SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 9,1994
FEDERAL SIGNAL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 1-6003 36-1063330
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1415 WEST 22ND STREET, OAK BROOK, ILLINOIS 60521
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 708-954-2000
NONE
(Former name or former address, if changed since last report)
Item 2 - Acquisition or Disposition of Assets
On May 9, 1994, Federal Signal Corporation (hereinafter "Registrant"), a
Delaware corporation, acquired the principal operating assets and assumed
the principal operating liabilities of Justrite Manufacturing Company
(hereinafter "Seller"), an Illinois corporation, pursuant to an Asset
Purchase Agreement between Registrant and Seller.
Consideration paid by the Registrant to Seller was $45 million in cash paid
at closing. The amount of consideration for the Registrant's acquisition
of Seller's assets and liabilities was determined pursuant to negotiation
between officers and other representatives of the Registrant and officers
and other representatives of Seller. The consideration offered by the
Registrant was determined after a review of Seller's financial statements
and other material deemed appropriate by the Registrant as well as a review
of the Registrant's internal acquisition criteria.
No material relationship exists between the shareholders of Seller and
shareholders of the Registrant or any of their affiliates, any director or
officer of Seller and the Registrant or any associate of any such director
or officer.
The sources of funds for the consideration paid were loans from various
banks with which Registrant has preexisting lines of credit available
(NBD Bank, N.A., SunBank, N.A. and Wachovia Bank of Georgia, N.A.).
The principal assets of Seller acquired by the Registrant include accounts
receivable, inventories, operating equipment and the rights to the name
"Justrite". The principal liabilities of Seller assumed by the Registrant
include the accounts payable and other operating liabilities. Justrite is
a manufacturer of products for the safe containment of flammable and other
hazardous materials. Justrite manufactures its products in facilities
located in Charleston, Illinois and Mattoon, Illinois, both of which are
leased from affiliates of Seller. Justrite also maintains a corporate
office facility in Des Plaines, Illinois, leased from a non-affiliated
entity. The Registrant intends to continue such use of these facilities
under the existing lease agreements.
Item 7 - Financial Statements and Exhibits
(a) & (b)
The Registrant has acquired the principal operating assets and assumed
the principal operating liabilities of Seller. The Registrant has
reviewed the financial information provided by Seller which the
Registrant considered material to its decision to enter into the Asset
Purchase Agreement with Seller. The financial information for
Justrite Manufacturing Company is filed in this report pursuant to
Item 2 of this Form 8-K and is limited, at this time, to the
following, all filed as part of this report:
(1) The audited balance sheets of Justrite Manufacturing Company as
of June 30, 1993 and 1992.
(2) The audited statements of income and retained earnings of
Justrite Manufacturing Company for the years ended June 30, 1993
and 1992.
(3) The audited statements of cash flows for the years ended June 30,
1993 and 1992.
(4) Notes to the financial statements described in (1), (2) and (3)
above.
(5) The opinion of Coopers & Lybrand dated August 11, 1993 on the
financial statements listed above.
(6) Additional explanatory notes prepared by the Registrant.
Pro forma financial information required pursuant to Article 11 of
Regulation S-X is not yet practicably determinable. The Registrant intends
to file any additional statements it deems necessary including appropriate
interim financial information which have been prepared pursuant to the
instructions of this Item 7 and Regulation S-X, file any necessary
corrections to the information filed with this report, and file the pro
forma financial information required pursuant to Article 11 of
Regulation S-X by July 11, 1994.
(c) In accordance with Item 601 of Regulation S-K, the following
information is filed with the report:
Exhibit
2 Asset Purchase Agreement
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.
FEDERAL SIGNAL CORPORATION
(Registrant)
Date: May 13, 1994 Richard L. Ritz
Vice President and Controller
THE JUSTRITE MANUFACTURING COMPANY
BALANCE SHEETS
June 30, 1993 and 1992
1993 1992
ASSETS
Current assets:
Cash and cash equivalents $1,644,787 $1,253,011
Accounts receivable, less allowance
of $232,000 in 1993 and $137,000
in 1992 for doubtful accounts 2,396,424 2,962,977
Inventories 1,808,508 1,603,644
Prepaid expenses 21,262 12,951
Total current assets 5,870,981 5,832,583
Equipment 8,051,608 6,961,252
Less accumulated depreciation 4,931,897 4,311,838
Net equipment 3,119,711 2,649,414
Tax deposits and other assets 828,996 928,834
---------- ----------
$9,819,688 $9,410,831
========== ==========
LIABILITIES
Current liabilities:
Accounts payable $1,555,800 $1,275,628
Accrued expenses and taxes withheld 1,140,992 1,115,159
Accrued profit-sharing contribution 313,532 282,529
Total current liabilities 3,010,324 2,673,316
Deferred income 191,000 224,000
Stockholders' equity:
Common stock, $10 par value -
100,000 shares authorized,
2,500 shares issued and outstanding 25,000 25,000
Retained earnings 6,593,364 6,488,515
Total stockholders' equity 6,618,364 6,513,515
---------- ----------
$9,819,688 $9,410,831
========== ==========
The accompanying notes are an integral part of the financial statements.
THE JUSTRITE MANUFACTURING COMPANY
STATEMENTS OF INCOME AND RETAINED EARNINGS
for the years ended June 30, 1993 and 1992
1993 1992
Net sales $31,951,238 $32,000,174
Cost of sales 18,893,733 18,418,313
----------- -----------
13,057,505 13,581,861
----------- -----------
Operating expenses:
Selling 4,396,256 5,033,034
General and administrative 2,828,737 3,174,896
Contributions to employees'
profit-sharing plan 313,532 282,529
----------- -----------
7,538,525 8,490,459
----------- -----------
Income from operations 5,518,980 5,091,402
Interest income 59,875 41,574
Loss on sale of assets and other, net (224,006) (65,568)
Net income 5,354,849 5,067,408
Retained earnings, beginning of year 6,488,515 5,871,107
Distributions to stockholders (5,250,000) (4,450,000)
Retained earnings, end of year $ 6,593,364 $ 6,488,515
The accompanying notes are an integral part of the financial statements.
THE JUSTRITE MANUFACTURING COMPANY
STATEMENTS OF CASH FLOWS
for the years ended June 30, 1993 and 1992
1993 1992
Cash and cash equivalents,
beginning of year $ 1,253,011 $ 875,245
Operating activities:
Net income 5,354,849 5,067,408
Adjustments to reconcile net income
to net cash provided by operating
activities:
Amortization of deferred income (33,000) (33,000)
Depreciation and amortization 656,443 525,763
(Increase) decrease in accounts receivable 566,553 (311,440)
(Increase) decrease in inventories (204,864) 1,052,670
(Increase) decrease in prepaid expenses (8,311) 15,917
Increase (decrease) in accounts payable 280,172 (78,465)
Increase in accrued expenses 56,836 8,646
----------- -----------
6,668,678 6,247,499
----------- -----------
Investing activities:
Additions to equipment (1,137,270) (1,319,647)
Disposals of equipment 21,230 41,399
Other 14,445 (9,033)
----------- -----------
(1,101,595) (1,287,281)
----------- -----------
Financing activities:
Distributions to stockholders (5,250,000) (4,450,000)
Tax deposits 74,693 (132,452)
----------- -----------
(5,175,307) (4,582,452)
----------- -----------
Cash and cash equivalents, end of year $ 1,644,787 $ 1,253,011
=========== ===========
The accompanying notes are an integral part of the financial statements.
THE JUSTRITE MANUFACTURING COMPANY
NOTES TO FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
Summarized below are the significant accounting policies of The
Justrite Manufacturing Company (the "Company").
Cash and cash equivalents
Cash and cash equivalents include demand deposits and investments with
maturities of ninety days or less.
Inventories
Inventories are stated at the lower of last-in, first-out (LIFO) cost
or market. The inventory value at June 30, 1993 and 1992 under the
FIFO (first-in, first-out) method, which approximates replacement
cost, would have been approximately $1,472,000 and $1,410,000,
respectively, greater than the value under the LIFO method.
Equipment
Equipment is carried at cost and depreciated on a straight-line basis
over estimated useful lives of 3 to 8 years. The cost and accumulated
depreciation relating to assets retired or otherwise disposed of are
eliminated from the respective accounts at the time of disposition.
The resultant gain or loss is included in net loss on sale of assets
and other.
2. Income Taxes
The Company has elected to be treated as a small business
(Subchapter S) corporation for income tax purposes. Accordingly, the
Company's taxable income and related tax credits are reportable by the
stockholders on their individual income tax returns. Tax regulations
stipulate that the Company, due to its fiscal year, must place funds
on deposit with the Internal Revenue Service. These deposits are
included in tax deposits and other assets and totaled $811,897 and
$886,590 at June 30, 1993 and 1992, respectively.
3. Related Party Transactions
In 1984, certain real property was sold and leased back for 15 years.
Minimum annual rentals are $338,000; the Company also pays
maintenance, insurance and real estate taxes. The gain from the 1984
transaction is being recognized over the term of the lease.
The Company also leases a different manufacturing plant from a related
party at a minimum annual rental of $110,000, plus maintenance,
insurance and taxes. This lease expires in 1996.
The Company has an agreement with Northbrook Management Corporation
(NMC) which is owned by a related party, under which NMC provides
operational and financial management services to the Company. Fees
paid for these services for the years ended June 30, 1993 and 1992
were $624,000 and $629,002, respectively.
4. Employees' Profit-Sharing Plan
The Company has a profit-sharing plan which covers substantially all
salaried and office hourly employees. Contributions to the trust are
discretionary but generally are limited to amounts deductible for
federal income tax purposes.
5. Leases
The Company leases manufacturing facilities and administrative office
space under operating leases. Rent expenses related to these leases
were $606,000 during 1993 and $587,000 in 1992. Future minimum rental
commitments for noncancelable operating leases are summarized as
follows:
1994 655,000
1995 655,000
1996 655,000
1997 591,000
1998 545,000
Thereafter 767,000
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
The Justrite Manufacturing Company
We have audited the accompanying balance sheets of The Justrite
Manufacturing Company as of June 30, 1993 and 1992, and the related
statements of income and retained earnings, and cash flows for the years
then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of The Justrite
Manufacturing Company as of June 30, 1993 and 1992, and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
Coopers & Lybrand
Chicago, Illinois
August 11, 1993
ADDITIONAL EXPLANATORY NOTES
The following notes are not part of the audited financial statements of
Justrite and are submitted by the Registrant to provide a further
understanding regarding the assets acquired and the liabilities assumed by
the Registrant as a result of the Asset Purchase Agreement dated April 18,
1994 between the Registrant and Justrite.
Assets not acquired:
Cash of $1,644,787 and a tax deposit of approximately $812,000 included in
the June 30,1993 balance sheet were the principal assets not acquired by
the Registrant from Justrite.
Deferred income:
Deferred income of $191,000 in the June 30, 1993 balance sheet will not be
realized by the Registrant. This balance represents the remaining portion
of a gain realized on the sale to an affiliated party and leaseback by
Justrite of real estate used in Justrite's operations. Approximately
$33,000 of the gain was amortized to income for the fiscal year ending
June 30, 1993.
Related party administrative fees:
Justrite's agreement with an affiliate for the affiliate's providing of
operational and financial management services will not be assumed by the
Registrant. Justrite paid the affiliate $624,000 for these services during
the fiscal year ended June 30, 1993. This amount represents the
approximate amount of expense recognized in general and administrative
expense for the same period.
ASSET PURCHASE AGREEMENT
DATED APRIL 18, 1994
BETWEEN
JUSTRITE MANUFACTURING COMPANY, AS SELLER
AND
FEDERAL SIGNAL CORPORATION, AS PURCHASER
TABLE OF CONTENTS
ARTICLE I Purchase and Sale of Assets
1.1 Agreement to Purchase and Sell
1.2 Description of Purchased Assets
1.3 Excluded Assets
ARTICLE II Assumption of Liabilities
2.1 Agreement to Assume
2.2 Description of Assumed Liabilities
2.3 Excluded Liabilities
ARTICLE III Purchase Price, Assumption of Liabilities,
Manner of Payment and Closing
3.1 Purchase Price and Assumption of Liabilities
3.2 Manner of Payment
3.3 Time and Place of Closing
ARTICLE IV Representations and Warranties
4.1 General Statement
4.2 Purchaser's Representations and Warranties
4.3 Seller's Representations and Warranties
4.4 Limitation on Warranties
4.5 Definition of Knowledge
ARTICLE V Conduct Prior to the Closing
5.1 General
5.2 Seller's Obligations
5.3 Purchaser's Obligations
5.4 Joint Obligations
ARTICLE VI Conditions to Closing
6.1 Conditions to Seller's Obligations
6.2 Conditions to Purchaser's Obligations
ARTICLE VII Closing
7.1 Form of Documents
7.2 Purchaser's Deliveries
7.3 Seller's Deliveries
ARTICLE VIIIPost-Closing Agreements
8.1 Post-Closing Agreements
8.2 Certain Administration Matters
8.3 Use of Trademarks
8.4 Payments of Accounts Receivable
8.5 Third Party Claims
8.6 Certain Insurance Matters
8.7 Non-Assignment
8.8 Further Assurances
ARTICLE IX Employees and Employee Benefit Plans
9.1 Employment of Seller's Employees
9.2 Pension and Welfare Benefits; Bonus
Arrangements; Workers' Compensation
9.3 Clarification and Amplification of Certain
Matters
ARTICLE X Indemnification
10.1 General
10.2 Certain Definitions
10.3 Indemnification Obligations of Seller
10.4 Limitation on Seller's Indemnification
Obligations
10.5 Purchaser's Indemnification Covenants
10.6 Cooperation
10.7 Third Party Claims
10.8 Environmental Indemnities
10.9 Indemnification Exclusive Remedy
ARTICLE XI Effect of Termination/Proceeding
11.1 General
11.2 Right to Terminate
11.3 Certain Effects of Termination
11.4 Remedies
11.5 Right to Damages
ARTICLE XII Miscellaneous
12.1 Limitation of Seller's Best Efforts
12.2 Publicity
12.3 Notices
12.4 Expenses
12.5 Entire Agreement
12.6 Non-Waiver
12.7 Counterparts
12.8 Severability
12.9 Applicable Law
12.10 Binding Effect; Benefit
12.11 Assignability
12.12 Amendments
12.13 Headings
12.14 Governmental Reporting
12.15 Waiver of Trial by Jury
12.16 Consent to Jurisdiction
12.17 Definitions
Exhibits and Schedules*
Exhibit A Material Consents
Exhibit B Form of Opinion of Kim Wehrenberg
Exhibit C Form of Opinion of Altheimer & Gray
Exhibit D Form of Covenant Not to Compete
Exhibit E Form of Guarantee
Exhibit F Dolly Waxstein Letter
Exhibit G Rackley and Shead Letters
* The exhibits and schedules listed above were omitted from this
8-K filing as they do not, in the opinion of the Registrant and
pursuant to Item 601 of Regulation S-K, contain information which
is material to an investment decision. A copy of any omitted
exhibit or schedule will be furnished to the Commission upon
request.
ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made this April 18, 1994, between JUSTRITE
MANUFACTURING COMPANY, an Illinois corporation ("Seller"), and
FEDERAL SIGNAL CORPORATION, a Delaware corporation ("Purchaser").
R E C I T A L S
A. Seller manufactures and supplies equipment and products
for handling and storing flammable and other hazardous materials.
The Seller's business of manufacturing, selling and distributing
such equipment and products is herein referred to as the
"Business".
B. Seller desires to sell to Purchaser substantially all
of Seller's assets, and Purchaser desires to purchase said
assets, all on the terms and subject to the conditions contained
in this Agreement.
A G R E E M E N T S
Therefore, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties
agree as follows:
ARTICLE I
Purchase and Sale of Assets
1.1 Agreement to Purchase and Sell. On the terms and
subject to the conditions contained in this Agreement, Purchaser
agrees to purchase from Seller, and Seller agrees to sell to
Purchaser, all of the assets, properties and rights as of the
Closing Date (as herein defined), wherever situated or located,
of Seller other than the Excluded Assets (as defined in Section
1.3). All of said assets, properties and rights (other than the
Excluded Assets) are collectively referred to in this Agreement
as the "Purchased Assets".
1.2 Description of Purchased Assets. The Purchased Assets
shall include without limitation, the following assets owned by
Seller except, without limiting the generality of the foregoing,
to the extent that any of the following constitute Excluded
Assets and, where applicable, expressly subject to Section 8.7:
(a) all inventory (including, without limitation, raw
materials, work in process, finished goods, service parts
and supplies), and also including, without limitation,
supplies and parts which have historically been expensed or
have not been valued on Seller's books and records
(collectively, the "Inventory");
(b) all furniture, art work, fixtures, equipment
(including office equipment), machinery, parts, computer
hardware, tools, dies, jigs, patterns, molds, automobiles
and trucks and all other tangible personal property (other
than the Inventory), including, without limitation, any of
the foregoing which has been fully depreciated
(collectively, the "Equipment");
(c) all leasehold interests and leasehold improvements
created by all leases, including without limitation
capitalized leases, of personal property under which Seller
is a lessee or lessor and Seller's entire leasehold interest
as lessee of (i) that certain real property commonly known
as 2454 Dempster Street, Des Plaines, Illinois 60016 (the
"Des Plaines Office"), (ii) that certain real property
commonly known as West Route 121, Mattoon, Illinois 61938
(the "Mattoon Plant") and (iii) that certain real property
commonly known as 855 N. 5th Street, Charleston, Illinois
61920 (the "Charleston Plant");
(d) certain real property located in Charleston,
Illinois (the "Real Estate"), a legal description of which
is attached to the Disclosure Schedule, and all
appurtenances, easements and other rights, buildings and
other improvements located thereon;
(e) all trade accounts receivable, notes receivable,
negotiable instruments and chattel paper (collectively, the
"Accounts Receivable");
(f) all deposits and rights with respect to such
deposits;
(g) all contracts (including, without limitation, the
Labor-Management Agreement between Seller and the United
Steelworkers of America, AFL-CLC, dated November 16, 1991
(the "Collective Bargaining Agreement")), claims and rights
(and benefits arising therefrom) with or against all persons
whomsoever, including, without limitation, all rights
against suppliers under warranties covering any of the
Inventory or Equipment and all Permits (as herein defined)
and Environmental Permits (as herein defined) (provided that
no Permit or Environmental Permit shall be a Purchased Asset
hereunder to the extent it is not legally transferable);
(h) all sales orders and sales contracts, purchase
orders and purchase contracts, quotations and bids;
(i) all intellectual property rights, including,
without limitation, patents and applications therefor,
know-how, unpatented inventions, trade secrets, secret
formulas, business and marketing plans, copyrights and
applications therefor, trademarks and applications therefor,
service marks and applications therefor, trade names and
applications therefor, trade dress, and names and slogans
used by Seller (including, the names "Justrite" and "Haz-
Stor"), and all goodwill associated with such intellectual
property rights;
(j) all dealer agreements, distribution agreements,
sales representative agreements, service agreements, supply
agreements and franchise agreements;
(k) all customer lists and customer records;
(l) all books and records, including, without
limitation, blueprints, drawings and other technical papers,
payroll, employee benefit, accounts receivable and payable,
inventory, maintenance, and asset history records, ledgers,
and books of original entry, and Occupational Safety and
Health Administration and Environmental Protection Agency
files;
(m) all insurance policies that constitute employee
welfare benefit plans under Section 3(1) of ERISA (as herein
defined);
(n) all rights in connection with prepaid expenses;
(o) all letters of credit issued to Seller as
beneficiary;
(p) all computer software agreements (including
licenses and leases) and all technical service agreements
and all computer software, including all documentation and
source codes with respect to such software (provided that
none of the foregoing in this paragraph shall be a Purchased
Asset to the extent it is not legally transferable);
(q) all sales and promotional materials, catalogues
and advertising literature;
(r) all telephone numbers; and
(s) all lock boxes to which Seller's account debtors
remit payment.
1.3 Excluded Assets. The Excluded Assets shall consist of
the following items:
(a) all cash on hand and in banks, cash equivalents
(exclusive of letters of credit issued to Seller as
beneficiary), investments and marketable securities;
(b) Seller's bank accounts (other than the lock boxes
referred to in Section 1-2(s)), checkbooks and cancelled
checks;
(c) that certain Management Agreement between
Northbrook Management Corporation and Seller (the "NMC
Contract");
(d) rights in and to claims (including, without
limitation, for indemnification) and litigation (and in each
case benefits to the extent they arise therefrom) that
relate to Excluded Liabilities (as herein defined) or relate
to, or are made under or pursuant to, other Excluded Assets;
(e) insurance policies of Seller, all coverages and
proceeds thereunder and rights in connection therewith
(except for insurance policies that constitute employee
welfare benefit plans under Section 3(1) of ERISA) and all
records with respect thereto (it being understood and agreed
that, without implication that the contrary would otherwise
be true and without limiting the generality of anything
elsewhere herein contained, liabilities for retrospective
premium adjustments and other like adjustments in connection
with the foregoing policies, contracts, arrangements and/or
rights shall be Assumed Liabilities);
(f) rights arising from prepaid expenses, if any, with
respect to Excluded Liabilities or other Excluded Assets
hereunder;
(g) rights arising from any refunds due with respect
to insurance premium payments to the extent they relate to
insurance policies which constitute Excluded Assets and
refunds due from federal, state and/or local taxing
authorities with respect to taxes on or measured by income
heretofore paid by Seller;
(h) deposits of the Seller with, and refunds from, the
Internal Revenue Service relating to taxes that are Excluded
Liabilities including, without limitation, tax deposits,
prepayments and estimated payments; deposits made pursuant
to, and refunds under, Section 444 and/or 7519 of the
Internal Revenue Code of 1986, as amended (the "Code"); and
all rights to and in such deposits and refunds and all
interest upon such deposits and refunds;
(i) Permits and Environmental Permits and agreements
and software under Section 1.2(p) in each case which are not
legally transferable; provided that such exclusion, without
implication that the contrary would otherwise be true, shall
not be deemed or construed as limiting the generality of
anything elsewhere herein contained, including, without
limitation, the liabilities and obligations assumed pursuant
to Article II below, including, further without limitation,
any cancellation fee or other penalty (each of which shall
be an Assumed Liability) with respect to such agreements and
software under Section 1.2(p);
(j) Seller's rights under this Agreement and Seller's
corporate charter, minute and stock record books, and
corporate seal and tax returns;
(k) Seller's 1992 Mitsubishi Model 3000 GT VR4 Coupe;
(l) all of the furniture located in John W. Ozag's
office in the southeast corner of the Des Plaines Office;
and
(m) rights under (i) that certain contract dated April
1, 1994 among the Company, the Mayline Company, Dynacircuits
Manufacturing Company and Advance Transportation Co., (ii)
that certain contract dated April 1, 1994 among the Company,
the Mayline Company, Dynacircuits Manufacturing Company and
Viking Freight System or (iii) any other contract identified
to Purchaser in writing by Seller prior to the Closing and
to which Seller and one or more of its Affiliates are
jointly parties (or pursuant to which goods and/or services
are provided to Seller and one or more of its Affiliates).
ARTICLE II
Assumption of Liabilities
2.1 Agreement to Assume. At the Closing (as herein
defined), Purchaser shall assume and agree to discharge and
perform when due, the liabilities and obligations of, or asserted
against, Seller described in Section 2.2 (the "Assumed
Liabilities"). All liabilities and obligations of Seller
enumerated in Section 2.3 are collectively referred to herein as
"Excluded Liabilities." Seller shall remain liable for the
Excluded Liabilities.
2.2 Description of Assumed Liabilities. The Assumed
Liabilities shall consist of all liabilities and obligations
(whether direct or indirect, matured or unmatured, known or
unknown, absolute, accrued, contingent or otherwise, whether now
existing or hereafter arising and including, without limitation,
any liabilities or obligations under the Comprehensive
Environmental Response, Compensation and Liability Act or any
analogous state or local law, regulation or ordinance, or any
similar rules of law embodied in the common law) of, or asserted
against, Seller other than the Excluded Liabilities.
2.3 Excluded Liabilities. The following liabilities and
obligations of Seller shall constitute Excluded Liabilities:
(a) any liabilities for legal, accounting, audit and
investment banking fees, brokerage commissions, and any
other like expenses incurred by Seller in connection with
the negotiation and preparation of this Agreement and the
sale of the Purchased Assets to Purchaser;
(b) any liabilities of Seller (federal, state, local
and/or foreign) for (i) taxes on or measured by the income
of Seller (including taxes on or measured by income arising
by virtue of the sale of the Purchased Assets to Purchaser)
and (ii) franchise taxes (it being understood and agreed
that, without limiting the generality of any provision
elsewhere herein contained, all other liabilities with
respect to taxes (including, without limitation, (i) income
and FICA taxes of employees of Seller which Seller is
legally obligated to withhold, (ii) employer FICA and
unemployment taxes, (iii) windfall profits, customs, duties
and other like taxes and fees, (iv) retailers' occupation,
sale and use taxes, (v) taxes on real property, and (vi)
sales, use and transfer taxes arising in connection with the
sale and transfer of the Purchased Assets to Purchaser
pursuant to this Agreement) shall be Assumed Liabilities);
(c) any liabilities of Seller for periods or portions
thereof after the Closing under the NMC Contract;
(d) any liabilities of Seller under (i) that certain
Justrite Manufacturing Company Deferred Compensation/
Phantom Stock Plan, (ii) those certain memoranda dated
November 22, 1993, February 16, 1994 and February 16, 1994
from Seller to Allyn C. Buric, James O. Rackley and Garry J.
McGovern, respectively, or (iii) the bonus portion of that
certain memorandum dated November 22, 1993 from Seller to
Kenneth L. Shead, and in each case, any liabilities for
taxes which Seller is legally obligated to withhold or pay
with respect to payment by Seller under such Plan or
memoranda;
(e) subject to Section 8.6(c) hereof, any liability,
loss, cost or expense of Seller for injury to, or death of,
any third person or damage to, or destruction or loss of use
of, property of any third person, in each case, occurring
prior to the Closing (including, without limitation, arising
from any product, designed, manufactured, marketed,
supplied, sold or installed by Seller), but only to the
extent Seller is actually indemnified and held harmless
therefrom (and, to the extent applicable, receives
reimbursement therefor) by Seller's insurance coverage with
respect thereto (provided that this paragraph shall not be
construed as applying to claims for workers' compensation
benefits regardless of any death, disability, injury or
condition and regardless of when incurred or sustained); and
(f) subject to the provisions of Section 9.2(c)
hereof, any liability of Seller with respect to claims of
employees for workers' compensation benefits with respect to
injury, death or disease occurring prior to the Closing Date
and covered by, and during the policy period of, Seller's
Workers' Compensation Policies (as herein defined) with
respect to any such employees (it being understood that (i)
that the inclusion of this paragraph (f) shall in no way
limit Purchaser's indemnification obligation pursuant to
Section 9.2(c) hereof; and (ii) any liability of Seller with
respect to claims of employees for workers' compensation
benefits which are not Excluded Liabilities in accordance
with the foregoing shall be Assumed Liabilities).
ARTICLE III
Purchase Price, Assumption of Liabilities,
Manner of Payment and Closing
3.1 Purchase Price and Assumption of Liabilities. The
purchase price (the "Purchase Price") of the Purchased Assets
shall be equal to $45,000,000.00. In addition to the payment of
the Purchase Price, Purchaser shall assume the Assumed
Liabilities as of the Closing Date.
3.2 Manner of Payment. At the Closing, Purchaser shall
assume the Assumed Liabilities, and pay the Purchase Price to
Seller, by wire transfer of immediately available funds to
Seller. Said wire-transfer shall be made to such bank accounts
as Seller shall specify by written notice to Purchaser delivered
before the Closing Date.
3.3 Time and Place of Closing. The transaction
contemplated by this Agreement shall be consummated (the
"Closing") at 10:00 a.m. at the offices of Altheimer & Gray,
10 South Wacker Drive, Suite 4000, Chicago, Illinois, 60606 on
May 16, 1994 or on such other date, or at such other time or
place, as shall be mutually agreed upon by Seller and Purchaser;
provided, however, that the date of the Closing shall be
automatically extended from time to time for so long as any of
the conditions set forth in Article VI shall not be satisfied or
waived, subject, however, to the provisions of Section 11.2. The
date on which the Closing occurs in accordance with the preceding
sentence is referred to in this Agreement as the "Closing Date".
ARTICLE IV
Representations and Warranties
4.1 General Statement. The parties make the
representations and warranties to each other which are set forth
in this Article IV. All such representations and warranties
shall survive the Closing (and none shall merge into any
instrument of conveyance). All representations and warranties of
Seller are made subject to the exceptions which are noted in the
schedule delivered by Seller to Purchaser concurrently herewith
and identified by the parties as the "Disclosure Schedule". Any
disclosure set forth on any particular schedule shall be deemed
disclosed in reference to all schedules to which such disclosure
may be applicable.
4.2 Purchaser's Representations and Warranties. Purchaser
represents and warrants to Seller that:
(a) Purchaser is a corporation duly organized,
existing and in good standing, under the laws of its state
of incorporation.
(b) Purchaser has full corporate power and authority
(and has been duly authorized by appropriate corporate
action) to enter into and perform (x) this Agreement and (y)
all documents and instruments to be executed by Purchaser
pursuant to this Agreement (collectively, "Purchaser's
Ancillary Documents"). This Agreement has been, and
Purchaser's Ancillary Documents will be, duly executed and
delivered by duly authorized officers of Purchaser. The
Agreement constitutes a valid and legally binding obligation
of Purchaser, enforceable against Purchaser in accordance
with its terms (except to the extent that enforcement may be
affected by laws relating to bankruptcy, reorganization,
insolvency and creditors' rights and by the availability of
injunctive relief, specific performance and other equitable
remedies).
(c) Except for filings under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the
"Hart-Scott-Rodino Act"), no consent, authorization, order
or approval of, or filing or registration with, any
governmental authority is required for the execution and
delivery by Purchaser of this Agreement and Purchaser's
Ancillary Documents, and the consummation by Purchaser of
the transactions contemplated by this Agreement and
Purchaser's Ancillary Documents.
(d) Neither the execution and delivery of this
Agreement and Purchaser's Ancillary Documents by Purchaser,
nor the consummation by Purchaser of the transactions herein
contemplated, will conflict with or result in a breach of
any of the terms, conditions or provisions of Purchaser's
Certificate of Incorporation or By-laws, or of any statute
or administrative regulation, or of any order, writ,
injunction, judgment or decree of any court or governmental
authority or of any arbitration award.
(e) Purchaser is not a party to any unexpired,
undischarged or unsatisfied written or oral contract,
agreement, indenture, mortgage, debenture, note or other
instrument under the terms of which performance by Purchaser
according to the terms of this Agreement will be a default,
or an event of acceleration or grounds for termination, or
whereby timely performance by Purchaser according to the
terms of this Agreement may be prohibited, prevented or
delayed.
(f) Neither Purchaser, nor any of its Affiliates has
dealt with any person or entity other than Lazard Freres &
Co. who is or may be entitled to a broker's commission,
finder's fee, investment banker's fee or similar payment
from Seller for arranging the transactions contemplated
hereby or introducing the parties to each other. As used
herein, an "Affiliate" is any person or entity which
controls another person or entity, which another person or
entity controls, or which is under common control with
another person or entity. "Control" means the power, direct
or indirect, to direct or cause the direction of the
management and policies of a person or entity through voting
securities, contract or otherwise.
(g) Purchaser has no present plans or intention to
carry out, after the Closing, any plant closing or mass
layoff which would violate the federal Worker Adjustment and
Retraining Notification Act at any facility of the Business
(assuming for purposes of this paragraph that no notice
would be given in connection with any such closing or
layoff).
(h) After giving effect to the consummation of the
transactions contemplated hereby and the incurrence of any
indebtedness in connection therewith, Purchaser's assets
will exceed its liabilities and Purchaser will have the
financial resources and ability to pay and discharge its
obligations as they become due.
(i) The representations and warranties of Purchaser in
this Agreement do not omit to state a material fact
necessary in order to make the representations, warranties
or statements contained herein not misleading.
4.3 Seller's Representations and Warranties. Seller
represents and warrants to Purchaser that, except as set forth in
the Disclosure Schedule:
CORPORATE
(a) Seller is a corporation duly organized, existing
and in good standing, under the laws of its state of
incorporation. Seller has all necessary corporate power and
authority to conduct its business as its business is now
being conducted.
(b) Seller has qualified as a foreign corporation, and
is in good standing, under the laws of all jurisdictions
where the nature of its business or the nature or location
of its assets requires such qualification and where the
failure to so qualify would have a Material Adverse Effect
(as defined below). For purposes of this Agreement,
"Material Adverse Effect" means a material adverse effect on
the Business as in existence on the date hereof.
(c) Seller has full corporate power and authority (and
has been duly authorized by appropriate corporate action) to
enter into and perform (x) this Agreement and (y) all
documents and instruments to be executed by Seller pursuant
to this Agreement (collectively, "Seller's Ancillary
Documents"). This Agreement has been, and Seller's
Ancillary Documents will be, duly executed and delivered by
duly authorized officers of Seller. This Agreement
constitutes a valid and legally binding obligation of
Seller, enforceable against Seller in accordance with its
terms (except to the extent that enforcement may be affected
by laws relating to bankruptcy, reorganization, insolvency
and creditors' rights and by the availability of injunctive
relief, specific performance and other equitable remedies).
(d) Except for filings under the Hart-Scott-Rodino
Act, no consent, authorization, order or approval of, or
filing or registration with, any governmental authority is
required for the execution and delivery of this Agreement
and Seller's Ancillary Documents and the consummation by
Seller of the transactions contemplated by this Agreement
and Seller's Ancillary Documents.
(e) Neither the execution and delivery of this
Agreement and Seller's Ancillary Documents by Seller, nor
the consummation by Seller of the transactions herein
contemplated, will conflict with or result in a breach of
any of the terms, conditions or provisions of Seller's
Certificate of Incorporation or By-laws, or of any statute
or administrative regulation, or of any order, writ,
injunction, judgment or decree of any court or any
governmental authority or of any arbitration award.
FINANCIAL
(f) Copies of the balance sheets, statements of income
and retained earnings, statements of cash flows, and notes
to financial statements of Seller, all as of and for the
years ended June 30, 1993 and June 30, 1992, respectively,
as audited by Coopers & Lybrand are contained in the
Disclosure Schedule. All such financial statements are
referred to herein collectively as the "Financial
Statements". The Financial Statements present fairly, in
all material respects, the financial position of Seller as
of the respective dates thereof and the results of
operations and cash flows of Seller for the respective
periods covered by said statements in accordance with
generally accepted accounting principles ("GAAP"),
consistently applied, except as disclosed therein.
(g) Copies of the unaudited balance sheet, statement
of income and statement of cash flows of Seller as of and
for the nine-month period ended March 25, 1994 are contained
in the Disclosure Schedule. Such financial statements are
herein referred to as the "Interim Financial Statements".
The Interim Financial Statements present fairly, in all
material respects, the financial position of Seller as of
the date thereof and the results of operations of Seller for
the period covered by said statements in accordance with
Seller's past practice in the preparation of interim
financial statements, except as disclosed therein.
(h) Since March 25, 1994, Seller has not incurred any
material liabilities or obligations (whether absolute,
accrued, contingent or otherwise) except (x) liabilities
incurred in the ordinary course of business and (y)
liabilities incurred in connection with or as a result of
this Agreement and the transactions contemplated hereby.
(i) Seller has good title to, and the corporate power
to sell, the Purchased Assets, free and clear of any liens,
claims, encumbrances and security interests, except for the
following liens (the "Permitted Liens"): (i) statutory
liens for taxes not yet due, (ii) statutory liens of
landlords, liens of carriers, warehousemen, mechanics and
materialmen incurred in the ordinary course of business for
sums not yet due; (iii) liens incurred or deposits made in
the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of
social security or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, bids,
leases, government contracts, performance and return of
money bonds and similar obligations; and (iv) minor
irregularities of title which do not in the aggregate
materially detract from the value or use of the Purchased
Assets. The foregoing representation and warranty shall not
apply to the Real Estate or the Leased Premises.
(j) Seller has properly paid and timely distributed or
filed, as the case may be, all tax returns, declarations,
reports, statements, and other documents which have
heretofore been required to be distributed or filed, as the
case may be, by Seller pertaining to taxes which constitute
Assumed Liabilities ("Assumed Taxes"), in each case where
the failure to so prepare and distribute or file, as the
case may be, any such return, declaration, report, statement
or document would have a Material Adverse Effect whether
prior to or subsequent to the Closing, and Seller has paid
all taxes reflected thereon, in each case where the failure
to pay such amounts would have a Material Adverse Effect,
whether prior or subsequent to the Closing.
CONDUCT OF BUSINESS
(k) Since June 30, 1993, Seller has not:
(i) sold or transferred any material portion
of its assets or property, except for (A) sales of
Inventory in the usual and ordinary course of business,
and (B) payments, transfers and distributions of cash;
(ii) suffered any material loss, or any
material interruption in use, of any material assets or
property (whether or not covered by insurance), on
account of fire, flood, riot, strike or other hazard or
Act of God;
(iii) made or suffered any change in the
conduct or nature of the Business which would have a
Material Adverse Effect (the foregoing representation
and warranty shall not be deemed to be breached by
virtue of the entry of Seller into this Agreement or
its consummation of the transactions contemplated
hereby or by any change affecting the Business'
industry generally);
(iv) paid payables, collected receivables or
waived any material rights, in each case other than in
the ordinary course of business;
(v) made (or committed to make) any capital
expenditure in an amount which exceeds $50,000 which
capital expenditure was not included in Seller's
existing capital plan (a copy of which is included on
Schedule 4.3(k));
(vi) without limitation by the enumeration of
any of the foregoing, entered into any material
transactions other than in the usual and ordinary
course of business; the foregoing representation and
warranty shall not be deemed to be breached by (A)
virtue of the entry by Seller into this Agreement, (B)
Seller's consummation of the transactions contemplated
hereby, or (C) the payment of any liabilities or the
transfer or distribution of any cash.
CONTRACTS
(l) Seller is not a party to, or bound by, or the
issuer, beneficiary or recipient of, any material
undischarged written:
(i) contract for the employment for any
period of time whatsoever, or in regard to the
employment, or restricting the employment, of any
employee;
(ii) consulting agreement;
(iii) collective bargaining agreement;
(iv) contract or agreement restricting in any
manner the right to compete with any other person or
entity, restricting the right to sell to or purchase
from any other person or to employ any person, or
restricting the right of any other person or entity to
compete with the Seller or employ any of Seller's
employees;
(v) contract with any Affiliate with respect
to the purchase or sale of goods or the rendering or
receipt of services;
(vi) contract of agency, representation,
dealership, distribution, or franchise which cannot be
cancelled by Seller without payment or penalty upon
notice of ninety (90) days or less;
(vii) service contract affecting any of the
Purchased Assets where the annual service charge is in
excess of $50,000 and has an unexpired term as of the
Closing Date in excess of one year;
(viii) guaranty, performance, bid or completion
bond, or surety agreement;
(ix) lease or sublease, either as lessee or
sublessee, lessor or sublessor, of real or personal
property or intangibles where the lease or sublease
provides for an annual rent in excess of $50,000 and
has an unexpired term as of the Closing Date in excess
of one year;
(x) contract or arrangements with, or
relating to the provision of goods or services to, any
governmental agency or instrumentality where the amount
involved exceeds $50,000, including, without
limitation, any such contract which imposes or was
awarded under size-limitations on the entities entitled
to enter into such contracts or provide such goods or
services;
(xi) any other contract included in the
Purchased Assets which provides for the receipt or
expenditure by Purchaser after the Closing of more than
$50,000, except sales and purchase orders accepted or
issued by Seller in the ordinary course of business.
All contracts, leases, subleases and other instruments
referred to in this paragraph 4.3(l) are binding upon Seller
and, to Seller's knowledge, the other party thereto. No
material default by Seller has occurred thereunder and, to
Seller's knowledge, no material default by the other
contracting parties has occurred thereunder, which default
would have a Material Adverse Effect.
(m) With the exception of provisions in contracts,
leases, licenses and other instruments which prohibit the
assignment of Seller's rights thereunder without the consent
of the other party thereto, Seller is not a party to, or
bound by, any unexpired, undischarged or unsatisfied written
contract, agreement, indenture, mortgage, debenture, note or
other instrument under the terms of which performance by
Seller according to the terms of this Agreement will be a
default or an event of acceleration or grounds for
termination (which default acceleration or termination would
have a Material Adverse Effect), or whereby timely
performance by Seller according to the terms of this
Agreement may be prohibited, prevented or delayed.
(n) Seller possesses all licenses, permits,
registrations and governmental approvals ("Permits") which
are required in order for the Seller to conduct the Business
as presently conducted and which if not possessed would have
a Material Adverse Effect. It is understood and agreed that
the foregoing definition and the foregoing representation
and warranty do not apply to Environmental Permits or
environmental matters which are the subject of Section
4.3(s) hereof.
EMPLOYEES
(o) With respect to employees of Seller:
(i) Seller maintains, administers or
contributes to only those employee pension benefit
plans intended to qualify under Section 401(a) of the
Code which are described in the Disclosure Schedule;
(ii) Seller maintains, administers or
contributes to only those employee welfare benefit
plans (as defined in Section 3(1) of the Employee
Retirement Security Act of 1974, as amended ("ERISA"))
which are described in the Disclosure Schedule (the
"Welfare Plans");
(iii) neither Seller nor any affiliate of
Seller as determined under Section 414(b), (c) or (m)
of the Code ("ERISA Affiliate") maintains, administers
or contributes to any employee pension benefit plan
subject to Title IV of ERISA nor has Seller or any
ERISA Affiliate incurred any liability to the Pension
Benefit Guaranty Corporation ("PBGC") as a result of
the voluntary or involuntary termination of any pension
plan subject to Title IV of ERISA; and neither Seller
nor any ERISA Affiliate has made a complete or partial
withdrawal from a multiemployer plan, as such term is
defined in Section 3(37) of ERISA, resulting in
withdrawal liability, as such term is defined in
Section 4201 of ERISA (without regard to subsequent
reduction or waiver of such liability under either
Section 4207 or 4208 of ERISA);
(iv) there are no pending or, to Seller's
knowledge, threatened material unfair labor practice
charges or employee grievance charges against Seller;
and
(v) the Disclosure Schedule contains a list
of all employees of Seller as of March 31, 1994 whose
annual base salaries exceed $50,000 and said list
correctly reflects their base salaries, bonuses, dates
of employment and positions.
LITIGATION AND CLAIMS
(p) There is no litigation or proceeding, in law or in
equity, and there are no proceedings or governmental
investigations before any commission or other administrative
authority, pending, or, to Seller's knowledge, overtly
threatened, against Seller or its Affiliates affecting the
Business or the consummation of the transactions
contemplated hereby, or the use of the Purchased Assets
(whether used by Purchaser after the Closing or by Seller
prior thereto), which has a reasonable probability of being
decided adversely to Seller and which, if decided adversely
to Seller, would have a Material Adverse Effect.
(q) Seller is not a party to, or bound by, any decree,
order or arbitration award (or agreement entered into in any
administrative, judicial or arbitration proceeding with any
governmental authority) the enforcement of which or
compliance with which would have a Material Adverse Effect.
(r) Except for laws, rules and regulations relating to
the environment (which are exclusively provided for in
Section 4.3(s) hereof), Seller is not in violation of, or
delinquent in respect to, any material decree, order or
arbitration award or law, statute, or regulation of or
agreement with, or Permit from, any Federal, state or local
governmental authority (or to which the properties, assets,
personnel, business activities of Seller are subject),
including, without limitation, laws, statutes and
regulations relating to equal employment opportunities, fair
employment practices, and sex, race, religious and age
discrimination, which violation or delinquency would have a
Material Adverse Effect.
ENVIRONMENTAL MATTERS
(s) To Seller's knowledge: (i) Seller is in
compliance with applicable Environmental Laws (as herein
defined) and Environmental Permits (as herein defined)
except to the extent that the failure to so comply would not
have a Material Adverse Effect; and (ii) Seller possesses
all Environmental Permits which are required for the
operation of the Business except to the extent that the
failure to possess such Environmental Permits would not have
a Material Adverse Effect. For the purposes of this
Agreement: "Environmental Laws" means all federal, state
and local statutes, regulations, ordinances, rules and
regulations and which are in existence on the date hereof,
and all final court orders and decrees and arbitration
awards which are in existence on the date hereof, which
pertain to environmental matters or contamination of any
type whatsoever and which are applicable to the Business,
the Mattoon Plant, the Charleston Plant or the Real Estate;
"Environmental Permits" means licenses, permits,
registrations, governmental approvals, agreements and
consents which are required under or are issued pursuant to
Environmental Laws.
REAL ESTATE AND LEASED PREMISES
(t) Seller has full corporate power and authority to
sell the Real Estate. The Real Estate is legally described
in the Disclosure Schedule. Seller holds fee simple title
to the Real Estate, subject only to real estate taxes not
delinquent and to covenants, conditions, restrictions and
easements of record. The Real Estate is not subject to any
leases or tenancies. The Leased Premises are leased to
Seller pursuant to written leases, true and correct copies
of which are attached to the Disclosure Schedule. Seller is
not in default under any material term of any agreement
relating to the Leased Premises nor to Seller's knowledge is
any other party thereto in material default thereunder.
(u) To Seller's knowledge, there are no condemnation
proceedings pending or threatened with respect to any
material portion of the Real Estate or the Leased Premises.
INTELLECTUAL PROPERTY
(v) The Disclosure Schedule lists each material
(i) trademark, service mark, slogan, trade name, trade dress
and the like, including under the common law, (collectively,
and together with the associated goodwill of each,
"Trademarks"), together with information regarding each
registration and pending application to register any such
rights; (ii) proprietary formulation, manufacturing method,
know-how and trade secret; (iii) patent on and pending
application to patent any technology or design;
(iv) registration of and application to register any
copyright; and (v) license of rights in computer software,
Trademarks, patents, copyrights, unpatented formulations,
manufacturing methods and other know-how, whether to or by
Seller. The scheduled rights are referred to herein
collectively as the "Intellectual Property."
(w) Seller has no knowledge: (i) that any other firm,
corporation, association or person claims the right to use
in connection with similar or closely related goods and in
the same geographic area, any name or mark which is
identical or confusingly similar to any of the Trademarks;
(ii) of any claim that any third party asserts ownership
rights in any of the Intellectual Property; (iii) of any
claim that Seller's use of any Intellectual Property
infringes any right of any third party; and (iv) that any
third party is infringing any of Seller's rights in any of
the Intellectual Property.
GENERAL
(x) The Purchased Assets are adequate to conduct the
Business as it is presently being conducted, and the
Purchased Assets conveyed to Purchaser on the Closing Date
will be adequate to enable Purchaser to continue to conduct
the Business as it is presently being conducted.
(y) The representations and warranties of Seller in
this Agreement do not omit to state a material fact
necessary in order to make such representations and
warranties not misleading.
(z) Neither Seller, nor any of its Affiliates, has
dealt with any person or entity who is or may be entitled to
a broker's commission, finder's fee, investment banker's fee
or similar payment from Purchaser for arranging the
transactions contemplated hereby or introducing the parties
to each other.
4.4 Limitation on Warranties. Except as expressly set
forth in Section 4.3, Seller makes no express or implied warranty
of any kind whatsoever, including, without limitation, with
respect to (i) any information furnished by Seller or its
financial advisor, Lazard Freres & Co. or any of Seller's other
representatives or agents, (ii) the physical condition or value
of any of the Purchased Assets or (iii) the future profitability
or future earnings performance of the Business. ALL IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE ARE EXPRESSLY EXCLUDED. None of the representations and
warranties in Section 4.3 (other than Section 4.3(s)) shall apply
to any Environmental Permit, Environmental Law or any other
environmental matter.
4.5 Definition of Knowledge. For the purposes of this
Agreement, the knowledge of Seller shall be deemed to be limited
to the actual knowledge as of the Closing Date of Charles L.
Barancik, John W. Ozag, Allyn C. Buric, Garry J. McGovern, James
O. Rackley and Kenneth L. Shead, without giving effect to imputed
knowledge.
ARTICLE V
Conduct Prior to the Closing
5.1 General. Seller and Purchaser shall have the rights
and obligations with respect to the period between the date
hereof and the Closing Date which are set forth in the remainder
of this Article V.
5.2 Seller's Obligations. The following are Seller's
obligations:
(a) Seller shall give to Purchaser's officers,
employees, attorneys, consultants, accountants and lenders
reasonable access during normal business hours to all of the
properties, books, contracts, documents and records of
Seller and shall furnish to Purchaser such information as
Purchaser may at any time and from time to time reasonably
request. All contacts of Purchaser with respect to the
Business (including, without limitation, with employees,
customers and suppliers), shall be coordinated through
Seller's Treasurer, John W. Ozag, or such other officer of
Seller designated by Seller in writing to Purchaser.
(b) Seller shall use reasonable efforts and make every
good faith attempt (and Purchaser shall cooperate with
Seller) to obtain the consents to the assignment of, or at
Purchaser's cost and expense, alternate arrangements
reasonably satisfactory to Purchaser with respect to, those
contracts, leases, or other instruments, which are
enumerated in Exhibit A attached hereto (the "Material
Consents").
(c) Seller shall carry on the Business in the usual
and ordinary course consistent with past practices,
including, without limitation, with respect to the payment
of payables and the collection of receivables; provided,
however, that Seller, whether or not in the usual and
ordinary course of business and whether or not consistent
with past practice, shall have the right to pay or prepay
any obligation (including, without limitation, any Excluded
Liability) and to pay, transfer or distribute cash;
(d) Without the prior written consent of Purchaser,
and without limiting the generality of any other provision
of this Agreement, Seller shall not:
(i) incur or commit to incur any capital
expenditure not set forth in the Disclosure Schedule in
excess of $50,000;
(ii) materially increase the compensation payable
to any employee, except in the ordinary course of
business consistent with past practice; or
(iii) sell, transfer or otherwise dispose of any
material asset or property, except for sales of
Inventory in the usual and ordinary course of business
and except for payments, transfers or distributions of
cash; and
(e) Seller shall reasonably assist and cooperate with
Purchaser in the transfer of all Permits and Environmental
Permits necessary for the operation of the Business by
Purchaser.
(f) Seller shall, if required by law, deliver a
disclosure document as required by the Illinois Responsible
Property Transfer Act (Ill.Rev.Stat. Ch. 30, 901 et seq., as
amended (the "IRPTA") to Purchaser (and to any other party
entitled by law to receipt thereof) within thirty (30) days
following execution of this Agreement and Purchaser shall,
and shall cause its lenders, if any, to, waive any
requirement for an earlier delivery thereof.
5.3 Purchaser's Obligations. The following are Purchaser's
obligations:
(a) Purchaser agrees that all information supplied to
it and its agents by Sellers or its representatives in
connection with the transactions contemplated hereby has
been, and will hereafter be, supplied pursuant to that
certain Confidentiality Agreement dated as of January 4,
1994 (accepted January 5, 1994) heretofore entered into
between Purchaser and Seller (the "Confidentiality
Agreement") and that, notwithstanding any provision of the
Confidentiality Agreement to the contrary regarding the
termination of such Confidentiality Agreement upon the
execution of a definitive purchase agreement, Purchaser
shall, and shall cause its Affiliates and Representatives
(as defined in the Confidentiality Agreement) to, comply
with all of the terms and conditions of the Confidentiality
Agreement with respect to all such information from and
after the date hereof until the consummation of the
transactions contemplated hereby or, if this Agreement is
terminated in accordance with its terms, five years from the
date of such termination.
(b) In the event that any Permit or Environmental
Permit which is to be assigned to Purchaser is not
assignable, and Purchaser needs such Permit or Environmental
Permit in order to operate the Business, Purchaser shall use
its best efforts and make every good faith attempt (and
Seller shall reasonably cooperate with Purchaser) to obtain
such Permit or Environmental Permit.
(c) Purchaser shall (i) use its best efforts and make
every good faith attempt to obtain for the benefit of Seller
unconditional releases of Seller's obligations and
liabilities, and substitute and replace itself for Seller,
under each surety, performance, fidelity or similar bond and
other similar obligation with respect to the Business
(collectively, the "Bonds") or (ii) if unable to obtain the
foregoing with respect to any Bond after the use of its best
efforts and every good faith attempt, obtain a back-up bond
or insurance over each such unreleased and/or unreplaced
Bond, by issuers and in amounts reasonably satisfactory to
Seller, in order to assure Seller that it will have no
obligations or liabilities under the Bonds. Nothing herein
contained shall relieve Purchaser of its liability hereunder
to duly and fully perform all obligations for which the
Bonds were given as security.
5.4 Joint Obligations. The following shall apply with
equal force to Seller and Purchaser:
(a) Without implication that such laws apply to the
transactions contemplated hereby, Seller and Purchaser shall
not comply with the provisions of the Uniform Commercial
Code of any states relating to bulk sales.
(b) Each party shall promptly give the other party
written notice of the existence or occurrence of any
condition which would make any material representation or
warranty herein contained of either party untrue or which
might reasonably be expected to prevent the consummation of
the transaction contemplated hereby.
(c) No party shall intentionally perform any act
which, if performed, or omit to perform any act which, if
omitted to be performed, would prevent or excuse the
performance of this Agreement by any party hereto or which
would result in any representation or warranty herein
contained of said party being untrue in any material respect
as if originally made on and as of the Closing Date.
(d) The parties shall forthwith make all filings and
perform all acts required by them respectively under the
Hart-Scott-Rodino Act; and
(e) Each party shall use its respective best efforts
to take, or cause to be taken, all action and to do, or
cause to done, all things necessary, proper or advisable to
consummate the transactions contemplated hereby as soon as
practicable.
ARTICLE VI
Conditions to Closing
6.1 Conditions to Seller's Obligations. The obligation of
Seller to consummate the transactions contemplated hereby is
subject to fulfillment of all of the following conditions on or
prior to the Closing Date, upon the non-fulfillment of any of
which this Agreement may, at Seller's option, be terminated
pursuant to and with the effect set forth in Article XI:
(a) Each and every material representation and
warranty made by Purchaser shall be true and correct in all
material respects as if originally made on and as of the
Closing Date.
(b) All obligations of Purchaser to be performed
hereunder through, and including on, the Closing Date
(including, without limitation, all obligations which
Purchaser would be required to perform at the Closing if the
transactions contemplated hereby were consummated) shall
have been fully performed.
(c) No suit, proceeding or investigation shall have
been commenced by any governmental authority on any grounds
to restrain, enjoin or hinder, or to seek material damages
on account of, the consummation of the transactions
contemplated hereby, which suit, proceeding or investigation
would result in damages in excess of $1,000,000 or the
restraint or prohibition of the transactions contemplated
hereby, in each case in the reasonable opinion of Seller's
counsel.
(d) Purchaser shall have delivered to Seller the
written opinion of Kim A. Wehrenberg, Esq. addressed to
Seller, dated as of the Closing Date, in substantially the
form of Exhibit B attached hereto.
(e) The waiting period applicable to the transactions
contemplated hereby under the Hart-Scott-Rodino Act and the
rules and regulations thereunder shall have expired or been
earlier terminated.
(f) Purchaser and Purchaser's lenders, if any, shall,
if the IRPTA is applicable, have executed waivers of the
requirement under the IRPTA, in the form required under the
IRPTA, that the disclosure documents requirement thereunder
be delivered not less than thirty (30) days prior to the
Closing Date.
6.2 Conditions to Purchaser's Obligations. The obligation
of Purchaser to consummate the transactions contemplated hereby
is subject to the fulfillment of all of the following conditions
on or prior to the Closing Date, upon the non-fulfillment of any
of which this Agreement may, at Purchaser's option, be terminated
pursuant to and with the effect set forth in Article XI:
(a) Each and every material representation and
warranty made by Seller shall be true and correct in all
material respects as if originally made on and as of the
Closing Date, except for inaccuracies in any such
representation and warranty which resulted from the ordinary
course of business and do not have a Material Adverse
Effect.
(b) All material obligations of Seller to be performed
hereunder through, and including on, the Closing Date
(including, without limitation, all obligations which Seller
would be required to perform at the Closing if the
transactions contemplated hereby were consummated) shall
have been fully performed.
(c) No suit, proceeding or investigation shall have
been commenced by any governmental authority on any grounds
to restrain, enjoin or hinder, or to seek material damages
on account of, the consummation of the transactions
contemplated hereby, which suit, proceeding or investigation
would result in damages in excess of $1,000,000 or the
restraint or prohibition of the transactions contemplated
hereby, in each case in the reasonable opinion of
Purchaser's counsel.
(d) Seller shall have delivered to Purchaser the
written opinion of Altheimer & Gray, counsel to Seller,
addressed to Purchaser, dated as of the Closing Date, in
substantially the form of Exhibit C attached hereto.
(e) The waiting period applicable to the transactions
contemplated hereby under the Hart-Scott-Rodino Act and the
rules and regulations thereunder shall have expired or been
earlier terminated.
(f) Seller shall have delivered to Purchaser the
Covenant Not to Compete and the Guarantee, in each case,
dated as of the Closing Date, in substantially the form of
Exhibit D and Exhibit E, respectively, attached hereto.
ARTICLE VII
Closing
7.1 Form of Documents. At the Closing, the parties shall
deliver the documents, and shall perform the acts, which are set
forth in this Article VII. All documents which Seller shall
deliver shall be in form and substance reasonably satisfactory to
Purchaser and Purchaser's counsel. All documents which Purchaser
shall deliver shall be in form and substance reasonably
satisfactory to Seller and Seller's counsel.
7.2 Purchaser's Deliveries. Subject to the fulfillment or
written waiver of the conditions set forth in Section 6.2,
Purchaser shall execute and/or deliver to Seller all of the
following:
(a) the Purchase Price;
(b) a certified copy of Purchaser's Certificate of
Incorporation and By-laws;
(c) a certificate of good standing of Purchaser,
issued not earlier than ten (10) days prior to the Closing
Date by the Secretary of State of Delaware;
(d) an incumbency and specimen signature certificate
with respect to the officers of Purchaser executing this
Agreement and Purchaser's Ancillary Documents on behalf of
Purchaser;
(e) a certified copy of resolutions of Purchaser's
board of directors authorizing the execution, delivery and
performance of this Agreement and Purchaser's Ancillary
Documents;
(f) a closing certificate executed by the President of
Purchaser (or any other officer of Purchaser specifically
authorized to do so), on behalf of Purchaser, pursuant to
which Purchaser represents and warrants to Seller that all
of Purchaser's material representations and warranties to
Seller are true and correct in all material respects as of
the Closing Date as if then originally made (or, if any such
representation or warranty is untrue in any respect,
specifying the respect in which the same is untrue), that
all covenants required by the terms hereof to be performed
by Purchaser on or before the Closing Date, to the extent
not waived by Seller in writing, have been so performed (or,
if any such covenant has not been performed, indicating that
such covenant has not been performed), and that all
documents to be executed and delivered by Purchaser at the
Closing have been executed by duly authorized officers of
Purchaser;
(g) an assumption agreement, duly executed by
Purchaser, under which Purchaser assumes the Assumed
Liabilities;
(h) a certificate of insurance, reflecting the
coverages set forth in Section 8.6(a);
(i) those documents required to be executed by
Purchaser pursuant to Article IX hereof;
(j) an assumption agreement, duly executed by
Purchaser, under which Purchaser assumes those certain
leases dated as of January 1, 1994 by and between Seller and
(i) Charles L. Barancik and (ii) Mattoon Real Estate
Partnership, copies of which are attached to Schedule 4.3(t)
and which have respectively been assigned by the landlords
thereunder to Charleston Building, L.L.C. and Mattoon
Building, L.L.C.
(k) such other documents from Purchaser, including,
without limitation, the IRPTA waiver required pursuant to
Section 5.2(f) as may reasonably be required in order to
effectuate the transactions contemplated (i) hereby and
(ii) by the Purchaser's Ancillary Documents.
7.3 Seller's Deliveries. Subject to the fulfillment or
written waiver of the conditions set forth in Section 6.1, Seller
shall deliver to Purchaser physical possession of all tangible
Purchased Assets, and shall execute (where applicable in
recordable form) and/or deliver or cause to be executed and/or
delivered to Purchaser all of the following:
(a) certified copies of Seller's Certificate of
Incorporation and By-laws;
(b) a certificate of good standing of Seller, issued
not earlier than ten (10) days prior to the Closing Date by
the Secretary of State of Illinois;
(c) an incumbency and specimen signature certificate
with respect to the officers of Seller executing this
Agreement and Seller's Ancillary Documents on behalf of
Seller;
(d) a certified copy of resolutions of Seller's board
of directors and stockholders, authorizing the execution,
delivery and performance of this Agreement and Seller's
Ancillary Documents;
(e) a bill of sale, executed by Seller, conveying all
of the Inventory and Equipment, free and clear of all liens,
claims, encumbrances and security interests other than
Permitted Liens and containing the warranties of title and
limitations on warranties, each as set forth in this
Agreement;
(f) an assignment to Purchaser, executed by Seller,
assigning to Purchaser all of the Purchased Assets (other
than the Inventory, Equipment, and the Real Estate), along
with the original instruments (if any) representing,
evidencing or constituting such Purchased Assets (containing
the warranties of title and limitations on warranties, each
as set forth in this Agreement). To the extent necessary in
the reasonable opinion of Purchaser's counsel, Seller shall
also execute and deliver (in recordable form where required)
separate assignments of any of such Purchased Assets, and
where applicable, in the form reasonably required by the
applicable governmental agencies, insurance companies,
customers, lessors, and other parties with whom the
assignments must be filed, but in each case containing only
the warranties of title set forth in this Agreement and
subject to the limitations on warranties as set forth in
this Agreement;
(g) a closing certificate duly executed by the
President of Seller (or any other officer of Seller
specifically authorized to do so), on behalf of Seller,
pursuant to which Seller represents and warrants to
Purchaser that all of Seller's material representations and
warranties to Purchaser are true and correct in all material
respects as of the Closing Date as if then originally made
(or, if any such representation or warranty is untrue in any
respect, specifying the respect in which the same is untrue
(it being understood and agreed that it shall not be a
breach of this paragraph for Seller to include a statement
in any such certificate to the effect that any such
representation and warranty is or may be inaccurate due to
changes in the ordinary course of business, none of which
inaccuracies, individually or in the aggregate, would have a
Material Adverse Effect)), that all material covenants
required by the terms hereof to be performed by Seller on or
before the Closing Date, have been so performed (or, if any
such covenant has not been so performed, indicating that
such covenant has not been performed), and that all
documents to be executed and delivered by Seller at the
Closing have been executed by duly authorized officers of
Seller;
(h) a quit claim deed with respect to the Real Estate
owned by Seller, together with any necessary transfer
declarations;
(i) copies of all existing surveys of the Real Estate
and the Leased Premises;
(j) copies of the Material Consents which have been
obtained;
(k) certificates of title or origin (or like
documents) with respect to all vehicles included in the
Purchased Assets and other Equipment for which a certificate
of title or origin is required in order for title thereto to
be transferred to Purchaser;
(l) disclosure documents required by IRPTA, if
applicable; and
(m) such other documents as may reasonably required
from Seller in order to effectuate the transactions
contemplated (i) hereby and (ii) by the Seller's Ancillary
Documents.
ARTICLE VIII
Post-Closing Agreements
8.1 Post-Closing Agreements. From and after the Closing,
the parties shall have the respective rights and obligations
which are set forth in the remainder of this Article VIII.
8.2 Certain Administration Matters. Seller and Purchaser
shall each make their respective books and records (including
work papers in the possession of their respective accountants)
available for inspection by the other party, or by its duly
accredited representatives, for reasonable business purposes at
all reasonable times during normal business hours, for a seven
(7) year period after the Closing Date, or for such longer period
of time as may be required to comply with the provisions of the
next following paragraphs of this Section 8.2 or with respect to
Section 8.5 hereof, with respect to all transactions occurring
prior to, and those transactions relating to, the Closing, the
historical financial condition, assets, liabilities, results of
operations and cash flows of Seller, the Purchased Assets or the
Assumed Liabilities. In the case of records owned by Seller,
such records shall be made available by Seller at a location in
the Chicago metropolitan area, and in the case of records owned
by Purchaser, such records shall be made available at Purchaser's
offices for the Business in Des Plaines, Illinois. As used in
this Section 8.2, the right of inspection includes the right to
make extracts or copies. The representatives of a party
inspecting the records of the other party shall be reasonably
satisfactory to the other party.
In all cases where Purchaser, pursuant to the terms hereof,
has assumed Seller's liability for the payment of taxes
(including, without limitation, deposits) Purchaser shall (unless
and to the extent otherwise requested by Seller) prepare and file
(and to the extent applicable, distribute) all returns, reports
and information statements, forms or similar documents
(including, without limitation 1099s and W-2s) for distribution
to third parties, with respect to such taxes and pay all amounts
required to be paid pursuant thereto or in connection therewith,
all in a timely and proper fashion and as may be necessary or
appropriate to assure that Seller shall be in full and prompt
compliance with law. Purchaser shall upon the request of Seller
forthwith provide to Seller proof of its compliance with the
foregoing. If requested by Seller, Purchaser, in lieu of the
filing and/or distribution of any of the foregoing by it, shall
prepare such returns, reports, information statements, forms or
similar documents (including, without limitation, 1099s and W-2s)
for filing and/or distribution by Seller and shall submit the
same to Seller (along with all amounts required to be paid
pursuant thereto or in connection therewith), all in proper
fashion and sufficient time to permit Seller to comply with the
applicable law for such payment, filing and/or distribution.
Prior to filing (and distributing to the extent applicable) any
of the foregoing returns, reports, information statements, forms
or similar documents or submitting the same to Seller for filing
and/or distribution by Seller, Purchaser shall provide Seller
with a reasonable opportunity to review each of the foregoing to
be so filed and/or distributed.
In addition, and not in limitation of the foregoing,
Purchaser shall give reasonable assistance to Seller, through
Purchaser's employees and without cost to Seller, in order for
Seller to record entries relating to the closing of Seller's
books relating to the Business and in preparing and filing tax
returns and other documents relating to the Business.
8.3 Use of Trademarks. Seller shall cease to use and shall
not license any third party to use any name, slogan, logo or
trademark which is similar or deceptively similar to any of the
Trademarks. Promptly following the Closing Seller shall change
its name so that it does not include the name "Justrite" or "Haz-
Stor".
8.4 Payments of Accounts Receivable. In the event Seller
shall receive any instrument of payment of any of the Accounts
Receivable, Seller shall forthwith deliver it to Purchaser,
endorsed where necessary, without recourse, in favor of
Purchaser.
8.5 Third Party Claims. Subject to, and without limiting
the rights or obligations of the parties pursuant to, any other
provision of this Agreement, the parties shall cooperate with
each other with respect to claims, litigation and other
proceedings made or commenced by third parties either subsequent
to the Closing Date or with respect to matters that are Excluded
Liabilities hereunder and, in connection therewith, shall make
available, upon reasonable advance notice and without expense to
the requesting party (other than for reasonable out-of-pocket
travel and travel-related items, which shall be promptly
reimbursed by the requesting party) personnel as are reasonably
necessary in connection therewith (for reasonable periods of time
and at such times as will not unreasonably disrupt such
providing-party's business) for purposes of preparation,
investigation, analysis, depositions, interrogations, testimony
and other like matters. Without otherwise limiting the
obligations set forth in this Section 8.5, nothing in this
Section 8.5 shall require a party entitled to indemnification
under this Agreement with respect to a matter covered by this
Section 8.5 to reimburse any travel or travel-related items under
this Section 8.5 with respect to such matter.
8.6 Certain Insurance Matters.
(a) Purchaser shall for a period of not less than ten
(10) years from the Closing Date, name Seller (and such officers,
directors, shareholders and other Affiliates of Seller as Seller
shall designate in writing to Purchaser from time to time) as
additional insureds under general liability and products
liability insurance policies to be maintained by Purchaser with
respect to the Business, which insurance policy or policies shall
(i) be in commercially reasonable form and be issued by an
insurer or insurers reasonably acceptable to Seller, (ii) apply
to products designed, manufactured, marketed, supplied, sold or
installed by Seller, or events with respect thereto, whether
occurring prior to, on, or after the Closing, (iii) be primary to
and without right of contribution from any other insurance held
or purchased or owned by Seller (except that with respect to any
liability or obligation which is an Excluded Liability pursuant
to Section 2.3(e), Seller's insurance with respect thereto shall
be primary and without right of contribution and the insurance
required by this Section 8.6(a) shall be secondary), (iv) provide
limits in the amount of at least $25 million for each claim or
occurrence and $25 million in the annual aggregate, and (v)
provide, by endorsement, that Seller is entitled to receive at
least thirty (30) days prior written notice of any intent to
reduce policy limits, restrict coverage, cancel or otherwise
alter or amend said policy in any manner that affects Seller.
Without limiting any other rights of Seller or obligations of
Purchaser hereunder, notwithstanding the requirements clause (ii)
of this paragraph, Purchaser shall not be required to name Seller
or any other person or entity as an additional insured with
respect to events occurring prior to the Closing Date to the
extent, but only to the extent, that Purchaser cannot obtain
insurance with respect to such events occurring prior to the
Closing Date. Without implication that the contrary would
otherwise be true and not in limitation of any other obligations
of Purchaser hereunder, including with respect to the discharge
of the Assumed Liabilities, Purchaser shall indemnify and hold
harmless Seller (and such officers, directors, shareholders and
other Affiliates of Seller as Seller shall designate in writing
to Purchaser from time to time) for all such events occurring
prior to the Closing Date and with respect to which Seller and
such persons and entities are not named as additional insured in
reliance upon the next preceding sentence.
(b) Proof of the insurance required pursuant to
paragraph (a) next above, including a certificate or certificates
of insurance, shall be submitted by Purchaser to Seller on the
date which is ten business days prior to the Closing Date, and
thereafter, during the period provided in subsection (a) next
above, on or prior to the date which is ten business days prior
to each policy expiration date. Purchaser shall deliver a copy
of Purchaser's then prevailing policy or policies of insurance
within thirty (30) days following the later of (i) the delivery
of the certificate(s) of insurance and (ii) the receipt by
Purchaser of a copy of such policy or policies.
(c) In the event that any liability, loss, cost or
expense which is an Excluded Liability pursuant to Section 2.3(e)
is asserted (each such liability, loss, cost and expense being a
"Potential Pre-Closing Third-Party Obligation"), then the party
against whom such Potential Pre-Closing Third-Party Obligation is
asserted shall give prompt written notice of such Potential
Obligation to the other party hereunder (together with all
information regarding such Potential Pre-Closing Third-Party
Obligation reasonably available to the party against whom such
Potential Pre-Closing Third-Party Obligation was asserted).
Promptly following the assertion of such Potential Pre-Closing
Third-Party Obligation against Seller or Seller's receipt of such
notice (and other information) from Purchaser, Seller shall make
a claim under its applicable insurance policy with respect to
such Potential Pre-Closing Third-Party Obligation. The
obligation under the immediately preceding sentence is Seller's
sole obligation with respect to such Potential Pre-Closing Third-
Party Obligation and, upon compliance therewith, Seller shall,
for all purposes, be deemed to have complied with all of its
obligations under this Agreement with respect to, and to have
discharged, such Potential Pre-Closing Third-Party Obligation as
an Excluded Liability under this Agreement (provided that Seller
shall nonetheless reasonably cooperate with such insurance
carrier and with Purchaser with respect to such Potential Pre-
Closing Third-Party Obligation and Seller shall nonetheless have
such additional obligations with respect to such Potential Pre-
Closing Third-Party Obligation as are set forth in the remainder
of this paragraph). Without limiting the generality of anything
elsewhere herein contained, the parties understand and agree that
if Seller's insurance carrier denies coverage with respect to
such claim by Seller, then all liabilities, loss, cost and
expense with respect to such Potential Pre-Closing Third-Party
Obligation shall be Assumed Liabilities hereunder and that
Article X hereof, including, without limitation, Section 10.7
hereof, shall apply fully with respect to such Potential Pre-
Closing Third-Party Obligation as an Assumed Liability. In such
event, Seller shall, upon Purchaser's request in writing, take
such reasonable action (or, if permissible under the applicable
insurance policy, assign to Purchaser the right) to enforce such
insurance coverage, provided that Purchaser and Seller reasonably
concur that there is a reasonable probability of prevailing with
respect to the enforcement thereof (taking into account all
relevant circumstances including, without limitation, the nature
of the claim underlying such Potential Pre-Closing Third-Party
Obligation and the terms and conditions of the relevant insurance
coverage.) Any recovery against such insurance carrier pursuant
to such actions shall go first to cover Seller's cost and expense
of such enforcement (which has not theretofore been reimbursed by
Purchaser, second to reimburse Seller for any payments made in
respect of such Potential Pre-Closing Third-Party Obligation
(which have not theretofore been reimbursed by Purchaser), third
to discharge any undischarged liability or obligation with
respect to such Potential Pre-Closing Third-Party Obligation and
fourth, and finally, to Purchaser to cover any liability, loss,
cost or expense incurred by Purchaser with respect to such
Potential Pre-Closing Third-Party Obligation. The parties
recognize that even if Seller's insurance carrier accepts
Seller's claim for coverage with respect to such Potential Pre-
Closing Third-Party Obligations, Purchaser may nonetheless have
liabilities and obligations with respect thereto as an Assumed
Liability hereunder (for example, but not by way of limitation,
if the insurance policy amounts are insufficient to fully cover
such Potential Pre-Closing Third-Party Obligation or if such
claim is accepted subject to a reservation of rights and coverage
is ultimately denied in connection therewith). Accordingly, if
Seller's insurance carrier accepts coverage with respect to a
Potential Pre-Closing Third-Party Obligation, whether with or
without a reservation of rights, then notwithstanding the fact
that all or a portion of the liability, loss, cost and expense
with respect thereto may in fact constitute an Assumed Liability
hereunder, Purchaser shall have only such rights and shall have
such obligations, if any, to defend, or participate in the
defense of, such Potential Pre-Closing Third-Party Obligation as
Seller has as imposed by, and subject to, the applicable
insurance policy with respect to such Potential Pre-Closing
Third-Party Obligation, any such defense or participation therein
by Purchaser being further subject to the rights and the
obligations under Section 10.7 hereof with respect to a Third-
Party Claim (as herein defined) for which Seller is entitled to
indemnification hereunder. Notwithstanding anything to the
contrary contained in this Agreement and not in limitation of the
foregoing provisions of this paragraph, except as expressly set
forth in the foregoing provisions of this paragraph, Seller shall
have no obligation or liability of any kind or nature whatsoever
with respect to such Potential Pre-Closing Third-Party Obligation
(including, without limitation, to indemnify Purchaser with
respect thereto (whether pursuant to Article X hereof or
otherwise), to defend Purchaser from and against such Potential
Pre-Closing Third-Party Obligation or to take any action to have
any claims against Purchaser in connection therewith dismissed).
All actions taken by Seller pursuant to this paragraph shall be
at Purchaser's sole cost and expense (which cost and expense
Purchaser shall advance to or reimburse Seller as Seller may from
time to time request) and Purchaser hereby indemnifies Seller for
all such actions. Nothing herein contained shall be deemed or
construed to require Seller, and Seller shall not be required, to
maintain or keep in effect for any period after the Closing any
insurance coverage which it has in effect on the Closing Date.
8.7 Non-Assignment. Notwithstanding any provision to the
contrary contained herein (but not in limitation of Seller's
obligations under Section 5.2(b)), Seller may, but shall not be
obligated to, assign to Purchaser any contract, purchase order,
sales order, lease or other instrument which is a Purchased Asset
but which restricts or prohibits the transfer or assignment
thereof or which provides that it may not be transferred or
assigned without the consent of another person and for which the
appropriate consent to the transfer and assignment thereof is not
obtained, but in any such event, Seller shall, to the extent, and
only if, reasonably necessary in order to provide the benefits
thereof to Purchaser and at Purchaser's cost and with full and
complete indemnification by Purchaser, cooperate with Purchaser
in any reasonable arrangement designed to provide the benefits
thereof to Purchaser. Without limiting the generality of any
provision elsewhere herein contained, the non-assignability and
non-transferability of, and the failure of Seller to assign and
transfer, any of the foregoing (or the assignment and transfer by
Seller thereof, despite the prohibition or restriction thereof or
the failure to obtain the appropriate consent or fulfill the
conditions thereto) shall not alter or in any manner affect its
status as a Purchased Asset and/or an Assumed Liability hereunder
or relieve Purchaser of its obligations or liabilities with
respect thereto or in connection therewith. It is the intention,
understanding and agreement of the parties that the "seconding"
arrangements contemplated by this Section 8.7 shall only be
utilized when there is no reasonable alternative to such
arrangement for Purchaser, even if Seller fails to assign any
such contract, purchase order, sales order, lease or other
instrument. In the event that any contracts to which Seller and
one or more of its Affiliates are jointly parties (or pursuant to
which goods and/or services are provided to Seller and one or
more of its Affiliates) are assigned or transferred pursuant to
this Agreement, then from and after the Closing Purchaser shall,
if an to the extent requested by Seller, take such action as is
necessary to, and cooperate with Seller in its efforts to, remove
Seller as a party to such contract. It is expressly agreed that
Seller's only obligation with respect to any contract with any
governmental agency or instrumentality shall be to reasonably
cooperate with Purchaser in obtaining any consents or novations
necessary to effect the transfer of such contract to Purchaser.
Nothing contained in any transfer document required to be
executed by Seller in connection with the transfer of any such
governmental contract shall alter or in any manner affect the
status of such contract as a Purchased Asset and/or an Assumed
Liability hereunder or relieve Purchaser of its obligations or
liabilities with respect thereto or in connection therewith,
including, without limitation, pursuant to Article X hereof.
8.8 Further Assurances. The parties shall execute such
further documents, and perform such further acts, as may be
necessary to transfer and convey the Purchased Assets to
Purchaser, on the terms herein contained, and to otherwise comply
with the terms of this Agreement and consummate the transactions
contemplated hereby.
ARTICLE IX
Employees and Employee Benefit Plans
9.1 Employment of Seller's Employees. Except for voluntary
resignations and deaths, Purchaser shall continue to employ each
employee employed by Seller on the Closing Date until at least
the sixty-first day after the Closing Date, but may at any time
terminate any such employee for cause or in connection with
normal seasonal layoffs. Each such employee shall be so employed
in positions, at compensation, with benefits and upon terms and
conditions which are each separately no less favorable to the
employee than the position, compensation, benefits and terms and
conditions in effect on the date hereof (excluding, however,
arrangements which constitute Excluded Liabilities pursuant to
Section 2.3(d)). Each such person who is employed by Purchaser
is hereinafter referred to individually as an "Employee" and
collectively as the "Employees". Purchaser hereby assumes and
shall be responsible for, and Seller shall have no liability with
respect to, any and all claims with respect to any employee
employed by Seller arising out of either (i) the termination of
employment of such employee, or (ii) any action by Purchaser on
or after the Closing Date. Purchaser hereby assumes and shall be
responsible for, and Seller shall have no liability with respect
to, any and all obligations and claims with respect to the
Collective Bargaining Agreement and Purchaser shall assume the
Collective Bargaining Agreement. Purchaser shall cooperate with
Seller in any bargaining required under law with respect to the
effects of the transactions contemplated hereby.
9.2 Pension and Welfare Benefits; Bonus Arrangements;
Workers' Compensation. (a) From and after the Closing Date,
Purchaser shall be liable for all claims and liabilities under
Welfare Plans, including, without limitation, each and every
claim and liability not discharged by Seller prior to the Closing
Date (regardless of when such claim or liability arises (or
arose) or is (or was) asserted). From and after the Closing
Date, Purchaser shall, at no expense to Seller, provide the
benefits, if any, required pursuant to Section 4980B of the Code
or Part 6 of Title I of ERISA for any person who is or becomes
entitled to such continuation from Seller or in connection with
any Welfare Plan at any time. Purchaser shall cover all
Employees with group medical benefits for which all waiting
periods and pre-existing conditions are waived. In addition,
from and after the Closing Date Purchaser shall pay the sum of
$450.00 per month to Ms. Dolly Waxstein for the remainder of her
life. Accordingly, at the Closing Purchaser shall execute the
letter agreement attached hereto as Exhibit F and providing for
such monthly pension payments.
(b) At the Closing, Purchaser shall expressly assume
the obligations of Seller pursuant to that certain memorandum
dated November 22, 1993 from Seller to James O. Rackley and shall
expressly assume the obligations of Seller pursuant to the salary
continuation portion of that certain memorandum dated November
22, 1993 to Kenneth L. Shead and, in each case, shall confirm in
writing the assumption thereof to each of the foregoing
individuals, such assumption and confirmations to be in the form
of Exhibit G attached hereto.
(c) Without limiting Purchaser's obligations under any
other provision of this Agreement, including, without limitation,
Article X, Purchaser shall indemnify and hold Seller harmless
from and against any and all liability, cost and expense that
Seller incurs with respect to (and promptly reimburse Seller for
any and all amounts paid by it (or on its behalf pursuant to
letters of credit, which letters of credit shall not be
transferred in the transaction contemplated by this Agreement,
provided by Seller) in connection with) any workers' compensation
claims which constitute Excluded Liabilities pursuant to Section
2.3(f) and/or the administration thereof, including, without
limitation, all payments made by Seller under Seller's workers'
compensation plans and arrangements and its insurance policies
funding such workers' compensation plans and arrangements
("Seller's Workers' Compensation Policies"), including, without
limitation, for retrospective and other like premium adjustments
under such Policies and payments made under letters of credit
issued in connection with such Policies or amounts owed under
such Policies. Purchaser shall make available to Seller, without
cost or expense to Seller, James O. Rackley, for so long as James
O. Rackley is employed by Purchaser or any of its Affiliates, at
such times and for such periods as Seller requests in connection
with the administration (and training of employees of Seller for
the administration) of claims made under Seller's Workers'
Compensation Policies until such time as all claims (including,
without limitation with respect to Seller's Affiliates) with
respect to occurrences prior to the Closing are discharged under
such Policies.
9.3 Clarification and Amplification of Certain Matters.
For purposes of clarification and amplification, it is expressly
understood and agreed that nothing contained in this Article IX
shall limit the generality of anything elsewhere herein contained
or shall imply, or be deemed to mean, that any obligation or
liability imposed upon Purchaser pursuant to this Article IX
would otherwise not be an obligation or liability of Purchaser
under this Agreement.
ARTICLE X
Indemnification
10.1 General. From and after the Closing, the parties
shall indemnify each other as provided in this Article X.
10.2 Certain Definitions. As used in this Agreement, the
following terms shall have the indicated meanings:
(a) "Damages" shall mean all assessments, levies,
losses, fines, penalties, damages, costs and expenses,
including, without limitation, reasonable attorneys',
accountants', investigators', and experts' fees and
expenses;
(b) "Indemnified Party" shall mean a party hereto who
is entitled to indemnification from another party hereto
pursuant to this Article X;
(c) "Indemnifying Party" shall mean a party hereto who
is required to provide indemnification under this Article X
to another party hereto;
(d) "Third Party Claim" shall mean any claim, action,
suit, proceeding, investigation or like matter asserted or
threatened by a party other than the parties hereto, their
successors and permitted assigns, against any Indemnified
Party or to which an Indemnified Party is subject.
10.3 Indemnification Obligations of Seller. Subject to the
provisions of Sections 10.4 and 10.8, Seller shall indemnify,
save and keep harmless Purchaser and its successors and permitted
assigns ("Purchaser Indemnitees") against and from all Damages
sustained or incurred by any of them resulting from or arising
out of or by virtue of:
(a) any inaccuracy in or breach of any representation
and warranty made by Seller in this Agreement or in any
closing document delivered to Purchaser in connection with
this Agreement;
(b) any breach by Seller of, or failure by Seller to
comply with, any of its covenants or obligations under this
Agreement (including, without limitation, its obligations
under this Article X); and
(c) the failure to discharge when due any Excluded
Liability (without implication that the contrary would
otherwise be true, expressly subject to and limited by
Section 8.6(c)).
10.4 Limitation on Seller's Indemnification Obligations.
Seller's obligations pursuant to the provisions of Section 10.3
are subject to the following limitations:
(a) the Purchaser Indemnitees shall not be entitled to
recover under Section 10.3(a) until the total amount which
Purchaser would recover under Section 10.3(a), but for this
Section 10.4(a), exceeds 5% of the Purchase Price, and then
only for the excess over 5% of the Purchase Price;
(b) the Purchaser Indemnitees shall not be entitled to
recover under Section 10.3(a) unless a claim has been
asserted by written notice, specifying the details of the
alleged misrepresentation or breach of warranty, delivered
to Seller on or prior to the expiration of the eighteenth
full calendar month next following the Closing Date;
(c) the Purchaser Indemnitees shall not be entitled to
recover under Section 10.3(b) with respect to an obligation
to perform a covenant or 10.3(c) with respect to the
discharge of the Excluded Liabilities, if the matter upon
which recovery is based also constitutes a breach of a
representation and warranty; it being understood and agreed
by the parties that the covenants of Seller (including the
obligation of Seller to discharge the Excluded Liabilities)
contained in this Agreement or any of Seller's Ancillary
Documents, may not be used to circumvent the negotiated
limitations and procedures with respect to the recovery by
the Purchaser Indemnitees on account of the breach by Seller
of any of its representations or warranties made in this
Agreement or its Ancillary Documents (it being further
understood and agreed that in such a case the Purchaser
Indemnitees' sole remedy shall be to seek recovery for the
breach of the representation and warranty pursuant to
Section 10.3(a);
(d) the Purchaser Indemnitees shall not be entitled to
recover under Section 10.3:
(i) with respect to title to the Real Estate or
the Leased Premises;
(ii) WITH RESPECT TO CONSEQUENTIAL DAMAGES,
INCLUDING, WITHOUT LIMITATION, CONSEQUENTIAL DAMAGES
CONSISTING OF BUSINESS INTERRUPTION OR LOST PROFITS, OR
WITH RESPECT TO PUNITIVE DAMAGES;
(iii) with respect to a misrepresentation or
breach of warranty or covenant by or of Seller which is
contained herein if at or before the time of Closing
Purchaser had knowledge of such misrepresentation or
breach of warranty or covenant (as to which Purchaser
shall be deemed to have waived all claims for recovery
hereunder if Purchaser proceeds to close the
transactions contemplated hereby);
(iv) with respect to a claim based upon or
arising out of the nonassignability or
nontransferability of any of the Purchased Assets or
Assumed Liabilities including, without limitation, with
respect to the assignment or transfer thereof by Seller
(if Seller did in fact so assign or transfer such
Purchased Asset or Assumed Liability) or the non-
assignment or non-transfer thereof by Seller (if Seller
did not assign such Purchased Asset or Assumed
Liability) or the failure to obtain any consent, or
satisfy conditions imposed incident to the giving of
any consent, required in connection with, or as a
consequence of, the assignment or transfer of any of
the Purchased Assets to, or the assumption of the
Assumed Liabilities by, Purchaser and further
including, without limitation, (and also without
limiting the generality of the foregoing or anything
elsewhere herein contained) as a result or arising out
of the entering into, or performance of, any
cooperative efforts or arrangements pursuant to Section
8.7;
(v) to the extent that aggregate claims for which
they are entitled to recover under Section 10.3(a)
(after taking into account the limitations in Section
10.4(a)) exceed 5% of the Purchase Price (except that,
without limiting any other limitation contained in this
Agreement with respect to either (x) Seller's
indemnification obligations under this Agreement or (y)
the rights of any Purchaser Indemnitee to recover under
this Agreement, this Section 10.4(d)(v) shall not apply
to limit recovery by a Purchaser Indemnitee for a
breach by Seller of Section 5.2(c) of this Agreement);
(vi) to the extent the subject matter of the claim
is covered by insurance held by Purchaser; or
(vii) without limiting the generality of
anything contained in the Article IX hereof, with
respect to any claim by or liability to any
employee employed by Seller arising as the result
of the termination of such employee's employment
with Purchaser or any action by Purchaser
subsequent to the Closing Date;
(e) the amount of any recovery by the Purchaser
Indemnitees pursuant to Section 10.3 shall be net of
any foreign, federal, state and/or local tax benefits
inuring to the Purchaser Indemnitees as a result of the
state of facts which entitled the Purchaser Indemnitees
to recover from Seller pursuant to Section 10.3.
(f) it is expressly understood and agreed that,
notwithstanding anything to the contrary herein contained,
Damages shall not be computed by using a multiple of
earnings, book value or any similar item which may have been
used in arriving at the Purchase or which may be reflective
of the Purchase Price.
10.5 Purchaser's Indemnification Covenants. Purchaser
shall indemnify, save and keep harmless Seller and its successors
and permitted assigns against and from all Damages sustained or
incurred by any of them resulting from or arising out of or by
virtue of:
(a) any inaccuracy in or breach of any representation
and warranty made by Purchaser in this Agreement or in any
closing document delivered to Seller in connection with this
Agreement;
(b) any breach by Purchaser of, or failure by
Purchaser to comply with, any of its covenants or
obligations under this Agreement (including, without
limitation, its obligations under this Article X);
(c) Purchaser's failure to pay, honor, discharge and
perform when due any of the Assumed Liabilities; or
(d) acts or omissions of Purchaser after the Closing
Date including, without limitation, Purchaser's operation of
the Business after the Closing Date (including, without
limitation, in reliance on Seller's conduct of the Business
prior to Closing).
(e) any obligation of Seller under any Bond.
(f) the non-assignability or non-transferability of
any Purchased Asset or Assumed Liability including, without
limitation, resulting from, arising out of, or in connection
with the assignment or transfer thereof by Seller (if Seller
did in fact so assign or transfer such Purchased Asset or
Assumed Liability) or the non-assignment or non-transfer
thereof by Seller (if Seller did not assign or transfer such
Purchased Asset or Assumed Liability) or the failure to
obtain any consent, or satisfy conditions imposed incident
to the giving of any consent, required in connection with,
or as a consequence of, the assignment or transfer of any of
the Purchased Assets to, or the assumption of the Assumed
Liabilities by, Purchaser and further including, without
limitation (and also without limiting the generality of
anything elsewhere herein contained), resulting from,
arising out of, or in connection with, the entry into, or
performance by Seller of, any cooperative efforts or
arrangements pursuant to Section 8.7.
10.6 Cooperation. Subject to the provisions of Section
10.7, the Indemnifying Party shall have the right, at its own
expense, to participate in the defense of any Third Party Claim,
and if said right is exercised, the parties shall cooperate in
the investigation and defense of said Third Party Claim.
10.7 Third Party Claims. Except as otherwise provided in
Section 10.8 and expressly subject to the procedures and
limitations set forth in Section 8.6(a), forthwith following the
receipt of notice of a Third Party Claim, the party receiving the
notice of the Third Party Claim shall (i) notify the other party
of its existence setting forth in writing and with reasonable
specificity the facts and circumstances of which such party has
received notice and (ii) if the party giving such notice is an
Indemnified Party, specifying in writing the basis hereunder upon
which the Indemnified Party's claim for indemnification is
asserted. The Indemnified Party may, upon reasonable notice,
tender the defense of a Third Party Claim to the Indemnifying
Party. If:
(a) the defense of a Third Party Claim is so tendered
and within thirty (30) days thereafter such tender is
accepted without qualification by the Indemnifying Party; or
(b) within thirty (30) days after the date on which
written notice of a Third Party Claim has been given
pursuant to this Section 10.7, the Indemnifying Party shall
acknowledge in writing to the Indemnified Party and without
qualification (i) its indemnification obligations as
provided in this Article X and (ii) that it will defend said
Third Party Claim;
then, except as hereinafter provided, the Indemnified Party shall
not, and the Indemnifying Party shall, have the right to contest,
defend, litigate and settle such Third Party Claim. The
Indemnified Party shall have the right to be represented by
counsel at its own expense in any such contest, defense,
litigation or settlement conducted by the Indemnifying Party,
provided that the Indemnified Party shall be entitled to
reimbursement therefor if the Indemnifying Party shall lose its
right to contest, defend, litigate and settle the Third Party
Claim as herein provided. The Indemnifying Party shall lose its
right to contest, defend, litigate and settle the Third Party
Claim if it shall fail to diligently contest the Third Party
Claim (except in connection with a settlement thereof in
accordance with the terms hereof). So long as the Indemnifying
Party has not lost its right to defend, contest, litigate and
settle as herein provided, the Indemnifying Party shall have the
exclusive right to contest, defend and litigate the Third Party
Claim and shall have the exclusive right, in its discretion
exercised in good faith, and with the advice of counsel, to
settle any such matter, either before or after the initiation of
litigation, at such time and upon such terms as it deems fair and
reasonable, provided that at least ten (10) days prior to any
such settlement, written notice of its intention to settle shall
be given to the Indemnified Party. All expenses (including
without limitation attorneys' fees) incurred by the Indemnifying
Party in connection with the foregoing shall be paid by the
Indemnifying Party. No failure by an Indemnifying Party to
acknowledge in writing its indemnification obligations under this
Article X shall relieve it of such obligations to the extent they
exist. If an Indemnified Party is entitled to indemnification
against a Third Party Claim, and the Indemnifying Party fails to
accept or assume the defense of a Third Party Claim pursuant to
this Section 10.7, or if, in accordance with the foregoing, the
Indemnifying Party shall lose its right to contest, defend,
litigate and settle such a Third Party Claim, the Indemnified
Party shall have the right, without prejudice to its right of
indemnification hereunder, in its discretion exercised in good
faith, and upon the advice of counsel, to contest, defend and
litigate such Third Party Claim, and may settle such Third Party
Claim, either before or after the initiation of litigation, at
such time and upon such terms as the Indemnified Party deems fair
and reasonable, provided that at least ten (10) days prior to any
such settlement, written notice of its intention to settle is
given to the Indemnifying Party. If, pursuant to this Section
10.7, the Indemnified Party so contests, defends, litigates or
settles a Third Party Claim for which it is entitled to
indemnification hereunder, as hereinabove provided, the
Indemnified Party shall be reimbursed by the Indemnifying Party
for the reasonable attorneys' fees and other expenses of
defending, contesting, litigating and/or settling the Third Party
Claim which are incurred from time to time, forthwith following
the presentation to the Indemnifying Party of itemized bills for
said attorneys' fees and other expenses.
10.8 Environmental Indemnities. As a condition to any
indemnification obligation hereunder with respect to a breach of
any of the representations and warranties contained in Section
4.3(s) (an "Environmental Claim"), Purchaser Indemnitee shall,
with respect to each potential or actual Environmental Claim,
give written notice to Seller (setting forth in reasonable detail
the basis for such an Environmental Claim) promptly following
Purchaser Indemnitee's knowledge of the occurrence of any event
or the existence of any condition or alleged state of facts in
respect thereof and:
(a) Purchaser Indemnitee shall promptly deliver to
Seller copies of all (draft and final) reports, studies,
investigations, surveys, test data, assessments, cost
estimates and all other information and documentation
available to it relating to or supporting such potential or
actual Environmental Claim;
(b) Purchaser Indemnitee shall permit representatives
of Seller (including advisors and consultants) to visit,
from time to time, and inspect, from time to time, any of
the properties and operations, if any, to which a potential
or actual Environmental Claim relates, and to enter on such
properties for the purpose of conducting such tests,
inspections, or other investigations, all as Seller may
reasonably desire with respect to such potential or actual
Environmental Claim, all during normal business hours and at
Seller's expense;
(c) Purchaser Indemnitee shall obtain Seller's written
consent (such consent not to be unreasonably withheld) prior
to undertaking or arranging to undertake any test,
inspection or investigation or retaining any consultant
relating to a potential or actual Environmental Claim;
(d) unless required to do so by applicable
Environmental Law, no Purchaser Indemnitee shall give notice
to any governmental authority of any event or of the
existence of any condition or alleged state of facts that
may give rise to a potential or actual Environmental Claim
without the prior written consent of Seller, which consent
shall not unreasonably be withheld; if the Purchaser
Indemnitee (or representative or advisor thereof) shall have
any discussion or other communication with, to, or from any
governmental authority relating to such potential or actual
Environmental Claim, Purchaser Indemnitee shall provide
reasonable prior written notice to Seller, and Seller shall
be entitled to participate in all such discussions and
communications;
(e) Purchaser Indemnitee shall cause to be furnished
to Seller drafts of any and all proposed remediation or
corrective action plans with respect to any potential or
actual Environmental Claims not less than twenty business
days prior to the date on which such plans are submitted to
any applicable governmental authorities or otherwise
implemented, and Purchaser Indemnitee shall adopt all
changes or modifications to such plans as may be proposed by
Seller or its representatives (except to the extent that any
such changes or modifications would be inconsistent with
existing law);
(f) except in the case of an emergency involving a
significant threat to public health or the environment,
Purchaser Indemnitee shall not undertake any remedial or
corrective action in respect of any potential or actual
Environmental Claim without the prior written consent of
Seller, which consent shall not unreasonably be withheld.
10.9 Indemnification Exclusive Remedy. Indemnification
pursuant to the provisions of this Article X shall be the
exclusive remedy of the parties for any misrepresentation or
breach of any warranty or covenant contained herein or in any
closing document executed and delivered pursuant to the
provisions hereof, including, without limitation with respect to
any Environmental Claim. The only legal action which may be
asserted by any party hereto (or a Purchaser Indemnitee or Seller
Indemnitee not a party hereto) against any other party hereto
with respect to any matter which is the subject of this Article X
(including, without limitation, with respect to each of the
failure to discharge any Excluded Liability and any Environmental
Claim) shall be a contract action to enforce, or to recover
damages for the breach of, this Article X. Without limiting the
generality of the preceding sentence, no legal action sounding in
contribution, tort or strict liability may be maintained by any
party hereto (or a Purchaser Indemnitee or Seller Indemnitee not
a party hereto) against any other party hereto with respect to
any matter that is the subject of this Article X (including,
without limitation, with respect to each of the failure to
discharge any Excluded Liability and any Environmental Claim),
including legal action pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act or any
analogous state or local law, regulation or ordinance or any
similar rules of law embodied in the common law. Nothing herein
contained shall limit the rights of a party hereto under Section
8.9 or 11.4(c) hereof to seek and obtain injunctive relief. In
addition, nothing herein contained shall limit Seller's right
(although it shall not have any obligation) to pursue (whether
separately, simultaneously or in seriatim) recovery under one or
more of the insurance policies maintained by Purchaser pursuant
to Section 8.6 hereof, Seller's own insurance policies or this
Article X. The pursuit of one or more of such remedies by Seller
shall not be deemed to be a waiver of the right to pursue any
other such remedy.
ARTICLE XI
Effect of Termination/Proceeding
11.1 General. The parties shall have the rights and
remedies with respect to the termination and/or enforcement of
this Agreement which are set forth in this Article XI.
11.2 Right to Terminate. This Agreement and the
transactions contemplated hereby may be terminated at any time
prior to the Closing by prompt notice given in accordance with
Section 12.3:
(a) by the mutual written consent of Purchaser and
Seller; or
(b) by either of the parties hereto if the Closing
shall not have occurred at or before 11:59 p.m. (prevailing
Chicago time) on June 17, 1994; provided, however, that the
right to terminate this Agreement under this Section 11.2(b)
shall not be available to any party whose failure to fulfill
any of its obligations under this Agreement has been the
cause of, or resulted in, the failure of the Closing to
occur on or prior to the aforesaid time.
11.3 Certain Effects of Termination. In the event of the
termination of this Agreement by either Seller or Purchaser as
provided in Section 11.2, then the Confidentiality Agreement
shall remain in full force and effect (including, without
limitation, with respect to copies of this Agreement)
notwithstanding any provision to the contrary contained therein
with respect to the execution of a definitive purchase agreement.
This Section 11.3 shall survive any termination of this
Agreement.
11.4 Remedies. Notwithstanding any termination right
granted in Section 11.2, in the event of the nonfulfillment of
any condition to a party's closing obligations, such party may,
in the alternative, elect to do one of the following:
(a) proceed to close despite the nonfulfillment of any
closing condition, it being understood that consummation of
the Closing shall be deemed a waiver of each breach of
representation, warranty and covenant and of such party's
rights and remedies with respect thereto to the extent that
such party shall have knowledge of such breach and the
Closing shall nonetheless occur;
(b) decline to close, terminate this Agreement as
provided in Section 11.2, and thereafter seek damages to the
extent permitted in Section 11.5; or
(c) seek specific performance of the obligations of
the other party (each party hereby agreeing that in the
event of any breach by such party of this Agreement, the
remedies available to the other party at law would be
inadequate and that such party's obligations under this
Agreement may be specifically enforced).
11.5 Right to Damages. If this Agreement is terminated
pursuant to Section 11.2, neither party hereto shall have any
claim against the other except if the circumstances giving rise
to such termination were caused by the other party's willful
failure to comply with a material covenant set forth herein, in
which event termination pursuant to Section 11.2 shall not be
deemed or construed as limiting or denying any legal or equitable
right or remedy of said party, and said party shall also be
entitled to recover its costs and expenses which are incurred in
pursuing its rights and remedies (including reasonable attorneys'
fees).
ARTICLE XII
Miscellaneous
12.1 Limitation of Seller's Best Efforts. For purposes of
this Agreement, when an obligation is imposed upon Seller to use
its "best efforts" and/or "best efforts to cause", or words of
similar import are used with respect to Seller, neither Seller
nor any of its Affiliates shall be required to pay or transfer
any money, property or other thing of value to any other party
except nominal and routine charges for filing or recording fees,
and courier and other communication services.
12.2 Publicity. Except as otherwise required by law or
applicable stock exchange rules, press releases and other
publicity concerning this transaction shall be made only with the
prior agreement of the Seller and Purchaser (and, in any event,
Seller and Purchaser shall use all reasonable efforts to consult
and agree with each other with respect to the content of any such
required press release or other publicity). Except as otherwise
required by law or applicable stock exchange rules or as
expressly permitted by Seller, no such press releases or other
publicity shall state the name of the controlling shareholder of
Seller or the amount of the Purchase Price.
12.3 Notices. All notices required or permitted to be
given hereunder shall be in writing and may be delivered by hand,
by facsimile, by nationally recognized private courier, or by
United States mail. Notices delivered by mail shall be deemed
given three (3) business days after being deposited in the United
States mail, postage prepaid, registered or certified mail
(return receipt requested). Notices delivered by hand, by
facsimile, or by nationally recognized private courier shall be
deemed given on the first business day following receipt;
provided, however, that a notice delivered by facsimile shall
only be effective if such notice is also delivered by hand, or
deposited in the United States mail, postage prepaid, registered
or certified mail (return receipt requested), on or before two
(2) business days after its delivery by facsimile. All notices
shall be addressed as follows:
If to Seller
Addressed to
c/o
Northbrook Management Company
555 Skokie Boulevard, Suite 366
Northbrook, IL 60062
Attention: Charles L. Barancik
Telecopier: (708) 480-9393
with a copy to
Altheimer & Gray
10 South Wacker Drive
Suite 4000
Chicago, Illinois 60606
Attention: Myron Lieberman, Esq.
Telecopier: (312) 715-4800
If to Purchaser
Addressed to
Federal Signal Corporation
1415 West 22nd Street
Oak Brook, Illinois 60521
Attention: President
Telecopier: (708) 954-2041
with a copy to
Federal Signal Corporation
1415 West 22nd Street
Oak brook, Illinois
Attention: General Counsel
Telecopier: (708) 954-2041
and/or to such other respective addresses and/or addressees as
may be designated by notice given in accordance with the
provisions of this Section 12.5.
12.4 Expenses. Except as set forth in Article X and except
as otherwise expressly stated herein, each party hereto shall
bear all fees and expenses incurred by such party in connection
with, relating to or arising out of the execution, delivery and
performance of this Agreement and the consummation of the
transactions contemplated hereby, including, without limitation,
financial advisors', attorneys', accountants' and other
professional fees and expenses.
12.5 Entire Agreement. This Agreement and the Purchaser's
Ancillary Documents and the Seller's Ancillary Documents (the
Purchaser's Ancillary Documents and the Seller's Ancillary
Documents together being referred to herein as the "Ancillary
Agreements") and the Confidentiality Agreement constitute the
entire agreement between the parties and shall be binding upon
and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. Each exhibit,
schedule and the Disclosure Schedule, shall be considered
incorporated into this Agreement and the Ancillary Agreements.
Any matter which is disclosed in any portion of the Disclosure
Schedule is deemed to have been disclosed for the purposes of all
relevant provisions of this Agreement and the Ancillary
Agreements. The inclusion of any item in the Disclosure Schedule
is not evidence of the materiality of such item for the purposes
of this Agreement and the Ancillary Agreements. The parties make
no representations or warranties to each other, except as
contained in this Agreement and the Ancillary Agreements, and any
and all prior representations or warranties made by any party or
its representatives, whether verbally or in writing, are deemed
to have been merged into this Agreement and the Ancillary
Agreements, it being intended that no such prior representations
or warranties shall survive the execution and delivery of this
Agreement and the Ancillary Agreements. Purchaser acknowledges
that it has conducted an independent investigation of the
Business and Seller's business operations, assets, liabilities,
results of operations, financial condition and prospects in
making its determination as to the propriety of the transactions
contemplated by this Agreement and the Ancillary Agreements, and
in entering into this Agreement and the Ancillary Agreements has
relied solely on the results of said investigation and on the
representations and warranties of Seller expressly contained in
this Agreement and in the Seller's Ancillary Documents delivered
by Seller pursuant to the provisions of this Agreement.
12.6 Non-Waiver. The failure in any one or more instances
of a party to insist upon performance of any of the terms,
covenants or conditions of this Agreement, to exercise any right
or privilege in this Agreement conferred, or the waiver by said
party of any breach of any of the terms, covenants or conditions
of this Agreement, shall not be construed as a subsequent waiver
of any such terms, covenants, conditions, rights or privileges,
but the same shall continue and remain in full force and effect
as if no such forbearance or waiver had occurred. Except as
otherwise expressly provided in Section 11.4, no waiver shall be
effective unless it is in writing and signed by an authorized
representative of the waiving party.
12.7 Counterparts. This Agreement may be executed in
multiple counterparts, each of which shall be deemed to be an
original, and all such counterparts shall constitute but one
instrument.
12.8 Severability. The invalidity of any provision of this
Agreement or portion of a provision shall not affect the validity
of any other provision of this Agreement or the remaining portion
of the applicable provision.
12.9 Applicable Law. This Agreement shall be governed and
controlled as to validity, enforcement, interpretation,
construction, effect and in all other respects by the internal
laws of the State of Illinois applicable to contracts made in
that State.
12.10 Binding Effect; Benefit. This Agreement shall inure
to the benefit of and be binding upon the parties hereto and
their successors and permitted assigns.
12.11 Assignability. This Agreement shall not be
assignable by either party without the prior written consent of
the other party.
12.12 Amendments. This Agreement shall not be modified or
amended except pursuant to an instrument in writing executed and
delivered on behalf of each of the parties hereto.
12.13 Headings. The headings contained in this Agreement
are for convenience of reference only and shall not affect the
meaning or interpretation of this Agreement.
12.14 Governmental Reporting. Anything to the contrary in
this Agreement notwithstanding, nothing in this Agreement shall
be construed to mean that a party hereto or other person must
make or file, or cooperate in the making or filing of, any return
or report to any governmental authority in any manner that such
person or such party reasonably believes or reasonably is advised
is not in accordance with law.
12.15 Waiver of Trial by Jury. Each of the parties hereto
waives the right to a jury trial in connection with any suit,
action or proceeding seeking enforcement of such party's rights
under this Agreement.
12.16 Consent to Jurisdiction. This Agreement has been
executed and delivered in and shall be deemed to have been made
in Chicago, Illinois. Seller and Purchaser each agrees to the
exclusive jurisdiction of any state or Federal court within the
City of Chicago, with respect to any claim or cause of action
arising under or relating to this Agreement, and waives personal
service of any and all process upon it, and consents that all
services of process be made by registered mail, directed to it at
its address as set forth in Section 12.5, and service so made
shall be deemed to be completed when received. Seller and
Purchaser each waives any objection based on forum non conveniens
and waives any objection to venue of any action instituted
hereunder. Nothing in this paragraph shall affect the right to
serve legal process in any other manner permitted by law.
12.17 Definitions. The following terms are defined in the
following sections of this Agreement:
Defined Term Where Found
Accounts Receivable 1.2(e)
Affiliate 4.2(f)
Ancillary Agreements 12.5
Assumed Liabilities 2.1
Bonds 5.3(c)
Business Recitals
Charleston Plant 1.2(c)
Closing 3.3
Closing Date 3.3
Code 1.3(h)
Collective Bargaining Agreements 1.2(g)
Confidentiality Agreement 5.3(a)
Control 4.2(f)
Damages 10.2(a)
Des Plaines Office 1.2(c)
Disclosure Schedule 4.1
Employee 9.1
Employees 9.1
Environmental Claim 10.8
Environmental Laws 4.3(s)
Environmental Permits 4.3(s)
Equipment 1.2(b)
ERISA 4.3(o)(ii)
ERISA Affiliate 4.3(o)(iii)
Excluded Assets 1.3
Excluded Liabilities 2.1
Financial Statements 4.3(f)
GAAP 4.3(f)
Hart-Scott-Rodino Act 4.2(c)
Indemnified Party 10.2(b)
Indemnifying Party 10.2(c)
Intellectual Property 4.3(v)
Interim Financial Statements 4.3(g)
Inventory 1.2(a)
IRPTA 5.2(f)
Material Adverse Effect 4.3(b)
Material Consents 5.2(b)
Mattoon Plant 1.2(c)
NMC Contract 1.3(c)
PBGC 4.3(o)(iii)
Permits 4.3(n)
Permitted Liens 4.3(i)
Potential Pre-Closing
Third-Party Obligation 8.6(c)
Purchase Price 3.1
Purchased Assets 1.1
Purchaser Preamble
Purchaser Indemnitees 10.3
Purchaser's Ancillary Documents 4.2(b)
Real Estate 1.2(d)
Seller Preamble
Seller's Ancillary Documents 4.3(c)
Seller's Workers Compensation
Policies 9.2(c)
Third Party Claims 10.2(d)
Trademarks 4.3(v)
Welfare Plans 4.3(o)(ii)
IN WITNESS WHEREOF, the parties have executed this Agreement on
the date first above written.
SELLER:
JUSTRITE MANUFACTURING COMPANY
By:Charles L. Barancik
Its: President
Attested:Deborah K. Hansow
Its: Secretary
PURCHASER:
FEDERAL SIGNAL CORPORATION
By:Kim A. Wehrenberg
Its: Vice President
Attested:Mary Ellen Penicook
Its: [Assistant] Secretary
