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
SEPTEMBER 2, 1998
Date of report (Date of earliest event reported)
BINKS SAMES CORPORATION
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 1-1416 36-0808480
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
9201 WEST BELMONT AVENUE
FRANKLIN PARK, ILLINOIS 60131
(Address of Principal Executive Office) (Zip Code)
847/671-3000
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
ITEM 5. OTHER EVENTS.
See attached press release issued by Binks Sames Corporation on August
31, 1998(the "Press Release") regarding the proposed sale by the Company of
certain of its assets to Illinois Tool Works Inc.("ITW"). The information set
forth in the Press Release is incorporated herein by reference.
A copy of the Agreement of Purchase and Sale of Assets and Stock
between the Company and ITW is attached hereto as Exhibit 99.3
In connection with the proposed sale, the Company amended its Rights
Agreement dated as of February 2, 1990, by and between the Company and Harris
Trust and Savings Bank.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) EXHIBITS
Exhibit No. Description
- ---------- -----------
99.1 Press Release dated August 31, 1998.
99.2 Second Amendment to Rights Agreement dated as of August 27,
1998, by and between the Company and Harris Trust and Savings
Bank.
99.3 Agreement of Purchase and Sale of Assets and Stock dated as of
August 31, 1998 by and between the Company and Illinois Tool
Works Inc.
2
<PAGE>
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.
BINKS SAMES CORPORATION
(Registrant)
Date: September 2, 1998 By: /s/ Dr. Wayne F. Edwards
----------------- --------------------------------------
Dr. Wayne F. Edwards
Chairman and Chief Executive
Officer
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INDEX TO EXHIBITS
Exhibit No. Description
- ----------- -----------
99.1 Press Release dated August 31, 1998
99.2 Second Amendment to Rights Agreement dated as of August 27,
1998, by and between the Company and Harris Trust and Savings
Bank.
99.3 Agreement of Purchase and Sale of Assets and Stock dated as of
August 31, 1998 by and between the Company and Illinois Tool
Works Inc.
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EXHIBIT 99.1
PRESS RELEASE BINKS SAMES CORPORATION
Contact:
Wayne F. Edwards
Chairman and CEO
Binks Sames Corporation
(847)671-3000 or
Ronald G. Bottrell
DNW Communications
(312)467-0760 For Immediate Release
---------------------
ITW TO ACQUIRE PORTIONS OF BINKS SAMES BUSINESS
FRANKLIN PARK, IL, August 31, 1998 -- Binks Sames Corporation (BIN:AMEX)
announced today that it has signed a definitive agreement with Illinois Tool
Works Inc. (ITW:NYSE) to sell certain of Binks Sames' domestic assets and
standard products lines. The purchase price is approximately $80 million in cash
plus the assumption of certain liabilities, currently estimated to be
approximately $26 million. The purchase price is subject to adjustment after
delivery of a closing balance sheet.
Under the terms of the sale, ITW will purchase all assets related to the
manufacture and distribution of Binks Sames standard products in the U.S.,
including a leased manufacturing facility in Longmont Colorado; the Poly-Craft
Systems division in Cottage Grove, Oregon; the Research and Development facility
in Boulder, Colorado and Binks Sames domestic branches and warehouses. All Binks
Sames employees related to the businesses being acquired will become employees
of ITW upon closing the transaction. International operations included in the
sale are Binks Sames businesses in the U.K., Belgium, Germany, Australia and a
portion of the Canadian operations. Combined revenues from those operations
being sold accounted for 49.6 percent, or $55.6 million of Binks Sames $112
million in sales for the first six months of fiscal 1998. As part of the
agreement, ITW will assume all trade liabilities of the acquired portion of the
business. The sale is expected to close on or before September 30, 1998, subject
to regulatory review.
In announcing the agreement, Wayne F. Edwards, Chairman and interim CEO of Binks
Sames, said that proceeds from the sale will be used to eliminate $72 million of
bank debt secured by the assets of the businesses being sold, and to pay, when
due, previously agreed-to litigation settlement costs amounting to $9 million.
<PAGE>
Not included in the sale to ITW are: the Sames business based in Grenoble,
France; Sames Electrostatic Inc., headquartered in Livonia, Michigan; the North
American powder systems group; subsidiaries in Japan and Sweden; and the spray
booth business in North America. These operations consist of $56.4 million, or
50.4 percent of Binks Sames sales for the first six months of fiscal 1998. Sames
is noted for its global leadership position in electrostatic finishing equipment
for the automotive finishing market and for the general industrial finishing
market.
"While smaller, the new Binks Sames that will emerge following the sale will
consist of historically profitable business units, will be tightly focused, have
a strong balance sheet, have strong market shares in its product categories and
still have an international presence," Edwards said.
Upon completion of the transaction, Binks Sames will transition to doing
business as Sames Corporation and will propose a corporate name change to its
stockholders at its next annual meeting.
In February 1998, Binks Sames' Board of Directors announced that it would pursue
the sale of the company in order to maximize shareholder value. William Blair &
Company was hired by the Board to serve as the Company's investment banker. In
July 1998, the Board determined that in addition to pursuing the sale of the
Company as a whole, it would consider other possible strategic alternatives,
including the sale of certain component parts of the Company.
"Based on the offers generated during the sale process, none of which
encompassed the purchase of the entire Company, the Board determined that the
ITW offer provided shareholders the most attractive option," Edwards said.
"After closing the ITW transaction, the remaining operating units of Binks Sames
will no longer be constrained by the provisions of the Company's existing bank
indebtedness, and while these units will not be debt free, they are expected to
have significant liquidity to cover their normal working capital needs, together
with any remaining liabilities not assumed by ITW."
Edwards said that Binks Sames' Board of Directors will continue to work with its
investment banking firm, William Blair & Company, in exploring strategic options
for the Company, in order to maximize shareholder value. He noted that
discussions have already been held with prospective buyers for the North
American spray booth business.
Binks Sames also announced today that concurrent with the completion of the
sale, Arnold H. Dratt will become President, Chief Executive Officer and a
director of the Company. Mr. Dratt, 54, is currently President of the
Dratt-Campbell Company, a Chicago area consulting firm, and has worked with more
than 100 companies over the past decade, leading turnarounds, financial
restructurings and due diligence and strategic studies.
His clients have included both public and private companies, such as Sybra,
Gander Mountain, Brenner Tank, Schwinn Bicycle, The Ariens Company and The M.W.
Kasch Company. Prior to forming his own consulting firm in 1991, Dratt was the
Midwest Managing Director for another turnaround firm and was with a publicly
held Chicago brokerage firm, where he specialized in doing
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middle-market leveraged buyouts. He is a graduate of The Harvard Law School
(1969) and Amherst College (1966).
"We are very fortunate to have Arnie Dratt as our new President and CEO," said
Wayne Edwards. "He was initially retained by the Company in January 1998 to
assist in negotiations with Binks Sames' lenders. Since that time, Arnie has
worked with the Board to analyze the Company's operations, advise the Board on
the decision to seek buyers for the Company and has assisted the Chairman of the
Board and President in matters involving vendor relations and strategic
planning. In addition to his management expertise, he has lived in France and is
fluent in French, an important skill since the Company's primary research and
manufacturing facilities will be in France."
Headquartered in Franklin Park, Illinois, Binks Sames is engaged in the design,
manufacture and sale of high-quality spray finishing and coating application
equipment. Founded in 1890, the Company pioneered the development of spray
finishing equipment for applying industrial and commercial coatings and finishes
and is recognized as a leader in the coating application field. The Company
currently employs approximately 1200 people and operates globally through its 13
divisions and subsidiaries.
ITW, headquartered in Glenview, Illinois, is a global diversified manufacturer
of highly engineered components and industrial systems. The company has 365
operations in 34 countries and approximately 25,700 employees.
# # #
(Statements regarding pursuit of strategic alternatives involving the Company
and/or its components and the Company's business post-sale constitute
"forward-looking statements" within the meaning of 21E of the Securities
Exchange Act of 1934, and are subject to the safe harbor created thereby.
Although the Company believes that the expectations reflected in such
forward-looking statements are reasonable, it can give no assurance that such
expectations reflected in such forward-looking statements will prove to be
correct. Important factors that could cause actual results to differ materially
from the Company's expectations include, without limitation, the Company's
ability to receive, negotiate and accept agreements relating to other strategic
alternatives and the Company's results from continuing operations. No assurance
can be given that the forward-looking statements will prove to be accurate.)
EXHIBIT 99.2
SECOND AMENDMENT
TO RIGHTS AGREEMENT
-------------------
THIS SECOND AMENDMENT TO RIGHTS AGREEMENT (this "Amendment") is made as
of the 28th day of August, 1998, by and among BINKS SAMES CORPORATION, a
Delaware corporation (the "Company"), and HARRIS TRUST AND SAVINGS BANK, a
national banking association, (the "Rights Agent") at the Company's direction.
W I T N E S E T H:
WHEREAS, the Company and the Rights Agent have entered into that
certain Rights Agreement dated February 2, 1990 and Amended January 21, 1991
(the "Agreement");
WHEREAS, on February 2, 1990 (the "Rights Dividend Declaration Date"),
the Board of Directors of the Company authorized and declared a dividend
distribution of one Right for each share, of the Company (the "Common Stock")
outstanding at the close of business on February 13, 1990 (the "Record Date"),
and has authorized the issuance of one Right (as such number may be hereinafter
adjusted pursuant to Section 11(i) of the Agreement) for each share of Common
Stock of the Company issued between the Record Date (whether originally issued
or delivered from the Company's treasury) and the Distribution Date and, in
certain circumstances, provided in Section 22 of the Agreement, after the
Distribution Date, each Right initially representing the right to purchase one
share of Common Stock upon the terms and subject to the conditions hereinafter
set forth (the "Rights"); and
WHEREAS, on January 21, 1991, the Board of Directors determined to
amend and restate the Agreement and directed the Rights Agent to enter into an
Amendment and Restatement.
WHEREAS, on August 27, 1998, the Board of Directors determined to amend
the Agreement and directed the Rights Agent to enter into this Amendment.
NOW, THEREFORE, in consideration of the premises, the mutual covenants
and agreements set forth herein and for the purpose of setting forth the terms
and conditions of this Amendment, the parties, intending to be bound, hereby
agree as follows:
1. INCORPORATION OF THE AGREEMENT. All capitalized terms
which are not defined herein shall have the same meanings as
set forth in the Agreement, and the Agreement to the extent
not inconsistent with this Amendment is incorporated herein by
this reference as though the same were set forth in its
entirety. To the extent any terms and provisions of the
Agreement are inconsistent with the amendments set forth
herein, such terms and provisions shall be deemed superseded
hereby. Except as specifically set forth herein, the Agreement
shall
<PAGE>
remain in full force and effect and its provisions shall be
binding on the parties hereto.
2. AMENDMENT OF THE AGREEMENT. The Agreement is hereby
amended as follows:
a. The definition of "Acquiring Person" in Section 1 is
hereby amended and restated to read in its entirety as
follows:
"Acquiring Person" shall mean any Person who or
which, together with all Affiliates and Associates of such
Person, shall be the Beneficial Owner of 15% or more of the
shares of Common Stock then outstanding, but shall not include
the Company, any Subsidiary of the Company or any employee
benefit plan of the Company or of any Subsidiary of the
Company: provided, however, that a Person (a "Passive
Holder") shall not become an Acquiring Person if, solely as a
result of a reduction in the number of shares of Common Stock
outstanding due to the repurchase of Common Stock by the
Company, such Passive Holder, together with all Affiliates and
Associates of such Passive Holder after such repurchase,
becomes the Beneficial Owner of 15% or more of the shares of
Common Stock then outstanding, unless and until such time as
such Passive Holder or any Affiliate or Associate of such
Passive Holder becomes the Beneficial Owner of any additional
shares of Common Stock or any other Person who is the
Beneficial Owner of any shares of Common Stock becomes an
Affiliate or Associate of such Passive Holder, such that,
after giving effect to such additional shares or the shares
beneficially owned by such other Person, such Passive Holder,
together with all Affiliates and Associates of such Passive
Holder, is the Beneficial Owner of 15% or more of the shares
of Common Stock then outstanding; provided further, however,
that Illinois Tool Works, Inc., a Delaware corporation
(hereinafter referred to as "ITW") shall not be deemed to be
an Acquiring Person.
b. The definition of "Adverse Person" in Section 1 is
hereby amended to read in its entirety as follows:
"Adverse Person" shall mean any Person declared to be
an Adverse Person by the Board of Directors upon determination
that the criteria set forth in Section 11(a)(ii)(D) apply to
such Person; provided, however, that the Board of Directors
shall not declare any Person (an "Existing Holder") who, on
the Record Date, together with all Affiliates and Associates
of such Existing Holder, is the Beneficial Owner of 10% or
more of the shares of Common Stock then outstanding to be an
Adverse Person as long
<PAGE>
as such Existing Holder or any Affiliate or Associate of such
Existing Holder does not become the Beneficial Owner of
additional shares of Common Stock or any other Person who is
the Beneficial Owner of any shares of Common Stock does not
become an Affiliate or Associate of such Existing Holder, such
that, after giving effect to such additional shares or the
shares beneficially owned by such other Person, such Existing
Holder, together with all Affiliates and Associates of such
Existing Holder is the Beneficial Owner of 15% or more of the
shares of Common Stock then outstanding; provided, further,
that the Board of Directors shall not declare any Passive
Holder (which term shall include any Existing Holder) to be an
Adverse Person if, solely as a result of a reduction in the
number of shares of Common Stock outstanding due to the
repurchase of Common Stock by the Company, such Passive
Holder, together with all Affiliates and Associates of such
Passive Holder after such repurchase, becomes the Beneficial
Owner of 10% or more (15% or more, in the case of any Existing
Holder) of the shares of Common Stock then outstanding, as
long as such Passive Holder or any Affiliate or Associate of
such Passive Holder does not become the Beneficial Owner of
any additional shares of Common Stock or any other Person who
is the Beneficial Owner of any shares of Common Stock does not
become an Affiliate or Associate of such Passive Holder, such
that, after giving effect to such additional shares or the
shares beneficially owned by such other Person, such Passive
Holder, is the Beneficial Owner of 10% or more (15% or more,
in the case of any Existing Holder) of the shares of Common
Stock then outstanding; provided further however, that ITW
shall not be deemed an Adverse Person.
(c) The definition of "Triggering Event" in Section 1 is
hereby amended to read in its entirety as follows:
"Triggering Event" shall mean any Section 11 Event or
any Section 13 Event; provided, however, the transactions
contemplated by that certain Agreement of Purchase and Sale of
Assets and Stock between the Company and ITW shall not be
considered a Triggering Event.
3. COUNTERPARTS. This Amendment may be executed in
two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and
the same instrument.
<PAGE>
4. HEADINGS. Paragraph headings in this Agreement are
included herein for convenience of reference only, and shall
not constitute a part of this Amendment for any other purpose.
5. ENTIRE AGREEMENT. The Agreement, as amended by this
Amendment embodies the entire agreement and understanding
between the parties hereto and supersede all prior agreements
and understandings, whether oral or written, between the
parties hereto relating to the subject matter hereof.
6. EFFECTUATION. The amendments to the Agreement
contemplated by this Amendment shall be deemed effective
immediately upon the full execution of this Amendment. There
are no conditions precedent or subsequent to the effectiveness
of this Amendment.
[SIGNATURE PAGE TO FOLLOW]
<PAGE>
IN WITNESS WHEREOF, this Amendment has been duly executed as of the day
and year specified at the beginning hereof.
BINKS SAMES CORPORATION
By: /s/ Jeffrey W. Lemajeur
--------------------------------
Its: Chief Financial Officer
------------------------------
HARRIS TRUST AND SAVINGS BANK
By: /s/ Todd C. Shafer
-------------------------------
Its: Vice President
-------------------------------
EXHIBIT 99.3
AGREEMENT OF PURCHASE AND SALE OF ASSETS AND STOCK
--------------------------------------------------
AGREEMENT dated August 31, 1998, by and between Binks Sames
Corporation, a Delaware corporation having its principal office at 9201 Belmont
Avenue, Franklin Park, Illinois 60131 (the "Seller"), and Illinois Tool Works
Inc., a Delaware corporation, or its nominee (the "Purchaser"), having its
principal office at 3600 West Lake Avenue, Glenview, Illinois 60025.
W I T N E S S E T H:
WHEREAS, Seller is engaged, through one or more of its Subsidiaries (as
defined herein), in, among other things, the business of developing, designing,
manufacturing, assembling, selling, installing and servicing conventional and
electrostatic coating application equipment and related products all of which
products are listed on Exhibit A attached hereto and made a part hereof and
includes all activities engaged in by Seller which generate the revenues set
forth on the Balance Sheet included in the Financial Statement (as defined
herein) (the "Binks Business");
WHEREAS, the Purchaser wishes to buy (directly or indirectly through an
entity controlled by Purchaser) from Seller, and Seller wishes to sell, assign
and transfer to Purchaser, substantially all of the assets owned by Seller which
are used in the conduct of the Binks Business as currently conducted wherever
located;
WHEREAS, Seller is the owner of all of the issued and outstanding
shares of capital stock of the following entities: Binks Sames UK Ltd., a United
Kingdom corporation; Binks Sames Deutschland GmbH, a German limited liability
company; and Binks Sames International, S.A., a Belgium corporation
(collectively, the "Stock");
WHEREAS, Purchaser wishes to buy (directly or indirectly through an
entity controlled by Purchaser) from Seller, and Seller wishes to sell to
Purchaser, the Stock upon the terms and conditions hereinafter set forth;
WHEREAS, Seller and Purchaser desire to make certain representations,
warranties and agreements in connection with the acquisition contemplated herein
(the "Acquisition") and also wish to set forth various conditions precedent to
the consummation of the Acquisition;
NOW, THEREFORE, in consideration of the mutual covenants,
representations and warranties made herein, and of the mutual benefits to be
derived hereby, the parties hereto agree as follows:
<PAGE>
1. PURCHASE AND SALE
1.1 Purchase and Sale of Stock. Subject to the terms and
conditions set forth in this Agreement, at the Closing (as defined in Section 8
hereof), Seller shall sell, assign, transfer and deliver to Purchaser, and the
Purchaser shall, directly or indirectly, purchase, acquire and take assignment
and delivery of the Stock from Seller.
1.2 Purchase and Sale of Assets. Subject to and upon the terms and
conditions set forth in this Agreement, at the Closing, Seller will sell,
transfer, convey, assign and deliver to Purchaser (or will cause its affiliates
to sell, transfer and convey, assign and deliver to Purchaser), and Purchaser
will purchase, acquire and take assignment and delivery of the Binks Assets. The
term "Binks Assets" shall mean the products listed on Exhibit A hereto and all
other assets of Seller that are reflected on the Financial Statements (as
defined herein) other than Excluded Assets (as defined herein), wherever located
and in whatever form, real, personal, tangible or intangible, and primarily
relating to or used in connection with the Binks Business, including, without
limitation all right, title and interest of the Seller in and to the following:
1.2.1 All tangible assets and properties including machinery,
equipment (including test, demonstration and prototype equipment),
computers, vehicles and other transportation equipment, tools, dies,
molds and parts and similar property (including, but not limited to,
any of the foregoing purchased subject to any conditional sales or
title retention agreement in favor of any other entity) wherever
located and in each case primarily related to or used in connection
with the Binks Business, including the assets that are reflected on the
Closing Balance Sheet;
1.2.2 All inventories of raw materials, work-in-process,
finished products, goods, spare parts, replacement and component parts,
and office and other supplies (collectively, the "Inventories"),
including Inventories held at any location controlled by Seller and
Inventories in transit in each case primarily related to or used in
connection with the Binks Business, including the Inventories that are
reflected on the Closing Balance Sheet.;
1.2.3 All rights in and to products sold by the Seller in the
ordinary course of business with respect to the Binks Business
(including, but not limited to, products hereafter returned or
repossessed and Seller's rights of rescission, replevin, reclamation
and rights to stoppage in transit);
1.2.4 All of the rights of the Seller with respect to the
Binks Business under all contracts, arrangements, licenses, leases and
other agreements, including, without limitation, any right to receive
payment for products sold or services rendered, and to receive goods
and services, pursuant to such agreements and to assert claims and take
other rightful actions in respect of breaches, defaults and other
violations of such contracts, arrangements, licenses, leases and other
agreements and otherwise;
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1.2.5 All credits, prepaid expenses (except with respect to
insurance carriers), deferred charges, advance payments, security
deposits and prepaid items, in each case primarily related to or used
in connection with the Binks Business;
1.2.6 All notes receivable and accounts receivable held by the
Seller and all notes, bonds and other evidences of indebtedness of and
rights to receive payments from any person held by the Seller, in each
case primarily related to or arising from the Binks Business;
1.2.7 All intellectual property including United States and
foreign patents, patent applications, trademarks, trademark
applications, invention disclosures, licenses to or from third parties,
copyrights, service marks, service names, trade names, trade secrets
and other proprietary rights listed on Schedule 1.2.7, and all rights
thereunder or in respect thereof primarily relating to or used or held
for use in connection with the Binks Business, including, but not
limited to, rights to sue for and remedies against past, present and
future infringements thereof, and rights of priority and protection of
interests therein under the laws of any jurisdiction worldwide and all
tangible embodiments thereof (together with all intellectual property
rights included in the other clauses of this Section 1.2, the
"Intellectual Property");
1.2.8 All books, records, manuals and other materials (in any
form or medium) primarily related to or used in connection with the
Binks Business, including, without limitation, all records and
materials maintained at the headquarters of Seller, advertising matter,
catalogues, price lists, correspondence, mailing lists, lists of
customers, distribution lists, photographs, production data, sales and
promotional materials and records, purchasing materials and records,
personnel records (with the consent of the relevant employee, which
consent Seller shall use its best efforts to receive), manufacturing
and quality control records and procedures, blueprints, research and
development files, records, data and laboratory books, Intellectual
Property disclosures, media materials and plates, accounting records,
sales order files and litigation files, in each case only to the extent
any of the aforementioned are primarily related to or used in
connection with the Binks Business;
1.2.9 The benefits, including all rights to defense and
indemnity coverage, under any and all policies of liability insurance
issued to Seller prior to the Closing Date (as defined in Section 8
hereof) with respect to insurance coverage for accidents, occurrences,
claims, suits, actions or proceedings arising from the operations,
activities or conduct of the Binks Business prior to the Closing Date;
provided, however, that such benefits shall transfer to Purchaser to
the extent liabilities for such accidents, occurrences, claims, suits,
actions or proceedings are threatened against, transferred to or
otherwise imposed upon Purchaser.
1.2.10 To the extent their transfer is permitted by law, all
governmental approvals primarily related to or used in connection with
the Binks Business, including all applications therefore;
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1.2.11 All of Seller's rights in and to the trademarks and
trade name "Binks";
1.2.12 All real property owned by Seller and listed on
Schedule 3.20 hereto;
1.2.13 All rights to causes of action, lawsuits, judgments,
claims and demands of any nature available to or being pursued by the
Seller with respect to the Binks Business or the ownership, use,
function or value of any Acquisition Asset (as defined herein), whether
arising by way of counterclaim or otherwise; provided, however that
such rights shall transfer to Purchaser to the extent liabilities
relating to such causes of action, lawsuits, judgments, claims and
demands are threatened against, transferred to or otherwise imposed
upon Purchaser; and
1.2.14 all guarantees, warranties, indemnities and similar
rights in favor of the Seller with respect to any Acquisition Asset.
The term "Acquisition Assets" shall mean collectively, the Stock and
the Binks Assets. Subject to the terms and conditions hereof and any
Schedule hereto, at the Closing, the Acquisition Assets shall be
transferred or otherwise conveyed to Purchaser free and clear of all
liabilities, obligations, liens, claims and encumbrances.
1.3 Excluded Assets. Notwithstanding the foregoing, the Seller will
retain and not transfer, and Purchaser will not purchase or acquire, the
following assets (collectively, the "Excluded Assets"):
1.3.1 The assets of the Seller which are used exclusively in
the Sames Business, as defined below including, but not limited to, its
current vendor codes and personal computers and software utilized by
Non-Transferees at its Franklin Park facility;
1.3.2 The corporate records including Certificate of
Incorporation, corporate seal, minute books, stock books and other
records having to do with the corporate organization of Seller and its
subsidiaries and affiliates listed on Schedule 1.3.2 hereto;
1.3.3 All rights, properties and assets used in the Binks
Business which shall have been transferred or disposed of by the Seller
prior to the Closing Date in transactions conducted in the ordinary
course of the Binks Business;
1.3.4 Except as set forth above, all insurance policies of
Seller, including liability and workers' compensation insurance
policies, binders and related prepaid expenses, other than liability
insurance policies in which Purchaser is a named insured;
1.3.5 Other than that held by the Subsidiaries (as defined
herein), all cash and cash equivalents, other than petty cash, held on
the Closing Date;
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<PAGE>
1.3.6 Other than that held by the Subsidiaries (as defined
herein), prepaid foreign, federal, state or local taxes and all claims
of Seller for refunds, credits, carrybacks or carryforwards in
connection with any Taxes (as herein defined) for tax periods ending on
or prior to the Closing Date and the proceeds thereof;
1.3.7 All rights, claims, demands and causes of action which
Seller or any of its affiliates may have against any person or entity
to the extent related to any of the Excluded Assets or Excluded
Liabilities, including all proceeds remitted to Seller or any of is
affiliates from claims, rights, demands and causes of action with
respect thereto; and
1.3.8 Any goodwill reflected on the Financial Statements.
1.3.9 The Rabbi Trust under Binks Manufacturing Company, Inc.
("Binks Mfg.") Executive Retirement Income Plan made as of April 2,
1994 between Binks Mfg. and BLU Benefits Group (the "Rabbi Trust").
1.3.10 The Confidentiality Agreement referenced in Section 6.8
hereto.
1.4 Sames Business. The Sames Business shall mean the business of
developing, designing, manufacturing, assembling, selling, installing and
servicing electrostatic coating application equipment, powder booths, sheet
metal equipment and related products, all of which products are listed on
Exhibit B attached hereto and made a part hereof as well as the selling,
installing and servicing of the Products covered under the Supply Agreement
referenced in Section 6.13 hereof as currently conducted by Seller and its
subsidiaries and affiliates listed on Schedule 1.3.2 hereto.
1.5 Assumption of Liabilities.
1.5.1 Subject to the terms and conditions set forth herein, at
the Closing, the Purchaser shall assume and agree to pay, honor and
discharge when due all of the following liabilities existing at or
arising on or after the Closing Date (collectively, the "Assumed
Liabilities"):
1.5.1.1 Any and all liabilities, obligations and
commitments relating to the Binks Business that are (i)
reflected on the Financial Statements (as defined in Section
3.5); (ii) incurred or arising under any of the Employment
Security Agreements and the Stay Bonus Agreements listed on
Schedule 3.22 hereto; (iii) incurred after the date of the
Financial Statements in the ordinary course of business
consistent with prior practice and in accordance with the
terms of this Agreement; (iv) liabilities related to product
liability claims arising out of products sold after the
Closing Date , (v) liabilities related to patent infringement
to the extent arising out of products sold on or after the
Closing Date, except, in each case, for (a) liabilities
related to product liability claims which are unresolved on
the Closing Date or arising out of products sold prior to the
Closing Date; (b) environmental
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liabilities and costs to the extent not accrued on the
Financial Statements; (c) liabilities for taxes relating to or
arising out of the Binks Business accruing, or with respect to
any event or time period occurring, at or prior to Closing
(except to the extent specifically set forth in Section 15.5);
(d) liabilities in respect of employees or plans, except to
the extent specifically set forth in Section 6.9 or arising
under the Employment Security Agreements and the Stay Bonus
Agreements listed on Schedule 3.22 hereto; (e) liabilities for
workers' compensation claims occurring prior to the Closing
Date or pending on the Closing Date; (f) liabilities related
to patent infringement to the extent arising out of products
sold prior to the Closing Date; and (g) liabilities relating
to the following litigation proceedings: CWA Investment
Company, L.L.C. v. Binks Sames Corporation v. The John Buck
Company; Continental Partners Group, Inc. v. Binks
Manufacturing; Behr Systems, Inc. v. Sames Electrostatic, Inc.
and Sames, S.A.; Durr GmbH v. Binks Sames France, S.A.;
Chester Baranowski v. Binks Sames Corporation, et al.; and
Robert Hashima v. Binks Sames Japan;
1.5.1.2 Any and all liabilities, obligations and
commitments arising out of the agreements, leases, contracts
and commitments set forth herein (or not required to be set
forth herein or in any Schedule hereto because of the amount
involved), including normal trade payables incurred in the
ordinary course of the Binks Business, but not including any
obligation or liability for any breach thereof occurring prior
to the Closing Date; and
1.5.1.3 The liabilities arising in the ordinary
course of business and resulting from the acquisition of the
Stock.
1.5.2 At the Closing, the Purchaser shall assume the Assumed
Liabilities by executing and delivering to Seller an Assumption
Agreement on terms which are mutually satisfactory.
1.6 Excluded Liabilities. Purchaser shall not assume any claims,
liabilities, obligations or commitments of any Seller relating to or arising out
of the operation of the Binks Business or the ownership of the Acquisition
Assets prior to the Closing other than the Assumed Liabilities (the "Excluded
Liabilities").
2. PURCHASE PRICE
2.1 Purchase Price. On the terms and subject to the conditions set
forth in this Agreement, Purchaser agrees to pay or cause to be paid to Seller
an aggregate of Seventy-Nine Million, Eight Hundred Seventy Three Thousand, Four
Hundred Fifty Eight Dollars ($79,873,458) (the "Purchase Price") and to assume
the Assumed Liabilities as provided in Section 1.5. The Purchase Price shall be
payable at the Closing by the wire transfer in immediately available funds to
such bank account or accounts as per written instructions of Seller given to the
Purchaser at least two (2) days prior to the Closing. The parties acknowledge
that the Purchase Price may be increased
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or decreased, after Closing, based on the Closing Balance Sheet (as hereinafter
defined) in accordance with the provisions set forth in Section 2.3 below.
2.2 Allocation of Purchase Price.
2.2.1 The parties agree to allocate the aggregate of the
Purchase Price and the Assumed Liabilities (collectively the "Aggregate
Purchase Price") between the Acquisition Assets acquired in the United
States and elsewhere in accordance with an allocation schedule to be
mutually agreed upon by the parties. Seller shall not be entitled to
receive from Purchaser any amount in excess of the respective amounts
set forth on such allocation schedule on account of the sale to the
Purchaser of such Acquisition Assets, provided that this provision
shall not affect the Purchase Price Adjustment provisions set forth
below.
2.2.2 The Aggregate Purchase Price allocated to the United
States shall be allocated among the domestic Binks Assets in accordance
with Section 1060 of the Internal Revenue Code of 1986, as amended (the
"Code") and the Treasury Regulations promulgated thereunder.
2.2.3 In connection with the determination of the foregoing
allocation schedules, the parties shall cooperate with each other and
provide such information as any of them shall reasonably request. The
parties will each report the federal, state and local and other tax
consequences of the purchase and sale contemplated hereby (including
the filing of Internal Revenue Service Form 8594) in a manner
consistent with such allocation schedules, unless a party is reasonably
advised by its counsel that to do so would violate statutory or
regulatory requirements relating to such reporting requirements.
2.3 Purchase Price Adjustment.
2.3.1 Within ninety (90) days following the Closing Date, the
Seller shall cause the preparation and delivery to Purchaser of a
consolidated balance sheet for the Binks Business as of the close of
business on the Closing Date, which shall be prepared on a basis
consistent with the preparation of the Financial Statements and
Seller's past practices as if the Binks Business' fiscal year ended on
the Closing Date, excluding the preparation of year-end statement of
cash flows and footnotes (the "Closing Balance Sheet"). Notwithstanding
the foregoing the parties hereby agree that Seller is not required
hereunder to perform a year-end audit, but the parties shall perform a
book to physical inventory following the Closing, the results of which
shall be included in the Closing Balance Sheet.. During such ninety
(90) day period, Purchaser shall cooperate with the Seller and shall
allow the Seller reasonable access to the books and records of the
Binks Business for the purpose of preparing the Closing Balance Sheet.
2.3.2 Unless Purchaser gives written notice to the Seller of a
good faith objection to the Closing Balance Sheet before the close of
business on the 20th business day after Purchaser's receipt thereof,
the Closing Balance Sheet shall become final and binding upon
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Purchaser and Seller. If Purchaser (by written notice before the close
of business on such 20th day) objects in good faith to the Closing
Balance Sheet and if Purchaser and Seller do not reach agreement on the
Closing Balance Sheet within twenty (20) days after Purchaser gives
such notice of objection, then the matter objected to (and only such
matter) shall be submitted to Deloitte & Touche, independent certified
public accountants, who shall act as an arbitrator and shall resolve
the dispute and submit a written statement of such resolution within
twenty (20) days, which statement shall be binding on all parties and
the date of such statement shall be the Final Report Date. Any
objection under this Section by Purchaser to the Closing Balance Sheet
that is based on the accounting procedures the Seller has consistently
applied in the past shall not be considered a good faith objection as
that term is used herein, provided that such procedure is in accordance
with generally accepted accounting principles, with such exceptions to
generally accepted accounting principles as set forth on Schedule 3.5.
Each of the parties hereto shall bear all costs and expenses incurred
by it in connection with such arbitration, except that the fees and
expenses of Deloitte & Touche hereunder shall be borne equally by
Seller and Purchaser.
2.3.3 If the Net Asset Value (as hereinafter defined) shown on
the Closing Balance Sheet exceeds the Net Asset Value of Sixty-Eight
Million, Two Hundred Thirty Four Thousand, Six Hundred Thirty Four
Dollars ($68,234,634) set forth on the Balance Sheet included in the
Financial Statements (as defined herein) as of May 31, 1998 (the
"Preliminary Net Asset Value"), then the amount of such excess shall be
paid by Purchaser to Seller by wire transfer of immediately available
funds within five (5) business days following the Final Report Date. If
the Net Asset Value shown on the Closing Balance Sheet is less than the
Preliminary Net Asset Value, then the amount of such deficiency shall
be paid by wire transfer of immediately available funds by the Seller
to Purchaser within five (5) business days following the Final Report
Date.
2.3.4 For purposes of this Section 2.3, "Net Asset Value"
shall mean total assets less total liabilities calculated in the same
manner as in the Financial Statements.
3. REPRESENTATIONS AND WARRANTIES. Seller represents and warrants to the
Purchaser as of the date of this Agreement and as of the Closing Date
(such representations and warranties being remade on the Closing Date)
as follows:
3.1 Authorization and Approval of Agreements. Seller has full corporate
power and authority to execute and deliver this Agreement, and, to consummate
the transactions contemplated hereby. The execution, delivery and performance of
this Agreement by Seller has been duly and validly authorized and approved by
Seller's Board of Directors, and no other corporate proceedings are necessary to
authorize this Agreement, or the consummation of the transactions contemplated
hereby. This Agreement has been duly and validly executed and delivered by
Seller and constitutes the legal, valid and binding obligation of the Seller,
enforceable against it in accordance with its terms, except as such
enforceability may be limited by (a) applicable bankruptcy, insolvency,
moratorium, reorganization, or similar laws in effect which affect the
enforcement of creditors' rights generally, or (b) by equitable limitations on
the availability of specific remedies.
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3.2 Corporate Status. Seller is a corporation duly organized, validly
existing, and in good standing under the laws of the jurisdiction of the State
of Delaware, and possesses all requisite power and authority to carry out the
transactions contemplated by this Agreement and to carry on its business
(including the Binks Business) as now being conducted, and to own or lease and
to operate its properties.
3.2.1 Seller is duly qualified or licensed to do business and
is in good standing in each of the jurisdictions in which the operation
of the Binks Business or the character of the properties owned, leased
or operated by it in connection with the Binks Business makes such
qualification or licensing necessary, except those jurisdictions, if
any, in which the failure to so qualify would not have a material
adverse effect on the business, operations or financial condition of
the Binks Business taken as a whole ("Material Adverse Effect"). A list
of each jurisdiction where the Seller is qualified is attached hereto
as Schedule 3.2.1.
3.2.2 Seller has delivered to Purchaser complete and correct
copies of its Certificate of Incorporation and by-laws or other
organizational documents as amended and in effect on the date hereof.
The Seller is not in violation of any of the provisions of its
certificate of incorporation or by-laws or other organizational
documents.
3.3 No Conflicts. No consent, authorization or approval of, filing or
registration with, any governmental authority or any other person or entity not
a party to this Agreement is necessary in connection with the execution,
delivery and performance by Seller of this Agreement, and the consummation of
the transactions contemplated hereby, or otherwise necessary with respect to the
Acquisition Assets, other than (a) the consents set forth on Schedule 3.3
attached hereto, and (b) as required by the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act") and such filings that may
be required in Germany, Belgium and Canada. Except as set forth on Schedule 3.3,
the execution, delivery and performance by Seller of this Agreement does not and
will not conflict with or result in a violation of, a default under, right to
accelerate or loss of rights under (with or without the giving of notice or the
lapse of time or both) (i) any law applicable to Seller or any affiliate
thereof, or any of the properties or assets of Seller (including the Acquisition
Assets), (ii) the certificate of incorporation or by-laws or other
organizational documents of Seller, or (iii) any contract, agreement or other
instrument to which Seller or any affiliate thereof is a party or by which
Seller or any of its properties or assets, including the Acquisition Assets, may
be bound or affected, except such violations or defaults which would not have a
Material Adverse Effect.
3.4 Subsidiaries. Schedule 3.4 hereto contains a complete and accurate
list of all entities, including partnerships, corporations, limited liability
companies, associations, joint stock companies, trusts, joint ventures or
unincorporated organizations, in which the Seller has a direct or indirect
ownership interest, and the Stock of which will be acquired by Purchaser as
expressly set forth in this Agreement (the "Subsidiaries"). Each of the
Subsidiaries is a corporation duly organized, validly existing and, where
applicable, in good standing under the laws of the jurisdiction of its
incorporation, set forth in Schedule 3.4 and has the corporate or other power to
carry on its business as now being conducted. Except as set forth on Schedule
3.4, the Seller is or will be, immediately
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prior to Closing, directly or indirectly, the record and beneficial owner of and
has, or will have, immediately prior to Closing, good and valid title to all of
the issued and outstanding capital stock of each of the Subsidiaries. Each of
issued and outstanding capital stock of the Subsidiaries is validly issued,
fully paid and non-assessable, and except as set forth in Schedule 3.4, as of
the Closing Date will be free and clear of all liens, claims, encumbrances,
security agreements, equities, charges and restrictions. Except as set forth on
Schedule 3.4, there are no outstanding options, commitments or other rights of
any nature that relate to the issuance, sale, purchase or redemption of any
shares of capital stock of any of the Subsidiaries. All of the issued and
outstanding shares of capital stock have been issued in compliance with all
applicable laws of their respective states or countries of incorporation and, to
the extent applicable, regulations of the Securities and Exchange Commission.
Except as set forth in Schedule 3.4, the Seller does not have a direct or
indirect ownership interest in any entity or person which is primarily engaged
in or required to conduct the Binks Business as currently conducted. Schedule
3.4 also sets forth the name and title of each officer and director of each of
the Subsidiaries immediately prior to Closing. Subject to applicable foreign
laws, the directors and officers of the Subsidiaries shall tender their
resignations effective as of the Closing Date. True and correct copies of the
Certificate of Incorporation, including all amendments thereto, and by-laws in
effect as of the Closing Date of each of the Subsidiaries shall be furnished to
Purchaser. Subject to applicable law Seller shall deliver the organizational
documents and records of the Subsidiaries at Closing.
3.5 Financial Statements. Seller has delivered to Purchaser unaudited
consolidated financial statements of the Binks Business as at and for the six
(6) month period ended May 31, 1998 (the "Financial Statements"), including a
balance sheet and statements of income. The Financial Statements have been
prepared in all material respects on a basis consistent with generally accepted
accounting principles, except as described on Schedule 3.5. The balance sheet
included in the Financial Statements does not include any material assets or
liabilities not intended to constitute part of the Binks Business or the
Acquisition Assets after giving effect to the transactions contemplated hereby,
and present fairly the financial condition of the Binks Business as at their
respective dates. The statements of income included in the Financial Statements
do not reflect the operations of any entity or business not intended to
constitute a part of the Binks Business after giving effect to all such
transactions and present fairly the results of operations of the Binks Business
for the periods indicated.
3.6 Absence of Undisclosed Liabilities. Except as set forth on Schedule
3.6, Seller has no liabilities or obligations of any nature, whether known or
unknown, absolute, accrued, contingent or otherwise and whether due or to become
due, arising out of or relating to the Binks Business, except (a) as and to the
extent disclosed or reserved against in the Financial Statements, and (b)
liabilities and obligations that (i) were incurred after the date of the
Financial Statements in the ordinary course of business consistent with prior
practice, and (ii) individually and in the aggregate are not material to the
Binks Business and have not had or resulted in, and will not have or result in,
a Material Adverse Effect. None of the employees of the Binks Business is now,
or will by the passage of time hereinafter become, entitled to receive any
vacation time, vacation pay or severance pay attributable to services rendered
prior to such date, except as set forth on Schedule 3.6.
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3.7 Taxes. Seller has (or by the Closing will have) duly and timely
filed all tax returns relating to the Binks Business required to be filed on or
before the Closing Date. With respect to the period prior to the Closing, all
taxes required to be withheld by or on behalf of the Seller in connection with
amounts paid and social security contributions (collectively "Taxes") or owing
to any employee, independent contractor, creditor or other party with respect to
the Binks Business have been (or by the Closing will have been) withheld, and
such withheld Taxes either have been or will be duly and timely paid to the
proper governmental authorities or set aside in accounts for such purpose.
3.7.1 Except as set forth on Schedule 3.7, no agreement or
other document extending, or having the effect of extending, the period
of assessment or collection on any Taxes, and no power of attorney with
respect to any such Taxes has been filed with the IRS or any other
governmental authority.
3.7.2 Except as set forth on Schedule 3.7, with respect to the
Seller, (a) there are no Taxes asserted in writing by any governmental
authority to be due, and (b) no issues have been raised in writing by
any governmental authority in the course of any audit with respect to
any Taxes. No Taxes are currently under audit by any governmental
authority. Neither the IRS nor any other governmental authority is now
asserting or, to the knowledge of Seller, threatening to assert against
Seller, any adjustment of Taxes that individually or in the aggregate
would, if paid by Purchaser, have a Material Adverse Effect, and there
is no reasonable basis for any such assertion of which Seller is or
reasonably should be aware.
3.7.3 Except as set forth on Schedule 3.7, there is no
litigation or administrative appeal pending or, to the knowledge of
Seller, threatened against or relating to Seller in connection with any
Taxes.
3.8 Absence of Adverse Changes or Events. Except as set forth on
Schedule 3.8, since the date of the Financial Statements, Seller has conducted
the Binks Business only in the ordinary course consistent with its prior
practices and has not with respect to the Binks Business or the Acquisition
Assets, as the case may be:
3.8.1 Incurred any material obligation or liability, absolute,
accrued, contingent or otherwise, whether due or to become due, except
current liabilities incurred in the ordinary course of business and
consistent with its prior practice, none of which liabilities, in any
case or in the aggregate have a Material Adverse Effect;
3.8.2 Discharged or satisfied any lien, charge or encumbrance
other than those then required to be discharged or satisfied, or paid
any obligation or liability, absolute, accrued, contingent or
otherwise, whether due or to become due, other than current liabilities
shown on the Financial Statements and current liabilities incurred
since the Financial Statements in the ordinary course of business and
consistent with its prior practice;
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3.8.3 Mortgaged, pledged or subjected to lien, charge,
security interest or any other encumbrance or restriction any of its
property, business or assets, tangible or intangible;
3.8.4 Sold, transferred, leased to others or otherwise
disposed of any of its assets, canceled or compromised any debt or
claim, or waived or released any right of substantial value, in each
case except in the ordinary course of business;
3.8.5 Received any notice of termination of any contract,
lease or other agreement or suffered any damage, destruction or loss
which, in any case or in the aggregate, has had or may be reasonably
expected to have a Material Adverse Effect;
3.8.6 Encountered any labor union organizing activity, had any
actual or threatened employee strikes, work stoppages, slow-downs or
lock-outs, or had any material change in its relations with its
employees, agents, customers or suppliers, or with any governmental
authorities or self-regulatory organizations, which would in each case
have a Material Adverse Effect on the Binks Business;
3.8.7 Transferred or granted any rights under, or entered into
any settlement regarding the breach or infringement of, any United
States or foreign license, patent, copyright, trademark, trade name,
invention or similar rights, or modified any existing rights with
respect thereto;
3.8.8 Made any change in the rate of compensation, commission,
bonus or other direct or indirect remuneration payable, or paid or
agreed or orally promised to pay, conditionally or otherwise, any
bonus, extra compensation, pension or severance or vacation pay to any
employee, salesman, distributor or agent of the Binks Business, except
as disclosed on Schedule 3.8 or in the ordinary course of business and
consistent with prior practice;
3.8.9 Issued or sold any shares of its capital stock or other
securities, or issued, granted or sold any options, rights or warrants
with respect thereto, or acquired any capital stock or other securities
of any corporation or any interest in any business enterprise, or
otherwise made any loan or advance to or investment in any person, firm
or corporation, but only to the extent related to the Binks Business;
3.8.10 Made any capital expenditures or capital additions with
respect to the Binks Business in excess of an aggregate of $500,000.00;
3.8.11 Instituted, settled or agreed to settle any litigation,
action or proceeding before any court or governmental body relating to
the Binks Business;
3.8.12 Failed to replenish its inventories and supplies of the
Binks Business in a normal and customary manner consistent with its
prior practice, or made any purchase commitment in excess of the
normal, ordinary and usual requirements of the Binks Business
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or at any price in excess of the then current market price, or made any
change in selling, pricing, advertising or personnel practices of the
Binks Business inconsistent with its prior practice;
3.8.13 Suffered any change, event or condition which, in any
case or in the aggregate, has had or reasonably may be expected to have
a Material Adverse Effect; or
3.8.14 Entered into any transaction, contract or commitment
other than in the ordinary course of business.
3.9 Litigation. Except as described on Schedule 3.9, there is no claim,
legal action, suit, arbitration, governmental investigation or other legal or
administrative proceeding, nor any order, decree or judgment in progress,
pending or in effect or, to the knowledge of Seller, threatened against or
relating to Seller which would have a Material Adverse Effect or would
materially or adversely affect the transactions contemplated by this Agreement.
Schedule 3.9 also contains a list of all such litigation (excluding silicosis
cases) pending as of the date of this Agreement or for which there remains any
financial liability or obligation of the Seller.
3.10 Compliance with Laws and Other Instruments. Seller has complied in
all material respects with all existing laws, rules, regulations, ordinances,
orders, judgments and decrees now applicable to the Binks Business, its
operations as presently conducted. Except as set forth on Schedule 3.10, neither
the ownership, the use of Seller's properties in the Binks Business, nor the
conduct of the Binks Business conflicts with the rights of any other person,
firm or corporation or violates, with or without the giving of notice or the
passage of time, or both, or will violate, conflict with or result in a default,
right to accelerate or loss of rights under, any terms or provisions of its
Certificate of Incorporation or by-laws as presently in effect, or any lien,
encumbrance, mortgage, deed of trust, lease, license, agreement, understanding,
law, ordinance, rule or regulation, or any order, judgment or decree to which
Seller is a party or by which it may be bound or affected, which would in each
case or in the aggregate have a Material Adverse Effect.
3.11 Title to Properties. Seller has good and marketable title to all
the Binks Assets and, to the extent required hereunder, Seller has the right to
transfer the Binks Assets to Purchaser. Except as set forth on Schedule 3.11,
none of the Binks Assets is subject to any mortgage, pledge, lien, charge,
security interest, encumbrance, restriction, lease, license, easement, liability
of any nature whatsoever, except (i) mortgages or security interests shown on
the Financial Statements as securing specific liabilities or obligations, or
(ii) liens for current taxes and assessments not yet due or payable or taxes the
validity of which are being contested in good faith by appropriate proceedings,
or (iii) those restrictions, easements and imperfections of title and
encumbrances, if any, which, individually or in the aggregate, (a) are not
substantial in character, amount or extent and do not materially detract from
the value of the properties subject thereto in their current use in the Binks
Business, and (b) do not interfere with either the present and continued use of
such property or the conduct of Seller's normal operations; in each case in the
same manner as the Binks Business is currently conducted (the aforementioned
exceptions collectively referred to as "Permitted Encumbrances"). All of the
properties and assets owned, leased or used by Seller in
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connection with the Binks Business are in good operating condition and repair,
ordinary wear and tear excepted.
3.12 Contracts. Schedule 3.12 lists specifically all contracts,
agreements, commitments (written or oral other than those of a type disclosed in
some other Schedule hereto) with respect to the Binks Business to which the
Seller is a party or by which the Seller, or any of the properties or assets of
the Binks Business is in any way bound, including all amendments and supplements
thereto and modifications thereof, which:
3.12.1 Provide for the sale of products or the performance of
services, or for the purchase of inventories, equipment, raw materials,
supplies, services, or utilities, which involves payments or receipts
by the Seller of Five Hundred Thousand Dollars ($500,000.00) or more
and (i) are not terminable by the Seller at any time upon thirty (30)
days or less prior written notice and without cause; or (ii) are not to
be fully performed within six (6) months from the date of this
Agreement;
3.12.2 Establish a sales agency, distributorship or brokerage
agreement or franchise;
3.12.3 Establish a collective bargaining, union,
non-competition or secrecy agreement (including any non-competition or
secrecy agreements routinely obtained by the Seller from its employees)
or agreement providing for a fixed term of employment;
3.12.4 Establish a loan or credit agreement, security
agreement, guaranty, indenture, mortgage, pledge, conditional sale or
title retention agreement, equipment obligation, lease purchase
agreement, or other instrument evidencing indebtedness;
3.12.5 Establish a partnership, joint venture, joint operating
or similar agreement; or
3.12.6 Provide for (other than those of the types covered by
the aforementioned subsections of this section) payments or receipts by
Seller of Five Hundred Thousand Dollars ($500,000) or more and are not
terminable by the Seller at any time upon thirty (30) days or less
prior written notice and without cause.
All of said contracts, agreements, commitments and undertakings are valid,
binding, and in full force and effect, according to their terms and subject to
(a) changes caused by partial and complete performance prior to Closing, and (b)
general principles of equity, including without limitation, concepts of
materiality, reasonableness, good faith and fair dealing and other similar
doctrines affecting the enforceability of agreements generally and applicable
bankruptcy, insolvency, reorganization, moratorium and other similar laws of
general application affecting creditors' rights.
Except as set forth on Schedule 3.12, there exists no material default by the
Seller, or to Seller's knowledge by another party thereto, nor has any event
occurred which with the passage of time or giving of notice would constitute a
material default thereunder. Copies of all of the documents
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described in the aforesaid Schedule, and of each other schedule delivered
pursuant to this Agreement, have been provided to Purchaser, and are true and
complete and include all amendments, supplements or modifications thereto.
3.13 Patents. Seller owns or possesses the royalty free licenses or
other rights to use all the Intellectual Property set forth on Schedule 1.2.7,
and to the knowledge of Seller, no other person or entity owns or has any
proprietary, financial or other interest, direct or indirect, in any
Intellectual Property which Seller is using or the use of which is necessary in
the operation of the Binks Business as presently conducted. Except as set forth
on Schedule 3.13, Seller is not infringing upon or otherwise acting adversely to
any copyrights, trademarks, trademark rights, service marks, service names,
trade names, patents, patent rights, licenses, trade secrets or other
proprietary rights owned by any other person or entity and there is no claim or
action by any such person or entity pending, or to the knowledge of Seller
threatened, with respect thereto. After due inquiry, to the knowledge of Seller,
none of the Intellectual Property is being infringed or otherwise used or
available for use by any other person or entity. Except as set forth on Schedule
3.13 hereto, there are no existing or, to the knowledge of Seller, threatened,
patent, trademark infringement opposition, interference or other intellectual
property related lawsuits by, or against, Seller relating to the Binks Business,
nor are there any outstanding notices, to Seller or by Seller to another,
regarding possible patent infringement of either a Seller owned or licensed
patent, or a third party's patent. The Intellectual Property included in the
Acquisition Assets constitute all of the intellectual property rights required
or necessary to conduct the Binks Business as currently conducted and shall be
assigned through a clean chain of title to the Purchaser or its designee
effective on the Closing Date.
3.14 No Guarantees. Except as set forth on Schedule 3.14, none of the
obligations or liabilities of Seller is guaranteed by, or subject to a similar
contingent liability of any other person, firm or corporation, nor has Seller
guaranteed, or otherwise become contingently liable for, the obligations or
liabilities of any other person, firm or corporation.
3.15 Inventory. Except as set forth on Schedule 3.15 or as reserved on
the Financial Statements, all items of Seller's inventory and related supplies
for the Binks Business (including raw materials, work-in-process and finished
goods) reflected on the Financial Statements or thereafter acquired are
merchantable, or suitable and usable for the production or completion of
merchantable products, for sale in the ordinary course of business as first
quality goods at normal mark-ups; are not obsolete or below standard quality and
are valued at the lower of cost or market in accordance with generally accepted
accounting principles consistently applied by the Seller.
3.16 Receivables. All receivables of Seller (including accounts
receivable, loans receivable and advances) which are reflected in the Financial
Statements, and all such receivables of the Binks Business which will have
arisen since the date thereof, shall have arisen only from bona fide
transactions in the ordinary course of Seller's operation of the Binks Business
and shall be (or have been) fully collected or in the case of each account
receivable within 180 days after it arose, without resort to litigation, in the
aggregate face amounts thereof, except to the extent of the normal allowance for
doubtful accounts with respect to accounts receivable computed consistently with
Seller's prior practices as reflected on the most recent annual Financial
Statement.
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3.17 Business Description. Schedule 3.17 attached hereto contains (i)
the percentage of total sales and revenues and income attributable to each
product line of the Binks Business from December 1, 1997 through July 31, 1998,
which accounted for 10% or more of the Binks Business' total sales and revenues
or income before taxes, (ii) the extent to which Seller makes sales to or
derives revenues or makes purchases from sources located in foreign countries
with respect to the Binks Business, and (iii) the name of each customer or
supplier of Seller with respect to the Binks Business, the loss of which might
materially and adversely affect the Binks Business.
3.18 Insurance. Schedule 3.18 lists in all material respects the
insurance policies (specifying the insurer, the amount and duration of the
coverage, the type of insurance including whether each such policy is based on
claims made or occurrence, premium allocation, the policy number and any pending
claims thereunder) maintained by Seller and covering the Binks Business and
personnel of the Binks Business (excluding U.S. and foreign employee benefits).
The information provided in Schedule 3.18 shall cover all time periods from 1961
to the present. Seller shall deliver at or prior to Closing full and complete
copies of all such insurance policies listed in Schedule 3.18 or secondary
evidence of same to the extent Seller possess the same. The Seller is not in
default with respect to any provision contained in any such insurance policy
related to Seller or its U.S. subsidiaries, nor has it failed to pay any
premiums thereunder or to give any notice or present any claim thereunder in due
and timely fashion. To the knowledge of Seller there is no occurrence involving
the Binks Business potentially giving rise to a material claim with respect to
which notice to the insurer has not been given.
3.19 Machinery and Equipment. The machinery and equipment regularly
being used by the Seller in the Binks Business are in good operating condition
and repair (normal wear and tear excepted), are in conformity with all
applicable material ordinances, regulations and other laws, and except as set
forth on Schedule 3.19 hereto, are either owned by the Seller free and clear of
all liens or encumbrances whatsoever, or are leased under valid leases which
will not be affected by the consummation of the Acquisition contemplated by this
Agreement.
3.20 Real Property. There is set forth in Schedule 3.20 a legal
description of all real property, including buildings and other improvements
thereon, owned by the Seller, which is included in the Acquisition Assets. The
real property included in the Acquisition Assets is all the real property
required to conduct the Binks Business as currently conducted. Except for
Permitted Encumbrances, Seller has good and marketable title in fee simple to
such real property, free of all mortgages, liens, claims, security interest or
other encumbrances whatsoever. All improved structures or buildings included in
the real property conform in all material respects, with all applicable material
ordinances, regulations, building, zoning, and other laws, and there are no
pending claims by any municipal or other authorities in connection with the real
property for any material violation thereof.
3.21 Leases. Schedule 3.21 hereto sets forth, a brief description
(including in each case the current annual base rental payable, the expiration
date, a brief description of the property covered and the name of the Lessor) of
every lease or agreement under which the Seller is lessee of,
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or holds or operates any property owned by any third party, including Seller,
which is used in the Binks Business. Except as specifically set forth in
Schedule 3.21, each such lease or agreement is in full force and effect and
constitutes a legal, valid and binding obligation of the respective parties
thereto. The buildings and other improvements located thereon are not in
violation of any zoning or other ordinance.
3.22 Employee Benefit Plans. Set forth in Schedule 3.22 is a list of
all pension, profit sharing, disability, welfare or group insurance, bonus,
deferred compensation, stock option, paid vacation and all other presently
effective employee benefit plans, agreements or commitments, written or oral,
with respect to employees of the Binks Business (the "Employee Benefit Plans").
Copies of each written plan, agreement or commitment, as amended to the date
hereof, and applicable summaries thereof, have been provided to the Purchaser.
3.22.1 Each such Employee Benefit Plan and each related trust,
insurance contract, book reserve or fund complies in form and operation
in all material respects with the requirements of applicable laws,
including the requirements of the Employee Retirement Income Security
Act of 1974 ("ERISA" and the "ERISA Plans"). Except as set forth in
Schedule 3.22.1, no ERISA Plan which is a pension benefit plan under
ERISA:
3.22.1.1 is a multi-employer plan within the meaning
of Section 4001(b) of ERISA;
3.22.1.2 has had any amendment which is not the
subject of a favorable determination letter by the Internal
Revenue Service;
3.22.1.3 has pending any operational compliance
failures which would result in disqualification or sanctions;
3.22.1.4 has any accumulated funding deficiency with
respect to the funding standard account described in Section
412(a) of the Internal Revenue Code of 1986 (whether or not
waived);
3.22.1.5 has had a complete or partial termination or
a permanent discontinuation of contributions;
3.22.1.6 has had a reportable event as such term is
defined in ERISA; or
3.22.1.7 has had a "fiduciary" or "party in interest"
or "disqualified person" enter into any "prohibited
transaction" as defined in ERISA.
3.22.2 Except as set forth on Schedule 3.22.2, all required
reports and descriptions with respect to the Employee Benefit Plans
have been filed or distributed as required by applicable law. Copies of
the applicable Form 5500 for the most recent plan year of each
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ERISA Plan, and of the most recent audit reports, actuarial valuations
and any required governmental reports have been provided to Purchaser.
3.22.3 Except as set forth on Schedule 3.22.3, all
contributions (including all employer contributions and employee
contributions, if any) and premiums, administrative fees and other
costs with respect to the Employee Benefit Plans which were due prior
to the Closing Date have been timely paid. Any contributions, premiums
or fees which are payable as of the Closing Date shall be paid by
Seller into the applicable Employee Benefit Plan as soon as practicable
following such date. Payroll, bonuses, vacation pay, deferred
compensation and all unfunded employment related obligations have been
accrued on the balance sheet of the Binks Business in accordance with
generally accepted accounting principles and there is no obligation or
commitment that the Purchaser is required to satisfy that is not
disclosed in Schedule 3.22.
3.22.4 Except as set forth on Schedule 3.22.4, there are no
actions, suits or claims (other than routine claims for benefits)
pending or threatened or, to the knowledge of Seller, any facts which
could give rise to any such actions, suits or claims against any
Employee Benefit Plan or the assets thereof.
3.23 Foreign Employee Matters.
3.23.1 Schedule 3.23.1 hereto lists each non-governmental
retirement and welfare benefit plan for employees of the Binks Business
located outside of the United States (the "Foreign Benefit Plans").
Except as set forth on Schedule 3.23.1, each Foreign Benefit Plan and
each fund, if any, maintained thereunder has been established,
operated, administered, maintained and invested, as the case may be, in
compliance with all laws applicable thereto and the respective
requirements of each such Plan's governing documents, all other
applicable pension benefits legislation, and all applicable
regulations, rules and policies in relation thereto.
3.23.2 Seller has heretofore delivered or shall upon request
deliver to Purchaser correct and complete copies of (i) each Foreign
Benefit Plan; (ii) if applicable, the most recent actuarial valuation
report available, whether or not filed, with respect to each such Plan;
(iii) the most recent funding and investment management agreements with
respect to each such Plan and all amendments thereto; (iv) the most
recent summary description for employees with respect to each such
Plan; and (v) the two most recent annual reports filed in respect of
each such Plan.
3.23.3 Except as set forth on Schedule 3.23.3, full payment
has been or will be made of all premiums, contributions and other
amounts required by the applicable documents governing any Foreign
Benefit Plan, or any applicable laws, regulations, rules and policies
in relation thereto to be paid by Seller under the terms of each such
Plan as of the Closing Date.
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3.23.4 Except as set forth on Schedule 3.23.4, there are no
pending or, to the best of Seller's knowledge, any written threat of
claims against or in respect of any of the Foreign Benefit Plans,
whether by any governmental agency, or employee, or beneficiary or
otherwise (other than routine claims for benefits).
3.23.5 Except as set forth on Schedule 3.23.5, no Foreign
Benefit Plan provides for benefits including, without limitation, death
or medical benefits (whether or not insured), with respect to any past
or present employees of the Binks Business beyond their retirement or
termination of service.
3.23.6 Except for the Subsidiaries or to the extent provided
by law or specifically set forth in this Agreement, Purchaser shall not
assume any liability to any employee, beneficiary or other person or
entity in connection with any Foreign Benefit Plan or by reason of any
action or inaction by the Seller or any administrator or fiduciary or
other person or entity with respect to any Foreign Benefit Plan,
whether before or after the Closing Date.
3.24 Environmental Matters. Except as disclosed on Schedule 3.24
(which scheduled matters remain the liability of Seller), with respect to the
Binks Business:
3.24.1 Seller has not deposited or caused to be deposited, on,
under or about any production or any other facility of the Binks
Business or at any off-site facility including, without limitation,
into the ambient air, surface water, groundwater, land surface, or
subsurface strata, any solvents, pollutants, chemicals, flammable,
contaminants, gasoline, petroleum products, crude oil, explosives,
radioactive materials, hazardous materials or industrial or other
hazardous or toxic materials, substances, or wastes, or polychlorinated
biphenyls or related or similar materials, asbestos or any material
containing asbestos, or any other substance or material (collectively,
the "Hazardous Substances") in material violation of, or in a manner
which creates liability under, any applicable federal, state or local
governmental law, rule, regulation or ordinance, including, without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended as of the Closing Date (42 U.S.C.
Sections 9601, et. seq.), the Hazardous Materials Transportation Act,
as amended as of the Closing Date (49 U.S.C. Section 1801, et. seq.),
the Resource Conservation and Recovery Act, as amended as of the
Closing Date (42 U.S.C. Sections 6901 et. seq.), the Federal Water
Pollution Control Act, as amended as of the Closing Date (33 U.S.C.
Sections 1251 et. seq.), the Clean Air Act, as amended as of the
Closing Date (42 U.S.C. Sections 7401 et. seq.), the Toxic Substances
Control Act, as amended as of the Closing Date (15 U.S.C. Sections 2601
et. seq.), the Clean Water Act, as amended as of the Closing Date (33
U.S.C. Sections 1251 et. seq.) (collectively all such laws, rules,
ordinances, or regulations called herein, "Environmental Laws");
3.24.2 Seller does not use any production or any other
facility owned or leased by it in respect of the Binks Business to
generate, manufacture, refine, transport, treat, store,
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handle, dispose, transfer, produce, process or in any manner deal with
Hazardous Substances, except in material compliance with applicable
Environmental Laws;
3.24.3 Seller has obtained for the Binks Business all material
registrations, permits, licenses, and other authorizations which are
required under federal, state and local laws and regulations relating
to pollution or protection of the environment including, but not
limited to, all Environmental Laws and including all laws relating to
emissions, discharges, releases, or threatened releases of Hazardous
Substances, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling
of Hazardous Substances;
3.24.4 Seller is in material compliance with all terms and
conditions of such required registrations, permits, licenses and
authorizations; and, to the knowledge of Seller, is also in material
compliance with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and
timetables contained in the Environmental Laws or contained in any
regulation, code, plan, order, decree, judgment, injunction, notice or
demand letter issued, entered, promulgated or approved thereunder;
3.24.5 There is no civil, criminal, or administrative action,
suit, demand, claim, hearing, notice of violation, investigation,
proceeding, notice or demand letter pending, or threatened against the
Seller with respect to the Binks Business relating in any way to (i)
the Environmental Laws or any regulation, code, plan, order, decree,
judgment, injunction, notice or demand letter issued, entered,
promulgated, or approved thereunder, or (ii) relating to the release
into the environment by the Binks Business of any Hazardous Substances
whether or not occurring at or on a site owned, leased or operated by
the Seller in connection with the Binks Business.
3.25 Absence of Certain Business Practices. Neither Seller nor any
officer, employee or agent of Seller, nor any other person acting on its behalf,
has given any gift or similar benefit to any customer, supplier, governmental
employee or other person who is in a position to help or hinder the business of
Seller (or assist Seller in connection with any actual or proposed transaction)
which (a) might subject Seller to any damage or penalty in any civil, criminal
or governmental litigation or proceeding, (b) if not given in the past, might
have had an adverse effect on the assets, business or operations of Seller as
reflected in the Financial Statements, or (c) if not continued in the future,
might adversely affect Seller's assets, business, operations or which might
subject Seller, with respect to the Binks Business, to suit or penalty in any
private or governmental litigation or proceeding.
3.26 Year 2000 Compliance. The Seller has developed and is in the
process of implementing a comprehensive, detailed program to address on a timely
basis Year 2000 Compliance. The Seller believes that it will achieve Year 2000
Compliance in a timely manner for all material computer applications used by the
Seller in the Binks Business. "Year 2000 Compliance" means in relation to any
computer program, correct treatment of dates through the year 1999 to the year
2000, including (without limitation) the correct handling of:
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(i) the day after December 31, 1999 being January 1, 2000
(correct changeover date);
(ii) the new year, 2000, being one year later than the
previous year, 1999 (years can be subtracted to
correctly give a number of elapsed years);
(iii) January 1, 2000, being a Saturday (day-of-week
calculations work correctly);
(iv) February 29, 2000 is a valid date (the year 2000 is a
leap year), and March 1, 2000 is a Wednesday (day of
week calculations take account of leap years).
3.27 Warranty Accruals. The warranty accruals being transferred to
Purchaser are sufficient to cover all outstanding warranty claims based upon
historical practices.
3.28 Customs Compliance. Seller has paid or has made provision for the
payment of all duty, tariffs, customs, penalties, merchandise processing fee or
other payment required to be paid by Seller with respect to the importation or
exportation of any merchandise by Seller with respect to the Binks Business and,
Seller is in compliance in all material respects with United States and foreign
laws and regulations governing the importation or exportation of merchandise
with respect to the Binks Business.
3.29 Brokers. Except for William Blair & Company L.L.C. ("William
Blair"), Seller has not directly or indirectly dealt with anyone acting on its
behalf in the capacity of a finder or broker (or investment advisor) and has not
incurred and, except for amounts solely payable by Seller to William Blair,
Seller shall not incur any obligation for any finder's, broker's or investment
banking fee related to the transaction contemplated herein.
3.30 Disclosure. No representation or warranty by Seller contained in
this Agreement (including the Schedules and Exhibits hereto), contains or will
contain any untrue statement of a material fact, or to the knowledge of Seller
omits to state a material fact required to make the statements herein or
therein, in light of the circumstances under which they were made, not
misleading.
4. REPRESENTATIONS AND WARRANTIES BY PURCHASER. Purchaser represents and
warrants to Seller as of the date of this Agreement and as of the
Closing Date (such representations and warranties being remade on the
Closing Date) as follows:
4.1 Authorization and Approval of Agreement. Purchaser has full
corporate power and authority to execute and deliver this Agreement and all
proceedings or corporate action required to be taken by Purchaser relating to
the consummation of the transactions contemplated hereby shall have been taken
on or prior to the Closing Date. This Agreement has been duly and validly
executed and delivered by Purchaser. This Agreement to which Purchaser (or its
designee) is a party constitutes the legal, valid and binding obligation of the
Purchaser (and/or its designee), enforceable against it or them in accordance
with its terms, except as such enforceability may be limited by (a)
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applicable bankruptcy, insolvency, moratorium, reorganization or similar laws in
effect which affect the enforcement of creditors' rights generally, or (b) by
equitable limitations on the availability of specific remedies.
4.2 Corporate Status. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of the
State of Delaware, and possesses all requisite power and authority to enter into
this Agreement and the related agreements referred to herein and to carry out
the transactions contemplated by this Agreement, and to carry on its business as
now being conducted and to own, lease or operate its properties.
4.3 No Conflicts. The execution, delivery and performance by Purchaser
of this Agreement and the consummation of the transactions contemplated hereby,
do not and will not conflict with or result in a violation of or a default under
(with or without the giving of notice or the lapse of time or both) (i) any law
applicable to Purchaser or any affiliate thereof or any of the properties or
assets of Purchaser, (ii) the Certificate of Incorporation or by-laws or other
organizational documents of Purchaser, or (iii) any contract, agreement or other
instrument to which Purchaser or any affiliate thereof is a party, or by which
Purchaser or any of its properties or assets may be bound or affected, except
such violations or defaults which would not have a Material Adverse Effect.
Except for compliance with the HSR Act and such filings that may be required in
Germany, Belgium and Canada, no governmental approval or other consent is
required to be obtained or made by Purchaser in connection with the execution
and delivery of this Agreement or the consummation of the transaction
contemplated hereby.
4.4 Litigation. There is no legal action, suit, arbitration,
governmental investigation or other legal or administrative proceeding, nor any
order, decree or judgment in progress, pending or in effect, or to the knowledge
of Purchaser threatened against or relating to Purchaser in connection with or
relating to the transactions contemplated by this Agreement, and Purchaser does
not know or have any reason to be aware of any basis for the same.
4.5 Brokers. Purchaser has not directly or indirectly dealt with anyone
acting on its behalf in the capacity of a finder or broker (or investment
advisor) and has not incurred, and shall not incur, any obligation for any
finder's, broker's or investment banking fee related to the transaction
contemplated herein.
4.6 Representation as to Knowledge of David B. Speer and John A.
Mayfield. David B. Speer and John A. Mayfield have no actual knowledge of any
material fact that would constitute a material breach of any representation or
warranty by the Seller in this Agreement. The preceding representation is made
by the Purchaser and shall not in any manner be construed to be a representation
by David B. Speer or John A. Mayfield. In the determination of the actual
knowledge of David B. Speer and John A. Mayfield, neither shall be deemed to
have knowledge of the documents provided to the Purchaser, which documents have
not been reviewed by David B. Speer and John A. Mayfield.
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5. SELLER'S COVENANTS
5.1 Conduct of Business Prior to Closing. Prior to the Closing, Seller
shall conduct the Binks Business only in the ordinary course and consistent with
its prior practice, and shall maintain, keep and preserve the assets and
properties of the Binks Business in good condition and repair, and maintain
insurance thereon in accordance with present practices, and Seller will use its
best efforts to (i) preserve the business and organization of the Binks Business
intact, (ii) keep available to Purchaser the services of the Binks Business'
present employees, agents and independent contractors, (iii) preserve for the
benefit of Purchaser the goodwill of the Binks Business' suppliers, customers,
landlords and others having business relations with it, and (iv) cooperate with
Purchaser and use reasonable efforts to assist Purchaser in obtaining the
consent of any landlord or other party to any lease or contract with Seller with
respect to the Binks Business where the consent of such landlord or other party
may be required by reason of the transactions contemplated hereby. Without
limiting the generality of the foregoing, prior to the Closing, Seller will not,
without Purchaser's prior written approval:
5.1.1 Change its Certificate of Incorporation or by-laws or
merge or consolidate or obligate itself to do so with or into any other
entity;
5.1.2 Enter into any contract, agreement, commitment or other
understanding or arrangement with respect to the Binks Business except
for those in the ordinary course of business which, in each case or in
the aggregate, would have a Material Adverse Effect; or
5.1.3 Perform, take any action or incur or permit to exist,
any of the acts, transactions, events or occurrences prohibited or
proscribed under this Agreement which would create a Material Adverse
Effect and would have been inconsistent with the representations and
warranties set forth herein had the same occurred prior to the date
hereof.
5.2 Adverse Change. Seller shall give Purchaser prompt written notice
of any adverse change in any of the information contained in the representations
and warranties made in Section 3, or elsewhere in this Agreement or the
Schedules referred to herein, which occurs prior to the Closing Date.
5.3 Consultation. Seller shall consult with the Purchaser with respect
to (i) the cancellation of material contracts, agreements, commitments or other
understandings or arrangements of the Binks Business to which Seller is a party
including, without limitation, purchase orders for any material item of
inventory and commitments for material capital expenditures or improvements,
(ii) the commencement in one or more of Binks Business' locations of the orderly
and gradual discontinuance of particular items or operations, and (iii) any
material changes in the purchasing, pricing or selling policy of the Binks
Business; provided, however, that nothing contained in this Section 5.3 shall
require Seller to take or fail to take any action that, in Seller's reasonable
judgment, is likely to give rise to a substantial penalty or a claim for damages
by any third party against Seller, or is likely to result in losses to Seller,
or is otherwise likely to prejudice
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in any respect or interfere with the conduct of Seller's business and operations
in the ordinary course consistent with prior practice, or is likely to result in
a breach by Seller of any of its representations, warranties or covenants
contained in this Agreement (unless any such breach is first waived in writing
by Purchaser).
5.4 Consent of Third Parties. Notwithstanding anything to the contrary
in this Agreement, this Agreement shall not constitute an agreement to assign or
transfer any governmental approval, instrument, contract, lease, permit or other
agreement or arrangement, or any claim, right or benefit arising thereunder or
resulting therefore, if an assignment or transfer or an attempt to make such an
assignment or transfer without the consent of a third party would constitute a
breach or violation thereof, or affect adversely the rights of Purchaser or
Seller thereunder, and any transfer or assignment to Purchaser by Seller of any
interest under any such instrument, contract, lease, permit or other agreement
or arrangement that requires the consent of a third party shall be made subject
to such consent or approval being obtained. In the event any such consent or
approval is not obtained on or prior to the Closing Date, Seller shall continue
after the Closing Date to use all reasonable efforts to obtain any such approval
or consent, and Seller will cooperate with Purchaser in any lawful and
economically feasible arrangement to provide that Purchaser shall receive the
interest of Seller in the benefits under any such instrument, contract, lease or
permit or other agreement or arrangement, including performance by Seller, as
agent, if economically feasible, provided that the Purchaser shall undertake to
pay or satisfy the corresponding liabilities for the enjoyment of such benefit
to the extent Purchaser would have been responsible therefore hereunder if such
consent or approval had been obtained. Seller shall pay any and all
out-of-pocket costs of seeking to obtain or obtaining any such consent or
approval whether before or after the Closing Date. Nothing in this Section 5.4
shall be deemed a waiver by Purchaser of its right to have received on or before
the Closing an effective assignment of all of the Acquisition Assets, nor shall
this Section 5.4 be deemed to constitute an agreement to exclude from the
Acquisition Assets any assets described under Section 1.2.
6. ADDITIONAL AGREEMENTS
6.1 Access to Information and Documents. At any time prior to Closing,
upon reasonable notice and during regular business hours, Seller will give
Purchaser and Purchaser's attorneys, accountants and other representatives full
access to all properties, documents, contracts, books and records of Seller
(solely with respect to the Binks Business), and will furnish Purchaser with
copies of such documents and with such information with respect to the affairs
of Seller (solely with respect to the Binks Business) as Purchaser may from time
to time reasonably request. Other than as required by applicable law, Purchaser
agrees that any information furnished to it, its designee or its authorized
representatives pursuant to this Section 6.1 will be subject to the
Confidentiality Agreement (as defined in Section 6.8 below). If the transactions
contemplated herein are not consummated on the Closing Date, all copies of such
documents and information shall be, upon written request, immediately returned
to the Seller.
6.2 Bulk Sales Compliance. Purchaser and Seller each hereby waive
compliance by the other with the provisions of the Bulk Sales Law of any state
or similar law of any foreign
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jurisdiction, and Seller warrants and agrees to pay and discharge when due all
claims of creditors which could be asserted against Purchaser by reason of such
non-compliance to the extent that such liabilities are not specifically assumed
by Purchaser under this Agreement. Seller hereby indemnifies and agrees to hold
Purchaser harmless from, against and in respect of (and shall on demand
reimburse Purchaser for) any loss, liability, cost or expense, including,
without limitation, attorneys' fees, suffered or incurred by Purchaser by reason
of the failure of Seller to pay or discharge claims described in this Section
6.2.
6.3 Covenant Not to Compete. Seller shall execute and deliver to
Purchaser at or prior to the Closing a Covenant Not to Compete on terms which
are mutually satisfactory.
6.4 Further Assurances. For a period of one year after the Closing
Date, and without further consideration:
6.4.1 Seller will execute and deliver such other instruments
of conveyance, assignment, transfer and delivery and take such other
action as Purchaser reasonably may request in order to more effectively
transfer, convey, assign and deliver to Purchaser and to place
Purchaser in possession or control of, any of the rights, properties
and assets intended to be sold, acquired, conveyed, assigned and
delivered hereunder, or to assist in the collection of any and all such
rights, properties and assets, or to enable Purchaser to exercise and
enjoy all rights and benefits of Seller with respect thereto, and
otherwise to consummate the transactions contemplated hereby including
accepting the reassignment of any accounts receivable not collected
after six months; and
6.4.2 Purchaser will take such actions as Seller reasonably
may request in order to assure the assumption of the Assumed
Liabilities by Purchaser and otherwise to consummate the transactions
contemplated hereby, including reassigning any Accounts Receivable not
collected after six months, as well as the benefits Purchaser received
from the corresponding reserves for such Accounts Receivable and
delivering to Seller copies of any and all documentation in Purchaser's
possession relating to any and all reassigned Accounts Receivable.
6.5 Books and Records. Unless otherwise consented to in writing by
Purchaser, for a period of five (5) years after the Closing Date, Seller will
not destroy, alter or otherwise dispose of any books, records, financial
statements or software of Seller which contain information or material relating
to the Binks Business (e.g., records relating to depreciation, sales costs, and
so forth which are part of business records retained by Seller) without first
offering to surrender such books and records to Purchaser. Upon reasonable
notice, the Seller shall allow Purchaser, its accountants, counsel and agents
reasonable access during normal business hours to examine and copy such books
and records.
6.6 Expenses. Whether or not the Acquisition is consummated, all costs
and expenses incurred in connection with this Agreement and the Acquisition
contemplated hereby shall be paid by the party incurring such expense.
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6.7 Publicity. At all times prior to the Closing, each party shall
promptly advise and cooperate with and, except as required by law, obtain the
consent of the other prior to issuing, or permitting any of its subsidiaries,
directors, officers, employees or agents, to issue, any press release or other
information to the press or any third party with respect to this Agreement or
the Acquisition contemplated hereby; provided, however, that neither Seller nor
Purchaser shall be required to consult with the other concerning any portion of
such press release or public statement that relates to matters other than the
transactions contemplated by this Agreement.
6.8 Confidentiality. The Confidentiality Agreement dated April 3, 1998
(the "Confidentiality Agreement") between the parties shall remain in full force
and effect until terminated in accordance with its terms and shall be a legally
binding obligation of the parties.
6.9 Purchaser's Employment of Seller's Employees.
6.9.1 Effective as of the Closing Date, all employees of the
Binks Business as listed in Schedule 6.9.1 will be offered employment
by the Purchaser as of the Closing Date and those individuals who
accept employment with the Purchaser ("Transferees") shall become
employees of Purchaser, except that any employee of the Binks Business
who is absent from employment on the Closing Date due to a leave of
absence shall not become an employee of Purchaser until he or she
returns to active employment without restrictions or with only such
restrictions as are required to be accommodated under applicable law.
Purchaser hereby agrees to assume responsibility for placement of any
employee of the Binks Business upon return from a leave of absence to
the extent such individual has a right to reinstatement under the
Family and Medical Leave Act or any other law or any written policy of
Seller covering such rights of an employee of the Binks Business.
Purchaser and Seller each agree that it will not solicit for hire any
employees of the other for a period of two (2) years after the Closing
Date. This provision shall not apply to the extent employees of
Purchaser or Seller, as the case may be, approach the other for
employment without solicitation. As of the Closing Date, Purchaser will
provide salary and other benefits of employment (excluding stock
options, deferred compensation and bonuses) which shall be
substantially comparable with those provided by Seller immediately
prior to the Closing Date.
6.9.2 Employee Benefit Plans. As of the Closing Date,
Purchaser shall assume sponsorship of all Foreign Benefit Plans
relating to the Subsidiaries and all Employee Benefit Plans listed on
Schedule 3.22 in which the Transferees participate except the Executive
Retirement Income Contracts and the related Rabbi Trust, the Amended
and Restated 1996 Stock Option Plan (the "Stock Option Plan") and the
John Francis Roche, Jr. Savings and Profit Sharing Plan of Binks
Manufacturing Co. (the "Assumed Benefit Plans"). Seller and Purchaser
agree:
6.9.2.1 that Seller will use its best efforts to
obtain the consents of insurers, third party administrators,
record keepers, trustees and other parties
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involved in the Assumed Benefit Plans to continuing all
contracts, agreements and fee and premium arrangements with
respect to such plans;
6.9.2.2 that Seller shall establish separate employee
welfare benefit plans for its employees who are not
Transferees which shall be effective on or before the Closing
Date;
6.9.2.3 that premiums under the Assumed Benefit Plans
which are due prior to the Closing Date shall be the
responsibility of the Seller and premiums due after the
Closing Date shall be the responsibility of the Purchaser;
6.9.2.4 that Seller shall be responsible for any and
all payments and liabilities resulting from or associated
with the Stock Option Plan;
6.9.2.5 that Seller shall promptly reimburse
Purchaser for claims under self-insured employee welfare
benefit plans of Transferees incurred but not reported prior
to the Closing Date;
6.9.2.6 that Seller shall establish separate
retirement plans for its employees who are not Transferees and
shall transfer the accounts of such employees to such plans
prior to the Closing Date;
6.9.2.7 that Seller shall make contributions due
under any Assumed Benefit Plan as of the Closing Date to such
plans as soon as practicable after the Closing Date;
6.9.2.8 that Purchaser shall be responsible for
audits and governmental filings with respect to the Assumed
Benefit Plans which are due after the Closing Date and hereby
indemnifies Seller for the timeliness of such filings;
6.9.2.9 that Purchaser shall give the Transferees
eligibility credit for employment with Seller for purposes of
coverage under the Assumed Benefit Plans;
6.9.2.10 that all documents and records concerning
the Assumed Benefit Plans shall be transferred to the
Purchaser, provided that Purchaser shall allow Seller
reasonable access to such documents and records for purposes
of governmental audits relating to periods on or prior to the
Closing Date and for other issues which arise with respect to
the period of Seller's sponsorship of such plans; and
6.9.2.11 that nothing in this Section 6.9.2 shall be
construed to require the continuation of any employee benefit
plan by Seller or Purchaser for any definite period of time
after the Closing Date, except as otherwise provided by law.
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6.9.3 Accrued Vacation Pay. After the Closing Date, Purchaser
shall be liable and responsible for the payment of accrued but unpaid
vacation pay for the Transferees, as determined in accordance with
Seller's vacation pay records and Seller's policies with respect to the
Transferees in effect on the Closing Date.
6.9.4 Limitation on Health Insurance Reimbursements for Former
Employees Who Are Not Transferees. To the extent cumulative health
insurance reimbursements for former employees of the Binks Business who
continue to be covered under the Assumed Benefit Plans exceed the
product of the sum of covered individuals in every month in which
coverage is provided times $350, Seller shall pay to Purchaser the
amounts of all excess, to the extent that such amounts are not
reimbursable under any applicable stop-loss policy.
6.9.5 Third Party Beneficiaries. This Agreement is between the
parties hereto only and nothing herein shall establish any enforceable
rights, legal or equitable, in any person other than Purchaser and
Seller, including any employee of either such party. Any claim,
including claims for benefits asserted by any person with respect to
his or her employment with Purchaser after the date hereof, shall be
governed by the applicable employment policies and such benefit plans
which Purchaser and Seller maintain for their employees, construed
under applicable law. Nothing in this Agreement shall be deemed to
restrict the right of Purchaser to deal with Transferees as employees
at will in the same manner as it would be free to deal with such
employees in the absence of this Agreement and to terminate the
employment of such Transferees at any time after the Closing Date.
6.10 Use of Binks and Sames Name. Purchaser and Seller shall enter into
a Trademark license agreement (the "Trademark License Agreement") providing for
the continued use of the names Binks and Sames by Purchaser and Seller, as the
case may be, for a period of nine (9) months from the Closing Date on terms
which are mutually satisfactory. The license grant under such Trademark License
Agreement shall be sublicensable by Seller to a third party purchaser of
Seller's sheet metal and powder booth business and shall be for a term of twelve
(12) months from the Closing Date.
6.11 Intercompany Transactions. Seller and Purchaser will net the
intercompany payables and receivables due from and to the Binks Business and the
Sames Business. The net payable due from either business to the other shall be
paid as of the Closing Date. The payment to be made at Closing shall be based
upon the Financial Statements with a final accounting and payment based upon the
Closing Balance Sheet due in accordance with the provisions of Section 2.3.
6.12 Transitional Services. Purchaser and Seller shall enter into a
transitional services agreement providing for the sharing of certain services
formerly provided by the Sames Business to the Binks Business and vice versa on
terms which are mutually satisfactory (the Transitional Services Agreement").
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6.13 Supply Agreement. Purchaser and Seller shall enter into a supply
agreement providing for the mutual supply of products formerly provided by the
Binks Business to the Sames Business and vice versa on terms which are mutually
satisfactory (the "Supply Agreement").
6.14 Seller Guarantees. Purchaser shall use its best efforts after the
Closing to obtain the release of all guarantees set forth on Schedule 3.14 by
the Seller or its subsidiaries, as the case may be, with respect to any Assumed
Liabilities not satisfied on or before the Closing Date, and to the extent such
releases cannot be reasonably obtained, Purchaser will indemnify Seller against
liability arising under such guarantees after the Closing Date.
6.15 Cross-License. Seller and Purchaser shall enter into a
cross-license agreement providing for a royalty free cross-license covering
certain patents and know-how relating to products manufactured and/or marketed
by the Sames Business and the Binks Business on the Closing Date on terms which
are mutually satisfactory (the "Cross-License Agreement").
6.16 Binks Sames Scandinavia AB. Prior to or concurrently with the
Closing, the Seller shall cause Binks Sames (UK) Ltd. to transfer the shares of
Binks Sames Scandinavia AB to a newly incorporated UK entity wholly owned by the
Seller.
6.17 Sublease. Seller and Purchaser shall enter into a sublease for a
period commencing on the Closing Date and ending on January 31, 2000, providing
for Purchaser's use of the facility located in Livonia, Michigan on terms that
are mutually satisfactory (the "Sublease").
7. CONDITIONS PRECEDENT
7.1 Conditions Precedent to Purchaser's Obligations. All obligations of
Purchaser hereunder are subject, at the option of Purchaser, to the fulfillment
of each of the following conditions on or prior to the Closing Date, and Seller
shall exert its best efforts to cause each such condition to be so fulfilled:
7.1.1 All representations and warranties of Seller contained
herein or in any document delivered pursuant hereto shall be true and
correct in all material respects when made, and shall be deemed to have
been made again on and as of the Closing Date, provided, however, that
if all costs, expenses, damages, liabilities, losses or deficiencies
suffered by Seller (calculated in accordance with Article 9 hereof) as
a result of any such representations and warranties not being true and
correct (the "Preclosing Violations"): (a) are less than $500,000, then
the Purchaser shall be obligated to close the transactions contemplated
herein and the $500,000 deductible in Section 9.1 shall be reduced by
the amount of the Preclosing Violations; or (b) equal or exceed
$500,000, then the Purchaser shall be obligated to close the
transactions contemplated herein, the $500,000 deductible in Section
9.1 shall be reduced to zero and the Purchase Price shall be reduced by
the amount by which the Preclosing Violations exceed $500,000.
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7.1.2 All covenants, agreements and obligations required by
the terms of this Agreement to be performed by Seller on or before the
Closing Date shall have been duly and properly performed in all
material respects.
7.1.3 Since the date of this Agreement, there shall not have
occurred any material adverse change in the condition (financial or
otherwise) of the Binks Business taken as a whole.
7.1.4 There shall be delivered to Purchaser a certificate,
executed by the President and Secretary of Seller dated the date of the
Closing Date, certifying that the conditions set forth in Sections
7.1.1, 7.1.2 and 7.1.3 hereof have been fulfilled.
7.1.5 All documents required to be delivered to Purchaser on
or prior to the Closing Date shall have been so delivered.
7.1.6 The applicable waiting period under the HSR Act and
under any applicable foreign governmental regulations shall have
expired or been terminated.
7.1.7 The Seller shall have obtained a fairness opinion from
William Blair;
7.1.8 The requisite consents, if any, for the transfer of the
Stock to Purchaser shall have been obtained;
7.1.9 Seller shall have obtained written consents to the
transfer or assignment to Purchaser of all material consignment
agreements, material licenses, material leases and other material
contracts of Seller related to the Binks Business (other than
immaterial purchase and sales orders in the ordinary course of
business) where the consent of any other party to any such contract may
be required for such assignment or transfer;
7.1.10 No order of any court or governmental authority shall
have been entered that enjoins, restrains or prohibits this Agreement
or the consummation of the transactions contemplated by this Agreement.
No governmental action shall be pending or threatened that seeks to
enjoin, restrain, prohibit or obtain damages with respect to this
Agreement or the complete consummation of the transactions contemplated
by this Agreement. No governmental investigation shall be pending or
threatened that might result in any such order, suit, action or
proceeding; and
7.1.11 Seller shall have executed and delivered the Covenant
Not to Compete, the Transitional Services Agreement, the Supply
Agreement, the Trademark License Agreement, the Cross-License Agreement
and the Sublease referenced in this Agreement.
7.2 Conditions Precedent to Seller's Obligations. All obligations of
Seller hereunder are subject, at the option of Seller, to the fulfillment of
each of the following conditions on or prior to
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the Closing Date, and Purchaser shall exert its best efforts to cause each such
condition to be so fulfilled:
7.2.1 All representations and warranties of Purchaser
contained herein or in any document delivered pursuant hereto shall be
true and correct in all material respects when made and as of the
Closing Date;
7.2.2 All covenants, agreements and obligations required by
the terms of this Agreement to be performed by Purchaser on or before
the Closing Date shall have been duly and properly performed in all
material respects;
7.2.3 There shall be delivered to Seller a certificate
executed by an officer and attested to by the Secretary or an Assistant
Secretary of Purchaser, dated the Closing Date, certifying that the
conditions set forth in Section 7.2.1 and 7.2.2 hereof have been
fulfilled;
7.2.4 Purchaser shall have paid the Purchase Price to Seller
in accordance with Section 2.1 hereof;
7.2.5 The applicable waiting period under the HSR Act and any
foreign governmental regulations shall have expired or been terminated;
7.2.6 The requisite consents, if any, for the transfer of the
Stock to Purchaser by Seller shall have been obtained;
7.2.7 No order of any court or Governmental authority shall
have been entered that enjoins, restrains or prohibits this Agreement
or the consummation of the transactions contemplated by this Agreement.
No governmental action shall be pending or threatened that seeks to
enjoin, restrain, prohibit or obtain damages with respect to this
Agreement or the complete consummation of the transactions contemplated
by this Agreement. No governmental investigation shall be pending or
threatened that might result in any such order, suit, action or
proceeding;
7.2.8 Seller shall have received a fairness opinion from
William Blair;
7.2.9 Purchaser shall have executed and delivered the Covenant
Not to Compete, the Transitional Services Agreement, the Supply
Agreement, the Trademark License Agreement, the Sublease and the
Cross-License Agreement referenced in this Agreement.
8. THE CLOSING
8.1 Place and Date. The closing of the sale and purchase of the
transactions contemplated by this Agreement (the "Closing") shall take place at
10:00 a.m. local time on the 30th day of September, 1998, at the office of
Vedder, Price, Kaufman & Kammholz, 222 North LaSalle
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Street, Chicago, Illinois 60601, or such other time and place upon which the
parties may agree. The day on which the Closing actually occurs is herein
referred to as the "Closing Date."
9. INDEMNIFICATION
9.1 Seller's Indemnification. Subject to the consummation of the
Acquisition and to the express limitations of this Section 9, Seller agrees
that, notwithstanding the Closing and regardless of any investigation made by or
on behalf of Purchaser, Seller will indemnify, save and hold harmless Purchaser
from and against any cost, expense, damage, liability, loss or deficiency
suffered or incurred by Purchaser arising out of or resulting from:
9.1.1 Any and all losses, liabilities or damages suffered or
incurred by Purchaser (a) by reason of any untrue representation,
breach of warranty or nonfulfillment of any covenant by Seller
contained herein, or (b) which would not have been suffered or incurred
if such representation or warranty were true and not breached or if
such covenant were fully performed;
9.1.2 Any and all losses, liabilities or damages suffered or
incurred by Purchaser in respect of or in connection with any
liabilities of Seller not expressly assumed by Purchaser pursuant to
Section 1.5;
9.1.3 Any and all debts, liabilities or obligations of Seller,
direct or indirect, fixed, contingent or otherwise, which exist on or
as of the Closing Date or which arise after the Closing Date, from any
act, omission, transaction, circumstance, sale of goods or services,
state of facts or other condition which occurred or existed on or
before the Closing Date, whether or not then known, due or payable,
except to the extent (a) reflected or reserved against on the face of
the Financial Statements or incurred after the date of the Financial
Statements in connection with the purchase of goods or services in the
ordinary course of Seller's business and in conformity with the
representations, warranties and covenants of Seller contained in this
Agreement (or a Schedule hereto) or (b) expressly assumed by Purchaser
pursuant to the terms of Section 1.5, or (c) expressly set out on a
Schedule hereto (excluding Schedule 3.21 regarding environmental
matters for which Seller will indemnify Purchaser regardless of any
facts or circumstances of which Purchaser may have knowledge);
9.1.4 The amount of any and all receivables of the Seller
which are not collected in accordance with the provisions of Section
3.16; and
9.1.5 Any and all losses, liabilities or damages suffered or
incurred by Purchaser by reason of or in connection with any claim for
a finder's fee or brokerage, or other commission arising by reason of
any services alleged to have been rendered to or at the instance of
Seller with respect to this Agreement or any of the transactions
contemplated hereby.
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provided that the amount of any such cost, expense, damage, liability, loss or
deficiency shall be calculated to be the cost or loss to the Purchaser after
giving effect to any related, determinable tax benefits applicable thereto
realized (or to be realized) by the Purchaser in connection therewith (provided
further that Seller shall not be obligated to Purchaser under this Section on
account of any tax liability resulting from adjustment of the income or
deductions of the Purchaser to the extent that such adjustments merely postpone
to a later period the tax benefit of such adjusted items). Seller shall have no
liability under this indemnity until the aggregate of all claims which have
become final equals or exceeds $500,000.00 in the aggregate and then only for
the amount by which such claims exceed $500,000.00. The foregoing deductible
shall apply to claims for breaches of Seller's representations and warranties
only and shall not apply to Excluded Liabilities.
9.2 Purchaser's Indemnification. Subject to the consummation of the
Acquisition and to the express limitations of this Section 9, Purchaser agrees
that notwithstanding the Closing, and regardless of any investigation made by or
on behalf of Seller or any information Seller may have in respect thereof,
Purchaser will indemnify, save and hold harmless Seller (and shall on demand
reimburse Seller for) from and against any cost, expense, damage, liability,
loss or deficiency suffered or incurred by Seller arising out of or resulting
from:
9.2.1 Any and all losses, liabilities or damages suffered or
incurred by Seller (a) by reason of any untrue representation, breach
of warranty or nonfulfillment of any covenant by Purchaser contained
herein, or (b) which would not have been suffered or incurred if such
representation or warranty were true and not breached or if such
covenant were fully performed; and
9.2.2 Any and all losses, liabilities or damages suffered or
incurred by Seller in respect of or in connection with any liabilities
expressly assumed by Purchaser pursuant to Section 1.5;
provided that the amount of any such cost, expense, damage, liability, loss or
deficiency shall be calculated to be the cost or loss to the Seller after giving
effect to (a) any related, determinable tax benefits applicable thereto realized
(or to be realized) by the Seller in connection therewith (provided further that
Purchaser shall not be obligated to Seller under this Section on account of any
tax liability resulting from adjustment of the income or deductions of the
Seller to the extent that such adjustments merely postpone to a later period the
tax benefit of such adjusted items), and (b) amounts recoverable under insurance
with respect thereto. Purchaser shall have no liability under this indemnity
until the aggregate of all claims equals or exceeds $500,000.00 in the aggregate
and then only for the amount by which such claims exceed $500,000.00. The
foregoing deductible shall apply to claims for breaches of Purchaser's
representations and warranties only and shall not apply to Assumed Liabilities.
9.3 Additional Provisions. Upon Seller's payment to Purchaser of the
face amount of any uncollected receivable by reason of the failure of such
receivable to be fully collected as warranted pursuant to the provisions
contained in Section 3.16 hereof, Purchaser shall assign such receivable to
Seller, without recourse. In the event of a dispute between the parties, each
party shall
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bear its own cost and expenses incident to any suit, action or proceeding
undertaken to resolve the dispute. Subject to Section 10 of this Agreement, all
covenants, agreements, representations and warranties made by any party pursuant
to this Agreement or in connection with the Acquisition contemplated hereby,
shall survive the Closing and remain effective for the term set forth below. For
purposes of this Section 9, in determining whether there is an inaccuracy in, or
action, omission or state of facts inconsistent with, any representation or
warranty, the terms "material," "materially," and "material adverse effect,"
when applicable to such representation and warranty shall mean claims which
total $10,000.00 for each individual claim or group of claims arising from the
same or similar events, conditions or causes of conduct for which
indemnification is being sought.
10. LIMITATIONS ON INDEMNIFICATION
10.1 Term. Purchaser's right to indemnification under Section 9 shall
apply (i) with respect to the matters covered by Section 9.1, or elsewhere
pursuant to this Agreement only to those matters, written notice of which shall
have been delivered by hand or by mail not later than two (2) years, except that
(i) with respect to any tax liability or expense covered by Section 3.7, such
right shall apply until the expiration of the applicable statutes of limitation
or until six (6) months after the assessment of taxes has become final with
respect to taxes related to Acquisition Assets located outside the United States
or owned by a Foreign Subsidiary; and (ii) with respect to the breach of any
environmental warranty covered under Section 3.22, such right shall apply until
September 30, 2003.
10.2 Extension for Certain Claims. If, prior to the expiration of any
of said periods set forth in Section 10.1 above, Purchaser shall give written
notice to Seller identifying any covenant, agreement, representation or warranty
which is inaccurate or has otherwise been breached, setting forth in reasonable
detail facts and circumstances showing that Purchaser has suffered or incurred
or reasonably may be expected to suffer or incur any damage, liability, loss or
deficiency arising out of or resulting from such inaccuracy or breach, then the
indemnity contained in Section 9 shall survive with respect to such covenant,
agreement, representation or warranty until the Seller has indemnified and saved
and held Purchaser harmless therefrom or such matter is otherwise resolved.
10.3 Dollar Limitation. Seller's indemnification obligations to
Purchaser shall not exceed Twenty-Five Million Dollars ($25,000,000.00).
10.4 Further Matters. No liability will be recoverable by or on behalf
of Purchaser in respect of any representation, warranty or covenant to the
extent that the event giving rise thereto was caused by compliance with the
requirements of this Agreement. In no event will consequential, exemplary or
punitive damages be recoverable with respect to this Agreement by any party
hereto (provided that the foregoing will not limit the right hereunder to
indemnification for such damages if recovered by persons or entities not parties
hereto).
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11. COOPERATION. Any party making a claim for indemnification under this
Section 11 (an "Indemnitee") shall notify the indemnifying party (an
"Indemnitor") of the claim in writing promptly after receiving written
notice of any action, lawsuit, proceeding, investigation or other claim
against it (if by a third party) describing the claim, the amount
thereof (if known and quantifiable) and the basis thereof; provided
that the failure to so notify an Indemnitor shall not relieve the
Indemnitor of its obligations hereunder except to the extent that (and
only to the extent that) the Indemnitor is prejudiced by such failure.
Any Indemnitor shall be entitled to participate in the defense of such
action, lawsuit, proceeding, investigation or other claim giving rise
to an Indemnitee's claim for indemnification at such Indemnitor's
expense, and at its option (subject to the limitations set forth below)
shall be entitled to appoint a recognized and reputable counsel
acceptable to the Indemnitee to be the lead counsel in connection with
such defense; provided further that, prior to the Indemnitor assuming
control of such defense, it shall first (i) verify to the Indemnitee in
writing that such Indemnitor shall be fully responsible (with no
reservation of any rights) for all liabilities and obligations relating
to such claim for indemnification and that it shall provide full
indemnification (as required hereunder) to the Indemnitee with respect
to such action, lawsuit, proceeding, investigation or other claim
giving rise to such claim for indemnification hereunder; (ii) enter
into an agreement with the Indemnitee in form and substance reasonably
satisfactory to the Indemnitee which agreement unconditionally
guarantees the payment and performance of any liability or obligation
which may arise with respect to such action, lawsuit, proceeding,
investigation or facts giving rise to such claim for indemnification
hereunder; and (iii) furnish the Indemnitee with evidence that the
Indemnitor, in the Indemnitor's reasonable judgment, financially and
otherwise is and will be able to satisfy all liabilities and
obligations relating to such claim for indemnification and provided
further that:
11.1 the Indemnitee shall be entitled to participate in the defense of
such claim and to employ counsel of its choice for such purpose, provided that
the fees and expenses of such separate counsel shall be borne by the Indemnitee
(other than any fees and expenses of such separate counsel that are incurred
prior to the date the Indemnitor effectively assumes control of such defense
which, notwithstanding the foregoing, shall be borne by the Indemnitor);
11.2 the Indemnitor shall not be entitled to assume control of such
defense and shall pay the fees and expenses of counsel retained by the
Indemnitee if (i) the claim for indemnification relates to or arises in
connection with any criminal proceeding, action, indictment, allegation or
investigation; (ii) the Indemnitee reasonably believes an adverse determination
with respect to the action, lawsuit, investigation, proceeding or other claim
giving rise to such claim for indemnification would be detrimental to or injure
the Indemnitee's reputation or future business prospects; (iii) the claim seeks
an injunction or equitable relief against the Indemnitee; (iv) the claim
involves environmental matters in which case the Indemnitee shall have sole
control and management authority over the resolution of such claim (including
hiring legal counsel and environmental consultants, conducting environmental
investigations and cleanups, negotiating with governmental agencies and third
parties and defending or settling claims and actions); provided that the
Indemnitee shall keep the Indemnitor apprised of any major developments relating
to any environmental claim;
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or (v) upon petition by the Indemnitee, the appropriate court rules that the
Indemnitor failed or is failing to vigorously prosecute or defend such claim;
and
11.3 if the Indemnitor shall control the defense of any such claim, the
Indemnitor shall obtain the prior written consent of the Indemnitee (which shall
not be unreasonably withheld) before entering into any settlement of a claim or
ceasing to defend such claim if, pursuant to or as a result of such settlement
or cessation, injunctive or other equitable relief shall be imposed against the
Indemnitee or if such settlement does not expressly and unconditionally release
the Indemnitee from all liabilities and obligations with respect to such claim,
without prejudice.
12. DISPUTES
12.1 Dispute Resolution. Any dispute arising out of or relating to this
Agreement, including, but not limited to, claims for indemnification pursuant to
Section 9, shall be resolved in accordance with the procedures specified in this
Section 12, which shall be sole and exclusive procedures for the resolution of
any such disputes.
12.2 Negotiation Between Executives. The parties shall attempt in good
faith to resolve any dispute arising out of or relating to this Agreement
promptly by negotiation between executives of Seller and Purchaser who, if
practicable, are at a higher level of management than the persons with direct
responsibility for administration of this Agreement. Any party may give the
other party written notice of any dispute not resolved in the normal course of
business. Within 15 days after delivery of the notice, the receiving party shall
submit to the other a written response. The notice and response shall include
(a) a statement of each party's position, and (b) the name and title of the
executive who will accompany the representative. Within 30 days after delivery
of the disputing party's notice, the executives of Purchaser and Seller shall
meet at a mutually acceptable time and place, and thereafter as often as they
reasonably deem necessary, to attempt to resolve the dispute. All reasonable
requests for information made by one party to the other will be honored.
12.2.1 If the matter has not been resolved by these persons
within 60 days of the disputing party's notice, or if the parties fail
to meet within 30 days, either party may initiate mediation as provided
hereinafter.
12.2.2 All negotiations pursuant to this clause are
confidential and shall be treated as compromise and settlement
negotiations for purposes of the Federal Rules of Evidence and State
rules of evidence.
12.3 Mediation. If the dispute has not been resolved by negotiation as
provided herein, the parties shall endeavor to settle the dispute by mediation
under the then current Center for Public Resources ("CPR") Model procedure for
Mediation of Business Disputes. The neutral third party will be selected from
the CPR Panels of Neutrals, with the assistance of CPR, unless the parties agree
otherwise. Each of the parties hereto shall bear all costs and expenses incurred
by it in connection with such mediation, except that the fees and expenses of
such mediator shall be borne equally by Seller and Purchaser.
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12.4 Litigation. If the dispute has not been resolved by non-binding
means as provided herein within 90 days of the initiation of such procedure,
either party may initiate litigation (upon 30 days' written notice to the other
party); provided, however, that if one party has requested the other to
participate in a non-binding procedure and the other has failed to participate,
the requesting party may initiate litigation before expiration of the above
period.
12.5 Provisional Remedies. The procedures specified in this Section 12
shall be the sole and exclusive procedures for the resolution of disputes
between the parties arising out of or relating to this Agreement; provided,
however, that either party, without prejudice to the above procedures, may file
a complaint for statute of limitations or venue reasons or to seek preliminary
injunction or other provisional judicial relief, if in its sole judgment such
action is necessary to avoid irreparable damage or to preserve the status quo.
Despite such action, the parties will continue to participate in good faith in
the procedures specified in this Section 12.
12.6 Tolling Statute of Limitations. All applicable statutes of
limitation and defenses based upon the passage of time shall be tolled while the
procedures specified in this Section 12 are pending. The parties will take such
action, if any, required to effectuate such tolling.
12.7 Performance to Continue. Each party is required to continue to
perform its obligations under this Agreement pending final resolution of any
dispute arising out of or relating to this Agreement.
13. TERMINATION, AMENDMENTS AND WAIVER
13.1 Termination. This Agreement may be terminated at any time prior to
the Closing:
13.1.1 by the mutual written consent of Purchaser and Seller;
or
13.1.2 by Purchaser if there has been a material
misrepresentation, breach of warranty or breach of a covenant by Seller
in the representations and warranties or covenants set forth in this
Agreement which, in the case of any breach of covenant hereunder, has
not been cured within ten (10) days after written notification thereof
by Purchaser; or
13.1.3 by Seller if there has been a material
misrepresentation, breach of warranty or breach of covenant by
Purchaser in the representations and warranties or covenants set forth
in this Agreement which, in the case of any breach of covenant
hereunder, has not been cured within ten (10) days after written
notification thereof by Seller; or
13.1.4 by Seller, if prior to the Closing Date the Board of
Directors of Seller determines in good faith (after consultation with
its financial advisors and outside legal counsel) that Seller should
enter into an agreement with a third party in respect of a merger,
consolidation, recapitalization or other business combination involving
Seller and/or its subsidiaries or an acquisition of any kind of all or
substantially all of the assets or capital
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stock of Seller and/or its subsidiaries or the Binks Business (i) in
order to discharge properly its fiduciary duties as they would exist in
the absence of this Agreement and (ii) that it would result in a
transaction more favorable to Seller or its stockholders than the
transaction contemplated by this Agreement, and Seller shall be
obligated to pay Purchaser an amount in cash equal to Two Million Five
Hundred Thousand Dollars ($2,500,000.00) (the "Termination Amount").
Purchaser shall be entitled to receive the Termination Amount
immediately upon the closing of the transaction contemplated under such
agreement.
13.1.5 by either Purchaser or Seller if the transactions
contemplated hereby have not been consummated by the earlier of (i)
October 31, 1998 or (ii) five (5) business days after the expiration or
termination of the applicable waiting period under the HSR Act, but, in
no event earlier than September 30, 1998;
provided that the party seeking termination pursuant to clause 13.1 of this
Section 13 is not in material breach of any of its representations, warranties
or covenants contained in this Agreement. In the event of termination by Seller
or Purchaser pursuant to this Section 13, written notice thereof describing in
reasonable detail the basis therefor shall promptly be delivered to the other
party.
13.2 Effect of Termination. In the event of termination of this
Agreement by either Purchaser or Seller as provided above, this Agreement shall
immediately become void and of no further force and effect, except that (i) the
covenants and agreements set forth in Sections 6.6 and 6.8 shall survive such
termination indefinitely, and (ii) nothing in this Section 13 shall be deemed to
release any party from any liability for any wilful or knowing breach by such
party of the terms and provisions of this Agreement prior to such termination.
13.3 Amendment. This Agreement and the Schedules hereto may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
14. GENERAL PROVISIONS
14.1 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally or mailed by
registered or certified mail (return receipt requested) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
If to Purchaser: Illinois Tool Works Inc.
Attention: Corporate Secretary
Telecopy: (847) 657-4392
3600 West Lake Avenue
Glenview, Illinois 60025
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If to Seller: Binks Sames Corporation
Attn: President
Telecopy: (847) 671-3062
9201 Belmont Avenue
Franklin Park, Illinois 60131
With a copy to: Vedder, Price, Kaufman & Kammholz
Attn: Guy E. Snyder
Telecopy: (312) 609-5005
222 North LaSalle Street
Chicago, Illinois 60601
15. MISCELLANEOUS
15.1 Entire Agreement. This writing constitutes the entire agreement of
the parties with respect to the subject matter hereof and may not be modified,
amended or terminated except by a written agreement specifically referring to
this Agreement signed by all of the parties hereto.
15.2 Waiver. No waiver of any breach or default hereunder shall be
considered valid unless in writing and signed by the party giving such waiver,
and no such waiver shall be deemed a waiver of any subsequent breach or default
of the same or similar nature.
15.3 Successors. This Agreement shall be binding on Seller and
Purchaser and their respective successors, including in the case of Seller to
any successor to all or substantially all of the assets of Seller as such exist
after giving effect to the transactions contemplated hereby and this Agreement
may not be assigned by operation of law or otherwise without the prior written
consent of both parties hereto, except that the Purchaser may assign its rights
with respect to the Stock to an entity, more than 90% of the equity interest of
which is owned by the Purchaser, provided that no such assignment shall relieve
Purchaser of its obligations hereunder.
15.4 Headings. The paragraph headings contained herein are for the
purposes of convenience only and are not intended to define or limit the
contents of said paragraphs.
15.5 Transfer Taxes. All sales, transfer, documentary taxes and notary
fees, if any, payable in connection with the sale, conveyances, assignments,
transfers and deliveries to be made to Purchaser hereunder shall be paid by the
party upon whom the law, ordinance, rule or regulation governing such tax or
fee places responsibility therefor.
15.6 Counterparts. This Agreement may be executed in one or more
counterparts, all of which taken together shall be deemed an original.
15.7 Knowledge. For purposes of this Agreement, any reference to "the
knowledge of" a party hereto, when modifying any representation and warranty,
shall mean that such party has no
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knowledge that such representation and warranty is not true and correct to the
same extent as provided in the applicable representation and warranty, and that:
(i) Such party has made appropriate inquiries of its
officers and responsible employees listed on
Schedule 15.7; and
(ii) Nothing has come to its attention in the course of
such investigation and review or otherwise which
would cause such party, in the exercise of due
diligence, to believe that such representation or
warranty is not true and correct in all material
respects.
15.8 Governing Law. This Agreement and all amendments thereof shall be
governed by and construed in accordance with the laws of the State of Delaware
applicable to contracts made and to be performed therein.
15.9 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby are not affected in any manner adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the extent possible.
15.10 Construction. No provision of this Agreement shall be interpreted
in favor of or against any party because that party or that party's legal
representative drafted that provision or this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date and year first above written.
ATTEST: BINKS SAMES CORPORATION
/s/Lillian Socki By: /s/Jeffrey W. Lemajeur
- ---------------------------------- -------------------------------
ATTEST: ILLINOIS TOOL WORKS INC.
/s/James H. Wooten By: /s/David B. Speer
- ---------------------------------- -------------------------------
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