Exhibit 2.2
STOCK PURCHASE AND SALE AGREEMENT
This Agreement is made this 6th day of April, 2000, by and among Mackie
Designs Inc. ("Mackie"), a Washington corporation, and the following persons
(collectively, the "Sellers"): Xxxxxxx X. Xxxxxx ("Xxxxxx"); Xxxxxx Xxxxxxxx
("Xxxxxxxx"); Xxxxx Xxxxx ("Xxxxx"); Xxxxxxx Xxxxxxx ("Xxxxxxx"); Xxxxx Xxxxxx
("Xxxxxx"); Xxxxxxx Xxxxxx ("Xxxxxx"); Will Xxxxxx ("Xxxxxx"); Xxxx X'Xxxxxx
("X'Xxxxxx"); Xxxx Xxxxxxxx ("Xxxxxxxx"); and Xxxxxx Xxxxxxxxx ("Macdonald");
The Xxxxxx X. Xxxxxx Charitable Remainder Unitrust ("Trust 1"); and the
Xxxxxxx X. Xxxxxx Charitable Remainder Unitrust ("Trust 2").
RECITALS
A. Sellers own all of the issued and outstanding voting common shares of
Eastern Acoustic Works, Inc. ("EAW"), a Massachusetts corporation.
B. EAW is a manufacturer of speakers, operating a manufacturing facility
located at Xxx Xxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxxx. EAW's subsidiaries
are engaged in the sale and distribution of products manufactured by EAW.
X. Xxxxxx wishes to buy, and Sellers wish to sell, all of the issued and
outstanding shares of EAW upon the terms and conditions set forth below.
Based upon the above recitals, the parties promise, warrant and agree as
follows:
1. DEFINITIONS AND PRINCIPLES OF CONSTRUCTION:
1.1. DEFINITIONS: The following terms shall have the following
meanings when used in this Agreement:
1.1.1. "Actual Knowledge" shall mean (a) the actual knowledge of
the party in question, and (b) such knowledge or information of
which such party should have known or become aware of had he
exercised reasonable due diligence by (i) making inquiry of
directors, officers and senior management of EAW or its
Affiliates, (ii) searching public records or (iii) reviewing
EAW's books and records of the type described in Section 6.3.14;
1.1.2. "Affiliate" shall mean any entity which is controlled by,
under common control with, or which controls any other entity;
provided, however, that for purposes of this Agreement Xxxxxx shall
not be an Affiliate;
1.1.3. "Assets" shall mean all of the assets of EAW and its
Affiliates wherever located, including, but not limited to:
inventory; Personal Property; fixtures; accounts receivable;
contract rights; Intellectual Property; prepaid expenses and
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deposits; cash; customer lists; phone numbers; rights to the
use of the name "Eastern Acoustic Works" or any variant
thereof; all documents, records, and files connected with the
Business or other Assets, including, without limitation,
customer lists, supplier lists, computer records, marketing
plans and strategies, financial records, licenses, permits,
blueprints, specifications, and maintenance and production
records; and, all manufacturers', vendors' and suppliers'
warranties, to the extent assignable, in respect of any item of
the Assets;
1.1.4. "Benefit Plans" shall have the meaning set forth in Section
6.3.3(a);
1.1.5. "Business" shall mean the business and operations of EAW
and its Affiliates, wherever located, including, but not
limited to, that conducted at EAW's facility in Whitinsville,
Massachusetts;
1.1.6. "Closing Date" shall mean April 6, 2000;
1.1.7. "Code" shall have the meaning set forth in Section
6.3.3(b);
1.1.8. "Contracts" shall have the meaning set forth in Section
6.3.7;
1.1.9. "EAW" shall have the meaning set forth above in the opening
paragraph of this Agreement;
1.1.10. "Environmental Action" means any administrative,
regulatory or judicial action, suit, demand, demand letter,
claim, notice of non-compliance or violation, investigation,
request for information, proceeding, consent order or consent
agreement relating in any way to any Environmental Law;
1.1.11. "Environmental Law" means any applicable federal, state
or local law, statute, rule, regulation, or ordinance relating
to the environment, human health or safety from pollution or
other environmental degradation or Hazardous materials,
including, without limitation, CERCLA, the Resource
Conservation and Recovery Act, the Hazardous Materials
Transportation Act, the Clean Water Act, the Toxic Substances
Control Act, the Clean Air Act, the Safe Drinking Water Act,
the Atomic Energy Act, the Federal insecticide, Fungicide and
Rodenticide Act and, to the extent dealing with emissions and
human exposure to Hazardous Materials, the Occupational Safety
and Health Act, and any similar state and local laws,
regulations or ordinances, together with all rules,
regulations, and interpretations thereunder, all as in effect
on the Closing Date;
1.1.12. "ERISA" shall have the meaning set forth in Section
6.3.3(a);
1.1.13. "Financial Statements" shall mean the financial
statements and schedules of EAW and its Affiliates prepared by
their independent certified public accountants for their fiscal
years ending in 1997, 1998, and 1999 and the internally
prepared statements for the period ending February 29, 2000 all
as attached as Exhibit A to this Agreement;
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1.1.14. "Hazardous Material" shall mean (a) petroleum or
petroleum products, natural or synthetic gas, asbestos, urea
formaldehyde foam insulation and radon gas, (b) any substances
defined as, or included in the definition of, "hazardous
materials," "hazardous substances," "hazardous wastes,"
"extremely hazardous wastes," "restricted hazardous waters,"
"toxic substances," "toxic pollutants," "contaminants," or
"pollutants," or words of similar import, under any
Environmental Law and (c) any other substance to which exposure
is regulated under any Environmental Law;
1.1.15. "Intellectual Property" shall mean all trade names,
trademarks, service marks (registered and unregistered), trade
dress, copyrights, patents, trade secrets, business logos,
slogans, license rights, and other intangibles of any kind
whatsoever owned or used by EAW or any EAW Affiliate in
connection with the Business, all as shown on Schedule 1.1.15
attached;
1.1.16. "Mackie" shall have the meaning set forth above in the
opening paragraph of this Agreement;
1.1.17. "Personal Property" shall mean all machinery, equipment,
tools, furniture, equipment, mobile equipment and other items of
personal property;
1.1.18. "Preferred Shares" shall mean all of the preferred shares
issued by EAW and outstanding as of the date of this Agreement;
1.1.19. "Purchase Price" shall have the meaning set forth in
Section 4;
1.1.20. "Sellers" shall have the meaning set forth above in the
opening paragraph of this Agreement;
1.1.21. "Shares" shall mean all of the issued and outstanding
voting shares of EAW, regardless of class, other than the
Preferred Shares.
1.2. ACCOUNTING PRINCIPLES: Any reference in this Agreement to
generally accepted accounting principles refers to generally
accepted accounting principles which have been established in the
United States, and as approved from time to time by the American
Institute of Certified Public Accountants, or any successor body
thereto.
1.3. CURRENCY: Unless otherwise indicated, all dollar amounts in this
Agreement are expressed in U.S. funds.
2. SALE OF STOCK: Sellers shall sell, and Mackie shall buy, all of the
Shares. The Shares shall be delivered to Mackie on the Closing Date, duly
endorsed for transfer to Mackie upon the books and records of EAW.
3. RETIREMENT OF PREFERRED SHARES: At or prior to Closing, the Preferred
Shares shall be redeemed or otherwise retired by EAW. The Preferred Shares may
be redeemed by cash presently belonging to EAW and/or by new funds borrowed by
EAW for such purpose, and the
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use of such cash and/or the borrowing of such funds for such purpose shall not
reduce the Purchase Price or be a violation of the terms of this Agreement;
provided, that the total amount of cash used, and/or borrowings incurred,
shall not exceed the sum of $945,915.00.
4. PURCHASE PRICE: The amount to be paid by Mackie for the Shares shall be
$18,000,000 ("Purchase Price"). The Purchase Price shall be allocated as
follows:
Amount for Amount for Total
Seller Shares Noncompete Received
---------------------------- -------------------------- -------------------------- --------------------------
Xxxxxx $ 10,998,858.72 $ 200,000 $10,828,695.17
-------------------------- --------------------------
Xxxxxxxx $1,242,319.68 $ 0 $ 1,200,509.75
-------------------------- --------------------------
Xxxxx $1,242,319.68 $ 0 $ 1,200,509.75
-------------------------- --------------------------
Garritt $676,134.16 $ 0 $ 653,379.05
-------------------------- --------------------------
Xxxxxx $797,530.97 $ 0 $ 770,690.29
-------------------------- --------------------------
Xxxxxx $153,666.85 $ 0 $ 148,495.24
-------------------------- --------------------------
Xxxxxx $144,062.68 $ 0 $ 139,214.29
-------------------------- --------------------------
X'Xxxxxx $364,958.78 $ 0 $ 352,676.19
-------------------------- --------------------------
Xxxxxxxx $124,854.32 $ 0 $ 120,652.38
-------------------------- --------------------------
Macdonald $57,625.07 $ 0 $ 55,685.71
-------------------------- --------------------------
Trust 1 $998,834.55 $ 0 $ 965,219.05
-------------------------- --------------------------
Trust 2 $998,834.55 $ 0 $ 965,219.05
-------------------------- --------------------------
Fees and Expenses N/A N/A $ 599,054.08
-------------------------- --------------------------
Total $17,800,000 $200,000 $ 18,000,000
The Purchase price shall be paid all in cash at Closing by wired funds. The
allocations provided for in this Section 4 have been made in good faith jointly
by Sellers and Mackie, all of whom were represented by counsel. Neither Sellers
nor Mackie will take any position inconsistent with the allocations contained in
this Section 4 on their tax returns and other statements filed with any
governmental body, agency, official or authority.
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5. POSSESSION AND CLOSING: Provided that Closing shall have occurred,
Mackie shall take title to the Shares effective as of the opening of business
on the Closing Date. Closing shall occur at the hour of 10:00 o'clock a.m., at
the offices of Xxxxxx, X'Xxxxxxx, XxXxxxxx & Lougee, LLP, 000 Xxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxxxxxxx 00000-0000 or at such other time and place as the
parties may mutually agree in writing. At closing, all deliveries shall be
considered to have taken place simultaneously as a single transaction, and no
delivery shall be considered to have been made until all deliveries are
completed.
6. SELLERS' REPRESENTATIONS AND WARRANTIES: Each of the Sellers, after due
inquiry, hereby represents and warrants to Mackie that the following statements
are, or will be, true and correct as of the Closing Date, and that such
representations and warranties will remain true following the Closing Date
notwithstanding any independent investigation or review by Mackie or its
employees, agents, or independent consultants. Each Seller will be deemed to
have given only the representations and warranties in such of the following
subsections which bear their name, and no other:
6.1. REPRESENTATIONS OF ALL SELLERS: Each of Berger, Forsythe, Loyko,
Garritt, Siegel, Durfee, O'Connor, Schwartz, Macdonald, Greene, Trust 1
and Trust 2 jointly and severally, represent and warrant the following
as per the opening paragraph of this Section 6:
6.1.1. SHARES HOLDINGS: The Shares are held solely by the Sellers
in the amounts set forth on Schedule 6.1.2 attached;
6.1.2. TITLE TO SHARES: Each Seller is the sole owner of the
Shares set forth opposite his name in Schedule 6.1.2, and has
good and marketable title thereto free and clear of all liens,
encumbrances, security interests, charges, pledges or other
rights of any nature in any third party, and their
transferability to Mackie under the provisions of this
Agreement is not restricted, prohibited or in any way subject
to the consent or approval of any third party;
6.1.3. TRANSFERABILITY: Except as set forth on Schedule 6.1.3,
the transfer of the Shares to Mackie shall not violate the
provisions of any agreement or contract to which EAW, its
Affiliates or the Sellers are a party;
6.1.4. AMOUNTS DUE TO OR FROM SELLERS: Except for salary,
bonuses, director or consulting fees, rent, benefits, expense
reimbursements and similar amounts payable by EAW to the Sellers
in the ordinary course of business and except as otherwise set
forth in Schedule 6.1.4 attached, all outstanding amounts due to
EAW or its Affiliates from the Sellers and vice versa have been
or will be paid in full, or otherwise settled or compromised, on
or prior to the Closing Date. Except as described in the
preceding sentence, Sellers have no expectation of any sums due
them as a result of being an officer, shareholder, director or
consultant of EAW or any of its Affiliates for periods prior to
the Closing Date;
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6.1.5. ENFORCEABILITY: This Agreement constitutes the legal,
valid, and binding agreement of Sellers, enforceable against them
in accordance with its terms, subject to the laws of bankruptcy
and laws of general applicability relating to or affecting
enforcement of creditors rights, and judicial discretion in the
application of principles of equity; and
6.1.6. TRUTHFULNESS: No representations or warranties given by
any Seller in this Agreement contains any untrue statement of a
material fact, or omits to state a material fact necessary to
make the statement and facts contained therein not misleading.
6.2. REPRESENTATIONS OF BERGER, FORSYTHE, AND XXXXX: Each of Berger,
Forsythe, and Xxxxx, jointly and severally, represents and warrants the
following as per the opening paragraph of this Section 6:
6.2.1. CORPORATE STATUS OF EAW: EAW is a corporation duly
organized and validly existing under the laws of the Commonwealth
of Massachusetts, with full power and authority to carry on its
business as now conducted and to enter into and carry out the
terms of this Agreement. EAW is qualified to do business in each
jurisdiction in which the nature of the Business and its
ownership of properties would make such qualification necessary
and where failure to be so qualified might have a material
adverse effect on its Assets, Business, or financial condition;
6.2.2. CORPORATE STATUS OF EAW AFFILIATES: Each of EAW's
Affiliates is organized in the jurisdiction set forth in Schedule
6.2.2 attached, with full power and authority to carry on its
business as now conducted. Each of EAW's Affiliates is qualified
to do business in each jurisdiction in which the nature of its
business and its ownership of properties would make such
qualification necessary and where failure to be so qualified
might have a material adverse effect on its assets, business, or
financial condition. The number and owners of capital shares of
each of EAW's Affiliates which are now issued and outstanding are
as set forth in Schedule 6.2.2, and there are no other owners of
such shares nor any other person with any right, however
conferred, to acquire any capital shares in such Affiliates,
whether by subscription, conversion or demand;
6.2.3. NON-VIOLATION: Neither the execution and delivery by
Xxxxxx, Xxxxxxxx or Xxxxx of this Agreement, nor the consummation
by Xxxxxx, Xxxxxxxx or Xxxxx of the transactions contemplated by
this Agreement, will conflict with, or result in a violation or
breach of, any provision of, or constitute a default under, EAW's
Articles of Organization or bylaws, or, to Xxxxxx'x, Xxxxxxxx'x
or Xxxxx'x Actual Knowledge, any statute, order, judgment,
decree, license, permit, rule, or regulation of any court or any
governmental body by which any of Sellers, EAW or its Affiliates
are bound, or any contract, agreement, or other instrument to
which any of Sellers, EAW or its Affiliates are a party, or by
which any of them are bound;
PAGE-6
6.2.4. NO ACTION AGAINST CONSUMMATION: Except as set forth on
Schedule 6.2.4, no action or proceeding has been instituted or,
to the best of Xxxxxx'x, Xxxxxxxx'x or Xxxxx'x Actual Knowledge,
threatened before any court or governmental body which challenges
(i) the execution, delivery, or performance by Sellers of this
Agreement, or (ii) the consummation by Sellers of the
transactions contemplated hereby, nor, to the best of Xxxxxx'x,
Xxxxxxxx'x or Xxxxx'x Actual Knowledge, is there any reasonable
basis for any such action or proceeding;
6.2.5. INTERESTS OF SELLERS: None of Xxxxxx, Xxxxxxxx or Xxxxx
owns, directly or indirectly, an interest in any partnership,
association, entity or corporation (other than as the holder of
less than one percent (1%) of the issued and outstanding stock of
a publicly held corporation) which presently is conducting a
business similar to that conducted by EAW or its Affiliates as a
competitor or a potential competitor of EAW or its Affiliates;
6.2.6. AUTHORIZED SHARES: The total number of shares which EAW is
authorized to issue consists of 100,000 shares of common stock
and 100,000 shares of preferred stock, with the rights and
obligations with respect to each class of shares being solely
those set forth in Article 4 of the Articles of Organization of
EAW, as amended;
6.2.7. RETIREMENT OF PREFERRED SHARES: As of Closing, all of the
Preferred Shares have been, or will be, redeemed or otherwise
retired as per the provisions of Section 3 of this Agreement;
6.2.8. SHARES SOLE CLASS: As of the Closing, and except for the
Preferred Shares to be redeemed at the Closing, the Shares
constitute the sole class of capital stock of EAW which are
issued and outstanding, and there will be no other shares of any
class of capital stock of EAW which are issued and outstanding;
6.2.9. AUTHORIZATION AND ACCESSIBILITY: All of the Shares were
duly authorized and validly issued, and are fully paid and
nonassessable;
6.2.10. OPTIONS AND OTHER RIGHTS: Except as set forth in Schedule
6.2.10 attached, there is no outstanding or authorized option,
warrant, subscription, call, conversion, stock appreciation or
similar right which, in any manner, requires EAW to issue any
additional shares of any class of EAW's capital stock or any
other instrument which is convertible into, exchangeable for, or
evidencing the right to subscribe for any class of EAW's capital
stock. There is no form of phantom stock right, stock
appreciation rights or similar rights held by any third party
whatsoever.
6.3. REPRESENTATIONS OF XXXXXX: Xxxxxx and Trust 2, jointly and
severally, represent and warrant the following as per the opening
paragraph of this Section 6:
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6.3.1. FINANCIAL MATTERS: The Financial Statements are true,
correct, and complete in all material respects. The Financial
Statements have been prepared in accordance with generally
accepted accounting principles consistently applied. Except as
set forth on Schedule 6.3.1 attached, there have been no
material adverse changes in the financial condition of EAW or
its Affiliates since February 29, 2000. All of EAW's and its
Affiliates' accounts receivable and accounts payable are
accurately reflected upon the Financial Statements;
6.3.2. EMPLOYEES: Schedule 6.3.2(a) attached contains a
complete list of all salaried personnel employed by EAW or its
Affiliates as of the date of execution of this Agreement,
together with their rates of compensation and bonus
arrangements. Schedule 6.3.2(b) attached contains a complete
list of all hourly personnel employed by EAW or its Affiliates
as of the date of execution of this Agreement, together with
their rates of compensation and bonus arrangements. To Xxxxxx'x
Actual Knowledge, no employee of EAW or any of its Affiliates
is in violation of any non-disclosure agreement or agreement
relating to proprietary information of EAW. Except as set forth
in Schedule 6.3.2(c) attached, neither EAW or any Affiliate has
any employment contract with any employee or collective
bargaining agreements with any employees. Since February 29,
2000, there has been no resignation of any salaried employee of
EAW or any of its Affiliates and there is no pending
termination of employment of any of EAW's or its Affiliates'
employees which would have a material adverse effect upon the
operations and Business. Neither EAW nor any of its Affiliates
is engaged in any unfair labor practice, nor is there any
strike, slowdown, dispute, representation campaign or work
stoppage of any kind actually pending or threatened against EAW
or any Affiliate, and neither EAW nor any Affiliate has
experienced any work stoppage;
6.3.3. ADDITIONAL EMPLOYEE MATTERS:
(a) Schedule 6.3.3(a) attached contains a true and
complete list of all bonus, deferred compensation,
vacation, incentive compensation, stock option,
disability, severance, profit, pension, retirement,
health, medical or life insurance plans or programs
or other employee benefit plans or programs
maintained or contributed to by EAW or any Affiliate
of EAW, whether or not subject to the Employee
Retirement Income Security Act ("ERISA")
(collectively, the "Benefit Plans"). Sellers have
delivered to Mackie, or made available to Mackie for
inspection, true and complete copies of all documents
comprising or relating to the Benefit Plans,
including, but not limited to, all plan documents,
summary plan descriptions, and reports, returns or
other filings with all applicable governmental
agencies. Except as identified on Schedule 6.3.3(a),
neither EAW nor any of its Affiliates maintains or
contributes to, and never has maintained or
contributed to, an employee benefit plan or program
that is a defined benefit plan in Sections 3(35) and
3(37) of ERISA;
PAGE-8
(b) Each Benefit Plan is in material compliance
with all applicable laws and regulations. No
prohibited transactions, as such term is defined in
Section 406 of ERISA or Section 4975 of the Internal
Revenue Code of 1986, as amended ("Code"), has
occurred with respect to any Benefit Plan. All
liabilities with respect to any Benefit Plan are
accurately reflected in the Financial Statements, and
there are no unfunded liabilities, known or unknown,
present or future, with respect to any such Benefit
Plan. Any Benefit Plan which is intended to be
"qualified" under Section 401(a) of the Code has
received favorable determination letters from the
Internal Revenue Service evidencing its qualified
status, and nothing has occurred to jeopardize such
qualified status other than changes to the laws and
regulations applicable to the Benefit Plans which
require, among other things, that EAW or its
Affiliates, as the case may be, make certain
amendments to such Benefit Plans in a timely manner.
All contributions required with respect to any
Benefit Plan for any period ending prior to the date
hereof have been timely made and fully paid. All
reports and summary plan descriptions have been
properly prepared, timely filed and properly
distributed;
(c) Neither EAW nor any of its Affiliates has ever
been obligated to contribute to any "multiemployer
plan," as such term is defined in Section 3(37) of
ERISA. Neither EAW nor any of its Affiliates has any
"withdrawal liability," as computed under Section
4211 of ERISA, with respect to any such plan and has
made all contributions to any such plan as are
required through the Closing Date under the terms of
such plan or applicable laws; and no event has
occurred, or will have occurred prior to the Closing
Date, which could give rise to any other liability
(other than a continuing obligation to contribute to
such plan(s) under the terms of any applicable
collective bargaining agreement(s)) on the part of
EAW, its Affiliates, or their respective officers,
employees or directors with respect to such plan(s).
6.3.4. ASSETS: Except as set forth in such Schedule 6.3.4, all
Assets are owned by EAW or the appropriate Affiliate free and
clear of all liens, claims, charges, pledges, security
interests, and encumbrances of any kind or nature. Each such
Asset has been regularly maintained and serviced and is in good
operating condition and repair, normal wear and tear excepted,
taking into account its age and level of usage. Except for
those assets listed in Schedule 6.3.4(a), the Assets represent
all of the assets ordinarily and customarily used by EAW or the
Affiliate in the current operation of the Business, and Sellers
have not retained any of the Assets;
6.3.5. INTELLECTUAL PROPERTY:
(a) Schedule 1.1.15 sets forth a complete list and
brief description of all Intellectual Property owned
by EAW and any Affiliate and in use or
PAGE-9
under development by EAW or any Affiliate in the
conduct of the Business, or which were owned and used
by EAW or any Affiliate during the lesser of the last
three (3) years prior to the Closing Date, or with
respect to an Affiliate, the period beginning upon
EAW's control of the Affiliate. Except for licenses
granted to third parties as set out in Schedule
6.3.5(a), EAW and its Affiliates have the exclusive
right to use, and EAW and the Affiliates, as the case
may be, are the exclusive owners of all right, title
and interest in the Intellectual Property;
(b) Schedule 6.3.5(b) sets forth a complete list
of all agreements, licenses and consents which have
been granted to EAW or any Affiliate with respect to
Intellectual Property which it does not own, other
than intellectual property licenses granted pursuant
to shrink-wrap licenses or other software or license
rights available "off the shelf" to the retail public
at large pursuant to a standard form license
agreement which is not separately negotiated. Each of
EAW and its Affiliates has all necessary licenses to
use all software currently employed in any phase of
the Business;
(c) To Xxxxxx'x Actual Knowledge (but excluding
such knowledge or information such party would have
become aware of by searching public records), no
Intellectual Property owned or used by EAW or any
Affiliate is being infringed by any person and is not
subject to any prior or concurrent claim or use,
license, estoppel or authority in favor of another
person except such licenses as are set out in
Schedule 6.3.5(a). Other than the license agreements
set out in Schedule 6.3.5(a), neither EAW nor any
Affiliate has alienated any right, title or interest
in, or encumbered in any way, any of its owned
Intellectual Property;
(d) Except as set forth on Schedule 1.1.15, all
Intellectual Property owned by EAW or any Affiliate
is fully enforceable and has not been used or
enforced, or failed to be used or enforced, in a
manner that would result in its abandonment,
cancellation or unenforceability. To Xxxxxx'x Actual
Knowledge (but excluding such knowledge or
information such party would have become aware of by
searching public records), the Business and the
Intellectual Property do not use, infringe, involve
the misappropriation of, or embody the subject matter
of any right in Intellectual Property of any other
person, or require a license from any other person
except as disclosed in Schedule 6.3.5(b). There are
no claims of adverse ownership, invalidity or other
opposition to, or conflict with, any of the
Intellectual Property of which EAW or any Affiliate
has notice, nor, to Xxxxxx'x Actual Knowledge, any
pending or threatened suit, proceeding, claim,
demand, action or investigation of any nature or kind
against EAW or any Affiliate relating to the
Intellectual Property;
PAGE-10
(e) The Intellectual Property is not the subject
of any claims of opposition from any employees or
contract staff of EAW or any Affiliate, and to
Xxxxxx'x Actual Knowledge, no such claims have been
threatened. Except as disclosed in this Agreement,
all inventions made by employees or by persons under
contract to EAW or any Affiliate and used or enjoyed
in the Business were made in the normal course of the
employee's or contractor's duties, and no claim for
compensation has been made or is pending. Complete
and accurate copies of such agreements have been
provided to Mackie in respect of all employees and
independent contractors who have been employed and
provided services to the Business during the past two
years;
(f) All Intellectual Property is able at all times
before, during and after January 1, 2000, to
accurately process, report and handle date and time
data (including without limitation calculating,
comparing, storing, sorting, defining, managing and
sequencing) from, into and between the twentieth and
twenty-first centuries, and the years 1999 and 2000,
including leap year calculation.
6.3.6. TAX RETURNS: Except as set forth in Schedule 6.3.6
attached, each of EAW and its Affiliates has properly prepared
and filed returns for all federal, state, local and foreign
taxes, assessments, and penalties to the extent such filings
and payments are required prior to the date of this Agreement.
There are no outstanding deficiencies with respect to any tax
period. The amounts set up as reserves for taxes on the
Financial Statements are sufficient for the payment of all
accrued and unpaid federal and state taxes, real property,
personal property, sales, withholding and all other taxes
imposed on the Company, the Assets or the Business, including
interest and penalties, if any, with respect thereto, whether
known or unknown and whether disputed or not, as of the dates
of the respective Financial Statements and for all periods
prior thereto;
6.3.7. CONTRACTS: Schedule 6.3.7 attached contains a true and
complete list of all agreements, leases or other obligations or
commitments (but excluding accounts receivable), whether
written or oral (collectively "Contracts"), if any, to which
EAW or any Affiliate is a party and by which they are bound,
(A) (i) which in any way relate to the ownership or operation
of the Assets or the Business, (ii) are not cancelable without
penalty with thirty (30) days or less notice by EAW and which
obligates EAW to expend at least $25,000 in any future year or
(B) are otherwise material to the Assets or Business. Each of
EAW and its Affiliates has performed all material obligations
required to be performed to date under such Contracts and, to
Xxxxxx'x Actual Knowledge, is not in material default under any
of such Contracts. To Xxxxxx'x Actual Knowledge, no other party
to any Contract is in material default thereof;
6.3.8. LITIGATION: Except as set forth in Schedule 6.3.8
attached, there are no pending investigations, suits, actions,
or legal, administrative, arbitrations, or
PAGE-11
other proceedings, and to Xxxxxx'x Actual Knowledge, no such
proceedings have been threatened, by, against, or affecting
Sellers, EAW, EAW's Affiliates, the Business, or the Assets. To
Xxxxxx'x Actual Knowledge, there are no events or circumstances
which could form the basis of any suit, action, proceeding, or
investigation;
6.3.9. COMPLIANCE WITH LAWS: To Xxxxxx'x Actual Knowledge, the
Business has been, and is being, conducted in all material
respects in accordance with all applicable laws, ordinances,
rules, and regulations, violation of which, individually or in
the aggregate, might materially and adversely affect the
Assets, Business or prospects of EAW or any Affiliate. Neither
EAW nor any Affiliate is in violation of, or in default under,
any term or provision of any instrument relating to its
formation and the governance of its business and affairs, or of
any lien, indenture, mortgage, lease, agreement, instrument,
commitment, or other arrangement to which it is a party or by
which it is bound;
6.3.10. LICENSES AND PERMITS: Schedule 6.3.10 attached contains
a true and complete list of all material licenses, permits,
orders, approvals and other authorizations issued to EAW or any
Affiliate which in any way relate to the Assets or the
Business, including, but not limited to, all permits to
discharge effluent or Hazardous Materials. To Xxxxxx'x Actual
Knowledge, each is in full force and effect, no limitation,
suspension or cancellation of any kind is threatened, neither
EAW nor any Affiliate is in material violation of any of the
terms and conditions thereof or the regulations, laws or other
authority under which they are issued, and there are no other
licenses or permits required for the conduct of the Business as
presently conducted;
6.3.11. BROKERS: Except for Xxxxxxx & Co., neither Sellers nor
EAW have incurred any liability to any broker, finder, or agent
for any brokerage fees, finders' fees, or commissions with
respect to the transactions contemplated by this Agreement.
Sellers will be solely responsible for any fees due to Xxxxxxx
& Co., and such fees will not be paid with funds or assets
belonging to EAW or any Affiliate;
6.3.12. CUSTOMER AND SUPPLIER MATTERS: Except as set forth in
Schedule 6.3.12 attached, no single supplier, customer,
customer buying group, or retail chain who accounted for more
than five percent (5%) of EAW's or any Affiliate's purchases or
sales during its most recent complete fiscal year, or the
fiscal year to date, nor any supplier who is a material source
of supply of any goods essential to the Business, has: (i)
canceled or otherwise terminated, or made any threat to cancel
or otherwise terminate, its relationship with EAW or any
Affiliate; (ii) materially decreased its sale of services or
supplies to EAW or any Affiliate or its purchase of products
therefrom, or has made any threat with respect thereto; or,
(iii) made any material change in its payment terms or other
terms or conditions of sale or purchase;
PAGE-12
6.3.13. ENVIRONMENTAL MATTERS: Except as disclosed on Schedule
6.3.13 and except for use of Hazardous Materials (which are
listed on Schedule 6.3.13) in the normal course of business in
compliance with all Environmental Laws:
(a) Neither EAW nor any Affiliate has ever generated,
transported, used, stored, treated, disposed of, or
managed any Hazardous Materials, except in
accordance with applicable Environmental Law. No
Hazardous Material has ever been, or is threatened
to be, spilled, released, or disposed of by EAW or
any Affiliate, except in accordance with applicable
Environmental Law, at any facility now or previously
owned or occupied by EAW or any Affiliate or, to
Xxxxxx'x Actual Knowledge (but excluding such
knowledge or information such party would have
become aware of by searching public records), has
ever come to be located in the soil or groundwater
at any such facility. Neither EAW nor any Affiliate
has ever transported any Hazardous Material from any
facility now or previously owned or occupied for
treatment, storage, or disposal at any other place,
except in accordance with applicable Environmental
Law;
(b) Each of EAW and any Affiliate is presently in
compliance with all applicable Environmental Laws.
Neither EAW nor any Affiliate has ever entered into
or been subject to any Environmental Action, and
Xxxxxx has no Actual Knowledge (but excluding such
knowledge or information such party would have
become aware of by searching public records) of, or
reason to know about, any state of affairs or facts
which might cause EAW or any Affiliate to become
subject to an Environmental Action;
(c) Sellers have provided to Mackie or its
representatives copies of all documents, records,
and information in EAW's or any Affiliate's
possession concerning any Environmental Action or
Environmental Laws, including, without limitation,
environmental audits, environmental risk
assessments, documentation of off-site Hazardous
Materials disposal, spill control plans, and
reports, correspondence, permits, licenses,
approvals, consents and other authorizations issued
pursuant to any Environmental Law;
6.3.14. BOOKS AND RECORDS: All books and records of EAW or any
Affiliate required to be maintained by applicable laws or
reasonably necessary in the operation of the Business,
including but not limited to the charter documents (including
amendments thereto), all minutes of the proceedings of the
Board of Directors and shareholders, all accounting records,
all tax returns, all current insurance policies and all
permits, orders and authorizations issued by any regulatory
authority to EAW or any Affiliate are in the possession of EAW
or such Affiliate, as the case may be, are complete and correct
and have been made available to Mackie for inspection and
copying during the negotiations leading to this Agreement;
PAGE-13
6.3.15. IMPORT/EXPORT COMPLIANCE: Each of EAW and its
Affiliates has paid all applicable customs duties and
import/export duties, where applicable, with respect to the
Assets, and has materially complied with all laws,
notifications, regulations and rules regarding its importation
into the United States. To Xxxxxx'x Actual Knowledge, each of
EAW and its Affiliates is in material compliance with all
United States laws and regulations regarding its operations in
foreign countries, and all foreign laws and regulations
regarding the import and export of products or materials;
6.3.16. CONDITION OF FACILITY: Neither Xxxxxx nor any member of
senior management of EAW has received any notices advising that
the Whitinsville Facility is not in material compliance with
any applicable law, or advising that the structures located
upon such facility are not in material compliance with all
applicable building codes and building regulations;
6.3.17. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set
forth in Schedule 6.3.17, since February 29, 2000, there has
not been:
(i) (a) except as set forth on Schedule 6.3.1,
any material adverse change in the Business,
operations, properties, working capital, earnings,
losses, reserves, assets, liabilities, condition
(financial or other) or, to the Actual Knowledge of
Xxxxxx, prospects of the Business, taken as a whole,
or, to the Actual Knowledge of Xxxxxx, any event
that has had, or which could reasonably be expected
to have, a material adverse effect on the foregoing;
(ii) (b) any material loss, damage, destruction or
other casualty to the Assets (other than any for
which insurance awards have been received or
guaranteed);
(iii) (c) any change in any method of accounting or
accounting practice of the Business, EAW or its
Affiliates relating to the Business; or,
(iv) (d) to the Actual Knowledge (but excluding
such knowledge or information such party would have
become aware of by searching public records) of
Xxxxxx any other event or condition, excluding
general economic conditions, of any character which
has had, or which could reasonably be expected to
have, a material adverse effect with respect to the
Business.
6.3.18. INSURANCE: Schedule 6.3.18 sets forth a complete list
of all insurance policies currently held by EAW and its
Affiliates. All such policies of insurance set forth in
Schedule 6.3.18 are in full force and effect to the Closing
Date, and neither EAW nor any Affiliate is in default for the
period up to and including the Closing Date as to the payment
of premium or otherwise under the terms of any such policy. EAW
and its Affiliates have maintained such policies of insurance,
PAGE-14
issued by responsible insurers, as recommended by EAW's
insurance agent as being appropriate to the Business, in such
amounts and against such risks as recommended by EAW's
insurance agent as being customarily carried and insured
against by owners of comparable businesses, properties and
assets, including, but not limited to, liability to employees
resulting from exposure to Hazardous Materials;
6.3.19. PRODUCT LIABILITY: Except as set forth in Schedule
6.3.19 or Schedule 6.3.8, (i) neither EAW nor any Affiliate has
received any notice, demand, claim, action, suit, injury,
hearing, proceeding, notice of violation or investigation of a
civil, criminal or administrative nature before any court,
arbitrator or governmental authority, domestic or foreign,
resulting from an alleged defect in design, manufacture,
materials or workmanship of any product manufactured and/or
sold by it, and (ii) to Xxxxxx'x Actual Knowledge, there has
not been any "Occurrence." For the purposes of the foregoing,
the term "Occurrence" means any accident, happening or event
causing injury to person or property which is caused or
allegedly caused by any alleged hazard or alleged defect in
manufacture, design, materials or workmanship of any product
manufactured by EAW;
6.3.20. ENFORCEABILITY: There are no agreements by which EAW or
its Affiliates are bound, nor are there provisions of the
Articles of Organization, bylaws or other governing corporate
instruments of EAW or its Affiliates, which prohibit the
consummation of the proposed transaction or require the consent
of any third party to consummation, except such consents as
shall have been obtained at or prior to the Closing Date; and
6.3.21. AUTHORIZATION: EAW has obtained all necessary corporate
and other authorizations and approvals required for the
execution and delivery of this Agreement.
7. REPRESENTATION AND WARRANTIES OF MACKIE: Mackie represents and
warrants that the following statements are true, will be true as of the date
of closing, and that such representations and warranties shall survive and
remain in effect following the Closing Date notwithstanding any independent
investigation or review by the Sellers, EAW or EAW's employees, agents, or
independent contractors:
7.1. CORPORATE ORGANIZATION: Mackie is a corporation duly organized
and validly existing under the laws of the State of Washington, with
full power and authority to carry on its business as now conducted and
to enter into and carry out the terms of this Agreement;
7.2. CORPORATE AUTHORIZATION: Mackie has obtained all necessary
corporate and other consents, authorizations and approvals required for
its execution, delivery and consummation of the documents or agreements
contemplated by this Agreement;
PAGE-15
7.3. VALID AGREEMENT: This Agreement constitutes the legal, valid, and
binding agreement of Mackie, enforceable against Mackie in accordance
with its terms subject to the laws of bankruptcy and laws of general
applicability relating to or affecting enforcement of creditors rights,
and judicial discretion in the application of principles of equity.
There are no agreements by which Mackie is bound or provisions of the
Articles of Incorporation, bylaws or other governing corporate
instruments of Mackie which prohibit the consummation of the proposed
transaction or require the consent of any third party to consummation,
except such consents as shall have been obtained at or prior to the
Closing Date;
7.4. NO ACTIONS: No action or proceeding has been instituted or, to
the best knowledge of Mackie after due inquiry, threatened before any
court or governmental body which challenges: (i) the execution, delivery
or performance by Mackie of this Agreement; or, (ii) the consummation by
Mackie of the transactions contemplated thereby, nor is there any basis
for any such action or proceeding;
7.5. NO VIOLATION: Neither the execution and delivery by Mackie of
this Agreement nor the consummation by Mackie of the transactions
contemplated by this Agreement will conflict with or result in a
violation or breach of any provision of, or constitute a default under,
Mackie's Articles of Incorporation or bylaws, or any statute, order,
judgment, decree, license, permit, rule, or regulation of any court or
any governmental body by which Mackie is bound, or any contract,
agreement, or other instrument to which Mackie is a party or by which it
is bound;
7.6. NO BROKERS: Mackie has not incurred any liability to any broker,
finder or agent for any brokerage fees, finders' fees or commissions
with respect to the transactions contemplated by this Agreement; and,
7.7. REPRESENTATIONS AND WARRANTIES: No representations or warranties
by Mackie set forth in this Agreement contain any untrue statement of a
material fact, or omit to state a material fact necessary to make the
statements and facts contained herein not misleading.
8. CONDUCT OF BUSINESS PENDING CLOSING: Except in the ordinary course of
business consistent with past practices, prior to the closing of this
transaction Sellers shall use their best efforts to assure that, from and
after the date of execution of this Agreement, EAW and its Affiliates shall
not, without the consent of Mackie:
8.1. Take any action other than in the ordinary course of business;
8.2. Fail to pay, in full as they come due, all of the wages,
salaries, overtime compensation, bonuses, vacation pay, benefits,
pension, tax, unemployment, and industrial insurance obligations with
respect to its employees;
8.3. Sell, encumber or dispose of any of the Assets other than
inventory;
PAGE-16
8.4. Enter into any contract, make or permit, or agree to make or
permit, any material alteration in any existing contract to which
it is a party;
8.5. Surrender or forfeit any material license, permit or other
qualification necessary in connection with the operation of the
Business as presently conducted;
8.6. Grant, adopt or amend any employment agreement, profit sharing,
compensation, bonus, deferred compensation, pension, retirement or
other employee benefit plan, agreement, fund trust or arrangement
for the benefit or welfare of any employee or agree to do the
same;
8.7. Settle any material litigation, legal, administrative, arbitration
or other proceeding, claim or tax audit;
8.8. Enter into any new collective bargaining agreement or engage in
any negotiations intended to lead to one;
8.9. Hire or fire any salaried employee;
8.10. Sell or otherwise dispose of inventory in any manner which is
materially inconsistent with its previous customary and usual
practices; or,
8.11. Fail to maintain its inventory levels at those consistent with the
customary and usual levels maintained in the ordinary course of
the Business.
9. MACKIE'S CONDITIONS PRECEDENT TO CLOSING: The obligation of Mackie to
consummate the transactions contemplated by this Agreement is expressly
subject to the satisfaction, on or prior to the Closing Date, of all of the
following conditions (compliance with which, or the occurrence of which, may
be waived in whole or in part by Mackie in writing):
9.1. REPRESENTATIONS AND WARRANTIES: All representations and warranties
of Sellers contained in this Agreement shall be true and correct in all
material respects as of the Closing Date, as if made at and as of such
date. Sellers shall have delivered a certificate to Mackie to that effect
in form and substance reasonably satisfactory to Mackie dated as of the
Closing Date;
9.2. CONDUCT OF OPERATIONS: The Business shall have been conducted in
accordance with the provisions of Section 8 of this Agreement;
9.3. COVENANTS AND AGREEMENTS: Sellers shall have performed and
satisfied all covenants and conditions required by this Agreement to be
performed or satisfied by them on or prior to the Closing Date;
9.4. OPINION OF COUNSEL: Sellers shall have furnished Mackie with the
opinion of their counsel, dated as of the Closing Date, in form and
substance of Exhibit B attached;
PAGE-17
9.5. NO ACTIONS: No action or proceeding shall have been instituted or
threatened and no administrative or court order shall be in effect: (i)
seeking to prevent or make illegal the execution and delivery of this
Agreement by Sellers or the consummation by Sellers of the transactions
contemplated hereby; or, (ii) which would materially and adversely affect
the operation of the Business or title to the Assets;
9.6. CONSENTS: Sellers shall have obtained the consent of: (i) the
owner of any leased property to an assignment of the lease or tenancy, if
such consent is required by the governing instrument due to the sale
contemplated by this Agreement or, (ii) the maker of any contract by
which EAW or any Affiliate is bound, if such consent is required by the
governing instrument due to the sale contemplated by this Agreement;
9.7. APPROVALS: Sellers shall have secured all authorizations and
approvals, if any, of federal, state and local authorities (or exemptions
therefrom) for the execution and delivery of this Agreement;
9.8. DUE DILIGENCE REVIEW: Mackie, through its officers, directors,
employees and agents, shall have completed a business, legal and
accounting review of EAW, its Affiliates and their respective operations,
and the results thereof shall be satisfactory to Mackie in its sole
discretion; provided, that Mackie shall have completed such reviews no
later than March 15, 2000, and provided its written waiver of this
Section 9.8 on or before such date;
9.9. ASSETS: Except as shown in Schedule 6.3.4, title to all of the
Assets shall be good and marketable, free and clear of all encumbrances,
security interests and liens;
9.10. ENVIRONMENTAL ASSESSMENT: Mackie shall have conducted, to its sole
satisfaction, an environmental assessment and review of the Business, its
operations and its location. Seller shall provide Mackie and its
consultants with access to the Business location for such purpose, and
Mackie shall be responsible for repairing any damage to the Business
location caused by such assessment and review; provided, that Mackie
shall have completed such reviews no later than March 15, 2000, and
provided its written waiver of this Section 9.10 on or before such date;
9.11. PREPARATION AND ATTACHMENT OF SCHEDULES: Sellers shall have
prepared and attached the various schedules called forth in this
Agreement which were not available at the time of execution of this
Agreement, which schedules shall be mutually acceptable to the parties;
9.12. XXXXXX EMPLOYMENT AGREEMENT: Xxxxxx shall have executed and
delivered to Mackie an employment agreement with Mackie in the form
attached as Exhibit C;
9.13. XXXXXXXX EMPLOYMENT AGREEMENT: Xxxxxxxx shall have executed and
delivered to EAW an employment agreement with EAW in the form attached as
Exhibit D;
PAGE-18
9.14. XXXXX EMPLOYMENT AGREEMENT: Xxxxx shall have executed and
delivered to EAW an employment agreement with EAW in the form attached as
Exhibit E;
9.15. XXXXXX EMPLOYMENT AGREEMENT: Xxxxxxx Xxxxxx shall have executed
and delivered to EAW an employment agreement with EAW in the form
attached as Exhibit F;
9.16. XXXXXXXX EMPLOYMENT AGREEMENT: Xxxx Xxxxxxxx shall have executed
and delivered to EAW an employment agreement with EAW in the form
attached as Exhibit G;
9.17. XXXXXX EMPLOYMENT AGREEMENT: Will Xxxxxx shall have executed and
delivered to EAW an employment agreement with EAW in the form attached as
Exhibit H;
9.18. XXXX XXXXX XXXXXX ACT: Sellers and Mackie shall have prepared and
submitted to the appropriate agencies all required information pursuant
to the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, and the
regulations thereunder, and approval of the proposed transaction from
such agencies shall have been received or the waiting period shall have
lapsed.
10. SELLERS' CONDITIONS PRECEDENT TO CLOSING: The obligation of Sellers to
consummate the transactions contemplated by this Agreement is expressly
subject to the satisfaction, on or prior to the Closing Date, of all of the
following conditions (compliance with which, or the occurrence of which, may
be waived in whole or in part by Seller in writing):
10.1.1. REPRESENTATIONS AND WARRANTIES: All representations and
warranties of Mackie contained in this Agreement shall be true and
correct in all material respects as of the Closing Date, as if made at
and as of such date. Mackie shall have delivered certificates to Seller
to that effect in form and substance reasonably satisfactory to Seller
dated as of the Closing Date;
10.2. COVENANTS AND AGREEMENTS: Mackie shall have performed and
satisfied all covenants and conditions required by this Agreement to be
performed or satisfied by it on or prior to the Closing Date;
10.3. NO ACTIONS: No action or proceeding shall have been instituted
or threatened and no administrative or court order shall be in effect
seeking to prevent or make illegal the execution and delivery of this
Agreement by Mackie or the consummation by Mackie of the transactions
contemplated hereby;
10.4. XXXXXX EMPLOYMENT AGREEMENT: EAW shall have executed and
delivered to Xxxxxx an employment agreement with EAW in the form
attached as Exhibit C;
10.5. XXXXXXXX EMPLOYMENT AGREEMENT: EAW shall have executed and
delivered to Xxxxxxxx an employment agreement with EAW in the form
attached as Exhibit D;
PAGE-19
10.6. XXXXX EMPLOYMENT AGREEMENT: EAW shall have executed and
delivered to Xxxxx an employment agreement with EAW in the form
attached as Exhibit E;
10.7. XXXXXX EMPLOYMENT AGREEMENT: Xxxxxxx Xxxxxx shall have executed
and delivered to EAW an employment agreement with EAW in the form
attached as Exhibit F;
10.8. XXXXXXXX EMPLOYMENT AGREEMENT: Xxxx Xxxxxxxx shall have executed
and delivered to EAW an employment agreement with EAW in the form
attached as Exhibit G;
10.9. XXXXXX EMPLOYMENT AGREEMENT: Will Xxxxxx shall have executed and
delivered to EAW an employment agreement with EAW in the form attached
as Exhibit H;
10.10. MACKIE BOARD APPROVAL: Mackie's Board of Directors shall have
granted approval of the contemplated transaction on or before March 15,
2000, and Sellers shall have been advised in writing to such effect;
10.11. MACKIE DUE DILIGENCE: Mackie shall have completed the due
diligence review and environmental assessment and provided written
waivers pursuant to Sections 9.8 and 9.10 on or before March 15, 2000;
10.12. XXXX XXXXX XXXXXX ACT: Sellers and Mackie shall have prepared
and submitted to the appropriate agencies all required information
pursuant to the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
and the regulations thereunder, and approval of the proposed
transaction from such agencies shall have been if such consent is
required by the governing instrument due to the sale contemplated by
this Agreement received or the waiting period shall have lapsed;
10.13. CONSENTS: EAW and the Sellers shall have obtained all third
party consents necessary to consummate the transfer of the shares;
10.14. REDEMPTION OF THE PREFERRED SHARES: The Preferred Shares shall
have been redeemed in accordance with Section 3 of this Agreement; and
10.15. RELEASE OF GUARANTIES: Xxxxxx shall have been released of all
obligations under any guaranty given by him to Fleet National Bank in
conjunction with any financing arrangements between EAW and Fleet
National Bank.
11. XXXXXX'X COVENANT NOT TO COMPETE: But for the provisions of this
Section 11, Mackie would not enter into this Agreement as it does not
wish competition from Xxxxxx. Accordingly:
11.1. NONCOMPETITION OF XXXXXX: Except pursuant to the terms and
conditions of his employment agreement with EAW and any services
provided to Mackie, for a period of three (3) years from and after the
Closing Date, Xxxxxx shall not, directly or indirectly, singly or in
partnership or in conjunction with any other person or persons, firm,
association, syndicate, company or corporation, as officer, director,
consultant, employee,
PAGE-20
independent contractor, principal, agent, shareholder, partner, owner
or otherwise, carry on, finance, guarantee the indebtedness of, be
engaged in or permit its name or credit to be used in any way in
conjunction with any manufacturer of speakers or professional audio
equipment located anywhere in the world; provided, however, Xxxxxx
shall not be restricted from holding less than 5% of the outstanding
securities of any company whose securities are listed on a national
securities exchange or automated quotation system;
11.2. NONDISCLOSURE: Xxxxxx shall not disclose or use in any way any
confidential business or technical information relating to operations,
customer lists, pricing policies, costs of operation, costs of supplies
and inventory, or marketing plans of EAW's or Mackie's business or the
Business;
11.3. NONSOLICITATION OF CUSTOMERS: During the three (3) year period
from and after the Closing Date, Xxxxxx shall not, directly or
indirectly, either for his own benefit or for the benefit of others or
in conjunction with any business or entity which is then in competition
with Mackie, solicit, call on, interfere with, accept business of a
competing nature from, or attempt to divert away from EAW or Mackie any
person or firm who was a customer of EAW, Mackie or any Affiliate of
Mackie or EAW at any time;
11.4. NONSOLICITATION OF EMPLOYEES: During the three (3) year period
from and after the Closing Date, Xxxxxx shall not, directly or
indirectly, employ, offer to employ, solicit or enlist any employee of
Mackie, EAW or any Affiliate of Mackie or EAW to leave Mackie's, EAW's
or such Affiliate's employ for any reason;
11.5. INJUNCTIVE RELIEF: In addition to damages suffered by Mackie as
a result of Xxxxxx'x breach of this paragraph, Mackie shall be entitled
to the granting of an injunction to prohibit violations of this
paragraph upon reasonable proof of the occurrence of any event which
contravenes its terms. If a bond is required with respect to the
securing of any such injunction, the parties agree that the maximum
amount of any such bond shall be $1,000;
11.6. TERMS: Xxxxxx acknowledges that the provisions of this Section
11 have been considered by him and are reasonable as to time, area, and
extent, having regard to all circumstances of this transaction. Xxxxxx
specifically acknowledges that the professional audio market is a
worldwide market and that the restriction of his involvement in such
market for the indicated period on a worldwide basis is, accordingly,
reasonable; and,
11.7. SEVERABILITY: If any provision of this Section 11 shall be
unenforceable, illegal, or contrary to the public policy of the
jurisdiction in which it is sought to be enforced, such provision shall
be deemed to be deleted from this Agreement and the remaining
provisions of this Section shall be and remain valid and binding upon
and enforceable by the parties hereto. In addition, the duration and
coverage of each separate covenant may be limited by a court in which
enforcement of such covenant is sought to the extent necessary to
permit the enforcement of such separate covenant.
PAGE-21
12. INDEMNIFICATION: Each party shall save, defend and hold harmless the
other parties as follows:
12.1. BY SELLERS: Each of the Sellers, severally and not jointly,
shall save and hold Mackie harmless from, and defend it against, any
and all claims, losses, expenses, obligations, and liabilities,
including court costs and attorneys' fees, which arise or result from,
or are incident to: (i) the inaccuracy or breach of any representation
or warranty of any Seller; (ii) any default or failure of Sellers to
perform commitments or obligations under this Agreement; or (iii) any
act or omission of Sellers which constitutes a breach or default under
this Agreement; provided, that the liability of any particular Seller
under item (i) above shall be limited to the inaccuracy or breach of
only those representations or warranties given by such Seller. Sellers
shall reimburse Mackie on demand for any payment made or loss suffered
by it due to their breach at any time after the Closing Date based upon
the final judgment of any court of competent jurisdiction or pursuant
to a bona fide compromise or settlement of claims, demands or actions,
in respect of any damages to which the foregoing indemnity relates.
12.2. BY MACKIE: Mackie shall save and hold each of the Sellers
harmless from, and defend them against, any and all damages, claims,
losses, expenses, costs, obligations, and liabilities, including court
costs and attorneys' fees, which arise, result from, or are incident
to: (i) the inaccuracy or breach of any representation or warranty of
Mackie; (ii) any default of Mackie's commitments or obligations under
this Agreement; (iii) any act or omission of Mackie which constitutes a
breach or default under this Agreement; or (iv) any of the matters set
forth on Schedule 6.3.8. Mackie shall also save and hold Xxxxxx
harmless from, and defend him against, liability under any guaranty of
payment given by Xxxxxx in connection with the payment of the purchase
price by EAW to the former shareholders of SIA-Software, Inc. at the
time that EAW purchased all of the issued and outstanding shares of
SIA-Software, Inc. Mackie shall reimburse Sellers on demand for any
payment made or loss suffered by it at any time after the Closing Date
based on the judgment of any court of competent jurisdiction, or
pursuant to a bona fide compromise or settlement of claims, demands, or
actions, in respect of any damages to which the foregoing indemnity
relates. Consummation of the transactions contemplated by this
Agreement shall not be deemed or construed to be a waiver of any right
or remedy of Sellers under this Agreement;
12.3. PROCEDURE: The party indemnified hereunder (the "Indemnitee")
shall promptly notify the indemnifying party (the "Indemnitor") of the
existence of any claim, demand, or other matter involving liabilities
to third parties to which the Indemnitor's indemnification obligations
would apply, and shall give the Indemnitor thirty (30) days in which to
elect to defend the same at its own expense and with counsel of its own
selection (who shall be approved by the Indemnitee, which approval
shall not be unreasonably withheld); provided that the Indemnitee shall
at all times also have the right to fully participate in the defense at
its own expense. If the Indemnitor shall, within such thirty (30) day
period, fail to defend, the Indemnitee shall have the right, but not
the obligation, to undertake the defense of and to compromise or settle
(exercising reasonable
PAGE-22
business judgment) the claim or other matter on behalf, for the
account, and at the risk and expense of the Indemnitor. Except as
otherwise provided above, the Indemnitee shall not compromise or settle
the claim or other matter without the written consent of the
Indemnitor, such consent not to be unreasonably withheld. If the claim
is one that cannot by its nature be defended solely by the Indemnitor,
the Indemnitee shall make available all information and assistance that
the Indemnitor may reasonably request; provided that any actual out of
pocket expenses shall be paid by the Indemnitor; and
12.4. LIMITATION ON LIABILITY: Notwithstanding the above provisions on
indemnification, Sellers shall have no liability to Mackie until such
time as Mackie's claims exceed, in the aggregate, $180,000 and then
only for the amount in excess of $180,000. Except with respect to a
breach of the representations and warranties contained in Sections
6.3.13 (environmental matters), 6.3.6 (taxes) and 6.3.3 (Benefit
Plans), the liability of any Seller to Mackie shall never exceed fifty
percent (50%) of the consideration to be received by that Seller as
shown in Section 4. With respect to a breach of the representations and
warranties contained in Sections 6.3.13 (environmental matters), 6.3.6
(taxes) and 6.3.3 (Benefit Plans), the liability of Xxxxxx to Xxxxxx
shall never exceed one hundred percent (100%) of the consideration to
be received by Xxxxxx as shown in Section 4. Except with respect to a
breach of the representations and warranties contained in Sections
6.3.6 (taxes) and 6.3.3 (Benefit Plans), Sellers shall have no
liability to Mackie for claims which Sellers do not receive notice of
within one (1) year of the Closing Date. Sellers shall have no
liability to Mackie (i) with respect to any claim for breach of a
representation, warranty, covenant or agreement that is disclosed to
Mackie in writing subsequent to execution of this Agreement and at or
prior to the Closing if Mackie nevertheless elects to close or (ii) if
the existence of such liability, breach of representation, warranty or
covenant or the falsity of the representation upon which such claim
would be based is known by Mackie as of the Closing as a result of a
written report provided to Mackie by a third party consultant, advisor
or representative of Mackie in connection with its due diligence review
of EAW, other than Weiss, Jensen, Xxxxx & Xxxxxx.
13. TERMINATION: This Agreement may be terminated prior to closing without
liability on the part of any party exercising the right of termination as
follows:
13.1. MUTUAL CONSENT: By the mutual written consent of the parties;
13.2. FOR BREACH: By any party hereto if there has been a material
misrepresentation or a material breach on the part of the other party
of the warranties of such other party as set forth in this Agreement or
made pursuant hereto, or if there has been any failure on the part of
the other party to perform its obligations or comply with the covenants
under this Agreement; or,
13.3. FAILURE OF CONDITION: By either party if the conditions precedent
to its performance have not been satisfied or waived.
PAGE-23
Each party to this Agreement shall act in good faith and use its best efforts to
cause the satisfaction of all conditions to the consummation of this Agreement
which are in the control of such party and to cooperate as necessary in the
satisfaction of all other conditions to the consummation of this Agreement. In
the event of termination and abandonment by any party as described above,
written notice shall be given to the party, and this Agreement shall terminate
and be abandoned without further action by any of the parties hereto. If this
Agreement is terminated as described above, each party shall redeliver all
documents, work papers, and other materials of any other party relating to the
transaction contemplated by this Agreement, whether obtained before or after the
execution of this Agreement, to the parties furnishing the same. If such
termination occurs because a condition to a party's obligation to consummate the
transaction contemplated by this Agreement has not been satisfied by the Closing
Date and the other party is not in default, no party thereto shall have any
liability or further obligation to any other party to this Agreement. If this
Agreement shall fail to close for any reason, any and all information acquired
by Mackie prior to closing in Mackie's review of the books and records of EAW or
its Affiliates or in its contact with their accountants, lenders, employees,
customers and suppliers is and shall remain confidential, and shall not be used
or disclosed by Mackie in any manner without the prior written consent of EAW.
14. TAXES: Mackie shall promptly pay any and all sales, use, transfer, or
other similar taxes attributable to the purchase of the Shares.
15. FURTHER DOCUMENTATION: From time to time at the request of the other
party, whether at or after the Closing Date and without further consideration,
each party shall execute and deliver such further instruments of transfer and
take such other action as the requesting party may reasonably require to
transfer more effectively to effect the transactions contemplated by this
Agreement.
16. CONFIDENTIALITY: Except in accordance with valid due
process, the parties shall not make or allow to be made any
public disclosure of the terms and conditions of this
Agreement.
17. MISCELLANEOUS: The following provisions shall be applicable to this
Agreement, and to its construction and interpretation:
17.1. ASSIGNMENT: The parties may not assign their rights and
obligations hereunder without the prior written consent of the other
party or parties, as the case may be; provided, that Mackie may assign
its interest in this Agreement to any other company or entity which
owns, is owned by or is under common control with the Mackie.
Notwithstanding the foregoing, Mackie may not assign its obligations,
under Section 12. Notwithstanding the above, this Agreement shall inure
to the benefit of, and be binding upon, the parties hereto and their
respective personal representatives, heirs, successors and/or assigns;
17.2. RULES OF CONSTRUCTION: All parties have been actively
represented by counsel throughout the negotiations leading to the
execution and delivery of this Agreement. Consequently, the usual rules
of construction of documents against the interest of the party drafting
the same are hereby waived, and the parties stipulate that the this
PAGE-24
Agreement and the documents contemplated thereby be construed in
accordance with the intent of the parties as expressed herein or
therein;
17.3. NOTICES: Any notice or other communication required or permitted
hereunder shall be in writing, and shall be deemed to have been given
when delivered addressed as follows or when sent by facsimile with
evidence of receipt to the telephone numbers listed below:
If to Xxxxxx: 00 Xxxxx Xx, Xxx 000
Xxxxxxx, XX 00000
If to Xxxxxxxx: 00 Xxxxx Xxxx Xxxx,
Xxxxx Xxxxxxxxxx, XX 00000
If to Xxxxx: 00 Xxxxxxxxxx Xxxx
Xxxxxx, XX 00000
If to Garritt: 00 Xxxxx Xxxxxx
Xxxxxxx, XX 00000
If to Xxxxxx: 00 Xxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
If to Xxxxxx: 0 Xxxxxx Xxxx
Xxxxxxxxxxxx, XX 00000
If to X'Xxxxxx: 0 Xxxxxxx Xxxx
Xxxxxxxxxxxx, XX 00000
If to Xxxxxx: 000 Xxxx Xxxxxx Xxxx
Xxxx Xxxxxxxxx, XX 00000
If to Xxxxxxxx: 00 Xxxxx Xxxxxx, X.
Xxxxxxx, XX 00000
If to Macdonald: 00 Xxx Xxxxxx
Xxxxxxxxxxx, XX 00000
In all cases above,
with a copy to: Xxxxxx, X'Xxxxxxx, XxXxxxxx & Lougee, LLP
000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxxxxxx
PAGE-25
If to Mackie: Mackie Designs Inc.
00000 Xxxx-Xxx Xxxx X.X.
Xxxxxxxxxxx, XX 00000
Attention: Chief Operating Officer
With a copy to: Weiss, Jensen, Xxxxx & Xxxxxx
0000 Xxxx Xxxxx,
000 Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention. Xxxxxxx X. Xxxxx
Each of the parties shall be entitled to specify a different address or
telephone number by giving notice as aforesaid.
17.4. EXHIBITS AND SCHEDULES: This Agreement, the exhibits and
schedules to this Agreement, and the agreements and other instruments
referred to in this Agreement constitute the entire agreement between
the parties pertaining to the subject matter and supersede all prior
agreements, understandings, negotiations, and discussions, whether oral
or written. No supplement, modification or waiver of this Agreement
shall be binding unless executed in writing by the party to be bound. No
waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of any other provisions (whether or not
similar), nor shall such waiver constitute a continuing waiver or
estoppel with respect to subsequent defaults unless otherwise expressly
provided. All exhibits and schedules which are appended hereto are
hereby incorporated into this Agreement by this reference;
17.5. HEADINGS: Section headings are not to be considered part of this
Agreement and are included solely for convenience and reference and are
not intended to be full or accurate descriptions of the content thereof;
17.6. GOVERNING LAW: The validity, construction, and interpretation of
this Agreement shall be governed by the laws of the Commonwealth of
Massachusetts applicable to contracts made and to be performed wholly
within that state;
17.7. VENUE AND CONSENT TO JURISDICTION: Venue and jurisdiction of any
litigation arising out of this Agreement shall lie in the United States
District Court for the District of Massachusetts, Central Section,
located in Worcester, Massachusetts. Sellers and Mackie hereby submit to
the jurisdiction of such court, and the rights granted under this
paragraph may be specifically enforced by either party to this Agreement;
17.8. COUNTERPARTS: This Agreement may be executed simultaneously in
two or more counterparts, each one of which shall be deemed an original,
but all of which shall constitute one and the same instrument;
17.9. NO THIRD PARTY RIGHTS: Except as specifically provided in this
Agreement and by documents contemplated by or attached as exhibits to
this Agreement, nothing in this
PAGE-26
Agreement is intended to imply or by implication to confer upon any
person other than the parties hereto any rights or remedies under or by
reason of this Agreement;
17.10. ATTORNEYS' FEES: In the event any party takes legal action to
enforce any of its rights under this Agreement, the prevailing party to
such action shall be entitled to recover its costs and expenses,
including reasonable attorneys' fees, incurred in any such action or any
appeal thereof;
17.11. COSTS AND EXPENSES: Except as set forth in the next sentence, all
costs and expenses, including attorneys' fees, incurred by the Sellers
in connection with this Agreement and the transactions contemplated
hereby shall be paid by Sellers personally, and shall not be paid by EAW
or from EAW assets; provided, that if such costs and expenses were paid
by EAW prior to Closing, Sellers shall reimburse EAW at Closing for all
such costs and expenses so paid. Notwithstanding the foregoing, the
costs and expenses of EAW's accountants shall be paid by EAW and not by
the Sellers;
17.12. NUMBER, GENDER AND PERSONS: In this Agreement, words importing
the singular number only shall include the plural and VICE VERSA, words
importing gender shall include all genders and words importing persons
shall include individuals, corporations, partnerships, associations,
trusts, unincorporated organizations, governmental bodies and other
legal or business entities of any kind whatsoever;
17.13. SURVIVAL OF REPRESENTATIONS AND WARRANTIES: The representations
and warranties of Sellers and Mackie contained in this Agreement and in
any document delivered or to be delivered pursuant to this Agreement
shall survive the Closing Date and remain in effect after the Closing
Date; and
17.14. TIME OF ESSENCE: Time shall be of the essence of this Agreement.
18. DISPUTE RESOLUTION
18.1. DISPUTE: As used in this Agreement, "DISPUTE" shall mean any
dispute or disagreement between Mackie and Sellers concerning the
interpretation of this Agreement, the validity of this Agreement,
any breach or alleged breach by any party under this Agreement or
any other matter relating in any way to this Agreement.
18.2. PROCESS: If a Dispute arises, the parties to the Dispute shall
follow the procedures specified in Sections 18.3, 18.4 and 18.5 of
this Agreement.
18.3. NEGOTIATIONS: A meeting shall be held promptly between the
parties, attended by individuals with decision-making authority
regarding the Dispute, to attempt in good faith to negotiate a
resolution of the Dispute.
18.4. ARBITRATION: If, within 30 days after such meeting the parties
have not succeeded in negotiating a resolution of the Dispute,
they shall submit the matter to binding arbitration in Boston,
Massachusetts in accordance with the commercial rules of the
American Arbitration Association. The arbitration will be
conducted before a panel of
PAGE-27
three arbitrators. Each party will select one of the three arbitrators
and the two arbitrators who are so chosen will select a third who will
act as chairperson. The decision of a majority of the arbitrators will
be final and conclusive upon the parties with respect to all matters
submitted to arbitration for decision, and such decision shall be
enforceable by a court of competent jurisdiction. Each party shall be
responsible for its own expenses incurred in resolving any dispute or
difference. Any expenses attributable to both parties shall be shared
equally.
18.5. EQUITABLE RELIEF: This Article 18 shall not apply to any claim
where relief of an equitable nature, such as injunctive relief, may be
sought through the courts (it being understood that only the equitable
relief portion of a claim may be sought through the courts). In the
event proceedings through the courts are commenced hereunder, the
prevailing party (which includes the party whose formal settlement offer
is closest to any ultimate determination) shall be entitled to
reimbursement for its related costs and expenses, including reasonable
legal fees, incurred with respect to said proceedings.
18.6. GENERAL:
18.6.1. At any time during the procedures specified in
Sections 18.3 and 18.4 of this Agreement, a party may seek a
preliminary injunction or other provisional judicial relief if
in its judgment such action is necessary to avoid irreparable
damage or to preserve the status quo. Despite such action, the
parties will continue to participate in good faith in the
procedures specified in this Article 18 of this Agreement.
18.6.2. All applicable statutes of limitation and defenses
based upon the passage of time shall be tolled while the
procedures specified in this Article 18 of this Agreement are
pending. The parties will take such action, if any, as is
required to effectuate such tolling.
18.6.3. Each party is required to continue to perform its
obligations under this Agreement pending final resolution of
any Dispute.
18.6.4. All deadlines specified in this Article 18 of this
Agreement may be extended by mutual agreement between Mackie
and Sellers.
18.6.5. The parties regard the obligations in this Article 18
of this Agreement to constitute an essential provision of this
Agreement and one that is legally binding on them. In case of
a violation of the obligations in this Article 18 of this
Agreement by either Mackie or Sellers, the other party may
bring an action to seek enforcement of such obligations in any
court of law having jurisdiction thereof.
19. EMPLOYEE BENEFITS: Mackie covenants and agrees to provide each employee
of EAW, who remains an employee of EAW immediately following the Closing
Date, with employee benefits no less favorable than those currently provided
by EAW and each such employee will be
PAGE-28
credited for all service to EAW for purposes of those
compensation, employee benefit, vacation and leave plans,
programs and arrangements which Mackie implements or causes
EAW to adopt on or after the Closing Date.
Dated the day and year first above written.
[SIGNATURE PAGES FOLLOW]
PAGE-29
MACKIE DESIGNS INC.
By: /s/ Xxxxx X. Xxxxx /s/ Xxxxxxx X. Xxxxxx
----------------------- -------------------------------------
Title: COO Xxxxxxx X. Xxxxxx
/s/ Xxxxxx Xxxxxxxx
-------------------------------------
Xxxxxx Xxxxxxxx
/s/ Xxxxx Xxxxx
-------------------------------------
Xxxxx Xxxxx
/s/ Xxxxxxx Xxxxxxx
-------------------------------------
Xxxxxxx Xxxxxxx
/s/ Xxxxx Xxxxxx
-------------------------------------
Xxxxx Xxxxxx
/s/ Xxxx Xxxxxxxx
-------------------------------------
Xxxx Xxxxxxxx
/s/ Xxxxxxx Xxxxxx
-------------------------------------
Xxxxxxx Xxxxxx
/s/ Xxxxxx Xxxxxxxxx
-------------------------------------
Xxxxxx Xxxxxxxxx
/s/ Will Xxxxxx
-------------------------------------
Will Xxxxxx
/s/ Xxxx X'Xxxxxx
-------------------------------------
Xxxx X'Xxxxxx
PAGE-30
The Xxxxxx X. Xxxxxx Charitable Remainder
Unitrust
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------------------
Xxxxxx X. Xxxxxx, Trustee
The Xxxxxxx X. Xxxxxx Charitable Remainder
Unitrust
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------------------
Xxxxxxx X. Xxxxxx, Trustee
PAGE-31
