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EXHIBIT 2(a)
EXECUTION COPY
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PURCHASE AGREEMENT
dated as of December 12, 1996
by and among
▇▇▇▇ ▇▇ Industries, Inc.,
Gulton Industries, Inc.,
▇▇▇▇ ▇▇ PLC,
and
Gulton Acquisition Corp.
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TABLE OF CONTENTS
PAGE
ARTICLE 1. THE SALE.............................................. 4
1.1 The Sale.............................................. 4
ARTICLE 2. PURCHASE PRICE........................................ 4
2.1 Purchase Price........................................ 4
2.2 Payment of Purchase Price............................. 5
2.3 [Intentionally omitted]............................... 5
2.4 Definitions Relating to Purchase Price
Adjustments.......................................... 5
2.5 Calculation of Estimated Purchase Price............... 8
2.6 Pre-Closing Deliveries of Financial
Information.......................................... 9
2.7 Post-Closing Adjustment............................... 9
2.8 Calculation of the Audited Cash Flow,
Audited Working Capital and Final Net Cash
Intercompany Transfer Amount......................... 10
ARTICLE 3. CLOSING............................................... 15
3.1 Time and Place of Closing............................. 15
3.2 Deliveries by ▇▇▇▇ ▇▇ and PLC......................... 15
3.3 Deliveries by the Buyer............................... 16
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF
▇▇▇▇ ▇▇ AND PLC...................................... 17
4.1 Organization of ▇▇▇▇ ▇▇............................... 17
4.2 Organization of the Audio Products Group
Companies............................................ 17
4.3 Authorization......................................... 17
4.4 Capitalization........................................ 18
4.5 Options or Other Rights............................... 19
4.6 Certificates of Incorporation and By-Laws............. 20
4.7 Binding Agreements.................................... 20
4.8 No Violation.......................................... 20
4.9 Financial Statements.................................. 21
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4.10 Absence of Certain Changes......................... 22
4.11 Assets............................................. 26
4.12 Real Property...................................... 26
4.13 Personal Property Leases........................... 29
4.14 Intangible Assets.................................. 29
4.15 Litigation......................................... 32
4.16 Banks and Brokers.................................. 32
4.17 Employee Benefit Plans............................. 33
4.18 Consents and Approvals............................. 38
4.19 Environmental Protection........................... 38
4.20 Insurance.......................................... 40
4.21 Contracts and Commitments.......................... 41
4.22 Tax Matters........................................ 43
4.23 Labor Relations.................................... 45
4.24 Customers and Suppliers............................ 46
4.25 Compliance with Law................................ 46
4.26 Brokers and Finders................................ 47
4.27 Product Warranties................................. 47
4.28 Potential Conflicts of Interest.................... 48
4.29 Inventories........................................ 48
4.30 Undisclosed Liabilities............................ 48
4.31 Disclosure......................................... 49
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF THE BUYER........ 49
5.1 Organization....................................... 49
5.2 Authorization by the Buyer......................... 49
5.3 Binding Agreements................................. 50
5.4 No Violation....................................... 50
5.5 Litigation......................................... 51
5.6 Consents and Approvals............................. 51
5.7 Financing.......................................... 51
5.8 Purchase for Investment............................ 52
5.9 Brokers and Finders................................ 52
ARTICLE 6. COVENANTS OF ▇▇▇▇ ▇▇ AND PLC....................... 52
6.1 Access Pending the Closing Date.................... 52
6.2 Conduct of Business Prior to the Closing........... 53
6.3 Termination of Benefit Accruals Under
Defined Benefit Plans............................. 54
6.4 Financing.......................................... 56
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6.5 Supplements to Schedules.......................... 56
6.6 No Solicitation................................... 56
6.7 Non-Competition................................... 57
6.8 Corporate Organization............................ 59
6.9 Insurance......................................... 60
6.10 Subsequent Financial Statements................... 61
6.11 Cash Balances..................................... 61
6.12 United Kingdom Trademarks......................... 62
ARTICLE 7. COVENANTS OF THE BUYER............................ 62
7.1 Obligation to Secure Financing.................... 62
7.2 Obligation to Continue Certain Employee
Benefits......................................... 63
7.3 Continuation of Welfare Plans..................... 64
7.4 Continuation of Certain Defined Benefit
Pension Benefits................................. 64
7.5 Continuation of 401(k) Benefits................... 65
7.6 Insurance Coverage................................ 65
7.7 Investigation..................................... 66
7.8 Schedules......................................... 66
ARTICLE 8. ADDITIONAL COVENANTS OF THE BUYER AND ▇▇▇▇ ▇▇..... 67
8.1 Consents and Conditions........................... 67
8.2 Filings........................................... 68
8.3 Access After the Closing Date..................... 68
8.4 Record Retention.................................. 69
8.5 Tax Matters....................................... 69
8.6 Tax Refunds....................................... 74
8.7 Confidentiality................................... 74
8.8 Coordination of Defined Benefit Plan
Payments......................................... 75
8.9 Transfer of 401(k) Plan Assets.................... 75
8.10 Public Announcements.............................. 78
8.11 Post-Closing Cooperation.......................... 78
ARTICLE 9. CONDITIONS PRECEDENT TO THE OBLIGATION
OF ▇▇▇▇ ▇▇, PLC AND THE COMPANY.................. 80
9.1 Representations and Covenants.................... 80
9.2 Government Consents; Filings..................... 80
9.3 Third-Party Consents............................. 81
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9.4 Substitute Sureties and Letters of Credit........... 81
9.5 Ancillary Documents................................. 81
9.6 Litigation.......................................... 82
9.7 Opinion of Counsel.................................. 82
9.8 Corporate and Other Proceedings; Delivery
of Documents....................................... 82
ARTICLE 10. CONDITIONS PRECEDENT TO THE OBLIGATION
OF THE BUYER...................................... 82
10.1 Representations and Covenants....................... 83
10.2 Government Consents; Filings........................ 83
10.3 Third-Party Consents................................ 83
10.4 Ancillary Agreements................................ 84
10.5 Litigation.......................................... 84
10.6 Certificate as to Authorization..................... 84
10.7 No Material Adverse Effect.......................... 85
10.8 Opinion of Counsel.................................. 85
10.9 Financing........................................... 85
10.10 Real Estate Matters................................. 85
10.11 Corporate and Other Proceedings; Delivery
of Documents....................................... 86
10.12 Repayment of Indebtedness........................... 86
10.13 Cancellation of Intercompany Arrangements........... 87
10.14 Data Base Transfer Instructions..................... 87
10.15 Equity Interests.................................... 87
ARTICLE 11. SURVIVAL OF REPRESENTATIONS; INDEMNIFICATIONS....... 87
11.1 Survival of Representations and Warranties,
Etc................................................ 87
11.2 Statements as Representations....................... 89
11.3 Indemnification by ▇▇▇▇ ▇▇.......................... 89
11.4 Indemnification by the Buyer and the Company........ 90
11.5 Payment Adjustments................................. 91
11.6 Conditions of Indemnification....................... 92
11.7 Litigation Cooperation.............................. 93
11.8 Remedies Cumulative................................. 93
ARTICLE 12. MISCELLANEOUS PROVISIONS............................ 94
12.1 Termination......................................... 94
12.2 Knowledge........................................... 94
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12.3 Amendment and Modification..................... 95
12.4 Waiver of Compliance........................... 95
12.5 Expenses....................................... 95
12.6 Notices........................................ 95
12.7 Further Assurances............................. 97
12.8 Assignment..................................... 97
12.9 Governing Law and Jurisdiction................. 98
12.10 Counterparts................................... 98
12.11 Headings....................................... 98
12.12 Entire Agreement............................... 98
12.13 Third Parties.................................. 98
12.14 Severability................................... 99
Schedule 4.4(a) Capitalization
Schedule 4.4(b) Encumbrances on Equity Interests
Schedule 4.8 No Violation
Schedule 4.10 Absence of Certain Changes
Schedule 4.11(a) Assets
Schedule 4.12(a) Real Property
Schedule 4.12(b) Encumbrances on Owned Properties
Schedule 4.12(c) Leased Properties
Schedule 4.12(d) Notice of Violation of Real Property
Schedule 4.12(e) Condemnation
Schedule 4.12(f) Easements
Schedule 4.13 Personal Property Leases
Schedule 4.14(a) Owned Intellectual Property
Schedule 4.14(b) Material Oral Licenses and Other Agreements
Schedule 4.14(c) Infringement of Intellectual Property
Schedule 4.14(d) Challenges to Intellectual Property
Schedule 4.15 Litigation
Schedule 4.16 Banks and Brokers
Schedule 4.17(a) Employee Benefit Plans; Personnel Policies
Schedule 4.17(b) Employee Benefit Plans not Delivered
Schedule 4.17(f) Employee Pension Plan
Schedule 4.17(h) Liability
Schedule 4.17(j) Multiemployer Plan
Schedule 4.17(1) Benefits Payable
Schedule 4.18 Consents and Approvals
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Schedule 4.19(a) Environmental Permits
Schedule 4.19(b) Environmental Compliance
Schedule 4.19(c) Environmental Notice of Regulated Material
Schedule 4.19(d) Environmental Action
Schedule 4.19(e) Environmental Liability
Schedule 4.20 Insurance
Schedule 4.21(a) Contracts and Commitments
Schedule 4.21(b) Validity of Contracts and Commitments
Schedule 4.21(c) Contract Default
Schedule 4.22(a) Tax Matters
Schedule 4.22(b) Tax Payments
Schedule 4.22(c) Tax Liabilities
Schedule 4.22(d) Tax Returns
Schedule 4.22(e) Tax Waivers
Schedule 4.22(f) Material Elections
Schedule 4.22(g) Tax Agreements
Schedule 4.23 Labor Agreements
Schedule 4.25 Notification to Comply with Laws
Schedule 4.26 Brokers and Finders
Schedule 4.27 Product Warranties
Schedule 4.28 Potential Conflicts of Interest
Schedule 4.29 Inventories
Schedule 4.30 Undisclosed Liabilities, Etc.
Schedule 5.6 Consents and Approvals
Schedule 5.10 Brokers and Finders
Schedule 6.2 Conduct of Business Prior to the Closing
Schedule 6.3 Employees Retirement Income Fund
Schedule 6.4 Employees to be Made Available in Connection with
Financing
Schedule 7.3 List of Employees Entitled to Certain Severance Benefits
Schedule 9.4 Substitute Guarantees and Letters of Credit
Schedule 10.12 Repayment of Indebtedness
Schedule 10.13 Cancellation of Intercompany Arrangements
Schedule 10.15 Ownership of Capital Stock, etc.
Schedule 11.3(a)(iv) Special Indemnity
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Schedule 12.2 Persons Having "Knowledge"
Exhibit A ▇▇▇▇ ▇▇ License Agreement
Exhibit B Transition Services Agreement
Exhibit C Software License Agreement
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PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (the "Agreement") is made on the 12th
of December, 1996, by and among ▇▇▇▇ ▇▇ Industries, Inc., a Delaware corporation
("▇▇▇▇ ▇▇"), Gulton Industries, Inc., a Delaware corporation (the "Company"),
▇▇▇▇ ▇▇ PLC, an United Kingdom corporation ("PLC"), and Gulton Acquisition
Corp., a Delaware corporation (the "Buyer").
RECITALS:
General
WHEREAS, ▇▇▇▇ ▇▇, through certain of its direct and indirect
wholly owned subsidiaries as hereinafter described, is engaged in the
manufacture and sale of a comprehensive range of high quality, high performance
sound system products for musical concerts, stadiums, theaters, hotel ballrooms,
churches and other places where music or speech is amplified (the "Audio
Products Business"). The principal product lines of these direct and indirect
wholly owned subsidiaries include, without limitation, wired and wireless
microphones, mixing consoles, signal processors, amplifiers, loudspeakers and
loudspeaker systems. For purposes of this Agreement, the term the "Audio
Products Group" shall mean all of the direct and indirect wholly owned
subsidiaries, other business entities or Affiliates (as defined in Section
6.7(e)) of ▇▇▇▇ ▇▇ engaged in the Audio Products Business, including, but not
limited to, the Company and the companies listed in the recitals below
(collectively, the "Audio Products Group Companies"), together with the
aggregate Audio Products Business as conducted, collectively, by such Audio
Products Group Companies;
WHEREAS, as of the date hereof, the corporate organization of
the Audio Products Group is as follows:
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The First Tier Subsidiaries
The Company is the direct owner of all the issued and
outstanding capital stock of: (a) ▇▇▇▇ ▇▇ Audio Magnetic, Inc., a Delaware
corporation ("ElectroSound"); (b) LFE Corporation, a Delaware corporation
("▇▇▇▇"); (c) ▇▇▇▇ ▇▇ Audio, Inc., a Delaware corporation ("▇▇▇▇ ▇▇ Audio"); (d)
Klark-Teknik PLC, an United Kingdom corporation ("Klark-Teknik"); (e) Dynacord
Audio GmbH, a German corporation ("Audio GmbH"); (f) Electro-Voice,
Incorporated, a Delaware corporation ("Electro-Voice"); (g) ▇▇▇▇ ▇▇ Audio
(Europe) AG, a Swiss corporation; (h) ▇▇▇▇ ▇▇ Audio (Aust) Pty Ltd., an
Australian corporation ("▇▇▇▇ ▇▇ Audio Australia"); (i) ▇▇▇▇ ▇▇ Audio Japan
Ltd., a Japanese corporation ("▇▇▇▇ ▇▇ Audio Japan"); and (j) ▇▇▇▇ ▇▇ Audio
France S.A., a French corporation ("▇▇▇▇ ▇▇ France").
The Second Tier Subsidiaries
Electro-Voice is the owner of all the issued and outstanding
capital stock of: (a) Altec Lansing International, an United Kingdom corporation
("Altec"); (b) ▇▇▇▇ ▇▇ Hong Kong Limited, a Hong Kong corporation ("▇▇▇▇ ▇▇ Hong
Kong"); and (c) ▇▇▇▇ ▇▇ Audio Canada, Inc., a Canadian corporation.
Klark-Teknik is the owner of all the issued and outstanding
capital stock of: (a) Cetec International Limited, an United Kingdom
corporation; (b) Rebis Audio Limited, an United Kingdom corporation; (c) ▇▇▇▇▇▇▇
▇▇▇▇▇▇ Associates Limited, an United Kingdom corporation; and (d) Nivenfield
(1992) Limited, an United Kingdom corporation.
WHEREAS, ▇▇▇▇ ▇▇ owns all of the issued and outstanding
capital stock of ▇▇▇▇ ▇▇ Industries GmbH, a German corporation ("Industries
GmbH"), and Industries GmbH is the owner of all the issued and outstanding
capital stock of: (a) ▇▇▇▇ ▇▇ Audio Deutschland GmbH, a German corporation
("▇▇▇▇ ▇▇ Audio Deutschland"); (b) ▇▇▇▇ ▇▇ Vertriebs GmbH, a
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German corporation ("Vertriebs"); and (c) in combination with ▇▇▇▇ ▇▇ Audio
Deutschland, the owner of all the issued and outstanding capital interests of
▇▇▇▇ ▇▇ Deutschland & Co. KG, a German partnership ("Dynacord").
The Third Tier Subsidiary
Dynacord will be the owner of all the issued and outstanding
shares of capital stock of Dynacord France, S.A., a French corporation
("Dynacord France").
▇▇▇▇ ▇▇ Hong Kong is the owner of all the issued and
outstanding shares of capital stock of Audio Consultants Co., Limited, a Hong
Kong corporation.
WHEREAS, prior to the Closing, and subject to Section 6.8
hereof, Audio GmbH shall acquire all of the equity interests in Dynacord from
Industries GmbH and ▇▇▇▇ ▇▇ Audio Deutschland, together with any other assets
related to the Audio Products Business held by any of Industries GmbH, ▇▇▇▇ ▇▇
Audio Deutschland or Vertriebs;
WHEREAS, the Boards of Directors of ▇▇▇▇ ▇▇, PLC the Company
and the Buyer have approved and deem it advisable and in the best interests of
their respective stockholders to consummate the transactions contemplated by
this Agreement;
WHEREAS, ▇▇▇▇ ▇▇ and PLC (as sole stockholders of the Company)
and the Buyer have each duly approved this Agreement the terms and subject to
the conditions set forth herein;
WHEREAS, immediately prior to the Closing Date (as defined in
Section 3.1) all the issued and outstanding capital stock of the Company will be
held as follows: ▇▇▇▇ ▇▇ will own 29,577 issued and outstanding shares of Common
Stock of the Company, par value $1.00 per share (the "Common Stock"), and PLC
will own 2,544 issued and outstanding shares of Common Stock;
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NOW, THEREFORE, in consideration of the foregoing and the
covenants and agreements hereinafter set forth, ▇▇▇▇ ▇▇, PLC, the Company and
the Buyer hereby agree as follows:
ARTICLE 1.
THE SALE
1.1 The Sale. Subject to the terms and conditions hereof, on
the Closing Date, upon payment of the Estimated Cash Purchase Price (as defined
in Section 2.1), ▇▇▇▇ ▇▇ and PLC will sell all of the issued and outstanding
shares of Common Stock to the Buyer and the Buyer will purchase all of the
issued and outstanding shares of Common Stock from ▇▇▇▇ ▇▇ and PLC.
ARTICLE 2.
PURCHASE PRICE
2.1 Purchase Price. (a) The aggregate cash consideration for
the purchase of the Common Stock shall be $151,500,000 (the "Initial Purchase
Price"), adjusted as described in this Article 2. For purposes of determining
the aggregate amount of cash consideration to be received at the Closing (as
defined in Section 3.1) by ▇▇▇▇ ▇▇ and PLC, as the sole stockholders of the
Company, the Initial Purchase Price shall be adjusted in the manner provided for
in Section 2.5 hereof (the Initial Purchase Price, as so adjusted, being
hereinafter referred to as the "Estimated Purchase Price") after determination
of the amount of the Estimated Cash Flow and the Estimated Working Capital (as
such terms are hereafter defined) is made.
(b) Of the Estimated Purchase Price, 92.08% shall be paid to
▇▇▇▇ ▇▇ and 7.92% shall be paid to PLC.
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(c) For purposes of determining the final aggregate amount of
the cash consideration that will be received by ▇▇▇▇ ▇▇ and PLC, the Initial
Purchase Price shall be adjusted in the manner provided by Section 2.7 to
determine the Final Purchase Price (as hereinafter defined) after the final
determination of the amount of the Audited Cash Flow, the Audited Working
Capital and the Final Net Cash Intercompany Transfer Amount (as such terms are
hereinafter defined) is made.
2.2 Payment of Purchase Price. At the Closing, the Buyer shall
pay the Estimated Purchase Price as provided in Section 3.3(a) hereof. The Final
Purchase Price shall be paid, as necessary, by wire transfer of immediately
available funds to an account specified by the party receiving such funds as
provided for in Section 2.7(c) hereof.
2.3 [Intentionally omitted].
2.4 Definitions Relating to Purchase Price Adjustments. For
purposes of calculating the adjustments to the Initial Purchase Price provided
for by this Article 2 and for purposes of this Agreement, the following terms
shall have the following meanings:
(a) "Audited Cash Flow" means the Cash Flow (as defined herein) for the
10-month period commencing March 1, 1996 and ending on December 31, 1996 as
determined pursuant to Section 2.8.
(b) "Audited Working Capital" means the Working Capital (as defined
herein) as at December 31, 1996 as determined pursuant to Section 2.8, except
that (i) cash balances reportable as cash in accordance with United States GAAP
shall be included in current assets to the extent such balances are held by the
Audio Products Group Companies as at December 31, 1996, whether or not such
balances appear on the Audited Closing Balance Sheet, and, (ii) all indebtedness
for borrowed money of the Audio Products Group Companies as at December 31, 1996
shall be included in
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current liabilities irrespective of the date of maturity of such indebtedness
and whether or not such indebtedness appears on the Audited Closing Balance
Sheet.
(c) "Cash Flow" means the consolidated net income or loss of the Audio
Products Group during the 10-month period commencing March 1, 1996 to and
including December 31, 1996 determined in accordance with United States
generally accepted accounting principles ("GAAP") applied on a basis consistent
with the statement of income included in the Financial Statements (as defined
herein) as at and for the year ending February 29, 1996, as calculated before
the deduction of interest, taxes, depreciation and amortization and excluding
any gains or losses on sales of fixed assets and other non-recurring items out
of the ordinary course of business, provided, however, that, in determining Cash
Flow, net income or loss shall be adjusted to reflect the annual amount to be
incurred by the Audio Products Group Companies under the Austin Sublease (as
defined in Section 10.4), including without limitation all rental, maintenance
and other occupancy costs, prorated as if such amounts had been incurred by the
Audio Products Group Companies from the period commencing March 1, 1996 to and
including December 31, 1996.
(d) "Cash Flow Multiple" means 7.0.
(e) "Estimated Cash Flow" means the unaudited Cash Flow for the
10-month period commencing March 1, 1996 to and including December 31, 1996, as
estimated in good faith by ▇▇▇▇ ▇▇ pursuant to Section 2.6(a).
(f) "Estimated Net Cash Intercompany Transfer Amount" means the Net
Cash Intercompany Transfer Amount (as defined herein) as estimated in good faith
by ▇▇▇▇ ▇▇ for the period commencing January 1, 1997 to and including the day
immediately preceding the Closing Date, as set forth in the daily written
statement provided by ▇▇▇▇ ▇▇ to Buyer on the Closing Date pursuant to Section
2.6.
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(g) "Estimated Working Capital" means the unaudited Working Capital (as
defined herein) as at December 31, 1996 as estimated in good faith by ▇▇▇▇ ▇▇
pursuant to Section 2.6, except that (i) cash balances reportable as cash in
accordance with United States GAAP shall be included in current assets to the
extent such balances are held by the Audio Products Group Companies as at
December 31, 1996, whether or not such balances appear on the Audited Closing
Balance Sheet, and, (ii) all indebtedness for borrowed money of the Audio
Products Group Companies as at December 31, 1996 shall be included in current
liabilities irrespective of the date of maturity of such indebtedness.
(h) "Final Net Cash Intercompany Transfer Amount" means the Net Cash
Intercompany Transfer Amount (as defined herein) for the period commencing
January 1, 1997 to and including the Closing Date as determined pursuant to
Section 2.8.
(i) "Final Purchase Price" means (i) the amount calculated pursuant to
Section 2.7(a) if such amount differs from the Initial Purchase Price by at
least $500,000, and (ii) the Initial Purchase Price, if such amount calculated
pursuant to Section 2.7(a) does not differ from the Initial Purchase Price by at
least $500,000.
(j) "Net Cash Intercompany Transfer Amount" means, with respect to any
period, the difference (positive or negative), between (i) the aggregate amount
of loans, advances or other disbursements of cash or cash equivalents made by
▇▇▇▇ ▇▇ or its Affiliates to any Audio Products Group Company and (ii) the
aggregate amount of the repayments, withdrawals, dividends, loans, advances or
other disbursements of cash and cash equivalents made by any Audio Products
Group Company to ▇▇▇▇ ▇▇ or its Affiliates.
(k) "Targeted Cash Flow" means $17.9 million.
(l) "Targeted Working Capital" means $75,758,000.
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(m) "Working Capital" means the amount by which the consolidated
current assets of the Audio Products Group as of a specified date exceeds or are
less than its consolidated current liabilities as at such date, determined in
accordance with United States GAAP applied on a basis consistent with the
Balance Sheet, except that no adjustments to current assets or current
liabilities as at December 31, 1996 will be made with respect to normal year end
audit adjustments reflected in the Audited Closing Balance Sheet.
2.5 Calculation of Estimated Purchase Price. The Initial
Purchase Price shall be adjusted as of the Closing Date as follows:
(a) If the Estimated Cash Flow is equal to or greater than the
Targeted Cash Flow, the Initial Purchase Price shall be adjusted on a
dollar-for-dollar basis, plus or minus, as the case may be, by (i) the amount by
which the Estimated Working Capital differs from the Targeted Working Capital,
and (ii) the Estimated Net Cash Intercompany Transfer Amount,
(b) If the Estimated Cash Flow is less than the Targeted Cash
Flow, the Initial Purchase Price shall be (i) reduced, on a dollar-for-dollar
basis, by an amount equal to (A) the excess of the Targeted Cash Flow over the
Estimated Cash Flow, multiplied by (B) the Cash Flow Multiple, and (ii) adjusted
plus or minus, as the case may be, by (x) the amount by which the Estimated
Working Capital differs from the Targeted Working Capital, and (y) the Estimated
Net Cash Intercompany Transfer Amount, provided, however, no adjustment of the
Initial Purchase Price shall be made pursuant to the foregoing clauses (a) and
(b) unless the aggregate amount of the adjustments required pursuant to either
such clause is greater than or equal to $500,000 in which case the entire amount
of such adjustment shall be made.
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2.6 Pre-Closing Deliveries of Financial Information. At least
three days prior to the Closing, ▇▇▇▇ ▇▇ shall provide the Buyer with statements
showing the Estimated Cash Flow and the Estimated Working Capital, accompanied
by a certificate of ▇▇▇▇ ▇▇ executed by its chief financial officer setting
forth the supporting calculations for each such statement in reasonable detail.
Beginning at least seven days prior to the Closing Date and on the Closing Date,
▇▇▇▇ ▇▇ shall provide the Buyer with a daily written statement setting forth the
then current Estimated Net Cash Intercompany Transfer Amount, which statement
provided on the Closing Date shall be certified by the chief financial officer
of ▇▇▇▇ ▇▇. ▇▇▇▇ ▇▇ shall also, promptly following a request from the Buyer,
provide to the Buyer copies of such additional documents as may reasonably be
requested by the Buyer for the purpose of verifying the amount of the Estimated
Cash Flow, Estimated Working Capital and Estimated Net Cash Intercompany
Transfer Amount as contained in the statements delivered to the Buyer pursuant
to this Section 2.6.
2.7 Post-Closing Adjustment. (a) The Final Purchase Price
shall be calculated upon final calculation of the final Audited Cash Flow,
Audited Working Capital and Final Net Cash Intercompany Transfer Amount (as each
is determined pursuant to Section 2.8 below). If the final Audited Cash Flow is
greater than the Targeted Cash Flow, the Initial Purchase Price shall be
adjusted, on a dollar-for-dollar basis, plus or minus, as the case may be, by
(x) the amount by which the final Audited Working Capital differs from the
Targeted Working Capital and (y) the Final Net Cash Intercompany Transfer
Amount. If the final Audited Cash Flow is less than the Targeted Cash Flow, the
Initial Purchase Price shall be (i) reduced, on a dollar-for-dollar basis, by an
amount equal to (A) the excess of the final Targeted Cash Flow over the Audited
Cash Flow, multiplied by (B) the Cash Flow Multiple and (ii) adjusted plus or
minus, as the case may be, by (A) the amount by which the final Audited Working
Capital differs from the Targeted Working
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Capital, and (B) the Final Net Cash Intercompany Transfer Amount.
(b) If the Final Purchase Price exceeds the Estimated Purchase
Price, the entire amount by which the Final Purchase Price exceeds the Estimated
Purchase Price shall be paid by the Buyer to ▇▇▇▇ ▇▇ and PLC. If the Final
Purchase Price is less than the Estimated Purchase Price, the entire amount by
which the Estimated Purchase Price exceeds the Final Purchase Price shall be
paid by ▇▇▇▇ ▇▇ and PLC to the Buyer.
(c) All payments required to be made pursuant to Section
2.7(b) above shall be paid to the party entitled to receive the same in cash or
immediately available funds promptly, but in no event later than ten business
days following the final determination of the Audited Cash Flow, Audited Working
Capital and Final Net Cash Intercompany Transfer Amount as contemplated in
Section 2.8 below, by delivery to such account as the party entitled to payment
shall specify in writing, of an amount equal to the sum of any such payment
together with interest thereon from, and including the Closing Date to, but
excluding, the date of such payment at a variable rate per annum equal to the
rate announced publicly by Bank of America National Trust and Savings
Association from time to time as its "base rate." ▇▇▇▇ ▇▇ and PLC shall be
jointly and severally liable for any amounts required to be paid by either of
them pursuant to Section 2.7(b) above and all amounts required to be paid by
Buyer pursuant to such sections shall be paid 92.08% to ▇▇▇▇ ▇▇ and 7.92% to PLC
unless ▇▇▇▇ ▇▇ and PLC otherwise instruct the Buyer in writing.
2.8 Calculation of the Audited Cash Flow, Audited Working
Capital and Final Net Cash Intercompany Transfer Amount. (a) As soon as
practicable, but no later than 90 days after the Closing Date, ▇▇▇▇ ▇▇ shall
prepare and deliver to the Buyer (i) audited combined financial statements of
the Audio Products Group as of and for the ten months ended December 31, 1996,
together with a report on
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such statements by Coopers & ▇▇▇▇▇▇▇ LLP, including (A) a balance sheet (the
"Audited Closing Balance Sheet"), (B) a statement of income and net equity (the
"Audited Income Statement") and (C) a statement of cash flow (the "Audited
Closing Cash Flow Statement", and together with the Audited Closing Balance
Sheet and the Audited Closing Income Statement, the "Audited Closing Financial
Statements"), all prepared in accordance with United States GAAP applied on a
consistent basis with the Financial Statements, (ii) a written statement setting
forth ▇▇▇▇ IV's proposed calculation of the Audited Cash Flow for such period
derived from the Audited Closing Cash Flow Statement (the "Proposed Audited Cash
Flow Statement") (iii) a written statement setting forth ▇▇▇▇ IV's proposed
calculation of the Audited Working Capital as of such date derived from the
Audited Closing Balance Sheet (the "Proposed Audited Working Capital
Statement"), and (iv) a written statement setting forth in reasonable detail the
calculation of the Final Net Cash Intercompany Transfer Amount (the "Proposed
Final Net Cash Intercompany Transfer Amount Statement", and together with the
Proposed Audited Cash Flow Statement and the Proposed Audited Working Capital
Statement, the "Proposed Statements").
(b) The Audited Closing Financial Statements and the Proposed
Statements and supporting documents shall be subject to verification and
examination by the Buyer and its representatives and, in order to facilitate
such verification and examination, ▇▇▇▇ ▇▇ shall, at such reasonable times and
places as may be requested by the Buyer or its representatives, promptly deliver
copies of all supporting documents to the Buyer and its representatives and
provide to the Buyer and its representatives the right to examine any such work
papers or to take copies of any such work papers (other than proprietary work
papers) used by ▇▇▇▇ ▇▇ or its accountants in the preparation of the Audited
Closing Financial Statements and the Proposed Statements.
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(c) The Buyer shall have a period of 30 days after delivery of
each of the Audited Closing Financial Statements and the Proposed Statements to
the Buyer to present in writing to ▇▇▇▇ ▇▇ any objections the Buyer may have to
the Audited Closing Financial Statements and the calculation of Audited Cash
Flow, Audited Working Capital and Final Net Cash Intercompany Transfer Amount
set forth in the Proposed Statements, which objections shall be set forth in
reasonable detail. If no objections are raised within such 30-day period, the
Audited Closing Financial Statements shall be deemed to be accepted and approved
by the Buyer, the calculation of Audited Cash Flow, Audited Working Capital and
Final Net Cash Intercompany Transfer Amount contained in the Proposed Statements
shall be deemed to be final, and any amounts required to be paid by Section
2.7(b) hereof shall be paid, as the case may be, either (i) by ▇▇▇▇ ▇▇ and PLC,
or (ii) by the Buyer to ▇▇▇▇ ▇▇ and PLC, in either case as provided in Section
2.7(c).
(d) If the Buyer shall object in any respect as to the Audited
Closing Financial Statements or as to the calculation of Audited Cash Flow,
Audited Working Capital and Final Net Cash Intercompany Transfer Amount set
forth in the Proposed Statements, the Buyer shall present to ▇▇▇▇ ▇▇ written
notice on or prior to the last day of the 30-day period described in Section
2.8(c) specifying such objections. Following receipt of such notice by ▇▇▇▇ ▇▇,
the Buyer and ▇▇▇▇ ▇▇ shall use their best efforts promptly to resolve the
matter or matters in disagreement. If ▇▇▇▇ ▇▇ and the Buyer resolve the matter
or matters in disagreement, ▇▇▇▇ ▇▇ and the Buyer shall either confirm or revise
the original Proposed Statements whereupon ▇▇▇▇ IV's calculations of the Audited
Cash Flow, Audited Working Capital and Final Net Cash Intercompany Transfer
Amount as contained in the confirmed or revised Proposed Statements shall be
deemed to be the final Audited Cash Flow, Audited Working Capital and Final Net
Cash Intercompany Transfer Amount and shall be binding upon the parties hereto,
and any amounts required to be paid by Section 2.7(b) hereof shall be paid, as
the case may be, either (i) by ▇▇▇▇ ▇▇ and PLC,
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or (ii) by the Buyer, in either case as provided in Section 2.7(c).
(e) If ▇▇▇▇ ▇▇ and the Buyer are unable to resolve the matter
or matters in disagreement within 45 days following ▇▇▇▇ IV's receipt of written
notice from the Buyer of the Buyer's objections, then such disagreement or
disagreements shall, within 15 days after the expiration of such 45-day period
or within 15 days after ▇▇▇▇ ▇▇ and the Buyer have agreed that they are unable
to resolve such disagreements, be referred for resolution to the Chicago Office
of KMPG Peat Marwick, a nationally recognized firm of independent certified
public accountants, or, if the Chicago Office of KMPG Peat Marwick is not
available, to another nationally recognized firm of independent certified public
accountants mutually agreeable to the Buyer and ▇▇▇▇ ▇▇. If the Buyer and ▇▇▇▇
▇▇ cannot agree on the independent certified accounting firm to be retained, the
Buyer and ▇▇▇▇ ▇▇ shall each submit the name of one accounting firm that has not
directly represented either party within the past three years and the
independent certified accounting firm shall be selected by lot from those two
firms. The firm that is selected pursuant to this Section 2.8(e) is herein
referred to as the "Independent Accountants." The Independent Accountants shall
be directed to furnish written notice to ▇▇▇▇ ▇▇ and the Buyer of their
resolution of any such disagreements referred to them as soon as practicable but
in no event later than 20 days following the referral of such dispute to the
Independent Accountants. The amounts of the Audited Cash Flow, Audited Working
Capital and Final Net Cash Intercompany Transfer Amount as determined by the
Independent Accountants shall be final and binding upon the parties and any
amounts required to be paid by Section 2.7(b) hereof after the Independent
Accountants have made their determination shall be paid, as the case may be,
either (i) by ▇▇▇▇ ▇▇ and PLC, or (ii) by the Buyer, in either case as provided
in Section 2.7(c).
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(f) Notwithstanding anything to the contrary in this Section
2.8, during the period that the determination of the final Audited Cash Flow,
Audited Working Capital and Final Net Cash Intercompany Transfer Amount shall
remain in dispute, neither ▇▇▇▇ ▇▇, PLC, the Company nor the Buyer shall be
required to pay the amount of the adjustment that would otherwise be payable
hereunder if no such disagreement were to exist. The rights to indemnification
of ▇▇▇▇ ▇▇, PLC or the Buyer pursuant to Article 11 (and any limitations on such
rights) shall not be deemed to limit, supersede or otherwise affect the parties'
rights to a full purchase price adjustment pursuant to this Article 2.
(g) During and with respect to the audit and reviews referred
to in this Section 2.8, ▇▇▇▇ ▇▇ and the Buyer, as the case may be, shall: (i)
fully cooperate with all reasonable requests of ▇▇▇▇ ▇▇, the Buyer and the
Independent Accountants, as the case be; (ii) upon reasonable request make
available to ▇▇▇▇ ▇▇, the Buyer and the Independent Accountants, all work
papers, supporting schedules, documents and other information (including access
to all appropriate knowledgeable personnel of ▇▇▇▇ ▇▇) upon which the Audited
Closing Financial Statements and Proposed Statements are prepared; and (iii)
promptly provide the Independent Accountants with such management representation
letters (in customary form) executed by appropriate personnel of ▇▇▇▇ ▇▇ and the
Buyer as applicable, as may reasonably be requested with respect to the
calculation of the final Audited Cash Flow, Audited Working Capital and Final
Net Cash Intercompany Transfer Amount and the preparation of the Audited
Closing Financial Statements and Proposed Statements.
(h) With the exception of the fees and expenses of the
Independent Accountants, all fees and expenses of ▇▇▇▇ ▇▇, PLC and, prior to the
Closing, the Company relating to the matters described in this Section 2.8 shall
be borne by ▇▇▇▇ ▇▇ or PLC, as the case may be, and all fees and expenses of the
Buyer and, after the Closing, the Company relating to the matters described in
this Section 2.8 shall
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be borne by the Buyer. The fees, expenses and disbursements of the Independent
Accountants shall be shared equally by the Buyer, on the one hand, and ▇▇▇▇ ▇▇
and PLC, on the other hand.
ARTICLE 3.
CLOSING
3.1 Time and Place of Closing. Unless this Agreement has been
terminated pursuant to the provisions of Section 12.1, the closing of the
transactions contemplated by this Agreement (the "Closing") shall take place at
the offices of Debevoise & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
on January 29, 1997 or at such other place, date and time as the parties hereto
may mutually agree in writing. For purposes of this Agreement, the date on which
the Closing occurs is referred to as the "Closing Date."
3.2 Deliveries by ▇▇▇▇ ▇▇ and PLC. At the Closing, ▇▇▇▇ ▇▇ and
PLC will deliver to the Buyer (unless previously delivered):
(a) free and clear of any liens, charges or encumbrances,
stock certificates evidencing 32,121 shares of Common Stock;
(b) the corporate minute books and stock ledgers of each Audio
Products Group Company;
(c) the written resignation of such of the officers and
directors of each of the Audio Products Group Companies, including the Company,
as may be requested by the Buyer in writing at least two days prior to the
Closing Date;
(d) an executed Trade Name and Trademark License Agreement,
substantially in the form of Exhibit A attached hereto, containing the terms and
conditions upon which the
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Buyer and each of the Audio Products Group Companies shall be permitted to use
the "▇▇▇▇ ▇▇" name following the Closing Date (the "▇▇▇▇ ▇▇ License Agreement");
(e) an executed transition services agreement, substantially
in the form of Exhibit B attached hereto, containing the terms and conditions
upon which ▇▇▇▇ ▇▇ will provide to the Audio Products Group Companies certain
services following the Closing Date (the "Transition Services Agreement");
(f) an executed Software License Agreement, substantially in
the form of Exhibit C attached hereto, containing the terms and conditions upon
which ▇▇▇▇ ▇▇ shall license and sublicense certain software programs to the
Company following the Closing Date (the "Software License Agreement"); and
(g) any other documentation identified in Article 10 hereof
which is required to be delivered to the Buyer in satisfaction of the conditions
to the transactions contemplated by this Agreement.
3.3 Deliveries by the Buyer. At the Closing, the Buyer will
deliver to ▇▇▇▇ ▇▇ and PLC, as applicable (unless previously delivered):
(a) an amount equal to the Estimated Purchase Price, by wire
transfer of immediately available funds to such account or accounts as may be
designated by ▇▇▇▇ ▇▇ in writing at least two business days prior to the
Closing, which shall be paid to ▇▇▇▇ ▇▇ and PLC pro rata on the basis set forth
in Section 2.1(b); and
(b) any other documentation identified in Article 9 hereof
which is required to be delivered to ▇▇▇▇ ▇▇ in satisfaction of the conditions
to the transactions contemplated by this Agreement.
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ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇ ▇▇ AND PLC
▇▇▇▇ ▇▇, on behalf of itself and PLC, and the Company hereby
jointly and severally represent and warrant to the Buyer as follows:
4.1 Organization of ▇▇▇▇ ▇▇. ▇▇▇▇ ▇▇ is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware and has all necessary corporate power and authority to carry on its
business as presently conducted.
4.2 Organization of the Audio Products Group Companies. Each
Audio Products Group Company (other than Dynacord) is a corporation, duly
incorporated, validly existing and in good standing under the laws of the
jurisdiction in which it was incorporated and has all necessary corporate power
and authority to carry on its business as presently conducted. Each Audio
Products Group Company (other than Dynacord) is qualified to do business as a
foreign corporation and is in good standing in each jurisdiction in which the
failure to be so qualified would have a material adverse effect on the business,
financial condition, results of operations, assets or liabilities of the Audio
Products Group Companies, taken as a whole (hereinafter, a "Material Adverse
Effect").
Dynacord is a partnership, duly organized and validly existing
under the laws of the Federal Republic of Germany and has full power and
authority to carry on its business as presently conducted. Dynacord is qualified
to do business as a foreign partnership in each jurisdiction in which failure to
be so qualified would have a Material Adverse Effect.
4.3 Authorization. Each of ▇▇▇▇ ▇▇, PLC and the Company has
full corporate power and authority to enter into, execute and deliver this
Agreement and each of the
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other documents and instruments to be executed and delivered by them, as the
case may be, pursuant to this Agreement (the "▇▇▇▇ ▇▇ Ancillary Agreements") and
to consummate the transactions contemplated hereunder and thereunder. The
execution, delivery and performance of this Agreement and the ▇▇▇▇ ▇▇ Ancillary
Agreements pursuant to this Agreement and the consummation of the transactions
contemplated hereunder and thereunder have been duly authorized by all necessary
corporate or shareholder action on the part of ▇▇▇▇ ▇▇, PLC or the Company, as
the case may be. This Agreement has been, and when executed the ▇▇▇▇ ▇▇
Ancillary Agreements will be, duly executed and delivered by ▇▇▇▇ ▇▇, PLC and
the Company, as the case may be. No other corporate act or proceeding on the
part of ▇▇▇▇ ▇▇, PLC, the Company or their respective shareholders is necessary
to authorize the execution and delivery of this Agreement and the ▇▇▇▇ ▇▇
Ancillary Agreements, or the consummation by ▇▇▇▇ ▇▇, PLC or the Company of the
transactions contemplated hereby and thereby.
4.4 Capitalization. (a) Schedule 4.4(a) attached hereto
contains a statement of: (i) the total number, class and par value of each class
of capital stock or other equity or partnership interest which each Audio
Products Group Company is authorized to issue; (ii) the total number, class and
par value of each class of capital stock or other equity or partnership interest
of each Audio Products Group Company which is issued and outstanding; and (iii)
the identity of the owner beneficially and of record of all the issued and
outstanding shares of each class of capital stock and all other outstanding
equity or partnership interests of each such Audio Products Group Company,
together with a statement of the number of shares of capital stock or other
equity or partnership interests of each such Audio Products Group Company that
is owned beneficially and of record by any such corporation or other entity. All
of such outstanding shares of capital stock and all other outstanding equity or
partnership interests, as the case may be, of each Audio Products Group Company
are duly authorized, validly issued, fully paid and nonassessable, or, in the
case of Dynacord, validly issued, fully paid and nonassess-
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able with no unlawful or remaining repayments or contributions, and are owned
beneficially and of record by the corporation or other entity as set forth on
Schedule 4.4(a). As of the Closing, ▇▇▇▇ ▇▇ will own 29,577 shares of Common
Stock and PLC will own 2,544 shares of Common Stock.
(b) Except as otherwise set forth in Schedule 4.4(b), each
corporation or other entity that is identified in Schedule 4.4(a) as owning any
issued and outstanding capital stock or other equity or partnership interest of
any Audio Products Group Company has good and valid legal title to all the
issued and outstanding capital stock or other equity or partnership interests
which are set forth next to such corporation's or other entity's name in
Schedule 4.4(a), in each case, free and clear of all liens, claims, encumbrances
or other restrictions or limitations of any kind.
4.5 Options or Other Rights. There are no preemptive or
similar rights on the part of any holders of any class of capital stock or other
equity or partnership interest of any Audio Products Group Company. There is no
existing subscription, option, warrant, call, commitment or other agreement
entitling any third party to, and there are no convertible or exchangeable
securities of ▇▇▇▇ ▇▇ or any of the Audio Products Group Companies outstanding
which (upon conversion or exchange) would require the issuance of, any
additional shares of capital stock or other equity or partnership interests in
any of the Audio Products Group Companies or any other securities convertible
into or exchangeable for shares of capital stock or other equity or partnership
interests in any of the Audio Products Group Companies, and no authorization
therefor has been given. None of the Audio Products Group Companies is a party
to any agreement which would require such Audio Products Group Company to
repurchase, redeem or otherwise acquire any of the issued and outstanding shares
of capital stock or other equity or partnership interests of such Audio Products
Group
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Company or to increase any capital contribution or other participation in any
such Audio Products Group Company.
4.6 Certificates of Incorporation and By-Laws. With respect to
each Audio Products Group Company, ▇▇▇▇ ▇▇ has heretofore delivered to the
Buyer, true and complete copies of the certificate of incorporation (or any
other substantially equivalent documentation required in the jurisdiction in
which any of such Audio Products Group Companies has been incorporated or
organized) (such certificates or documents are hereinafter referred to as
"Incorporation Documents") and the By-Laws or any other substantially equivalent
documentation regulating the internal affairs of such Audio Products Group
Company (such By-Laws or documents are hereinafter referred to as the "ByLaws")
as the same are in effect on and as of the date hereof, including all amendments
and restatements thereto. In addition, ▇▇▇▇ ▇▇ has heretofore made the minute
books of each Audio Products Group Company available to the Buyer for inspection
by the Buyer and its representatives. No Audio Products Group Company is in
violation of any of the provisions of its Incorporation Documents or By-Laws.
4.7 Binding Agreements. This Agreement constitutes and, when
executed and delivered on the Closing Date, each of the ▇▇▇▇ ▇▇ Ancillary
Agreements will constitute, valid and binding obligations of ▇▇▇▇ ▇▇, PLC and
the Company, as the case may be, enforceable against ▇▇▇▇ ▇▇, PLC, the Company
in accordance with their respective terms.
4.8 No Violation. Except as set forth in Schedule 4.8, neither
the execution and delivery of this Agreement, the ▇▇▇▇ ▇▇ Ancillary Agreements
or the Reorganization Agreements (as defined in Section 6.8), nor the
consummation by ▇▇▇▇ ▇▇, PLC, or each Affiliate of ▇▇▇▇ ▇▇ that is a party to
any of the Reorganization Agreements, of the transactions contemplated hereby or
thereby: (a) violate any statute or law, or any rule or regulation of any
governmental authority; or (b) violate any
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29
order, writ, injunction or decree of any court or governmental authority; or (c)
violate or conflict with or constitute a default under (or an event which, with
notice or lapse of time, or both, would constitute a default under), or will
result in the termination of, or give any third party the right to terminate or
modify in any material respect, or accelerate the performance required by, or
result in the creation of any material lien, security interest, charge or
encumbrance upon any of the material assets of any of the Audio Products Group
Companies under any term or provision of: (i) the Incorporation Documents and
By-Laws of ▇▇▇▇ ▇▇, PLC or any of the Audio Products Group Companies; or (ii)
any material lease, contract, commitment, license, agreement or restriction of
any kind or character: (A) to which ▇▇▇▇ ▇▇, PLC or any of the Audio Products
Group Companies is a party or (B) by which any of the Audio Products Group
Companies or any of their material assets or properties may be bound.
4.9 Financial Statements.
(a) ▇▇▇▇ ▇▇ has heretofore delivered to the Buyer true and
complete copies of (i) the unaudited combined financial statements of the Audio
Products Group as at and for the eight-month period ended October 31, 1996 (the
"Interim Financial Statements"), including a balance sheet and a statement of
income, and (ii) the audited combined financial statements of the Audio Products
Group as of the last day of February 1996 and 1995 and for each of the three
years ended February 29, 1996, together with reports on such years and
statements by Coopers & ▇▇▇▇▇▇▇, LLP, the Audio Products Group's independent
public accountants, including in each case a balance sheet, a statement of
income and net equity, and a statement of cash flows, and accompanying notes
(the "Audited Financial Statements" and, together with the Interim Financial
Statements, hereinafter collectively referred to as the "Financial Statements").
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(b) The Financial Statements (i) have been derived from the
accounting books and records of the Audio Products Group Companies, and (ii)
have been prepared in accordance with United States GAAP applied on a consistent
basis throughout the periods presented therein subject, in the case of the
Interim Financial Statements, only to normal adjustments and the absence of
notes thereto.
(c) The balance sheets included in the Financial Statements
present fairly the financial position of the Audio Products Group as at the
respective dates thereof, and the statements of income, statements of
stockholder's equity and statements of cash flows included in such Financial
Statements present fairly the results of operations and cash flows of the Audio
Products Group for the respective periods indicated.
(d) The balance sheets included in the Financial Statements do
not include any material assets or liabilities not constituting a part of the
Audio Products Group as it is organized immediately prior to the Closing Date.
The statements of income, stockholders' equity and cash flows included in the
Financial Statements do not reflect the operations of any entity or business not
constituting a part of the business of the Audio Products Group as it is
organized immediately prior to the Closing Date.
4.10 Absence of Certain Changes. Except as and to the extent
set forth in Schedule 4.10 or Schedule 6.2, from February 29, 1996 through the
date hereof, no Audio Products Group Company has:
(a) (i) amended its Incorporation Documents or its By-Laws;
(ii) merged with or into or consolidated with any other person, firm,
corporation or other entity; or (iii) subdivided or reclassified any shares of
its capital stock or any of its other outstanding equity or partnership
interests;
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(b) issued, sold, purchased or redeemed or issued options or
rights to subscribe to, or entered into any contracts or commitments to issue,
sell, purchase or redeem any shares of its capital stock or other equity or
partnership interests or any securities convertible into or exchangeable for any
of its shares of capital stock or other equity or partnership interests;
(c) declared or paid any dividends or declared or made any
distributions of any kind (other than cash distributions) to its stockholders or
other owners of any of its outstanding equity or partnership interests or made
any direct or indirect redemption, retirement, purchase or other acquisition of
any shares of its capital stock or other equity or partnership interests, except
for cash receipts remitted to ▇▇▇▇ ▇▇ in connection with the ordinary cash
management practices of ▇▇▇▇ ▇▇;
(d) entered into or amended any (i) written employment
agreement with any officer, director or management employee of any of the Audio
Products Group Companies; (ii) agreement with any labor union or association
representing any employee; or (iii) employee benefit plan or arrangement
relating to any employees of any of the Audio Products Group Companies in any
material respect;
(e) suffered any Material Adverse Effect;
(f) sold, transferred, assigned, mortgaged, pledged,
hypothecated, granted any security interest in or otherwise disposed of or
subjected to any lien, charge or encumbrance any of its material assets,
tangible or intangible, properties, Real Property (as defined in Section 4.12),
or rights other than in the ordinary course of the conduct of its business or
canceled any claims which are material to its business;
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(g) disposed of or permitted to lapse any material patent,
patent application, trademark, trademark registration, trademark application,
assumed name, service ▇▇▇▇, trade name or copyright application, copyright
registration or license or disposed of or permitted to lapse any agreement under
which it has any material right or license;
(h) made any single capital expenditure in excess of $100,000
or made any commitment to make capital expenditures in excess of $200,000 in
the aggregate, except for commitments to make such capital expenditures which
have been made in the ordinary course of the business of such Audio Products
Group Company;
(i) made any material change in any method of accounting or
accounting practice or policy or in its manner of keeping its books, accounts or
records, filed any amended Tax Return (as defined in Section 4.22(i)), made any
material Tax (as defined in Section 4.22(i)) elections, settled or compromised
any claim in respect of Taxes, or conducted the Tax affairs of any of the Audio
Products Group Companies in a manner inconsistent with past practice;
(j) made any material changes in its warranty policies;
(k) granted any increase in the compensation or benefits of
any of its officers or employees other than in the ordinary course of business,
(including any such increase pursuant to any bonus, pension, profit sharing,
severance or other plan or commitment);
(l) made any loan or advance to any of its officers, directors
or employees other than advances of expenses made in the ordinary course of its
business and cash receipts remitted to ▇▇▇▇ ▇▇ in accordance with the regular
cash management policies of ▇▇▇▇ ▇▇ and the Audio Products Group Companies;
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(m) materially modified any existing contract required to be
set forth on Schedule 4.21(a) hereto or entered into any agreement or commitment
that, pursuant to its terms, is not cancelable without penalty on less than 30
days' notice;
(n) suffered any damage, destruction or loss (whether or not
covered by insurance), or any strike or other employment-related problem, or any
change in relations with or any loss of a supplier, customer or employee, that,
individually or in the aggregate, had or could reasonably be expected to have, a
Material Adverse Effect;
(o) incurred any indebtedness for borrowed money, issued or
sold any debt securities or prepaid any debt, including, without limitation, any
borrowings from or prepayments to ▇▇▇▇ ▇▇ or any of its Affiliates (as defined
in Section 6.7), except for borrowings and prepayments in the ordinary course of
business;
(p) other than in the ordinary course of business consistent
with past practice, incurred, assumed, guaranteed or otherwise become directly
or indirectly liable with respect to any liability or obligation in excess of
$100,000 in each case or $200,000 in the aggregate at any one time outstanding
(whether absolute, accrued, contingent or otherwise and whether direct or
indirect, or as guarantor or otherwise with respect to any liability or
obligation of any other person);
(q) entered into agreements with any governmental authority
with respect to environmental remediation pursuant to which ▇▇▇▇ ▇▇ or any of
the Audio Products Groups agreed to spend in excess of $50,000 in connection
with any individual site or in excess of $200,000 in the aggregate; or
(r) agreed to take any action, taken any action or omitted to
take any action that would result in the occurrence of any of the foregoing.
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4.11 Assets. Except as set forth in Schedule 4.11(a),
together, the Audio Products Group Companies own, or otherwise have sufficient
and legally enforceable rights to use, all of the properties and assets (real,
personal or mixed, tangible or intangible), used or held for use in connection
with, necessary for the conduct of, or otherwise material to, the Audio Products
Group Business as such business is currently conducted (the "Assets"). Each
Audio Products Group Company has good, valid and legal title to, or in the case
of leased property has good and valid leasehold interests in, all Assets that
are material to the business as such business is currently conducted, including
but not limited to all such Assets reflected in the consolidated balance sheet
of the Audio Products Group as at February 29, 1996 included in the Financial
Statements (the "Balance Sheet") or acquired since the date thereof (except as
may be disposed of in the ordinary course of business since February 29, 1996
and in accordance with this Agreement), in each case free and clear of any
lien, charge or encumbrance, except for any such liens, charges or encumbrances
listed in Schedules 4.11(a) and 4.12(b). Each Audio Products Group Company has
maintained its tangible Assets in reasonable repair and working order, exclusive
of equipment which in the ordinary course may be non-operational or held as
spares. Upon consummation of the transactions contemplated by this Agreement,
the Company will own, lease or have the right to use, directly or indirectly,
all the Assets, except for Assets disposed of during the period from the date of
this Agreement to the Closing Date in the ordinary course of business consistent
with past practice.
4.12 Real Property. (a) Schedule 4.12(a) hereto contains a
list of the address of each parcel of real property owned, leased or occupied by
the Audio Products Group Companies (the "Real Property") and includes a
statement of: (i) the approximate square footage of each such parcel of Real
Property; (ii) whether such Real Property is owned or leased; (iii) in the case
of any Real Property which is owned by any of the Audio Products Group
Companies, the identity of the Audio Products Group Company
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that is the owner of such Real Property and (iv) in the case of any Real
Property which is leased or occupied by any of the Audio Products Group
Companies, the identity of the lessee or occupant and the lessor of such Real
Property and a description of the documents constituting the lease or occupancy
agreement, including any amendments, modifications or extensions, or, for oral
agreements, an accurate description of all material terms of the oral agreement,
including parties, premises, duration, options and sums to be paid. The Real
Property constitutes all the fee, leasehold and other interests in real property
held by the Audio Products Group, and constitutes (except for the corporate
headquarters of ▇▇▇▇ ▇▇ located in Amherst, New York at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇) all of the fee, leasehold and other interests in
real property used or held for use in connection with, necessary for the conduct
of, or otherwise material to, the business of the Audio Products Group as such
business is currently conducted.
(b) Except as otherwise set forth in Schedule 4.12(b), each
Audio Products Group Company that is identified in Schedule 4.12(a) as the owner
of any Real Property has good and marketable fee simple title to the Real
Property which the Audio Products Group Company is identified as the owner of,
free and clear of all liens, charges or other encumbrances.
(c) Except as set forth in Schedule 4.12(c), with respect to
each parcel of Real Property which is identified in Schedule 4.12(a) as being
leased or occupied by an Audio Products Group Company, each Audio Products Group
Company that is identified in Schedule 4.12(a) as the lessee or occupant of such
Real Property, and, to the knowledge of ▇▇▇▇ ▇▇, each other party that is a
lessee or occupant of such Real Property, has a valid and enforceable leasehold
or occupancy interest in such Real Property free and clear of all liens, charges
or other encumbrances. Each lease or occupancy agreement is valid, binding and
in full force and effect and enforceable in accordance with its terms. Each
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lease or occupancy agreement grants the tenant under the lease or occupancy
agreement the exclusive right to use and occupy the premises and rights demised
and intended to be demised thereunder, except as set forth in Schedule 4.12(c).
Each Audio Products Group Company enjoys peaceful and undisturbed possession
under its respective leases or occupancy agreements for the leased or occupied
Real Property, except as set forth in Schedule 4.12(c). Except as otherwise set
forth in Schedule 4.12(c), there are no material defaults that have occurred
under the terms of any lease or occupancy agreement of any Real Property used by
any of the Audio Products Group Companies with respect to the obligations of the
Audio Products Group Company party or occupant thereto or with respect to the
obligations of the lessor of such Real Property. No event has occurred and is
continuing that, with respect to the Audio Products Group, constitutes or, with
notice or the passage of time or both, would constitute a material default,
violation or breach in any respect under any such lease or occupancy agreement.
Prior to the date hereof, ▇▇▇▇ ▇▇ has delivered to the Buyer a complete and true
copy of each document set forth on Schedule 4.12(a).
(d) Except as otherwise set forth in Schedule 4.12(d), neither
▇▇▇▇ ▇▇ nor any of the Audio Products Group Companies has received any written
or, to the knowledge of ▇▇▇▇ ▇▇, oral notice that the current use, occupancy and
ownership (or leasing) of any Real Property, including any buildings, structure
or other improvements constituting part of the Real Property, violates in any
material way any applicable building, zoning, subdivision and other land use and
similar laws affecting the Real Property. No current use by the Audio Products
Group of the Real Property is dependent on a nonconforming use or other
governmental approval, the absence of which would materially limit the use of
any of the properties or assets in the business of the Audio Products Group.
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(e) Except as otherwise set forth in Schedule 4.12(e), none of
the Real Property is subject to any pending or, to the knowledge of ▇▇▇▇ ▇▇ or
the Company, threatened condemnation proceeding by any public or quasi-public
agency or other authority.
(f) To the knowledge of ▇▇▇▇ ▇▇, except as otherwise set forth
in Schedule 4.12(f), all of the Real Property is benefited by all easements or
other rights (including utility service) necessary for the Audio Products Group
Company which is identified in Schedule 4.12(a) as the owner or lessee of such
Real Property, to continue to conduct its business at such Real Property in the
ordinary course.
4.13 Personal Property Leases. Schedule 4.13 contains a list
of each lease relating to any personal property used by any of the Audio
Products Group Companies in the conduct of its business that (a) provides for
annual lease payments in excess of $25,000, (b) has a term in excess of one year
and (c) is not cancelable upon 30 or fewer days' notice without any liability,
penalty or premium, other than nominal cancellation fee or charge (the
"Leases"). Prior to the date hereof, ▇▇▇▇ ▇▇ has delivered to the Buyer copies
of the Leases including all amendments thereof and all modifications thereto.
Except as set forth in Schedule 4.13, no material default has occurred under the
terms of any of the Leases with respect to the obligations of any of the Audio
Products Group Companies or, to the knowledge of ▇▇▇▇ ▇▇, any other parties to
the Leases.
4.14 Intangible Assets. (a) For the purposes of this
Agreement, "Intellectual Property" is defined as: the United States and foreign
trademarks, service marks, trade names, brand names, trade dress, domain names,
copyrights, mask works and similar rights, including registrations and
applications to register or renew the registration of any of the foregoing,
patents and patent applications, inventions, processes, designs, manufacturing,
engineering and other drawings, formulae, technology, trade secrets,
confidential
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information, computer software, data and documentation, tangible embodiments of
any of the foregoing (in any medium including electronic media). Schedule
4.14(a) contains a complete and accurate list and general description of all
Intellectual Property that is owned by any member of the Audio Products Group
(the "Owned Intellectual Property"), provided, however, that Owned Intellectual
Property shall include, but Schedule 4.14(a) need not disclose, inventions,
processes, designs, manufacturing, engineering and other drawings, formulae,
technology, trade secrets or confidential information. Except as specifically
set forth on Schedule 4.14(a) or 4.14(b), each member of the Audio Products
Group has the exclusive right to use all Owned Intellectual Property set forth
in Schedule 4.14(a) used in connection with the Audio Products Business and owns
such Owned Intellectual Property free and clear of any liens, charges or
encumbrances and any requirement of any past, present or future royalty
payments, license fees, charges or other payments. Immediately after the
Closing, each member of the Audio Products Group shall own or have licensed to
it all Intellectual Property used in the Audio Products Business on the same
terms and conditions as in effect immediately prior to the Closing.
(b) Schedule 4.14(b) sets forth a complete and correct list of
all written, and a description of all material oral, licenses and agreements
related to the Audio Products Group Business, (i) pursuant to which the use by
any person of Intellectual Property is permitted by any member of the Audio
Products Group, and (ii) pursuant to which the use of Intellectual Property by
any member of the Audio Products Group is permitted by any person (collectively,
the "Intellectual Property Licenses"). All Intellectual Property Licenses are in
full force and effect in accordance with their terms, and are free and clear of
any liens, charges or encumbrances relating to, incurred by or granted by any
Audio Products Group Company. Neither any member of the Audio Products Group
nor, to the knowledge of ▇▇▇▇ ▇▇, any other party is in default under any
Intellectual Property License. Prior to the date hereof
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▇▇▇▇ ▇▇ has delivered or otherwise made available to the Buyer copies of the
written Intellectual Property Licenses and accurate descriptions of all terms of
any material oral Intellectual Property License.
(c) Except as set forth on Schedule 4.14(a), the Owned
Intellectual Property and the Intellectual Property used by the members of the
Audio Products Group pursuant to Intellectual Property Licenses is all the
Intellectual Property used or held for use in connection with, necessary for the
conduct of or otherwise material to the Audio Products Business as such business
is currently conducted.
(d) Neither the conduct of the Audio Products Group Business
nor, to the knowledge of ▇▇▇▇ ▇▇, that of any other party, conflicts with or
infringes the rights of any third party in respect of any Intellectual Property,
except as set forth on Schedule 4.14(c). Except as set forth on Schedule
4.14(c), to the knowledge of ▇▇▇▇ ▇▇, none of the Owned Intellectual Property is
being infringed or misappropriated by third parties. Except as set forth on
Schedule 4.14(d), there is no written claim or demand of any person pertaining
to, or any proceeding which is pending or, to the knowledge of ▇▇▇▇ ▇▇,
threatened, that (i) challenges the rights of any member of the Audio Products
Group in respect of any Owned Intellectual Property or Intellectual Property
License, (ii) asserts that any member of the Audio Products Group is infringing
or otherwise in conflict with, or is required to pay any royalty, license fee,
charge or other amount with respect to, any Intellectual Property, or (iii)
claims that any default exists under any Intellectual Property License.
(e) The Owned Intellectual Property listed on Schedule 4.14(a)
is in proper form, not disclaimed and has been properly maintained and otherwise
duly registered with, filed in or issued by, as the case may be, the United
States Patent and Trademark Office and the United States Copyright Office or
other filing offices, domestic or foreign, to the extent necessary or desirable
to ensure full protection
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under any applicable law, and the same remain in full force and effect to the
extent material to the Audio Products Business, and each member of the Audio
Products Group has taken such other actions necessary (including maintaining all
necessary and appropriate standards of quality control) to ensure full
protection under applicable laws.
4.15 Litigation. Except as set forth in Schedule 4.15, there
are no actions, suits or written claims (including, without limitation, product
liability claims or claims that any of the Audio Products Group Companies has
breached or otherwise failed to perform its obligations under any product or
service warranties described in Section 4.27 hereof) or legal, administrative,
equitable or arbitration proceedings or outstanding orders, judgments,
injunctions, awards or decrees of any court, any governmental or regulatory
body or any arbitration tribunal pending or, to the knowledge of ▇▇▇▇ ▇▇,
threatened against or involving ▇▇▇▇ ▇▇ or any of the Audio Products Group
Companies which: (a) seek to prevent the consummation of the transactions
contemplated by this Agreement or the ▇▇▇▇ ▇▇ Ancillary Agreements; or (b)
relate to the business of any of the Audio Products Group Companies and which,
if adversely decided, would have a Material Adverse Effect. There are no
outstanding orders, judgments, decrees, stipulations or injunctions issued by
any governmental authority against any member of the Audio Products Group, ▇▇▇▇
▇▇ or PLC or that in any way affect the Audio Products Group.
4.16 Banks and Brokers. Schedule 4.16 sets forth the name of
each bank, trust company, securities or other broker or other financial
institution: (a) with which ▇▇▇▇ ▇▇ or the Company have any account, lock box,
safe deposit box or vault for the exclusive purpose of providing or maintaining
banking or other financial services to any of the Audio Products Group
Companies; and (b) with which any of the Audio Products Group Companies has any
account, lock box, safe deposit box or vault.
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4.17 Employee Benefit Plans. (a) Except for any individual
employment, consulting or severance contracts disclosed in Schedule 4.21
attached hereto, Schedule 4.17(a) attached hereto sets forth a list, and a
general description for each of the Audio Products Group Companies of:
(i) each written personnel practice and each material
non-written personnel practice (collectively, the "Personnel
Practices") including, without limitation, vacation policies, holiday
pay policies, severance pay policies, sick or personal pay policies,
incentive bonus programs, bereavement pay programs, company car
policies, service award policies, tuition refund policies, relocation
assistance policies and patent award policies but excluding any stock
ownership, stock purchase, stock option and phantom stock plans;
(ii) each plan, fund or program which provides to its participants
or beneficiaries, through the purchase of insurance or otherwise,
medical, surgical or hospital care or benefits, in the event of
sickness, accident, disability, death or unemployment, vacation,
benefits or severance benefits (each of such plans, funds or programs
being hereinafter referred to individually as an "Employee Welfare
Plan" and collectively as "Employee Welfare Plans"); and
(iii) each plan, fund or program which, by its express terms,
provides a retirement income to employees or results in the deferral of
income by employees for periods extending to the termination of covered
employment or beyond (other than any such plans, funds or programs
which are required to be maintained by any of the Audio Products Group
Companies, ▇▇▇▇ ▇▇ or any other person or entity that, together with
▇▇▇▇ ▇▇ and/or any Audio Products Group Company, is treated as a single
employer under Section 414(b), (c), (m) or (o) of the Code (each, a
"Commonly Controlled Entity")) under the terms of any law, rule
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or regulation of any United States or foreign federal, state (or its
regional equivalent) or local governmental authority (each of such
plans, funds or programs being hereinafter referred to individually as
an "Employee Pension Plan" and collectively as the "Employee Pension
Plans") which is: (w) maintained, assumed or contributed to by ▇▇▇▇ ▇▇
for the benefit of any employee of any of the Audio Products Group
Companies; or (x) maintained, assumed or contributed to by any Audio
Products Group Company for the benefit of any of its employees
(all such Personnel Practices, Employee Welfare Plans and Employee Pension Plans
being sometimes hereinafter referred to individually as a "Plan" and
collectively as the "Plans").
(b) Except as otherwise set forth in Schedule 4.17(b), ▇▇▇▇ ▇▇
has previously delivered to the Buyer: (i) complete copies of all written plan
documents which set forth the terms of each of the Plans and where applicable,
complete copies of each currently effective trust agreement, insurance or group
annuity contract and each other funding or financing arrangement relating to any
Plan; (ii) a general description of any of the Plans with respect to which no
formal written plan document has been adopted; (iii) the most recent summary
plan description for each Plan for which such summary plan description is
required or has been prepared; and (iv) where applicable, copies of the most
recent annual report or registration forms, if any, required to be filed with
respect to any such Plans with any governmental agency or authority.
(c) Each of the Plans is in material compliance with the
applicable requirements of all laws, rules and regulations of any United States
or foreign, federal, state (or its regional equivalent) or local governmental
authority and the terms of all collective bargaining agreements relating to the
Plans and each of the Plans has been administered in all material respects in
substantial
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compliance with its terms, all laws, rules and regulations of any United States
or foreign, federal, state (or its regional equivalent) or local governmental
authority and the terms of all collective bargaining agreements relating to the
Plans. To the reasonable knowledge of ▇▇▇▇ ▇▇, there are no investigations by
any governmental agency, termination proceedings or other claims (except routine
claims for benefits payable under the Plans), suits or proceedings pending or
threatened against any Plan or asserting any rights or claims to benefits under
any Plan that, individually or in the aggregate, is reasonably likely to result
in a Material Adverse Effect.
(d) (i) There has been no application for waiver or waiver of
the minimum funding standards imposed by Section 412 of the Code with respect to
any Employee Pension Plan; and (ii) no Employee Pension Plan has or had at any
time during the current plan year an "accumulated funding deficiency" within the
meaning of Section 412(a) of the Code.
(e) Each Employee Pension Plan that is intended to be a
tax-qualified plan has received a determination letter from the Internal Revenue
Service to the effect that such Pension Plan and related trust is qualified and
exempt from Federal income taxes under Sections 401(a) and 501(a), respectively,
of the Code; no such determination letter has been revoked, and, to the
knowledge of ▇▇▇▇ ▇▇, revocation has not been threatened; and no such Employee
Pension Plan has been amended since the effective date of its most recent
determination letter in any respect that would reasonably be expected to
adversely affect its qualification. Each foreign Employee Pension Plan that is
required to receive the equivalent of a determination letter from its applicable
host country has received such letter; no such letter has been revoked and, to
the knowledge of ▇▇▇▇ ▇▇, revocation has not been threatened; and no such
foreign Employee Pension Plan has been amended since the effective date of its
most recent letter in any respect that would reasonably be expected to adversely
affect such letter. ▇▇▇▇ ▇▇ has
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delivered or made available to the Buyer a copy of the most recent determination
letter, or any foreign equivalent, received with respect to each Employee
Pension Plan for which such a letter has been issued, as well as a copy of any
pending application for a determination letter or foreign equivalent. To the
knowledge of ▇▇▇▇ ▇▇, no event has occurred that could subject any Employee
Pension Plan to tax under Section 511 of the Code.
(f) (i) Within the past five years, no Employee Pension Plan
that is subject to Title IV of the Employee Retirement Income Security Act of
1974, as amended ("ERISA") has been terminated other than in a standard
termination in accordance with Section 4041(b) of ERISA (a "Standard
Termination") and, except as otherwise disclosed on Schedule 4.17(f), no
Employee Pension Plan has been the subject of a "reportable event" (as defined
in Section 4043 of ERISA and the regulations thereunder); (ii) no Employee
Pension Plan is reasonably expected to be terminated other than in a Standard
Termination prior to the Closing Date or as a result of the transactions
contemplated hereby; and (iii) none of ▇▇▇▇ ▇▇, any Audio Products Group Company
or any significant subsidiaries thereof or, to the knowledge of ▇▇▇▇ ▇▇, any
non-employee trustee, non-employee administrator or other non-employee fiduciary
of any Plan has breached the fiduciary duty provisions of ERISA or any other
applicable law in a manner that, individually or in the aggregate, is reasonably
likely to result in a Material Adverse Effect.
(g) ▇▇▇▇ ▇▇ has furnished to the Buyer the most recent
actuarial report or valuation with respect to each Defined Benefit Plan.
(h) Within the last six years, no Commonly Controlled Entity
has incurred any liability under Title IV of ERISA other than for the payment of
premiums to the Pension Benefit Guaranty Corporation, other than any liability
identified on Schedule 4.17(h) hereof which has
been fully paid as of the date hereof.
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(i) No Commonly Controlled Entity has engaged in a transaction
described in Section 4069 of ERISA that could subject ▇▇▇▇ ▇▇ or any Audio
Products Group Company to liability under such Section .
(j) Except as disclosed in Schedule 4.17(j), no Employee
Pension Plan constitutes, or within the past 6 years, has constituted, a
multiemployer plan within the meaning of Section 4001(a)(3) of ERISA and no
Commonly Controlled Entity has incurred or is expected to incur prior to the
Closing Date or will incur as a result of the transactions contemplated hereby,
any liability to any multiemployer plan which remains unsatisfied in connection
with a complete or partial withdrawal from any such Plan within the meaning of
Section 4203 or 4205 of ERISA. Except as disclosed in Schedule 4.17(j), no
condition exists and no event has occurred with respect to any multiemployer
plan that could present a risk of any liability arising with respect to a
complete or partial withdrawal by any Commonly Controlled Entity within the
meaning of Section 4203 or 4205 of ERISA, which would have a Material Adverse
Effect.
(k) Except as specifically provided in this Agreement, no
employee of any Audio Products Group Company will be entitled to any additional
benefits or any acceleration of the time of payment or vesting of any benefits
under any Plan or under any employment, severance, termination or compensation
agreement or as a result of the transactions contemplated by this Agreement.
(l) Except as otherwise set forth in Schedule 4.17, no benefit
that is payable, or which may become payable, to any employee of an Audio
Products Group Company pursuant to any Plan shall constitute an "excess
parachute payment" (as defined in Section 280G(b)(1)of the Code) which is
subject to the imposition of an excise tax under Section 4999 of the Code or
which would not be deductible by reason of Section 280G of the Code.
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4.18 Consents and Approvals. Except for consents listed in
Schedule 4.18 and for the filing of notification documentation under the HSR Act
and the expiration of all applicable waiting periods thereunder, no material
permit, consent, approval or authorization of, or declaration, filing or
registration with, any governmental agency or authority or any other person,
firm or corporation is necessary or required to be obtained in connection with
the execution and delivery by ▇▇▇▇ ▇▇, PLC or the Company of this Agreement and
the ▇▇▇▇ ▇▇ Ancillary Agreements or the consummation of the transactions
contemplated hereby or thereby. Schedule 4.18 also contains a list of all
material consents, approvals, authorizations, declarations, filings, or
registrations which are, to the knowledge of ▇▇▇▇ ▇▇, required to be obtained by
the Audio Products Group Companies from any governmental agency or authority and
that are necessary for, or otherwise material to, the conduct of the business of
the Audio Products Group as currently conducted. Except as set forth in Schedule
4.18, all such governmental approvals and other consents have been duly obtained
and are held by the Audio Products Group and are in full force and effect. Each
member of the Audio Products Group is in compliance with all such governmental
approvals and other consents held by any member thereof, and no member of the
Audio Products Group has been notified in writing or otherwise has reason to
believe that any such governmental approval or consent will be modified,
suspended, canceled or modified or that such governmental approval or consent
cannot be renewed in the ordinary course of business.
4.19 Environmental Protection. (a) Except as set forth in
Schedule 4.19(a), each Audio Products Group Company has obtained all permits,
licenses, consents, authorizations, waivers, grants, exemptions, orders,
registrations and approvals (collectively, the "Permits") that: (i) are required
to be obtained by any such Audio Products Group Company under all applicable
United States or foreign federal, state (or its regional equivalent) and local
statutes, laws, rules and regulations relating to pollution, cleanup,
restoration or protection of the
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environment or to the protection of flora or fauna or their habitat or to human
or public health or safety (collectively referred to as "Environmental Laws"),
including, without limitation, laws relating to emissions, discharges, releases
or threatened releases into the environment (including, without limitation,
ambient air, surface water, ground water or land) of any substances identified
in any such Environmental Laws (such substances being hereinafter referred to as
"Regulated Materials"); and (ii) relate to the manufacture, generation,
processing, distribution, use, treatment, receipt, storage, disposal, transport,
or handling of Regulated Materials.
(b) Except as set forth in Schedule 4.19(b), each Audio
Products Group Company has complied in all material respects and is currently in
material compliance with: (i) all terms and conditions of all Permits required
under any applicable Environmental Laws and the making and filing of all
reports, forms and documents and the maintenance of all records required to be
made, filed or maintained by it under any Environmental Law; (ii) all applicable
Environmental Laws pertaining to any of the properties and assets of the Audio
Products Group (including Real Property) and the use and ownership thereof; and
(iii) all plans, orders, decrees, judgments, injunctions, notices or demand
letters applicable to such Audio Products Group Company and issued, entered,
promulgated or approved under any Environmental Law.
(c) Except as set forth in Schedule 4.19(c), neither ▇▇▇▇ ▇▇
nor any of the Audio Products Group Companies has received any written notice
that any past or present conditions, circumstances, activities, practices,
incidents or actions of any Audio Products Group Company relating to the
manufacture, generation, processing, distribution, use, treatment, receipt,
storage, disposal, transport, or handling of any Regulated Material or relating
to any emission, discharge, release or threatened release into the environment
of any Regulated Material: (i) may interfere with or prevent compliance or
continued compliance
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by any of the Audio Products Group Companies with any of the Environmental Laws
or any regulation, code, plan, order, decree, judgment, injunction, notice or
demand letter issued, entered, promulgated or approved thereunder; (ii) may give
rise to any common law or legal liability; or (iii) may otherwise form the basis
of any claim, action, demand, suit, proceeding, hearing, study or investigation.
(d) Except as set forth in Schedule 4.19(d), there is no
civil, criminal or administrative action, suit, demand, claim, hearing, notice
or demand letter, notice of violation, investigation or proceeding pending or to
the knowledge of ▇▇▇▇ ▇▇, threatened against any Audio Products Group Company
relating in any way to any violation of any Environmental Law or any regulation,
code, plan, order, decree, judgment, injunction, notice or demand letter issued,
entered, promulgated or approved thereunder.
(e) Except as set forth in Schedule 4.19(e), no Audio Products
Group Company or other person has caused or taken any action that will result
in, and no Audio Products Group Company is subject to, any material liability or
obligation relating to (i) the environmental conditions on, under, or about the
Real Property or other properties or assets owned, leased, operated or used by
any Audio Products Group Company or any predecessor thereto at the present time
or in the past, including without limitation, the air, soil and groundwater
conditions at such properties; or (ii) the past or present use, management,
handling, transport, treatment, generation, storage, disposal or release of any
Regulated Material.
4.20 Insurance. Schedule 4.20 contains a complete and correct
list and summary description (including the amount of any applicable
deductibles) of all policies of fire, liability, workmen's compensation and
other forms of insurance owned or held by ▇▇▇▇ ▇▇ or any Audio Products Group
Company and issued with respect to or covering risks associated with the assets,
properties or business of each Audio Products Group Company. All such policies
are in full
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force and effect, all premiums with respect thereto covering all periods up to
and including the Closing Date have been paid, and no notice of cancellation or
termination has been received with respect to any such policy. Such policies are
valid, outstanding and enforceable; will remain in full force and effect through
the respective dates set forth in Schedule 4.20 without the payment of
additional premiums; and will not, with respect to all periods up to and
including the Closing Date, in any way be affected by, or terminate or lapse by
reason of, the consummation of the transactions contemplated by this Agreement,
except to the extent set forth in Schedule 4.20.
4.21 Contracts and Commitments. (a) Except for leases required
to be disclosed pursuant to Sections 4.12 and 4.13 hereof, Plans required to be
disclosed pursuant to Section 4.17(a) hereof and insurance policies required to
be disclosed by Section 4.20 hereof, Schedule 4.21(a) contains a list of each
written contract, subcontract, agreement, commitment, option, note, bond,
mortgage, indenture, deed of trust, guarantee, franchise or license of the Audio
Products Group which: (i) (A) requires payments in excess of $150,000 per year;
(B) contains the terms and conditions: (x) upon which any person is employed as
an officer or management-level employee or under which any person serves as a
consultant; or (y) upon which any severance or other termination payments (other
than severance or termination payments required to be made by applicable law)
are payable; (C) provides preferential rights to purchase any material quantity
of any assets; (D) limits the freedom of any party to engage in any business in
any geographic area; (E) contains any "change in control" provision which would
be activated or otherwise affected by the consummation of the transactions
contemplated by this Agreement; (F) contains the terms of any guaranty of the
payment or performance of any liabilities or obligations the cost of the payment
or performance of which liabilities or obligations exceeds, in the aggregate, an
amount equal to $150,000; or (G) contains terms and conditions upon which any
person or entity is engaged to act as a distributor or a sales representative,
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whether on exclusive or non-exclusive terms, for any products manufactured,
assembled, purchased or otherwise procured for sale by the Audio Products Group
and pursuant to which there were in excess of $100,000 of annual sales of
products of the Audio Products Group Companies in 1996 fiscal year or the
eight-month period ended October 31, 1996; and (ii) (A) ▇▇▇▇ ▇▇ is a party to
and relates exclusively to the Audio Products Group (hereinafter individually
referred to as a "▇▇▇▇ ▇▇ Contract" and collectively as the "▇▇▇▇ ▇▇
Contracts"); or (B) any Audio Products Group Company is a party to or the
beneficiary of (hereinafter individually referred to as an "Audio Products Group
Contract" and collectively as the ("Audio Products Group Contracts"). Prior to
the date hereof ▇▇▇▇ ▇▇ has delivered or otherwise made available to the Buyer
copies of the ▇▇▇▇ ▇▇ Contracts and the Audio Products Group Contracts, and
accurate descriptions of all material terms of any oral contracts which, if
written, would be required to be disclosed on Schedule 4.21(a), including all
amendments thereof and modifications thereto.
(b) Except as set forth in Schedule 4.21(b), each of the ▇▇▇▇
▇▇ Contracts and each of the Audio Products Group Contracts is valid, binding
and in full force and effect and enforceable in accordance with its terms.
(c) Except as set forth in Schedule 4.21(c), ▇▇▇▇ ▇▇ is not in
material default with respect to any of its obligations under any of the ▇▇▇▇ ▇▇
Contracts, and, to the knowledge of ▇▇▇▇ ▇▇, there is no basis for any claim
that any other parties to any of the ▇▇▇▇ ▇▇ Contracts is in material default
with respect to its obligations under such ▇▇▇▇ ▇▇ Contracts.
(d) Except as set forth in Schedules 4.21(b)-(d), there does
not exist under any Audio Products Group Contracts any material violation,
breach or event of default, or event or condition that, after notice or lapse of
time or both, would constitute a material violation, breach or event of default
thereunder, on the part of any
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member of the Audio Products Group or, to the knowledge of ▇▇▇▇ ▇▇, any other
person.
4.22 Tax Matters. (a) Except as set forth in Schedule 4.22(a),
(i) ▇▇▇▇ ▇▇ and each of the Audio Products Group Companies have duly and timely
filed or caused to be filed with the appropriate governmental agencies all Tax
Returns (as hereinafter defined) required to be filed with respect to any of the
Audio Products Group Companies or the respective operations or assets thereof,
(ii) all Taxes shown due on such Tax Returns have been paid, (iii) all such Tax
Returns are correct and complete in all material respects, and (iv) none of the
Audio Products Group Companies or any group of companies that files a combined,
consolidated or unitary Tax Return that includes any of the Audio Products Group
Companies is currently the beneficiary of any extension of time within which to
file any Tax Return.
(b) Except as set forth on Schedule 4.22(b), (i) all Taxes
that are or may become payable by any of the Audio Products Group Companies or
chargeable as a lien upon any of the assets thereof for which the filing of a
Tax Return is not required have been or as of the Closing Date will have been
duly and timely paid or, to the extent not yet due and payable, accrued and (ii)
each of the Audio Products Group Companies has duly and timely withheld all
Taxes required to be withheld in connection with the business or assets of such
Company, and such withheld Taxes have been either duly and timely paid to the
proper governmental authorities or properly set aside in accounts for such
purpose.
(c) Except as set forth on Schedule 4.22(c), there has been no
written claim (other than a claim that has been finally settled) concerning any
liability for Taxes of any of the Audio Products Group Companies or that may be
chargeable as a lien on the assets thereof asserted or raised by any taxing
authority and, to the knowledge of ▇▇▇▇
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IV and its Affiliates, no circumstances exist to form the basis for such a
claim.
(d) Schedule 4.22(d) lists all Income Tax Returns that have
been filed with respect to any of the Audio Products Group Companies or any
combined, consolidated or unitary Tax Return that includes any of the Audio
Products Group Companies and that have not yet been audited or are currently the
subject of audit or for which the relevant period for the assessment of Taxes
has not expired.
(e) Except as set forth on Schedule 4.22(e), none of the Audio
Products Group Companies or any combined, consolidated or unitary Tax Return
that includes any of the Audio Products Group Companies has (i) waived any
statute of limitations or agreed to any extension of the period for assessment
or collection of Taxes, or (ii) executed or filed any power of attorney with
respect to Taxes, which waiver, agreement or power of attorney is currently in
force.
(f) Except as set forth on Schedule 4.22(f), no material
elections for United States federal Income Tax purposes have been made by any of
the Audio Products Group Companies or any combined, consolidated or unitary Tax
Return that includes any of the Audio Products Group Companies that are
currently in force and by which any of the Audio Products Group Companies is
bound.
(g) Except as set forth in Schedule 4.22(g), none of the Audio
Products Group Companies (i) is a party to or bound by or has any obligation
under any Tax allocation, sharing, indemnity or similar agreement or
arrangement, or (ii) is or has been a member of any combined, consolidated or
unitary Tax Return that includes any of the Audio Products Group Companies.
(h) For the purposes of this Agreement: (i) "Taxes" shall mean
all taxes, charges, fees, levies, duties or other assessments, including,
without limitation, income, excise, sales, use, value added, alternative,
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minimum, accumulated earnings, personal holding company, capital stock, profits,
windfall profits, gross receipts, transfer, registration, stamp, premium,
customs duties, severance, environmental (including taxes under section 59A of
the Code), real property, personal property, ad valorem, occupancy, license,
occupation, employment, payroll, social security, disability, unemployment,
workers' compensation, withholding, estimated or other similar tax, duty, fee,
assessment or other governmental charge or deficiencies thereof, franchise taxes
or other similar tax, duty, fee, assessment or other governmental charge or
deficiencies thereof (including any interest, penalties or additions
attributable to or imposed on or with respect to any such assessment) imposed by
the United States, any foreign jurisdiction, and any state, province, county,
locality or other government, taxing authority, or subdivision thereof; (ii)
"Income Taxes" shall mean all Taxes computed in whole or in part based on or by
reference to net income and any alternative, minimum, accumulated earnings or
personal holding company Tax; and (iii) "Tax Return" shall mean any return,
report, information return or other document (including any related attachments,
schedules or supporting information) filed or required to be filed with any
governmental entity or other authority in connection with the determination,
assessment or collection of any Taxes (whether or not such Taxes are imposed on
▇▇▇▇ ▇▇ or any of the Audio Products Group Companies) or the administration of
any laws, regulations or administrative requirements relating to any Taxes.
4.23 Labor Relations. Schedule 4.23 contains a list of each
contract or other agreement between ▇▇▇▇ ▇▇ or any Audio Products Group Company
and any labor union or other association representing any employees of any Audio
Products Group Company (each such contract being hereinafter referred to as a
"Labor Agreement"). Prior to the date hereof, ▇▇▇▇ ▇▇ has delivered to the Buyer
true and complete copies of each Labor Agreement listed in Schedule 4.23. Except
as set forth in Schedule 4.23, none of the Audio Products Group Companies has,
at any time during the last
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three years, experienced any material labor disputes or any work stoppage due to
labor disagreements. Except to the extent set forth in Schedule 4.23: (a) there
is no unfair labor practice charge, or complaint or other action against any of
the Audio Products Group Companies pending or, to the knowledge of ▇▇▇▇ ▇▇,
threatened before the National Labor Relations Board or any other foreign,
federal, state (or its regional equivalent) or local administrative or
governmental agency or authority having regulatory powers with respect to the
relationships between employers and employees (hereinafter a "Foreign Labor
Board"), and none of the Audio Products Group Companies is subject to any order
to bargain by the National Labor Relations Board or any Foreign Labor Board; (b)
there is no, and during the past three years there has been no, labor strike or
work stoppage and, to the knowledge of ▇▇▇▇ ▇▇, no labor strike or work stoppage
is threatened against or affecting ▇▇▇▇ ▇▇ with respect to any of the Audio
Products Group Companies; (c) no question concerning representation is pending
or to ▇▇▇▇ IV's knowledge is threatened respecting employees of any of the Audio
Products Group Companies; and (d) no grievance is pending under any collective
bargaining agreement to which any Audio Products Group Company is a party or
bound, before any Foreign Labor Board or that would have a Material Adverse
Effect.
4.24 Customers and Suppliers. None of the Audio Products Group
Companies is engaged in any dispute with any customer or supplier of any of the
Audio Products Group Companies which, individually or in the aggregate, would
have a Material Adverse Effect.
4.25 Compliance with Law. Except for matters pertaining to the
Plans which are provided for in Section 4.17 and matters pertaining to
Environmental Laws which are provided for in Section 4.19, the operations of
each of the Audio Products Group Companies are conducted in compliance with all
applicable laws, regulations and other requirements of all national governmental
authorities, and of all states, municipalities, foreign governments and other
political
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subdivisions and agencies thereof, having jurisdiction over the business of the
Audio Products Group Companies, including, without limitation, all such laws,
regulations and requirements relating to employment of unauthorized aliens,
antitrust, consumer protection, currency exchange, equal opportunity, health,
occupational safety, pension and securities except to the extent that any
failure to so comply would not have a Material Adverse Effect. Except as set
forth in Schedule 4.25, none of the Audio Products Group Companies has received
any written notification of any asserted failure by any of the Audio Products
Group Companies to comply with any such laws, rules or regulations.
4.26 Brokers and Finders. Except as set forth in Schedule
4.26, neither ▇▇▇▇ ▇▇, the Company nor any of their respective stockholders,
officers, directors or employees, as the case may be, nor any of the Audio
Products Group Companies, has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders' fees in connection
with the transactions contemplated by this Agreement.
4.27 Product Warranties. The standard product or service
warranties, indemnifications and guarantees which each of the Audio Products
Group Companies extends to its customers in the ordinary course of the conduct
of their respective businesses, copies of which have been delivered to the
Buyer, are identified in Schedule 4.27. Schedule 4.27 also contains a general
description of any product or service warranties, indemnifications or guarantees
extended by any of the Audio Products Companies to any material customer, the
terms of which are materially different from the standard product or service
warranties, indemnifications or guarantees otherwise described in Schedule 4.27.
No material warranties, indemnifications or guarantees are now in effect or
outstanding with respect to products or services manufactured, produced or
performed by any of the Audio Products Group Companies in the ordinary course of
conduct of their respective businesses, except for
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warranties implied by law and warranties, indemnifications and guarantees of the
types identified in Schedule 4.27.
4.28 Potential Conflicts of Interest. Except as set forth in
Schedule 4.28, no contract, agreement or arrangement (excluding employment
agreements and rights arising under any of the Plans), whether written or oral,
providing for the purchase or sale of any goods or services or relating to any
interest in any property, whether real or personal, or tangible or intangible,
which is used by or relates to any of the Audio Products Group Companies exists
between: (a) ▇▇▇▇ ▇▇ and any of the Audio Products Group Companies; (b) ▇▇▇▇ ▇▇
and any officers or directors of any of the Audio Products Group Companies; or
(c) between any of the Audio Products Group Companies and any officers or
directors of any of the Audio Products Group Companies. Except as set forth in
Schedule 4.28, none of the officers or directors of ▇▇▇▇ ▇▇ and none of the
stockholders, officers or directors of any of the Audio Products Group Companies
has any cause of action or other claim whatsoever against any of the Audio
Products Group Companies.
4.29 Inventories. All inventories of raw materials,
work-in-process and finished goods of the Audio Products Group included in the
audited balance sheet of the Audio Products Group as at December 31, 1996 shall
be usable or saleable, as the case may be, in the ordinary course of business,
except for obsolete, discontinued and slow moving items for which reserves shall
be established in said balance sheet in accordance with United States GAAP
applied on a basis consistent with the Balance Sheet.
4.30 Undisclosed Liabilities. Except as set forth on Schedule
4.30 and except for the liabilities reflected, reserved or otherwise disclosed
in the Balance Sheet and in the notes thereto, no member of the Audio Products
Group has any other liabilities, whether known, unknown, absolute, accrued or
contingent, which would be required, in order to conform with United States
GAAP, to be set forth in the Balance Sheet, and no member of the Audio
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Products Group has incurred any material liability since the date of the Balance
Sheet other than (a) as set forth in Schedule 4.30, (b) as reflected, reserved
or otherwise disclosed in the balance sheet included in the Interim Financial
Statements or (c) in the ordinary course of business.
4.31 Disclosure. This Agreement and each of the ▇▇▇▇ ▇▇
Ancillary Agreements and the instruments attached hereto as Exhibits to be
executed and delivered pursuant to this Agreement by ▇▇▇▇ ▇▇ or the Company, and
each certificate furnished by or on behalf of ▇▇▇▇ ▇▇ and any member of the
Audio Products Group to the Buyer pursuant hereto, taken as a whole, do not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated herein or therein or necessary to make the statements
contained herein or therein, in light of the circumstances under which they were
made, not misleading.
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to ▇▇▇▇ ▇▇ and PLC as
follows:
5.1 Organization. The Buyer is a limited liability company
duly organized and in good standing under the laws of Delaware, and has the
power and authority to carry on its business as presently conducted.
5.2 Authorization by the Buyer. The Buyer has full power and
authority to enter into, execute and deliver this Agreement and each of the
other documents and instruments to be executed and delivered by it pursuant to
this Agreement (the "Buyer Ancillary Agreements" and, together with the ▇▇▇▇ ▇▇
Ancillary Agreements, the "Ancillary Agreements") and to consummate the
transactions
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contemplated hereunder or thereunder. The execution and delivery of this
Agreement and each of the Buyer Ancillary Agreements and the consummation of the
transactions contemplated hereunder or thereunder have been duly authorized by
all necessary action on the part of the Buyer. No other act or proceeding on the
part of the Buyer is necessary to authorize the execution and delivery of this
Agreement and each of the other documents and instruments to be executed and
delivered by the Buyer pursuant to this Agreement, or the consummation by the
Buyer of the transactions contemplated hereby or thereby.
5.3 Binding Agreements. This Agreement constitutes, and, when
executed and delivered on the Closing Date, each of the Buyer Ancillary
Agreements will constitute, valid and binding obligations of the Buyer,
enforceable against the Buyer in accordance with their respective terms.
5.4 No Violation. Neither the execution and delivery of this
Agreement nor the Buyer Ancillary Agreements, nor the consummation of the
transactions contemplated hereby or thereby will: (a) violate any statute or
law, or any rule or regulation of any governmental authority; (b) violate any
order, writ, injunction or decree of any court or governmental authority; or (c)
violate or conflict with or constitute a default under (or an event which, with
notice or lapse of time, or both, would constitute a default under) or will
result in the termination of, or accelerate the performance required by, or
result in the creation of any material lien, security interest, charge or
encumbrance upon any of the material assets of the Buyer under any term or
provision of: (i) the Operating Agreement or Certificate of Formation of the
Buyer, (ii) any material lease, contract, commitment, agreement or restriction
of any kind or character to which the Buyer is party or by which the Buyer or
any of its assets or properties may be bound or affected.
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5.5 Litigation. There are no actions, suits or written claims
or legal, administrative, equitable or arbitration proceedings or outstanding
orders, judgments, injunctions, awards or decrees of any court, any governmental
or regulatory body or arbitration tribunal pending, or to the knowledge of the
Buyer, threatened against or involving the Buyer which: (a) seek to prevent the
consummation of the transactions contemplated by this Agreement or the Buyer
Ancillary Agreements; or (b) or relate to the business or operations of the
Buyer and which, if adversely decided, would have a material adverse effect on
the business, assets, liabilities or financial condition of the Buyer. There are
no outstanding orders, judgments, decrees, stipulations or injunctions issued by
any governmental authority against the Buyer.
5.6 Consents and Approvals. Except for consents listed in
Schedule 5.6 and for the filing of pre-merger notification documentation under
the HSR Act and the expiration of all applicable waiting periods thereunder, no
material permit, consent, approval or authorization of, or declaration, filing
or registration with, any governmental agency or authority or any other person,
firm or corporation is necessary or required to be obtained in connection with
the execution and delivery by the Buyer of this Agreement and the Buyer
Ancillary Agreements or the consummation of the transactions contemplated hereby
or thereby.
5.7 Financing. Buyer has access to net equity capital funds in
an amount in excess of $60 million, which net equity capital funds are free and
clear of any liens, charges or other encumbrances and available to fund the
purchase of the Common Stock and the other obligations of the Buyer set forth in
this Agreement. Prior to the date hereof, the Buyer has delivered to ▇▇▇▇ ▇▇
written commitments (the "Bank Commitments") from one or more banks or other
financial institutions which contain the general terms and conditions upon which
such banks or financial institutions have agreed to make loans to the Company,
the proceeds of which loans, together with the Buyer's net
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equity capital funds, will be sufficient to enable the Buyer to consummate the
transactions contemplated in this Agreement (the funds to be loaned to the
Company are hereinafter referred to as the "Financing"). The Bank Commitments
are in full force and effect without modification or amendment of any kind.
5.8 Purchase for Investment. The Buyer is acquiring the Common
Stock of the Company for investment and not for resale or distribution and the
Buyer will not sell, transfer, offer for sale, pledge, hypothecate or otherwise
dispose of any of the shares of Common Stock in violation of any applicable
securities laws or regulations.
5.9 Brokers and Finders. Except as set forth in Schedule 5.10,
neither the Buyer nor any of its officers, directors or employees has employed
any broker or finder or incurred any liability for any brokerage fees,
commissions or finders fees in connection with the transactions contemplated by
this Agreement.
ARTICLE 6.
COVENANTS OF ▇▇▇▇ ▇▇ AND PLC
6.1 Access Pending the Closing Date. Subject to applicable
laws and upon reasonable advance written notice, ▇▇▇▇ ▇▇ and PLC will and will
cause each of the Audio Products Group Companies to: (a) grant to the Buyer and
its prospective lenders and investors and its and their counsel, accountants and
other representatives, reasonable access during normal business hours to each
parcel of Real Property which is owned, leased or used by the Audio Products
Group Companies in the conduct of their respective businesses and to all
properties, books, contracts, commitments and records of each of the Audio
Products Group Companies; and (b) furnish the Buyer and its prospective lenders
and investors and its and their counsel, accountants and other representatives
all such information as the Buyer or its
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representatives may reasonably request concerning the business and assets of the
Audio Products Group Companies.
6.2 Conduct of Business Prior to the Closing. Except as
described in Schedule 6.2, during the period commencing on the date hereof and
ending on the Closing Date, neither ▇▇▇▇ ▇▇, PLC nor the Company have taken, and
▇▇▇▇ ▇▇ will take any and all action necessary to prevent each of the Audio
Products Group Companies from taking, any action that would cause any of the
representations and warranties of ▇▇▇▇ ▇▇ and PLC contained in Section 4.10 to
be untrue as of the Closing Date. ▇▇▇▇ ▇▇ and PLC shall cause each of the Audio
Products Group Companies not to increase or otherwise enhance the compensation
payable to any employee of the Audio Products Group Companies other than
increases in base salary in the ordinary course consistent with past practices.
In addition, on and after the date hereof to the Closing Date, except as
expressly permitted or required by this Agreement or as otherwise expressly
consented to by the Buyer in writing, ▇▇▇▇ ▇▇, PLC and the Company will, and
will cause each other member of the Audio Products Group to:
(a) carry on its business in, and only in, the ordinary course
of business, in substantially the same manner as heretofore conducted, and use
reasonable efforts to preserve intact its present business organization, keep
available the services of its present officers and significant employees, and
preserve its relationships with customers, suppliers and others having business
dealings with it;
(b) maintain all of the tangible Assets and all other tangible
properties and assets owned, leased, occupied, operated or used by it in
reasonable working order and repair consistent with past practice;
(c) use best efforts to keep in full force and effect
insurance comparable in amount and scope of coverage to insurance now carried by
it;
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(d) pay accounts payable and other obligations, when they
become due and payable, in the ordinary course of business;
(e) perform in all material respects all of its obligations
under any contracts, licenses, agreements or other instruments relating to or
affecting any of the properties and assets of any member of the Audio Products
Group (including the Assets) or the business of the Audio Products Group;
(f) promptly advise the Buyer in writing of the occurrence or
non-occurrence of any event or condition (other than matters of a general
economic or political nature that do not affect the business of the Audio
Products Group uniquely) that individually or in the aggregate would reasonably
be expected to have a Material Adverse Effect or result in a breach of this
Section 6.2;
(g) not agree or otherwise commit to take any action
prohibited in the foregoing paragraphs (a) through (e); and
(h) conduct all tax affairs relating to the Audio Products
Group only in the ordinary course of business, in the same manner as heretofore
conducted.
6.3 Termination of Benefit Accruals Under Defined Benefit
Plans. Schedule 6.3 contains a list of each Audio Products Group Company whose
employees are eligible to participate in the master defined benefit pension plan
known as the "▇▇▇▇ ▇▇ Industries, Inc. and Subsidiaries Employees Retirement
Income Fund" (hereinafter the "Master Defined Benefit Plan"), which is
maintained by ▇▇▇▇ ▇▇ for the purpose of providing a defined benefit retirement
income for employees of certain direct and indirect wholly owned subsidiaries of
▇▇▇▇ ▇▇. ▇▇▇▇ ▇▇ agrees that, prior to the Closing Date, ▇▇▇▇ ▇▇ shall amend the
terms of the Master Defined Benefit Plan to the extent necessary: (a) to provide
that participants therein who are employees of any
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of the Audio Products Group Companies immediately prior to the Closing Date
("Audio Products Group Participants") shall cease to accrue benefits thereunder
effective not later than sixteen days following the Closing Date (or such
earlier date as ▇▇▇▇ ▇▇ and the Buyer may subsequently agree to in writing); (b)
to provide that, as of the Closing Date, Audio Products Group Participants shall
be fully vested (i.e., one hundred percent vested) in their accrued benefits
under the Master Defined Benefit Plan; (c) to provide that post- Closing Date
service will be counted for purposes of determining eligibility for benefits for
disability and early retirement for each Audio Products Group Participant
subject to a collective bargaining agreement; and (d) to provide that Audio
Products Group Participants who are located at the Newport, Tennessee plant,
subject (i) to the Collective Bargaining Agreement between Electro-Voice and the
International Union of Electronic, Electrical, Salaried, Machine and Furniture
Workers, AFL-CIO, and its Local 662 and who terminate employment with the Buyer
and its Affiliates on or after May 16, 1997, or (ii) to the Collective
Bargaining Agreement between Electro-Voice and the International Union of
Electronic, Electrical, Salaried, Machine and Furniture Workers, AFL-CIO, and
its Local 663 and who terminate employment with the Buyer and its Affiliates on
or after July 10, 1997, shall be entitled to the monthly pension benefit due to
such employee pursuant to the Master Defined Benefit Plan for each year of
credited service (as defined in the Master Defined Benefit Plan) earned through
the Closing Date based on the multiplier that is effective as of May 16, 1997 or
July 10, 1997, as the case may be (i.e., $17.00 per month) and such benefit
shall be paid from the assets of the Master Defined Benefit Plan. ▇▇▇▇ ▇▇ agrees
to take, or cause each of the Audio Products Group Companies to take, prior to
the Closing Date, any and all actions (including, without limitation, the
delivery of any notices required under ERISA and the Code and the timely filing
of all required filings with any government agency), which are necessary or
reasonably required to effectuate the intent of this Section 6.3.
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6.4 Financing. At the direction of the Buyer and to the extent
so directed, ▇▇▇▇ ▇▇, PLC and each member of the Audio Products Group will use
its reasonable efforts to assist the Buyer in obtaining the Financing,
including, at Buyer's request, by causing each member of the Audio Products
Group and their respective officers, and employees, and by using reasonable
efforts to cause the respective counsel and accountants of each member of the
Audio Products Group to, cooperate with the Buyer in obtaining such Financing.
Without limiting the foregoing, ▇▇▇▇ ▇▇ agrees to cause the employees of the
Audio Products Group set forth on Schedule 6.4 to be available to assist the
Buyer in obtaining the Financing as Buyer may request.
6.5 Supplements to Schedules. From time to time prior to the
Closing Date, ▇▇▇▇ ▇▇ and PLC will promptly supplement or amend any Schedules
with respect to any matter arising after the execution of this Agreement, which,
if existing or occurring at or prior to the date of this Agreement, would have
been required to have been set forth by ▇▇▇▇ ▇▇ or PLC in a Schedule pursuant to
this Agreement, provided that ▇▇▇▇ ▇▇ and PLC shall deliver a final set of
updated Schedules to the Buyer no later than the third calendar day preceding
the Closing, which set of Schedules shall be subject to further supplementation
only in the case of matters having or expected to have a Material Adverse
Effect. Notwithstanding the foregoing, for purposes of Section 10.7, the
Schedules to this Agreement delivered by ▇▇▇▇ ▇▇ and PLC shall be deemed to
include only such information as is contained therein on the date of this
Agreement and shall be deemed to exclude any information contained in any
supplement thereto.
6.6 No Solicitation. ▇▇▇▇ ▇▇ and PLC shall not, and ▇▇▇▇ ▇▇
shall take any and all action necessary to prevent any of ▇▇▇▇ IV's directors,
officers, employees or agents and any directors, officers, employees or agents
of any of the Audio Products Group Companies, as the case may be, from, directly
or indirectly, encouraging, soliciting, initiating or entering into any
discussions or negotiations
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concerning, any disposition of all the stock or assets of the Audio Products
Group Companies or any of the business of the Audio Products Group (other than
pursuant to this Agreement) or any proposal therefor, or from furnishing or
causing to be furnished any information concerning the Audio Products Group to
any party in connection with any transaction involving the acquisition of any
stock or assets of any Audio Products Group Company or any of the business of
the Audio Products Group by any person other than the Buyer.
6.7 Non-Competition. (a) As a part of the inducement to the
Buyer to enter into this Agreement, ▇▇▇▇ ▇▇ hereby agrees that for a period of
five years from the Closing Date (the "Covenant Term"), ▇▇▇▇ ▇▇ shall not, nor
shall any Affiliate of ▇▇▇▇ ▇▇ (the "▇▇▇▇ ▇▇ Affiliates") without the prior
express written consent of the Buyer, own, manage, operate, or control, directly
or indirectly, any business, firm or corporation which competes with the Audio
Products Business as conducted immediately prior to the Closing Date in any
geographical market in which the Audio Products Business conducts its business
as of such date (a "Competing Business"). Ownership by ▇▇▇▇ ▇▇ or any ▇▇▇▇ ▇▇
Affiliate at or after the time of Closing, of less than five percent of the
issued and outstanding capital stock of any enterprise that engages in a
Competing Business the securities of which are listed on a national securities
exchange or included in the national list of over-the-counter securities shall
not be deemed a violation of this Section 6.7.
(b) In addition, neither ▇▇▇▇ ▇▇ nor any ▇▇▇▇ ▇▇ Affiliate
shall be deemed to be in violation of this Section 6.7 in the event that, at any
time during the Covenant Term, ▇▇▇▇ ▇▇ or any ▇▇▇▇ ▇▇ Affiliate acquires
substantially all the assets of any person, firm or corporation or a majority of
the issued and outstanding capital stock or interests of any corporation or
other entity and, following such acquisition, (i) less than the smaller of five
percent or $5 million of annual sales of any such acquired company are in
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respect of a Competing Business or (ii) (x) more than (A) the smaller of five
percent or $5 million of annual sales of any such acquired company, but less
than (B) the smaller of ten percent or $20 million of annual sales of any such
acquired company are in respect of a Competing Business and (y) ▇▇▇▇ ▇▇ disposes
of the entities or assets of such acquired company engaged in a Competing
Business (the "Interest") within 18 months following such acquisition pursuant
to the terms of clause (c) of this Section 6.7.
(c) If ▇▇▇▇ ▇▇ or a ▇▇▇▇ ▇▇ Affiliate determines to sell an
Interest to a third party, ▇▇▇▇ ▇▇ shall notify the Buyer of such determination
and offer to negotiate a sale of such Interest to the Buyer. Such notice shall
describe the Interest in reasonable detail. The Buyer shall notify ▇▇▇▇ ▇▇
within 30 days after receipt of the notice from ▇▇▇▇ ▇▇ as to whether the Buyer
desires to engage in such negotiations. If the Buyer does not wish to engage in
such negotiations or if the Buyer fails to respond to ▇▇▇▇ IV's notice within
such 30-day period, ▇▇▇▇ ▇▇ may sell the Interest to any third party or parties
for such price and on such terms and conditions as are acceptable to ▇▇▇▇ ▇▇ in
its discretion. If within such 30-day period the Buyer informs ▇▇▇▇ ▇▇ that it
desires to engage in such negotiations, ▇▇▇▇ ▇▇ and the Buyer shall each
negotiate in good faith the price and other terms and conditions of a sale of
the Interest to the Buyer. If despite such good faith negotiations ▇▇▇▇ ▇▇ and
the Buyer are unable to enter into a definitive agreement within 60 days after
the Buyer has informed ▇▇▇▇ ▇▇ it desires to negotiate and to consummate such
sale within the time provided for closing therein, then ▇▇▇▇ ▇▇ may sell the
Interest to any third party or parties for not less than the purchase price, and
on terms and conditions no more favorable to the third party or parties than the
material terms and conditions last offered by the Buyer to ▇▇▇▇ ▇▇ during the
course of such negotiations.
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(d) In the event of a breach by ▇▇▇▇ ▇▇ or any ▇▇▇▇ ▇▇
Affiliate of any provision of this Section 6.7, the Buyer shall be entitled to
injunctive relief, both preliminarily and permanently, since the remedy at law
would be inadequate and insufficient. Additionally, the Buyer will be entitled
to all such other legal and equitable remedies as may be available to it. In the
event any of the provisions of this Section 6.8 are determined by a court of
competent jurisdiction to be contrary to any applicable statute, law or rule, or
for any reason to be unenforceable as written, such court may modify any of such
provisions so as to permit enforcement thereof as thus modified.
(e) For purposes of this Agreement, an "Affiliate" of a
person shall mean the subsidiaries of such person, any person that controls such
person or any of such person's subsidiaries, provided that an Affiliate of ▇▇▇▇
▇▇ shall not include a person that acquires control of ▇▇▇▇ ▇▇ unless such
person or its subsidiaries acquires any Competing Business subsequent to
acquiring control of ▇▇▇▇ ▇▇, in which event such person shall be treated as an
Affiliate with respect to such newly acquired Competing Business. As used in
this clause (e), "control" shall mean the possession, directly or indirectly, of
the power to direct or cause the direction of the management policies of a
person, whether through the ownership of voting securities, by contract or
otherwise.
6.8 Corporate Organization. ▇▇▇▇ ▇▇ and PLC agree that, prior
to taking any action in connection with any restructuring, reorganization,
transfer, distribution or other disposition described in the recitals to this
Agreement or otherwise affecting the Audio Products Business (the
"Reorganization"), ▇▇▇▇ ▇▇ shall (a) consult with the Buyer and the Buyer's
advisors and (b) refrain from taking any such proposed action to which the
Buyer, in its reasonable judgment, objects on the basis that such proposed
action is inconsistent with the Reorganization. The fact that ▇▇▇▇ ▇▇ shall have
consulted with, and the Buyer shall have consented to, any proposed action in
connection with such
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restructuring shall in no way affect or limit any indemnification obligations
▇▇▇▇ ▇▇ or PLC may have hereunder. Prior to the Closing, ▇▇▇▇ ▇▇, PLC and each
Audio Products Group Company will have taken all corporate and other actions and
proceedings necessary to be taken in order to effect the Reorganization, and all
documents, including instruments of conveyance and assumption related thereto
(the "Reorganization Agreements") (or pursuant to which any Audio Products Group
Company or Asset has been restructured, reorganized, transferred, distributed or
otherwise disposed of during the six months prior to the Closing), will be
provided to the Buyer prior to the execution thereof and the Reorganization
Documents will be in form and substance reasonably satisfactory to the Buyer.
Each of ▇▇▇▇ ▇▇, PLC and their respective Affiliates has full power and
authority to enter into, execute and deliver each of the Reorganization
Agreements to be executed and delivered by them and to consummate the
transactions contemplated thereunder. As of the Closing, (i) the execution,
delivery and performance of each of the Reorganization Agreements will have been
duly authorized by all necessary action on the part of ▇▇▇▇ ▇▇, PLC and their
respective Affiliates and their respective shareholders, (ii) each of the
Reorganization Agreements will have been duly executed and delivered by ▇▇▇▇ ▇▇,
PLC or by their respective Affiliates which are party thereto, as the case may
be, (iii) no other corporate act or proceeding on the part of ▇▇▇▇ ▇▇, PLC or
their respective Affiliates or their respective shareholders will be necessary
to authorize the execution and delivery of the Reorganization Agreements or the
consummation by ▇▇▇▇ ▇▇ or each Affiliate which is a party thereto of the
transactions contemplated thereby, and (iv) will constitute valid and binding
obligations of ▇▇▇▇ ▇▇, PLC or their respective Affiliates, as the case may be,
enforceable against them in accordance with their respective terms.
6.9 Insurance. (a) In the event that, after the Closing, the
Buyer shall suffer any loss, arising out of a third party claim or otherwise,
that the Buyer in good faith
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notifies ▇▇▇▇ ▇▇ would be covered by any insurance policy maintained prior to
Closing by or for the benefit of any member of the Audio Products Group or any
asset used in the Audio Products Business (an "Insured Claim"), ▇▇▇▇ ▇▇ shall
present and diligently prosecute a claim for payment under such policy in
respect of such loss, and pay to the Buyer the proceeds of such claim under such
policy as reimbursement in respect of the amount of such loss, subject to the
provisions of this Section 6.9.
(b) ▇▇▇▇ ▇▇ shall not be obligated to present or prosecute any
claim under any such insurance policy with respect to any Insured Claim unless
(i) such Insured Claim is based upon bodily injury, property damage, wrongful or
other acts or another condition or event that arose or occurred (as determined
under the applicable insurance policy) prior to the Closing; and (ii) the Buyer
cooperates fully at its expense with ▇▇▇▇ IV's insurers in the investigation of
such Insured Claim and (in the case of any Insured Claim arising out of a
third-party claim) the defense thereof.
6.10 Subsequent Financial Statements. From the date hereof to
and including the Closing Date, ▇▇▇▇ ▇▇ will, and will cause the Audio Products
Group to, timely prepare, and promptly deliver to the Buyer, a monthly
consolidated balance sheet of the Audio Products Group as at the last day of
each month commencing from October 31, 1996, prepared in accordance with United
States GAAP applied on a consistent basis with the Financial Statements for the
period presented therein subject only to normal adjustments and the absence of
the notes thereto.
6.11 Cash Balances. ▇▇▇▇ ▇▇ and PLC will cause the Audio
Products Group Companies to hold only such cash at December 31, 1996 as is
necessary (a) in ▇▇▇▇ ▇▇ and PLC's reasonable judgment, to meet the Audio
Products Group Companies' anticipated working capital needs through and
including the Closing Date, and (b) to repay any
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indebtedness for borrowed money of the Audio Products Group Companies
outstanding as at December 31, 1996.
6.12 United Kingdom Trademarks. ▇▇▇▇ ▇▇ and PLC shall use
their best efforts to purchase or obtain, or to procure an assignment or
transfer to Klark Teknik of, the right to use the trademarks ELECTROVOICE as set
forth in Registration No. B1,077,124 and SENTRY as set forth in Registration No.
1,077,127 in the United Kingdom, free and clear of all liens, charges or
encumbrances and any requirement of any past, present or future royalty
payments, license fees, charges or other payment. Subject to Sections 11.6 and
11.7 of this Agreement, in the event neither ▇▇▇▇ ▇▇ nor PLC are able to
purchase, obtain or procure such use of such trademarks, ▇▇▇▇ ▇▇ and PLC shall,
jointly and severally, indemnify, defend and hold harmless the Buyer Group (as
defined in Section 11.3) from and against all Damages (as defined in Section
11.3) asserted against, resulting from, imposed upon or incurred by the Buyer
Group or any member thereof by reason of or resulting from the any lawsuit,
claim, action, litigation, demand, proceeding, citation, opposition, summons or
investigation brought by any party that is not an Affiliate of ▇▇▇▇ ▇▇, PLC, the
Company or the Buyer alleging or stating that the use of either or both such
trademarks conflicts with, imitates, infringes upon, makes illegal use of,
dilutes or misappropriates such third party's rights.
ARTICLE 7.
COVENANTS OF THE BUYER
7.1 Obligation to Secure Financing. The Buyer shall use
reasonable efforts to enter into definitive financing agreements pursuant to the
Bank Commitments as may be necessary to permit the Buyer to consummate the
transactions contemplated hereby on terms satisfactory to the Buyer in its
reasonable judgment and to do all such acts and
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things reasonably necessary to consummate the financing transactions
contemplated by the Bank Commitments.
7.2 Obligation to Continue Certain Employee Benefits. (a)
Except as expressly provided below, the Buyer hereby agrees that, at all times
during the one-year period following the Closing Date (the "Benefit Continuation
Period"), the Buyer shall maintain and provide for the employees of each Audio
Products Group Company or take such action as may be necessary to cause each
Audio Products Group Company to maintain and provide for its employees,
personnel practices, employee welfare plans and employee pension plans which
provide to the employees of each such Audio Products Group Company, benefits
that are substantially comparable in the aggregate to the Personnel Practices,
the Employee Welfare Plans and the Employee Pension Plans which were provided to
the employees of such Audio Products Group Company on the Closing Date, but
specifically excluding (i) any retiree medical benefits or insurance programs
maintained for former employees and retirees of any of the Audio Products Group
Companies, and (ii) any retiree medical benefits which are the subject of the
Settlement Agreement between IUE Local Union 900 and Electro-Voice, Inc. ▇▇▇▇ ▇▇
hereby expressly agrees, without limiting any other terms of this Agreement,
that it or any of its successors shall be responsible for the retiree liability
set forth in clauses (i) and (ii) hereof.
(b) Notwithstanding anything else in this Agreement to the
contrary, ▇▇▇▇ ▇▇ acknowledges and agrees that it is and shall be solely
responsible for the payment of any deferred compensation or stay bonuses payable
to any Audio Products Group Company employee related to services performed for
any of ▇▇▇▇ ▇▇ or any of the Audio Products Group Companies on or before the
Closing Date which is not paid or otherwise satisfied on or before the Closing
Date, and that, if any liability for any such amount is carried on the books and
records of any Audio Products Group Company as of the Closing Date, such
liability shall be taken into account as a current liability of such Audio
Products Group
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Company in determining its Working Capital for purposes of the purchase price
adjustment contemplated under Section 2.8 hereof.
7.3 Continuation of Welfare Plans. In connection with its
obligations set forth in Section 7.2 hereof, the Buyer agrees that, as soon as
reasonably practical following the Closing Date, the Buyer shall take such
action as may be necessary (including, but not limited to, the establishment of
contractual relationships with providers of group medical insurance, health
maintenance organizations, preferred provider organizations, insurance companies
and others) to cause each Audio Products Group Company to continue to maintain
and provide, at all times during the Benefit Continuation Period, benefits
which, in the aggregate, are substantially comparable to those provided under
the Employee Welfare Plans immediately prior to the Closing Date.
Notwithstanding anything contained in this Agreement to the contrary, if the
employment of any Audio Products Group Company employee set forth on Schedule
7.3 is terminated on or before the three-month anniversary following the
Closing Date, then ▇▇▇▇ ▇▇ shall be liable for and obligated to pay, in cash,
any severance or termination benefits payable to such employee under any
severance plan, policy or other arrangement entered into by such employee and
executed by with ▇▇▇▇ ▇▇ prior to the Closing Date. If the employment of any of
the Audio Products Group Company employees who are listed on Schedule 7.3 is
terminated after the three-month anniversary of the Closing Date, the Buyer or
the appropriate Audio Products Group Company shall be solely responsible for any
severance or other termination benefits that are payable to such employee as a
result of such termination of employment.
7.4 Continuation of Certain Defined Benefit Pension Benefits.
Except as otherwise required by any collective bargaining agreement, the Buyer
shall not be obligated by this Agreement or any other agreement or plan to adopt
and maintain, or to cause any Audio Products Group Company whose employees are
currently participating in the
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Master Defined Benefit Plan to adopt and maintain, any defined benefit pension
plans. If the Buyer or any Audio Products Group Company is required by any
collective bargaining agreement to provide benefits under a defined benefit
pension plan, the Buyer or the appropriate Audio Products Group Company shall
establish and maintain such a plan that provides benefits that are substantially
comparable to those provided in the Master Defined Benefit Plan and satisfies
the terms of the collective bargaining agreement currently applicable; provided,
however, that nothing contained herein shall limit the Buyer's ability to amend
or change such plan in any respect (i) if, in the good faith judgement of the
Buyer, such change is necessary to preserve the tax qualified status of such
plan or (ii) after the expiration of the collective bargaining agreements
currently in force.
7.5 Continuation of 401(k) Benefits. In connection with the
Buyer's obligations set forth in Section 7.2 hereof, the Buyer hereby agrees to
take such action as shall be necessary to adopt and maintain or to cause each
Audio Products Group Company whose employees are currently eligible to
participate in the ▇▇▇▇ ▇▇ Savings & Retirement Plan (the "Master 401(k) Plan"),
to adopt and maintain one or more profit sharing/401(k) type retirement plans
(all such profit sharing/401(k) type retirement plans hereinafter adopted and
maintained by the Buyer or any Audio Products Group Company being hereinafter
referred to as the "New 401(k) Plan") which provide each such employee of each
Audio Products Group Company during the Benefits Continuation Period the
opportunity to receive contributions to his account which are at least
substantially the same as the contributions made available under the terms of
the Master 401(k) Plan immediately prior to the Closing Date.
7.6 Insurance Coverage. The Buyer acknowledges that the
insurance coverage which ▇▇▇▇ ▇▇ maintains with respect to certain of the Audio
Products Group Companies, including, without limitation, general liability,
product liability, auto liability, property, commercial umbrella,
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excess umbrella, aircraft products, fiduciary liability, crime liability and
workers compensation insurance coverage, is maintained by ▇▇▇▇ ▇▇ under policies
with respect to which ▇▇▇▇ ▇▇ is the named insured and the Audio Products Group
Companies for whose benefit such insurance is maintained are additional
insureds. The Buyer acknowledges that effective as of the Closing Date, ▇▇▇▇ ▇▇
intends to remove the Audio Products Group Companies from the insurance coverage
provided by such insurance policies to the extent that such insurance coverage
relates to the business and assets of the Audio Products Group Companies with
respect to any periods arising at any time on or after the Closing Date.
Accordingly, the Buyer acknowledges that no insurance protection shall be
available to the Buyer with respect to any injury, loss or damage which the
Buyer, any of the Audio Products Companies, or any third party may suffer as a
result of any event occurring with respect to any of the Audio Products Group
Companies at any time on or after the Closing Date.
7.7 Investigation. The Buyer acknowledges that, except for the
representations and warranties of ▇▇▇▇ ▇▇, PLC and the Company contained in or
made pursuant to this Agreement, neither ▇▇▇▇ ▇▇, PLC nor any of their
respective officers, employees, agents, stockholders, Affiliates, consultants,
investment bankers, legal advisors or other representatives shall: (a) be deemed
to have made any representations, warranties or assurances of any kind; and (b)
have any liability or obligation to the Buyer in respect of any statement or
assurance made to the Buyer in connection with the transactions contemplated
hereby, including, without limitation, statements set forth in a Confidential
Selling Memorandum and provided to the Buyer or any written or oral statements
made by any employee or representative of ▇▇▇▇ ▇▇ or any of the Audio Products
Group Companies.
7.8 Schedules. ▇▇▇▇ ▇▇ and PLC shall deliver to Buyer
definitive Schedules to this Agreement no later than December 10, 1996.
Following delivery of the Schedules,
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Buyer shall have the period from December 11, 1996 up to and including December
16, 1996 to review and comment upon them. If, following such period of comment
and review Buyer is not satisfied with the Schedules or the disclosures
contained therein, Buyer may, by notice given to ▇▇▇▇ ▇▇ on or before December
17, 1996, reject such Schedules whereupon this Agreement shall be terminated
without liability on the part of either party. If Buyer does not so reject such
Schedules following such period of comment and review, such Schedules (including
any modifications agreed to by Buyer, ▇▇▇▇ ▇▇ and PLC) shall become part of this
Agreement as of the date hereof.
ARTICLE 8.
ADDITIONAL COVENANTS OF THE BUYER AND ▇▇▇▇ ▇▇
8.1 Consents and Conditions. (a) ▇▇▇▇ ▇▇ and PLC will use
their reasonable efforts, at their own cost and expense, to seek to obtain any
required stockholder, partner, third-party and governmental consents necessary
to consummate the transactions contemplated by this Agreement and to cause each
of the conditions to the obligations of ▇▇▇▇ ▇▇ and PLC and the Buyer to close
the transactions contemplated hereby (as more particularly set forth in Articles
9 and 10 hereof) to be satisfied. The Buyer will cooperate with ▇▇▇▇ ▇▇ and PLC
and take such action as ▇▇▇▇ ▇▇ and PLC may reasonably request in connection
with ▇▇▇▇ IV's and PLC's efforts to obtain any consent from any third party to
the consummation of the transactions contemplated hereby or to otherwise cause
such conditions to be fulfilled.
(b) The Buyer will use its reasonable efforts, at its own cost
and expense, to seek to obtain any required interest holder, third-party and
governmental consents necessary to consummate the transactions contemplated by
this Agreement, and to cause each of the conditions to the obligations of the
Buyer and ▇▇▇▇ ▇▇ to close the transac-
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tions contemplated hereby (as more particularly set forth in Articles 9 and 10
hereof) to be satisfied. ▇▇▇▇ ▇▇ will cooperate with the Buyer and take any such
action as the Buyer may reasonably request in connection with the Buyer's
efforts to obtain any consent from any third party to the consummation of the
transactions contemplated hereby or to otherwise cause such conditions to be
fulfilled. ▇▇▇▇ ▇▇ agrees to cooperate in good faith with Buyer in restructuring
the transactions contemplated hereby to provide for the acquisition of one or
more Audio Products Companies organized outside the United States by Buyer or
its subsidiaries, provided that ▇▇▇▇ ▇▇ and PLC shall not be required to consent
to any such restructuring to which ▇▇▇▇ ▇▇ objects in its reasonable judgment.
8.2 Filings. As soon as practicable after the date hereof,
▇▇▇▇ ▇▇, PLC and the Buyer shall make any and all filings required under the HSR
Act. In addition, ▇▇▇▇ ▇▇ and PLC shall furnish to the Buyer and the Buyer shall
furnish to ▇▇▇▇ ▇▇ and PLC: (a) such information and assistance as may
reasonably be requested in connection with the preparation by such other party
of any necessary filings or submissions to any governmental agency, including,
without limitation, any filings necessary under the provisions of the HSR Act;
and (b) copies of all correspondence, filings or communications (or memoranda
setting forth the substance thereof) between such party or its representatives,
on the one hand, and the Federal Trade Commission, the Antitrust Division of the
U.S. Department of Justice or any other governmental agency or authority or
members of their respective staffs, on the other hand, with respect to this
Agreement and the transactions contemplated hereby.
8.3 Access After the Closing Date. ▇▇▇▇ ▇▇, PLC and the
Company agree with the Buyer that, on and after the Closing Date, each, upon
reasonable advance notice from the other, will permit the other and their
respective representatives (including their counsel and auditors), during
normal business hours to have access to and examine and make
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copies of all books and records of the other which pertain to the business and
assets of any of the Audio Products Group Companies, including, but not limited
to, correspondence, memoranda, books of account, payroll records, computer,
litigation and tax records and insurance policies. The out-of-pocket costs of
photocopying any such material (excluding the compensation and related payroll
taxes of employees engaged in the copying of any such materials) shall be borne
by the party requesting such photocopies.
8.4 Record Retention. For a period of seven years after the
date hereof, or, in the case of books or records pertaining to Taxes, for a
period until the expiration of all applicable statutes of limitation, ▇▇▇▇ ▇▇,
PLC, the Company and the Buyer agree that, prior to the destruction or
disposition of any books or records pertaining to any of the ▇▇▇▇ ▇▇ Contracts,
any of the Audio Products Group Contracts or the business or assets of any of
the Audio Products Group Companies, each party shall provide not less than 45
nor more than 90 days' prior written notice to the other of any such proposed
destruction or disposal. If the recipient of such notice desires to obtain any
of such documents, it may do so by notifying the other party in writing at any
time prior to the scheduled date for such destruction or disposal. Such notice
must specify the documents which the requesting party wishes to obtain. The
parties shall then promptly arrange for the delivery of such documents. All
out-of-pocket costs associated with the delivery of the requested documents
(excluding the compensation (and related payroll taxes) of employees engaged in
the preparation, copying or delivery of any such documents) shall be paid by the
requesting party.
8.5 Tax Matters. (a) Tax Payments. (i) ▇▇▇▇ IV's
Responsibility. ▇▇▇▇ ▇▇ shall pay or cause to be paid to the relevant taxing
authorities, and shall reimburse and indemnify the Audio Products Group
Companies and the Buyer for (A) all federal Income Taxes of the consolidated
group (as defined in Section 1504(a) of the Code) that includes any of the Audio
Products Group Companies and of which ▇▇▇▇
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IV is a member ("▇▇▇▇ IV's Consolidated Group") for all periods or portions
thereof ending on or prior to the Closing Date, (B) all state, local and foreign
Income Taxes of any combined, consolidated or unitary state, local or foreign
group that includes any of the Audio Products Group Companies and of which ▇▇▇▇
▇▇ or any of ▇▇▇▇ IV's Affiliates (other than the Audio Products Group
Companies) is a member for all periods or portions thereof ending on or prior to
the Closing Date, (C) all Taxes for which any of the Audio Products Group
Companies may be held liable as a member of ▇▇▇▇ IV's Consolidated Group
pursuant to Section 1.1502-6(a) of the Treasury Regulations or as a member of
any combined, consolidated or unitary group of which ▇▇▇▇ ▇▇ or any of the its
Affiliates is or was a member pursuant to any similar provision of any state,
local or foreign law with respect to Income Taxes, (D) any Taxes arising from
any "intercompany transaction" (within the meaning of Section 1.1503-13 of the
Treasury Regulations and any similar provision of state, local or foreign law)
that occurred on or prior to the Closing Date and is required, for any reason,
to be taken into account on or after the Closing Date and (E) all Taxes for
which ▇▇▇▇ ▇▇ is responsible pursuant to Section 8.5(d). ▇▇▇▇ ▇▇ shall also pay
to the relevant taxing authorities, or shall reimburse or indemnify the Audio
Products Group Companies and the Buyer for, all Taxes that are or may become
payable by any of the Audio Products Group Companies or chargeable as a lien
upon the assets thereof and that (A) are attributable to any period or a portion
thereof ending or event occurring on or prior to the Closing Date, (B) have not
been paid as of the Closing Date, and (C) do not appear as a liability on the
balance sheet of the relevant Audio Products Group Company used in determining
the final Audited Working Capital.
(ii) The Buyer's Responsibility. The Buyer shall pay or cause
to be paid to the relevant taxing authorities, or shall reimburse and indemnify
▇▇▇▇ ▇▇ for, all Taxes that are or may become payable by any of the Audio
Products Group Companies or chargeable as a lien upon the
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assets thereof and that are not described as being the responsibility of ▇▇▇▇ ▇▇
in Section 8.5(a)(i) above.
(b) Tax Returns. (i) ▇▇▇▇ IV's Responsibility. ▇▇▇▇ ▇▇ and the
Buyer will cause each of the Audio Products Group Companies, to the extent
permitted by law, to join, for all periods ending on or prior to the Closing
Date, in ▇▇▇▇ IV's Consolidated Group and in any unitary, combined or
consolidated group state or local Tax Return that includes any of the Audio
Products Group Companies and ▇▇▇▇ ▇▇ or any of its Affiliates. ▇▇▇▇ ▇▇ shall
prepare and timely file, or cause to be prepared and timely filed, with the
relevant taxing authorities all Tax Returns relating to the business or assets
of any of the Audio Products Group Companies that are required to be filed on or
prior to the Closing Date.
(ii) The Buyer's Responsibility. The Buyer shall prepare and
timely file, or cause to be prepared and timely filed, with the relevant taxing
authorities all Tax Returns relating to the business or assets of the Audio
Products Group Companies other than those Tax Returns
described in Section 8.5(b)(i).
(iii) Cooperation. The Buyer and ▇▇▇▇ ▇▇ shall cooperate with
respect to the preparation and filing of any Tax Return for which the other is
responsible pursuant to this Section 8.5.
(iv) Apportionment. For purposes of paragraphs (a) and (b) of
this Section 8.5, any liability attributable to a taxable period that begins
before and ends after the Closing Date shall be apportioned between the portion
of such period ending on the Closing Date and the portion beginning on the day
after the Closing Date (A) in the case of real and personal property Taxes, by
apportioning such Taxes on a per diem basis, and (B) in the case of all other
Taxes on the basis of the actual activities of the Audio Products Group
Companies as determined from the books and records of the relevant entity for
such partial period, except that the exemptions, allowances or deductions that
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are calculated on an annual basis, such as the deduction for depreciation, shall
be apportioned on a time basis.
(c) Audits and Other Proceedings. Following the Closing Date,
▇▇▇▇ ▇▇ will, at its sole cost and expense, control the conduct of all stages of
any audit or other administrative or judicial proceeding with respect to (i) the
federal Income Tax liability of ▇▇▇▇ IV's Consolidated Group, (ii) any unitary,
combined or consolidated foreign, state or local Tax Return that includes any of
the Audio Products Group Companies and ▇▇▇▇ ▇▇ or any of its Affiliates, and
(iii) the Tax liability of the Audio Products Group Companies for any tax period
ending on or prior to the Closing Date. The Buyer will control the conduct of
all other audits or administrative or judicial proceedings with respect to the
Tax liability of the Audio Products Group Companies for any tax period or
portion thereof. With respect to any audit or other proceeding that it controls,
▇▇▇▇ ▇▇ (A) will give prompt notice to the Buyer of any Tax adjustment proposed
in writing pursuant to any audit or other proceeding controlled by ▇▇▇▇ ▇▇ with
respect to the assets or activities any of the Audio Products Group Companies,
provided that the failure to comply with this provision shall not affect any
party's right to indemnification hereunder except to the extent such party is
materially prejudiced thereby; (B) upon the Buyer's reasonable request will
discuss with the Buyer and its counsel the position that ▇▇▇▇ ▇▇ intends to take
regarding any issue concerning such assets or activities; and (C) will not, and
will not permit any of its Affiliates to, enter into any settlement or agreement
in compromise of any proposed adjustment which purports to bind the Buyer or any
of the Audio Group Companies with respect to any tax period ending after the
Closing Date without the express written consent of the Buyer, which consent
will not be unreasonably withheld. The Buyer (x) will give prompt notice to ▇▇▇▇
▇▇ of the commencement of any audit or other proceeding which could give rise to
a claim for payment against ▇▇▇▇ ▇▇ under this Agreement, provided that the
failure to comply with this provision shall not affect any party's right to
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indemnification hereunder except to the extent such party is materially
prejudiced thereby; (y) with respect to any audit or proceeding controlled by
the Buyer, afford ▇▇▇▇ ▇▇ and its counsel a reasonable opportunity to
participate in the conduct of any administrative or judicial proceeding
regarding a proposed adjustment described in clause (x) above including, without
limitation, the right to participate at its own expense in conferences with tax
authorities and submit pertinent material in support of ▇▇▇▇ IV's position; and
(z) will not, and will not permit any of its Affiliates to, accept any proposed
adjustment or enter into any settlement or agreement in compromise which would
result in a claim for indemnification against ▇▇▇▇ ▇▇ pursuant to this Agreement
without ▇▇▇▇ IV's express written consent, which consent will not be
unreasonably withheld. The Buyer and ▇▇▇▇ ▇▇ shall cooperate, and the Buyer
shall cause the Audio Products Group Companies Company Group to cooperate with
▇▇▇▇ ▇▇, with respect to any Tax audit or administrative or court proceeding
relating to Taxes referred to in this Section 8.05(c). Such cooperation shall
include providing all relevant information available to ▇▇▇▇ ▇▇ or the Buyer
(through the Audio Products Group Companies or otherwise), as the case may be,
with respect to any such audit or proceeding and making personnel available at
and for reasonable times, provided, that the foregoing shall be done in a manner
so as not to interfere unreasonably with the conduct of the business of the
parties.
The procedures in this Section 8.5(c), and not the procedures
in Section 11.6 or 11.7, shall govern the conduct of any audit or other
governmental proceeding with respect to Taxes described herein.
(d) Transaction-Related Taxes. ▇▇▇▇ ▇▇ shall be responsible
for, and neither the Buyer nor any of the Audio Products Group Companies shall
bear, any Taxes that relate to the consummation of the transactions contemplated
by this Agreement (including, but not limited to, any real property gains and
transfer Taxes).
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(e) Tax Sharing. On or before the Closing Date, all Tax
sharing agreements and arrangements between any of the Audio Products Group
Companies, on the one hand, and ▇▇▇▇ ▇▇ or any of its Affiliates on the other
hand, shall be terminated, and no additional payments shall be made thereunder.
8.6 Tax Refunds. ▇▇▇▇ ▇▇ shall be entitled to any tax refund
received by the Buyer or any of the Audio Products Group Companies (net of any
Taxes payable by the Buyer, its Affiliates or any of the Audio Products Group
Companies as a result of the receipt of such refunds and any reasonable
out-of-pocket fees or expenses, including attorneys' and accountants' fees,
payable by the Buyer, its Affiliates or the Company in connection with the
receipt thereof) to the extent that ▇▇▇▇ ▇▇ would be required to indemnify the
Buyer, its Affiliates or any of the Audio Products Group Companies for such
Taxes under this Agreement, other than (a) any refund reflected on the balance
sheets used in determining the final Audited Working Capital, and (b) any
refunds attributable to the carryback to any period ending on or prior to the
Closing Date of net operating losses, net capital losses or any other Tax
credits or benefits provided by law which are generated after the Closing Date
(other than any such loss or other credit or benefit that may be carried forward
under applicable law). Any amounts due to ▇▇▇▇ ▇▇ pursuant to this Section 8.6
shall be payable by the Buyer within 45 days after the receipt of such refund by
the relevant Audio Products Group Company. The Buyer shall be entitled to retain
all other refunds of Taxes of Audio Products Group Companies.
8.7 Confidentiality. ▇▇▇▇ ▇▇, PLC and the Company, on the one
hand, and the Buyer, on the other hand, will hold and will cause their
directors, officers, employees, agents, consultants and advisors to hold in
strict confidence, unless compelled to disclose by judicial or administrative
process or, in the opinion of their counsel, by other requirements of law, all
documents and
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information concerning the other parties furnished to them by such other parties
or its representatives in connection with the transactions contemplated by this
Agreement (except to the extent that such information can be shown to have been:
(a) previously lawfully known by the party to which it was furnished, (b) in the
public domain through no fault of the party to which it was furnished, or (c)
later lawfully acquired from other sources by the party to which it was
furnished), and the parties will not release or disclose such information to any
other person, except their auditors, attorneys, financial advisors, bankers and
other consultants and advisors in connection with this Agreement. If the
transactions contemplated by this Agreement are not consummated, such confidence
shall be maintained except to the extent such information comes into the public
domain through no fault of the party required to hold it in confidence, and in
any event such information shall not be used to the detriment of, or in relation
to any investment in, the other party and all such documents (including copies
thereof and software) shall be returned to the other party immediately upon the
written request of such other party.
8.8 Coordination of Defined Benefit Plan Payments. Subject to
the requirements of law, ▇▇▇▇ ▇▇ and PLC agree to use their best efforts, on and
after the Closing Date, to provide the Buyer with any information that may be
reasonably requested with respect to the amount or level of benefits under the
terms of any collective bargaining agreement or the Master Defined Benefit Plan.
8.9 Transfer of 401(k) Plan Assets. Certain employees of
certain of the Audio Products Group Companies have accumulated funds for their
retirement in an account which is maintained for the benefit of such Audio
Products Group Company employees under the terms of ▇▇▇▇ IV's Master 401(k)
Plan. The assets of the Master 401(k) Plan are held under the terms of a master
trust agreement, dated as of January 1, 1987, between ▇▇▇▇ ▇▇ and Marine Midland
Bank, N.A. (the "Master Trust").
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(a) As soon as practicable following the Closing, ▇▇▇▇ ▇▇
shall take such action as may reasonably be necessary to amend the Master 401(k)
Plan to the extent necessary to provide that each Audio Products Group Company
employee who is a participant in the Master 401(k) Plan shall be fully vested
(i.e., one-hundred percent vested) in his or her account balance, if any,
determined as of the Closing Date under the terms of the Master 401(k) Plan.
(b) As soon as practicable following the Closing Date, the
Buyer shall take such action as may be reasonably necessary to provide for the
transfer of the account balance of each employee of any Audio Products Group
Company under the terms of the Master 401(k) Plan to the New 401(k) Plan. In
connection with such transfer, the Buyer shall take such action as may
reasonably be necessary or which may be required by the Internal Revenue
Service, including, but not limited to, the adoption of amendments to the New
401(k) Plan, to accommodate such transfer. In addition, the Buyer shall take all
necessary steps to ensure that: (i) the account balance determined under the
terms of the New 401(k) Plan as of the date on which the assets of the Master
401(k) Plan which are attributable to employees of the Audio Products Group
Companies are transferred (as hereinafter provided for) is not less than the
account balance of each such employee determined as of such date under the terms
of the Master 401(k) Plan; and (ii) the New 401(k) Plan shall continue to
conform to all applicable requirements established for qualification of
retirement plans under the terms of Section 401(a) of the Code and all
requirements of Section 401(k) of the Code for the duration of the Benefit
Continuation Period.
(c) As soon as practicable following the Closing Date, ▇▇▇▇ ▇▇
shall deliver to the Buyer a statement of the amount of the account balance
under the terms of the Master 401(k) Plan of each employee of each Audio
Products Group Company.
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(d) As soon as practicable following the Closing Date and the
delivery by the Buyer to ▇▇▇▇ ▇▇ of a copy of the New 401(k) Plan, a copy of any
amendment to such plan adopted pursuant to Section 8.9(b) hereof, a copy of the
trust established pursuant to the terms of the New 401(k) Plan, documentation
establishing to the reasonable satisfaction of ▇▇▇▇ IV's counsel that the New
401(k) Plan, as amended, is intended to conform to all applicable requirements
established for qualification of retirement plans under Section 401(a) of the
Code and that the trust established pursuant to the terms of the New 401(k) Plan
is intended to conform to all applicable requirements under Section 501(a) of
the Code and the regulations thereunder, but in no event prior to the expiration
of 30 days following the filing of any notices of transfer and assumption
required under Section 6058(b) of the Code, ▇▇▇▇ ▇▇ shall, direct the trustee of
the Master Trust holding the assets of the Master 401(k) Plan to transfer to the
trust established under the terms of the New 401(k) Plan, an amount, in cash,
equal to the aggregate value of the accounts established under the terms of the
Master 401(k) Plan for all employees of the Audio Products Group Companies. For
purposes of calculating the amount to be transferred to the trust established
under the terms of the New 401(k) Plan pursuant to the preceding sentence, the
value of such accounts shall be determined as of the valuation date immediately
preceding the Closing Date, plus or minus, as the case may be, the net earnings
or losses of such trust attributable to the employees of the Audio Products
Group Companies for the period from the valuation date immediately preceding the
Closing Date to the valuation date immediately preceding the date of such
transfer, plus any contributions which are required to be made in respect of
such employees which were not yet paid to the trustee of the Master Trust.
(e) In connection with the transfer contemplated by this
Section 8.9, ▇▇▇▇ ▇▇ and the Buyer shall cooperate with each other and make all
appropriate filings required under the Code or the regulations thereunder in
connection
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with such transfers and provide any necessary information to the Buyer.
8.10 Public Announcements. The Buyer, on the one hand, and
▇▇▇▇ ▇▇, PLC and the Company, on the other hand, will consult with each other
before issuing any press releases or otherwise making any public statements with
respect to this Agreement or the transactions contemplated hereby and shall not
issue any press release or make any public statement prior to receiving the
written consent of the party being consulted, except as may be required by law.
8.11 Post-Closing Cooperation. After the Closing, without
further consideration: (a) ▇▇▇▇ ▇▇ and PLC shall, and shall cause their
respective officers, directors, employees, representatives, Affiliates and
agents to, take all such further actions and execute, acknowledge and deliver
all such further consents and other documents as the Buyer may reasonably
request to facilitate or effect the transactions contemplated hereby or pursuant
to the Ancillary Agreements; and (b) the Buyer shall, and shall cause each of
the Audio Products Group Companies and its and their respective officers,
members, directors, employees, representatives, Affiliates and agents, to take
all such further actions and execute, acknowledge and deliver all such further
consents and other documents as ▇▇▇▇ ▇▇ may reasonably request in order to
facilitate or effect the transactions contemplated hereby or pursuant to the
Ancillary Agreements. ▇▇▇▇ ▇▇ and PLC shall also provide cooperation and
information with respect to ongoing legal matters relating to the Audio Products
Group Companies and shall use reasonable commercial efforts to cause any lawyers
or law firms who currently provide services to any Audio Products Group Company
to cooperate in providing information or services to any Audio Products Group
Company in connection with such matters after the Closing. In addition, ▇▇▇▇ ▇▇
and PLC shall use reasonable commercial efforts, and shall use reasonable
commercial efforts to cause their respective officers, directors, employees,
representatives and agents, to take all such further actions
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to execute, acknowledge and deliver all such further consents and other
documents as the Buyer may reasonably request to facilitate or effect the
refinancing of the subordinated debt and equity contemplated by the Bank
Commitments, provided, however, that (i) Buyer shall pay any third party fees
and expenses required to be incurred by ▇▇▇▇ ▇▇ or PLC in connection therewith,
and (ii) to the extent that compliance with any such request could result in
other material liability to either ▇▇▇▇ ▇▇ or PLC, ▇▇▇▇ ▇▇ or PLC, as the case
may be, shall not be required to comply with any such request unless Buyer or
the Company agrees to provide indemnification against any such liability in form
and substance reasonably satisfactory to ▇▇▇▇ ▇▇ or PLC.
8.12 Gulton Name. Buyer will change the name of the Company
immediately following the Closing to a name that does not include the word
GULTON or any word confusingly similar to GULTON. The Buyer acknowledges that
after Closing, ownership of all right, title and interest in and to the
trademark, trade name and service ▇▇▇▇ ▇▇▇▇▇▇ owned by ▇▇▇▇ ▇▇, PLC and/or any
of the Audio Products Group Companies prior to the Closing shall remain with
▇▇▇▇ ▇▇ or PLC, as the case may be. Except as set forth herein, nothing in this
Agreement grants the Buyer, any right, title or interest in and to GULTON and
the Buyer agrees, at ▇▇▇▇ IV's and/or PLC's expense, to take all actions and to
execute and deliver all documents reasonably necessary, desirable or proper to
assist ▇▇▇▇ ▇▇ and/or PLC in maintaining their respective rights to the GULTON
trademark, trade name or service ▇▇▇▇, provided, however, that notwithstanding
anything contained in this Section 8.12 to the contrary, for a period of one
month after the Closing Date, ▇▇▇▇ ▇▇ and PLC hereby grant the Buyer, the
Company and each Audio Products Company a royalty-free right and license to use
GULTON as a trade name, trademark or service ▇▇▇▇ in any jurisdiction in the
world in which the Audio Products Business is currently using GULTON.
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ARTICLE 9.
CONDITIONS PRECEDENT TO THE OBLIGATION
OF ▇▇▇▇ ▇▇, PLC AND THE COMPANY
The obligations of ▇▇▇▇ ▇▇, PLC and the Company to enter into
and complete the transactions contemplated by this Agreement are subject to the
fulfillment of the following conditions, any one or more of which may be waived
by them:
9.1 Representations and Covenants. (a) The representations and
warranties of the Buyer contained in this Agreement shall be true and correct in
all material respects (without regard to any materiality or knowledge
qualification contained in such representation or warranty) on and as of the
Closing Date with the same force and effect as though made on and as of the
Closing Date.
(b) The Buyer shall have performed and complied in all
material respects with all covenants and agreements required by this Agreement
to be performed or complied with by it on or prior to the Closing Date.
(c) The Buyer shall have delivered to ▇▇▇▇ ▇▇ a certificate,
dated the Closing Date and signed by an officer of the Buyer, to the foregoing
effect and stating that all conditions to ▇▇▇▇ IV's obligations hereunder have
been satisfied.
9.2 Government Consents; Filings. All consents, approvals,
authorizations, filings and registrations required to be obtained or made under
applicable law in connection with the transactions contemplated by this
Agreement shall have been obtained or made and shall be in full force and
effect, the waiting period under the HSR Act shall have expired and no
conditions to the transactions contemplated by this Agreement shall have been
imposed or proposed by any foreign or U.S. federal or state governmental or
regulatory agency.
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9.3 Third-Party Consents. All consents and approvals required
to be obtained by the Buyer in connection with the execution and delivery of
this Agreement and the Buyer Ancillary Agreements for the consummation of the
transactions contemplated hereby or thereby shall have been obtained, including
all consents and approvals from any parties to any contracts or other agreements
with the Buyer set forth in Schedule 5.6.
9.4 Substitute Sureties and Letters of Credit. Except as
otherwise set forth in this Section 9.4, the Buyer shall deliver to the parties
identified in Schedule 9.4 letters of credit and sureties to replace the letters
of credit and sureties identified in Schedule 9.4. The form and substance of
such substitute letters of credit and sureties shall be reasonably acceptable to
▇▇▇▇ ▇▇ and shall be sufficient to cause each of the parties identified in
Schedule 9.4 to deliver to ▇▇▇▇ ▇▇ a written acknowledgment from such parties
that, effective as of the Closing Date, ▇▇▇▇ ▇▇ is and shall be unconditionally
released and discharged from any and all liabilities and obligations that ▇▇▇▇
▇▇ may have under the terms of any such sureties or letters of credit set forth
on such Schedule 9.4, or in the event that any such discharges cannot be
obtained at or prior to Closing, as an interim measure the Buyer shall deliver
one or more letters of credit for the benefit of ▇▇▇▇ ▇▇ in the same amount and
otherwise of like tenor to any letter of credit or surety for which such
discharge cannot be obtained.
9.5 Ancillary Documents. The Buyer or the Company shall have
executed and delivered to ▇▇▇▇ ▇▇ and PLC the ▇▇▇▇ ▇▇ License Agreement, the
Transition Services Agreement and the Software License Agreement and a sublease
in form and substance reasonably satisfactory to ▇▇▇▇ ▇▇ and the Buyer pursuant
to which ▇▇▇▇ ▇▇ shall sublease to the Company a portion of the property at
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇.
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9.6 Litigation. No action, suit or proceeding which seeks to
restrain, modify or prevent the carrying out of the transactions contemplated
hereby or which seeks damages or a discovery order in connection with such
transactions shall have been instituted before any court or U.S. or foreign
governmental or regulatory body, or instituted or threatened by any U.S. or
foreign governmental or regulatory body, and no suit, action or proceeding shall
have been instituted or threatened against the Buyer by any person, firm,
corporation or other entity before any court or U.S. or foreign governmental or
regulatory body which, if adversely determined against the Buyer, would have a
material adverse effect on the business and financial condition of the Buyer.
9.7 Opinion of Counsel. ▇▇▇▇ ▇▇ shall have received an
opinion, addressed to it and dated the Closing Date, from Debevoise & ▇▇▇▇▇▇▇▇,
counsel to the Buyer, in form and substance reasonably satisfactory to ▇▇▇▇ ▇▇.
9.8 Corporate and Other Proceedings; Delivery of Documents.
All limited liability company proceedings of the Buyer necessary in connection
with the transactions contemplated by this Agreement shall have been taken, and
the Buyer shall have delivered to ▇▇▇▇ ▇▇ and PLC at the Closing all other
documents, instruments and writings reasonably requested by ▇▇▇▇ ▇▇ or PLC in
order to effect the consummation of the transactions contemplated by this
Agreement.
ARTICLE 10.
CONDITIONS PRECEDENT TO THE OBLIGATION OF THE BUYER
The obligations of the Buyer to enter into and complete the
transactions contemplated by this Agreement are subject to the fulfillment, on
or prior to the Closing Date, of the following conditions, any one or more of
which may be waived by them:
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10.1 Representations and Covenants. (a) The representations
and warranties of ▇▇▇▇ ▇▇, PLC and the Company contained in this Agreement shall
be true and correct in all material respects (without regard to any materiality
or knowledge qualification contained in such representation or warranty) on and
as of the Closing Date with the same force and effect as though made on and as
of the Closing Date.
(b) ▇▇▇▇ ▇▇, PLC and the Company shall have performed and
complied in all material respects with all covenants and agreements required by
this Agreement to be performed or complied with by ▇▇▇▇ ▇▇, PLC or the Company,
as the case may be, on or prior to the Closing Date.
(c) ▇▇▇▇ ▇▇ and PLC shall each have delivered to the Buyer a
certificate, dated the Closing Date and signed by an officer of ▇▇▇▇ ▇▇ and PLC,
to the foregoing effect and stating that all conditions to the Buyer's
obligations hereunder have been satisfied.
10.2 Government Consents; Filings. All consents, approvals,
authorizations, filings and registrations required to be made under applicable
law in connection with the transactions contemplated by this Agreement shall
have been made and shall be in full force and effect, the waiting period under
the HSR Act shall have expired and no conditions to the transactions
contemplated hereby shall have been imposed or proposed by any foreign or U.S.
federal or state governmental or regulatory agency.
10.3 Third-Party Consents. (a) Chase Manhattan Bank shall have
released all the shares of Common Stock of the Company and the shares of common
stock of Electro-Voice held by them from any lien under, or pledge contemplated
by, the terms of the Credit Agreement between ▇▇▇▇ ▇▇ and ▇▇▇▇▇ Manhattan Bank,
dated as of March 8, 1996.
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(b) All consents and approvals required to be obtained by ▇▇▇▇
▇▇, PLC or the Company and all notices required to be provided in connection
with the execution and delivery of this Agreement and the ▇▇▇▇ ▇▇ Ancillary
Agreements for the consummation of the transactions contemplated hereby or
thereby shall have been obtained or given, including all consents and approvals
from any parties to any contracts or other agreements with ▇▇▇▇ ▇▇, PLC or any
of the Audio Products Group Companies as more particularly set forth in
Schedule 4.18 and any notices to workers councils or other similar bodies.
10.4 Ancillary Agreements. ▇▇▇▇ ▇▇ and PLC shall have executed
and delivered to the Buyer the ▇▇▇▇ ▇▇ License Agreement, the Transition
Services Agreement and the Soft ▇▇▇▇ License Agreement and a sublease in form
and substance reasonably satisfactory to the Buyer and ▇▇▇▇ ▇▇ pursuant to which
▇▇▇▇ ▇▇ shall sublease to the Company a portion of the property at ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ (the "Austin Sublease").
10.5 Litigation. No action, suit or proceeding which seeks to
restrain, modify or prevent the carrying out of the transactions contemplated
hereby or which seeks damages or a discovery order in connection with such
transactions shall have been instituted before any court or U.S. or foreign
governmental or regulatory body, or instituted or threatened by any U.S. or
foreign governmental or regulatory body, and no suit, action or proceeding shall
have been instituted or threatened against ▇▇▇▇ ▇▇, PLC or the Company by any
person, firm, corporation or other entity before any court or U.S. or foreign
governmental or regulatory body which, if adversely determined against ▇▇▇▇ ▇▇,
PLC or the Company, would have a Material Adverse Effect.
10.6 Certificate as to Authorization. The Buyer shall have
received a certificate of the Secretary or an Assistant Secretary of each of
▇▇▇▇ ▇▇, PLC and the Company, dated the Closing Date, setting forth the
resolutions of their respective Boards of Directors authorizing the
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execution and delivery of this Agreement, the transactions contemplated by this
Agreement, and certifying that such resolutions were duly adopted and have not
been rescinded or amended as of the Closing Date, and certifying that approval
by the shareholders of ▇▇▇▇ ▇▇, PLC and the Company is not required, or has been
obtained, in connection with this Agreement or the transactions contemplated by
this Agreement.
10.7 No Material Adverse Effect. No event or condition shall
exist or have occurred since the date of this Agreement that, individually or in
the aggregate, has had or resulted in, or would reasonably be expected to have
or result in, a Material Adverse Effect.
10.8 Opinion of Counsel. The Buyer shall have received an
opinion, addressed to it and dated the Closing Date, from Lippes, ▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP, counsel to ▇▇▇▇ ▇▇, in form and substance reasonably
satisfactory to the Buyer.
10.9 Financing. The Buyer shall have obtained funds sufficient
to enable it to consummate the transactions contemplated by this Agreement on
such terms as are consistent with the Bank Commitments and satisfactory to the
Buyer in its reasonable judgment.
10.10 Real Estate Matters. The Buyer shall have received
commitments from one or more nationally recognized title insurance companies
selected by the Buyer (each a "Title Company") to issue, at the Buyer's expense,
(a) a fee owner's title insurance policy to the applicable members of the Audio
Products Group, and a loan policy to one or more of the Buyer's financial
institutions, with respect to each of the material Real Properties in the United
States owned by the Audio Products Group Companies, and (b) a leasehold owner's
title insurance policy to the applicable members of the Audio Products Group,
and a leasehold loan policy issued to one or more of the Buyer's financial
institutions, with respect to each of the material Real Properties leased by
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the Audio Products Group Companies in the United States, in each case in form
and substance reasonably satisfactory to the Buyer and each such financial
institution, together with reinsurance agreements and endorsements reasonably
requested by the Buyer, including, without limitation, access, survey, zoning,
non-imputation, comprehensive and contiguity endorsements, in an amount
determined by the Buyer, insuring applicable members of the Audio Products Group
and the Buyer's financial institutions and issued as of the Closing Date by such
Title Company, showing the applicable members of the Audio Products Group to
have a fee simple title to all of the Real Property owned and a valid leasehold
estate in such Real Property leased, in each case subject only to such liens,
charges or other encumbrances as are set forth on appropriate schedules to
Section 4.12. The Buyer shall also have received any affidavits or indemnities
required by the Title Company in connection with the deletion of standard
exceptions and provision of gap coverage on the owner's title policies,
leasehold title policies and any loan title policies issued to the Buyer's
lenders.
10.11 Corporate and Other Proceedings; Delivery of Documents.
All corporate, partnership and other proceedings of ▇▇▇▇ ▇▇, PLC and the Company
necessary in connection with the transactions contemplated hereby shall have
been taken, and the Buyer and its counsel shall have received all such
documents, instruments and writings reasonably requested by the Buyer in order
to effect the consummation of the transactions contemplated by this Agreement.
10.12 Repayment of Indebtedness. All outstanding indebtedness
for borrowed money of any of the Audio Products Group Companies, including but
not limited to guarantees, letters of credit, performance bonds, sureties,
loans, security interests, other debt obligations and those such items set forth
in Schedule 10.12 hereto (other than any item set forth in Schedule 9.4 or at
items VIII, IX and XI in Schedule 4.11(a) and, if requested by Buyer on or prior
to the seventh day prior to the Closing Date and subject to
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the Mortgagee's consent, the mortgage of the Gauss Facility in Sun Valley,
California (the "Gauss Mortgage")) shall have been repaid or removed as of the
Closing Date without liability to the Buyer.
10.13 Cancellation of Intercompany Arrangements. Except for
the Ancillary Agreements, all arrangements, whether written or oral, between any
of the Audio Products Group Companies, on the one hand, and ▇▇▇▇ ▇▇ or any of
its Affiliates (other than the Audio Products Group Companies but excluding
PLC), on the other hand, shall have been canceled without liability to the Buyer
or any of the Audio Products Group Companies, including those set forth on
Schedule 10.13.
10.14 Data Base Transfer Instructions. A complete copy of all
data and computer records with respect to any health and welfare plans or Plans
of any of the Audio Products Group Companies or the benefits, dates of service
of any employee of any Audio Products Group Company shall, as of the Closing
Date, has been segregated and downloaded from the computers of ▇▇▇▇ ▇▇ to the
computers of the Company.
10.15 Equity Interests. All issued and outstanding shares of
capital stock or other outstanding equity or partnership interests of each of
the Audio Products Group Companies shall be owned free and clear of all liens
and encumbrances by the person set forth opposite such company's name on
Schedule 10.15.
ARTICLE 11.
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATIONS
11.1 Survival of Representations and Warranties, Etc. All
claims for indemnification under Section 11.3 or Section 11.4 with respect to
the representations and warranties contained herein must be asserted on or prior
to
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the date of termination of the respective survival periods set forth in this
Section 11.1, provided that, no obligation of indemnification pursuant to this
Article 11 shall terminate with respect to any representation or warranty if an
Indemnified Party (as defined in Section 11.6) shall have, prior to the
termination of the survival period for such representation or warranty, made a
claim relating to a breach of such representation or warranty by delivering
written notice (stating in reasonable detail the basis of such claim) to an
Indemnifying Party (as defined in Section 11.6). The representations and
warranties contained in this Agreement shall survive the execution and delivery
of this Agreement, any examination by or on behalf of the parties hereto and the
completion of the transactions contemplated herein, but only to the extent
specified below:
(a) except as set forth in clause (c) below, the
representations and warranties contained in Article 4 shall survive for a period
of 18 months from and after the Closing Date;
(b) the representations and warranties contained in Article 5
shall survive for a period of 18 months from and after the Closing Date; and
(c) the representations and warranties of ▇▇▇▇ ▇▇ contained in
(i) Sections 4.3 (the "Due Authorization Warranties") and 4.4 and 4.5 (the
"Title Warranties") shall survive without limitation; (ii) Section 4.17(c) (the
"ERISA Warranties") shall survive for a period of three years; (iii) Section
4.19 (the "Environmental Warranties") shall survive for a period of five years;
(iv) Section 4.22 (the "Tax Warranties") shall survive until 30 days after the
expiration of the applicable statute of limitations (plus extensions) with
respect to the Tax giving rise to such Claim; and (v) Section 4.29 shall survive
for a period of 45 days following the delivery to Buyer of the Audited Closing
Financial Statements.
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11.2 Statements as Representations. All statements contained
in any Schedule delivered pursuant to Articles 4 and 5 hereof, shall be deemed
representations and warranties for purposes of this Agreement.
11.3 Indemnification by ▇▇▇▇ ▇▇. (a) Subject to the terms and
conditions of this Section 11, ▇▇▇▇ ▇▇ and PLC hereby agree to, jointly and
severally, indemnify, defend and hold harmless the Buyer and any parent,
subsidiary or Affiliate entities of the Buyer and the officers, directors,
partners, members, stockholders, employees, agents and advisers of each such
person, including, without limitation, each of the Audio Products Group
Companies (hereinafter the "Buyer Group"), from and against all demands, claims,
actions or causes of action, assessments, payments, losses, damages,
liabilities, costs and expenses, including, without limitation, interest,
penalties and reasonable attorneys' fees and expenses (collectively "Damages")
asserted against, resulting to, imposed upon or incurred by the Buyer Group or
any member thereof, by reason of or resulting from: (i) any liabilities of ▇▇▇▇
▇▇, PLC or any of their Affiliates (other than the Audio Products Group
Companies), arising for any reason, and any liabilities relating to any of their
respective businesses, operations or assets (other than the business, assets or
operations of the Audio Products Group Business); (ii) any breach of any
representation, warranty, covenant or agreement of ▇▇▇▇ ▇▇ or PLC; (iii) Taxes
that are the responsibility of ▇▇▇▇ ▇▇ as provided in Section 8.5; (iv) any
liabilities arising in connection with the items set forth on Schedule
11.3(a)(iv); and (v) any liabilities arising in connection with the obligations
set forth in Section 6.12. For purposes of this Agreement, the claims described
in Section 11.3(a)(i) through (v) shall be referred to individually as a "Claim"
and collectively as "Claims".
(b) The obligation of ▇▇▇▇ ▇▇ and PLC to indemnify the Buyer
Group shall exclude Damages which may arise as a result of any reorganization or
other legal restructuring of the Buyer or the Buyer Group and in no
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event shall any such reorganization or restructuring be deemed to increase the
liability of ▇▇▇▇ ▇▇ or PLC beyond the actual Damages arising from any Claims.
(c) Neither ▇▇▇▇ ▇▇ nor PLC shall be required to indemnify the
Buyer or any member of the Buyer Group from any Damages except to the extent
that (i) the aggregate amount of the Damages incurred by the Buyer and the Buyer
Group arising from any such Claim or from all Claims exceeds $1,500,000 and then
only to the extent that the amount of such Damages exceeds $1,500,000, and (ii)
the aggregate liability of ▇▇▇▇ ▇▇ and PLC under this Section 11.3 shall not
exceed the amount of the Final Purchase Price; provided, however, that (A) the
foregoing clauses (c)(i) and (c)(ii) shall not apply to Claims under Section
11.3(a)(i) and 11.3(a)(iv) and (B) the foregoing clause (c)(i) shall not apply
to Claims under (x) Section 11.3(a)(ii) to the extent that such Claim arises out
of a breach of the Title Warranty, Due Authorization Warranty, or Tax Warranty,
(y) Section 11.3(a)(iii) or (z) Section 11.3(a)(v).
11.4 Indemnification by the Buyer and the Company. (a) The
Buyer and the Company hereby agree to, jointly and severally, indemnify, defend
and hold harmless ▇▇▇▇ ▇▇ and any subsidiary or Affiliate entities of ▇▇▇▇ ▇▇
and the officers, directors, partners, members, stock holders, employees, agents
and advisers of each such person (the "Seller Group") from any Damages arising
by reason of or resulting from: (i) any claim made against ▇▇▇▇ ▇▇ or any member
of the Seller Group relating to any of the business, assets or operations of the
Audio Products Group after, but not before, the Closing Date; and (ii) any
breach of any representation, warranty, covenant or agreement of the Buyer
contained in or made pursuant to this Agreement.
(b) The obligation of the Buyer and the Company to indemnify
the ▇▇▇▇ ▇▇ Group as set forth in the preceding paragraph shall exclude Damages
which may arise as a result of any reorganization or other legal restructuring
of ▇▇▇▇ ▇▇ or the Seller Group and in no event shall any such
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reorganization or restructuring be deemed to increase the liability of the Buyer
or the Company beyond the actual Damages arising from any such claims.
(c) Neither the Buyer nor the Company shall be required to
indemnify ▇▇▇▇ ▇▇ or any member of the Seller Group from any Damages except to
the extent that (i) the aggregate amount of the Damages incurred by ▇▇▇▇ ▇▇ and
the Seller Group arising from any claim or claims described solely in Section
11.4(a) hereof exceeds $1,500,000 and then only to the extent that the amount of
such Damages exceeds $1,500,000, and (ii) the aggregate liability of the Buyer
and the Company under this Section 11.4 shall not exceed the amount of the Final
Purchase Price; provided, however, that the foregoing clauses (c)(i) and (c)(ii)
shall not apply to claims under Section 11.4(a)(i) and the foregoing clause
(c)(i) shall not apply to claims under Section 11.4(a)(iii) to the extent that
such claim arises out of a breach of Section 5.2.
11.5 Payment Adjustments. Any indemnity payment made by ▇▇▇▇
▇▇ to the Buyer Group, on the one hand, or by the Buyer and the Company to the
Seller Group, on the other hand, pursuant to this Article 11 in respect of any
claim shall be net of an amount equal to (a) any insurance proceeds realized by
and paid to the Indemnified Party (as defined in Section 11.6 below) minus (b)
any related costs and expenses, including the aggregate cost of pursuing any
related insurance claims plus any correspondent increases in insurance premiums
or other chargebacks. The Indemnified Party shall use its reasonable efforts to
make insurance claims relating to any claim for which it is seeking
indemnification pursuant to this Article 11; provided, that the Indemnified
party shall not be obligated to make such an insurance claim if the Indemnified
Party in its reasonable judgment believes that the cost of pursuing such an
insurance claim together with any correspondent increase in insurance premiums
or other chargebacks to the Indemnified Party or the Company, as the case may
be, would exceed the
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value of the claim for which the Indemnified Party is seeking indemnification
pursuant to this Article 11.
11.6 Conditions of Indemnification. The obligations and
liabilities of ▇▇▇▇ ▇▇ under Section 11.3 hereof and the obligations and
liabilities of the Buyer and the Company under Section 11.4 hereof with respect
to Claims relating to third parties shall be subject to the following terms and
conditions:
(a) A party seeking indemnification under this Agreement
("Indemnified Party") will give the party required to provide such
indemnification (the "Indemnifying Party") prompt notice of any such Claim, and
thereafter the Indemnifying Party will undertake the defense thereof by
representatives chosen by it (which counsel shall be reasonably acceptable to
the Indemnified Parties).
(b) If the Indemnifying Party, within a reason able time after
notice of any such Claim, fails to defend such Claim, the Indemnified Party
will, upon further notice to the Indemnifying Party, have the right to undertake
the defense, compromise or settlement of such Claim on behalf of and for the
account and risk of the Indemnifying Party, subject to the right of the
Indemnifying Party to assume the defense of such Claim at any time prior to
settlement, compromise or final determination thereof.
(c) Anything in this Section 11.6 to the contrary
notwithstanding: (i) if there is a reasonable probability that a Claim may
materially and adversely affect an Indemnified Party other than as a result of
money damages or other money payments, the Indemnified Party shall have the
right, at its own cost and expense, to defend, and with the consent of the
Indemnifying Party, to compromise or settle such Claim; and (ii) the
Indemnifying Party shall not, without the written consent of the Indemnified
Party, its successors and assigns settle or compromise any Claim or consent to
the entry of any judgment which does not include as an unconditional term
thereof the giving by the claimant
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or the plaintiff to the Indemnified Party, a release from all liability in
respect of such Claim.
11.7 Litigation Cooperation. (a) ▇▇▇▇ ▇▇ shall cooperate with
the Buyer and each of the Audio Products Group Companies and shall cause its
officers, employees, agents, auditors and representatives to cooperate with the
Buyer and each of the Audio Products Group Companies in connection with the
investigation, prosecution, defense and settlement of any judicial or
administrative proceeding or claim which the Buyer or any of the Audio Products
Group Companies has undertaken the defense of in connection with the Buyer's
obligation to indemnify ▇▇▇▇ ▇▇ as provided for in Section 11.4 above; provided,
that the Buyer shall reimburse ▇▇▇▇ ▇▇ and its officers, employees, agents,
auditors and representatives for the reasonable out-of-pocket costs and expenses
incurred in providing such assistance.
(b) The Buyer shall cooperate with ▇▇▇▇ ▇▇ and shall cause its
officers, employees, agents, auditors and representatives (and the officers,
employees, agents, auditors and representatives of each of the Audio Products
Group Companies) to cooperate with ▇▇▇▇ ▇▇ in connection with the investigation,
prosecution, defense and settlement of any judicial or administrative proceeding
or claim which ▇▇▇▇ ▇▇ has undertaken the defense of in connection with ▇▇▇▇
IV's obligation to indemnify the Buyer as provided for in Section 11.3 above;
provided, that ▇▇▇▇ ▇▇ shall reimburse the Buyer, its officers, employees,
agents, auditors and representatives (and the officers, employees, agents,
auditors and representatives of each of the Audio Products Group Companies) for
the reasonable out-of-pocket costs and expenses incurred in providing such
assistance.
11.8 Remedies Cumulative. Except as herein expressly provided,
the remedies provided herein shall be cumulative and shall not preclude
assertion by any party hereto of any other rights or the seeking of any other
remedies against any other party hereto.
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ARTICLE 12.
MISCELLANEOUS PROVISIONS
12.1 Termination. This Agreement may be terminated at any time
prior to the Closing: (a) by either the Buyer or ▇▇▇▇ ▇▇ by written notice to
the other party if: (i) the representations and warranties of the other party
shall not be true and correct in all material respects at and as of the date
when made, or shall not be true and correct in all material respects as of the
Closing Date as though made on and as of such date, or (ii) the other party
shall (and the terminating party shall not) have failed to perform and comply
with, in all material respects, all agreements, covenants and conditions hereby
required to have been performed or complied with by such party prior to the time
of such termination, and such failure shall not have been cured within a
reasonable period of time but not less than 15 days following notice of such
failure; (b) by written agreement of ▇▇▇▇ ▇▇ and the Buyer; (c) by Buyer
pursuant to section 7.8; and (d) by ▇▇▇▇ ▇▇ or the Buyer at any time subsequent
to February 11, 1997, if the Closing has not occurred by or before such date
unless such date is extended by the mutual written consent of ▇▇▇▇ ▇▇ and the
Buyer. In the event of the termination of this Agreement pursuant to the
provisions of this Section 12.1, this Agreement shall become void and have no
effect, without any liability to any person in respect hereof or of the
transactions contemplated hereby on the part of any party hereto, or any of its
directors, officers, parties, members, representatives, stockholders or
Affiliates, except for any liability resulting from such party's willful breach
of this Agreement and except that Sections 8.7, 8.10, 12.3, 12.5 and 12.9 and
this Section 12.1 shall not terminate.
12.2 Knowledge. For purposes of this Agreement, the term
"knowledge" with respect to ▇▇▇▇ ▇▇ means the actual knowledge of those persons
identified in Schedule 12.2 attached hereto.
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12.3 Amendment and Modification. This Agreement may be
amended, modified and supplemented only by written agreement of the parties
hereto.
12.4 Waiver of Compliance. Any failure of ▇▇▇▇ ▇▇ or PLC, on
the one hand, or the Buyer, on the other, to comply with any obligation,
covenant, agreement or condition herein may be expressly waived in writing by
the President or a Vice President of the Buyer or ▇▇▇▇ ▇▇, but such waiver or
failure to insist upon strict compliance with such obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure.
12.5 Expenses. Whether or not the transactions contemplated
hereby shall be consummated, ▇▇▇▇ ▇▇ and PLC, on the one hand, and the Buyer, on
the other hand, shall bear their respective expenses, costs and fees (including,
without limitation, attorneys', auditors' and financing commitment fees) in
connection with the transactions contemplated hereby, including the
preparation, execution and delivery of this Agreement and compliance herewith,
provided, that (a) ▇▇▇▇ ▇▇ shall pay any and all fees and expenses of Salomon
Brothers Inc and any and all expenses of ▇▇▇▇ ▇▇ or any of its Affiliates
relating to the Reorganization and (b) the Buyer shall pay any and all
third-party fees and expenses relating to the Financing.
12.6 Notices. All notices, requests, demands, waivers and
other communications required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been duly given if (a) delivered
personally, (b) mailed, certified or registered mail with postage pre-paid, (c)
sent by next day or overnight mail or delivery or (d) sent by telecopy or
telegram, as follows:
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(i) If to ▇▇▇▇ ▇▇, PLC or the Company, to:
▇▇▇▇ ▇▇ Industries, Inc.
One Towne Centre
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Lippes, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇ LLP
700 Guaranty Building
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
or to such other person or address as ▇▇▇▇ ▇▇ shall furnish to the Buyer in
writing.
(ii) If to the Buyer, to:
Gulton Acquisition Corp.
▇/▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ LLC
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Debevoise & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
or to such other person or address as the Buyer shall furnish to ▇▇▇▇ ▇▇ in
writing.
All such notices, requests, demands, waivers and other
communications shall be deemed to have been received (w) if by personal
delivery, on the day after such delivery,
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(x) if by certified or registered mail, on the seventh business day after the
mailing thereof, (y) if by next-day or overnight mail or delivery, on the day
delivered, (z) if by telecopy or telegram, on the next day following the day on
which such telecopy or telegram was sent, provided that a copy is also sent by
certified or registered mail.
12.7 Further Assurances. If at any time after the Closing Date
the Company shall consider or be advised that any deeds, bills of sale,
assignments or assurances or any other acts or things are necessary, desirable
or proper (a) to vest, perfect or confirm, of record or otherwise, in the
Company its right, title or interest in, to or under any of the rights,
privileges, immunities, powers, purposes, franchises, properties or assets of
any of the Audio Products Group Companies, or (b) otherwise to carry out the
purposes of this Agreement, the Company and its proper officers and directors or
their designees shall be authorized to solicit in the name of the Company or the
Buyer any third party consents or other documents required to be delivered by
any third party, to execute and deliver, in the name and on behalf of the
Company or the Buyer, all such deeds, bills of sale, assignments and assurances
and do, in the name and on behalf of the Company or the Buyer, all such other
acts and things necessary, desirable or proper to vest, perfect or confirm its
right, title or interest in, to or under any of the rights, privileges,
immunities, powers, purposes, franchises, properties or assets of the Company or
the Buyer and otherwise to carry out the purposes of this Agreement.
12.8 Assignment. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns, but neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned by
any of the parties hereto without the prior written consent of the other
parties; provided, that the Buyer may assign this Agreement to any subsidiary of
the Buyer, or to any lender to the Buyer or any subsidiary or
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Affiliate thereof as security for obligations to such lender, and provided,
further, that no assignment to any such lender shall in any way affect the
Buyer's obligations or liabilities under this Agreement.
12.9 Governing Law and Jurisdiction. This Agreement and the
legal relations among the parties hereto shall be governed by and construed in
accordance with the internal laws of the State of New York without regard to its
conflicts of law doctrine.
12.10 Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
12.11 Headings. The headings of the Sections , Schedules and
Articles of this Agreement are inserted for convenience only and shall not
constitute a part hereof or affect in any way the meaning or interpretation of
this Agreement.
12.12 Entire Agreement. This Agreement, including the Exhibits
and Schedules hereto and the other documents and certificates delivered pursuant
to the terms hereof, sets forth the entire agreement and understanding of the
parties hereto in respect of the subject matter contained herein, and supersedes
all prior agreements, promises, covenants, arrangements, communications,
representations or warranties, whether oral or written, between the parties with
respect to the subject matter hereof.
12.13 Third Parties. Except as specifically set forth or
referred to herein, nothing herein expressed or implied is intended or shall be
construed to confer upon or give to any person or corporation other than the
parties hereto and their successors or assigns, any rights or remedies under or
by reason of this Agreement.
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12.14 Severability. The invalidity, illegality or
unenforceability of any provision, term, or agreement contained in or made a
part of this Agreement shall not affect the validity, legality or enforceability
of the remainder of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and their respective corporate seals to be affixed
hereto, all as of the day and year first above written.
▇▇▇▇ ▇▇ INDUSTRIES, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President and
Chief Financial Officer
▇▇▇▇ ▇▇ PLC
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Director
GULTON INDUSTRIES, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
GULTON ACQUISITION CORP.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
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Schedule 6.4
Employees to be Made Available In Connection with Financing
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇
110
Schedule 7.3
List of Employees Entitled to Certain Severance Benefits
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇. ▇▇▇▇▇ ▇▇▇▇▇▇, Jr.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇
▇. ▇'▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇. ▇▇▇▇▇
▇. ▇▇▇▇▇
▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. Birmingham
Colin Formston
111
Schedule 11.3(a)(iv)
1. All environmental liabilities, obligations, losses, damages,
litigation, fines, penalties, payments, costs or expenses (whether or
not resulting from third party claims), including attorneys' and
accountants' fees and expenses (collectively, "Losses"), arising out of
or related to the following:
a. Contamination, testing, monitoring, remediation of dry wall
and lagoon areas at the Electro-Voice facility in Buchanan,
Michigan.
b. Contamination, testing, monitoring, remediation, excavation,
back fill of plating and process residues in soil and ground
water at Electro-Voice, Inc., ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇.,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇.
c. Monitoring, remediation and excavation resulting from existing
ground water contamination at Electro-Voice, Inc./▇▇▇▇ ▇▇
Audio Facility, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇.
2. All Losses arising out of any lawsuit, claim, action, litigation,
demand, proceeding, citation, summons or investigation brought against
or involving the Audio Products Group and relating to any of the
following:
a. The Cameron Yakima, Inc. Waste Site in Yakima, Washington
b. The Seaboard Group II Superfund Waste Site in Jamestown, North
Carolina
c. The Archem Waste Site in Houston, Texas
112
d. U.S. and State of Texas v. Motorola, et al., Civil No.
3-96CV-0844G regarding ▇▇▇▇▇▇ S'West Superfund Site, Forth
Worth, Texas
e. The former Gulton Industries site in Metuchen, New Jersey
f. The Ekotec Gas and Oil Waste Site at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇
g. The Metcoa Salvage Site in Pulaski, Pennsylvania
h. The Rinchem Recycling Facility Site in Albuquerque, New Mexico
i. The former Gulton Data Systems Facility Site in Albuquerque,
New Mexico
j. Environmental Protection Agency/Department of Justice
investigation regarding Bags Site, New Found Road, Mt. Olive,
Alabama
k. The Chemsol Facility Site in Picataway, New Jersey
l. The Liquid Disposal Site in Utica, Shelby Township, Michigan
m. The Tri-County Investors Group Ltd. v. Southern States
litigation, the Jack's Creek/Sitkin Smelting Superfund Site in
Maitlan County, Pennsylvania and the Southern States Facility
Remediation Cleanup in Hampton, Georgia as well as any other
environmental matter arising out of these properties or any
other properties owned or previously owned by Southern States
Inc.
o. The State College Associates Ltd. v. Gulton Industries, Inc.,
EDO Western Corporation, et al. litigation and the ▇▇▇▇▇ v.
EDO Western Corporation, Gulton Industries, et al. litigation,
as well as,
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113
any other environmental matter arising from the State College
site in Fullerton, California.
3. All Losses, whether or not resulting from collateral suits or
liabilities, or arising from the same factual context of, or otherwise
arising out of or related to Transmatic Inc. v. Gulton Industries, Inc.
4. Any Losses arising in connection with any arrangements in existence at
or prior to Closing pursuant to which ▇▇▇▇ ▇▇ or any Audio Products
Group Company is required to indemnify any of its officers or directors
or any officer or director of ▇▇▇▇ ▇▇, whether arising under an
indemnification agreement, applicable law or the Incorporation
Documents or By-Laws of the entity, but only to the extent that such
Losses arise out of or are in connection with acts that were committed
prior to the Closing by any person in his capacity as a director or
officer of an Audio Products Group Company or ▇▇▇▇ ▇▇.
5. Without regard to Section 11.4(b), any Losses arising out of or related
to the assets or liabilities on or prior to the Closing Date of Cetec
International Limited, Rebis Audio Limited, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Associates
Limited, Altec Lansing International, Nivenfield (1992) Limited, except
with respect to the Hounslow lease, the Wembley lease and two items of
Intellectual Property owned by Rebis Audio Limited and that are being
transferred to the Company or any of Audio Products Group Companies.
6. Any breach of ▇▇▇▇ IV's agreement in Section 7.3 to provide severance
arrangements or stay bonuses for the employees covered by the
agreements set forth on Schedule 7.3.
7. Any Losses arising out of or related to the fire on March 11, 1996 at
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇, ▇▇-▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇.
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Schedule 12.2
Persons Having "Knowledge"
▇▇▇▇▇▇ ▇▇▇▇
Kazuyasu ▇▇▇▇▇▇
▇▇▇▇▇ Formston
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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