STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("Agreement") is made as of January 26, 1998,
by IAC HOLDINGS CORP., a Delaware corporation, with offices located at ("Buyer")
and XXXXXX XXXXXXXXX, an individual resident in New York, New York ("Xxxxxxxxx"
or "Seller").
RECITALS
Seller desires to sell, and Buyer desires to purchase, a total of 1,913,429
of the issued and outstanding shares (the "Shares") of capital stock, $. 10 par
value of Industrial Acoustics Company, Inc., a New York corporation (the
"Company"), for the consideration and on the terms set forth in this Agreement.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1. DEFINITIONS.
For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Section 1:
"Breach" -- a "Breach" of a representation, warranty, covenant, obligation,
or other provision of this Agreement or any instrument delivered pursuant to
this Agreement will be deemed to have occurred if there is or has been any
material inaccuracy in or material breach of, or any material failure to perform
or comply with, such representation, warranty, covenant, obligation, or other
provision, and the term "Breach" means any such inaccuracy, breach, failure,
claim, occurrence, or circumstance.
"Buyer" -- as defined in the first paragraph of this Agreement.
"Closing" -- as defined in Section 2.3.
"Closing Date" -- the date and time as of which the Closing actually takes
place.
"Company" -- Industrial Acoustics Company, Inc., a New York corporation.
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"Consent" -- any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
"Contemplated Transactions" -- all of the transactions contemplated by this
Agreement, including: (a) the sale of the Shares by Seller to Buyer; (b) the
performance by Buyer and Seller of their respective covenants and obligations
under this Agreement; and (c) Buyer's acquisition and ownership of the Shares
and exercise of control over the Company and its Subsidiaries.
"Contract" -- any agreement, contract, obligation, promise, or undertaking
(whether written or oral and whether express or implied) that is legally
binding.
"Damages" -- as defined in Section 10.2.
"Disclosure Schedule" -- the Disclosure Schedule delivered by Seller to
Buyer concurrently with the execution and delivery of this Agreement.
"EBITDA" -- consolidated operating profit for the fiscal year ended
December 31, 1997 (i) after all sales, general and administrative expenses,
before interest income and expense, taxation, depreciation and amortization,
(ii) inclusive of royalty income and after bonus expenses, and (iii) excluding
any non-recurring income and adding back redundancy costs relating to the
operations of Industrial Acoustics Company, Ltd. For purposes of computing
EBITDA, bonus expense shall not be less than $1,300,000, and any provision for
potential late penalties on the "Xxxxxx/Miramar" contract #50-0833 shall not
exceed $90,000.
"Encumbrance" -- any charge, claim, community property interest, condition,
equitable interest, lien, option, pledge, security interest, right of first
refusal, or restriction of any kind, including any restriction on use, voting,
transfer, receipt of income, or exercise of any other attribute of ownership.
"Environmental Claim" -- means any notice, claim, demand, order, direction
(conditional or otherwise) or other communication by any governmental authority
or any Person alleging liability for any response or corrective action, any
damage, including, without limitation, personal injury, property damage,
contribution, indemnity, indirect or consequential damages, damage to natural
resources, nuisance, pollution, contamination or other adverse effects on the
environment, or for fines or penalties, in each case arising under any
Environmental Law, including without limitation, relating to, resulting from or
in connection with Hazardous Materials and relating to the Company, any of its
Subsidiaries or any of their respective properties or predecessors in interest.
"Environmental Laws" -- means the common law and all statutes, ordinances,
orders, rules, regulations, judgments, writs, decrees or injunctions relating to
pollution
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or protection of human health, safety or the environment including, without
limitation, ambient air, indoor air, soil, surface water, groundwater, wetlands
and other natural resources, land or subsurface strata, including, without
limitation, those relating to the Release or threatened Release of Hazardous
Materials or otherwise relating to the generation, manufacture, use, storage,
transport, treatment, distribution, or disposal of Hazardous Materials, each as
amended or supplemented and each as in effect as of the date of determination.
"Environmental Lien" -- means a Lien in favor of a Tribunal or other Person
(i) for any liability under an Environmental Law or (ii) for damages arising
from or costs incurred by such Tribunal or other Person in response to a release
or threatened release of any Hazardous Materials.
"Facilities" -- any real property, leaseholds, or other interests currently
or formerly owned or operated by the Company or any of its Subsidiaries and any
buildings, plants, structures, or equipment (including motor vehicles, tank
cars, and rolling stock) currently or formerly owned or operated by the Company
or any of its Subsidiaries.
"GAAP" -- generally accepted United States accounting principles.
"Governmental Authorization" any approval, consent, license, permit,
waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement.
"Governmental Body" -- any (a) nation, state, county, city, town, village,
district, or other jurisdiction of any nature; (b) federal, state, local,
municipal, foreign, or other government; (c) governmental or quasi-governmental
authority of any nature (including any governmental agency, branch, department,
official, or entity and any court or other tribunal); (d) multinational
organization or body; or (e) body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative, police, regulatory, or taxing
authority or power of any nature.
"Hazardous Materials" -- means any pollutant, contaminant, toxic, hazardous
or extremely hazardous substance, constituent or waste, or any other
constituent, waste, material, compound, chemical or substance including, without
limitation, petroleum including crude oil or any fraction thereof, or any
petroleum product, subject to regulation under any Environmental Law.
"HSR Act -- the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976 or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"Intellectual Property Assets" -- includes (i) the name Industrial
Acoustics Company, all fictional business names, trading names, registered and
unregistered trademarks,
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service marks, and applications (collectively, "Marks"); (ii) all patents,
patent applications, and inventions and discoveries that may be patentable
(collectively, "Patents"); (iii) a copyrights in both published works and
unpublished works (collectively, "Copyrights"); and (iv) all know-how, trade
secrets, confidential information, customer lists, software, technical
information, data, process technology, plans, drawings, and blue prints
(collectively, "Trade Secrets"); owned, used, or licensed by the Company or any
Subsidiary as licensee or licensor.
"Interim Balance Sheet" -- as defined in Section 3.7.
"IRC" -- the Internal Revenue Code of 1986 or any successor law, and
regulations issued by the IRS pursuant to the Internal Revenue Code or any
successor law.
"IRS" -- the United States Internal Revenue Service or any successor
agency, and, to the "tent relevant, the United States Department of the
Treasury.
"Knowledge" -- an individual will be deemed to have "Knowledge" of a
particular fact or other matter if (a) such individual is actually aware of such
fact or other matter; or (b) a prudent individual could be expected to discover
or otherwise become aware of such fact or other matter in the course of
conducting a reasonably comprehensive investigation concerning the existence of
such fact or other matter.
A Person (other than an individual) will be deemed to have "Knowledge" of a
particular fact or other matter if any individual who is serving, or who has at
any time served, as a director, officer, partner, executor, or trustee of such
Person (or in any similar capacity) has, or at any time had, or should have had
(based on the standard set forth in clause (b) above) Knowledge of such fact or
other matter.
"Licensed Intellectual Property Assets" -- Intellectual Property Assets
licensed by the Company or any Subsidiary as licensee or licensor.
"Legal Requirement" -- any federal, state, local, municipal, foreign,
international, multinational, or other administrative order, constitution, law,
ordinance, principle of common law, regulation, statute, or treaty.
"Material Adverse Effect" -- any circumstance, change in, or effect on the
business of the Company or any Subsidiary that, individually or in the aggregate
with any other circumstances, changes in, or effects on, the business of the
Company or any Subsidiary: (a) is materially adverse to the business,
operations, assets or liabilities, employee relationships, customer or supplier
relationships, prospects, results of operations or the condition (financial or
otherwise) of the Company and the Subsidiaries, taken as a whole, or (b)
adversely affects the ability of the Buyer, the Company or the Subsidiaries to
operate or
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conduct their business in the manner in which it is currently operated or
conducted by Xxxxxxxxx, the Company and the Subsidiaries.
"Order" -- any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
"Organizational Documents" -- (a) the articles or certificate of
incorporation and the bylaws of a corporation; (b) the partnership agreement and
any statement of partnership of a general partnership; (c) the limited
partnership agreement and the certificate of limited partnership of a limited
partnership; (d) any charter or similar document adopted or filed in connection
with the creation, formation, or organization of a Person; and (e) any amendment
to any of the foregoing.
"Owned Intellectual Property Assets" -- Intellectual Property Assets owned
by the Company or any Subsidiary.
"Permitted Encumbrance" -- any of the following as to which no enforcement,
collection, execution, levy or foreclosure proceeding shall have been commenced:
(a) liens for taxes, assessments and governmental charges or levies not yet due
and payable which are not in excess of the amount accrued therefor on the
Reference Balance Sheet; (b) Encumbrances imposed by law, such as materialmen's,
mechanics', carriers', workmen's and repairmen's liens and other similar liens
arising in the ordinary course of business securing obligations that (i) are not
overdue for a period of more than 30 days and (ii) are not in excess of $5,000
in the case of a single property or $50,000 in the aggregate at any time; (c)
pledges or deposits to secure obligations under workers' compensation laws or
similar legislation or to secure public or statutory obligations; and (d) minor
survey exceptions, reciprocal easement agreements and other customary
encumbrances on title to real property that (i) were not incurred in connection
with any Indebtedness, (ii) do not render title to the property encumbered
thereby unmarketable and (iii) do not, individually or in the aggregate,
materially adversely affect the value or use of such property for its current
and anticipated purposes.
"Person" -- any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or Governmental Body.
"Proceeding" -- any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative, investigative, or
informal) commenced, brought, conducted, or heard by or before, or otherwise
involving, any Governmental Body or arbitrator.
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"Reference Balance Sheet" -- the unaudited consolidated financial
statements for the Company and its Subsidiaries for the year ending December 31,
1997, which are subject to confirmation by the audited consolidated financial
statements of the Company and its Subsidiaries for the year ending December 31,
1997 described in Section 5. 1 (b).
"Related Person" -- means, with respect to a particular individual:
(a) each other member of such individual's Family;
(b) any Person that is directly or indirectly controlled by such
individual or one or more members of such individual's Family;
(c) any Person in which such individual or members of such
individual's Family hold (individually or in the aggregate) a Material
Interest; and
(d) any Person with respect to which such individual or one or more
members of such individual's Family serves as a director, officer, partner,
executor, or trustee (or in a similar capacity)-
With respect to a specified Person other than an individual:
(a) any Person that directly or indirectly controls, is directly or
indirectly controlled by, or is directly or indirectly under common control
with such specified Person;
(b) any Person that holds a Material Interest in such specified
Person;
(c) each Person that serves as a director, officer, partner, executor,
or trustee of such specified Person (or in a similar capacity);
(d) any Person in which such specified Person holds a Material
Interest;
(e) any Person with respect to which such specified Person serves as a
general partner or a trustee (or in a similar capacity); and
(f) any Related Person of any individual described in clause (b) or
(c).
For purposes of this definition, (a) the "Family" of an individual includes
(i) the individual, (ii) the individual's spouse, (iii) any other natural person
who is related to the individual or the individual's spouse within the second
degree, and (iv) any other natural person who resides with such individual, and
(b) "Material Interest" means direct or indirect beneficial ownership (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934) of voting
securities or other voting interests representing at least 10% of the
outstanding voting
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power of a Person or equity securities or other equity interests representing at
least 10% of the outstanding equity securities or equity interests in a Person.
"Release" -- means any spill, emission, leaking, pumping, pouring,
injection, escaping, deposit, disposal, discharge, dispersal, dumping, emitting,
leaching or migration of Hazardous Materials into the indoor or outdoor
environment (including, without limitation, the abandonment or disposal of any
barrels, containers or other closed receptacles containing any Hazardous
Materials), including without limitation the movement of any Hazardous Material
through the air, soil, surface water, groundwater or property.
"Representative" -- with respect to a particular Person, any director,
officer, employee, agent, consultant, advisor, or other representative of such
Person, including legal counsel, accountants, and financial advisors.
"Securities Act" -- the Securities Act of 1933 or any successor law, and
regulations and rules issued pursuant to that Act or any successor law.
"Seller" -- as defined in the first paragraph of this Agreement.
"Shares" -- as defined in the Recitals of this Agreement.
"Subsidiary" -- with respect to any Person (the "Owner"), any corporation
or other Person of which securities or other interests having the power to elect
a majority of that corporation's or other Person's board of directors or similar
governing body, or otherwise having the power to direct the business and
policies of that corporation or other Person (other than securities or other
interests having such power only upon the happening of a contingency that has
not occurred) are held by the Owner or one or more of its Subsidiaries; when
used without reference to a particular Person, "Subsidiary" means a Subsidiary
of the Company.
"Tax" or "Taxes" -- (i) all federal, state, local or foreign taxes,
charges, fees, imposts, levies or other assessments, including, without
limitation, all net income, alternative minimum, gross receipts, capital, sales,
use, ad valorem, value added, transfer, franchise, profits, inventory, capital
stock, license, withholding, payroll, employment, social security, unemployment,
excise, severance, stamp, occupation, property and estimated taxes, customs
duties, fees, assessments and charges of any kind whatsoever, (ii) all interest,
penalties, fines, additions to tax or other additional amounts imposed by any
taxing authority in connection with any item described in clause (i), and (iii)
all transferee, successor, joint and several or contractual liability in respect
of any items described in clause (i) or (ii) above.
"Tax Return" -- any return (including any information return), report,
statement, schedule, notice, form, or other document or information filed with
or submitted to, or required to be filed with or submitted to, any Governmental
Body in connection with the de-
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termination, assessment, collection, or payment of any Tax or in connection with
the administration, implementation, or enforcement of or compliance with any
Legal Requirement relating to any Tax.
"Threatened" -- a claim, Proceeding, dispute, action, or other matter will
be deemed to have been "Threatened" if any demand or statement has been made
(orally or in writing) or any notice has been given (orally or in writing), or
if any other event has occurred or any other circumstances exist, that would
lead a prudent Person to conclude that such a claim, Proceeding, dispute,
action, or other matter is likely to be asserted, commenced, taken, or otherwise
pursued in the future.
2. SALE AND TRANSFER OF SHARES; CLOSING.
2.1. SHARES.
Subject to the terms and conditions of this Agreement, at the Closing,
Seller will sell and transfer the Shares to Buyer, and Buyer will purchase the
Shares from Seller.
2.2. PURCHASE PRICE.
The purchase price for each of the Shares will be $11.00; therefor, the
total purchase price for the Shares is $21,047,719 (the "Purchase Price").
2.3. CLOSING.
The purchase and sale (the "Closing") provided for in this Agreement will
take place at the offices of Xxxx Xxxxxxxxxx Xxxxx Xxxxxx Xxxxxx & Xxxxxxxx LLP,
000 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000, at 10:00 A.M. on the later of
(i) Xxxxx 00, 0000, (xx) 15 days following the delivery of consolidated audited
financial statements of the Company and its Subsidiaries for the year ending
December 31, 1997 as required by Section 5. l(b), or (iii) the date that is two
business days following the termination of the applicable waiting period under
the HSR Act, or at such other time and place as the parties may agree in
writing.
2.4. CLOSING OBLIGATIONS.
At the Closing (a) Seller will deliver to Buyer:
(i) certificates representing the Shares, duly endorsed (or
accompanied by duly executed stock powers), with signatures guaranteed by a
commercial bank or by a member firm of the New York Stock Exchange, for
transfer to Buyer; and
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(ii) a certificate executed by Xxxxxxxxx representing and warranting
to Buyer- that each of Xxxxxxxxx'x representations and warranties in this
Agreement was accurate in all respects as of the date of this Agreement and
is accurate in all respects as of the Closing Date as if made on the
Closing Date (giving full effect to any supplements to the Disclosure
Schedule that were delivered by Xxxxxxxxx to Buyer prior to the Closing
Date in accordance with Section 5.5); and
(b) Buyer will deliver:
(i) to Seller, by bank cashier's or certified check payable to the
order of, or by wire transfer to accounts specified by the Seller, the
amount set forth on Schedule A attached hereto;
(ii) to the Escrow Agent by bank cashier's or certified check or by
wire transfer $1,750,000 pursuant to the Escrow Agreement referred to in
Section 7.4(c); and
(iii) a certificate executed by Buyer to the effect that, except as
otherwise stated in such certificate, each of Buyer's representations and
warranties in this Agreement was accurate in all respects as of the date of
this Agreement and is accurate in all respects as of the Closing Date as if
made on the Closing Date.
2.5. CONDITIONS TO CLOSING.
The Closing shall be conditioned and subject to (a) EBITDA, as calculated
from the consolidated audited financial statements of the Company and its
Subsidiaries for the year ending December 31, 1997 referred to in Section 5. 1
(b), being not less than $783,000, (b) audited Net Cash (cash, investments and
marketable securities held for sale less all long term and short term
indebtedness and capital lease obligations), as calculated from the consolidated
audited financial statements of the Company and its Subsidiaries for the year
ending December 31, 1997 referred to in Section 5. 1 (b), being equal to or
greater than $10,600,000. In the event that the Winchester, U.K. property sale
has not been closed, $2,200,000 shall be added to the calculation of audited Net
Cash, and (c) the disclosure by Seller to Buyer, for informational purposes
only, of the amount provided by Coopers & Xxxxxxx of any withdrawal liability
that the Company and its Subsidiaries would incur in a complete withdrawal on
the date of such disclosure from any multi-employer plan and Buyer shall be
satisfied with such amount. In the event that any of (a), (b) or (c) hereof is
not met, this Agreement shall terminate and no longer have any further force or
effect unless the requirement of (a) and/or (b) and/or (c) is waived by Buyer in
its sole discretion.
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3. REPRESENTATIONS AND WARRANTIES OF SELLER.
3.1. ORGANIZATION, AUTHORITY AND QUALIFICATION OF THE COMPANY.
The Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of New York and has all necessary power and
authority to own, operate or lease the properties and assets now owned, operated
or leased by it and to carry on its business as it has been and is currently
conducted. The Company is duly licensed or qualified to do business and is in
good standing in each jurisdiction in which the properties owned or leased by it
or the operation of its business makes such licenses or qualification necessary
or desirable and all such jurisdictions are set forth in Section 3.1 of the
Disclosure Schedule. All corporate actions taken by the Company have been duly
authorized, and the Company has not taken any action that in any respect
conflicts with, constitutes a default under or results in a violation of any
provision of its Certificate of Incorporation or By-laws. True and correct
copies of the Certificate of Incorporation and By-laws of the Company, each as
in effect on the date hereof, have been delivered by Xxxxxxxxx to the Buyer.
3.2. CAPITAL STOCK OF THE COMPANY; OWNERSHIP OF THE SHARES.
The authorized capital stock of the Company consists of 5,000,000 shares of
Common Stock, $. 10 par value. As of the date hereof, (i) 2,978,961 shares of
Common Stock are issued and outstanding, all of which are validly issued, fully
paid and nonassessable, and which do not include 86,698 shares held in the
Company's treasury, and (ii) 200,000 shares of Common Stock are reserved for
issuance pursuant to employee stock options granted pursuant to the Industrial
Acoustics Company, Inc. 1995 Stock Option Plan, as amended (the "Stock Option
Plan"). None of the issued and outstanding shares of Common Stock was issued in
violation of any preemptive rights. Except for the Stock Option Plan, there are
no options, warrants, convertible securities or other rights, agreements,
arrangements or commitments of any character relating to the capital stock to
the Company or obligating Xxxxxxxxx or the Company to issue or sell any shares
of capital stock of, or any other interest in, the Company. There are no
outstanding contractual obligations of the Company to repurchase, redeem or
otherwise acquire any shares of Common Stock or to provide funds to, or make any
investment (in the form of a loan, capital contribution or otherwise) in any
other Person. The Shares are owned of record and beneficially solely by Seller
free and clear of all Encumbrances. Upon consummation of the transactions
contemplated by this Agreement, the Shares will be fully paid and nonassessable.
Upon consummation of the transactions contemplated by this Agreement and
registration of the Shares in name of the Buyer in the stock records of the
Company, the Buyer, assuming it shall have purchased the Shares for value in
good faith and without notice of any adverse claim, will own the Shares free and
clear of all
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Encumbrances. There are no voting trusts, stockholder agreements, proxies, other
agreements or understandings in effect with respect to the voting or transfer of
any of the Shares.
3.3. SUBSIDIARIES.
(a) Section 3.3(a) of the Disclosure Schedule sets forth a true and
complete list of all Subsidiaries, listing for each Subsidiary its name, type of
entity, the jurisdiction and date of its incorporation or organization, its
authorized capital stock, partnership capital or equivalent, the number and type
of its issued and outstanding shares of capital stock, partnership interests or
similar ownership interests and the current ownership of such shares,
partnership interests or similar ownership interests.
(b) Other than the Subsidiaries, there are no other corporations,
partnerships, joint ventures, associations or other entities in which the
Company owns, of record or beneficially, any direct or indirect equity or other
interest or any right (contingent or otherwise) to acquire the same. Other than
the Subsidiaries, the Company is not a member of, nor is any part of the
business of the Company conducted through, any partnership. Except as set forth
in Section 3.3(b) of the Disclosure Schedule, the Company is not a participant
in any joint venture or similar arrangement.
(c) Each Subsidiary that is a corporation: (i) is a corporation duly
organized and validly existing under the laws of its jurisdiction of
incorporation, (ii) has all necessary power and authority to own, operate or
lease the properties and assets owned, operated or leased by such Subsidiary and
to carry on its business as it has been and is currently conducted by such
Subsidiary, and (iii) is duly licensed or qualified to do business and is in
good standing in each jurisdiction in which the properties owned or leased by it
or the operation of its business makes such licensing or qualification necessary
or desirable, except for such failures which, when taken together with all other
such failures, would not have a Material Adverse Effect. Each Subsidiary that is
not a corporation: (i) is duly organized and validly existing under the laws of
its jurisdiction of organization, (ii) has all necessary power and authority to
own, operate or lease the properties and assets owned, operated or leased by
such Subsidiary and to carry on its business as it has been and is currently
conducted by such Subsidiary and (iii) is duly licensed or qualified to do
business and is in good standing in each jurisdiction in which the properties
owned or leased by it or the operation of its business makes such licensing or
qualification necessary or desirable, except for such failures which, when taken
together with all other such failures, would not have a Material Adverse Effect.
(d) All the outstanding shares of capital stock of each Subsidiary that is
a corporation are validly issued, fully paid, nonassessable and, except with
respect to wholly owned Subsidiaries, free of preemptive rights and are owned by
the Company, whether directly or indirectly, free and clear of all Encumbrances.
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(e) Other than the Stock Option Plan, there are no options, warrants,
convertible securities, or other rights, agreements, arrangements or commitments
of any character relating to the capital stock of any Subsidiary or obligating
the Company or any Subsidiary to issue or sell any shares of capital stock of,
or any other interest in, any Subsidiary.
(f) All corporate actions taken by each Subsidiary have been duly
authorized and no Subsidiary has taken any action that in any respect conflicts
with, constitutes a default under, or results in a violation of any provision of
its charter or by-laws (or similar organizational documents). True and complete
copies of the charter and by-laws (or similar organizational documents), in each
case as in effect on the date hereof, of each Subsidiary have been made
available to the Buyer.
(g) Except as set forth in Section 3.3(g) of the Disclosure Schedule, no
Subsidiary is a member of, nor is any part of its business conducted through,
any partnership nor is any Subsidiary a participant in any joint venture or
similar arrangement.
(h) There are no voting trusts, stockholder agreements, proxies or other
agreements or understandings in effect with respect to the voting or transfer of
any shares of capital stock of or any other interests in any Subsidiary.
(i) The stock register of each Subsidiary accurately records: (i) the name
and address of each Person owning shares of capital stock of such Subsidiary and
(ii) the certificate number of each certificate evidencing shares of capital
stock issued by such Subsidiary, the number of shares evidenced each such
certificate, the date of issuance thereof and, in the case of cancellation, the
date of cancellation.
3.4. CORPORATE BOOKS AND RECORDS.
The minute books of the Company and the Subsidiaries contain accurate
records of all meetings and accurately reflect all other actions taken by the
stockholders, Boards of Directors and all committees of the Boards of Directors
of the Company and the Subsidiaries. Complete and accurate copies of all such
minute books and of the stock register of the Company and each Subsidiary have
been provided by Xxxxxxxxx to the Buyer.
3.5. NO CONFLICT.
Assuming that all consents, approvals, authorizations and other actions
described in Section 3.6 have been obtained and all filings and notifications
listed in 3.6 of the Disclosure Schedule have been made, the execution, delivery
and performance of this Agreement by Xxxxxxxxx does not and will not (a)
violate, conflict with or result in the breach of any provision of the charter
or by-laws (or similar organizational documents) of the Company or any
Subsidiary, (b) conflict with or violate (or cause an event which could have a
Material
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Adverse Effect as a result of) any Law or Governmental Order applicable to the
Company, any Subsidiary or any of their respective assets, properties or
businesses, including, without limitation, the business of the Company and its
Subsidiaries, or (c) except as set forth in Section 3.5(c) of the Disclosure
Schedule, conflict with, result in any breach of, constitute a default (or event
which with the giving of notice or lapse of time, or both, would become a
default) under, require any consent under, or give to others any rights of
termination, amendment, acceleration, suspension, revocation or cancellation of,
or result in the creation of an Encumbrance on any of the Shares or on any of
the assets or properties of, the Company or any Subsidiary pursuant to any note,
bond, mortgage or indenture, contract agreement, lease, sublease, license,
permit, franchise or other instrument or arrangement to which the Company or any
Subsidiary is a party or by which any of the Shares or any of such assets or
properties is bound or affected.
3.6. GOVERNMENTAL CONSENTS AND APPROVALS.
The execution, delivery and performance of this Agreement by Xxxxxxxxx do
not and will not require any consent, approval, authorization or other order of,
action by, filing with, or notification to, any Governmental Authority, except
(a) as described in Section 3.6 of the Disclosure Schedule, and (b) the
notification requirements of the HSR Act.
3.7. FINANCIAL STATEMENTS.
(a) True and complete copies of (i) the audited consolidated balance sheet
of the Company for each of the three fiscal years ended as of December 31, 1994,
December 31, 1995, and December 31, 1996, and the related audited consolidated
statements of income, retained earnings, stockholders' equity and changes in
financial position of the Company, together with all related notes and schedules
thereto, accompanied by the opinions thereon of Coopers & Xxxxxxx and, with
respect to Industrial Acoustics Company Limited, Kidsons Impey (collectively
referred to herein as the "Financial Statements"), (ii) the unaudited
consolidated balance sheet of the Company as of November 30, 1997 (referred to
herein as the "Interim Financial Statements") and, (iii) the Reference Balance
Sheet are attached as Section 3.7(a) of the Disclosure Schedule. The Financial
Statements, the Interim Financial Statements and the Reference Balance Sheet (i)
were prepared in accordance with the books of account and other financial
records to the Company, (ii) present fairly the consolidated financial condition
and results of operations of the Company and the Subsidiaries as of the dates
thereof or for the periods covered thereby, (iii) have been prepared in
accordance with GAAP applied on a basis consistent with the past practices of
the Company and (iv) include all adjustments (consisting only of normal
recurring accruals) that are necessary for a fair presentation of the
consolidated financial condition of the Company and the Subsidiaries and the
results of the operations of the Company and the Subsidiaries as of the dates
thereof or for the periods covered thereby.
-14-
(b) The books of account and other financial records of the Company and the
Subsidiaries: (i) reflect all items of income and expense and all assets and
liabilities required to be reflected therein in accordance with GAAP applied on
a basis consistent with the past practices of the Company and the Subsidiaries,
respectively, (ii) are in all material respects complete and correct, and do not
contain or reflect any material inaccuracies or discrepancies, and (iii) have
been maintained in accordance with good business and accounting practices.
Section 3.7(b) of the Disclosure Schedule identifies all unusual or nonrecurring
income included in the Reference Balance Sheet profit and loss statement.
(c) True and complete copies of projections of the Company and the
Subsidiaries for each of the fiscal years ended as of December 31, 1998,
December 31, 1999, and December 31, 2000, prepared by senior management of the
Company (the "Projections") are attached as Section 3.7(c) of the Disclosure
Schedule. The Projections reflect the best currently available estimates and
judgment of the Company's senior management as to the expected future financial
performance of the Company and the Subsidiaries, have been prepared on a basis
consistent with prior year financial statements and have been prepared and
presented for informational purposes only and shall not be relied upon by Buyers
for any reason or purpose whatsoever.
(d) Section 3.7(d) of the Disclosure Schedule contains the "management
letters" delivered by Coopers & Xxxxxxx and Kidsons Impey in respect of their
audits as of December 31, 1996, identifying any material weaknesses, in the
Company's internal controls, together with communications received by the
Company and its Subsidiaries since January 1, 1997 from Coopers & Xxxxxxx and
Kidsons Impey in connection with their respective reviews of the 1997 quarterly
financial statements of the Company.
(e) Section 3.7(e) of the Disclosure Schedule contains true and complete
calculations of (a) EBITDA and (b) Net Cash (as defined in Section 2.5(b)).
(f) Section 3.7(f) of the Disclosure Schedule contains a true and complete
list of all audited adjustments recommended by Coopers & Xxxxxxx and by Kidsons
Impey, respectively, in connection with their 1996 audits, indicating whether
and, if so, to what extent, such adjustments were recorded in the audited
consolidated financial statements of the Company for 1996.
3.8. NO UNDISCLOSED LIABILITIES.
There are no liabilities of the Company or any Subsidiary, other than
liabilities (i) reflected or reserved against on the Reference Balance Sheet, or
(ii) disclosed in Section 3.8 of the Disclosure Schedule or (iii) incurred since
December 31, 1997 in the ordinary course of business of the Company and the
Subsidiaries and which do not and could not have a Material Adverse Effect.
Reserves are reflected on the Reference Balance Sheet against all
-15-
Liabilities of the Company and the Subsidiaries in amounts that have been
established on a basis consistent with the past practices of the Company and the
Subsidiaries and in accordance with GAAP. Section 3.8(a) of the Disclosure
Schedule contains a list of all liabilities for borrowed funds, and complete
copies of all agreements relating thereto. Section 3.8(b) identifies all sales
contracts as to which the Company currently has knowledge of a pending or
threatened penalty for late delivery, cost overruns or other matters.
3.9. RECEIVABLES.
Section 3.9 of the Disclosure Schedule sets forth an aged list of the
receivables of the Company and the Subsidiaries as of the date of the Reference
Balance Sheet showing separately those receivables that as of such date had been
outstanding (i) 29 days or less, (ii) 30 to 59 days, (iii) 60 to 89 days, and
(iv) 90 days and above. Except to the extent, if any, reserved for on the
Reference Balance Sheet, all receivables reflected on the Reference Balance
Sheet and the audited consolidated balance sheet of the Company and the
Subsidiaries delivered pursuant to Section 5.1(b) arose from, and the
receivables existing on the Closing Date will have arisen from. the sale of
Inventory or services to Persons not affiliated with Xxxxxxxxx, the Company or
any Subsidiary and in the ordinary course of business and, except as reserved
against on the Reference Balance Sheet or the audited consolidated financial
statements of the Company and its Subsidiaries for the year ending December 31,
1997 required pursuant to Section 5.1 (b), constitute, or will constitute, as
the case may be, only valid, undisputed claims of the Company or a Subsidiary
not subject to valid claims of set-offs or other defenses or counterclaims other
than normal cash discounts accrued in the ordinary course of business. All
Receivables reflected on the Reference Balance Sheet or arising from the date
thereof until the Closing (subject to the reserve for bad debts, if any,
reflected on the Reference Balance Sheet) are or will be good and have been
collected or are or will be collectible.
3.10. INVENTORIES.
(a) Subject to amounts reserved therefor on the Reference Balance Sheet and
the audited consolidated balance sheet of the Company and the Subsidiaries
delivered pursuant to Section 5.1(b), the values at which all inventories are
carried on the Reference Balance Sheet reflect the historical inventory
valuation policy of the Company and the Subsidiaries of stating such inventories
at the lower of cost (determined on the first-in first-out method) or market
value and all inventories are valued such that the Company and the Subsidiaries
will earn their customary gross margins thereon. Except as set forth in Section
3.10 of the Disclosure Schedule, the Company or a Subsidiary, as the case may
be, has good and marketable title to the inventories free and clear of all
Encumbrances. The inventories do not consist of, in any material amount, items
that are obsolete, damaged or slow-moving. The inventories do not consist of any
items held on consignment. Neither the Company nor any Subsidiary is under
-16-
any obligation or liability with respect to accepting returns of items of
inventory or merchandise in the possession of their customers other than in the
ordinary course of business. No clearance or extraordinary sale of the
inventories has been conducted since December 31, 1997. Neither the Company nor
any Subsidiary has acquired or committed to acquire or manufacture inventory for
sale which is not of a quality and quantity usable in the ordinary course of
business within a reasonable period of time, nor has the Company or any
Subsidiary changed the price of inventory except for (i) price reductions to
reflect any reduction in the cost thereof to the Company or such Subsidiary,
(ii) reductions and increases responsive to normal competitive conditions and
consistent with the Company's or such Subsidiary's past sales practices, (iii)
increases to reflect any increase in the cost thereof to the Company or such
Subsidiary, and (iv) increases and reductions made with the written consent of
the Buyer.
(b) The Inventories are in good and merchantable condition in all material
respects, are suitable and usable for the purposes for which they are
intentioned and are in a condition such that they can be sold in the ordinary
course of business.
(c) Amounts reflected in the Reference Balance Sheet as "Costs and
Estimated Earnings in Excess of Xxxxxxxx on Uncompleted Contracts" represent (i)
costs properly incurred in respect of valid open sales contracts which had not
been invoiced to customers at December 31, 1997 and (ii) earnings on such
contracts computed on a cost of completion basis applied consistently with prior
periods. Section 3. 10(c) of the Disclosure Schedule identifies each such
contract amount exceeding S 100,000 at December 31, 1997.
3.11. ACQUIRED ASSETS.
Except as disclosed in Section 3.11(a) of the Disclosure Schedule, each
asset of the Company and the Subsidiaries (including without limitation, the
benefit of any licenses, leases or other agreements or arrangements) acquired
since the date of the Reference Balance Sheet has been acquired for
consideration not less than the fair market value of such asset at the date of
such acquisition. Section 3.11(b) of the Disclosure Schedule identifies all
commitments for capital expenditures outstanding at December 31, 1997.
3.12. CURRENT REAL PROPERTY TRANSACTIONS.
(a) The Company is party to a certain Exchange Agreement with Deferred
Exchange Option dated March 29, 1995 ("Exchange Agreement") which is included in
Section 3.12(a) of the Disclosure Schedule. Pursuant to the terms of the
Exchange Agreement, the transaction contemplated thereby is scheduled to close
on March 1, 1998. Buyer and Seller have discussed various approaches which may
be undertaken with regard to the Exchange Agreement. Seller agrees that neither
he nor the Company will take any action with regard to the Exchange Agreement
without the advice of Buyer. If a decision is made to acquire the premises which
is the subject of the Exchange Agreement, such acquisition will be
-17-
accomplished through the use of a mortgage on such property, the terms of watch
shall be reasonable in light of this Agreement and the Contemplated
Transactions.
(b) The Company is the owner of real property in Winchester, U.K. which is
utilized by its Subsidiary, Industrial Acoustics Company Limited, as its
manufacturing facilities. The Seller and Company have disclosed to the Buyer
that negotiations have occurred in connection with the possible sale and lease
back of the Winchester property owned by the Company. Seller agrees that neither
he nor the Company will take any action with regard to the Winchester property
without the advice and consent of Buyer.
3.13. BACKLOG.
(a) As of December 31, 1997, open sales orders accepted by the Company or
any Subsidiary, determined on a revenue recognition basis, totaled $45,637,084.
Section 3.13(a) of the Disclosure Schedule lists all sales orders exceeding
$100,000 per order which have been accepted by the Company or any Subsidiary,
and which were open as of December 31, 1997. No orders included in the backlog
at December 31, 1997 have been accepted at prices which will lead to profit
margins substantially below historical levels (according to the product
category), nor on payment terms which will require any material change in the
Company's future requirement for working capital. All contracts to which the
Company (specifically excluding Industrial Acoustics Company Limited) is a party
for delivery outside of the United States in the backlog at December 31, 1997
determined on a billing recognition basis of the Company and its Subsidiaries
are fully supported by valid bank letters of credit. All material contracts as
to which Industrial Acoustics Company Limited is a party for delivery outside of
the continent of Europe and North America in the backlog as of December 31, 1997
have been accepted with appropriate downpayments.
(b) Section 3.13(b) of the Disclosure Schedule lists all purchase orders
exceeding $500,000.00 per order, which have been issued by the Company or any
Subsidiary, and which were open as of December 31, 1997. No purchase orders have
been issued on payment terms which are materially different from those available
to the Company in the past.
3.14. CONDUCT IN THE ORDINARY COURSE, ABSENCE OF CERTAIN CHANGES, EVENTS
AND CONDITIONS.
Since December 31, 1997, except as disclosed in Section 3.14 of the
Disclosure Schedule, the business of the Company and the Subsidiaries has been
conducted in the ordinary course and consistent with past practice. As
amplification and not limitation of the foregoing, except as disclosed in
Section 3.14 of the Disclosure Schedule and except as would not have a Material
Adverse Effect since the Reference Balance Sheet Date, neither the Company nor
any Subsidiary has:
-18-
(i) permitted or allowed any of the assets or properties (whether
tangible or intangible) of the Company or any Subsidiary to be subjected to
any Encumbrance other than Permitted Encumbrances;
(ii) except in the ordinary course of business consistent with past
practice, discharged or otherwise obtained the release of any Encumbrance
or paid or otherwise discharged any Liability, other than current
liabilities reflected on the Reference Balance Sheet and current
liabilities incurred in the ordinary course of business consistent with
past practice since the Reference Balance Sheet Date;
(iii) made any loan to, guaranteed any Indebtedness on behalf of any
Person;
(iv) failed to pay any creditor any amount owed to such creditor more
than 30 days past the due date;
(v) redeemed any of the capital stock or declared, made or paid any
dividends or distributions (whether in cash, securities or other property)
to the holders of capital stock of the Company or any Subsidiary or
otherwise, other than dividends, distributions and redemptions declared,
made or paid by any Subsidiary solely to the Company;
(vi) made any material changes in the customary methods of operations
of the Company or any Subsidiary, including, without limitation, practices
and policies relating to manufacturing, purchasing, Inventories, marketing,
selling, recognition of profits on contracts and pricing;
(vii) merged with, entered into a consolidation with or acquired an
interest of 5 % or more in any Person or acquired a substantial portion of
the assets or business of any business thereof, or otherwise acquired any
material assets other than in the ordinary course of business consistent
with past practice;
(viii) made any capital expenditure or commitment for any capital
expenditure in excess of S25,000 individually or $100,000 in the aggregate;
(ix) issued any purchase orders or otherwise agreed to make any
purchases involving exchanges in value in excess of $100,000 individually
or $1,000,000 in the aggregate;
(x) except as relates to Industrial Acoustics Company Limited,
accepted any sales order for delivery outside of the United States not
fully covered by a valid bank letter of credit;
-19-
(xi) sold, transferred, leased, licensed or otherwise disposed of any
properties, assets, real, personal or mixed (including, without limitation,
leasehold interests and intangible assets), other than the sale of
Inventories in the ordinary course of business consistent with past
practice;
(xii) issued or sold any capital stock, bonds or other securities, or
any option, warrant or other right to acquire the same, of, or any other
interest in, the Company or any Subsidiary;
(xiii) entered into any agreement, arrangement or transaction with any
of its directors, officers, employees or shareholders (or with any
relative, beneficiary, spouse or Affiliate of such Person);
(xiv) (A) granted any increase, or announced any increase, in the
wages, salaries, compensation, bonuses, incentives, pension or other
benefits payable by the Company or any Subsidiary to any of its employees,
including, without limitation, any increase or change pursuant to any Plan,
(B) established or increased or promised to increase any benefits under any
Plan, in either case except as required by Law or any collective bargaining
agreement and involving ordinary increases consistent with the past
practices of the Company or such Subsidiary or (C) introduced any new bonus
programs;
(xv) written down or written up (or failed to write down or write up
in accordance with GAAP consistent with past practice) the value of any
inventories or receivable or revalued any assets of the Company or any
Subsidiary other than in the ordinary course of business consistent with
past practice and in accordance with GAAP;
(xvi) amended, terminated, canceled or compromised any material claims
of the Company or any Subsidiary or waived any other rights of substantial
value to the Company or any Subsidiary;
(xvii) made any change in any method of accounting or accounting
practice or policy used by the Company or any Subsidiary, other than such
changes required by GAAP or disclosed in Section 3.14 of the Disclosure
Schedule;
(xviii) failed to maintain the Assets in accordance with good business
practice and in good operating condition and repair;
(xix) allowed any Permit or Environmental Permit that was issued or
relates to the Company or any Subsidiary or otherwise relates to any Asset
to lapse or terminate or failed to renew any such Permit or Environmental
Permit or any insurance pol-
-20-
icy that is scheduled to terminate or expire within 45 calendar days of the
Closing Date;
(xx) incurred any indebtedness for borrowed money;
(xxi) changed the type of short-term investments and marketable
securities contained in its portfolio;
(xxii) amended, modified or consented to the termination of any
Material Contract or the Company's or any Subsidiary's rights thereunder;
(xxiii) amended or restated the Organizational Documents of the
Company or any Subsidiary;
(xxiv) terminated, discontinued, closed or disposed of any plant,
facility or other business operation, or laid off any employees or
implemented any early retirement, separation or program providing early
retirement window benefits within the meaning of Section 1.40(a)-4 of the
Regulations or announced or planned any such action or program for the
future;
(xxv) made any material charitable contribution;
(xxvi) disclosed any secret or confidential Intellectual Property
Asset (except by way of issuance of a Patent) or permitted to lapse or go
abandoned any Intellectual Property Asset (or any registration or grant
thereto or any application thereto to which, or under which, the Company or
any Subsidiary has any right, title, interest or license;
(xxvii) made any express or deemed election or settled or compromised
any liability, with respect to Taxes of the Company or any Subsidiary;
(xxviii) suffered any casualty loss or damage with respect to any of
the Assets which in the aggregate have a replacement cost of more than
$25,000, whether or not such loss or damage shall have been covered by
insurance; or
(xxix) agreed, whether in writing or otherwise, to take any of the
actions specified in this Section 3.14 or granted any options to purchase,
rights of first refusal, rights of first offer or any other similar rights
or commitments, with respect to any of the actions specified in this
Section 3.14, except as expressly contemplated by this Agreement.
-21-
3.15. LITIGATION.
Except as set forth in Section 3.15 of the Disclosure Schedule (which, with
respect to each Proceeding disclosed therein, sets forth: the parties, nature of
the proceeding, date and method commenced, amount of damages or other relief
sought, and, if applicable, paid or granted), there are no Proceedings by or
against the Company or any Subsidiary (or by or against Xxxxxxxxx and relating
to the Company or any Subsidiary), or affecting any of the Assets, pending
before any Governmental Authority (or, to the Knowledge of Seller, threatened to
be brought by or before any Governmental Authority). None of the matters
disclosed in Section 3.15 of the Disclosure Schedule has or has had a Material
Adverse Effect or could affect the legality, validity or enforceability of this
Agreement or the consummation of the transactions contemplated hereby or thereby
except as set forth in Section 3.15 of the Disclosure Schedule. None of the
Company, the Subsidiaries nor any of the Assets nor Seller is subject to any
Governmental Order (nor to the Knowledge of Seller are there any such
Governmental Orders threatened to be imposed by any Governmental Authority)
which has or has had a Material Adverse Effect. Section 3.15 of the Disclosure
Schedule lists all Proceedings to which the Company has been a party in the past
five years except for collections matters and matters in which the amount in
controversy did not exceed $ 10,000, and all product liability claims brought
against the Company during such period of which the Company has Knowledge,
regardless of whether such claim resulted in litigation, including all such
claims in respect of which notice of a claim was made under the Company's
insurance policies.
3.16. CERTAIN INTERESTS.
(a) Except as disclosed in Section 3.16(a) of the Disclosure Schedule, no
officer or director of the Company or any Subsidiary and no relative or spouse
(or relative of such spouse) who resides with or is a dependent of, any such
officer or director:
(i) has any direct or indirect financial interest in any competitor,
supplier or customer of the Company or any Subsidiary; provided, however,
that the ownership of securities representing no more than one (1%) percent
of the outstanding voting power of any competitor, supplier or customer,
and which are listed on any national securities exchange or traded actively
in the national over-the-counter market shall not be deemed to be a
"financial interest" so long as the Person owning such securities has no
other connection or relationship with such competitor, supplier or
customer;
(ii) owns, directly or indirectly, in whole or in part, or has any
other interest in any tangible or intangible property which the Company or
any Subsidiary uses or has used in the conduct of the Business or
otherwise: or
(iii) has outstanding any Indebtedness to the Company or any
Subsidiary.
-22-
(b) Except as disclosed in Section 3.16(b) of the Disclosure Schedule, no
officer or director of the Company or any Subsidiary and no relative or spouse
(or relative of such spouse) who resides with, or is a dependent of, any such
officer or director, has outstanding any Indebtedness to Xxxxxxxxx or the
Company or any Subsidiary.
(c) Except as disclosed in Section 3.16(c) of the Disclosure Schedule,
neither the Company nor any Subsidiary has any liability or any other obligation
of any nature whatsoever to any officer, director or shareholder of the Company
or any Subsidiary or to any relative or spouse (or relative of such spouse) who
resides with, or is a dependent of, any such officer, director or shareholder.
(d) Except as disclosed in Section 3.16(d) of the Disclosure Statement, no
employee of the Company or its Subsidiaries is a relative or spouse of a
director, officer or senior manager of Industrial Acoustics Company, Inc. or
Industrial Acoustics Company Limited.
3.17. COMPLIANCE WITH LAWS.
(a) Except as set forth in Section 3.17(a) of the Disclosure Schedule, the
Company and the Subsidiaries have each conducted and continue to conduct the
Business in accordance with all Laws and Governmental Orders applicable to the
Company or any Subsidiary or any of the Assets or the Business, and neither the
Company nor any Subsidiary is in violation of any such Law or Governmental
Order. None of Xxxxxxxxx, the Company, any Subsidiary nor any officer, director,
employee, agent or representative of Xxxxxxxxx, the Company or any Subsidiary
has furthered or supported any foreign boycott in violation of the Anti-Boycott
laws and regulations promulgated pursuant to the Export Administration Act of
1979 (50 U.S.C.A. Appx ss. 2407, and regulations promulgated thereunder), nor
violated the provisions of the Foreign Corrupt Practices Act of 1977, as
amended, (15 U. S. C. A. xx.xx. 78dd-1 et seq.).
(b) Section 3.17(b) of the Disclosure Schedule sets forth a brief
description of each Governmental Order applicable to the Company or any
Subsidiary or any of the Assets or the Business, and no such Governmental Order
has or has had a Material Adverse Effect.
3.18. ENVIRONMENTAL COMPLIANCE.
Except as disclosed in Section 3.18(a)(i) of the Disclosure Schedule and
except as would not reasonably be expected to have a Material Adverse Effect
(a) the Company and the Subsidiaries currently hold all permits,
licenses, authorizations and approvals of Governmental Authorities
(collectively, "Permits"),
-23-
including those required under Environmental Laws, necessary for the
current use, occupancy and operation of each Asset of the Company and the
Subsidiaries and the conduct of the Business, and all such Permits are in
full force and effect;
(b) the Company and its Subsidiaries are, and their business is being
conducted, in compliance with Environmental Laws and the Permits;
(c) there is no practice, action or activity of the Company or any
Subsidiary or, with respect to any portion of the business of the Company
or any Subsidiary, and no existing condition of the Assets of the Company
or any Subsidiary or their business which could reasonably be expected to
give rise to liability under, or violate or prevent compliance with, any
Environmental Law;
(d) none of the Seller, the Company nor any Subsidiary has received
any notice from any Governmental revoking, canceling, rescinding,
materially modifying or refusing to renew any Permit or any Environmental
Claim;
(e) none of the Company or its Subsidiaries is involved in any
investigation, response or corrective action relating to or in connection
with any Hazardous Materials at any Real Property or at any other location;
(f) none of the Company or its Subsidiaries or any Real Property are
subject to any judicial or administrative proceeding alleging the violation
of or liability under any Environmental Laws;
(g) none of the Company or its Subsidiaries or any Real Property or
any of their respective operations are subject to any outstanding written
order, decree or agreement with any governmental authority or private party
relating to (i) any actual or potential violation of or liability under
Environmental Laws or (ii) any Environmental Claims;
(h) none of the Company or its Subsidiaries has assumed by contract,
law or otherwise any obligation or liability under any Environmental Law;
(i) no Real Properties are listed or proposed for listing on the
National Priorities List under CERCLA or listed on the Comprehensive
Environmental Response, Compensation and Liability Information System List
promulgated pursuant to CERCLA, or included on any similar list maintained
by any governmental authority;
(j) no Hazardous Materials exist on, at or under any Real Property in
a manner that would reasonably be expected to give rise to an Environmental
Claim, and
-24-
none of the Company or its Subsidiaries has filed any notice or report of a
Release of any Hazardous Materials;
(k) none of the Company or its Subsidiaries or, to the best of the
Company's knowledge, any of their respective predecessors has disposed of,
or arranged for the disposal or treatment of, any Hazardous Materials in a
manner or at any location that would reasonably be expected to give rise to
an Environmental Claim; and
(l) no underground storage ranks, landfills or surface impoundments
are on, at or under any Real Property.
Section 3.18(a)(v) of the Disclosure Schedule identifies all Permits that
are nontransferable or which will require the consent of any Governmental
Authority in the event of the consummation of the transactions contemplated by
this Agreement.
Section 3.18(a)(vi) of the Disclosure Schedule includes all reports of the
Environmental Protection Agency issued with respect to any property of the
Company, including those for the Bronx and South Carolina and all environmental
reports with respect to any property of the Company, including for Winchester,
England.
Section 3.18(a)(vii) of the Disclosure Schedule includes true and complete
copies of (x) the most recent Phase I environmental audits with respect to any
U.S. property of the Company, including those for the Bronx and South Carolina
and (y) an environmental audit of the property of Industrial Acoustics Company
Limited in Winchester, England.
Section 3.18(a)(viii) of the Disclosure Schedule contains a true and
complete copy of the indemnification by Xxxxx/Corning relating to fiberglass.
3.19. MATERIAL CONTRACTS.
(a) Section 3.19(a) of the Disclosure Schedule lists each of the following
contracts and agreements (including without limitation, oral and informal
arrangements) of the Company and the Subsidiaries (such contracts and agreements
together with all contracts, agreements, leases and subleases concerning the
management or operation of any Real Property (including without limitation,
brokerage contracts) listed or otherwise disclosed in Section 3.21 (a) or
3.21(b) of the Disclosure Schedule to which the Company or any Subsidiary is a
party and all agreements relating to Intellectual Property set forth in Section
3.20(a) of the Disclosure Schedule, being "Material Contracts"):
(i) each contract and agreement for the purchase of inventory, spare
parts, other materials or personal property with any supplier or for the
furnishing of services to the Company, any Subsidiary or otherwise related
to the Business under the terms of
-25-
which the Company or any Subsidiary which (A) is likely to pay or otherwise
give consideration of more than $100,000.00 in the aggregate during the
calendar year ended December 31, 1998, (B) is likely to pay or otherwise
give consideration of more than $500,000.00 in the aggregate over the
remaining term of such contract, or (C) cannot be canceled by the Company
or such Subsidiary without penalty or further payment and without more than
30 days notice;
(ii) each contract and agreement for the sale of inventory or other
personal property or for the furnishing of services by the Company or any
Subsidiary which (A) is likely to involve consideration of more than
$100,000.00 in the aggregate during the calendar year ending December 31,
1998, (B) is likely to involve consideration of more than $500,000.00 in
the aggregate over the remaining term to the contract, or (C) cannot be
canceled by the Company or such Subsidiary without penalty or further
payment and without more than 30 days notice;
(iii) all broker, distributor, dealer, manufacturer's representative,
franchise, agency sales, promotion, market research, marketing consultants
and advertising contracts and agreements to which the Company or any
Subsidiary is a party;
(iv) all management contracts and contracts with independent
contractors or consultants (or similar arrangements) to which the Company
or any Subsidiary is a party and which are not cancelable without penalty
or further payment and without more than 30 days notice;
(v) all contracts and agreements relating to indebtedness to the
Company or any Subsidiary;
(vi) all contracts and agreements with any Governmental Authority to
which the Company or any Subsidiary is a party;
(vii) all contracts and agreements that limit or purport to limit the
ability of the Company or any Subsidiary to compete in any line of business
or with any Person or in any geographic area or during any period of time.
(viii) all contracts and agreements between or among the Company or
any Subsidiary and Xxxxxxxxx or any Affiliate of Xxxxxxxxx.
(ix) all contracts and agreements providing for benefits under any
Plan; and
(x) all other contracts and agreements whether or not made in the
ordinary course of business, which are material to the Company, any
Subsidiary or the conduct of the Business or the absence of which would
have a Material Adverse Effect.
-26-
For purposes of this Section 3.19 and Sections 3.20, 3.21 and 3.22, the
terms "lease" shall include any and all leases, subleases, sale/leaseback
agreements or similar arrangements.
(b) Except as disclosed in Section 3.19(b) of the Disclosure Schedule, each
Material Contract: (i) is valid and binding on the respective parties thereto
and is in full force and effect and (ii) upon consummation of the transactions
contemplated by this Agreement, except to the extent that any consents set forth
in Section 3.7 of the Disclosure Schedule are not obtained, shall continue in
full force and effect without penalty or other adverse consequence. Neither the
Company nor any Subsidiary is in breach of, or default under, any Material
Contract.
(c) Except as disclosed in Section 3.19(c) of the Disclosure Schedule, no
other party to any Material Contract is in breach thereof or default thereunder.
(d) Except as disclosed in Section 3.19(d) of the Disclosure Schedule,
there is no contract, agreement or other arrangement granting any Person any
preferential right to purchase, other than in the ordinary course of business,
any of the properties or assets of the Company or any Subsidiary.
(e) Schedule 3.19(e) of the Disclosure Schedule identifies (i) all assets
of the Company and its Subsidiaries that are pledged as security for the payment
of any liabilities, (ii) any crosscollateralization agreements to which the
Company and its Subsidiaries are a party, (iii) any guarantees by the Company
and its Subsidiaries of the liabilities of any person, (iv) all guarantee,
performance, warranty and similar obligations outside the ordinary course of
business outstanding in favor of customers or others, where bonds or letters of
credit have not been issued in respect thereof, details are set forth on such
Schedule 3.19(e).
3.20. INTELLECTUAL PROPERTY ASSETS.
(a) Section 3.20(a)(i) of the Disclosure Schedule sets forth a true and
complete list and a brief description, including a complete identification of
each Patent and each registration or application for registration thereof, of
all Owned Intellectual Property Assets and Section 3.20(a)(ii) of the Disclosure
Schedule sets forth a true and complete list and a brief description, including
a description of any license or sublicense thereof, of all Licensed Intellectual
Property Assets. Except as otherwise described in Section 3.20(a)(i) of the
Disclosure Schedule, in each case where a registration or Patent or application
for registration or Patent listed in Section 3.20(a)(i) of the Disclosure
Schedule is held by assignment, the assignment has been duly recorded with the
State or national Trademark Office from which the original registration issued
or before which the application for registration is pending. Except as disclosed
in Section 3.20(a)(iii) of the Disclosure Schedule, the rights of the Company or
any Subsidiary, as the case may be, in or to such Intellectual Property Asset do
not conflict
-27-
with or infringe on the rights of any other Person, and none of Seller, the
Company nor any Subsidiary has received any claim or written notice from any
Person to such effect.
(b) Except as disclosed in Section 3.20(b) of the Disclosure Schedule: (i)
all the Owned Intellectual Property Assets are owned by either the Company or a
Subsidiary, as the case may be, free and clear of any Encumbrance and (ii) no
Proceedings have been made or asserted or are pending (nor, to the Knowledge of
Seller, has any such Proceeding been threatened) against the Company or any
Subsidiary either (A) based upon or challenging or seeking to deny or restrict
the use by the Company or any Subsidiary of any of the Owned Intellectual
Property Assets or (B) alleging that any services provided, or products
manufactured or sold by the Company or any Subsidiary are being provided,
manufactured or sold in violation of any Patents or Trademarks, or any other
rights of any Person. To the Knowledge of Seller, no Person is using any
Patents, Copyrights, Trademarks, service marks, trade names, trade secrets or
similar property that are confusingly similar to the Owned Intellectual Property
Assets or that infringe upon the Owned Intellectual Property Assets or upon the
rights of the Company or any Subsidiary therein. Except as disclosed in Section
3.20(b) of the Disclosure Schedule, none of Seller, the Company nor any
Subsidiary has granted any license or other right to any other Person with
respect to the Owned Intellectual Property Assets. The consummation of the
transactions contemplated by this Agreement will not result in the termination
or impairment of any of the Owned Intellectual Property Assets.
(c) With respect to all Licensed Intellectual Property Assets and Owned
Intellectual Property Assets, the registered user provisions of all nations
requiring such registrations have been complied with.
(d) Seller has made available to the Buyer correct and complete copies of
all the licenses and sublicenses for Licensed Intellectual Property Assets
listed in Section 3.20(a)(ii) of the Disclosure Schedule and any and all
ancillary documents pertaining thereto (including, but not limited to, all
amendments, consents and evidence of commencement dates and expiration dates).
With respect to each of such licenses and sublicenses:
(i) such license or sublicense, together with all ancillary documents
delivered pursuant to the first sentence of this Section 3.20(d), is valid
and binding and in full force and effect and represents the entire
agreement between the respective licensor and licensee with respect to the
subject matter of such license or sublicense;
(ii) except as otherwise set forth in Section 3.20(a)(ii) of the
Disclosure Schedule, such license or sublicense will not cease to be valid
and binding and in full force and effect on terms identical to those
currently in effect as a result of the consummation of the transactions
contemplated by this Agreement, nor will the consummation of the
transactions contemplated by this Agreement constitute a breach or de-
-28-
fault under such license or sublicense or otherwise give the licensor or
sublicensor a right to terminate such license or sublicense;
(iii) except as otherwise disclosed in Section 3.20(a)(ii) of the
Disclosure Schedule, with respect to each such license or sublicense: (A)
none of Seller, the Company nor any Subsidiary has received any notice of
termination or cancellation under such license or sublicense and no
licensor or sublicensor has any right of termination or cancellation under
such license or sublicense except in connection with the default of the
Company or any Subsidiary thereunder, (B) none of Seller, the Company nor
any Subsidiary has received any notice of a breach or default under such
license or sublicense, which breach or default has not been cured, and (C)
none of Seller, the Company nor any Subsidiary has granted to any other
Person any rights, adverse or otherwise, under such license or sublicense;
(iv) none of the Company, any Subsidiary nor (to the Knowledge of
Seller) any other party to such license or sublicense is in breach or
default in any material respect, and, to the Knowledge of Seller, no event
has occurred that, with notice or lapse of time would constitute such a
breach or default or permit termination, modification or acceleration under
such license or sublicense;
(v) no Proceedings have been made or asserted or are pending (nor, to
the Knowledge of Seller, has any such Proceeding been threatened) against
the Company or any Subsidiary either (A) based upon or challenging or
seeking to deny or restrict the use by the Company or any Subsidiary of any
of the Licensed Intellectual Property Assets or (B) alleging that any
Licensed Intellectual Property Asset is being licensed, sublicensed or used
in violation of any patents or trademarks, or any other rights of any
Person; and
(vi) to the Knowledge of Seller, no Person is using any patents,
copyrights, trademarks, service marks, trade names, trade secrets or
similar property that are confusingly similar to the Licensed Intellectual
Property Assets or that infringe upon the Licensed Intellectual Property
Assets or upon the rights of the Company or any Subsidiary therein.
(e) Except as set forth in Section 3.20(e) of the Disclosure Schedule,
Seller is not aware of any reason that would prevent any pending applications to
register trademarks, service marks or copyrights or any pending patent
applications from being granted.
(f) The Intellectual Property Assets described in Sections 3.20(a)(i) and
(ii) of the Disclosure Schedule constitute all the Intellectual Property Assets
used or held or intended to be used by the Company or any Subsidiary, and
constitutes all such Intellectual
-29-
Property Assets necessary in the conduct of the business of the Company and
there are no other items of Intellectual Property Assets that are material to
the Company or any Subsidiary.
3.21. REAL PROPERTY.
(a) Section 3.21(a) of the Disclosure Schedule lists: (i) the street
address of each parcel of Owned Real Property, (ii) the date on which each
parcel of Owned Real Property was acquired, (iii) the current owner of each such
parcel of Owned Real Property, and (iv) the current use of each such parcel of
Owned Real Property.
(b) Section 3.21(b) of the Disclosure Schedule lists: (i) the street
address of each parcel of Leased Real Property, (ii) the identity of the lessor,
lessee and current occupant (if different from lessee) of each such parcel of
Leased Real Property, (iii) the term (referencing applicable renewal periods)
and rental payment terms of the laws (and any subleases) pertaining to each such
parcel of Leased Real Property and (iv) the current use of each such parcel of
Leased Real Property.
(c) Except as described in Section 3.21(c) of the Disclosure Schedule,
there is no material violation of any Law (including, without limitation, any
building, planning or zoning law) relating to any of the Real Property.
Xxxxxxxxx has made available to the Buyer true and complete copies of each deed
for each parcel of Owned Real Property and, to the extent available, for each
parcel of Leased Real Property and all the title insurance policies, title
reports, surveys, certificates of occupancy, environmental reports and audits,
appraisals, Permits, other title documents and other documents relating to, or
otherwise affecting the Real Property, the operations of the Company or any
Subsidiary thereon or any other uses thereof. Either the Company or a
Subsidiary, as the case may be, is in peaceful and undisturbed possession of
each parcel of Real Property and there are no contractual or legal restrictions
that preclude or restrict the ability to use the premises for the purposes for
which they are currently being used. All existing water, sewer, steam, gas,
electricity, telephone and other utilities required for the construction, use,
occupancy, operation and maintenance of the Real Property are adequate for the
conduct of the business of the Company and the Subsidiaries as it has been and
currently is conducted. There are no material latent defects or material adverse
physical conditions affecting the Real Property or any of the facilities,
buildings, structures, erections, improvements, fixtures, fixed assets and
personally of a permanent nature annexed, affixed or attached to, located on or
forming part of the Real Property, except as set forth in Section 3.2 1 (c) of
the Disclosure Schedule, neither the Company nor any Subsidiary has leased or
subleased any parcel or any portion of any parcel of Real Property to any other
Person, nor has the Company or any Subsidiary assigned its interest under any
lease or sublease listed in Section 3.21(b) of the Disclosure Schedule to any
third party.
(d) Xxxxxxxxx has made available to the Buyer true and complete copies of
all leases and subleases listed in Section 3.2 1 (b) of the Disclosure Schedule
and any and all
-30-
ancillary documents pertaining thereto (including, but not limited to, all
amendments, consents for alterations and documents recording variations and
evidence of commencement dates and expiration dates). With respect to each of
such leases and subleases:
(i) such lease or sublease, together with all ancillary documents made
available pursuant to the first sentence of this Section 3.21(d), is legal,
valid, binding, enforceable and in full force and effect and represents the
entire agreement between the respective landlord and tenant with respect to
such property;
(ii) except as otherwise set forth in Sections 3.6(c) and 3.21(b) of
the Disclosure Schedule, such lease or sublease will not cease to be legal,
valid, binding, enforceable and in full force and effect on terms identical
to those currently in effect as a result of the consummation of the
transactions contemplated by this Agreement, nor will the consummation of
the transactions contemplated by this Agreement constitute a breach or
default under such lease or sublease or otherwise give the landlord a right
to terminate such lease or sublease;
(iii) except as otherwise disclosed in Section 3.21(b) of the
Disclosure Schedule, with respect to each such lease or sublease: (A) none
of Xxxxxxxxx, the Company nor any Subsidiary has received any notice of
cancellation or termination under such lease or sublease and no lessor has
any right of termination or cancellation under such lease or sublease
except upon a breach or default by the Company or any Subsidiary
thereunder, (B) none of Xxxxxxxxx, the Company nor any Subsidiary has
received any notice of a breach or default under such lease or sublease,
which breach or default has not been cured, and (C) none of Xxxxxxxxx, the
Company nor any Subsidiary has granted to any other Person any rights,
adverse or otherwise, under such lease or sublease; and
(iv) none of the Company, any Subsidiary nor (to the Knowledge of
Xxxxxxxxx) any other party to such lease or sublease, is in breach or
default in any material respect, and, to the Knowledge of Xxxxxxxxx, no
event has occurred that, with notice or lapse of time, would constitute
such a breach or default or permit termination, modification or
acceleration under such lease or sublease.
(e) There are no condemnation proceedings or eminent domain proceedings of
any kind pending or, to the Knowledge of Xxxxxxxxx, threatened against the Real
Property.
(f) All the Real Property is occupied under a valid and current certificate
of occupancy or similar permit, the transactions contemplated by this Agreement
will not require the issuance of any new or amended certificate of occupancy
and, to the Knowledge of Xxxxxxxxx, there are no facts that would prevent the
Real Property from being occupied by the
-31-
Company or any Subsidiary, as the case may be, after the Closing in the same
manner as occupied by the Company or such Subsidiary immediately prior to the
Closing.
(g) All improvements on the Real Property constructed by or on behalf of
the Company or any Subsidiary or, to the Knowledge of Xxxxxxxxx, constructed by
or on behalf of any other Person were constructed in compliance with all
applicable Laws (including, but not limited to, any building, planning or zoning
Laws) affecting such Real Property.
(h) No improvements on the Real Property and none of the current uses and
conditions thereof violate any applicable deed restrictions or other applicable
covenants, restrictions, agreements, existing site plan approvals, zoning or
subdivision regulations or urban redevelopment plans as modified by any duly
issued variances, and no permits, licenses or certificates pertaining to the
ownership or operation of all improvements on the Real Property, other than
those which are transferable with the Real Property, are required by any
Governmental Authority having jurisdiction over the Real Property.
(i) All improvements on any Real Property are wholly within the lot limits
of such Real Property and do not materially encroach on any adjoining premises,
and there are no material encroachments on any Real Property by any improvements
located on any adjoining premises.
(j) Except as otherwise set forth in Section 3.21j) of the Disclosure
Schedule, there have been no improvements of a value in excess of $10,000 in the
aggregate made to or construction on any Real Property within the applicable
period for the filing of mechanics' liens.
(k) The rental set forth in each lease or sublease of the Leased Real
Property is the actual rental being paid, and there are no separate agreements
or understandings with respect to the same.
(l) Either the Company or a Subsidiary, as the case may be, has the full
fight to exercise any renewal options contained in the leases and subleases
pertaining to the Leased Real Property on the terms and conditions contained
therein and upon due exercise would be entitled to enjoy the use of each Leased
Real Property for the full term of such renewal options.
3.22. TANGIBLE PERSONAL PROPERTY.
(a) Section 3.22 of the Disclosure Schedule lists each item or distinct
group of machinery, equipment, tools, supplies, furniture, fixtures, personalty,
vehicles, rolling stock and other tangible personal property with a value in
excess of $25,000 per item or
-32-
per category of items (the "Tangible Personal Property") used in the Business or
owned or leased by the Company or any Subsidiary.
(b) Seller has, or has caused to be, delivered to the Buyer true and
complete copies of all leases and subleases for Tangible Personal Property and
any and all material ancillary documents pertaining thereto (including, but not
limited to, all amendments, consents and evidence of commencement dates and
expiration dates). With respect to each of such leases and subleases:
(i) such lease or sublease, together with all ancillary documents
delivered pursuant to the first sentence of this Section 3.22(b), is legal,
valid, binding, enforceable and in full force and effect and represents the
entire agreement between the respective lessor and lessee with respect to
such property;
(ii) except as set forth in Section 3.22(b) of the Disclosure
Schedule, such lease or sublease will not cease to be legal, valid,
binding, enforceable and in full force and effect on terms identical to
those currently in effect as a result of the consummation of the
transactions contemplated by this Agreement, nor will the consummation of
the transactions contemplated by this Agreement constitute a breach or
default under such lease or sublease or otherwise give the lessor a right
to terminate such lease or sublease;
(iii) except as otherwise disclosed in Section 3.22(b) of the
Disclosure Schedule, with respect to each such lease or sublease: (A) none
of Xxxxxxxxx, the Company nor any Subsidiary has received any notice of
cancellation or termination under such lease or sublease and no lessor has
any right of termination or cancellation, under such lease or sublease
except upon a breach or default by the Company or any Subsidiary
thereunder, (B) none of Xxxxxxxxx, the Company nor any Subsidiary has
received any notice of a breach or default under such lease or sublease,
which breach or default has not been cured, and (C) none of Xxxxxxxxx, the
Company nor. any Subsidiary has granted to any other Person any rights,
adverse or otherwise, under such lease or sublease; and
(iv) none of the Company, any Subsidiary nor (to the best knowledge of
Xxxxxxxxx) any other party to such lease or sublease, is in breach or
default in any material respect, and to the best knowledge of Xxxxxxxxx, no
event has occurred that, with notice or lapse of time would constitute such
a breach or default or permit termination, modification or acceleration
under such lease or sublease.
(c) Either the Company or a Subsidiary, as the case may be, has the full
right to exercise any renewal options contained in the leases and subleases
pertaining to the Tangible Personal Property on the terms and conditions
contained therein and upon due exer-
-33-
cise would be entitled to enjoy the use of each item of leased Tangible Personal
Property for the full term of such renewal options.
3.23. ASSETS.
(a) Except as disclosed in Section 3.23 of the Disclosure Schedule, either
the Company or a Subsidiary, as the case may be, owns, leases or has the legal
right to use all the properties and assets, including, without limitation, the
Intellectual Property Assets, the Real Property and the Tangible Personal
Property, used or intended to be used in the conduct of the Business or
otherwise owned, leased or used by the Company or any Subsidiary and, with
respect to contract rights, is a party to and enjoys the right to the benefits
of all contracts, agreements and other arrangements used or intended to be used
by the Company or any Subsidiary or in or relating to the conduct of the
Business (all such properties, assets and contract rights being, the "Assets").
Either the Company or a Subsidiary, as the case may be, has good and marketable
title to, or, in the case of leased or subleased Assets, valid and subsisting
leasehold interests in, all the Assets, free and clear of all Encumbrances,
except (i) as disclosed in Section 3.20, 3.21 (a), 321(b), 3.22 or 3.23(a) of
the Disclosure Schedule and (ii) Permitted Encumbrances.
(b) The Assets constitute all the properties, assets and rights forming a
part of, used, held or intended to be used in, and all such properties, assets
and rights as are necessary in the conduct of, the business of the Company and
its Subsidiaries. At all times since the date of the Reference Balance Sheet,
the Company has caused the Assets to be maintained in accordance with good
business practice, and all the Assets are in good operating condition and repair
and are suitable for the purposes for which they are used and intended.
(c) Following the consummation of the transactions contemplated by this
Agreement, either the Company or a Subsidiary, as the case may be, will continue
to own, pursuant to good and marketable title, or lease, under valid and
subsisting leases, or otherwise retain its respective interest in the Assets
without incurring any penalty or other adverse consequence, including, without
limitation, any increase in rentals, royalties, or licenses or other fees
imposed as a result of, or arising from, the consummation of the transactions
contemplated by this Agreement. Immediately following the Closing, either the
Company or a Subsidiary, as the case may be, shall own and possess all
documents, books, records, agreements and financial data of any sort used by the
Company or such Subsidiary in the conduct of the Business or otherwise.
(d) Section 3.23(d) of the Disclosure Schedule contains a true and complete
schedule of the Company's portfolio of short-term investments and marketable
securities as at December 31, 1997.
-34-
3.24. CUSTOMERS.
Listed in Section 3.24 of the Disclosure Schedule are the names and
addresses of the ten most significant customers (by revenue) of the Company and
the Subsidiaries for the twelve-month period ended December 31, 1997 and the
amount for which each such customer was invoiced during such period. Except as
disclosed in Section 3.24 of the Disclosure Schedule, none of Xxxxxxxxx, the
Company nor any Subsidiary has received any notice or has any reason to believe
that any significant customer of the Company has ceased, or will cease, to use
the products, equipment, goods or services of the Company or any Subsidiary, or
has substantially reduced, or will substantially reduce, the use of such
products, equipment, goods or services at any time.
3.25. SUPPLIERS.
Listed in Section 3.25 of the Disclosure Schedule are the names and
addresses of each of the ten most significant suppliers of raw materials,
supplies, merchandise and other goods for the Company and the Subsidiaries with
an aggregate purchase price of $100,000.00 or more during the twelve-month
period ended December 31, 1997 and the amount for which each such supplier
invoiced the Company and the Subsidiaries during such period. Except as
disclosed in Section 3.25 of the Disclosure Schedule, none of Xxxxxxxxx, the
Company nor any Subsidiary has received any notice or has any reason to believe
that any such supplier will not sell raw materials, supplies, merchandise and
other goods to the Company or any Subsidiary at any time after the Closing Date
on terms and conditions substantially similar to those used in its current sales
to the Company and the Subsidiaries, subject only to general and customary price
increases.
3.26. EMPLOYEE BENEFIT MATTERS.
(a) Plans and Material Documents. Section 3.26(a) of the Disclosure
Schedule lists (i) all employee benefit plans (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")) and all
bonus, stock option, stock purchase, restricted stock, incentive, deferred
compensation, retiree medical or life insurance, supplemental retirement,
severance or other benefit plans, programs or arrangements, and all employment,
termination, severance or other contracts or agreements, whether legally
enforceable or not, to which the Company or any Subsidiary is a party, with
respect to which the Company or any Subsidiary has any obligation or which are
maintained, contributed to or sponsored by the Company or any Subsidiary for the
benefit of any current or former employee, officer or director of the Company or
any Subsidiary, (ii) each employee benefit plan for which the Company or any
Subsidiary could incur liability under Section 4069 of ERISA in the event such
plan has been or were to be terminated, (iii) any plan in respect of which the
Company or any Subsidiary could incur liability under Section 4212(c) of ERISA
and (iv) any contracts, arrangements or understandings between Xxxxxxxxx or any
of its Affiliates and any
-35-
employee of the Company or of any Subsidiary, including, without limitation, any
contracts, arrangements or understandings relating to the sale of the Company
(collectively, the "Plans"). Each Plan is in writing and Xxxxxxxxx has made
available to the Buyer complete and accurate copies of each Plan and a complete
and accurate copy of each material document prepared in connection with each
such Plan including, without limitation, (i) a copy of each trust or other
funding arrangement, (ii) each summary plan description and summary of material
modifications, (iii) the most recently filed IRS Form 5500, (iv) the most
recently received IRS determination letter for each such Plan, and (v) the most
recently prepared actuarial report and financial statement in connection with
each such Plan. Except as disclosed on Section 3.26(a) of the Disclosure
Schedule, there are no other employee benefit plans, programs, arrangements or
agreements, whether formal or informal, whether in writing or not, to which the
Company or any Subsidiary is a party, with respect to which the Company or any
Subsidiary has any obligation or which are maintained, contributed to or
sponsored by the Company or any Subsidiary for the benefit of any current or
former employee, officer or director of the Company or any Subsidiary. Neither
the Company nor any Subsidiary has any express or implied material commitment,
whether legally enforceable or not, (i) to create, incur liability with respect
to or cause to exist any other employee benefit plan, program or arrangement,
(ii) to enter into any contract or agreement to provide compensation or benefits
to any individual or (iii) to modify, change or terminate any Plan, other than
with respect to a modification, change or termination required by ERISA or the
Code.
(b) Absence of Certain Types of Plans. None of the Plans is a single
employer pension plan (within the meaning of Section 4001(a)(15) of ERISA) for
which the Company or any Subsidiary could incur liability under Section 4063 or
4064 of ERISA. None of the Plans provides for the payment of separation,
severance, termination or similar-type benefits to any Person or obligates the
Company or any Subsidiary to pay separation, severance, termination or
similar-type benefits solely as a result of any transaction contemplated by this
Agreement or as a result of a "change in control," within the meaning of such
term under Section 280G of the Code. None of the Plans provides for or promises
retiree medical, disability or life insurance benefits to any current or former
employee, officer or director of the Company or any Subsidiary for which
accruals have not been taken. Any such accruals are listed on the Reference
Balance Sheet. Except for those Plans of Industrial Acoustics Company Limited,
each of the Plans is subject only to the laws of the United States or a
political subdivision thereof.
(c) Compliance with Applicable Law. Each Plan is now and always has been
operated in all respects in accordance with the requirements of all applicable
Law, including, without limitation, ERISA and the Code, and all persons who
participate in the operation of such Plans and all Plan "fiduciaries" (within
the meaning of Section 3(21) of ERISA) have always acted in accordance with the
provisions of all applicable Law, including, without limitation, ERISA and the
IRC. The Company and each Subsidiary has performed all
-36-
obligations required to be performed by it under, is not in any respect in
default under, or in violation of, and has no knowledge of any default or
violation by any party to any Plan. No legal action, suit or claim is pending or
threatened with respect to any Plan (other than claims for benefits in the
ordinary course) and no fact or event exists that could give rise to any such
action, suit or claim.
(d) Qualification of Certain Plans. Each Plan which is intended to be
qualified under Section 401(a) of the IRC or Section 401(k) of the IRC has
received a favorable determination letter from the IRS that it is so qualified
and each trust established in connection with any Plan which is intended to be
exempt from federal income taxation under Section 501(a) of the IRC has received
a determination letter from the IRS that it is so exempt and no fact or event
has occurred since the date of such determination letter from the IRS to
adversely affect the qualified status of any such Plan or the exempt status of
any such trust. Each trust maintained or contributed to by the Company or any
Subsidiary which is intended to be qualified as a voluntary employees'
beneficiary association and which is intended to be exempt from federal income
taxation under Section 501(c)(9) of the IRC has received a favorable
determination letter from the IRS that it is so qualified and so exempt, and no
fact or event has occurred since the date of such determination by the IRS to
adversely affect such qualified or exempt status.
(e) Absence of Certain Liabilities and Events. There has been no prohibited
transaction (within the meaning of Section 406 of ERISA or Section 4975 of the
IRC) with respect to any Plan. Neither the Company nor any Subsidiary has
incurred any liability for any penalty or tax arising under Section 4971, 4972,
4980, 4980B or 6652 of the IRC or any liability under Section 502 of ERISA and
no fact or event exists which could give rise to any such liability. Neither the
Company nor any Subsidiary has incurred any liability under, arising out of or
by operation of Title IV of ERISA (other than liability for premiums to the
Pension Benefit Guaranty Corporation arising in the ordinary course), including,
without limitation, any liability in connection with (i) the termination or
reorganization of any employee benefit plan subject to Title IV of ERISA or (ii)
the withdrawal from any multiemployer plan (within the meaning of Section 3(37)
or 4001(a)(3) of ERISA, and no fact or event exists which could give rise to any
such liability. Except as set forth on Section 3.26(e) of the Disclosure
Schedule, no complete or partial termination has occurred within the five years
preceding the date hereof with respect to any Plan. No reportable event (within
the meaning of Section 4043 of ERISA) has occurred or is expected to occur with
respect to any Plan subject to Title IV of ERISA. No Plan had an accumulated
funding deficiency (within the meaning of Section 302 of ERISA or Section 412 of
the Code) whether or not waived as of the most recently ended plan year of such
Plan. None of the assets of the Company or any Subsidiary is the subject of any
lien arising under Section 302(f) of ERISA or Section 412(n) of the Code;
neither the Company nor any Subsidiary has been required to post any security
un-
-37-
der Section 307 of ERISA or Section 401(a)(29) of the Code; and no fact or event
exists which could give rise to any such lien or requirement to post any such
security.
(f) Plan Contributions and Funding. All contributions, premiums or payments
required to be made with respect to any Plan (and any other employee benefit
plan for which the Company or any Subsidiary may have liability for funding)
have been made on or before their due dates. All such contributions have been
fully deducted for income tax purposes and no such deduction has been challenged
or disallowed by any government entity and no fact or event exists which could
give rise to any such challenge or disallowance. As of the Closing Date, no Plan
which is subject to Title IV of ERISA will have an "unfunded benefit liability"
(within the meaning of Section 4001(a)(18) of ERISA).
(g) Certain Employee-Benefits Assets. Each of the guaranteed investment
contracts and other funding contracts with any insurance company that are held
by any of the Plans and any annuity contracts purchased by (i) any of the Plans
or (ii) any pension benefit plans (as defined in Section 3(2) of ERISA) that
provided benefits to any current or former employees of the Company or any
Subsidiary was issued by an insurance company which carried the highest rating
from each of Duff & Xxxxxx Credit Rating Co., Standard & Poor's Insurance Rating
Services, A.M. Best Company and Xxxxx'x Investors Service, as of the date such
contract was issued, the date hereof and the Closing Date.
(h) WARN Act. The Company and the Subsidiaries are in compliance with the
requirements of the Workers Adjustment and Retraining Notification Act ("WARN")
and have no liabilities pursuant to WARN.
(i) Americans With Disability Act. Except as set forth in Section 3.26(i)
of the Disclosure Schedule, the Seller has no Knowledge that the Company and
each Subsidiary are not in compliance with the requirements of the Americans
With Disabilities Act.
(j) Withdrawal Liability. Neither the Company nor any Subsidiary has
announced an intention to withdraw, but has not yet completed withdrawal, from a
multiemployer plan. No action has been taken that could result in either a
partial or complete withdrawal from a multiemployer plan by the Company or any
Subsidiary.
3.27. LABOR RELATIONS; COMPLIANCE.
The Company or one of its Subsidiaries is a party to those collective
bargaining or other labor Contracts set forth on Section 3.27 of the Disclosure
Schedule. Except as set forth on Section 3.27 of the Disclosure Schedule, since
January 1, 1994, there has not been, there is not presently pending or existing,
and to Xxxxxxxxx'x Knowledge there is not threatened, (a) any strike, slowdown,
picketing, work stoppage, or employee grievance process, (b) any Proceeding
against or affecting the Company or any of its Subsidiaries relating to the
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alleged violation of any Legal Requirement pertaining to labor relations or
employment matters, including any charge or complaint filed by an employee or
union with the National Labor Relations Board, the Equal Employment Opportunity
Commission, or any comparable Governmental Body, organizational activity, or
other labor or employment dispute against or affecting any of the Company and
its Subsidiaries or their premises, or (c) any application for certification of
a collective bargaining agent. To Xxxxxxxxx'x Knowledge, no event has occurred
or circumstance exists that could provide the basis for any work stoppage or
other labor dispute. There is no lockout of any employees by the Company or any
of its Subsidiaries, and no such action is contemplated by the Company or any of
its Subsidiaries. The Company and each of the Subsidiaries have complied in all
respects with all Legal Requirements relating to employment, equal employment
opportunity, nondiscrimination, immigration, wages, hours, benefits, collective
bargaining, the payment of social security and similar taxes, occupational
safety and health, and plant closing. Neither the Company nor any Subsidiary is
liable for the payment of any compensation, damages, taxes, fines, penalties, or
other amounts, however designated, for failure to comply with any of the
foregoing Legal Requirements.
3.28. KEY EMPLOYEES.
(a) Section 3.28 of the Disclosure Schedule lists the name, place of
employment, the current annual salary rates, bonuses, deferred or contingent
compensation, pension, accrued vacation, "golden parachute" and other like
benefits paid or payable (in cash or otherwise) in 1996 and 1997, the date of
employment, nature of employment (whether contractual or at will), and a
description of position and job function of each current salaried employee,
officer, director, consultant or agent of the Company or any Subsidiary whose
annual compensation exceeded (or, in 1997, is expected to exceed) $100,000.00.
(b) All directors, officers, management employees, and technical and
professional employees of the Company and each Subsidiary are under written
obligation to the Company or such Subsidiary to maintain in confidence all
confidential or proprietary information acquired by them in the course of their
employment and to assign to the Company or such Subsidiary all inventions made
by them within the scope of their employment during such employment and for a
reasonable period thereafter.
3.29. TAXES.
(a) The Company and its Subsidiaries have filed or caused to be filed all
Tax Returns that are or were required to be filed by or with respect to any of
them, either separately or as a member of a group of corporations, pursuant to
applicable Legal Requirements. The Company has made available to Buyer copies of
all such Tax Returns relating to income or franchise taxes filed since January
1, 1992. The Company and its Subsidiaries (i) have timely paid, or made
provision for the payment of, all Taxes that have or may have become due
pursuant to those Tax Returns or otherwise, or pursuant to any assessment
received by the
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Company or any of its Subsidiaries, except such Taxes, if any, as are listed in
Section 3.29 of the Disclosure Schedule and are being contested in good faith
and as to which adequate reserves (determined in accordance with GAAP) have been
provided in the Reference Balance Sheet and the Interim Balance Sheet, and (ii)
have made adequate provision (through a current accrual on the Reference Balance
Sheet) for any Taxes attributable to any taxable period (or portion thereof) of
the Company and/or its Subsidiaries ending on or prior to the date hereof that
are not yet due and payable.
(b) The United States federal income Tax Returns of the Company and each of
its subsidiaries subject to such Taxes have been audited by the IRS or are
closed by the applicable statute of limitations for all taxable years through
December 31, 1995. The New York State income Tax Returns of the Company and each
of its subsidiaries subject to such Taxes have been audited by the relevant
state tax authorities or are closed by the applicable statute of limitations for
all taxable years through December 31, 1994. The New York City income Tax
Returns of the Company and each of its subsidiaries subject to such Taxes have
been audited by the relevant tax authorities or are closed by the applicable
statute of limitations for all taxable years through December 31, 1992. The
United Kingdom income Tax Returns of the Company and each of its subsidiaries
subject to such Taxes have been audited by Inland Reserve or are closed by the
applicable statute of limitations for all taxable years through December 31,
1996. Xxxxxxxxx has made available to Buyer a complete and accurate list of all
audits of all such Tax Returns, including a reasonably detailed description of
the nature and outcome of each audit. All deficiencies proposed as a result of
such audits have been paid, reserved against or settled. Except as described in
Section 3.29 of the Disclosure Schedule, neither the Company nor any of the
Subsidiaries has given or been requested to give waivers or extensions (or is or
would be subject to a waiver or extension given by any other Person) of any
statute of limitations relating to the payment of Taxes of the Company or any of
its Subsidiaries or for which the Company or any of its Subsidiaries may be
liable.
(c) The charges, accruals, and reserves with respect to Taxes on the
respective books of the Company and each of its Subsidiaries are adequate
(determined in accordance with GAAP) and are at least equal to the Company's or
such Subsidiary's liability for Taxes. There exists no proposed tax assessment
against the Company or any of its Subsidiaries except as disclosed in the
Balance Sheet or in Section 3.29 of the Disclosure Schedule. No consent to the
application of Section 3.41(f)(2) of the IRC has been filed with respect to any
property or assets held, acquired, or to be acquired by the Company or any of
its Subsidiaries. All Taxes that the Company or any of its Subsidiaries is or
was required by Legal Requirements to withhold or collect have been duly
withheld or collected and, to the extent required, have been paid to the proper
Governmental Body or other Person.
(d) All Tax Returns filed by (or that include on a consolidated basis) the
Company or any of its Subsidiaries are true, correct, and complete. There is no
tax sharing
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agreement to which the Company or any of its Subsidiaries is a party. Neither
the Company nor any Subsidiary is, or within the five-year period preceding the
Closing Date has been, an "S" corporation.
(e) Except as set forth in Section 3.29(e) of the Disclosure Schedule, (i)
no liens have been filed with respect to any Taxes; (ii) neither the Company nor
any of its Subsidiaries is a party to any agreement or arrangement that would
result, separately or in the aggregate, in the payment of any "excess parachute
payments" within the meaning of IRC Section 280G; (iii) neither the Company nor
any of its Subsidiaries has been a "United States real property holding
corporation" within the meaning of IRC Section 897(c)(2); (iv) neither the
Company nor any Subsidiary owns any interest in any "passive foreign investment
company" as defined in IRC Section 1296 or other entity the income of which is
required to be included in the income of the Company or its Subsidiaries whether
or not distributed; (v) neither the Company nor any Subsidiary has any income
reportable for a period ending after the Closing Date but attributable to a
transaction (e.g., "an installment sale") occurring in or a change in accounting
method made for a period ending on or prior to the Closing Date which resulted
in a deferred reporting of income from such transaction or from such change in
accounting method (other than a deferred intercompany transaction); (vi) neither
the Company nor any Subsidiary has any deferred gain or loss (a) arising out of
any intercompany transactions or (b) with respect to the stock or obligations of
any other member of the affiliated group of which the Company is the common
parent; (vii) the Company or any Subsidiary has no Knowledge that there are any
reassessments of any property owned by the Company or any Subsidiary or other
proposals that could increase the amount of any Tax to which the Company or any
Subsidiary would be subject; (viii) no power of attorney currently in force has
been granted with respect to any matter relating to Taxes that could affect the
Company or a Subsidiary; (ix) no assets of the Company or its Subsidiaries are
held in an arrangement for which partnership Tax Returns are being filed and
neither the Company nor any of its Subsidiaries is a partner in any partnership;
(x) neither the Company nor any of its Subsidiaries has requested a ruling from
any taxing authority; (xi) there are no "excess loss accounts" (as defined in
Treas. Reg. ss. 1. 1502-19) with respect to any stock of any Subsidiary; and
(xii) none of the assets of the Company nor any of its Subsidiaries is "tax
exempt use property" as defined in IRC Section 168(h)(1) or may be treated as
owned by any other person pursuant to IRC Section 168(f)(8) of the Internal
Revenue Code of 1954 (as in effect prior to the Tax Reform Act of 1986).
(f) All transfer, documentary, sales, use, stamp, registration and other
such taxes and fees (including any penalties and interest) incurred in
connection with the transactions contemplated by this Agreement (including,
without limitation, any New York State Real Estate Transfer Tax and any similar
tax imposed in other states or subdivisions), shall be paid by the party
obligated by Legal Requirement to make such payment when due, and such
responsible party will, at their own expense, file all necessary Tax Returns and
other
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documentation with respect to all such transfer, documentary, sales, use, stamp,
registration and other Taxes and fees, and, if required by applicable law, the
party not obligated to make such payment shall join in the execution of any such
Tax Returns and other documentation.
3.30. INSURANCE.
(a) Section 3.30(a) of the Disclosure Schedule sets forth the following
information with respect to each insurance policy (including policies providing
property, casualty, liability, workers' compensation, any bond and surety
arrangements) under which the Company or any Subsidiary has been an insured, a
named insured or otherwise the principal beneficiary of coverage at any time
within the past three years:
(i) the name, address and telephone number of the agent or broker;
(ii) the name of the insurer and the names of the principal insured
and each named insured;
(iii) the policy number and the period of coverage;
(iv) the type, scope (including an indication of whether the coverage
was on a claims made, occurrence or other basis) and amount (including a
description of how deductibles, retentions and aggregates are calculated
and operate) of coverage; and
(v) the premium charged for the policy, including, without limitation,
a description of any retroactive premium adjustments or other loss-sharing
arrangements.
(b) With respect to each such insurance policy: (i) the policy is legal,
valid, binding and enforceable in accordance with its terms and, except for
policies that have expired under their terms in the ordinary course, is in full
force and effect; (ii) neither the Company nor any Subsidiary is in breach or
default (including any breach or default with respect to the payment of premiums
or the giving of notice), and no event has occurred which, with notice or the
lapse of time, would constitute such a breach or default or permit termination
or modification, under the policy; (iii) no party to the policy has repudiated,
or given notice of an intent to repudiate, any provision thereof; and (iv) to
the Knowledge of Xxxxxxxxx, no insurer on the policy has been declared insolvent
or placed in receivership, conservatorship or liquidation or currently has a
rating of "B+" or below from A.M. Best & Co. or a claims paying ability rating
of "BBB" or below from Standard & Poor's, Inc.
(c) Section 3.30(c) of the Disclosure Schedule sets forth all risks against
which the Company or any Subsidiary is self-insured or which are covered under
any risk retention program in which the Company or any Subsidiary participates,
together with details for
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the last five years of the Company's and each Subsidiary's loss experience with
respect to such risks.
(d) All material assets, properties and risks of the Company and each
Subsidiary are, and for the past five years have been, covered by valid and,
except for policies that have expired under their terms in the ordinary course,
currently effective insurance policies or binders of insurance (including,
without limitation, general liability insurance, property insurance and workers'
compensation insurance) issued in favor of the Company or a Subsidiary. as the
case may be, in each case with responsible insurance companies, in such types
and amounts and covering such risks as are consistent with customary practices
and standards of companies engaged in businesses and operations similar to those
of the Company or such Subsidiary, as the case may be.
(e) At no time subsequent to January 1, 1994 has the Company or any
Subsidiary (i) been denied any insurance or indemnity bond coverage which it has
requested, (ii) made any material reduction in the scope or amount of its
insurance coverage, or, except as set forth in Section 3.30(e) of the Disclosure
Schedule, received notice from any of its insurance carriers that any insurance
premiums will be subject to increase in an amount materially disproportionate to
the amount of the increases with respect thereto (or with respect to similar
insurance) in prior years or that any insurance coverage listed in Section
3.30(a) of the Disclosure Schedule will not be available in the future
substantially on the same terms as are now in effect or (iii) suffered any
extraordinary increase in premium for renewed coverage. Since January 1, 1994,
no insurance carrier has canceled, failed to renew or materially reduced any
insurance coverage for the Company or any Subsidiary or given any notice or
other indication of its intention to cancel, not renew or reduce any such
coverage.
(f) At the time of the Closing, all insurance policies currently in effect
will be outstanding and duly in force.
(g) No insurance policy listed in Section 3.30(a) of the Disclosure
Schedule will cease to be legal, valid, binding, enforceable in accordance with
its terms and in full force and effect on terms identical to those in effect as
of the date hereof as a result of the consummation of the transactions
contemplated by this Agreement.
3.31. ACCOUNTS, LOCKBOXES, SAFE DEPOSIT BOXES, POWERS OF ATTORNEY.
Section 3.31 of the Disclosure Schedule is a true and complete list of (a)
the names of each bank, savings and loan association, securities or commodities
broker or other financial institution in which the Company or any Subsidiary has
an account, including cash contribution accounts, and the names of all persons
authorized to draw thereon or have access thereto, (b) the location of all
lockboxes and safe deposit boxes of the Company and each
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Subsidiary and the names of all Persons authorized to draw thereon or have
access thereto and (c) the names of all Persons, if any, holding powers of
attorney from Seller relating to the Company, any Subsidiary or the Business, or
from the Company or any Subsidiary. Section 3.31 of the Disclosure Schedule sets
forth a list of all authorizations by the Board of Directors of the Company for
any officer, director or employee to enter into negotiations or otherwise
interact with any foreign entity. At the time of the Closing, without the prior
written consent of the Buyer, neither the Company nor any Subsidiary shall have
any such amount, lockbox or safe deposit box other than those listed in Section
3.31 of the Disclosure Schedule, nor shall any additional Person have been
authorized, from the date of this Agreement, to draw thereon or have access
thereto or to hold any such power of attorney relating to the Company, any
Subsidiary or the Business or from the Company or any Subsidiary. Except as
disclosed in Section 3.31 of the Disclosure Schedule, Xxxxxxxxx has not
commingled monies or accounts of the Company or any Subsidiary with other monies
or accounts of Xxxxxxxxx nor has Xxxxxxxxx transferred monies or accounts of the
Company or any Subsidiary other than to an account of the Company or such
Subsidiary. At the time of the Closing, all monies and accounts of the Company
and each Subsidiary shall be held by, and be accessible only to, the Company or
such Subsidiary.
3.32. FULL DISCLOSURE.
(a) Xxxxxxxxx is not aware of any facts pertaining to the Company, any
Subsidiary or the Business which could have a Material Adverse Effect and which
have not been disclosed in this Agreement, the Disclosure Schedule or the
Financial Statements or otherwise disclosed to the Buyer by Xxxxxxxxx in
writing.
(b) No representation or warranty of Xxxxxxxxx in this Agreement, nor any
statement or certificate furnished or to be furnished to the Buyer pursuant to
this Agreement, or in connection with the transactions contemplated by this
Agreement, contains or will contain any untrue statement of a material fact, or
omits or will omit to state a material fact necessary to make the statements
contained herein or therein not misleading.
3.33. BROKERS OR FINDERS.
Xxxxxxxxx has incurred no obligation or liability, contingent or otherwise,
for brokerage or finders' fees or agents' commissions or other similar payment
in connection with this Agreement.
3.34. YEAR 2000 COMPUTER CONVERSION.
Section 3.34 of the Disclosure Schedule sets forth the Company's proposal
regarding its computer conversion for the year 2000. The changes necessary to be
made to the computer system could not reasonably be expected to have a Material
Adverse Effect.
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3.35. SECURITIES EXCHANGE ACT FILINGS.
All reports of the Company pursuant to the Securities Exchange Act of 1934
have been filed when due and in accordance with the provisions of such at and
the rules and regulations thereunder of the Securities and Exchange Commission.
Neither the Company or Seller has any Knowledge of any investigation or inquiry
(whether or not formally authorized) with respect to securities of the Company
or any report or registration statement filed, or required to be filed, by the
Company with such Commission.
4. REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer represents and warrants to Sellers as follows:
4.1. ORGANIZATION AND GOOD STANDING.
Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all necessary corporate
power and authority to enter into this Agreement, to carry out its obligations
hereunder and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by the Buyer, the performance by the Buyer of its
obligations hereunder and the consummation by the Buyer of the transactions
contemplated hereby have been duly authorized by all requisite action on the
part of the Buyer. This Agreement has been, and (assuming due authorization,
execution and delivery by the Sellers) this Agreement constitutes, a legal,
valid and binding obligation of the Buyer enforceable against the Buyer in
accordance with its terms. Buyer does also specifically represent that it has
the financial wherewithal to undertake and consummate the transactions
contemplated by this Agreement.
4.2. NO CONFLICT.
Assuming compliance with the notification requirements of the HSR Act and
the making and obtaining of all filings, notifications, consents, approvals,
authorizations and other actions referred to in Section 4.3, except as may
result from any facts or circumstances relating solely to Xxxxxxxxx, the
execution, delivery and performance of this Agreement by Buyer do not and will
not (a) violate, conflict with or result in the breach of any provision of the
charter or by-laws (or similar organizational documents) of the Buyer, (b)
conflict with or violate (or cause an event which could have a Material Adverse
Effect as a result of) any Law or Governmental Order applicable to the Buyer, or
(c) conflict with, result in any breach of, constitute a default (or event which
with the giving of notice or lapse of time, or both, would become a default)
under, require any consent under, or give to others any rights of termination,
amendment, acceleration, suspension, revocation or cancellation of, or result in
the creation of an Encumbrance on any of the assets or properties of the Buyer
pursuant to any note, bond, mortgage or indenture, contract agreement, lease,
sublease, license, permit, franchise or
-45-
other instrument or arrangement to which the Buyer is a party or by which any of
such assets or properties are bound or affected which would have a Material
Adverse Effect on the ability of the Buyer to consummate the transactions
contemplated by this Agreement.
4.3. GOVERNMENTAL CONSENTS AND APPROVAL.
The execution, delivery and performance of this Agreement by the Buyer do
not and will not require any consent, approval, authorization or other order of,
action by, filing with, or notification to, any Governmental Authority, except
(a) in a writing given to Xxxxxxxxx by the Buyer on the date of this Agreement,
and (b) the notification requirements of the HSR Act.
4.4. INVESTMENT INTENT.
Buyer is acquiring the Shares for its own account and not with a view to
their distribution within the meaning of Section 2(l1) of the Securities Act.
4.5. CERTAIN PROCEEDINGS.
There is no pending Proceeding that has been commenced against Buyer and
that challenges, or may have the effect of preventing, delaying, making illegal,
or otherwise interfering with, any of the Contemplated Transactions. To Buyer's
Knowledge, no such Proceeding has been Threatened.
4.6. BROKERS OR FINDERS.
Buyer and its officers and agents have incurred no obligation or liability,
contingent or otherwise, for brokerage or finders' fees or agents' commissions
or other similar payment in connection with this Agreement and will indemnify
and hold Sellers harmless from any such payment alleged to be due by or through
Buyer as a result of the action of Buyer or its officers or agents.
5. COVENANTS OF XXXXXXXXX PRIOR TO CLOSING DATE.
5.1. ACCESS AND INVESTIGATION; AUDIT.
Between the date of this Agreement and the Closing Date, Xxxxxxxxx will,
and will cause the Company and the Subsidiaries and its Representatives to, (a)
furnish Buyer and Buyer's Advisors with copies of all such contracts, books and
records, and other existing documents and data as Buyer may reasonably request,
(b) furnish Buyer and Buyer's Advisors with such additional financial,
operating, and other data and information as Buyer may rea-
-46-
sonably request, and (c) furnish Buyer true and complete copies of the audited
consolidated balance sheet of the Company and the Subsidiaries for the fiscal
year ended as of December 31, 1997, and the related audited consolidated
statements of income, retained earnings, stockholders' equity and changes in
financial position of the Company and the Subsidiaries, together with all
related notes and schedules thereto, accompanied by the audit opinion and
management letters thereon of Coopers & Xxxxxxx and, with respect to Industrial
Acoustics Company Limited, Kidsons Impey.
5.2. OPERATION OF THE BUSINESS OF THE COMPANY AND ITS SUBSIDIARIES.
(a) Between the date of this Agreement and the Closing Date, Xxxxxxxxx
will, and will cause the Company and the Subsidiaries to:
(i) conduct the business of the Company and the Subsidiaries only in
the ordinary course of business;
(ii) use his Best Efforts to preserve intact the current business
organization of the Company and the Subsidiaries, keep available the
services of the current officers, employees, and agents of the Company and
the Subsidiaries, and maintain the relations and good will with suppliers,
customers, landlords, creditors, employees, agents, and others having
business relationships with the Company and the Subsidiaries;
(iii) confer with Buyer concerning operational matters of a material
nature; and
(iv) otherwise report periodically to Buyer concerning the status of
the business, operations, and finances of the Company and the Subsidiaries.
(b) Except as disclosed in Section 5.2(a) of the Disclosure Schedule, the
Seller covenants and agrees that, prior to Closing, without the prior written
consent of the Buyer, neither the Company nor any Subsidiary will do any of the
things enumerated in the second sentence of Section 3.14 (including, without
limitation, clauses (i) through (xxix) thereof).
(c) The Seller covenants and agrees that, prior to Closing, the Company
will not engage in any practice, take any action, fail to take any action or
enter into any transaction which would cause any representation or warranty of
the Seller to be untrue or result in the Breach of any covenant made by the
Seller in this Agreement.
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5.3. NEGATIVE COVENANT.
Except as otherwise expressly permitted by this Agreement, between the date
of this Agreement and the Closing Date, Seller will not, and will cause the
Company and the Subsidiaries not to, without the prior consent of Buyer, take
any affirmative action, or fail to take any reasonable action within his or its
control, as a result of which any of the changes or events listed in Section
3.14 is authorized or is likely to occur.
5.4. REQUIRED APPROVALS.
As promptly as practicable after the date of this Agreement, Xxxxxxxxx
will, and will cause the Company and the Subsidiaries to, make all filings
required by Legal Requirements to be made by them in order to consummate the
Contemplated Transactions (including all filings under the HSR Act). Between the
date of this Agreement and the Closing Date, Xxxxxxxxx will, and will cause the
Company and the Subsidiaries to, (a) cooperate with Buyer with respect to all
filings that Buyer elects to make or is required by Legal Requirements to make
in connection with the Contemplated Transactions, and (b) cooperate with Buyer
in obtaining all consents identified in Schedule 4.3 (including taking all
actions requested by Buyer to cause early termination of any applicable waiting
period under the HSR Act).
5.5. NOTIFICATION.
Between the date of this Agreement and the Closing Date, Seller will
promptly notify Buyer in writing if such Seller or the Company or any of its
Subsidiaries becomes aware of any fact or condition that causes or constitutes a
Breach of any of Seller's representations and warranties as of the date of this
Agreement, or if Seller or the Company or any of its Subsidiaries becomes aware
of the occurrence after the date of this Agreement of any fact or condition that
would (except as expressly contemplated by this Agreement) cause or constitute a
Breach of any such representation or warranty had such representation or
warranty been made as of the time of occurrence or discovery of such fact or
condition. Should any such fact or condition require any change in the
Disclosure Schedule if the Disclosure Schedule were dated the date of the
occurrence or discovery of any such fact or condition, Seller will promptly
deliver to Buyer a supplement to the Disclosure Schedule specifying such change.
During the same period, Seller will promptly notify Buyer of the occurrence of
any Breach of any covenant of Seller in this Section 5 or of the occurrence of
any event that may make the satisfaction of the conditions in Section 7
impossible or unlikely.
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5.6. PAYMENT OF INDEBTEDNESS BY RELATED PERSONS.
Except as expressly provided in this Agreement and except as is set forth
on Section 5.6 of the Disclosure Schedule, Seller will cause all indebtedness
owed to the Company and the Subsidiaries by any Seller or any Related Person to
be paid in full prior to Closing. The obligation of Xxxxxxx Xxxxxxxxx to the
Company shall continue and the terms of such obligation shall be amended to
include the payment of interest on the outstanding balance calculated monthly at
the prime rate of Chase Manhattan Bank as of the first day of such month.
5.7. NO NEGOTIATION.
Until such time, if any, as this Agreement is terminated pursuant to
Section 9, Seller will not, and will cause the Company and the Subsidiaries and
each of their Representatives not to, directly or indirectly solicit, initiate,
or encourage any inquiries or proposals from, discuss or negotiate with, provide
any non-public information to, or consider the merits of any unsolicited
inquiries or proposals from, any Person (other than Buyer) relating to any
transaction involving the sale of the Shares (other than in the ordinary course
of business) of the Company, or any merger, consolidation, business combination,
or similar transaction involving the Company or any of its Subsidiaries.
5.8. BEST EFFORTS.
Between the date of this Agreement and the Closing Date, Seller will use
his Best Efforts to cause the conditions in Sections 7 and 8 to be satisfied.
5.9. TERMINATION OF AUTHORIZATIONS.
Seller will cause the Company to terminate all existing authorizations by
the Board of Directors of the Company for any officer, director or employee to
enter into negotiations or otherwise interact with any foreign entity except in
the ordinary course of business relating to specific transactions.
6. COVENANTS OF BUYER PRIOR TO CLOSING DATE.
6.1. APPROVALS OF GOVERNMENTAL BODIES.
As promptly as practicable after the date of this Agreement, Buyer will,
and will cause each of its Related Persons to, make all filings required by
Legal Requirements to be made by them to consummate the Contemplated
Transactions (including all filings under the HSR Act). Between the date of this
Agreement and the Closing Date, Buyer will, and will
-49-
cause each Related Person to, (i) cooperate with Seller with respect to all
filings that Seller is required by Legal Requirements to make in connection with
the Contemplated Transactions, and (ii) cooperate with Seller in obtaining all
consents identified in Parts 3.5, 3.6 and 4.3 of the Disclosure Schedule;
provided that this Agreement will not require Buyer to dispose of or make any
change in any portion of its business or to incur any other burden to obtain a
Governmental Authorization.
6.2. BEST EFFORTS.
Except as set forth in the proviso to Section 6.1, between the date of this
Agreement and the Closing Date, Buyer will use its Best Efforts to cause the
conditions in Sections 7 and 8 to be satisfied.
7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE.
Buyer's obligation to purchase the Shares and to take the other actions
required to be taken by Buyer 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 Buyer, in whole or in part):
7.1. ACCURACY OF REPRESENTATIONS.
All of Seller's representations and warranties in this Agreement
(considered collectively), and each of these representations and warranties
(considered individually), must be accurate as of the date of this Agreement and
as of the Closing Date without giving effect to any notice or supplement
delivered by Xxxxxxxxx pursuant to Section 5.5.
7.2. SELLER'S PERFORMANCE
(a) All of the covenants and obligations that Seller is required to perform
or to comply with pursuant to this Agreement at or prior to the Closing
(considered collectively), and each of these covenants and obligations
(considered individually), must have been duly performed and complied with in
all material respects.
(b) Each document required to be delivered pursuant to Section 2.4 must
have been delivered, and each of the other covenants and obligations in Section
5.4 must have been performed and complied with in all material respects.
7.3. CONSENTS.
Each of the Consents identified in Parts 3.5(c), 3.6 and 4.3 of the
Disclosure Schedule must have been obtained and must be in full force and
effect.
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7.4. ADDITIONAL DOCUMENTS.
Each of the following documents must have been delivered to Buyer:
(a) an opinion of Xxxx Xxxxxxxxxx Xxxxx Xxxxxx Xxxxxx & Xxxxxxxx LLP,
dated the Closing Date, in the form of Exhibit 7.4(a);
(b) such other documents as Buyer may reasonably request for the
purpose of (i) enabling its counsel to provide the opinion referred to in
Section 8.4(a), (ii) evidencing the accuracy of any of Seller's
representations and warranties, (iii) evidencing the performance by Seller
of, or the compliance by Seller with, any covenant or obligation required
to be performed or complied with by Seller, (iv) evidencing the
satisfaction of any condition referred to in this Section 7, or (v)
otherwise facilitating the consummation or performance of any of the
Contemplated Transactions; and
(c) a copy of the Escrow Agreement substantially in the form attached
hereto as Exhibit A, executed by Seller.
7.5. NO INJUNCTION.
Them must not be in effect any Legal Requirement or any injunction or other
Order that prohibits the sale of the Shares by Seller to Buyer.
7.6. NO PROHIBITION.
Neither the consummation nor the performance of any of the Contemplated
Transactions will, directly or indirectly (with or without notice or lapse of
time), materially contravene, or conflict with, or result in a material
violation of, or cause Buyer or any Person affiliated with Buyer to suffer any
Material Adverse Effect under, any applicable Legal Requirement or Order.
7.7. BOARD ACTION.
The Board of Directors of the Company shall have specifically approved (i)
the Contemplated Transactions and (ii) the contemporaneous acquisition by Buyers
of the shares listed in Schedule A, such approval being effective prior to the
signing of this Agreement, in effect as of the Closing and evidenced by a
certified resolution of such Board satisfactory to Buyer.
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7.8. HSR ACT AND EXON-XXXXXX AMENDMENT.
The waiting period (including any extension thereof by reason of a request
for additional information) relating to the notification and report forms under
the HSR Act filed by Buyer and Seller with respect to the transactions
contemplated by this Agreement shall have expired or been terminated, and no
conditions to the transactions contemplated by this Agreement shall have been
imposed by any Governmental Body and clearance shall have been received from the
Committee on Foreign Investment in the United States for the transactions
contemplated by this Agreement under Section 721 of the Defense Production Act
of 1950, as amended.
8. CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE.
Seller's obligation to sell the Shares and to take the other actions
required to be taken by Seller 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 Seller, in whole or in part):
8.1. ACCURACY OF REPRESENTATIONS.
All of Buyer's representations and warranties in this Agreement (considered
collectively), and each of these representations and warranties (considered
individually), must be accurate as of the date of this Agreement and as of the
Closing Date.
8.2. BUYER'S PERFORMANCE.
(a) All of the covenants and obligations that Buyer is required to perform
or to comply with pursuant to this Agreement at or prior to the Closing
(considered collectively), and each of these covenants and obligations
(considered individually), must have been performed and complied with in all
material respects.
(b) Buyer must have delivered each of the documents required to be
delivered by Buyer pursuant to Section 2.4 and must have made the cash payments
required to be made by Buyer pursuant to Sections 2.4(b)(i) and 2.4(b)(ii).
8.3. CONSENTS.
Each of the Consents identified in Parts 3.6(c), 3.7 and 4.3 of the
Disclosure Schedule must have been obtained and must be in full force and
effect.
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8.4. ADDITIONAL DOCUMENTS.
Buyer must have caused the following documents to be delivered to Seller:
(a) an opinion of Xxxxxx Xxxxxx & Xxxxxxx, dated the Closing Date, in
the form of Exhibit 8.4(a); and
(b) such other documents as Seller may reasonably request for the
purpose of (i) enabling their counsel to provide the opinion referred to in
Section 7.4(a), (ii) evidencing the accuracy of any representation or
warranty of Buyer, (iii) evidencing the performance by Buyer of, or the
compliance by Buyer with, any covenant or obligation required to be
performed or complied with by Buyer, (iv) evidencing the satisfaction of
any condition referred to in this Section 8, or (v) otherwise facilitating
the consummation of any of the Contemplated Transactions; and
(c) a copy of the Escrow Agreement substantially in the form attached
hereto as Exhibit A, executed by Buyer.
8.5. NO INJUNCTION.
There must not be in effect any Legal Requirement or any injunction or
other Order that prohibits the sale of the Shares by Seller to Buyer.
9. TERMINATION.
9.1. TERMINATION EVENTS.
This Agreement may, by notice given prior to or at the Closing, be
terminated:
(a) by either Buyer or Seller if a material Breach of any provision of
this Agreement has been committed by the other party, such material Breach
has not been cured after notice and a reasonable period of time to cure,
and such Breach has not been waived;
(b) (i) by Buyer if any of the conditions in Section 7 has not been
satisfied as of the Closing Date or if satisfaction of such a condition is
or becomes impossible (other than through the failure of Buyer to comply
with its obligations under this Agreement) and Buyer has not waived such
condition on or before the Closing Date; or (ii) by Seller, if any of the
conditions in Section 8 has not been satisfied of the Closing Date or if
satisfaction of such a condition is or becomes impossible (other than
through
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the failure of Seller to comply with his obligations under this Agreement)
and Seller has not waived such condition on or before the Closing Date;
(c) by Buyer if, between the date hereof and the Closing Date: (i) an
event or condition occurs that has resulted in or that may be expected to
result in a Material Adverse Effect, (ii) any material representation or
warranty of Seller contained in this Agreement shall not have been true and
correct when made, (iii) Seller shall not have complied with any material
covenant or agreement to be complied with by it and contained in this
Agreement; or (iv) Seller, the Company or any Subsidiary makes a general
assignment for the benefit of creditors, or any proceeding shall be
instituted by or against Seller, the Company or any Subsidiary seeking to
adjudicate any of them a bankrupt or insolvent, or seeking liquidation,
winding up or reorganization, arrangement, adjustment, protection, relief
or composition of its debts under any law relating to bankruptcy,
insolvency or reorganization;
(d) by mutual consent of Buyer and Seller; or
(e) by either Buyer or Seller if the Closing has not occurred (other
than through the failure of any party seeking to terminate this Agreement
to comply fully with its obligations under this Agreement) on or before
April 30, 1998 or such later date as the parties may agree upon.
9.2. EFFECT OF TERMINATION.
Each party's right of termination under Section 9.1 is in addition to any
other rights it may have under this Agreement or otherwise, and the exercise of
a right of termination will not be an election of remedies. If this Agreement is
terminated pursuant to Section 9.1, all further obligations of the parties under
this Agreement will terminate, except that the obligations in Sections 11.1 and
11. 3 will survive; provided, however, that if this Agreement is terminated by a
party because of the Breach of the Agreement by the other party or because one
or more of the conditions to the terminating party's obligations under this
Agreement is not satisfied as a result of the other party's failure to comply
with its obligations under this Agreement, the terminating party's right to
pursue all legal remedies will survive such termination unimpaired.
10. INDEMNIFICATION; REMEDIES.
10.1. SURVIVAL.
All representations, warranties, covenants, and obligations in this
Agreement, the Disclosure Schedule, the supplements to the Disclosure Schedule,
the certificate delivered
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pursuant to Section 2.4(a)(ii), and any other certificate or document delivered
pursuant to this Agreement will survive the Closing.
10.2. INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLER.
Seller will indemnify and hold harmless Buyer, the Company and its
Subsidiaries, and their respective Representatives, stockholders, controlling
persons, and affiliates (collectively, the "Indemnified Persons") for, and will
pay to the Indemnified Persons the amount of, 74% any loss, liability, claim,
damage (including incidental and consequential damages), expense (including
costs of investigation and defense and reasonable attorneys' fees) or diminution
of value, whether or not involving a third-party claim (collectively,
"Damages"), arising, directly or indirectly, from or in connection with:
(a) any Breach of any representation or warranty made by Seller in
this Agreement, the Disclosure Schedule, the supplements to the Disclosure
Schedule, or any other certificate or document delivered by Seller pursuant
to this Agreement;
(b) any Breach of any representation or warranty made by Seller in
this Agreement as if such representation or warranty were made on and as of
the Closing Date, other than any such Breach that is disclosed in a
supplement to the Disclosure Schedule and is expressly identified in the
certificate delivered pursuant to Section 2.4(a)(ii) as having caused the
condition specified in Section 7.1 not to be satisfied;
(c) any Breach by Seller of any covenant or obligation of Seller in
this Agreement;
(d) any product shipped or manufactured by, or any services provided
by, the Company or any of its Subsidiaries prior to the Closing Date;
(e) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by any such Person with either Seller or the
Company or any of its Subsidiaries (or any Person acting on their behalf)
in connection with any of the Contemplated Transactions; and
(f) any Taxes of the Company and/or its Subsidiaries with respect to
any Tax year or portion thereof ending on or before the Closing Date (or
for any Tax year beginning before and ending after the Closing Date, to the
extent allocable to the portion of such period beginning before and ending
on the Closing Date), to the extent such Taxes are not reflected in the
reserve for Tax liabilities shown on the Interim Bal-
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ance Sheet, as such reserve is adjusted for the passage of time through the
closing date in accordance with the past practice and custom of the Company
and its Subsidiaries in filing their Tax Returns.
Buyer shall request payment of Damages to be made by a claim against funds
held in escrow pursuant to the Escrow Agreement.
10.3. TIME LIMITATIONS.
If the Closing occurs, Seller will have no liability (for indemnification
or otherwise) with respect to any representation or warranty, or covenant or
obligation to be performed and complied with prior to the Closing Date, other
than those in Section 3.2, 3.18 and 3.29, unless on or before eighteen (18)
months from the Closing Date Buyer notifies Seller of a claim specifying the
factual basis of that claim in reasonable detail to the extent then known by
Buyer; a claim with respect to Section 3.2 or 3.29 may be made at any time until
five (5) years from the Closing Date; and a claim with respect to Section 3.18
may be made at any time until thirty (30) months from the Closing Date.
10.4. LIMITATIONS ON AMOUNT -- SELLER.
Seller will have no liability (for indemnification or otherwise) with
respect to the matters described in clause (a), clause (b), to the extent
relating to any failure to perform or comply prior to the Closing Date, clause
(c), clause (d) or clause (f) of Section 10.2, until the total of all Damages
with respect to such matters exceeds $250,000.00, at which time all such Damages
shall become due (not just the amounts in excess of $250,000.00). For purposes
of the preceding sentences, Damages shall not include amounts that individually
do not result in a loss of at least $5,000.00. The maximum amount of Seller's
total liability (for indemnification or otherwise) shall be $1,750,000.00.
10.5. PROCEDURE FOR INDEMNIFICATION -- THIRD-PARTY CLAMS.
(a) Promptly after receipt by an indemnified party under Section 10.2 of
notice of the commencement of any Proceeding against it, such indemnified party
will, if a claim is to be made against an indemnifying party under such Section,
give notice to the indemnifying party of the commencement of such claim, but the
failure to notify the indemnifying party will not relieve the indemnifying party
of any liability that it may have to any indemnified party, except to the extent
that the indemnifying party demonstrates that the defense of such action is
prejudiced by the indemnifying party's failure to give such notice.
(b) If any Proceeding referred to in Section 10.5(a) is brought against an
indemnified party and it gives notice to the indemnifying party of the
commencement of such
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Proceeding, the indemnifying party will, unless the claim involves Taxes, be
entitled to participate in such Proceeding and, to the extent that it wishes
(unless (i) the indemnifying party is also a party to such Proceeding and the
indemnified party determines in good faith that joint representation would be
inappropriate, or (ii) the indemnifying party fails to provide reasonable
assurance to the indemnified party of its financial capacity to defend such
Proceeding and provide indemnification with respect to such Proceeding), to
assume the defense of such Proceeding with counsel satisfactory to the
indemnified party and, after notice from the indemnifying party to the
indemnified party of its election to assume the defense of such Proceeding, the
indemnifying party will not, as long as it diligently conducts such defense, be
liable to the indemnified party under this Section 10 for any fees of other
counsel or any other expenses with respect to the defense of such Proceeding, in
each case subsequently incurred by the indemnified party in connection with the
defense of such Proceeding, other than reasonable costs of investigation. If the
indemnifying party assumes the defense of a Proceeding, (i) it will be
conclusively established for purposes of this Agreement that the claims made in
that Proceeding are within the scope of and subject to indemnification; (ii) no
compromise or settlement of such claims may be effected by the indemnifying
party without the indemnified party's consent unless (A) there is no finding or
admission of any violation of Legal Requirements or any violation of the rights
of any Person and no effect on any other claims that may be made against the
indemnified party, and (B) the sole relief provided is monetary damages that are
paid in full by the indemnifying party; and (iii) the indemnified party will
have no liability with respect to any compromise or settlement of such claims
effected without its consent. If notice is given to an indemnifying party of the
commencement of any Proceeding and the indemnifying party does not, within ten
days after the indemnified party's notice is given, give notice to the
indemnified party of its election to assume the defense of such Proceeding, the
indemnifying party will be bound by any determination made in such Proceeding or
any compromise or settlement effected by the indemnified party.
(c) Notwithstanding the foregoing, if an indemnified party determines in
good faith that there is a reasonable probability that a Proceeding may
adversely affect it or its affiliates other than as a result of monetary damages
for which it would be entitled to indemnification under this Agreement, the
indemnified party may, by notice to the indemnifying party, assume the exclusive
right to defend, compromise, or settle such Proceeding, but the indemnifying
party will not be bound by any determination of a Proceeding so defended or any
compromise or settlement effected without its consent (which may not be
unreasonably withheld).
10.6. PROCEDURE FOR INDEMNIFICATION -- OTHER CLAIMS.
A claim for indemnification for any matter not involving a third-party
claim may be asserted by notice to the party from whom indemnification is
sought.
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11. GENERAL PROVISIONS.
11.1. EXPENSES.
Except as otherwise expressly provided in this Agreement, each party to
this Agreement will bear its respective expenses incurred in connection with the
preparation, execution, and performance of this Agreement and the Contemplated
Transactions, including all fees and expenses of agents, representatives,
counsel, and accountants. Buyer and Seller will each pay their respective HSR
Act filing fees. Seller will cause the Company and its Subsidiaries not to incur
any out-of-pocket expenses in connection with this Agreement except for
professional fees and environmental survey fees not in excess of $50,000.00. In
the event of termination of this Agreement, the obligation of each party to pay
its own expenses will be subject to any rights of such party arising from a
breach of this Agreement by another party.
11.2. PUBLIC ANNOUNCEMENTS.
Any public announcement or similar publicity with respect to this Agreement
or the Contemplated Transactions will be issued, if at all, at such time and in
such manner as Seller and the Buyer jointly determine. Unless consented to by
Buyer in advance or required by Legal Requirements, prior to the Closing Seller
shall, and shall cause the Company and its Subsidiaries to, keep this Agreement
strictly confidential and may not make any disclosure of this Agreement to any
Person. Seller and Buyer will consult with each other concerning the means by
which the Company's and its Subsidiaries' employees, customers, and suppliers
and others having dealings with the Company and its Subsidiaries will be
informed of the Contemplated Transactions, and Buyer will have the right to be
present for any such communication.
11.3. CONFIDENTIALITY.
Between the date of this Agreement and the Closing Date, Buyer and Seller
will maintain in confidence, and will cause the directors, officers, employees,
agents, and advisors of Buyer and the Company and its Subsidiaries to maintain
in confidence, and not use to the detriment of another party or the Company or
any of its Subsidiaries, any written, oral, or other information obtained in
confidence from, written information stamped "confidential" when originally
furnished by another party or the Company or any of its Subsidiaries in
connection with this Agreement or the Contemplated Transactions, unless (a) such
information is already known to such party or to others not bound by a duty of
confidentiality or such information becomes publicly available through no fault
of such party, (b) the use of such information is necessary or appropriate in
making any filing or obtaining any consent or approval required for the
consummation of the Contemplated Transactions, or (c) the furnishing or use of
such information is required by legal proceedings.
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If the Contemplated Transactions are not consummated, each party will
return or destroy as much of such written information as the other party may
reasonably request.
11.4. NOTICES.
All notices, consents, waivers, and other communications under this
Agreement must be in writing and will be deemed to have been duly given when (a)
delivered by hand (with written confirmation of receipt), (b) sent by telecopier
(with written confirmation of receipt); provided that a copy is mailed by
registered mail, return receipt requested, or (c) when received by the
addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
party may designate by notice to the other parties):
Seller: Xx. Xxxxxx Xxxxxxxxx
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.:
with a copy to: Xxxx Xxxxxxxxxx Xxxxx Xxxxxx
Xxxxxx & Xxxxxxxx LLP
000 Xxxxx Xxxxxx -- 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn.: Xxxxx X. Xxxxx, Esq.
Facsimile No.: (000) 000-0000
Buyer: IAC Acquisition Corp.
Attention: Xx. Xxxxx X. Read, President
Facsimile No.:
with a copy to: Xxxxxx Xxxxxx & Xxxxxxx
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxxxxx, Esq.
Facsimile No.: (000) 000-0000
11.5. JURISDICTION; SERVICE OF PROCESS.
Any action or proceeding seeking to enforce any provision of, or based on
any right arising out of, this Agreement may be brought against any of the
parties in the courts of the State of New York, County of New York, or, if it
has or can acquire jurisdiction, in the United States District Court for the
Southern District of New York, and each of the parties
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consents to the jurisdiction of such courts (and of the appropriate appellate
courts) in any such action or proceeding and waives any objection to venue laid
therein. Process in any action or proceeding referred to in the preceding
sentence may be served on any party anywhere in the world.
11.6. FURTHER ASSURANCES.
The parties agree (a) to furnish upon request to each other such further
information, (b) to execute and deliver to each other such other documents, and
(c) to do such other acts and things, all as the other party may reasonably
request for the purpose of carrying out the intent of this Agreement and the
documents referred to in this Agreement.
11.7. WAIVER.
The rights and remedies of the parties to this Agreement are cumulative and
not alternative. Neither the failure nor any delay by any party in exercising
any right, power, or privilege under this Agreement or the documents referred to
in this Agreement will operate as a waiver of such right, power, or privilege,
and no single or partial exercise of any such right, power, or privilege will
preclude any other or further exercise of such right, power, or privilege or the
exercise of any other right, power, or privilege. To the maximum extent
permitted by applicable law, (a) no claim or right arising out of this Agreement
or the documents referred to in this Agreement can be discharged by one party,
in whole or in part, by a waiver or renunciation of the claim or right unless in
writing signed by the other party; (b) no waiver that may be given by a party
will be applicable except in the specific instance for which it is given; and
(c) no notice to or demand on one party will be deemed to be a waiver of any
obligation of such party or of the right of the party giving such notice or
demand to take further action without notice or demand as provided in this
Agreement or the documents referred to in this Agreement.
11.8. ENTIRE AGREEMENT AND MODIFICATION.
This Agreement supersedes all prior agreements between the parties with
respect to its subject matter, including the Letter of Intent between the
predecessor to the Buyer and Seller dated November 3, 1997 and the modification
to the Letter of Intent dated December 23, 1997, and constitutes (along with the
documents referred to in this Agreement) a complete and exclusive statement of
the terms of the agreement between the parties with respect to its subject
matter. This Agreement may not be amended except by a written agreement executed
by the party to be charged with the amendment.
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11.9. DISCLOSURE SCHEDULE.
(a) The disclosures in the Disclosure Schedule, and those in any Supplement
thereto, must relate only to the representations and warranties in the Section
of the Agreement to which they expressly relate and not to any other
representation or warranty in this Agreement.
(b) In the event of any inconsistency between the statements in the body of
this Agreement and those in the Disclosure Schedule (other than an exception
expressly set forth as such in the Disclosure Schedule with respect to a
specifically identified representation or warranty), the statements in the body
of this Agreement will control.
11.10. ASSIGNMENT; SUCCESSORS, AND NO THIRD-PARTY RIGHTS.
Neither party may assign any of its rights under this Agreement without the
prior consent of the other parties. Subject to the preceding sentence, this
Agreement will apply to, be binding in all respects upon, and inure to the
benefit of the successors and permitted assigns of the parties. Nothing
expressed or referred to in this Agreement will be construed to give any Person
other than the parties to this Agreement any legal or equitable right, remedy,
or claim under or with respect to this Agreement or any provision of this
Agreement. This Agreement and all of its provisions and conditions are for the
sole and exclusive benefit of the parties to this Agreement and their successors
and assigns.
11.11. SEVERABILITY.
If any provision of this Agreement is held invalid or unenforceable by any
court of competent jurisdiction, the other provisions of this Agreement will
remain in full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
11.12. SECTION HEADINGS; CONSTRUCTION.
The headings of Sections in this Agreement are provided for convenience
only and will not affect its construction or interpretation. All references to
"Section" or "Sections" refer to the corresponding Section or Sections of this
Agreement. All words used in this Agreement will be construed to be of such
gender or number as the circumstances require. Unless otherwise expressly
provided, the word "including" does not limit the preceding words or terms.
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11.13. GOVERNING LAW.
This Agreement will be governed by the laws of the State of New York
without regard to conflicts of laws principles.
11.14. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of which
will be deemed to be an original copy of this Agreement and all of which, when
taken together, will be deemed to constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first written above.
Buyer: Seller:
IAC HOLDINGS CORP.
By: /s/ Xxxxx X. Read /s/ Xxxxxx Xxxxxxxxx
------------------------ ----------------------------
Xxxxx X. Read Xxxxxx Xxxxxxxxx
President
IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement as of the date first written above.
Buyer: Seller:
IAC HOLDINGS CORP.
By: --------------------------- --------------------------------
Xxxxx X. Read Xxxxxx Xxxxxxxxx
President/Secretary
SCHEDULE A
SELLING NUMBER
SHAREHOLDERS OF SHARES PURCHASE PRICE
------------ --------- --------------
Xxxxxx Xxxxxxxxx 1,913,429 $21,047,719
Xxxxxxx Xxxxxxxxx 1,000 $ 11,000
Xxxxxxxx X. Xxxx 58,300 $ 661,300
Xxxxxx X. Xxxxxxx 2,500 $ 27,500
Trustees of Xxxxxxx College 116,666 $ 1,283,326
Community Fund, Inc. 233,334 $ 2,566,674
ARK International (Xxxxxxxxx
Xxxxxxxx) 2,500 $ 27,500
Xxxxxx X. Xxxxx 16,325 $ 179,575
--------- -----------
Total 2,344,054 $25,784,594
========= ===========
AMENDMENT TO STOCK PURCHASE AGREEMENT
This Amendment to a certain Stock Purchase Agreement made as of January 26,
1998 ("Agreement") is made as of March 19, 1998 ("Amendment"), by IAC HOLDINGS
CORP., a Delaware corporation, with offices located at Greenwich, Connecticut
("Buyer") and XXXXXX XXXXXXXXX, an individual resident in New York, New York
("Hirschhorn" or "Seller").
1. The Recitals of the Agreement are amended to read:
"Seller desires to sell, and Buyer desires to purchase, a total of
1,914,929 of the issued and outstanding shares (the "Shares") of capital
stock, $.10 par value of Industrial Acoustics Company, Inc. a New York
corporation (the "Company"), for the consideration and on the terms set
forth in this Agreement."
2. Paragraph 2.2 of the Agreement is amended to read:
"2.2 Purchase Price
The purchase price for each of the Shares will be $11.00; therefore, the
total purchase price for the Shares is $21,064,219 (the 'Purchase Price')."
3. The Buyer hereby expressly waives the Conditions to Closing set
forth in Paragraph 2.5 of the Agreement.
4. Schedule A as attached to the Agreement is deleted and is replaced
by a revised Schedule A attached hereto.
IN WITNESS WHEREOF, the parties have executed and delivered this
Amendment as of the date first written above.
Buyer: Seller:
IAC HOLDINGS CORP.
By: /s/ Xxxxx X. Read /s/ Xxxxxx Xxxxxxxxx
---------------------- ---------------------------
Xxxxx X. Read Xxxxxx Xxxxxxxxx
President
