EXHIBIT 2.1
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 Stamford,
Connecticut ("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.
"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 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)
multi-national 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, service marks, and
applications (collectively, "Marks");
(ii) all patents, patent applications, and inventions and discoveries that may
be patentable (collectively, "Patents");
(iii) all 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 extent 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 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.
"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"--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 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 determination, 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 5.1(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;
(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.
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 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.
(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 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.
(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 audit 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
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 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 $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 accomplished through the use of a mortgage on such property, the terms of
which 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:
(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 $25,000 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;
(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 on
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 policy 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;
(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.
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.
(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"), 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 Authority revoking, cancelling, 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
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 tanks, 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 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.
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 cross-collateralization 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 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 default 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 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 leases (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 3.21(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 3.21(b) of the Disclosure Schedule and
any and all 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 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 3.21(j) 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 right
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 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 hy the Company or an, 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 exercise would be entitled to enjoy the use of
each item of leased Tangible Personal Property tor 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),
3.21(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.
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 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 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 under 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 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 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 341(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 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
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 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 tor 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 indemnify 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 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.
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 of 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 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 APPROVALS.
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(11) 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.
(a) 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, and (b) furnish Buyer and Buyer's Advisors with such additional
financial, operating, and other data and information as Buyer may reasonably
request.
(b) 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 BUSINESSES OF THE COMPANY AND ITS SUBSIDIARIES.
Between the date of this Agreement and the Closing Date, Xxxxxxxxx will, and
will cause the Company and the Subsidiaries to:
(a) conduct the business of the Company and the Subsidiaries only in the
ordinary course of business;
(b) 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;
(c) confer with Buyer concerning operational matters of a material nature; and
(d) otherwise report periodically to Buyer concerning the status of the
business, operations, and finances of the Company and the Subsidiaries.
(e) 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.
(f) 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.
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.
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 cause each Related Person to,
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.
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.
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.
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.
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.
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, (ii) 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 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 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;
(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 Balance 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 preceeding 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 CLAIMS.
(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 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.
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 a 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.
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 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.
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 ASSIGNMENTS, 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.
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/Secretary
SCHEDULE A
PURCHASE
SELLING SHAREHOLDERS # OF SHARES 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
========== ===========
