payment, demand, notice of
non-payment, notice of protest and protest of this Note, diligence in collection
or bringing suit. The liability of Borrower shall be absolute and unconditional,
without regard to the liability of any other party hereto.
This Note is executed pursuant to and secured by a Loan and Security
Agreement dated of even date herewith as the same may be amended, restated,
modified or altered from time to time (the "Loan Agreement") and the Collateral
and Collateral Documents therein defined and described. Reference is hereby made
to said Loan Agreement and Collateral Documents for additional terms relating to
the transaction giving rise to this instrument, the security given for this
instrument and additional terms and conditions under which this instrument
matures, accelerates or may be prepaid.
ADDRESS: BORROWER:
3925 Industrial Drive Seville Plastics, Inc.,
Rochester Hills, MI 48309 a Michigan Corporation
By: Filipp Kreissl
--------------------------
Filipp Kreissl
Its: Chairman
Tax ID Number: 38-2432661
<PAGE>
CORPORATE
GUARANTY
DATED: April 6, 1999
PARTICULAR TERMS - DEFINITIONS
As used in this Guaranty, the following terms and expressions have the
respective meanings indicated opposite each of them:
Guarantor:
Name: G.P. Plastics, Inc.,
a Michigan Corporation
Address: 3910 Industrial Drive
Rochester Hills, Michigan 48309
Bank:
Name: Crestmark Bank, a Michigan banking corporation
Address: 850 East Long Lake Road Troy, Michigan 46098
Borrower:
Name: Seville Plastics, Inc.,
a Michigan corporation
Address: 3909 Industrial Drive
Rochester Hills, Michigan 48309
Note:
Type: Promissory Note (Line of Credit)
Amount: $350,000.00
Date: Dated of even date herewith, including any extensions,
renewals, amendments or modifications thereof
Loan Agreement: Loan and Security Agreement dated of even date
herewith, including any extensions, renewals amendments
or modifications thereof
Collateral: As defined in the Loan Agreement
Collateral
Documents: As defined in the Loan Agreement
Indebtedness: As defined in the Loan Agreement
THIS GUARANTY, above-dated, by Guarantor to Bank is made to induce Bank to
make the loan evidenced by the Note to Borrower and because Guarantor, who is an
affiliate of Borrower and whose economic success is linked to Borrower through
various working relationships, has determined that executing and delivering this
Guaranty is in the Guarantor's best interest and is to the financial benefit of
Guarantor, and for other good and valuable consideration, the receipt of which
is hereby acknowledged. THE GUARANTOR AGREES AS FOLLOWS:
1. Consideration/Nature of Guaranty: In consideration of and in order to
induce Bank to make the loan evidenced by the Note to Borrower and other good
and valuable consideration, the receipt of which is hereby acknowledged,
Guarantor hereby absolutely, irrevocably and unconditionally guaranties to Bank:
(a) the full, prompt and unconditional payment, and not just the collectability
of, the indebtedness, including, but not limited to, principal and interest on,
the Note when due, whether on demand, at maturity, pursuant to mandatory or
optional prepayments, by acceleration or
<PAGE>
otherwise, at the time, place and at the rate described in, and otherwise
according to the terms of the Loan Documents (as defined in Paragraph 3); and
(b) the punctual and faithful performance and observation by Borrower of all
duties, agreements, covenants, representations and obligations of Borrower
contained in the Loan Documents, including but not by way of limitation, the
affirmative covenants, the negative covenants and the truth and accuracy of all
representations and warranties therein set forth.
2. Absolute and Unconditional obligation: This Guaranty is an absolute,
continuing, unconditional, and irrevocable guaranty and Guarantor shall not be
relieved from any obligations under this Guaranty until such time as this
Guaranty has been terminated in accordance with Paragraph 14. The obligations of
Guarantor shall continue notwithstanding any defect in the genuineness,
validity, regularity or enforceability of the Indebtedness or the Loan
Documents, or any other circumstances whether or not referred to herein, which
might otherwise constitute a legal or equitable discharge or defense of a surety
or guarantor.
3. The Loan Documents: The Loan Agreement and Collateral Documents and all
other related instruments, documents and writings (sometimes hereinafter
collectively referred to as the "Loan Documents") are hereby incorporated into
and made a part of this Guaranty by reference, with the same force and effect as
if fully set forth herein.
4. Continuation of Liability: The liability and obligations of Guarantor
shall in no way be affected, impaired, diminished or released by: (a) any
amendment, amendment and restatement, alteration, extension, consolidation,
renewal, waiver, indulgence, extension of time regarding performance or other
modification of the Indebtedness or the Loan Documents; (b) any settlement,
release, discharge or compromise whatsoever relating to the Loan Documents, the
Indebtedness or relating to Borrower, any other guarantor or any other party
liable for the Indebtedness; (c) any subordination of payments under the
Indebtedness, the Collateral or the Loan Documents to any other debt or claim;
(d) any substitution, exchange, release or other disposition of all or any part
of the Indebtedness or the Loan Documents; (e) any failure, delay, neglect, or
omission to act by Bank in connection with the Indebtedness, the Loan Documents
or the Collateral; (f) any advances for the purpose of performing any covenant
or agreement of Borrower, or curing any breach or event of default in the Loan
Documents; (g) the filing by or against Borrower or the discharge or release of
any obligations of Borrower, any other guarantor or of any other person now or
hereafter liable on the Indebtedness by reason of bankruptcy, insolvency,
reorganization or other debtor's relief afforded Borrower pursuant to the
present or future provisions of the Bankruptcy Code or any other state or
federal statute or by the decision of any court; or (h) any other matter whether
similar or dissimilar to the foregoing.
5. Unconditional Waiver of all Defenses: Guarantor unconditionally,
absolutely and irrevocably waives each and every defense which under principles
of guaranty or suretyship law would otherwise operate to impair or diminish the
liability of Guarantor for the Indebtedness. without limiting the generality of
the foregoing waiver, Guarantor agrees that none of the following acts,
omissions or occurrences shall diminish or impair the liability of Guarantor in
any respect and Guarantor waives: (a) notice of acceptance of this Guaranty and
of creations of Indebtedness of Borrower to Bank; (b) presentment and demand for
payment of any Indebtedness of Borrower; (c) protest, notice of protest, and
notice of dishonor or default with respect to any of the Indebtedness or the
Loan Documents; (d) all other notices to which Guarantor might otherwise be
entitled; (e) any demand for payment under this Guaranty; (f) any defense
arising by reason of any disability or any other defense of Borrower; and (g)
any right or claim of right to cause a marshaling of Borrower's assets, and it
is agreed that Bank shall be under no duty to marshal the assets of Borrower for
Guarantor's benefit or any third party. No notice to or demand on Guarantor
shall be deemed to be a waiver of the obligation of Guarantor or of the right of
Bank to take further action without notice or demand as provided herein. No
modification or waiver of the provisions of this Guaranty shall be effective
unless in writing and no waiver shall be applicable except in the specific
instance for which it is given.
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<PAGE>
6. Immediate Liability/Exercise of Rights By Bank: This is an irrevocable,
unconditional and absolute guaranty of payment and performance and Guarantor
agrees that the liability of Guarantor on this Guaranty shall be immediate and
shall not be contingent upon (i) the exercise or enforcement by Bank of whatever
remedies it may have against Borrower, any other guarantor, or any other person
or entity, or (ii) the enforcement of any lien or realization upon any security
or Collateral Bank may at any time possess. At the election of Bank, any one or
more successive and/or concurrent actions may be brought hereon against
Guarantor, either in the same action, if any, brought against Borrower, or
another guarantor, or in separate actions, as often as Bank, in its sole
discretion, may deem advisable. No election to proceed in one form of action or
proceeding, or against any party, or on any obligation, shall constitute a
waiver of Bank's right to proceed in any other form of action or proceeding or
against other parties unless Bank has expressly waived such right in writing.
Specifically, but without limiting the generality of the foregoing, no action or
proceeding by Bank against Borrower, or another guarantor under any document or
instrument evidencing or securing the Indebtedness, or this Guaranty, including
but not by way of limitation, the Loan Documents shall serve to diminish the
liability of Guarantor, except to the extent Bank irrevocably realized payment
in cash by such action or proceeding. Receipt by Bank of payment or payments
with knowledge of the breach of any provision of the Loan Documents shall not be
deemed a waiver of such breach. All rights, powers and remedies of Bank
hereunder and under any other agreement now or at any time hereafter in force
between Bank and Guarantor shall be cumulative and not alternative and shall be
in addition to all rights, powers and remedies given to Bank by law.
7. Subordination/Subrogation: In the event that Guarantor shall advance or
become obligated to pay any sums to Borrower, or in the event that for any
reason Borrower or any subsequent owner of any Collateral is now or shall
hereafter become indebted to Guarantor, the amount of such indebtedness shall at
all times be subordinate as to lien, time of payment and all other respects, to
the amounts owing to Bank by Borrower. Furthermore, until the Indebtedness is
paid in full, Guarantor hereby absolutely, irrevocably and unconditionally
waives all rights Guarantor may have, at law or in equity to seek or claim
subrogation (including any right of subrogation hereafter arising against
Borrower resulting from a right of contribution from any other Guarantor)
contribution, indemnification, or any other form of reimbursement from Borrower
or from any other Guarantor by virtue of any payment(s) made to Bank under this
Guaranty or otherwise. Interest will accrue from the date(s) the payment(s) upon
the Indebtedness was originally made. Guarantor agrees to indemnify and hold
Bank harmless from and against any and all claims, actions, damages, costs, fees
and expenses including, without limitation, reasonable attorney fees incurred by
Bank in connection with Guarantor's exercise of any right of subrogation,
contribution, indemnification or recourse with respect to this Guaranty, and
also with respect to Bank's defending any preference or fraudulent conveyance
claim or action brought against Bank in any bankruptcy proceeding concerning
Borrower or any Guarantor. Bank has no duty to enforce or protect any rights
which the undersigned may have against Borrower or any other Person and
Guarantor assumes full responsibility for enforcing and protecting these rights.
8. Representations and Warranties/N6tice/Financial Statements: Guarantor
represents, warrants and covenants to Bank that, as of the date of this
Guaranty: (a) the fair salable value of Guarantor's assets exceeds its
liabilities; (b) Guarantor is meeting its current liabilities as they mature;
(c) any financial statements of Guarantor furnished Bank are true and correct
and include all contingent liabilities of Guarantor; (d) since the date of any
financial statements furnished to Bank, no material adverse change has occurred
in the financial condition of Guarantor; (e) there are no pending or threatened
material court or administrative proceedings or undischarged judgments against
Guarantor, and no federal or state tax liens have been filed or threatened
against Guarantor, nor is Guarantor in default or claimed default under any
agreement for borrowed money. Guarantor agrees to immediately give Bank written
notice of any material adverse change in its financial condition, including but
not limited to litigation commenced, tax liens filed, default claimed under
indebtedness for borrowed money or bankruptcy proceedings commenced by or
against Guarantor. Guarantor shall
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<PAGE>
deliver, timely to Bank, its annual financial statements for the preceding
fiscal year; and at such reasonable times as Bank requests shall furnish its
current financial statements to Bank. Guarantor is fully aware of the financial
condition of Borrower. Guarantor delivers this Guaranty based solely upon its
own independent investigation and in no part upon any representation or
statement of Bank with respect thereto. Guarantor is in a position to and hereby
assumes full responsibility for obtaining any additional information concerning
Borrower's financial condition as Guarantor may deem material to its obligations
hereunder; and Guarantor is not relying upon, nor expecting, Bank to furnish it
any information in Bank's possession concerning Borrower's financial condition.
9. Expenses/Preferential Payments: Guarantor further agrees to pay all
expenses incurred by Bank in connection with the enforcement of Bank's rights
under the Loan Documents, this Guaranty, the collection of the Indebtedness or
in the event Bank is a party to any litigation because of the existence of the
Indebtedness, the Loan Documents or this Guaranty, as well as court costs,
collection charges and reasonable attorney fees and disbursements. Guarantor
further agrees that to the extent Borrower makes a payment or payments to Bank,
which payment or payments or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver or any other party under any bankruptcy act, state
or federal law, common law or equitable cause, then to the extent of such
payment or repayment, the obligation or part thereof intended to be satisfied
shall be revived and continued in full force and effect as if said payment had
not been made.
10. Transfer of Assets: Guarantor further agrees that until Borrower's
Indebtedness to Bank is paid in full, Guarantor will not, without Bank's prior
written consent: (i) make any voluntary transfer of any of Guarantor's assets
which would have the effect of materially diminishing Guarantor's present net
worth or (ii) guaranty the debts or obligations of any other Person.
11. Reduction of Indebtedness: Guarantor agrees that any Indebtedness from
revolving loans will not be deemed repaid or reduced by collection and
subsequent relending of the proceeds of accounts, chattel paper and similar
Collateral.
12. Assignability/Binding Effect: This Guaranty shall be assignable by Bank
without notice to Guarantor and shall inure to the benefit of Bank and to any
subsequent successors and assigns. Each reference herein to Bank shall be deemed
to include its successors and assigns, in whose favor the provisions of this
Guaranty shall also run. in the event of the death of Guarantor, this Guaranty
shall continue in effect against the estate of said Guarantor. The pronouns and
relative words herein used shall be read as if written in the plural, feminine,
masculine or neuter form so as to appropriately refer to the parties designated.
13. Joint and Several Liability: The term "Guarantor" shall mean each
person executing this Guaranty, each individually and together collectively, and
the Guarantor's and any other guarantor's obligations, including, those of
Inmold, Inc., an Indiana corporation, to Bank shall be joint and several.
14. Termination. Notwithstanding anything contained herein to the contrary,
the liability of Guarantor shall be terminated only in the event that (i)
Borrower has irrevocably paid Bank in cash and in full the Indebtedness and (ii)
the Loan Agreement is terminated. The revocation, termination, discharge or
release, for any reason, of a guaranty of the Indebtedness by or on behalf of
another guarantor, or by the executors or administrators of any deceased
guarantor, will not affect Guarantor's continuing liability under this Guaranty.
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<PAGE>
15. Severability: If any provision of this Guaranty is in conflict with any
statute or rule of law or is otherwise unenforceable for any reason, then that
provision shall be deemed null and void to the extent of the conflict or
unenforceability and shall be deemed severable, but shall not invalidate any
other provision of this Guaranty.
16. Governing Law: This Guaranty shall be governed by and construed in
accordance with the internal laws of the State of Michigan, without regard to
any choice of law principles which would otherwise require the application of
the law of any other jurisdiction.
17. Jurisdiction: GUARANTOR HEREBY WAIVES ANY PLEA OF JURISDICTION OR VENUE
ON THE GROUND THAT SUCH GUARANTOR IS NOT A RESIDENT OF OAKLAND COUNTY, MICHIGAN,
AND HEREBY SPECIFICALLY AUTHORIZES ANY ACTION BROUGHT TO ENFORCE GUARANTOR'S
OBLIGATIONS TO THE BANK TO BE INSTITUTED AND PROSECUTED IN EITHER THE CIRCUIT
COURT OF OAKLAND COUNTY OR A DISTRICT COURT WITHIN THE BOUNDARIES OF OAKLAND
COUNTY, AS APPROPRIATE, OR IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN
DISTRICT OF MICHIGAN AT THE ELECTION OF THE, BANK, AND GUARANTOR HEREBY SUBMITS
TO THE JURISDICTION OF SUCH COURT.
18. Waiver of Jury Trial: GUARANTOR ACKNOWLEDGES THAT THE RIGHT TO TRIAL BY
JURY IS A CONSTITUTIONAL RIGHT, BUT THAT IT MAY BE WAIVED. GUARANTOR, AFTER
CONSULTING WITH, OR HAVING THE OPPORTUNITY TO CONSULT WITH COUNSEL OF ITS
CHOICE, KNOWINGLY WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION
REGARDING THE PERFORMANCE OR ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS
GUARANTY, THE INDEBTEDNESS OR THE COLLATERAL DOCUMENTS.
19. Counterparts: This Guaranty may be executed in several counterparts,
and each executed counterpart shall constitute an original instrument, but such
counterparts shall together constitute but one and the same instrument.
20. Complete Agreement: This Guaranty is intended by Guarantor to be the
final, complete and exclusive expression of the agreement between Guarantor and
Bank with respect to the subject matter of this Guaranty. Guarantor acknowledges
and agrees with Bank that this Guaranty cannot be modified or amended in any
respect except by an additional writing signed by both Guarantor and Bank.
IN WITNESS WHEREOF, Guarantor hereto has executed this Guaranty as of the
day and year first above written.
WITNESSES: GUARANTOR:
G.P. Plastics, Inc., a
Michigan Corporation
By: Filipp Kelssi
------------------------
Filipp Kelssi
Its: Chairman
Guarantor's Tax I.D. Number: 38-1785938
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<PAGE>
CORPORATE
GUARANTY
DATED: April 6, 1999
PARTICULAR TERMS - DEFINITIONS
As used in this Guaranty, the following terms and expressions have the
respective meanings indicated opposite each of them:
Guarantor:
Name: Inmold, Inc.
an Indiana Corporation
Address: 3910 Industrial Drive
Rochester Hills, Michigan 48309
Bank:
Name: Crestmark Bank, a Michigan banking corporation
Address: 850 East Long Lake Road Troy, Michigan 48098
Borrower:
Name: Seville Plastics, Inc.,
a Michigan corporation
Address: 3909 Industrial Drive
Rochester Hills, Michigan 48309
Note:
Type: Promissory Note (Line of Credit)
Amount: $350,000.00
Date: Dated of even date herewith, including any extensions,
renewals, amendments or modifications thereof
Loan Agreement: Loan and Security Agreement dated of even date herewith,
including any extensions, renewals amendments or
modifications thereof
Collateral: As defined in the Loan Agreement
Collateral
Documents: As defined in the Loan Agreement
Indebtedness: As defined in the Loan Agreement
THIS GUARANTY, above-dated, by Guarantor to Bank is made to induce Bank to
make the loan evidenced by the Note to Borrower and because Guarantor, who is
the sole shareholder of Borrower, has determined that executing and delivering
this Guaranty is in the Guarantor's best interest and is to the financial
benefit of Guarantor, and for other good and valuable consideration, the receipt
of which is hereby acknowledged.
THE GUARANTOR AGREES AS FOLLOWS:
1. Consideration/Nature of Guaranty: in consideration of and in order to
induce Bank to make the loan evidenced by the Note to Borrower and other good
and valuable consideration, the receipt of which is hereby acknowledged,
Guarantor hereby absolutely, irrevocably and unconditionally guaranties to Bank:
(a) the full, prompt and unconditional payment, and not just the collectability
of, the Indebtedness, including, but not limited to, principal and interest on,
the Note when due, whether on demand, at maturity, pursuant to mandatory or
optional prepayments, by acceleration or otherwise, at the time, place and at
the rate described in, and otherwise
<PAGE>
according to the terms of the Loan Documents (as defined in Paragraph 3); and
(b) the punctual and faithful performance and observation by Borrower of all
duties, agreements, covenants, representations and obligations of Borrower
contained in the Loan Documents, including but not by way of limitation, the
affirmative covenants, the negative covenants and the truth and accuracy of all
representations and warranties therein set forth.
2. Absolute and Unconditional obligation: This Guaranty is an absolute,
continuing, unconditional, and irrevocable qguaranty and Guarantor shall not be
relieved from any obligations under this Guaranty until such time as this
Guaranty has been terminated in accordance with Paragraph 14. The obligations of
Guarantor shall continue notwithstanding any defect in the genuineness,
validity, regularity or enforceability of the indebtedness or the Loan
Documents, or any other circumstances whether or not referred to herein, which
might otherwise constitute a legal or equitable discharge or defense of a surety
or guarantor.
3. The Loan Documents: The Loan Agreement and Collateral Documents and all
other related instruments, documents and writings (sometimes hereinafter
collectively referred to as the "Loan Documents") are hereby incorporated into
and made a part of this Guaranty by reference, with the same force and effect as
if fully set forth herein.
4. Continuation of Liability: The liability and obligations of Guarantor
shall in no way be affected, impaired, diminished or released by: (a) any
amendment, amendment and restatement, alteration, extension, consolidation,
renewal, waiver, indulgence, extension of time regarding performance or other
modification of the indebtedness or the Loan Documents; (b) any settlement,
release, discharge or compromise whatsoever relating to the Loan Documents, the
Indebtedness or relating to Borrower, any other guarantor or any other party
liable for the Indebtedness; (c) any subordination of payments under the
Indebtedness, the Collateral or the Loan Documents to any other debt or claim;
(d) any substitution, exchange, release or other disposition of all or any part
of the Indebtedness or the Loan Documents; (e) any failure, delay, neglect, or
omission to act by Bank in connection with the Indebtedness, the Loan Documents
or the Collateral; (f) any advances for the purpose of performing any covenant
or agreement of Borrower, or curing any breach or event of default in the Loan
Documents; (g) the filing by or against Borrower or the discharge or release of
any obligations of Borrower, any other guarantor or of any other person now or
hereafter liable on the Indebtedness by reason of bankruptcy, insolvency,
reorganization or other debtor's relief afforded Borrower pursuant to the
present or future provisions of the Bankruptcy Code or any other state or
federal statute or by the decision of any court; or (h) any other matter whether
similar or dissimilar to the foregoing.
5. Unconditional Waiver of all Defenses: Guarantor unconditionally,
absolutely and irrevocably waives each and every defense which under principles
of guaranty or suretyship law would otherwise operate to impair or diminish the,
liability of Guarantor for the Indebtedness. without limiting the generality of
the foregoing waiver, Guarantor agrees that none of the following acts,
omissions or occurrences shall diminish or impair the liability of Guarantor in
any respect and Guarantor waives: (a) notice of acceptance of this Guaranty and
of creations of Indebtedness of Borrower to Bank; (b) presentment and demand for
payment of any Indebtedness of Borrower; (c) protest, notice of protest, and
notice of dishonor or default with respect to any of the indebtedness or the
Loan Documents; (d) all other notices to which Guarantor might otherwise be
entitled; (e) any demand for payment under this Guaranty; (f) any defense
arising by reason of any disability or any other defense of Borrower; and (g)
any right or claim of right to cause a marshaling of Borrower's assets, and it
is agreed that Bank shall be under no duty to marshal the assets of Borrower for
Guarantor's benefit or any third party. No notice to or demand on Guarantor
shall be deemed to be a waiver of the obligation of Guarantor or of the right of
Bank to take further action without notice or demand as provided herein. No
modification or waiver of the provisions of this Guaranty shall be effective
unless in writing and no waiver shall be applicable except in the specific
instance for which it is given.
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<PAGE>
6. Immediate Liability/Exercise of Rights By Bank: This is an irrevocable,
unconditional and absolute guaranty of payment and performance and Guarantor
agrees that the liability of Guarantor on this Guaranty shall be immediate and
shall not be contingent upon (i) the exercise or enforcement by Bank of whatever
remedies it may have against Borrower, any other guarantor, or any other person
or entity, or (ii) the enforcement of any lien or realization upon any security
or Collateral Bank may at any time possess. At the election of Bank, any one or
more successive and/or concurrent actions may be brought hereon against
Guarantor, either in the same action, if any, brought against Borrower, or
another guarantor, or in separate actions, as often as Bank, in its sole
discretion, may deem advisable. No election to proceed in one form of action or
proceeding, or against any party, or on any obligation, shall constitute a
waiver of Bank's right to proceed in any other form of action or proceeding or
against other parties unless Bank has expressly waived such right in writing.
Specifically, but without limiting the generality of the foregoing, no action or
proceeding by Bank against Borrower, or another guarantor under any document or
instrument evidencing or securing the Indebtedness, or this Guaranty, including
but not by way of limitation, the Loan Documents shall serve to diminish the
liability of Guarantor, except to the extent Bank irrevocably realized payment
in cash by such action or proceeding. Receipt by Bank of payment or payments
with knowledge of the breach of any provision of the Loan Documents shall not be
deemed a waiver of such breach. All rights, powers and remedies of Bank
hereunder and under any other agreement now or at any time hereafter in force
between Bank and Guarantor shall be cumulative and not alternative and shall be
in addition to all rights, powers and remedies given to Bank by law.
7. Subordination/Subrogation: In the event that Guarantor shall advance or
become obligated to pay any sums to Borrower, or in the event that for any
reason Borrower or any subsequent owner of any Collateral is now or shall
hereafter become indebted to Guarantor, the amount of such indebtedness shall at
all times be subordinate as to lien, time of payment and all other respects, to
the amounts owing to Bank by Borrower. Furthermore, until the Indebtedness is
paid in full, Guarantor hereby absolutely, irrevocably and unconditionally
waives all rights Guarantor may have, at law or in equity to seek or claim
subrogation (including any right of subrogation hereafter arising against
Borrower resulting from a right of contribution from any other Guarantor)
contribution, indemnification, or any other form of reimbursement from Borrower
or from any other Guarantor by virtue of any payment(s) made to Bank under this
Guaranty or otherwise. Interest will accrue from the date(s) the payment(s) upon
the Indebtedness was originally made. Guarantor agrees to indemnify and hold
Bank harmless from and against any and all claims, actions, damages, costs, fees
and expenses including, without limitation, reasonable attorney fees incurred by
Bank in connection with Guarantor's exercise of any right of subrogation,
contribution, indemnification or recourse with respect to this Guaranty, and
also with respect to Bank's defending any preference or fraudulent conveyance
claim or action brought against Bank in any bankruptcy proceeding concerning
Borrower or any Guarantor. Bank has no duty to enforce or protect any rights
which the undersigned may have against Borrower or any other Person and
Guarantor assumes full responsibility for enforcing and protecting these rights.
8. Representations and Warranties/Notice/Financial Statements: Guarantor
represents, warrants and covenants to Bank that, as of the date of this
Guaranty: (a) the fair salable value of Guarantor's assets exceeds its
liabilities; (b) Guarantor is meeting its current liabilities as they mature;
(c) any financial statements of Guarantor furnished Bank are true and correct
and include all contingent liabilities of Guarantor; (d) since the date of any
financial statements furnished to Bank, no material adverse change has occurred
in the financial condition of Guarantor; (e) there are no pending or threatened
material court or administrative proceedings or undischarged judgments against
Guarantor, and no federal or state tax liens have been filed or threatened
against Guarantor, nor is Guarantor in default or claimed default under any
agreement for borrowed money. Guarantor agrees to immediately give Bank written
notice of any material adverse change in its financial condition, including but
not limited to litigation commenced, tax liens filed, default claimed under
indebtedness for borrowed money or bankruptcy proceedings commenced by or
against Guarantor. Guarantor shall deliver, timely to Bank, its annual financial
statements for the preceding
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<PAGE>
fiscal year; and at such reasonable times as Bank requests shall furnish its
current financial statements to Bank. Guarantor is fully aware of the financial
condition of Borrower. Guarantor delivers this Guaranty based solely upon its
own independent investigation and in no part upon any representation or
statement of Bank with respect thereto. Guarantor is in a position to and hereby
assumes full responsibility for obtaining any additional information concerning
Borrower's financial condition as Guarantor may deem material to its obligations
hereunder; and Guarantor is not relying upon, nor expecting, Bank to furnish it
any information in, Bank's possession concerning Borrower's financial condition.
9. Expenses/Preferential Payments: Guarantor further agrees to pay all
expenses incurred by Bank in connection with the enforcement of Bank's rights
under the Loan Documents, this Guaranty, the collection of the Indebtedness or
in the event Bank is a party to any litigation because of the existence of the
Indebtedness, the Loan Documents or this Guaranty, as well as court costs,
collection charges and reasonable attorney fees and disbursements. Guarantor
further agrees that to the extent Borrower makes a payment or payments to Bank,
which payment or payments or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver or any other party under any bankruptcy act, state
or federal law, common law or equitable cause, then to the extent of such
payment or repayment, the obligation or part thereof intended to be satisfied
shall be revived and continued in full force and effect as if said payment had
not been made.
10. Transfer of Assets: Guarantor further agrees that until Borrower's
Indebtedness to Bank is paid in full, Guarantor will not, without Bank's prior
written consent- (i) make any voluntary transfer of any of Guarantor's assets
which would have the effect of materially diminishing Guarantor's present net
worth or (ii) guaranty the debts or obligations of any other Person.
11. Reduction of Indebtedness: Guarantor agrees that any Indebtedness from
revolving loans will not be deemed repaid or reduced by collection and
subsequent relending of the proceeds of accounts, chattel paper and similar
Collateral.
12. Assignability/Binding Effect: This Guaranty shall be assignable by Bank
without notice to Guarantor and shall inure to the benefit of Bank and to any
subsequent successors and assigns. Each reference herein to Bank shall be deemed
to include its successors and assigns, In whose favor the provisions of this
Guaranty shall also run. In the event of the death of Guarantor, this Guaranty
shall continue in effect against the estate of said Guarantor. The pronouns and
relative words herein used shall be read as if written in the plural, feminine,
masculine or neuter form so as to appropriately refer to the parties designated.
13. Joint and Several Liability: The term "Guarantor" shall mean each
person executing this Guaranty, each individually and together collectively, and
the Guarantor's and any other guarantor's obligations, including those of G.P.
Plastics, Inc., a Michigan corporation, to Bank shall be joint and several.
14. Termination. Notwithstanding anything contained herein to the contrary,
the liability of Guarantor shall be terminated only in the event that (i)
Borrower has irrevocably paid Bank in cash and in full the Indebtedness and (ii)
the Loan Agreement is terminated. The revocation, termination, discharge or
release, for any reason, of a guaranty of the Indebtedness by or on behalf of
another guarantor, or by the executors or administrators of any deceased
guarantor, will not affect Guarantor's continuing liability under this Guaranty.
15. Severability: If any provision of this Guaranty is in conflict with any
statute or rule of law or is otherwise unenforceable for any reason, then that
provision shall be deemed null and void to the extent of the conflict or
unenforceability and shall be deemed severable, but shall not invalidate any
other provision of this Guaranty.
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<PAGE>
16. Governing Law: This Guaranty shall be governed by and construed in
accordance with the internal laws of the State of Michigan, without regard to
any choice of law principles which would otherwise require the application of
the law of any other jurisdiction.
17. Jurisdiction: GUARANTOR HEREBY WAIVES ANY PLEA OF JURISDICTION OR VENUE
ON THE GROUND THAT SUCH GUARANTOR IS NOT A RESIDENT OF OAKLAND COUNTY, MICHIGAN,
AND HEREBY SPECIFICALLY AUTHORIZES ANY ACTION BROUGHT TO ENFORCE GUARANTOR'S
OBLIGATIONS TO THE BANK TO BE INSTITUTED AND PROSECUTED IN EITHER THE CIRCUIT
COURT OF OAKLAND COUNTY OR A DISTRICT COURT WITHIN THE BOUNDARIES OF OAKLAND
COUNTY, AS APPROPRIATE, OR IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN
DISTRICT OF MICHIGAN AT THE ELECTION OF THE BANK, AND GUARANTOR HEREBY SUBMITS
TO THE JURISDICTION OF SUCH COURT.
18. Waiver of Jury Trial: GUARANTOR ACKNOWLEDGES THAT THE RIGHT TO TRIAL BY
JURY IS A CONSTITUTIONAL RIGHT, BUT THAT IT MAY BE WAIVED. GUARANTOR, AFTER
CONSULTING WITH, OR HAVING THE OPPORTUNITY TO CONSULT WITH COUNSEL OF ITS
CHOICE, KNOWINGLY WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION
REGARDING THE PERFORMANCE OR ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS
GUARANTY, THE INDEBTEDNESS OR THE COLLATERAL DOCUMENTS.
19. Counterparts: This Guaranty may be executed in several counterparts,
and each executed counterpart shall constitute an original instrument, but such
counterparts shall together constitute but one and the same instrument.
20. Complete Agreement: This Guaranty is intended by Guarantor to be the
final, complete and exclusive expression of the agreement between Guarantor and
Bank with respect to the subject matter of this Guaranty. Guarantor acknowledges
and agrees with Bank that this Guaranty cannot be modified or amended in any
respect except by an additional writing signed by both Guarantor and Bank.
IN WITNESS WHEREOF, Guarantor hereto has executed this Guaranty as of the
day and year first above written.
WITNESSES:
GUARANTOR:
Inmold, Inc.,
an Indiana Corporation
By: Filipp Kreissl
Laurence H. Smith -------------------------
- ----------------- Filipp Kreissl
Laurence H. Smith Its: Chairman
Guarantor's Tax I.D. Number: 38-3381342
-5-
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EXHIBIT 10.08
BUSINESS LOAN AGREEMENT
Agreement made and entered into June 12 1997, by and between G-P PLASTICS,
INC., a Michigan corporation of 3910 Industrial Drive, Rochester Hills, Michigan
48309 ("Borrower"); and Horizon BIDCO Investment Co., a Michigan corporation
organized under the Michigan BIDCO Act, having its office and principal place of
business at 2545 Spring Arbor Road, Jackson, Michigan 49203 ("Lender").
1. LOAN AGREEMENT. The Borrower agrees to borrow from the Lender, and the
Lender agrees to lend to the Borrower on the date hereof, subject to the terms
and conditions set forth in this Business Loan Agreement ("Agreement") and the
promissory note, up to the sum of $500,000.00, hereinafter referred to as
"Loan".
2. EXECUTION OF NOTE. The obligation to repay the Loan shall be evidenced
by the Borrower's promissory note, hereinafter referred to as the "Note" and
substantially in the form set forth in Exhibit "A", attached and incorporated,
which Note shall be payable according to its terms in 60 monthly installments
("Loan Term"), nine initial monthly payments of interest only payable in arrears
and 51 monthly payments of principal and interest of approximately $ 11,505.00.
Monthly payments to commence June 30, 1997, and shall be due the last day of
each month thereafter, with the entire unpaid balance due and owing 60 months
from the date hereof. Interest shall be included on the unpaid portion of the
principal balance in the amount of the Prime rate as published from time to time
in the Wall Street Journal plus 4%, adjusted at the end of each calendar
quarter, but not less than 13.5% per annum, which shall be calculated on the
basis of a 360 day year with payments, as hereinabove set forth. A late fee in
the amount of 5.0% of the monthly installments due and owing will be assessed
against the Borrower in the event the monthly payments required hereunder are
received by the Lender after the due date. Prepayment ("Prepayment") shall not
be permitted during the first 24 months of the Loan Term. After month 24 of the
Loan Term the Borrower shall have the right to prepay the entire principal
balance of the Loan plus accrued interest at any time without a Prepayment
penalty. The provisions for continuing revenue participation payments pursuant
to paragraph 3 and redemption of options pursuant to paragraph 4 hereof shall
continue in event of Prepayment.
3. REVENUE PARTICIPATION. In addition to the payment of principal and
interest pursuant to the Loan as set forth in Section 2 above, the Borrower
shall pay to the Lender Revenue Participation Payments ("Payment" or
"Payments"), pursuant to a Revenue Participation. Agreement substantially in the
form set forth in Exhibit "B", as follows:
(a) Basis for Payment: The Payments shall be based upon the Revenue
Participation formula ("Formula") using the annual gross revenues ("Gross
Revenues") Generated
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by the Borrower's existing company or companies and any successor or affiliate
companies formed during the Loan Term, and Payments shall continue throughout
the entire Loan Term, even if the principal balance plus accrued interest of the
Loan is prepaid. Gross Revenues from all sources shall be determined using
generally accepted accounting principles applied on a consistent basis as
prescribed by the American Institute of Certified Public Accountants, as set
forth in the Borrower's fiscal year-end reviewed financial statement. If the
Gross Revenues generated by Borrower or its affiliates for any fiscal year of
Borrower are between $12,000,000 and $15,500,000, the participation by the
Lender shall be an amount equal to .75% of the Gross Revenues generated by the
Borrower in excess of $12,000,000 up to and including $15,500,000. If the Gross
Revenues generated by the Borrower are in excess of $15,500,000, the Lender
shall receive additional revenue participation equal to 1.25% of Gross R evenues
generated by the Borrower in excess of $15,500,000. Payments for the period
commencing on the date of this Agreement and ending on June 11, 2002 shall be on
a proportionate basis according to the Formula. Payments for any short year at
the end of the Loan Term shall likewise be on a proportionate basis.
(b) Payments Due: Payments shall be made on a calendar quarter basis
during the Loan Term.
(c) Estimated Payments: The Payments for each calendar quarter shall
be estimated and paid as follows:
(i) For the initial period ("initial Period") commencing on the
date hereof and ending at the end of the first calendar quarter after
the date hereof the Borrower shall determine its Gross Revenues for
the Initial Period which shall be annualized for the purpose of
applying the Formula as set forth in Section 3(a) above and a
proportionate quarterly Payment based upon the number of days in th e
Initial Period divided by 360 days shall be made by the Borrower.
(ii) Gross Revenues for each calendar quarter thereafter during
the Loan Term shall be determined by the Borrower and annualized for
the purpose of applying the Formula and the amount so determined as
the annual Payment shall be divided by four and paid to the Lender as
quarterly estimated Payments.
(iii) The estimated Payments for the final period of the Loan
Term shall be determined in the same manner as said Payments were
determined for the Initial Period as set forth in Section 3(c)(i)
above.
(iv) The estimated Payments shall be payable as follows: the
Payments shall be due and payable 30 days after the end of each
calendar quarter.
(d) Adjustment: Within 30 days of receipt of the Borrower's fiscal
year-end reviewed financial statement the Borrower shall determine the
actual Payments due pursuant to the Formula for the fiscal year to which
such statement relates and notify the Lender of the result of such
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determination. Within 30 days thereafter, Borrower, shall pay to Lender any
deficiency due, or the Leader shall refund to the Borrower any overpayment
made.
(e) Accounting: Each Payment by the Borrower to the Lender, whether
estimated or otherwise, shall be accompanied by an accounting substantially
in the form set forth in Exhibit "C" setting forth the calculation which
was used to determine the amount of the payment.
(f) Review of Books and Records: The Borrower will permit Lender or
its representatives to examine and make copies of Borrower's books and
records related to the determination of the Payments during the normal
business hours and upon reasonable notice, for the purpose of verifying the
calculation of such Payments.
(g) Dispute Resolution: If the Lender believes that the Borrower's
calculation of any Payment hereunder is not accurate, then the Lender may
select an independent certified public accountant to conduct an examination
of the Borrower's books and records to review the calculation of the
Payment. If after such examination there exists a material dispute with
respect to such calculation, the matter shall be resolved by arbitration in
accordance with the Commercial Arbitration Rules of the American
Arbitration Association in Detroit, Michigan, the determination in such
arbitration shall be binding upon the parties, and judgment may be entered
upon such arbitrator's decision by any court having jurisdiction. The
arbitrator shall be an audit partner of a nationally recognized accounting
firm not affiliated with the Lender or Borrower and acceptable to both of
them. If any such examination discloses an underpayment of the amount due
to the Lender, which Borrower agrees with or is determined in a final
judgment to be correct, Borrower shall reimburse Under for the costs of any
such examination and arbitration, including without limitation, reasonable
attorney fees. If any such examination discloses the Borrower's initial
calculation was correct or was overpaid, Lender shall pay for the costs of
any such examination and arbitration, including, without limitation,
reasonable attorney fees.
(h) Late Payment Fee: A late fee in the amount of 5.0% of the amount
of the Payment due and owing shall also be due and payable to Lender by
Borrower in the event any Payment required hereunder is received by the
Lender after the due date.
4. OPTIONS. As additional consideration for the granting of the Loan the
Borrower shall cause to be issued to the Lender at the time of the closing
("Closing") of the Loan, negotiable options ("Options") to acquire 75,000 shares
of the common stock of Inmold, Inc., an Indiana corporation authorized to do
business in Michigan ("Inmold"), at $.10 per share ("Exercise Price"). The total
exercise price shall be $7,500.00. In the event the Borrower's Gross Revenues do
not exceed $17,500,000 by Borrower's fiscal year ending in 2001, then Inmold
agrees to issue options to acquire an additional 10,000 shares of the common
stock of Inmold at the same Exercise Price.
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The Options issued shall be substantially in the form set forth in Exhibit "D"
attached and incorporated. The Lender may require Inmold to redeem the Options
during the first 60 days after the end of the Loan Term at a price equal to $2.
10 per share ("Put Price") or the Lender may retain the Options and convert them
to common stock in Inmold at any time during the Loan Term and for 24 months
thereafter.
If Prepayment occurs after month 24 of the Loan Term, the Lender may require
Imnold to redeem the Options during the 60 day period following the date of
Prepayment at the Put Price or the Lender may retain the Options and convert
them to common stock in Inmold.
5. CONDITIONS OF LOAN. The obligation of the Lender to perform its
obligations herein shall be subject to the following conditions precedent:
(a) Approval of Lender's Counsel: All legal matters incident to the
transactions set forth herein shall be satisfactory to all counsel for the
Lender.
(b) Compliance Certificate: The Lender shall have received a
certificate dated the date of the Loan and signed by an authorized
representative of the Borrower to the effect that: (1) the Borrower has
compiled, and is then in compliance, with all the terms and covenants of
this Agreement which are binding upon it; (2) there exists no Event of
Default as defined in Section 10 and no event which, with the giving of
notice or the lapse of time, or both, would constitute such an Event of
Default; and (3) the Representations and Warranties contained in Section 6
are true with the same effect as though such Representations and Warranties
have been made at the time of the Loan.
(c) Evidence of Company Action: The Lender shall have received
certified copies of all corporate action taken by the Borrower and Inmold
to authorize this Agreement, the Note, the Options and the borrowing
hereunder, and such other documents as the Leader may reasonably require
("Loan Documents") relating to the existence of the Borrower and Inmold,
the corporate authority for and the validity of this Agreement the Note,
the Options and any other matters relevant hereto, all in form and
substance satisf actory to Lender's counsel and indicating the name and
title of the officer or officers of the Borrower and Imnold authorized to
sign this Agreement and the Loan Documents.
(d) Opinion of Borrower's Counsel: The Lender shall have received a
favorable written opinion of counsel for the Borrower, dated the date of
the Loan and satisfactory in form and substance to the Lender, as to the
matters referred to in Section 6, except subparagraphs (f), (h), (k), (1)
and (o). Lender may also request a favorable written opinion of counsel for
Inmold, dated the date of the Loan and satisfactory in favor and substance
to the Lender.
(e) Payment of the Fees: The Lender shall have received from the
Borrower partial payment of the facility fee in the total amount of $
12,500, with the receipt of $3,000 of said fee being acknowledged and the
balance of $9,500, plus all out-of-pocket expenses of the Lender
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<PAGE>
regarding this financing including but not limited to the reasonable fees
and expenses of its counsel, Hen searches, credit reviews and environmental
reviews to be paid at closing from the proceeds of the Loan. In the event
the Borrower decides to withdraw its request from the Lender for financing,
the $3,000 of the facility fee already deposited with the Lender shall be
forfeited and an additional $3,250 of the balance of the facility fee shall
be due and payable in addition to any out-of-pocket expenses incurred by
the Borrower. In the event the Lender, as a result of an adverse finding
during its due diligence process (unless such adverse finding was known and
not disclosed by the Borrower to the Lender) elects not to proceed with the
Loan, the $3,000 fee less any out-of-pocket expenses of the Lender will be
refunded.
(f) Certificates: The Lender shall have received from the Borrower and
Imnold certificates of good standing and certified copies of the Articles
of Incorporation for the Borrower issued by the Director of the Michigan
Department of Consumer and Industry Services, Corporation, Securities and
Land Development Bureau, or such other appropriate authority of the State
of incorporation.
(g) Bylaw : The Leader shall have received from the Borrower within 60
days of the date hereof copies of the Bylaws of the Borrower and Inmold and
all amendments thereto, certified by the Secretary of the Borrower and
Inmold as being true, correct and complete as of the date of such
certification.
(h) Litigation: The Lender shall have received from the Borrower a
certificate signed by a duly authorized officer of the Borrower stating
that no litigation, investigation, or proceeding before or by an
arbitrator, court or governmental agency is continuing or threatened
against either the Borrower or any of its officers, directors or affiliates
with respect to this Agreement, the Note, the collateral documents, any
other Loan Documents or any of the transactions contemplated hereby or
thereby.
(i) Insurance: Evidence satisfactory to the Lender that the Borrower
has obtained the policies required by the Lender including but not limited
to liability insurance and worker's compensation insurance with limits and
carriers satisfactory to the Lender.
(j) Due Diligence: The Lender has reached no adverse findings as a
result of its continued due diligence investigation of the Borrower, its
management, its future financing needs or the environmental review, if any,
and the Lender shall be satisfied regarding the Borrower's ability to
achieve its projected financial results and the Lender's comfort in the
financial statements and projections to be presented to the Lender.
(k) Arrangements with Senior Lenders: The Borrower has presented to
the Lender evidence of lending arrangements with its current senior lenders
("Senior Lenders") that are satisfactory to the Lender.
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<PAGE>
(1) Subordination: Any stock redemption agreements between the Borrower and
any of its shareholders, excepting agreements with preferred shareholders, shall
be subordinate to the obligations created by the Loan and such subordination
shall be consented to by the shareholders of the Borrower. Additionally, any
debt owed by the Borrower to any of its shareholders or officers shall be
subordinated to the Loan pursuant to a Subordination Agreement substantially in
the form set forth in Exhibit "E", attached and incorporated. Anything contained
herein to the contrary notwithstanding, proceeds from life insurance purchased
by the Borrower for the purpose of funding any stock redemption agreement, shall
not be subordinate to the obligations created by the Loan.
(m) Receipt of Executed Documents: The Lender shall have received each
of the following in form and substance satisfactory to the Lender and its
counsel:
(i) the Note duly executed by the Borrower;
(ii) the Security Agreement and UCC-1 forms duly executed by the
Borrower;
(iii) the Subordination Agreement as set forth in Exhibit "E"
duly executed by the Borrower and its appropriate officers and
shareholders.
(iv) Consent Resolution of the Board of Directors of the Borrower
duly executed by all of the Directors of the Borrower, as set forth in
Exhibit "F";
(v) all Certifications pursuant to this Section 5 duly executed
by Borrower,
(vi) the Loan Agreement duly executed between the Borrower and
the Lender;
(vii) Certified copy of a resolution of the Board of Directors of
Inmold authorizing the issuance of the Options;
(viii) the Options duly executed by an authorized officer of
Inmold;
(ix) all other duly executed documents as may be reasonably
requested by the Lender.
(n) U. C. C. Searches: The Lender shall have received appropriate UCC
lien searches as it deems appropriate.
6. REPRESENTATIONS AND WARRANTIES. The Borrower represents and warrants to
the Lender as follows:
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(a) Existence and Power: The Borrower is a corporation duly
incorporated, validly existing and in good standing under the laws of the
State of Michigan and 88% of its common shares are owned by Inmold. The
Borrower has corporate powers and all material government licenses,
authorizations, consents and approvals required to carry on its business as
now being conducted and is duly qualified to do business and is in good
standing in each jurisdiction in which the character of the property owned
by it therein or in which the transaction of its business makes such
qualification necessary in the judgment of the Borrower. Inmold is a
corporation duly incorporated, validly existing and in good standing under
the laws of the State of Indiana.
(b) Corporate Authority: The execution, delivery and performance by
the Borrower of the Agreement, the Note, the Revenue Participation
Agreement, the Security Agreement and the other Loan Documents are within
the Borrower's powers, have been duly authorized by all necessary action,
require no action by or in respect of, or filing with, any governmental
body, agency or official and do not contravene, or constitute a default
under any provision of applicable law or regulation or the Articles of
Incorporation or the Bylaws of the Borrower or any agreement, judgment,
injunction, order, decree or other instrument binding upon the Borrower or
result in the creation or imposition of any lien on any asset of the
Borrower, result in a breach or constitute a default under any indenture,
loan or credit agreement or any other agreement or instrument to which
Borrower is a party or by which any of its properties may be bound or
affected. The consent and approval of the Borrower's Board of Directors is
shown by their duly adopted resolution attached hereto as Exhibit "F". The
execution, delivery and performance by Inmold of the Options have been duly
authorized by the Board of Directors of Inmold and does not contravene or
constitute a default under any provision of applicable law or regulation or
the Articles of Incorporation or the Bylaws of Inmold or any agreement,
judgment, injunction, order, decree or other instrument binding upon
Inmold.
(c) Binding Agreement: The Agreement constitutes, and the Note and the
Revenue Participation Agreement when executed and delivered pursuant hereto
for value received shall constitute, the legal valid, and binding
obligation of the Borrower in accordance with its terms subject to
bankruptcy and insolvency laws and any other laws of general application
affecting the rights and remedies of creditors.
(d) Litigation : There is no action, suit or proceeding pending
against, or to the knowledge of the Borrower threatened against or
affecting the Borrower, before any court or arbitrator or any governmental
body, agency or official in which there is a reasonable possibility of an
adverse decision which could materially adversely affect the business, the
financial condition or operations of the Borrower or which in any manner
draws into question the validity of the Agreement, the Note, the Revenue
Participation Agreement, the Options or the Security Agreement.
(e) No Conflicting Agreement: There is no provision in the Articles of
Incorporation or Bylaws of the Borrower or Inmold and no provision of any
existing mortgage, indenture, contract, or agreement binding on the
Borrower and Inmold or affecting its property,
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<PAGE>
which would conflict with or in any way prevent the execution, delivery, or
carrying out of the terms of the Agreement, the Note, the Revenue
Participation Agreement and the Options.
(f) Financial Statements: The compiled financial statements of the
Borrower which include the balance sheet and statement of earnings for the
fiscal year ending September 30, 1996, fairly present the financial
position of the Borrower and the results of its operations for such fiscal
year and are in conformity with generally accepted accounting principles
consistently applied. Additionally, any other financial statements, whether
audited or unaudited furnished to the Lender for any other period fairly
represents the financial condition of the Borrower and the results of its
operations as of the date and for the periods referred to therein, prepared
according to generally accepted accounting principles consistently applied.
(g) Business Operations: The Borrower represents and warrants that its
business involves the manufacture and sale of parts to the automobile and
other industries and that the proceeds of the Loan will be used only in
connection with said business and for equipment purchase, project
development funding and working capital only.
(h) Environmental Compliance: Except as disclosed in Schedule 6(h) to
this Agreement and to the best of Borrower's knowledge, there are no
claims, investigations, litigation, administrative proceedings, pending or
threatened, or judgments or orders, relating to any hazardous substances,
hazardous wastes, discharges, emissions, or other forms of polution
relating in any way to any real property owned or leased by the Borrower,
or any of the sites where hazardous materials are disposed of by the
Borrower . To the best of Borrower's knowledge, the Borrower does not have
any ability for cleanup, compliance, or required capital expenditures in
connection with any environmental matter arising before the date of this
Agreement. No hazardous or toxic substances, within the meaning of any
applicable state or federal statute or regulations, are presently stored or
otherwise located on real estate owned or leased by the Borrower, in
violation of applicable state or federal statutes and regulations.
Furthermore, within the definition of the statutes, to the best of
Borrower's knowledge, no part of the Borrower's real estate, whether leased
or owned, including the ground water, is presently contaminated by any
hazardous or toxic substance.
(i) ERISA Compliance: The Borrower is in compliance in all material
respects with the Employee Retirement Income Security Act of 1974 (ERISA),
as amended, and has fulfilled its obligations under the minimum funding
standards of ERISA and the Internal Revenue Code of 1986, as amended, with
respect to each of its federally insured pension plans and is in compliance
in all material respects with the presently applicable provisions of ERISA
and such Code. No "Reportable Event" (as defined in ERISA) which could
result in a material accumulated deficiency under ERISA or material
liability to the PBGC has occurred or is continuing, and there exists no
condition or set of circumstances which could result in a "Reportable
Event". The value of all accrued benefits are fully funded by the assets of
such plans. All contributions have been made or accrued for each of the
plans, including contributions that are payable for the proceeding and
current plan year. The Borrower does not participate in any "multi-employer
plan" as defined in ERISA.
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Borrower does not have any liability under ERISA on account of the prior
termination of any employee welfare or benefit plan.
(j) Officers, Directors and Shareholders: The names of the officers,
directors and shareholders of Borrower are set forth in Exhibit "G",
attached and incorporated. Exhibit "G" also sets forth all indebtedness of
the officers, directors and shareholders to the Borrower, and any of their
respective close relatives, to the Borrower, if any.
(k) Misstatements or Omissions: The Agreement, the proforma financial
statements applicable to Borrower's anticipated operations and all other
information pertaining to the Borrower delivered to the Lender hereunder
when taken together do not contain any untrue statement of a material fact
and do not omit any statement of material fact necessary in order to make
the statements contained herein not misleading in fight of the
circumstances under which they are made.
(l) Conflicts of Interest: To the best knowledge of Borrower:
(i) The Borrower is not a principal shareholder of the Lender;
controlled by a principal shareholder of Lender; or a director,
officer, partner, relative, controlling person or affiliate of a
principal shareholder of the Lender.
(ii) No member of the Lender, nor any director, officer, partner,
relative, controlling person, or affiliate of the Lender, or any
person controlled by a member of the Lender, currently provides or
plans to provide any financing assistance to Borrower
contemporaneously with the Loan, and Borrower has not had any
discussions with any such person regarding the provision of financing
assistance Borrower.
(iii) Borrower does not have nor does it expect to have a
substantial business relationship with any other business firm which
has a director, officer or controlling person who is also a director,
officer or controlling person of the Lender, or who is the spouse of
director, officer or controlling person of the Lender.
(iv) Borrower nor any of its managers or members have loaned or
will loan money to an associate of the Lender.
(v) Borrower has not received financing assistance from any
person associated with the Lender.
(vi) No person associated with the Lender will receive, directly
or indirectly, from the Borrower (a) compensation in connection with
providing the Loan or (b) anything of value from procuring,
influencing, or attempting to procure or influence the Lender's
actions with respect to the providing of the Loan.
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(m) Ownership of Real Property: The Borrower does not own any real
property of any kind or nature whatsoever.
(n) Securities Law Compliance: Any securities issued by the Borrower
or Inmold to its shareholders have been in compliance with all state and
federal securities laws and regulations applicable to the respective
securities issued.
(o) Taxes: Except as set forth in Schedule 6(o) to this Agreement, all
real and personal property taxes which have become a lien on any of the
Borrower's property have been paid in full, and all federal, state and
local taxes including, but not limited to FICA, withholding, MESC, use and
SBT taxes have been paid.
All Representations and Warranties by the Borrower shall survive delivery
of the Note, the other Loan Documents and the closing of the Loan, and any
investigation at any time made by or on behalf of the Lender shall not diminish
Lender's right to rely thereon.
7. SECURITY, ASSURANCE AND INSURANCE. To secure the faithful performance of
this Agreement and the repayment of the indebtedness created hereunder, the
Borrower shall do the following:
(a) Collateral: The Borrower gives, assigns, and conveys to the Lender
as collateral, the following: (1) the security interest pursuant to a
Security Agreement, substantially in the form set forth in Exhibit "H"
attached hereto, in the accounts receivable, inventory, equipment,
furniture, fixtures and other tangible assets and after-acquired property
("All Assets") of the Borrower subject to a prior security interest of the
Borrower's Senior Lenders pursuant to a Subordination Agreement with the
Senior Lenders satisfactory to the Lender, and present and future money
purchase security interests.
(b) Further Assurances: On reasonable demand of the Lender, the
Borrower shall furnish further assurances of title, execute any written
agreement, or do any other acts necessary to effectuate the intended
purposes and provision of this Agreement, execute any instrument or
statement required by law or otherwise, in order to perfect and continue
the security interest of the Lender in the collateral, and pay all costs of
preparation and filing in connection therewith.
(c) Insurance: The Borrower shall maintain, without expense to the
Lender, a policy or policies of insurance with respect to All Assets, in an
amount which is at least equal to the fair market value thereof, which
policy or policies contain a deductible provision acceptable to the Lender
naming the Lender as an insured party as its interest my appear and said
policy shall contain a provision requiring that the insurer provide at
least 30 days notice to the Lender prior to cancellation of said insurance.
The Borrower shall deliver a certificate of such insurance to the Lender.
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8. AFFIRMATIVE COVENANTS. Until the payment in full of the Note, the
Payments, the redemption of the Options and performance of all obligations of
the Borrower hereunder, the Borrower shall:
(a) Financial Statements: Furnish to the Leader: (1) monthly financial
statements containing at a minimum a balance sheet and income statement
prepared to the reasonable satisfaction of the Lender no later than 30 days
after the end of each month, certified as true and correct by an officer of
the Borrower; (2) if requested by the Lender, quarterly aging of accounts
receivable and accounts payable prepared to the reasonable satisfaction of
the Lender no later than 30 days after the end of each quarter, certified
as true and correct by an officer of the Borrower; (3) reviewed annual
financial statements containing balance sheet, statement of earnings,
statement of equity, statement of cash flows and notes to financial
statements within 90 days of the end of the Borrower's fiscal year prepared
by an accounting firm which is satisfactory to the Lender; (4) such
additional information, reports, budgets or statements as the Lender may
from time to time reasonably request in connection with this Agreement.
The Borrower shall also permit, upon reasonable notice, a
representative of the Leader to inspect the books, records, budgets and
documents received by the Members or properties of the Borrower at
reasonable times and to make copies and abstracts of such books and records
and any documents relating to such.
(b) Taxes: Pay and discharge all taxes, assessments, and governmental
charges upon it, its income, and its properties prior to the date on which
penalties are attached thereto, unless and to the extent only that such
taxes shall be contested in good faith and by appropriate proceedings by
the Borrower.
(c) Insurance: Maintain insurance with responsible insurance companies
on such of its properties, in such amounts and against such risks as is
customarily maintained by similar businesses operating in the same
vicinity, but not less than the coverage currently maintained by the
Borrower as of the date of this Agreement, and furnish evidence and a
detailed list thereof to the Lender on an annual basis.
(d) Litigation : Promptly notify the Lender of any actions, suits,
proceedings or claims before any court, governmental department,
commission, board, bureau, agency or instrumentality, commenced or
threatened against the Borrower involving $10,000.00 or more or which could
materially affect the conduct of its business.
(e) Maintenance: Maintain preserve and keep its properties and
equipment, whether leased or owned, in good repair and working order and
condition, ordinary wear and tear excepted, and will from time to time make
all needed and proper repairs, renewals, replacements, additions and
betterments thereto so that at all times the efficiency thereof shall be
fully preserved and
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maintained, and comply with all the federal, state and local laws and
regulations including environmental law.
(f) Board of Directors: Maintain a Board of Directors, with a minimum
of two directors, which shall hold meetings semi-annually, at a place and
time acceptable to the Lender, and shall forward to the Lender copies of
all documents given by the Borrower to its board of directors and shall
allow a representative of the Lender to observe the board meetings and to
provide the Lender with at least 14 days notice (unless Lender consents in
writing to a shorter notice period) prior to each and every meeting of the
Board. Lender may attend such meetings. Lender may call meetings with the
management of the Borrower on an as needed basis. Borrower shall also cause
Inmold to similarly notify the Lender of As Board meetings and allow a
representative of the Lender to observe same.
(g) Operating Budget : The Borrower's Board of Directors must approve
the Borrower's annual operating budget and the Borrower shall provide the
Lender with a copy of said annual operating budget at least 30 days prior
to the beginning of each fiscal year.
(h) Notice of Environmental Concerns: Notify the Lender of any
hazardous or toxic substance or any other contaminant found in any property
owned or leased by the Borrower other than in the ordinary course of its
business and to immediately advise the Lender of any notice received from a
public agency concerning environmental issues, including any notice
regarding any environmental issue at any of the sites where the Borrower
disposes of hazardous material, and provide the Lender if requested, with
appropriate certificates of compliance with the provisions of Section 6(h)
on a quarterly basis.
(i) Corporate Existence and Due Qualification: Borrower shall preserve
and maintain its corporate existence and good standing in the State of
Michigan and qualify and remain qualified to do business in each
jurisdiction where such qualification is required.
(j) Compliance with all Laws: Comply with all laws, rules and
regulations in effect or hereinafter promulgated by any federal, state or
local government.
(k) Information from Senior Lenders: Provide the Lender, within five
days of receipt thereof with copies of any or all notices or information of
a material nature received from the Borrower's Senior Lenders.
(l) Compliance Certificate: If requested by Lender, provide the Lender
with appropriate certification on a quarterly basis that the Borrower is in
compliance with all the terms and conditions of this Agreement and that an
Event of Default pursuant to Section 10 hereof has not occurred.
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(m) Use of Proceeds: The Borrower shall use the proceeds of the Loan
for equipment purchase, project development funding and working capital,
and for no other purpose without the written consent of the Lender.
(n) Compliance with ERISA: Comply in all material respects with the
Employee Retirement Income Security Act of 1974, as amended and the
Internal Revenue Code of 1986, as amended, with respect to any federally
insured pension plans it maintains now or in the future.
(o) Changes in Management: Notify Lender in writing of any proposed
changes in Borrower's senior management including chief executive officer,
chief financial officer and general manager, which shall be subject to the
approval of the Lender and said approval shall not unreasonably be
withheld.
(p) Management Fees: The Borrower shall limit management fees
("Management Fees") paid to Inmold to 2.5% of Gross Revenues without the
written consent of the Lender which shall not unreasonably be withheld.
(q) Wage Laws: Comply with all federal, state and local laws
concerning wage payments, minimum wages and payment of withholding taxes.
(r) Capital Expenditures: Obtain Lender's consent prior to any capital
expenditures which exceed $500,000 annually. Consent shall be unreasonably
withheld by Lender.
(s) Management Compensation : The Borrower shall develop a
compensation plan, including bonuses and retirement plans for senior
management which shall be subject to the written consent of the Leader,
which consent shall not unreasonably be withheld.
9. NEGATIVE COVENANTS. Until payment in full of the Note and the
performance of all other obligations of the Borrower hereunder, the Borrower and
shall not, except with the prior written consent of the Lender:
(a) Loans: Make loans or advances of money or products to any person,
firm, or corporation.
(b) Additional Borrowing and Guaranty. Issue, incur, assume, or have
outstanding any indebtedness for borrowed money, including as such all
indebtedness representing the deferred purchase price of property, any
lease of property required to be capitalized under generally accepted
accounting principles, any remaining balance of indebtedness, whether or
not assumed, secured by liens and property,acquired by the Borrower
existing at the time of acquisition, nor become liable, whether as an
endorser, guarantor, surety, or otherwise, for any debt or obligation of
any other person, firm, or corporation except the obligations of the
Borrower currently owed to or authorized by its Senior Lenders.
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<PAGE>
(c) Liens and Indebtedness: Pledge, mortgage or otherwise encumber, or
subject to or permit to exist upon or be subjected to any lien, security
interest or charge, any asset or any property of any kind or character at
any time owned by the Borrower, except: (1) liens for taxes not yet due
which are being contested; (2) purchase money security interest incidental
to the conduct of its business, and (3) liens and encumbrances granted to
Borrower's Senior Lenders.
(d) Dividends and Purchase of Stock: Declare any dividends on any
shares of its capital stock, whether common or preferred, hereinafter
referred to as "Dividend Payments" or apply any of its property or assets
to purchase, redeem or retire any of its shares of any class of its capital
stock hereinafter referred to as "Stock Purchase Payments". Anything
contained herein to the contrary notwithstanding, the payment of preferred
stock dividends, or the redemption of preferred stock pursuant to
redemption agreements in effect as of the date hereof, shall be allowed as
along as (1) the Borrower is not in default according to the terms of this
Agreement or any loan agreement with its Senior Lenders, or (2) any such
dividend payment or redemption would not cause such a default.
(e) Acquisitions and Investments: Make or have outstanding any
investments, whether through purchase of stock or obligations or otherwise,
in any other person, firm, or corporation; or acquire all or any
substantial part of the assets or business of any other person firm, or
corporation excepting any joint ventures existing as of the date hereof,
without the consent of the Lender which shall not unreasonably be withheld.
(f) Stock: Allow the issuance or sale of additional shares of capital
stock or rights effecting the capital stock of Inmold, whether common or
preferred, to other parties, except for the Options granted to the Lender
pursuant to the terms and conditions of this Agreement, except for shares
issued by Inmold for the purpose of acquiring other business entities and
except for shares issued pursuant to a public offering or market making
activity.
(g) Changes in Business: Sell, assign, lease, transfer, or convey
assets other than in the usual or regular course of business; merge or
consolidate, except as contemplated previously herein, with any other
corporation; enter into a joint venture or similar business arrangement
with any third party; modify the nature and type of business presently
engaged in.
(h) Leases: Acquire the use or possession of any real or personal
property under a lease or similar arrangement or to enter into any
arrangement with any lender or investor providing for the leasing by the
Borrower of any real or personal property theretofore owned by the
Borrower, except in the normal course of business not to exceed $5,000 per
month.
(i) Environmental: The real property owned or leased by the Borrower
or any sublessor shall not be used to store, use, or otherwise handle any
hazardous or toxic substance or other contaminants, except in the ordinary
course of Borrower's business, nor shall the Borrower allow any oil or gas
tanks to be placed on any of its real property, whether owned or leased, or
any other similar activities which might result in the raising of
environmental issues regarding the
14
<PAGE>
property, nor shall the Borrower handle, arrange for transport, deliver for
disposal or dispose of (directly or indirectly) any hazardous waste or
hazardous substances so as to contaminate any property or give rise to any
remediation, clean-up or damage obligation under any statute, rule,
regulation, ordinance or other common law.
(j) Transactions with Insiders or Related Companies: Make any material
transactions with insiders or related companies except as disclosed to
Lender in writing prior to closing. Moreover, Borrower shall not enter into
any transaction or contract including, without limitation, the purchase,
sale, exchange or rental of property or rendering of any service with any
insider, affiliate or related party except in the ordinary course of
business and pursuant to the reasonable requirements of the business of the
Borrower and upon fair and reasonable terms no less favorable to Borrower
than Borrower would obtain in a comparable arm's-length transaction at
market rates with a person not an insider, affiliate or related party,
other than as previously disclosed.
(k) Management Fees. Pay to Inmold Management Fees if Borrower is
delinquent in any payments to Lender or in default of this Agreement as set
forth in Section 10 until such defaults are remedied.
(1) Securities Registration. Sell or transfer its stock unless
pursuant to a registration thereof under appropriate federal and/or state
securities laws or regulations or pursuant to an opinion of Borrower's
counsel reasonably acceptable to Lender indicating the sale or transfer is
exempt from registration.
10. EVENTS OF DEFAULT. Additional interest will be accrued upon any and all
payments of principal, interest or Revenue Participation from the Borrower,
which are made after they have become due and payable, whether at maturity or
otherwise; and the Note and all other obligations set forth in the Agreement, at
the option of the Lender, shall become immediately due and payable in full upon
the occurrence of any one or more of the following events of default:
(a) Payment of any installment of principal or interest on the Note or
the Payments from the Borrower more than 10 days after it shall have become
due and payable, whether at maturity or otherwise;
(b) Any representation or warranty made or deemed made by the Borrower
herein or which is contained in any certificate, document or financial or
other statement furnished at any time under or in connection with this
Agreement shall prove to have been incorrect in any material respect on or
as of the date made or deemed made; or
(c) The Borrower shall default in the observance or nonperformance of
any agreement contained in Section 8 or 9 (Affirmative Covenants or
Negative Covenants), or the Borrower shall default in the observance or
performance of any other agreement contained in the Agreement (other than
as provided in (a) through (b) above) or in any loan document, and such
15
<PAGE>
default shall continue unremedied for a period of 30 days after receipt of
written notice from Lender; or
(d) Default by the Borrower in the payment when due of any other
indebtedness for borrowed money, taxes or the deferred purchase price of
property, or default on any indebtedness or obligation guaranteed by the
Borrower, or default by the Borrower under any loan agreement, mortgage, or
lease agreement under or pursuant to which the same is issued and such
default shall continue for a period of time as may be sufficient to permit
the acceleration of such indebtedness; or
(e) The dissolution termination of existence or business failure of
the Borrower; or
(f) The application for the appointment of a custodian (including
without limitation of a receiver or trustee) of any part of the property of
the Borrower; or
(g) Institution by or against the Borrower of any proceeding under any
bankruptcy, creditor arrangement, or reorganization, insolvency, or similar
law; or
(h) The Borrower's failure to pay its debts as they become due; or
(i) The bringing of formal foreclosure proceedings against Borrower;
(j) If any material event occurs which, in the reasonable judgment of
the Lender, will endanger the collateral or the prospect of payment of any
of the liabilities hereunder or performance of this Agreement is impaired,
and such material event continues for a period of 30 days after receipt of
written notice from Lender, or
(k) One or more judgments or decrees shall be entered against Borrower
involving in the aggregate a liability (not paid or fully covered by
insurance) of $ 10,000.00 or more and such judgments or decrees shall not
have been vacated, discharged, satisfied or stayed within 60 days from the
entry thereof, or as otherwise agreeable to the Lender; or
(l) Borrower or any sublessee handles, uses, stores, delivers for
disposal, disposes of, transport or arranges for the transportation of any
waste, whether hazardous or not, in any manner which is not in compliance
with applicable law, or which contaminates any property or gives rise to
any remediation or clean-up obligation under any law, rule, regulation
ordinance or the common law beyond that disclosed in Schedule 6(h); or
Borrower contaminates any real property owned or leased by it or any other
property , or its real property is used to handle, treat or store, or
becomes contaminated (including without limitation contamination of soil
ground water and service water located on, in or under the real property)
with, pollutants or any other substances which handling, treatment, storage
or contamination may give rise to remediation or clean-up obligations with
respect to its real property or the property of others under any law, rule,
regulation ordinance or the common law; or their real property or any
property to which Borrower delivers for disposal, disposes of,
16
<PAGE>
transports or arranges for transport (directly or indirectly) any waste
listed on the National Priority List or any state listing which identifies
sites for remedial cleanup or investigatory action.
(m) (i) Any person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302
of ERISA), whether or not waived, shall exist with respect to any plan,
(iii) a Reportable Event shall occur with respect to, or proceedings shall
commence to have a trustee appointed, or a trustee shall be appointed, to
administer or to terminate, any plan, which Reportable Event or institution
of proceedings is, in the reasonable opinion of Lender, likely to result in
the termination of such plan for purposes of Title IV of ERISA, and, in the
case of a Reportable Event the continuance of such Reportable Event
unremedied for ten (10) days after notice of such Reportable Event pursuant
to Section 4043(a),(e) or (d) of ERISA is given or the continuance of such
proceedings for ten days after commencement thereof, as the case may be,
(iv) any plan shall terminate for purposes of Title IV of ERISA, or (v) any
other event or condition shall occur or exist; and in each case in clauses
(i) through (v) above, such event or condition, together with all other
such events or conditions, if any, could subject the Borrower to any tax,
penalty or other liabilities which in the aggregate is material in relation
to the business, operations, property or financial or other condition of
Borrower.
(n) Failure of Borrower to maintain appropriate insurance coverage as
provided in Section 7.
(o) Change of Borrower's senior management without prior Written
consent of Lender.
(p) Failure of Inmold to redeem lender's Options when requested to do
so by the Lender.
11. REMEDIES.
(a) Upon the occurrence of any Event of Default as set forth in
Section 10 above, and at any time thereafter, at the election of the Lender
and by notice of default to Borrower, the Lender may declare the Loan (with
accrued interest thereon) and all other amounts owing to the Lender under
the Agreement and the Note (including without limited the Payments due to
date) to be due and payable forthwith, whereupon the same shall immediately
become due and payable. Further, additional interest will be accrued and
payable upon any and all late payments, at the Lender's option. In addition
to any rights granted hereunder or in any Loan Documents delivered in
connection herewith and subject to the rights of Senior Lenders, the Lender
shall have all rights and remedies granted by any applicable law, all of
which shall be cumulative. Except as expressly provided above in this
Section 11, presentment, demand, protest and other notices of any kind are
hereby expressly waived.
17
<PAGE>
(b) Further, upon the occurrence of any Event of Default, which
remains uncured for 30 days, the Lender is authorized, at the Borrower's
expense to hire a consultant or "work-out" specialist for the purpose of
assisting Borrower with its business operation.
12. EXPENSES. The Borrower agrees to pay all out-of-pocket expenses of the
Lender, including the fees and expenses of its counsel lien searches, credit
reviews and environmental review, in connection with the preparation of this
Agreement and the supporting documentation in connection with the Loan expenses
in connection with the attending of this Agreement or waiving any provision
contained herein or incidental to the enforcement of any provision of this
Agreement, the Note, the Security Agreement, the Options and the Revenue
Participation Agreement.
13. MISCELLANEOUS. The following miscellaneous provisions shall apply:
(a) Rights: This Agreement and all of the covenants, warranties, and
representations of the Borrower and all of the powers and rights of the
Lender hereunder shall be in addition to and cumulative of all other
covenants, representations, and warranties of the Borrower and all other
rights and powers of the Lender contained in, or provided for in, any other
instrument or document now or hereafter executed and delivered by the
Borrower to or in favor of the Lender. No delay or failure on the part of
the Lender in the exercise of any power or right shall operate as a waiver
thereof, nor shall any single or partial exercise of the same preclude any
other or further exercise thereof or the exercise of any other power or
right; and the rights and remedies of the Lender are cumulative to and not
exclusive of any rights or remedies which it would otherwise have. No
waiver, consent or modification, or amendment shall be effective as against
the Lender unless the same is in writing and signed by an officer of the
Under. No such amendment, modification, waiver, or consent shall extend to
or affect any obligation or right except to the extent expressly provided
for therein. All computations and determinations of the assets and
liabilities of the Borrower for the purpose of this Agreement shall be made
in accordance with generally accepted principles of accounting consistently
applied, except as may be otherwise specifically provided herein.
(b) Notice : If to Lender, 2545 Spring Arbor Road, Jackson, Michigan
49203, or if to Borrower, at 3910 Industrial Drive, Rochester Hills,
Michigan 48309, and to Inmold at 901 Wilshire Dr., Suite 360, Troy,
Michigan 48084.
(c) Reimbursement for Expenses: The Borrower agrees to pay and
reimburse the Lender for all reasonable expenses and damages paid or
incurred by the Lender, including court costs and attorney fees, arising
out of a default hereunder or the collection of the Note, the Payments or
any other liability, or in preserving or protecting or exercising the right
of the Lender hereunder or with respect to any collateral or security for
the Note or other liabilities, including all of the foregoing, incurred in
any bankruptcy, arrangement, or reorganization proceeding involving the
Borrower. Upon the occurrence of an Event of Default, any or all
indebtedness owing by the
18
<PAGE>
Lender to the Borrower may at any time without notice or demand be offset
and applied to any indebtedness or liability of the Borrower to the Lender,
whether or not then due.
(d) Binding Effect: This Agreement shall be binding upon and shall
inure to the benefit of the Borrower and the Lender, their successors and
assigns, including any subsequent holder or holders of the Note or any
interest therein.
(e) Environmental Inspection: The Lender reserves the right at any
time with reasonable cause to have an environmental expert visit any of the
properties owned or leased by the Borrower and inspect same for any
contaminants at Borrower's expense.
(f) No Partnership or Joint Venture Established: Nothing contained in
the Agreement or any other Loan Document, and no action taken by the Lender
pursuant hereto or thereto shall be deemed to create a partnership, joint
venture or other entity or business relationship between the Lender and the
Borrower except that created in a conventional commercial loan transaction.
It is acknowledged by the Borrower that the Under assets no dominion or
control over the business operations of the Borrower other than for
purposes of monitoring its business operations to protect its interest in
the Collateral as a secured creditor of the Borrower.
14. GOVERNING LAW. The Agreement shall be governed by the laws of the State
of Michigan.
15. SURVIVAL OF TERMS REPRESENTATIONS AND WARRANTIES. The terms and
conditions of this Agreement and the Representations and Warranties contained
herein or incorporated by reference shall continue and survive the closing of
this transaction and shall continue and survive the Loan Term and shall continue
and survive thereafter and shall not terminate or expire until all of the
Options to purchase stock in Inmold or stock in Inmold held by the Leader has
been redeemed, notwithstanding payment of the Loan in full.
16. INDEMNIFICATION. The Borrower hereby agrees to indemnify and hold
harmless the Lender for any and all losses or damages suffered by the Lender
resulting from the Borrower's operation of its business.
17. JURY TRIAL WAIVER. The Borrower and the Lender hereby irrevocably and
unconditionally waive trial by jury in any legal action or proceeding relating
to this Agreement or the transaction contemplated hereby.
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Executed at Farmington Hills, Michigan, on the day and year first above
written. This Agreement may be executed in any number of counterparts, each
counterpart constituting an original, but altogether one agreement.
LENDER:
Horizon BIDCO Investment Co.
By: [illegible]
----------------------------
Its: President
---------------------------
BORROWER:
G-P PLASTICS, INC.
By: /s/ Filipp J. Kreissl
----------------------------
Its: General Manager
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EXHIBIT "A"
PROMISSORY NOTE
$500,000.00 Jackson, Michigan
June 12,1997
FOR VALUE RECEIVED, G-P PLASTICS, INC., a Michigan corporation, ("Maker"),
promises to pay to Horizon BIDCO Investment Co., ("Payee"), or order the sum of
$500,000.00 in lawful money of the United States of America, ("Loan"), at the
principal OFFICE of the Payee at 2545 Spring Arbor Road, Jackson, Michigan
49203, or at such other place as the holder hereof may designate by written
notice to the Maker, with the principal and interest being payable in the manner
and at the times hereinafter set forth.
Security
1. This Promissory Note ("Note") is issued pursuant to a Business Loan
Agreement ("Agreement") of even date herewith and is secured by a certain
Security Agreement on all of the assets of the Maker, ("Security Agreement"),
bearing the same date as this Note.
Payment of Principal and Interest
2. The obligation shall be paid over a 60 month period ("Loan Term") with
nine initial monthly payments of interest only, monthly payments of principal
and interest for 51 months of $11,505.00. Monthly payments to commence June 30,
1997, and shall be due the last day of each month thereafter, with the entire
unpaid balance due and owing 60 months from the date hereof Interest shall begin
to accrue as of the date hereof as hereinabove set forth. Interest shall be
included on the unpaid portion of the principal balance in the amount of the
Prime rate as published from time to time in the Wall Street Journal plus 4%,
adjusted at the end of each calendar quarter, but not less than 13.5% per annum,
which shall be calculated on the basis of a 360 day year with payments, as
hereinabove set forth.
Late Payment Fee
3. A late payment fee in the amount of 5% of the monthly installments due
and owing will be assessed against the Maker in the event the monthly payment
required hereunder is received by the Payee after the due date.
A-1
<PAGE>
Event of Default
4. The following shall constitute Events of Default hereunder, upon the
happening of any one or more of which the entire unpaid balance of the
principal, the accrued interest and all other sums secured hereunder, at the
option of the Payee, shall become immediately due and payable without notice:
a) The failure of the Maker to pay any installment of principal and/or
interest according to the terms and conditions of this Note more than 10
days after it shall become due and payable, whether at maturity, by notice
of intention to prepay, or otherwise.
b) The occurrence of any Event of Default as defined in the Agreement
or a default according to the terms and conditions of the Security
Agreement.
Waivers
5. The failure by the Payee to exercise the option provided for in
Paragraph 4 of this Note shall not constitute a waiver of the right to exercise
it in the event of any subsequent default. Presentment, notice of dishonor and
protest are hereby waived by Maker and this Note shall be binding upon the
Maker, its successors and assigns.
Construction and Assignment
6. The words "Maker" and "Payee" include singular or plural, individual
partnership or corporation, and the respective assigns of the Maker or the
Payee, as the case may be. The use of any gender applies to all genders. If more
than one party is named as the Maker, the obligation hereunder of each such
party is joint and several. The Maker shall not assign this Note or the
obligation created hereunder without the express written consent of the Payee.
The Payee may assign or negotiate the obligation created hereunder, subject to
applicable securities laws and/or exemptions therefrom.
Attorneys' Fees and Costs
7. The Maker agrees to pay to the holder of this Note, the reasonable cost
of collection, expenses and attorneys' fees paid or incurred in connection with
the collection or enforcement of this Note, whether or not suit is filed, and
the costs of any suit and any attorneys' fees adjudged by a court in any action
to enforce payment of this Note or any part of it.
A-2
<PAGE>
Prepayment
8. Prepayment of the balance of the Loan shall not be permitted during the
first 24 months of the Loan Term After month 24 of the Loan Term, only
Prepayment of the entire principal balance plus accrued interest shall be
allowed and shall be without a Prepayment penalty.
Governing Law
9. This Note shall be governed by the laws of the State of Michigan.
G-P PLASTICS, INC.
By:________________________
Its:_______________________
A-3
<PAGE>
EXHIBIT "B"
REVENUE PARTICIPATION AGREEMENT
AGREEMENT entered into this 12th day of June, 1997, by and between G-P
PLASTICS, INC., a Michigan corporation, of 3910 Industrial Drive, Rochester
Hills, Michigan 48309, hereinafter referred to as the "Borrower", and Horizon.
BIDCO Investment Co., a Michigan corporation organized under the Michigan BIDCO
Act of 2545 Spring Arbor Road, Jackson, Michigan, hereinafter referred to as
"Lender".
WITNESSETH:
WHEREAS, the parties hereto have entered into a Business Loan Agreement
("Agreement") of even date herewith whereby the Lender has agreed to loan to the
Borrower $500,000.00 ("Loan"); and
WHEREAS, in order to induce the Lender to loan funds to the Borrower, the
Borrower has agreed, as additional consideration, to allow the Lender to
participate in a portion of the revenue earned by the Borrower according to the
terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the Agreement and other good and
valuable consideration, the parties hereto agree as follows:
1. Term. The revenue participation ("Revenue Participation") shall commence
on the date hereof and shall continue throughout the 60 month loan term even if
the Loan is prepaid ("Loan Term").
2. Amount of Participation. The Lender shall participate in the Borrower's
gross revenues ("Gross Revenues") generated during the Loan Term by the
Borrower's existing company or companies and any successor or affiliate
companies formed during the Loan Terra, and such payments ("Payments") shall
continue throughout the entire Loan Term, even in the event of prepayment and
thereafter if the Loan remains unpaid at the end of the Loan Term. Gross
Revenues from all sources generated during the Loan Term shall be determined
using generally accepted accounting principles applied on a consistent basis as
prescribed by the American Institute of Certified Public Accountants, as set
forth in the Borrower's, fiscal year-end reviewed financial statement. If the
Gross Revenues generated by Borrower from all sources for any fiscal year of
Borrower are between
B-1
<PAGE>
$12,000,000.00 and $15,500,000.00, the participation by the Lender shall be an
amount equal to .75% of the Gross Revenues generated by the Borrowe between $
12,000,000.00 and $15,500,000.00. If Gross Revenues generated by the Borrower
from all sources are in excess of $15,500,000, the Lender shall receive further
revenue participation, in addition to the .75% on the amount between
$12,000,000.00 and $15,500,000.00, equal to 1.25% of Gross Revenues generated by
the Borrower in excess of $15,500,000. Revenue Participation payments for the
period commencing on the date of this Agreement and ending September 30, 1997,
shall be on a proportionate basis according to the above-referenced formula.
Revenue Participation payments for any short year at the end of the Loan Term
shall likewise be on a proportionate basis.
3. Payment. Revenue Participation payments shall be made on a calendar
quarter basis during the Loan Term.
4. Estimated Payments. Estimated payments shall be made within 30 days
after the end of the first calendar quarter during the Loan Term in which
Revenue Participation payments are due, and each calendar quarter thereafter
based upon the unaudited financial statements prepared by the Borrower or its
certified public accountant until the end of the Loan Term.
The Revenue Participation payments for each calendar quarter shall be
estimated and paid as follows:
(a) For the initial period ("Initial Period") commencing on the date
hereof and ending at the end of the first calendar quarter af ter said
date, the Borrower shall determine its Gross Revenues for the Initial
Period on an annualized basis for the purpose of apply ing the Revenue
Participation Formula (Formula) as set forth in Section 2 above. Borrower
shall then make proportionate quarterly Revenue Participation payment based
upon the number of days in the Initial Period divided by 360.
(b) Gross Revenues for each calendar quarter thereafter during the
Loan Term shall be determined by the Borrower and annualized for the
purpose of applying the Formula and the amount so determined as the annual
Revenue Participation payment shall be divided by fo ur and paid to the
Lender as the quarterly estimated Revenue Participation payments.
B-2
<PAGE>
(c) The estimated Revenue Participation payment for the final period
of the Loan Term shall be determined in the same manner as said payment was
determined for the Initial Period.
5. Adjustment. Within 30 days of receipt of the Borrower's fiscal year- end
reviewed financial statement the Borrower shall determine the actual Revenue
Participation payments due pursuant to the Formula as set forth above for the
fiscal year to which such statement relates and notify the Lender of the result
of such determination. Within 30 days thereafter, Borrower, shall pay to Lender
any deficiency due, or the Lender shall refund to the Borrower any overpayment
made.
6. Accounting. Each Payment by the Borrower to the Lender, whether
estimated or otherwise, shall be accompanied by an accounting substantially in
the form set forth in Exhibit "A" setting forth the calculation which was used
to determine the amount of the payment.
7. Review of Books and Records. The Borrower will permit Lender or its
representatives to examine and make copies of Borrower's books and records
related to the determination of the Revenue Participation payments during the
normal business hours and upon reasonable notice, for the purpose of verifying
the calculations of such Revenue Participation payments.
8. Dispute Resolution. If the Lender believes that the Borrower's
calculation of any Revenue Participation payment hereunder is not accurate, then
the Lender may select an independent certified public accountant to conduct an
examination of the Borrower's and its subsidiaries'books and records to review
the calculation of the Revenue Participation payment If after such examination
there exists a material dispute with respect to such calculation, the matter
shall be resolved by arbitration in accorda nce with the Commercial Arbitration
Rules of the American Arbitration Association in Detroit Michigan, the
determination in such arbitration shall be binding upon the parties, and
judgment may be entered upon such arbitration decision by any court having
jurisdiction. The arbitrator shall be an audit partner of a nationally
recognized accounting firm not affiliated with the Lender or Borrower and
acceptable to both of them. If any examination discloses an underpayment of the
amount due to the Lender, which Borrower agrees with or is determined in a final
judgment to be correct Borrower shall reimburse Lender for the costs of any such
examination and arbitration, including without limitation, reasonable attorney
fees. If any
B-3
<PAGE>
such examination discloses the Borrower's initial calculation was correct or
overstated, Lender shall pay for the costs of any such examination and
arbitration, including, without limitation, reasonable attorney fees.
9. Late Payment Fee. A late fee in the amount of 5.0% of the amount of the
Payment due and owing shall also be due and payable to Lender by Borrower in the
event any Payment required hereunder is received by the Lender after the due
date.
10. Binding Effect. This Revenue Participation Agreement shall be binding
upon the Borrower, and its successors and assigns, and shall inure to the
benefit of the Lender and its successors and assigns.
11. Governing Law. This Agreement shall be governed by the laws of the
State of Michigan.
IN WITNESS WHEREOF, this Agreement is signed on the day and year first
above written.
G-P PLASTICS, INC.
By:__________________________
Its:_________________________
Horizon BIDCO Investment Co.
By:__________________________
Its:_________________________
B-4
<PAGE>
EXHIBIT "A"
(Revenue Participation Payment Accounting)
A-1
<PAGE>
EXHIBIT "C"
(Revenue Participation Payment Accounting)
C-1
<PAGE>
EXHIBIT "D"
STOCK OPTION
Grant of Option
1. FOR GOOD AND VALUABLE CONSIDERATION, the receipt of which is hereby
acknowledged, INMOLD, INC., an Indiana corporation, hereinafter referred to as
the "Corporation", grants to HORIZON BIDCO INVESTMENT CO., a Michigan
corporation organized under the Michigan BIDCO Act hereinafter referred to as
"BIDCO", the right to acquire up to 75,000 shares of common stock of the
Corporation at $. 10 per share ("Exercise Price"), at any time and from time to
time during the Loan Term as defined in a Business Loan Agreement ("Agreement")
of even date herewith between BIDCO and G-P Plastics, Inc. ("G-P"), a subsidiary
of the Corporation, and for 24 months after the expiration of the Loan Term
("Exercise Period") subject to the following provisions, terms and conditions.
Procedure for Exercise
2. The right to purchase granted under this option may be exercised by
BIDCO in whole or in part but not as to a fractional share, by surrender of this
option, properly endorsed if required, at the principal office of the
Corporation, and by delivering payment to the Corporation by certified check or
bank check of the aggregate Exercise Price for the number of shares purchased.
The shares purchased shall be deemed to be issued to BIDCO as the record owner
as of the close of business on the date on which this option is surrendered and
payment is made for the shares. Certificates representing the shares purchased
shall be delivered to BIDCO within 10 days after the rights represented by this
option have been properly exercised. Unless this option shall have expired or
shall have been fully exercised, a new option in the same form as this option,
representing any number of shares for which this option shall not have been
exercised, shall also be delivered to BIDCO within that time.
Shares to be Fully Paid and Reservation of Shares
3. The Corporation covenants and agrees that all shares that may be issued
on the exercise of the rights represented by this option shall, on issuance, be
fully paid and nonassessable and free from all taxes, hens and charges related
to the issuance of the shares. The Corporation further covenants and agrees that
during the period within which the rights represented by this option may be
exercised, the Corporation shall, at all times, have
D-1
<PAGE>
authorized and reserved for the purpose of issuance or transfer on exercise of
this option a sufficient number of the shares subject to this option to provide
for its exercise.
Exercise Price Adjustment
4. If the Corporation shall, at any time, subdivide the outstanding shares
of the class of shares covered by this option into a greater number of shares,
the Exercise Price shall be proportionally reduced and the number of shares
covered by this option shall be proportionally increased. Conversely, if the
outstanding shares shall be combined into a smaller number of shares, the
Exercise Price shall be proportionally increased and the number of shares
covered by this option shall be proportionally reduced. In the event of any
reorganization, reclassification, consolidation, merger or sale of all or
substantially all of the assets of the Corporation, BIDCO shall subsequently
have the right to purchase and receive the securities or assets that BIDCO would
have received or been entitled to receive had BIDCO been a holder or an
aggregate number of outstanding shares at the effective time of the
reorganization, reclassification, consolidation, merger or sale. This right
shall be on the basis and on the terms and conditions specified in this option
and shall replace the right to purchase the shares specified in this option.
Right to Acquire Additional Shares
5. Pursuant to the terms of the Agreement in the event the Gross Revenues,
as defined in the Agreement, of G-P do not exceed $17,500,000 annually by its
fiscal year ending in 2001, the,Corporation shall grant to BIDCO the right to
acquire an additional 10,000 shares of the common stock of the Corporation at
the Exercise Price, subject to any adjustment pursuant to Section 4 above, at
any time during the Exercise Period. A new option in the same form as this
option shall be delivered to BIDCO within 10 days of receipt by G-P of its
reviewed financial statement for its fiscal year ending in 2001.
Absence of Rights of Holder
6. This option shall not entitle BIDCO to any rights as a shareholder of
this Corporation prior to the exercise of this option.
Redemption of Option
7. BIDCO, at its option, may require the Corporation to redeem the options
granted, hereunder, or hereafter granted pursuant to Section 5 hereof at a price
equal to $2.10 per share during the 60 day period ("Redemption Period")
commencing with the day the Loan Term expires. In the event of prepayment the 60
day Redemption Period shall commence on the date of prepayment. BIDCO shall
notify the Corporation in writing at any time during the Redemption Period of
its desire to have the options redeemed.
D-2
<PAGE>
IN WITNESS WHEREOF, INMOLD, INC. has caused this option to be executed by
its duly authorized officers on_________________,1997.
INMOLD, INC.
By:_________________________
Its:________________________
D-3
<PAGE>
EXHIBIT "E"
SUBORDINATION AGREEMENT
THE SUBORDINATION AGREEMENT is made and entered into by and among
___________, (the "Officer"), HORIZON BIDCO INVESTMENT CO., a Michigan Business
Industrial Development Corporation, ("BIDCO"), and G-P PLASTICS, INC., a
Michigan corporation, ("Company").
RECITALS
A. The Company wishes to obtain credit from BIDCO pursuant to a Business
Loan Agreement between the Company and BIDCO pursuant to a Promissory Note in
favor of BIDCO, all of which are dated June 12, 1997 (collectively the "BIDCO
Documents").
B. The Company is indebted to the Officer pursuant to a promissory note
dated________________,a copy of which is attached hereto (the "Officer Note").
C. As a condition to entering into the BIDCO Documents, BIDCO has required
the execution and delivery of this Agreement and the Officer desires to aid the
Company in obtaining credit from BIDCO.
NOW, THEREFORE, to induce BIDCO to extend credit to the Company and in
consideration of such extension of credit the parties hereby agree as follows:
1. Subordination of Principal and Interest Payments to Officer. The
obligations and liabilities of the Company to the Officer pursuant to the
Officer Note, including principal and interest, whether direct or indirect,
absolute or contingent secured or unsecured, due or to become due, now existing
or hereafter arising, and however evidenced, are subordinated in right of
payment in the manner set forth herein to the obligations of the Company to
BIDCO, including principal and interest and Revenue Participation Payments,
whether direct or indirect absolute or contingent secured or unsecured, due or
to become due, now existing or hereafter arising, and whether accrued before or
after the filing of a petition in bankruptcy or insolvency or similar
proceeding, and however evidenced (the "Senior Indebtedness").
2. Right of Officer to Payments . The Officer shall be entitled to receive,
and the Company shall be entitled to pay to the Officer, payment of principal
and interest pursuant to the terms of the Officer Note but subject to the
restrictions set forth in Section 5(i) of said
E-1
<PAGE>
Business Loan Agreement; provided however that if an Event of Default has
occurred and is continuing under the BIDCO Documents, the Officer shall not be
entitled to receive, and the Company shall not be entitled to pay to the
Officer, any payment (whether of principal, interest or otherwise), pursuant to
the Officer Note, and the Officer shall not ask, demand, take or receive any
such payment until such time such an Event of Default is waived in writing by
BIDCO or cured.
3. Principal Payments Held in Trust. If the Officer receives any payment
which he is not permitted to receive pursuant to Section 2, the Officer shall
promptly deliver the same to BIDCO in the form received (except for endorsement
or assignment as may be required by BIDCO), for application to the Senior
Indebtedness, and until so delivered, the same shall be held in trust by the
Officer as the property of BIDCO. If the Officer fails to make any such
endorsement or assignment BIDCO is hereby irrevocably authorized to make the
same.
4. Notices Provided by Office . The Officer shall provide BIDCO with 30
days prior written notice before the Officer may sue for the whole or any part
of the amounts owing by the Company to the Officer pursuant to the Officer Note
(the "Subordinated Indebtedness ").
5. Amendment of BIDCO Documents and Officer Note. At any time and from time
to time, BIDCO may enter in such agreement or agreements with the Company as
BIDCO may deem proper (i) extending the time of payment or otherwise amending or
modifying the terms of the BIDCO Documents, or (ii) affecting any security
underlying any or all of such obligations, or may exchange, sell or surrender or
otherwise deal with any such security without notice to the Officer and the
Officer and Company must obtain the prior written consent of BIDCO, which
consent shall not be unreasonably withheld, to any amendment of the Officer Note
(including without limitation the repayment schedule thereof).
6. Waivers. No waiver shall be deemed to be made by either party of any of
its rights hereunder unless the same shall be in writi ng signed on behalf of
the party making the waiver, and each such waiver, if any, shall be a waiver
only with respect to the specific matter or matters to which the waiver relates
and shall in no way impair the rights of such party in any other respect at any
time.
7. Acceptance. Notice of acceptance by each party of this Agreement is
hereby waived by the other parties, and this Agreement and all of the terms and
provisions hereof shall be immediately binding upon all of the parties from the
date of execution hereof
E-2
<PAGE>
8. Assignees, Governing Law. This Agreement shall bind or inure to the
benefit of the parties and their respective successors and assigns, and shall be
construed according to the laws of the State of Michigan.
9. Successors. The term "Company" as used herein, includes any person,
corporation, partnership or business entity which succeeds to the interests or
business of the Company named above, and the terms "Senior Indebtedness" and
"Subordinated Indebtedness" include indebtedness of any such successor Company
to BIDCO and the Officer.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of June 12, 1997.
HORIZON BIDCO INVESTMENT CO.
By:
---------------------------
Its:
---------------------------
G-P PLASTICS, INC.
By:
---------------------------
Its:
---------------------------
OFFICER
--------------------------------
E-3
<PAGE>
EXHIBIT "F"
G-P PLASTICS, INC.
CONSENT RESOLUTION OF THE BOARD OF DIRECTORS
The undersigned Directors of G-P Plastics, Inc., a Michigan corporation,
"Corporation", acting without a meeting and by unanimous consent pursuant to
Section 525 of the Michigan Business Corporation Act of 1989, hereby adopt the
following preambles and resolutions, the said preambles and resolutions to have
fall force and effect as if adopted at a duly called meeting of the Board of
Directors held on June 12, 1997.
WITNESSETH:
WHEREAS, the Corporation desires to borrow capital from Horizon BIDCO
Investment Co. in an amount of $500,000.00 for the purpose of providing working
capital, equipment purchase and project development in the normal course of
business.
WHEREAS, Horizon BIDCO Investment Co. has agreed to loan funds to the
Corporation.
THEREFORE, BE IT
RESOLVED, that the Corporation be authorized to borrow $500,000.00
from Horizon BIDCO Investment Co. and to enter into a Business Loan
Agreement, a Promissory Note, Revenue Participation Agreement Security
Agreement and any other related documents as Horizon BIDCO Investment Co.
may reasonably require relating to the existence of the Corporation, the
corporate authority for and the validity of said Agreement, and any other
matters relevant thereto.
FURTHER RESOLVED, that any of the officers of the Corporation are
authorized to execute the Business Loan Agreement the Promissory Note,
Revenue Participation Agreement and any and all other related documents as
may be required by Horizon BIDCO Investment Co. on behalf of the
Corporation.
----------------------------
----------------------------
F-1
<PAGE>
E X H I B I T "G"
Officers, Directors and Shareholders
Directors Indebtedness
$
- --------------------------- ------------
$
- --------------------------- ------------
$
- --------------------------- ------------
$
- --------------------------- ------------
$
- --------------------------- ------------
Officers
President $
- --------------------------- ------------
Secretary $
- --------------------------- ------------
Treasurer $
- --------------------------- ------------
$
- --------------------------- --------------- ------------
$
- --------------------------- --------------- ------------
- --------------------------- ------------
Shareholders
$
- --------------------------- ------------
$
- --------------------------- ------------
$
- --------------------------- ------------
$
- --------------------------- ------------
$
- --------------------------- ------------
$
- --------------------------- ------------
Relatives of Officers, Directors and Shareholders
$
- --------------------------- ------------
$
- --------------------------- ------------
$
- --------------------------- ------------
G-1
<PAGE>
EXHIBIT "H"
SECURITY AGREEMENT
This Security Agreement is entered into on _________, 1997, by and between
G-P PLASTICS, INC., the "Debtor", of 3910 Industri al Drive, Rochester Hills,
michigan 48-' )09, and Horizon BIDCO Investment Co., the "Secured Party".
For value received, the Debtor hereby grants to Secured Party a security
interest in and to all of the Debtor's tangible and intangible real and personal
property and fixtures, whether now owned or hereafter acquired, including, but
not limited to, goods, documents, inventory, instruments, equipment@ furniture,
fixtures, trade fixtures, contract rights, accounts receivable, licenses and
motor vehicles, together with the proceeds from the sale or other disposition
thereof and the products thereof (the "Collateral"). The Collateral shall be
considered to be all of the assets of the Debtor. Such security interest shall
be subject to the security interest of the Debtor's Senior Lenders or substitute
senior lender in the Collateral pursuant to consent given by Secured Party under
the terms and conditions of the Business Loan Agreement between Debtor and
Secured Party of even date herewith, and in pari passu with all other holders of
subordinated indebtedness. The Debtor hereby pledges, assigns, transfers and
gran ts to the Secured Party a security interest in the Collateral to secure (1)
the Debtor's Note of even date herewith in the amount of $500,000.00 to the
Secured Party, payable as to principal and interest as provided in the Note; (2)
future advances by the Secured Party to the Debtor, to be evidenced by similar
notes; (3) all expenditures by the Secured Party for taxes, insurance and
repairs to and maintenance of the Collateral incurred by the Secured Party in
the collection and enforcement of the Note an d other indebtedness of Debtor;
and (4) all liabilities of Debtor to Secured Party now existing or incurred in
the future, matured or unmatured, direct or contingent and any renewals,
extensions, and substitutions of those liabilities, and any other obligations of
the Debtor pursuant to a certain Business Loan Agreement of even date herewith,
including, but not limited to, revenue participation payments.
The Debtor warrants, covenants and agrees as follows:
Title
1. Except for the security interest granted to Debtor's Senior Lenders and
the security interest granted by this Agreement and t he security interest
granted to other holders of subordinated indebtedness from time to time as
permitted by the Business Loan
H-1
<PAGE>
Agreement the Debtor has, or on acquisition will have, full title to the
Collateral free from lien, security interest encumbrance, or claim, and the
Debtor will, at the Debtor's cost and expense, defend any action that may affect
the Secured Party's security interest in, or the Debtor's title to, the
Collateral.
Financing Statement
2. No Financing Statement covering the Collateral or any part of it or any
proceeds of it is on file in any public office with the exception of a financing
statement filed by the Debtor's Senior Lenders and the security interest granted
to other holders of subordinated indebtedness from time to time as permitted by
the Business Loan Agreement and, at the Secured Party's request, the Debtor will
join in executing all necessary financing statements in forms satisfactory to
the Secured Party and win further execute all other instruments deemed necessary
by the Secured Party.
Sale, Lease or Disposition of Collateral
3. The Debtor will not without the written consent of the Secured Party,
except for the sale of inventory in the ordinary course of business, sell
contract to sell, lease, encumber, or dispose of the Collateral or any interest
in it until this Security Agreement and all debts secured by it have been fully
satisfied.
Insurance
4. The Debtor will insure the Collateral with companies acceptable to the
Secured Party against the casualties and in the amounts that the Secured Party
shall reasonably require with a loss payable clause in favor of the Debtor and
Secured Party as their interest may appear, and, subject to the interest of the
Debtor's Senior Lenders, the Secured.Party is authorized to collect sums that
may become due under any of the insurance policies and apply them to the
obligation secured by this Agreement.
Protection of Collateral
5. The Debtor will keep the Collateral in good order and repair and will
not waste or destroy the Collateral or any part of it. The Debtor will not use
the Collateral
H-2
<PAGE>
in violation of any statute or ordinance, and the Secured Party will have the
right to examine and inspect the Collateral at any reasonable time.
Taxes
6. The Debtor will pay promptly when due all taxes and assessments on the
Collateral or for its use and operation.
Security Interest in Proceeds and Accessions
7. The Debtor grants to the Secured Party a security interest in and to all
proceeds, increases, substitutions, replacements, additions and accessions to
the Collateral. This provision shall not be construed to mean that the Debtor is
authorized to sell lease or dispose of the Collateral without the consent of the
Secured Party.
Reimbursement of Expenses
8. At the option of the Secured Party, the Secured Party may discharge
taxes, liens, interest or perform or cause to be performed for and on behalf of
the Debtor any actions and conditions, obligations or covenants that the Debtor
has failed or refused to perform, and may gay for the repair, maintenance and
preservation of the Collateral. All sums so expended, including but not limited
to attorneys' fees, court costs, agents fees or commissions or any other costs
or expenses, shall bear interest from th e date of payment at the annual rate of
21.5% per annum calculated on the basis of a 360 day year and shall be payable
at the place designated in the Debtor's Note and shall be secured by this
Security Agreement.
Books of Account
9. The Debtor will, at reasonable times and from time to time, allow the
Secured Party or any of its officers, employees or representatives to examine
and inspect and make abstracts from Debtor's books and other records and, where
accounts or contract rights are part of the CollateraL to arrange for
verification of accounts, under reasonable procedures, directly with account
debtors or by other methods and permit the Secured Party to inspect inventory
and motor vehicles.
H-3
<PAGE>
Payment
10. The Debtor will pay the Note secured by this Security Agreement and any
other indebtedness secured by this Agreement in accordance with the terms and
provisions of the indebtedness and will repay immediately all sums expended by
the Secured Party in accordance with the terms and conditions of this Security
Agreement.
Change of Place of Business
11. The Debtor will promptly notify the Secured Party of any change of
Debtor's chief place of business, or place where records concerning the
Collateral are kept.
Time of Performance and Waiver
12. In performing any act under this Security Agreement and the Note, time
shall be of the essence. The Secured Party's acceptance of partial or delinquent
payments, or the failure of the Secured Party to exercise any right or remedy,
shall not be a waiver of any obligation of the Debtor or right of the Secured
Party or constitute a waiver of any other similar default that occurs later.
Default
13. The Debtor shall be in default under this Security Agreement on the
occurrence of any event of default under the Business Loan Agreement the Note or
the Revenue Participation Agreement.
Remedies
14. On the occurrence of any event of default, and at any later time, the
Secured Party, at its option, may declare all obligations secured due and
payable immediately. The Secured Party may require the Debtor to assemble the
Collateral and make it available to the Secured Party at any place to be
designated by the Secured Party that is reasonably convenient to both parties.
Unless the Collateral is perishable or threatens to decline speedily in value or
is of a type customarily sold on a recognized mar ket the Secured Party will
give the Debtor reasonable notice of the time and place of any public sale or of
the time after which any private sale or any other intended disposition of the
H-4
<PAGE>
Collateral is to be made. The requirements of reasonable notice shall be met if
the notice is mailed, postage prepaid, to the address of the Debtor shown at the
beginning of this Security Agreement at least five days before the time of the
sale or disposition. Expen ses of retaking, holdings, preparing for sale,
selling, or the like shall include the Secured Party's reasonable attorneys'
fees and legal expenses.
Miscellaneous Provisions
15. a. Michigan Law to Apply: This Security Agreement shall be construed
under and in accordance with the Uniform Commercial Code and other applicable
laws of the State of Michigan.
b. Parties Bound: This Security Agreement shall be binding on and
inure to the benefit of the parties and their respective successors and
assigns as permitted by this Security Agreement.
c. Legal Construction: In case any one or more of the provisions
contained in this Security Agreement shall for any reason be hel d invalid,
illegal, or unenforceable in any respect the invalidity, illegality or
unenforceability shall not affect any other provisi on of this Security
Agreement and this Security Agreement shall be construed as if the invalid,
illegal or unenforceable provision ha d never been contained in it.
d. Prior Agreement Superseded: This Security Agreement constitutes the
only agreement of the parties and supersedes a ny prior understandings or
written or oral agreements between the parties respecting the subject
matter of this Security Agreement.
e. Definitions: All terms used in this Security Agreement that are
defined in the Uniform Commercial Code of Michigan shall have the same
meaning in this Security Agreement as in the Code and all terms used herein
shall have the same assigned in the Business Loan Agreement between the
parties hereto of even date herewith.
f. Amendment: The Security Agreement may only be amended by written
notice signed by all the parties hereto.
H-5
<PAGE>
g. Release of Lien: Upon payment of all of the obligations owed by the
Debtor to the Secured Party, the Secured Party shall execute any and all
instruments and documents reasonably necessary and proper to discharge and
release the lien on the Collateral arising pursuant to this Security
Agreement.
DEBTOR:
G-P PLASTICS, INC.
By:
---------------------
Its: President
SECURED PARTY:
Horizon BIDCO Investment Co.
By:
---------------------
Its:
H-6
EXHIBIT 10.09
LOAN AGREEMENT
THIS LOAN AGREEMENT ("Agreement"), made as of the 24 day of July, 1997, by
and between G-P PLASTICS, INC., a Michigan corporation ("Borrower"), and CAPITAL
BIDCO, INC a Michigan business and industrial development corporation
("Lender").
BACKGROUND The Borrower needs $500,000 in debt financing. The Lender is
willing to provide such financing on the terms and conditions set forth in this
Agreement.
SECTION I. DEFINITIONS.
1.1 Defined Terms. The following terms shall have the following respective
meanings:
"Accounts," "Chattel Paper," "Documents," "Equipment," "Fixtures," "General
Intangibles," "Goods," "Investments" and "Inventory" shall have the meanings
assigned to them in the UCC on the date of this Agreement.
"Affiliate" of a person shall mean any person (a) who or which, directly or
indirectly, controls, is controlled by or is under common control with such
person, (b) who is director, officer or employee of such person or of an
Affiliate or (c) who is related by blood or marriage to an Affiliate.
"Assignment" shall mean an assignment pursuant to which the Borrower
provides to the Lender a collateral assignment of the Policy, in such form as
the Lender shall, in its sole discretion. require.
"Bankruptcy Code" shall mean the Bankruptcy Code of 1978 of the United
States. as amended, or any successor act or code.
"Borrower's Address" shall mean 3910 Industrial Drive, Rochester Hills,
Michigan 48309.
"Business Day" shall mean a day on which banks in Michigan are open to
carry on their normal commercial banking, business.
"Cash Flow" shall mean, as of any applicable date of determination, net
earnings before interest, taxes, depreciation and amortization expense paid,
payable or chargeable for the twelve (12) month period immediately preceding
such date of determination.
"Charter" shall mean the certificate or articles of incorporation pursuant
to which a corporation was formed or is subsisting.
1
<PAGE>
"Collateral" shall mean all of Borrower' s properties, rights,- and assets
whether now owned or hereafter acquired, and whether real, personal or mixed,
including but not limited to, Borrower's Accounts, Chattel Paper, Documents,
Equipment, Fixtures, General Intangibles, Goods, Instruments and Inventory, the
Policy and any other properties or assets in which a lien or security interest
is granted to the Lender pursuant to the Security Agreement, the Assignment or
any other instrument or agreement executed and delivered in connection with this
Agreement.
"Debt" shall mean, as of any applicable date of determination, all items of
indebtedness, obligation or liability of a person, whether matured or unmatured,
liquidated or unliquidated, direct or indirect, absolute or contingent, joint or
several, that should be classified as liabilities in accordance with GAAP.
"Debt Service" shall mean, as of any applicable date of determination, all
principal and interest expense for borrowed money, all capitalized lease
obligation payments and payments with respect to similar items of indebtedness
paid or payable for the twelve (12) month period immediately preceding such date
of determination.
"Default" shall mean a condition or event which, with the giving of notice
or the passage of time, or both, would become an Event of Default.
"Disbursement Date" shall mean each date upon which the Lender makes a loan
under Section 2.1 of this Agreement.
"Environmental Laws" shall mean any United States, state, local or foreign
statute, code, ordinance, rule, regulation, permit, consent, approval, license,
judgment, order, writ, decree, injunction or other authorization or mandate
relating to:
(i) emissions, discharges, releases or threatened releases of
Hazardous Substances into ambient air, surface water, ground water,
publicly owned treatment works, septic systems or land;
(ii) the use, treatment, storage, disposal, handling, manufacture,
sale, transportation, generation, or shipment of any hazardous waste, toxic
waste, solid waste, medical waste, infectious waste, radioactive waste or
material or by-product material, other material, pollutant or contaminant,
substance, product or by-product; or
(iii) otherwise relating to pollution or the protection of health,
safety or environment.
-2-
<PAGE>
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended, or any successor act or code.
"Event of Default" shall mean any of those conditions or events listed in
Section 8.1 of this Agreement after the expiration of any applicable notice or
cure periods set forth in Section 8.1.
"Financial Statements" shall mean all those balance sheets, earnings
statements, cash flows, projections and other financial data (whether of the
Borrower, any Subsidiary, any Guarantor or otherwise) which have been, or will
be, under Section 6.1, furnished to the Lender for the purposes of, or in
connection with, this Agreement and the transactions contemplated hereby.
"Financing Statements" shall mean UCC financing statements or similar
filing instruments describing the Lender as secured party and the Borrower as
debtor covering the Collateral and otherwise in such form, for filing in such
jurisdictions and with such filing offices as the Lender shall reasonably deem
necessary or advisable.
"GAAP" shall mean, as of any applicable date of determination, Generally
accepted accounting principles consistently applied.
"Gross Sales" shall mean, for any applicable period of determination
aggregate gross revenues received by a party from all sales of its products or
services, net of discounts, returns and allowances.
"Guarantor" shall mean each of John Horner and David Shiflett.
"Guaranty" shall mean a conditional guaranty pursuant to which the
Guarantor guarantees the Indebtedness if the Guarantor shall voluntarily leave
the employ of the Borrower, in such form as the Lender shall, in its sole
discretion, require.
"Hazardous Materials" shall mean hazardous waste, solid waste, pollutant or
contaminant, toxic substance or hazardous substance as defined in any
Environmental Laws, or any of the regulations adopted and publications
promulgated pursuant to said laws, any asbestos, asbestos fibers or friable
asbestos, any PCBs, any medical or infectious waste, radioactive waste or
material or by-product material, any petroleum or petroleum products, paint
containing lead, urea formaldehyde foam insulation, discharges of sewage or
effluent, or any other hazardous. toxic, foreign or obnoxious pollutant or
material or substance.
"Horizon" shall mean Horizon BIDCO Investment Company, a Michigan business
and industrial development corporation, and its successors and assigns.
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"Indebtedness" shall mean all indebtedness, obligations and liabilities
whatsoever of the Borrower to the Lender, including, without limitation,
indebtedness, obligations and liabilities arising under the Note, this Agreement
and the transactions contemplated hereby, including, without limitation Revenue
Participation Payments, whether matured or unmatured, liquidated or
unliquidated, direct or indirect, absolute or contingent, joint or several, due
or to become due or now existing or hereafter arising, and however evidenced.
"Inmold" shall mean Inmold, Inc., an Indiana corporation.
"Intercreditor Agreement" shall mean an agreement between Lender and
Horizon relating to the relative priority of Lender and Horizon in the
Collateral in such form as Lender shall, in its sole discretion, require.
"IRC" shall mean the Internal Revenue Code of 1986, as amended.
"Lender's Address" shall mean 6412 Centurion, Suite 150, Lansing, Michigan
48917.
"Mortgage" shall mean a mortgage granted to secure up to 75% of a purchase
price not exceeding $ 1,800,000 incurred in the purchase of the facilities
located at Borrower's Address and currently leased to the Borrower.
"Net Worth" shall mean, as of any applicable date of determination, net
worth of a person determined in accordance with GAAP.
"Note" shall mean a promissory note payable to the Lender in the form of
Exhibit A and executed and delivered under Section 2.1.
"Notice Date" shall mean the earlier of (i) the date of notice to the
Borrower by the Lender of a Default or (ii) the date the Lender is notified, or
should have been notified, pursuant to the Borrower's obligation under Section
6.1.6 of this Agreement, of such Default.
"Option" shall mean an option in favor of Capital to purchase 75,000 shares
of common stock of Inmold, in such form and with such terms and conditions as
Capital shall, in its sole discretion, require.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any person
succeeding to the present powers and functions of the Pension Benefit Guaranty
Corporation.
"Permitted Liens" shall mean:
(a) Liens and encumbrances in favor of the Lender;
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(b) Liens and encumbrances in favor of the Senior Lender;
(c) Liens and encumbrances in favor of Horizon, for so long as the
Intercreditor Agreement shall remain in effect;
(d) The Mortgage;
(e) Existing liens (other than in favor of Senior Lender or Horizon
and in no event including outstanding federal or state tax liens, including
property tax and MESC liens) described on Schedule 5.21;
(f) Liens for taxes, assessments or other governmental charges
incurred in the ordinary course of business and not yet past due or being
contested in good faith by appropriate proceedings;
(g) Liens not delinquent created by statute in connection with
worker's compensation, unemployment insurance, social security and similar
statutory obligations;
(h) Liens of mechanics, materialmen, carriers, warehousemen or other
like statutory or common law liens securing obligations incurred in good
faith in the ordinary course of business that are not yet due and payable;
(i) Encumbrances consisting of zoning restrictions, rights-of-way,
easements or other restrictions on the use of real property, none of which
materially impairs the use of such property in the operation of the
business for which it is used and none of which is violated in any material
respect by any existing or proposed structure or land use; and
(j) Purchase money security interests in fixed assets granted to
secure not more than the purchase price of such fixed assets, provided that
any such purchase giving rise to such security interest does not otherwise
violate any provision of this Agreement.
"Person" (whether or not capitalized) shall mean any individual,
corporation, partnership, joint venture, association, trust, unincorporated
association, joint stock company, government, municipality, political
subdivision or agency or other entity.
"Plans" shall mean any employee benefit or pension plan governed by ERISA.
"Policy" shall mean a policy of key-man life insurance upon the life of
each Guarantor in the respective amount of not less than $500,000 each.
"Revenue Participation Payment" shall have the meaning set forth in Section
2.2.
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"Revenue Participation Termination Date" shall mean June 30, 2002.
"Security Agreement" shall mean a security agreement pursuant to which
Borrower grants to the Lender a security interest in the Collateral to be
provided by Borrower, in such form as the Lender shall, in its sole discretion,
require.
"Senior Lender" shall mean The CIT Group/Credit Finance, Inc. and any
subsequent commercial bank or financial such initial Senior Lender on terms
substantially commercial bank or financial institution replacing similar to
those applicable to such initial Senior Lender.
"Senior Lender Subordination Agreement" shall mean an agreement pursuant to
which the Lender subordinates the Indebtedness owing the Lender to the Debt
owing the Senior Lender, in such form as the Lender and the Senior Lender shall,
in their respective sole discretion, agree.
"Subsidiaries" shall mean any person of which more than fifty percent (50%)
of the outstanding voting rights or securities shall, as of any applicable date
of determination, be owned directly, or indirectly through one or more
subsidiaries, by a person.
"UCC" shall mean Public Act 174 of 1962 of the State of Michigan, as
amended.
1.2 Accounting Terms. All accounting terms not specifically defined in this
Agreement shall be construed in accordance with GAAP.
1.3 Singular and Plural. Where the context herein requires. the singular
number shall be deemed to include the plural, and vice versa.
SECTION 2. THE LOAN.
2.1 Term Loan. Lender agrees to make to the Borrower in a single
disbursement on the date of this Agreement, subject to the satisfaction of the
conditions set forth in Section 4, a term loan in the principal amount of Five
Hundred Thousand Dollars ($500,000) evidenced by, and payable as set forth in,
the Note. The loan shall be disbursed directly to the Borrower, unless otherwise
directed in writing by the Borrower.
2.2 Revenue Participation Payments. In consideration of the Lender's
agreements hereunder, the Borrower agrees to pay to the Lender, on the dates and
calculated in the manner set forth below, during, the period commencing on the
date of this Agreement and ending on the forth below, during, Revenue
Participation Termination Date amounts (each a "Revenue Participation Payment")
equal to (a) Seventy Five-Hundreths (0.75%) per cent of Borrower's annual Gross
Sales in excess of Twelve Million ($12,000,000) Dollars up to and including
Fifteen Million Five Hundred Thousand ($15,500,000) Dollars and (b) One and
one-quarter (1.25%) per cent of Borrower's annual Gross Sales in excess of
Fifteen Million Five Hundred Thousand ($15,500,000) Dollars.
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Gross Sales for periods other than a full fiscal year shall be annualized
as provided below and the percentages set forth above shall be used to calculate
an interim Revenue Participation Payment on the basis of such annualized Gross
Sales.
The Borrower acknowledges that the Revenue Participation Payments will
continue, notwithstanding the prepayment of the Note or any other event, until
June 30, 2002 (the Revenue Participation Termination Date).
Revenue Participation Payments under this Agreement shall be due and
payable as follows:
(v) On each January 20, April 20, July 20 and October 20, commencing
October 20, 1997, the Borrower shall pay to the Lender a Revenue
Participation Payment equal to the difference between (A) the product of
(1) an amount calculated on the basis of the percentages set forth above
for the Borrower's Annualized Gross Sales (as defined below) for the period
from the commencement of the fiscal year with respect to which such amount
is calculated through the end of the fiscal quarter ending twenty (20) days
prior to such payment date, multiplied by (II) a fraction, the numerator of
which is the number of days from the commencement of such fiscal year (or
from the commencement of this Agreement, in the case of the first fiscal
year in which this Agreement is in effect) through the end of such fiscal
quarter and the denominator of which is the number of days in such fiscal
year (whether 365 or 366), minus (B) the Revenue Participation Payments
already paid by the Borrower under this paragraph (v) for prior quarters of
such fiscal year. If such difference equals a negative number (meaning that
the Borrower has overpaid to such date Revenue Participation Payments due
under this Agreement), the overpayment shall be credited to the Revenue
Participation Payments next coming due.
(w) Not later than ninety (90) days after the end of each fiscal year
(including the fiscal year ending September 30, 1997), the Borrower shall
provide to the Lender a reconciliation describing (i) the Borrower's Gross
Sales for such year as set forth on the Borrower's annual financial
statements, (ii) the aggregate annual Revenue Participation Payment due to
the Lender on the basis of such Gross Sales (prorated as required by
paragraph (x) below in the case of any partial fiscal years) and (iii) the
amount of Revenue Participation Payments already made quarterly as above in
paragraph (v) required. If the Revenue Participation Payment calculated on
Gross Sales as set forth in such annual financial statements exceeds the
aggregate quarterly Revenue Participation Payments made by the Borrower
with respect to such year, the Borrower shall pay the difference to the
Lender, together with the delivery of the Borrower's annual reconciliation;
if the Borrower has overpaid the Revenue Participation Payment with respect
to such year, the overpayment hall be credited to the Revenue Participation
Payments next coming due (or, if no further payments are due, shall be
refunded to the Borrower by the Lenders, without interest, promptly after
the determination that no further Revenue Participation Payments are due).
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(x) In the case of any year during the effective period of this
Section 2.2 which is less than a full year, the Revenue Participation
Payment calculated under paragraph (w) above shall be equal to the product
of (i) a fraction, the numerator of which is the number of days during such
fiscal year during which this Section 2.2 is in effect (commencing on July
1, 1997, in the case of the first such year) and the denominator of which
is the number of days in such fiscal year (whether 365 or 366), multiplied
by (ii) the Revenue Participation Payment calculated on the basis of the
percentages set forth in paragraphs (a) and (b) above for the entire
cumulative annual Gross Sales of the Borrower for such fiscal year (without
regard to whether such Gross Sales occurred during the effective period of
this Agreement).
(y) Any revenue Participation Payment not paid when due shall bear
interest at 18% per annum (or, if less, the maximum rate permitted by law)
until paid in full .
(z) This Section 2.2 is drafted on the basis that the Borrower's
fiscal year end is September 30. The Borrower may change its fiscal year
with the prior consent of the Lender (which consent shall not be
unreasonably withheld). In such case, the payment due dates, calculations
and prorations set forth in this Section 2.2 shall be mutually and
equitably adjusted, if necessary, to conform to such different fiscal year,
provided that in all events the Lender shall be entitled to Revenue
Participation Payments calculated on the basis set forth in paragraph (a)
above for the entire period from July 1, 1997, through the Revenue
Participation Termination Date.
"Annualized Gross Sales" shall mean, for each respective period for which a
Revenue Participation Payment shall be payable, the product of (1) Borrower's
cumulative Gross Sales from the commencement of the fiscal year (or from July 1,
1997, in the case of the first year in which this Agreement is in effect) in
which such fiscal period occurs through the end of the fiscal period for which
such Revenue Participation Payment is calculated, multiplied by (2) a fraction,
the numerator of which is the number of days in such fiscal year (whether 365 or
366) and the denominator of which is the number of days from the commencement of
such year (or from the date of this Agreement, in the case of the first year in
which this Agreement is in effect) through the end of such period. "Annualized
Gross Sales" for a full fiscal year of the Borrower shall equal Gross Sales for
such fiscal year.
2.3 Maximum Rate. If at any time the amount of interest payable on any date
under this Agreement would exceed the maximum interest permitted to be paid by
the Borrower or received by the Lender under applicable law, then the amount of
interest payable on such date shall be automatically reduced to such maximum
amount and any amounts previously paid to Lender in excess of such maximum
amounts shall be automatically deemed to be a payment of principal due under
this Agreement.
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SECTION 3. SECURITY.
The Borrower agrees to grant and assign (or cause to be granted and
assigned) a lien upon and security interest in the Collateral to the Lender,
subject only to the Permitted Liens, pursuant to the Assignment, the Security
Agreement and other instruments and agreements satisfactory to the Lender to
create, perfect and maintain such liens and security interests to secure full
and timely performance of the Indebtedness.
SECTION 4. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE LENDER.
The obligations of the Lender to make the loan under Section 2.1 of this
Agreement are subject to the occurrence, prior to or on the Disbursement Date,
of each of the following conditions:
4.1 Documents Executed and Filed. There shall have been EXECUTED and
delivered and, as appropriate, there shall have been filed with such filing
offices as the Lenders shall deem appropriate, the following:
(a) The Note;
(b) The Assignment;
(c) The Security Agreement, and
(d) The Financing Statements.
4.2 Third Party Actions. There shall have been executed and delivered the
following:
(a) Each Guarantor shall have executed and delivered to Lender the
Guaranty, and
(b) Inmold shall have executed and delivered to Lender the Option.
4.3 Corporate Documents. The Borrower shall have furnished to the Lender
copies of the following, certified by such persons and as of such dates as shall
be required by the Lender:
(a) The Borrower's Charter;
(b) The Borrower's bylaws;
(c) The Borrower's and Inmold's resolutions authorizing
the transactions described in this Agreement;
(d) The Borrower's good standing certificate in the
jurisdictions of its respective incorporation and where
qualified to do business; and
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(e) The incumbency and signatures of the officers of the
Borrower and Inmold executing any agreements or documents
delivered pursuant to this Agreement.
4.4 Opinion of Counsel. The Borrower shall have furnished to the Lender the
favorable written opinion of the Borrower's and Inmold's legal counsel, in form
and substance satisfactory to the Lender.
4.5 UCC Lien Search. The Lender shall have received UCC record and copy
searches, evidencing the appropriate filing and recording of the Financing
Statements and disclosing no notice of any liens or encumbrances filed against
any of the Collateral or other assets and properties of the Borrower in any
relevant jurisdiction other than as relate to Permitted Liens.
4.6 Other Lenders. The Senior Lender and the Borrower shall have entered
into a loan transaction for a term of not less than one year and otherwise on
terms and conditions satisfactory to Lender and the Lender and the Senior Lender
shall have executed and delivered the Senior Lender Subordination Agreement.
Horizon and Lender shall have executed and delivered the Intercreditor
Agreement.
4.7 Hazard and Liability Insurance. The Borrower shall have furnished to
the Lender, in form and amounts and with companies satisfactory to the Lender,
evidence of insurance policies complying in all respects with Section 6.2.
4.8 Closing and Preparation Fees. The Borrower shall pay to the Lender (a)
a closing fee of $7,500 and (b) the amount of the Lender's legal fees and
related out-of-pocket expenses incurred by the Lender in connection with the
preparation of this Agreement and related agreements and instruments and the
negotiation and closing of the loan under this Agreement.
4.9 Due Diligence. The Lender shall have been provided an opportunity to
review all material agreements, records and documents relating to the business
of the Borrower and the Lender shall be satisfied with the form and substance of
all such items. Without limitation of the foregoing, (a) Lender shall have
verified all orders and scheduled production start dates of each new job listed
in Borrower's projections with start dates of August 1, 1997, through January 1,
1998, and (b) Lender shall have received written evidence of the satisfaction
and discharge of all outstanding federal tax liens and written evidence of
payment plans with appropriate authorities on delinquent MESC and property
taxes.
4.10 Lender Satisfaction. The Lender shall not know or have any reasonable
reason to believe that, as of the Disbursement Date:
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(a) Any Default or Event of Default has occurred and is continuing;
(b) Any warranty or representation set forth in Section 5 of this
Agreement shall not be true and correct; or
(c) Any provision of law, any order of any court or other agency of
government or any regulation, rule or interpretation thereof shall have had
any material adverse effect on the validity or enforceability of this
Agreement or the agreements or instruments contemplated hereunder,
including, but not limited to, the Guaranty, the Security Agreement, the
Assignment or the financing Statements.
4.11 Approval of Lender's Counsel. All actions, proceedings, instruments
and documents required to carry out the transactions contemplated by this
Agreement or incidental thereto and all other related legal matters shall have
been satisfactory to and approved by legal counsel for the Lender, and said
counsel shall have been furnished with such certified copies of actions and
proceedings and such other instruments and documents as it shall have reasonably
requested.
SECTION 5. WARRANTIES AND REPRESENTATIONS.
The Borrower represents and warrants to the Lender, as of the date of this
Agreement and on each Disbursement Date, that:
5.1 Organization and Good Standing. Borrower is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Michigan and has full power and authority to own its properties and to carry on
its business as now conducted, and is in good standing and duly qualified to
conduct business as a foreign corporation in each jurisdiction in which the
ownership or leasing of its properties or the conduct of its business requires
such qualification.
5.2 Capitalization. Borrower's authorized capital stock consists solely of
50,000 shares of common stock, 43,610 of which shares are validly issued and
outstanding and owned, beneficially and of record, by Inmold. All shares of the
capital stock of the Borrower are validly issued, fully paid and nonassessable,
there are no options, calls, warrants or other securities or rights outstanding
which are convertible into, exercisable for or relate to any shares of capital
stock of the Borrower and all shares of the capital stock of the Borrower were
offered and sold in compliance with all applicable federal and state securities
laws.
5.3 Authority. The Borrower has the full right, power and authority to
execute and deliver this Agreement and to execute and deliver the other
agreements and instruments contemplated hereunder and to perform its respective
obligations hereunder and thereunder. This Agreement is, and the Note, Security
Agreement, Assignment and other agreements and
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instruments contemplated hereunder will be, upon execution and delivery thereof,
the legal, valid and binding obligations of the Borrower and are (or will be)
enforceable in accordance with their respective terms, except as the enforcement
thereof may be limited by laws of general application relating to bankruptcy,
insolvency and the relief of debtors.
5.4 Subsidiaries and Investments. Borrower does not have any Subsidiaries
or own directly or indirectly any interest or have any investment in any other
person.
5.5 Corporate Records. All corporate actions, including stock transfers, of
the Borrower have been duly authorized and adopted in accordance with applicable
law and the Borrower's Charter and bylaws and have been duly recorded in the
Borrower's corporate minute books, and all stock transfers of the Borrower have
been duly recorded in the Borrower's stock transfer books.
5.6 Financial Statements. The Financial Statements
(i) are true, complete and correct in all material respects;
(ii) fairly present the properties, assets, financial position and
results of operations of the parties as of the dates and for the periods
stated therein or,if the same are projected or pro forma results, are
reasonably expected to occur and are based on reasonable assumptions; and
(iii) have been prepared to the extent applicable pursuant to and in
accordance with GAAP.
5.7 Unreported and Contingent Liabilities. The Borrower does not have any
liabilities or obligations, whether accrued, absolute, contingent or otherwise,
other than such matters as are specifically and expressly set forth in the
Financial Statements or Schedule 5.7 (if any).
5.8 Environmental Matters. Except as set forth in Schedule 5.8 (if any),
(a) neither the Borrower nor any Affiliate of the Borrower has used Hazardous
Materials on or affecting any premises occupied by the Borrower or such
Affiliate in any manner which violates Environmental Laws and, to the best of
the Borrower's knowledge, no prior owner of any premises occupied by the
Borrower or such Affiliate or any current or prior occupant has used Hazardous
Materials on or affecting any premises occupied by the Borrower or such
Affiliate in any manner which violates Environmental Laws, (b) neither the
Borrower nor any Affiliate of the Borrower has ever received any notice of any
violations (and are not aware of any existing violations) of any Environmental
Laws, received any information or known any facts or circumstances which would
cause a reasonable person to suspect that there may be or may have been any
violations of any Environmental Laws and to the best
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of the Borrower's knowledge, there have been no actions commenced or threatened
by any party for noncompliance with any Environmental Laws, and (c) the Borrower
has no accrued or contingent liability to any federal, state or local government
or to any private party on account of or arising out of sewage, waste or
hazadous waste disposal, air, water or land pollution or other environmental
matters.
5.9 No Adverse Change. Except as set forth in Schedule 5.7 (if any), since
the date of the latest annual Financial Statements, there have not been any
material adverse changes, either individually or in the aggregate, in the
general affairs, business, prospects, customers, franchisees, competition,
properties, financial position, results of operations or net worth of the
Borrower, nor have there been any material casualties affecting the Borrower or
loss, damage or destruction to any of its properties (whe ther or not covered by
insurance).
5.10 Taxes. Except as set forth in Schedule 5.10 (if any), the Borrower has
prepared in accordance with law and filed all tax returns required to be filed
by them respectively under the laws of the United States and any state, and have
paid or established an adequate reserve in respect of all taxes, penalties,
interest and related charges and fees for the periods covered by such returns
and the Borrower has received no notice of any pending or threatened audit by
the Internal Revenue Service or any state or local taxing authority related to
the Borrower's tax returns or tax liability for a ny period and no claim for
assessment or collection of taxes has been asserted against the Borrower.
5.11 Litigation. Except as disclosed in Schedule 5.11 (if any), there are
no material claims, demands, disputes, actions, suits, proceedings or
investigations pending or, to the knowledge of the Borrower, threatened against
or directly or indirectly affecting the Borrower, at law or in equity or
admiralty or before or by any federal, state, municipal or other governmental
court, department commission board, bureau, agency or instrumentality, domestic
or foreign, nor is the Borrower subject to any presently effective adverse
order, writ, injunction or decree of any such body.
5.12 Insurance. All policies of insurance covering the Borrower's plant,
machinery and equipment, inventory and other assets or providing for business
interruption, personal and product liability coverage, or insuring against other
risks, are in amounts sufficient with respect to the Borrower's assets,
properties, business, operations, products and services as the same are
presently owned or conducted. All such policies are in full force and effect and
the premiums therefor have been paid as they become due and payable.
5.13 Employee Pension Plans. Each of the Borrower's Plans is a "qualified
plan" within the meaning of the IRC, and no Plan has been terminated or
experienced any "reportable event" within the meaning of ERISA. Based upon an
actuarial method of valuation of assets which complies with ERISA and upon
actuarial assumptions and methods which comply with ERISA: (i) the present value
of all accrued pension benefits under each
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of the Plans, determined as of the date of the latest actuarial valuation
report, did not exceed the value of the assets of such Plan on that date and no
amendment or proposed amendment to such Plan adopted or proposed subsequent to
such date would, retroactively applied, make the foregoing information
inaccurate; and (ii) as of the date of the latest actuarial valuation report
there existed no "accumulated finding deficiency" as defined in ERISA with
respect to any pension plan. No termination or partial termination of the Plans
has created, or will create or give rise to, any liability to the PBGC under
ERISA or otherwise operate in a manner so as to permit the PBGC to acquire a
lien upon any of the Borrower's properties or assets. The Borrower does not
participate, nor has the Borrower ever participated, in any "multi-employer
plan" as defined in ERISA.
5.14 Labor Relations. There is not any strike, lock-out, sit-down, slow-
down, grievance or other labor dispute or trouble of any nature whatsoever
pending or threatened against the Borrower which to any extent or in any manner
affects the Borrower.
5.15 Payments to Employees. All accrued obligations of the Borrower
relating to employees, whether arising by operation of law, by contract or by
past service, have been paid when due by the Borrower.
5.16 Warranties; Product Liability. There are no liabilities of the
Borrower, fixed or contingent, with respect to any product liability or any
claim for the breach of any express or implied product warranty, or any similar
claim that relates to any product sold by the Borrower and the Borrower has no
knowledge of any product defects which could give rise to any such liabilities
or claims.
5.17 Compliance with Laws. Except as set forth in Schedule 5.7 (if any),
the Borrower has complied fully and faithfully with all laws, orders,
regulations, rules, decrees and ordinances affecting to any material extent or
in any material manner any aspect of its business. There are no existing or
proposed laws, orders, regulations, rules, decrees or ordinances of such a
nature as could be expected to adversely affect the continued conduct of the
Borrower's business in the manner presently being carried on and conducted.
5.18 Compliance with Agreements, Etc. Neither the execution of this
Agreement nor the consummation of the transactions contemplated herein will
constitute or cause a breach or violation of the Charter, bylaws or other
covenants or obligations binding upon the Borrower or affecting any of the
Borrower's properties, or cause a lien or other encumbrance to attach to any of
its respective properties, or result in the termination of or the right to
terminate any license, franchise, lease, permits, approval or agreement to which
the Borrower is a party or by which the Borrower is bound, or require a consent
of any person to prevent any such breach, default, violation, lien, encumbrance,
right or termination. The Borrower has complied with all licenses, franchises,
eases, permits, approvals and agreements to which the Borrower is a party or by
which the Borrower is bound the breach of which would
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materially and adversely affect the operations or condition, financial or
otherwise, of the Borrower.
5.19 Approvals. No approval of or filing with any federal, state or local
court authority or administrative agency is necessary to authorize the execution
and delivery of this Agreement by the Borrower or the consummation by the
Borrower of the transactions contemplated herein.
5.20 Franchises, Licenses, Trademarks, Patents and Other Rights. The
Borrower has all franchises, permits, licenses and other similar authority
necessary for the conduct of its businesses as now being conducted and as
planned to be conducted, the lack of which could materially and adversely affect
the operations or condition, financial or otherwise, of the Borrower. The
Borrower possesses all patents, patent rights, trademarks, trademark rights,
trade names, trade name rights and copyrights necessary to conduct their
respective businesses as now being conducted and as planned to be conducted
without conflict with or infringement upon any rights of others and the lack of
which could materially and adversely affect the operations or condition,
financial or otherwise, of the Borrower, and the Borrower has not received any
notice of infringement upon or conflict with the asserted rights of others in
any such patents, patent rights, trademarks, trademark rights, trade names,
trade name rights or copyrights. The Borrower has no knowledge that there
exists, or there is pending or planned, any patent, invention, device,
application or principle, or any statute, rule, law, regulation, standard or
code which would materially adversely affect the condition, financial or
otherwise, or the operations of the Borrower.
5.21 Title to Properties: Liens and Encumbrances. The Borrower has a valid
and indefeasible ownership interest in all the real and personal property and
assets recorded in the Financial Statements (including but not limited to the
Collateral), free from all mortgages, pledges, liens, security interests,
conditional sale agreements, encumbrances or other charges, of any nature
whatsoever, other than Permitted Liens and the rights of purchasers of Inventory
in the ordinary course of the Borrower's business.
5.22 Leases. All premises on which the Borrower conducts business which are
not owned by the Borrower are possessed by the Borrower pursuant to leases which
are legal, valid, binding and enforceable obligations of the Borrower and, to
the knowledge of the Borrower, the lessor thereof, which leases are not in
default and which leases are not terminable by the lessor, any mortgagor or
other person in the absence of a breach of such lease by the Borrower.
5.23 Guarantor. Each Guarantor has the full right, power and authority to
execute and deliver the Guaranty and to perform his respective obligations
thereunder. The Guaranty is the legal, valid and binding obligation of each
Guarantor and is enforceable in accordance with its terms, except as the
enforcement thereof may be limited by laws of general
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application relating to bankruptcy, insolvency and the relief of debtors.
Neither the execution of the Guaranty nor the consummation of the transactions
contemplated therein will constitute or cause a breach or violation of the
covenants or obligations binding upon the Guarantor or affecting any property of
the Guarantor, or cause a lien or other encumbrance to attach to any properties
of the Guarantor, or result in the termination of or the right to terminate any
license, franchise, lease, permit, approval or agreement to which the Guarantor
is a party, or require a consent of any person (other than those which have been
obtained and disclosed in writing to the Lender) to prevent any such breach,
default, violation. lien, encumbrance, right or termination. No approval of or
filing with any federal, state or local court, authority or administrative
agency is necessary to authorize the execution and delivery of the Guaranty by
the Guarantor or the consummation by the Guarantor of the transactions
contemplated therein.
5.24 Inmold. Inmold has the full right, power and authority to execute and
deliver the Option and to perform its obligations thereunder. The Option is the
legal, valid and binding obligation of Inmold and is enforceable in accordance
with its terms, except as the enforcement thereof may be limited by laws of
general application relating to bankruptcy, insolvency and the relief of
debtors. Neither the execution of the Option nor the consummation of the
transactions contemplated requires the consent of an y person (other than those
which have been obtained and disclosed in writing to the Lender). No approval of
or filing with any federal, state or local court authority or administrative
agency is necessary to authorize the execution and delivery of the Option by
Inmold or the consummation by Inmold of the transactions contemplated therein.
5.25 Materiality. No statements in this Agreement or in any document,
schedule, certificate or exhibit furnished or to be furnished by the Borrower to
the Lender pursuant to this Agreement, or in connection with the transactions
contemplated by this Agreement, contain or will contain any untrue statement of
a material fact, or fail to contain any material facts necessary in order to
make the statements therein not misleading. Except as already disclosed in this
Agreement, there are no events, transactions or other facts which, either
individually or in the aggregate, might reasonably give rise to circumstances or
conditions which might have a material adverse effect on any of the general
affairs, business, prospects, customers, competition, properties, financial
position, results of operation or net worth of the Borrower.
SECTION 6. COVENANTS OF THE BORROWER.
From the date hereof until all obligations of the Borrower under this
Agreement have been satisfied and performed, the Borrower covenants and agrees
that it will:
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6.1 Reporting.
6. 1.1 Annual Financial Reports. Furnish to the Lender in form
satisfactory to the Lender as soon as available and in any event not later
than ninety (90) days after the close of each fiscal year of the Borrower,
a balance sheet as at the close of each such fiscal year, statements of
income and retained earnings and changes in financial position for each
such fiscal year and such other comments and financial details as are
usually included in similar reports. Such reports shall be prepared in
accordance with GAAP, reviewed by independent certified public accountants
of recognized standing and accompanied by a customary statement of such
accountants relating to such review.
6.1.2 Monthly Financial Statements. Furnish to the Lender not later
than twenty (20) days after the close of each month financial statements
containing the balance sheet of the Borrower as of the end of each such
period, consolidated and consolidating statements of income and retained
earnings of the Borrower with comparisons to previous years' statements
(for both the current month and year-to-date) and to budgets (and
accompanied by an analysis from the Borrower's management explaining all
significant variances, whether positive or negative) and a consolidated
statement of changes in financial position of the Borrower for the portion
of the fiscal year up to the end of such period. These statements shall be
prepared on substantially the same accounting basis as the Borrower's
annual financial statements and shall be in such detail as the Lender may
reasonably require, and the accuracy of the statements (subject to year-
end adjustments) shall be certified by the chief executive or financial
officer of the Borrower.
6.1.3 Monthly Agings. Furnish to the Lender not later than twenty (20)
days after the close of each month agings of the Borrower's accounts
payable and accounts receivable as of the end of such month.
6.1.4 No Default Certificate. Furnish to the Lender together with each
delivery of the financial statements required by Section 6.1.1 or 6.1.2 of
this Agreement a certificate of the Borrower's chief executive or financial
officer stating that no Event of Default or Default has occurred or, if any
such Event of Default or Default exists, stating its nature, its period of
existence and what action the Borrower proposes to take with respect
thereto.
6.1.5 Monthly Compliance Certificate. Furnish to the Lender not later
than ten (10) days after the close of each calendar month a certificate
demonstrating compliance with the financial covenants set forth in Section
6.8 as of the end of such calendar month.
6.1.6 Adverse Events. Promptly inform the Lender of the occurrence of
any Event of Default or Default, or of any other occurrence which has or
could reasonably be expected to have a materially adverse effect upon the
Borrower's business, properties, financial condition or ability to comply
with the Borrower's obligations hereunder.
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6.1.7 Board and Shareholder Reports. Promptly furnish to the Lender
upon becoming available a copy of all financial statements, reports,
notices and proxy statements sent by the Borrower to its board of directors
or stockholders, and all regular and periodic reports filed by the Borrower
with any securities exchange, the Securities and Exchange Commission or any
other governmental authorities.
6.1.8 Management Letters. Furnish to the Lender,promptly upon receipt
thereof, copies of all management letters and other reports of substance
submitted to the Borrower by independent certified public accountants in
connection with any annual or interim audit of the books of the Borrower.
6.1.9 Other Information As Requested. Promptly furnish to the Lender
such other information regarding the operations, business affairs and
financial condition of the Borrower as the Lender may reasonably request
from time to time, permit the Lender, its employees, attorneys and agents,
to inspect all of the books, records and properties of the Borrower at any
reasonable time and in no event shall the Lender have information,
observation and inspection rights less favorable than those granted to
other creditors of the Borrower (including Horizon and the Senior Lender).
6.2 Insurance. Keep the Borrower's insurable properties adequately insured
and maintain insurance against fire, public liability, product liability and
other risks customarily insured against by companies engaged in the same or a
similar business to that of the Borrower, necessary worker's compensation
insurance and such other insurance as may be required by law. All such policies
shall contain a provision whereby they may not be canceled except upon thirty
(30) days' prior written notice to the Lender. The Borrower will deliver to the
Lender, at the Lender's request, evidence satisfactory to the Lender that such
insurance has been so procured and made payable to the Lender, as its interest
appear, and that the Lender has been named as an additional insured (with
respect to liability insurance).
6.3 Taxes. Pay promptly and within the time that they can be paid without
interest or penalty all taxes, assessments and similar imposts and charges of
every kind and nature lawfully levied, assessed or imposed upon the Borrower,
and its property, except to the extent being contested in good faith.
6.4 Maintain Corporation and Business. Do or cause to be done all things
necessary to preserve and keep in full force and effect the Borrower's corporate
existence, rights and franchises and to comply with all applicable laws;
maintain adequate records of its respective transactions and affairs and
complete and accurate books of account; continue to conduct and operate its
respective business substantially as conducted and operated during the present
and preceding calendar year; at all times maintain, preserve and protect all
franchises and trade names and preserve all the remainder of its respective
property used or useful in the conduct of its business and keep the same in good
repair, working, order and condition; and from time to time make, or cause to be
made, all needed
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and proper repairs, renewals, replacements, betterments and improvements thereto
so that the business carried on in connection therewith may be properly and
advantageously conducted at all times.
6.5 ERISA. (a) At all times meet the minimum funding requirements of ERISA
with respect to the Borrower's Plans and (b) promptly after the Borrower knows
or has reason to know (i) of the occurrence of any event which would constitute
a reportable event or prohibited transaction under ERISA, or (ii) that the PBGC
or the Borrower has instituted or will institute proceedings to terminate a
Plan, deliver to the Lender a certificate of the chief financial officer of the
Borrower setting forth details as to such event or proceedings and the action
which the Borrower proposes to take with respect thereto, together with a copy
of any notice of such event which may be required to be filed with the PBGC.
6.6 Board Matters.
6.6.1 Notice. Provide the Lender reasonable notice of all meetings of
the Board of Directors of the Borrower and of any action to be taken by
written consent of the members of the Board of Directors of the Borrower
and permit a representative of the Lender to attend all meetings of the
Board of Directors of the Borrower.
6.6.2 Frequency. Hold meetings of the Board of Directors of the
Borrower not less frequently than semi-annually.
6.6.3 Annual Budget. Cause the Borrower's annual operating budget to
be presented to and approved by the Board of Directors of the Borrower at a
meeting of the respective Board of Directors prior to the commencement of
the new fiscal year.
6.7 Key Man Life Insurance. Maintain the Policy in full force and effect at
all times, not borrow for any purpose (including, but not limited to the payment
of premiums thereunder) any cash value of the Policy or any other amounts
secured by the Policy, pay when due all premiums and assessments from time to
time due under the Policy and provide to the Lenders upon request reasonable
evidence of the payment of such premiums.
6.8 Financial Covenants.
6.8.1 Net Worth. Maintain Borrower's Net Worth at not less than:
(a) $ 1,000,000 at September.30, 1998;
(b) $ 1,750,000 at September 30, 1999;
(c) $ 2,500,000 at September 30, 2000, and
(d) $ 3,250,000 at September 30, 2001.
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6.8.2 Debt Ratio. Maintain Borrower's ratio of Debt to Net Worth at
not more than:
(a) 8.0 to 1.0 at September 30, 1998;
(b) 5.0 to 1.0 at September 30, 1999;
(c) 4.0 to 1.0 at September 30, 2000, and
(d) 3.0 to 1.0 at September 30, 2001.
6.8.3 Debt Service Coverage Ratio. Maintain Borrower's ratio of Cash
Flow to Debt Service at each September 30, commencing September 30, 1998,
at not less than 2.0 to 1.0.
6.8.4 Fixed Asset Expenditures. Not permit Borrower to acquire or
expend for, or commit itself to acquire or expend for by lease, purchase or
otherwise, fixed assets (other than the property secured by the Mortgage)
in excess of $500,000 in any fiscal year during the term of this Agreement
without the prior written consent of the Lender, which consent shall not be
unreasonably withheld.
6.9 Negative Covenants.
6.9.1 Dividends. Not declare or pay any dividend on, or make any other
distribution with respect to (whether by reduction of capital or otherwise)
any shares of its capital stock without the prior written consent of
Lender, which consent shall not be unreasonably withheld.
6.9.2 Stock Issuance. Not issue or otherwise sell or transfer any
shares of its capital stock, or any warrant, right or option relating
thereto or any security convertible into any of the foregoing without the
prior written consent of Lender, which consent shall not be unreasonably
withheld, provide that Inmold thereafter retains control of the Borrower
and owns not less than 51% of the outstanding capital stock of Borrower.
6.9.3 Stock Acquisition. Not purchase, redeem, retire or otherwise
acquire any of the shares of its capital stock, or make any commitment to
do so.
6.9.4 Liens and Encumbrances. Not create, incur,assume or suffer to
exist any mortgage, pledge, encumbrance, security interest, lien or charge
of any kind (including any charge upon property purchased under a
conditional sales or other title retaining agreement) upon any of its
property or assets whether now owned or hereafter acquired other than
Permitted Liens.
6.9.5 Indebtedness. Not incur, create, assume or permit to exist any
indebtedness or liability on account of deposits or advances or any
indebtedness or liability for borrowed
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money, or any other indebtedness or liability evidenced by notes, bonds,
debentures or similar obligations, or any obligations evidenced by capital
or operating leases, or any other indebtedness whatsoever, except for (a)
the Note, (b) trade indebtedness incurred and paid in the ordinary course
of business, (c) contingent indebtedness to the extent permitted by Section
6.9.7 of this Agreement and (d) indebtedness secured by Permitted Liens.
6.9.6 Extension of Credit. Not make loans, advances or extensions of
credit to any person, except for loans, advances or sales on open account
in the ordinary course of business.
6.9.7 Guarantee Obligations. Not guarantee or otherwise, directly or
indirectly, in any way be or become responsible for obligations of any
other person, whether by agreement to purchase the indebtedness of any
other person, agreement for the furnishing of funds to any other person
through the furnishing of goods, supplies or services, by way of stock
purchase, capital contribution, advance or loan, for the purpose of paying
or discharging (or causing the payment or discharge of) the indebtedness of
any other person, or otherwise, except for the endorsement of negotiable
instruments in the ordinary course of business for deposit or collection.
6.9.8 Investments. Not purchase or hold beneficially any stock or
other securities of or make any investment or acquire any interest in, or
assets or properties as a going concern of, any other person. except for
direct obligations of the United States maturing within one year from the
date of acquisition.
6.9.9 Subordinate Indebtedness. Not subordinate any indebtedness due
to it from a person to indebtedness of other creditors of such person.
6.9.10 Property Transfer, Merger or Lease-Back. Not, without the
Lender's prior written consent (which consent shall not be unreasonably
withheld), (a) sell, lease, transfer or otherwise dispose of all or any
material part of its properties and assets (whether in one transaction or
in a series of related transactions), except as to the sale of Inventory in
the ordinary course of business, (b) change its name, consolidate with or
merge into any other corporation, permit another corporation to merge into
it, acquire all or substantially all the properties or assets of any other
person, enter into any reorganization or recapitalization or reclassify its
capital stock, or (c) enter into any sale-leaseback or joint-venture
transaction.
6.9.11 Pension Plans. Not(a) allow any fact,condition or event to
occur or exist with respect to a Plan of the Borrower, or any of the
Subsidiaries, which might constitute grounds for termination of any such
plan or for the appointment by a United States District Court of a trustee
to administer any such Plan, or (b) permit any such Plan to be the subject
of termination proceedings (whether voluntary or involuntary) from which
termination proceedings there may result a liability of the Borrower or any
of the Subsidiaries to the
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PBGC, which will have a materially adverse effect upon the operations,
business, property, assets, financial condition or credit of the Borrower.
6.9.12 Transactions With Affiliates. Not (a) enter into any contract,
arrangement or other transaction with any Affiliate, including but not
limited to a purchase, sale, lease or exchange of property or the rendering
of services through an employment or consulting relationship, other than a
contract, arrangement or other transaction in the ordinary course of its
business which is upon fair and commercially reasonable terms no less
favorable to it than would be obtained from a person not an Affiliate, (b)
permit the conduct of its business to be undertaken by any Affiliate or (c)
make any advance or loan whatsoever to an Affiliate (other than travel and
entertainment advances made in the ordinary course of the its business and
in accordance with its standard practices); provided, however that Inmold
may, at its discretion. place new business of a type otherwise performed by
Borrower with any of Inmold's operating subsidiaries without violation of
this Section 6.9.12, so long as Borrower's annual sales are at a rate which
would generate not less than $17,500,000 in annual sales.
6.9.13 Misrepresentation. Not furnish the Lender with any
certificate or other document that contains any untrue statement of a
material fact or omits to state a material fact necessary to make such
certificate or document not misleading in light of the circumstances under
which it was furnished.
6.10 Use of Proceeds. Use the proceeds of the Lender's loans under this
Agreement for ordinary working capital and fixed asset expenditures (subject, in
any event to the other limitations of this Agreement).
SECTION 7.INDEMNIFICATION.
The Borrower shall indemnify, defend and hold harmless the Lender and the
Lender's employees, agents, successors and assigns from, against and with
respect to any claim, liability, obligation, loss, damage, assessment, judgment,
cost and expense (including, without limitation, reasonable attorney's and
accountant's fees and costs and expenses reasonably incurred in investigating,
preparing, defending against or prosecuting any litigation or claim, action,
suit proceeding or demand), of any kind or character, arising out of or in any
manner incident, relating or attributable to (and without giving effect to ANY
tax benefit to the indemnified party) (i) any inaccuracy in ANY representation
or WARRANTY of the Borrower contained in this Agreement or in any certificate or
other document or agreement executed or delivered by the Borrower in connection
with this Agreement or otherwise made or given in connection with this
Agreement, (ii) ANY failure by the Borrower to perform or observe, or to have
performed or obs erved, in full any covenant, agreement or condition to be
performed or observed by it under this Agreement or under any certificate or
other document or agreement executed by the Borrower in connection with this
Agreement, (iii) reliance BY the Lender on any books or records of the Borrower
or reliance by the
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Lender on any information furnished pursuant to this Agreement by the Borrower
or any of the Borrower's officers to the Lender, or (iv) the general business
and operations of the Borrower. Any amounts not paid when due under this Section
7 shall bear interest at 18% per annum (but not in excess of the maximum rate
permitted by law).
SECTION 8. DEFAULTS AND REMEDIES.
8.1 Events of Default. The Borrower shall be in default of this Agreement
upon the occurrence of any of the following conditions or events:
8.1.1 Failure to Pay Monies Due. If any of the Indebtedness shall not
be paid when due.
8.1.2 Non-Compliance with Certain in Covenants. If the Borrower shall
fail to perform any of its obligations or covenants contained in Section 3
(Security), Section 6.1 (Reporting), Section 6.7 (Key Man Life Insurance),
Section 6.8 (Financial Covenants), Section 6.9 Negative Covenants) or
Section 7 (Indemnifcation) and such failure shall not be cured by the
Borrower or waived by the Lender within ten (10) Business Days after the
Notice Date.
8.1.3 Misrepresentation. If any warranty or representation in
connection with or contained in this Agreement, or if any financial data or
other information now or hereafter furnished to the Lender in connection
with this Agreement or the transactions contemplated by this Agreement
shall prove to be false or misleading in any material respect.
8.1.4 Other Non-Compliance. If the Borrower shall fail to perform any
of its obligations and covenants (other than those described in Sections
8.1.1 or 8.1.2) under, or shall fail to comply with any of the provisions
of, this Agreement or any other agreement with Lender to which the Borrower
may be a party and such failure shall not be cured by the Borrower or
waived by Lender within twenty (20) Business Days after the Notice Date.
8.1.5 Change in Management or Control. If the employment of either
Guarantor or other senior management by Borrower shall be terminated for
any reason ,without the prior consent of Lender, or if Inmold shall no
longer control Borrower.
8.1.6 Cross-Defaults. If (a) there shall occur any event which permits
the Senior Lender to accelerate the due date of any Debt owing the Senior
Lender, (b) there shall occur any event which permits Horizon to accelerate
the due date of any Debt owing Horizon, (c) the Borrower shall default in
the due payment of any of its Debt (other than that owing to the Senior
Lender or Horizon) or in the due observance or performance of any term,
covenant or condition in any agreement or instrument evidencing, securing
or relating to such Debt, or in the due observance or performance of any
other material contract or undertaking and such default shall continue
beyond any grace periods described therein or (d) either
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Guarantor shall default in the observance or performance of any term,
covenant or condition in the Guaranty.
8.1.7 Judgments, Garnishments, Etc. If there shall be rendered against
the Borrower one or more judgments or decrees involving an aggregate
liability of $10,000 or more, which has or have become non- appealable and
shall remain undischarged, unsatisfied by insurance and unstayed for more
than twenty (20) days, whether or not consecutive; or if a writ of
attachment or garnishment against the property of the Borrower shall be
issued and levied in an action claiming $10,000 or more, and not released
or appealed and bonded in a manner satisfactory to the Lender.
8.1.8 Business Suspension, Bankruptcy, Etc. If the Borrower shall
voluntarily suspend transaction of its business, shall not pay its debts as
they mature or shall make a general assignment for the benefit of
creditors; or proceedings in bankruptcy or for reorganization or
liquidation of the Borrower under the Bankruptcy Code or under any other
state or federal law for the relief of debtors shall be commenced by the
Borrower or shall be commenced against the Borrower and shall not be
discharged within thirty (30) days after commencement; or a receiver,
trustee or custodian shall be appointed for the Borrower or for any
substantial portion of its properties or assets.
8.2 Acceleration of Indebtedness. Upon the occurrence of an Event of
Default, and at any time thereafter, Lender may at its option declare the Note
and any other Indebtedness owing to the Lender to be immediately due and payable
in full without presentation, demand, protest, notice of dishonor or other
notice of any kind, all of which are expressly waived.
8.3 Application of Proceeds. The proceeds arising from any sale or other
disposition of the Collateral or from the exercise of any right or remedy
exercised or undertaken under or in connection with this Agreement shall be
applied first to all costs and expenses authorized by this Agreement, the
Security Agreement, the Assignment, any other document contemplated hereby or
the UCC, and the balance shall be applied to the Indebtedness, first to
interest, next to unpaid Revenue Participation Payments and then to principal
and the balance, if any, shall be paid to the Borrower or to such other person
or persons as may be entitled thereto under applicable law. The Borrower shall
remain liable for any deficiency which it shall pay on demand.
8.5 Non-Exclusive Remedies. The remedies provided for herein are cumulative
to the remedies available to the Lender as provided by law or equity, by the
Guaranty, the Security Agreement, the Assignment or any other document
contemplated hereby. Nothing herein contained is intended, nor should it be
construed, to preclude the Lender from pursuing any other remedy for the
recovery of any other sum to which the Lenders may be or become entitled for the
breach of this Agreement by the Borrower.
SECTION 9. MISCELLANEOUS.
9.1 Governing Law. This Agreement shall be governed in all respects by the
internal laws of the State of Michigan.
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9.2 Survival. The representations, warranties, covenants and agreements
made herein shall survive (i) any investigation made by the Lender and (ii) the
Disbursement Date.
9.3 Successors and Assigns. Except as otherwise expressly provided herein,
the provisions hereof shall inure to the benefit of, and be binding upon, the
successors and assigns of the parties hereto; provided, however, that the
Borrower may not assign its rights and obligations hereunder. The Borrower
specifically acknowledges and agrees that the Lender may assign any of its
rights hereunder or the Note in whole or in any part.
9.4 Entire Agreement; Amendment. This Agreement and the other documents
delivered pursuant hereto (including the Exhibits hereto and thereto) constitute
the full and entire understanding and agreement among the parties with regard to
the subject matter hereof and thereof and supersede the letter dated July 17,
1997, in its entirety. Neither this Agreement nor any term hereof may be
amended, waived. discharged or terminated orally, except by a written instrument
signed by the Borrower and the Lender.
9.5 Notices and Other Communications. All notices and other communications
required or permitted hereunder shall be in writing, and shall be mailed by
first-class mail, postage prepaid, or delivered, either by hand or by messenger,
addressed (a) if to Lender, at Lender's Address, or at such other address as
Lender shall have furnished to the Borrower in writing, and (b) if to the
Borrower, at the Borrower's Address, or at such other address as the Borrower
shall have furnished to the Lender in writing. Notices shall be effective on the
earlier of receipt or three days after mailing by first class mail as above
described.
9.6 Delays or Omissions. No delay or omission to exercise any right, power
or remedy accruing to the Lender, upon any breach or default of the Borrower
under this Agreement, shall impair any such right, power or remedy, nor shall it
be construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default thereafter be deemed a waiver
of any other breach or default theretofore or thereafter occurring. Any waiver,
permit, consent or approval of any kind or character on the part of the Lender
of any breach or default under this Agreement, or any waiver of any provisions
or conditions of this Agreement, must be made in writing and shall be effective
only to the extent specifically set forth in such writing. Without limitation of
the foregoing, no agreement by the Lender with any lender to, or other creditor
of, the Borrower to subordinate, defer, waive or otherwise agree not to enforce
any or all of the obligations of the Borrower (or any other party) to the Lender
under this Agreement, the Note, the Security Agreement, the Assignment, the
Guaranty or any other document contemplated hereby shall amend, waive or
otherwise forgive such obligations or affect in any way the right of the Lender
to take any action, or to exercise any remedy, permitted to the Lender under
this Agreement or under such other agreements and instruments, including,
without limitation, the right of the Lender to charge and receive default
interest or late payment charges, to declare an Event of Default and to exercise
the Lender's remedies arising upon the occurrence of an Event of Default.
9.7 Covenant Independence. Each covenant in this Agreement shall be deemed
to be independent of any other covenant, and an exception in one covenant shall
not create an exception in another covenant.
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9.8 Agent's Fees. The Borrower (i) represents and warrants that the
Borrower has retained no finder or broker, other than Guiness Mahon Andover in
connection with the transactions contemplated by this Agreement and (ii) hereby
agree to indemnify and to hold the Lender harmless of and from any liability for
commission or compensation in the nature of an agent's fee to any broker or
other person or firm (and the costs and expenses of defending against such
liability or asserted liability, including reasonable attorney's fees and
disbursements), including without limitation Guiness Mahon Andover, arising from
any act by the Borrower or any of its employees, representatives or agents.
9.9 Loan Administration Expenses. The Borrower agrees to reimburse Lender,
on demand, for all reasonable out-of-pocket costs, fees, charges and expenses,
including legal fees, incurred or arising in connection with (a) the enforcement
or protection, or attempted enforcement or protection, of the Lender's rights
and remedies under this Agreement, the Note, the Security Agreement, the
Assignment, the Guaranty or any other document contemplated hereby, including
without limitation the commencement, defense or intervention in any litigation,
taking any other action in or with respect to any suit or proceeding (bankruptcy
or otherwise), the protection, collection, lease, sale, taking possession of or
liquidation of any of the Collateral, and any other attempt to enforce or
protect any rights or claimed rights of the Lender to collect the Indebtedness,
(b) protecting Lender's security interest and lien in the Collateral, including
without limitation title and UCC reports, the cost of audits (announced and
unannounced) and the cost of appraisals, surveys, environmental reports and
consultants, in each case as deemed reasonably necessary by the Lender or (c)
any other matters arising out of or contemplated by this Agreement, the Note,
the Security Agreement, the Assignment, the Guaranty or any other document
contemplated hereby, including without limitation the review, preparation or
making of any amendments, modifications, waivers or consents with respect to
this Agreement, the Note, the Security Agreement, the Assignment, the Guaranty
or any other document contemplated hereby. Any such charges or expenses shall be
payable by Borrower upon demand by Lender and shall bear interest at 18% per
annum (or, if less, the maximum rate permitted by law) until paid in full.
9.10 Exhibits, Etc. All exhibits and schedules referred to in this
Agreement shall be deemed to be attached to and made a part of this Agreement.
9.11 Headings. Section headings used in this Agreement are included for
convenience of reference only and shall not constitute a part of this Agreement
for any purpose.
9.12 Counterparts. This Agreement may be executed in counterparts, each of
which shall be an original, but all of which together shall constitute one
instrument.
9.13 Jury Trial Waiver. THE LENDER AND THE BORROWER, AFTER CONSULTING OR
HAVING THE OPPORTUNITY TO CONSULT WITH COUNSEL, KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THE
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CONSTITUTIONAL RIGHT TO A TRIAL BY JURY IN ANY LITIGATION BASED ON OR ARISING
OUT OF THIS AGREEMENT, ANY RELATED AGREEMENT OR INSTRUMENT OR ANY OF THE
TRANSACTIONS EVIDENCED THEREBY.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers as of the
day and year first written above.
G-P PLASTICS, INC.
By:Filipp J. Kreissl
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Its:(Illegible)
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CAPITAL BIDCO INC
By:(Illegible)
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Its:President
----------------------------
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<PAGE>
SCHEDULE 5.21
Permitted Liens
(1) Rights of General Motors Corporation in inventory and tooling owned by
General Motors Corporation
(2) Security interest of Cincinnati Milacron in a Cincinnati Milacron
CH-90-R-40mm-12.00 (serial number 3987AOI/94-10)
<PAGE>
EXHIBIT A
(Copy of Term Note]
<PAGE>
THE INDEBTEDNESS EVIDENCED BY THIS TERM NOTE IS SUBORDINATED TO INDEBTEDNESS
OWING TO THE CIT GROUP/CREDIT FINANCE INC. PURSUANT TO A SUBORDINATION AGREEMENT
AMONG MAKER, PAYEE AND THE CIT GROUP/CREDIT FINANCE, INC.
TERM NOTE
Lansing, Michigan $500,000
Date: July______1997
FOR VALUE RECEIVED, the undersigned promise to pay to the order of Capital
BIDCO, Inc., a Michigan business and industrial development corporation
("Payee"), at any office of the Payee in the State of Michigan, the sum of Five
Hundred Thousand ($500,000) Dollars with interest from the date hereof at the
Contract Rate (as defined below) until maturity, whether by acceleration or
otherwise. in sixty one (61) monthly payments as follows:
(a) One (1) payment due on the first day of the month immediately
following the date of this Note, in the amount of interest accrued at the
Contract Rate on the outstanding principal balance of this Note from the
date of this Note through the end of the preceding month;
(b) Nine (9) payments due on the first day of each month, commencing
with the payment due on September 1, 1997, and ending with the payment due
on May 1, 1998, each in the amount of interest accrued at the Contract Rate
on the outstanding principal balance of this Note during the preceding
month;
(c) Fifty (50) payments due on the first day of each month, commencing
with the payment due on June 1, 1998, and ending with the payment due on
July 1, 2002, each in the amount of the Amortizing Payment (as defined
below), and
(d) A final balloon payment due on August 1, 2002, in an amount
sufficient to fully amortize all outstanding principal and interest accrued
under this Note to such date.
As used in this Note:
"Contract Rate" shall mean the per annum interest rate equal to the
greater of (a) thirteen and one-half percent (13-1/2%) or (b) four percent
(4%) plus the prime rate as from time to time published in the Wall Street
Journal (or in a substitute national daily financial publication selected
by Payee if the Wall Street Journal shall no longer be published) (or the
predominant prime rate, if more than one is so published). The prime rate
in effect on the last business day of a calendar quarter shall be
applicable for purposes of calculating the Contract Rate at all times
during, the following calendar quarter. Payee shall endeavor to notify the
undersigned of any change in the Contract Rate at least ten (10) business
days after the end of the calendar quarter in which such change is
effective and Payee's calculation of the Contract Rate shall be binding on
the undersigned, absent fraud, willful misconduct or manifest error in
calculation.
"Amortizing Payment" shall mean a payment, inclusive of principal and
interest, calculated as of the date such Amortizing Payment is due in an
amount which would cause the complete amortization of the outstanding
principal balance of the Note at the Contract Rate in effect on such date
if paid over a term of (i) sixty (60) months minus (ii) the number of
months in which Amortizing Payments have been made prior to such date.
Payee shall
<PAGE>
endeavor to notify the undersigned of the amount of each Amortizing Payment
at least ten (1O) business days in advance of its respective due date and
Payee's calculation of the Amortizing Payment shall be binding on the
undersigned, absent fraud, willful misconduct or manifest error in
calculation.
Any provision of this Note to the contrary notwithstanding, (a) the entire
amount of principal and interest accrued and outstanding, hereunder shall be due
and payable on August 1, 2002, and (b) this Note shall bear interest at a
default rate after maturity, whether by acceleration or otherwise, of the
Contract Rate plus five (5%) per cent per annum on unpaid principal and ten
(10%) per cent per annum on accrued and unpaid interest.
If any installment of this Note is not paid when due (if due prior to an
acceleration of the due date of this Note by Payee), the undersigned shall owe
and immediately pay to the Payee a late charge in the amount of four (4%) per
cent of the late installment. Neither Payee's demand for nor receipt of such
late charge shall waive any default or otherwise affect Payee's rights and
remedies under this Note.
This Note is issued pursuant to a Loan Agreement, of even date, between the
undersigned and the Payee (the "Agreement"). In addition to the payment of
principal and interest, the undersigned is obligated to pay Revenue
Participation Payments as described in the Agreement. This Note is secured by
the Collateral described in the Agreement and is cross-defaulted with other
indebtedness of the undersigned as described in the Agreement.
This Note may not be prepaid in whole or in part prior to August 1, 1999,
without the consent of the Payee and then only upon such conditions, including
the payment of a premium, as Payee shall in its sole discretion require. From
and after such date, this Note may be prepaid in whole or in partial increments
of not less than $5,000 without Payee's consent or premium or penalty. Partial
prepayments shall be applied to the installments last coming due under this
Note. Revenue Participation Payments shall continue, notwithstanding prepayment,
as provided in the Agreement.
Any payment due hereunder on a day which is not a day on which banks in
Michigan are open to carry on their normal commercial banking business shall be
extended to the next succeeding business day and interest shall be payable
through such extended date.
Interest shall be calculated for the actual number of days outstanding on
the basis of a 360 day year. If at any time the amount of interest payable on
any date under this Note would exceed the maximum interest permitted to be paid
by the undersigned or received by the Payee under applicable law, then the
amount of interest payable on such date shall be automatically reduced to such
maximum amount and any amounts previously paid to the Payee hereunder in excess
of such maximum amounts shall be automatically deemed to be a payment of
principal due under this Note.
Upon the occurrence of an Event of Default (as defined in the Agreement),
the Payee may at its option and without prior notice to the undersigned declare
this Note to be immediately due and payable, sell or liquidate all or any
portion of the Collateral, offset against the indebtedness any amounts owing by
the Payee to the undersigned, charge interest at the default rate herein
provided and exercise any one or more of the rights and remedies granted to the
Payee by any agreement with the undersigned or given it under applicable law.
-2 -
<PAGE>
This Note shall bind the undersigned and the undersigned's respective
successors and assigns and may be negotiated or assigned, in whole or in part,
by Payee.
Each maker and indorser waives presentment, demand, protest and notice of
dishonor, and agrees that no extension or indulgence to the undersigned or
release or nonenforcement of any security, or release of any party, whether with
or without notice, shall affect the obligations of any maker, indorser or
accommodation party.
Each maker and indorser agrees to reimburse the holder of this Note for any
and all costs and expenses (including, but not limited to, reasonable attorney
fees) incurred in collecting or attempting to collect this Note.
THE UNDERSIGNED AND THE PAYEE, AFTER CONSULTING OR HAVING THE OPPORTUNITY
TO CONSULT WITH COUNSEL, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE
CONSTITUTIONAL RIGHT TO A TRIAL BY JURY IN ANY LITIGATION BASED ON OR ARISING
OUT OF THIS NOTE, ANY RELATED AGREEMENT OR INSTRUMENT OR ANY OF THE TRANSACTIONS
EVIDENCED THEREBY.
G-P PLASTICS, INC.
By_____________________________
Its____________________________
-3-
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"): Gerald M. Pederson. 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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<PAGE>
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 Meyer,
Kirk, Snyder & Safford, 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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<PAGE>
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/ Gerald M. Pederson
---------------------------------
Gerald M. Pederson
"SELLING SHAREHOLDER" /s/ Gerald M. Pederson
----------------------------------
Gerald M. Pederson
3
<PAGE>
-----------------------------------
STOCK PURCHASE AGREEMENT
among:
INMOLD, INC.
an Indiana corporation;
SEVILLE PLASTICS, INC.
a Michigan corporation;
and
GERALD M. PEDERSON
--------------------------
Dated as of March 17, 1998
--------------------------
-----------------------------------
<PAGE>
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"): Gerald M. Pederson. 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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<PAGE>
(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 Laurence H. Smith, 7115
Orchard Lake Road, Suite 500, West Bloomfield, Michigan 48322 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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<PAGE>
(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 Gerald M. Pederson 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 Gerald M.
Pederson, substantially in the form of Exhibit 1.3(vii).
(viii) The parties have entered into an equipment lease for
certain equipment owned by Gerald M. Pederson 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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<PAGE>
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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<PAGE>
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) Gerald M. Pederson 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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<PAGE>
(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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<PAGE>
(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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<PAGE>
(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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<PAGE>
(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
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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:
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(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.
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(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
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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:
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(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
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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
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(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
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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 Pat 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
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(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
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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;
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(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;
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(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;
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(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.
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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)
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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.
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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 Gerald M. Pederson 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
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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 Gerald M. Pederson 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 Gerald M. Pederson 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);
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(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).
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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;
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(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;
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(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
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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,
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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
<PAGE>
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.
3925 Industrial Drive
Rochester Hills, MI 48309
Attention: President
if to Selling Shareholder:
Gerald M. Pederson
1202 Bluebird
Rochester Hills, MI
with a copy to:
Donald H. Baker, Jr., Esq.
MEYER, KIRK, SNYDER & SAFFORD
100 West Long Lake Road
Suite 100
Bloomfield Hills, MI 48304
if to Purchaser:
Inmold, Inc.
3901 Industrial Drive
Rochester Hills, MI 48309
Attention: President
Telecopier: 248 852-5059
39
<PAGE>
with a copy to:
Laurence H. Smith, Esq.
LAURENCE H. SMITH, P.C.
7115 Orchard Lake Road, Suite 500
West Bloomfield, Ml 48322
Telecopier: 248 539-1323
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
<PAGE>
(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
<PAGE>
(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
<PAGE>
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/ Gerald M. Pederson
-------------------------------
Gerald M. Pederson
"SELLING SHAREHOLDER": /s/ Gerald M. Pederson
-------------------------------
43
<PAGE>
3/17/98
44
<PAGE>
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 GERALD M.
PEDERSON ("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
<PAGE>
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 Bill 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
<PAGE>
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:
<PAGE>
(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.
<PAGE>
IN WITNESS WHEREOF, the parties have executed and delivered this Amendment
this _______ day of March, 1999.
INMOLD, INC.
By /s/ John M. Horner
---------------------------
John M. Horner
Chief Financial Officer
SEVILLE PLASTICS, INC.
By /s/ John M. Horner
----------------------------
John M. Horner
Chief Financial Officer
/s/ Gerald M. Pederson
----------------------------
Gerald M. Pederson
ROCHESTER PLASTICS, INC.
By /s/ Gerald M. Pederson
----------------------------
Gerald M. Pederson
Vice President
EXHIBIT 10.11
COMMERCIAL PROPERTY LEASE
THIS LEASE AGREEMENT is made and entered into this 27th day of August,
1998, by and between GERALD M. AND NORMA PEDERSON, whose address is 1202
Bluebird Drive, Rochester Hills, MI 48307 ("Lessor"),SEVILLE PLASTICS,INC., a
Michigan corporation, whose address is 3909 Industrial Drive, Rochester Hills,
MI 48309 ("Lessee") and INMOLD,INC., whose address is 3910 Industrial Drive,
Rochester Hills, MI 48309 ("Guarantor").
Statement of Purpose
Lessor is the owner of two commercial buildings and surrounding real estate
located at 3925 and 3909 Industrial Drive, Rochester Hills, MI 48309. Lessor has
agreed to lease such building and real estate to Lessee, and Lessee has agreed
to lease such building and real estate, under the terms and conditions of this
Agreement. By Agreement of even date, Guarantor has acquired all of the
outstanding stock of Lessee. As part of that transaction Guarantor agreed, among
other things, to guarantee Lessees' obligations under this Lease.
1. Premises. Lessor hereby leases to Lessee the two adjacent commercial
buildings (collectively, the "Building") and related real estate (the
"Land") located at the 3925 and 3909 Industrial Drive, Rochester Hills, MI
48309 (the Building and Land are hereinafter individually and collectively
referred to as the "Premises"), for the term of this Lease, subject to the
terms and conditions of this Lease Agreement. A legal description of the
Land is attached hereto as Exhibit A and by this reference incorporated
herein.
2. Superceding Nature of this Lease. This Lease supecedes an earlier lease
between the Lessor and the Lessee for the Premises. The parties acknowledge
that Lessee is currently in possession of the Premises under the earlier
lease which is presently in full force and effect neither party being in
default thereunder, and that the rent and all other obligations of Lessee
under the earlier lease are paid through July 1, 1998.
3. Term. This Lease shall become effective on August 1, 1998 (the "Lease
Commencement Date"), and shall end on July 31, 2005 (the "Term").
4. Rent
a. Base rent. Lessee shall pay Lessor the following sums as the Base Rent
for the Term of this Lease, payable at the following rates, beginning
March 1, 1998:
August 1, 1998 - July 31, 2001 $9,200 per month
August 1, 2001 - July 31, 2003 $9,700 per month
August 1, 2003 - May 31, 2005 $10,200 per month
Rent shall be payable in equal monthly installments as noted above,
which shall be due and payable to Lessor without notice and demand and
without deduction or offset, in advance, on the first day of each
calendar month. Rent shall be paid to Lessor at the address shown
above or any other place designated in writing by Lessor. All amounts
payable by Lessee to Lessor hereunder, if not paid when due, shall
bear interest from the due date until paid at
<PAGE>
the rate equal to one (1%) percent in excess of the then current
"prime rate" of NBD Bank, but not in excess of the legal rate. Such
prime rate shall be the rate announced by NBD Bank as its "prime
rate". If no such prime rate is announced by NBD Bank, then the prime
rate shall be a generally accepted substitute for the rate announced
by a commercial bank as its charge on a loan to a prime customer.
b. Additional rent. This Lease is intended by both parties to be an
absolute net\net\net lease to Lessor. As such, Lessee shall be
responsible for the payment of (i) all real estate and personal
property taxes and insurance on the Premises for the entire Term, (ii)
all costs of maintenance, repair and replacement, including without
limitation all equipment, the roof and outer walls, and (iii) all
costs of utilities, water, sewer, electricity, gas and all other
services to the Premises, including without limitation snow removal,
landscaping and the like. Lessee shall at its sole cost and expense
arrange for the periodical removal of trash and refuse in a manner
acceptable to Lessor. Lessee shall pay for all other services
contracted for by Lessee as soon as an invoice is presented so that no
past due accounts arise. Lessee shall indemnify and hold Lessor
harmless from and against any and all such costs, expenses, taxes,
personal property, utility bills, insurance premiums, costs of
maintenance, replacement and repair and other charges. In addition,
any fees, costs, or expenses incurred by Lessor for enforcing Lessee's
obligations under this lease, including reasonable attorney fees,
shall be additional rent owing under the Lease and shall be
immediately due and payable by Lessee.
5. Signs. All signs placed on the Premises shall be in keeping with the
character and decor of the Premises, and shall be subject to Lessor's
written approval, to be given or withheld in Lessor's sole discretion.
6. Acceptance of Occupancy. Lessee is presently and has for some time been in
possession of the Premises, and acknowledges that the Premises are in a
state of repair that is acceptable for Lessee's intended use of the
Premises as of the date hereof, and Lessee accepts the Premises in "as is"
condition as of the Lease Commencement Date.
7. Evironmental Matters. Tenant shall not cause or permit the use, generation,
storage or disposal in, on or about the Premises of any substances,
materials or wastes subject to regulation under federal, state or local
laws from time to time in effect concerning hazardous, toxic or radioactive
materials in quantities or conditions prohibited by such laws. Lessee
indemnifies and holds Lessor, and Lessor's successors and assigns, harmless
from and against any loss, damage, claims, costs, liability or clean up
costs arising out of Lessor's use, handling, storage or disposal of any
such hazardous, toxic or radioactive material on the Premises. Three weeks
prior to expiration of the Lease, Lessee shall, at Lessee's expense,
conduct a baseline environmental assessment ("BEA") with respect to the
Premises, which BEA shall comply with the rules promulgated for such
assessments by the Michigan Department of Natural Resources. Lessee shall
then, at Lessee's own expense, take any actions necessary to remediate any
environmental contamination found on the Premises.
8. Vacation of the Premises. Lessee shall not vacate or abandon the Premises
during the term of this Lease. If Lessee does abandon or vacate the
Premises or is dispossessed by process of law or otherwise, any of Lessee's
personal property that is left on the Premises shall be
<PAGE>
deemed abandoned by Lessee, at the option of Lessor.
9. Use. The Premises are to be used and occupied by Lessee for plastic
injection molding, warehouse and office uses. No activity shall be
conducted on the Premises that does not comply with all state and local
laws, including all laws relating to environmental protection.
10. Repairs, Maintenance and Replacement. (a) Lessee shall keep the Premises
and every part thereof, including without limitation all building systems
and improvements, walls, roof, interior, exterior, electrical system,
plumbing system, HVAC system, water and sewer systems, parking area, roads,
sidewalks, landscaping, drainage, lighting facilities and any other
facilities serving the Premises in good condition and repair, and in a
first class condition, ordinary wear and tear excepted. Lessee hereby
waives all rights to make repairs to and/or replacements of the Building
and/or any equipment or system thereof or therein, at the expense of Lessor
or in lieu thereof to vacate the Premises as provided by any law, statute
or otherwise now or hereafter in effect. During the Term of this Lease,
Lessee shall make all repairs, additional modifications or alterations to
the Premises, regardless of the nature thereof, which may subsequently be
required by any applicable laws. All repairs made by or on behalf of Lessee
shall be made and performed by contractors or mechanics reasonably approved
by Lessor and in accordance with all applicable laws and regulations of
governmental authorities having jurisdiction.
(b) Notwithstanding the foregoing, the Lessee shall have no obligation to
replace the walls and roof, such replacement obligaton being the sole
obligation of Landlord.
11. Surrender of the Premises. Lessee shall surrender the Premises to Lessor
when this Lease expires, broom clean and in the same condition as on the
Lease Commencement Date, normal wear and tear excepted.
12. Entry and inspection. Lessee shall permit Lessor or Lessor's agents to
enter the Premises at reasonable times and with reasonable notice, to
inspect the Premises. During the one hundred and eighty (180) days before
the Lease expires, Lessee shall permit Lessor to place standard "For Lease"
signs on the Promises and permit persons desiring to lease the Premises to
inspect the Premises.
13. Taxes and assessments. Lessee shall pay all real and personal property
taxes and assessments levied against the Premises during the term of this
Lease. All taxes levied on personal property owned or leased by Lessee are
the sole responsibility of Lessee.
14. Alterations. Lessee may remodel and improve the Premises. However, any
remodeling or improvements that significantly alter the Premises or require
an investment by Lessee in excess of $5,000 shall require written approval
from Lessor, which approval shall not be unreasonably withheld. Such work
shall be done without injury to any structural portion of the building. Any
improvements constructed on the Premises shall become the property of
Lessor when this Lease terminates.
15. Assignment and Subletting. Lessee may not assign, sublet or otherwise
transfer or convey
<PAGE>
its interest or any portion of its interest in the Premises without written
consent from Lessor. Lessor shall have total discretion on its approval of
proposed assignments or subleases. Lessor may assign its rights under this
Agreement.
16. Trade Fixtures. All trade fixtures and movable equipment installed by
Lessee in connection with the business it conducts on the Premises shall
remain the property of Lessee and shall be removed when this Lease expires.
Lessee shall repair any damage caused by the removal of such fixtures, and
the Premises shall be restored to the original condition.
17. Insurance. Lessee hereby waives all claims against Lessor for damage to any
property or injury or death of any person in, on or about the Premises
arising at any time and from any cause and Lessee shall hold Lessor
harmless from any damage to any property or injury to or death of any
person arising from the use of the Premises by Lessee. The foregoing
indemnity obligations of Lessee shall include reasonable attorney's fees,
investigation costs and all other reasonable costs and expenses incurred by
Lessor from the first notice that any claim or demand is to be made or may
be made. This provision shall survive the termination of this Lease with
respect to any damage, injury or death occurring prior to such termination.
Without limiting the foregoing, Lessee shall also insure the Premises,
including all buildings and improvements, for the replacement cost of the
buildings and improvements, against loss or damage under a policy or
policies of fire and extended coverage insurance, including additional
perils. Lessee shall obtain and maintain in full force general liability
and property damage insurance with coverage of $2,000,000 combined single
limit for injury or death and $300,000 for property damage, covering all
claims for injuries to persons occurring in, on or around the Premises. The
insurer providing insurance coverage specified in the preceding sentence
shall be reasonably acceptable to Lessor. Each insurance policy shall also
contain a provision exempting Lessor from any loss of coverage as an
insured due to the acts of Lessee. Lessee shall give Lessor the customary
insurance certificates evidencing that the foregoing insurance is in effect
during the term of the Lease. All policies must also provide for notice by
the insurance company to Lessor of any termination or cancellation of a
policy at least thirty (30) days in advance. All policies shall name both
Lessee and Lessor as insured parties.
18. Lessee's Personal Property. All Lessee's personal property, including trade
fixtures, on the Premises shall be kept at Lessee's sole risk.
19. Destruction of the Premises. It is understood and agreed that if the
Building hereby leased is damaged or destroyed, in whole or in part, by
fire or other casualty during the term hereof, the Lessor will repair and
restore the same to good tenantable condition with reasonable dispatch, and
the rent herein provided for shall abate entirely, in case the entire
premises are untenantable, and pro rata for the portion untenantable, in
case only a part is untenantable, until the same shall be restored to a
tenantable condition; provided, however, if Lessee shall fail to adjust
Lessee's insurance or to remove Lessee's damaged goods, wares, equipment or
property within a reasonable time and, as a result thereof, the repairing
and/or restorimg is delayed, there shall be no abatement of rental for such
period of delay. Alternatively, Lessor may elect to terminate this Lease
upon giving notice of such election in writing to Lessee within sixty (60)
days after the happening of the event causing the damage. Lessee
<PAGE>
may also elect to teminate this Lease if (a) 50% or more of the leased
premises are unusable by Lessee for conducting its business; and (b) the
Premises are not restored to a tenantable and usable condition within
ninety (90) days following the happening of the event causing the damage.
Lessee shall provide written notice to Lessor of its intent to terminate
within ten (10) days following the expiration of such ninety (90) day
period. Upon termination of this Lease by Lessee as aforesaid, Lessor shall
receive all insurance proceeds from the policies carried by Lessee insuring
the Premises and if such proceeds are less than the full replacement cost
of the Premises so damaged or destroyed Lessee shall pay an amount equal to
such deficiency to Lessor upon demand.
20. Condemnation. If any part of the Premises is taken for any public or
quasi-public purpose pursuant to any power of eminent domain, or by private
sale in lieu of eminent domain, and such taking adversely affects the
Lessee's use of the Premises, then either Lessor or Lessee may terminate
this Lease, effective the date the public authority takes possession. All
damages for the condemnation of the Premises, or damages awarded because of
the taking, shall be payable to and the sole property of Lessor.
21. Default and reentry. (a) Upon the occurrence of an Event of Default
hereunder, Lessor may terminate this Lease, reenter the Premises, and seek
to relet the Premises on whatever terms Lessor thinks advisable.
Notwithstanding reentry by Lessor, Lessee shall continue to be liable to
Lessor for rent owed under this Lease and for any rent deficiency that
results from reletting the Premises during the term of this Lease.
Notwithstanding any reletting without termination, Lessor may at any time
elect to terminate this Lease for any default by Lessee by giving Lessee
written notice of the termination. In addition to Lessor's other rights and
remedies as stated in this Lease, and without waiving any of those rights,
if Lessor deems necessary any repairs that Lessee is required to make or if
Lessee defaults in the performance of any of its other obligations under
this Lease, Lessor may make such repairs or cure such defaults and Lessor
shall not be responsible to Lessee for any loss or damage that is caused by
that action. Lessee shall immediately pay to Lessor, on demand, Lessor's
costs for curing any defaults as Additional Rent under this Lease. (b) For
purposes of this Lease, an "Event of Default" means:
(i) Lessee's failure to pay rent when due;
(ii) Lessee fails to perform any other obligations under this Lease within
ten (10) days afta receiving written notice of such failure from
Lessor;
(iii)Lessee or Guarantor makes any assignment for the benefit of creditors
or a receiver is appointed for Lessee or Guarantor or their respective
property; or if any proceedings are instituted by or against Lessee or
Guarantor for bankruptcy (including reorganization) or under any
insolvency laws;
(iv) Guarantor fails to pay or perform any obligation to Lessor under a
certain Stock Purchase Agreement of even date and a Promissory Note
executed in connection therewith in the original principal amount of
$400,000; or
<PAGE>
(v) Lessee fails to pay or perform any obligation to Lessor under a
certain employment letter of even date, or fails to pay or perform any
obligation to the Rochester Entity, as defined therein, under a
certain Stock Purchase Agreement of even date.
22. Subordination. This Lease and Lessee's rights under it shall at all times
be subordinate to the lien of any mortgage Lessor places on the Premises or
to any collateral assignment Lessor makes of this Lease or of rent under
this Lease. However, as long as Lessee is not in default under this Lease,
the foreclosure of a mortgage given by Lessor shall not affect Lessee's
rights under this Lease. At the request of any lienholder, Lessee shall
provide Lessor with a customary tenant's estoppel letter regarding the
status of this Lease.
23. Notices. Any notices required under this lease shall be in writing and
served in person or sent by registered or certified mail, return receipt
requested, to the addresses of the parties stated in this lease or to such
other addresses as the parties substitute by written notice. Notices shall
be effective on the date of the first attempted delivery.
24. Lessee's Possession and Enjoyment. As long as Lessee pays the rent as
specified in this Lease and performs all its obligations under this Lease,
Lessee may peacefully and quietly hold and enjoy the Premises for the term
of this Lease.
25. Holding Over. If Lessee does not vacate the Premises at the end of the
Term, the holding over shall constitute a month-to-month tenancy and the
Base Rent for such hold over period shall be on hundred fifty (150%)
percent of the Base Rent for the immediately preceding year (computed on a
monthly basis).
26. Entire Agreement. This Agreement contains the entire agreement of the
parties with respect to its subject matter. This Agreement may not be
modified except by a written document signed by the parties.
27. Waiver. The failure of Lessor to enforce any condition of this Lease shall
not be a waiver of Lessor's right to enforce every condition of this Lease.
No provision of this Lease shall be deemed to have been waived unless the
waiver is in writing.
28. Binding effect. This Agreement shall bind and benefit the parties and their
successors and permitted assigns.
29. Time is the essence. Time is the essence in the performance of this Lease.
30. Guarantee by Guarantor. The Guarantor hereby guarantees the full and prompt
payment and fulfillment of all obligations of Lessee under this Lease for
the entire Term. This guaranty is a guaranty of payment and not of
collection, and Lessor is not required to first attempt to collect or to
obtain performance from Lessee before requesting Guarantor to satisfy
and/or to perform Lessee's's obligations hereunder. Guarantor waives notice
of any breach or default by Lessee under this Lease. The liability of
Guarantor under this guarantee will not be released or affected by:
<PAGE>
a. Lessor granting any indulgences or extensions of time to Lessee;
b. Any modification of this Lease by Lessor and Lessee, and in the event
of any such modification the liability of Guarantor will be deemed
modified in accordance with the terms of such modification;
c. Release, discharging or modification of Lessee's obligation under this
Lease in any creditors, receivership, bankruptcy or other proceedings;
or
d. Assignment or transfer of this Lease by Lessee.
31. Attorneys Fees. Upon default by Lessor hereunder, Lessee (or Guarantor, as
the case may be) shall reimburse Lessor for all costs of enforcing the
provisions of this Lease, including reasonable attorneys fees incurred in
any trial or appellate court.
32. Unenforceable Provisions. If any provisions of this Lease shall be
determined to be illegal or unenforceable, such determination shall not
affect any other provisions of this Lease and all such provisions shall
remain in full force and effect.
33. Governing Law. This Lease shall be governed and construed pursuant to the
laws of the State of Michigan.
IN WITNESS WHEREOF the parties have each signed this Agreement as of
the _______ day of August, 1998.
GUARANTOR: LESSEE:
INMOLD, INC. SEVILLE PLASTICS, INC.
By /s/ John M. Horner By /s/ John M. Horner
------------------ ------------------
Its Treasurer Its Treasurer
------------------ ------------------
LESSOR:
/s/ Gerald M. Pederson
----------------------
Gerald M. Pederson
/s/ Norma Pederson
-----------------------
Norma Pederson
<PAGE>
EXHBIT A
LEGAL DESCRIPTION OF LAND
EXHIBIT 10.12
STOCK OPTION
Grant of Option
1. FOR GOOD AND VALUABLE CONSIDERATION, the receipt which is hereby
acknowledged, INMOLD, INC., an Indiana corporation, hereinafter referred to as
the "Corporation", grants to HORIZON BIDCO INVESTMENT CO., a Michigan
corporation organized under the Michigan BIDCO Act, hereinafter referred to as
"BIDCO", the right to acquire up to 75,000 shares of common stock of the
Corporation at $. 10 per share ("Exercise Price"), at any time and from time to
time during the Loan Term as defined in a Business Loan Agreement ("Agreement")
of even date herewith between BIDCO and G-P Plastics, Inc. ("G-P"), a subsidiary
of the Corporation, and for 24 months after the expiration of the Loan Term
("Exercise Period") subject to the following provisions, terms and conditions.
Procedure for Exercise
2. The right to purchase granted under this option may be exercised by
BIDCO in whole or in part, but not as to a fractional share, by surrender of
this option, properly endorsed if required, at the principal office of the
Corporation, and by delivering payment to the Corporation by certified check or
bank check of the aggregate Exercise Price for the number of shares purchased.
The shares purchased shall be deemed to be issued to BIDCO as the record owner
as of the close of business on the date on which this option is surrendered and
payment is made for the shares. Certificates representing the shares purchased
shall be delivered to BIDCO within 10 days after the rights represented by this
option have been properly exercised. Unless this option shall have expired or
shall have been fully exercised, a new option in the same form as this option,
representing any number of shares for which this option shall not have been
exercised, shall also be delivered to BIDCO within that time.
Shares to be Fully Paid and Reservation of Shares
3. The Corporation covenants and agrees that all shares that may be issued
on the exercise of the rights represented by this option shall, on issuance, be
fully paid and nonassessable and free from all taxes, liens and charges related
to the issuance of the shares. The Corporation further covenants and agrees that
during the period within which the rights represented by this option may be
exercised, the Corporation shall, at all times, have authorized and reserved for
the purpose of issuance or transfer on exercise of this option a sufficient
number of the shares subject to this option to provide for its exercise.
<PAGE>
Exercise Price Adjustment
4. If the Corporation shall, at any time, subdivide the outstanding shares
of the class of shares covered by this option into a greater number of shares,
the Exercise Price shall be proportionally reduced and the number of shares
covered by this option shall be proportionally increased. Conversely, if the
outstanding shares shall be combined into a smaller number of shares, the
Exercise Price shall be proportionally increased and the number of shares
covered by this option shall be proportionally reduced. In the event of any
reorganization, reclassification, consolidation, merger or sale of all or
substantially all of the assets of the Corporation, BIDCO shall subsequently
have the right to purchase and receive the securities or assets that BIDCO would
have received or been entitled to receive had BIDCO been a holder or an
aggregate number of outstanding shares at the effective time of the
reorganization, reclassification, consolidation, merger or sale. This right
shall be on the basis and on the terms and conditions specified in this option
and shall replace the right to purchase the shares specified in this option.
Right to Acquire Additional Shares
5. Pursuant to the terms of the Agreement, in the event the Gross Revenues,
as defined in the Agreement of G-P do not exceed $17,500,000 annually by its
fiscal year ending in 2001, the Corporation shall grant to BIDCO the right to
acquire an additional 10,000 shares of the common stock of the Corporation at
the Exercise Price, subject to any adjustment pursuant to Section 4 above, at
any time during the Exercise Period. A new option in the same form as this
option shall be delivered to BIDCO within 10 days of receipt by G-P of its
reviewed financial statement for its fiscal year ending in 2001.
Absence of Rights of Holder
6. This option shall not entitle BIDCO to any rights as a shareholder of
this Corporation prior to the exercise of this option.
Redemption of Option
7. BIDCO, at its option, may require the Corporation to redeem the options
granted hereunder, or hereafter granted pursuant to Section 5 hereof at a price
equal to $2.10 per share during the 60 day period ("Redemption Period")
commencing with the day the Loan Term expires. In the event of prepayment, the
60 day Redemption Period shall commence on the date of prepayment. BIDCO shall
notify the Corporation in writing at any time during the Redemption Period of
its desire to have the options redeemed.
2
<PAGE>
IN WITNESS WHEREOF, INMOLD, INC. has caused this option to be executed
by its duly authorized officers on 1997.
INMOLD, INC.
By:
----------------------------
Its:
----------------------------
3
<PAGE>
EXHIBIT 10.13
COMMON STOCK OPTION
INMOLD, INC.
(an Indiana corporation)
OPTION TO PURCHASE COMMON STOCK
Right to Purchase 75,000 shares As of July 24 1997
of Common Stock
This is to certify that CAPITAL BIDCO, INC., a Michigan business and
industrial development corporation, with its principal office at 6412 Centurion
Drive, Suite 150, Lansing, Michigan 48917, its successors and assigns (such
party, and such successors and assigns as the context requires, being referred
to as the "Holder"), is entitled to purchase 75,000 shares, subject to
adjustment as herein set forth, of Common Stock (the "Shares"), par value
$,.AX@X'per share ("Common Stock"), of Inmold, Inc., an Indian a corporation
(the "Company"), at a price per share (the "Exercise Price") equal to Ten Cents
($0.10), upon the terms and subject to the conditions hereinafter set forth.
This Option is issued in satisfaction of a condition set forth in a certain Loan
Agreement, of even date, as amended, between the Holder and G-P Plastics, Inc.
("Borrower"), a Michigan corporation and wholly-owned subsidiary of the Company
(the "Loan Agreement").
The number of shares subject to this Option shall be increased by an
additional 10,000 shares of Common Stock if Borrower's Gross Sales (as defined
in the Loan Agreement) do not exceed $17,500,000 in Borrower's 2001 fiscal year.
Except as otherwise provided in this Option, the purchase rights may be
exercise in whole or in part at any time prior to August 1, 2004 (the "Option
Termination Date") and only upon the surrender of this Option at the office of
the Company located at 3910 Industrial Drive, Rochester Hills, Michigan 48309,
Attention: President, or such other place as the Company shall have given the
Holder written notice of, accompanied by payment of the aggregate Exercise Price
of the number of Shares purchased to the Company by cashier's or certified
check, whereupon the Holder will become entitled to the issuance to it (within
ten days after such exercise) of a certificate or certificates (registered in
its name or the name of its nominee) representing the number of Shares
purchased. Upon such issuance the Shares shall be fully paid and nonassessable.
Unless this Option shall have expired or shall have been fully exercised, a new
option in the same form as this Option, representing any number of shares for
which this Option shall not have been exercised, shall also be delivered to
Holder.
If the right to purchase the Shares hereunder is not fully exercised, as
indicated above, by the Option Termination Date, the unexercised portion of this
Option shall be void and of no value with respect to any Shares not purchased.
1
<PAGE>
SECTION 1. NEGOTIATION AND TRANSFER
1.1 OPTION TRANSFERABLE. Subject to the terms and conditions contained
herein, this Option, and all rights hereunder, are transferable, in whole or in
part, without charge to the Holder in person or by duly authorized attorney,
upon surrender of this Option properly endorsed to the transferee.
1.2 OPTION NEGOTIABLE. The Holder, by taking or holding this Option, and
the Company consent and agree that, subject to the terms and conditions
contained herein, this Option, when endorsed in blank, shall be deemed
negotiable, and that the Holder hereof, when this Option shall have been so
endorsed, shall be treated by the Company and all other persons dealing with
this Option as the absolute owner hereof for any purpose and as the person
entitled to exercise the rights represented by this Option, or to the transfer
hereof on the books of the Company, any notice to the contrary notwithstanding;
but until such transfer on such books, the Company may treat the Holder owned on
the books of the Company as the owner for all purposes. No fractional shares
shall be issued upon the exercise of this Option. In lieu of any fractional
shares to which the Holder would be otherwise entitled, the Company shall make a
cash payment equal to the Exercise Price multiplied by such fraction.
1.3 PROCEDURE FOR TRANSFER OR NEGOTIATION. Prior to any proposed transfer
or negotiation of this Option, the holder thereof shall give written notice to
the Company of such holder's intention to effect such transfer or negotiation.
Each such notice shall identify the proposed transferee and describe the manner
and circumstances of the proposed transfer or negotiation and thereafter the
holder of such Restricted Securities shall be entitled to transfer or negotiate
such Restricted Securities in accordance with the terms of the notice delivered
by the holder to the Company.
SECTION 2. AJUSTMENT.
2.1 SUBDIVISION OR COMBINATION OF SHARES. If the Company shall, at any
time, subdivide the outstanding shares of the Common Stock into a greater number
of shares, defined below) shall be proportionally reduced and the the Exercise
Price and the Put Price (as defined below number of shares covered by this
Option shall be proportionally increased. Conversely, if the outstanding shares
of Common Stock shall be combined into a smaller number of shares, the Exercise
Price and the Put Price shall be proportionally increased and the number of
shares covered by this Option shall be proportionally reduced.
2.2 CONTINUATION OF RIGHTS. In the event of any reorganization,
reclassification, consolidation, merger or sale of all or substantially all of
the assets of the Company, the Holder shall subsequently have the right to
purchase and receive the securities or assets that the Holder would have
received or been entitled to receive had the Holder been a holder of shares of
Common Stock at the effective time of such reorganization, reclassification,
consolidation, merger or sale. This right shall be on the basis and on the terms
and conditions
2
<PAGE>
specified in this Option (including, without limitation, the rights described in
Section 5) and shall replace the right to purchase t he shares specified in this
Option.
2.3 NO REISSUANCES OF OPTION REQUIRED. Irrespective of any adjustment in
the number or kind of shares issuable upon exercise of this Option, the
certificate representing this Option may continue to express the same price and
number and kind of shares as are stated in this Option as initially issued.
SECTION 3. FURTHER ASSURANCES.
The Company covenants and agrees that all shares of Common Stock which may
be issued upon the exercise of this Option shall, upon issuance, be duly
authorized, validly issued, fully paid and nonassessable and free from all
preemptive rights of any stockholder and all taxes, liens and charges with
respect to the issue thereof (other than taxes in respect of any transfer
occurring contemporaneously with such issue). The Company further covenants and
agrees that during the period within which the rights represented esented by
this Option may be exercised the Company will at all times have authorized and
reserved a sufficient number of shares of its Common Stock to provide for the
exercise of the rights represented by this Option. The Company will not, by
amendment to its Articles of Incorporation or through any reorganization,
reclassification, consolidation, merger, sale of assets, dissolution, issue or
sale of securities or other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Option, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the Holder.
SECTION 4. SURVIVAL
The rights and obligations of the Company, the Holder and the holder of
shares of common stock issued upon exercise of this Option contained herein
shall survive the exercise of this Option.
SECTION 5. REQUIRED PURCHASE
The Holder shall have the right, during the sixty (60) day period after
either August 1, 2002, or such earlier date, if any, on which the Borrower
prepays in its entirety the loan to the Borrower under the Loan Agreement, to
require the Company to purchase all or any portion of any Shares acquired by the
Holder in the exercise of this Option and/or all or any unexercised portion of
this Option. Such right shall be exercisable by surrender and delivery by the
Holder the Company of such Shares and/or this Option, together with a written
notice duly executed on behalf of the Holder and indicating that the Holder has
elected to exercise its rights under this Section 5 (the date of such notice is
herein referred to as the "Put Notice Date". The purchase price to be paid by
the Company (a) shall be Two Dollars and Ten Cents per share (subject to
adjustments, if any, required under Section 2.1 of this Option) (the "Put
Price", in the case of
3
<PAGE>
Shares, and (b) shall be the Put Price less the then applicable Exercise Price
per Share, in the case of the tender to the Company of all or any unexercised
portion of this Option. The purchase price shall be paid by the Company to the
Holder by certified or bank check, within ninety (90) days after the Put Notice
Date. If the Company shall fail to pay any amount when due under this Section 5
and such failure shall continue for a period of five (5) days, interest shall
accrue at eighteen percent (18%) per annum.
SECTION 6. REMEDIES
In the event the Company shall at any time fail to perform fully and
completely its obligations under this Option, the Holder shall, in addition to
all other rights and remedies hereunder, at law or in equity, have the right to
petition any court with jurisdiction in the premises for an order compelling the
Company specifically to perform said obligations, it being recognized that
monetary damages are not adequate compensation for any such failure.
SECTION 7. OPTION HOLDER NOT SHAREHOLDER
This Option does not confer upon the Holder any right to vote or to consent
or to receive notice as a shareholder of the Company, as such, in respect of any
matter whatsoever, or any other rights or liabilities as a shareholder, prior to
the exercise of this Option as above provided.
IN WITNESS WHEREOF, the Company has caused this Option to be duly executed
as of the 24 day of July, 1997.
INMOLD, INC.
By_________________________
Its________________________
4
EXHIBIT 10.14
OPTION AGREEMENT
This agreement ("Agreement") is entered into between Inmold, Inc., an Indiana
corporation ("Corporation"), and Rick D. Bessette, an individual ("Bessette"),
residing at 160 Brookwood Drive, Lake Orion, Michigan 48362.
Purpose. The purpose of this Agreement is to advance the interests of the
Corporation by providing an opportunity for Bessette to acquire common stock of
the Corporation under this Agreement.
Effective date. This Agreement becomes effective on____________, the date that
it was approved by the Board of Directors of the Corporation.
Stock Subject to the Agreement. The number of shares of common stock of the
Corporation which may be issued to Bessette under this Agreement shall not
exceed Fifty Thousand (50,000) shares.
Duration of the Agreement. This Agreement shall terminate five (5) years from
the Effective Date hereof, unless terminated earlier under the provisions of the
Early Termination paragraph included hereinafter.
Date of Exercise. Bessette may exercise his option at any time during the
duration of this Agreement but not before April 1, 1999.
Price. The price at which Bessette may exercise his option to purchase shares of
common stock of the Corporation shall be one-half (1/2) of the market price of
said common stock established by the average of the bid and asked price on the
over-the-counter market, or in any alternative, the average between the high and
low prices for said stock in any alternative market for a given date, but in no
eve nt shall the price be less than_______per share.
Stock Dividends and Stock Splits. The Board of Directors of the Corporation
shall make appropriate adjustment in the number of shares of common stock
subject to this Agreement to give effect to any stock dividends, stock splits,
stock combinations, recapitalization and other similar changes in the capital
structure of the Corporation after the effective date of this Agreement.
<PAGE>
Termination of the Agreement. This Agreement shall be terminated before the Date
of Termination provided for hereinbefore upon Bessette's termination, voluntary
or involuntary, of employment with the Corporation or with any corporation in
which the Corporation has a direct or indirect equity interest.
Entire Agreement. This Agreement constitutes the entire agreement between the
Corporation and Bessette as to the granting of this Option. Any modifications to
this Agreement must be in writing and signed by all parties.
INMOLD, INC.
Witness:
[illegible] By: /s/ Filipp J. Kreissl
- ---------------------- ---------------------------------
Filipp J. Kreissl, President
RICK D. BESSETTE
[illegible] /s/ Rick D. Bessette
- ---------------------- --------------------------------
EXHIBIT 10.15
- --------------------------------------------------------------------------------
INMOLD LUKMANI DESIGN
TECHNOLOGIES, INC.
FORMATION DOCUMENTS
(FINAL/SIGNATORY DRAFT - D3)
(February __, 1999)
- --------------------------------------------------------------------------------
Ian D. Pesses, Esq.
Maddin, Hauser, Wartell, Roth,
Heller & Pesses, P.C.
Third Floor - Essex Centre
28400 Northwestern Hwy.
Southfield, Michigan 48034
Direct Dial (248) 827-1866
Telephone (248) 354-4030
Fax: (248) 354-1422
<PAGE>
TABLE OF CONTENTS
FOR
INMOLD LUKMANI DESIGN
TECHNOLOGIES, INC.
PROPOSED FORMATION DOCUMENTS (D2)
I. TRANSACTION DOCUMENTS
A. SUMMARY
1. TRANSACTION SUMMARY
B. OPERATIONAL AGREEMENTS
2. STOCK OPTION AGREEMENT
3. SERVICE AGREEMENT (ILD/II)
4. SERVICE AGREEMENT (ILD/DES)
5. SERVICE AGREEMENT (II/DES)
C. AUTHORIZATIONS
6. CONSENT (ILD)
7. CONSENT (II)
8. CONSENT (DES)
II. FORMATION DOCUMENTS
A. SUMMARIES
9. CORPORATE SUMMARY
10. STOCK LEDGER
B. STATE
11. ARTICLES OF INCORPORATION
12. CERTIFICATE OF ASSUMED NAME
C. SHAREHOLDER
13. BY-LAWS
14. STOCK CERTIFICATES
15. SHAREHOLDER AGREEMENT
D. AUTHORIZATIONS
16. INCORPORATOR
17. SHAREHOLDER/DIRECTOR
E. IRS
18. SS-4/EIN APPLICATION
<PAGE>
- --------------------------------------------------------------------------------
CONFIDENTIAL
SUMMARY
FOR
PROPOSED TRANSACTION
- --------------------------------------------------------------------------------
<PAGE>
CONFIDENTIAL SUMMARY
FOR
PROPOSED TRANSACTION
A. TRANSACTION 1. Form (2) bona fide , certified
Minority Business Enterprises.
B. PURPOSE 1. Exploit potential synergies among
the MBE companies and Inmold and
create value for Inmold.
2. Provide Inmold with critical
design and engineering services and
facilitate the development of a new
minority certified injection molder.
C. NEW ENTITIES 1. New Co. 1
a. Inmold Lukmani Design
Technologies, Inc. ("ILD")
b. To be a MBE professional design
and engineering service firm.
2. New Co. 2
a. Inmold Lukmani Manufacturing, Inc.
("ILM")
b. To be a MBE manufacturing, molding
and production company.
D. OWNERSHIP 1. Minority - 51%
a. Nasser Lukmani 41%
b. Arifa Hasan 10%
2. Non-Minority
a. Inmold, Inc. ("II") 49%
3. Required Consent
a. Simple Majority
E. MANAGEMENT 1. Directors
a. Nasser Lukmani
b. Arifa Hasan
c. Filipp Kreissl (or designee)
2. Officers
a. President - Nasser Lukmani
b. Secretary - Arifa Hasan
c. Treasurer - Arifa Hasan
1
<PAGE>
F. KEY AGREEMENTS 1. Stock Option (Inmold/Lukmani)
a. Between II and Nasser Lukmani,
Sheryar Durrani and Richard Matsu.
b. For 250,000 shares
c. At lower of (i) $1.00, or (ii)
closing price 60 days after trading
d. divided (i) 40% - Nasser Lukmani,
(ii) 40% Sheryar Durrani, and (iii)
20% Richard Matsu.
2. Service Agreement (No. 1)
a. Between II and ILD.
b. ILD to provide design and
engineering services on a preferred
basis and rates. ILD will utilize DES
engineering and design resources.
c. II to pay commission to ILD for
projects on which it participates or
refers.
d. Non-Solicitation by ILD of II's
employees and customers
3. Service Agreement (No. 2)
a. Between II and Design Engineering
Services, Inc. ("DES"),
b. DES to provide engineering
services on preferred basis and rates.
Initially, to provide not less than
200 hours at $65/hr. May
extend contract for 4 more years at
$5/hr. rate increase per year.
c. Incentivize DES to refer current
clients to II for production work
through the payment of a commission of
not less than 1% on all referrals.
d. DES not to solicit employees and
customers of II.
e. DES gives II the Third Right of
Refusal to purchase DES after (i)
First Option to existing shareholders,
SD and NL, and (ii) Second Option to
ILD.
4. Service Agreement (No. 3)
a. Between ILD and DES,
2
<PAGE>
F. KEY ARRANGEMENTS (cont'd.)
b. DES to provide design and
engineering services to ILD on
preferred basis. To be reviewed on a
quarterly basis. May extend for 4
more years.
c. ILD to pay DES a commission of not
less than 1% on all referrals.
d. DES not to solicit ILD's employees
and customers.
e. DES gives ILD the second right of
refusal and option to purchase DES,
after First Option to existing
Shareholders, SD and NL.
G. OPEN ISSUES 1. Possible Directorship for NL
2. Physical location for ILD.
3. Capitalization for ILD.
3
<PAGE>
- --------------------------------------------------------------------------------
INMOLD, INC.
STOCK OPTION AGREEMENT
DATED ____________________, 1999
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Ian D. Pesses, Esq.
MADDIN, HAUSER, WARTELL,
ROTH, HELLER & PESSES, P.C.
28400 Northwestern Highway
Third Floor, Essex Centre
Southfield, Michigan 48034
(T/GEN.) (248) 354-4030
(T/DIR.) (248) 827-1866
(FAX) (248) 354-1422
<PAGE>
INMOLD, INC.
STOCK OPTION AGREEMENT
TABLE OF CONTENTS
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1. PARTIES................................................................. 1
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2. DATES................................................................... 1
-----
3. RECITAL................................................................. 1
-------
4. CONSIDERATION AND AGREEMENT............................................. 1
---------------------------
5. STOCK OPTION............................................................ 2
------------
6. DISPUTE RESOLUTION...................................................... 3
------------------
7. INTERPRETATION AND CONSTRUCTION......................................... 4
-------------------------------
8. GENERAL PROVISIONS...................................................... 5
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<PAGE>
INMOLD, INC.
STOCK OPTION AGREEMENT
1. PARTIES. THIS STOCK OPTION AGREEMENT, herein referred to as the "Agreement",
is made and entered into by and among the following parties:
A. Optioner. Inmold, Inc., an Indiana corporation, whose address is 775
East Big Beaver, Suite 312, Troy, Michigan 4 3083, herein 'Optionor".
B. Optionee(s).
(i) NL. Nasser Lukmani, whose address is 34641 Princeton Drive,
Farmington Hills, Michigan 48331, herein 'NL'.
(ii) SD. Sheryar Durrani, whose address is 30800 Telegraph Road, Suite
1947, Bingham Farms, Michigan 48025, herein 'SD", and
(iii) RM. Richard L. Matsu, whose address is 30800 Telegraph Road,
Suite 1947, Bingham Farms, Michigan 48D25, herein "RM",
(iv) NL, SD and RM may jointly and collectively be referred to as the
"Optionees" and/or separately or individually as the 'Optionee'.
C. Party/Parties. Optionor and Optionee(s) may be collectively and jointly
referred to as the "Parties" and individually or separately referred to as a
"Party".
2. DATES. This Agreement is:
A. Entered into and dated as of ________________ 1999,
B. Made and effective as of and retroactive back to __________, 1999,
herein "Effective Date."
3. RECITAL. The following is a recital of some of the facts involved in this
Agreement.
A. Options. Optionor desires to grant to Optionees a stock option for a
certain number of shares of common stock of the Company on the terms provided
for in this Agreement.
B. Agreement. The Parties desire to document in writing the Stock Options
and to enter into this Agreement for the mutual benefit set forth herein.
4. CONSIDERATION AND AGREEMENT . FOR AND IN CONSIDERATION of the mutual
covenants and benefits contained herein, the adequacy, sufficiency, and receipt
of which are hereby acknowledged and accepted, and with the intent to be legally
bound hereby, the Parties agree to all the terms and provisions contained in
this Agreement.
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<PAGE>
5. STOCK OPTION.
A. Grant . Optionor hereby grants and gives to Optionees an option to
purchase, herein "Option" or "Stock Option", Two Hundred Fifty Thousand
(250,000) shares of Stock of Optionor, herein "Stock", on a non-diluted basis as
of December 31, 1998.
B. Exercise. To exercise the Option, Optionee shall pay to Optionor the
Purchase Price of the lower of (i) One ($1.00) Dollar per share, or (ii) the
closing price of the Stock on the sixtieth (60th) day after the Stock first
trades on any national stock or securities exchange.
C. Term. Optionee may exercise this Option at any time in whole or in part
until all the Stock is acquired during the next ten (10) years from the
Effective Date of this Agreement or unless earlier terminated by Optionor
pursuant to the terms hereof.
D. Division. The Option and the Stock which may be purchased by Optionees
shall be divided among Optionees as follows: (i) Forty percent (40%) to NL; (ii)
Forty percent (40%) to SD, and (iii) Twenty percent (20%) to RM. Each individual
Optionee may only exercise the Option and purchase the percentage of shares as
noted in this Paragraph 5.D. In the event of the death of an Optionee, the
remaining or surviving Optionees (a) automatically succeed to, on pro rata
basis, the unexercised Options of the decease Optionee, and (b) as the successor
in interests, may exercise, on a pro rata basis, unused or remaining Options in
accordance with the terms of this Agreement.
E. Vesting. The Option vests and transfers to each of the individual
Optionees twenty percent (20%) per year, beginning upon the execution of this
Agreement.
F. Termination. Optionor may terminate this Agreement and the Stock Option
if Optionor terminates or ends the Service Agreements with Inmold Lukmani Design
Technologies, Inc.
G. Assignment. Optionees may not assign or otherwise transfer any interests
in and/or to this Agreement, the Option, and/or the Stock, except as
specifically provided herein. Optionee may assign their respective interests,
herein "Assignment," or "Assign", in to this Agreement, the Option, and/or the
Stock only to a qualified trust, herein "Qualified Trust". A Qualified Trust
shall mean as follows:
(i) a revocable living trust,
(ii) established solely for the benefit of the Optionee or the wife
and children of the Optionee,
(iii) the Optionee is the sole trustee of the Trust during the life of
the Optionee,
(iv) the Trust and all trustees of the Trust hold the Stock and the
Option in accordance with this Agreement,
(v) all trustees of the Trust agree to and sign a copy of this
Agreement as it exists now or as may be amended in the future, and
(vi) the Assigning Optionee is the sole and exclusive person to vote
the Stock during his life time.
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<PAGE>
6. DISPUTE RESOLUTION.
A. Self Regulation. In the event of a dispute, the Parties shall use best
efforts and diligently attempt, in good faith, to resolve and settle the
disagreement as quickly, reasonably, and as confidentially as possible. The
Parties will make every effort to avoid arbitration.
B. Arbitration. In the event the Parties are unable to settle their
differences among themselves, then the Parties shall arbitrate, herein
"Arbitration", such disputes. Notwithstanding anything to the contrary, such
Arbitration shall be as follows:
i. In accordance with the Rules of the American Arbitration
Association for a three-member panel, except as may be specifically
provided herein.
ii. Located only in Southfield, Michigan, U.S.A. The Parties consent
to the exclusive jurisdiction and venue of Oakland County, Michigan, U.S.A.
for this Arbitration and any enforcement proceeding.
iii. The sole and exclusive method for the resolution of all disputes
and disagreements among the Parties and in place of all other or
alternative judicial procedures.
iv. Conducted and concluded on a confidential basis. The parties shall
not disclose and shall not assist others in the disclosure of any
information whatsoever concerning the nature of the dispute.
v. Conducted and concluded on an expedited basis such that the time
limit for any individual or separate action shall not exceed fifteen (15)
days, herein the "15-Day Rule", unless otherwise agreed to by the Parties.
The 15-Day Rule shall mean there will be only 15 days to do and take all
individual or separate actions, including but not limited to the following:
(a) Answer or respond to all responsive pleadings;
(b) Select the arbitrators;
(c) Conduct all discovery;
(d) Hold any hearings;
(e) Issue final, binding opinion after the hearing;
vi. Concluded and a final, binding, and written Arbitration award
issued within 180 days of first filing the request for Arbitration,
notwithstanding anything to the contrary, including but not limited to: (a)
any rules of AAA, or (b) the 15-Day Rule.
vii. Award costs and actual attorneys fees to the prevailing party.
The Prevailing Party shall be the party awarded the most amount of money
from any claim, counter-claim, cross-claim, or otherwise. The Arbitrators
shall have the authority to award any legal and/or equitable remedy,
including, but not limited to (a) specific enforcement and (b) permanent
restraining orders, notwithstanding anything to the contrary.
viii. Binding on all Parties and all Parties consent to the immediate
enforcement of any Arbitration award by the appropriate court. If a Party
("Enforcing Party") files a lawsuit to seek the enforcement of an
Arbitration award, the non-complying party ("Defaulting Party") shall pay
the Enforcing Party as follows:
(a) Double the Arbitration award; and
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<PAGE>
(b) Interest at 20% per annum from commencement of the
Arbitration proceeding;
(c) All costs, including actual attorneys fees, of the Enforcing
Party from commencement of the Arbitration; and
(d) Any other award, damage and/or penalty which the Court
believes appropriate.
C. Governing Law. This Agreement and any Arbitration will be governed by
and construed in accordance with the laws of the State of Michigan.
7. INTERPRETATION AND CONSTRUCTION.
A. Entire Agreement. This Agreement represents the entire and integrated
Stock Option Agreement between the Parties relative to the subject matter
hereof. No amendment, modification, or change to this Agreement shall be
effective or binding unless reduced to writing and signed by all the Parties.
B. Conflicts. In the event of a direct conflict or inconsistency between
this Agreement and any other agreement, herein referred to as 'Other
Agreements', this Agreement, or any amendment hereto, shall govern and control
the Other Agreements, notwithstanding anything to the contrary.
C. Number and Gender. Whenever required by the context or use, the singular
work shall include the plural word and the masculine g ender shall include the
feminine and/or neuter gender.
D. Captions. The paragraph titles, headings, and/or captions contained
herein have been inserted solely as a means of reference and convenience. Such
captions shall not affect the interpretation or construction hereof and shall
not define, limit, extend, or otherwise describe the scope or the intent of any
provision contained herein.
E. Waiver. No action or omission by any Party, including but not limited to
any extension, modification, amendment, forbearance, delay, acceleration,
indulgence, or concession with regarding thereto, if any, is intended to, nor
shall constitute or be deemed a waiver, discharge, or release of any other Party
or term, of this Agreement, or any obligation or right established thereby, nor
shall any such action or omission constitute an approval of, or acquiescence in,
any breach hereof, except as may be expressly agreed to in writing.
F. Time. Time is of the essence for all purposes of this Agreement.
G. Conformity. Any provision hereof which is in conflict with applicable
laws as of the date hereof, is hereby amended to conform to and comply with such
laws to the maximum and fullest extent permitted thereunder. If, as a result of
such, law, conflict, and/or required amendment thereto, any term, obligation,
right, condition, or provision thereof is held invalid, inoperative, void, or
unenfor ceable, herein the "Offensive
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<PAGE>
Provision", the remaining provisions hereof shall (a) remain in full force; (b)
in no way be altered, affected, impaired, invalidated, or otherwise changed by
the Offensive Provision; and (c) be interpreted, construed, and applied as
though the Offensive Provision was not in the first instance contained herein.
H. Construction. The terms and provisions hereof have been determined by
arms-length negotiation by the Parties hereto. In the event of a dispute, the
terms hereof should not be construed against any Party as drafter,
notwithstanding the fact Optionor may have physically prepared or processed the
written form hereof.
I. Counterparts. This Agreement, or any amendments thereto, may be executed
in one or more counterparts, each of which shall constit ute and be deemed an
original. All of the counterparts collectively or together shall constitute one
and the same instrument and agreement, binding on all the Parties. Counterpart
copies of this Agreement need not be signed by more than one (1) Party. A
counterpart or copy of this Agreement is binding upon the signed party, even if
(a) only one party has signed that counterpart copy and/or (b) a signature is a
fax copy, photocopy, or an original copy of this Agreement.
8. GENERAL PROVISIONS.
A. Notices. All notices, including all demands, consents, requests or other
communications, given or furnished pursuant hereto must be given in writing to
be effective and binding, herein referred to as "Notices". The Notices may be
sent by (i) ordinary, first class U.S. mail, (ii) certified or registered U. S.
Mail, regardless if the return receipt is received by the sender, (iii) any
private next-day delivery carrier or couriers, or their equivalent, (iv)
telegram, telecopy, telex, fax, or (v) personal service. All Notices must be
properly addressed and contain the appropriate or respective addresses as
provided herein. All Notices are intended to and shall be effective on the
actual date of the Notice. The Notices shall be deemed received and delivered
for all purposes one (1) day after the same is deposited or delivered to the
carrier or transmitter for the same regardless of the actual date of receipt. If
the last day for the giving or receiving of any Notice or performing any act
under this Note is a Saturday, Sunday or legal holiday in the State of Michigan,
then in such event, the time period and date shall be automatically extended to
the next business day which is not a Saturday, Sunday or legal holiday in the
State of Michigan. Any Party may change its address for purposes of the Notices
by giving Notice of any such change to all the other Parties. Unless and until
the Parties are notified of a change in address, all Notices shall be sent to
the Parties at the address contained in this Agreement.
B. Binding Effect. All rights and obligations contained in this Agreement
shall be binding upon and inure to the respective Parties, their successors and
assigns, if any.
C. Execution. The Parties, each, separately and individually, have (i)
carefully read, fully understand and agree to all of the terms and provisions of
this Agreement; (ii) consulted with, received from, and been represented by
separate and independent legal
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<PAGE>
counsel at all times prior to and simultaneous with the execution and
implementation of this Agreement; (iii) signed this Agreement as their free act
and deed without coercion, duress, or other undue influence whatsoever; and (iv)
executed and delivered this Agreement as of the date first set forth
hereinabove. Optionees acknowledge they have not been represented by the Law
Firm of Maddin, Hauser, Wartell, Roth, Heller & Pesses, P.C. with regard to this
Agreement and do hereby waive any claim of conflict of interest, actual or
potential, with regard to the participation of Maddin, Hauser, Wartell, Roth,
Heller & Pesses, in processing this Agreement.
THIS SPACE WAS INTENTIONALLY LEFT BLANK.
THIS AGREEMENT CONTINUES ON THE
NEXT PAGE WITH PARAGRAPH 8.D.
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<PAGE>
D. RECEIPT. THE PARTIES HEREBY ACKNOWLEDGE AND ACCEPT A COMPLETE COPY OF
THIS AGREEMENT.
"OPTIONOR"
In the Presence of: INMOLD, INC.,
an Indiana corporation
[illegible] By: /s/ Filipp J. Kreissl
- -------------------------- ----------------------------
Filipp J. Kreissi, President
[illegible] "OPTIONEES"
- --------------------------
[illegible] /s/ Nasser Lukmani
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Nasser Lukmani, individually
[illegible] /s/ Sheryar Durrani
- -------------------------- ----------------------------
Sheryar Durrani, individually
[illegible] /s/ Richard L. Matsu
- -------------------------- ----------------------------
Richard L. Matsu, individually
AGREED TO AND ACCEPTED IN ITS
ENTIRETY
Nasser Lukmani Living Trust,
dated 2/8/99, or as may be amended.
[illegible] By: /s/ Nasser Lukmani
- ---------------------------- ----------------------------
Nasser Lukmani, its sole Trustee
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<PAGE>
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SERVICE AGREEMENT
BETWEEN
INMOLD, INC.
AND
INMOLD LUKMANI DESIGN TECHNOLOGIES, INC.
DATED ____________________, 1999
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<PAGE>
SERVICE AGREEMENT
BETWEEN
INMOLD, INC.
AND
INMOLD LUKMANI DESIGN TECHNOLOGIES, L.L.C.
TABLE OF CONTENTS
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PAGE
----
1. PARTIES................................................................... 1
-------
2. DATES..................................................................... 1
-----
3. RECITAL................................................................... 1
-------
4. CONSIDERATION............................................................. 2
-------------
5. SERVICES.................................................................. 2
--------
6. COMMISSION................................................................ 2
----------
7. NON SOLICITATION.......................................................... 2
----------------
8. TERM...................................................................... 3
----
9. DISPUTE RESOLUTION........................................................ 3
------------------
10. INTERPRETATION AND CONSTRUCTION.......................................... 5
-------------------------------
11. GENERAL PROVISIONS....................................................... 6
------------------
i
<PAGE>
SERVICE AGREEMENT
BETWEEN
INMOLD, INC.
AND
INMOLD LUKMANI DESIGN TECHNOLOGIES, INC.
1. PARTIES. This Service Agreement, herein 'Agreement', is made by and between
the following parties:
A. Inmold Lukmani Design Technologies, Inc., whose address is 28400
Northwestern Highway, Third Floor, Southfield, Michigan 48034, herein "ILD",
B. Inmold, Inc., whose address is 775 E. Big Beaver Road, Suite 312, Troy,
Michigan 48083, herein "II", and
C. Nassar Lukmani, whose address if 34641 Princeton Drive, Farmington
Hills, Michigan 48331
D. ILD and II may be collectively and jointly referred to as the "Parties"
and individually or separately as a "Party".
2. DATES. This Agreement is
A. Entered into and dated as of ________________, 1999, and
B. Made and effective as of and retroactive back to ____________, 1999.
3. RECITAL. The following is a recital of some of the facts involved in this
Agreement.
A. II is in the business of engineering, designing and manufacturing
certain items for the automobile industry.
B. ILD is a new start up business to provide certain engineering and design
services.
C. The Parties want to establish a close working relationship and provide
for certain of the terms of the relationship between II and ILD.
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<PAGE>
4. CONSIDERATION. For and in consideration of the mutual obligations and
benefits contained herein and other good and valuable consideration, the
receipt, adequacy and sufficiency of which are hereby acknowledged and accepted,
and with the intent to be legally bound hereby, the Parties hereby agree to and
accept the terms and provisions contained in this Agreement.
5. SERVICES. ILD will provide II with engineering, design, and related
consulting services, herein "Services' as reasonably requested by II. ILD will
use best efforts to treat II as a preferred customer and provide the Services to
II on the best and most favored customer basis as it relates to pricing, timing,
delivery, priority, and quality. ILD and II will review and adjust the requested
Service hours on not less than a quarterly basis. The Parties will try to have
the customer pay the development costs for all products or parts, whenever
possible and/or reasonably appropriate.
6. COMMISSION.
A. II will pay ILD a commission, herein "Commission", on all sales leads,
referrals, and/or introductions by and/or from ILD to II.
B. The Commission to be paid by II to ILD will be as follows:
(i) Four percent (4%) of the Gross Sales generated on projects which
ILD initiates and manages.
(ii) Two percent (2%) of the Gross Sales generated on projects which
are initiated by ILD, but engineered, managed, and/or otherwise supplied by
II.
(iii) not less than one percent (1%) of the Gross Sales on prospects
which are not initiated by ILD, but which ILD provides some form of
Services related to that particular contract.
7. NON SOLICITATION.
A. A Party will not solicit any business or employee of another Party,
herein "Non Solicitation Obligation".
B. For purposes of this Non Solicitation Obligation:
(i) A Party will mean and will include any entity a Party owns or
controls, is employed by, contracts with, and/or otherwise ha's the ability
to influence.
(ii) Solicit and/or Solicitation will mean:
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<PAGE>
a. For business, any attempt to obtain any business from, to
influence the customer to do business with any one other than the
Party then doing the Business, and/or to otherwise change the
relationship between the customer and that Party.
b. For an Employee, an attempt to hire and/or to otherwise
change the relationship between a Party as the Employer and any
employee of that Party.
(iii) Business will mean any Service related to a product, part,
component, and/or related item which a Party subcontracts and/or
otherwise involves the other Party on or with, except any part which a
Party is or may have worked on in the past.
(iv) Employee will mean any current to future employee,
contractor, vendor, and/or supplier of any Party.
(v) This Non Solicitation Obligation will exist during the term
of this Agreement and will continue for the term of one (1) year
following the termination of the last business, service, and/or
agreement between the Parties.
C. II will not develop DES technologies, herein 'DES Technologies", during
the term of this Agreement. II, however, may develop such DES Technologies if
this Agreement is terminated.
8. TERM. This Agreement commences as of the date hereof and continues on an
annual renewable basis for the next sixty (60) years. This Agreement may only be
terminated upon the following, and if not, continues as provided herein:
A. The terminating party ("Terminating Party") provides the non-terminating
party ("Non-Terminating Party") with written notice of at least ninety (90) days
prior to any such desired termination; and
B. The full payment by the Terminating Party to the Non-Terminating Party
of all money due to the Non-Terminating Party.
9. DISPUTE RESOLUTION
A. Self Regulation. In the event of a dispute, the Parties shall use best
efforts and diligently attempt, in good faith, to resolve a nd settle the
disagreement as quickly, reasonably, and as confidentially as possible. The
Parties will make every effort to avoid arbitration.
3
<PAGE>
B. Arbitration. In the event the Parties are unable to settle their
differences among themselves, then the Parties shall arbitrate, herein
"Arbitration", such disputes. Notwithstanding anything to the contrary, such
Arbitration shall be as follows:
i. In accordance with the Rules of the American Arbitration
Association for a three-member panel, except as may be specifically
provided herein.
ii. Located only in Southfield, Michigan, U.S.A. The Parties consent
to the exclusive jurisdiction and venue of Oakland County, Michigan, U.S.A.
for this Arbitration and any enforcement proceeding.
iii. The sole and exclusive method for the resolution of all disputes
and disagreements among the Parties and in place of all other or
alternative judicial procedures.
iv. Conducted and concluded on a confidential basis. The parties shall
not disclose and shall not assist others in the disclosure of any
information whatsoever concerning the nature of the dispute.
v. Conducted and concluded on an expedited basis such that the time
limit for any individual or separate action shall not exceed fifteen (15)
days, herein the "15-Day Rule", unless otherwise agreed to by the Parties.
The 15-Day Rule shall mean there will be only 15 days to do and take each
individual or separate action, including but not limited to the following:
(a) Answer or respond to all responsive pleadings;
(b) Select the arbitrators;
(c) Conduct all discovery;
(d) Hold any hearings;
(e) Issue final, binding opinion after the hearing;
vi. Concluded and a final, binding, and written Arbitration award
issued within 180 days of first filing the request for Arbitration,
notwithstanding anything to the contrary, including but not limited to: (a)
any rules of AAA, or (b) the 15-Day Rule.
vii. Award costs and actual attorneys fees to the prevailing party.
The Prevailing Party shall be the party awarded the most amount of money
from any claim, counter-claim, cross-claim, or otherwise. The Arbitrators
shall have the authority to award any legal and/or equitable remedy,
including, but not limited to (a) specific performance and (b) permanent
restraining orders, notwithstanding anything to the contrary.
viii. Binding on all Parties and all Parties consent to the immediate
enforcement of any Arbitration award by the appropriate court. If a Party
('Enforcing Party') files a lawsuit to seek the enforcement of an
Arbitration award, the non-complying party ("Defaulting Party") shall pay
the enforcing party as follows:
(a) Double the Arbitration award; and
(b) Interest at 20% per annum from commencement of the
Arbitration proceeding;
(c) All costs, including actual attorneys fees, of the enforcing
party from commencement of the arbitration; and
4
<PAGE>
(d) Any other award, damage, and/or penalty which the Court
believes appropriate.
C. Governing Law. This Agreement and any Arbitration will be governed by
and construed in accordance with the laws of the State of Michigan.
10. INTERPRETATION AND CONSTRUCTION.
A. Entire Agreement. This Agreement represents the entire and integrated
Agreement between the Parties relative to the subject matter hereof. No
amendment, modification, or change to this Agreement shall be effective or
binding unless reduced to writing and signed by all the Parties.
B. Conflicts. In the event of a direct conflict between this Agreement and
any other agreement, herein referred to as "Other Agreements", this Agreement,
or any amendment hereto, shall govern and control the Other Agreements,
notwithstanding anything to the contrary.
C. Number and Gender. Whenever required by the context or use, the singular
work shall include the plural word and the masculine gender shall include the
feminine and/or neuter gender.
D. Captions. The paragraph titles, headings, and/or captions contained
herein have been inserted solely as a means of reference and convenience. Such
captions shall not affect the interpretation or construction hereof and shall
not define, limit, extend, or otherwise describe the scope or the intent of any
provision contained herein.
E. Waiver. No action or omission by any Party, including but not limited to
any extension, modification, amendment, forbearance, delay, acceleration,
indulgence, or concession with regarding thereto, if any, is intended to, nor
shall constitute or be deemed a waiver, discharge, or release of any other Party
or term, of this Agreement, or any obligation or right established thereby, nor
shall any such action or omission constitute an approval of, or acquiescence in,
any breach hereof, except as may be expressly agreed to in writing.
F. Time. Time is of the essence for all purposes of this Agreement.
G. Conformity. Any provision hereof which is in conflict with applicable
laws as of the date hereof, is hereby amended to conform to and comply with such
laws to the maximum and fullest extent permitted thereunder. If, as a result of
such law, conflict, and/or required amendment thereto, any term, obligation,
right, condition, or provision thereof is held invalid, inoperative, void, or
unenforceable, herein the "Offensive Provision", the remaining provisions hereof
shall (a) remain" in full force; (b) in no way be altered, affected, impaired,
invalidated, or otherwise changed by the
5
<PAGE>
Offensive Provision; and (c) be interpreted, construed, and applied as though
the Offensive Provision was not in the first instance contained herein.
H. Construction. The terms and provisions hereof have been determined by
arms-length negotiation by the Parties hereto. In the event of a dispute, the
terms hereof should not be construed against any Party as drafter,
notwithstanding the fact that ILD may have physically prepared or processed the
written form hereof.
I. Counterparts. This Agreement, or any amendments thereto, may be executed
in one or more counterparts, each of which shall constitute and be deemed an
original. All of the counterparts collectively or together shall constitute one
and the same instrument and agreement, binding on all the Parties. Counterpart
copies of this Agreement need not be signed by more than one (1) Party and may
be in the form of (i) original copy, (ii) photocopy, and/or (iii) fax copy.
J. Continued Application. Certain of the terms and provisions of this
Agreement, herein "Enforceable Terms", shall continue to apply to and be
enforceable against the Parties, notwithstanding the termination of this
Agreement. The Enforceable Terms will include, but not be limited to the
following:
(i) Payment of Commissions earned prior the Date of the termination
but which remain unpaid as of the Termination: See Paragraph 6 hereof,
(ii) The Non-Solicitation obligations of Paragraph 7, and
(iii) The Dispute Resolution and Arbitration requirements of Paragraph
9
11. GENERAL PROVISIONS.
A. Notices. All notices, including all demands, consents, requests or other
communications, given or furnished pursuant hereto must be given in writing to
be effective and binding, herein referred to as "Notices". The Notices may be
sent by (i) ordinary, first class U.S. mail, (ii) certified or registered U. S.
Mail, regardless if the return receipt is received by the sender, (iii) any
private next-day delivery carrier or couriers, or their equivalent, (iv)
telegram, telecopy, telex, fax, or (v) personal service. All Notices must be
properly addressed and contain the appropriate or respective addresses as
provided herein. All Notices are intended to and shall be effective on the
actual date of the Notice. The Notices shall be deemed received and delivered
for all purposes one (1) day after the same is deposited or delivered to the
carrier or transmitter for the same regardless of the actual date of receipt. If
the last day for the giving or receiving of any Notice or performing any act
under this Note is a Saturday, Sunday or legal holiday in the State of Michigan,
then in such event, the time period and date shall be automatically extended to
the next business day which is not a Saturday, Sunday or legal holiday in the
State of Michigan. Any Party may change its address for purposes of the Notices
by giving Notice of any such change to all the other Parties. Unless and until
the Parties are notified of a change in address, all Notices shall be sent to
the Parties at time address contained in this Agreement.
6
<PAGE>
B. Confidentiality. All business information, including but not limited to
design, engineering, and related information, regardless of its form, concerning
the business and customers of II is very valuable and confidential, herein
"Confidential Information". ILD and NL shall hold, retain, and maintain in the
strictest confidence, and shall not disclose in any manner whatsoever, the
Confidential Information. ILD and NL will use the Confidential Information for
the sole and exclusive benefit of II and the customer of II.
C. Costs. The prevailing Party in any dispute may receive from the losing
or non-prevailing Party all costs and expenses incurred by the prevailing Party
by reason of any such dispute or dispute resolution or on account of enforcing
the terms hereof, including but not limited to, travel expenses, court costs,
and actual attorneys' fees.
D. Binding Effect. All rights and obligations contained in this Agreement
shall be binding upon and inure to the respective Parties, their successors and
assigns, if any.
E. Execution. The Parties, each, separately and individually, have (i)
carefully read, fully understand and agree to all of the terms and provisions of
this Agreement; (ii) consulted with, received from, and been represented by
separate and independent legal counsel at all times prior to and simultaneous
with the execution and implementation of this Agreement; (iii) signed this
Agreement as their free act and deed without, coercion, duress, or other undue
influence whatsoever; and (iv) executed and deliver delivered this Agreement as
of the date first set forth hereinabove. The Parties acknowledge that the Law
Firm of Maddin, Hauser, Wartell, Roth, Heller & Pesses, P.C. represents only
Inmold Lukmani Design Technologies, Inc. and not any of the other Parties and
the Parties hereby waive any claim of conflict of interest related to the
involvement of Maddin, Hauser, et al.
THIS SPACE WAS INTENTIONALLY LEFT BLANK.
THIS AGREEMENT CONTINUES ON THE
NEXT PAGE WITH PARAGRAPH 11.F.
7
<PAGE>
F. RECEIPT. THE PARTIES HEREBY ACKNOWLEDGE AND ACCEPT A COMPLETE COPY OF
THIS AGREEMENT.
In the Presence of: INMOLD, INC.,
[illegible] By: /s/ Filipp J. Kreissl
- -------------------------- ----------------------------
Filipp J. Kreissl, President
- -------------------------- INMOLD LUKMANI DESIGN TECHNOLOGIES,
INC.
[illegible]
- -------------------------- By: /s/ Nasser Lukmani
----------------------------
Nasser Lukmani, President
- --------------------------
- -------------------------- ----------------------------
Nasser Lukmani, individually
[illegible] By: /s/ Arifa Hasan
- -------------------------- ----------------------------
Arifa Hasan, individually
8
<PAGE>
- --------------------------------------------------------------------------------
SERVICE AGREEMENT
BETWEEN
INMOLD LUKMANI DESIGN TECHNOLOGIES, INC.
AND
DESIGN ENGINEERING SERVICES, INC.,
DATED ____________________, 1999
- --------------------------------------------------------------------------------
<PAGE>
SERVICE AGREEMENT
BETWEEN
INMOLD LUKMANI DESIGN TECHNOLOGIES, INC.
AND
DESIGN ENGINEERING SERVICES, INC.
TABLE OF CONTENTS
-----------------
PAGE
----
1. PARTIES 1
-------
2. DATES 1
-----
3. RECITAL 1
-------
4. CONSIDERATION 2
-------------
5. SERVICES 2
--------
6. COMMISSION 2
----------
7. NON SOLICITATION 3
----------------
8. PURCHASE OPTION 3
---------------
9. CONSENT 4
-------
10. DISPUTE RESOLUTION 4
------------------
11. INTERPRETATION AND CONSTRUCTION 5
-------------------------------
12. GENERAL PROVISIONS 7
------------------
-i-
<PAGE>
INMOLD LUKMANI DESIGN TECHNOLOGIES, INC.
AND
DESIGN ENGINEERING SERVICES, INC.
SERVICE AGREEMENT
1. PARTIES. This Service Agreement, herein 'Agreement", is made by and between
the following parties:
A. lnmold Lukmani Design Technologies, Inc., whose address is 28400
Northwestern Highway, Third Floor, Southfield, Michigan 48034, herein 'ILD',
B. Design Engineering Services, Inc., whose address is 30800 Telegraph
Road, Suite 1947, Bingham Farms, Michigan 48025, herein 'DES',
C. Sheryar Durrani, whose address is 30800 Telegraph Road, Suite 1947,
Bingham Farms, Michigan 48025, herein 'SD', and
D. Richard L. Matsu, whose address is 30800 Telegraph Road, Suite 1947,
Bingham Farms, Michigan 48025, herein 'RM'.
E. Nasser Lukmani, whose address is 30800 Telegraph Road, Suite 1947,
Bingham Farms, Michigan 48025, herein 'NL.'
F. ILD, DES, SD, NL, and/or RM may be collectively and jointly referred to
as the 'Parties' and individually or separately as a 'Party'.
2. DATES. This Agreement is
A. Entered into and dated as of _______________, 1999, and
B. Made and effective as of and retroactive back to ________________, 1999.
3. RECITAL The following is a recital of some of the facts involved in this
Agreement.
A. DES is in the business of providing engineering and design services.
B. ILD is a new start up business to provide certain engineering and design
services.
-1-
<PAGE>
C. The Parties want to establish a close working relationship between DES
and ILD and provide for certain of the terms of the relat ionship between DES
and ILD.
4. CONSIDERATION. For and in consideration of the mutual obligations and
benefits contained herein and other good and valua ble consideration, the
receipt, adequacy and sufficiency of which are hereby acknowledged and accepted,
and with the intent to be legally bound hereby, the Parties hereby agree to and
accept the terms and provisions contained in this Agreement.
5. SERVICES.
A. DES will provide ILD with contract engineering, design, and related
consulting services, herein 'Services' as reasonably requested by ILD, who will
function as agents for ILD related to the Services.
B. DES will use best efforts to treat ILD as a preferred customer and
provide the Services to ILD on the best and most favored customer basis as it
relates to pricing, timing, delivery, priority, and quality.
C. DES will provide ILD with the Services at the rate schedule, herein
"Rate Schedule," as attached hereto as Schedule 5-C. DES and ILD will review and
adjust the requested Service hours as needed, but not less than on a quarterly
basis.
D. ILD may extend and renew this Agreement and the Services to be provided
by DES for four (4) additional years, or for a total of five years. DES may
increase the hourly rate of the Services $5 per year during each annual
extension or renewal of the term of this Agreement, beginning the second year of
this Agreement. ILD may extend and renew this Agreement for additional time
periods as may be mutually agreed upon.
E. The Parties will try to have the customer pay the development costs for
all products or parts, whenever possible and/or reasonably appropriate.
6. COMMISSION. ILD will pay DES a commission, herein "Commission", on all sales
leads, referrals, and/or introductions generated directly from and/or initiated
by DES to ILD. The Commission to be paid by ILD to DES will be as mutually
agreed, but not less than one percent (1%) of Gross Sales. DES may not receive
more than one fee or commission for any one contract or matter. For example, DES
may not receive a Commission from ILD on any matter DES receives an hourly
Service Fee from ILD.
-2-
<PAGE>
7. NON SOLICITATION.
A. A Party will not solicit any business or employee of another Party,
herein "Non Solicitation Obligation".
B. For purposes of this Non Solicitation Obligation:
(i) A Party will mean and will include any entity a Party owns or
controls, is employed by, contracts with, and/or otherwise has the
ability to influence.
(ii) Solicit and/or Solicitation will mean:
a. For business, any attempt to obtain any business from, to
influence the customer to do business with any one other than the
Party then doing the business, and/or to otherwise change the
relationship between the customer and that Party.
b. For an Employee, an attempt to hire and/or to otherwise change
the relationship between ILD and any employee of ILD.
(iii)Business will mean any Service related to a product, part,
component, and/or related item which a Party subcontracts and/or
otherwise involves the other Party on or with, except any part which
the other Party is or may have worked on in the past.
(iv) Employee will mean any current to future employee, contractor,
vendor, and/or supplier of any Party.
(v) This Non Solicitation Obligation will exist during the term of
this Agreement and will continue for the term of one (1) year
following the termination of the last business, service, and/or
agreement between the Parties.
C. II will not develop DES technologies, herein 'DES Technologies", during
the term of this Agreement. II, however, may develop such DES Technologies if
this Agreement is terminated.
8. PURCHASE OPTION.
A. DES, NL, and SD, jointly and severally, hereby grant and give ILD the
second right of refusal option and right to purchase their interest in and to
DES, herein "Purchase Option".
-3-
<PAGE>
B. The Purchase Option shall be subordinate and second only to the prior
first right of refusal and purchase option, herein 'FRR', granted by DES to SD
and Nasser Lukmani, herein 'NL'.
C. The Purchase Option shall become operative and available to ILD upon the
following:
(i) First, after SD and NL have waived or failed to exercise their
respective FRR, and
(ii) Second, upon the following:
(a) DES, SD and/or NL receive an offer to purchase or otherwise
desire to sell its stock or assets,
(b) SD dies, or
(c) NL dies.
D. The Purchase Option shall be on the same terms, provisions, pricing, and
timing as the FRR so that ILD stands second and behind only SD and NL in
acquiring any interests in or to DES.
9. CONSENT. DES, SD and RM do hereby acknowledge and consent to the formation of
ILD by NL and Inmold, Inc. and waive all claims against NL and Inmold which they
may have in connection with the creation, ownership, operation, and competition
involving ILD.
10. DISPUTE RESOLUTION
A. Self Regulation. In the event of a dispute, the Parties shall use best
efforts and diligently attempt, in good faith, to resolve and settle the
disagreement as quickly, reasonably, and as confidentially as possible. The
Parties will make every effort to avoid arbitration.
B. Arbitration. In the event the Parties are unable to settle their
differences among themselves, then the Parties shall arbitrate, herein
"Arbitration", such disputes. Notwithstanding anything to the contrary, such
Arbitration shall be as follows:
i. In accordance with the Rules of the American Arbitration
Association for a three-member panel, except as may be specifically
provided herein.
ii. Located only in Southfield, Michigan, U.S.A. The Parties consent
to the exclusive jurisdiction and venue of Oakland County, Michigan, U.S.A.
for this Arbitration and any enforcement proceeding.
-4-
<PAGE>
iii. The sole and exclusive method for the resolution of all disputes
and disagreements among the Parties and in place of all other or
alternative judicial procedures.
iv. Conducted and concluded on a confidential basis. The parties shall
not disclose and shall not assist others in the disclosure of any
information whatsoever concerning the nature of the dispute.
v. Conducted and concluded on an expedited basis such that the time
limit for any individual or separate action shall not exceed fifteen (15)
days, herein the "15-Day Rule", unless otherwise agreed to by the Parties.
The 15-Day Rule shall mean there will be only 15 days to do and take each
individual or separate action, including but not limited to the following:
(a) Answer or respond to all responsive pleadings;
(b) Select the arbitrators;
(c) Conduct all discovery;
(d) Hold any hearings;
(e) Issue final, binding opinion after the hearing;
vi. Concluded and a final, binding, and written Arbitration award
issued within 180 days of first filing the request for Arbitration,
notwithstanding anything to the contrary, including but not limited to: (a)
any rules of AAA, or (b) the 15-Day Rule.
vii. Award costs and actual attorneys fees to the prevailing party.
The Prevailing Party shall be the party awarded the most amount of money
from any claim, counter-claim, cross-claim, or otherwise. The Arbitrators
shall have the authority to award any legal and/or equitable remedy,
including, but not limited to (a) specific performance and (b) permanent
restraining orders, notwithstanding anything to the contrary.
viii. Binding on all Parties and all Parties consent to the immediate
enforcement of any Arbitration award by the appropriate court. If a Party
('Enforcing Party") files a lawsuit to seek the enforcement of an
Arbitration award, the non-complying party ("Defaulting Party') shall pay
the enforcing party as follows:
(a) Double the Arbitration award; and
(b) Interest at 20% per annum from commencement of the
Arbitration proceeding;
(c) All costs, including actual attorneys fees, of the Enforcing
Party from commencement of the arbitration; and
(d) Any other award, damage, and/or penalty which the Court
believes appropriate.
C. Governing Law. This Agreement and any Arbitration will be governed by
and construed in accordance with the laws of the State of Michigan.
11. INTERPRETATION AND CONSTRUCTION.
A. Entire Agreement. This Agreement represents the, entire and integrated
Agreement between the Parties relative to the subject matter hereof. No
-5-
<PAGE>
amendment, modification, or change to this Agreement shall be effective or
binding unless reduced to writing and signed by all the Parties.
B. Conflicts. In the event of a direct conflict between this Agreement and
any other agreement, herein referred to as "Other Agreements", this Agreement,
or any amendment hereto, shall govern and control the Other Agreements,
notwithstanding anything to the contrary.
C. Number and Gender. Whenever required by the context or use, the singular
work shall include the plural word and the masculine gender shall include the
feminine and/or neuter gender.
D. Captions. The paragraph titles, headings, and/or captions contained
herein have been inserted solely as a means of reference and convenience. Such
captions shall not affect the interpretation or construction hereof and shall
not define, limit, extend, or otherwise describe the scope or the intent of any
provision contained herein.
E. Waiver. No action or omission by any Party, including but not limited to
any extension, modification, amendment, forbearance, delay, acceleration,
indulgence, or concession with regarding thereto, if any, is intended to, nor
shall constitute or be deemed a waiver, discharge, or release of any other Party
or term, of this Agreement, or any obligation or right established th ereby, nor
shall any such action or omission constitute an approval of, or acquiescence in,
any breach hereof, e xcept as may be expressly agreed to in writing.
F. Time. Time is of the essence for all purposes of this Agreement.
G. Conformity. Any provision hereof which is in conflict with applicable
laws as of the date hereof, is hereby amended to conform to and comply with such
laws to the maximum and fullest extent permitted thereunder. If, as a result of
such law, conflict, and/or required amendment thereto, any term, obligation,
right, condition, or provision thereof is held invalid, inoperative, void, or
unenforceable, herein the "Offensive Provision", the remaining provisions hereof
shall (a) remain in full force; (b) in no way be altered, affected, impaired,
invalidated, or otherwise changed by the Offensive Provision; and (c) be
interpreted, construed, and applied as though the Offensive Provision was not in
the first instance contained herein.
H. Construction. The terms and provisions hereof have been determined by
arms-length negotiation by the Parties hereto. In the event of a dispute, the
terms hereof should not be construed against any Party as drafter,
notwithstanding the fact that ILD may have physically prepared or processed the
written form hereof.
I. Counterparts. This Agreement, or any amendments, thereto, may be
executed in one or more counterparts, each of which shall constitute and be
deemed
-6-
<PAGE>
an original. All of the counterparts collectively or together shall constitute
one and the same instrument and agreement, binding on all the Parties.
Counterpart copies of this Agreement need not be signed by more than one (1)
Party and may be in the form of (i) original copy, (ii) photocopy, and/or (iii)
fax copy.
J. Termination. Either Party may terminate and end this Agreement at any
time, for any reason, and without any ongoing liability to the other Party upon
receipt of written notice thereof by the Non-Terminating Party.
K. Continued Application. Certain of the terms and provisions of this
Agreement, herein 'Enforceable Terms', shall continue t o apply to and be
enforceable against the Parties, notwithstanding the termination of this
Agreement. The Enforceable Terms will include, but not be limited to the
following:
i. Payment of commissions earned prior to the Date of the termination
but which remain unpaid as of the Termination. See paragraph 6 hereof;
ii. The Non-Solicitation obligations of paragraph 7; and
iii. The Dispute Resolution and Arbitration requirements of paragraph
10.
12. GENERAL PROVISIONS.
A. Notices. All notices, including all demands, consents, requests or other
communications, given or furnished pursuant hereto must be given in writing to
be effective and binding, herein referred to as "Notices". The Notices may be
sent by (i) ordinary, first class U.S. mail, (ii) certified or registered U. S.
Mail, regardless if the return receipt is received by the sender, (iii) any
private next-day delivery carrier or couriers, or their equivalent, (iv)
telegram, telecopy, telex, fax, or (v) person al service. All Notices must be
properly addressed and contain the appropriate or respective addresses as
provided herein. All Notices are intended to and shall be effective on the
actual date of the Notice. The Notices shall be deemed received and delivered
for all purposes one (1) day after the same is deposited or delivered to the
carrier or transmitter for the same regardless of the actual date of receipt. If
the last day for the giving or receiving of any Notice or performing any act
under this Note is a Saturday, /Sunday or legal holiday in the State of
Michigan, then in such event, the time period and date shall be automatically
extended to the next business day which is not a Saturday, Sunday or legal
holiday in the State of Michigan. Any Party may change its address for purposes
of the Notices by giving Notice of any such change to all the other Parties.
Unless and until the Parties are notified of a change in address, all Notices
shall be sent to the Parties at the address contained in this Agreement.
B. Confidentiality. All business information, including but not limited to
design, engineering, and related information, regardless of its form, concerning
the business and customers of ILD is very valuable and confidential,herein.
"Confidential Information". DES, SD and RM shall hold, retain, and maintain in
the strictest confidence, and shall not disclose in any manner whatsoever, the
Confidential
-7-
<PAGE>
Information. DES, SD and RM will use the Confidential Information for the sole
and exclusive benefit of ILD and the customer of ILD.
C. Costs. The prevailing Party in any dispute may receive from the losing
or non-prevailing Party all costs and expenses incurred by the prevailing Party
by reason of any such dispute or dispute resolution or on account of enforcing
the terms hereof, including but not limited to, travel expenses, court costs,
and actual attorneys' fees.
D. Binding Effect. All rights and obligations contained in this Agreement
shall be binding upon and inure to the respective Parties, their successors and
assigns, if any.
E. Execution. The Parties, each, separately and individually, have (i)
carefully read, fully understand and agree to all of the terms and provisions of
this Agreement; (ii) consulted with, received from, and been represented by
separate and independent legal counsel at all times prior to and simultaneous
with the execution and implementation of this Agreement; (iii) signed this
Agreement as their free act and deed without coercion, duress, or other undue
influence whatsoever; and (iv) executed and de livered this Agreement as of the
date first set forth hereinabove. The Parties acknowledge that the Law firm of
Maddin, Hauser, Wartell, Roth, Heller & Pesses, P.C. represents only Inmold
Lukmani Design Technologies, Inc. and not any of the other Parties and the
Parties hereby waive any claim of conflict of interest related to the
involvement of Maddin, Hauser, et al.
THIS SPACE WAS INTENTIONALLY LEFT BLANK.
THIS AGREEMENT CONTINUES ON THE
NEXT PAGE WITH PARAGRAPH 12.F.
-8-
<PAGE>
F. RECEIPT THE PARTIES HEREBY ACKNOWLEDGE AND ACCEPT A COMPLETE COPY OF
THIS AGREEMENT.
In the Presence of: DESIGN ENGINEERING SERVICES, INC.
By: /s/ Sheryar Durrani
- ------------------------------ ---------------------------------
Sheryar Durrani, President
[illegible]
- ------------------------------
INMOLD LUKMANI DESIGN TECHNOLOGIES,
INC.
[illegible] By: /s/ Nasser Lukmani
- ------------------------------ ---------------------------------
Nasser Lukmani, President
[illegible]
- ------------------------------
/s/ Sheryar Durrani
- ------------------------------ ---------------------------------
Sheryar Durrani, individually
[illegible] /s/ Richard L. Matsu
- ------------------------------ ---------------------------------
Richard L. Matsu, individually
[illegible] /s/ Nasser Lukmani
- ------------------------------ ---------------------------------
Nasser Lukmani, individually
-9-
<PAGE>
[DES LETTERHEAD]
DESIGN ENGINEERING SERVICES INC.
RATE SCHEDULE FOR INMOLD DEVELOPMENT
1/25/99
HOURS RATE/HR
---------------------------
500 $85
2500 $75
5,000 $65
10,000 $55
15,000 $53
20,000 $50
25,000 $50
[GRAPH OF HOURS - RATE/HR APPEARS HERE]
Assumptions
1. Number of Hours worked is based on number of Design Engineers assigned
multiplied by 2000 hours/year
2. Development budget for next quarter to be reviewed in previous mid-quarter
3. Required # of Design Engineers for next quarter agreed upon one month
previous to next quarter
Approved: /s/ Sheryar Durrani Date: 1/25/99
------------------------------------ ------------
Sheryar Durrani
Approved: /s/ Nasser Lukmani Date: 1/25/99
------------------------------------ ------------
Nasser Lukmani
<PAGE>
- --------------------------------------------------------------------------------
SERVICE AGREEMENT
BETWEEN
INMOLD, INC.
AND
DESIGN ENGINEERING SERVICES, INC.,
DATED ____________________, 1999
- --------------------------------------------------------------------------------
<PAGE>
SERVICE AGREEMENT
BETWEEN
INMOLD, INC.
AND
DESIGN ENGINEERING SERVICES, INC.
TABLE OF CONTENTS
-----------------
PAGE
----
1. PARTIES 1
-------
2. DATES 1
-----
3. RECITAL 1
-------
4 CONSIDERATION 2
-------------
5. SERVICES 2
--------
6. COMMISSION 2
----------
7. NON SOLICITATION 2
----------------
8. CONSENT 3
-------
9. PURCHASE OPTION 3
---------------
10. DISPUTE RESOLUTION 4
------------------
11. INTERPRETATION AND CONSTRUCTION 5
-------------------------------
12. GENERAL PROVISIONS 7
------------------
i
<PAGE>
INMOLD, INC.
AND
DESIGN ENGINEERING SERVICES, INC.
SERVICE AGREEMENT
1. PARTIES. This Service Agreement, herein "Agreement", is made by and between
the following parties:
A. Inmold, Inc., whose address 775 East Big Beaver, Suite 312, Troy,
Michigan 48083, herein "II".
B. Design Engineering Services, Inc., whose address is 30800 Telegraph
Road, Suite 1947, Bingham Farms, Michigan 48025, herein "DES",
C. Sheryar Durrani, whose address is 30800 Telegraph Road, Suite 1947,
Bingham Farms, Michigan 48025, herein "SD", and
D. Richard L. Matsu, whose address is 30800 Telegraph Road, Suite 1947,
Bingham Farms, Michigan 48025, herein "RM".
E. Nasser Lukmani, whose address is 30800 Telegraph Road, Suite 1947,
Bingham Farms, Michigan 48025, herein NL.
F. II, DES, SD, NL, and/or RM may be collectively and jointly referred to
as the "Parties" and individually or separately as a "Party".
2. DATES. This Agreement is
A. Entered into and dated as of __________, 1999, and
B. Made and effective as of and retroactive back to ________, 1999.
3. RECITAL. The following is a recital of some of the facts involved in this
Agreement.
A. DES is in the business of providing engineering and design services.
B. II is in the business of engineering, designing, and manufacturing
certain items for the automobile industry.
C. The Parties want to establish a close working relationship, and provide
for certain of the terms of the relationship between DES and II.
1
<PAGE>
4. CONSIDERATION. For and in consideration of the mutual obligations and
benefits contained herein and other good and valuable consideration, the
receipt, adequacy and sufficiency of which are hereby acknowledged and accepted,
and with the intent to be legally bound hereby, the Parties hereby agree to and
accept the terms and provisions contained in this Agreement.
5. SERVICES.
A. DES will provide II with engineering, design, and related consulting
services, herein 'Services' as reasonably requested by II.
B. DES will use best efforts to treat II as a preferred customer and
provide the Services to II on the best and most favored customer basis as it
relates to pricing, timing, delivery, priority, and quality.
C. DES will provide II with not less than 200 hours per year at an hourly
rate not to exceed $65 per hour during the first year of this Agreement. DES and
If will review and adjust the requested Service hours on not less than a
quarterly basis.
D. II may extend and renew this Agreement and the Services to be provided
by DES for four (4) additional years, or for a total of five years. DES may
increase the hourly rate of the Services $5 per year during the term of this
Agreement, or any renewal thereof, beginning the second year of this Agreement.
II may extend and renew this Agreement for additional time periods as may be
mutually agreed upon.
E. The Parties will try to have the customer pay the development costs for
all products or parts, whenever possible and/or reasonably appropriate.
6. COMMISSION. II will pay DES a commission, herein "Commission", on and for all
sales, leads, referrals, and/or introductions, herein "Referrals", by and/or
from DES referrals to II. The Commission to be paid by II to DES will be as
mutually agreed upon, but not less than One (1%) Percent of the Gross Sales
generated on such qualified Referrals from DES. DES may not receive more than
one fee or Commission for a matter. For example, DES may not receive a
Commission from II on any matter DES receives an hourly Service Fee from II.
7. NON SOLICITATION.
A. The Parties will not solicit any business or employee of any other
Party, herein "Non Solicitation Obligation".
B. For purposes of this Non Solicitation Obligation:
2
<PAGE>
(i) A Party will mean and will include any entity (a Party) owns, or
controls, is employed by, contracts with, and/or otherwise has the ability
to influence.
(ii) Solicit and/or Solicitation will mean:
a. For business, any attempt to obtain any business from, to
influence the customer to do business with any one other than the
Party then doing the business, and/or to otherwise change the
relationship between the customer and that Party.
b. For an Employee, an attempt to hire and/or to otherwise change
the relationship between the Party and any employee of that Party.
(iii) Business will mean any Service related to a product, part,
component, and/or related item which a Party subcontracts and/or otherwise
involves the other Party on or with, except any part which a Party is or
may have worked on in the past.
(iv) Employee will mean any current to future employee, contractor,
vendor, and/or supplier of any Party.
(v) This Non Solicitation Obligation will exist during the term of
this Agreement and will continue for the term of one (1) year following the
termination of the last business, service, and/or agreement between the
Parties.
C. II will not develop DES technologies, herein "DES Technologies", during
the term of this Agreement. II, however, may develop such DES Technologies if
this Agreement is terminated.
8. CONSENT. DES, SD, NL, and RM do hereby acknowledge and consent to the
formation of Inmold Lukmani Design Technologies, Inc., herein "ILD", by NL and
II and waive all claims against NL, ILD, and II which they may have in
connection with the creation, ownership, operation, and competition involving
ILD.
9. PURCHASE OPTION.
A. DES, NL, and SD, jointly and severally, hereby grant and give II the
third right of refusal option and right to purchase their interest in and to
DES, herein "Purchase Option".
B. The Purchase Option shall be subordinate, (i) and third only to the
prior first right of refusal and purchase option, herein "FRR", granted by DES
to SD and NL, and, (ii) third to the second right of refusal and purchase option
granted by DES to Inmold Lukmani Design Technologies, Inc., herein "ILD".
3
<PAGE>
C. The Purchase Option shall become operative and available to II upon the
following:
(i) First, after SD and NL waive or fail to exercise their respective FRR,
(ii) Second, ILD waives or fails to exercise its FRR, and,
(iii)Third, upon the following:
(a) DES, SD and/or NL receive an offer to purchase or otherwise
desire to sell its stock or assets,
(b) SD dies, or
(c) NL dies.
D. The Purchase Option shall be on the same terms, provisions, pricing, and
timing as the FRR so that II stands third and behind only, SD and NL, who are
first, and ILD, who is second, in acquiring any interests in or to DES.
10. DISPUTE RESOLUTION
A. Self Regulation. In the event of a dispute, the Parties shall use best
efforts and diligently attempt, in good faith, to resolve and settle the
disagreement as quickly, reasonably, and as confidentially as possible. The
Parties will make every effort to avoid arbitration.
B. Arbitration. In the event the Parties are unable to settle their
differences among themselves, then the Parties shall arbitrate, herein
"Arbitration", such disputes. Notwithstanding anything to the contrary, such
Arbitration shall be as follows:
i. In accordance with the Rules of the American Arbitration
Association for a three-member panel, except as may be specifically
provided herein.
ii. Located only in Southfield, Michigan, U.S.A. The Parties consent
to the exclusive jurisdiction and venue of Oakland County, Michigan, U.S.A.
for this Arbitration and any enforcement proceeding.
iii. The sole and exclusive method for the resolution of all disputes
and disagreements among the Parties and in place of all other or
alternative judicial procedures.
iv. Conducted and concluded on a confidential basis. The parties shall
not disclose and shall not assist others in the disclosure of any
information whatsoever concerning the nature of the dispute.
v. Conducted and concluded on an expedited basis such that the time
limit for any individual or separate action shall not exceed fifteen (15)
days, herein the "15-Day Rule", unless otherwise agreed to by the Parties.
The 15-Day Rule shall
4
<PAGE>
mean there will be only 15 days to do and take each individual or separate
action, including but not limited to the following:
(a) Answer or respond to all responsive pleadings;
(b) Select the arbitrators;
(c) Conduct all discovery;
(d) Hold any hearings;
(e) Issue final, binding opinion after the hearing;
vi. Concluded and a final, binding, and written Arbitration award
issued within 180 days of first filing the request for Arbitration,
notwithstanding anything to the contrary, including but not limited to: (a)
any rules of AAA, or (b) the 15-Day Rule.
vii. Award costs and actual attorneys fees to the prevailing party.
The Prevailing Party shall be the party awarded the most amount of money
from any claim, counter-claim, cross-claim, or otherwise. The Arbitrators
shall have the authority to award any legal and/or equitable remedy,
including, but not limited to (a) specific enforcement and (b) permanent
restraining orders, notwithstanding anything to the contrary.
viii. Binding on all Parties and all Parties. consent to the immediate
enforcement of any Arbitration award by the appropriate court. If a Party
('Enforcing Party") files a lawsuit to seek the enforcement of an
Arbitration award, the non-complying pa rty ('Defaulting Party') shall pay
the enforcing party as follows:
(a) Double the Arbitration award; and
(b) Interest at 20% per annum from commencement of the Arbitration
proceeding;
(c) All costs, including actual attorneys fees, of the Enforcing
Party from commencement of the Arbitration; and
(d) Any other award, damage, and/or penalty which the Court believes
appropriate.
C. Governing Law. This Agreement and any Arbitration will be governed by
and construed in accordance with the laws of the State of Michigan.
11. INTERPRETATION AND CONSTRUCTION.
A. Entire Agreement. This Agreement represents the entire and integrated
Agreement between the Parties relative to the subject matter hereof. No
amendment, modification, or change to this Agreement shall be effective or
binding unless reduc ed to writing and signed by all the Parties.
B. Conflicts. In the event of a direct conflict between this Agreement and
any other agreement, herein referred to as "Other Agreements", this Agreement,
or any amendment hereto, shall govern and control the Other Agreements,
notwithstanding anything to the contrary.
5
<PAGE>
C. Number and Gender. Whenever required by the context or use, the singular
work shall include the plural word and the masculine gender shall include the
feminine and/or neuter gender.
D. Captions. The paragraph titles, headings, and/or captions contained
herein have been inserted solely as a means of reference and convenience. Such
captions shall not affect the interpretation or construction hereof and shall
not define, limit, extend, or otherwise describe the scope or the intent of any
provision contained herein.
E. Waiver. No action or omission by any Party, including but not limited to
any extension, modification, amendment, forbearance, delay, acceleration,
indulgence, or concession with regarding thereto, if any, is intended to, nor
shall constitute or be deemed a waiver, discharge, or release of any other Party
or term, of this Agreement, or any obligation or right established thereby, nor
shall any such action or omission constitute an approval of, or acquiescence in,
any breach hereof, except as may be expre ssly agreed to in writing.
F. Time. Time is of the essence for all purposes of this Agreement.
G. Conformity. Any provision hereof which is in conflict with applicable
laws as of the date hereof, is hereby amended to conform to and comply with such
laws to the maximum and fullest extent permitted thereunder. If, as a result of
such law, conflict, and/or required amendment thereto, any term, obligation,
right, condition, or provision thereof is held invalid, inoperative, void, or
unenforceable, herein the 'Offensive Provision', the remaining provisions hereof
shall (a) remain in full force; (b) in no way be altered, affected, impaired,
invalidated, or otherwise changed by the Offensive Provision; and (c) be
interpreted, construed, and applied as though the Offensive Provision was not in
the first instance contained herein.
H. Construction. The terms and provisions hereof have been determined by
arms-length negotiation by the Parties hereto. In the event of a dispute, the
terms hereof should not be construed against any Party as drafter,
notwithstanding the fact that II may have physically prepared or processed the
written form hereof.
I. Counterparts. This Agreement, or any amendments thereto, may be executed
in one or more counterparts, each of which shall constitute and be deemed an
original. All of the counterparts collectively or together shall constitute one
and the same instrument and agreement, binding on all the Parties. Counterpart
copies of this Agreement need not be signed by more than one (1) Party and may
be in the form of (i) original copy, (ii) photocopy, and/or (iii) fax copy.
J. Termination. Either Party may terminate and end this Agreement, at any
time, for any reason, and without any ongoing liability to the other Party, upon
receipt of written notice thereof by the Non-Terminating Party.
6
<PAGE>
K. Continued Application. Certain of the terms and provisions of this
Agreement, herein "Enforceable Terms", shall continue to apply to and be
enforceable against the Parties, notwithstanding the termination of this
Agreement. The Enforceable Terms will include, but not be limited to the
following:
i. Payment of Commissions earned prior to the Date of the
termination but which remain unpaid as of the Termination. See
Paragraph 6 hereof.
ii. The Non-Solicitation obligations of Paragraph 7, and
iii. The Dispute Resolution and Arbitration requirements of Paragraph
10.
12. GENERAL PROVISIONS.
A. Notices. All notices, including all demands, consents, requests or other
communications, given or furnished pursuant hereto must be given in writing to
be effective and binding, herein referred to as 'Notices'. The Notices may be
sent by (i) ordinary, first class U.S. mail, (ii) certified or registered U. S.
Mail, regardless if the return receipt is received by the sender, (iii) any
private next-day delivery carrier or couriers, or their equivalent, (iv)
telegram, telecopy, telex, fax, or (v) personal service. All Notices must be
properly addressed and contain the appropriate or respective addresses as
provided herein. All Notices are intended to and shall be effective on the
actual date of the Notice. The Notices shall be deemed received and delivered
for all purposes one (1) day after the same is deposited or delivered to the
carrier or transmitter for the same regardless of the actual date of receipt. If
the last day for the giving or receiving of any Notice or performing any act
under this Note is a Saturday, /Sunday or legal holiday in the State of
Michigan, then in such event, the time period and date shall be automatically
extended to the next business day which is not a Saturday, Sunday or legal
holiday in the State of Michigan. Any Party may change its address for purposes
of the Notices by giving Notice of any such change to all the other Parties.
Unless and until the Parties are notified of a change in address, all Notices
shall be sent to the Parties at the address contained in this Agreement.
B. Confidentiality. All business information, including but not limited to
design, engineering, and related information, regardless of its form, concerning
the business and customers of 11 is very valuable and confidential, herein
"Confidential Information". DES, SD, NL, and RM shall hold, retain, and maintain
in the strictest confidence, and shall not disclose in any manner whatsoever,
the Confidential Information. DES, SD, NL, and RM will use the Confidential
Information for the sole and exclusive benefit of 11 and the customers of II.
C. Costs. The prevailing Party in any dispute may receive from the losing
or non-prevailing Party all costs and expenses incurred by the prevailing Party
by reason of any such dispute or dispute resolution or on account of enforcing
the terms hereof, including but not limited to, travel expenses, court costs,
and actual attorneys' fees.
7
<PAGE>
D. Binding effect. All rights and obligations contained in this Agreement
shall be binding upon and inure to the respective Parties, their successors and
assigns, if any.
E. Execution. The Parties, each, separately and individually, have (i)
carefully read, fully understand and agree to all of the terms and provisions of
this Agreement; (ii) consulted with, received from, and been represented by
separate and independent legal counsel at all times prior to and simultaneous
with the execution and implementation of this Agreement; (iii) signed this
Agreement as their free act and deed without coercion, duress, or other undue
influence whatsoever; and (iv) executed and delivered d this Agreement as of the
date first set forth hereinabove. The Parties acknowledge that the Law Firm of
Maddin, Hauser, Wartell, Roth, Heller and Pesses, P.C. represents only Inmold
Lukmani Design Technologies, Inc. and not any of the other Parties and the
Parties hereby waive any claim of conflict of interest related to the
involvement of Maddin, Hauser, et al.
THIS SPACE WAS INTENTIONALLY LEFT BLANK.
THIS AGREEMENT CONTINUES ON THE
NEXT PAGE WITH 12.F.
8
<PAGE>
F. RECEIPT THE PARTIES HEREBY ACKNOWLEDGE AND ACCEPT A COMPLETE COPY OF THIS
AGREEMENT.
In the Presence of: DESIGN ENGINEERING SERVICES, INC.
By:
- ------------------------ ----------------------------------
Sheryar Durrani, President
- ------------------------
INMOLD, INC.
By:
- ------------------------ ----------------------------------
Filipp J. Kreissi, President
- ------------------------
- ------------------------ ----------------------------------
Sheryar Durrani, individually
- ------------------------ ----------------------------------
Richard L. Matsu, individually
- ------------------------ ----------------------------------
Nasser Lukmani, individually
9
<PAGE>
CONSENT RESOLUTIONS AND AUTHORIZATIONS
IN LIEU OF
SPECIAL MEETING
OF
THE DIRECTORS
OF
INMOLD LUKMANI DESIGN TECHNOLOGIES, INC.
FOR
INMOLD/DES MATTERS
The Undersigned, being all of the Board of Directors of Inmold Lukmani
Design Technologies, Inc. ('Corporation'), a Michigan corporation, do hereby
consent to and adopt the following resolutions and authorizations as and for the
actions of all of the Directors of the Corporation in lieu of holding a formal
or Special Meeting of the Directors.
1. Inmold/DES Matters.
RESOLVED, that the Corporation is authorized and directed to enter into any
appropriate agreements related to the design, engineering and related services
involving lnmold, Inc. and Design Engineering Services, Inc. ("DES"). This
authorization specifica lly includes, but is not limited to the execution and
performance of certain Service Agreements with Inmold, Inc. and DES.
2. Waiver of Notice.
RESOLVED, the Directors do hereby waive the necessity of a prior written
notice of a meeting and the necessity of holding an actual formal or special
meeting of the same.
4. Agent Ratificationification.
RESOLVED, the Corporation ratifies, affirms, and approves any and all
actions taken prior to the date hereof, on behalf of the Corporation by the
Directors and/or Officers and acknowledges as being the obligations of the
Corporation any and all contracts, liabilities and/or undertakings entered into
and/or approved by the Directors and/or Officers of the Corporation on behalf of
the Corporation relative to the Proposed Transaction.
4. Binding Effect.
RESOLVED, the Resolutions contained herein shall be binding upon the
Corporation in accordance with the terms of the particular Resolution, without
the need of any other form of written agreement, plan, acknowledgment, receipt,
or any other item whatsoever.
<PAGE>
Consent Resolutions in Lieu of
Special Meeting of the Directors
of Inmold Lukmani Design Technologies, Inc. Page 2
5. Conflict.
RESOLVED, this Resolution supersedes, cancels, and replaces any prior
Minutes, Resolutions and Consents of the Directors when or if these Minutes or
Resolutions conflict with any such prior Authorizations, Consents, or Agreements
of the Directors.
6. Minutes,
RESOLVED, the Secretary shall be, and hereby is, authorized and directed to
make the original, and/or a copy of this Resolution and Decision part of the
official minutes of the Corporation.
7. Further Authorizations.
RESOLVED, any of the Officers of the Corporation, together or individually,
are authorized, empowered and directed to do any and all acts and things
necessary, desirable and/or appropriate to implement, effectuate and/or
accomplish the foregoing Resolutions, even if the same may not have been
specifically detailed herein, without the need for additional meetings,
communications, authorizations or consents with and/or from the Shareholder and
Directors, on behalf of the Corporation, including by way of illustration
stration and not limitation, the execution of any documents and the payment of
any monies.
"DIRECTORS"
-----------------------------
Nasser Lukmani
-----------------------------
Arif a Hasan
-----------------------------
Filipp J. Kreissl
Dated:______________________, 1999
<PAGE>
CONSENT RESOLUTIONS AND AUTHORIZATIONS
IN LIEU OF
SPECIAL MEETING
OF
THE DIRECTORS
OF
INMOLD, INC.
FOR
LUKMANI MATTER
The Undersigned, being all of the Directors of Inmold, Inc.,
("Corporation'), do hereby consent to and adopt the following resolutions as and
for the actions of the Directors of the Corporation in lieu of holding a formal
or Special Meeting of the Directors.
1. Lukmani Matter.
RESOLVED, the Corporation is authorized and directed to enter into all
agreements and to pay the appropriate costs related to the for mation and
operation of a certified minority business enterprise, herein 'Proposed
Transaction.' This Authorization specifically includes, but is not limited to
the execution and performance of the following:
A. Articles of Incorporation, By-Laws, and Shareholder Agreement for
Inmold Lukmani Design Technologies, Inc. ('ILD').
B. Service Agreements with ILD and Design Engineering Services, Inc.
('DES').
C. Stock Option Agreement with Nasser Lukmani, Sheryar Durrani and
Richard Matsu, and
D. Engagement Letter Agreement with the law firm of Maddin, Hauser,
Wartell, Roth, Heller & Pesses, P.C.
2. Waiver of Notice.
RESOLVED, the Directors do hereby waive the necessity of a formal written
notice of a meeting of the Directors of the Corporation and the necessity of
holding an actual formal or special meeting of the same.
<PAGE>
Consent Resolutions and Authorizations
in Lieu of Special Meeting of the Directors
of Inmold, Inc. Page 2
3. Agent Ratification.
RESOLVED, the Corporation: (A) ratifies, affirms, and approves any and all
actions taken prior to the date hereof on behalf of the Corporation by the
Directors and/or officers of the Corporation; and (B) acknowledges as being the
obligations of the Corporation any and all contracts, liabilities and/or
undertakings entered into and/or approved by the Directors and/or officers of
the Corporation on behalf of the Corporation relative to the Proposed
Transaction.
4. Binding Effect.
RESOLVED, the Resolutions and Authorizations contained herein shall be
binding upon the Corporation in accordance with the terms of the particular
Resolutions or Authorizations, without the need of any other form of written
agreement, plan, acknowledgment, receipt, or any other item whatsoever.
5. Conflict.
RESOLVED, these Resolutions and Authorizations supersede, cancel, and
replace any prior Minutes, Resolutions and Consents of the Directors when or if
these Minutes or Resolutions conflict with any such prior Authorizations,
Consents, or Agreements of the Directors.
6. Minutes.
RESOLVED, the Secretary shall be, and hereby is, authorized and directed to
make the original, and/or a copy of these Resolutions, Authorizations and
Decisions part of the official minutes of the Corporation.
7. Further Authorizations.
RESOLVED, the Directors and/or officers of the Corporation are authorized,
empowered and directed to do any and all acts and things necessary, desirable
and/or appropriate to implement, effectuate and/or accomplish the foregoing
Resolutions, even if the same may not have been specifically detailed herein,
without the need for additional meetings, communications, authorizations or
consents with and/or from the Directors, on behalf of the Corporation, including
by way of illustration and not limitation, the execution of any documents and
payment of any monies.
<PAGE>
Consent Resolutions and Authorizations
in Lieu of Special Meeting of the Directors
of Inmold, Inc. Page 3
DIRECTORS:
-------------------------
David S. Eberly
-------------------------
John R. Edman
-------------------------
Philip B. Fischer
-------------------------
John F. Horner
-------------------------
Filipp J. Kreissl
-------------------------
Mayer Morganroth
-------------------------
J. Will Paull
-------------------------
John M. Sanders
-------------------------
Joseph P. Schmidt
-------------------------
David C. Schifflett
-------------------------
Owen A. Pierce
-------------------------
-------------------------
Dated:____________________, 1999
<PAGE>
CONSENT RESOLUTIONS AND AUTHORIZATIONS
IN LIEU OF
SPECIAL MEETING
OF
THE DIRECTORS
OF
DESIGN ENGINEERING SERVICES, INC.
FOR
INMOLD LUKMANI MATTERS
The Undersigned, being all of the Board of Directors of Design Engineering
Services, Inc. ("Corporation"), a Michigan corporation, do hereby consent to and
adopt the following resolutions and authorizations as and for the actions of all
of the Directors of the Corporation in lieu of holding a formal or Special
Meeting of the Directors.
1. Inmold Lukmani Matters.
RESOLVED, that the Corporation is authorized and directed to enter into any
appropriate agreements related to the formation of a certified minority business
enterprise involving Nasser Lukmani and Inmold, Inc., herein 'Proposed
Transaction.' This authorization specifically includes, but is not limited to
the execution and performance of certain Service Agreements with Inmold, Inc.
and Inmold Lukmani Design Technologies, L.L.C.
2. Waiver of Notice.
RESOLVED, the Directors do hereby waive the necessity of a prior written
notice of a meeting and the necessity of holding an actual formal or special
meeting of the same.
4. Agent Ratification ification.
RESOLVED, the Corporation ratifies, affirms, and approves any and all
actions taken prior to the date hereof, on behalf of the Corporation by the
Directors and/or Officers and acknowledges as being the obligations of the
Corporation any and all contracts, liabilities and/or undertakings entered into
and/or approved by the Directors and/or Officers of the Corporation on behalf of
the Corporation relative to the Proposed Transaction.
4. Binding Effect.
RESOLVED, the Resolutions contained herein shall be binding upon the
Corporation in accordance with the terms of the particular,- Resolution, without
the need of any other form of written agreement, plan, acknowledgment, receipt,
or
<PAGE>
Consent Resolutions in Lieu of
Special Meeting of the Directors
of Design Engineering Services, Inc. Page 2
any other item whatsoever.
5. Conflict.
RESOLVED, this Resolution supersedes, cancels, and replaces any prior
Minutes, Resolutions and Consents of the Directors when or if these Minutes or
Resolutions conflict with any such prior Authorizations, Consents, or Agreements
of the Directors.
6. Minutes.
RESOLVED, the Secretary shall be, and hereby is, authorized and directed to
make the original, and/or a copy of this Resolution and Decision part of the
official minutes of the Corporation.
7. Further Authorizations.
RESOLVED, any of the Officers of the Corporation, together or individually,
are authorized, empowered and directed to do any and all acts and things
necessary, desirable and/or appropriate to implement, effectuate and/or
accomplish the foregoing Resolutions, even if the same may not have been
specifically detailed herein, without the need for additional meetings,
communications, authorizations or consents with and/or from the Shareholder and
Directors, on behalf of the Corporation, including by way of illu stration and
not limitation, the execution of any documents and the payment of any monies.
"DIRECTORS"
----------------------------
Sheryar Durrani
----------------------------
Nasser Lukmani
----------------------------
Richard L. Matsu
Dated:___________________, 1999
<PAGE>
- --------------------------------------------------------------------------------
CORPORATE SUMMARY
FOR
INMOLD LUKMANI
DESIGN TECHNOLOGIES, INC.
- --------------------------------------------------------------------------------
Ian D. Pesses, Esq.
Maddin, Hauser, Wartell, Roth,
Heller & Pesses, P.C.
Third Floor - Essex Centre
28400 Northwestern Hwy.
Southfield, Michigan 48034
Telephone: (248) 354-4030
Fax: (248) 354-1422
<PAGE>
CORPORATE SUMMARY
-----------------
for
---
INMOLD LUKMANI
--------------
DESIGN TECHNOLOGIES, INC.
-------------------------
A. FORMATION
1. State Michigan
2. Dates
a. Incorporation 2/__/99
b. Amendments None
B. NAMES
1. Current Inmold Lukmani
Design Technologies, Inc.
2. Prior None
3. Assumed ILD Technologies
C. I.D. NOS.
1. IRS/EIN 38-_______________
2. Michigan __________________
D. CAPITALIZATION
1. Authorized 60,000
2. Par Value -0-
3. Issued 1,000
E. SHAREHOLDERS
Shares Percent
------ -------
1. Nasser Lukmani 410 41%
2. Arifa Hasan 100 10%
3. Inmold, Inc. 490 49%
--- ---
TOTAL 1,000 100%
1
<PAGE>
F. DATES
1. Year End Calendar
2. Annual Meeting Month of March
G. AGENTS
1. Resident Agent Ian D. Pesses
2. Registered Address Maddin Hauser, Wartell, Roth,
Heller & Pesses, P.C.
Third Floor Essex Centre
28500 Northwestern Hwy.
Southfield, Michigan 48034
3. Directors a. Nasser Lukmani
b. Arifa Hasan
c. Fillip Kreissl
4. Officers a. Nasser Lukmani, President
and Treasurer
b. Arifa Hasan, Secretary
5. Accountant Richard ("Dick") D. Pagac, CPA
Pagac & Company, PC
1750 S. Telegraph Rd., Ste. 203
Bloomfield Hills, MI 48302
(T) 248-338-0770
(F) 248-338-2625
6. Counsel Ian D. Pesses, Esq.
Maddin Hauser, Wartell, Roth,
Heller & Pesses, P.C.
Third Floor Essex Centre
28500 Northwestern Hwy.
Southfield, Michigan 48034
(T/Dir.) 248-827-1866
(T/Gen) 248-3540-4030
(F) 248-354-1422
2
<PAGE>
H. SPECIAL AGREEMENTS
1. Shareholder Agreements, dated ____,
1999.
2. Service Agreements, dated ____,
1999, with
a. Inmold, Inc.
b. Design Engineering Services, Inc.
I. SPECIAL CERTIFICATION
1. Certified Minority Business Enterprise, obtained
from the Michigan Minority Business Development
Council, on ________________, 1999.
J. AFFILIATIONS
1. Inmold Lukmani Manufacturing, Inc.
3
<PAGE>
- --------------------------------------------------------------------------------
SHAREHOLDER
AND
STOCK LEDGER SUMMARY
FOR
INMOLD LUKMANI DESIGN TECHNOLOGIES, INC.
- --------------------------------------------------------------------------------
Ian D. Pesses, Esq.
Maddin, Hauser, Wartell, Roth,
Heller & Pesses, P.C.
Third Floor - Essex Centre
28400 Northwestern Hwy.
Southfield, Michigan 48034
Telephone: (248) 354-4030
Fax: (248) 354-1422
<PAGE>
INMOLD LUKMANI DESIGN TECHNOLOGIES, INC.
SHAREHOLDER SUMMARY AND STOCK LEDGER
------------------------------------
A. SUMMARY OF HEADINGS
-------------------
B. CURRENT SHAREHOLDERS
C. OPTIONS
D. STOCK LEDGER
<TABLE>
<CAPTION>
B. CURRENT SHAREHOLDERS Shares Percent Certificates
-------------------- ------- ------------
<S> <C> <C> <C>
1. Nasser Lukmani Living Trust 400 41% #1
2. Arifa Hasan 100 10% #2
---------------- ----------------
3. Inmold, Inc. 490 49% #3
---------------- ----------------
1,000 100%
================ ================
</TABLE>
C. OPTIONS
-------
None/Not applicable.
D. LEDGER
------
<TABLE>
<CAPTION>
Number Issued Shares Issued To Canceled Transferred To
------ ------ ------ --------- -------- --------------
<S> <C> <C> <C> <C> <C>
1 02/__/99 410 Nasser Lukmani Original issue
2 02/__/99 100 Arifa Hasan Original issue
3 02/__/99 490 Inmold, Inc. Original issue
</TABLE>
Page 1 of 1
<PAGE>
C&S 500 (12/95)(0154690)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
MICHIGAN DEPARTMENT OF CONSUMER AND INDUSTRY SERVICES - CORPORATION, SECURITIES & LAND DEVELOPMENT BUREAU
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Date Received (FOR BUREAU USE ONLY)
- -----------------------------------------
- --------------------------------------------------------------
Name IAN D. PESSES
*MADDIN, HAUSER, WARTELL, ROTH, HELLER & PESSES, PC EFFECTIVE DATE:
- --------------------------------------------------------------
Address P.O. BOX 215
*28400 Northwester Hwy., Third Floor-Essex Centre
- --------------------------------------------------------------
City State Zip
*SOUTHFIELD MICHIGAN 48037
- ------------------------------------------------------------------------------------------------------------
Document will be returned to the name and address you enter above
----------------------
*
-----------------------------
</TABLE>
ARTICLES OF INCORPORATION
For use by Domestic Profit Corporations
(Please read information and instructions on last page)
Pursuant to the provisions of Act 284, Public Acts of 1972, the undersigned
corporation executes the following Articles:
ARTICLE I
- --------------------------------------------------------------------------------
The name of the corporation is: *INMOLD LUKMANI DESIGN TECHNOLOGIES, INC.
- --------------------------------------------------------------------------------
ARTICLE II
- --------------------------------------------------------------------------------
The purpose or purposes for which the corporation is formed is to engage in any
activity within the purposes for which corporations may be formed under the
Business Corporation Act of Michigan.
*
- --------------------------------------------------------------------------------
ARTICLE III
- --------------------------------------------------------------------------------
The total authorized shares:
1. Common shares * 60,000
------------------------------------------------------------
2. Preferred shares * N/A
--------------------------------------------------------
3. A statement of all or any of the relative rights, preferences and
limitations of the shares of each class is as follows: *N/A
- --------------------------------------------------------------------------------
<PAGE>
ARTICLE IV
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
- -
<S> <C> <C>
1. The address of the current registered office is: P. O. Box 215,
*28400 Northwestern Hwy., Third Floor-Essex Centre, Southfield, MICHIGAN *48037
--------------------------------------------------------------- -----------------------
(Street Address) (City) (State) (Zip Code)
The mailing address of the registered office, if different than above:
* MICHIGAN *
--------------------------------------------------------------- -----------------------
(Street Address) (City) (State) (Zip Code)
The name of the resident agent at the registered office is: *IAN D. PESSES
- -----------------------------------------------------------------------------------------------------------------------------------
- -
ARTICLE V
- -----------------------------------------------------------------------------------------------------------------------------------
- -
The name(s) and address(es) of the incorporator(s) is (are) as follows:
Name Residence or Business Address
* IAN D. PESSES 28400 Northwestern Hwy.,
- -------------------------------------------------------------------------------------------------------------------
* Third Floor-Essex Centre,
- -------------------------------------------------------------------------------------------------------------------
* Southfield, MI 48037
- -------------------------------------------------------------------------------------------------------------------
*
- -------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -
</TABLE>
- --------------------------------------------------------------------------------
ARTICLE VI (Optional. Delete if not applicable.)
When a compromise or arrangement or a plan of reorganization of this corporation
is proposed between this corporation and its creditors or any class of them or
between this corporation and its shareholders or any class of them, a court of
equity jurisdiction within the state, on application of this corporation or of a
creditor or shareholder thereof, or on application of a receiver appointed for
the corporation, may order a meeting of the creditors or class of creditors or
of the shareholders or class of shareholders to be affected by the proposed
compromise or arrangement or reorganization, to be summoned in such manner as
the court directs. If a majority in number representing 3/4 in value of the
creditors or class of creditors, or of the shareholders or class of shareholders
to be affected by the proposed compromise or arrangement or a reorganization,
agree to a compromise or arrangement or a reorganization of this corporation as
a consequence of the compromise or arrangement, the compromise or arrangement
and the reorganization, if sanctioned by the court to which the application has
been made, shall be binding on all the creditors or class of creditors, or on
all the shareholders or class of shareholders and also on this corporation.
- --------------------------------------------------------------------------------
ARTICLE VII (Optional. Delete if not applicable.)
- --------------------------------------------------------------------------------
Any action required or permitted by the Act to be taken at an annual or special
meeting of shareholders may be taken without a meeting, without prior notice,
and without a vote, if consents in writing, setting forth the action so taken,
are signed by the holders of outstanding shares having not less than the minimum
number of votes that would be necessary to authorize or take the action at a
meeting at which all shares entitled to vote on the action were present and
voted. The written consents shall bear the date of signature of each shareholder
who signs the consent. No written consents shall be effective to take the
corporate action referred to unless, within 60 days after the record date for
determining shareholders entitled to express consent to or to dissent from a
proposal without a meeting, written consents dated not more than 10 days before
the record date and signed by a sufficient number of shareholders to take the
action are delivered to the corporation. Delivery shall be to the corporation's
registered office, its principal place of business, or an officer or agent of
the corporation having custody of the minutes of the proceedings of its
shareholders. Delivery made to a corporation's registered office shall be by
hand or by certified or registered mail, return receipt requested.
Prompt notice of the taking of the corporate action without a meeting by less
than unanimous written consent shall be given to shareholders who would have
been entitled to notice of the shareholder meeting if the action had been taken
at a meeting and who have not consented in writing.
- --------------------------------------------------------------------------------
<PAGE>
Use space below for additional Articles of for continuation of previous
Articles. Please identify any Article being continued or added. Attach
additional pages if needed.
NONE
I, the incorporator sign my name this * day of * , 1999.
--------- ----------------
* *
- ------------------------------------ -----------------------------------
Ian D. Pesses
* *
- ------------------------------------ -----------------------------------
* *
- ------------------------------------ -----------------------------------
* *
- ------------------------------------ -----------------------------------
<PAGE>
C&S 541 (3/95) (0151674)
- --------------------------------------------------------------------------------
MICHIGAN DEPARTMENT OF CONSUMER AND INDUSTRY SERVICES - CORPORATION, SECURITIES
& LAND DEVELOPMENT BUREAU
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Date Received (FOR BUREAU USE ONLY)
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Name EXPIRATION DATE:
*Ian D. Pesses, Esq.
Maddin, Hauser, Wartell, Roth, Heller & Pesses, P.C.
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Address
*28400 Northwestern Highway
P. O. Box 215
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City State Zip
*Southfield, Michigan 48037-0215
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Document will be returned to the name and address you enter above.
CERTIFICATE OF ASSUMED NAME
For use by Corporations, Limited
Partnerships and Limited Liability Companies
(Please read information and instructions on reverse side)
Pursuant to the provisions of Act 284, Public Acts of 1972 (profit
corporations), or Act 162, Public Acts of 1982 (nonprofit corporations), or Act
213, Public Acts of 1982 (limited partnerships), or Act 23, Public Acts of 1993
(limited liability companies), the corporation, limited partnership, or limited
liability company in item one executes the following Certificate:
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1. The true name of the corporation, limited partnership, or limited liability
company is:
INMOLD LUKMANI DESIGN TECHNOLOGIES, INC.
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2. The identification number assigned by the Bureau is: *
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3. The location of the corporation or limited liability company registered
office in Michigan or the office at which the limited partnership records are
maintained is:
* 28400 Northwestern Highway, Southfield, Michigan 48034
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(Street Address) (City) (State) (Zip code)
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4. The assumed name under which business is to be transacted is: I L D
TECHNOLOGIES
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COMPLETE ITEM 5 ON LAST PAGE IF THIS NAME IS ASSUMED BY MORE THAN ONE ENTITY.
Signed this * day of * , 1999
---------------------- -------- --
By: ____________________________________________________
Nasser Lukmani (Signature)
President
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(Type or Print Name and Title)
<PAGE>
C&S 541
5. If the same name is assumed by two or more corporations, limited
partnerships, limited partnerships, or limited liability companies, or any
combination thereof, each participant corporation, limited partnership, or
limited liability company shall file a separate certificate. Each assumed
name certificate shall reflect the correct true name or qualifying assumed
name of the other corporations, limited partnerships, or limited liability
companies which are simultaneously adopting the same assumed name.
An entity that already has the assumed name shall simultaneously file a
Certificate of Termination of Assumed Name and a new Certificate of Assumed
Name.
Listed below in alphabetical order are the participating corporations
and/or limited partnerships and/or limited liability companies and their
identification numbers.
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*
1.*NOT APPLICABLE
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*
2.*
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3.*
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*
4.*
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*
5.*
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*
6.*
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*
7.*
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*
8.*
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*
9.*
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10.*
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11.*
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12.*
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13.*
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14.*
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<PAGE>
C&S 541 Name of Person or Organization
Remitting Fees:
*Ian D. Pesses
------------------------------
Preparer's Name and Business
Telephone Number:
*Ian D. Pesses
--------------------------------
28400 Northwestern Hwy.,
--------------------------------
Southfield, Michigan 48034
--------------------------------
(248) 354-4030
--------------------------------
INFORMATION AND INSTRUCTIONS
1. The certificate of assumed name cannot be filed until this form, or a
comparable document, is submitted. This certificate is to be used by a
corporation, limited partnership, or limited liability company desiring to
transact business under a name other than its true name.
2. Submit one original of this document. Upon filing, the document will be
added to the records of the Corporation and Securities Bureau. The original
will be returned to the address you enter in the box on the front as
evidence of the filing.
Sincethis document will be maintained on optical disc media, it is
important that the filing be legible. Documents with poor black and white
contrast, or otherwise illegible, will be rejected.
3. The certificate shall be effective for a period expiring on December 31 of
the fifth full calendar year following the year in which it was filed,
unless a certificate of termination is filed.
4. When the same name is assumed by more than one entity, each participant
corporation, limited partnership, or limited liability company must file a
separate Certificate of Assumed Name. The assumed name will be effective
for the same period for each participant.
5. Item 1 - The true name is the name contained in the original, amended, or
restated articles of incorporation, certificate of limited partnership, or
articles of organization. The true name of a foreign corporation, limited
partnership, or limited liability company, is that name under which it
obtained its authority to transact business or conduct affairs in Michigan.
6. Item 2 - Enter the identification number assigned by the Bureau.
7. Item 3 - If a foreign limited partnership, this address must be that shown
in item 6 of the application for registration to transact business in
Michigan.
8. The certificate must be signed in ink by
FOR CORPORATIONS: an authorized officer or agent
FOR LIMITED PARTNERSHIPS: a general partner
FOR DOMESTIC LIMITED LIABILITY COMPANY: a manager if management is vested
in one or more managers; otherwise
the signature of at least one
member.
FOR FOREIGN LIMITED LIABILITY COMPANY: a person with authority to do so
under the laws of the jurisdiction
of its organization.
9. FEES: Make remittance payable to the State of Michigan. Include name and
identification number on check or money order. Non-refundable filing fee.
CORPORATION OR LIMITED PARTNERSHIP....................... $10.00
LIMITED LIABILITY COMPANY................................ $25.00
10. Mail form and fee to: The office is located at:
Michigan Department of Consumer & Industry
Corporation, Securities & Land Development 6546 Mercantile Way
Bureau
Corporation Division Lansing, MI 48910
P.O. Box 30054
Lansing, Michigan 48909-7554 Telephone: (517) 334-6302
<PAGE>
CORPORATION, SECURITIES AND LAND DEVELOPMENT BUREAU
Phone: (517) 334-6327
Fax: (517) 334-8048
MICH-ELF COVER SHEET
Authorized pursuant to P.A. 284 of 1972, as amended
Submitter's Mich-Elf Filer Number
001107
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Include this cover sheet as the first page of your transmission.
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Name and/or ID Number appearing on document(s) INMOLD LUKMANI DESIGN TECHNOLOGIES, INC.
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Title of document(s) CERTIFICATE OF ASSUMED NAME
I L D TECHNOLOGIES
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Total pages including cover sheet Number of pages in document(s) Expected fee Approved for up to
4 3 $ $
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Special Instructions
PLEASE FILE THE ATTACHED ARTICLES OF ORGANIZATION AND FAX A COPY OF THE FILED
DOCUMENT TO IAN D. PESSES, ESQ., c/o MADDIN, HAUSER, WARTELL, ROTH, HELLER & PESSES, P.C.,
PHONE: 248-827-1866 FAX: 248-354-1422
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Copies Requested (check box). Your credit card will be billed the appropriate fee.
[ ] Certified Copies [ ] Certificate of Status for Limited Liability Company
[ ] Certificate of Good Standing [ ] Certificate of Limited Partnership not canceled
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</TABLE>
If you have any questions, you may contact Linda Garrison at (517) 334-6327
for assistance.
Corporation, Securities and Land Development Bureau
6546 Mercantile Way
P.O. Box 30054
Lansing, MI 48909
cc: Sandra J. McCoy
Billing Code: 07534-0002
<PAGE>
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BYLAWS OF
INMOLD LUKMANI DESIGN TECHNOLOGIES, INC.,
A MICHIGAN CORPORATION
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IAN D. PESSES, ESQ.
Maddin, Hauser, Wartell, Roth,
Heller & Pesses, P.C.
Third Floor, Essex Centre
28400 Northwestern Highway
Southfield, Michigan 48034
(248) 827-1866 (Dir. Dial)
(248) 354-4030 (Gen. Dial)
(248) 354-1422 (Fax)
<PAGE>
BYLAWS OF
INMOLD LUKMANI DESIGN TECHNOLOGIES, INC.,
A MICHIGAN CORPORATION
TABLE OF CONTENTS
PAGE NO.
PREAMBLE ................................................................. 1
ARTICLE I-MEETINGS OF SHAREHOLDERS ....................................... 1
Section 1.01 PLACE OF MEETINGS................................... 1
Section 1.02 ANNUAL MEETING...................................... 1
Section 1.03 SPECIAL MEETINGS.................................... 1
Section 1.04 NOTICE OF MEETINGS.................................. 1
Section 1.05 WAIVER OF NOTICE.................................... 2
Section 1.06 INSPECTORS OF ELECTION.............................. 2
Section 1.07 QUORUM AND ADJOURNMENT.............................. 2
Section 1.08 VOTE OF SHAREHOLDERS................................ 3
Section 1.09 CORPORATION'S ACCEPTANCE OF VOTES................... 3
Section 1.10 REMOTE PARTICIPATION ............................... 4
Section 1.11 WRITTEN VOTE........................................ 4
Section 1.12 PROXIES............................................. 4
Section 1.13 CONSENTS............................................ 4
Section 1.14 ORGANIZATION OF SHAREHOLDERS'MEETINGS............... 5
ARTICLE II- DETERMINATION OF VOTING, DIVIDEND AND OTHER RIGHTS............ 5
ARTICLE III-DIRECTORS..................................................... 6
Section 3.01 GENERAL POWERS....................................... 6
Section 3.02 NUMBER, QUALIFICATIONS AND TERM OF OFFICE............ 6
Section 3.03 PLACE OF MEETINGS.................................... 6
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Section 3.04 ANNUAL MEETING...................................... 6
Section 3.05 SPECIAL MEETINGS.................................... 6
Section 3.06 QUORUM AND MANNER OF ACTION......................... 7
Section 3.07 REMOTE PARTICIPATION................................ 7
Section 3.08 COMPENSATION........................................ 7
Section 3.09 REMOVAL OF DIRECTORS................................ 7
Section 3.10 RESIGNATIONS.........................................7
Section 3.11 VACANCIES............................................7
Section 3.12 ORGANIZATION OF BOARD MEETING........................8
ARTICLE IV ...............................................................8
Section 4.01 CONSTITUTION AND POWERS..............................8
Section 4.02 REGULAR MEETINGS.....................................8
Section 4.03 SPECIAL MEETINGS.....................................8
Section 4.04 QUORUM AND MANNER OF ACTION..........................9
Section 4.05 RECORDS..............................................9
Section 4.06 VACANCIES............................................9
ARTICLE V-OFFICERS........................................................9
Section 5.01 OFFICERS.............................................9
Section 5.02 TERM OF OFFICE AND RESIGNATION.......................9
Section 5.03 REMOVAL OF ELECTED OFFICERS........................ 10
Section 5.04 VACANCIES.......................................... 10
Section 5.05 COMPENSATION ...................................... 10
Section 5.06 THE PRESIDENT...................................... 10
Section 5.07 THE VICE-PRESIDENT................................. 10
Section 5.08 THE SECRETARY...................................... 11
Section 5.09 THE TREASURER...................................... 11
Section 5.10 REIMBURSEMENT TO CORPORATION....................... 11
ARTICLE VI-INDEMNIFICATION.............................................. 12
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Section 6.01 THIRD-PARTY PROCEEDINGS ............................. 11
Section 6.02 ACTIONS BY OR ON BEHALF OF THE CORPORATION........... 12
Section 6.03 APPLICATION TO COURT FOR INDEMNIFICATION............. 12
Section 6.04 DETERMINATION........................................ 13
Section 6.05 CUMULATIVE RIGHT..................................... 14
Section 6.06 INSURANCE............................................ 14
Section 6.07 CONSTITUENT CORPORATIONS............................. 15
Section 6.08 CLAIMS PROCEDURES.................................... 15
Section 6.09 CONTRACT............................................. 16
ARTICLE VII-CONFLICTS OF INTEREST......................................... 16
Section 7.01 General.............................................. 16
Section 7.02 Disclosure........................................... 16
Section 7.03 Self-Dealing......................................... 16
ARTICLE VI I-SHARE CERTIFICATES........................................... 16
Section 8.01 CERTIFICATES......................................... 16
Section 8.02 FORM; SIGNATURE...................................... 17
Section 8.03 TRANSFER AGENTS AND REGISTRARS....................... 17
Section 8.04 TRANSFER OF SHARES................................... 17
Section 8.05 REGISTERED SHAREHOLDERS.............................. 17
Section 8.06 LOST CERTIFICATES.................................... 17
ARTICLE IX-MISCELLANEOUS.................................................. 18
Section 9.01 FISCAL YEAR.......................................... 18
Section 9.02 SIGNATURES ON NEGOTIABLE INSTRUMENTS................. 18
Section 9.03 DIVIDENDS............................................ 18
Section 9.04 RESERVES............................................. 18
Section 9.05 SEAL................................................. 18
Section 9.06 CORPORATION OFFICES.................................. 18
iii
<PAGE>
ARTICLE X-RESTRICTIONS UPON TRANSFER OF STOCK......................... 19
Section 10.01 LIFETIME RESTRICTIONS........................... 19
Section 10.02 PERMITTED TRANSFER.............................. 19
Section 10.03 AGREEMENT....................................... 19
ARTICLE XI -AMENDMENTS................................................ 20
Section 11.01 POWER TO AMEND.................................. 20
iv
<PAGE>
BYLAWS
OF
INMOLD LUKMANI DESIGN TECHNOLOGIES, INC.,
A MICHIGAN CORPORATION
PREAMBLE
Inmold Lukmani Design Technologies, Inc., herein "Corporation," is a
minority owned enterprise. Any ambiguity herein, or in any other document of the
Corporation, the interpretation of which shall be governed by these Bylaws,
shall be resolved in the manner which shall most ensure the continuing status of
the Corporation as a minority owned enterprise.
ARTICLE I
MEETINGS OF SHAREHOLDERS
Section 1.01. PLACE OF MEETINGS. Annual and special meetings of the
shareholders shall be held at such place within or outside the State of Michigan
as may be fixed from time to time by the Board of Directors and stated in the
notice of the meeting or in a duly executed waiver of notice thereof.
Section 1.02. ANNUAL MEETING. The annual meeting of the shareholders for
the election of Directors and for the transaction of such other business as may
properly come before the meeting shall be held at such time during the month of
March as may be fixed by the Board of Directors and stated in the notice of the
meeting or in a duly executed waiver of notice thereof. If the election of
Directors shall not be held on the date fixed by the Board of Directors for the
annual meeting or at any adjournment of such meeting, the Board of Directors
shall cause the election to be held at a special meeting as soon thereafter as
conveniently may be.
Section 1.03. SPECIAL MEETINGS. A special meeting of the shareholders may
be called at any time and for any purpose or purposes by the President, the
Chairman of the Board or the Board of Directors, or by a shareholder or
shareholders holding of record at least thirty-five (35%) percent of the
outstanding capital stock of the Corporation entitled to vote at such meeting.
If any newly created directorship or any vacancy occurs in the Board of
Directors a special meeting may be called by any shareholder for the purpose of
filling the newly created directorship or electing a successor to the vacant
position (which may have been temporarily filled by the Board of Directors,
pursuant to Section 3.11 of these Bylaws).
Section 1.04. NOTICE OF MEETINGS. A written notice of the place, date and
hour of each meeting, whether annual or special, and any adjournment thereof,
shall be
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given personally or by mail to each shareholder entitled to vote thereat at
least ten (10) but not more than sixty (60) days prior to the meeting unless a
shorter time is fixed by the Board of Directors. The notice of any special
meeting shall also state the purpose or purposes for which the meeting is called
and by or at whose direction it is being issued. If, at any meeting, whether
annual or special, action is proposed to be taken which would, if taken, entitle
shareholders fulfilling requirements of law to receive payment for their shares,
the notice of such meeting shall include a statement of that purpose and to that
effect. If any notice, as provided in this Section 1.04 is mailed, it shall be
directed to the shareholder in a postage prepaid envelope at his address as it
appears on the record of shareholders, or, if he shall have filed with the
Secretary a written request that notices to him be mailed to some other address,
then directed to him at such other address.
Section 1.05. WAIVER OF NOTICE. Notice of meeting need not be given to any
shareholder who submits a waiver of notice, signed in person or by proxy,
whether before or after the meeting. The attendance of any shareholder at a
meeting, in person or by proxy, without protesting prior to the conclusion of
the meeting the lack of notice of such meeting, shall constitute a waiver of
notice by him.
Section 1.06. INSPECTORS OF ELECTION. The Board of Directors, or any
officer or officers duly authorized by the Board of Directors, in advance of any
meeting of shareholders, may appoint one or more inspectors to act at the
meeting or any adjournment thereof. If inspectors are not so appointed, the
person presiding at the meeting may, and on the request of any shareholder
entitled to vote thereat shall, appoint one or more inspectors. In case any
person appointed fails to appear or act, the vacancy may be filled by
appointment made by the Board of Directors in advance of the meeting or at the
meeting by the chairman of the meeting. Each inspector, before entering upon the
discharge of his duties, shall take and sign an oath faithfully to execute the
duties of inspector at such meeting with strict impartiality and according to
the best of his ability. The inspectors shall determine the number of shares
outstanding and the voting power of each, the shares represented at the meeting,
the existence of a quorum, the validity and effect of proxies, and shall receive
votes, ballots or consents, hear and determine all challenges and questions
arising in connection with the right to vote, count and tabulate all votes,
ballots or consents, determine the result, and do such acts as are proper to
conduct the election or vote with fairness to all shareholders. On request of
the person presiding at the meeting or any shareholder entitled to vote thereat,
the inspectors shall make a report in writing of any challenge, ques tion or
matter determined by them and execute a certificate of any fact found by them.
Section 1.07. QUORUM AND ADJOURNMENT. At all meetings of shareholders,
except as otherwise provided by statute or the Articles of Incorporation, the
holders of a majority of the shares entitled to vote thereat, present in person
or by proxy, shall be necessary and sufficient to constitute a quorum for the
transaction of business. The shareholders present in person or by proxy at any
of such meetings at which a quorum is initially present may continue to do
business until adjournment; notwithstanding the
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withdrawal of enough shareholders to leave less than a quorum. The shareholders,
by a vote of the majority of shareholders present, in person or by proxy,
whether or not a quorum is present, may, by resolution, adjourn the meeting, to
another place and time, from time to time for a period not exceeding fourteen
(14) days in any one case. At any such adjourned meeting at which a quorum shall
be present, any business may be transacted which might have been transacted at
the meeting as originally called.
Section 1.08. VOTE OF SHAREHOLDERS. Each shareholder having the right to
vote shall be entitled at every meeting of shareholders to one (1) vote for
every share having voting power standing in his name on the record date of
shareholders fixed by the Board of Directors pursuant to Article 11 of these
Bylaws. Whenever any corporate action is to be taken by vote at a meeting of the
shareholders, it shall, except as otherwise required by statute or by the
Articles of Incorporation, be authorized by a majority of the votes cast by such
holders present in person or by proxy and entitled to vote, a quorum being
present as provided in Section 1.07.
Section 1.09. CORPORATION'S ACCEPTANCE OF VOTES.
a. If the name signed on a vote, consent, waiver, or proxy appointment
corresponds to the name of a shareholder, the Corporation, if acting in good
faith, is entitled to accept the vote, consent, waiver, or proxy appointment and
give it effect as the act of the shareholder.
b. If the name signed on a vote, consent, waiver, or proxy appointment does
not correspond to the name of the shareholder, the Corporation, if acting in
good faith, is entitled to accept the vote, consent, waiver, or proxy
appointment and give it effect as the act of the shareholder if:
(i) the shareholder is a corporation and the name signed purports to
be that of an officer or agent of the corporation;
(ii) the name signed purports to be that of an administrator,
executor, guardian, or conservator representing the shareholder and, if the
Corporation requests, evidence of fiduciary status acceptable to the
Corporation has been presented with respect to the vote, consent, waiver,
or proxy appointment;
(iii) the name signed purports to be that of a receiver or trustee in
bankruptcy of the shareholder and, if the Corporation requests, evidence of
this status acceptable to the Corporation has been presented with respect
to the vote, consent, waiver, or proxy appointment;
(iv) the name signed purports to be that of a pledgee, beneficial
owner, or attorney-in-fact of the shareholder and, if the Corporation
requests, evidence acceptable to the Corporation of the signatory's
authority to sign for the shareholder has been presented with respect to
the vote, consent, waiver, or proxy appointment;
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(v) two or more persons are the shareholder as co-tenants or
fiduciaries and the name signed purports to be the name of at least one of
the co-owners and the person signing is acting on behalf of all the
co-owners.
c. The Corporation is entitled to reject a vote, consent, waiver, or proxy
appointment if the secretary or other officer or agent authorized to tabulate
votes acting in good faith has reasonable basis for doubt about the validity of
the signature on it or about the signatory's authority to sign for the
shareholder.
d. The Corporation and its officer or agent who accepts or rejects a vote,
consent, waiver, or proxy appointment in good faith and in accordance with the
standards of this section are not liable in damages to the shareholder for the
consequences of the acceptance or rejection.
e. Corporate action based on the acceptance or rejection or a vote,
consent, waiver, or proxy appointment under this section is valid unless a court
of competent jurisdiction determines otherwise.
Section 1.10. REMOTE PARTICIPATION. Any or all shareholders may participate
in a meeting of the shareholders by means of a conference telephone call or
other similar medium through which all persons participating in the meeting may
communicate with each other. A shareholder so participating shall be deemed to
be present in person at the meeting. Prior to commencement of the meeting, all
participants in the meeting shall be advised of any communication medium used
and the names of all of the participants.
Section 1.11. WRITTEN VOTE. Votes at meetings of shareholders shall be cast
either orally or in writing as directed by the chairman of the meeting. If the
chairman directs that a vote be cast in writing, then the vote of a shareholder
participating by means of a conference telephone or similar communication medium
permitted under Section 1.10 shall, if communicated contemporaneously with the
meeting, either orally or by facsimile, be certified by the secretary of the
meeting and counted as a written vote.
Section 1.12. PROXIES. Every shareholder entitled to vote at a meeting of
shareholders or to express consent or dissent without a meeting may authorize
another person or persons to act for him by proxy. Every proxy must be in
writing and signed by the shareholder or his attorney-in-fact. No proxy shall be
valid after the expiration of three (3) years from the date thereof unless
otherwise provided in the proxy.
Section 1.13. CONSENTS.
a. Unanimous Consent. Any action required or permitted by the Michigan
Business Corporation Act to be taken at a meeting of shareholders may be taken
4
<PAGE>
without a meeting, without prior notice and without a vote, if all the
shareholders entitled to vote thereon consent thereto in writing.
b. Majority Consent. If authorized by the Articles of Incorporation, any
action required or permitted by the Michigan Business Corporation Act or by
these Bylaws to be taken at an annual or special meeting of shareholders may be
taken without a meeting, without prior notice and without a vote, if a consent
in writing, setting forth the action so taken, is signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take the action at a meeting at which all shares
entitled to vote thereon were present and voted. The written consents shall bear
the date of signature of each shareholder who signs the consent. No written
consents pursuant to this Section 1.13(b) shall be effective to take the
corporate action referred to unless, within sixty (60) days after the record
date for determining shareholders entitled to express consent to or to dissent
from a proposal without a meeting, written consents signed by a sufficient
number of shareholders to take the action are delivered to the Corporation.
Delivery shall be to the Corporation's registered office, its principal place of
business, or an officer or agent of the Corporation having custody of the
minutes of the proceedings of its shareholders. Delivery made to the
Corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested. Prompt notice of the taking of the corporate
action without a meeting by less than unanimous written consent, as herei n
provided, shall be given to shareholders who have not consented in writing.
Section 1.14. ORGANIZATION OF SHAREHOLDERS' MEETINGS. At every meeting of
the shareholders, the President, or in his absence, a Vice-President, or in the
absence of the President and a Vice-President, a chairman chosen by a majority
in interest of the shareholders of the Corporation present in person or by proxy
and entitled to vote, shall act as chairman for the meeting; and the Secretary,
or in his absence any person appointed by the chairman, shall act as secretary
of the meeting.
ARTICLE II
DETERMINATION OF VOTING, DIVIDEND AND OTHER RIGHTS
For the purposes of determining the shareholders entitled to notice of or
to vote at any meeting of shareholders or any adjournment thereof, or to express
consent to or dissent from any proposal without a meeting, or for the purpose of
determining shareholders entitled to receive payment of any dividend or the
allotment of any rights, or the date when any change or conversion or exchange
of capital stock shall go into effect, or for the purpose of any other action,
the Board of Directors may fix, in advanc e, a date as the record date for any
such determination of shareholders. Such date shall not be more than sixty (60)
nor less than ten (10) days before the date of any such meeting, nor more than
thirty (30) days prior to any other action. If a record date is so fixed, such
shareholders and only such shareholders as shall be shareholders of record on
that date so fixed shall be entitled to notice of, and to vote at, such meeting
and any
5
<PAGE>
adjournment thereof, or to express such consent or dissent, or to receive
payment of such dividend or such allotment of rights, or otherwise to be
recognized as shareholders for the purpose of any other action, notwithstanding
any transfer of any shares on the books of the Corporation after any such record
date so fixed.
ARTICLE III
DIRECTORS
Section 3.01. GENERAL POWERS. The business and all the powers of the
Corporation, except as otherwise provided by the Articles of Incorporation, the
Bylaws or by statute, shall be managed by the Board of Directors. Should the
Articles of Incorporation provide that the business affairs of the Corporation
shall be managed by the shareholders, then the Board of Directors shall only act
when otherwise required by law.
Section 3.02. NUMBER, QUALIFICATIONS AND TERM OF OFFICE. The Board of
Directors shall consist of not less than one (1) and not more than five (5)
Directors. The initial Board of Directors may comprise of three (3) Directors.
Such Numbers may be decreased or increased by amendment to these Bylaws by
majority of interest of shareholders entitled to vote. Unless required by the
Articles of Incorporation, the Directors need not be residents of the State of
Michigan or shareholders of the Corporation.
Section 3.03. PLACE OF MEETINGS. Meetings of the Board of Directors, annual
or special, shall be held at any place within or outside of the State of
Michigan, as may from time to time be determined by the Board of Directors.
Section 3.04. ANNUAL MEETING. The Board of Directors shall meet as soon as
practicable after each annual election of Directors for the purpose of
organization, election of officers and the transaction of other business on the
same day and at the same place at which the shareholders' meeting is held.
Notice of such meeting need not be given. Such meeting may be held at such other
time and place as shall be specified in a notice to be given as hereinafter
provided for special meetings of the Board of Directors, or according to consent
and waiver of notice thereof signed by all Directors. The Board of Directors may
provide, by resolution, the time and place for the holding of additional regular
meetings without other notice than such resolution.
Section 3.05. SPECIAL MEETINGS. Special meetings of the Board of Directors
shall be held whenever called by any Director. Notice of any special meeting,
and any adjournment thereof, stating the place, date and hour of the meeting,
and the purpose thereof, shall be mailed to each Director, addressed to him at
his residence or usual place of business, or shall be sent to him at such place
by telegraph, or be delivered personally, or by telephone, not later than the
fifth (5th) calendar day before the day on which the meeting is to be held.
Notice of any meeting of the Board of Directors need not be given to any
Director who submits a signed waiver of notice before or after the
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meeting, or who attends the meeting without protesting, prior thereto or at its
commencement, the lack of notice to him. Unless limited by statute, the Articles
of Incorporation, these Bylaws, or the terms of the notice thereof, any and all
business may be transacted at any special meeting.
Section 3.06. QUORUM AND MANNER OF ACTION. A majority of the Directors in
office at the time of any annual or special meeting of the Board of Directors,
present in person, shall be necessary and sufficient to constitute a quorum for
the transaction of business. The vote of a majority of the Directors present at
the time of such vote, if a quorum is present at the time of such vote, shall be
the act of the Board of Directors, except as otherwise required by statute or
the Articles of Incorporation. A majority ty of the Directors present whether or
not a quorum is present, may by resolution adjourn any meeting, to another place
and time, from time to time for a period not exceeding fourteen (14) days in any
one case. If the Directors shall severally and/or collectively consent in
writing to any act taken or to be taken by the Corporation, such action shall be
valid corporate action as though it had been authorized at a meeting of the
Board of Directors.
Section 3.07. REMOTE PARTICIPATION. Any or all Directors of the Corporation
may participate in a meeting of the Board of Directors by means of a conference
telephone or similar medium. A Director so participating shall be deemed to be
present in person at the meeting. Prior to the commencement of the meeting, all
participants in the meeting shall be informed of the communication medium to be
used, the identity of all persons present in person and the persons
participating by means of any communication medium or otherwise able to monitor
the meeting.
Section 3.08. COMPENSATION. Each Director of the Corporation shall serve
without fee, but by resolution of the Board of Directors a fixed sum and
expenses of attendance, if any, may be allowed for attendance at each annual or
special meeting of the Board of Directors; provided, however, that nothing
herein contained shall be construed to preclude any Director from serving the
Corporation in any other capacity and receiving compensation therefor.
Section 3.09. REMOVAL OF DIRECTORS. By a vote of the majority of all the
shares of stock outstanding and entitled to vote, one or more or all of the
Directors may be removed from office with or without cause.
Section 3.10. RESIGNATIONS. Any Director may resign at any time by giving
written notice to the Board of Directors, the President or the Secretary of the
Corporation. Such resignation shall take effect at the time specified therein;
and unless otherwise specified therein, the acceptance of such resignation shall
not be necessary to make it effective.
Section 3.11. VACANCIES. Any newly created directorships- and vacancies
occurring on the Board of Directors by reason of death, resignation, retirement,
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disqualification or removal shall be temporarily filled by a vote of a majority
of the Directors then in office, although less than a quorum. Unless a successor
Director is elected by a vote of the shareholders, pursuant to Section 1.03 of
these Bylaws, any Director elected by the Board of Directors to temporarily fill
a vacancy shall hold office for the unexpired portion of the term of his
predecessor.
Section 3.12. ORGANIZATION OF BOARD MEETING. At each meeting of the Board of
Directors, the chairman, or in his absence, the President, shall preside as
chairman of the meeting. The Secretary, or in his absence, any person appointed
by the chairman of the meeting shall act as secretary of the meeting.
ARTICLE IV
EXECUTIVE COMMITTEE
Section 4.01. CONSTITUTION AND POWERS. The Board of Directors, by
resolution adopted by a majority of the entire Board, may designate from among
its members an Executive Committee and a chairman and officers thereof,
consisting of two (2) or more Directors which, to the extent provided in such
resolution, shall have all the authority of the Board of Directors, except as to
each of the following matters:
(a) the submission to shareholders of any action as to which shareholders'
authorization is required by statute;
(b) the filling of vacancies in the Board of Directors or in any Committee
of the Board of Directors;
(c) the amendment or repeal of these Bylaws, or the adoption of new
Bylaws; and
(d) the amendment or repeal of any resolution of the Board of Directors
which by its terms shall not be so amendable or repealable.
Section 4.02. REGULAR MEETINGS. Regular meetings of the Executive Committee
shall be held without notice at such time and at such place as shall from time
to time be determined by resolution of the Executive Committee. In case the day
so determined shall be a legal holiday, such meeting shall be held on the next
succeeding day, not a legal holiday, at the same hour.
Section 4.03. SPECIAL MEETINGS. Special meetings of the Executive Committee
shall be held whenever called by the Chairman of the Executive Committee. Notice
of any special meeting and any adjournment thereof, shall be mailed to each
member, addressed to him at his residence or usual place of business, or be sent
to him at such place by telegraph, or be delivered personally, or by telephone
not later than the fifth (5th) day before the day on which the meeting is to be
held. Notice of any meeting of the Executive cutive Committee need not be given
to any member who submits a
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signed waiver of notice before or after the meeting, or who attends the meeting
without protesting prior thereto or at its commencement, the lack of notice to
him. Unless limited by statute, the Articles of Incorporation, these Bylaws, or
the terms of the notice thereof, any and all business may be transacted at any
special meeting of the Executive Committee.
Section 4.04. QUORUM AND MANNER OF ACTION. A majority of the members of the
Executive Committee in office at the time of any regular or special meeting of
the Executive Committee present in person shall constitute a quorum for the
transaction of business. The vote of a majority of the members present at the
time of such vote, if a quorum is present at such time, shall be the act of the
Executive Committee. A majority of the members present, whether or not a quorum
is present, may adjourn any meeting to another ther time and place; and no
notice of an adjourned meeting need be given.
Section 4.05. RECORDS. The Executive Committee shall keep minutes of its
proceedings and shall submit the same from time to time to the Board of
Directors. The Secretary of the Corporation, or in his absence an Assistant
Secretary, shall act as secretary to the Executive Committee; or the Executive
Committee may in its discretion appoint its own secretary.
Section 4.06. VACANCIES. Any newly created memberships and vacancies
occurring in the Executive Committee shall be filled by resoluti on adopted by a
majority of the entire Board of Directors.
ARTICLE V
OFFICERS
Section 5.01. OFFICERS. The elected officers of the Corporation shall be a
President, a Secretary and a Treasurer. The Board of Directors or the Executive
Committee may also appoint such other officers and agents as may from time to
time appear to be necessary or advisable in the conduct of the affairs of the
Corporation, including but not limited to any of the following: (a) Chairman of
the Board, (b) Chief Executive Officer ("CEO"), (c) Chief Operating Officer
("COO"), (d) Chief Financial Officer ("CFO"), (e) Chief Information Officer
("CIO"), (f) Vice-Presidents, and (g) Assistant Vice-Presidents, Secretaries,
and Treasurers. Any two or more offices, whether elective or appointive, may be
held by the same person, except that an officer shall not execute, acknowledge
or verify any instrument in more than one capacity if the instrument is required
by law or the Articles of Incorporation or these Bylaws to be executed,
acknowledged or verified by two or more officers.
Section 5.02. TERM OF OFFICE AND RESIGNATION. So far as practicable, all
elected officers shall be elected at the first meeting of the Board of Directors
following the annual meeting of shareholders in each year and, except as
otherwise hereinafter provided, shall hold office until the first meeting of the
Board of Directors following the next annual meeting of shareholders and until
their respective successors shall have
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been elected or appointed and qualified. All other officers shall hold office at
the sole discretion of the Board of Directors. Any elected or appointed officer
may resign at any time by giving written notice to the Board of Directors, the
President or the Secretary of the Corporation. Such resignation shall take
effect at the time specified therein, and unless otherwise specified therein,
the acceptance of such resignation shall not be necessary to make it effective.
Section 5.03. REMOVAL OF ELECTED OFFICERS. Any officer may be removed at
any time, with or without cause, by vote of a majority of the entire Board of
Directors, at any meeting. Such removal shall be without prejudice to any rights
under the employment contract, if any, between the Corporation and the person so
removed. However, election of an officer shall not of itself constitute an
employment agreement or create contract rights.
Section 5.04. VACANCIES. If any vacancy shall occur in any office for any
reason, the Board of Directors or, in the case of an appointive office, the
Executive Committee, may elect or appoint a successor to fill such vacancy for
the remainder of the term.
Section 5.05. COMPENSATION. The compensation, if any, of all elected
officers of the Corporation shall be fixed by the Board of Directors. The
compensation, if any, of officers and agents of the Corporation appointed by the
Board of Directors or the Executive Committee shall be fixed by the body
appointing such officers and agents.
Section 5.06. THE PRESIDENT. The President shall be the chief executive
officer of the Corporation, and, subject to the control of the Board of
Directors, shall have general and active charge, control and supervision of all
its business and affairs and shall see that all orders and resolutions of the
Board of Directors are carried into effect. He shall act as chairman at all
meetings of the shareholders. The President shall have general authority to
execute contracts in the ordinary course of business in the he name and on
behalf of the Corporation; to sign stock certificates; to cause the employment
or appointment of such employees and agents of the Corporation (other than
officers or agents elected or appointed by the Board of Directors or the
Executive Committee) as the conduct of the business of the Corporation may
require, and to fix their compensation; to remove or suspend any employee or
agent who shall not have been appointed by the Board of Directors or the
Executive Committee; to suspend for cause, pending ending final action by the
authority which shall have elected or appointed him, any officer or agent who
shall have been elected or appointed either by the Board of Directors or
Executive Committee; and, in general, to exercise all the powers generally
appertaining to the office of president of a corporation.
Section 5.07. THE VICE-PRESIDENT. During the absence or disability of the
President, the Vice-President, or the Vice-Presidents, in the order designated
by the Board of Directors, shall exercise all the functions of the President.
The Vice-President, or if there is more than one Vice-President, each Vice-
President, shall have such
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powers and discharge such duties as may be assigned to him from time to time by
the Board of Directors.
Section 5.08. THE SECRETARY. The Secretary shall attend all meetings of the
Board of Directors and the shareholders and shall record all votes and the
minutes of all proceedings in a book to be kept for that purpose and shall, when
requested, perform like duties for all committees of the Board of Directors. He
shall attend to the giving of notice of all meetings of the shareholders, and
special meetings of the Board of Directors and committees thereof; he shall have
custody of the corporate seal, if same is s provided, and, when authorized by
the Board of Directors, shall have authority to affix the same to any instrument
and, when so affixed, it shall be attested by his signature or by the signature
of the Treasurer or an Assistant Secretary or an Assistant Treasurer. He shall
keep and account for all books, documents, papers and record of the Corporation,
except those for which some other officer or agent is properly accountable. He
shall have authority to sign stock certificates, and shall generally perform m
all the duties appertaining to the office of secretary of a corporation. In the
absence of the secretary, such person as shall be designated by the President
shall perform his duties.
Section 5.09. THE TREASURER. The Treasurer shall have the care and custody
of all the funds of the Corporation and shall deposit the same in such banks or
other depositories as the Board of Directors, or any officer and agent jointly,
duly authorized by the Board of Directors, shall, from time to time, direct or
approve. He shall keep a full and accurate account of all monies received and
paid on account of the Corporation, and shall render a statement of his accounts
whenever the Board of Directors shall require. He shall perform all other
necessary acts and duties in connection with the administration of the financial
affairs of the Corporation, and shall generally perform all the duties usually
appertaining to the office of treasurer of a corporation. When required by the
Board of Directors, he shall give bonds for the faithful discharge of his duties
in such sums and with such sureties as the Board of Directors shall approve. In
the absence of the Treasurer, such person as shall be designated by the
President sident shall perform his duties.
Section 5.10. REIMBURSEMENT TO CORPORATION. Any payment made to an officer
of the Corporation such as a salary, commission, bonus, interest, or rent, or
travel or entertainment expense incurred by him, which shall be disallowed in
whole or in part as a deductible expense by the Internal Revenue Service, shall
be reimbursed by such officer to the Corporation to the full extent of such
disallowance. It shall be the duty of the Directors, as a board, to enforce
payment of each such amount disallowed. In lieu of payment by the officer,
subject to the determination of the Directors, proportionate amounts may be
withheld from his future compensation payments until the amount owed to the
Corporation has been recovered.
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ARTICLE VI
INDEMNIFICATION
Section 6.01. THIRD-PARTY PROCEEDINGS. The Corporation shall indemnify,
defend and hold harmless, any person who was or is a party or is threatened to
be made a party to a threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative and whether
formal or informal, other than an action by or in the right of the Corporation
as described and encompassed within Section 6.02 of this Article, by reason of
the fact that the person is or was a Director, officer, employee, agent of the
Corporation or is or was serving at the request of the Corporation as a
Director, officer, employee, agent, partner or trustee of another foreign or
domestic corporation, partnership, joint venture, trust or other enterprise,
whether for profit or not for profit, and shall include, but not be limited to,
the attorneys, law firms, accountants, consultants, advisors, counselors, and
all other authorized and/or designated representatives of the Corporation,
herein collectively and individually referred to as "Agent", against all
expenses, including but not limited to, attorneys'fees, judgments, penalties,
fines, court costs, interest, travel expenses, expert fees, accounting fees,
consulting fees, and all other amounts paid in or incurred relative to any
settlement by the person or by the Corporation or the shareholders in connection
with such action, suit or proceeding herein collectively and individually
referred to as the "Expenses", if the person acted in good faith and in a man
manner the person reasonably believed to be in or not opposed to the best
interests of the Corporation and/or the shareholders, and with respect to any
criminal action or proceeding, if the person had no reasonable cause to believe
his/her conduct was unlawful. The termination of an action, suit or proceeding
by judgment, order, settlement, conviction, or upon a plea of nolo contenders or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which the person reasonably believed to be
in or not opposed to the best interests of the Corporation and/or the
shareholders, and with respect to any criminal action or proceeding, that the
person had no reasonable cause to believe that the conduct was unlawful.
Section 6.02. ACTIONS BY OR ON BEHALF OF THE CORPORATION. The Corporation
shall indemnify any person who was or is a party to or is threatened to be made
a party to any threatened, pending or completed action, suit or other proceeding
by or in the right of the Corporation to procure a judgment in its favor by
reason of the fact that the person is or was an Agent of the Corporation, or is
otherwise liable as an Agent, against Expenses, including amounts paid in
settlement actually and reasonably incurred by the person in connection with the
action or suit, if the person acted in good faith and in a manner the person
reasonably believed to be in or not opposed to the best interests of the
Corporation or its shareholders. However, except as described in Section 6.03,
indemnification shall not be made for any claim, issue or matter as to which the
person shall have been found to be liable to the Corporation.
Section 6.03. APPLICATION TO COURT FOR INDEMNIFICATION. To the extent that
a court of competent jurisdiction has determined upon application that a
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person is fairly and reasonably entitled to indemnification in view of all the
relevant circumstances, a person who is not otherwise entitled to
indemnification because he did not meet the applicable standard of conduct set
forth in Sections 6.01 and 6.02 or was adjudged liable to the Corporation as
described in Section 6.02, shall be indemnified in accordance with such order.
However, if the person has been adjudged liable to the Corporation,
indemnification shall 'be limited to reasonable Expenses incurred ed as
determined by the court.
Section 6.04. DETERMINATION.
a. Mandatory. The Corporation shall immediately indemnify, reimburse, and
pay all Expenses, incurred by any Agent who has been s uccessful on the merits
in the defense of any action, suit, or proceeding referred to in Sections 6.01
and 6.02 hereof or in the defe nse of any claim, issue, or matter relative
thereto or otherwise incurred in any threatened, pending, or completed action,
suit or pr oceeding brought to enforce the mandatory indemnification provided by
this Section 6.04.a.
b. Permissive. Unless ordered by a court of competent jurisdiction as
provided in Section 6.03, or by operation of law, an indemnification under
Sections 6.01 or 6.02 above shall be made by the Corporation only as authorized
in the specific case upon a determination that indemnification of the person is
proper under the circumstances because that person had met the applicable
standard of conduct set forth in Sections 6.01 and 6.02 above and upon an
evaluation of the reasonableness of the Expenses and a mounts paid in settlement
for which indemnification is sought. This determination shall be made in any of
the following ways:
(i) By a majority vote of a quorum of the Board of Directors
consisting of Directors who are not parties or threatened to be made
parties to the action, suit or proceeding; or
(ii) If the quorum described in Section 6.03.b.(i) hereof is not
obtainable, then by a majority vote of a committee designated by the Board
of Directors and consisting solely of two (2) or more Directors not at the
time parties or threatened to be made parties to the action, suit or
proceeding; or
(iii) By independent legal counsel in a written opinion, which counsel
shall be selected by the Board of Directors or its committee as prescribed
in Sections 6.03.b.(i) and (ii) above or, if a quorum of the Board is not
obtainable and a committee cannot be designated, then by the Board of
Directors; or
(iv) By a majority of a quorum of the shareholders, but shares held by
persons who are parties or threatened to be made parties to the action,
suit or proceeding may not be voted; or
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(v) By all independent Directors who are not parties or threatened to
be made parties to the action, suit or proceedings
c. Partial Indemnification. If a person is entitled to indemnification
under Section 6.01 or 6.02 of this Article for a portion of Expenses paid in
settlement but not for the total amount thereof, the Corporation shall indemnify
the person for the portion of the Expenses paid in settlement for which the
person is otherwise entitled to be indemnified.
d. Board Discretion. The Board Of Directors of the Corporation, in its sole
and absolute discretion, shall have the power, but not the obligation, to expand
the scope of the indemnity of this Article to the fullest extent permitted by
Michigan law, and to indemnify, hold harmless, and defend an Agreement and/or
any other person, party, or entity for good faith acts taken for and on behalf
of the Corporation, if the Board of Directors believes that any such
indemnification is reasonable, appropriate, necessary cessary, desirable, and/or
otherwise in the best interests of the Corporation or its shareholders,
notwithstanding any other provision contained in the Articles of Incorporation,
these Bylaws, this Article VI, or any other agreement to the contrary.
Section 6.05. CUMULATIVE RIGHT.
a. Non-Exclusive. The indemnification or advancement of Expenses provided
for in this Article is not exclusive of any other rights, remedies, or
alternatives which may be available apart from or as otherwise provided in these
Bylaws and is intended as, and shall be, in addition to, and not in limitation
of, any other rights, remedies, or alternatives and may be pursued separately,
concurrently, successively, or as often as the occasion may afford.
b. Limited Amount. The total amount of Expenses advanced or indemnified
from all sources combined shall not exceed the amount of the actual Expenses
incurred by the person seeking indemnification or advancement of Expenses.
c. Continuity. The indemnification provided in this Article shall continue
as to a person even after that person ceases to be an Agent, thereby continuing
indefinitely even after the relationship with the Agent ends, and shall inure to
the benefit of the heirs, executors, administrators, personal representatives,
trustees, and other legal representatives of the person.
Section 6.06. INSURANCE. The Corporation shall have power, but not the
obligation, to purchase and maintain insurance on behalf of or for any person
who is or was an Agent or who may be liable as an Agent, against any liability
asserted against that person and incurred by that person in any such capacity or
arising out of the status as such, whether or not the Corporation would have
power to indemnify that person against such liability under the provisions of
this Article.
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Section 6.07. CONSTITUENT CORPORATIONS. For the purposes of this Article,
references to the Corporation shall include all constituent corporations
absorbed in a consolidation or merger and the resulting or surviving
corporation, so that a person who is or was an Agent of such constituent
corporation or is or was serving at the request of such constituent corporation
as an Agent, shall stand in the same position under the provisions of this
Article with respect to the resulting or surviving corporation as the he person
would if the person had served the resulting or surviving corporation in the
same capacity.
Section 6.08. CLAIMS PROCEDURES.
a. Filing Claim. To initiate a claim for indemnification pursuant to this
Article, a person shall file a written Claim for Indemn ification with the
Treasurer of the Corporation together with written proof sufficient to evidence
the undertaking by or on behalf of the person and the actual Expenses incurred
by the person.
b. Payment. The Corporation shall pay or reimburse the actual and
reasonable Expenses incurred by a Director, officer, employee o r Agent who is a
party or threatened to be made a party to an action, suit or proceeding in
advance of the final disposition of such proceeding as authorized in this
Article within five (5) days of receipt by the Treasurer of a written Claim for
Indemnification or R equest for Advancement if:
(i) The request for indemnification is submitted together with both a
written affirmation of the person's good faith belief that he has met the
applicable standard of conduct set forth in Sections 6.01 and 6.02 and a
written undertaking, executed personally or on behalf of the person to
repay the advance if it is ultimately determined that the person did not
meet the standard of conduct set forth in Sections 6.01 and 6.02 above
standard of conduct, and
(ii) A determination is made that the facts then known to those making
the determination as provided in Section 6.03 would not preclude
indemnification under applicable law or these Bylaws.
c. Evidence of Advancement. Any sums advanced by the Corporation pursuant
to this Article shall be by way of an unlimited general obligation of the person
on whose behalf the advances are made, and the Board of Directors may, but need
not, require that such advances be secured by the person. Any such advances
shall be evidenced by a properly executed and written demand and interest
bearing promissory note secured by a written and recorded mortgage on the
primary residence of the requesting party, if an any, which shall immediately
become due and payable upon a good faith determination by the Board of Directors
of the Corporation or a court that the person receiving the Expense advance is
not entitled to be indemnified by the Corporation, and which shall include such
other terms as may be required by the Board of Directors.
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Section 6.09. CONTRACT . This Article of the Bylaws is, and shall be deemed
to be, a contract by and between the Corporation and the Agents, while this
Article is in effect. Any repeal or modification of this Article shall not
adversely affect any rights or obligations provided by this Article with respect
to any facts then or theretofore existing or any action, suit, or proceeding
theretofore or thereafter brought based in whole or in part upon any such facts
or this Article.
ARTICLE VII
CONFLICTS OF INTEREST
Section 7.01. General. As a general policy, the Corporation and its
Shareholders, Directors, Sub-Committee Members, Officers, Employees, and other
Agents, herein collectively referred to as "Corporate Parties", should make
every effort to avoid actual, potential, and/or the appearance of conflicts of
interest, herein collectively referred to as "Conflicts of Interest", when
dealing with the Corporation. Even though Conflicts of Interest may not
necessarily be wrong, illegal, or injurious to the Corporation , they may,
however, project an negative, improper, or inappropriate image or appearance
which the Corporation would like to avoid.
Section 7.02. Disclosure. In the event of a Conflict of Interest, the
interested or effected Corporate Party should promptly make full and complete
disclosure thereof to the Board of Directors and/or the President of the
Corporation.
Section 7.03. Self-Dealing. A Corporate Party may contract or otherwise
deal with the Corporation with respect to the sale, lease, and/or purchase of
any property of the Corporation, the rendering or providing of any services to
or for the Corporation and/or clients, borrowers, agents, etc. of the
Corporation, the receipt of compensation, fees, and/or commissions from the
Corporation and/or clients, borrowers, agents, etc. of the Corporation, the
borrowing of any monies from the Corporation by a client of a Corporate Party,
and/or in any other manner whatsoever, without being subject to or liable for
any claim of Conflict of Interest and/or self-dealing, provided that all such
dealings or related transactions (a,) are fully disclosed to the Board of
Directors, (b) are approved by the Board of Directors and such interested or
effected Corporate Party abstains from the voting and approval process, and (c)
are at such prices and/or on such terms as are fair, reasonable, and not
substantially less favorable to the Corporation than would be generally
available from unrelated third/outside parties.
ARTICLE VIII
SHARE CERTIFICATES
Section 8.01. CERTIFICATES. The Board of Directors of the Corporation may
authorize the issuance of some or all of the shares of any or all classes or
series of stock in the Corporation without issuing certificates to represent,
those shares. The issuance of shares without certificates shall have no effect
upon shares previously
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issued and represented by certificates until such certificates as remain
outstanding are surrendered to the Corporation.
Section 8.02. FORM: SIGNATURE. Except as otherwise authorized under Section
8.01, the shares of the Corporation shall be represented by certificates in such
form as shall be determined by the Board of Directors and shall be signed by the
President or a Vice-President of the Corporation, and, in addition thereto, may
be signed by such other officer as determined by the Board of Directors, and if
a seal has been provided for the Corporation, shall be sealed with the seal of
the Corporation or a facsimile the reof. The signatures of the officers upon a
certificate may be facsimiles if the certificate is counter signed by a Transfer
Agent or registered by a Registrar other than the Corporation or its employee.
In case any officer who has signed or whose facsimile signature has been placed
upon a certificate shall have ceased to be such officer before such certificate
is issued, it may be issued by the Corporation with the same effect as if he
were such officer at the date of issue.
Section 8.03. TRANSFER AGENTS AND REGISTRARS. The Board of Directors may,
in its discretion, appoint one or more banks or trust companies in the State of
Michigan and in such other state or states as the Board of Directors may deem
advisable, from time to time, to act as Transfer Agents and Registrars of the
shares of the Corporation; and upon such appointments being made, no certificate
representing shares shall be valid until countersigned by one of such Transfer
Agents and registered by one of such Registrars.
Section 8.04. TRANSFER OF SHARES. A transfer of shares shall be recorded on
the books of the Corporation only as directed in writing by the holder of record
(the "Transferor"), or by his attorney lawfully constituted in writing, and upon
surrender by the Transferor and cancellation of a certificate or certificates
for a like number of shares of the same class, if the shares are represented by
a certificate, with a fully executed assignment and a power of transfer endorsed
thereon or attached thereto, and with such proof of the authenticity of the
required signatures as the Corporation or its agents may reasonably require.
Section 8.05. REGISTERED SHAREHOLDERS. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends and other distributions, and to vote as such
owner, and to hold liable for calls and assessments the person registered on its
books as the owner of shares, and shall not be bound to recognize any equitable
or other claim to. or interest in such shares on the part of any other person,
whether or not it shall have express or other notice thereof, except as
otherwise provided by law.
Section 8.06. LOST CERTIFICATES. In case any certificate representing
shares shall be lost, stolen or destroyed, the Board of Directors, or any
officer or officers duly authorized by the Board of Directors, may authorize the
issuance of a substitute certificate in place of the certificate so lost,
stolen, or destroyed, and may cause or
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authorize such substitute certificate to be countersigned by the
appropriate Transfer Agent and registered by the appropriate Registrar. In each
such case the applicant for a substitute certificate shall furnish to the
Corporation and to such of its Transfer Agents and Registrars as may require the
same, evidence to their satisfaction, in their discretion, of the loss, theft or
destruction of such certificate and of the ownership thereof, and also such
security or indemnity as may by them be required.
ARTICLE IX
MISCELLANEOUS
Section 9.01. YEAR END. The Board of Directors from time to time shall
determine the financial and/or tax year end of the Corporation. The initial tax
and financial year end shall be calendar.
Section 9.02. SIGNATURES ON NEGOTIABLE INSTRUMENTS. All bills, notes,
checks or other instruments for the payment of money shall be signed or
countersigned by such officers or agents and in such manner as from time to time
may be prescribed by resolution of the Board of Directors, or may be prescribed
by any officer or officers, or any officer and agent jointly, duly authorized by
the Board of Directors.
Section 9.03. DIVIDENDS. Except as otherwise provided in the Articles of
Incorporation, distributions (including dividends upon the s hares of the
Corporation) may be declared and paid as permitted by law in such amounts as the
Board of Directors may determine at any annual or special meeting. Dividends may
be paid in cash, in property, or in shares of capital stock of the Corporation,
subject to the Articles of Incorporation.
Section 9.04. RESERVES. Before payment of any dividend, there may be set
aside out of any funds of the Corporation available for dividends such sum or
sums as the Board of Directors from time to time, in its absolute discretion,
deems proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the Corporation or
for such other purpose as the Board of Directors deems conducive to the interest
of the Corporation; and in its discretion th e Board of Directors may decrease
or abolish any such reserve.
Section 9.05. SEAL. The Board of Directors may, but need not, provide a
corporate seal which shall consist of two concentric circles between which is
the name of the Corporation and in the center of which shall be inscribed
"SEAL".
Section 9.06. CORPORATION OFFICES. The registered office of the Corporation
shall be as set forth in the Articles of Incorporation. T he Corporation may
also have offices in such places as the Board of Directors may from time to time
appoint, or the business of the Corporation requires. Such offices may be
outside the State of Michigan.
18
<PAGE>
ARTICLE X
RESTRICTIONS UPON TRANSFER OF STOCK
Section 10.01. LIFETIME RESTRICTIONS. A shareholder desiring to sell,
transfer or assign any shares of stock of the Corporation ("Selling
Shareholder') to a person who is not currently a shareholder must first offer to
sell such shares to the Corporation upon the same terms and conditions offered
by the prospective purchaser. The Corporation shall have ten (10) days in which
to determine whether to purchase the stock of the Selling Shareholder. If the
Corporation declines to purchase such shares of stock (the Selling Shareholder
not voting if he is a Director of the Corporation), the Selling Shareholder must
then offer to sell such shares to the remaining shareholders upon the same terms
and conditions offered by the prospective purchaser. The remaining shareholders
shall have fifteen (15) days to determine whether to purchase the stock of the
Selling Shareholder. Each shareholder shall have the right to purchase a
fraction of the total number of shares for sale, the numerator of which is the
number of shares currently owned by the purchasing shareholder and the
denominator of which is the total number of shares currently owned by all
purchasing shareholders. In the event the Corporation and/or the purchasing
shareholders have not agreed to purchase all of the shares being offered for
sale by the Selling Shareholder, any offers to purchase the stock by the
Corporation and/or purchasing shareholders shall be void, and the Selling
Shareholder may proceed to sell to the prospective purchaser, upon terms and co
nditions no less favorable to the Selling Shareholder than those specified in
the terms of the third party offer as proposed to the Corporation and
shareholders. If for any reason such sale is not consummated within forty-five
(45) days after the Corporation and remaining shareholders have refused the
Selling Shareholder's offer to sell, the restrictions of this Section 9.01 shall
again be applicable, and no subsequent sale may be made, except in compliance
with the terms of this Section 9.01.
Section 10.02. PERMITTED TRANSFER. Notwithstanding anything herein
contained to the contrary, each shareholder shall have the right, during his
lifetime, to transfer and assign all or any part of his interest in his stock in
the Corporation to a revocable trust in which he is named as settlor and
trustee, provided, however, that the trustee and any successors shall be bound
by the terms of this Bylaw. In the event stock in the Corporation is in a trust
described in the preceding sentence or is transferred into such a trust, then
such shares may be transferred to the settlor of such trust, provided, however,
that the settlor shall be bound by the terms of this Bylaw.
Section 10.03. AGREEMENT. Any Agreement pertaining to the subject matter of
this Article shall supersede this Article as to those sha reholders executing
the Agreement, if the Corporation is a party to the Agreement or if such
Agreement has been approved by the Board of Directors of the Corporation.
19
<PAGE>
ARTICLE XI
AMENDMENTS
Section 11.01. POWER TO AMEND. These Bylaws may be amended, altered,
changed, added to or repealed by the affirmative vote of a majority of the
shares entitled to vote at any regular or special meeting of the shareholders if
notice of the proposed amendment, alteration, change, addition or repeal be
contained in the notice of the meeting, or by the affirmative vote of a majority
of the Board of Directors if the amendment, alteration, change, addition, or
repeal be proposed at a regular or special meeting of the Board and adopted at a
subsequent regular meeting; provided, however, that the Board of Directors shall
not make or alter any Bylaw fixing their number, qualifications,
classifications, or term of office; and provided further, that any Bylaws made
by the affirmative vote of a majority of the Board of Directors as provided
herein may be amended, altered, changed, added to or repealed by the affirmative
vote of a majority of the shares entitled to vote at any regular or special
meeting of the shareholders; also provided, however, that no change of the date
for the annual meeting of shareholders shall be made within thirty (30) days
next before the day on which such meeting is to be held, unless consented to in
writing, or by a resolution adopted at a meeting, by all shareholders entitled
to vote at the annual meeting.
The foregoing are hereby executed by the undersigned as the Bylaws for the
regulation of business and affairs of the Corporation.
DIRECTOR(S):
/s/ Nasser Lukmani
- --------------------------
Nasser Lukmani
/s/ Arifa Hassan
- --------------------------
Arifa Hasan
/s/ Filipp J. Kreissl
- --------------------------
Filipp J. Kreissl
Dated: March 10, 1999
20
<PAGE>
COPYRIGHT 1930 BY
DWIGHT & M. H. JACKSON
CHICAGO
PATENT PENDING
**SEE RESTRICTIONS ON REVERSE SIDE**
INCORPORATED UNDER THE LAWS OF THE STATE OF
MICHIGAN
NUMBER SHARES
-1- 410
INMOLD LUKMANI DESIGN TECHNOLOGIES, INC.
AUTHORIZED CAPITAL 60,000 SHARES -0- PAR VALUE
----------------- ---------------
This Certifies That NASSER LUKMANI is the owner of
---------------------------------------
Four Hundred Ten (410) -------------------------- full paid and non-assessable
- -------------------------------------------------
SHARES OF THE CAPITAL STOCK OF INMOLD LUKMANI DESIGN TECHNOLOGIES, INC.
---------------------------------------------
transferable on the books of the Corporation in person or by duly authorized
Attorney upon surrender of this Certificate properly endorsed.
In Witness Whereof the said Corporation has caused this Certificate to be signed
by its duly authorized officers and sealed with the Seal of the Corporation.
this day of A.D. 1999
---------------------- ---------------------- --
------------------------------ ------------------------------------
ARIFA HASAN SECRETARY NASSER LUKMANI PRESIDENT
**SEE RESTRICTIONS ON REVERSE SIDE**
<PAGE>
(C) DWIGHT & M. H. JACKSON
CORPORATION SUPPLY CO.
205 W. RANDOLPH ST.
CHICAGO, ILLINOIS 60606
- --------------------------------------------------------------------------------
(RESERVE THIS SPACE TO PASTE BACK CANCELLED STOCK CERTIFICATE)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
- -
<S> <C> <C> <C> <C>
IF NOT AN ORIGINAL ISSUE SHOW DETAILS OF TRANSFER BELOW
Original Certificate No of Origil. No. of Shrs
Certificate No. -1- For 410 Shares Transferred from No. Date Shares Transfd.
----------- --------------- --------------------------------------------------
INMOLD LUKMANI DESIGN TECHNOLOGIES, INC. Corporation N/A N/A
-------------------------------------- ------------------------------------------------------------------------
(original issue)
Dated 1999
----------------------- -- ------------------------------------------------------------------------
Issued to NASSER LUKMANI
-------------------------------------- ------------------------------------------------------------------------
-------------------------------------- ------------------------------------------------------------------------
-------------------------------------- ------------------------------------------------------------------------
IF THIS CERTIFICATE IS SURRENDERED FOR TRANSFER SHOW DETAILS
-------------------------------------- ------------------------------------------------------------------------
No. of New No. of Shares
New certificate Issued to Certificate Transferred
----------------------------------------
Received this Certificate 1999 -----------------------------------------------------------------------
------------------ -- -----------------------------------------------------------------------
-------------------------------------- ------------------------------------------------------------------------
Nasser Lukmani
------------------------------------------------------------------------
Surrendered this Certificate 1999
--------------- -- ------------------------------------------------------------------------
- ----------------------------------------------- ------------------------------------------------------------------------
</TABLE>
<PAGE>
COPYRIGHT 1930 BY
DWIGHT & M. H. JACKSON
CHICAGO
PATENT PENDING
**SEE RESTRICTIONS ON REVERSE SIDE**
INCORPORATED UNDER THE LAWS OF THE STATE OF
MICHIGAN
NUMBER SHARES
-2- 100
INMOLD LUKMANI DESIGN TECHNOLOGIES, INC.
AUTHORIZED CAPITAL 60,000 SHARES -0- PAR VALUE
----------------- ---------------
This Certifies That ARIFA HASAN is the owner of
---------------------------------------
One Hundred (100) ------------------------------- full paid and non-assessable
- -------------------------------------------------
SHARES OF THE CAPITAL STOCK OF INMOLD LUKMANI DESIGN TECHNOLOGIES, INC.
---------------------------------------------
transferable on the books of the Corporation in person or by duly authorized
Attorney upon surrender of this Certificate properly endorsed. In Witness
Whereof the said Corporation has caused this Certificate to be signed by its
duly authorized officers and sealed with the Seal of the Corporation,
this day of A.D. 1999
---------------------- ---------------------- --
------------------------------ ------------------------------------
ARIFA HASAN SECRETARY NASSER LUKMANI PRESIDENT
<PAGE>
(C) DWIGHT & M. H. JACKSON
CORPORATION SUPPLY CO.
205 W. RANDOLPH ST.
CHICAGO, ILLINOIS 60606
- --------------------------------------------------------------------------------
(RESERVE THIS SPACE TO PASTE BACK CANCELLED STOCK CERTIFICATE)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
- -
<S> <C> <C> <C> <C>
IF NOT AN ORIGINAL ISSUE SHOW DETAILS OF TRANSFER BELOW
Original Certificate No of Origil. No. of Shrs
Certificate No. -2- For 100 Shares Transferred from No. Date Shares Transfd.
----------- --------------- --------------------------------------------------
INMOLD LUKMANI DESIGN TECHNOLOGIES, INC. Corporation N/A N/A
-------------------------------------- ------------------------------------------------------------------------
(original issue)
Dated 1999
----------------------- -- ------------------------------------------------------------------------
Issued to ARIFA HASAN
-------------------------------------- ------------------------------------------------------------------------
-------------------------------------- ------------------------------------------------------------------------
-------------------------------------- ------------------------------------------------------------------------
IF THIS CERTIFICATE IS SURRENDERED FOR TRANSFER SHOW DETAILS
-------------------------------------- ------------------------------------------------------------------------
No of New No. of Shares
New certificate Issued to Certificate Transferred
----------------------------------------
Received this Certificate 1999 -----------------------------------------------------------------------
------------------ -- -----------------------------------------------------------------------
-------------------------------------- ------------------------------------------------------------------------
Arifa Hasan
------------------------------------------------------------------------
Surrendered this Certificate 1999
--------------- -- ------------------------------------------------------------------------
- ----------------------------------------------- ------------------------------------------------------------------------
</TABLE>
<PAGE>
COPYRIGHT 1930 BY
DWIGHT & M. H. JACKSON
CHICAGO
PATENT PENDING
**SEE RESTRICTIONS ON REVERSE SIDE**
INCORPORATED UNDER THE LAWS OF THE STATE OF
MICHIGAN
NUMBER SHARES
-3- 490
INMOLD LUKMANI DESIGN TECHNOLOGIES, INC.
AUTHORIZED CAPITAL 60,000 SHARES -0- PAR VALUE
----------------- ---------------
This Certifies That INMOLD, INC. is the owner of
---------------------------------------
Four Hundred Ninety (490) ------------------------ full paid and non-assessable
- --------------------------------------------------
SHARES OF THE CAPITAL STOCK OF INMOLD LUKMANI DESIGN TECHNOLOGIES, INC.
---------------------------------------------
transferable on the books of the Corporation in person or by duly authorized
Attorney upon surrender of this Certificate properly endorsed. In Witness
Whereof the said Corporation has caused this Certificate to be signed by its
duly authorized officers and sealed with the Seal of the Corporation,
this day of A.D. 1999
---------------------- ---------------------- --
------------------------------ ------------------------------------
ARIFA HASAN SECRETARY NASSER LUKMANI PRESIDENT
<PAGE>
(C) DWIGHT & M. H. JACKSON
CORPORATION SUPPLY CO.
205 W. RANDOLPH ST.
CHICAGO, ILLINOIS 60606
- --------------------------------------------------------------------------------
(RESERVE THIS SPACE TO PASTE BACK CANCELLED STOCK CERTIFICATE)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
- -
<S> <C> <C> <C> <C>
IF NOT AN ORIGINAL ISSUE SHOW DETAILS OF TRANSFER BELOW
Original Certificate No of Origil. No. of Shrs
Certificate No. -3- For 490 Shares Transferred from No. Date Shares Transfd.
----------- --------------- --------------------------------------------------
INMOLD LUKMANI DESIGN TECHNOLOGIES, INC. Corporation N/A N/A
-------------------------------------- ------------------------------------------------------------------------
(original issue)
Dated 1999
----------------------- -- ------------------------------------------------------------------------
Issued to INMOLD, INC.
-------------------------------------- ------------------------------------------------------------------------
-------------------------------------- ------------------------------------------------------------------------
-------------------------------------- ------------------------------------------------------------------------
IF THIS CERTIFICATE IS SURRENDERED FOR TRANSFER SHOW DETAILS
-------------------------------------- ------------------------------------------------------------------------
No. of New No. of Shares
New certificate Issued to Certificate Transferred
----------------------------------------
Received this Certificate 1999 -----------------------------------------------------------------------
------------------ -- -----------------------------------------------------------------------
-------------------------------------- ------------------------------------------------------------------------
Filip J. Kreissl, President of
Inmold, Inc. ------------------------------------------------------------------------
Surrendered this Certificate 1999
--------------- -- ------------------------------------------------------------------------
- ----------------------------------------------- ------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
INMOLD LUKMANI DESIGN TECHNOLOGIES, INC.
SHAREHOLDER
AND
STOCK RESTRICTION AGREEMENT
_________, 1999
IAN D. PESSES. ESQ.
MADDIN, HAUSER, WARTELL,
ROTH, HELLER & PESSES, P.C
Third Floor Essex Centre
28400 Northwestern Hwy.
Southfield, MI 48034
(P/G) 248-354-4030
(Fax) 248-354-1422
(P/D) 248-827-1866
<PAGE>
INMOLD LUKMANI DESIGN TECHNOLOGIES, INC.
SHAREHOLDER
AND
STOCK RESTRICTION AGREEMENT
TABLE OF CONTENTS
ARTICLES PAGE
1.00 PARTIES ....................................................... 1
1.01 Company..................................................... 1
1.02 Shareholders................................................ 1
1.03 Parties..................................................... 1
2.00 DATES.......................................................... 1
3.00 RECITALS....................................................... 1
3.01 Stock Ownership.............................................. 1
3.02 Restrictions................................................ 1
3.03 Duties and Management Responsibilities....................... 1
4.00 CONSIDERATION AND AGREEMENT..................................... 1
5.00 MANAGEMENT..................................................... 2
5.01 Shareholders................................................ 2
5.02 Board of Directors.......................................... 2
5.03 Officers.................................................... 2
5.04 Compensation................................................ 2
5.05 Expense Reimbursement........................................ 3
<PAGE>
5.06 Financial Reports................................................. 3
5.07 Severance......................................................... 3
6.00 CAPITALIZATION....................................................... 3
6.01 Initial........................................................... 4
6.02 Subsequent........................................................ 4
6.03 Failure To Make Capital Contributions............................. 4
6.04 Debt.............................................................. 4
6.05 Shareholder Loans................................................. 4
6.06 Dividends......................................................... 4
7.00 STOCK TRANSFER RESTRICTIONS.......................................... 5
7.01 Restrictions...................................................... 5
7.02 Violations........................................................ 5
7.03 Stock............................................................. 5
7.04 Restrictive Legend................................................ 5
7.05 Effect............................................................ 5
7.06 Permitted Transfers............................................... 5
7.07 Continuing Application............................................ 6
8.00 PREEMPTIVE STOCK RIGHTS.............................................. 6
8.01 Qualified Rights.................................................. 6
8.02 Preservation of Minority Business Enterprise Status............... 6
9.00 FIRST REFUSAL RIGHTS................................................. 7
9.01 Company........................................................... 7
9.02 Role of Selling Shareholder....................................... 7
9.03 Shareholder....................................................... 7
<PAGE>
10.00 PUT-CALL OPTIONS.................................................. 8
10.01 Shareholder Co-Sale Option..................................... 8
10.02 Shareholder Put Option......................................... 8
11.00 SHAREHOLDER DEATH................................................. 8
11.01 Stock Redemption............................................... 8
11.02 Purchase Price................................................. 9
11.03 Method of Payment.............................................. 9
11.04 Deferred Payment............................................... 9
11.05 Personal Guaranties............................................ 10
12.00 INSURANCE......................................................... 10
12.01 Insurance...................................................... 10
12.02 Additional Insurance........................................... 10
12.03 Ownership Rights............................................... 10
12.04 Creditor Claim................................................. 10
12.05 Cooperation.................................................... 10
13.00 DISPUTE RESOLUTION................................................ 10
13.01 Self Regulation................................................ 10
13.02 Arbitration.................................................... 11
13.03 Governing Law.................................................. 12
13.04 Specific Performance........................................... 12
14.00 FURTHER ACTIONS................................................... 12
14.01 Additional Actions............................................. 12
14.02 Supplemental Agreements........................................ 12
<PAGE>
14.03 Disclosure..................................................... 12
14.04 Shareholder Voting............................................. 13
15.00 CONFLICTS OF INTEREST............................................. 13
15.01 No Competing................................................... 13
15.02 Self-Dealing................................................... 13
15.03 Confidentiality................................................ 13
15.04 Exclusivity.................................................... 14
15.05 Non Solicitation............................................... 14
16.00 INTERPRETATION AND CONSTRUCTION................................... 14
16.01 Entire Agreement............................................... 14
16.02 Conflicts...................................................... 15
16.03 Prior Agreements............................................... 15
16.04 Number and Gender.............................................. 15
16.05 Captions....................................................... 15
16.06 Waiver......................................................... 15
16.07 Time........................................................... 15
16.08 Conformity..................................................... 15
16.09 Construction................................................... 15
16.10 Counterparts................................................... 16
17.00 INSOLVENCY........................................................ 16
17.01 Required Consent............................................... 16
17.02 Pre-Filing..................................................... 16
<PAGE>
18.00 GENERAL PROVISIONS................................................... 16
18.01 Representation.................................................... 16
18.02 Production Option................................................. 17
18.03 Name Use.......................................................... 17
19.00 MISCELLANEOUS PROVISIONS............................................. 17
19.01 Notices........................................................... 17
19.02 Binding Effect.................................................... 18
19.03 Execution......................................................... 18
19.04 RECEIPT........................................................... 19
<PAGE>
INMOLD LUKMANI DESIGN TECHNOLOGIES, INC.
SHAREHOLDER
AND
STOCK RESTRICTION AGREEMENT
1.00 PARTIES. This SHAREHOLDER AND STOCK RESTRICTION AGREEMENT, herein referred
to as the "Agreement", is made and entered into by and among the following
parties:
1.01 Company. INMOLD LUKMANI DESIGN TECHNOLOGIES, INC., a Michigan
corporation, whose address is 28400 Northwestern Highway, Third Floor-Essex
Centre, Southfield, Michigan 48034, herein referred to as "Company", and
1.02 Shareholders. The word "Shareholder", individually, or "Shareholders",
collectively, shall mean and refer to the holders and/or owners of any series
and/or class of capital stock of the Company.
1.03 Parties. The word "Party", individually, or "Parties", collectively,
shall mean and refer to Company and/or the Shareholders.
2.00 DATES. This Agreement is made and entered into as of__________, 1999,
herein referred to as the "Execution Date", and effective and binding as of
__________, 1999, herein referred to as of the "Effective Date".
3.00 RECITALS.
3.01 Stock Ownership. Simultaneously with the execution of this Agreement,
the Shareholders will collectively own one hundred percent (I 00%) of all of the
presently issued and outstanding capital stock, herein referred to as "Stock",
of the Company.
3.02 Restrictions. The Parties desire to provide for certain restrictions
and protections relative to the sale or other transfer of the Stock or any newly
authorized or issued Stock.
3.03 Duties and Management Responsibilities. The Parties also wish to
provide for various rights and duties by and among themselves, relative to the
voting shares, the management, and related matters, in accordance with the terms
and conditions hereinafter set forth.
4.00 CONSIDERATION AND AGREEMENT . FOR AND IN CONSIDERATION of the mutual
covenants and benefit set forth herein, the adequacy and sufficiency of which
are hereby acknowledged and accepted, and with the intent to be legally bound
hereby, the Parties agree to all the terms and provisions contained in this
Agreement.
1
<PAGE>
5.00 MANAGEMENT.
5.01 Shareholders.
A. Participation, Shareholders of the Company may not participate
directly in the management of the Company, except as follows: (1) as
provided by State law; (2) when acting in some other capacity or role;
and/or (3) as otherwise agreed by all the Parties.
B. Required Consent. Notwithstanding anything to the contrary, all
decisions of and/or by the Shareholders shall be made by a vote of a simple
majority of the Shareholders, except as may otherwise be provided herein.
5.02 Board of Directors.
A. Initial. Notwithstanding anything to the contrary, the initial
Board of Directors of the Company, herein sometimes "Board of Directors",
"Board", and/or Directors", shall consist of three (3) Directors: (1)
Nasser Lukmani; (2) Arifa Hasan; and (3) Filipp J. Kreissi, herein 'Initial
Directors". Nasser Lukmani shall be Chairman of the Board of Directors and
Chief Executive Officer of the Company.
B. Term. The Director(s) shall continue to serve on an annual basis
until his/her successors are duly chosen by the Shareholders. The
Shareholders shall vote their stock and take all other actions necessary to
elect the Initial Directors as the only Directors.
C. Required Consents. Except as may be specially provided herein, any
and/or all decisions of and/or by the Board of Directors shall be made by a
simple majority of all Directors.
5.03 Officers.
A. Designations. The Officers of the Company shall consist of the
following: (1) the President and Chief Executive Officer will be Nasser
Lukmani; (2) Secretary will be Arifa Hasan; and (3) Treasurer will be
Nasser Lukmani.
B. Term. The officers of the Company shall continue on an annual basis
unless otherwise determined by the Board of Directors. The Board of
Directors shall take all actions necessary and/or appropriate to continue
to designate those people to the positions, ti tles and offices noted in
this paragraph 5.03, notwithstanding anything to the contrary.
5.04 Compensation.
A. Lukmani. The Company shall pay Nasser Lukmani the following
compensation:
1. Annual Base Salary of $100,000.00, herein "Base Salary". The
Base Salary will be reviewed and increased annually, with such
increase not to be less than five percent (5%) per annum.
2. Benefits, herein "Benefits", essentially equivalent to the
type of Benefits received by Nasser Lukmani from his prior
Employer related to (a) health/medical insurance, (b) life
insurance, (c) telephone, (d) automobile, (e) travel and
entertainment, (f) vacation, (g) legal, (h) accounting, and (i)
other related and/or similar expenses and Benefits. The Benefits
will be increased annually as may be reasonably appropriate.
2
<PAGE>
3. Annual incentive compensation, herein "Incentive Compensation"
as reasonably determined by the Board of Directors. The Parties
intend that Nasser Lukmani is to receive reasonable Incentive
Compensation on an annual basis.
B. Others. The Company shall pay such other Compensation to the other
employees of the Company as is reasonably determined by Nasser Lukmani.
5.05 Expense Reimbursement. The Company shall promptly pay and/or reimburse
a Shareholder, Director, and/or Officer for all expenses incurred for or on
behalf of the Company or in the performance of any duties hereunder.
5.06 Financial Reports. The President shall make full and prompt disclosure
to the Directors and Shareholders of the operations and financial condition of
the Company. Such disclosures shall include, but not be limited to the
following:
A. Monthly financial statements, which include:
i. estimated monthly profit and loss statement by the sixth (6)
day of each month.
ii. actual financial statements by the twentieth (20) day of each
month, which reports shall consist of:
a. profit and loss/income statements,
b. balance sheet/position statements,
c. aged account statements, for all accounts payables and
receivables,
d. program management reports for the next sixty (60) days.
B. State and Federal Tax returns within ten (10) days after the same
are (a) prepared, or (b) filed.
C. Any such other information as may be reasonably requested by the
Shareholders or Directors, including copies of all contracts.
5.07 Severance. The Company shall pay Nasser Lukmani severance
compensation, herein "Severance', in accordance with the terms hereof. Service
shall include (A) Base Salary, and (B) Benefits. Severance shall be payable in
accordance with the regular payroll practices of the Company on a monthly basis
and will continue as mutually and unanimously determined by the Board of
Directors, as such Severance is thought to be appropriate, but not to exceed the
earlier of (Y) six (6) months or (Z) the subsequent re-employment of Nasser
Lukmani as an employee or otherwise as an Independent Contractor.
6.00 CAPITALIZATION.
6.01 Initial. The initial capitalization of the Company shall be on the
following basis:
A. Nasser Lukmani - $410
B. Arifa Hasan $100
C. lnmold, Inc. - $490
3
<PAGE>
6.02 Subsequent. If the Company is to properly develop, the Company will,
from time to time, require additional capital. The Parties anticipate that
Inmold, Inc. will provide and/or arrange for any such subsequent capital, herein
"Subsequent Capital", upon terms agreeable to all the Parties.
6.03 Failure To Make Capital Contributions. All Capital Contributions shall
be voluntary, except for the equity capital specified in Paragraph 6.01.
Shareholders shall not be required to make capital contributions to the Company.
The Shareholders may not be diluted and/or otherwise penalized for the failure
to make a capital contribution.
6.04 Debt. The Company may incur debt (whether in the form of loans from
financial institutions or other conventional sources, or in the form of Company
issued bond indebtedness), provided, however, that no Shareholder shall be
required to personally guarantee the payment or collection of such debt.
6.05 Shareholder Loans. Except for the initial capital contribution as
provided in Paragraph 6.01, all subsequent capital contributions to the Company
shall be treated as "debt", and not "equity", herein "Shareholder Debt". The
Shareholder Debt shall be as follows:
A. Shall be secured by a lien on all the assets and subordinated to
all institutional, third party, and/or bank debt,
B. Shall be repaid when cash flow permits,
C. Shall be repaid after all compensation, base, incentive, and
expense reimbursements have been fully paid, including all such
compensation to shareholders as employees of the Company.
D. Shall be repaid prior to any dividend distributions to the
Shareholders, and
E. Shall pay interest at a rate agreed to by the Parties thereto.
6.06 Dividends. The Company shall pay dividends as is authorized by law.
Notwithstanding anything to the contrary, the Company will not pay any dividends
until the following:
A. The Company has fully paid all compensation to the shareholders as
Directors, Officers, and employees. This Compensation includes all base,
incentive and reimbursements.
B. The Company has fully paid all appropriate third party expenses.
C. The Company has fully paid and/or funded the appropriate reserves
for working capital, maintenance, repairs, replacements, improvements, and
expansions.
D. The Company has sufficient cash flow.
7.00 STOCK TRANSFER RESTRICTIONS.
7.01 Restrictions. The Parties shall not issue, sell, give, pledge, assign
or otherwise transfer, voluntarily, involuntarily, by operation of law or
otherwise, herein referred to as "Transfer", any interest they may have or to
the Stock or otherwise in or to the Company, except as specifically permitted by
this Agreement (the "Stock Transfer Restrictions").
4
<PAGE>
7.02 Violations. Any Transfer in violation of this Agreement shall be null
and void, without effect on the other Parties, and shall operate as a material
default hereunder by the offending Party.
7.03 Stock. This Agreement is binding upon all Parties and all Stock,
including, without limitation, all Stock now or subsequently authorized or
issued by the Company, and whether now or subsequently owned by the
Shareholders, and all future owners or holders of the Stock, even if they do not
sign a copy of this Agreement.
7.04 Restrictive Legend. All Stock Certificates, whether presently issued
and outstanding, or newly issued or authorized, shall be conspicuously endorsed
with and contain the following restrictive legend or the equivalent thereof:
"Transfer of the shares represented by this certificate is restricted
by and subject to the terms of a Shareholder Agreement by and among
the Company and its Shareholders, a copy of which is on file at the
office of the Company."
7.05 Effect. Notwithstanding the foregoing, the failure to have such
statements or notice of restriction endorsed on any certificate of Stock shall
in no way adversely affect or impair the validity or enforceability of this
Agreement or the Stock Transfer restrictions.
7.06 Permitted Transfers. Notwithstanding the Stock Transfer Restrictions,
any Shareholder may, upon prior written notice to and without the approval of
the Board of Directors or any other Shareholder, Transfer some or all of the
Shareholder's Stock as follows:
A. If the shareholder is an individual, then only to a revocable
Living Trust established for the benefit of a record holder of shares of
Stock who is an individual and/or the immediate family (spouse and/or
children) of such holder, provided (1) that the transferring record holder
is the sole trustee of the Trust during his or her lifetime, (2) that all
Trustees of such Trust hold such Stock subject to the terms and conditions
hereof, (3) that all such Trustees agree to the terms of this Agreement and
sign a duplicate copy of this Agreement, as it exists now or as may be
amended in the future, and (4) that the record holder of the Stock is the
sole and exclusive person to vote the Stock.
B. If the shareholder is a corporation, then only to (1) a wholly
owned subsidiary of that corporate shareholder, and/or (2) to anyone who
acquires controlling interest in or to the corporate shareholders, provided
(a) that the Party holds such Stock subject to the terms of this Agreement,
(b) that the Party signs a copy and agrees to all of the terms of this
Agreement, and (c) that the original corporate Shareholder/Inmold, Inc. is
the sole and exclusive person to vote the Stock.
7.07 Continuing Application. Any transferee of the Stock shall take and
hold the Stock subject to the continued application of this Agreement and must
sign a duplicate copy of this Agreement, as it exists now or as may be amended
in the future, or an acknowledgment thereof. The form and content of any such
5
<PAGE>
acknowledgment shall be as determined by the Board of Directors, in its sole and
absolute discretion.
8.00 PREEMPTIVE STOCK RIGHTS.
8.01 Unqualified Rights. The Shareholders shall have full and absolute
preemptive rights, notwithstanding anything to the contrary, to subscribe for or
otherwise acquire any additional or other shares of Stock now or hereafter
authorized or issued by the Company.
8.02 Preservation of Minority Status. The following general restrictions
shall apply to transfers of the Company stock in order to preserve the status of
the Company as a Minority Controlled and Certified Business Enterprise:
A. All Parties intend that the Company to be and qualified as a
Minority Business Enterprise and controlled by a minority s hareholder,
notwithstanding anything to the contrary.
B. All Shareholders, Directors, and Officers of the Company shall use
best efforts and take all actions necessary or appropriate to obtain and
maintain status of the Company as a certified Minority Business Enterprise,
notwithstanding anything to the contrary. This obligation includes, but
certainly is not limited to using best effort to insure that Nasser Lukmani
owns, controls, and votes at least fifty-one (51%) percent of the Stock at
all times, notwithstanding anything to contrary.
C. Subject to the other provisions of this Agreement, a proposed non-
Minority shareholder may acquire shares of stock in the Company only from
then current non-Minority Shareholder(s).
D. Subject to the other provisions of this Agreement, a proposed
Minority shareholder may acquire stock from any of the Shareholders,
provided, however, that in no event shall the percentage interest of all
minority shareholders be less than fifty-one (51 %) percent.
9.00 FIRST REFUSAL RIGHTS.
9.01 Company. Except as permitted in Paragraph 7.06 and subject to the
restrictions and limitations contained in Paragraph 8.02 with respect to the
percentage share of the Company's stock required to be held by Minority
Shareholders, a Shareholder shall not Transfer any or all of the Stock without
first offering the Stock for the same price, on the same terms as are contained
in a bona fide, written offer received by the Shareholder from a third party,
herein referred to as a "Bona Fide Offer". The Company shall have thirty (30)
days from the date of receipt of an unedited, complete copy of the Bona Fide
Offer and a written and complete disclosure of all facts which describe the
transaction, (a) to acquire all, but not less than all, of the shares of Stock
offered to be purchased in the Bona Fide Offer on the same terms and condition
as are contained in the Bona Fide Offer, or (b) to waive this first right of
refusal and not acquire the Stock. If the Company elects to redeem the selling
Stock, and notifies the selling Shareholder as required above, the Company and
the selling Shareholder shall close the redemption of the Stock within thirty
(30) days thereafter. Notwithstanding anything to the contrary, the Company
shall not elect to redeem
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the Stock if the effect thereof would be to reduce minority holdings of stock
below the limits set forth in Paragraph 8.02 hereof.
9.02 Role of Selling Shareholder. Except as provided in Paragraph 7.01, the
decision whether to exercise the right of first refusal set forth in Paragraph
9.01 hereof shall be made by the vote of the Board of Directors. If the selling
Shareholder is a member of the Board of Directors, the selling Shareholder shall
not have any role or vote in deciding whether to redeem the Stock of the selling
Shareholder.
9.03 Shareholder. Should the Company fail to elect to purchase the Stock,
or otherwise waives the right of first refusal to purchase the Stock, then the
selling Shareholder, herein referred to as "Offeror", shall then offer the Stock
to the other Shareholders, herein referred to as the "Offeree", under the same
terms and conditions contained in Paragraph 9.01 above. Notwithstanding anything
to the contrary, an Offeree may not elect to purchase the Stock if the effect
thereof would be to reduce minority holdings of Stock below the limits set forth
in Paragraph 8.02 hereof. If the Offeree elects to purchase the Offeror's Stock
and notifies the Offeror as required above, they shall close the purchase within
thirty (30) days thereafter. Should the Offeree fail to so elect, or having
elected, fail to close the sale within this thirty (30) day period, then the
Offeror may sell, assign or transfer Offeror's Stock only to the purchaser named
in the Bona Fide Offer, upon the terms specified therein, provided that such
sale is consummated within ninety (90) days following the Offeror's receipt of
the Offeree's decision not to purchase the Stock, or the expiration of the
thirty (30) day closing period. If the sale is not consummated within the
specified ninety (90) day period, the Offeror must again offer the Stock first
to the Company and second to the other Shareholders in accordance with the
provisions hereof.
10.00 PUT-CALL OPTIONS.
10.01 Shareholder Co-Sale Option. Subject to the restrictions and
limitations set forth in Paragraph 8.02, in the event the Company decides and/or
elects to sell or enter into an agreement to sell any Stock to an outside,
third-party, non-Shareholder purchaser, then the Shareholders may participate
equally on a proportionate basis with, and on the same terms and conditions as
the Company and/or any other Shareholder in any such sale of shares of Stock,
herein "Shareholder Co-Sale Option". This Shareholder Co-Sale Option must be
exercised before, and automatically terminates thirty (30) business/working days
after receipt of the Notice from the Company of the intent or decision to sell
any of the Stock, even if the sale of Stock is not actually consummated. The
waiver of this Shareholder Co-Sale Option shall only be for a single transaction
and a Shareholder cannot in any way be deemed to have adversely affected and/or
to otherwise waived the Shareholder's Co-Sale Option with re spect to any
subsequent sale of Stock by the Company.
10.02 Shareholder Put Option. In the event that any Shareholder decides to
voluntarily separate from the Company, then such Shareholder herein "Withdrawing
Shareholder" may sell all, but not less than all, of his Stock back to the
Company, herein "Shareholder Put Option". The sale price equal to the greater of
either (A) the original amount of the selling Shareholder's investment in
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the Company, or (B) the prorata portion of the net book value of the Company,
which shall be calculated without reference and value being given to insurance
proceeds, good will, or any other intangible assets, herein referred to as the
"Shareholder Put Option". The Company's accountant shall calculate and determine
the net book value of the Company in accordance with generally accepted
accounting principles, consistently applied. The withdrawing Shareholder and the
Company will close on the Share holder Put Option within thirty (30) days after
receipt by the Company of written notice to exercise the Shareholder Put Option.
Notwithstanding anything to the contrary, the Company may not redeem any
Shareholder's Stock until three (3) years from the Execution Date of this
Agreement.
11.00 SHAREHOLDER DEATH.
11.01 Stock Redemption. In the event of the death of a Shareholder or, and
regardless of whether the Stock of the deceased Shareholder is held and/or owned
by a trust or an entity owned and controlled by the deceased Shareholder, the
Company shall repurchase and redeem all such Stock owned directly or indirectly
by the deceased Shareholder, herein referred to as the "Stock Redemption". The
deceased Shareholder's Stock shall be transferred to the Company pursuant to the
Stock Redemption free and clear of all claims and encumbrances whatsoever. The
Company shall have ninety (90) days after receipt of written notice of the death
of a Shareholder to complete the Stock Redemption.
11.02 Purchase Price. The purchase price, herein "Purchase Price", which
the Company shall pay to the estate of any deceased Shareholder in redemption,
of his shares of Stock shall be the greater either (A) the original amount of
the deceased Shareholder's investment in the Company, (B) the prorata portion of
the net book value of the Company, which shall be calculated without reference
and value being given to insurance proceeds, goodwill, or any other intangible
assets, or (C) insurance proceeds received eived by the Company on the life of
the Shareholder. The Company's accountant for the Company shall calculate and
determine the Purchase Price.
11.03 Method of Payment. The Purchase Price which the Company will pay to
the appropriate legal representative of the deceased Shareholder under the
preceding Subparagraph shall be paid promptly upon receipt by the Company of the
proceeds of any insurance covering such deceased Shareholder. Notwithstanding
the foregoing, in the event that life insurance proceeds are insufficient or
unavailable to pay the Purchase Price calculated in connection with the
preceding subparagraph, then the amount of the Purchase Price which is not
covered by insurance (the "Uninsured Amount") shall be paid in installments as
provided in Subparagraph 11.04 below.
11.04 Deferred Payment. The Uninsured Amount shall be paid as follows:
A. Down Payment. The Company shall pay thirty percent (30%) of the
Uninsured Amount within ninety (90) days after receipt by the Company of
written notice of the death of a Shareholder from the legal representative
of the deceased Shareholder.
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B. Annual Installments. The Company shall pay the balance of the
Uninsured Amount in two (2) equal annual installment payments commencing
one (1) year from the date of the Shareholder's death, and continuing
thereafter each succeeding year until paid in full. No interest shall be
due on any such installment payments, unless same are not timely paid, in
which event, interest shall accrue on the unpaid balance from the date of
default at the rate of twenty percent (20%) per annum until paid.
C. Security. In the event the Uninsured Amount is required to be paid
in installments as provided above, the Company and the estate of the
deceased Shareholder shall enter into a stock pledge agreement, whereby the
redeemed shares shall be held in escrow by a mutually satisfactory escrow
agent, until the redemption price is fully paid to the legal representative
of the deceased Shareholder. The legal representative of the deceased
Shareholder shall have no further voting or other rights in the he Stock or
the Company, pending the timely payment of the purchase price.
D. Prepayment. All amounts due under this Paragraph 11 may be prepaid
in full or in part at any time without penalty.
E. Acceleration. In the event the Company fails to make any payment
within the time period(s) required hereunder, the Company shall be deemed
to be in beach of this Agreement, and all remaining and unpaid amounts due
hereunder may be accelerated, and immediately become due and owning, unless
the overdue installment is paid within ten (10) days after the Company
receives written notice that such installment is overdue.
11.05 Personal Guaranties. In the event of a Stock Redemption, the Company
shall use reasonable efforts to have any personal guaranty of such deceased
Shareholder removed and/or released; provided, however, the Company shall have
no liability for any failure, after using reasonable efforts, to have any such
personal guaranty removed and/or released.
12.00 INSURANCE.
12.01 Insurance. The Company may maintain during the term hereof policies
of life insurance on the life of a Shareholder in an amount as determined by the
President of the Company, which amount may be two or more times the estimated
purchase price of each Shareholder's Stock as calculated under Section 11.02
hereof, herein the "Life Insurance". Further, the Company may, but without
obligation, obtain a policy or policies of disability insurance on any of the
Shareholders, officers, directors and/or agents of the Company, in such amounts
and on whatever terms the Company, in its sole discretion, deems appropriate
(the "Disability Insurance"). The Life Insurance and Disability Insurance may
sometimes hereinafter be referred to as "Insurance".
12.02 Additional Insurance. The Company may, but without obligation,
maintain the Insurance, substitute other policies for the Disability Insurance
and/or convert, modify, increase or decrease the amount type or form of coverage
under the Insurance, as it deems appropriate in its sole discretion.
12.03 Ownership Rights. The Company shall be the sole owner and beneficiary
of the Insurance. The Shareholders will have no individual or separate
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ownership interests in or to any such Insurance, except as specifically provided
herein.
12.04 Creditor Claim. The interest of the Company in, and the cash value of
and proceeds from, the Insurance shall not be subject to any claim of any
creditor of the Company and/or any creditor of a Shareholder. The rights of any
creditor of a Shareholder can attach only to the Stock of that particular
Shareholder.
12.05 Cooperation. The Shareholders shall fully cooperate and take all
reasonable actions to help the Company obtain and maintain any such Insurance
and shall not knowingly take any action which may or could prevent, deny, end,
terminate, or otherwise preclude any such Insurance coverage.
13.00 DISPUTE RESOLUTION.
13.01 Self Regulation. In the event of a dispute, the Parties shall use
best efforts and diligently attempt, in good faith, to resolve and settle the
disagreement as quickly, reasonably, and as confidentially as possible. The
Parties will make every effort to avoid arbitration.
13.02 Arbitration. In the event the Parties are unable to settle their
differences among themselves, then the Parties shall arbitrate, herein
"Arbitration", such disputes. Notwithstanding anything to the contrary, such
Arbitration shall be as follows:
i. In accordance with the Rules of the American Arbitration
Association for a three-member panel, except as may be specifically
provided herein.
ii. Located only in Southfield, Michigan, U.S.A. The Parties consent
to the exclusive jurisdiction and venue of Oakland County, Michigan, U.S.A.
for this Arbitration and any enforcement proceeding.
iii. The sole and exclusive method for the resolution of all disputes
and disagreements among the Parties and in place of all other or
alternative judicial procedures.
iv. Conducted and concluded on a confidential basis. The parties shall
not disclose and shall not assist others in the disclosure of any
information whatsoever concerning the nature of the dispute.
v. Conducted and concluded on an expedited basis such that the time
limit for any individual or separate action shall not exceed fifteen (15)
days, herein the "15-Day Rule", unless otherwise agreed to by the Parties.
The 15- Day Rule shall mean there will be only 15 days to do and take any
individual or separate actions, including but not limited to the following:
(a) Answer or respond to responsive pleadings;
(b) Select the arbitrators;
(c) Conduct all discovery;
(d) Hold any hearings;
(e) Issue final, binding opinion after the hearing;
vi. Concluded and a final, binding, and written Arbitration award
issued within 180 days of first filing the request for Arbitration,
notwithstanding
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anything to the contrary, including but not limited to: (a) any rules of
AAA, or (b) the 15-Day Rule.
vii. Award costs and actual attorneys fees to the prevailing party.
The Prevailing Party shall be the party awarded the most amount of money
from any claim, counter claim, cross-claim, or otherwise. The Arbitrators
shall have the authority to award any legal and/or equitable remedy,
including, b ut not limited to (a) specific performance and (b) permanent
restraining orders, notwithstanding anything to the contrary.
viii. Binding on all Parties and all Parties consent to the immediate
enforcement of any Arbitration award by the appropriate court. If a Party
("Enforcing Party") files a lawsuit to seek the enforcement of an
Arbitration award, the non-complying party ("Defaulting Party") shall pay
the Enforcing Party as follows:
(a) Double the Arbitration award;
(b) Interest at 20% per annum from commencement encement of the
Arbitration proceeding;
(c) All costs, including actual attorneys fees, of the Enforcing
Party from commencement of the Arbitration; and
(d) Any other award, damage, and/or penalty which the Court
believes appropriate.
13.03 Governing Law. This Agreement and any Arbitration will be governed by
and construed in accordance with the laws of the State of Michigan.
13.04 Specific Performance. The Stock cannot be readily sold or purchased
in the open market and for that reason, among others, the Parties will be
irreparably damaged and injured in the event this Agreement is not specifically
enforced. -Notwithstanding anything to the contrary, the Parties specifically
authorize and empower the Arbitration with the power and authority to
specifically enforce any term of this Agreement. Specific Enforcement authority
may include the power to specifically issue an ex parte preliminary injunction
or restraining order restraining any Transfer pending the determination of such
controversy. In the event of any controversy concerning the right or obligation
to purchase, redeem or sell any of the Stock, such right or obligation may be
enforced by specific performance. The specific performance provided for herein
shall be inclusive of, and in addition to, all other remedies otherwise
available.
14.00 FURTHER ACTIONS.
14.01 Additional Actions. This Agreement is intended to include all
provisions, terms, and other items necessary, desirable, or appropriate for a
Shareholder Agreement. The Shareholders shall take such additional actions,
shall perform all incidental work, and shall render such additional services as
may be reasonably required or requested by Company in furtherance of the intent
and purpose of this Agreement, notwithstanding that the same may not have been
specifically provided for in, or may have been omitted from, this Agreement.
14.02 Supplemental Agreements. The Parties anticipate that certain
additional actions may be necessary, desirable and/or appropriate to implement
and/or effectuate this Agreement. The Board of Directors must approve the form
and content of all subsequent documents which may be prepared and/or executed
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in connection herewith. After approval by the Board of Directors, then all
Parties shall sign any such additional documents as may be necessary, desirable,
appropriate, and/or otherwise requested by the Board of Directors.
14.03 Disclosure. Whenever reasonably required by another Shareholder, or
his or her representative, each Shareholder shall make full and complete
disclosure of all information concerning or related to the affairs of the
Company and the Business, including, but not limited to, the type, amount, and
date of all Benefits, paid or to be paid. The Shareholders shall hold and
retain, in the strictest confidence, all such disclosures and related
information and shall not disclose any such information to any non-Shareholder
out of the ordinary course of business without the prior written consent from
the Board of Directors.
14.04 Shareholder Voting. Each Shareholder shall take such actions, execute
such proxies and other agreements, and otherwise vote their Stock in such manner
as shall effectuate, implement, enforce, acknowledge, continue, and/or confirm
all of the terms and provision of this Agreement, including, without limitation,
acknowledging, agreeing and executing such amendments to the Articles of
Incorporation, Bylaws or other agreements as shall be appropriate for the
purpose of implementing, enforcing, acknowledging continuing, and/or confirming
this Agreement to its fullest extent.
15.00 CONFLICTS OF INTEREST.
15.01 No Competing. A Shareholder, directly, indirectly, or by any other
means whatsoever, may not compete, directly, indirectly, or by any other means
whatsoever with the Company or the Business. The Shareholders shall make full
and complete, prior written disclosure to the Board of Directors of any actual
or potential competition and/or conflict of interest with the Company and/or the
Business. The Parties acknowledge that Nasser Lukmani is involved with Design
Engineering Services, Inc., herein "DES". Nasser Lukmani may continue his
involvement with DES and such continued involvement will not be a violation of
this Agreement or any obligation of Nasser Lukmani to the Company,
notwithstanding anything to the contrary.
15.02 Self-Dealing. A Shareholder may contract or otherwise deal with the
Company and/or the Business with respect to the sale, lease, and/or purchase of
any property of the Company, the rendering or providing services to or for the
Company and/or the Business, the lending of money to or for the Company and/or
the Business, the receipt of compensation, fees, commission, and/or interest
from the Company, and/or in any other manner whatsoever without being subject to
claims of self-dealing, provided that all such dealings or transactions (a) are
fully disclosed, in writing and in advance, to the Board of Directors, (b) are
approved, in advance, by the Board of Directors and such interested Shareholder
abstains from the voting and/or approval process, and (c) are at such prices
and/or on such terms not substantially less favorable to the Company than would
be generally available from unrelated third/outside parties.
15.03 Confidentiality. All business information, including but not limited
to financing, developing, managing, operating, and related information,
regardless of its form, concerning the Company and/or the Business, is very
valuable and confidential, herein "Confidential Information". The Shareholders
shall hold,
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retain, and maintain in the strictest confidence, and shall not disclose in any
manner whatsoever, the Confidential Information.
15.04 Non-Exclusive. Nasser Lukmani will be actively involved in the
management and operation of the Company and the Business. Nasser Lukmani may
have other related and unrelated outside employment, contractor, investor,
and/or business interests and such activities will not be a violation of this
Agreement and any obligation to the Company. Nasser Lukmani is not expected to
devote his full time and exclusive efforts to the Company or the Business. The
Parties acknowledge, consent, and anticipate that Nasser Lukmani may become
involved with other minority business enterprises with Inmold, Inc., the first
of such other businesses may be known as "Inmold Lukmani Manufacturing, Inc."
15.05 Non Solicitation
A. The Company and Nasser Lukmani will not solicit any customer or
employee of Inmold, Inc., on the one hand, and Inmold, Inc. will not
solicit any customer or employee of the Company, on the other hand, (herein
"Non Solicitation Obligation").
B. For purposes of this Non Solicitation Obligation:
i. The Company and/or Inmold, Inc. will mean any entity they own,
control, are employed by , contract with, and/or otherwise have
the ability to influence, jointly or severally.
ii. Solicit and/or Solicitation will mean:
a. For a customer, any attempt to obtain any business from,
to influence the customer to do business with anyone other
than the Company or Inmold, Inc., and/or to otherwise change
the relationship between the customer and Inmold, Inc. or
the Company.
b. For an Employee, an attempt to hire and/or to otherwise
change the relationship between Inmold, Inc. or the Company
and any employee.
iii. Customer will mean any current and/or future customer of
Inmold, Inc. or the Company.
iv. Employee will mean any current or future employee,
contractor, vendor, and/or supplier of Inmold, Inc. or the
Company.
v. This Non Solicitation Obligation will exist during the term of
this Agreement and will continue for the term of one (1) year
following the later date of the following: (a) termination of the
business of the Company; (b) dissolution and final distribution
of the assets of the Company to the Shareholders, and/or (c)
repayment of all the moneys due from the Company, Arifa Hasan,
and/or Nasser Lukmani to Inmold, Inc.
16.00 INTERPRETATION AND CONSTRUCTION.
16.01 Entire Agreement. This Agreement represents the entire and integrated
Shareholder Agreement between the Parties relative to the subject matter hereof.
No amendment, modification, or change to this Agreement shall be effective or
binding unless reduced to writing and signed by all the Parties.
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16.02 Conflicts. In the event of a direct conflict or inconsistency between
this Agreement and any other agreement, including the Articles of Incorporation,
Bylaws, Stock Certificates, Employment Agreements, and/or Service Agreements, or
any amendment thereto, herein referred to as "Other Agreements", this Agreement,
or any amendment hereto, shall govern and control the Other Agreements.
16.03 Prior Agreements. The Parties hereby agree and acknowledge that the
execution of this Agreement hereby supersedes, replaces and cancels any and all
other prior agreements, contracts and arrangements, whether written or verbal,
between the Company and any of the Shareholders.
16.04 Number and Gender. Whenever required by the context or use, the
singular word shall include the plural word and the masculine gender shall
include the feminine and/or neuter gender.
16.05 Captions. The paragraph titles, headings, and/or captions contained
herein have been inserted solely as a means of reference and convenience. Such
captions shall not affect the interpretation or construction hereof and shall
not define, limit, extend, or otherwise describe the scope or the intent of any
provision contained herein.
16.06 Waive. No action or omission by any Party, including but not limited
to any extension, modification, amendment, forbearance, delay, acceleration,
indulgence, or concession with regard thereto, if any, is intended to, nor shall
constitute or be deemed a waiver, discharge, or release of any other Party or
term, of this Agreement, or any obligation or right established thereby, nor
shall any such action or omission constitute an approval of, or acquiescence in,
any breach hereof, I except as may be expressly agreed to in writing.
16.07 Time. Time is of the essence for all purposes of this Agreement.
16.08 Conformity. Any provision hereof which is in conflict with applicable
laws as of the date hereof, is hereby amended to conform to and comply with such
laws to the maximum and fullest extent permitted thereunder. If, as a result of
such law conflict and/or required amendment thereto, any term, obligation,
right, condition, or provision thereof is held invalid, inoperative, void, or
unenforceable, herein the "Offensive Provision", the remaining provisions hereof
shall (a) remain in full force; (b) in no way be altered, affected, impaired,
invalidated, or otherwise changed by the Offensive Provision; and (c) be
interpreted, construed, and applied as though the Offensive Provision was not in
the first instance contained herein.
16.09 Construction. The terms and provisions hereof have been determined by
arms-length negotiation by the Parties hereto. In the event of a dispute, the
terms hereof should not be construed against any Party as drafter,
notwithstanding the fact that the Company or any one Shareholder may have
physically prepared or processed the written form hereof.
16.10 Counterparts. This Agreement, or any amendments thereto, may be
executed in one or more counterparts, each of which shall constitute and be
deemed an original and binding. All of the counterparts collectively or together
shall constitute one and the same instrument and agreement, binding on all the
Parties. Counterpart copies of this Agreement need not be signed by more than
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one (1) Party. Counterparts (a) may be original copies or fax copies and (b) may
contain original signatures or fax signatures.
17.00 INSOLVENCY In the event the Company desires to seek the protection of
any state or federal insolvency law, then the following shall apply.
17.01 Required Consent. Two-thirds (2/3) consent from the Directors and the
Shareholders shall be required to authorize the Company to voluntarily seek the
protection under any insolvency law, notwithstanding anything to the contrary,
including state or federal law, or the Articles of Incorporation.
17.02 Pre-Filing. In the event of a voluntary or involuntary filing under
any insolvency law, then in such event:
A. Notice. The Company will provide each shareholder with
simultaneous, same day written notice thereof and a complete copy of all
filings.
B. Name. The Company will simultaneously, same day change its name so
that the new name has no reference to the name "Inmold". In connection with
this name change, the Company will no longer (1) use any reference to
Inmold in any future business activity, products, and/or services, or (2)
reference its prior affiliation or association with Inmold, Inc.
C. Put. Inmold, Inc. may immediately put and sell to the Company its
interest in and to the Company, herein "Insolvency Put". The Parties will
use best efforts to try to permit Inmold, Inc. to exercise the Insolvency
Put at least fourteen (14) days prior to the actual filing of the
insolvency protection by the Company. The Insolvency Put and the actual
sale shall be effective immediately upon receipt by the Company of the
exercise by lnmold, Inc. of the Insolvency Put, even if Inmold, Inc. has
not (1) received any payment of the purchase price, (2) returned the Stock
to the Company, or (3) otherwise completely closed the Insolvency Put
Transaction.
18.00 GENERAL PROVISIONS
18.01 Representation.
A. The Parties acknowledge that legal counsel preparing this Agreement
("Counsel") was representing the Company and all of the Shareholders
collectively as a group. In preparing this Agreement or forming the
Company, Counsel did not represent any of the shareholders individually.
B. The Parties have been advised by Counsel that a conflict may exist
among their individual interests. Each Party has been advised by Counsel to
seek the advice of separate counsel. Each Party has had the opportunity to
seek the advice of independent counsel.
C. Each Party has received all information necessary to make an
informed decision regarding the consent to this representation and waiver
of conflict of interest with regard thereto. Each Party does hereby consent
to and waive all claims of conflict of interest, breach of duty, or similar
causes related to the representation of the Company by Counsel in
connection with the preparation of this Agreement and the operation of the
Company.
18.02 Production Option. The Company does hereby grant and give to Inmold,
Inc. the sole, exclusive, and irrevocable option to manufacture, produce, and/or
supply ("Production Option") all products, parts, accessories, and/or related
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items which the Company designs, engineers, outsources, coordinates, and/or
otherwise becomes involved with. Included with the Production Option, the
Company shall use best efforts to direct and steer production, manufacturing
and/or sourcing business to Inmold, Inc. whenever it has the opportunity. The
Company shall make full and prompt written disclosure of all relevant
information to Inmold, Inc. related to this Production Option.
18.03 Name Use.
A. If Lukmani is no longer a shareholder of the Company, the Company
may continue to use the name Lukmani in the name of the Company and in, to,
or with any of its products or services.
B. If Inmold, Inc. is no longer a shareholder of the Company, the
Company must immediately do the following:
1. Stop using the name of 'Inmold" or the initials of ILD, or any
reasonable variation or version thereof,
2. Stop using any reference to the prior association or
affiliation with Inmold, Inc.,
3. Change the name of its legal entity, assumed names, trade
names, product names, trade marks, service marks, copyrights,
and/or other labels or titles away from the name Inmold or any
reasonable derivation thereof.
19.00 MISCELLANEOUS PROVISIONS
19.01 Notices. All notices, including all demands, consents, requests or
the communications, given or furnished pursuant hereto must be given in writing
to be effective and binding, herein referred to as "Notices". The Notices may be
sent by (a) ordinary, first class U.S. mail, (b) certified or registered U.S.
mail, regardless if the return receipt is received by the sender, (c) any
private next-day delivery carrier, or couriers, or their equivalent, (d)
telegram, telecopy, telex, fax or (e) personal service. All Notices must be
properly addressed and contain the appropriate or respective addresses as
provided herein. All Notices are intended to and shall be effective on the
actual date of the Notice. The Notices shall be deemed received and delivered
for all purposes one (1) day after the same is deposited or delivered to the
carrier or transmitter for the same regardless of the actual date of receipt. If
the last day for the giving or receiving of any Notice or performing any act
under this Agreement is a Saturday, Sunday or legal holiday in the State of
Michigan, then in such event, the time period an d date shall be automatically
extended to the next business day which is not a Saturday, Sunday or legal
holiday in the State of Michigan. Any Party may change its address for purposes
of the Notices by giving Notice of any such change to all the other Parties. Unl
ess and until the Parties are notified of a change in address, all Notices shall
be sent to the Parties at the address contained in this Agreement. Copies of all
Notices shall be sent to: Ian D. Pesses, Esq., MADDIN, HAUSER, WARTELL, ROTH,
HELLE R & PESSES, P.C., 28400 Northwestern Highway, Third Floor Essex Centre,
Southfield, Michigan 48034, (248) 354-4030 (Ph), (248) 354-1422 (Fax), (248)
827-1866 (Direct).
16
<PAGE>
19.02 Binding Effect. All rights and obligations contained in this
Agreement shall be binding upon and inure to the respective Parties, their
successors and assigns, if any.
19.03 Execution. The Parties, each, separately and individually, have (a)
carefully read, fully understand and agree to all of the terms and provisions of
this Agreement; (b) consulted with, received from, and been represented by
separate and independent legal counsel at all times prior to and simultaneous
with the execution and implementation of this Agreement; (c) signed this
Agreement as their free act and deed without coercion, duress, or other undue
influence whatsoever; and (d) executed and delivered this Agreement as of the
date first set forth hereinabove.
THIS SPACE WAS INTENTIONALLY LEFT BLANK.
THIS AGREEMENT CONTINUES ON THE
NEXT PAGE WITH PARAGRAPH 19.04
17
<PAGE>
19.04 RECEIPT. THE PARTIES HEREBY ACKNOWLEDGE AND ACCEPT A COMPLETE COPY OF
THIS AGREEMENT.
"COMPANY"
In the Presence of: INMOLD LUKMANI DESIGN
TECHNOLOGIES, INC.,
a Michigan corporation
[illegible] By: /s/ Nasser Lukmani
- -------------------------- ----------------------------
Nasser Lukmani, its President
- --------------------------
SHAREHOLDERS:
/s/ Nasser Lukmani
- -------------------------- ----------------------------
Nasser Lukmani, individually
and as Trustee
- --------------------------
INMOLD, INC.
[illegible] By: /s/ Filipp J. Kreissl
- -------------------------- ----------------------------
Filipp J. Kreissl, its President
- --------------------------
[illegible] /s/ Arifa Hassan
- -------------------------- -----------------------------
Arifa Hasan, individually
- --------------------------
AGREED TO AND ACCEPTED IN ITS
ENTIRETY
- -------------------------- Nasser Lukmani Living Trust, dated
2/8/99, or as may be Amended
/s/ Nasser Lukmani
- -------------------------- ------------------------------
Nasser Lukmani, its sole Trustee
18
<PAGE>
ACTION BY INCORPORATOR
IN LIEU OF MEETING
FOR
INMOLD LUKMANI DESIGN TECHNOLOGIES, INC.
The undersigned, being the Incorporator of INMOLD LUKMANI DESIGN
TECHNOLOGIES, INC., a Michigan Corporation, herein the "Corporation", does
hereby consent to and adopt the following resolutions as and for the action of
the Incorporator, for and on behalf of the Corporation, in lieu of a formal
meeting:
1. Waiver of Notice.
RESOLVED, that the undersigned hereby waives the necessity of Notice of
Meeting of the Incorporator of the Corporation and the necessity of holding an
actual meeting of the same.
2. Incorporation.
RESOLVED, that Ian D. Pesses is authorized and empowered to form the
Corporation and to serve as the Incorporator for the Corporation.
3. Articles of Incorporation.
RESOLVED, that the Incorporator is authorized and directed execute and file
the Articles of Incorporation, as presented and as may be modified by the
Incorporator.
4. Directors.
A. Designation.
RESOLVED, that the following persons are hereby designated as the
Directors of the Corporation, to serve in such capacity until the
first Annual Meeting of the Shareholders of the Corporation or until
their successors are duly elected and qualified, whichever shall first
occur.
1. Nasser Lukmani
2. Arifa Hasan
3. Filipp J. Kreissl
Page 1 of 2
<PAGE>
B. Turnover.
RESOLVED, that the Incorporator is authorized and directed to
turn over the affairs of the Corporation to the designated Directors.
5. Minutes.
RESOLVED, that the Corporation shall be, and hereby is, authorized to make
the original of this Consent part of the official minutes of the Corporation.
6. Binding Effect.
RESOLVED, that the Resolutions and Authorizations contained herein shall be
binding upon the Corporation in accordance wit the terms of that particular
Resolution or Authorization, without the need for any other form of written
agreement, plan, acknowledgement, receipt, or any other item whatsoever.
7. Further Authorization.
RESOLVED, that the Incorporation shall be, and hereby is, authorized to do
all acts and things necessary, desirable or appropriate to effectuate the
foregoing resolutions, including by way of illustration and not limitation, the
preparation, execution, filing and delivering of any and all required documents.
/s/ Ian D. Pesses
------------------------------
Ian D. Pesses
Incorporator
Dated:___________________, 1999
Page 2 of 2
<PAGE>
CONSENT RESOLUTIONS AND AUTHORIZATIONS
IN LIEU OF
THE FIRST MEETING
OF
SHAREHOLDERS AND DIRECTORS
OF
INMOLD LUKMANI DESIGN TECHNOLOGIES, INC.
FOR
FORMATION
The Undersigned, being all of the Shareholders and Directors of Inmold
Lukmani Design Technologies, Inc., herein "Company", do hereby consent to and
adopt the following resolutions as and for the actions of the Shareholders and
Directors of the Company in lieu of holding a formal First Meeting.
1. Waiver of Notice.
RESOLVED, the Shareholders and Directors do hereby waive the necessity of
formal written notice of a meeting of the Shareholders and Directors of the
Company and the necessity of holding an actual formal meeting of the same.
2. Purpose.
RESOLVED, the Company shall be, and hereby is, authorized to engage in and
carry on any activity within the purposes for which a corporation may be
organized under the laws of the State of Michigan.
3. Minority Certification.
RESOLVED, the Company is authorized and directed to obtain and maintain
certification as a minority business enterprise from the Michigan Minority
Business Development Council, or its successor.
1 of 7
<PAGE>
4. Articles of Incorporation.
RESOLVED, the Articles of Incorporation of the Company, as presented, and
as may be modified, shall be and hereby are adopted as, and for the Articles of
Incorporation of the Company.
5. By-Laws.
RESOLVED, the By-Laws of the Company as presented, and as may be modified
by the Shareholders and Directors, shall be, and hereby are, adopted and
approved as the By-Laws of the Company.
6. Stock.
RESOLVED, the Company is authorized and directed to sell and issue stock in
the Company as follows:
Shares Percent
1. Nasser Lukmani 410 41%
2. Arifa Hasan 100 10%
3. Inmold, Inc. 490 49%
----- ----
Total 1,000 100%
7. Directors.
A. Election. RESOLVED, the initial Board of Directors for and of the
Company shall be as follows:
1. Nasser Lukmani
2. Arifa Hasan
3. Filipp J. Kreissi
B. Authority. RESOLVED, the Directors shall have the fullest and
broadest power and authority as directors under Michigan law and to take
all actions necessary, desirable, and/or appropriate to manage the Company.
8. Officers.
A. Designation. RESOLVED, the initial Officers of and for the Company
shall be as follows:
2 of 7
<PAGE>
1. Nasser Lukmani - President and Treasurer
2. Arifa Hasan - Secretary
B. Authority . RESOLVED, the Officers shall have the fullest and
broadest power and authority as Officers under Michigan law and to take all
actions necessary, desirable, and/or appropriate to operate the Company,
including but not limited to the authority to enter into all agreements for
and on behalf of the Company.
9. Incorporator Resignation.
RESOLVED, the Company does hereby (a) accept the resignation of Ian D.
Pesses as the Incorporation and initial Agent of and for the Company, and (b)
releases the Incorporator from all liability which may be associated with the
formation and operation of the Company, (i) prior to the sale of Stock to the
Shareholders, (ii) prior to the election of the Directors, and/or (iii) prior to
the designation of the Officers.
10. Specimen Stock Certificate.
RESOLVED, the form of Stock Certificate for the shares of capital stock of
the Company presented to the Shareholders and Directors is hereby adopted as the
Certificate to represent the shares of capital stock of the Company, and that
the Secretary is hereby instructed to cause a specimen copy thereof to be
inserted into the Minute Book of the Company.
11. Section 1244 Stock.
RESOLVED, all shares of stock of the Company subscribed for now or in the
future, shall be and hereby are issued pursuant and subject to Section 1244 of
the Internal Revenue Code of 1986, as amended, and this reference shall be
sufficient to satisfy the requirements of Section 1244.
12. Registered Office.
RESOLVED, the registered office of the Company shall be, and hereby is,
28400 Northwestern Highway, Third Floor Essex Centre, Southfield, Michigan
48034.
13. Resident Agent.
RESOLVED, the Resident Agent of the Company shall be, and hereby is, Ian D.
Pesses.
3 of 7
<PAGE>
14. Bank Accounts.
A. Location. RESOLVED, the Company shall be and hereby is authorized
to use such banking institutions as the Officers deem necessary and
appropriate as depositories of the Company, and funds so deposited may be
withdrawn in accordance with the written instructions filed with the
banking institutions.
B. Signatory Authority . RESOLVED, all checks, drafts, notes, or other
banking instruments for the payment of monies may be signed by the Officers
and/or any other person as the Officers may designate.
15. Employment Agreements.
RESOLVED, the Company shall be and hereby is authorized, but not required,
to hire any individual and otherwise employ and enter into any written
employment agreements as the Officers may deem necessary, desirable, or
appropriate.
16. Office Lease.
RESOLVED, the Company shall be and hereby is authorized to and may enter
into any lease agreement, under any terms and at any location, as the Officers
may deem necessary, desirable, or appropriate.
17. Shareholder Agreement.
RESOLVED, the Company shall be and hereby is authorized and directed to
enter into that certain Shareholder and Stock Restriction Agreement, as it
exists now or as it may be revised in the future.
18. Contracts.
RESOLVED, the Incorporator, Resident Agent, Directors, and Officers of the
Company are authorized to and may enter into any contract, agreement, and/or
other arrangement, individually, or in the name of the Company, as may be
necessary, desirable and appropriate for the Company.
19. Loans.
RESOLVED, the Company shall be, and hereby is, authorized to and may lend
to and/or borrow from the Shareholders, Directors, and/or Officers and/or any
other person or entity such monies as may be necessary, desirable, or
appropriate. The loans shall be payable pursuant to such terms and conditions as
may be agreed upon by the
4 of 7
<PAGE>
Officers. So long as such loans are evidenced on the books of the Company, such
loan need not be evidenced by separate written notes.
20. Fringe Benefits.
RESOLVED, the Company is authorized to, and may negotiate and obtain such
employee benefits as the Officers may determine from time to time, are in the
best interest of the Company, including by way of illustration and not
limitation, hospitalization and medical insurance, dental insurance, life
insurance, disability insurance, malpractice insurance, legal representation,
accounting, and any other benefits that the Officers, in their sole discretion,
deem appropriate or desirable.
21. Expenses of the Company.
RESOLVED, that the Company shall be, and hereby is, authorized and directed
to reimburse the Directors, Officers, employees, and/or agents of the Company
for any and all ordinary and/or necessary business expenses incurred, including
but not limited to travel, entertainment, meals, lodging, automobile insurance,
automobile maintenance, automobile gasoline and oil, gifts, professional
memberships, social memberships, subscriptions, and any and all other ordinary
and/or necessary business expenses that the Officers in their sole discretion,
deem necessary, appropriate, or desirable. If any expense reimbursed by the
Company to the Directors, Officers, and/or employees is disallowed by the
Internal Revenue Service, then in such event, that particular individual shall
immediately reimburse the Company for any and all such disallowed expenses. The
Company may offset or credit any amounts which may be due by the Company to the
particular individual in the event there is any obligation which is owed by the
individual to the Company for expense deductions which are in fact disallowed by
the Internal Revenue Service. Any expense item which is in fact disallowed by
the Internal Revenue Service is not to be treated (a) as an additional income
item to the Company, or (b) as an non-deductible dividend by the Company or to
the affected individual.
22. Attorney.
RESOLVED, the Company shall be, and is hereby, authorized and directed to
hire and engage Ian D. Pesses, Esquire and the law firm of Maddin, Hauser,
Wartell, Roth, Heller & Pesses, P.C. as the attorneys for the Company
("Attorneys"), and to pay all fees and costs in connection with such services.
The Company, Shareholders, and Directors do hereby consent to the representation
of the Company by the Attorneys in the matters involving the Companies, the
Shareholders, Inmold, Inc. and/or Design Engineering Services, Inc. and waives
all conflicts of interests involved therewith.
5 of 7
<PAGE>
23. Accountant.
RESOLVED, the Company shall be, and is hereby, authorized and directed to
hire and engage Richard Pagac and the account firm of Pagac & Company, P.C. as
the accountants for the Company, and to pay all fees and costs in connection
with such services.
24. Agent Ratification.
RESOLVED, the Company does hereby ratify and approve any and all actions
taken prior to the date hereof, on behalf of the Company by the Incorporator,
Resident Agent, Directors, and/or Officers and acknowledges as being the
obligations of the Company any and all contracts, liabilities and/or
undertakings entered into and/or approved by the Incorporator, Resident Agent,
Directors, and/or Officers of the Company on behalf of the Company,
25. Indemnification.
RESOLVED, the Company shall be, and hereby is, authorized and directed to
indemnify, defend and hold harmless the Incorporator, Resident Agent, Directors,
and/or Officers of the Company, to the fullest extent permitted under law, and
subject to the same terms, conditions and procedures as provided in the Articles
of Incorporation and the By Laws, against any loss, liability, claim or judgment
resulting from or caused by any act or omission of or by the Incorporator,
Resident Agent, Directors, and/or Officers of the Company.
26. Binding Effect.
RESOLVED, the Resolutions and Authorizations contained herein shall be
binding upon the Company in accordance with the terms of the particular
Resolution or Authorization, without the need of any other form of written
agreement, plan, acknowledgment, receipt, or any other item whatsoever.
27. Conflict.
RESOLVED, these Resolutions and Authorizations supersede, cancel, and
replace any prior Minutes, Resolutions and Consents of the Members when or if
these Minutes or Resolutions conflict with any such prior Authorizations,
Consents, or Agreements of the Shareholders and/or Directors.
6 of 7
<PAGE>
28. Minutes.
RESOLVED, the Officers shall be, and hereby are, authorized and directed to
make the original of these Resolutions, Authorizations and Decisions part of the
official minutes of the Company.
29. Further Authorizations.
RESOLVED, the President of the Company is hereby authorized, empowered and
directed to do any and all acts and things necessary, desirable and/or
appropriate to implement, effectuate and/or accomplish the foregoing
Resolutions, even if the same may not have been specifically detailed herein,
without the need for additional meetings, communications, authorizations or
consents with and/or from the Members, on behalf of the Company, including by
way of illustration and not limitation, the preparation of any documents, and
the payment of any monies.
DIRECTORS SHAREHOLDERS:
Nasser Lukmani Living Trust, dated
2/8/99, or as may be amended
/s/ Nasser Lukmani By: /s/ Nasser Lukmani
- ---------------------------- -------------------------------
Nasser Lukmani Nasser Lukmani, its sole Trustee
/s/ Arifa Hasan /s/ Arifa Hasan
- ---------------------------- -------------------------------
Arifa Hasan Arifa Hasan
/s/ Filipp Kreissl INMOLD, INC.
- ----------------------------
Filipp Kreissl
By: /s/ Filipp J. Kreissl
-------------------------------
Filipp J. Kreissl, President
7 of 7
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Form SS-4 Application for Employer Identification Number
(For use by employers, corporations, partnerships, trusts, estates,
(Rev. December 1995) churches, government agencies, certain individuals, and others. EIN 38-
Department of the Treasury See instructions.) OMB No. 1545-0003
Internal Revenue Service -- Keep a copy for your records.
- -----------------------------------------------------------------------------------------------------------------------------------
- -
1 Name of applicant (Legal name) (See instructions.)
INMOLD LUKMANI DESIGN TECHNOLOGIES, INC.
------------------------------------------------------------------------------------------------------------------------------
2 Trade name of business (if different from name on line 1) 3 Executor, trustee, "care of" name
------------------------------------------------------------------------------------------------------------------------------
4a Mailing address (street address) (room, apt., or suite no.) 5a Business address (if different from address on
28400 Northwestern Highway, 3rd Floor lines 4a and 4b)
------------------------------------------------------------------------------------------------------------------------------
4b City, state and ZIP code 5b City, state and ZIP code
Southfield, Michigan 48034
------------------------------------------------------------------------------------------------------------------------------
6 County and state where principal business is located
Oakland County, Michigan
------------------------------------------------------------------------------------------------------------------------------
7 Name of principal officer, general partner, grantor, owner, or trustor-SSN required (See instructions.) ______|_____|________
Nasser Lukmani
------------------------------------------------------------------------------------------------------------------------------
8a Type of entity (Check only one box.) (See instructions.) [ ] Estate (SSN of decedent) _______|________|_________
[ ] Sole proprietor (SSN) ______|_______|_________ [ ] Plan administrator-SSN _______|________|_________
[ ] Partnership [ ] Personal Service corp. [ ] Other corporation (specify)_________________________
[ ] REMIC [ ] Limited liability co. [ ] Trust [ ] Farmer's cooperative
[ ] State/local government [ ] National Guard [ ] Federal Government/military [ ] Church or church-controlled
organization
[ ] Other nonprofit organization (specify) ____________ (enter GEN if applicable____________________________
[X] Other (specify) FOR PROFIT CORPORATION
- --------------------------------------------------------------------------------------------------------------------------------
8b If a corporation, name the state or foreign country (if applicable) State Foreign country
where incorporated MICHIGAN
- --------------------------------------------------------------------------------------------------------------------------------
9 Reason for applying (Check only one box.) [ ] Banking purpose (specify) ________________________
[X] Started new business (specify) _________________ [ ] Changed type of organization (specify)____________
[ ] Hired employees [ ] Purchased going business
[ ] Created a pension plan (specify type) [ ] Created a trust (specify) ______________________
[ ] Other (specify)
- --------------------------------------------------------------------------------------------------------------------------------
10 Date business started or acquired (Mo., day, year) (See 11 Closing month of accounting year (See
Instructions.) instructions.)
/ /99 / /
- -----------------------------------------------------------------------------------------------------------------------------------
12 First date wages or annuities were paid or will be paid (Mo., day, year). Note: If applicant is a withholding agent,
enter date income will first be paid to nonresident alien. (Mo., day. year) . . . . . . . . . / /99
- -----------------------------------------------------------------------------------------------------------------------------------
13 Highest number of employees expected in the next 12 months. Nonagricultural Agricultural Household
Note: If the applicant does not expect to have any
employees during the period, enter -0-. (See instructions).
- -----------------------------------------------------------------------------------------------------------------------------------
14 Principal activity (See instructions.)
- -----------------------------------------------------------------------------------------------------------------------------------
15 Is the principal business activity manufacturing? . . . . . . . . . . . . . . . . . . . [ ] Yes [X] No
If "Yes," principal product and raw material used
- --------------------------------------------------------------------------------------------------------------------------------
16 To whom are most of the products or services sold? Please check the appropriate box. [X] Business (wholesale)
[ ] Public (retail) [ ] Other (specify) [ ] N/A
- --------------------------------------------------------------------------------------------------------------------------------
17a Has the applicant ever applied for an identification number for this or any other business? [ ] Yes [X] No
Note: If "Yes," please complete lines 17b and 17c.
- --------------------------------------------------------------------------------------------------------------------------------
17b If you checked "Yes" on line 17a, give applicant's legal name and trade name shown on prior application, if different from
line 1 or 2 above. Legal name Trade name
- --------------------------------------------------------------------------------------------------------------------------------
17c Approximate date when and city and state where the application was filed. Enter previous employer identification number if
known.
Approximate date when filed (Mo., day, year) City and state where filed Previous EIN
- ---------------------------------------------------------------------------------------------------------------------------------
Under penalties of perjury, I declare that I have examined this application, and to Business telephone number (include area code)
the best of my knowledge and belief, it is true, correct, and complete. (248) 354-4030
Name and title (Please type or print clearly.) Nasser Lukmani, President Fax telephone number (include area code)
(248) 354-1422
- ----------------------------------------------------------------------------------------------------------------------------------
Signature Date February , 1999
Note: Do not write below this line. For official use only.
- ----------------------------------------------------------------------------------------------------------------------------------
Please leave Geo. Ind. Class Size Reason for applying
blank
- ----------------------------------------------------------------------------------------------------------------------------------
For Paperwork Reduction Act Notice, see page 4. 16044N Form SS-4 (Rev.
12/95)
</TABLE>
(0154705)
EXHIBIT 10.16
CORPORATE SUMMARY
FOR
INMOLD LUKMANI
MANUFACTURING CORPORATION
Ian D. Pesses, Esq.
Maddin, Hauser, Wartell, Roth,
Heller & Pesses, P.C.
Third Floor - Essex Centre
28400 Northwestern Highway
Southfield, Michigan 48034
Telephone: (248) 354-4030
Fax: (248) 354-1422
<PAGE>
CORPORATE SUMMARY
for
INMOLD LUKMANI
MANUFACTURING CORPORATION
A. FORMATION
1. State Michigan
2. Dates
a. Incorporation 5/__/99
b. Amendments None
B. NAMES
1. Current Inmold Lukmani
Manufacturing Corporation
2. Prior None
3. Assumed ILMC
C. I.D. NOS.
1. IRS/EIN 38-_______________
2. Michigan __________________
D. CAPITALIZATION
1. Authorized 60,000
2. Par Value -0-
3. Issued 1,000
E. SHAREHOLDERS
Shares Percent
------ -------
1. Nasser Lukmani 410 41%
Living Trust
2. Arifa Hasan 100 10%
3. Inmold, Inc. 490 49%
--- ---
TOTAL 1,000 100%
F. DATES
1. Year End Fiscal - May 31
2. Annual Meeting Month of June
G. AGENTS
1. Resident Agent Ian D. Pesses
1
<PAGE>
2. Registered Address Maddin Hauser, Wartell, Roth,
Heller & Pesses, P.C.
Third Floor Essex Centre
28500 Northwestern Hwy.
Southfield, Michigan 48034
3. Directors a. Nasser Lukmani
b. Arifa Hasan
c. Fillip Kreissl
4. Officers a. Nasser Lukmani, President
b. Arifa Hasan, Secretary and
Treasurer
5. Accountant Richard ("Dick") D. Pagac, CPA
Pagac & Company, PC
1750 S. Telegraph Rd., Ste. 203
Bloomfield Hills, Mi 48302
(T) 248-338-0770
(F) 248-338-2625
6. Counsel Ian D. Pesses, Esq.
Maddin Hauser, Wartell, Roth,
Heller & Pesses, P.C.
Third Floor Essex Centre
28500 Northwestern Hwy.
Southfield, Michigan 48034
(T/Dir.) 248-827-1866
(T/Gen) 248-3540-4030
(F) 248-354-1422
2
<PAGE>
H. SPECIAL AGREEMENTS
1. Shareholder Agreements, dated April __, 1999.
I. SPECIAL CERTIFICATION
1. Certified Minority Business Enterprise,
obtained from the Michigan Minority Business
Development Council, on ________________, 1999.
J. AFFILIATIONS
1. Inmold Lukmani Design Technologies, Inc.
3
<PAGE>
SHAREHOLDER SUMMARY
FOR
INMOLD LUKMANI MANUFACTURING CORPORATION
Ian D. Pesses, Esq.
Maddin, Hauser, Wartell, Roth,
Heller & Pesses, P.C.
Third Floor - Essex Centre
28400 Northwestern Highway
Southfield, Michigan 48034
Telephone: (248) 354-4030
Fax: (248) 354-1422
4
<PAGE>
INMOLD LUKMANI DESIGN TECHNOLOGIES, INC.
SHAREHOLDER SUMMARY AND STOCK LEDGER
A. SUMMARY OF HEADINGS
B. CURRENT SHAREHOLDERS
C. OPTIONS
D. STOCK LEDGER
<TABLE>
<CAPTION>
B. CURRENT SHAREHOLDERS Shares Percent Certificates
------- ------------
<S> <C> <C> <C>
1. Nasser Lukmani Living Trust 410 41% #1
2. Arifa Hasan 100 10% #2
3. Inmold, Inc. 490 49% #3
--- ---
1,000 100%
===== ====
</TABLE>
C. OPTIONS
-------
None/Not applicable.
D. LEDGER
------
<TABLE>
<CAPTION>
Number Issued Shares Issued To Canceled Transferred To
- ------ ------ ------ --------- -------- --------------
<S> <C> <C> <C> <C> <C>
1 04/__/99 410 Nasser Lukmani Original issue
Living Trust
2 04/__/99 100 Arifa Hasan Original issue
3 04/__/99 490 Inmold, Inc. Original issue
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
<S><C>
C&S 500 (4/3/99)(0163334)
- -----------------------------------------------------------------------------------------------------------------------------------
- -
MICHIGAN DEPARTMENT OF CONSUMER AND INDUSTRY SERVICES - CORPORATION, SECURITIES & LAND DEVELOPMENT BUREAU
- -----------------------------------------------------------------------------------------------------------------------------------
- -
Date Received (FOR BUREAU USE ONLY)
- ----------------------------------------------------
- --------------------------------------------------------------------------------
Name IAN D. PESSES
*MADDIN, HAUSER, WARTELL, ROTH, HELLER & PESSES, PC EFFECTIVE DATE:
- --------------------------------------------------------------------------------
Address P.O. BOX 215
*28400 Northwester Hwy., Third Floor-Essex Centre
- --------------------------------------------------------------------------------
City State Zip
*SOUTHFIELD MICHIGAN 48037
- -----------------------------------------------------------------------------------------------------------------------------------
- -
</TABLE>
Document will be returned to the name and address you enter above
*
ARTICLES OF INCORPORATION
For use by Domestic Profit Corporations
(Please read information and instructions on last page)
Pursuant to the provisions of Act 284, Public Acts of 1972, the
undersigned corporation executes the following Articles:
ARTICLE I
- -------------------------------------------------------------------------------
The name of the corporation is: *INMOLD LUKMANI DESIGN TECHNOLOGIES, INC.
- -------------------------------------------------------------------------------
ARTICLE II
- -------------------------------------------------------------------------------
The purpose or purposes for which the corporation is formed is to engage in any
activity within the purposes for which corporations may be formed under the
Business Corporation Act of Michigan.
*
- -------------------------------------------------------------------------------
ARTICLE III
- -------------------------------------------------------------------------------
The total authorized shares:
1. Common shares * 60,000
hares* N/A
2. A statement of all or any of the relative rights, preferences and
limitations of the shares of each class is as follows: *N/A
3
- -------------------------------------------------------------------------------
6
<PAGE>
<TABLE>
<CAPTION>
<S><C>
ARTICLE IV
- -----------------------------------------------------------------------------------------------------------------------------------
- -
1. The address of the current registered office is: P. O. Box 215,
*28400 Northwestern Hwy., Third Floor-Essex Centre, Southfield, MICHIGAN *48037
------------------------------------------------------------------- --------------------------
(Street Address) (City) (State) (Zip Code)
The mailing address of the registered office, if different than above:
* MICHIGAN*
---------------------------------------------------------------------- --------------------------
(Street Address) (City) (State) (Zip Code)
The name of the resident agent at the registered office is: *IAN D. PESSES
- -----------------------------------------------------------------------------------------------------------------------------------
- -
ARTICLE V
- -----------------------------------------------------------------------------------------------------------------------------------
- -
The name(s) and address(es) of the incorporator(s) is (are) as follows:
Name Residence or Business Address
* IAN D. PESSES 28400 Northwestern Hwy.,
- ----------------------------------------------------------------------------------------------------------------
* Third Floor-Essex Centre,
- ----------------------------------------------------------------------------------------------------------------
* Southfield, MI 48037
- ----------------------------------------------------------------------------------------------------------------
*
- ----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -
</TABLE>
ARTICLE VI (Optional. Delete if not applicable.)
- --------------------------------------------------------------------------------
When a compromise or arrangement or a plan of reorganization of this corporation
is proposed between this corporation and its creditors or any class of them or
between this corporation and its shareholders or any class of them, a court of
equity jurisdiction within the state, on application of this corporation or of a
creditor or shareholder thereof, or on application of a receiver appointed for
the corporation, may order a meeting of the creditors or class of creditors or
of the shareholders or class of shareholders to be affected by the proposed
compromise or arrangement or reorganization, to be summoned in such manner as
the court directs. If a majority in number representing 3/4 in value of the
creditors or class of creditors, or of the shareholders or class of shareholders
to be affected by the proposed compromise or arrangement or a reorganization,
agree to a compromise or arrangement or a reorganization of this corporation as
a consequence of the compromise or arrangement, the compromise or arrangement
and the reorganization, if sanctioned by the court to which the application has
been made, shall be binding on all the creditors or class of creditors, or on
all the shareholders or class of shareholders and also on this corporation.
- --------------------------------------------------------------------------------
ARTICLE VII (Optional. Delete if not applicable.)
- --------------------------------------------------------------------------------
Any action required or permitted by the Act to be taken at an annual or special
meeting of shareholders may be taken without a meeting, without prior notice,
and without a vote, if consents in writing, setting forth the action so taken,
are signed by the holders of outstanding shares having not less than the minimum
number of votes that would be necessary to authorize or take the action at a
meeting at which all shares entitled to vote on the action were present and
voted. The written consents shall bear the date of signature of each shareholder
who signs the consent. No written consents shall be effective to take the
corporate action referred to unless, within 60 days after the record date for
determining shareholders entitled to express consent to or to dissent from a
proposal without a meeting, written consents dated not more than 10 days before
the record date and signed by a sufficient number of shareholders to take the
action are delivered to the corporation. Delivery shall be to the corporation's
registered office, its principal place of business, or an officer or agent of
the corporation having custody of the minutes of the proceedings of its
shareholders. Delivery made to a corporation's registered office shall be by
hand or by certified or registered mail, return receipt requested.
Prompt notice of the taking of the corporate action without a meeting by less
than unanimous written consent shall be given to shareholders who would have
been entitled to notice of the shareholder meeting if the action had been taken
at a meeting and who have not consented in writing.
- --------------------------------------------------------------------------------
8
<PAGE>
Use space below for additional Articles of for continuation of previous
Articles. Please identify any Article being continued or added. Attach
additional pages if needed.
NONE
I, the incorporator sign my name this _*____ day of _*_______________, 1999.
* *
- ------------------------------ ---------------------------------
Ian D. Pesses
* *
- ------------------------------ ---------------------------------
* *
- ------------------------------ ---------------------------------
10
<PAGE>
C&S 500 Name of Person or Organization Preparer's Name and Business
Remitting Fees: Telephone Number:
Maddin, Hauser, Wartell, Roth,
*IAN D. PESSES Heller & Pesses, PC
------------------------------- -------------------------------
28400 Northwestern Hwy.,
Third Floor-Essex Centre,
Southfield, Michigan 48037
* (248) 354-4030 (telephone)
------------------------------- -------------------------------
(248) 354-1422(telefax)
INFORMATION AND INSTRUCTIONS
1. The articles of incorporation cannot be filed until this form, or a
comparable document, is submitted.
2. Submit one original of this document. Upon filing, the document will be
added to the records of the Corporation and Securities Bureau. The original
will be returned to the address appearing in the box on front as evidence
of filing.
Since this document will be maintained on optical disk media, it is
important that the filing be legible. Documents with poor black and white
contrast, or otherwise illegible, will be rejected.
3. This document is to be used pursuant to the provisions of Act 284, P.A. of
1972, by one or more persons for the purpose of forming a domestic profit
corporation.
4. Article I - The corporate name of a domestic profit corporation is required
to contain one of the following words or abbreviations: "Corporation",
"Company", "Incorporated", "Limited", "Corp.", "Co.", "Inc.", or "Ltd.".
5. Articles II - State, in general terms, the character of the particular
business to be carried on. Under section 202(b) of the Act, it is
sufficient to state substantially, alone or with specifically enumerated
purposes, that the corporation may engage in any activity within the
purposes for which corporations may be formed under the Act. The Act
requires, however, the educational corporations state their specific
purposes.
6. Article III - Indicate the total number of shares which the corporation has
authority to issue. If there is more than one class or series of shares,
state the relative rights, preferences and limitations of the shares of
each class in Article III(2).
7. Article IV - A post office box may not be designated as the address of the
registered office.
8. Article V - The Act requires one or more incorporators. Educational
corporations are required to have at least three (3) incorporators. The
address(es) should include a street number and name (or other designation),
city and state.
9. The duration of the corporation should be stated in the articles only if
not perpetual.
10. This document is effective on the date endorsed "Filed" by the Bureau. A
later effective date, no more than 90 days after the date of delivery, may
be stated as an additional article.
11. The articles must be signed in ink by each incorporator. The names of the
incorporators as set out in article V should correspond with the
signatures.
FEES: Make remittance payable to the State of Michigan. Include corporation
name on check or money order.
<TABLE>
<CAPTION>
<S> <C> <C>
12. NON-REFUNDABLE FEE .............................................. $10.00
ORGANIZATION FEE: first 60,000 authorized shares or
portion thereof ................................................. $50.00
TOTAL MINIMUM FEE ............................................... $60.00
ADDITIONAL ORGANIZATION FEE FOR AUTHORIZED SHARES OVER 60,000:
each additional 20,000 authorized shares or portion thereof ... $30.00
maximum fee for first 10,000,000 authorized shares ............ $5,000.00
each additional 20,000 authorized shares or portion thereof
in excess of 10,000,000 shares................................. $30.00
maximum fee per filing for authorized shares in
excess of 10,000,000 shares.................................... $200,000.00
</TABLE>
13. Mail form and fee to: The office is located at:
Michigan Department of Consumer & Industry
Corporation, Securities & Land Development
Bureau 6546 Mercantile Way
Corporation Division Lansing, MI 48910
P.O. Box 30054
Lansing, Michigan 48909-7554 Telephone: (517) 334-6302
1
<PAGE>
<TABLE>
<CAPTION>
<S><C>
C&S 541 (4/99)(163337)
- -----------------------------------------------------------------------------------------------------------------------------------
- -
MICHIGAN DEPARTMENT OF CONSUMER AND INDUSTRY SERVICES - CORPORATION, SECURITIES & LAND DEVELOPMENT BUREAU
- -----------------------------------------------------------------------------------------------------------------------------------
- -
Date Received (FOR BUREAU USE ONLY)
- ----------------------------------------------------
- ----------------------------------------------------------------------------
Name EXPIRATION DATE:
*Ian D. Pesses, Esq.
Maddin, Hauser, Wartell, Roth, Heller & Pesses, P.C.
- ----------------------------------------------------------------------------
Address
*28400 Northwestern Highway
P. O. Box 215
- ----------------------------------------------------------------------------
City State Zip
*Southfield, Michigan 48037-0215
- -----------------------------------------------------------------------------------------------------------------------------------
- -
</TABLE>
Document will be returned to the name and address you enter above.
CERTIFICATE OF ASSUMED NAME
For use by Corporations, Limited Partnerships and Limited Liability Companies
(Please read information and instructions on reverse side)
Pursuant to the provisions of Act 284, Public Acts of 1972 (profit
corporations), or Act 162, Public Acts of 1982 (nonprofit corporations), or Act
213, Public Acts of 1982 (limited partnerships), or Act 23, Public Acts of 1993
(limited liability companies), the corporation, limited partnership, or limited
liability company in item one executes the following Certificate:
- --------------------------------------------------------------------------------
1. The true name of the corporation, limited partnership,
or limited liability company is:
INMOLD LUKMANI DESIGN TECHNOLOGIES, INC.
- --------------------------------------------------------------------------------
2. The identification number assigned by the Bureau is: *
- --------------------------------------------------------------------------------
3. The location of the corporation or limited liability company registered
office in Michigan or the office at which the limited partnership records
are maintained is:
* 28400 Northwestern Highway, Southfield, Michigan 48034
- --------------------------------------------------------------------------------
(Street Address) (City) (State) (Zip code)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. The assumed name under which business is to be transacted is: ILMC
- --------------------------------------------------------------------------------
COMPLETE ITEM 5 ON LAST PAGE IF THIS NAME IS ASSUMED BY MORE THAN ONE ENTITY.
Signed this_*__________ day of _*_____, 1999
By:
------------------------------------------
Nasser Lukmani (Signature)
President
------------------------------------------
(Type or Print Name and Title)
<PAGE>
C&S 541
5. If the same name is assumed by two or more corporations, limited
partnerships, limited partnerships, or limited liability companies, or any
combination thereof, each participant corporation, limited partnership, or
limited liability company shall file a separate certificate. Each assumed
name certificate shall reflect the correct true name or qualifying assumed
name of the other corporations, limited partnerships, or limited liability
companies which are simultaneously adopting the same assumed name.
An entity that already has the assumed name shall simultaneously file a
Certificate of Termination of Assumed Name and a new Certificate of Assumed
Name.
Listed below in alphabetical order are the participating corporations
and/or limited partnerships and/or limited liability companies and their
identification numbers.
------------------------------------------------------------------------
1. *NOT APPLICABLE *
------------------------------------------------------------------------
2. * *
------------------------------------------------------------------------
3. * *
------------------------------------------------------------------------
4. * *
------------------------------------------------------------------------
5. * *
------------------------------------------------------------------------
6. * *
------------------------------------------------------------------------
7. * *
------------------------------------------------------------------------
8. * *
------------------------------------------------------------------------
9. * *
------------------------------------------------------------------------
10.* *
------------------------------------------------------------------------
11.* *
------------------------------------------------------------------------
12.* *
------------------------------------------------------------------------
13.* *
------------------------------------------------------------------------
14.* *
------------------------------------------------------------------------
15.* *
------------------------------------------------------------------------
<PAGE>
C&S 541 Name of Person or Organization
Remitting Fees:
*Ian D. Pesses
-----------------------------------
Preparer's Name and Business
Telephone Number:
*Ian D. Pesses
-----------------------------------
28400 Northwestern Hwy.,
-----------------------------------
Southfield, Michigan 48034
-----------------------------------
(248) 354-4030
- --------------------------------------------------------------------------------
INFORMATION AND INSTRUCTIONS
1. The certificate of assumed name cannot be filed until this form, or a
comparable document, is submitted. This certificate is to be used by a
corporation, limited partnership, or limited liability company desiring to
transact business under a name other than its true name.
2. Submit one original of this document. Upon filing, the document will be
added to the records of the Corporation and Securities Bureau. The original
will be returned to the address you enter in the box on the front as
evidence of the filing.
Sincethis document will be maintained on optical disc media, it is
important that the filing be legible. Documents with poor black and white
contrast, or otherwise illegible, will be rejected.
3. The certificate shall be effective for a period expiring on December 31 of
the fifth full calendar year following the year in which it was filed,
unless a certificate of termination is filed.
4. When the same name is assumed by more than one entity, each participant
corporation, limited partnership, or limited liability company must file a
separate Certificate of Assumed Name. The assumed name will be effective
for the same period for each participant.
5. Item 1 - The true name is the name contained in the original, amended, or
restated articles of incorporation, certificate of limited partnership, or
articles of organization. The true name of a foreign corporation, limited
partnership, or limited liability company, is that name under which it
obtained its authority to transact business or conduct affairs in Michigan.
6. Item 2 - Enter the identification number assigned by the Bureau.
7. Item 3 - If a foreign limited partnership, this address must be that shown
in item 6 of the application for registration to transact business in
Michigan.
8. The certificate must be signed in ink by
FOR CORPORATIONS: an authorized officer or agent
FOR LIMITED PARTNERSHIPS: a general partner
FOR DOMESTIC LIMITED LIABILITY COMPANY: a manager if management is
vested in one or more
managers; otherwise the
signature of at least one
member.
FOR FOREIGN LIMITED LIABILITY COMPANY: a person with authority to do
so under the laws of the
jurisdiction of its
organization.
9. FEES: Make remittance payable to the State of Michigan. Include name and
identification number on check or money order. Non-refundable filing fee.
CORPORATION OR LIMITED PARTNERSHIP ................................ $10.00
LIMITED LIABILITY COMPANY.......................................... $25.00
10. Mail form and fee to: The office is located at:
Michigan Department of
Consumer & Industry Corporation,
Securities & Land Development Bureau 6546 Mercantile Way
Corporation Division Lansing, MI 48910
P.O. Box 30054
Lansing, Michigan 48909-7554 Telephone: (517) 334-6302
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
<S><C>
- -----------------------------------------------------------------------------------------------------------------------------------
- -
Application for Employer Identification Number
Form SS- 4 (For use by employers, corporations, partnerships, trusts,
estates, churches, government agencies, certain individuals,
and others. See instructions.)
(Rev. December 1995) EIN 38-
Department of -----------------
the Treasury -- Keep a copy for your records. OMB No. 1545-0003
Internal Revenue Service
- -----------------------------------------------------------------------------------------------------------------------------------
- -
1 Name of applicant (Legal name) (See instructions.)
INMOLD LUKMANI MANUFACTURING CORPORATION
- -----------------------------------------------------------------------------------------------------------------------------------
- -
2 Trade name of business (if different from name on line 1)
- -----------------------------------------------------------------------------------------------------------------------------------
- -
3 Executor, trustee, "care of" name
- -----------------------------------------------------------------------------------------------------------------------------------
- -
4a Mailing address (street address) (room, apt., or suite no.) 5a Business address
28400 Northwestern Highway, 3rd Floor (if different from address on lines 4a and 4b)
- -----------------------------------------------------------------------------------------------------------------------------------
- -
4b City, state and ZIP code 5b City, state and ZIP code
Southfield, Michigan 48034
- -----------------------------------------------------------------------------------------------------------------------------------
- -
6 County and state where principal business is located
Oakland County, Michigan
- -----------------------------------------------------------------------------------------------------------------------------------
- -
7 Name of principal officer, general partner, grantor, owner, or trustor-SSN required (See instructions.)-- 306|78|2488
Nasser Lukmani
- -----------------------------------------------------------------------------------------------------------------------------------
- -
8a Type of entity (Check only one box.) (See instructions.) [ ] Estate (SSN of decedent) _______|________|_________
[ ] Sole proprietor (SSN) ______|_______|_________ [ ] Plan administrator-SSN _______|________|_________
[ ] Partnership [ ] Personal Service corp. [ ] Other corporation (specify)--______________________________
[ ] REMIC [ ] Limited liability co. [ ] Trust [ ]Farmer's cooperative
[ ] State/local government [ ] National Guard
[ ] Other nonprofit organization (specify)--______________ [ ]Federal Government/military
(enter GEN if applicable)___________________________________
[ ]Church or church-controlled organization
[X] Other (specify) -- FOR PROFIT CORPORATION
- -----------------------------------------------------------------------------------------------------------------------------------
- -
8b If a corporation, name the state or foreign State Foreign country
country (if applicable) where incorporated MICHIGAN
- -----------------------------------------------------------------------------------------------------------------------------------
- -
9 Reason for applying (Check only one box.) [ ] Banking purpose (specify) --_____________________________
[ ] Started new business (specify) --_______________ [ ] Changed type of organization (specify) --________________
____________________________________________________ [ ] Purchased going business
[ ] Hired employees [ ] Created a trust (specify) --_____________________________
[ ] Created a pension plan (specify type) -- [ ] Other (specify)
- -----------------------------------------------------------------------------------------------------------------------------------
- -
10 Date business started or acquired (Mo., day, year) 11 Closing month of accounting year (See instructions.)
(See Instructions.)
/ /99 5/31 (May 31)
- -----------------------------------------------------------------------------------------------------------------------------------
- -
12 First date wages or annuities were paid or will be paid (Mo., day, year).
Note: If applicant is a withholding agent, enter date income will first be paid to
nonresident alien. (Mo., day. year) . . . . . . . . . -- / /99
- -----------------------------------------------------------------------------------------------------------------------------------
- -
13 Highest number of employees expected in the next 12 months. Nonagricultural Agricultural Household
Note: If the applicant does not expect to have any employees
during the period, enter -0-. (See instructions). --
- -----------------------------------------------------------------------------------------------------------------------------------
- -
14 Principal activity (See instructions.) --
- -----------------------------------------------------------------------------------------------------------------------------------
- -
15 Is the principal business activity manufacturing? . . . . . . . . . [X] Yes [ ] No
If "Yes," principal product and raw material used -- Plastic
- -----------------------------------------------------------------------------------------------------------------------------------
- -
16 To whom are most of the products or services sold? Please check the appropriate box. [X] Business (wholesale)
[ ] Public (retail) [ ] Other (specify) -- [ ] N/A
- -----------------------------------------------------------------------------------------------------------------------------------
- -
17a Has the applicant ever applied for an identification number for this or any other business? [ ] Yes [ ] No
Note: If "Yes," please complete lines 17b and 17c.
- -----------------------------------------------------------------------------------------------------------------------------------
- -
17b If you checked "Yes" on line 17a, give applicant's legal name and trade name shown on prior application,
if different from line 1 or2 above. Legal name --
Trade name --
- -----------------------------------------------------------------------------------------------------------------------------------
- -
17c Approximate date when and city and state where the application was filed. Enter previous employer
identification number if known.
Approximate date when filed (Mo., day, year) City and state where filed Previous EIN
- -----------------------------------------------------------------------------------------------------------------------------------
- -
Under penalties of perjury, I declare that I have examined this application, Business telephone number (include area
code)
and to the best of my knowledge and belief, it is true, correct, and complete. (248) 354-4030
--------------------------------------------
- -
Fax Number (248) 354-1422 Fax telephone number (include area code)
--------------------------------------------
- -
Name and title (Please type or print clearly.) -- Nasser Lukmani, President (248) 354-1422
- -----------------------------------------------------------------------------------------------------------------------------------
- -
Signature -- Date -- April , 1999
- -----------------------------------------------------------------------------------------------------------------------------------
- -
Note: Do not write below this line. For official use only.
- -----------------------------------------------------------------------------------------------------------------------------------
- -
Please leave Geo. Ind. Class Size Reason for applying
blank --
- -----------------------------------------------------------------------------------------------------------------------------------
- -
For Paperwork Reduction Act Notice, see page 4. 16044N Form SS-4(Rev. 12/95)
(0163343)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S><C>
Power of Attorney
Form 2848
(Rev. December 1995 and Declaration of Representative OMB No. 1545-0150
For IRS Use Only
- -------------------------------------------------------------------------------------------------------------------------------
Department of Treasury For paperwork Reduction and Privacy Act Notice, see the instructions Received by:
Internal Revenue Service Name
Telephone( )
Function
Date
Power of Attorney (Please type or print)
- -------------------------------------------------------------------------------------------------------------------------------
1 Taxpayer Information (Taxpayer(s) must sign and date this form on page 2, line 9.)
- -------------------------------------------------------------------------------------------------------------------------------
Taxpayer names(s) and address Social security number(s) of Employer Identification
INMOLD LUKMANI MANUFACTURING CORPORATION Taxpayer: Number
c/o Maddin, Hauser, Wartell, Roth, Heller & Pesses, P.C. "WILL APPLY FOR"
28400 Northwestern Highway, 3rd Floor ----------------------------------
Southfield, MI 48034
----------------------------------
Daytime telephone number Plan number (if applicable)
(248) 827-1866
- -----------------------------------------------------------------------------------------------------------------------------
hereby appoint(s) the following Representative(s) as attorney(s)-in-fact: IAN D. PESSES and ROBERT D. KAPLOW
2 Representative(s) (Representative(s) must sign and date this form on page 2, Part 11.)
- ---------------------------------------------------------------- ------------------------------------------------------------
Name and address
Ian D. Pesses, Esq. CAF No. 3205-13718-R
Maddin, Hauser, Wartell, Roth, Heller & Pesses, P.C. Telephone No: (248) 354-4030
28400 Northwestern Highway, Third Floor Essex Centre Fax No: (248) 354-1422
Southfield, Michigan 48034 Check if new: Address [ ] Telephone No: [ ]
- -------------------------------------------------------------------------------------------------------------------------------
Names and address
Robert D. Kaplow, Esq. CAF No. 3205-13718-R
Maddin, Hauser, Wartell, Roth, Heller & Pesses, P.C. Telephone No: (248) 354-4030
28400 Northwestern Highway, Third Floor Essex Centre Fax No: (248) 354-1422
Southfield, Michigan 48034 Check if new: Address [ ] Telephone No: [ ]
- ----------------------------------------------------------------------------------------------------------------------------
Names and address
CAF No.
Telephone No:
Fax No:
Check if new: Address [ ] Telephone No: [ ]
- -------------------------------------------------------------------------------------------------------------------------------
to represent the taxpayer(s) before the Internal Revenue Service for the following tax matters:
3 Tax Matters
- -------------------------------------------------------------------------------------------------------------------------------
Type of Tax (Income, Employment, Excise, etc) Tax Form Number (1040, 941, 720, etc.) Year(s) or Period(s)
- -------------------------------------------------------------------------------------------------------------------------------
Application for Employer
Identification Number SS-4
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
4 Specific Use Not Recorded on Centralized Authorization File (CAF) -- If the power of attorney is for
a specific use not recorded on CAF,
check this box, (See Line 4 ---- Specific uses not recorded on CAF on page 3.) . . . . . . . . .-- [ ]
- -------------------------------------------------------------------------------------------------------------------------------
5 Acts Authorized. -- The representatives are authorized to receive and inspect confidential tax information and to perform any
and all acts that I (we) can perform with respect to the tax matters described on line 3, for example, the authority to sign
any agreements, consents, or other documents. The authority does not include the power to receive refund checks (see line 6
below), the power to substitute another representative unless specifically added below, or the power to sign certain returns
(see Line 5--Acts authorized on page 4). List any specific additions or deletions to the acts otherwise authorized in the
power of attorney: N/A
Note: In general, an unenrolled preparer of tax returns cannot sign any document for a taxpayer. See Revenue Procedure 81-38,
printed as Pub. 470, for more information.
Note The tax matters partner/person of a partnership or S corporation is not permitted to authorize representatives to perform
certain acts. See the instructions for more information.
- -------------------------------------------------------------------------------------------------------------------------------
6 Receipt of Refund Checks. If you want to authorize a representative named on line 2 to receive, BUT NOT TO ENDORSE OR CASH,
refund checks, initial here N/A and list the name of that representative below.
Name of representative to receive refund check(s)-- N/A
- -------------------------------------------------------------------------------------------------------------------------------
Cat. No. 11980J Form 2848 (Rev 12-95)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S><C>
Form 2848 (rev. 12-95) Page
2
- -----------------------------------------------------------------------------------------------------------------------------------
- -
7 Notices and Communications.---- Original notices and other written communications will be sent to you and a copy to the first
representative listed on line 2 unless you check one or more of the boxes below.
a If you want the first representative listed on line 2 to receive the original, and yourself a copy, of such notices of
communications, check this box . . . . . . . . . . . . . . . . . . . . . [X]
b If you also want the second representative listed to receive a copy of such notices and communications, check this
box . . . . . . . . . . . . . . . . . . . . . . . . . . . . [ ]
c If you do not want any notices or communications sent to your representative, check this box . . . . . . [ ]
- -----------------------------------------------------------------------------------------------------------------------------------
- -
8 Retention/Revocation of Prior Power(s) of Attorney. ---- The filing of this power of attorney automatically revokes all earlier
power(s) of attorney on file with the Internal Revenue Service for the same tax matters and years or periods covered by this
document. If you do not want to revoke a prior power of attorney, check here . . . . . . . . [ ]
YOU MUST ATTACH A COPY OF ANY POWER OF ATTORNEY YOU WANT TO REMAIN IN EFFECT.
- -----------------------------------------------------------------------------------------------------------------------------------
- -
9 Signature of Taxpayer(s).---- If a tax matter concerns a joint return, both husband and wife must sign if joint representation
is requested, otherwise, see the instructions. If signed by a corporate officer, partner, guardian, tax matters
partner/person, executor, receiver, administrator or trustee on behalf of the taxpayer, I certify that I have the authority to
execute this form on behalf of the tax payer.
- -----------------------------------------------------------------------------------------------------------------------------------
- -
IF NOT SIGNED AND DATED, THIS POWER OF ATTORNEY WILL BE RETURNED.
President
- ------------------------------------------ ------------------- ---------------------
Signature Date Title (if applicable)
Nasser Lukmani, President
Inmold Lukmani Manufacturing Corporation
- ------------------------------------------
Print Name
- ------------------------------------------ ------------------- ---------------------
Signature Date Title (if applicable)
- ------------------------------------------
Print Name
- -----------------------------------------------------------------------------------------------------------------------------------
- -
Part II Declaration of Representative
- -----------------------------------------------------------------------------------------------------------------------------------
- -
Under penalties of perjury, I declare that:
- I am not currently under suspension or disbarment from practice before the Internal Revenue Service;
- I am aware of regulations contained in Treasury Department Circular No. 230 (31 CFR, Part 10), as amended, concerning the
practice of attorneys, certified public accountants, enrolled agents, enrolled actuaries, and others;
- I am authorized to represent the taxpayer(s) identified in Part I for the tax matter(s) specified there; and
- I am one of the following:
a Attorney - a member in good standing of the bar of the highest court of the jurisdiction shown below.
b Certified Public Accountant - duly qualified to practice as a certified public accountant in the jurisdiction shown
below.
c Enrolled Agent - enrolled as an agent under the requirements of Treasury Department Circular No. 230.
d Officer - a bona fide officer of the taxpayer's organization.
e Full-Time Employee - a full-time employee of the taxpayer.
f Family Member - a member of the taxpayer's immediate family (i.e., spouse, parent, child, brother, or sister).
g Enrolled Actuary - enrolled as an actuary by the Joint Board for the Enrollment of Actuaries under 29 U.S.C. 1242
(the
authority to practice before the Service is limited by section 10.3(d)(1) of Treasury Department Circular No. 230).
h Unenrolled Return Preparer - an unenrolled return preparer under section 10.7(a)(7) of Treasury Department Circular
No. 230.
IF THIS DECLARATION OF REPRESENTATIVE IS NOT SIGNED AND DATED, THE POWER OF ATTORNEY WILL BE RETURNED.
- -----------------------------------------------------------------------------------------------------------------------------------
- -
Designation - Insert Jurisdiction (state)
above letter (a-h) or Enrollment Card No. Signature Date
- -----------------------------------------------------------------------------------------------------------------------------------
- -
a Michigan
- -----------------------------------------------------------------------------------------------------------------------------------
- -
Ian D. Pesses
- -----------------------------------------------------------------------------------------------------------------------------------
- -
- -----------------------------------------------------------------------------------------------------------------------------------
- -
Robert D. Kaplow
166668
</TABLE>
<PAGE>
BYLAWS OF
INMOLD LUKMANI MANUFACTURING CORPORATION,
A MICHIGAN CORPORATION
IAN D. PESSES, ESQ.
Maddin, Hauser, Wartell, Roth,
Heller & Pesses, P.C.
Third Floor, Essex Centre
28400 Northwestern Highway
Southfield, Michigan 48034
(248) 827-1866 (Dir. Dial)
(248) 354-4030 (Gen. Dial)
(248) 354-1422 (Fax)
7
<PAGE>
BYLAWS OF
INMOLD LUKMANI MANUFACTURING CORPORATION,
A MICHIGAN CORPORATION
TABLE OF CONTENTS
PAGE NO.
--------
PREAMBLE.......................................................1
ARTICLE l-MEETINGS OF SHAREHOLDERS.............................1
Section 1.01 PLACE OF MEETINGS........................ 1
Section 1.02 ANNUAL MEETING........................... 1
Section 1.03 SPECIAL MEETINGS......................... 1
Section 1.04 NOTICE OF MEETINGS....................... 1
Section 1.05 WAIVER OF NOTICE......................... 2
Section 1.06 INSPECTORS OF ELECTION................... 2
Section 1.07 QUORUM AND ADJOURNMENT................... 2
Section 1.08 VOTE OF SHAREHOLDERS..................... 3
Section 1.09 CORPORATION'S ACCEPTANCE OF VOTES........ 3
Section 1.1O REMOTE PARTICIPATION..................... 4
Section 1.11 WRITTEN VOTE............................. 4
Section 1 12 PROXIES.................................. 4
Section 1.13 CONSENTS................................. 4
Section 1.14 ORGANIZATION OF SHAREHOLDERS' MEETINGS... 5
ARTICLE Il-DETERMINATION OF VOTING, DIVIIDEND AND OTHER RIGHTS.5
ARTICLE III-DIRECTORS..........................................6
Section 3.01 GENERAL POWERS........................... 6
Section 3.02 NUMBER, QUALIFICATIONS AND TERM OF OFFICE 6
Section 3.03 PLACE OF MEETINGS........................ 6
Section 3.04 ANNUAL MEETING........................... 6
i
<PAGE>
Section 3.05 SPECIAL MEETINGS.........................6
Section 3.06 QUORUM AND MANNER OF ACTION..............7
Section 3.07 REMOTE PARTICIPATION.....................7
Section 3.08 COMPENSATION.............................7
Section 3.09 REMOVAL OF DIRECTORS.....................7
Section 3.10 RESIGNATIONS.............................7
Section 3.11 VACANCIES................................7
Section 3.12 ORGANIZATION OF BOARD MEETING............8
ARTICLE IV..................................................8
Section 4.01 CONSTITUTION AND POWERS..................8
Section 4.02 REGULAR MEETINGS.........................8
Section 4.03 SPECIAL MEETINGS.........................8
Section 4.04 QUORUM AND MANNER OF ACTION..............9
Section 4.05 RECORDS..................................9
Section 4.06 VACANCIES................................9
ARTICLE V-OFFICERS..........................................9
Section 5.01 OFFICERS.................................9
Section 5.02 TERM OF OFFICE AND RESIGNATION...........9
Section 5.03 REMOVAL OF ELECTED OFFICERS.............10
Section 5.04 VACANCIES...............................10
Section 5.05 COMPENSATION............................10
Section 5.06 THE PRESIDENT...........................10
Section 5.07 THE VICE-PRESIDENT......................10
Section 5.08 THE SECRETARY...........................11
Section 5.09 THE TREASURER...........................11
Section 5.10 REIMBURSEMENT TO CORPORATION............11
ARTICLE Vl-INDEMNIFICATION.................................12
Section 6.01 THIRD-PARTY PROCEEDINGS.................11
ii
<PAGE>
Section 6.02 ACTIONS BY OR ON BEHALF OF THE
CORPORATION..............................12
Section 6.03 APPLICATION TO COURT FOR INDEMNIFICATION.12
Section 6.04 DETERMINATION............................13
Section 6.05 CUMULATIVE RIGHT.........................14
Section 6.06 INSURANCE................................14
Section 6.07 CONSTITUENT CORPORATIONS.................15
Section 6.08 CLAIMS PROCEDURES........................15
Section 6.09 CONTRACT.................................16
ARTICLE Vll-CONFLICTS OF INTEREST...........................16
Section 7.01 General..................................16
Section 7.02 Disclosure...............................16
Section 7.03 Self-Dealing.............................16
ARTICLE VI I-SHARE CERTIFICATES.............................16
Section 8.01 CERTIFICATES.............................16
Section 8.02 FORM; SIGNATURE..........................17
Section 8.03 TRANSFER AGENTS AND REGISTRARS...........17
Section 8.04 TRANSFER OF SHARES.......................17
Section 8.05 REGISTERED SHAREHOLDERS..................17
Section 8.06 LOST CERTIFICATES........................17
ARTICLE IX-MISCELLANEOUS....................................18
Section 9.01 FISCAL YEAR..............................18
Section 9.02 SIGNATURES ON NEGOTIABLE INSTRUMENTS.....18
Section 9.03 DIVIDENDS................................18
Section 9.04 RESERVES.................................18
Section 9.05 SEAL.....................................18
Section 9.06 CORPORATION OFFICES......................18
ARTICLE X-RESTRICTIONS UPON TRANSFER OF STOCK...............19
iii
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Section 10.01 LIFETIME RESTRICTIONS....................19
Section 10.02 PERMITTED TRANSFER.......................19
Section 10.03 AGREEMENT................................19
ARTICLE Xl-AMENDMENTS........................................20
Section 11.01 POWER TO AMEND...........................20
iv
<PAGE>
BYLAWS
OF
INMOLD LUKMANI MANUFACTURING CORPORATION,
A MICHIGAN CORPORATION
PREAMBLE
Inmold Lukmani Manufacturing Corporation, herein "Corporation," is a
minority owned enterprise. Any ambiguity herein, or in any other document of the
Corporation, the interpretation of which shall be governed by these Bylaws,
shall be resolved in the manner which shall most ensure the continuing status of
the Corporation as a minority owned enterprise.
ARTICLE I
MEETINGS OF SHAREHOLDERS
Section 1.01. PLACE OF MEETINGS. Annual and special meetings of the
shareholders shall be held at such place within or outside the State of Michigan
as may be fixed from time to time by the Board of Directors and stated in the
notice of the meeting or in a duly executed waiver of notice thereof.
Section 1.02. ANNUAL MEETING. The annual meeting of the shareholders for
the election of Directors and for the transaction of such other business as may
properly come before the meeting shall be held at such time during the month of
June as may be fixed by the Board of Directors and stated in the notice of the
meeting or in a duly executed waiver of notice thereof. If the election of
Directors shall not be held on the date fixed by the Board of Directors for the
annual meeting or at any adjournment of such meeting, the Board of Directors
shall cause the election to be held at a special meeting as soon thereafter as
conveniently may be.
Section 1.03. SPECIAL MEETINGS. A special meeting of the shareholders may
be called at any time and for any purpose or purposes by the President, the
Chairman of the Board or the Board of Directors, or by a shareholder or
shareholders holding of record at least thirty-five (35%) percent of the
outstanding capital stock of the Corporation entitled to vote at such meeting.
If any newly created directorship or any vacancy occurs in the Board of
Directors a special meeting may be called by any shareholder for the purpose of
filling the newly created directorship or electing a successor to the vacant
position (which may have been temporarily filled by the Board of Directors,
pursuant to Section 3.11 of these Bylaws).
Section 1.04. NOTICE OF MEETINGS. A written notice of the place, date and
hour of each meeting, whether annual or special, and any adjournment thereof,
shall be given personally or by mail to each shareholder entitled to vote
thereat at least ten (10) but not more than sixty (60) days prior to the meeting
unless a shorter time is fixed by the Board of Directors. The notice of any
special meeting shall also state the purpose or purposes for which the meeting
is called and by or at whose direction it is being issued. If, at any meeting,
whether annual or special, action is proposed to be taken which would, if taken,
entitle shareholders fulfilling requirements of law to receive payment for their
shares, the notice of such meeting shall include a statement of that
<PAGE>
purpose and to that effect. If any notice, as provided in this Section 1.04 is
mailed, it shall be directed to the shareholder in a postage prepaid envelope at
his address as it appears on the record of shareholders, or, if he shall have
filed with the Secretary a written request that notices to him be mailed to some
other address, then directed to him at such other address.
Section 1.05. WAIVER OF NOTICE. Notice of meeting need not be given to any
shareholder who submits a waiver of notice, signed in person or by proxy,
whether before or after the meeting. The attendance of any shareholder at a
meeting, in person or by proxy, without protesting prior to the conclusion of
the meeting the lack of notice of such meeting, shall constitute a waiver of
notice by him.
Section 1.06. INSPECTORS OF ELECTION. The Board of Directors, or any
officer or officers duly authorized by the Board of Directors, in advance of any
meeting of shareholders, may appoint one or more inspectors to act at the
meeting or any adjournment thereof. If inspectors are not so appointed, the
person presiding at the meeting may, and on the request of any shareholder
entitled to vote thereat shall, appoint one or more inspectors. In case any
person appointed fails to appear or act, the vacancy may be filled by
appointment made by the Board of Directors in advance of the meeting or at the
meeting by the chairman of the meeting. Each inspector, before entering upon the
discharge of his duties, shall take and sign an oath faithfully to execute the
duties of inspector at such meeting with strict impartiality and according to
the best of his ability. The inspectors shall determine the number of shares
outstanding and the voting power of each, the shares represented at the meeting,
the existence of a quorum, the validity and effect of proxies, and shall receive
votes, ballots or consents, hear and determine all challenges and questions
arising in connection with the right to vote, count and tabulate all votes,
ballots or consents, determine the result, and do such acts as are proper to
conduct the election or vote with fairness to all shareholders. On request of
the person presiding at the meeting or any shareholder entitled to vote thereat,
the inspectors shall make a report in writing of any challenge, question or
matter determined by them and execute a certificate of any fact found by them.
Section 1.07. QUORUM AND ADJOURNMENT. At all meetings of shareholders,
except as otherwise provided by statute or the Articles of Incorporation, the
holders of a majority of the shares entitled to vote thereat, present in person
or by proxy, shall be necessary and sufficient to constitute a quorum for the
transaction of business. The shareholders present in person or by proxy at any
of such meetings at which a quorum is initially present may continue to do
business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum. The shareholders, by a vote of the
majority of shareholders present, in person or by proxy, whether or not a quorum
is present, may, by resolution, adjourn the meeting, to another place and time,
from time to time for a period not exceeding fourteen (14) days in any one case.
At any such adjourned meeting at which a quorum shall be present, any business
may be transacted which might have been transacted at the meeting as originally
called.
Section 1.08. VOTE OF SHAREHOLDERS. Each shareholder having the right to
vote shall be entitled at every meeting of shareholders to one (1) vote for
every share having voting power standing in his name on the record date of
shareholders fixed by the Board of Directors pursuant to Article II of these
Bylaws. Whenever any corporate action is to be taken by vote at a meeting of the
shareholders, it shall, except as otherwise required by statute or by the
Articles of Incorporation, be authorized by a majority of the votes cast by such
holders present in person or by proxy and entitled to vote, a quorum being
present as provided in Section 1.07.
<PAGE>
Section 1.09. CORPORATION'S ACCEPTANCE OF VOTES.
a. If the name signed on a vote, consent, waiver, or proxy appointment
corresponds to the name of a shareholder, the Corporation, if acting in
good faith, is entitled to accept the vote, consent, waiver, or proxy
appointment and give it effect as the act of the shareholder.
b. If the name signed on a vote, consent, waiver, or proxy appointment
does not correspond to the name of the shareholder, the Corporation, if
acting in good faith, is entitled to accept the vote, consent, waiver, or
proxy appointment and give it effect as the act of the shareholder if:
(i) the shareholder is a corporation and the name signed purports
to be that of an officer or agent of the corporation;
(ii) the name signed purports to be that of an administrator,
executor, guardian, or conservator representing the shareholder and,
if the Corporation requests, evidence of fiduciary status acceptable
to the Corporation has been presented with respect to the vote,
consent, waiver, or proxy appointment;
(iii) the name signed purports to be that of a receiver or
trustee in bankruptcy of the shareholder and, if the Corporation
requests, evidence of this status acceptable to the Corporation has
been presented with respect to the vote, consent, waiver, or proxy
appointment;
(iv) the name signed purports to be that of a pledgee, beneficial
owner, or attorney-in-fact of the shareholder and, if the Corporation
requests, evidence acceptable to the Corporation of the signatory's
authority to sign for the shareholder has been presented with respect
to the vote, consent, waiver, or proxy appointment;
(v) two or more persons are the shareholder as co-tenants or
fiduciaries and the name signed purports to be the name of at least
one of the co-owners and the person signing is acting on behalf of all
the co-owners.
c. The Corporation is entitled to reject a vote, consent, waiver, or
proxy appointment if the secretary or other officer or agent authorized to
tabulate votes acting in good faith has reasonable basis for doubt about
the validity of the signature on it or about the signatory's authority to
sign for the shareholder.
d. The Corporation and its officer or agent who accepts or rejects a
vote, consent, waiver, or proxy appointment in good faith and in accordance
with the standards of this section are not liable in damages to the
shareholder for the consequences of the acceptance or rejection.
e. Corporate action based on the acceptance or rejection or a vote,
consent, waiver, or proxy appointment under this section is valid unless a
court of competent jurisdiction determines otherwise.
Section 1.10. REMOTE PARTICIPATION. Any or all shareholders may participate
in a meeting of the shareholders by means of a conference telephone call or
other similar medium
<PAGE>
through which all persons participating in the meeting may communicate with each
other. A shareholder so participating shall be deemed to be present in person at
the meeting. Prior to commencement of the meeting, all participants in the
meeting shall be advised of any communication medium used and the names of all
of the participants.
Section 1.11. WRITTEN VOTE. Votes at meetings of shareholders shall be cast
either orally or in writing as directed by the chairman of the meeting. If the
chairman directs that a vote be cast in writing, then the vote of a shareholder
participating by means of a conference telephone or similar communication medium
permitted under Section 1.10 shall, if communicated contemporaneously with the
meeting, either orally or by facsimile, be certified by the secretary of the
meeting and counted as a written vote.
Section 1.12. PROXIES. Every shareholder entitled to vote at a meeting of
shareholders or to express consent or dissent without a meeting may authorize
another person or persons to act for him by proxy. Every proxy must be in
writing and signed by the shareholder or his attorney-in-fact. No proxy shall be
valid after the expiration of three (3) years from the date thereof unless
otherwise provided in the proxy.
Section 1.13. CONSENTS.
a. Unanimous Consent. Any action required or permitted by the Michigan
Business Corporation Act to be taken at a meeting of shareholders may be
taken without a meeting, without prior notice and without a vote, if all
the shareholders entitled to vote thereon consent thereto in writing.
b. Majority Consent. If authorized by the Articles of Incorporation,
any action required or permitted by the Michigan Business Corporation Act
or by these Bylaws to be taken at an annual or special meeting of
shareholders may be taken without a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the action so taken,
is signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take the
action at a meeting at which all shares entitled to vote thereon were
present and voted. The written consents shall bear the date of signature of
each shareholder who signs the consent. No written consents pursuant to
this Section 1.13(b) shall be effective to take the corporate action
referred to unless, within sixty (60) days after the record date for
determining shareholders entitled to express consent to or to dissent from
a proposal without a meeting, written consents signed by a sufficient
number of shareholders to take the action are delivered to the Corporation.
Delivery shall be to the Corporation's registered office, its principal
place of business, or an officer or agent of the Corporation having custody
of the minutes of the proceedings of its shareholders. Delivery made to the
Corporation's registered office shall be by hand or by certified or
registered mail, return receipt requested. Prompt notice of the taking of
the corporate action without a meeting by less than unanimous written
consent, as herein provided, shall be given to shareholders who have not
consented in writing.
Section 1.14. ORGANIZATION OF SHAREHOLDERS' MEETINGS. At every meeting of
the shareholders, the President, or in his absence, a Vice-President, or in the
absence of the President and a Vice-President, a chairman chosen by a majority
in interest of the shareholders of the Corporation present in person or by proxy
and entitled to vote, shall act as chairman for the
<PAGE>
meeting; and the Secretary, or in his absence any person appointed by the
chairman, shall act as secretary of the meeting.
ARTICLE II
DETERMINATION OF VOTING, DIVIDEND AND OTHER RIGHTS
For the purposes of determining the shareholders entitled to notice of or
to vote at any meeting of shareholders or any adjournment thereof, or to express
consent to or dissent from any proposal without a meeting, or for the purpose of
determining shareholders entitled to receive payment of any dividend or the
allotment of any rights, or the date when any change or conversion or exchange
of capital stock shall go into effect, or for the purpose of any other action,
the Board of Directors may fix, in advance, a date as the record date for any
such determination of shareholders. Such date shall not be more than sixty (60)
nor less than ten (10) days before the date of any such meeting, nor more than
thirty (30) days prior to any other action. If a record date is so fixed, such
shareholders and only such shareholders as shall be shareholders of record on
that date so fixed shall be entitled to notice of, and to vote at, such meeting
and any adjournment thereof, or to express such consent or dissent, or to
receive payment of such dividend or such allotment of rights, or otherwise to be
recognized as shareholders for the purpose of any other action, notwithstanding
any transfer of any shares on the books of the Corporation after any such record
date so fixed.
ARTICLE III
DIRECTORS
Section 3.01. GENERAL POWERS. The business and all the powers of the
Corporation, except as otherwise provided by the Articles of Incorporation, the
Bylaws or by statute, shall be managed by the Board of Directors. Should the
Articles of Incorporation provide that the business affairs of the Corporation
shall be managed by the shareholders, then the Board of Directors shall only act
when otherwise required by law.
Section 3.02. NUMBER, QUALIFICATIONS AND TERM OF OFFICE. The Board of
Directors shall consist of not less than one (1) and not more than five (5)
Directors. The initial Board of Directors may comprise of three (3) Directors.
Such Numbers may be decreased or increased by amendment to these Bylaws by
majority of interest of shareholders entitled to vote. Unless required by the
Articles of Incorporation, the Directors need not be residents of the State of
Michigan or shareholders of the Corporation.
Section 3.03. PLACE OF MEETINGS. Meetings of the Board of Directors, annual
or special, shall be held at any place within or outside of the State of
Michigan, as may from time to time be determined by the Board of Directors.
Section 3.04. ANNUAL MEETING. The Board of Directors shall meet as soon as
practicable after each annual election of Directors for the purpose of
organization, election of officers and the transaction of other business on the
same day and at the same place at which the shareholders' meeting is held.
Notice of such meeting need not be given. Such meeting may be held at such other
time and place as shall be specified in a notice to be given as hereinafter
provided for special meetings of the Board of Directors, or according to consent
and waiver of
<PAGE>
notice thereof signed by all Directors. The Board of Directors may provide, by
resolution, the time and place for the holding of additional regular meetings
without other notice than such resolution.
Section 3.05. SPECIAL MEETINGS. Special meetings of the Board of Directors
shall be held whenever called by any Director. Notice of any special meeting,
and any adjournment thereof, stating the place, date and hour of the meeting,
and the purpose thereof, shall be mailed to each Director, addressed to him at
his residence or usual place of business, or shall be sent to him at such place
by telegraph, or be delivered personally, or by telephone, not later than the
fifth (5th) calendar day before the day on which the meeting is to be held.
Notice of any meeting of the Board of Directors need not be given to any
Director who submits a signed waiver of notice before or after the meeting, or
who attends the meeting without protesting, prior thereto or at its
commencement, the lack of notice to him. Unless limited by statute, the Articles
of Incorporation, these Bylaws, or the terms of the notice thereof, any and all
business may be transacted at any special meeting.
Section 3.06. QUORUM AND MANNER OF ACTION. A majority of the Directors in
office at the time of any annual or special meeting of the Board of Directors,
present in person, shall be necessary and sufficient to constitute a quorum for
the transaction of business. The vote of a majority of the Directors present at
the time of such vote, if a quorum is present at the time of such vote, shall be
the act of the Board of Directors, except as otherwise required by statute or
the Articles of Incorporation. A majority of the Directors present whether or
not a quorum is present, may by resolution adjourn any meeting, to another place
and time, from time to time for a period not exceeding fourteen (14) days in any
one case. If the Directors shall severally and/or collectively consent in
writing to any act taken or to be taken by the Corporation, such action shall be
valid corporate action as though it had been authorized at a meeting of the
Board of Directors.
Section 3.07. REMOTE PARTICIPATION. Any or all Directors of the Corporation
may participate in a meeting of the Board of Directors by means of a conference
telephone or similar medium. A Director so participating shall be deemed to be
present in person at the meeting. Prior to the commencement of the meeting, all
participants in the meeting shall be informed of the communication medium to be
used, the identity of all persons present in person and the persons
participating by means of any communication medium or otherwise able to monitor
the meeting.
Section 3.08. COMPENSATION. Each Director of the Corporation shall serve
without fee, but by resolution of the Board of Directors a fixed sum and
expenses of attendance, if any, may be allowed for attendance at each annual or
special meeting of the Board of Directors; provided, however, that nothing
herein contained shall be construed to preclude any Director from serving the
Corporation in any other capacity and receiving compensation therefor.
Section 3.09. REMOVAL OF DIRECTORS. By a vote of the majority of all the
shares of stock outstanding and entitled to vote, one or more or all of the
Directors may be removed from office with or without cause.
Section 3.10. RESIGNATIONS. Any Director may resign at any time by giving
written notice to the Board of Directors, the President or the Secretary of the
Corporation. Such resignation shall take effect at the time specified therein;
and unless otherwise specified therein, the acceptance of such resignation shall
not be necessary to make it effective.
<PAGE>
Section 3.11. VACANCIES. Any newly created directorships and vacancies
occurring on the Board of Directors by reason of death, resignation, retirement,
disqualification or removal shall be temporarily filled by a vote of a majority
of the Directors then in office, although less than a quorum. Unless a successor
Director is elected by a vote of the shareholders, pursuant to Section 1.03 of
these Bylaws, any Director elected by the Board of Directors to temporarily fill
a vacancy shall hold office for the unexpired portion of the term of his
predecessor.
Section 3.12. ORGANIZATION OF BOARD MEETING. At each meeting of the Board
of Directors, the chairman, or in his absence, the President, shall preside as
chairman of the meeting. The Secretary, or in his absence, any person appointed
by the chairman of the meeting shall act as secretary of the meeting.
ARTICLE IV
EXECUTIVE COMMITTEE
Section 4.01. CONSTITUTION AND POWERS. The Board of Directors, by
resolution adopted by a majority of the entire Board, may designate from among
its members an Executive Committee and a chairman and officers thereof,
consisting of two (2) or more Directors which, to the extent provided in such
resolution, shall have all the authority of the Board of Directors, except as to
each of the following matters:
(a) the submission to shareholders of any action as to which shareholders'
authorization is required by statute;
(b) the filling of vacancies in the Board of Directors or in any Committee
of the Board of Directors;
(c) the amendment or repeal of these Bylaws, or the adoption of new
Bylaws; and
(d) the amendment or repeal of any resolution of the Board of Directors
which by its terms shall not be so amendable or repealable.
Section 4.02. REGULAR MEETINGS. Regular meetings of the Executive Committee
shall be held without notice at such time and at such place as shall from time
to time be determined by resolution of the Executive Committee. In case the day
so determined shall be a legal holiday, such meeting shall be held on the next
succeeding day, not a legal holiday, at the same hour.
Section 4.03. SPECIAL MEETINGS. Special meetings of the Executive Committee
shall be held whenever called by the Chairman of the Executive Committee. Notice
of any special meeting and any adjournment thereof, shall be mailed to each
member, addressed to him at his residence or usual place of business, or be sent
to him at such place by telegraph, or be delivered personally, or by telephone
not later than the fifth (5th) day before the day on which the meeting is to be
held. Notice of any meeting of the Executive Committee need not be given to any
member who submits a signed waiver of notice before or after the meeting, or who
attends the meeting without protesting prior thereto or at its commencement, the
lack of notice to him. Unless limited by statute, the Articles of Incorporation,
these Bylaws, or the terms of the notice thereof, any and all business may be
transacted at any special meeting of the Executive Committee.
<PAGE>
Section 4.04. QUORUM AND MANNER OF ACTION. A majority of the members of the
Executive Committee in office at the time of any regular or special meeting of
the Executive Committee present in person shall constitute a quorum for the
transaction of business. The vote of a majority of the members present at the
time of such vote, if a quorum is present at such time, shall be the act of the
Executive Committee. A majority of the members present, whether or not a quorum
is present, may adjourn any meeting to another time and place; and no notice of
an adjourned meeting need be given.
Section 4.05. RECORDS. The Executive Committee shall keep minutes of its
proceedings and shall submit the same from time to time to the Board of
Directors. The Secretary of the Corporation, or in his absence an Assistant
Secretary, shall act as secretary to the Executive Committee; or the Executive
Committee may in its discretion appoint its own secretary.
Section 4.06. VACANCIES. Any newly created memberships and vacancies
occurring in the Executive Committee shall be filled by resolution adopted by a
majority of the entire Board of Directors.
ARTICLE V
OFFICERS
Section 5.01. OFFICERS. The elected officers of the Corporation shall be a
President, a Secretary and a Treasurer. The Board of Directors or the Executive
Committee may also appoint such other officers and agents as may from time to
time appear to be necessary or advisable in the conduct of the affairs of the
Corporation, including but not limited to any of the following: (a) Chairman of
the Board, (b) Chief Executive Officer ("CEO"), (c) Chief Operating Officer
("COO"), (d) Chief Financial Officer ("CFO"), (e) Chief Information Officer
("CIO"), (f) Vice-Presidents, and (g) Assistant Vice-Presidents, Secretaries,
and Treasurers. Any two or more offices, whether elective or appointive, may be
held by the same person, except that an officer shall not execute, acknowledge
or verify any instrument in more than one capacity if the instrument is required
by law or the Articles of Incorporation or these Bylaws to be executed,
acknowledged or verified by two or more officers.
Section 5.02. TERM OF OFFICE AND RESIGNATION. So far as practicable, all
elected officers shall be elected at the first meeting of the Board of Directors
following the annual meeting of shareholders in each year and, except as
otherwise hereinafter provided, shall hold office until the first meeting of the
Board of Directors following the next annual meeting of shareholders and until
their respective successors shall have been elected or appointed and qualified.
All other officers shall hold office at the sole discretion of the Board of
Directors. Any elected or appointed officer may resign at any time by giving
written notice to the Board of Directors, the President or the Secretary of the
Corporation. Such resignation shall take effect at the time specified therein,
and unless otherwise specified therein, the acceptance of such resignation shall
not be necessary to make it effective.
Section 5.03. REMOVAL OF ELECTED OFFICERS. Any officer may be removed at
any time, with or without cause, by vote of a majority of the entire Board of
Directors, at any meeting. Such removal shall be without prejudice to any rights
under the employment contract, if any, between the Corporation and the person so
removed. However, election of an officer shall not of itself constitute an
employment agreement or create contract rights.
<PAGE>
Section 5.04. VACANCIES. If any vacancy shall occur in any office for any
reason, the Board of Directors or, in the case of an appointive office, the
Executive Committee, may elect or appoint a successor to fill such vacancy for
the remainder of the term.
Section 5.05. COMPENSATION. The compensation, if any, of all elected
officers of the Corporation shall be fixed by the Board of Directors. The
compensation, if any, of officers and agents of the Corporation appointed by the
Board of Directors or the Executive Committee shall be fixed by the body
appointing such officers and agents.
Section 5.06. THE PRESIDENT. The President shall be the chief executive
officer of the Corporation, and, subject to the control of the Board of
Directors, shall have general and active charge, control and supervision of all
its business and affairs and shall see that all orders and resolutions of the
Board of Directors are carried into effect. He shall act as chairman at all
meetings of the shareholders. The President shall have general authority to
execute contracts in the ordinary course of business in the name and on behalf
of the Corporation; to sign stock certificates; to cause the employment or
appointment of such employees and agents of the Corporation (other than officers
or agents elected or appointed by the Board of Directors or the Executive
Committee) as the conduct of the business of the Corporation may require, and to
fix their compensation; to remove or suspend any employee or agent who shall not
have been appointed by the Board of Directors or the Executive Committee; to
suspend for cause, pending final action by the authority which shall have
elected or appointed him, any officer or agent who shall have been elected or
appointed either by the Board of Directors or Executive Committee; and, in
general, to exercise all the powers generally appertaining to the office of
president of a corporation.
Section 5.07. THE VICE-PRESIDENT. During the absence or disability of the
President, the Vice-President, or the Vice-Presidents, in the order designated
by the Board of Directors, shall exercise all the functions of the President.
The Vice-President, or if there is more than one Vice-President, each Vice-
President, shall have such powers and discharge such duties as may be assigned
to him from time to time by the Board of Directors.
Section 5.08. THE SECRETARY. The Secretary shall attend all meetings of the
Board of Directors and the shareholders and shall record all votes and the
minutes of all proceedings in a book to be kept for that purpose and shall, when
requested, perform like duties for all committees of the Board of Directors. He
shall attend to the giving of notice of all meetings of the shareholders, and
special meetings of the Board of Directors and committees thereof; he shall have
custody of the corporate seal, if same is provided, and, when authorized by the
Board of Directors, shall have authority to affix the same to any instrument
and, when so affixed, it shall be attested by his signature or by the signature
of the Treasurer or an Assistant Secretary or an Assistant Treasurer. He shall
keep and account for all books, documents, papers and record of the Corporation,
except those for which some other officer or agent is properly accountable. He
shall have authority to sign stock certificates, and shall generally perform all
the duties appertaining to the office of secretary of a corporation. In the
absence of the secretary, such person as shall be designated by the President
shall perform his duties.
Section 5.09. THE TREASURER. The Treasurer shall have the care and custody
of all the funds of the Corporation and shall deposit the same in such banks or
other depositories as the
<PAGE>
Board of Directors, or any officer and agent jointly,duly authorized by the
Board of Directors, shall, from time to time, direct or approve. He shall keep a
full and accurate account of all monies received and paid on account of the
Corporation, and shall render a statement of his accounts whenever the Board of
Directors shall require. He shall perform all other necessary acts and duties in
connection with the administration of the financial affairs of the Corporation,
and shall generally perform all the duties usually appertaining to the office of
treasurer of a corporation. When required by the Board of Directors, he shall
give bonds for the faithful discharge of his duties in such sums and with such
sureties as the Board of Directors shall approve. In the absence of the
Treasurer, such person as shall be designated by the President shall perform his
duties.
Section 5.10. REIMBURSEMENT TO CORPORATION. Any payment made to an officer
of the Corporation such as a salary, commission, bonus, interest, or rent, or
travel or entertainment expense incurred by him, which shall be disallowed in
whole or in part as a deductible expense by the Internal Revenue Service, shall
be reimbursed by such officer to the Corporation to the full extent of such
disallowance. It shall be the duty of the Directors, as a board, to enforce
payment of each such amount disallowed. In lieu of payment by the officer,
subject to the determination of the Directors, proportionate amounts may be
withheld from his future compensation payments until the amount owed to the
Corporation has been recovered.
ARTICLE VI
INDEMNIFICATION
Section 6.01. THIRD-PARTY PROCEEDINGS. The Corporation shall indemnify,
defend and hold harmless, any person who was or is a party or is threatened to
be made a party to a threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative and whether
formal or informal, other than an action by or in the right of the Corporation
as described and encompassed within Section 6.02 of this Article, by reason of
the fact that the person is or was a Director, officer, employee, agent of the
Corporation or is or was serving at the request of the Corporation as a
Director, officer, employee, agent, partner or trustee of another foreign or
domestic corporation, partnership, joint venture, trust or other enterprise,
whether for profit or not for profit, and shall include, but not be limited to,
the attorneys, law firms, accountants, consultants, advisors, counselors, and
all other authorized and/or designated representatives of the Corporation,
herein collectively and individually referred to as "Agent", against all
expenses, including but not limited to, attorneys' fees, judgments, penalties,
fines, court costs, interest, travel expenses, expert fees, accounting fees,
consulting fees, and all other amounts paid in or incurred relative to any
settlement by the person or by the Corporation or the shareholders in connection
with such action, suit or proceeding herein collectively and individually
referred to as the "Expenses", if the person acted in good faith and in a manner
the person reasonably believed to be in or not opposed to the best interests of
the Corporation and/or the shareholders, and with respect to any criminal action
or proceeding, if the person had no reasonable cause to believe his/her conduct
was unlawful. The termination of an action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which the person reasonably believed to be in
or not opposed to the best interests of the Corporation and/or the shareholders,
and with respect to any criminal action or proceeding, that the person had no
reasonable cause to believe that the conduct was unlawful.
<PAGE>
Section 6.02. ACTIONS BY OR ON BEHALF OF THE CORPORATION. The Corporation
shall indemnify any person who was or is a party to or is threatened to be made
a party to any threatened, pending or completed action, suit or other proceeding
by or in the right of the Corporation to procure a judgment in its favor by
reason of the fact that the person is or was an Agent of the Corporation, or is
otherwise liable as an Agent, against Expenses, including amounts paid in
settlement actually and reasonably incurred by the person in connection with the
action or suit, if the person acted in good faith and in a manner the person
reasonably believed to be in or not opposed to the best interests of the
Corporation or its shareholders. However, except as described in Section 6.03,
indemnification shall not be made for any claim, issue or matter as to which the
person shall have been found to be liable to the Corporation.
Section 6.03. APPLICATION TO COURT FOR INDEMNIFICATION. To the extent that
a court of competent jurisdiction has determined upon application that a person
is fairly and reasonably entitled to indemnification in view of all the relevant
circumstances, a person who is not otherwise entitled to indemnification because
he did not meet the applicable standard of conduct set forth in Sections 6.01
and 6.02 or was adjudged liable to the Corporation as described in Section 6.02,
shall be indemnified in accordance with such order. However, if the person has
been adjudged liable to the Corporation, indemnification shall be limited to
reasonable Expenses incurred as determined by the court.
Section 6.04. DETERMINATION.
a. Mandatory. The Corporation shall immediately indemnify, reimburse,
and pay all Expenses, incurred by any Agent who has been successful on the
merits in the defense of any action, suit, or proceeding referred to in
Sections 6.01 and 6.02 hereof or in the defense of any claim, issue, or
matter relative thereto or otherwise incurred in any threatened, pending,
or completed action, suit or proceeding brought to enforce the mandatory
indemnification provided by this Section 6.04.a.
b. Permissive. Unless ordered by a court of competent jurisdiction as
provided in Section 6.03, or by operation of law, an indemnification under
Sections 6.01 or 6.02 above shall be made by the Corporation only as
authorized in the specific case upon a determination that indemnification
of the person is proper under the circumstances because that person had met
the applicable standard of conduct set forth in Sections 6.01 and 6.02
above and upon an evaluation of the reasonableness of the Expenses and
amounts paid in settlement for which indemnification is sought. This
determination shall be made in any of the following ways:
(i) By a majority vote of a quorum of the Board of Directors
consisting of Directors who are not parties or threatened to be made
parties to the action, suit or proceeding; or
(ii) If the quorum described in Section 6.03.b.(i) hereof is not
obtainable, then by a majority vote of a committee designated by the
Board of Directors and consisting solely of two (2) or more Directors
not at the time parties or threatened to be made parties to the
action, suit or proceeding; or
(iii) By independent legal counsel in a written opinion, which
counsel shall be selected by the Board of Directors or its committee
as prescribed in Sections 6.03.b.(i) and (ii)
<PAGE>
above or, if a quorum of the Board is not obtainable and a committee
cannot be designated, then by the Board of Directors; or
(iv) By a majority of a quorum of the shareholders, but shares
held by persons who are parties or threatened to be made parties to
the action, suit or proceeding may not be voted; or
(v) By all independent Directors who are not parties or
threatened to be made parties to the action, suit or proceeding.
c. Partial Indemnification. If a person is entitled to indemnification
under Section 6.01 or 6.02 of this Article for a portion of Expenses paid
in settlement but not for the total amount thereof, the Corporation shall
indemnify the person for the portion of the Expenses paid in settlement for
which the person is otherwise entitled to be indemnified.
d. Board Discretion. The Board of Directors of the Corporation, in its
sole and absolute discretion, shall have the power, but not the obligation,
to expand the scope of the indemnity of this Article to the fullest extent
permitted by Michigan law, and to indemnify, hold harmless, and defend an
Agreement and/or any other person, party, or entity for good faith acts
taken for and on behalf of the Corporation, if the Board of Directors
believes that any such indemnification is reasonable, appropriate,
necessary, desirable, and/or otherwise in the best interests of the
Corporation or its shareholders, notwithstanding any other provision
contained in the Articles of Incorporation, these Bylaws, this Article VI,
or any other agreement to the contrary.
Section 6.05. CUMULATIVE RIGHT.
a. Non-Exclusive. The indemnification or advancement of Expenses
provided for in this Article is not exclusive of any other rights,
remedies, or alternatives which may be available apart from or as otherwise
provided in these Bylaws and is intended as, and shall be, in addition to,
and not in limitation of, any other rights, remedies, or alternatives and
may be pursued separately, concurrently, successively, or as often as the
occasion may afford.
b. Limited Amount. The total amount of Expenses advanced or
indemnified from all sources combined shall not exceed the amount of the
actual Expenses incurred by the person seeking indemnification or
advancement of Expenses.
c. Continuity. The indemnification provided in this Article shall
continue as to a person even after that person ceases to be an Agent,
thereby continuing indefinitely even after the relationship with the Agent
ends, and shall inure to the benefit of the heirs, executors,
administrators, personal representatives, trustees, and other legal
representatives of the person.
Section 6.06. INSURANCE. The Corporation shall have power, but not the
obligation, to purchase and maintain insurance on behalf of or for any person
who is or was an Agent or who may be liable as an Agent, against any liability
asserted against that person and incurred by that person in any such capacity or
arising out of the status as such, whether or not the Corporation would have
power to indemnify that person against such liability under the provisions of
this Article.
<PAGE>
Section 6.07. CONSTITUENT CORPORATIONS. For the purposes of this Article,
references to the Corporation shall include all constituent corporations
absorbed in a consolidation or merger and the resulting or surviving
corporation, so that a person who is or was an Agent of such constituent
corporation or is or was serving at the request of such constituent corporation
as an Agent, shall stand in the same position under the provisions of this
Article with respect to the resulting or surviving corporation as the person
would if the person had served the resulting or surviving corporation in the
same capacity.
Section 6.08. CLAIMS PROCEDURES.
a. Filing Claim. To initiate a claim for indemnification pursuant to
this Article, a person shall file a written Claim for Indemnification with
the Treasurer of the Corporation together with written proof sufficient to
evidence the undertaking by or on behalf of the person and the actual
Expenses incurred by the person.
b. Payment. The Corporation shall pay or reimburse the actual and
reasonable Expenses incurred by a Director, officer, employee or Agent who
is a party or threatened to be made a party to an action, suit or
proceeding in advance of the final disposition of such proceeding as
authorized in this Article within five (5) days of receipt by the Treasurer
of a written Claim for Indemnification or Request for Advancement if:
(i) The request for indemnification is submitted together with
both a written affirmation of the person's good faith belief that he
has met the applicable standard of conduct set forth in Sections 6.01
and 6.02 and a written undertaking, executed personally or on behalf
of the person to repay the advance if it is ultimately determined that
the person did not meet the standard of conduct set forth in Sections
6.01 and 6.02 above standard of conduct, and
(ii) A determination is made that the facts then known to those
making the determination as provided in Section 6.03 would not
preclude indemnification under applicable law or these Bylaws.
c. Evidence of Advancement. Any sums advanced by the Corporation
pursuant to this Article shall be by way of an unlimited general obligation
of the person on whose behalf the advances are made, and the Board of
Directors may, but need not, require that such advances be secured by the
person. Any such advances shall be evidenced by a properly executed and
written demand and interest bearing promissory note secured by a written
and recorded mortgage on the primary residence of the requesting party, if
any, which shall immediately become due and payable upon a good faith
determination by the Board of Directors of the Corporation or a court that
the person receiving the Expense advance is not entitled to be indemnified
by the Corporation, and which shall include such other terms as may be
required by the Board of Directors.
Section 6.09. CONTRACT. This Article of the Bylaws is, and shall be deemed
to be, a contract by and between the Corporation and the Agents, while this
Article is in effect. Any repeal or modification of this Article shall not
adversely affect any rights or obligations provided by this Article with respect
to any facts then or theretofore existing or any action, suit, or proceeding
theretofore or thereafter brought based in whole or in part upon any such facts
or this Article.
<PAGE>
ARTICLE VII
CONFLICTS OF INTEREST
Section 7.01. General. As a general policy, the Corporation and its
Shareholders, Directors, Sub-Committee Members, Officers, Employees, and other
Agents, herein collectively referred to as "Corporate Parties", should make
every effort to avoid actual, potential, and/or the appearance of conflicts of
interest, herein collectively referred to as "Conflicts of Interest", when
dealing with the Corporation. Even though Conflicts of Interest may not
necessarily be wrong, illegal, or injurious to the Corporation, they may,
however, project an negative, improper, or inappropriate image or appearance
which the Corporation would like to avoid.
Section 7.02. Disclosure. In the event of a Conflict of Interest, the
interested or effected Corporate Party should promptly make full and complete
disclosure thereof to the Board of Directors and/or the President of the
Corporation.
Section 7.03. Self-Dealing. A Corporate Party may contract or otherwise
deal with the Corporation with respect to the sale, lease, and/or purchase of
any property of the Corporation, the rendering or providing of any services to
or for the Corporation and/or clients, borrowers, agents, etc. of the
Corporation, the receipt of compensation, fees, and/or commissions from the
Corporation and/or clients, borrowers, agents, etc. of the Corporation, the
borrowing of any monies from the Corporation by a client of a Corporate Party,
and/or in any other manner whatsoever, without being subject to or liable for
any claim of Conflict of Interest and/or self-dealing, provided that all such
dealings or related transactions (a) are fully disclosed to the Board of
Directors, (b) are approved by the Board of Directors and such interested or
effected Corporate Party abstains from the voting and approval process, and (c)
are at such prices and/or on such terms as are fair, reasonable, and not
substantially less favorable to the Corporation than would be generally
available from unrelated third/outside parties.
ARTICLE VIII
SHARE CERTIFICATES
Section 8.01. CERTIFICATES. The Board of Directors of the Corporation may
authorize the issuance of some or all of the shares of any or all classes or
series of stock in the Corporation without issuing certificates to represent
those shares. The issuance of shares without certificates shall have no effect
upon shares previously issued and represented by certificates until such
certificates as remain outstanding are surrendered to the Corporation.
Section 8.02. FORM; SIGNATURE. Except as otherwise authorized under Section
8.01, the shares of the Corporation shall be represented by certificates in such
form as shall be determined by the Board of Directors and shall be signed by the
President or a Vice-President of the Corporation, and, in addition thereto, may
be signed by such other officer as determined by the Board of Directors, and if
a seal has been provided for the Corporation, shall be sealed with the seal of
the Corporation or a facsimile thereof. The signatures of the officers upon a
certificate may be facsimiles if the certificate is counter signed by a Transfer
Agent or registered by a Registrar other than the Corporation or its employee.
In case any officer who has signed or whose facsimile signature has been placed
upon a certificate shall have ceased to be such officer
<PAGE>
before such certificate is issued, it may be issued by the Corporation with the
same effect as if he were such officer at the date of issue.
Section 8.03. TRANSFER AGENTS AND REGISTRARS. The Board of Directors may,
in its discretion, appoint one or more banks or trust companies in the State of
Michigan and in such other state or states as the Board of Directors may deem
advisable, from time to time, to act as Transfer Agents and Registrars of the
shares of the Corporation; and upon such appointments being made, no certificate
representing shares shall be valid until countersigned by one of such Transfer
Agents and registered by one of such Registrars.
Section 8.04. TRANSFER OF SHARES. A transfer of shares shall be recorded on
the books of the Corporation only as directed in writing by the holder of record
(the "Transferor"), or by his attorney lawfully constituted in writing, and upon
surrender by the Transferor and cancellation of a certificate or certificates
for a like number of shares of the same class, if the shares are represented by
a certificate, with a fully executed assignment and a power of transfer endorsed
thereon or attached thereto, and with such proof of the authenticity of the
required signatures as the Corporation or its agents may reasonably require.
Section 8.05. REGISTERED SHAREHOLDERS. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends and other distributions, and to vote as such
owner, and to hold liable for calls and assessments the person registered on its
books as the owner of shares, and shall not be bound to recognize any equitable
or other claim to or interest in such shares on the part of any other person,
whether or not it shall have express or other notice thereof, except as
otherwise provided by law.
Section 8.06. LOST CERTIFICATES. In case any certificate representing
shares shall be lost, stolen or destroyed, the Board of Directors, or any
officer or officers duly authorized by the Board of Directors, may authorize the
issuance of a substitute certificate in place of the certificate so lost,
stolen, or destroyed, and may cause or authorize such substitute certificate to
be countersigned by the appropriate Transfer Agent and registered by the
appropriate Registrar. In each such case the applicant for a substitute
certificate shall furnish to the Corporation and to such of its Transfer Agents
and Registrars as may require the same, evidence to their satisfaction, in their
discretion, of the loss, theft or destruction of such certificate and of the
ownership thereof, and also such security or indemnity as may by them be
required.
ARTICLE IX
MISCELLANEOUS
Section 9.01. YEAR END. The Board of Directors from time to time shall
determine the financial and/or tax year end of the Corporation. The initial tax
and financial year end will be a fiscal year ending May 31st of each year.
Section 9.02. SIGNATURES ON NEGOTIABLE INSTRUMENTS. All bills, notes,
checks or other instruments for the payment of money shall be signed or
countersigned by such officers or agents and in such manner as from time to time
may be prescribed by resolution of the Board of Directors, or may be prescribed
by any officer or officers, or any officer and agent jointly, duly authorized by
the Board of Directors.
<PAGE>
Section 9.03. DIVIDENDS. Except as otherwise provided in the Articles of
Incorporation, distributions (including dividends upon the shares of the
Corporation) may be declared and paid as permitted by law in such amounts as the
Board of Directors may determine at any annual or special meeting. Dividends may
be paid in cash, in property, or in shares of capital stock of the Corporation,
subject to the Articles of Incorporation.
Section 9.04. RESERVES. Before payment of any dividend, there may be set
aside out of any funds of the Corporation available for dividends such sum or
sums as the Board of Directors from time to time, in its absolute discretion,
deems proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the Corporation or
for such other purpose as the Board of Directors deems conducive to the interest
of the Corporation; and in its discretion the Board of Directors may decrease or
abolish any such reserve.
Section 9.05. SEAL. The Board of Directors may, but need not, provide a
corporate seal which shall consist of two concentric circles between which is
the name of the Corporation and in the center of which shall be inscribed
"SEAL".
Section 9.06. CORPORATION OFFICES. The registered office of the Corporation
shall be as set forth in the Articles of Incorporation. The Corporation may also
have offices in such places as the Board of Directors may from time to time
appoint, or the business of the Corporation requires. Such offices may be
outside the State of Michigan.
ARTICLE X
RESTRICTIONS UPON TRANSFER OF STOCK
Section 10.01. LIFETIME RESTRICTIONS. A shareholder desiring to sell,
transfer or assign any shares of stock of the Corporation ("Selling
Shareholder") to a person who is not currently a shareholder must first offer to
sell such shares to the Corporation upon the same terms and conditions offered
by the prospective purchaser. The Corporation shall have ten (10) days in which
to determine whether to purchase the stock of the Selling Shareholder. If the
Corporation declines to purchase such shares of stock (the Selling Shareholder
not voting if he is a Director of the Corporation), the Selling Shareholder must
then offer to sell such shares to the remaining shareholders upon the same terms
and conditions offered by the prospective purchaser. The remaining shareholders
shall have fifteen (15) days to determine whether to purchase the stock of the
Selling Shareholder. Each shareholder shall have the right to purchase a
fraction of the total number of shares for sale, the numerator of which is the
number of shares currently owned by the purchasing shareholder and the
denominator of which is the total number of shares currently owned by all
purchasing shareholders. In the event the Corporation and/or the purchasing
shareholders have not agreed to purchase all of the shares being offered for
sale by the Selling Shareholder, any offers to purchase the stock by the
Corporation and/or purchasing shareholders shall be void, and the Selling
Shareholder may proceed to sell to the prospective purchaser, upon terms and
conditions no less favorable to the Selling Shareholder than those specified in
the terms of the third party offer as proposed to the Corporation and
shareholders. If for any reason such sale is not consummated within forty-five
(45) days after the Corporation and remaining shareholders have refused the
Selling Shareholder's offer to sell, the restrictions of this
<PAGE>
Section 9.01 shall again be applicable, and no subsequent sale may be made,
except in compliance with the terms of this Section 9.01.
Section 10.02. PERMITTED TRANSFER. Notwithstanding anything herein
contained to the contrary, each shareholder shall have the right, during his
lifetime, to transfer and assign all or any part of his interest in his stock in
the Corporation to a revocable trust in which he is named as settlor and
trustee, provided, however, that the trustee and any successors shall be bound
by the terms of this Bylaw. In the event stock in the Corporation is in a trust
described in the preceding sentence or is transferred into such a trust, then
such shares may be transferred to the settlor of such trust, provided, however,
that the settlor shall be bound by the terms of this Bylaw.
Section 10.03. AGREEMENT. Any Agreement pertaining to the subject matter of
this Article shall supersede this Article as to those shareholders executing the
Agreement, if the Corporation is a party to the Agreement or if such Agreement
has been approved by the Board of Directors of the Corporation.
ARTICLE XI
AMENDMENTS
Section 11.01. POWER TO AMEND. These Bylaws may be amended, altered,
changed, added to or repealed by the affirmative vote of a majority of the
shares entitled to vote at any regular or special meeting of the shareholders if
notice of the proposed amendment, alteration, change, addition or repeal be
contained in the notice of the meeting, or by the affirmative vote of a majority
of the Board of Directors if the amendment, alteration, change, addition, or
repeal be proposed at a regular or special meeting of the Board and adopted at a
subsequent regular meeting; provided, however, that the Board of Directors shall
not make or alter any Bylaw fixing their number, qualifications,
classifications, or term of office; and provided further, that any Bylaws made
by the affirmative vote of a majority of the Board of Directors as provided
herein may be amended, altered, changed, added to or repealed by the affirmative
vote of a majority of the shares entitled to vote at any regular or special
meeting of the shareholders; also provided, however, that no change of the date
for the annual meeting of shareholders shall be made within thirty (30) days
next before the day on which such meeting is to be held, unless consented to in
writing, or by a resolution adopted at a meeting, by all shareholders entitled
to vote at the annual meeting.
The foregoing are hereby executed by the undersigned as the Bylaws for the
regulation of business and affairs of the Corporation.
DIRECTOR(S):
- -----------------------------------------------------
Nasser Lukmani
- -----------------------------------------------------
Arifa Hasan
- -----------------------------------------------------
Filipp J. Kreissl
Dated: , 1999
-----
<PAGE>
INMOLD LUKMANI MANUFACTURING CORPORATION
SHAREHOLDER
AND
STOCK RESTRICTION AGREEMENT
APRIL ____, 1999
IAN D. PESSES. ESQ.
MADDIN, HAUSER, WARTELL,
ROTH, HELLER & PESSES, P.C.
Third Floor Essex Centre
28400 Northwestern Highway
Southfield, Ml 48034
(T/G) 248-354-4030
(Fax) 248-354-1422
(T/D) 248-827-1866
<PAGE>
INMOLD LUKMANI MANUFACTURING CORPORATION
SHAREHOLDER
AND
STOCK RESTRICTION AGREEMENT
TABLE OF CONTENTS
ARTICLES PAGE
- -------- ----
1.00 PARTIES....................................................1
1.01 Company...............................................1
1.02 Shareholders..........................................1
1.03 Parties...............................................1
2.00 DATES......................................................1
3.00 RECITALS...................................................1
3.01 Stock Ownership.......................................1
3.02 Restrictions..........................................1
3.03 Duties and Management Responsibilities................1
4.00 CONSIDERATION AND AGREEMENT................................1
5.00 MANAGEMENT.................................................1
5.01 Shareholders.........................................2
5.02 Board of Directors...................................2
5.03 Officers.............................................2
5.04 Compensation.........................................2
5.05 Expense Reimbursement................................3
5.06 Financial Reports....................................3
5.07 Severance............................................3
6.00 CAPITALIZATION............................................3
6.01 Initial..............................................3
6.02 Subsequent...........................................3
6.03 Failure To Make Capital Contributions................3
6.04 Debt.................................................4
6.05 Shareholder Loans....................................4
6.06 Dividends............................................4
i
<PAGE>
7.00 STOCK TRANSFER RESTRICTIONS...............................4
7.01 Restrictions........................................4
7.02 Violations..........................................4
7.03 Stock...............................................4
7.04 Restrictive Legend..................................4
7.05 Effect..............................................5
7.06 Permitted Transfers.................................5
7.07 Continuing Application
8.00 PREEMPTIVE STOCK RIGHTS...................................5
8.01 Qualified Rights....................................5
8.02 Preservation of Minority Business Enterprise Status.5
9.00 FIRST REFUSAL RIGHTS......................................6
9.01 Company.............................................6
9.02 Role of Selling Shareholder.........................6
9.03 Shareholder.........................................6
10.00 PUT-CALL OPTIONS.........................................6
10.01 Shareholder Co-Sale Option.........................6
10.02 Shareholder Put Option.............................7
11.00 SHAREHOLDER DEATH........................................7
11.01 Stock Redemption...................................7
11.02 Purchase Price.....................................7
11.03 Method of Payment..................................7
11.04 Deferred Payment...................................7
11.05 Personal Guaranties................................8
12.00 INSURANCE................................................8
12.01 Insurance..........................................8
12.02 Additional Insurance...............................8
12.03 Ownership Rights...................................8
12.04 Creditor Claim.....................................8
12.05 Cooperation........................................9
13.00 DISPUTE RESOLUTION.......................................9
13.01 Self Regulation....................................9
13.02 Arbitration........................................9
13.03 Governing Law......................................10
13.04 Specific Performance...............................10
14.00 FURTHER ACTIONS..........................................10
ii
<PAGE>
14.01 Additional Actions.................................10
14.02 Supplemental Agreements............................10
14.03 Disclosure.........................................11
14.04 Shareholder Voting.................................11
15.00 CONFLICTS OF INTEREST....................................11
15.01 Competition........................................11
15.02 Self-Dealing.......................................11
15.03 Confidentiality....................................11
15.04 Exclusivity........................................11
15.05 Non Solicitation...................................12
16.00 INTERPRETATION AND CONSTRUCTION..........................12
16.01 Entire Agreement...................................12
16.02 Conflicts..........................................12
16.03 Prior Agreements...................................12
16.04 Number and Gender..................................12
16.05 Captions...........................................13
16.06 Waiver.............................................13
16.07 Time...............................................13
16.08 Conformity.........................................13
16.09 Construction.......................................13
16.10 Counterparts.......................................13
17.00 INSOLVENCY...............................................13
17.01 Required Consent...................................13
17.02 Pre-Filing.........................................13
18.00 GENERAL PROVISIONS.......................................14
18.01 Representation.....................................14
18.02 Production Option..................................14
18.03 Name Use...........................................14
19.00 MISCELLANEOUS PROVISIONS................................14
19.01 Notices............................................14
19.02 Binding Effect.....................................15
19.03 Execution..........................................15
19.04 RECEIPT............................................16
iii
<PAGE>
INMOLD LUKMANI MANUFACTURING CORPORATION
SHAREHOLDER
AND
STOCK RESTRICTION AGREEMENT
1.00 PARTIES. This SHAREHOLDER AND STOCK RESTRICTION AGREEMENT, herein referred
to as the "Agreement", is made and entered into by and among the following
parties:
1.01 Company. INMOLD LUKMANI MANUFACTURING CORPORATION, a Michigan
corporation, whose address is 28400 Northwestern Highway, Third Floor-Essex
Centre, Southfield, Michigan 48034, herein referred to as "Company", and
1.02 Shareholders. The word "Shareholder", individually, or "Shareholders",
collectively, shall mean and refer to the holders and/or owners of any series
and/or class of capital stock of the Company.
1.03 Parties. The word "Party", individually, or "Parties", collectively,
shall mean and refer to Company and/or the Shareholders.
2.00 DATES. This Agreement is made and entered into as of April ___, 1999,
herein referred to as the "Execution Date", and effective and binding as of
___________________, 1999, herein referred to as of the "Effective Date".
3.00 RECITALS.
3.01 Stock Ownership. Simultaneously with the execution of this Agreement,
the Shareholders will collectively own one hundred percent (100%) of all of the
presently issued and outstanding capital stock, herein referred to as "Stock",
of the Company.
3.02 Restrictions. The Parties desire to provide for certain restrictions
and protections relative to the sale or other transfer of the Stock or any newly
authorized or issued Stock.
3.03 Duties and Management Responsibilities. The Parties also wish to
provide for various rights and duties by and among themselves, relative to the
voting shares, the management, and related matters, in accordance with the terms
and conditions hereinafter set forth.
4.00 CONSIDERATION AND AGREEMENT. FOR AND IN CONSIDERATION of the mutual
covenants and benefit set forth herein, the adequacy and sufficiency of which
are hereby acknowledged and accepted, and with the intent to be legally bound
hereby, the Parties agree to all the terms and provisions contained in this
Agreement.
1
<PAGE>
5.00 MANAGEMENT.
5.01 Shareholders.
A. Participation. Shareholders of the Company may not participate
directly in the management of the Company, except as follows: (1) as
provided by State law; (2) when acting in some other capacity or role;
and/or (3) as otherwise agreed by all the Parties.
B. Required Consent. Notwithstanding anything to the contrary, all
decisions of and/or by the Shareholders shall be made by a vote of a simple
majority of the Shareholders, except as may otherwise be provided herein.
5.02 Board of Directors.
A. Initial. Notwithstanding anything to the contrary, the initial
Board of Directors of the Company, herein sometimes "Board of Directors",
"Board", and/or Directors", shall consist of three (3) Directors: (1)
Nasser Lukmani; (2) Arifa Hasan; and (3) Filipp J. Kreissl, herein "Initial
Directors". Nasser Lukmani shall be Chairman of the Board of Directors and
Chief Executive Officer of the Company.
B. Term. The Director(s) shall continue to serve on an annual basis
until his/her successor(s) are duly chosen by the Shareholders. The
Shareholders shall vote their stock and take all other actions necessary to
elect the Initial Directors as the only Directors.
C. Required Consents. Except as may be specially provided herein, any
and/or all decisions of and/or by the Board of Directors shall be made by a
simple majority of all Directors.
5.03 Officers.
A. Designations. The Officers of the Company shall consist of the
following: (1) the President and Chief Executive Officer will be Nasser
Lukmani; (2) Secretary will be Arifa Hasan; and (3) Treasurer will be Arifa
Hasan.
B. Term. The officers of the Company shall continue on an annual basis
unless otherwise determined by the Board of Directors. The Board of
Directors shall take all actions necessary and/or appropriate to continue
to designate those people to the positions, titles and offices noted in
this paragraph 5.03, notwithstanding anything to the contrary.
5.04 Compensation.
A. Lukmani. The Company shall pay Nasser Lukmani the following
compensation:
1. Annual Base Salary of $100,000.00, herein "Base Salary". The
Base Salary will be reviewed and increased annually, with such
increase not to be less than five percent (5%) per annum.
2. Benefits, herein "Benefits", essentially equivalent to the
type of Benefits received by Nasser Lukmani from his prior
Employer related to (a) health/medical insurance, (b) life
insurance, (c) telephone, (d) automobile, (e) travel and
entertainment, (f) vacation, (g) legal, (h) accounting, and (i)
other related and/or similar expenses and Benefits. The Benefits
will be increased annually as may be reasonably appropriate.
3. Annual incentive compensation, herein "Incentive Compensation"
as reasonably determined by the Board of Directors. The Parties
intend that Nasser Lukmani is to receive reasonable Incentive
Compensation on an annual basis.
B. Hasan. The Company shall pay Arifa Hasan the following
compensation:
1. annual Base Salary of $90,000.00, herein ("Base Salary"). The
Company will review the Base Salary on an annual basis.
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2. Benefits, herein "Benefits", will be as follows: (a)
health/medical insurance, (b) telephone, and (c) automobile. The
Company will review the Benefits on an annual basis.
C. Others. The Company shall compensate the other employees
of the Company as is reasonably determined by Nasser Lukmani.
5.05 Expense Reimbursement. The Company shall promptly pay and/or reimburse
a Shareholder, Director, and/or Officer for all expenses incurred for or on
behalf of the Company or in the performance of any duties hereunder
5.06 Financial Reports. The President shall make full and prompt disclosure
to the Directors and Shareholders of the operations and financial condition of
the Company. Such disclosures shall include, but not be limited to the
following:
A. Monthly financial statements, which include:
i. estimated monthly profit and loss statement by the sixth (6)
day of each month.
ii. actual financial statements by the twentieth (20) day of
each month, which reports shall consist of:
a. profit and loss/income statements,
b. balance sheet/position statements,
c. aged account statements, for all accounts payables and
receivables,
d. program management reports for the next sixty (60)
days.
B. State and Federal Tax returns within ten (10) days after the same
are (a) prepared, or (b) filed.
C. Any such other information as may be reasonably requested by the
Shareholders or Directors, including copies of all contracts.
5.07 Severance. The Company shall pay Nasser Lukmani severance
compensation, herein "Severance", in accordance with the terms hereof. Severance
shall include (A) Base Salary, and (B) Benefits. Severance shall be payable in
accordance with the regular payroll practices of the Company on a monthly basis
and will continue as mutually and unanimously determined by the Board of
Directors, as such Severance is thought to be appropriate, but not to exceed the
earlier of (Y) six (6) months or (Z) the subsequent re-employment of Nasser
Lukmani as an employee, as an independent Contractor, or otherwise.
6.00 CAPITALIZATION.
6.01 Initial. The initial capitalization of the Company shall be on the
following basis:
A. Nasser Lukmani - $410
B. Arifa Hasan - $100
C. Inmold, Inc. - $490
6.02 Subsequent. If the Company is to properly develop, the Company will,
from time to time, require additional capital. The Parties anticipate that
Inmold, Inc. will provide and/or arrange for any such subsequent capital, herein
"Subsequent Capital", upon terms agreeable to all the Parties.
6.03 Failure To Make Capital Contributions. All Capital Contributions shall
be voluntary, except for the equity capital specified in Paragraph 6.01.
Shareholders shall not be
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required to make capital contributions to the Company. The Shareholders may not
be diluted and/or otherwise penalized for the failure to make a capital
contribution.
6.04 Debt. The Company may incur debt (whether in the form of loans from
financial institutions or other conventional sources, or in the form of Company
issued bond indebtedness), provided, however, that no Shareholder shall be
required to personally guarantee the payment or collection of such debt.
6.05 Shareholder Loans. Except for the initial capital contribution as
provided in (P) 6.01, all subsequent capital contributions to the Company shall
be treated as "debt", and not "equity", herein "Shareholder Debt". The
Shareholder Debt shall be as follows:
A. Shall be secured by a lien on all the assets and subordinated to
all institutional, third party, and/or bank debt,
B. Shall be repaid when cash flow permits,
C. Shall be repaid after all compensation, base, incentive, and
expense reimbursements have been fully paid, including all such
compensation to shareholders as employees of the Company.
D. Shall be repaid prior to any dividend distributions to the
Shareholders, and
E. Shall pay interest at a rate agreed to by the Parties thereto.
6.06 Dividends. The Company shall pay dividends as is authorized by law.
Notwithstanding anything to the contrary, the Company will not pay any dividends
until the following:
A. The Company has fully paid all compensation to the shareholders as
Directors, Officers, and employees. This Compensation includes all base,
incentive and reimbursements.
B. The Company has fully paid all appropriate third party expenses.
C. The Company has fully paid and/or funded the appropriate reserves
for working capital, maintenance, repairs, replacements, improvements, and
expansions.
D. The Company has sufficient cash flow.
7.00 STOCK TRANSFER RESTRICTIONS.
7.01 Restrictions. The Parties shall not issue, sell, give, pledge, assign
or otherwise transfer, voluntarily, involuntarily, by operation of law or
otherwise, herein referred to as "Transfer", any interest they may have in or to
the Stock or otherwise in or to the Company, except as specifically permitted by
this Agreement (the "Stock Transfer Restrictions").
7.02 Violations. Any Transfer in violation of this Agreement shall be null
and void, without effect on the other Parties, and shall operate as a material
default hereunder by the offending Party.
7.03 Stock. This Agreement is binding upon all Parties and all Stock,
including, without limitation, all Stock now or subsequently authorized or
issued by the Company, and whether now or subsequently owned by the
Shareholders, and all future owners or holders of the Stock, even if they do not
sign a copy of this Agreement.
7.04 Restrictive Legend. All Stock Certificates, whether presently issued
and outstanding, or newly issued or authorized, shall be conspicuously endorsed
with and contain the following restrictive legend or the equivalent thereof:
"Transfer of the shares represented by this certificate is
restricted by and subject to the terms of a Shareholder Agreement
by and among the Company and its Shareholders, a copy of which is
on file at the office of the Company."
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7.05 Effect. Notwithstanding the foregoing, the failure to have such
statements or notice of restriction endorsed on any certificate of Stock shall
in no way adversely affect or impair the validity or enforceability of this
Agreement or the Stock Transfer restrictions.
7.06 Permitted Transfers. Notwithstanding the Stock Transfer Restrictions,
any Shareholder may, upon prior written notice to and without the approval of
the Board of Directors or any other Shareholder, Transfer some or all of the
Shareholder's Stock as follows:
A. If the shareholder is an individual, then only to a revocable
Living Trust established for the benefit of a record holder of shares of
Stock who is an individual and/or the immediate family (spouse and/or
children) of such holder, provided (1) that the transferring record holder
is the sole trustee of the Trust during his or her lifetime, (2) that all
Trustees of such Trust hold such Stock subject to the terms and conditions
hereof, (3) that all such Trustees agree to the terms of this Agreement and
sign a duplicate copy of this Agreement, as it exists now or as may be
amended in the future, and (4) that the record holder of the Stock is the
sole and exclusive person to vote the Stock.
B. If the shareholder is a corporation, then only to (1) a wholly
owned subsidiary of that corporate shareholder, and/or (2) to anyone who
acquires controlling interest in or to the corporate shareholders, provided
(a) that the Party holds such Stock subject to the terms of this Agreement,
(b) that the Party signs a copy and agrees to all of the terms of this
Agreement, and (c) that the original corporate Shareholder/Inmold, Inc. is
the sole and exclusive person to vote the Stock.
7.07 Continuing Application. Any transferee of the Stock shall take and
hold the Stock subject to the continued application of this Agreement and must
sign a duplicate copy of this Agreement, as it exists now or as may be amended
in the future, or an acknowledgment thereof. The form and content of any such
acknowledgment shall be as determined by the Board of Directors, in its sole and
absolute discretion.
8.00 PREEMPTIVE STOCK RIGHTS.
8.01 Unqualified Rights. The Shareholders shall have full and absolute
preemptive rights, notwithstanding anything to the contrary, to subscribe for or
otherwise acquire any additional or other shares of Stock now or hereafter
authorized or issued by the Company.
8.02 Preservation of Minority Status. The following general restrictions
shall apply to transfers of the Company stock in order to preserve the status of
the Company as a Minority Controlled and Certified Business Enterprise:
A. All Parties intend that the Company to be and qualify as a Minority
Business Enterprise and controlled by minority shareholders,
notwithstanding anything to the contrary.
B. All Shareholders, Directors, and Officers of the Company shall use
best efforts and take all actions necessary or appropriate to obtain and
maintain status of the Company as a certified Minority Business Enterprise,
notwithstanding anything to the contrary. This obligation includes, but
certainly is not limited to using best effort to insure that Nasser Lukmani
and Arifa Hasan own, control, and vote at least fifty-one (51%) percent of
the Stock at all times, notwithstanding anything to contrary.
C. Subject to the other provisions of this Agreement, a proposed non-
Minority shareholder may acquire shares of stock in the Company only from
then current non-Minority Shareholder(s).
D. Subject to the other provisions of this Agreement, a proposed
Minority shareholder may acquire stock from any of the Shareholders,
provided, however, that in
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no event shall the percentage interest of all minority
shareholders be less than fifty-one (51%) percent.
9.00 FIRST REFUSAL RIGHTS.
9.01 Company. Except as permitted in Paragraph 7.06 and subject to the
restrictions and limitation to the restrictions and limitations contained in
Paragraph 8.02 with respect to the percentage share of the Company's stock
required to be held by Minority Shareholders, a Shareholder shall not Transfer
any or all of the Stock without first offering the Stock for the same price, on
the same terms as are contained in a bona fide, written offer received by the
Shareholder from a third party, herein referred to as a "Bona Fide Offer". The
Company shall have thirty (30) days from the date of receipt of an unedited,
complete copy of the Bona Fide Offer and a written and complete disclosure of
all facts which describe the transaction, (a) to acquire all, but not less than
all, of the shares of Stock offered to be purchased in the Bona Fide Offer on
the same terms and condition as are contained in the Bona Fide Offer, or (b) to
waive this first right of refusal and not acquire the Stock. If the Company
elects to redeem the selling Stock, and notifies the selling Shareholder as
required above, the Company and the selling Shareholder shall close the
redemption of the Stock within thirty (30) days thereafter. Notwithstanding
anything to the contrary, the Company shall not elect to redeem the Stock if the
effect thereof would be to reduce minority holdings of stock below the limits
set forth in Paragraph 8.02 hereof.
9.02 Role of Selling Shareholder. Except as provided in Paragraph 7.01, the
decision whether to exercise the right of first refusal set forth in Paragraph
9.01 hereof shall be made by the vote of the Board of Directors. If the selling
Shareholder is a member of the Board of Directors, the selling Shareholder shall
not have any role or vote in deciding wheth er to redeem the Stock of the
selling Shareholder.
9.03 Shareholder. Should the Company fail to elect to purchase the Stock,
or otherwise waives the right of first refusal to purchase the Stock, then the
selling Shareholder, herein referred to as "Offeror", shall then offer the Stock
to the other Shareholders, herein referred to as the "Offeree", under the same
terms and conditions contained in Paragraph 9.01 above. Notwithstanding anything
to the contrary, an Offeree may not elect to purchase the Stock if the effect
thereof would be to reduce minority holdings of Stock below the limits set forth
in Paragraph 8.02 hereof. If the Offeree elects to purchase the Offeror's Stock
and notifies the Offeror as required above, they shall close the purchase within
thirty (30) days thereafter. Should the Offeree fail to so elect, or having
elected, fail to close the sale within this thirty (30) day period, then the
Offeror may sell, assign or transfer Offeror's Stock only to the purchaser named
in the Bona Fide Offer, upon the terms specified therein, provided that such
sale is consummated within ninety(90) days following the Offeror's receipt of
the Offeree's decision not to purchase the Stock, or the expiration of the
thirty (30) day closing period. If the sale is not consummated within the
specified ninety (90) day period, the Offeror must again offer the Stock first
to the Company and second to the other Shareholders in accordance with the
provisions hereof.
10.00 PUT-CALL OPTIONS
10.01 Shareholder Co-Sale Option. Subject to the restrictions and
limitations set forth in Paragraph 8.02, in the event the Company decides and/or
elects to sell or enter into an agreement to sell any Stock to an outside,
third-party, non-Shareholder purchaser, then the Shareholders may participate
equally on a proportionate basis with, and on the same terms and conditions as
the Company and/or any other Shareholder in any such sale of shares of Stock,
herein "Shareholder Co-Sale Option". This Shareholder Co-Sale Option must be
exercised before, and automatically terminates thirty (30) business/working days
after receipt of the Notice
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from the Company of the intent or decision to sell any of the Stock, even if the
sale of Stock is not actually consummmated. The waiver of this Shareholder Co-
Sale Option shall only be for a single transaction and a Shareholder cannot in
any way be deemed to have adversely affected and/or to otherwise waived the
Shareholder's Co-Sale Option with respect to any subsequent sale of Stock by the
Company.
10.02 Shareholder Put Option.
A. In the event that any Shareholder decides to voluntarily separate
from the Company, then such Shareholder herein "Withdrawing Shareholder"
may sell all, but not less than all, of his Stock back to the
Company,herein "Shareholder Put Option".
B. The sale price for the Shareholder Put Option will be the greater
of the following (1) the original amount of the Shareholder's investment in
the Company, (2) the Withdrawing Shareholder's prorata portion of the net
book value of the Company, which shall be calculated without reference and
value being given to insurance proceeds, good will, or any other intangible
assets, or (3) the Withdrawing Shareholder's prorata portion of five times
(5x) the Earnings Before Interest, Taxes, Depreciation and Add Backs of the
Company ("EBITDA").
C. The Company's accountant shall calculate and determine the net book
value or EBITDA of the Company in accordance with generally accepted
accounting principles, consistently applied. The Withdrawing Shareholder
and the Company will close on the Shareholder Put Option within sixty (60)
days after receipt by the Company of written notice to exercise the
Shareholder Put Option.
11.00 SHAREHOLDER DEATH.
11.01 Stock Redemption. In the event of the death of a Shareholder or, and
regardless of whether the Stock of th deceased Shareholder is held and/or owned
by a trust or an entity owned and controlled by the deceased Shareholder, the
Company shall repurchase and redeem all such Stock owned directly or indirectly
by the deceased Shareholder, herein referred to as the "Stock Redemption". The
deceased Shareholder's Stock shall be transferred to the Company pursuant to the
Stock Redemption free and clear of all claims and encumbrances whatsoever. The
Company shall have ninety (90) days after receipt of written notice of the death
of a Shareholder to complete the Stock Redemption.
11.02 Purchase Price. The purchase price, herein "Purchase Price", which
the Company shall pay to the estate of any deceased Shareholder in redemption of
his shares of Stock shall be the greater the following: (A) the original amount
of the deceased Shareholder's investment in the Company, (B) the prorata portion
of the net book value of the Company, which shall be calculated without
reference and value being given to insurance proceeds, goodwill, or any other
intangible assets, (C) insurance proceeds received by the Company on the life of
the Shareholder, or (D) the Shareholder's prorata portion of five times (5x)
EBITDA of the Company. The Company's accountant for the Company shall calculate
and determine the Purchase Price, in accordance with generally accepted
accounting principles, consistently applied.
11.03 Method of Payment. The Purchase Price which the Company will pay to
the appropriate legal representative of the deceased Shareholder under the
preceding Subparagraph shall be paid promptly upon receipt by the Company of the
proceeds of any insurance covering such deceased Shareholder. Notwithstanding
the foregoing, in the event that life insurance proceeds are insufficient or
unavailable to pay the Purchase Price calculated in connection with the
preceding subparagraph, then the amount of the Purchase Price which is not
covered by insurance (the "Uninsured Amount") shall be paid in installments as
provided in Subparagraph 11.04 below.
11.04 Deferred Payment. The Uninsured Amount shall be paid as follows:
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A. Down Payment. The Company shall pay thirty percent (30%) of the
Uninsured Amount within ninety (90) days after receipt by the Company of
written notice of the death of a Shareholder from the legal representative
of the deceased Shareholder.
B. Annual Installments. The Company shall pay the balance of the
Uninsured Amount in two (2) equal annual installment payments commencing
one (1) year from the date of the Shareholder's death, and continuing
thereafter each succeeding year until paid in full. No interest shall be
due on any such installment payments, unless same are not timely paid, in
which event, interest shall accrue on the unpaid balance from the date of
default at the rate of twenty percent (20%) per annum until paid.
C. Security. In the event the Uninsured Amount is required to be paid
in installments as provided above, the Company and the estate of the
deceased Shareholder shall enter into a stock pledge agreement, whereby the
redeemed shares shall be held in escrow by a mutually satisfactory escrow
agent, until the redemption price is fully paid to the legal representative
of the deceased Shareholder. The legal representative of the deceased
Shareholder shall have no further voting or other rights in the Stock or
the Company, pending the timely payment of the purchase price.
D. Prepayment. All amounts due under this Paragraph 11 may be prepaid
in full or in part at any time without penalty.
E. Acceleration. In the event the Company fails to make any payment
within the time period(s) required hereunder, the Company shall be deemed
to be in beach of this Agreement, and all remaining and unpaid amounts due
hereunder may be accelerated, and immediately become due and owning, unless
the overdue installment is paid within ten (10) days after the Company
receives written notice that such installment is overdue.
11.05 Personal Guaranties. In the event of a Stock Redemption, the
Company shall use reasonable efforts to have any personal guaranty of such
deceased Shareholder removed and/or released; provided, however, the
Company shall have no liability for any failure, after using reasonable
efforts, to have any such personal guaranty removed and/or released.
12.00 INSURANCE.
12.01 Insurance. The Company may maintain during the term hereof
policies of life insurance on the life of a Shareholder in an amount as
determined by the President of the Company, which amount may be two or more
times the estimated purchase price of each Shareholder's Stock as
calculated under Section 11.02 hereof, herein the "Life Insurance".
Further, the Company may, but without obligation, obtain a policy or
policies of disability insurance on any of the Shareholders, officers,
directors and/or agents of the Company, in such amounts and on whatever
terms the Company, in its sole discretion, deems appropriate (the
"Disability Insurance"). The Life Insurance and Disability Insurance may
sometimes hereinafter be referred to as "Insurance".
12.02 Additional Insurance. The Company may, but without obligation,
maintain the Insurance, substitute other policies for the Disability
Insurance and/or convert, modify, increase or decrease the amount type or
form of coverage under the Insurance, as it deems appropriate in its sole
discretion.
12.03 Ownership Rights. The Company shall be the sole owner and
beneficiary of the Insurance. The Shareholders will have no individual or
separate ownership interests in or to any such Insurance, except as
specifically provided herein.
12.04 Creditor Claim. The interest of the Company in, and the cash
value of and proceeds from, the Insurance shall not be subject to any claim
of any creditor of the Company
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and/or any creditor of a Shareholder. The rights of any creditor of a
Shareholder can attach only to the Stock of that particular Shareholder.
12.05 Cooperation. The Shareholders shall fully cooperate and take all
reasonable actions to help the Company obtain and maintain any such
Insurance and shall not knowingly take any action which may or could
prevent, deny, end, terminate, or otherwise preclude any such Insurance
coverage.
13.00 DISPUTE RESOLUTION.
13.01 Self Regulation. In the event of a dispute, the Parties shall
use best efforts and diligently attempt, in good faith, to resolve and
settle the disagreement as quickly, reasonably, and as confidentially as
possible. The Parties will make every effort to avoid arbitration.
13.02 Arbitration. In the event the Parties are unable to settle their
differences among themselves, then the Parties shall arbitrate, herein
"Arbitration", such disputes. Notwithstanding anything to the contrary,
such Arbitration shall be as follows:
i. In accordance with the Rules of the American Arbitration
Association, except as may be specifically provided in this Agreement.
ii. Located only in Southfield, Michigan, U.S.A. The Parties
consent to the exclusive jurisdiction and venue of Oakland County,
Michigan, U.S.A. for this Arbitration and any enforcement proceeding.
iii. The sole and exclusive method for the resolution of all
disputes and disagreements among the Parties and in place of all other
or alternative judicial procedures. The Arbitration requirements of
this Agreement shall be specifically enforced by the Arbitrators
and/or any court. The Parties waive all defenses and challenges to the
Arbitration requirements of this Agreement, including, but not limited
to (w) exclusivity, (x) jurisdiction and venue, (y) costs and damages,
and (z) time limits. If a Party (the "Enforcing Party") files a law
suit to seek the enforcement of any term or provision of this
Arbitration Paragraph prior to an Arbitration Award, then the
non-complying party ("Defaulting Party") shall pay the Enforcing Party
the following:
(a) All costs, including actual attorneys fees, of the Enforcing
Party from the commencement of the Arbitration and/or any suit to
enforce the Arbitration terms of this Agreement;
(b) Interest at the rate of Twenty (20%) Percent per annum on any
damages and costs of the Enforcing Party from commencement of the
Arbitration; and
(c) Any other award, damage, and/or penalty which the court
believes appropriate.
iv. Decided by the major decision of a three (3) member panel.
The Claiming Party and Responding Party shall each select one (1)
Arbitrator. The two (2) designated Arbitrators shall select the third
Arbitrator.
v. Conducted and concluded on a confidential basis. The parties
shall not disclose and shall not assist others in the disclosure of
any information whatsoever concerning the nature of the dispute.
vi. Conducted and concluded on an expedited basis such that the
time limit for any individual or separate action shall not exceed
fifteen (15) days, herein the "15-Day Rule", unless otherwise agreed
to by the Parties. The 15-Day Rule shall mean there will be only 15
days to do and take any individual or separate action, including but
not limited to the following:
(a) Answer or respond to responsive pleadings;
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(b) Select each of the arbitrators;
(c) Conduct all discovery;
(d) Hold any hearings;
(e) Issue final,binding opinion after the hearing;
vii. Concluded and a final, binding, and written Arbitration
award issued within 180 days of first filing the request for
Arbitration, notwithstanding anything to the contrary, including but
not limited to: (a) any rules of AAA, or (b) the 15-Day Rule.
viii. Award costs and actual attorneys fees to the prevailing
party. The Prevailing Party shall be the party awarded the most amount
of money from any claim, counter-claim, cross-claim, or otherwise. The
Arbitrators shall have the authority to award any legal and/or
equitable remedy, including, but not limited to (a) specific
performance and (b) permanent restraining orders, notwithstanding
anything to the contrary.
ix. Binding on all Parties and all Parties consent to the
immediate enforcement of any Arbitration award by the appropriate
court. If a Party ("Enforcing Party") files a lawsuit to seek the
enforcement of an Arbitration award, the non-complying party
("Defaulting Party") shall pay the Enforcing Party as follows:
(a) Double the Arbitration award;
(b) Interest at the rate of Twenty (20%) Percent per annum on
all awards and costs from commencement of the Arbitration;
(c) All costs, including actual attorneys fees, of the Enforcing
Party from commencement of the Arbitration; and
(d) Any other award, damage, and/or penalty which the Court
believes appropriate.
13.03 Governing Law. This Agreement and any Arbitration will be governed by
and construed in accordance with the laws of the State of Michigan.
13.04 Specific Performance. The Stock cannot be readily sold or purchased
in the open market and for that reason, among others, the Parties will be
irreparably damaged and injured in the event this Agreement is not specifically
enforced. Notwithstanding anything to the contrary, the Parties specifically
authorize and empower the Arbitration with the power and authority to
specifically enforce any term of this Agreement. Specific Enforcement authority
may include the power to specifically issue an ex parte preliminary injunction
or restraining order restraining any Transfer pending the determination of such
controversy. In the event of any controversy concerning the right or obligation
to purchase, redeem or sell any of the Stock, such right or obligation may be
enforced by specific performance. The specific performance provided for herein
shall be inclusive of, and in addition to, all other remedies otherwise
available.
14.00 FURTHER ACTIONS.
14.01 Additional Actions. This Agreement is intended to include all
provisions, terms, and other items necessary, desirable, or appropriate for a
Shareholder Agreement. The Shareholders shall take such additional actions,
shall perform all incidental work, and shall render such additional services as
may be reasonably required or requested by Company in furtherance of the intent
and purpose of this Agreement, notwithstanding that the same may not have been
specifically provided for in, or may have been omitted from, this Agreement.
14.02 Supplemental Agreements. The Parties anticipate that certain
additional actions may be necessary, desirable and/or appropriate to implement
and/or effectuate this Agreement. The Board of Directors must approve the form
and content of all subsequent documents which may be prepared and/or executed in
connection herewith. After approval by the
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Board of Directors, then all Parties shall sign any such additional documents as
may be necessary, desirable, appropriate, and/or otherwise requested by the
Board of Directors.
14.03 Disclosure. Whenever reasonably required by another Shareholder, or
his or her representative, each Shareholder shall make full and complete
disclosure of all information concerning or related to the affairs of the
Company and the Business, including, but not limited to, the type, amount, and
date of all Benefits, paid or to be paid. The Shareholders shall hold and
retain, in the strictest confidence, all such disclosures and related
information and shall not disclose any such information to any non-Shareholder
out of the ordinary course of business without the prior written consent from
the Board of Directors.
14.04 Shareholder Voting. Each Shareholder shall take such actions, execute
such proxies and other agreements, and otherwise vote their Stock in such manner
as shall effectuate, implement, enforce, acknowledge, continue, and/or confirm
all of the terms and provision of this Agreement, including, without limitation,
acknowledging, agreeing and executing such amendments to the Articles of
Incorporation, Bylaws or other agreements as shall be appropriate for the
purpose of implementing, enforcing, acknowledging continuing, and/or confirming
this Agreement to its fullest extent.
15.00 CONFLICTS OF INTEREST.
15.01 Competition. The Company and Inmold may compete with each other. The
Company will only pursue business which is unanimously agreed upon by the
Directors of the Company. The Shareholders shall make full and complete, prior
written disclosure to the Board of Directors of any actual or potential
competition and/or conflict of interest with the Company and/or the Business.
The Parties acknowledge that Nasser Lukmani is involved with Design Engineering
Services, Inc., herein "DES" and Inmold Lukmani Design Technologies, Inc.,
herein "ILD". Nasser Lukmani may continue his involvement with DES and ILD and
such continued involvement will not be a violation of this Agreement or any
obligation of Nasser Lukmani to the Company, notwithstanding anything to the
contrary. Inmold, Inc. may continue in its business as planned, and such
continued business activity, even if competitive with the Company will not
violate this Agreement or any obligation of Inmold, Inc. to the Company or any
other Shareholder, notwithstanding anything to the contrary.
15.02 Self-Dealing. A Shareholder may contract or otherwise deal with the
Company and/or the Business with respect to the sale, lease, and/or purchase of
any property of the Company, the rendering or providing services to or for the
Company and/or the Business, the lending of money to or for the Company and/or
the Business, the receipt of compensation, fees, commission, and/or interest
from the Company, and/or in any other manner whatsoever without being subject to
claims of self-dealing, provided that all such dealings or transactions (a) are
fully disclosed, in writing and in advance, to the Board of Directors, (b) are
approved, in advance, by the Board of Directors and such interested Shareholder
abstains from the voting and/or approval process, and (c) are at such prices
and/or on such terms not substantially less favorable to the Company than would
be generally available from unrelated third/outside parties.
15.03 Confidentiality. All business information, including but not limited
to financing, developing, managing, operating, and related information,
regardless of its form, concerning the Company and/or the Business, is very
valuable and confidential, herein "Confidential Information". The Shareholders
shall hold, retain, and maintain in the strictest confidence, and shall not
disclose in any manner whatsoever, the Confidential Information.
15.04 Non-Exclusive. Nasser Lukmani will be actively involved in the
management and operation of the Company and the Business. Nasser Lukmani may
have other related and unrelated outside employment, contractor, investor,
and/or business interests and such activities
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will not be a violation of this Agreement and any obligation to the Company.
Nasser Lukmani is not expected to devote his full time and exclusive efforts to
the Company or the Business. The Parties acknowledge, consent, and anticipate
that Nasser Lukmani may become involved with ILD and other minority business
enterprises with Inmold, Inc.
15.05 Non Solicitation
A. Subject to paragraph 15.01 hereof above, the Company and Nasser
Lukmani will not solicit any customer or employee of Inmold, Inc., on the
one hand, and Inmold, Inc. will not solicit any customer or employee of the
Company, on the other hand, (herein "Non Solicitation Obligation").
B. For purposes of this Non Solicitation Obligation:
i. The Company and/or Inmold, Inc. will mean any entity they own,
control, are employed by , contract with, and/or otherwise have
the ability to influence, jointly or severally.
ii. Solicit and/or Solicitation will mean:
a. For a customer, any attempt to obtain any business from,
to influence the customer to do business with anyone other
than the Company or Inmold, Inc., and/or to otherwise change
the relationship between the customer and Inmold, Inc. or
the Company.
b. For an Employee, an attempt to hire and/or to otherwise
change the relationship between Inmold, Inc. or the Company
and any employee.
iii. Customer will mean any current and/or future customer of
Inmold, Inc. or the Company.
iv. Employee will mean any current or future employee,
contractor, vendor, and/or supplier of Inmold, Inc. or the
Company.
v. This Non Solicitation Obligation will exist during the term of
this Agreement and will continue for the term of one (1) year
following the later date of the following: (a) termination of the
business of the Company; (b) dissolution and final distribution
of the assets of the Company to the Shareholders, and/or (c)
repayment of all the moneys due from the Company, Arifa Hasan,
and/or Nasser Lukmani to Inmold, Inc.
16.00 INTERPRETATION AND CONSTRUCTION.
16.01 Entire Agreement. This Agreement represents the entire and integrated
Shareholder Agreement between the Parties relative to the subject matter hereof.
No amendment, modification, or change to this Agreement shall be effective or
binding unless reduced to writing and signed by all the Parties.
16.02 Conflicts. In the event of a direct conflict or inconsistency between
this Agreement and any other agreement, including the Articles of Incorporation,
Bylaws, Stock Certificates, Employment Agreements, and/or Service Agreements, or
any amendment thereto, herein referred to as "Other Agreements", this Agreement,
or any amendment hereto, shall govern and control the Other Agreements.
16.03 Prior Agreements. The Parties hereby agree and acknowledge that the
execution of this Agreement hereby supersedes, replaces and cancels any and all
other prior agreements, contracts and arrangements, whether written or verbal,
between the Company and any of the Shareholders.
16.04 Number and Gender. Whenever required by the context or use, the
singular word shall include the plural word and the masculine gender shall
include the feminine and/or neuter gender.
12
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16.05 Captions. The paragraph titles, headings, and/or captions contained
herein have been inserted solely as a means of reference and convenience. Such
captions shall not affect the interpretation or construction hereof and shall
not define, limit, extend, or otherwise describe the scope or the intent of any
provision contained herein.
16.06 Waiver. No action or omission by any Party, including but not limited
to any extension, modification, amendment, forbearance, delay, acceleration,
indulgence, or concession with regard thereto, if any, is intended to, nor shall
constitute or be deemed a waiver, discharge, or release of any other Party or
term, of this Agreement, or any obligation or right established thereby, nor
shall any such action or omission constitute an approval of, or acquiescence in,
any breach hereof, I except as may be expressly agreed to in writing.
16.07 Time. Time is of the essence for all purposes of this Agreement.
16.08 Conformity. Any provision hereof which is in conflict with applicable
laws as of the date hereof, is hereby amended to conform to and comply with such
laws to the maximum and fullest extent permitted thereunder. If, as a result of
such law conflict and/or required amendment thereto, any term, obligation,
right, condition, or provision thereof is held invalid, inoperative, void, or
unenforceable, herein the "Offensive Provision", the remaining provisions hereof
shall (a) remain in full force; (b) in no way be altered, affected, impaired,
invalidated, or otherwise changed by the Offensive Provision; and (c) be
interpreted, construed, and applied as though the Offensive Provision was not in
the first instance contained herein.
16.09 Construction. The terms and provisions hereof have been determined by
arms-length negotiation by the Parties hereto. In the event of a dispute, the
terms hereof should not be construed against any Party as drafter,
notwithstanding the fact that the Company or any one Shareholder may have
physically prepared or processed the written form hereof.
16.10 Counterparts. This Agreement, or any amendments thereto, may be
executed in one or more counterparts, each of which shall constitute and be
deemed an original and binding. All of the counterparts collectively or together
shall constitute one and the same instrument and agreement, binding on all the
Parties. Counterpart copies of this Agreement need not be signed by more than
one (1) Party. Counterparts (a) may be original copies or fax copies and (b) may
contain original signatures or fax signatures.
17.00 INSOLVENCY In the event the Company desires to seek the protection
of any state or federal insolvency law, then the following shall apply.
17.01 Required Consent. Two-thirds (2/3) consent from the Directors and the
Shareholders shall be required to authorize the Company to voluntarily seek the
protection under any insolvency law, notwithstanding anything to the contrary,
including state or federal law, or the Articles of Incorporation.
17.02 Pre-Filing. In the event of a voluntary or involuntary filing under
any insolvency law, then in such event:
A. Notice. The Company will provide each shareholder with
simultaneous, same day written notice thereof and a complete copy of all
filings.
B. Name. The Company will simultaneously, same day change its name so
that the new name has no reference to the name "Inmold". In connection with
this name change, the Company will no longer (1) use any reference to
Inmold in any future business activity, products, and/or services, or (2)
reference its prior affiliation or association with Inmold, Inc.
C. Put. Inmold, Inc. may immediately put and sell to the Company its
interest in and to the Company, herein "Insolvency Put". The Parties will
use best efforts to try to permit Inmold, Inc. to exercise the Insolvency
Put at least fourteen (14) days prior to the actual filing of the
insolvency protection by the Company. The Insolvency Put and the actual
sale shall be
13
<PAGE>
effective immediately upon receipt by the Company of the exercise by
Inmold, Inc. of the Insolvency Put, even if Inmold, Inc. has not (1)
received any payment of the purchase price, (2) returned the Stock to the
Company, or (3) otherwise completely closed the Insolvency Put Transaction.
18.00 GENERAL PROVISIONS
18.01 Representation.
A. The Parties acknowledge that legal counsel preparing this Agreement
("Counsel") was representing the Company and all of the Shareholders
collectively as a group. In preparing this Agreement or forming the
Company, Counsel did not represent any of the shareholders individually.
B. The Parties have been advised by Counsel that a conflict may exist
among their individual interests. Each Party has been advised by Counsel to
seek the advice of separate counsel. Each Party has had the opportunity to
seek the advice of independent counsel.
C. Each Party has received all information necessary to make an
informed decision regarding the consent to this representation and waiver
of conflict of interest with regard thereto. Each Party does hereby consent
to and waive all claims of conflict of interest, breach of duty, or similar
causes related to the representation of the Company by Counsel in
connection with the preparation of this Agreement and the operation of the
Company.
18.02 Outsource Option. The Company does hereby grant and give to Inmold,
Inc. the sole, exclusive, and irrevocable option to manufacture, produce, and/or
supply ("Outsource Option") all products, parts, accessories, and/or related
items which the Company outsources, or otherwise acquires from other sources.
Included with the Outsource Option, the Company shall use best efforts to direct
and steer production, manufacturing and/or sourcing business to Inmold, Inc.
whenever it has the opportunity. The Company shall make full and prompt written
disclosure of all relevant information to Inmold, Inc. related to this Outsource
Option.
18.03 Name Use.
A. If Lukmani is no longer a shareholder of the Company, the Company
may continue to use the name Lukmani in the name of the Company and in, to,
or with any of its products or services.
B. If Inmold, Inc. is no longer a shareholder of the Company, the
Company must immediately do the following:
1. Stop using the name of "Inmold" or the initials of ILD, or any
reasonable variation or version thereof,
2. Stop using any reference to the prior association or
affiliation with Inmold, Inc.,
3. Change the name of its legal entity, assumed names, trade
names, product names, trade marks, service marks, copyrights,
and/or other labels or titles away from the name Inmold or any
reasonable derivation thereof.
19.00 MISCELLANEOUS PROVISIONS
19.01 Notices. All notices, including all demands, consents, requests or
the communications, given or furnished pursuant hereto must be given in writing
to be effective and binding, herein referred to as "Notices". The Notices may be
sent by (a) ordinary, first class U.S. mail, (b) certified or registered U.S.
mail, regardless if the return receipt is received by the sender, (c) any
private next-day delivery carrier, or couriers, or their equivalent, (d)
telegram, telecopy,
14
<PAGE>
telex, fax or (e) personal service. All Notices must be properly addressed and
contain the appropriate or respective addresses as provided herein. All Notices
are intended to and shall be effective on the actual date of the Notice. The
Notices shall be deemed received and delivered for all purposes one (1) day
after the same is deposited or delivered to the carrier or transmitter for the
same regardless of the actual date of receipt. If the last day for the giving or
receiving of any Notice or performing any act under this Agreement is a
Saturday, Sunday or legal holiday in the State of Michigan, then in such event,
the time period and date shall be automatically extended to the next business
day which is not a Saturday, Sunday or legal holiday in the State of Michigan.
Any Party may change its address for purposes of the Notices by giving Notice of
any such change to all the other Parties. Unless and until the Parties are
notified of a change in address, all Notices shall be sent to the Parties at the
address contained in this Agreement. Copies of all Notices shall be sent to: lan
D. Pesses, Esq., MADDIN, HAUSER, WARTELL, ROTH, HELLER & PESSES, P.C., 28400
Northwestern Highway, Third Floor Essex Centre, Southfield, Michigan 48034,
(248) 354-4030 (Ph), (248) 354-1422 (Fax), (248) 827-1866 (Direct).
19.02 Binding Effect. All rights and obligations contained in this
Agreement shall be binding upon and inure to the respective Parties, their
successors and assigns, if any.
19.03 Execution. The Parties, each, separately and individually, have (a)
carefully read, fully understand and agree to all of the terms and provisions of
this Agreement; (b) consulted with, received from, and been represented by
separate and independent legal counsel at all times prior to and simultaneous
with the execution and implementation of this Agreement; (c) signed this
Agreement as their free act and deed without coercion, duress, or other undue
influence whatsoever; and (d) executed and delivered this Agreement as of the
date first set forth hereinabove.
THIS SPACE WAS INTENTIONALLY LEFT BLANK.
THIS AGREEMENT CONTINUES ON THE
NEXT PAGE WITH (PARAGRAPH) 19.04
<PAGE>
19.04 RECEIPT. THE PARTIES HEREBY ACKNOWLEDGE AND ACCEPT A COMPLETE
COPY OF THIS AGREEMENT.
"COMPANY"
In the Presence of: INMOLD LUKMANI MANUFACTURING CORPORATION.
a Michigan corporation
- ------------------------------------ By:
--------------------------------
Nasser Lukmani, its President
- ------------------------------------
SHAREHOLDERS:
- ------------------------------------ ---------------------------------
Nasser Lukmani, individually and as
Trustee
- ------------------------------------
INMOLD, INC.
- ------------------------------------ By:
---------------------------------
Filipp J. Kreissl, its President
- ------------------------------------
- ------------------------------------ ---------------------------------
Arifa Hasan, individually
- ------------------------------------
AGREED TO AND ACCEPTED IN ITS ENTIRETY
- ------------------------------------ Nasser Lukmani Living Trust, dated
2/8/99, or as may be Amended
- ------------------------------------ ----------------------------------
Nasser Lukmani, its sole Trustee
16
<PAGE>
ACTION BY INCORPORATOR
IN LIEU OF MEETING
FOR
INMOLD LUKMANI MANUFACTURING CORPORATION
----------------------------------------
The undersigned, being the Incorporator of INMOLD LUKMANI MANUFACTURING
CORPORATION, a Michigan Corporation, herein the "Corporation", does hereby
consent to and adopt the following resolutions as and for the action of the
Incorporator, for and on behalf of the Corporation, in lieu of a formal meeting:
1. Waiver of Notice.
RESOLVED, that the undersigned hereby waives the necessity of Notice of
Meeting of the Incorporator of the Corporation and the necessity of holding an
actual meeting of the same.
2. Incorporation.
RESOLVED, that Ian D. Pesses is authorized and empowered to form the
Corporation and to serve as the Incorporator for the Corporation.
3. Articles of Incorporation.
RESOLVED, that the Incorporator is authorized and directed execute and file
the Articles of Incorporation, as presented and as may be modified by the
Incorporator.
4. Directors.
A. Designation.
RESOLVED, that the following persons are hereby designated as the Directors
of the Corporation, to serve in such capacity until the first Annual Meeting of
the Shareholders of the Corporation or until their successors are duly elected
and qualified, whichever shall first occur.
1. Nasser Lukmani
2. Arifa Hasan
3. Filipp J. Kreissl
B. Turnover.
RESOLVED, that the Incorporator is authorized and directed to turn over the
affairs of the Corporation to the designated Directors.
5. Minutes.
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RESOLVED, that the Corporation shall be, and hereby is, authorized to make
the original of this Consent part of the official minutes of the Corporation.
6. Binding Effect.
RESOLVED, that the Resolutions and Authorizations contained herein shall be
binding upon the Corporation in accordance wit the terms of that particular
Resolution or Authorization, without the need for any other form of written
agreement, plan, acknowledgement, receipt, or any other item whatsoever.
7. Further Authorization.
RESOLVED, that the Incorporation shall be, and hereby is, authorized to do
all acts and things necessary, desirable or appropriate to effectuate the
foregoing resolutions, including by way of illustration and not limitation, the
preparation, execution, filing and delivering of any and all required documents.
--------------------------------
--------------------------------
Ian D. Pesses
Incorporator
Dated: _______________, 1999
19
<PAGE>
CONSENT RESOLUTIONS AND AUTHORIZATIONS
IN LIEU OF
THE FIRST MEETING
OF
SHAREHOLDERS AND DIRECTORS
OF
INMOLD LUKMANI MANUFACTURING CORPORATION
FOR
FORMATION
The Undersigned, being all of the Shareholders and Directors of Inmold
Lukmani Manufacturing Corporation, herein "Company", do hereby consent to and
adopt the following resolutions as and for the actions of the Shareholders and
Directors of the Company in lieu of holding a formal First Meeting.
I. Waiver of Notice.
RESOLVED, the Shareholders and Directors do hereby waive the necessity of
formal written notice of a meeting of the Shareholders and Directors of the
Company and the necessity of holding an actual formal meeting of the same.
II. Purpose.
RESOLVED, the Company shall be, and hereby is, authorized to engage in and
carry on any activity within the purposes for which a corporation may be
organized under the laws of the State of Michigan.
III.Minority Certification.
RESOLVED, the Company is authorized and directed to obtain and maintain
certification as a minority business enterprise from the Michigan Minority
Business Development Council, or its successor.
IV. Articles of Incorporation.
RESOLVED, the Articles of Incorporation of the Company, as presented, and
as may be modified, shall be and hereby are adopted as, and for the Articles of
Incorporation of the Company.
V. By-Laws.
RESOLVED, the By-Laws of the Company as presented, and as may be modified
by the Shareholders and Directors, shall be, and hereby are, adopted and
approved as the By-Laws of the Company.
VI. Stock.
RESOLVED, the Company is authorized and directed to sell and issue stock in
the Company as follows:
Shares Percent
------ -------
1. Nasser Lukmani 410 41%
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<PAGE>
2. Arifa Hasan 100 10%
3. Inmold, Inc. 490 49%
--- ---
Total 1,000 100%
VII. Directors.
A. Election. RESOLVED, the initial Board of Directors for and of the
Company shall be as follows:
1. Nasser Lukmani
2. Arifa Hasan
3. Filipp J. Kreissl
B. Authority. RESOLVED, the Directors shall have the fullest and broadest
power and authority as directors under Michigan law and to take all actions
necessary, desirable, and/or appropriate to manage the Company.
VIII. Officers.
A. Designation. RESOLVED, the initial Officers of and for the Company shall
be as follows:
1. Nasser Lukmani - President
2. Arifa Hasan - Secretary and Treasurer
B. Authority. RESOLVED, the Officers shall have the fullest and broadest
power and authority as Officers under Michigan law and to take all actions
necessary, desirable, and/or appropriate to operate the Company, including but
not limited to the authority to enter into all agreements for and on behalf of
the Company.
IX. Incorporator Resignation.
RESOLVED, the Company does hereby (a) accept the resignation of Ian D.
Pesses as the Incorporation and initial Agent of and for the Company, and (b)
releases the Incorporator from all liability which may be associated with the
formation and operation of the Company, (i) prior to the sale of Stock to the
Shareholders, (ii) prior to the election of the Directors, and/or (iii) prior to
the designation of the Officers.
X. Specimen Stock Certificate.
RESOLVED, the form of Stock Certificate for the shares of capital stock of
the Company presented to the Shareholders and Directors is hereby adopted as the
Certificate to represent the shares of capital stock of the Company, and that
the Secretary is hereby instructed to cause a specimen copy thereof to be
inserted into the Minute Book of the Company.
XI. Section 1244 Stock.
21
<PAGE>
RESOLVED, all shares of stock of the Company subscribed for now or in the
future, shall be and hereby are issued pursuant and subject to Section 1244 of
the Internal Revenue Code of 1986, as amended, and this reference shall be
sufficient to satisfy the requirements of Section 1244.
XII. Registered Office.
RESOLVED, the registered office of the Company shall be, and hereby is,
28400 Northwestern Highway, Third Floor Essex Centre, Southfield, Michigan
48034.
XIII. Resident Agent.
RESOLVED, the Resident Agent of the Company shall be, and hereby is, Ian D.
Pesses.
XIV. Bank Accounts.
A. Location. RESOLVED, the Company shall be and hereby is authorized
to use such banking institutions as the Officers deem necessary and
appropriate as depositories of the Company, and funds so deposited may be
withdrawn in accordance with the written instructions filed with the
banking institution(s).
B. Signatory Authority. RESOLVED, all checks, drafts, notes, or other
banking instruments for the payment of monies may be signed by the Officers
and/or any other person as the Officers may designate.
XV. Employment Agreements.
RESOLVED, the Company shall be and hereby is authorized, but not required,
to hire any individual and otherwise employ and enter into any written
employment agreements as the Officers may deem necessary, desirable, or
appropriate.
XVI. Office Lease.
RESOLVED, the Company shall be and hereby is authorized to and may enter
into any lease agreement, under any terms and at any location, as the Officers
may deem necessary, desirable, or appropriate.
XVII. Shareholder Agreement.
RESOLVED, the Company shall be and hereby is authorized and directed to
enter into that certain Shareholder and Stock Restriction Agreement, as it
exists now or as it may be revised in the future.
XVIII. Contracts.
RESOLVED, the Incorporator, Resident Agent, Directors, and Officers of the
Company are authorized to and may enter into any contract, agreement, and/or
other arrangement, individually, or in the name of the Company, as may be
necessary, desirable and appropriate for the Company.
XIX. Loans.
RESOLVED, the Company shall be, and hereby is, authorized to and may lend
to and/or borrow from the Shareholders, Directors, and/or Officers and/or any
other person or entity such monies as may be necessary, desirable, or
appropriate. The loans shall be payable pursuant to such terms and
22
<PAGE>
conditions as may be agreed upon by the Officers. So long as such loans are
evidenced on the books of the Company, such loan need not be evidenced by
separate written notes.
XX. Fringe Benefits.
RESOLVED, the Company is authorized to, and may negotiate and obtain such
employee benefits as the Officers may determine from time to time, are in the
best interest of the Company, including by way of illustration and not
limitation, hospitalization and medical insurance, dental insurance, life
insurance, disability insurance, malpractice insurance, legal representation,
accounting, and any other benefits that the Officers, in their sole discretion,
deem appropriate or desirable.
XXI. Expenses of the Company.
RESOLVED, that the Company shall be, and hereby is, authorized and directed
to reimburse the Directors, Officers, employees, and/or agents of the Company
for any and all ordinary and/or necessary business expenses incurred, including
but not limited to travel, entertainment, meals, lodging, automobile insurance,
automobile maintenance, automobile gasoline and oil, gifts, professional
memberships, social memberships, subscriptions, and any and all other ordinary
and/or necessary business expenses that the Officers in their sole discretion,
deem necessary, appropriate, or desirable. If any expense reimbursed by the
Company to the Directors, Officers, and/or employees is disallowed by the
Internal Revenue Service, then in such event, that particular individual shall
immediately reimburse the Company for any and all such disallowed expenses. The
Company may offset or credit any amounts which may be due by the Company to the
particular individual in the event there is any obligation which is owed by the
individual to the Company for expense deductions which are in fact disallowed by
the Internal Revenue Service. Any expense item which is in fact disallowed by
the Internal Revenue Service is not to be treated (a) as an additional income
item to the Company, or (b) as an non-deductible dividend by the Company or to
the affected individual.
XXII. Attorney.
RESOLVED, the Company shall be, and is hereby, authorized and directed to
hire and engage Ian D. Pesses, Esquire and the law firm of Maddin, Hauser,
Wartell, Roth, Heller & Pesses, P.C. as the attorneys for the Company
("Attorneys"), and to pay all fees and costs in connection with such services.
The Company, Shareholders, and Directors do hereby consent to the representation
of the Company by the Attorneys in the matters involving the Company, the
Shareholders, Inmold, Inc., Design Engineering Services, Inc., Inmold Lukmani
Design Technologies, Inc., and all affiliated and related entities and waives
all conflicts of interests involved therewith.
XXIII. Accountant.
RESOLVED, the Company shall be, and is hereby, authorized and directed to
hire and engage Richard Pagac and the account firm of Pagac & Company, P.C. as
the accountants for the Company, and to pay all fees and costs in connection
with such services.
XXIV. Agent Ratification.
RESOLVED, the Company does hereby ratify and approve any and all actions
taken prior to the date hereof, on behalf of the Company by the Incorporator,
Resident Agent, Directors, and/or Officers and acknowledges as being the
obligations of the Company any and all contracts, liabilities and/or
undertakings entered into and/or approved by the Incorporator, Resident Agent,
Directors, and/or Officers of the Company on behalf of the Company.
23
<PAGE>
XXV. Indemnification.
RESOLVED, the Company shall be, and hereby is, authorized and directed to
indemnify, defend and hold harmless the Incorporator, Resident Agent, Directors,
and/or Officers of the Company, to the fullest extent permitted under law, and
subject to the same terms, conditions and procedures as provided in the Articles
of Incorporation and the By Laws, against any loss, liability, claim or judgment
resulting from or caused by any act or omission of or by the Incorporator,
Resident Agent, Directors, and/or Officers of the Company.
XXVI. Binding Effect.
RESOLVED, the Resolutions and Authorizations contained herein shall be
binding upon the Company in accordance with the terms of the particular
Resolution or Authorization, without the need of any other form of written
agreement, plan, acknowledgment, receipt, or any other item whatsoever.
XXVII. Conflict.
RESOLVED, these Resolutions and Authorizations supersede, cancel, and
replace any prior Minutes, Resolutions and Consents of the Members when or if
these Minutes or Resolutions conflict with any such prior Authorizations,
Consents, or Agreements of the Shareholders and/or Directors.
XXVIII. Minutes.
RESOLVED, the Officers shall be, and hereby are, authorized and directed to
make the original of these Resolutions, Authorizations and Decisions part of the
official minutes of the Company.
XXIX. Further Authorizations.
RESOLVED, the President of the Company is hereby authorized, empowered and
directed to do any and all acts and things necessary, desirable and/or
appropriate to implement, effectuate and/or accomplish the foregoing
Resolutions, even if the same may not have been specifically detailed herein,
without the need for additional meetings, communications, authorizations or
consents with and/or from the Members, on behalf of the Company, including by
way of illustration and not limitation, the preparation of any documents, and
the payment of any monies.
DIRECTORS SHAREHOLDERS:
Nasser Lukmani Living Trust, dated 2/8/99,
or as may be amended
- --------------------------- By: _________________________________
Nasser Lukmani Nasser Lukmani, its sole Trustee
- --------------------------- _____________________________________
Arifa Hasan Arifa Hasan
- --------------------------- INMOLD, INC.
Filipp J. Kreissl
By: _________________________________
Filipp J. Kreissl, President
24
<PAGE>
EXHIBIT 99.01
STATE OF INDIANA
OFFICE OF THE SECRETARY OF STATE
CERTIFICATE OF INCORPORATION
OF
INMOLD, INC.
I, SUE ANNE GIIROY, Secretary of State of Indiana, hereby certify that Articles
of Incorporation of the above corporation have been presented to me at my office
accompanied by the fees prescribed by law; that I have found such Articles
conform to law; all as prescribed by the provisions of the Indiana Business
Corporation Law, as amended.
NOW, THEREFORE, I hereby issue to such corporation this Certificate of
Incorporation, and further certify that its corporate existence will begin
January 10, 1997.
[STATE OF INDIANA SEAL] In Witness Whereof, I have hereunto set my
hand and affixed the seal of the State of
Indiana, at the City of Indianapolis, this
Tenth day of January, 1997.
Sue Anne Gilroy
SUE ANNE GILROY, Secretary of State
[Illegible]
------------------------------------
Deputy
EXHIBIT 99.02
STATE OF INDIANA
OFFICE OF THE SECRETARY OF STATE
CERTIFICATE OF EXISTENCE
To Whom These Presents Come, Greeting:
I, SUE ANNE GILROY, Secretary of State of Indiana, do hereby certify that I
am, by virtue of the laws of the State of Indiana, the custodian of the
corporate records and the proper official to execute this certificate.
I further certify that records of this office disclose that
INMOLD, INC.
filed Articles of Incorporation on January 10, 1997, and is a corporation duly
organized and existing under and by virtue of the laws of the State of Indiana.
I further certify this corporation has filed its most recent annual report
required by Indiana law with the Secretary of State, or is not yet required to
file such annual reports, and that Articles of Dissolution have not been filed.
[STATE OF INDIANA SEAL] In Witness Whereof, I have hereunto set my
hand and affixed the seal of the State of
Indiana, at the City of Indianapolis, this
Fifth day of October, 1998.
Sue Anne Gilroy
SUE ANNE GILROY, Secretary of State
[Illegible]
------------------------------------
Deputy
EXHIBIT 99.03
MICHIGAN DEPARTMENT OF CONSUMER AND INDUSTRY SERVICES
CORPORATION, SECURITIES AND LAND DEVELOPMENT BUREAU
Date Received (FOR BUREAU USE ONLY)
10-09-98 This document is effective on the date
filed, unless a subsequent effective
date within 90 days after received date
is stated on the document.
FILED - 10/13/98
Name Administrator
InMold, Inc. MI DEPARTMENT OF CONSUMER & INDUSTRY
Address SERVICES CORPORATION, SECURITIES &
755 W. Big Beaver, Ste 312 LAND DEVELOPMENT BUREAU
City State Zip Code 10/09/1998 CSALKELD
Troy Michigan 48084 Trans 00939963
Document will be returned to the SANDERS CONFECTIONERY PRODUCT
name and address you enter above. 1619
If left blank document will be Total $10.00
mailed to the registered office. Crps Org & Filing & LLC art
EXPIRATION DATE: DECEMBER 31,2003
CERTIFICATE OF ASSUMED NAME
For use by Corporations, Limited Partnerships and Limited Liability Companies
(Please read information and instructions on reverse side)
Pursuant to the provisions of Act 284, Public Acts of 1972 (profit
corporations), Act 162, Public Acts of 1982 (nonprofit corporations), Act 213,
Public Acts of 1982 (limited partnerships), or Act 23, Public Acts of 1993
(limited liability companies), the corporation, limited partnership, or limited
liability company in item one executes the following Certificate:
1. The name of the corporation, limited partnership, or limited liability
company is:
Inmold, Inc.
2. The identification number assigned by the Bureau is: [628827]
3. The assumed name under which business is to be transacted is:
Inmold Corporation
4. This document is hereby signed as required by the Act.
COMPLETE ITEM 5 ON LAST PAGE IF THIS NAME IS ASSUMED BY MORE THAN
ONE ENTITY.
Signed this 5th day of October, 1998
By /s/ John M. Sanders
--------------------------------------------------------
(Signature)
John M. Sanders Secretary
--------------------------------------------------------
(Type or Print Name) (Type or Print Title)
--------------------------------------------------------
(Limited Partnerships Only-indicate Name of General Partner
if the General Partner is a corporation or other entity)
EXHIBIT 99.04
PROXY STATEMENT
NOTICE
Special Meeting of Shareholders of
SANDERS CONFECTIONERY PRODUCTS, INC.
April 9, 1997
In Connection with Proposed Transaction Involving Exchange
of up to 3,911,122 Outstanding Shares of Common Stock,
Par Value $.00001 Per Share, of INMOLD, INC.
for up to 7,822,244 Outstanding Shares of
SANDERS CONFECTIONERY PRODUCTS, INC.
and a Contemplated Acquisition of GP Plastics, Inc. by Inmold Inc.
This is a Notice of Sanders Confectionery Products, Inc. ("SCP") relating
to the proposed arrangement and reorganization (exchange of stock) transaction
(the "Transaction") involving an exchange on a 2 for 1 basis of up to 7,822,244
of SCP's outstanding shares of common stock, par value $.001 per share (the
"Share[s]"), by SCP shareholders of record on February 12, 1997, subject to
certain adjustments, for 3,911,122 shares of Inmold, Inc., an Indian corporation
("Inmold"), common stock, par value $.00001 per share, pursuant to the terms and
conditions of (i) Section 3(a)(10) of the Securities Act of 1933, as amended
(the "Act"), Michigan Compiled Laws Section 801(j)(A) and (B), and Section
801(b)(19) and Sections 450.1204 and .1205 (herinafter referred to as the
"Applicable Statutes"), and (ii) an Agreement and Plan of Reorganization, with
respect to a contemplated acquisition of GP Plastics, Inc., a Michigan
corporation, ("GP") which shall be referred to as the "Agreement".
The Proxy statement is furnished in connection with the solicitation of
proxy/consents by the Management of SCP to be cast at a Special Meeting of
Shareholders of SCP to be held at the Novi Hilton located at 8 Mile and Haggerty
Roads in Novi, Michigan at 1:30 P.M. Detroit time on April 9, 1997 for the
purpose of considering and voting upon the adoption, approval and authorization
of the Transaction, in which each SCP shareholder will acquire 1 share of Inmold
free trading common stock in exchange for 2 of his, her or its outstanding
shares of SCP common stock that they owned of record on February 12, 1997. The
Transaction will require each SCP shareholder to exchange approximately sixteen
(16%) percent of his, her or its holdings of SCP common stock for shares of
Inmold common stock, that will be free-trading in most, of not all instances.
That transaction is to be followed by a contemplated acquisition of all of the
outstanding shares of common stock of GP by Inmold for 1,000,000 shares of
Inmold's restricted common stock. (see Part I - "General Information").
To be effective, the Transaction must be adopted, approved as to its
fairness and authorized by at least the consent of a majority in number of SCP
shareholders of record on February 12, 1997 holding at least 3/4 in cash value
of each outstanding class of shares issued by SCP (which has only one class of
capital stock presently outstanding). Following satisfaction of this condition
and recommended approval of the arrangement involved in the Transaction by the
Special Master, Joel Serlin: approval of such arrangement and the fairness of
the Transaction shall be required upon petition to the Oakland County, Michigan
Circuit Court, Judge John J. McDonald presiding, in Sanders Confectionery
Products, Inc. vs. Francis Houttekeir, II, a shareholder of record on December
27, 1996 and on February 12, 1997, Case No. 97-536279-CZ, each SCP shareholder
of record on February 12, 1997 shall be deemed to have exchanged 2 SCP Shares
outstanding that are owned by him, her or it for 1 share of Inmold unrestricted
common stock (restricted only as to Messrs. Fillip J. Kreissl and John M.
Sanders, as corporate insiders) allocated among them, based on the number of SCP
Shares owned by him, her or it on that record date, February 12, 1997.
Shareholders shall have no appraisal or dissenters' rights in connection with
the proposed Transaction.
SCP shareholders may be taxed on the Inmold shares received by him, her or
it to the extent of any difference between their basis for tax purposes in their
SCP Shares exchanged and the fair market value of the Inmold Shares that they
receive. Each SCP shareholder should review this potential with his, her or its
tax advisor, particularly if their basis for 2 SCP Shares will not exceed the
par value of $.00001 per share of Inmold common stock that they will receive in
exchange therefor. If the necessary favorable consent is received, all SCP
shareholders must so exchange approximately sixteen (16%) percent of their
outstanding shares of SCP common stock for shares of Inmold common stock. There
shall be no exceptions. A letter of transmittal shall be sent to each SCP
shareholder by the SCP Stock Transfer Agent (Fidelity Transfer Company, 1800
South West Temple, Suite 301, Box 53, Salt Lake City, Utah, 84116) in connection
with their surrender of SCP shares exchanged for Inmold shares, which will be
sent to them reasonably promptly after the necessary approvals take place. It is
to be completed and returned together with duly endorsed and guaranteed
certificates for the SCP shares which are to be exchanged. New certificates of
Inmold and adjusted certificates representing any excess shares of SCP will
thereafter be sent to them by the SCP Stock Transfer Agent. If the transaction
is considered to be taxable to the SCP shareholders, and SCP believes that it
will be, SCP shareholders will be subject to a income (probably capital gains)
tax on the amount of taxable income that they receive; that is, par value,
($.00001) per Inmold share received, less their basis in the 2 Shares of SCP
exchanged for each share of Inmold. SCP believes that the tax impact of this
Exchange will be negligible.
The date of this Notice is March 18, 1997
EXHIBIT 99.05
PROXY STATEMENT
Special Meeting of Shareholders of
SANDERS CONFECTIONERY PRODUCTS,INC.
April 9,1997
<PAGE>
SANDERS CONFECTIONERY PRODUCTS, INC.
PROXY STATEMENT
TABLE OF CONTENTS
Section
PART I
SUMMARY AND GENERAL INFORMATION................................................1
1.1 General...............................................................1
1.2 Purpose of the Meeting................................................1
1.3 Summary of Certain Aspects of the Transaction.........................2
1.3.1 Consummation of the Transaction..............................2
1.3.2 Consideration................................................2
1.3.3 Tax Consequences.............................................2
1.3.4 Lack of Appraisal Rights.....................................2
1.3.5 Analysis of SCP and Inmold Shares............................3
1.3.6 Business of SCP, Inmold and GP...............................3
1.3.7 Selected Financial Information...............................4
1.4 Consent Vote Required to Approve Transaction and Record Date .........4
1.5 Voting/Consent by Proxy...............................................4
1.6 Solicitation of Proxies/Consents......................................4
1.7 Expenses..............................................................4
PART II
THE TRANSACTION................................................................5
2.1 Mechanics of the Transaction..........................................5
2.2 Reasons for the Transaction...........................................5
2.3 Exchange of Stock Certificates........................................5
2.4 Federal Income Tax Consequences.......................................6
2.5 Agreements and Intentions of Certain SCP Shareholders.................6
2.6 Appraisal Rights......................................................7
PART III
3.1 HISTORY AND BUSINESS..................................................8
3.1.1 History......................................................8
3.1.2 Business of SCP..............................................8
3.2 Properties............................................................9
3.3 Directors and Principal Officers......................................9
3.4 Remuneration and Other Transactions with Officers and Directors......10
3.5 Principal Shareholders...............................................11
i
<PAGE>
3.6 Description of SCP Common Stock......................................11
3.7 Dividend Policy......................................................11
3.8 Price of Common Stock................................................12
PART IV
OVERALL TRANSACTION...........................................................13
PART V
MISCELLANEOUS.................................................................23
5.1 Accounting...........................................................23
5.2 Legal Opinions.......................................................23
5.2 Source of Information................................................23
ii
<PAGE>
PROXY STATEMENT
Special Meeting of Shareholders of
SANDERS CONFECTIONERY PRODUCTS, INC.
April 9, 1997
In Connection with Proposed Transaction
Involving Exchange of up to 3,911,122 Outstanding Shares of Common Stock,
Par Value $.00001 Per Share, of INMOLD, INC.
for up to $7,822,244 Outstanding Shares of
SANDERS CONFECTIONERY PRODUCTS, INC.
and a Contemplated Acquisition of GP Plastics, Inc. by Inmold, Inc.
PART I
SUMMARY AND GENERAL INFORMATION
1.1 General
This Proxy Statement is furnished to holders of common stock, par value
$.001 per share, of Sanders Confectionery Products, Inc. ("SCP") in connection
with the solicitation of proxies by management of SCP for use at a special
meeting of the shareholders called by Joel Serlin, Special Master appointed by
the Oakland County, Michigan Circuit Court, to be held on April 9, 1997, and at
any adjournment thereof. The meeting will be held at the Novi Hilton, located at
8 Mile and Haggerty Roads, Novi, Michigan, at 1:30 P.M. Detroit Time. The
address of the executive offices of SCP is 901 Wilshire Drive, Suite 360, Troy,
Michigan, 48084, telephone (810) 362-3223.
1.2 Purpose of the Meeting
The purpose of the special meeting of shareholders is to consider and vote
upon the adoption and the fairness of an arrangement and reorgaization (exchange
of stock) transaction ("Transaction"). Prior to the Transaction, Inmold, Inc.
("Inmold"), an Indiana corporation, is a wholly-owned subsidiary of SCP, a
Michigan corporation, having its principal place of business at 901 Wilshire
Drive, Suite 360, Troy, Michigan. Under the Transaction, SCP will exchange up to
3,911,122 free-trading shares of Inmold (out of the 4,000,000 shares of its
common stock, par value $.00001 per share, that it previously sold to SCP at par
value, using funds advanced on its behalf of SCP for that purpose by Filipp J.
Kreissl/John M. Sanders) with SCP's shareholders on the basis of 2 shares of SCP
common stock for each share of Inmold common stock. The exchange will require
each SCP shareholder to exchange approximately sixteen (16%) perce nt of his,
her or its holdings of SCP common stock for the Inmold common stock. After the
exchange, Inmold contemplates acquiring all of the outstanding shares of GP
Plastics, Inc., a Michigan corporation ("GP"), in exchange for 1,000,000
restricted shares of the ou tstanding common stock of Inmold. Subsequent to the
Transaction, SCP shareholders of record on February 12, 1997, would own
approximately seventy-five (75%) percent of the outstanding shares of Inmold
common stock, which would be unrestricted as to its trading, except for Inmold
shares owned by Messrs. Kreissl and Sanders and other GP insider/affiliates.
SCP shareholders must approve the fairness of the Transaction by consent of
a majority in number representing 3/4 in value of the outstanding shares of SCP
to be affected by the Transaction.
1
<PAGE>
A hearing to approve the arrangement and the fairness thereof, Judge John
J. MacDonald presiding, upon a petition to the Oakland County Circuit Court at
1200 Telegraph Road, Pontiac, Michigan (the "Court"), which shall be conducted
on April 23, 1997 at 8:30 a.m. The petition for the hearing is entitled Sanders
Confectionery Products, Inc. v. Francis Houttekier, II, a representative of all
SCP shareholders of record on December 27, 1996 and February 12, 1997, Case No.
97-536279-CZ. All SCP shareholders may attend.
The Board of Directors of SCP has approved the Transaction that it proposes
to be adopted, approved and authorized.
The management of SCP does not anticipate that any other matter will come
before the meeting.
1.3 Summary of Certain Aspects of the Transaction
The following is a summary of selected information appearing elsewhere in
this Proxy Statement. It should be considered in conjunction with the more
detailed information:
1.3.1 Consummation of the Transaction
Consummation of the Transaction requires an affirmative vote of the holders
of the issued and outstanding Shares of SCP common stock, as provided in Section
1.4 hereinafter.
1.3.2 Consideration
If the Transaction is thereafter consummated, up to 7,822,244 outstanding
Shares of SCP will be converted into rights to receive up to 3,911,122 shares of
Inmold common stock, par value $.00001 per share.
1.3.3 Tax Consequences
SCP has been advised that the proposed Transaction will be a fully taxable
transaction under the Internal Revenue Code of 1986, as amended ("IRC").
Accordingly, SCP shareholders will be required to recognize taxable gain or loss
by reason of exchange of their SCP Shares for Inmold shares. Since the value of
the SCP shares exchanged will be negligible and there is no credible market
therefor at this time, and the value of the freely trading shares of Inmold to
be received is estimated to be the par value of $.00001 per share, and since
Inmold will not own all of the GP or any other substantial common stock or
assets until later, if and when the Transaction takes place, the value thereof
is expected to be low, at least as of the time of the Transaction. SCP
shareholders who receive Inmold common stock pursuant to the Transaction for
their SCP shares (there will be no appraisal rights) will be required to
recognize gain or loss by reason of that exchange. SCP shareholders will be
required to recognize ordinary income or loss or short or long term capital gain
or loss under Section 1244 of the IRC, if applicable thereto. To determine the
relative tax effects of the proposed Transaction upon each SCP shareholder in
particular, he, she or it is advised to consult with his, her or its own
adviser.
1.3.4 Lack of Appraisal Rights
SCP shareholders shall have no right to dissent and demand appraisal rights
with respect to his, her or
2
<PAGE>
its SCP Shares, which are to be exchanged in connection with the Transaction.
(see Section 2.6 "Appraisal Rights")
1.3.5 Analysis of SCP and Inmold Shares
The holders of SCP shares and Inmold shares have substantially the same
rights, privileges and obligations under the Michigan and Indiana business
corporation acts, respectively, as any other shareholders would normally have.
SCP shares have never paid a cash dividend. SCP shares have been sporadically
traded in a limited over-the-counter market over the past several years.
Presently, there are no independent quotes for shares of SCP common stock.
Inmold has been recently organized in Indiana. Its shares are newly issued,
with no history, and Inmold has no operating history or earnings. Public trading
of shares acquired by each affiliate of Inmold (not previously an owner of GP
shares), are limited to a maximum of approximately 4% of the outstanding shares
of Inmold per annum under Rule 144 under the Securities Act of 1933. Affiliates
of GP will own in the aggregate approximately 832,000 restricted shares of
Inmold, and the GP affiliates who will not be able to trade the Inmold old
shares that they receive in the Acquisition without registration thereof for 2
years (one year from April 29, 1997 on). The rest of the outstanding shares of
Inmold, or slightly less than 3,400,000 shares of common stock, will be freely
tradeable on the over-the-counter market after the Transaction.
1.3.6 Business of SCP, Inmold and GP
SCP currently has no active trade or business. It is currently prosecuting
claims arising out of the bankruptcy proceedings of its principal subsidiary,
Fred Sanders, Inc., in 1987.
Inmold is a newly organized Indiana corporation with no business
operations, assets or liabilities at this time. It was organized on January 10,
1997. It seeks to develop a public trading market for its common stock and to
acquire GP in taxable transactions. Its address is the same as that of SCP, set
forth on page 1, above.
Inmold's present purpose is to carry out the Transaction and to acquire GP
and other plastics injection molding companies. 4,000,000 of its outstanding
shares of common stock have been sold to SCP, with Messrs. Kreissl and Sanders
paying for them at par with cash.
GP was organized in 1965. Its principal office is located at 3910
Industrial Drive, Rochester Hills, Michigan, 48309. Its telephone number is
(810) 852-5022. Its business operations consist principally of manufacturing
plastic molded parts for the automotive industry. GP acquired A.E.P
Technologies, Inc., a similar plastics molding company, in April, 1996.
The par value of the GP common stock is $1.00 per share. GP has common
stock, and debt-like classes of nonvoting preferred shares outstanding. The GP
common stock is the only class that is being exchanged for Inmold common stock
in this transaction. The preferred classes of capital stock are subject to a
mandatory redemption agreement, with varying terms. The preferred classes are
not affected by the Transaction.
3
<PAGE>
1.3.7 Selected Financial Information
SCP had no earnings per share, dividends per share, book value or tangible
book value per share for the years ended December 31, 1992, 1993, 1994, 1995 or
1996.
1.4 Consent Vote Required to Approve Transaction and Record Date
Holders of record of SCP common stock at the close of business on February
12, 1997, will be entitled to consent to adoption of the Transaction and to vote
on any other matter that may properly be brought before the special meeting. On
February 12, 1997, there were 48,889,022 shares of SCP common stock outstanding.
Each share of SCP common stock is entitled to one vote or consent. In order for
the Transaction to be effective, a majority in number of SCP shareholders
holding 3/4 in value of the outstanding shares of SCP common stock on the record
date, February 12, 1997, must consent thereto, and approval of the arrangement
in and overall Transaction must be approved by the Oakland County Circuit Court.
1.5 Voting/Consent by Proxy
If a proxy/consent is given to SCP management in the form distributed,
properly executed and returned, the SCP shares represented thereby will be voted
and consented at the special meeting of Shareholders of SCP and any adjournment
thereof. Where a shareholder of record on February 12, 1997 specifies a choice,
his, her or its proxy will be voted in accordance with such specification. If no
specific direction is given, the Shares represented thereby will be voted "for"
adoption, approval and authorization of the Transaction. Management of SCP does
not currently know of any other matters to be presented at the special meeting,
but if other matters are presented, the shares will be voted in accordance with
the recommendations of management of SCP. A proxy may be revoked at any time
prior to its exercise by written notice delivered to SCP.
1.6 Solicitation of Proxies/Consents
Solicitation of proxies/consents will be made initially by mail and/or by
personal contact by the management of SCP. If they deem such solicitation
advisable, SCP officers, directors, and employees may also solicit proxies in
person or by telephone without additional compensation. In addition,
proxies/consents may be solicited by nominees and other fiduciaries who may, at
the request of SCP, mail material to or otherwise communicate with the
beneficial owners of SCP shares held by them.
1.7 Expenses
If the Transaction is consummated, the expenses in connection with the
solicitation of proxies/consents, including clerical work, printing, postage,
and other costs and expenses, including certain allowable, chargeable expenses,
will be borne by SCP. Any other partie s will bear their own other costs and
expenses. If the transaction is abandoned for any reason, SCP, Inmold and GP
will each pay their own respective fees, costs and expenses. For this purpose,
the expenses of printing this Proxy Statement and related documents would be
attributed to SCP.
4
<PAGE>
PART II
THE TRANSACTION
2.1 Mechanics of the Transaction
SCP is soliciting proxies/consents from its shareholders for the purpose of
adopting, approving and authorizing the Transaction at a special meeting of SCP
shareholders to be called and held for that purpose.
The Transaction is being conducted on a Petition before Judge John J.
McDonald in the Oakland County Circuit Court in Pontiac, Michigan. The Petition
takes the form of SCP vs. one of its shareholders of record on both December 27,
1996 and February 12, 1997. The Petition takes place under Section 3 (a)(10), 15
USC Section 77(c)(a)(10) of the Securities Act of 1933, as amended, MCLA Section
451.801(j)(6)(B) and 451.802(b)(9), Article V of the SCP Articles of
Incorporation and MCLA Section 450.1204, 1205. A copy of the Complaint is
attached hereto, together with an order appointing Joel Serlin as Special Master
in this matter. The Petition seeks to have the Court call a shareholders meeting
to approve the Transaction, to be followed by a hearing in the Court, whereby
the Court will be asked to act to approve the arrangement and the fairness of
the Transaction. If the SCP shareholders vote to approve the Transaction and the
Court favorably holds that that Transaction is fair and approved, it will be
carried out and the 3,911,122 shares to be exchanged will be issued a s free
trading shares, with 88,878 shares being retained by SCP. Inmold shall also sell
90,000 shares of its common stock with the Daniel S. Hoops Irrevocable Trust,
for which it shall pay the par value $.00001 therefor. Tbereafter, Inmold
contemplates exchanging 1,000,000 of its restricted shares of common stock for
all of the issued and outstanding shares of common stock of GP as a private
placement transaction.
2.2 Reasons for the Transaction
The Board of Directors of SCP has considered the financial condition,
earnings history and trends, dividend record, common stock mark et prices, book
value and future prospects of SCP and believes that the Transaction will be
desirable and in the best interests of SCP and its shareholders. Although the
transaction is taxable to the SCP shareholders, the amount of taxability is not
believed to be significant to any SCP shareholders. Inmold is new and has no
significant assets or liabilities, but it has a reasonable business future to
look forward to since the Inmold shares will be tradeable, the SCP shareholders
will be able to liquidate a portion of their position in an effort to recoup
some of their losses on their SCP investment, or in the alternative, to hold the
Inmold shares for investment.
2.3 Exchange of Stock Certificates
Promptly after the Transaction is approved by the SCP shareholders and the
Court, SCP shall deliver a Letter of Transmittal calling for each SCP
shareholder to endorse it and the SCP certificate(s) for the number of SCP
Shares to be exchanged, and send them to the SCP transfer agent. Upon receipt of
such duly signed Letter of Transmittal and certificate(s), the SCP transfer
agent will return a new certificate for the correct number of SCP Shares
remaining after the exchange, together with a certificate for his/her or its
Inmold shares.
5
<PAGE>
2.4 Federal Income Tax Consequences
Hoops, Hoops & Hoops, P.L.C., counsel to SCP, has, in a letter addressed to
SCP, given its written opinion that the Transaction will be a taxable
transaction under the Federal Internal Revenue Code of 1986, as amended, with
the following specific consequences:
(a) Taxable gain or loss will be realized and recognized by SCP's
shareholders upon the exchange.
(b) The taxable gain or loss to be recognized will be the difference
between the fair market value of the Inmold shares received a and the basis
(bases) of each SCP shareholder in his, her or its particular SCP Shares
exchanged therefor. The long or short term characterization of any capital
gain or loss for tax purposes resulting from the exchange transaction will
be based upon the holding period for each of the exchanged SCP Shares as of
the date of the exchange.
(c) The value of the Inmold shares received for the exchanged SCP
Shares will be treated as received in a distribution in redemption of his,
her or its SCP Share interest and taxed to the recipient SCP shareholder as
a sale or exchange of a capital asset and not as a share dividend. The
recipient SCP shareholders basis in the Inmold shares received shan be the
fair market value on the date of the exchange.
(d) In addition, the GP shareholders will recognize gain equal to the
excess of the fair market value of the Inmold restricted shares that they
receive over their basis in the GP shares exchanged therefor.
A ruling of the Federal Internal Revenue Service on the tax consequences
identified in subparagraphs (a) through (d) above has not been requested.
The opinion described in this Section 2.4 is not binding on the Internal
Revenue Service, which may take a different position. The tax impact of the
exchange on any specific SCP and GP shareholder depends substantially on the
specific circumstances of that SCP and GP shareholder and the timing of the
specific transaction. SCP and GP shareholders are advised to consult their own
tax counsel for advice regarding the effect of the Transaction in their own
peculiar circumstances. See Appendix 1, Tax Opinion.
2.5 Agreements and Intentions of Certain SCP Shareholders
The following SCP shareholders (watch term includes their respective
families) intend to vote all SCP Shares owned of record by them on February 12,
1997, or with respect to which they have the right to vote, in favor of
adoption, approval and authorization of the Transaction and to use their best
efforts to cause the Transaction to be adopted, approved and authorized by SCP
shareholders and cons ummated according to its terms. These SCP sharcholders own
or have the right to vote a total of l4,213,730 SCP shares or 29.1% out of a
total 48,889,022 SCP shares outstanding on the record date, February 12, 1997.
See Section 1.4 regarding the SCP shareholder vote/consent necessary to approve
the Transaction:
6
<PAGE>
<TABLE>
<CAPTION>
Name of Number of Percent of
Title of Beneficial Shares(1) 3/4 in Position
Class Owner Value With Company
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Filipp J. Kreissl 7,284,788 19.9% President, Treasurer
and Director
- ----------------------------------------------------------------------------------------------------
Common John M. Sanders 6,928,942 18.9% Chairman, Secretary
and Director
- ----------------------------------------------------------------------------------------------------
Total 14,213,730 38.8%
Common
</TABLE>
(1)Includes Shares owned jointly or severally of record and beneficially by
the named person above or with his spouse and/or by any trust and/or family
members or businesses controlled by him, her or it (see "Directors and
Principal Officers").
Inmold has not signed an Agreement and Plan of Reorganization with the GP
shareholders to acquire all of their outstanding shares of GP common stock (and
it does not intend to acquire any shares of any other class of GP capital stock
in this Transaction) but some or all of the GP shareholders may have presigned
the Agreement and Plan of Reorganization. After this Transaction, Inmold intends
to sign that agreement, but reserves the right not to sign it, if good reason
arises (of which it is currently unaware) before it is signed.
2.6 Appraisal Rights
SCP takes the position that no appraisal/dissenter's rights exist for SCP
shareholders who dissent from the Transaction. Since the exchange is pro rata
based on the number of outstanding SCP Shares on the record date, February 12,
1997, there is absolutely no change in any SCP shareholder's position, e.g., the
book value, voting rights, etc. All that happens to them economically is that
they will receive an additional asset in the form of Inmold shares in an amount
proportionate to the number of SCP Shares that are owned on the Fe bruary 12,
1997 record date. The net effect is that they have received the equivalent of a
stock dividend, plus a new interest in Inmold's plastics injection molding
business, if and when Inmold acquires GP Plastics, Inc. Neither SCP nor its
counsel are giving or may be relied upon for legal advice in this regard.
7
<PAGE>
PART III
SANDERS CONFECTIONERY PRODUCTS, INC.
3.1 HISTORY AND BUSINESS
3.1.1 History
SCP is a public corporation. The assets of its operating subsidiary were
sold in a bankruptcy proceeding in 1988. SCP was not involved in the bankruptcy.
Since that time it has concentrated on certain litigation arising from the
bankruptcy which seeks recovery for the creditors and SCP shareholders; on
resolving its obligations; and on positioning itself to return to active
operations.
3.1.2 Business of SCP
Presently SCP has no business operations. Its intentions are to provide
value for its shareholders through the Transaction and Acquisition described
herein.
Personnel
SCP has only three persons who work for the corporation, Filipp J. Kreissl,
John M. Sanders and Barbara Myhal.
Background
SCP was organized in 1986 to provide a public parent for Fred Sanders,
Inc., then a 111-year-old confectionery business, as well as to explore
opportunities in non-food businesses.
A public offering, was undertaken at the end of 1986 which provided net
proceeds of approximately $4,800,000, substantially all of which were invested
in a two-year plan to provide for sales growth for the Fred Sanders, Inc.
subsidiary.
This investment was beginning to show material results toward the end of
1987. However, Heller Financial Inc., which was the principal the lender to Fred
Sanders, Inc., had changed its business plan. This caused it to breach its
contract with Fred Sanders, Inc. without notice. The result was that Fred
Sanders, Inc. was forced into a Chapter 11 bankruptcy proceeding. It seems that
Heller had been acquired by Fuji Bank of Japan while in a distressed condition
in 1984. Once in bankruptcy, Heller forced the appointment of an operating
trustee, without the knowledge and approval of members of the creditors
committee. The trustee appointment was not valid because of the appointee's
failure to file the required disclosures, including the fact that he had a
serious and adversarial conflict with, and bias against the president of Fred
Sanders, Inc.
The result of the actions of Heller and the trustee, Jay Alix, who has
continued to serve to this date despite the invalidity of his appointment and
motions for his removal which have not yet been finally adjudicated, was a
liquidating sale and demise of the Fred Sanders business, the only asset of its
public parent, SCP. This would not have occurred but for the effect of that
appointment.
SCP, the public company, was kept out of the bankruptcy proceeding.
Since the liquidating sale of the
8
<PAGE>
Fred Sanders business in 1988, the objective of the public company has been to
restore value for its shareholders, including the recovery of the Fred Sanders
name and assets.
Litigation
Early in 1989, Sanders Confectionery Products, Inc. and a shareholder filed
a 13-count lawsuit against Heller, its counsel and the trustee, Jay Alix, citing
fraud on the bankruptcy court, conspiracy and securities fraud. On the same day,
the Company filed a motion for removal of the trustee for his deliberate failure
to disclose his conflict of interest and bias, which would have prevented his
appointment. The facts of the lawsuit were never heard. Despite appeals to the
U.S. Supreme Court, the case was dismissed solely on procedural grounds.
As to the action against Alix, the chair of the creditors committee filed a
motion for his removal on behalf of all creditors. The majority of the members
of the committee also filed their own motions or joined the existing ones. This
action was also dismissed on procedural grounds. The Court noted, however, that
Alix had failed to make the necessary disclosures and that that could be the
basis for his removal. Such removal would result in the return of all fees which
he and his firm collected. This dismissal is presently on appeal with the Court
of Appeals for the Sixth Circuit, where recent case law has affirmed the removal
of professionals for conflict of interest, whether or not disclosed, under the
principal of strict liability. An important issue here is, as it was in the
13-count law-suit, that to date there has never been a hearing as to the facts.
3.2 Properties
Presently SCP occupies rented office space consisting of approximately 1200
square feet, located at 901 Wilshire Drive, Suite 360, Troy, MI 48084.
3.3 Directors and Principal Officers
The Board of Directors of SCP presently consists of two (2) persons, each
of whom will serve as such until the next annual meeting or until his successor
is duly elected and qualified. Each director as of February 12, 1997, according
to information supplied by him, has had for the last five years the occupations
set forth opposite his name below and presently owns beneficially, directly or
indirectly, the number of SCP Shares set forth opposite his name below:
<TABLE>
<CAPTION>
Name and Address of Beneficial Title or Posi6on Became a Term Expires Number of Percent of
Owner Director shares (1) Class
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Filipp J. Kreissl Director 1986 1997 5,018,542 10.3%
4230 Orchard Way CEO, President and
Bloomfield Hills, MI 48301 Treasurer
- --------------------------------------------------------------------------------------------------------------
John M. Sanders Director 1986 1997 5,106,090 10.4
18349 13 Mile Road, Apt. 34 Chairman and
Southfield, MI 48076 Secretary
- --------------------------------------------------------------------------------------------------------------
Total 10,124,632 20.7%
Common
- --------------------------------------------------------------------------------------------------------------
(1)See discussion in Section 2.5
</TABLE>
9
<PAGE>
A biographical history of each of the above-named individuals follows:
John M. Sanders
John M. Sanders, 71, is Chairman, Secretary and a Director of SCP. He is a
graduate of Amherst College with a bachelor's degree in mathematics. He joined
Fred Sanders, the Company's predecessor company, as a cost accountant in 1947,
and worked in sales from 1952 to 1962. Mr. Sanders was elected Secretary of Fred
Sanders in 1959, Executive Vice President of Fred Sanders in 1962, President of
Fred Sanders in 1963, and Chairman of the Board of all predecessors of the
Company and of the Company, since that time.
Filipp J. Kreissl
Filipp 1. Kreissl 75, is President, CEO, Treasurer and a Director of SCP.
He is a graduate of Northwestern University. From 1941 to 1 962 Mr. Kreissl was
employed by Detroit Controls Corporation, a subsidiary of American Standard,
Inc., eventually as President. From 1962 to 1965, he was employed as Vice
President in charge of subsidiaries for Detroit Engineering Machine Co. From
1965 to 1975, Mr. Kreissl owned all of the common stock of and operated Robin
Products, Inc., a manufacturer of engineered fastening devices for the
automotive market. From 1975 until 1980 he was occupied as principal owner and
President of KWD Group, Inc., a management firm specializing in management for
severely distressed companies. In addition, from 1980 to January, 1982, he
served as Executive Vice President of Fred Sanders. Mr. Kreissl was elected
President for Fred Sanders in February, 1982. He served as President of Fred
Sanders, Inc. until February 1985 and as Vice Chairman until September, 1985,
when he was again elected President. He has served as President of the Company
since its inception.
3.4 Remuneration and Other Transactions with Off-icers and Directors
The following table shows the aggregate direct remuneration paid by SCP
during its fiscal years ended December 31, 1994, 1995 and 1996 to each director
of SCP:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Principal Director Other Annual Total Compen-
Name Position Years Salary Bonus Fees Compensation sation
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
John M. Sanders Chairman 1994 None None None None None
Secretary, 1995 None None None None None
Director 1996 None None None None None
======================================================================================================================
Filipp J. Kreissl President CEO, 1994 None None None None None
Treasurer and 1995 None None None None None
Director 1996 None None None None None
======================================================================================================================
All Officers and 1994 None None None None None
Directors as a 1995 None None None None None
Group (2)(1) 1996 None None None None None
======================================================================================================================
</TABLE>
(1)The above figure for all officers and directors as a group includes
compensation for consulting and legal services. Messrs. Sanders and Kreissl have
each received 500,000 shares of SCP restricted common stock for each of the
years 1994 and 1995.
10
<PAGE>
SCP has no, and has had no annuity, pension or retirement plans for the benefit
of its officers and directors.
No officer or director of SCP has been indebted to SCP for amounts
exceeding $10,000 at any time. Except as otherwise disclosed in this Proxy
Statement, no officer or director has been or is to be party to any material
transaction or proposed transaction with SCP. No officer or director of SCP has
or has held any option to acquire any security issued by SCP.
3.5 Principal Shareholders
The following lists all persons and groups of persons known by the
management of SCP to be beneficial owners/1/ of more than 5% of SCP Common
Stock, their addresses, the number of Shares of SCP common stock beneficially
owned by them and the percentage of all issued a nd outstanding SCP common stock
their holdings represent:
See Sections 2.5 and 3.3
Except as otherwise described in this Proxy Statement, the management of
SCP knows of no contractual arrangements which may result in a chanae of control
of SCP.
3.6 Description of SCP Common Stock
SCP is authorized to issue 50,000,000 Shares of common stock $.001 par
value ("Shares" or "SCP common stock"). As of February 12, 1997, 48,889,022 of
such SCP Shares were outstanding. Holders of record of SCP common stock are
entitled to cast one vote for each share held of record by such shareholder on
all matters voted upon by the shareholders, including election of directors.
Holders of SCP common stock have no preemptive right to subscribe for or to
purchase any additional securities issued by SCP. In the event of liquidation of
SCP, the holders of SCP common stock are entitled to share pro rata in the
distribution of assets remaining after payment of debts and expenses. All issued
and outstanding shares of SCP common stock are fully paid and nonassessable. The
holders of SCP common stock are entitled to dividends when, as and if declared
by the Board of Directors of SCP out of funds legally available for that
purpose. SCP common stock has no conversion rights and is not subject to
redemption.
As of February 12, 1997, there were no outstanding options to purchase any
securities of SCP. Since February 12, 1997, no options to purchase SCP Shares
have been granted.
3.7 Dividend Policy
Since SCP's formation on August 6, 1986, it has never paid a cash dividend.
Prior to commencing negotiation of the proposed acquisition, SCP's Board of
Directors had established a no dividend policy. SCP has never declared or
distributed any stock dividends.
- -----------------
/1/Beneficial ownership includes SCP shares owned by family members.
<PAGE>
3.8 Price of Common Stock
There is a limited market for SCP common stock in the over-the-counter
market. SCP had 2,991 shareholders of record and three (3) inactive market
makers for its Shares on February 12, 1997. There have been occasional trades,
but no recent, independent quotations through brokers interested in the Shares.
12
<PAGE>
PART IV
OVERALL TRANSACTION
The objective of the Transaction described herein is to employ a newly-organized
public holding company to build, through acquisition, a significant automotive
supplier organization in the plastics injection molding industry, thereby
providing an investment opportunity for the shareholders of SCP and other
entities with an interest in the Transaction.
The Transaction centers on Inmold, a newly-organized Indiana corporation doing
business in Michigan. By the initial Transaction being proposed, approximately
seventy-five percent (3,911,122 shares) of the outstanding common stock of
Inmold will be exchanged pro rata for 7,822,244 shares of outstanding SCP common
stock held by SCP's shareholders, which amounts to approximately sixteen percent
of their holdings. The SCP shares will be retired.
This Transaction will have the effect of (1) making Inmold a public company with
approximately 2,991 shareholders and (2) providing the shareholders of SCP with
a majority interest in a new holding company having prospective income-producing
assets and stock which will be freely tradable without registration.
Inmold will then be in a position to attempt to make its first acquisition of
all of the outstanding common stock of GP.
GP is effectively a new company formed by physically combining two plastics
injection molding businesses with a total of 55 years of service to the
automotive industry between them. The combination was accomplished by the
acquisition of A.E.P. Technologies, Inc. of Fraser, Michigan, a Michigan
corporation, by GP in April, 1996. Both companies had experienced extremely
adverse circumstances during the mid-1990's which had threatened their continued
operations as separate companies.
In the past year, the management of GP completed the implementation of a new
product line for General Motors Corporation, its principal customer; physically
consolidated the operations of A.E.P. in GP's own facility; sold the former
A.E.P. real estate and plant; restructured its debt; and completed a refinancing
with a commercial lender, C.I.T. Group/Credit Finance, Inc. The effect of these
actions is dealt with in the following pages.
THE PROPOSED TRANSACTION
The Transaction being proposed here consists of the following steps:
1. Filipp J. Kreissl/John M. Sanders have purchased 4,000,000 shares of
the common stock of Inmold at par value ($.00001 per share), on behalf
of SCP. These are the only outstanding shares of Inmold at this point.
2. SCP will next distribute approximately 3,911,122 of its 4,000,000
shares of Inmold to its shareholders in a taxable exchange for
approximately 7,822,244 of their Sanders shares, which will be
retired. The effect of the exchange and retirement will be that the
shareholders will
13
<PAGE>
maintain their proportionate ownership of SCP, and there will be
7,822,244 less shares outstanding.
3. It is anticipated, consistent with the position taken by the United
States Securities and Exchange Commission in similar transactions,
that those shares of Inmold exchanged in reliance upon the Section
3(a)(1O) exemption from registration may be freely traded by the
shareholders of SCP under Section 4(l) of the 1933 Act, with the
exception of those shares governed by Rule 144(a)(1) under the 1933
Act for affiliates (insiders) of SCP, Inmold and GP.
4. Concurrently with the above-described exchange, Inmold will attempt to
issue an additional 1,000,000 of its shares in an exchange with the
seven shareholders of GP for all of the outstanding shares of that
company, which would make it a wholly subsidiary of Inmold.
Though there can be no assurance thereof, the anticipated earnings of GP will
provide an earnings base under the stock of its public parent, Inmold.
While the shareholders of Inmold will experience dilution as the result of
additional acquisitions which involve the use of stock, it is anticipated that
the earnings from such acquired companies will grow at a rate greater than that
of the dilution.
Inmold, Inc.
Inmold was incorporated on January 10,1997, as an Indiana corporation doing
business in Michigan. It has been organized as a holding company in the plastics
injection molding industry. Its objective is to develop a public company of a
size significant to the automotive industry through successive acquisitions of
privately-held molding companies.
Inmold has no operating history and neither material assets nor liabilities at
this time. Through the transaction being proposed here, Inmold will become a
public company with stock that is tradable on the over-the-counter market
without registration, though there can be no assurance that trading on that
market will take place or assurance of any other parameters about the market,
such as price, volume, etc. at any time as they impact Inmold's common stock.
Inmold has 100,000,000 shares authorized, reflecting its plan for development
through both internal growth and acquisition. Only 5,000,000 shares will be
issued in the Transaction being proposed here. While Sanders Confectionery
Products, Inc. will be the sole initial shareholder of Inmold, it is anticipated
that the Transaction will result in approximately 2,991 shareholders for the
Company, none of whom will hold more than 10% of the outstanding shares.
As the last step in this Transaction, Inmold will, attempt to make its first
acquisition by purchasing GP, a privately held company, through a taxable
exchange of shares with the seven shareholders thereof. Due to the low values of
shares being exchanged, no substantial taxability is anticipated in this
Transaction.
14
<PAGE>
Principal Office
901 Wilshire Drive, Suite 360
Troy, Michigan 48084
(810) 362-3223
Principal Shareholders
The following table sets forth the number and percentage of shares of common
stock of Inmold owned of record and beneficially by each officer, director and
owner of 10% of the outstanding common stock of Inmold, and owned by all
officers and directors as a group, both before and after the completion of the
entire Transaction proposed herein.
<TABLE>
<CAPTION>
Number of Inmold Shares
Beneficially Owned Percentage of Ownership
----------------------- -----------------------
Name and Address Before After Before After
- ---------------- Transaction Transaction Transaction Transaction
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Sanders Confectionery 4,000,000 88,878 100.0 1.8
Products, Inc.
901 Wilshire Drive, Ste. 360
Troy, MI 48084
John M. Sanders -0- 408,487 0.0 8.2
18349 W. 13 Mile, Apt. 34
Southfield, MI 48076
Filipp J. Kreissl -0- 401,483 0.0 8.0
4230 Orchard Way
Bloomfield Hills, MI 48301
John F. Horner -0- 150,011 0.0 3.0
4809 Foxcroft
Troy, MI 48098
Philip B. Fischer -0- 20,000 0.0 0.4
1524 Sandringham Way
Birmingham, MI 48301
J. Will Paull -0- 2,000 0.0 0.1
960 Woodridge Hills Drive
Brighton, MI 48116
All Off All and Directors as a -0- 1,070,859 -0- 21.5
Group (5)
</TABLE>
15
<PAGE>
Management
The initial Executive Officers and Directors of Inmold, Inc are as follows:
Filipp J. Kreissi, President and Director
John M. Sanders, Secretary and Director
John F. Homer, Treasurer
Philip B. Fischer, Director
J. Will Paull, Director
A biographical history of each of the above-named individuals follows:
John M.Sanders,71,is a gaduate of Amherst College, with a bachelor's degree in
mathematics. He joined Fred Sanders as a cost accountant in 1947, and worked in
sales from 1952 to 1962. Mr. Sanders was elected Secretary of Fred Sanders in
1959, Executive Vice President of Fred Sanders in 1962, President of Fred
Sanders in 1963, and subsequently Chairman of the Board of both the successor
company, Fred Sanders, Inc., and Sanders Confectionery Products, Inc.
Filipp J. Kreissl, 75, is a graduate of Northwestern University. From 1941 to
1962 Mr. Kreissl was employed by Detroit Controls Corporation a subsidiary of
American Standard, Inc., eventually as President. From 1962 to 1965, he was
employed as Vice President in charge of subsidiaries for Detroit Engineering
Machine Co. From 1965 to 1975, Mr. Kreissl owned all of the common stock of and
operated Robin Products, Inc., a manufacturer of engineered fastening devices
for the automotive market. From 1975 until 1980 he was occupied as principal
owner and President of KWD Group, Inc., a management firm specializing in
management for severely distressed companies. In addition, from 1980 to January,
1982, he served as Executive Vice President of Fred Sanders. Mr. Kreissl was
elected President for Fred Sanders in February, 1982. He served as President of
Fred Sanders, Inc. until February, 1985 and as Vice Chairman until September,
1985, when he was again elected President. Since 1986, he has served as
President of Sanders Confectionery Products, Inc. He has been a Director of GP
since 1996.
John F. Horner, 46, is a magna cum laude graduate of the University of Detroit,
with a bachelor's degree in accounting. He has been a certified public
accountant since 1974. From 1972 to 1974 he was a staff accountant and
accountant-in-charge with Arthur Young & Company. He served in a controllership
capacity with two companies until 1981, when he became Chief Financial Officer
for BHT Distributing Company and Commercial Air Systems, Inc. From 1981 until
1996, he was Chief Financial Officer for Car-O-Liner Company, Thielenhaus
Microfinish Corporation and Omni Engineering Corporation. He was employed as
Controller, Treasurer and Chief Financial Officer by GP in 1996 and was elected
to the Board of Directors in the same year.
Philip B. Fischer, 60, received his undergraduate degree from Adelphi College
and a law degree from George Washington University. Prior to moving to Detroit
in 1972, he was President of Divco-Wayne Sales Financial Corporation in New
York. He served as President of Divco Truck Corporation in Detroit until 1975,
when he organized Philip B. Fischer Company, Inc., a real estate and financial
consulting firm specializing in commercial properties, corporate restructuring
and business development. He is a past Vice Chairman of the Greater Detroit
Chamber of Commerce, responsible for the Government relations and economic
development
16
<PAGE>
departments. Presently, he serves as a Director of the Michigan Jobs Commission
and of the Detroit-Wayne County Port Authority, both gubernatorial appointments,
and as a Director of the Michigan Chamber of Commerce.
J. Will Paull, 74, attended the Detroit Institute of Technology and the Detroit
College of Law and began his career in the life insurance business in 1944. He
was conferred the professional designation of Chartered Life Underwriter in 1969
and Certified Financial Planner in 1979. He was President of Associated
Financial Planning Corporation from 1960 to 1984. Subsequently, he served as
Chairman, Chief Executive Officer and a Director of Associated Mariner Financial
Group, Inc., a financial services holding company, which he continues to serve
as Chairman and a Director. He is Chairman and a Director of several wholly-
owned subsidiaries: Mariner Financial Services, Inc., a national securities
broker-dealer; Mariner Planning Corporation a national registered investment
advisory firm; Associated Mariner Agency, Inc., a licensed life and health
insurance agency; and Mariner Mortgage Corporation.
G P Plastics, Inc.
G P Plastics, Inc. was organized in Michigan on April 8, 1965 for the purpose of
"manufacturing by injection molding, extrusion and other means, using plastic
materials." It moved to its present location in Rochester Hills, Michigan in
1973, where it operates from a 46,000 square foot facility in two separate
buildings on a 7.35 acre industrial site.
The Company's products include a range of plastic molded parts, especially
comfort handles for minivans, sports utility vehicles and light trucks for the
Truck and Bus Division of General Motors, with which a long-term relationship
has existed.
In April 1996, GP acquired a similar, but smaller, plastics injection molding
company, A.E.P. Technologies, Inc. of Fraser, Michigan for cash and stock. In
July, the equipment and operations of the latter were physically consolidated in
the GP manufacturing facility in Rochester Hills. The vacated real estate of
A.E.P. Technologies, Inc. was sold in August for its appraised value.
Principal Office
3910 Industrial Drive
Rochester Hills, Michigan 48309
(810) 852-5022
GP has 50,000 shares of common stock authorized and 43,610 shares outstanding.
Principal Stockholders
The following table sets forth the number and percentage of shares of common
stock of GP owned of record and beneficially by each officer, director and owner
of 10% of the outstanding common stock of GP, and owned by all officers and dire
ctors as a group. Also shown are the respective percentages of the common stock
of Inmold owned after the taxable stock exchange.
17
<PAGE>
<TABLE>
<CAPTION>
Perentage of Ownership
----------------------
Number of Shares of
Common Stock of G P GP Inmold
Name and Address Beneficially Owned Before Exchange After Exchange
- ---------------- -------------------- --------------- --------------
<S> <C> <C> <C>
Owen A Pierce 21,000 48.2 9.9
5375 Orion Road
Rochester, MI 48306
John F. Horner 6,542 15.0 3.0
4809 Foxcroft
Troy, MI 48098
David C. Shifflett 6,542 15.0 3.0
23585 Hagen Road
Macomb Township, MI 48042
Joseph P. Schmidt 3,360 7.7 1.8
226 Norcliff Drive
Bloomfield Hills. MI 48302
Filipp J. Kreissl -0- -0- 8.0/1/
4230 Orchard Way
Bloomfield Hills, MI 48301
All Officers and Directors as a 37,444 85.9 25.7
Group
</TABLE>
/1/From exchange for 802,967 of his shares of the common stock of Sanders
Confectionery Products, Inc
Management
The Executive Officers and Directors of GP are as follows:
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Owen A. Pierce 78 Director, Chairman of the Board and Secretary
John F. Horner 46 Director and Treasurer
Filipp J. Kreissl 75 Director
Joseph P. Schmidt 65 Director
David C. Shifflett 44 Director
</TABLE>
A biographical history of each of the named individuals follows:
Owen A. Pierce, 78, attended Ferris State College as an electrical engineering
student. In 1946, he took a position as Plant Superintendent with General
Machine & Tool Co. From 1959 until 1964, he was Plant Manager for Bopp & Decker
Co. Of Birmingham. He was a founder of GP in 1965 and has been an owner and
officer of the Company since that time. He was elected President of the Company
in 1974 and currently serves as a Director and as Chairman of the Board of
Directors.
18
<PAGE>
John F. Horner, 46, is a magna cum laude graduate of the University of Detroit,
with a bachelor's degree in accounting. He has been a certified public
accountant since 1974. From 1972 to 1974 he was a staff accountant and
accountant-in-charge with Arthur Young & Company. He served in a controllership
capacity with two companies until 1981, when he became Chief Financial Officer
for BHT Distributing Company and Commercial Air Systems, Inc. From 1981 until
1996, he was Chief Financial Officer for Car-O-Liner Company, Thielenhaus
Microfinish Corporation and Omni Engineering Corporation. He was employed as
Controller, Treasurer and Chief Financial Officer by GP in 1996 and was elected
to the Board of Directors in the same year.
Filipp J. Kreissl, 75, is a graduate of Northwestern University. From 1941 to
1962 Mr. Kreissl was employed by Detroit Controls Corporation, a subsidiary of
American Standard, Inc., eventually as President. From 1962 to 1965, he was
employed as Vice President in charge of subsidiaries for Detroit Engineering
Machine Co. From 1965 to 1975, Mr. Kreissl owned all of the common stock of, and
operated Robin Products, Inc., a manufacturer of engineered fastening devices
for the automotive market. From 1975 until 1980 he was occupied as principal
owner and President of KWD Group, Inc., a management firm specializing in
management for severely distressed companies. In addition, from 1980 to January,
1982, he served as Executive Vice President of Fred Sanders. Mr. Kreissl was
elected President for Fred Sanders in February, 1982. He served as President of
Fred Sanders, Inc. until February, 1985 and as Vice Chairman until September,
1985, when he was again elected President. Since 1986, he has served as
President of S anders Confectionery Products, Inc. He has been a Director of GP
since 1996.
Joseph P. Schmidt, 65, is a graduate of the University of Pittsburgh with a
bachelor of science degree in education. He was named to the All-American
football team in 1952. He was captain of the Detroit Lions football team in the
NFL for nine years, played in the Pro Bowl for ten years and was elected to the
NFL Hall of Fame in 1973. He coached the Detroit Lions for six years. After
retiring with a 43-34-7 record in 1972, he established Joe Schmidt Sales, a
manufacturers representative organization selling to the automotive
manufacturers and Tier I suppliers. He is also Vice President of Michigan Multi-
King, which operates 20 Burger King restaurants in the Detroit metropolitan
area. He has been a Director of GP since 1984.
David C. Shifflett, 44, is a graduate of Fraser, (MI) High School, where he
earned a four-year scholarship to Western University in industrial arts. From
1968 until 1974, he was employed as an apprentice and then as mold-maker by B &
C Industries of Fraser. He was a general foreman and latterly General Manager of
ACM Corporation in Fraser from 1974 until 1977. In 1977, he became one of three
owners of the company which became A.E.P. Technologies, Inc. in 1987. He served
as President of A.E.P. Technologies , Inc. until its acquisition by GP in 1996.
He holds 11 patents for devices in industrial products.
A.E.P. Technologies, Inc.
A.E.P. Technologies, Inc. was organized in Michigan in 1987 as a result of the
merger of two related companies, Al-Ko Enterprises and Al-Ko Products. The
former was established in 1976 and was engaged in the production of tooling and
prototype tools and parts. The latter was organized in Michigan in 1977 and was
involved solely in the manufacturing of parts.
Prior to its acquisition by GP in April, 1996, the Company operated its plastics
injection molding business from a 16,000 square foot facility in Fraser,
Michigan. It provides a range of molded parts (including the Al-Ko
19
<PAGE>
manifold, which is protected by trademarks). Chrysler Corporation has been the
Company's largest customer, accounting for about one-third of all sales.
The Combined Companies
GP and A.E.P. Technologies, Inc. are now operating as a single company under the
former's name, effectively as a new company with consolidated manufacturing,
sales and administrative operations since August, 1996.
The two companies operating separately had a total of 55 years of service to the
automotive industry between them. Both experienced extremely adverse
circumstances during the mid-1990's which had threatened their continued
operations.
In the course of 1995, however, GP was able to secure orders for a new line of
comfort handles from General Motors which was fully implemented in 1996. This
was the initial step in a business plan directed at a return to profitability
through (1) physical consolidation of the two companies; (2) the aggressive
development of new business opportunities with major customers; (3)
restructuring of the companies' debt; (4) refinancing with a commercial lender;
and (5) the sale of the A.E.P.. Technologies, Inc. plant and real estate. All of
these steps were completed in 1996.
New Business
Annualized sales for the new company are approximately $11,000,000 with only
sixty-five (65%) percent of the present production capacity of the Rochester
Hills facility being used. This provides a basis for management's belief that
additional sales will bring a proportionately greater degree of profitability.
Some of these additions are scheduled for the second quarter of 1997 in the form
of new sales commitments from General Motors and Chrysler, which together are
expected to amount to nearly $2,000,000 per year in sales.
Also, the new company has been selected to design and produce a new steering
column bracket for Chrysler under the S.C.O.R.E. cost reduction program. If
implemented, as expected in the late summer of 1997, this part will add
twenty-five to fifty percent to the present sales level.
Effect of Consolidation
Beginning with the August through November period, the new consolidated company
operated at a virtual break-even. This was accomplished despite the effect of
the General Motors strikes in October and November which management estimates
affected sales by $216,000 and income by $90,000. The new company has operated
profitable since the beginning of 1997.
After the consolidation of the two companies, and in consideration of the new
business referred to herein, General Motors accounts for approximately
sixty-seven (67%) percent of sales, and Chrysler Corporation accounts for
approximately twenty percent.
20
<PAGE>
Material Obligations
Coincident with the consolidation of the two companies, and required under the
terms of the new financing, GP negotiated extended-term agreements with its
major creditors, the obligations to whom had become material to continued
operations because of the adverse circumstances of the mid-1990's.
These agreements consist of a combination of cash paid at the time of the
closing of the new financing and redeemable preferred stock of GP for the
balance. The preferred stock is redeemable by the creditors over periods ranging
from 12-36 months, but payments cannot be made unless the tangible net worth of
GP exceeds $400,000.
GP has also cast the remaining payments to V. Allen Koch for his majority
stockholdings of A.E.P.. Technologies, Inc. in the amount of $244,000, in the
form of redeemable preferred stock. Redemption payments are spread over a period
of 14 months, with the same restriction on payments as cited above.
With respect to the purchase of the real estate and facility presently leased by
GP, an agreement has been executed with the unrelated owner of one-half
interest, Donald C. Nolta, to purchase his half-interest for $775,000 no later
than May 31, 1997. An additional agreement with respect to past-due rent was
also executed, with payments being made on an installment basis.
The financing arrangement with C.I.T. Group/Credit Finance, Inc. consists of a
term loan in the initial amount of $1,156,000, secure d by the fixed assets of
the consolidated companies, and a working capital line of credit secured by all
accounts receivable and inve ntories. The latter varies in amount, but stood at
$1,069,000 at the time of closing on the loan, September 13. Monthly principal
pay ments of $20,000 are being made on the term loan.
GP also is obligated on certain loans involving related parties in the amount of
$275,000. The lenders involved are Joseph P. Schmidt and John F. Horner, both
members of the Board of Directors.
Contracts
The sales relationship between the new consolidated company and its major
customers is based on one-year, blanket purchase orders, usually geared to the
model year of the automotive industry. Deliveries are then scheduled through
releases to the various plants.
Competition
The new company operates in a highly competitive environment where service,
quality and price are critical to the automotive industry. There are many
plastics injection molding companies serving the industry in Michigan and other
states. In many instances, the competitors are much larger and better financed,
and some are regional and national in scope.
While not exclusive to it, the new company has developed a reputation for
innovative, proactive approaches to cost reduction opportunities.
21
<PAGE>
Property
GP presently leases a 46,000 square foot, one story manufacturing facility,
consisting of two buildings at 3910 Industrial Drive in Rochester Hills,
Michigan. The facility is situated on a 7.35 acre industrial site. The property
is leased from two owners, including Owen A. Pierce, the principal shareholder
of GP and a second, unrelated party. Each owns an undivided half-interest in the
property.
GP has, however, entered into an agreement to purchase the property from the
present owners by May 31,1997 for cash. Management does not anticipate
difficulty in arranging mortgage financing for the transaction, and has
undertaken such negotiations, though there is no financing therefor in place yet
and no guarantee thereof can be made at this time.
An environmental pollution situation was identified in a very limited area of
the property. A plan to eliminate it, using the soil vapor evaporation process,
has been developed and will be implemented in the first half of 1997 at an
expense which management of GP does not expect to affect the company's financial
condition materially. The work will be monitored by the Department of
Environmental Quality of the State of Michigan.
Stock Options
Neither Inmold nor GP have any existing or contemplated stock option agreements.
Legal Proceedings
To the best of the knowledge of management of the companies involved in this
transaction, litigation pending or threatened against them consists only of
collection actions, none of which are material to the financial position of any
of them.
22
<PAGE>
PART V
MISCELLANEOUS
5.1 Accounting
In connection with the acquisition of GP by Inmold and as soon as the
Exchange portion of the Transaction is completed, Inmold shall publish its
unaudited financial statements and file them with any market under Rule 15c-2-11
under the Securities Exchange Act of 1934, as amended.
5.2 Legal Opinions
Legal matters in connection with SCP have been passed upon by the law
offices of Hoops, Hoops & Hoops, P.L.C., 31555 West Fourteen Mile Road, Suite
315, Farmington Hills, Michigan 48334.
5.2 Source of Information
The information contained in this Proxy Statement relating to GP and SCP
has been furnished by each of them respectively for inclusion in this Proxy
Statement. GP has relied upon SCP with respect to the accuracy and completeness
of the information concerning SCP, and SCP has relied upon GP with respect to
the accuracy and completeness of the information concerning GP.
23
EXHIBIT 99.06
AFFIDAVIT
SANDERS CONFECTIONERY PRODUCTS, INC.
REPORT OF CHAIRMAN
April 9, 1997
The undersigned being first duly sworn deposes and says as follows:
1. My name is John M. Sanders
2. I am Chairman of the Board of Directors of Sanders Confectionery
Products, Inc. ("S.C.P.") and as such I chaired the Special Meeting of
Shareholders of S.C.P. (the "Meeting") on April 9, 1997.
3. Based on the report of Inspector of the Meeting, 48,889,022 shares of
common stock of S.C.P. were outstanding of record on February 12, 1997. Of that
number, 27,624,922 shares were present at the meeting in person and by proxy.
27,610,502 shares of common stock were voted for the arrangement and
reorganization (exchange of stock) transaction (the "Transaction") and 14,420
shares were voted against the Transaction. Since the vote in favor of the
Transaction exceeded a majority of the Shareholders (35) owning 3/4 in value of
the outstanding shares of record of S.C.P. in February 12, 1997, the proposal
passed.
IN WITNESS WHEREOF, I hereby set my hand on behalf of S.P. on this
14th day of April, 1997.
/s/ John M. Sanders
--------------------
John M. Sanders
Chairman
STATE OF MICHIGAN )
)SS:
COUNTY OF OAKLAND )
Subscribed and sworn to before me on this 14 day of April, 1997
/s/ Barbara J. Myhal
---------------------
Notary Public
Name: Barbara J. Myhal
----------------
My Commission expires 5/25/98
County of Oakland
EXHIBIT 99.07
STATE OF MICHIGAN
IN THE CIRCUIT COURT FOR THE COUNTY OF OAKLAND
SANDERS CONFECTIONERY PRODUCTS, INC.
Plaintiff,
vs.
FRANCES HOUTTEKIER, II, A SHAREHOLDER
OF RECORD ON DECEMBER 27, 1996 OF SANDERS
CONFECTIONERY PRODUCTS, INC.
Defendant.
- ---------------------------/
HOOPS, HOOPS & HOOPS, P.L.C JOEL H. SERLIN (P20224)
By: Frederick K. Hoops (P15109) Special Master
Frederick H. Hoops, III (P52397) 2000 Town Center, Suite 1500
Daniel S. Hoops (P54720) Southfield, Michigan 48075-2058
Attornys for Plaintiff (810) 353-7620
31555 W. 14 Mile Road, Suite 315
Farmington Hills, Michigan 48334
(810) 932-2990
MORGANROTH & MORGANROTH FRANCES HOUTTEKIER, II
By: Mayer Norganroth (P17966) Defendant
Attorney for Plaintiff 300 E. Maple
3000 Town Center, Suite 1500 Birmingham, Michigan
Southfield, Michigan 48075
(810) 355-3084
- ---------------------------/
ORDER APPROVING REORGANIZATION,
ARRANGEMENT/EXCHANGE OF STOCK TRANSACTIONS UNDER
MCLA 4501204 AND .1205; MSA 21.200(204) AND MSA 21.200(205) AND
MCLA 451.801(j)(6)(B); MSA 19.7876(401(j)(6)(B) AND SECTION 3(a)(10) OF
THE SECURITIES ACT OF 1933, AS AMENDED
At a session of said Court, held in the Oakland County
Courthouse in the city of Pontiac, County of Oakland
State of Michigan on:
Apr 23 1997
--------------------------
PRESENT: HONORABLE JOHN J. MCDONALD
CIRCUIT JUDGE
This matter having come before the Court on application made in Plaintiff's
Complaint and Petition to appoint a special master regarding a corporate
reorganization, arrangement/exchange of stock transactions, the Court's
subsequent Order Appointing Special Master on February 5, 1997 and Plaintiff's
Motion for Hearing on Special Master's Report and Recommendation and for Order
<PAGE>
Approving Reorganization Arrangement/Exchange of Stock Transactions Under MCLA
4501204 and .1205; MSA 21.200(204) and MSA 21.200(205) and MCLA 451.801
(j)(6)(B); MSA 19.776(401(j)(6)(B) and Section 3(a)(10) of the Securities Act of
1933, as amended.
In addition, the Court has received and given weight to the report and
recommendation of its Court-Appointed Special Master, Joel Serlin, in this case
and has considered any comments made in this hearing.
IT IS HEREBY ORDERED that:
A. The reorganization is approved for purposes of Section 401(j)(6)(B)
of the Michigan Uniform Securities Act; MCLA 451.801(j)(6)(B); MSA
19.776(401(j)(6)B);
B. The reorganization, arrangement/exchange of stock transactions are
approved and sanctioned for the purposes of Sections 204 and 205 of the
Michigan Business Corporation Act; MCLA 4501204 and.1205; MSA 21.200(204)
and MSA 21.200(205);
C. The reorganization, arrangement/exchange of stock transactions
under Sections 204 and 205 of the Michigan Business Corporation Act; MCLA
450.1204 and .1205;MSA 21.200(204) and MSA (21.200(205) shall be binding on
all of the holders of outstanding shares of the common stock of Plaintiff
and Plaintiff, and
D. The fairness of the transaction is approved for purposes of Section
3(a)(10) of the Securities Act of 1933, as amended.
/s/ John J. McDonald
--------------------------
CIRCUIT COURT JUDGE
EXHIBIT 99.08
DRAFT FOR REVIEW Contact: Mike Szudarek
[email protected]
Michael Shmarak
[email protected]
Marx Layne & Co.
248-855-6777
World's First Thermoplastic Steering Column Support Bracket
Earns SPE "Most Innovative Use of Plastics" Award
TROY, Mich., Jan. XX, 1999 - InMold Corp.
(NASDAQ Bulletin Board OTC: MOLD)-in conjunction with DaimlerChrysler and Dupont
Automotive-recently earned the Society of Plastic Engineers (SPE) "Most
Innovative Use of Plastics" award in the chassis/hardware/assembly category for
an innovative appplication of advanced plastic injection molding technology.
The winning component-which debuted on the entire 1999 Chrysler minivan
lineup-is the world's first thermoplastic steering column support bracket. The
new component, developed in partnership with DuPont Automotive and
DaimlerChrysler, is composed of Zytel(R) nylon 66, a glass-reinforced nylon.
SPE awards are made annually based on the trend-setting nature of an
application, as well as its anticipated impact on the automotive industry. In
citing InMold's innovative steering column support bracket for its chassis/
hardware/assembly category, the SPE noted the product's cost and weight savings;
design, installation and safety advantages; and potential for expanded
application of the basic materials technology.
"It is always a tremendous accomplishment to be recognized by one's peers,"
said Dave Shifflett, InMold's vice president of new business development. "At
InMold Corp., we've invested in an environment where our engineers are
encouraged to create new, innovative product solutions. We've combined the most
modern computer-aided design equipment with the expertise learned from more than
three decades of manufacturing molded plastic parts. The result is a unique
blend of capabilities which allow us to produce components with benefits that
far exceed those made from steel, magnesium or other materials."
(more)
<PAGE>
SPE Award......Page 2
The innovative steering column support bracket, which appears in the Dodge
Caravan, Plymouth Voyager and Chrysler Town & Country, was introduced during the
middle of the automaker's production cycle-unique for a new component.
The revolutionary new bracket provides a 30 percent reduction in cost, a 10
percent savings in weight (compared to its magnesium predecessor), increased
durability and simplified installation. The new steering column bracket from
InMold also provides a significant reduction in annual tooling costs, reduced
assembly scrap (compared to the previous magnesium component), and improved
safety through greater pliancy and reduced flammability.
Headquartered in Troy, Mich, InMold Corp. (NASDAQ Bulletin Board OTC:
MOLD), provides highly engineered components and systems design solutions to the
automotive industry, with injection molding and engineering facilities in
southeastern Michigan. InMold was formed in 1997 as a public corporation for the
purpose of acquiring a family of injection molding companies. Later that year,
it acquired and physically consolidated two long-time industry suppliers-GP
Plastics, Inc. and A.E.P. Technologies, Inc., both of Rochester Hills, Mich.
EXHIBIT 99.09
[GMA CAPITAL LETTERHEAD]
November 1, 1998
Mr. Filipp J. Kreissl
Inmold, Inc.
755 W. Big Beaver Rd.
Suite 312
Troy, MI 48084
Re: The raising of additional capital, financings,
refinancings, joint ventures, strategic
alliances, mergers and/or acquisitions and
general financial advisory services.
Dear Mr. Kreissl:
We understand that Inmold, Inc., its subsidiaries, affiliates, and any of its
assigns jointly referred to as "Inmold") wishes to retain GMA Capital, L.L.C.
("GMA") as Financial Advisor on a month-to-month basis in connection with the
above-captioned transaction or any transaction similar thereto.
As Financial Advisor, GMA will help to establish a list of acquisition targets,
circulate inquiry letters, negotiate acquisition structures, identify
lenders/investors, coordinate any acquisitions or financings on behalf of
Inmold, arrange for financing transactions, coordinate market-making activities
and provide general financial advisory services.
As consideration for these services, Inmold agrees to pay GMA a monthly retainer
fee equal to $ 10,000 on the first of each month, unless otherwise mutually
agreed. In addition, Inmold agrees to reimburse GMA for its pre-approved travel
and out-of-pocket expenses relating to this relationship. Expense reimbursement
shall be due within 15 days following receipt of an invoice. An interest charge
of one and one half percent (1.5%) per month will apply to all late payments of
retainers and expenses.
If during the term of this letter agreement there are negotiations with a party
introduced to a potential transaction by GMA which leads to a concluded
transaction during, or within 18 months of the termination of this letter, or,
GMA advises or consults with respect to an offer. agreement, commitment, letter
of intent or the like, which leads to a concluded transaction during or within
18 months of the termination of this letter, Inmold will compensate GMA with a
Transaction Fee paid at closing and equal to an amount based on both the type of
transaction and total Funds as set forth below:
Financings
. one percent (1%) of any senior debt facility
. two and one half percent (2 1/2%) of any subordinated debt facility
. five percent (5%) of any proceeds generated through the sale of common stock
or other equity interest (excluding secondary or rights offerings which shall
bear a fee of three percent (3%)
31500 Northwestern Highway Suite 120 Farmington Hills Michigan 48334
Telephone (248) 851-9200 Facsimile (248) 851-9208
<PAGE>
Mr. Filipp J. Kreissl
November 1, 1998
Page 2
Acquisitions & Mergers
two percent (2%) of total Funds
In connection with the closing of any acquisition or merger, inmold will grant
GMA options to obtain equity of Imold, in an amount and at terms to be mutually
agreed upon prior to the closing of the transaction.
As used herein, "Funds" means the sum of all money, property (including all sums
promised to be paid in the future as represented by written instruments),
securities paid or transferred at closing and all debt (at face amount) whether
assumed, refinanced or discounted. GMA will have a lien on all Funds transferred
at closing and a copy of this letter agreement will cause the payer of such
Funds to pay GMA its Transaction Fee directly out of Funds transferred at
closing and, if insufficient, from any amount to be paid thereafter. Inmold will
indemnify GMA for all reasonable legal costs that GMA incurs in collecting its
Transaction Fee.
The Inmold may terminate this agreement at any time and for any reason
whatsoever. However, regardless of termination, GMA will be due any outstanding
retainer fees and all Transaction Fees otherwise payable in accordance with this
letter agreement.
If the above correctly describes the agreement between Inmold, Inc. and GMA
Capital, LLC. please sign and return a copy of this letter agreement.
Sincerely,
GMA Capital, LLC. Agreed and Accepted by Inmold, Inc.
and by its duly authorized
representative:
/s/ David S. Eberly
Signed:/s/ F.J. Kreissl
David S. Eberly ----------------------------
Director
Its: President
-------------------------------
Dated: 11/19/98
-----------------------------
EXHIBIT 99.10
[FIRST OF MICHIGAN LETTERHEAD]
November 11, 1998
Mr. Fillipp J. Kreissl ENGAGEMENT LETTER
President
Inmold, Inc.
755 E. Big Beaver
Suite 312
Troy, Michigan 48083 PRIVATE AND CONFIDENTIAL
Dear Mr. Kreissl:
First of Michigan Corporation ("FoM") is pleased to present this Engagement
Letter pursuant to which FoM will act as financial adviser to Inmold, Inc.
(together with its affiliates, the "Company"), in connection with a possible
"Transaction", as defined below.
Scope of Engagement
The Company hereby engages FoM to act as its financial advisor to assist and
advise it, as requested by Company, in:
I. reviewing and defining the Company's objectives with respect to a
transaction ("Transaction") whereby the Company may acquire another
company, business, corporation, partnership, limited liability company,
sole proprietorship, trust, division, group of assets or other business
entity ("Target"). As used in this Engagement Letter, the term
"Transaction" includes (a) any merger, consolidation, share exchange,
tender or exchange offer, leveraged buy-out, formation of a joint venture,
minority investment, partnership, similar transaction, reorganization,
recapitalization, business combination or other transaction pursuant to
which the Target sells to, or combines with, the Company or any of its
affiliates, or the Company, directly or indirectly, acquires control of, or
a material interest in, the Target or any of its businesses or assets, (b)
(i) the sale or lease of all, substantially all or selected assets of the
Target to the Company or any of its affiliates, or (ii) the sale of fifty
percent or more or a controlling block of the Target's outstanding common
stock to the Company or any of its affiliates, and (c) the election or
appointment of nominees or representatives of the Company to the Board of
Directors of the Target so that such nominees or representatives represent,
in the aggregate, at least a majority of such Board of Directors;
II. determining an acquisition strategy;
III. identifying potential Targets for the Company;
IV. coordinating discussions with, screening and negotiating with potential
Targets;
<PAGE>
Page 2 of 4
November 11, 1998
V. structuring the Transaction;
VI. attending and participating in meetings of the Company's Board of Directors
at which the Transaction will be discussed; and
VII. working with the Company and its advisors on the various details necessary
to close the Transaction.
Timetable
FoM will endeavor to assist the Company in completing items I, II, and III
within 60 days from the signing of this Engagement Letter, and items IV and V
within 180 days of the signing of this Engagement Letter. This timing assumes
all due diligence information needed by FoM will be available promptly.
Compensation
As compensation for the services to be provided by FoM under this Engagement
Letter, the Company agrees to pay FoM a monthly Advisory Fee of $6,000. The
first installment of the Advisory Fee will be due upon signing this Engagement
Letter. Each additional payment of the Advisory Fee will be due on the same day
of the month that this Engagement Letter is signed.
In addition, the Company agrees to pay FoM the Success Fee described in the
attached Schedule I, based on the "Total Consideration" (as defined in the
attached Schedule I) received by the Target or its shareholders in connection
with the Transaction. The Success Fee is payable at the closing of the
Transaction, except that the portion of the Success Fee based on the contingent
portion of the Total Consideration, if any, shall be paid to FoM when paid by
the Company.
Reimbursements
The Company agrees to reimburse FoM for all of its reasonable out-of-pocket
expenses incurred in connection with its engagement under this Engagement
Letter, including, without limitation, data base services, travel to Company and
Target locations and expenses of FoM's legal counsel, if any. All requests for
reimbursement of out-of-pocket expenses shall be submitted to the Company
together with appropriate documentation, and shall be paid by the Company within
30 days after receipt of such request.
Information Availability
The Company agrees to make available to FoM on a confidential basis all
information and documents about the Company and the Target whether or not
publicly available, which FoM requests in conducting its review and analysis or
in performing its duties under this Engagement Letter and to allow FoM access to
the Company's and the Target's facilities and properties and an opportunity to
discuss with the Company's and the Target's management, employees, agents,
customers, suppliers, distributors, lenders and auditors the operation of the
Company and the Target and their prospects.
Accuracy of Company Supplied Information
FoM may rely on the information furnished to it by the Company and may assume
the accuracy and completeness of such information, without any obligation to
attempt to independently verify any of such information. The Company agrees that
information provided to FoM and the contents of any disclosure documents used in
connection with the Transaction will not contain any untrue or misleading
statement
<PAGE>
Page 3 of 4
November 11, 1998
of a material fact or omit to state a material fact required to be stated in
such information for the purpose for which it is supplied or necessary to make
the information provided not misleading.
Termination of Agreement
FoM's services and the Company's obligations under this Engagement Letter may be
terminated with or without cause at any time by the Company or by FoM, except
for (i) the Company's obligation to pay to FoM any compensation earned, and to
reimburse FoM for any expenses incurred by FoM, through the date of termination,
(ii) the last sentence of this paragraph, and (iii) the indemnity provisions
contained in this Engagement Letter, all of which shall remain operative and in
full force and effect regardless of termination. Termination shall be effected
by written notice mailed by registered or certified mail; if given to by FoM to
the Company, addressed as this letter is addressed; if given by the Company to
FoM addressed to Mr. J. Michael Davis, Managing Director - Corporate Finance, at
FoM's address stated in the letterhead on the first page of this letter.
Termination shall be effective as of the third business day after the notice is
mailed.
The Company agrees to pay FoM the Success Fee for any Transaction which occurs
within 12 months of termination of this Engagement Letter.
Indemnification
We have attached an Indemnification Agreement as Schedule II. Acceptance of this
Engagement Letter constitutes agreement by the Company and FoM to the
Indemnification Agreement set forth in the attached Schedule II which is
incorporated into, and made a part of, this Engagement letter by this reference.
Miscellaneous
The Company shall comply with all applicable securities laws in connection with
the Transaction. The Company acknowledges that FoM is acting as the Company's
agent in connection with the Transaction, and that there is no understanding or
commitment, expressed or implied, on the part of FoM to purchase or place any
securities in connection with the Transaction or otherwise.
Except as contemplated by the terms of this Engagement Letter or as required by
applicable law or as consented to by the Company, FoM shall keep confidential
all material non-public information about the Company or the Target that is
provided to FoM by the Company and not otherwise known to FoM or independently
developed by it, and FoM shall not disclose such information to any third party,
other than such of its directors, officers, and employees as FoM determines to
have a need to know such information. The Company agrees that FoM has the right
to place advertisements in financial and other newspapers and journals at its
own expense describing its services to the Company under this Engagement Letter.
Except as required by applicable law, any advice to be provided by FoM under
this Engagement Letter shall not be disclosed publicly, made available to third
parties, or filed with, included in, or referred to, in whole or in part, in any
document, without the prior written approval of FoM.
This Engagement Letter shall not be amended or modified except in writing. This
Engagement Letter represents the entire understanding between the parties, and
all prior discussions and negotiations are merged into it. This Engagement
Letter shall be governed by, and construed in accordance with, the internal law
of the State of Michigan.
<PAGE>
Page 4 of 4
November 11, 1998
Please confirm that the foregoing is in accordance with your understanding and
agreements with FoM by signing and returning to us the enclosed duplicate of
this Engagement Letter along with the Advisory Fee.
We look forward to working with you and are prepared to proceed immediately.
Very truly yours,
FIRST OF MICHIGAN CORPORATION
- ----------------------
J. Michael Davis
Managing Director
Accepted:
Inmold, Inc.
By:
--------------------
Mr. Fillipp J. Kreissl
Its: President
Date:
--------------------
<PAGE>
Engagement Letter Between
First of Michigan Corporation and Inmold, Inc.
Dated November 11, 1998
SCHEDULE I
SUCCESS FEE
The Company agrees to pay to FoM in cash as the "Success Fee" an amount equal to
the percentages set forth in the table below of each portion of the "Total
Consideration" (as defined below) set forth in the table below received by the
Target or its shareholders in connection with the Transaction.
The Amount of "Total
Percentage of Consideration" Between
- ---------- -- ----------------------
5% $ -0- and $1,000,000
4% $1,000,001 and $2,000,000
3% $2,000,001 and $3,000,000
2% $3,000,001 and $4,000,000
1% $4,000,001 and greater amounts
For purposes of this Engagement Letter, "Total Consideration" shall mean the
total fair market value of all consideration (including, without limitation,
cash, notes, securities, property, obligations assumed, and any other form of
consideration) to be received by the Target and/or its shareholders in a
Transaction, including, without limitation, the sum of the cash consideration
paid as part of the consideration in the Transaction and any cash and cash
equivalents retained by the Target, the principal amount of any notes delivered
as part of the consideration in the Transaction, plus the fair market value of
any securities or other property received as part of the consideration in the
Transaction and the fair market value of any inventory, receivables and other
property retained by the Company. "Total Consideration" includes, without
limitation, any contingent payments of cash, notes, securities or other property
and any consideration paid pursuant to employment contracts or non-compete
agreements. "Total Consideration" shall not be reduced by any amount placed in
escrow as part of the Transaction or any deferred consideration. If the Target
is the surviving entity in a merger or similar transaction, the "Total
Consideration" shall be deemed to be the fair market value of the shares
retained by the Target's shareholders after consummation the Transaction.
<PAGE>
Engagement Letter Between
First of Michigan Corporation and Inmold, Inc.
Dated November 11, 1998
SCHEDULE II
INDEMNIFICATION AGREEMENT
The Company shall indemnify and hold harmless FoM and its directors, officers,
and employees (each such person is referred to as an "Indemnified Person") from
and against any losses, claims, damages, liabilities and expenses to which any
of them may become subject (including counsel fees and expenses) (collectively,
"Claims"), arising in any manner out of, (i) FoM's services under the Engagement
Letter (the "Engagement", except for Claims which resulted primarily from the
bad faith or gross negligence of the Indemnified Person) or (ii) breaches,
actions or omissions by the Company. The Company will reimburse each Indemnified
Person for all expenses (including counsel fees and expenses) as they are
incurred by the Indemnified Person in connection with investigating, preparing,
pursuing or defending any Claim except for Claims pursuant to clause (i) which
resulted primarily from the bad faith or gross negligence of the Indemnified
Person.
The Company also agrees that none of the Indemnified Persons shall have any
liability to the Company or any of its affiliates in connection with such
Engagement except for such liability incurred by the Company which is finally
judicially determined to have resulted primarily from FoM's bad faith or gross
negligence. In no event shall the aggregate amount of FoM's and all other
Indemnified Persons' liability exceed the amount of the fee actually received by
FoM under the Engagement Letter.
The Company and FoM agree that if any indemnification or reimbursement sought
pursuant to the above paragraphs is finally judicially determined not to be
fully available (except by reason of the gross negligence or bad faith of FoM or
any of its Affiliates) then, the Company shall contribute to the losses, claims,
damages, liabilities and expenses for which such indemnification or
reimbursement is held unavailable in such proportion as is appropriate to
reflect the relative benefits to the Company transaction to which such
indemnification or reimbursement relates, and other equitable considersations;
provided, however that in no event shall the amount to be contributed by FoM
exceed the amount of the fee actually received by FoM under the Engagement
Letter.
This Indemnification Agreement shall be in addition to any rights any
Indemnified Person may have at common law or otherwise. This Indemnification
Agreement and any other agreements relating to the Engagement shall be governed
by and construed in accordance with the internal laws of the State of Michigan
applicable to contracts executed in and to be performed in that state.
