<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED):
SEPTEMBER 12, 1994
____________
TRANSTECHNOLOGY CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 1-7872 95-4062211
(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification
incorporation) Number)
700 Liberty Avenue 07083
Union, New Jersey (Zip Code)
(Address of principal
executive offices)
(908) 964-5666
(Registrant's telephone number, including area code)
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On September 12, 1994, the registrant acquired all of the outstanding
capital stock of Industrial Retaining Ring Company, a New Jersey corporation,
and of Retainers, Inc., a New Jersey corporation and substantially all of the
assets of Industrial Advertising, a New Jersey general partnership
(collectively the "Business"). The aggregate purchase price of the Business
was $14,750,000.00, payable in cash. The Business consists of manufacturing of
retaining rings used in heavy equipment and industrial machinery. Registrant
acquired the Business from Vincent A. Stabile, individually and as trustee
under trust dated July 1, 1985, Antoinette D. Stabile, individually and as
trustee under trust dated July 1, 1985 and Madeline C. Stabile, individually
and as trustee under trust dated July 1, 1985. The Business is located at
Irvington, New Jersey. The acquired assets of the business consist of real
estate, machinery and equipment, inventories, receivables, intellectual
property rights and other intangibles. The registrant intends to use the
acquired assets in substantially the same manner as previously used by the
prior owners.
The purchase price of approximately $15,000,000 was determined as a
result of arm's-length negotiations between registrant and the sellers. The
registrant increased its credit facility with National Canada Finance Corp. and
used such borrowed funds to effect such acquisition.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of businesses acquired:
No financial statements are available at this time. An extension to
file the financial statements will be filed under cover of Form 8
within the 60 day period required by Form 8-K.
(b) Pro forma financial information
No pro forma financial information is available at this time. An
extension to file the required financial information will be filed
under cover of Form 8 within the 60 day period required by Form 8-K.
(c) Exhibits:
(1) Stock and Asset Purchase Agreement dated as of September 12,
1994 between the Company and Vincent A. Stabile, Antoinette D.
Stabile and Madeline C. Stabile.
(2) Fifth Amendment to the Revolving Loan and Security Agreement
between TransTechnology and National Bank of Canada.
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: September 23, 1994
TRANSTECHNOLOGY CORPORATION
By: /s/ VALENTINA DOSS
-------------------------------
Valentina Doss
Vice President & Secretary
<PAGE> 4
EXHIBIT INDEX
Exhibit
Number Description
------- ------------
(1) Stock and Asset Purchase Agreement dated as of September 12,
1994 between the Company and Vincent A. Stabile, Antoinette D.
Stabile and Madeline C. Stabile.
(2) Fifth Amendment to the Revolving Loan and Security Agreement
between TransTechnology and National Bank of Canada.
<PAGE> 1
STOCK AND ASSET
PURCHASE AGREEMENT
DATED AS OF SEPTEMBER 12, 1994
BETWEEN
TRANSTECHNOLOGY CORPORATION
AND
VINCENT A. STABILE,
INDIVIDUALLY AND AS TRUSTEE,
UNDER TRUST DATED JULY 1, 1985,
ANTOINETTE D. STABILE,
INDIVIDUALLY AND AS TRUSTEE,
UNDER TRUST DATED JULY 1, 1985,
MADELINE C. STABILE,
INDIVIDUALLY AND AS TRUSTEE,
UNDER TRUST DATED JULY 1, 1985,
AND
INDUSTRIAL ADVERTISING
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C> <C>
1. Sale and Purchase of Stock and Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
-------------------------------------
1.1 Sale and Purchase of Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
--------------------------
1.2 Sale and Purchase of Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
---------------------------
2. Purchase Price and Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
---------------------------
2.1 Purchase Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
--------------
2.2 Payment of Purchase Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
-------------------------
2.3 Allocation, Section 338(h)(10) Election. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
----------------------------------------
3. The Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
-----------
3.1 Time and Place of Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
--------------------------
3.2 Deliveries at Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
----------------------
3.3 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
-------------------
3.4 Sales and Transfer Taxes and Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
----------------------------------
4. Representations and Warranties of Shareholders as to IRR and
------------------------------------------------------------
Retainers (collectively the "Companies") and Advertising. . . . . . . . . . . . . . . . . . . . . . . . . . . 7
- - - --------------------------------------------------------
4.1 Due Organization; Good Standing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
--------------------------------
4.2 Capitalization of IRR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
----------------------
4.3 Capitalization of Retainers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
---------------------------
4.4 Governmental Approval. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
----------------------
4.5 Articles of Incorporation; By-Laws; Minute Books. . . . . . . . . . . . . . . . . . . . . . . 9
-------------------------------------------------
4.6 Companies' Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
--------------------------------
4.7 Title to Assets; Liens and Encumbrances. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
----------------------------------------
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
4.8 List of Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
---------------
4.9 Compliance With Law; Suits and Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . 14
-------------------------------------------
4.10 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
----------
4.11 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
------
4.12 Accounts Receivable; Inventory; Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . 17
-----------------------------------------
4.13 Real Property; Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
----------------------
4.14 Patents, Trademarks, Copyrights, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
-------------------------------------
4.15 Employee Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
--------------------
4.16 Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
-------------------
4.17 Customers and Distributors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
---------------------------
4.18 Further Representations and Warranties as to Advertising . . . . . . . . . . . . . . . . . . 28
---------------------------------------------------------
4.19 Subsidiaries and Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
-----------------------------
4.20 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
---------------------
4.21 Bank Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
-------------
4.22 No Adverse Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
------------------------
4.23 No Material Omissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
----------------------
5. Individual Representations and Warranties of Shareholders. . . . . . . . . . . . . . . . . . . . . . 37
----------------------------------------------------------
5.1 Title to Capital Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
-----------------------
5.2 Capacity of Shareholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
-------------------------
5.3 No Violations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
--------------
6. Representations and Warranties of Purchaser. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
--------------------------------------------
6.1 Due Incorporation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
------------------
</TABLE>
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<TABLE>
<S> <C> <C>
6.2 Corporate Authorization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
------------------------
6.3 No Breach. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
---------
6.4 Completeness of Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
---------------------------
7. Pre-Closing Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
----------------------
7.1 Access to Records; Investigation by Purchaser. . . . . . . . . . . . . . . . . . . . . . . . . 40
---------------------------------------------
7.2 No Inaccuracies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
----------------
7.3 Best Efforts; Special Dividend. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
-------------------------------
7.4 Preservation of Good Will. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
--------------------------
7.5 Consent to Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
----------------------
7.6 Liens, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
-----------
7.7 Amendments or Termination of Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
---------------------------------------
7.8 Maintenance of Equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
-------------------------
7.9 Covenants for Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
-----------------------------------
7.9A Compliance With ISRA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
--------------------
7.10 Termination of Benefit Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
----------------------------
7.11 Assignment of Plan Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
------------------------------------
8. Risk of Loss. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
-------------
9. Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
----------------
10. Broker. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
-------
11. Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
----------------
11.1 General Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
------------------------
11.2 Environmental Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
------------------------------
</TABLE>
<PAGE> 5
<TABLE>
<S> <C> <C>
11.3 Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
-----------
12. Survival of Representations and Warranties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
-------------------------------------------
13. Conditions Precedent To and Requirements At Closing. . . . . . . . . . . . . . . . . . . . . . . . . 53
----------------------------------------------------
13.1 Conditions Precedent to Purchaser's Obligation. . . . . . . . . . . . . . . . . . . . . . . . 53
-----------------------------------------------
13.2 Conditions Precedent to Sellers' Obligations . . . . . . . . . . . . . . . . . . . . . . . . . 56
--------------------------------------------
14. Restrictive Covenant. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
---------------------
14.1 Restraints . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
-----------
14.2 Reasonableness of Restraints . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
-----------------------------
15. Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
------------
15.1 Manner of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
----------------------
15.2 Election to Terminate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
----------------------
15.3 No Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
------------
16. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
----------
16.1 Option to Assign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
----------------
16.2 No Release. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
-----------
17. Post-Closing Commitments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
-------------------------
18. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
--------------
18.1 Entire Understanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
---------------------
18.2 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
------------------
18.3 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
----------
</TABLE>
<PAGE> 6
<TABLE>
<S> <C> <C>
18.4 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
-----------------
18.5 Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
----------
18.6 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
---------------
18.7 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
-------
18.8 Execution of Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
-----------------------
18.9 Paragraph Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
-------------------
18.10 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
--------------
18.11 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
--------
19. Definitions of Certain Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
-----------------------------
</TABLE>
<PAGE> 7
LIST OF EXHIBITS AND SCHEDULES
<TABLE>
<CAPTION>
Exhibits Description
- - - -------- -----------
<S> <C>
A Opinion of Counsel for Sellers
B Consulting Agreement with Vincent A. Stabile
C Assignment and Assumption Agreement
</TABLE>
<TABLE>
<CAPTION>
Schedule Title
- - - -------- -----
<S> <C>
1.1 Stock Ownership and Encumbrances
1.2B Acquired Assets of Industrial Advertising
4.1 Permits, Restrictions, Licenses and Authorizations
4.2 Outstanding Warrants, Options, Rights etc. as to IRR
4.3 Outstanding Warrants, Options, Rights etc. as to Retainers
4.4 Governmental Approvals
4.6A Financial Statements of IRR and Retainers
4.6A.2 Exceptions to Financial Statements
4.6B Material Changes
4.6C Actions Not in Ordinary Course
4.6D Debts, Obligations, Liabilities
4.7 Liens on Assets or IRR or Retainers
4.8 Assets of IRR and Retainers
4.9 Pending Suits and Actions
4.10 Insurance Coverage
4.11 Unpaid Taxes
4.12A Accounts Receivable
4.12B Inventory
4.13 Real Property Ownership and Leases
4.14A Patents, Copyrights, Etc.
</TABLE>
<PAGE> 8
<TABLE>
<S> <C>
4.14B Patents, Copyrights, Etc. Not Owned by Seller
4.15A Employee Agreements
4.15B List of Employees
4.16A Material Contracts
4.17A Customers and Distributors
4.17B Open Orders
4.19 Subsidiaries and Investments
4.20(b) Enforcement Notice
4.20(d) Compliance with all Environmental Laws
4.20(e) Release of a Hazardous Substance
4.20(f) Asbestos, PCBs etc.
4.20(g) Permits, Licenses, Etc.
4.21 Bank Accounts
4.22B No Adverse Consequences
</TABLE>
<PAGE> 9
STOCK AND ASSET PURCHASE AGREEMENT
AGREEMENT dated as of the 12th day of September, 1994, between
TransTechnology Corporation, a Delaware corporation, ("Purchaser") and Vincent
A. Stabile, individually and as Trustee, under Trust dated July 1, 1985,
Antoinette D. Stabile, individually and as Trustee, under Trust dated July 1,
1985, Madeline C. Stabile, individually and as Trustee, under Trust dated July
1, 1985, (collectively the "Shareholders"), and Industrial Advertising, a New
Jersey general partnership ("Advertising") (the Shareholders and Advertising
are sometimes hereinafter referred to as the "Sellers").
RECITALS:
A. Shareholders own all of the issued and outstanding Stock (as
defined below) of Industrial Retaining Ring Company, a New Jersey corporation,
("IRR") and of Retainers, Inc., a New Jersey corporation, ("Retainers") in the
amounts set forth on Schedule 1.1 hereto. The term "Stock" as used in this
Agreement means the issued and outstanding capital stock of IRR, Retainers or
both as required by the context in which the term appears.
B. Vincent A. Stabile and Madeline C. Stabile together constitute
all the partners of Advertising.
C. Shareholders desire to sell and Purchaser desires to
1
<PAGE> 10
purchase from Shareholders all of the Stock in each of IRR and Retainers, and
Advertising desires to sell and Purchaser desires to purchase substantially all
the assets of Advertising ("Acquired Assets"), all in the manner and subject to
the terms and conditions hereinafter set forth.
NOW THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties herein contained, the parties hereto agree as
follows:
1. Sale and Purchase of Stock and Assets.
1.1 Sale and Purchase of Stock. Each of the Shareholders
hereby agrees to sell, convey, transfer, assign and deliver to Purchaser at the
Closing the number of shares of Stock set opposite such Shareholder's name on
Schedule 1.1 hereto, and Purchaser agrees to buy and accept as hereinafter
provided, all (but not less than all) of the Stock owned by the Sellers as set
out on Schedule 1.1.
1.2 Sale and Purchase of Assets. (a) Advertising agrees
to sell, convey, transfer, assign and deliver to Purchaser and Purchaser agrees
to buy and accept as hereinafter provided all of the Acquired Assets.
(b) The Acquired Assets include all of the property,
personal, tangible and intangible, contracts and rights therein, set out in
Schedule 1.2B. Any asset of Advertising not set out in
2
<PAGE> 11
Schedule 1.2B is not included in the purchase contemplated by this Agreement.
(c) No "Obligations," as hereinafter defined, of
Advertising existing on or before the Closing Date or arising as a result of
any action or failure to act of Advertising on or before the Closing Date is or
will be assumed by Purchaser, except such Obligations directly arising from
contracts identified in Schedule 1.2B. "Obligations" means all liabilities and
obligations of Advertising, whether or not reflected on the books and records
of Advertising, and all obligations of Advertising existing with respect to any
statute, regulation or other exercise of governmental authority or under any
and all contracts, leases, debts, notes, negotiable instruments and written or
oral commitments of Advertising maintained by Retainers.
2. Purchase Price and Payment.
2.1 Purchase Price. The aggregate purchase price to be paid by
Purchaser to the Shareholders for the Stock and to Advertising for the Acquired
Assets shall be the sum of (a) Fourteen Million Seven Hundred and Fifty
Thousand ($14,750,000.00) Dollars, and (b) an amount equal to the cash
surrender value on the Closing Date, less an amount equal to any charges which
would be imposed by the insurer upon cashing in the policies, of any life
insurance policies maintained by Retainers (the "Life Insurance Policies") on
the lives of the Shareholders (the "Purchase Price"). Shareholders acknowledge
as to each of them receipt of value for any interest they have or may have in
the Life Insurance Policies or the
3
<PAGE> 12
benefits thereof and in consideration thereof hereby waive, release and
renounce any claim they or any executor or administrator may have in any of the
Life Insurance Policies or the benefits thereof.
2.2 Payment of Purchase Price. The Purchase Price shall be paid on
the Closing Date to the Sellers by wire transfer to an account or accounts, and
in allocations amongst accounts, designated in writing by Sellers.
2.3 Allocation, Section 338(h)(10) Election. The Purchase Price
shall be allocated as set out in an allocation schedule to be provided to
Seller by Purchaser within sixty (60) days of the Closing. Sellers and
Purchaser agree to file all returns and reports in respect of the transactions
herein contemplated, including but not limited to, all Federal and state tax
returns, in a manner consistent with such allocation. With respect to the
preceding, Sellers agree that Purchaser may exercise the election available
under section 338(h)(10) of the Code (the "Section 338 Election"), in
accordance with the applicable Treasury regulations. In the event Purchaser
makes the Section 338 Election, Purchaser agrees (a) to assume full
responsibility for any additional Federal or state corporate taxes payable by
IRR or Retainers as a result of such election, regardless of the tax period in
which such corporate taxes are deemed payable, and (b) to pay Shareholders, as
additional consideration for the Stock, the Shareholders' "Increased Tax
Liability," which term shall mean the
4
<PAGE> 13
full amount by which the Shareholders' Federal and state tax liability relating
to the sale of the Stock pursuant to Purchaser's Section 338 Election exceeds
the Shareholders' Federal and state tax liability that would have resulted from
the sale of the Stock in the event no such election were made by Purchaser,
increased by Federal and state taxes arising from the reimbursement of the
Increased Tax Liability to the Shareholders on a grossed-up basis. The
additional consideration due from Purchaser by reason of the Section 338
Election shall be due ten (10) days after receipt by Purchaser from
Shareholders' tax preparer of a written statement of the additional sum due,
which statement shall be binding on Purchaser in the absence of manifest error.
It is understood and agreed that the Purchaser shall indemnify and reimburse
the Shareholders for the full amount of the Increased Tax Liability. The
Purchaser's obligation to indemnify the Shareholders pursuant to this paragraph
shall not expire until expiration of the applicable statute of limitations
under Federal and state tax laws for the tax year of the Shareholders in which
the Increased Tax Liability is incurred.
3. The Closing
3.1 Time and Place of Closing. The closing of the transaction
contemplated by this Agreement (the "Closing") shall take place at 9:00 a.m.
local time on September 12, 1994 or any other mutually agreed on date, at the
offices of TransTechnology
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Corporation, 700 Liberty Avenue, Union, New Jersey 07083. The time and date of
the Closing is referred to in this Agreement as the "Closing Date". For
accounting purposes only the date of the Closing will be treated as August 31,
1994.
3.2 Deliveries at Closing. (a) At the Closing each Shareholder
shall deliver to Purchaser a certificate or certificates representing the Stock
being sold by such Shareholder duly endorsed for transfer, or accompanied by
appropriate assignments for transfer of stock duly executed, in favor of
Purchaser, and Sellers shall cause to be delivered those items required by
Paragraph 13.1 hereof.
(b) At the Closing, Purchaser shall deliver to
Sellers the items required by Paragraph 13.2 hereof.
3.3 Further Assurances. Sellers agree that they shall, at any
time and from time to time after the Closing, upon request of Purchaser, do,
execute, acknowledge and deliver or will cause to be done, executed,
acknowledged and delivered, all such further acts, deeds, assignments,
transfers, conveyances, powers of attorney and assurances as may in Purchaser's
reasonable opinion be necessary or advisable to confirm Purchaser's title to or
interest in, or to enable it to deal with and dispose of, the Stock, any of the
business, assets and properties of each and both of IRR and Retainers and the
Acquired Assets of Advertising.
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3.4 Sales and Transfer Taxes and Fees. All applicable sales, use
and similar taxes and fees that may be due or payable as a result of the
conveyance, assignment, transfer or delivery of the Stock and Acquired Assets
to Purchaser shall be borne by Sellers.
4. Representations and Warranties of Shareholders as to IRR and Retainers
(collectively the "Companies") and Advertising. For purposes of this Article
4, the term "Shareholders" shall include only Vincent A. Stabile and not
Antoinette D. Stabile or Madeline C. Stabile, each of whom only make such
representations and warranties in this Article 4 as are specifically provided.
Shareholders hereby represent, warrant and agree that:
4.1 Due Organization; Good Standing. Each of IRR and Retainers is
a corporation duly organized, validly existing and in good standing under the
laws of the State of New Jersey; is duly qualified and in good standing in all
jurisdictions in which its ownership of property and conduct of its business
requires such qualification, except where the failure to be so qualified would
not have a material adverse effect on the business or properties of the
Companies taken as a whole; and has full corporate power to carry on its
business as now conducted and to own and operate the properties and assets now
owned by it. Each of IRR and Retainers has the corporate power and authority
and possesses all governmental permits, licenses and other authorizations
necessary to own its assets and to carry on its business and operations as
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now conducted. Except as set forth on Schedule 4.1 hereof, all such permits,
licenses and authorizations will remain in effect following the sale of the
Stock without the consent, approval or act of any other party.
4.2 Capitalization of IRR. The authorized capital stock of IRR,
the number of issued and outstanding shares of such stock and the owners
thereof are set out on Schedule 1.1 annexed hereto and made a part hereof. No
shares of capital stock of IRR are reserved for issuance. All outstanding
Stock is duly authorized, validly issued, fully paid and non-assessable. All
transfer taxes, if any, with respect to transfers of securities of IRR made
prior to the date hereof have been paid. Except as set forth in Schedule 1.1,
no Person has any interest, direct or indirect, in any or all of such shares.
Except as shown on Schedule 4.2, there are no outstanding warrants, options or
rights (preemptive or otherwise) to purchase or otherwise acquire (whether from
Shareholders, IRR or any third party) any shares of capital stock of IRR or any
securities convertible into or exchangeable for shares of such capital stock.
None of the shares of capital stock of IRR has been issued in violation of the
Securities Act of 1933, as amended, or any other federal or state securities
law.
4.3 Capitalization of Retainers. The authorized capital stock of
Retainers, the number of issued and outstanding shares of such stock and the
owners thereof are set out on Schedule 1.1
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annexed hereto and made a part hereof. No shares of capital stock of Retainers
are reserved for issuance. All outstanding Stock is duly authorized, validly
issued, fully paid and non-assessable. All transfer taxes, if any, with
respect to transfers of securities of Retainers made prior to the date hereof
have been paid. Except as set forth in Schedule 1.1, no Person has any
interest, direct or indirect, in any or all of such shares. Except as shown on
Schedule 4.3, there are no outstanding warrants, options or rights (preemptive
or otherwise) to purchase or otherwise acquire (whether from Shareholders,
Retainers or any third party) any shares of capital stock of Retainers or any
securities convertible into or exchangeable for shares of such capital stock.
None of the shares of capital of Retainers has been issued in violation of the
Securities Act of 1933, as amended, or any other federal or state securities
law.
4.4 Governmental Approval. Except as described in Schedule 4.4
hereto, neither the consummation of the transactions contemplated herein by
Sellers, nor compliance with and performance of the terms and provisions hereof
by Sellers, requires any governmental permit, authorization or approval.
4.5 Articles of Incorporation; By-Laws; Minute Books.
Shareholders have previously delivered to Purchaser true and complete copies of
the articles of incorporation and by-laws of each of IRR and Retainers, all as
amended to and including the date
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hereof, along with any and all agreements with directors and/or shareholders of
the Companies. The minute books, stock books and stock transfer records of the
Companies, true and complete copies of which have been made available to
Purchaser, contain true and complete minutes and records of all issuances and
transfers of shares of capital stock of the respective Companies and of all
existing minutes and records of all meetings, proceedings and other actions of
the shareholders, board of directors and/or committees of the board of
directors of each of IRR and Retainers from the date of incorporation to the
date hereof. Nothing that was contained in any such minutes and records which
have been destroyed or lost will have a material adverse effect on the
transactions contemplated by this Agreement or the operations, profits or
businesses of the Companies after the date hereof.
4.6 Companies' Financial Statements. (a) Shareholders have
furnished Purchaser with the financial statements of (i) IRR as at fiscal year
end for 1986, 1987, 1988, 1989, 1990, 1991, 1992, and 1993 (the "IRR Year-end
Financials") and as of the end of the six-month period ending June 30, 1994
(the "IRR Stub Period Financials"), and (ii) Retainers as at fiscal year end
for 1986, 1987, 1988, 1989, 1990, 1991, 1992 and 1993 (the "Retainers Year-end
Financials"). The IRR Year-End Financials and the IRR Stub Period Financials
and Retainers Year-End Financials are sometimes hereafter referred to
collectively as the "Financial Statements". The Financial Statements are
attached hereto as Schedule 4.6A.
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Except as shown on Schedule 4.6A.2, the Financial Statements are in accordance
with the books and records of the respective Companies for which they were
prepared and fairly present the financial position and the results of
operations of said respective Companies, as, at and for the periods indicated
(subject, with respect to the IRR Stub Financials to year-end adjustments
consistent with past practices), in each case in conformity with generally
accepted accounting principles consistently applied.
(b) Except as set forth on Schedule 4.6B hereof, since June
30, 1994, there has been: (i) no material adverse change in the assets,
liabilities or business or in the condition, financial or otherwise, of the
Companies taken as a whole, and to Shareholders' knowledge no fact or condition
exists or is threatened which may reasonably be expected to cause such a change
in the future; and (ii) no damage, destruction, loss or claim, whether or not
covered by insurance, or condemnation or other taking of assets materially and
adversely affecting the properties, assets and businesses of the Companies
taken as a whole.
(c) Except as set forth in Schedule 4.6C hereto, since June
30, 1994, neither IRR nor Retainers has: (i) made, or agreed to make, any
payment of dividends or distributions to stockholders in violation of section
14A:7-14.1 of the New Jersey Business Corporation Act, or purchased or
redeemed, or agreed to purchase or redeem, any of its capital stock; (ii)
mortgaged, pledged or
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encumbered any assets (except for liens for current taxes not yet due); (iii)
except in the ordinary course of business, sold or transferred or agreed to
sell or transfer any assets or rights; (iv) cancelled or agreed to cancel any
material debts or claims, waived or agreed to waive any rights of material
value, or allowed to lapse or failed to keep in force any franchise, permit or
other right; (v) except in the ordinary course of business made or permitted
any amendment or termination of any material contract, agreement or license;
(vi) undertaken or committed to capital expenditures exceeding $20,000 in the
aggregate; (vii) increased the rate of compensation payable to any employee
paid at an annual rate of more than $35,000, or instituted, or made any
increase in, any profit sharing, bonus, deferred compensation, insurance,
pension, retirement or employee benefit plan, or made any accrual or
arrangement for a payment of any bonus or special compensation of any kind or
any severance or termination pay to any present or former officer or employee
paid at an annual rate of more than $20,000; (viii) made any loan or advance to
an officer or employee; or (ix) entered into or become committed to enter into
any other transaction material to the Companies taken as a whole except in the
ordinary course of business.
(d) As of June 30, 1994, each of IRR and Retainers had no
debts, obligations (including but not limited to obligations as a guarantor) or
liabilities of any nature, whether absolute, accrued, contingent or otherwise,
except as shown (and in the amounts shown)
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on the balance sheet which is part of respectively the IRR Stub Period
Financials and the 1993 Retainers Year-end Financials, or shown (and in the
amounts shown) on Schedule 4.6D or any other Schedule attached or incurred in
the ordinary course of business and consistent with past practices. Except as
shown on Schedule 4.6D, from June 30, 1994, to the date hereof, the Companies
have not incurred or become subject to any debts, obligations (including but
not limited to obligations as a guarantor) or liabilities of any nature,
whether absolute, accrued, contingent or otherwise, other than debts,
obligations and liabilities incurred in the ordinary course of business
consistent with past practices, none of which are inconsistent with the
representations and warranties of Sellers or other provisions of this Agreement
or which have or may be expected to have any material adverse affect on the
business, properties, liabilities, operations or financial condition of the
Companies taken as a whole.
4.7 Title to Assets; Liens and Encumbrances. Each of the
Companies is the owner of, and has good and marketable title to (a) all of the
assets reflected on their respective 1993 Year-end Financials in the amounts
and categories set forth therein and (b) all of the assets acquired by the
Companies since the date of their respective 1993 Year-end Financials, in each
case free and clear of all security interests, liens, claims, restrictions,
equities and encumbrances whatsoever, except for (i) those assets sold or
otherwise disposed of in the ordinary course of business since the
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date of such 1993 Year-end Financials and (ii) the security interests, liens,
claims, restrictions, equities and encumbrances, if any, disclosed in such 1993
Year-end Financials or referred to in Schedule 4.7 hereto, or which are not
material in any one case or in the aggregate. Each of the Companies owns all
of the assets of its respective business, except for those assets leased by
either of the Companies pursuant to leases specifically referred to in Schedule
4.8 hereto.
4.8 List of Assets. Annexed hereto as Schedule 4.8 is a true and
correct list, to the best of the Shareholders' knowledge, as of the date hereof
of all the material equipment, machinery, fixtures, and leasehold improvements
of the Companies. The material tangible business property owned or leased by
the Companies and used in their respective businesses at the date hereof is in
good operating condition and repair, excluding ordinary wear and tear, except
as set out in Schedule 4.8 hereto. No properties or assets owned or leased by
the Companies and set out in Schedule 4.8 are subject to any judicial order,
ordinance or zoning restriction which materially adversely affects the use of
such properties in the respective businesses of the Companies. The value of
any leasehold improvement, machinery or equipment owned or leased by either of
the Companies has not been written up above original cost less depreciated or
amortized cost.
4.9 Compliance With Law; Suits and Proceedings. Neither of
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the Companies is in violation of any law, regulation or order of any court or
any federal, state, municipal or other governmental department, commission,
bureau, agency, or instrumentality as it respects the business, properties,
operations and affairs of the Companies where the failure to comply therewith
would have a material adverse effect on the business and properties of the
Companies taken as a whole. Except as set forth in Schedule 4.9 hereto, there
are no actions, suits, proceedings, investigations or claims pending or, to the
Shareholders' knowledge, threatened against either or both of the Companies
with respect to the business, properties, operations, employment policies and
practices or the application thereof, assets or affairs of the Companies, at
law or in equity, before or by any federal, state, municipal or any other
governmental court, department, commission, agency or instrumentality, domestic
or foreign; nor to the actual knowledge of Shareholders, without independent
investigation or consultation with legal counsel, is there any basis for any
claim, suit, proceeding or investigation.
4.10 Insurance. Schedule 4.10 hereto contains a complete list of
all fire and casualty, liability, key-man insurance, workmen's compensation
insurance, and other forms of insurance coverage that each of the Companies or
Advertising currently has in force, showing policy limits, types of coverage,
and annual premium. As to the insurance policies identified in Schedule 4.10
as being in full force and effect, none of the Sellers has received
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notice of, or has knowledge of, actual or proposed cancellation or reduction in
coverage.
4.11 Taxes. Except as set forth on Schedule 4.11 hereto, IRR,
Retainers and Advertising have each filed all federal, state, county, and local
tax returns which are required to be filed up to and including the date hereof
and have each paid all taxes which have become due pursuant to such returns or
otherwise, or pursuant to any assessment which has become payable, and no
extension of the time for filing a federal, state, county or local tax return
is presently in effect. All such returns and the returns to be filed by the
Companies and Advertising with respect to any period ending on or before the
Closing Date are or will be true and correct, and all returns required to be
filed prior to the Closing Date will be timely filed or appropriately extended.
The subchapter S election of IRR under the Internal Revenue Code of 1986 and
its predecessor statutes is, and has been, in effect since the organization of
IRR. To the extent that any tax liability or assessment with respect to either
of the Companies has accrued but has not yet become payable as of June 30,
1994, or has been proposed for assessment or determined but remains unpaid as
of June 30, 1994, the same has been reflected as a liability on the books and
records and, in the case of IRR, on the IRR Stub Period Financials. No waiver
or extension of the statute of limitations relating to the assessment of any
state or federal income tax against any of the Companies or Advertising is
presently in effect. No notice of an audit as to
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any income, sales or other taxes has been received by the Companies from the
Internal Revenue Service or any state taxing authority nor is any audit by the
Internal Revenue Service or any state taxing authority in progress. All
payments for withholding taxes, unemployment insurance and other amounts
required to be paid to any governmental authority in respect of the Companies'
and Advertising's respective employees for any period ending on or before the
last payroll date before the date of the Agreement have been made.
4.12 Accounts Receivable; Inventory; Equipment. (a) Purchaser has
previously been provided with a true, accurate and complete list of the
accounts receivable of the Companies and Advertising as of June 30, 1994, which
list is summarized in Schedule 4.12A. All such accounts receivable, and all
accounts receivable generated since June 30, 1994, arose in the ordinary course
of the respective businesses of the Companies and Advertising. All accounts
receivable of the Companies and Advertising have arisen from bona fide
transactions by the Companies and Advertising. None of such accounts
receivable reflects a sale on consignment or other contingent basis, is subject
to any defense, counterclaim or set-off or is in dispute.
(b) Since June 30, 1994, there has been no change in the
quantity, quality or condition of the inventory of the Companies, except as
incurred in the ordinary course of business consistent
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with past practice. All such inventory is in good condition or otherwise
usable for its intended purpose, except to the extent of any identified
inventory reserves. Except as shown on Schedule 4.12B hereto, such inventory
does not include any obsolete items or items which are of less than standard
quality, except to the extent of any identified inventory reserves.
4.13 Real Property; Leases. Annexed hereto as Schedule 4.13 is a
brief description of all real properties which are owned by or leased to IRR,
Retainers and Advertising, including all plants and structures located thereon.
Each of the Companies and Advertising own the fee simple title in and to the
real properties shown on Schedule 4.13 as being owned by them and have valid
and enforceable leases not in default with respect to the real properties shown
on Schedule 4.13 as being leased by them. No real property or improvement
thereon has been or is utilized in the conduct of the business of any of the
Companies and Advertising except for such real properties set out on Schedule
4.13. All said real properties are free and clear of all liens, mortgages,
charges or encumbrances of any nature whatsoever except (a) those described in
Schedule 4.13, (b) the lien of current state and local property taxes not in
default, and (c) such liens, encumbrances, easements, rights of way, building
and use restrictions, exceptions, reservations, and limitations as do not in
any material respect adversely (i) affect the value of the property subject
thereto or (ii) interfere with or impair the present and continued use thereof
in the usual and
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normal conduct of its business.
4.14 Patents, Trademarks, Copyrights, Etc. (a) Schedule 4.14A
contains a list or description of: (i) all United States and foreign patents,
patent applications, copyright registrations and material copyrights, and all
United States, state and foreign trade name, trademark and service-marks owned,
assigned to, licensed to, or used by the Companies or Advertising showing in
each case the product, device, process, service, business or publication
covered thereby, the registered owner, expiration date and number, if any; (ii)
a description of all material licenses or other agreements relating to any
asset, property or right of the character described in the preceding clause to
which any of the Companies or Advertising is a party showing in each case the
parties thereto,; and (iii) a description of all material licenses or
agreements pertaining to know-how, trade secrets, inventions, disclosures or
uses of ideas to which any of the Companies or Advertising is a party showing
in each case the parties thereto.
(b) Except as disclosed in Schedule 4.14B, each of the
Companies and Advertising is the owner of all right, title and interest in and
to, or has valid rights to use, all patents, trademarks, material
service-marks, trade names, material copyrights, protected inventions,
improvements, processes, trade secrets and know-how (collectively, the
"Intellectual Property") used in conducting its respective business. None of
the Companies
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or Advertising has knowledge of any proceedings, pending or threatened,
challenging ownership by, or the right to use of, any of the Companies or
Advertising of any Intellectual Property owned by them or in which they have
rights to use, and the Shareholders have no knowledge of infringing use of any
Intellectual Properties owned by or licensed to the Companies or Advertising by
others. Shareholders have no knowledge of any facts which would invalidate any
of the Intellectual Property owned by or licensed to the Companies or
Advertising or the respective rights of the Companies or Advertising therein.
The Companies and Sellers have had no notice of or knowledge of a claim against
the Companies or Advertising that any of the Companies' or Advertising's
operations, activities, products, equipment, machinery or processes infringes
the patents, trademarks, service-marks, trade names, copyrights or other
property rights of others or that it is unfairly competing with or illegally
using the trade secrets or property rights of others.
4.15 Employee Agreements. (a) Except as described in Schedule
4.15A, none of the Companies or Advertising is a party to or bound by any oral
or written: (i) employee collective bargaining agreement, employment agreement
(other than employment agreements under which the respective obligations of
IRR, Retainers and Advertising thereunder are terminable by IRR, Retainer or
Advertising, as the case may be, without premium or penalty on not more than
thirty (30) days notice), consulting agreement, deferred
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compensation agreement, severance agreement or covenant not to compete; (ii)
contract or agreement with any officer, director, stockholder or employee
(other than employment agreements excluded from the scope of clause (i)) or
agent; (iii) power of attorney; or (iv) employees' pension, profit sharing,
stock option, bonus, incentive, stock purchase, welfare, life insurance,
hospital or medical benefit plan or any other employee benefit agreement or
plan; and since December 31, 1993, there have not been any discussions with any
union, organization or group representing or seeking to represent any employees
of the Companies or Advertising in connection with any aspect of the employment
arrangement of such employees with the Companies or Advertising.
(b) Schedule 4.15B contains: (i) a list of all of the
Companies' or Advertising's respective directors, officers and employees,
showing job assignment or classification, and the current compensation
arrangements with each, including fringe benefits provided by the Companies and
Advertising; (ii) a list of all present or former directors, officers or
supervisory employees of the Companies and Advertising who have terminated or
indicated a desire or intention to terminate their relationship with the
Companies or Advertising since December 31, 1993; (iii) a list of any
increases, effective after December 31, 1993, in the rate of compensation of
any directors, officers, supervisory employees, consultants or agents of the
Companies or Advertising, unless the increased annual rate of compensation does
not exceed $20,000 per such individual; and (v) a list of all substantial
changes in job
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assignments of, or arrangements with, or promotions and appointments of, any
directors, officers or employees of the Companies or Advertising whose
compensation on an annual basis exceeds $20,000 since December 31, 1993.
(c) No "employee benefit plan", as defined in Section 3 of
the Employee Retirement Income Security Act of 1974 ("ERISA"), maintained by
IRR, as from time to time in effect (collectively, the "Benefit Plans",
individually, a "Benefit Plan") nor any trusts created thereunder, nor any
trustee or administrator thereof, has engaged in a "prohibited transaction", as
defined in Section 4975 of the Internal Revenue Code of 1986, as amended, which
could subject any Benefit Plan or any such trust, or any trustee or
administrator thereof, or any party dealing with any Benefit Plan, or any such
trust to the tax or penalty on prohibited transactions imposed by said Section
4975. Neither any of the Benefit Plans nor any such trusts have been
terminated, nor has there been any "reportable event", as defined in Section
4043 of ERISA, or "accumulated funding deficiency", as defined in Section 302
of ERISA, or application for an extension of any amortization period within the
meaning of Section 412 of the Internal Revenue Code of 1986, as amended, or any
predecessor statute, since the effective date of ERISA. All Internal Revenue
Service Form 5500s were accurate at the time of filing, have been filed on a
timely basis and, to Shareholders' knowledge, are not subject to any Internal
Revenue Service or Department of Labor penalties. All Pension
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Benefit Guaranty Corporation premium filings were accurate at the time of
filing, have been filed on a timely basis and are not subject to any penalties
or late payment interest charges of the Pension Benefit Guaranty Corporation.
IRR has not incurred any liability to the Pension Benefit Guaranty Corporation,
nor do Shareholders know of any state of facts which would result in the
imposition of such liability on IRR.
(d) No Benefit Plan is a multiemployer plan within the meaning
of section 3(37) of ERISA and IRR has not withdrawn or partially withdrawn from
any multiemployer plan under circumstances giving rise to a withdrawal
liability under ERISA.
(e) Neither Retainers nor Advertising now maintains, or at any
time in the past has maintained, an employee benefit plan as defined in Section
3 of ERISA.
(f) Each Benefit Plan and any related trust substantially
conforms to, and each Benefit Plan and the administrators and fiduciaries of
each Benefit Plan are in substantial compliance with, all applicable laws and
regulations, including but not limited to ERISA, the Age Discrimination in
Employment Act, the Equal Pay Act and Title VII of the Civil Rights Act of 1964
and the Internal Revenue Code of 1986, as amended (the latter to the extent
that the Benefit Plan is designed to obtain special Federal income tax
treatment for the sponsor of, the trust maintained for, or the participants in
such Benefit Plan), and each Benefit Plan has been administered substantially
in accordance with its terms to the extent consistent with such laws.
Shareholders are not aware of
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any fact or circumstance that would adversely affect the qualified status of
any Benefit Plan.
(g) With respect to each "employee welfare plan" (as defined
in Section 3(1) of ERISA), the Companies and Shareholders have met the
continuing coverage requirements of Section 162(k) or 4980(b) of the Internal
Revenue Code of 1986, as amended, for all periods during which these Sections
applied to that plan.
(h) There are no scheduled or agreed upon future increases of
benefit levels (or creation of new benefits) and no increases in (or creation
of) benefits have been proposed, been made the subject of representations or
similar communications to employees, or been requested or demanded by employees
under circumstances which make it reasonable to expect that such increases will
be granted.
(i) With respect to each Benefit Plan, full payment has been
made of all amounts which IRR, or any other Person, is or has been required to
have paid as contributions to such plan under the terms of each such plan.
(j) Each "Pension Plan" (within the meaning of Section 3(2) of
ERISA) is, and will be as of the Closing, able to terminate under ERISA
paragraph 4041(b) as a "Standard Termination", in accordance with the
applicable rules of the Pension Benefit Guaranty Corporation in effect on such
date.
(k) The Benefit Plans do not now, and will not be amended in
the future by Sellers to provide for the single sum payment of benefits with a
present value in excess of $3,500.
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4.16 Material Contracts. (a) Except as set forth in Schedule
4.16A, none of the Companies or Advertising is a party to, or bound by any oral
or written contract, agreement, commitment, understanding or instrument
(collectively, "Contracts": individually, a "Contract"): (i) for the lease of
real property; (ii) for the lease of personal property which provides for
annual rentals in excess of $1,000; (iii) for the purchase or sale of supplies,
other materials or personal property (other than inventory purchased or sold in
the ordinary course of business) or for the furnishing or receipt of services
which calls for performance over a period of more than sixty (60) days and
involves more than the sum of $5000; (iv) for the purchase or sale of inventory
by IRR to Customers identified in Schedule 4.17A in amounts in excess of
$10,000; (v) for the purchase or sale of, or for the purpose of regulating,
controlling or otherwise affecting the voting of, shares of Stock of the
Companies; or (vi) for any purpose (whether or not made in the ordinary course
of the Companies' or Advertising's business or otherwise) not required to be
listed or described in Schedule 4.16A which is material to the business of the
Companies taken as a whole.
(b) The Companies and Advertising have, and on the Closing
Date will have, performed in all material respects the obligations required to
be performed by them pursuant to all material contracts and commitments
(whether or not listed in Schedule 4.16A) and the Companies and Advertising are
not, and on
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the Closing Date will not be, in default in any material respect of any such
contracts or commitments to which they are a party or by which they or any of
their respective properties or assets is bound, and there does not, and on the
Closing Date will not, exist any state of facts which might give rise to a
material default under such contracts or commitments, nor have Sellers or the
Companies waived any right under any contracts or commitments. All such
contracts and commitments will remain in force from and after the Closing Date
without obtaining the consent or approval of any person or party except as
otherwise stated in Schedule 4.16A. No contract to which either of the
Companies or Advertising is a party has been entered into with the knowledge of
Shareholders that it requires any of the Companies or Advertising to provide
any product or service at a loss. Between the date hereof and the Closing
Date, the Companies and Advertising will not enter into any contract or
commitment, except in the usual and ordinary course of business and consistent
with their respective business practices heretofore followed. The Companies
and Advertising are not (and will not between the date hereof and the Closing
Date be) re-negotiating or making any payments in lieu of performing any such
contracts or commitments. The Companies and Advertising are not subject to any
purchase commitments in excess of their normal business requirements or
requiring the payment of prices in excess of market prices in effect at the
times such commitments were made.
(c) Except as set forth in Schedule 4.16A, all Contracts
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listed or described in Schedule 4.16A, to the extent such contracts are
assignable, will remain the property of IRR, Retainers or Advertising, as the
case may be, on the Closing Date, without the consent, approval or act of any
person or party. Without the consent of Purchaser, the Companies and
Advertising will not make any changes or modifications in any Contract listed
or described in Schedule 4.16A nor incur any further obligations or
commitments, nor make any further purchases of equipment, supplies, materials,
or inventory, except in each case in the ordinary course of business.
4.17 Customers and Distributors. (a) Schedule 4.17A hereto
contains a list of (x) the twenty largest customers of IRR in terms of sales
during the 1993 fiscal year and the amount of sales made to each such customer
and (y) the twenty largest distributors in terms of sales during the 1993
fiscal year and the amount of sales made to each such distributor. Such list
also indicates any of such customers and distributors who, since the end of the
1993 fiscal year, by reason of the transactions contemplated hereby or for any
other reason: (i) has terminated or decreased substantially, or indicated an
intention or plan to terminate or decrease substantially, its business with
IRR; or (ii) Shareholders have reason to believe may terminate or decrease
substantially its business with IRR. IRR is and will be as of the Closing
Date, in substantial compliance with all of the orders of its customers and
distributors with respect to work in process and neither has
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received any notice of, and Shareholders know of no reasonable basis for, any
material complaint by any customer or distributor identified in Schedule 4.17A
with respect to any such work or items sold since the close of the 1993 fiscal
year, exclusive of product returns consistent with historical experience and
received in the ordinary course of business.
(b) Schedule 4.17B contains a list of each open order for the
sale of goods from a customer or distributor listed on Schedule 4.17A, and each
open quotation for the same, amounting to more than $10,000. All such orders
and quotations (and all orders and quotations accepted or made prior to the
Closing Date) have been or will be priced in accordance with the respective
normal pricing policies of the Companies except as set forth in 4.17B.
4.18 Further Representations and Warranties as to Advertising.
Vincent A. Stabile and Madeline C. Stabile represent and warrant as to (a) and
(b) below, and Vincent A. Stabile represents as to (c) below, that:
(a) Advertising is a general partnership organized under the
laws of the State of New Jersey and Vincent A. Stabile and Madeline C. Stabile
are all, and the only, partners in Advertising and each partner is a general
partner in Advertising.
(b) Upon execution of this Agreement by Vincent A. Stabile
and Madeline C. Stabile in their respective capacities as general partners of
Advertising, all action required to authorize and empower the sale of the
Acquired Assets to Purchaser shall have
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been taken.
(c) Advertising is the owner of, and has good and marketable
title to, all of the assets set out in Schedule 1.2B. The contracts identified
in Schedule 1.2B are in full force and effect, are not in default and, to
Shareholders' knowledge, there exists no act or failure to act which with lapse
of time would give rise to a default under any of such contracts. None of the
assets set out in Schedule 1.2B is subject to any judicial order, ordinance or
other governmental restriction which would materially adversely affect the use
of such assets in the business of Advertising. The value of assets set out in
Schedule 1.2B has not been written up above original cost less depreciated or
amortized cost.
4.19 Subsidiaries and Investments. Except as set forth on Schedule
4.19 hereto, the Companies and Advertising do not have and have never had any
subsidiaries and the Companies and Advertising have not made any advances to or
investments in, and do not own any securities of or any interests in, any
person, firm or corporation.
4.20 Environmental Matters
4.20.1 Definitions
For the purposes of this Agreement, the terms listed below shall have
the following meanings:
(a) "Compliance with ISRA" shall mean with respect to the Premises
the receipt of a letter or letters from the NJDEP
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approving IRR's Negative Declaration (as such term is defined under ISRA), a No
Further Action Letter (as such term is defined under ISRA), or other written
determination by the NJDEP that the Shareholders and IRR have satisfied their
obligations under ISRA or the RA (as herein defined).
(b) "Enforcement Notice" shall mean a summons, citation, directive,
order, claim, litigation, investigation, judgment, letter or other
communication, written or oral, actual or threatened, from the New Jersey
Department of Environmental Protection ("NJDEP"), the United States
Environmental Protection Agency ("USEPA"), any other federal, state or local
agency or authority, any other entity or any individual, concerning compliance
or failure to comply with Environmental Laws (as that term is defined herein).
(c) "Environment" shall mean ambient air, surface water, groundwater,
surface soil, subsurface soils, sediment and land.
(d) "Environmental Conditions" shall mean any environmental
contamination or pollution or threatened contamination or pollution of, or the
Release or threatened Releases of Hazardous Substances into, the Environment.
(e) "Environmental Laws" shall mean all federal, regional, state,
county or local laws, statutes, ordinances, decisional law, rules, regulations,
codes, orders, decrees, directives and judgments relating to public health or
safety, pollution, damage to or protection of the Environment, Environmental
Conditions, Releases or threatened Releases of Hazardous Substances into the
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Environment or the use, manufacture, processing, distribution, treatment,
storage, generation, disposal, transport or handling of Hazardous Substances,
whether exiting in the past or present or hereafter enacted, rendered, adopted
or promulgated. Environmental Laws shall include, but are not limited to, the
following laws, and the regulations promulgated thereunder, as the same may be
amended from time to time; the Comprehensive Environmental Response
Compensation and Liability Act (42 U.S.C. 9601 et. seq.) ("CERCLA"); the
Resource Conservation and Recovery Act (42 U.S.C. 6901 et. seq.); ("RCRA");
the Clean Air Act (42 U.S.C. 7401 et. seq.); the Clean Water Act (33 U. S. C.
1251 et seq.); the New Jersey Industrial Site Recovery Act (N.J.S.A. 13:1K-6 et
seq.) ("ISRA"); the New Jersey Spill Compensation and Control Act (N.J.S.A.
58:10-23.11 et seq.) (the "Spill Act"); the New Jersey Water Pollution Control
Act (N.J.S.A. 58:10A-1 et seq.); the New Jersey Sanitary Landfill Facility
Closure and Contingency Fund Act (N.J.S.A. 13:1E-100 et seq.); the New Jersey
Underground Storage of Hazardous Substances Act (N.J.S.A. 58:10A-21 et seq.);
the New Jersey Toxic Catastrophe Prevention Act (N.J.S.A. 13:1K-19 et seq.);
and the New Jersey Environmental Rights Act ("ERA"), N.J.S.A. 2A:35A-1 et
seq.).
(f) "Environmental Losses" shall mean any civil liabilities, damages,
losses, judgments, settlements, fines, penalties, costs, or expenses, of any
kind or nature whatsoever, including without limitation, fees, costs and
expenses for sampling, monitoring or remediating Environmental Conditions,
governmental filing fees or
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oversight costs, reasonable attorneys', consultants' and engineering fees and
disbursements, costs of defense, and any interest which may be imposed thereon,
that (i) are imposed or incurred at any time pursuant to Environmental Laws;
and (ii) arise under, result from or relate in any way to the business of the
Companies or the ownership, operation, management, use or control of the
Premises or other assets or properties of the Companies, prior to or after the
Closing. The term "Environmental Losses" shall not include criminal
liabilities. Without limiting in any way the generality of the foregoing,
Environmental Losses shall include civil liabilities arising from: (i) the
obligation of the Companies or the Shareholders to comply with ISRA in
connection with the transactions contemplated by this Agreement or any other
transaction or event, whether occurring in the past, present or future, to
which ISRA is applicable; (ii) any violation of any Environmental Laws by the
Companies; (iii) any violation of any Environmental Laws in any way related to
the ownership, operation, management, control or use of the Premises; (iv)
Environmental Conditions on, at, under or emanating from the Premises; (v)
Environmental Conditions on, at, under or emanating from any other location
other than the Premises related in any way to the treatment, storage, disposal
or Release of a Hazardous Substance used, generated or handled in any way by
the Companies or for which the Companies, or any of them, are in any way
legally responsible; and (vi) claims of third parties alleging personal
injuries, property damages or damages to natural resources resulting from
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exposure to or Releases of Hazardous Substances for which the Companies, or any
of them, are in any way legally responsible, including, without limitation,
exposure to or Releases of Hazardous Substances on, at, under or emanating from
the Premises.
(g) "Hazardous Substances" shall mean any pollutants, toxic
substances, hazardous waste or hazardous substances defined in or regulated
under any Environmental Law.
(h) "ISRA" shall mean the New Jersey Industrial Site Recovery Act,
N.J.S.A. 13:1K-6 et seq., and the regulations promulgated thereunder.
(i) "Knowledge" and "Know" shall mean for the purposes of paragraph
4.20, the conscious awareness of facts, circumstances or information by Vincent
A. Stabile at the time of the execution of this Agreement. The foregoing
notwithstanding, these terms shall not include any facts, circumstances or
information that could have been known or should have been known by Vincent A.
Stabile.
(j) "NJDEP" shall mean the New Jersey Department of Environmental
Protection, its divisions' bureaus, subdivisions, and it Commissioner,
Assistant Commissioners and all other officers nd employees.
(k) "Release" shall mean any intentional or unintentional release,
discharge, spill, leaking, pumping, pouring, emitting, emptying, migrating,
leaching, injection, disposal or dumping.
4.20.2 Representations and Warranties.
(a) The Shareholders acknowledge that they have received and reviewed
with consultants and counsel of their choice the Phase I
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Environmental Assessment and the Preliminary Data Tables and Figures prepared
by Conestoga-Rovers dated August 1994 (the "CRA Reports").
(b) The Shareholders represent to their knowledge that:
(i) No lien has attached to the Premises as a result of
the New Jersey Spill Compensation Fund expending monies from the Fund to pay
for damages, as such term is described in N.J.S.A. 58:10-23.11g, and/or Cleanup
and Removal Costs, as such term is defined in N.J.S.A. 58:10-23.11b(d), arising
from any intentional or unintentional action or omission of the Companies or
any previous owner, user and/or operator of the Premises.
(ii) Except as set forth in Schedule 4.20(b) or referred
to in the CRA Reports, there are no Enforcement Notices issued against the
Companies.
(iii) Neither the Companies nor the Shareholders know of
any person who has suffered any physical or other impairment or disability as a
result of his exposure to any Hazardous Substances currently or previously
existing on, at, under or emanating from the Premises.
(iv) Except as set forth in Schedule 4.20(d) or referred
to in the CRA Reports, the Companies are in compliance with all Environmental
Laws.
(v) Except as set forth in Schedule 4.20(e) or referred
to in the CRA Reports, the Shareholders have no knowledge of a Release of a
Hazardous Substance on, at, under or emanating from the Premises.
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(vi) Except as set forth in Schedule 4.20(f) or referred
to in the CRA Reports, there is not constructed, placed, deposited, stored,
installed, disposed of or located on the Premises any (i) asbestos or asbestos
containing materials; or (ii) polychlorinated byphenyls ("PCBs") or
transformers, capacitors, ballasts or other equipment which contain dielectric
fluid containing PCBs.
(vii) Except as set forth in Schedule 4.20(g) or referred
to in the CRA Reports, the Companies are in possession of all permits, licenses
and other authorizations of governmental authorities that are required under
Environmental Laws (x) for the business of the Companies, and (y) the ownership
and operation of the Premises.
For the purposes of this paragraph 4.20, the phrase "referred to in
the CRA Reports," shall include without limitation all matters, events or
circumstances referred to in any such reports and all noncompliance with
Environmental Laws, Releases or threatened Releases of Hazardous Substances and
requirements for any licenses, permits or other authorizations required under
Environmental Laws resulting from or in connection with any matters, facts or
circumstances referred to in the CRA Reports.
Anything in this Agreement to the contrary notwithstanding, the
representations and warranties set forth in paragraph 4.20.2 are the only
representations and warranties given by the Shareholders with respect to
environmental matters of any kind or nature whatsoever including, without
limitation, compliance with Environmental Laws, Environmental Conditions on,
at, under or
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emanating from the Premises or any other property, permits, licenses or other
authorizations required under Environmental Laws, Releases or threatened
Releases of Hazardous Substances or any other matters relating to environmental
conditions or liabilities arising under Environmental Laws.
4.21 Bank Accounts. Schedule 4.21 contains a list of all bank
accounts of the Companies and all persons who are authorized signatories
therefor.
4.22 No Adverse Consequences. (a) All assets belonging to others
and used by the Companies shall, after the consummation of the transactions
contemplated herein, be available for such use by the Companies.
(b) Except as set out on Schedule 4.22(b) no contract to which
IRR is a party is terminable by the other party thereto in the event Vincent A.
Stabile is no longer associated with IRR.
4.23 No Material Omissions. To the best of Shareholders'
knowledge, none of the information or documents furnished or to be furnished by
Sellers or their authorized representatives to Purchaser, or any of its
representatives, is false or misleading or misstates a material fact required
to be stated therein in order to make any of the statements therein not
misleading, and such information or such documents are true and correct as of
the date
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hereof. Notwithstanding anything else to the contrary, Sellers, as of the date
hereof, have delivered or made available to Purchaser any and all material
information, documents, items, correspondence, agreements etc. regarding the
Companies and Advertising.
5. Individual Representations and Warranties of Shareholders. Each of
Vincent A. Stabile, Antoinette D. Stabile and Madeline C. Stabile for
themselves and not for each other hereby warrant and represent to and agree
with Purchaser that:
5.1 Title to Capital Stock. The Stock is owned of record and
beneficially by the persons set forth in Schedule 1.1 free and clear of all
liens, charges and encumbrances whatsoever, and upon the delivery of and
payment for such shares of stock at the Closing as provided for in this
Agreement, the Purchaser will acquire good and valid title to all of the Stock
of the Companies, free and clear of any liens, charges and encumbrances other
than any lien, charge or encumbrance created by the Purchaser.
5.2 Capacity of Shareholders. Each Shareholder has the full
right, power, legal capacity and authority to enter into this Agreement and to
sell and to deliver to Purchaser the shares of Stock to be sold and delivered
by such Shareholder hereunder. No Shareholder, in his or her capacity as
"trustee" under respective trusts established by each of them as of July 1,
1985, (respectively as to each trust, the "Trust") has been subject to a
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determination that the powers of the grantor as trustee Under the Trust should
be suspended, and the trustee has been the trustee under the Trust at all times
since the establishment of the Trust. Each Shareholder as to his or her
respective Trust represents and warrants that there have been no amendments to
the trust instrument except as to Vincent A. Stabile an amendment denominated
"First Amendment to Vincent A. Stabile Trust dated July 1, 1985", and dated
July 30, 1991; as to Antoinette D. Stabile an amendment denominated "First
Amendment to Antoinette D. Stabile Trust dated July 1, 1985", and dated August
26, 1991; and as to Madeline C. Stabile an amendment denominated "First
Amendment to Madeline C. Stabile Trust dated July 1, 1985", and dated August
13, 1991. The sale and delivery of the shares of Stock is and will be effected
in accordance with all applicable Federal and state statutes and regulations.
5.3 No Violations. The execution, delivery and performance by
each Shareholder of this Agreement does not contravene any law, governmental
rule, regulation or order applicable to such Shareholder, and does not and will
not contravene any provision of, or constitute a default under any indenture,
mortgage, contract, trust instrument or other instrument or order, writ,
injunction or decree to which such Shareholder is a party or by which he or she
or any of his or her assets are bound; and will not result in the imposition of
a lien upon his or her assets pursuant to the terms of any agreement or
instrument to which such Shareholder is a party
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or by which he or she is bound.
6. Representations and Warranties of Purchaser. Purchaser hereby represents
and warrants to Shareholders that:
6.1 Due Incorporation. Purchaser is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware, and has full corporate power to acquire the Stock and Acquired
Assets and to conduct its business.
6.2 Corporate Authorization. This Agreement, the execution and
delivery hereof by Purchaser, payment of the purchase price to Sellers and the
performance by Purchaser of its obligations and undertakings hereunder have
been duly and validly authorized by all necessary corporate action. All
consents and approvals have been obtained or filed with any governmental body
or agency or third party required for the consummation of any of the
transactions contemplated hereby by Purchaser. This Agreement has been duly
executed and delivered by Purchaser.
6.3 No Breach. The making of this Agreement and the consummation
of all transactions herein provided for will not conflict with or result in a
breach of any of the terms, conditions or provisions of Purchaser's certificate
of incorporation, by-laws, or other governing documents, or any contracts or
agreements to which Purchaser is a party and by which it is bound.
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6.4 Completeness of Statements. None of the information or
documents furnished or to be furnished by Purchaser or any of its
representatives to Sellers is false or misleading or misstates a material fact
required to be stated therein in order to make the statements therein not
misleading.
7. Pre-Closing Covenants. The Parties agree as follows with respect to
the period between the execution of this Agreement and the Closing:
7.1 Access to Records; Investigation by Purchaser. Sellers shall
afford the officers and authorized representatives of the Purchaser such access
to the offices, properties, business and records of the Companies and
Advertising as Purchaser shall deem necessary or desirable in its sole
discretion, and shall furnish to Purchaser or such authorized representatives
such additional financial and operating data and any and all additional
information, documents, items, correspondence, agreements etc. as shall be
reasonably requested by Purchaser, including all such information and data as
shall be necessary in order to enable Purchaser or its representatives to
investigate the business and properties of the Companies and Advertising but no
such investigation shall affect Purchaser's reliance on the accuracy of the
representations and warranties of Sellers hereunder.
7.2 No Inaccuracies. Sellers shall refrain from taking any
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action which would render any representation and/or warranty contained in this
Agreement inaccurate as of the Closing Date. Sellers will promptly notify
Purchaser of losses, claims, proceedings or investigations against any of the
Companies, their officers and directors, or Advertising, which would have been
listed in Schedule 4.9 if such lawsuit, claim, proceeding or investigation had
arisen prior to the date hereof.
7.3 Best Efforts; Special Dividend. (a) Shareholders shall cause
the Companies and Advertising to conduct their respective business, operations
and affairs in the same manner and with the same business policies as was the
case prior to the date hereof, including the maintaining of normal inventories
so as to supply the requirements of the customers and distributors of the
Companies, and during such period Shareholders will not cause the Companies or
Advertising to dispose of any of their respective assets or properties or incur
any obligation other than in arms-length transactions in the usual and ordinary
course of business practices heretofore followed by the Companies and
Advertising, or take any action which may adversely affect the goodwill or the
normal conduct of the business of the Companies and Advertising; or take, or
cause the Companies to take, any action which would constitute a fraudulent
conveyance under any state or federal law or which would render either or both
the Companies insolvent under any state or federal standard of insolvency.
(b) Shareholders shall be entitled to cause each of IRR
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and Retainers to declare and pay a special dividend in an aggregate amount
equal to the excess of cash and cash equivalents held by each as of the close
of business on August 31, 1994 over trade accounts due and payable and accrued
compensation as of the close of business on August 31, 1994.
7.4 Preservation of Good Will. Sellers will use all reasonable
efforts to maintain the business organization for the Companies and Advertising
intact and to preserve the good will of the respective suppliers, contractors,
employees, customers and others having business relations with the Companies
and Advertising.
7.5 Consent to Assignment. With respect to all contracts,
agreements, understandings or commitments of the Companies and Advertising
which require consent of another party in order to remain in force after the
Closing, Sellers shall use reasonable efforts to obtain all such consents and
deliver the same to Purchaser.
7.6 Liens, Etc. Sellers will not subject to any material lien,
encumbrance, charge, security interest or mortgage any of the assets of the
Companies or Advertising.
7.7 Amendments or Termination of Contracts. Sellers will not
amend or terminate any contract, commitment, understanding, lease,
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license or instrument without obtaining the prior written consent of Purchaser.
7.8 Maintenance of Equipment. Sellers will maintain the equipment
of the Companies and Advertising in good working order.
7.9 Covenants for Compliance with Laws.
Sellers shall comply with all laws applicable to the
transactions contemplated in this Agreement including, without limitation,
local certificate of occupancy laws. Sellers shall promptly provide to
Purchaser all correspondence, reports, notices, orders, findings and other
materials pertinent to Sellers' compliance with such laws.
7.9A Compliance With ISRA.
7.9A.1 Closing
(a) Prior to the Closing, the Shareholders shall
cause IRR to obtain from the NJDEP and to execute a Remediation Agreement
("RA") permitting the consummation of the transactions contemplated by this
Agreement. Purchaser shall have an opportunity to review the RA prior to
execution. The form of the RA shall be reasonably acceptable to Purchase.
Shareholders shall cause IRR to prepare and submit all documents required by
the NJDEP to obtain the RA. IRR shall be the Ordered Party on the RA.
Purchaser shall execute any documents reasonably requested by the Shareholders
to secure any such Remediation Agreement.
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(b) Following the Closing, the Purchaser shall cause
IRR to establish, and shall thereafter cause IRR to maintain in full force and
effect until released by the NJDEP, in each case at Purchaser's or IRR's sole
expense, a remediation funding source (as such term is defined under ISRA)
satisfactory in form, content and amount to the NJDEP.
7.9A.2 Duty to Achieve Compliance with ISRA. Following the
Closing, the Purchaser shall cause IRR to take all actions required under the
RA or ISRA to achieve Compliance with ISRA. Notwithstanding the foregoing
sentence, IRR may seek a deferral from the NJDEP with respect to the
implementation of any Remedial Action Workplan required to achieve Compliance
with ISRA, provided, however, that such deferral shall not in any way relieve
Purchaser's or IRR's obligations pursuant to this Section or Section 11 of this
Agreement. Shareholders shall have no duty or obligation to take any action or
to incur any expense whatsoever to achieve Compliance with ISRA.
7.10 Termination of Benefit Plan. Prior to Closing, Shareholders
may, in their discretion, effect the termination of any Benefit Plan maintained
by IRR, provided that in the event any Benefit Plan is terminated, Shareholders
shall be liable to IRR or to any successor thereto, for an amount equal to the
expenses incurred by IRR in connection with the termination (including, without
limitation, legal, accounting and actuarial expenses relating to submissions to
any governmental authorities and
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contributions, if any, necessary to make the Benefit Plan able to terminate
under ERISA paragraph 4041(b) as a "Standard Termination", in accordance with
the applicable rules of the Pension Benefit Guaranty Corporation in effect on
such date), and shall indemnify IRR, any successor thereto, and Purchaser for
any liability or penalty incurred upon or as a result of the termination of
such Benefit Plan, or in connection with the operation of such plan prior to
Closing. The amount of any assets of such Benefit Plan remaining after
complete satisfaction of all of its liabilities to participants (as described
above), reduced by the amount of the expenses described above, shall be paid to
Shareholders. In any event, Shareholders shall cause any Benefit Plan of IRR
to be fully funded in accordance with applicable law prior to assignment of
plan responsibility under Paragraph 7.11.
7.11 Assignment of Plan Responsibilities. Effective as of Closing,
each of Vincent A. Stabile, Antoinette D. Stabile and Madeline C. Stabile shall
transfer to Purchaser all of their rights, duties and responsibilities under
the Benefit Plans as the sponsor, employer, plan administrator and trustees.
Each of Vincent A. Stabile, Antoinette D. Stabile and Madeline C. Stabile agree
to provide Purchaser with appropriate documents in form and substance
satisfactory to Purchaser to effect such assignment. Purchaser agrees to
assume all such rights, duties and responsibilities from and after Closing,
except that:
(a) Each of Vincent A. Stabile, Antoinette D.
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Stabile and Madeline C. Stabile shall continue to be liable for any act taken
or omitted by them or IRR or any failure to act on or prior to Closing as
either the employer, plan sponsor, plan administrator, or trustees;
(b) Vincent A. Stabile shall continue to be
responsible for the preparation and filing with the appropriate governmental
agencies any annual report forms and returns required with respect to any plan
year which ends prior to Closing, and shall be responsible for any audit of the
financial statements of any Benefit Plan with respect to any plan year which
ends prior to Closing;
(c) In the event that any of Vincent A. Stabile,
Antoinette D. Stabile, Madeline C. Stabile or IRR, or any employee or agent
thereof, have engaged in or are responsible for a violation of ERISA or of the
Internal Revenue Code of 1986, as amended, and such violation continues after
Closing, Vincent A. Stabile, Antoinette D. Stabile and Madeline C. Stabile
shall be jointly and severally liable for any losses of Purchaser resulting
from such continuing violation. No claim for any such losses shall be made by
Purchaser, nor shall Purchaser cause or suffer IRR to make any such claim,
where the statute of limitations for asserting such violation has run under
Section 413 of ERISA (with respect to ERISA claims) or under the applicable
section of the Code, and no claim of violation has been asserted.
8. Risk of Loss. Until the Closing Date, the risk of loss or
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damage to any of the assets of IRR, Retainers and Advertising by fire or other
casualty shall be upon Sellers. In the event the loss or damage to any of the
assets of any of IRR, Retainers and/or Advertising by fire or other casualty is
sufficiently extensive to impair substantially the continued conduct of the
business of any of IRR, Retainers or Advertising, Purchaser in its sole
discretion may terminate this Agreement. In the event that Purchaser decides
not to terminate this Agreement pursuant to this Paragraph, any insurance claim
for such risk of loss or damage shall accrue to the Sellers and the Purchase
Price shall be reduced by the amount of the loss or damage as determined by the
parties hereto.
9. Confidentiality. Sellers and Purchasers agree to comply with their
respective obligations under that certain confidentiality agreement among
Sellers, the Companies and Purchaser dated July 15, 1994.
10. Broker.
Purchaser, on the one hand, and Sellers, on the other hand,
represent to each other that no broker or finder has been connected with the
transactions contemplated by this Agreement. In the event of a claim by any
broker or finder based upon representing or being retained by Sellers, on the
one hand, or Purchaser, on the other hand, Sellers, or Purchaser, as the case
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may be, agree to indemnify and save harmless the other in respect of such
claim. This obligation to indemnify shall survive the Closing.
11. Indemnification.
11.1 General Indemnification. (a) Sellers jointly and severally
shall defend, indemnify and hold harmless Purchaser, the Companies, and each of
their respective officers, directors, employees and agents (collectively the
"Purchaser Indemnitees") from any and all liabilities, losses, costs or damages
suffered by any or all of the Purchaser Indemnitees ("Loss"), and any and all
reasonable attorneys' and accountants' fees and expenses and other
out-of-pocket expenses incurred in defending or prosecuting any claim resulting
in or from a Loss, proximately caused by: (i) any breach of a covenant which
was required to be performed by any of Sellers at or prior to the Closing Date
(regardless of when such breach was discovered) or which by its terms imposes
continuing liability after the Closing Date, including without limitation, the
covenants set out in paragraph 7.11 above; or (ii) any misrepresentation or
breach of warranty made by any of Sellers in this Agreement or any certificate
delivered on behalf of Sellers pursuant hereto. Recovery under this indemnity
shall be limited to the Purchase Price and the indemnification provisions of
this Agreement shall, in the absence of fraud, constitute Purchaser's sole
remedy for any misrepresentation or breach of any of the representations,
warranties, covenants and agreements set out
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herein. The obligations contained herein shall survive the Closing.
(b) Purchaser shall defend, indemnify and hold harmless
Sellers, and each of them, (collectively the "Seller Indemnitees") from any and
all liabilities, losses, costs or damages suffered by any or all of the Seller
Indemnitees ("Loss"), and any and all reasonable attorneys' and accountants'
fees and expenses and other out-of-pocket expenses incurred in defending or
prosecuting any claim resulting in or from a Loss, proximately caused by: (i)
any breach of a covenant which was required to be performed by Purchaser at or
prior to the Closing Date (regardless of when such breach was discovered) or
which by its terms imposes continuing liability after the Closing Date; or (ii)
any misrepresentation or breach of warranty made by Purchaser in this Agreement
or any certificate delivered on behalf of Purchaser pursuant hereto. Recovery
under this indemnity shall be limited to the Purchase Price and the
indemnification provisions of this Agreement shall, in the absence of fraud,
constitute Sellers' sole remedy for any misrepresentation or breach of any of
the representations, warranties, covenants and agreements set out herein. The
obligations contained herein shall survive the Closing.
11.2 Environmental Indemnification. (a) Purchaser shall
defend and indemnify each of the Shareholders from and hold them harmless
against Environmental Losses. The obligations contained herein shall survive
the Closing without limitation.
(b) Purchaser shall deliver at Closing a release by each
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<PAGE> 58
of IRR and Retainers from claims for Environmental Losses in form reasonably
satisfactory to Shareholders (together with reasonably satisfactory evidence of
authority to execute the release on behalf of IRR and the release on behalf of
Retainers).
11.3 Procedures.
(a) Promptly after receipt by a Purchaser Indemnitee
or Seller Indemnitee (hereinafter referred to as "Indemnitee") of notice of the
assertion or the commencement of any litigation, suit, action or claim (each
and all of the foregoing items being herein referred to as "Litigation") with
respect to any matter for which indemnification is sought under this Article
11, the Indemnitee shall give written notice thereof (the "Notice") to the
person from whom indemnification is sought pursuant hereto (the "Indemnitor")
and shall thereafter keep the Indemnitor reasonably informed with respect
thereto. Failure of the Indemnitee to give the Indemnitor prompt notice as
provided herein shall not relieve the Indemnitor of any of its obligations
hereunder, except to the extent the failure to give such notice prejudices the
Indemnitor's ability to defend such Litigation. In case any such Litigation is
commenced or asserted against any Indemnitee, the Indemnitor shall be entitled
to assume the defense thereof, by giving written notice to the Indemnitee of
its intention to do so within thirty (30) days after receipt of the Notice,
with counsel as selected by Indemnitor, at the Indemnitor's own expense. If
the Indemnitor shall assume the defense of such Litigation, the Indemnitor
shall not make any admission of liability, agreement or compromise with
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<PAGE> 59
any person, body or competent authority without the written consent of the
Indemnitee, such consent not to be unreasonably withheld, conditioned or
delayed. Notwithstanding the assumption by the Indemnitor of the defense of
any Litigation as provided in this subsection, the Indemnitee shall be
permitted to join in the defense of such Litigation and to employ counsel at
its own expense. Each party agrees to cooperate in good faith with each other
party in providing testimony, documents and other assistance necessary or
desirable to the defense of any such Litigation.
(b) If the Indemnitor shall fail to notify the
Indemnitee of its desire to assume the defense of any such Litigation within
the prescribed period of time, or shall notify the Indemnitee that it will not
assume the defense of any such Litigation, then the Indemnitee may assume the
defense of any such Litigation, in which event it may do so in such manner as
it may deem appropriate, and the Indemnitor shall be bound by any
determinations made in such Litigation or any settlement thereof effected by
the indemnitee; provided, however, that the Indemnitee shall not make any
admission of liability, agreement or compromise with any person, body or
competent authority without the written consent of the Indemnitor, such consent
not to be unreasonably withheld, conditioned or delayed. The Indemnitor shall
be permitted to join in the defense of such Litigation and to employ counsel at
its own expense.
12. Survival of Representations and Warranties.
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The representations and warranties made by Sellers, and each
of them, or Purchaser shall survive the execution and delivery of this
Agreement, the Closing and any investigation made by any party hereto, but only
as set out below:
(a) the representations and warranties contained in paragraphs
4.2, 4.3, 4.7, 5.1, 5.2 and 6.2 shall survive without limitation;
(b) the representations and warranties contained in paragraph
4.11 shall survive for so long as any tax period covered by such
representations and warranties remain open, in whole or in part, and subject to
audit and/or adjustment including without limitation by reason of waiver of any
statute of limitations;
(c) the representations and warranties contained in paragraph
4.20 shall survive for a period of five (5) years following the Closing Date;
(d) all other representations and warranties set out in this
Agreement shall survive for a period of two (2) years following the Closing
Date; and
(e) any claim made by Purchaser or any Seller for
indemnification pursuant to paragraph 11.1 hereof for any misrepresentation or
breach of any representation or warranty contained herein must be made, if at
all, by written notice delivered to the party from whom indemnification is
sought prior to the expiration of the relevant survival period of such
representation or warranty.
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13. Conditions Precedent To and Requirements At Closing.
13.1 Conditions Precedent to Purchaser's Obligation.
The obligation of Purchaser to close the transactions
contemplated by this Agreement is subject to and conditioned upon the
performance prior to or at the Closing Date of each of the following:
(a) All the terms and conditions of this Agreement
to be complied with and performed by Sellers on or before the Closing Date,
including the delivery to Purchaser of all documents and instruments referred
to in this Agreement, shall have been complied with and performed.
(b) Purchaser shall not have discovered any error,
misstatement or omission in the representations, warranties and agreements made
by Sellers which alone is, or in the aggregate are, in the opinion of Purchaser
or its counsel, materially adverse to Purchaser;
(c) The delivery to Purchaser of a certificate
signed by each Shareholder, dated the Closing Date, which states that all
representations and warranties of such Shareholder contained in this Agreement
or in any certificate, schedule or instrument delivered pursuant hereto in
connection with the
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<PAGE> 62
transaction contemplated hereby, are true and correct as of the Closing Date in
all material respects, and that the agreements and covenants of such
Shareholder contained in this Agreement have been complied with in each and
every respect as of the Closing Date;
(d) The delivery to Purchaser of a certificate or
certificates representing all the shares of Stock of both IRR and Retainers;
(e) The delivery to Purchaser of a bill of sale for
the Acquired Assets;
(f) No suit, action or other proceeding to restrain,
prohibit or otherwise affect the consummation of the transactions contemplated
by this Agreement, which in the judgment of Purchaser or its counsel, requires
the delay of the Closing or the termination of this Agreement, shall have been
instituted or threatened;
(g) The validity or legality of all actions,
proceedings, instruments and documents required to carry out this Agreement or
incidental thereto and all other related legal documents shall have been
approved by Purchaser's counsel;
(h) Sellers shall have obtained consents to the
assignment to Purchaser of all material contracts, agreements,
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<PAGE> 63
commitments, understandings or instruments to which the Companies or
Advertising is a party or by which they are bound, which require the consent of
any other party or person in order to remain in force from and after the
Closing, either by the terms of the contract, agreement, commitment,
understanding or instrument, or as a matter of law;
(i) Any permit, approval or any action of any
jurisdiction or governmental authority required in the opinion of Purchaser's
counsel for the lawful consummation of the transactions contemplated by this
Agreement shall have been obtained;
(j) The delivery to Purchaser of the resignations of
the officers and directors of the Companies, all dated as of the Closing Date,
as requested by Purchaser;
(k) The delivery to Purchaser of an opinion letter
from McCarter & English, counsel to Sellers, in the form of Exhibit A annexed
hereto;
(l) The delivery by Vincent A. Stabile of a
Consulting Agreement with IRR in the form of Exhibit B annexed hereto;
(m) No significant employee or supplier of the
Companies or Advertising or customer set out in Schedule 4.17A
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<PAGE> 64
shall have expressed to the Companies or Advertising an unwillingness to
maintain a business relationship with the Companies or Advertising following
the Closing;
(n) No material adverse change (whether or not in
the ordinary and usual course of business) shall have occurred in the business
or the financial condition of either of the Companies or Advertising and there
shall not have been any damage, destruction or loss (whether or not covered by
insurance) materially affecting the assets, properties or business of the
Companies and Advertising taken as a whole;
(o) A fully executed Remediation Agreement issued by
the NJDEP under ISRA permitting the consummation of the transactions
contemplated by this Agreement; and
(p) The delivery for Industrial Advertising of an
executed Assignment and Assumption Agreement in the form of Exhibit C annexed
hereto.
13.2 Conditions Precedent to Sellers' Obligations
The obligations of Sellers to close is subject to and
conditioned upon the performance prior to or at the Closing Date of each of the
following:
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<PAGE> 65
(a) The terms and conditions of this Agreement to be
complied with and performed by Purchaser on or before the Closing Date,
including the delivery to Sellers of all documents and instruments referred to
in this Agreement, shall have been complied with and performed;
(b) Sellers shall not have discovered any error,
misstatement or omission in any representations, warranties and agreements made
by Purchaser which alone is or in the aggregate are, in Sellers' opinion,
materially adverse to Sellers;
(c) The delivery to Sellers of a certificate signed
by Purchaser's authorized officer, dated as of the Closing Date, which states
that all representations and warranties of Purchaser contained in this
Agreement or in any certificate, schedule or instrument delivered pursuant
hereto in connection with the transactions contemplated hereby are true and
correct as of the Closing Date with the same force and effect as if made on the
Closing Date, and that the agreements and covenants of Purchaser contained in
this Agreement have been complied with in each and every respect as of the
Closing Date;
(d) The delivery to Sellers of a resolution of the
Board of Directors of Purchaser, certified by its Secretary or other authorized
officer, authorizing execution by Purchaser of this Agreement and the
consummation of the transactions
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<PAGE> 66
contemplated hereby;
(e) No suit, action or other proceeding to restrain,
prohibit or otherwise affect the consummation of the transactions contemplated
by this Agreement, which, in the judgment of Sellers or Sellers' counsel,
requires a delay of the Closing or termination of this Agreement, shall have
been instituted or threatened;
(f) The validity or legality of all actions,
proceedings, instruments and documents required to carry out this Agreement or
incidental thereto and all other related legal matters shall have been approved
by Sellers' counsel; and
(g) Any permit, approval or any action of any
jurisdiction or governmental authority required in the opinion of the Sellers'
counsel for the lawful consummation of the transactions contemplated by this
Agreement shall have been obtained.
14. Restrictive Covenant.
14.1 Restraints. Each of the Shareholders hereby covenants
and agrees that from and after the Closing, he or she, as the case may be,
shall not:
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(a) For a period of five (5) years, directly or
indirectly, solicit business from or perform any services for any person,
company or individual which, on the date hereof or the Closing Date, is a
customer of the Companies, if such business or services are of the same general
character as those engaged in or performed by either of the Companies on the
date hereof or at the Closing Date;
(b) For a period of five (5) years, directly or
indirectly, including, without limitation, as partner, lender, joint venturer,
shareholder, consultant, or otherwise, manage, operate, engage or participate
in, loan money for, act as guarantor of loans of, perform services for or
otherwise carry on or assist a business similar to that of the Companies on the
date hereof or on the Closing Date in any state or foreign country in which the
Companies sold goods or provided services within one (1) year prior to the
Closing Date hereof;
(c) For a period of five (5) years, solicit for any
competitor of the Companies, any customers, suppliers or employees of the
Companies. Without limiting any of the foregoing, the hiring of any employee
of the Companies or Advertising, directly or indirectly, shall be deemed to be
a violation of this covenant;
(d) Without limitation as to time, divulge to
anyone, or use any non-public information in such Shareholder's
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possession with respect to the services, operations or customer lists of the
Companies or Advertising, except as otherwise required by law; and
(e) Without limitation as to time, divulge, use,
disclose or furnish to anyone (except Purchaser) trade secrets, processes of
manufacture, product specifications, or any other non-public information of any
nature regarding the methods of conducting or operating the business of the
Companies or Advertising, except as otherwise provided by law.
(f) In the event any Shareholder receives any
judicial or administrative order, subpoena, or other demand requiring the
disclosure of any trade secret, process of manufacture, product specifications
or other non-public information covered by subparagraphs (d) and (e) above,
such Shareholder shall promptly notify the Purchaser of such demand prior to
disclosure of such non-public information in order to allow Purchaser the
opportunity to seek to quash such a demand or obtain a protective order or
other appropriate remedy.
14.2 Reasonableness of Restraints. Each Shareholder
hereby acknowledges that:
(a) The imposition of restrictions, restraints and
limitations set out in Paragraph 14.1 hereof are necessary for the
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<PAGE> 69
reasonable and adequate protection of the Stock and Acquired Assets purchased
by Purchaser hereunder, and the business of the Companies and Advertising;
(b) Each and every restriction, restraint and
limitation set out in Paragraph 14.1 hereof is reasonable in respect to
geographic area, subject matter and length of time; and
(c) Monetary damages alone will not adequately
compensate Purchaser in the event of a breach by any of the Shareholders of the
restrictions, restraints and limitations contained in Paragraph 14.1 hereof,
and each Shareholder for himself or herself agrees that in addition to all
remedies available to Purchaser, at law or in equity, Purchaser shall be
entitled to interim restraints and permanent injunctive relief for the
enforcement thereof.
15. Termination.
15.1 Manner of Termination. This Agreement may be
terminated and the transactions contemplated by this Agreement may be abandoned
on or before the Closing Date:
(a) As provided in Article 8 in the event of a loss
as contemplated therein;
(b) By mutual agreement of Sellers and Purchaser; or
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(c) By Purchaser, if any of the conditions of
Paragraph 13.1 of this Agreement have not been met by September 30, 1994 and
have not been waived in writing by Purchaser.
15.2 Election to Terminate. Any election to terminate
this Agreement under Paragraph 15.1(b), any assent to amendments to this
Agreement and any election to waive any provision of this Agreement shall be
exercised in writing signed by the Sellers and a duly authorized officer of
Purchaser.
15.3 No Liability. In the event of the termination and
abandonment of this Agreement pursuant to the provisions of this Article 15,
this Agreement shall become null and void and have no effect, without any
liability on the part of any party or the directors, officers, stockholders or
employees of any party in respect of this Agreement, other than the liability
on the part of each party for its own expenses incurred in connection with the
transactions contemplated by this Agreement, provided, however, that
notwithstanding the foregoing, nothing herein shall limit the liability of
Purchaser or Sellers for the breach of any representation or warranty of
Purchaser or Sellers, as the case may be.
16. Assignment
16.1 Option to Assign. Prior to the Closing Date,
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Purchaser may, without the consent of Sellers, assign all of its rights, title
and interest in and to this Agreement and its obligations hereunder to a
majority-owned subsidiary of Purchaser or to an entity formed by Purchaser in
which Purchaser owns a majority of the stock, in the event that such entity is
a corporation, or owns a majority partnership interest, in the event that such
entity is a partnership. Any such subsidiary established by the Purchaser
shall perform all of the terms, covenants and conditions to be performed by the
Purchaser hereunder, including, without limitation, the payment of the Purchase
Price pursuant to Article 2 hereof.
16.2 No Release. Upon the Purchaser's making an
assignment to a subsidiary pursuant to Paragraph 16.1 hereof, for all purposes
of this Agreement, Purchaser's assignee shall be considered the "Purchaser"
hereunder entitled to all rights and benefits inuring to Purchaser hereunder;
however, Purchaser named hereinabove shall not be released or discharged from
any of the obligations of "Purchaser" under this Agreement and any transactions
accompanying or related to this Agreement.
17. Post-Closing Commitments. In addition to any other requirement to be
observed by any party hereto after the Closing:
(a) Shareholders shall be responsible for the preparation and
timely filing of the short period returns for IRR as an S corporation and any
payments due from any taxpayer in respect
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thereof; and
(b) Purchaser shall give Shareholders and their agents or
representatives full access to IRR's books and records for the purpose of
allowing Shareholders to fulfill their commitment pursuant to subparagraph (a)
of this Paragraph 17.
(c) Sellers shall refrain from all use of the trade name
"Industrial Advertising" after the closing and shall not contest any use of
said trade name by Purchaser, IRR and/or Retainers.
18. Miscellaneous.
18.1 Entire Understanding. This Agreement represents the entire
understanding of the parties hereto with respect to the subject matter hereof
and may not be amended or modified except by a writing executed by all of the
parties hereto.
18.2 Fees and Expenses. Each party shall bear his, her or its own
fees and expenses incurred in connection with this Agreement and the
consummation of the transactions contemplated hereby.
18.3 Publicity. Except as may be required by law or, as to
Purchaser, by reason of its status as a listed company on the New York Stock
Exchange, no press release, public announcement or other communication relating
to the transactions contemplated herein shall be made by Purchaser without the
prior approval of Vincent A.
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Stabile or by Sellers, or any of them, without the prior approval of Purchaser.
All such approvals shall not be unreasonably withheld.
18.4 Entire Agreement. Except as specifically provided in
paragraph 9, this Agreement supersedes all prior and contemporaneous
negotiations, understandings and agreements, written or oral, between the
parties hereto with respect to the subject matter hereof, all of which prior
agreements and understandings are hereby rendered null and void.
18.5 Schedules. Disclosure of any information in any Schedule
hereto shall be deemed disclosure of such information for all Schedules hereto.
18.6 Binding Effect. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto, and their respective heirs,
successors, executors, administrators and assigns.
18.7 Waiver. No waiver of any provision hereof shall be effective
unless set out by a written instrument signed by all of the parties hereto.
18.8 Execution of Agreement. This Agreement may be signed in
counterparts, all of which shall be considered an original and
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together they shall constitute one agreement.
18.9 Paragraph Headings. Paragraph headings contained in this
Agreement are for convenience of reference only and shall not be deemed part of
this Agreement.
18.10 Governing Law. This Agreement shall be governed by, and
construed and interpreted in accordance with, the laws of the State of New
Jersey applicable to agreements made and to be performed wholly within such
State. If any legal action should be filed by any of the parties against any
other party, the venue and forum of such action shall be the New Jersey
Superior Court, Union County and all parties hereto consent and submit to the
jurisdiction of such court.
18.11 Notices. Any and all notices or other communications or
deliveries required or permitted to be given pursuant to any of the provisions
of this Agreement shall be deemed to have been duly given for all purposes if
sent by certified or registered mail, return receipt requested and postage
prepaid, hand delivered, sent by overnight delivery service or sent by
facsimile as follows:
<TABLE>
<S> <C>
If to Seller: Vincent A. Stabile
c/o Industrial Retaining Ring Company
57 Cordier Street
Irvington, New Jersey 07111
With a copy to: Todd M. Poland, Esq.
McCarter & English
Four Gateway Center
</TABLE>
66
<PAGE> 75
<TABLE>
<S> <C>
100 Mulberry Street
Newark, New Jersey 07102-0652
If to Purchaser: Valentina Doss, Esq.
Vice President and General Counsel
TransTechnology Corporation
700 Liberty Avenue
Union, New Jersey 07083
With a copy to: Gerald C. Harvey, Esq.
Pfaltz & Woller, P.A.
382 Springfield Ave.
Summit, New Jersey 07901
</TABLE>
or at such other address as any party may specify by notice given to
the other party in accordance with this paragraph. The date of giving of any
such notice shall be the (a) date of hand delivery, (b) the date following the
posting of the mail or the date when sent by overnight delivery service or (c)
the date when sent by facsimile.
19. Definitions of Certain Terms. The following terms shall have the
following meanings:
"Acquired Assets": the assets of Advertising set out in Schedule 1.2B.
"Advertising": Industrial Advertising, a New Jersey general
partnership.
"Applicable Laws": means all applicable provisions of all (i)
constitutions, treaties, statutes, laws, rules, regulations, ordinances or
orders of any Federal, state or local governing authority, (ii) governmental
approvals and (iii) orders, decisions, judgments, awards and decrees of all
courts, administrative boards
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or other Federal, state or local governmental authorities.
"Benefit Plan(s)": as defined in Paragraph 4.15(c) hereof.
"Closing": as defined in Paragraph 3.1 hereof.
"Closing Date": as defined in Paragraph 3.1 hereof.
"Code": the Internal Revenue Code of 1986, as amended.
"Companies": IRR and Retainers collectively.
"Contract(s)": as defined in Paragraph 4.16(a) hereof.
"Enforcement Notice": as defined in Paragraph 4.20.1(b) hereof.
"Environmental Laws" and "Environmental Law": as defined in Paragraph
4.20.1(e) hereof.
"ERISA": The Employee Retirement Income Security Act of 1974, as
amended.
"Financial Statements": as defined in Paragraph 4.6(a) hereof.
"Hazardous Substances": as defined in Paragraph 4.20.1(g) hereof.
"Indemnitees": as defined in Article 11 hereof.
"IRR": Industrial Retaining Ring Company, a New Jersey corporation.
"IRR Year-end Financials": as defined in Paragraph 4.6(a) hereof.
"IRR Stub Period Financials": as defined in Paragraph 4.6(a) hereof.
"ISRA": as defined in Paragraph 4.20.1(h) hereof.
"Loss": as defined in Article 11 hereof.
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"NJDEP": as defined in Paragraph 4.20.1(j) hereof.
"Obligations": as defined in Paragraph 1.2(c) hereof.
"PCBs": as defined in Paragraph 4.20 hereof.
"Person": any natural person, firm, partnership, association,
corporation, trust or Federal, state or local governmental authority.
"Premises": All of the real properties at any time owned or leased by
any or all of the Companies or Advertising.
"Purchase Price": as defined in Paragraph 2.1 hereof.
"Purchaser": TransTechnology Corporation, a Delaware corporation, or
as provided in Article 16 hereof.
"Release": as defined in Paragraph 4.20.1(k) hereof.
"Remediation Agreement": as defined in Paragraph 7.9(A).1(a) hereof.
"Retainers": Retainers, Inc., a New Jersey corporation.
"Retainers Year-end Financials": as defined in Paragraph 4.6(a)
hereof.
"Sellers": as defined in the opening paragraph of this Agreement.
"Shareholders": as defined in the opening paragraph of this Agreement.
"Stock": as defined in Recital A of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
<TABLE>
<S> <C> <C>
ATTEST: TRANSTECHNOLOGY CORPORATION
/s/ VALENTINA DOSS By: /s/ PATRICK BOLGER
- - - -------------------------- -------------------------
Name: Patrick Bolger
Title: Executive V.P. & COO
WITNESS:
/s/ GARY DEFAZIO /s/ VINCENT A. STABILE (L.S.)
- - - --------------------------- -------------------------
Vincent A. Stabile,
Individually and as Trustee
under Trust dated July 1, 1985
/s/ VINCENT A. STABILE /s/ ANTOINETTE D. STABILE (L.S.)
- - - --------------------------- -------------------------
Antoinette D. Stabile,
Individually and as Trustee
under Trust dated July 1, 1985
/s/ VINCENT A. STABILE /s/ MADELINE C. STABILE (L.S.)
- - - --------------------------- -------------------------
Madeline C. Stabile,
Individually and as Trustee
under Trust dated July 1, 1985
INDUSTRIAL ADVERTISING
/s/ VINCENT A. STABILE
By: -------------------------------
Vincent A. Stabile,
General Partner
/s/ MADELINE C. STABILE
By: -------------------------------
Madeline C. Stabile,
General Partner
</TABLE>
70
<PAGE> 1
FIFTH AMENDMENT TO THE
REVOLVING LOAN AND
SECURITY AGREEMENT
THIS FIFTH AMENDMENT TO THE REVOLVING LOAN AND SECURITY AGREEMENT (the
"Fifth Amendment") is entered into by and among NATIONAL CANADA FINANCE CORP.,
NATIONAL BANK OF CANADA (New York, New York) (collectively, "Bank"),
TRANSTECHNOLOGY CORPORATION, a Delaware corporation ("TT"), ELECTRONIC
CONNECTIONS AND ASSEMBLIES, INC., a Delaware corporation ("ECA, Inc."),
INDUSTRIAL RETAINING RING COMPANY, a New Jersey corporation ("IRR") and
RETAINERS, INC., a New Jersey corporation ("Retainers" and, together with TT,
ECA, Inc. and IRR, sometimes hereinafter referred to collectively in this Fifth
Amendment as "Borrowers").
RECITALS
A. On June 21, 1991, TT and Bank entered into a certain Revolving
Loan And Security Agreement (the "Loan Agreement," all terms defined therein
being used in this Fifth Amendment with the same meaning unless otherwise
stated) under the terms of which Bank loaned to TT $9,000,000 on a revolving
loan basis and $4,000,000 in the form of letters of credit pursuant to the
provisions set forth in the Loan Agreement.
B. On December 18, 1991, TT and Bank entered into a certain First
Amendment To The Revolving Loan And Security Agreement (the "First Amendment")
to provide for (1) the elimination of the $4,000,000 sub-limit imposed on TT by
Bank with respect to funding of the Letter of Credit Facility, (2) the
modification of certain covenants, and (3) the waiver by Bank of TT's
compliance with Section 7.1(N) of the Loan Agreement relating to TT's net worth
for the period ended September 29, 1991.
C. On December 10, 1992, TT and Bank entered into a certain
Second Amendment To The Revolving Loan And Security Agreement (the "Second
Amendment") to provide for (1) an increase in the maximum principal amount of
borrowings under the Revolving Loan from $13,000,000 to $25,000,000 (inclusive
of the issuance by Bank to TT of a maximum of $5,000,000 of standby letters of
credit), (2) a modification to the rate of interest charged on borrowings under
the Revolving Loan to provide for a rate of interest based on the Base Rate or
LIBOR (as defined therein), (3) a modification to the Borrowing Base to permit
loan advances against the Eligible Inventory of TT, (4) the modification of
Bank's Collateral of TT to include machinery and equipment of TT, (5) the
modification of certain financial covenants of TT, (6) the payment by TT of
certain dividends, and (7) the extension of the Termination Date of the Loan
Agreement.
<PAGE> 2
D. On December 31, 1992, TT and Bank entered into a letter
agreement (the "Letter Agreement") to permit TT to pay dividends in accordance
with Section 7.2(H) of the Loan Agreement, as amended, commencing with the
quarter ending December 31, 1992.
E. On August 2, 1993, TT and Bank entered into a certain Third
Amendment To The Revolving Loan And Security Agreement (the "Third Amendment")
to provide for (1) an increase in the maximum principal amount of borrowings
under the Revolving Loan from $25,000,000 to $35,000,000 (inclusive of the
issuance by Bank to TT of a maximum of $5,000,000 of standby letters of
credit), (2) a term loan facility in the principal amount of $10,000,000 with
interest accruing at a rate equal to one-quarter (1/4) percentage points above
the Base Rate, (3) the grant to Bank of a mortgage on the Palnut Property (as
defined in the Third Amendment), (4) a modification to the Borrowing Base to
increase the amount of funds TT may borrow against Eligible Inventory from
$13,000,000 to $18,000,000, and (5) the establishment of a termination fee upon
the prepayment by TT of the term loan.
F. On January 31, 1994, TT, ECA, Inc. and Bank entered into a
certain Fourth Amendment To The Revolving Loan Security Agreement (the "Fourth
Amendment") to add ECA, Inc., a wholly-owned subsidiary of TT, as a co-obligor
for the repayment of all loans to TT and ECA, Inc. by Bank.
G. TT is purchasing all of the outstanding stock of each of IRR
and Retainers, each of which will be operated as wholly-owned subsidiaries of
TT.
H. In consideration for Bank agreeing to loan and re-loan funds
to each of IRR and Retainers under the Revolving Loan in accordance with the
provisions of the Loan Agreement, as amended, each of IRR and Retainers desire
to (1) assume as a co-obligor all obligations and liabilities of Borrowers due
and owing to Bank now or hereafter arising under the Loan Agreement, as
amended, and (2) grant to Bank a security interest in and to its Collateral in
accordance with the provisions of this Fifth Amendment.
I. Borrowers and Bank now desire to amend the Loan Agreement, as
amended, to (1) add each of IRR and Retainers as a co-obligor for the repayment
of all loans to Borrowers by Bank, (2) provide for a term loan facility in the
principal amount of $15,000,000 with interest accruing at a rate equal to the
Base Rate, (3) modify the Borrowing Base to increase the maximum amount of
borrowings against Eligible Inventory and to permit borrowings against the
stock of Mace Security International owned by TT, (4) modify certain financial
covenants of Borrowers, and (5) provide for such other amendments and
modifications as are set forth in the provisions of this Fifth Amendment.
-2-
<PAGE> 3
J. Due to the affiliation and financial interdependence of
Borrowers, Bank and Borrowers have determined that it would be in their
respective best interests for each Borrower to be a joint and several obligor
of each other Borrower's obligations to Bank in accordance with the provisions
set forth in the Loan Agreement, as amended by the First Amendment, the Second
Amendment, the Letter Agreement, the Third Amendment, the Fourth Amendment and
this Fifth Amendment.
PROVISIONS
NOW, THEREFORE, in consideration of the foregoing, the parties agree
as follows:
SECTION I. AMENDMENTS TO LOAN AGREEMENT.
The Loan Agreement is amended as follows:
A. On and after the effective date of this Fifth Amendment, each
reference in the Loan Agreement to "this Agreement," "hereunder," and "hereof,"
or words of like import referring to the Loan Agreement shall mean and refer to
the Loan Agreement, as amended by the First Amendment, the Second Amendment,
the Letter Agreement, the Third Amendment, the Fourth Amendment and this Fifth
Amendment. The Loan Agreement, as amended by the First Amendment, the Second
Amendment, the Letter Agreement, the Third Amendment, the Fourth Amendment and
this Fifth Amendment, is, and shall continue to be, in full force and effect
and hereby is ratified and confirmed in all respects.
B. On and after the effective date of this Fifth Amendment, each
reference in the Loan Agreement, as amended, to "Borrower" or words of like
import referring to Borrower shall mean, refer to, and include each of TT, ECA,
Inc., IRR and Retainers, and shall hereinafter be treated as referring to
"Borrowers" on a collective basis and in the aggregate.
C. Grant of Security Interest. To secure the prompt payment and
performance of the Obligations, each of IRR and Retainers hereby grants to Bank
in accordance with the provisions of Section 4.1 of the Loan Agreement, as
amended, a continuing security interest in and to all of the Property of IRR
and Retainers, as the case may be, described in Section 4.1(A) through (G) of
the Loan Agreement, as amended, whether now owned or existing or hereafter
acquired or arising and wheresoever located.
D. Paragraphs (G), (J), (N), (MM), and (JJJ) of Section 1.1 of
the Loan Agreement are amended in their entirety as follows:
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<PAGE> 4
(G) Borrowing Base. Subject to the provisions of Section
2.1 of this Agreement, an amount equal to the lesser of:
(1) The sum of (a) eighty percent (80%) of the
unpaid face amount of Eligible Accounts, plus (b) the lesser
of (i) fifty percent (50%) of the lower of cost (determined on
a first-in, first-out basis) or market value of Eligible
Inventory or (ii) $19,000,000, plus (c) the lesser of (i)
fifty percent (50%) of the close price (to be determined as of
the last day of the immediately preceding month for the then
current month) of the Mace Stock as quoted by the NASDAQ
National Market Issues, or (ii) $1,000,000; or
(2) The Revolving Loan Credit Limit.
(J) Collateral. The Accounts, Inventory, Fixed
Collateral, the Palnut Property, the Mace Stock and all other Property
of Borrowers now or at any time or times hereafter subject to a Lien
in favor of Bank.
(N) Credit Documents. This Agreement, the Promissory
Note, the Term Note, the Acquisition Term Note, the Mortgage, the
Pledge Agreement and all other agreements, instruments, and documents
(including, but not limited to, all assignments, security agreements,
lien waivers, subordinations, guarantees, powers of attorney, and
consents) heretofore, now, or hereafter executed by Borrowers and
delivered to Bank (other than the legal opinions) with respect to the
transactions contemplated by this Agreement, in each instance as the
foregoing may be amended from time to time.
(MM) Promissory Note. The Promissory Note executed by TT and
delivered to Bank, dated June 21, 1991, as amended by (1) the First
Amendment To Promissory Note, executed by TT and delivered to Bank,
dated December 10, 1992, (2) the Second Amendment To Promissory Note,
executed by TT and delivered to Bank, dated August 2, 1993, (3) the
Third Amendment To Promissory Note executed by TT and ECA, Inc. and
delivered to Bank, dated January 31, 1994, and (4) the Fourth
Amendment To Promissory Note in the form attached to the Fifth
Amendment as Exhibit A (with such changes or modifications, if any, to
which Borrowers and National Canada Finance Corp. may agree)
evidencing the Revolving Loan made by National Canada Finance Corp.
pursuant to Section 2.1(A) of this Agreement, together with all
amendments thereto and all notes issued in substitution therefor or
replacement thereof.
-4-
<PAGE> 5
(JJJ) Term Note. The Term Note executed by TT and delivered
to Bank, dated August 2, 1993, as amended by (1) the First Amendment
To Term Note, executed by TT and ECA, Inc., dated January 31, 1994,
and (2) the Second Amendment To Term Note in the form attached to the
Fifth Amendment as Exhibit B (with such changes or modifications, if
any, to which Borrowers and National Canada Finance Corp. may agree)
evidencing the Term Loan made by National Canada Finance Corp.
pursuant to Section 2.2(A) of this Agreement, together with all
amendments thereto and all notes issued in substitution therefor or
replacement thereof.
E. Paragraphs (KKK), (LLL), (MMM) and (NNN) are added to Section
1.1 of the Loan Agreement as follows:
(KKK) Acquisition Term Loan. As defined in Section 2.3(A) of
this Agreement.
(LLL) Acquisition Term Note. The Acquisition Term Note to be
executed by Borrowers in substantially the form attached to the Fifth
Amendment as Exhibit C (with such changes or modifications, if any, to
which Borrowers and National Canada Finance Corp. may agree)
evidencing the Acquisition Term Loan made by National Canada Finance
Corp. pursuant to Section 2.3(A) of this Agreement, together with all
amendments thereto and all notes issued in substitution therefor or
replacement thereof.
(MMM) Mace Stock. The 465,000 shares of common stock of Mace
Security International, a Delaware corporation, owned by TT.
(NNN) Pledge Agreement. The Pledge And Security Agreement in
the form attached to the Fifth Amendment as Exhibit D (with such
changes or modifications, if any, to which TT and National Canada
Finance Corp. may agree).
F. Sections 2.3 through 2.12 of the Loan Agreement are amended in
their entirety and a new Section 2.13 is added to the Loan Agreement as
follows:
2.3 Acquisition Term Loan.
(A) Establishment of Acquisition Term Loan. Subject to the
provisions of this Agreement, on the effective date of the Fifth
Amendment, Bank shall make a term loan to Borrowers in the amount of
Fifteen Million Dollars ($15,000,000; the "Acquisition Term Loan").
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<PAGE> 6
(B) Payment. The Acquisition Term Loan shall bear
interest as provided in paragraph (C) of this Section 2.3 and shall be
evidenced by, and repayable in accordance with, the Acquisition Term
Note but, in the absence of such Acquisition Term Note, shall be
evidenced by Bank's records of disbursements and repayments. Without
in any way limiting Bank's right at any time to demand payment of the
entire principal amount of the Acquisition Term Loan, and all interest
accrued thereon, upon the occurrence of an Event of Default, which
right is absolute and unconditional, the entire principal amount of
the Acquisition Term Loan, together with all interest accrued thereon,
shall become due and payable in full on September 30, 1999, without
notice, presentment, demand, notice of dishonor, or any notice of any
kind.
(C) Interest on Acquisition Term Loan. Borrowers shall
pay interest (based on a year having 360 days and calculated for the
actual number of days elapsed) on the unpaid principal amount of the
Acquisition Term Loan outstanding from time to time from the date
thereof until paid, payable as of the last day of each month
commencing September 30, 1994, and continuing on the last day of each
month thereafter, and, at the maturity thereof, at a rate per annum
which shall be equal to the Base Rate from time to time in effect.
Any increase or decrease in the Base Rate shall become effective on
the date of such change.
2.4 Letter of Credit Facility. Subject to the provisions
of this Agreement, National Canada Finance Corp. or its parent
corporation, National Bank of Canada (New York, New York), shall issue
for and on behalf of Borrowers standby letters of credit the issued
and outstanding amounts of which, together with all unpaid draws
thereon, (1) shall not exceed the lesser of (a) the Borrowing Base or
(b) $5,000,000 (the "Letter of Credit Facility"), and (2) shall
reduce, on a dollar for dollar basis, the Borrowing Base and the
Revolving Loan Credit Limit. All draws made upon any issued and
outstanding standby letter of credit shall bear interest at the
Adjusted Base Rate from time to time in effect and all payments of
principal, and accrued interest thereon, shall be due and payable in
accordance with the provisions of Section 2.1(B) and (D) above.
2.5 Fees and Additional Charges.
(A) Commitment Fee. On the date of execution of the
Fifth Amendment, Borrowers shall pay to Bank a commitment fee of
$37,500 (the "Commitment Fee").
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<PAGE> 7
(B) Unused Line Fee. Commencing July 31, 1991, and
continuing on the last day of each month thereafter until such time as
the Revolving Loan is terminated as provided herein and Borrowers'
Obligations are paid in full, Borrowers shall pay to Bank an amount
equal to one-quarter of one percent (1/4%) per annum of the difference
between the Revolving Loan Credit Limit and the sum of (1) the issued
and outstanding standby letters of credit and (2) the outstanding
principal balance of the Revolving Loan during the preceding month
(the "Unused Line Fee").
(C) Termination Fee. Prior to the Termination Date,
Borrowers may terminate this Agreement as of the last day of any month
by giving Bank at least ninety (90) days prior written notice of the
date on which this Agreement is to terminate, which date must be the
last day of a month, and by paying to Bank on such termination date
all of the outstanding principal balance due and payable under the
Promissory Note, the Term Note, the Acquisition Term Note, all other
Obligations, and all accrued and unpaid interest thereon; provided,
however, that if such specified date of termination is on or before
the Termination Date, Borrowers shall pay Bank an amount equal to one
percent (1%) of the sum of the Revolving Loan Credit Limit and the
original principal amount of the Term Loan (the "Termination Fee").
The Termination Fee shall be paid to Bank at the same time and in the
same manner in which Borrowers pay in full the then outstanding
principal amounts and interest thereon due and owing under the
Promissory Note, the Term Note, the Acquisition Term Note and all
other Obligations.
(D) Letter of Credit Fee. Borrowers shall be obligated
to pay Bank a per-annum amount equal to one and one-half percent
(1.5%) of the face amount of each standby letter of credit issued by
Bank for the benefit of Borrowers (the "Letter of Credit Fee"). Each
Letter of Credit Fee shall be due and payable in equal quarterly
installments. The first quarterly installment of each Letter of
Credit Fee shall be due and payable on the date of issuance of such
Letter of Credit and any additional quarterly installments shall be
due and payable in advance for each subsequent quarter in which a
standby letter of credit is issued and outstanding for the benefit of
Borrowers.
2.6 Accountings. Any accounting rendered by Bank to
Borrowers shall be deemed correct and conclusively binding upon
Borrowers unless (A) Borrowers notify Bank by certified mail, return
receipt requested, within thirty (30) calendar days after the date
when each such
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<PAGE> 8
accounting is mailed or otherwise delivered to Borrowers, or (B) there
exists a bona fide mistake in such accounting regardless of which
party discovers such mistake.
2.7 All Advances to Constitute One Loan. The Revolving
Loan, the Term Loan, the Acquisition Term Loan and all other amounts
owed by Borrowers to Bank under this Agreement, whether or not
evidenced by a promissory note or term note, shall constitute one
obligation of Borrowers, secured by Bank's lien on and security
interest in all of the Collateral. Borrowers shall be liable to Bank
for all of the Obligations, regardless of whether such Obligations
arise as a result of advances made directly to Borrowers, it being
stipulated and agreed that all monies advanced by Bank hereunder inure
to the benefit of Borrowers, and that Bank is relying on the liability
of Borrowers in extending credit and otherwise making advances under
this Agreement.
2.8 Excess Interest. In no contingency or event
whatsoever shall the interest rate charged pursuant to the terms of
this Agreement exceed the highest rate permissible under any law which
a court of competent jurisdiction shall, in a final determination,
deem applicable hereto. In the event that such a court determines
that Bank has received interest under this Agreement in excess of the
highest applicable rate, such excess interest shall first be applied
to any unpaid principal balance owed by Borrowers and, if the then
remaining excess interest is greater than the unpaid principal
balance, Bank promptly shall refund such excess interest to Borrowers.
Notwithstanding anything to the contrary contained in this Agreement,
the Promissory Note, the Term Note or the Acquisition Term Note, if
the rate of interest payable on the Promissory Note, the Term Note or
the Acquisition Term Note is ever reduced as a result of this Section
2.8 and at any time thereafter the maximum rate permitted by
applicable law shall exceed the rate of interest provided for in the
Promissory Note, the Term Note or the Acquisition Term Note, then the
rate provided for in the Promissory Note, the Term Note or the
Acquisition Term Note, as the case may be, shall be increased to the
maximum rate permitted by applicable law for such period as is
required so that the total amount of interest received by Bank is that
which would have been received by Bank but for the operation of this
Section 2.8.
2.9 Revival. To the extent that Borrowers make a payment
or payments to Bank or to the extent Bank receives any payment or
proceeds of the Collateral for
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<PAGE> 9
Borrowers' benefit, which payment or proceeds or any part thereof is
subsequently invalidated, declared to be fraudulent or preferential,
set aside, and/or required to be repaid to a trustee, receiver, or any
other party under any bankruptcy act, state or Federal law, common
law, or equitable cause, then, to the extent of such payment or
proceeds received by Borrowers, the Obligations or part thereof
intended to be satisfied shall be revived and shall continue in full
force and effect as if such payment or proceeds had not been received
by Bank.
2.10 Optional Charge Against Revolving Loan. To the
extent Borrowers do not remit, when due, any payments of interest or,
in the case of the Term Loan, the Acquisition Term Loan or any other
loans or Obligations other than the Revolving Loan, any payment of
principal or any other payment required to be made by Borrowers to
Bank pursuant to the terms of any of the Credit Documents within any
applicable grace periods, Bank, at its option, may make such payment
by increasing the outstanding principal balance of the Revolving Loan
in order to prevent such amount from becoming past due, but it is
expressly acknowledged and covenanted that Bank shall be under no
obligation to do so.
2.11 Specific Conditions Applicable to Requests for
Revolving Loan. In addition to all other conditions set forth in this
Agreement, each request by Borrowers for a Revolving Loan also is
subject to the following specific conditions:
(A) Notice of Request. Borrowers shall notify Bank in
writing or telephonically of Borrowers' request for a Revolving Loan,
which request shall be received by Bank not later than 2:00 p.m.,
Cleveland, Ohio time and shall state the total amount of the Revolving
Loan requested.
(B) Borrowing Base Certificate. Borrowers' written
request shall be accompanied by a duly completed and executed
"Borrowing Base Certificate" in the form attached to this Agreement as
Exhibit 2.9(B). If Borrowers' request is made telephonically, the
Borrowing Base Certificate shall be delivered to Bank no later than
the next business day after such telephonic request is made. Each
Borrowing Base Certificate shall demonstrate that the principal amount
of the Revolving Loan, when added to the aggregate principal amount of
all Revolving Loans then outstanding, shall not exceed the Borrowing
Base, as determined based on the last Borrowing Base Certificate
timely delivered to Bank pursuant to Section 5.4(B) of this Agreement.
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<PAGE> 10
(C) Borrowers' Acceptance of Proceeds. The acceptance by
Borrowers of the proceeds of any Revolving Loan, as of the date of
such acceptance, shall be deemed (1) to constitute a representation
and warranty by Borrowers that all conditions to the making of such
Revolving Loan set forth in this Agreement have been satisfied, and
(2) a confirmation by Borrowers of the granting and continuance of the
Lien in favor of Bank created pursuant to this Agreement and the
Credit Documents.
(D) Conditions to Making Revolving Loan. Bank shall not
make any Revolving Loan unless (1) it shall have received Borrowers'
written or telephonic request and Borrowing Base Certificate in the
prescribed time as set forth in paragraph (A) of this Section 2.11,
(2) no Event of Default shall then exist or, immediately after the
making of any Revolving Loan, would exist, (3) all provisions or
covenants contained in Section 7 of this Agreement shall have been
complied with or performed, (4) all of the Credit Documents shall be
in full force and effect, (5) the representations and warranties
contained in Section 6 of this Agreement shall be true and correct in
all material respects as if made on and as of the date of such
borrowing except to the extent that any thereof expressly relate to an
earlier date, and (6) Bank shall not have made demand for the payment
of the Obligations or otherwise terminated the availability of any
Revolving Loan.
2.12 Manner of Payments. On or before the date they
become due, Borrowers shall make payments to Bank in immediately
available funds, even if it contests any statement rendered by Bank;
provided, however, that if any statement is subsequently proved to be
incorrect, Bank, at the option of Borrowers, shall (A) refund any
overpaid amount to Borrowers, or (B) grant a credit against amounts
due for the following month in the appropriate amount. As to
Obligations which become due and payable other than on a fixed date by
their terms or as a result of demand for payment and/or acceleration
on account of an Event of Default, Borrowers immediately shall pay to
Bank such Obligations in immediately available funds. Whenever any
payment to be made hereunder including, but not limited to, any
payment to be made on the Promissory Note, the Term Note or the
Acquisition Term Note, is stated to be due on a day which is not a
banking day, such payment may be made on the next succeeding banking
day and such extension of time in each such case shall be included in
the computation of the interest payable on the Promissory Note, the
Term Note or the Acquisition Term Note or such other
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<PAGE> 11
Obligation. Unless otherwise provided in this Agreement, all payments
or prepayments made or due hereunder (including, but not limited to,
payments with respect to the Promissory Note, the Term Note or the
Acquisition Term Note) shall be made in immediately available funds to
Bank prior to 2:00 p.m., Cleveland, Ohio time, on the date when due.
Payments received by Bank after 2:00 p.m., Cleveland, Ohio time, shall
be deemed to have been made on the next following banking day.
2.13 Default Interest. Upon and after the occurrence of
an Event of Default, and during the continuation thereof, the
Obligations shall bear interest at the Default Rate, calculated daily
on a 360-day year basis, based upon the actual number of days elapsed.
G. The reference to Section 2.10(B) set forth in Section 5.4 of
the Loan Agreement is hereby amended to mean and refer to Section 2.11(B).
H. Section 4.6 is added to the Loan Agreement as follows:
4.6 Pledge of Mace Stock. To further secure the prompt
payment and performance of the Obligations, TT hereby pledges to Bank
the Mace Stock pursuant to the provisions of the Pledge Agreement.
I. Paragraphs (N), (Q) and (S) and the first paragraph of
paragraph (O) of Section 7.1 of the Loan Agreement are amended in their
entirety as follows:
(N) Tangible Net Worth. Maintain a Tangible Net Worth on
the following dates which is equal to or greater than as set forth
below:
<TABLE>
<CAPTION>
Minimum
Tangible
Date Net Worth
---- ---------
<S> <C> <C>
(1) As of the date of
this Agreement and
on December 31, 1992 56,000,000
(2) As of March 31, 1993 57,000,000
(3) As of June 30, 1993 58,000,000
(4) As of September 30,
1993 59,000,000
(5) As of December 31,
1993 59,000,000
(6) As of March 31, 1994 60,000,000
(7) As of June 30, 1994 61,000,000
(8) As of September 30,
1994 45,000,000
(9) As of March 31, 1995 50,000,000
</TABLE>
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<PAGE> 12
<TABLE>
<S> <C> <C>
(10) As of March 31, 1996 59,000,000
(11) As of March 31, 1997
and the last day of
each quarter thereafter 64,000,000
</TABLE>
For purposes of this Section 7.1(N) and Section 7.1(O),
"Tangible Net Worth" shall mean the amount of the shareholders' equity
computed in accordance with GAAP as shown on the financial statements
of Borrowers described in Section 7.1(I) (as certified to by the Chief
Financial Officer of Borrowers), but deducting from such amount the
sum of (1), (2), (3), (4), and (5) below:
(1) The net book value of all intangible assets
includings, but not limited to, goodwill, trademarks, trade
names, copyrights, and rights in any thereof, and "special
technologies"; provided, however, for purposes of this
paragraph (1), intangible assets shall not include unamortized
debt discount and expense or any intangibles arising from the
Kinnedyne or the Coil Systems acquisitions by Borrowers.
(2) The net book value of all marketable and
nonmarketable securities which are not deemed to be cash
equivalents by Bank;
(3) Any write-up in the book value of any assets,
other than (a) purchase accounting write-ups made in
accordance with GAAP and (b) write-ups in the ordinary course
of business resulting from a revaluation thereof which results
in a corresponding increase in shareholder equity;
(4) Loans or advances to individual shareholders,
employees, or any other individual except in the ordinary
course of business; and
(5) Loans or advances by Borrowers to any
Affiliate (other than a Subsidiary of Borrowers).
For purposes of this Section 7.1(N) and Section 7.1(O), "Tangible Net
Worth" shall be increased by the amount of the FAS 106 liability recorded by
Borrowers (if any) for the fiscal year ending March 31, 1994, up to a maximum
of Two Million Five Hundred Thousand Dollars ($2,500,000).
(O) Total Debt/Tangible Net Worth Ratio. Maintain at the
close of each calendar quarter during the following time periods a
"Total Debt to Tangible Net
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<PAGE> 13
Worth" ratio which is equal to or less than as set forth below:
<TABLE>
<CAPTION>
Total Debt/
Tangible Net
Date Worth Ratio
---- -----------
<S> <C>
(1) As of the date of this 0.8 to 1.0
Agreement through
March 30, 1993
(2) As of March 31, 1993, and 0.75 to 1.0
through the day immediately
prior to the date of
execution of the Third
Amendment
(3) As of the date of execution 1.0 to 1.0
of the Third Amendment and
through September 29, 1994
(4) As of September 30, 1994 1.65 to 1.0
and through March 30, 1995
(5) As of March 31, 1995 and 1.4 to 1.0
through March 30, 1996
(6) As of March 31, 1996, and at 1.25 to 1.0
the end of each quarter
thereafter
</TABLE>
(Q) Cashflow Coverage. For the period ending September
30, 1994, and at the close of each fiscal quarter thereafter, maintain
a "Cashflow Coverage" ratio equal to or greater than 1.1 to 1.0. For
purposes of this Section 7.1(Q), "Cashflow Coverage" shall be a ratio
the numerator of which is equal to Borrowers' net income plus
depreciation and amortization of Borrowers for such quarter and the
denominator of which is equal to Borrowers' current maturities of its
long-term debt plus Borrowers' Capital Expenditures for such quarter.
So long as no Event of Default has occurred, commencing September 30,
1994, the outstanding principal portion of the Obligations shall not
be characterized as a current liability for purposes of determining
Borrowers' compliance with the requirements of this Section 7.1(Q).
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<PAGE> 14
(S) Net Income. Commencing with Borrowers' fiscal year
ending March 31, 1995, Net Income (as defined in Section 7.2(H) of
this Agreement) shall not be less than $5,000,000 for each of its
fiscal years during the term of this Agreement.
J. Section 10.1(A) of the Loan Agreement is amended in its
entirety as follows:
(A) Payment of Debt Service. Failure by Borrowers to (1)
make payment of principal or interest on the Promissory Note, the Term
Note or the Acquisition Term Note on or within two (2) days after the
due date thereof, (2) pay any other Obligation on or within ten (10)
days after the due date thereof, (3) remit Accounts or deposit funds
as required by the terms of this Agreement; or (4) make payment of any
other sum on the Promissory Note, the Term Note or the Acquisition
Term Note within ten (10) days after receipt by Borrowers from Bank of
notice of such failure to pay.
K. Section 10.2 of the Loan Agreement is amended in its entirety
as follows:
10.2 Acceleration of the Obligations. Upon and after the
occurrence of an Event of Default and upon notice by Bank to Borrowers
in the manner set forth in Section 12.10 hereof, all of the
Obligations due or to become due from Borrowers to Bank, whether under
this Agreement, the Promissory Note, the Term Note, the Acquisition
Term Note or otherwise, at the option of Bank immediately shall become
due and payable, anything in the Promissory Note, the Term Note, the
Acquisition Term Note or other evidence of the Obligations or in any
of the other Credit Documents to the contrary notwithstanding.
SECTION II. REPRESENTATIONS, WARRANTIES AND COVENANTS OF
BORROWERS.
A. Each Borrower represents, warrants, and covenants that it has
good and marketable title to the Collateral free and clear of all liens,
claims, mortgages, security interests, pledges, charges or encumbrances
whatsoever (other than Permitted Liens or as have otherwise been permitted by
Bank pursuant to the Loan Agreement, as amended), except as have been granted
to Bank.
B. To the extent such representations, warranties and covenants
pertain to or are to be performed by Borrowers, all representations, warranties
and covenants in the Loan Agreement, as amended by the First Amendment, the
Second Amendment, the Letter
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<PAGE> 15
Agreement, the Third Amendment, and the Fourth Amendment shall continue and be
binding on Borrowers under this Fifth Amendment.
SECTION III. CONDITIONS PRECEDENT.
Each Borrower acknowledges that the effectiveness of this Fifth
Amendment is subject to the receipt by Bank of the following documents on the
date of this Agreement, all in form and substance satisfactory to Bank and its
counsel:
A. A certified copy of resolutions of Members of the
Board of Directors of each Borrower approving this Fifth Amendment and
all of the matters described in this Fifth Amendment, and authorizing
the execution, delivery, and performance by such Borrower of this
Fifth Amendment, the Fourth Amendment To Promissory Note, the Second
Amendment To Term Note, the Acquisition Term Note, and every other
document required to be delivered pursuant to this Fifth Amendment.
B. The Fourth Amendment To Promissory Note executed by
Borrowers and accepted by Bank in substantially the same form as is
attached to this Fifth Amendment as Exhibit A.
C. The Second Amendment To Term Note executed by
Borrowers and accepted by Bank in substantially the same form as is
attached to this Fifth Amendment as Exhibit B.
D. The Acquisition Term Note executed by Borrowers and
accepted by Bank in substantially the same form as is attached to this
Fifth Amendment as Exhibit C.
E. The Pledge And Security Agreement executed by TT to
Bank in substantially the same form as is attached to this Fifth
Amendment as Exhibit D, along with (1) the stock certificate(s)
possessed by TT evidencing TT's ownership in the stock of Mace
Security International, and (2) an irrevocable stock power executed in
blank by TT.
F. A certificate signed by a duly authorized officer of
each Borrower to the effect that:
(1) As of the date hereof, no Event of Default
has occurred and is continuing, and no event has occurred and
is continuing that, with the giving of notice or passage of
time or both, would be an Event of Default; and
(2) The representations and warranties set forth
in Section 6.1 of the Loan Agreement are true as of the date
of this Fifth Amendment.
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<PAGE> 16
G. A certificate of each Borrower's corporate secretary
certifying (1) to the incumbency and signatures of the officers of
each Borrower signing this Fifth Amendment and every other document to
be delivered pursuant to the Fifth Amendment, (2) to the effect that
TT's Certificate of Incorporation has not been amended since the
execution of the Loan Agreement, (3) to the effect that TT's Bylaws
have not been amended since the execution of the Second Amendment, (4)
to the effect that the Certificate of Incorporation and Bylaws of ECA,
Inc. have not been amended since the execution of the Fourth
Amendment, and (5) attached thereto are true, correct and complete
copies of the Articles of Incorporation and Bylaws of each of IRR and
Retainers, and each Borrower's Articles of Incorporation and Bylaws
are in full force and effect as of the date of such certificate.
H. UCC-1 Financing Statements signed by a duly
authorized officer of ECA, Inc., IRR and Retainers.
I. A good standing certificate for ECA, Inc. from the
Secretary of State for each of Delaware, Texas and Illinois, and a
good standing certificate for each of IRR and Retainers from the
Secretary of State of New Jersey.
J. Such other documents as Bank may reasonably request
to implement this Fifth Amendment and the transactions described in
this Fifth Amendment.
SECTION IV. APPLICABLE LAW.
This Fifth Amendment shall be deemed to be a contract under the laws
of the State of New Jersey, and for all purposes shall be construed in
accordance with the laws of such State.
SECTION V. COUNTERPARTS.
This Fifth Amendment may be executed in any number of counterparts,
all of which taken together shall constitute one and the same instrument, and
any one of the parties hereto may execute this Fifth Amendment by signing any
such counterpart.
-16-
<PAGE> 17
IN WITNESS WHEREOF, the parties have executed this Fifth Amendment by
their duly authorized officers this 9 day September, 1994.
TRANSTECHNOLOGY CORPORATION INDUSTRIAL RETAINING RING
COMPANY
By: /s/ CHANDLER J. MOISEN By: /s/ STEVEN R. WILSON
-------------------------------- -----------------------------
Senior Vice President
Title: and Chief Financial Officer Title: President
--------------------------- --------------------------
ELECTRONIC CONNECTIONS RETAINERS, INC.
AND ASSEMBLIES, INC.
By: /s/ VALENTINA DOSS By: /s/ STEVEN R. WILSON
-------------------------------- -----------------------------
Vice President and
Title: Secretary Title: President
----------------------------- --------------------------
NATIONAL BANK OF CANADA NATIONAL CANADA FINANCE CORP.
(NEW YORK, NEW YORK)
By: By:
--------------------------------- -----------------------------
Title: Title:
------------------------------ --------------------------
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<PAGE> 18
SCHEDULE OF EXHIBITS
Exhibit A - Form of Fourth Amendment To Promissory Note
Exhibit B - Form of Second Amendment To Term Note
Exhibit C - Form of Acquisition Term Note
Exhibit D - Form of Pledge And Security Agreement
-18-
<PAGE> 19
EXHIBIT A
FORM OF FOURTH AMENDMENT TO PROMISSORY NOTE
<PAGE> 20
EXHIBIT B
FORM OF SECOND AMENDMENT TO TERM NOTE
<PAGE> 21
EXHIBIT C
FORM OF ACQUISITION TERM NOTE
<PAGE> 22
EXHIBIT D
FORM OF PLEDGE AND SECURITY AGREEMENT
