<PAGE>
UNITED STATES
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: December 9, 1998
QUIXOTE CORPORATION
- ------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware
- ------------------------------------------------------------------------------
(State or other jurisdiction of incorporation)
0-7903 36-2675371
------------------- --------------------
(Commission File Number) (I.R.S. Employer
Identification Number)
One East Wacker Drive, Suite 3000, Chicago, Illinois 60601
- -----------------------------------------------------------------------------
(Address of principal executive offices) (zip code)
(312) 467-6755
- -----------------------------------------------------------------------------
(Registrant's telephone number, including area code)
<PAGE>
Item 1. Not Applicable.
Item 2. Acquisition or Disposition of Assets.
On December 9, 1998, Quixote Corporation ("Quixote") purchased all of the
outstanding stock of Nu-Metrics, Inc. ("Nu-Metrics") from its six shareholders.
Nu-Metrics is based in Uniontown, Pennsylvania, and is engaged in the business
of developing and manufacturing electronic measuring instruments for the highway
transportation industry. Nu-Metrics' traffic sensing and distance measuring
devices are sold worldwide.
The purchase price of $14,900,000 (less adjustments of $1,020,000 based
on tax holdbacks and changes in the net assets of Nu-Metrics from June 30,
1998, to September 30, 1998) was paid in cash. A final determination of the
purchase price based on the value of the net assets as of November 30, 1998,
will be made in January 1999. In January 1999, Quixote will also pay
$100,000 to the principal shareholder of Nu-Metrics in connection with his
covenants to refrain from competition. When acquired, Nu-Metrics had long
term debt of approximately $1.03 million, of which Quixote intends to repay
approximately $463,000 in December 1998. Quixote borrowed funds on its line
of credit to make this acquisition.
Quixote intends to continue the Nu-Metrics business operations in
Uniontown, Pennsylvania. Quixote has transferred all of the Nu-Metrics stock
to its wholly-owned subsidiary, TranSafe Corporation.
Quixote has determined that Nu-Metrics is a significant subsidiary and will
file separate company financial statements and pro forma financial information
within sixty (60) days of December 9, 1998.
Items 3 and 4. Not Applicable.
Item 5. Other Events.
On December 14, 1998 Quixote and its formerly owned subsidiary, Disc
Manufacturing, Inc., ("DMI"), entered into a Confidential Settlement Agreement
and Release in final settlement of litigation pending in the United States
District Court for the District of Delaware. The litigation includes a lawsuit,
Civil Action No. 95-21-SLR, brought by Discovision Associates against DMI for
infringement of certain patents related to optical disc technology as well as a
lawsuit, Civil Action No. 95-345-SLR, brought by DMI against Discovision
Associates, Pioneer Electronic Corporation, Pioneer Electronics (USA) Inc. and
Pioneer Electronics Capital Inc. for violations of the antitrust laws and acts
of unfair competition. The Company's press release describing the settlement is
attached hereto and incorporated herein as Exhibit 2.3. See the Company's Form
10-K Report for the fiscal year ended June 30, 1998, Item 3, for additional
information concerning these lawsuits.
Item 6. Not Applicable.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
Exhibit 2.1. Stock Purchase Agreement by and among Quixote Corporation and
Nu-Metrics, Inc. and Harry R. Sampey, Ph.D., Brenda J. Auer, Christine C.
Sampey, Kim A. Sampey, Vicki L. Sampey and Karen Singo dated as of
November 30, 1998.
Exhibit 2.2. Press release dated December 11, 1998.
Exhibit 2.3. Press release dated December 15, 1998.
<PAGE>
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.
QUIXOTE CORPORATION
-----------------------------
Date: December 16, 1998 /s/ Daniel P. Gorey
- ------------------------ -----------------------------
By: Daniel P. Gorey
Its: Vice President, Chief
Financial Officer and
Treasurer
<PAGE>
EXECUTION DOCUMENT
Exhibit 2.1
===============================================================================
===============================================================================
STOCK PURCHASE AGREEMENT
By and Among
QUIXOTE CORPORATION
and
NU-METRICS, INC.
and
HARRY R. SAMPEY, Ph.D,
BRENDA J. AUER,
CHRISTINE C. SAMPEY,
KIM A. SAMPEY
VICKI L. SAMPEY and
KAREN SINGO
Dated as of November 30, 1998
===============================================================================
===============================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
ARTICLE I
TERMS OF PURCHASE AND SALE . . . . . . . . . . . . . . . . . . . . . . . . . .2
1.1 Purchase and Sale of the Shares. . . . . . . . . . . . . . . . . . . . .2
1.2 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
1.3 Payment of Purchase Price. . . . . . . . . . . . . . . . . . . . . . . .2
1.4 Calculation of Purchase Price. . . . . . . . . . . . . . . . . . . . . .2
1.5 Tax and Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . .3
1.6 Holdback . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
ARTICLE II
PURCHASE PRICE ADJUSTMENTS . . . . . . . . . . . . . . . . . . . . . . . . . .3
2.1 Adjustment Amount. . . . . . . . . . . . . . . . . . . . . . . . . . . .3
2.2 Net Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF NU-METRICS AND THE SHAREHOLDERS. . . . . . .4
3.1 Organization and Qualification . . . . . . . . . . . . . . . . . . . . .4
3.2 Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
3.3 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
3.4 Title to Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
3.5 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . .6
3.6 Absence of Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . .6
3.7 Financial Statements: Accounts Receivable . . . . . . . . . . . . . . .6
3.8 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . .7
3.9 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . .7
3.10 Intentionally Omitted. . . . . . . . . . . . . . . . . . . . . . . . . .8
3.11 Real and Personal Property; Inventories. . . . . . . . . . . . . . . . .8
3.12 Patents, Trademarks. Etc . . . . . . . . . . . . . . . . . . . . . . . .9
3.13 Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.14 Contracts and Commitments. . . . . . . . . . . . . . . . . . . . . . . 10
3.15 Licenses and Royalties . . . . . . . . . . . . . . . . . . . . . . . . 11
3.16 Government Contracts . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.17 Product Warranties and Liabilities . . . . . . . . . . . . . . . . . . 11
3.18 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.19 Litigation and Administrative Proceedings. . . . . . . . . . . . . . . 12
3.20 Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.20.1 Corporation Matters. . . . . . . . . . . . . . . . . . . . 13
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
3.20.2 All Returns Filed. . . . . . . . . . . . . . . . . . . . . 13
3.20.3 All Taxes Paid . . . . . . . . . . . . . . . . . . . . . . 13
3.20.4 Examinations, Etc. . . . . . . . . . . . . . . . . . . . . 13
3.20.5 Withholding. . . . . . . . . . . . . . . . . . . . . . . . 13
3.20.6 Foreign Person, Etc. . . . . . . . . . . . . . . . . . . . 14
3.20.7 Parachute Payments . . . . . . . . . . . . . . . . . . . . 14
3.20.8 Accounting; Tax Attributes . . . . . . . . . . . . . . . . 14
3.20.9 Prior Consolidated Groups. . . . . . . . . . . . . . . . . 14
3.21 Compliance with Laws.. . . . . . . . . . . . . . . . . . . . . . . . . 14
3.22 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . . . 14
3.23 Employee Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.24 Licenses and Permits . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.25 Relations With Suppliers and Customers . . . . . . . . . . . . . . . . 19
3.26 Interests in Competitors, Suppliers and Customers. . . . . . . . . . . 19
3.27 Employment Matters . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.28 Discrimination: Occupational Safety; Labor. . . . . . . . . . . . . . 19
3.29 Related Transactions . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.30 Brokers and Finders. . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.31 Questionable Payments. . . . . . . . . . . . . . . . . . . . . . . . . 20
3.32 Books and Records. . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.33 Bank Accounts; Safe Deposit Boxes. . . . . . . . . . . . . . . . . . . 20
3.34 Full Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.35 Effect of Certificates . . . . . . . . . . . . . . . . . . . . . . . . 21
3.36 Source Code. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.37 Licenses and Royalties . . . . . . . . . . . . . . . . . . . . . . . . 21
3.38 Adequacy of Documentation. . . . . . . . . . . . . . . . . . . . . . . 21
3.39 Third-Party Components in Software Programs. . . . . . . . . . . . . . 21
3.40 Third-Party Interests or Marketing Rights in Software Programs . . . . 21
3.41 No Virus Warranties. . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.42 Software: Physical Media. . . . . . . . . . . . . . . . . . . . . . . 22
3.43 Year 2000 Compliance . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.44 Material Misstatements or Omissions. . . . . . . . . . . . . . . . . . 22
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF QUIXOTE. . . . . . . . . . . . . . . . . . 23
4.1 Organization and Qualification . . . . . . . . . . . . . . . . . . . . 23
4.2 Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.3 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . 23
4.4 Absence of Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.5 Litigation and Administrative Proceedings. . . . . . . . . . . . . . . 23
4.6 Brokers and Finders. . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.7 Conduct of Business. . . . . . . . . . . . . . . . . . . . . . . . . . 24
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS. . . . . . . . . . . . . . . . . . 24
5.1 Conduct of Business. . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE VI
COVENANTS OF NU-METRICS AND THE SHAREHOLDERS . . . . . . . . . . . . . . . . 26
6.1 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . 26
6.2 Closing Returns. . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.3 Access to Information. . . . . . . . . . . . . . . . . . . . . . . . . 27
6.4 Non-Competition and Right of First Refusal . . . . . . . . . . . . . . 27
6.5 338(h)(10) Election. . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.6 Consulting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.7 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE VII
COVENANTS OF QUIXOTE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.1 Retention of Records . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.2 Termination Agreements . . . . . . . . . . . . . . . . . . . . . . . . 29
7.3 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE VIII
MUTUAL COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.1 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.2 Consistent Tax Reporting . . . . . . . . . . . . . . . . . . . . . . . 31
8.3 Cooperation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF NU-METRICS AND THE SHAREHOLDERS . . . . . . . . 31
9.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . 31
9.2 Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.3 Filings; Consents: Waiting Periods . . . . . . . . . . . . . . . . . . 31
9.4 No Injunction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE X
CONDITIONS TO OBLIGATIONS OF QUIXOTE . . . . . . . . . . . . . . . . . . . . 32
10.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . 32
10.2 Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
10.3 Filings: Consents; Waiting Periods. . . . . . . . . . . . . . . . . . 32
10.4 No Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.5 Legal Opinion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.6 Due Diligence Investigation. . . . . . . . . . . . . . . . . . . . . . 32
10.7 Shareholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.8 Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.9 338(h)(10) Election. . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.10 Accountant's Consent . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE XI
CLOSING DELIVERIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11.1 Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11.2 Books and Records. . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11.3 Legal Opinion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11.4 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11.5 Closing Certificates and Releases. . . . . . . . . . . . . . . . . . . 33
11.6 Charter: Good Standing Certificates. . . . . . . . . . . . . . . . . . 34
11.7 Resignations of Nu-Metrics' Officers and Directors . . . . . . . . . . 34
11.8 Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.9 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.10 Bank Accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.11 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE XII
SURVIVAL AND INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . 34
12.1 Survival of Representations and Warranties: Covenants. . . . . . . . . 34
12.2 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
12.3 Indemnification by Quixote . . . . . . . . . . . . . . . . . . . . . . 36
12.4 Indemnification Procedure. . . . . . . . . . . . . . . . . . . . . . . 36
12.5 Offset Against Unpaid Amounts. . . . . . . . . . . . . . . . . . . . . 37
12.6 Treatment as Adjustment of Purchase Price. . . . . . . . . . . . . . . 38
12.7 Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE XIII
TERMINATION, AMENDMENT AND WAIVERS . . . . . . . . . . . . . . . . . . . . . 39
13.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
13.2 Effect of Termination. . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE XIV
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
</TABLE>
iv
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
14.1 Amendment and Modification . . . . . . . . . . . . . . . . . . . . . . 39
14.2 Waiver of Compliance . . . . . . . . . . . . . . . . . . . . . . . . . 39
14.3 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
14.4 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
14.5 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
14.6 Publicity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
14.7 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
14.8 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
14.9 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
14.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
14.11 Third Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
14.12 Arbitration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
14.13 Review of Accounting Matters . . . . . . . . . . . . . . . . . . . . . 42
14.14 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
</TABLE>
v
<PAGE>
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT, dated as of November 30, 1998, (the
"Agreement"), by and among QUIXOTE CORPORATION, a Delaware corporation,
having an address at One East Wacker Drive, Chicago, Illinois 60601, or a
subsidiary thereof ("Quixote") and NU-METRICS, INC., a Pennsylvania
corporation, having an address at University Drive, Box 518, Uniontown,
Pennsylvania 15401 ("Nu-Metrics") and HARRY R. SAMPEY, Ph.D, an individual,
having an address at P. O. Box 73, Farmington, Pennsylvania 15437 ("Sampey"),
BRENDA J. AUER, an individual, having an address at RD 1, Box 522,
Vanderbilt, Pennsylvania 15486, CHRISTINE C. SAMPEY, an individual, having an
address at 10600 Bloomfield Drive, #1234, Orlando, Florida 32825, KIM A.
SAMPEY, an individual, having an address at RD 1, Box 465, Vanderbilt,
Pennsylvania 15486, VICKI L. SAMPEY, an individual, having an address at RD
1, Box 465, Vanderbilt, Pennsylvania 15486, and KAREN SINGO, an individual,
having an address at 2383 Ben Franklin Drive, Delano, Florida 32720 (Sampey,
together with the above-named individuals, are hereinafter collectively
referred to as the "Shareholders").
W I T N E S S E T H:
WHEREAS, Nu-Metrics is engaged in the business of designing and
developing electronic instruments for the highway transportation industry;
WHEREAS, the respective Boards of Directors of each of Quixote and
Nu-Metrics have determined that it is advisable and for the benefit of their
corporations and their respective shareholders that Nu-Metrics be acquired by
Quixote by means of the acquisition from the Shareholders by Quixote of all
of the outstanding capital shares of Nu-Metrics, $1.00 par value per share
(the "Shares"), in exchange for cash, pursuant to the terms and conditions
set forth herein (the "Acquisition");
WHEREAS, the Shareholders own of record and beneficially all of the
issued and outstanding Shares;
WHEREAS, the parties intend that, for federal income tax purposes, this
transaction qualify for an election under Section 338(h)(10) of the Internal
Revenue Code of 1986, as amended (the "Code");
NOW, THEREFORE, in consideration of the premises, the mutual covenants
and agreements contained herein, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, and in reliance
upon the representations and warranties contained herein, the parties hereto
agree as follows:
<PAGE>
ARTICLE I
TERMS OF PURCHASE AND SALE
1.1 PURCHASE AND SALE OF THE SHARES. Subject to the terms and
conditions contained in this Agreement, on the Closing Date (as hereinafter
defined), the Shareholders shall sell, assign, transfer and deliver the
Shares to Quixote, and Quixote shall purchase the Shares from the
Shareholders, for an aggregate purchase price consisting of the amounts set
forth in Section 1.3 hereof (the "Purchase Price") payable pursuant to the
terms provided in Section 1.3 hereof.
1.2 CLOSING. Subject to the terms and conditions of this Agreement,
the closing of the transactions contemplated hereby (the "Closing") shall
take place at the offices of Ross & Hardies, Chicago, Illinois, at 9:00 a.m.,
Central Standard Time, on November 30, 1998 (the "Closing Date") or such
other place or time as the parties may agree.
1.3 PAYMENT OF PURCHASE PRICE. Upon satisfaction of all the terms
and conditions set forth in this Agreement, on the Closing Date Quixote shall
deliver to the Shareholders the Purchase Price consisting of FOURTEEN
MILLION NINE HUNDRED THOUSAND AND NO/100 DOLLARS ($14,900,000) (the "Cash
Consideration") to be allocated pursuant to the terms of SCHEDULE 1.3, less
the Holdback Amount as set forth on SCHEDULE 1.6. The Cash Consideration
will be adjusted by an amount (which may be positive or negative) equal to
the change in the value of Net Assets (hereinafter defined) of Nu-Metrics
from June 30, 1998 to the Closing Date, which adjustment shall be
accomplished by the payment of money from the Shareholders to Quixote or from
Quixote to the Shareholders, whichever the case may be, after the Closing,
and in the event either party breaches this obligation, the other party shall
be entitled to indemnification therefor pursuant to Article XII hereof,
without regard to the Basket (hereinafter defined). Delivery to the
Shareholders of the Cash Consideration shall be accomplished on the Closing
Date in immediately available funds by wire transfer to such bank account as
Sampey shall specify and, notwithstanding the physical delivery of the
Shares, the transfer to Quixote of the ownership of the Shares shall not be
effective unless and until such wire transfer has been completed and
acknowledged by the receiving bank.
1.4 CALCULATION OF PURCHASE PRICE. The parties hereto acknowledge
and agree that the calculation of the Purchase Price, and the calculation of
the Net Assets, does not include the following items which shall be
distributed by Nu-Metrics to the Shareholders the day before the Closing
Date: all of the cash, all marketable securities, the condominium apartment,
the Mercedes convertible and the lease related thereto, the airport lease and
the aircraft presently owned by Nu-Metrics, the airport hangar building and
improvements thereto, including the fuel tanks and the paving, the outer
laboratory and the improvements and the equipment relating thereto, and the
policy issued by American Guardian Life Assurance, which insures the life of
Sampey (collectively, the "Retained Assets"). The
2
<PAGE>
Shareholders shall assume all liabilities relating to the Retained Assets
including, without limitation, the related aircraft debt (the "Aircraft
Debt").
1.5 TAX AND ACCOUNTING. The parties hereto shall each use their best
efforts to cause the transactions contemplated hereunder to qualify for an
election pursuant to Section 338(h)(10) of the Code.
1.6 HOLDBACK. The transactions contemplated herein (including the
distribution of the Retained Assets contemplated in Section 1.4 hereof and
the Section 338(h)(10) election) might result in tax to Nu-Metrics under Code
Section 1374. Prior to the Closing, the Shareholders and Quixote shall make
a reasonable estimation of the anticipated amount of any such tax; and, at
the time of Closing, that amount (the "Holdback Amount") shall be withheld
from the Cash Consideration which is to be delivered to the Shareholders
pursuant to Section 1.3 hereof and paid to Nu-Metrics for later distribution
consistent herewith. Within thirty (30) days after the filing of the income
tax return on which the amount of any such tax is shown to be due, the
portion of the Holdback Amount in excess of the amount of any such tax due,
if any, shall be paid by Nu-Metrics to Sampey for distribution to the
Shareholders. If the Holdback Amount is not sufficient to pay the amount of
the tax as shown on the income tax return, the Shareholders shall reimburse
Nu-Metrics for the additional amount of the tax which is so paid within
thirty (30) days after the return has been filed.
ARTICLE II
PURCHASE PRICE ADJUSTMENTS
2.1 ADJUSTMENT AMOUNT. As provided herein, the Cash Consideration
will be adjusted by an amount (which may be positive or negative) equal to
the change in the value of Net Assets of Nu-Metrics as shown on the June 30,
1998 financial statements of Nu-Metrics, from June 30, 1998 to the Closing
Date (the "Adjustment Amount"). The change in the value of Net Assets shall
be calculated in conformity with GAAP.
(a) PRELIMINARY ADJUSTMENT. On or before the Closing Date, the
Shareholders shall cause Smith, Lewis, Chess & Company ("SLCC"), who are
Nu-Metrics' outside auditors, to prepare a preliminary Closing balance sheet
(the "Preliminary Closing Balance Sheet") based upon the September 30, 1998
financial statements of Nu-Metrics, and deliver such Preliminary Closing
Balance Sheet to Quixote for review and approval. Based upon such
Preliminary Closing Balance Sheet, as approved by Quixote, Quixote and Sampey
shall make a preliminary determination of the Adjustment Amount (the
"Preliminary Adjustment Amount"). If the Preliminary Closing Balance Sheet
indicates that the value of Net Assets has decreased from June 30, 1998 to
the Closing Date, the Cash Consideration to be delivered to the Shareholders
hereunder shall be reduced by the amount of the Preliminary Adjustment
Amount, and if the value of Net Assets has increased from June 30, 1998 to
the
3
<PAGE>
Closing Date, the Cash Consideration to be delivered to the Shareholders
hereunder shall be increased by the amount of the Preliminary Adjustment
Amount.
(b) FINAL ADJUSTMENT. Within 30 days of the Closing, the
Shareholders shall deliver to Quixote a final Closing balance sheet (the
"Final Closing Balance Sheet") based upon the November 30, 1998 financial
statements of Nu-Metrics, and its final determination of the Adjustment
Amount (the "Final Adjustment Amount"), based upon the Final Closing Balance
Sheet. Quixote shall have 15 days to review the Final Closing Balance Sheet
and Final Adjustment Amount. Failure of Quixote to notify the Shareholders
within such 15 day period of Quixote's approval or disapproval thereof shall
be deemed approval. On the fifth business day after Quixote's approval
thereof, if the value of Net Assets has decreased from June 30, 1998 to the
Closing Date, the Shareholders will pay to Quixote, and if the value of Net
Assets has increased from June 30, 1998 to the Closing Date, Quixote will pay
to the Shareholders, the Final Adjustment Amount (treated as a positive
number in all cases), with appropriate credit being given for the Preliminary
Adjustment Amount paid pursuant to Section 2.1(a). Payments must be made in
immediately available funds. Payments to the Shareholders will be made by
wire transfer to such bank accounts as Sampey shall specify and in the same
proportions as the Cash Consideration. Payment to Quixote will be made by
wire transfer to such bank account as Quixote specifies.
(c) DISPUTES. If Quixote and Sampey are unable to agree upon
the Final Adjustment Amount, such dispute shall be resolved by a "Big Five"
accounting firm, in accordance with Section 14.13 hereof.
2.2 NET ASSETS. For the purposes of this Article II and this
Agreement, "Net Assets" shall mean the assets minus the liabilities as
reflected in the financial statements of Nu-Metrics; however, in all events,
there shall be excluded from the determination of the Net Assets the Retained
Assets and the Aircraft Debt as defined in Section 1.4 hereof, as well as all
other liabilities related to the Retained Assets.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF NU-METRICS
AND THE SHAREHOLDERS
Nu-Metrics and the Shareholders, jointly and severally, represent and
warrant to Quixote as follows:
3.1 ORGANIZATION AND QUALIFICATION. (a) Nu-Metrics is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Pennsylvania, and has the corporate power and authority to enter
into this Agreement, to consummate the transactions contemplated hereby, to
own or lease the properties and other assets which it presently owns or
leases and to carry on its business as presently conducted.
4
<PAGE>
(b) The copy of the Articles of Incorporation, and all
amendments thereto, of Nu-Metrics, as certified by the Secretary of State of
the State of Pennsylvania, and of the By-laws, as amended to date, of
Nu-Metrics, as certified by its Secretary, being delivered herewith to
Quixote, are true, complete and correct copies as amended and presently in
effect. All minutes and consents of the shareholders and directors of
Nu-Metrics are contained in the minute books of Nu-Metrics, and said minute
books have been furnished to Quixote for examination at a reasonable time
prior to the Closing. No minutes or consents have been included in such
minute books since such examination by Quixote which have not heretofore been
furnished to Quixote and no corporate action not reflected in said minute
books has been taken.
(c) Nu-Metrics is duly licensed or qualified to do business as
a foreign corporation, and is in good standing, in every domestic and foreign
jurisdiction in which Nu-Metrics is required to be so licensed or qualified.
3.2 AUTHORITY. Nu-Metrics and the Shareholders, on their own behalf,
as appropriate, have full power, capacity and authority (corporate or
otherwise) to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have
been duly and validly authorized and approved by all necessary action on the
part of each of the Shareholders and the Board of Directors of Nu-Metrics
and no other proceedings (corporate or otherwise) on the part of the
Shareholders or Nu-Metrics are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby. This Agreement and the
other agreements contemplated by this Agreement have been duly and validly
executed and delivered by each of the Shareholders and Nu-Metrics, and
constitute legal, valid and binding agreements of Nu-Metrics and the
Shareholders.
3.3 CAPITALIZATION. The entire authorized capital stock of
Nu-Metrics and the number of Shares thereof which are issued and outstanding
are as follows:
<TABLE>
<CAPTION>
NUMBER OF NUMBER
AUTHORIZED SHARES ISSUED AND
OF NU-METRICS CLASS OUTSTANDING
<S> <C> <C>
2,000,000 Common 366,233
</TABLE>
All of the issued and outstanding Shares of Nu-Metrics' capital stock are
owned of record and beneficially by the Shareholders in the respective
amounts set forth in SCHEDULE 3.3 hereto. The Shares are subject to no
restrictions on transferability other than restrictions imposed by the 1933
Act, and applicable state securities laws. All of the outstanding Shares of
capital stock of Nu-Metrics are duly authorized and validly issued and
outstanding, fully paid and non-assessable, and were not issued in violation
of any preemptive rights. There are no Shares of capital stock in treasury,
and there are no Shares reserved for issuance.
5
<PAGE>
Except as set forth in this Agreement, there are no outstanding options,
warrants, conversion or other rights to acquire from any of the Shareholders
or Nu-Metrics, or any plans, contracts or commitments providing for the
issuance of, or the granting of, rights by the Shareholders or Nu-Metrics to
acquire: (i) any capital stock of Nu-Metrics (whether issued or unissued) or
(ii) any securities convertible into or exchangeable for any capital stock of
Nu-Metrics. There are no agreements or understandings with respect to the
voting, holding or selling of any Shares of capital stock of Nu-Metrics, or
any contractual obligations of Nu-Metrics or any of the Shareholders with
respect to Nu-Metrics' capital stock. There are no voting trusts or proxies
currently in effect with respect to the Shares. No person has any right to
require Nu-Metrics to register any of its securities under the 1933 Act.
3.4 TITLE TO SHARES. The Shareholders own and have good and
marketable title to the Shares, free and clear of any lien, pledge, claim,
encumbrance, restriction or right of any third party of any kind. On the
Closing Date, Quixote will acquire good and marketable title to the Shares,
free and clear as aforesaid, including without limitation, any of the
foregoing set forth in the By-laws of Nu-Metrics. The Shares represent the
only equity interest of the Shareholders in Nu-Metrics.
3.5 CONSENTS AND APPROVALS. Except as set forth in SCHEDULE 3.5
hereto, there is no authorization, consent, order or approval of, or notice
to or filing with, any individual or entity required to be obtained or given
in order for Nu-Metrics and the Shareholders to consummate the transactions
contemplated hereby and fully perform their respective obligations hereunder.
3.6 ABSENCE OF CONFLICTS. The execution, delivery and performance by
Nu-Metrics and the Shareholders of this Agreement and the consummation by
Nu-Metrics and the Shareholders of the transactions contemplated hereby will
not, with or without the giving of notice or lapse of time or both, (i)
violate any provision of law, statute, rule or regulation to which either
Nu-Metrics or the Shareholders are or were subject, (ii) violate any order,
judgment or decree which is or was applicable to either Nu-Metrics or the
Shareholders; (iii) conflict with or result in a breach or default under any
term or condition of the Articles of Incorporation or By-laws of Nu-Metrics,
or any agreement or other instrument to which either Nu-Metrics or the
Shareholders are a party or by which either of them is bound, or (iv) cause,
or give any person grounds to cause, the maturity of any debt, liability or
obligation of Nu-Metrics to be accelerated or increase any such liability or
obligation.
3.7 FINANCIAL STATEMENTS: ACCOUNTS RECEIVABLE. Nu-Metrics has
previously delivered to Quixote true and correct copies of the unaudited
balance sheets of Nu-Metrics, as of June 30, 1998 and the related unaudited
statements of income, statements of retained earnings and statements of
changes in financial position for the periods ending on such dates
(collectively, the "Financial Statements"). Except as disclosed on
SCHEDULE 3.7, the Financial Statements (i) have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis,
are correct and complete and are in accordance with the books and records of
Nu-Metrics, (ii) present fairly the financial position and condition
6
<PAGE>
of Nu-Metrics and the related results of operations as at the dates and for
the periods then ended (subject to customary year-end adjustments, which
adjustments shall not be material in kind or amount) and (iii) contain no
material misstatements or omissions which under generally accepted accounting
principles would be required to be disclosed for financial statement
purposes. As used in this Section 3.7, "material" shall mean any such
adjustments, misstatements or omissions, which individually exceeds
$5,000.00, and in the aggregate, exceeds $100,000.00.
Subject to applicable reserves for bad debts shown on Nu-Metrics'
latest balance sheets included in the Financial Statements, as such reserves
are adjusted from the date thereof in the ordinary course of business, all
accounts and notes receivable reflected on the balance sheets are, and all
accounts and notes receivable subsequently accruing to the Closing Date will
be, (a) valid, genuine and subsisting, (b) subject to no known defenses,
setoffs or counterclaims and (c) current and collectible.
3.8 ABSENCE OF UNDISCLOSED LIABILITIES. Except as and to the extent
reserved for in the Financial Statements or as set forth in SCHEDULE 3.8
hereto, Nu-Metrics has no liabilities or obligations, whether accrued,
absolute or contingent, determined or undetermined, known or unknown or
whether due or to become due (including, without limitation, obligations as
guarantor) other than those in the ordinary course of business since June 30,
1998, which have not yet been accrued or booked. Nu-Metrics does not know of
any basis for the assertion of any claim or liability relating to the
business of Nu-Metrics, nor is it aware of any occurrence or fact that has or
might have an adverse effect on the businesses of Nu-Metrics. Except as
disclosed in SCHEDULE 3.8, as of the date of this Agreement, Nu-Metrics has
no outstanding debt to any bank or other lender.
3.9 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth on
SCHEDULE 3.9 hereto, since June 30, 1998, there has not been (a) any damage,
destruction or casualty loss to the properties or assets of Nu-Metrics
(whether covered by insurance or not) outside the ordinary course of
business; (b) any material adverse change in the business, assets,
properties, operations, prospects or financial condition of Nu-Metrics or any
fact or condition which could cause such a change, other than any change,
fact or condition related solely to the transactions contemplated hereby; (c)
any entry into any transaction, commitment or agreement (including, without
limitation, any borrowing) in excess of $10,000.00, or outside the ordinary
course of business of Nu-Metrics; (d) any direct or indirect redemption,
repurchase or other acquisition for value by Nu-Metrics of its capital stock
or any agreement to take such action, or any declaration, setting aside or
payment of any dividend or other distribution in cash, stock or property with
respect to Nu-Metrics' capital stock (other than the distribution of Retained
Assets as set forth in Section 1.4 hereof); (e) any increase in the rate or
terms of compensation payable or to become payable by Nu-Metrics to its
directors, officers, employees, agents or independent contractors or any
increase in the rate or change in the terms of any employment agreement or
compensatory arrangement, or any changes in any bonus, severance, pension,
insurance or other employee benefit plan, or any other payment or benefit
made to or for any such director, officer, employee, agent or independent
7
<PAGE>
contractor; (f) any sale, transfer or other disposition of any asset of
Nu-Metrics to any party, including, without limitation, the Shareholders,
except for payment of obligations incurred, and sale of products, in the
ordinary course of business consistent with past practices; (g) any amendment
or termination of any material contract or agreement to which Nu-Metrics is a
party or any termination or waiver of any other rights of value to the
businesses of Nu-Metrics; (h) any capital expenditure for additions to
property or equipment by Nu-Metrics in excess of $10,000.00; (i) any split,
combination, exchange or reclassification of shares of capital stock of
Nu-Metrics; (j) any issuance of capital stock of Nu-Metrics or of securities
convertible into or rights to acquire any such capital stock; (k) any failure
by Nu-Metrics to pay accounts payable or other obligations in the ordinary
course of business; (l) the incurrence of any obligations or liability
(absolute or contingent) or the making of any capital expenditure not in the
ordinary course of business or in excess of $10,000.00; (m) any pledge of any
of the assets or properties of Nu-Metrics or any action or inaction which
would subject any such assets or properties to any lien, security interest,
mortgage, pledge, claim, charge or other encumbrance of any kind; (n) the
incurrence of any liability or obligation by Nu-Metrics, except for
liabilities incurred in the ordinary course of business; (o) any actual or
threatened termination or cancellation of, or modification or change in, any
business relationship with any customer or customers of Nu-Metrics or other
agreement or arrangement involving or related to the assets or properties of
the businesses of Nu-Metrics; (p) any cancellation of a debt due to or a
claim of Nu-Metrics, other than by payment or other satisfaction; (q) any
failure of Nu-Metrics to perform under, or any default by Nu-Metrics under,
any agreement, obligation or covenant to which it is or was bound; (r) any
change in any method of accounting or accounting practice, principle or
procedure; (s) any action or inaction which might cause Nu-Metrics to incur
any tax liability out of the ordinary course of business (other than the
distribution of Retained Assets as set forth in Section 1.4 hereof); (t) any
other event or condition of any character which materially and adversely
affects the businesses of Nu-Metrics; or (u) any agreement, whether in
writing or otherwise, to take any action described in this Section 3.9. The
provisions of this Section 3.9 shall not have any application to (and this
Section 3.9 shall not prohibit or restrict) any distributions to one or more
Shareholders of any of the Retained Assets.
3.10 INTENTIONALLY OMITTED.
3.11 REAL AND PERSONAL PROPERTY; INVENTORIES. SCHEDULE 3.11(a) hereto
correctly identifies (i) each lease or rental of real property held or paid
by Nu-Metrics; and (ii) each parcel of real property, and each interest
(other than such leases or rentals) in real property, used in the operations
of the businesses of Nu-Metrics. Except as set forth in SCHEDULE 3.11(a)
hereto, (a) any structures described in SCHEDULE 3.11(a) and Nu-Metrics' use
thereof conform in all material respects with all applicable ordinances,
requirements, regulations, zoning laws, restrictive covenants, conditions and
restrictions and do not encroach on property of others, and are not
encroached upon by structures of others; and (b) no claims, charges or notice
of violations have been filed, served, made or threatened, orally or in
writing, against or relating to any such property or any of the operations
conducted at any such property (currently or in the past) as a result of (i)
any violation or alleged violation of
8
<PAGE>
any applicable ordinances, requirements, regulations, zoning laws,
restrictive covenants, conditions or restrictions, or (ii) as a result of any
encroachment on the property of others. SCHEDULE 3.11(b) hereto describes
all material tangible or intangible personal property and assets of
Nu-Metrics. Nu-Metrics has good and marketable title to, and is in
possession of or has control over, all of its real and personal property,
none of which is held under or subject to any mortgage, pledge, lien, lease,
encumbrance, conditional sales contract or other security arrangement except
to the extent described in SCHEDULE 3.11(b) hereto. Each item of such
tangible personal property and assets is in good working order or condition,
reasonable wear and tear excepted.
The inventories of Nu-Metrics are in good and merchantable condition
and are of a quality suitable and usable or saleable in the ordinary course
of business for the purposes for which such inventories are intended. The
products comprising such inventory are free from defects and operate in
accordance with specifications for such products. The inventory is adequate
for Nu-Metrics' business and there has been no material adverse change in
such inventories since June 30, 1998. For purposes of this Section 3.11,
"merchantable" shall exclude parts which are not listed in bills of materials
for current products in Nu-Metrics' catalogs and parts which are not in usage
by Nu-Metrics for one (1) year or more.
3.12 PATENTS, TRADEMARKS. ETC. SCHEDULE 3.12 hereto contains an
accurate and complete description of all domestic and foreign patents,
trademarks, service marks, trademark registrations, service mark
registrations, logos, trade names, assumed names, copyrights and copyright
registrations and all applications therefor (collectively, the "Intellectual
Property"), presently owned or held by Nu-Metrics, Sampey or Sampey
Scientific, Ltd. (or any predecessor in interest of any of them) (each, a
"Nu-Metrics Entity") or under which a Nu-Metrics Entity owns or holds any
license, or in which Nu-Metrics owns or holds any direct or indirect
interest. Nu-Metrics, for itself and each Nu-Metrics Entity, represents and
warrants that it has the full right, power and authority to transfer the
rights, titles and interests granted herein, and that it is the legal and
beneficial owner of all right, title and interest in and to the Intellectual
Property, having good title thereto, free and clear of any and all mortgages,
liens, security interests and charges and that no other person or entity has
or shall have any claims of ownership in the Intellectual Property.
Nu-Metrics has not previously assigned, transferred, conveyed or otherwise
encumbered any right, title or interest in the Intellectual Property, and has
not granted to any third party any license to use the Intellectual Property
in any manner, or any covenant not to sue for any such use of the
Intellectual Property. To the extent any Intellectual Property, and the
right, title and interest therein has not yet been assigned by any Nu-Metrics
Entity to Nu-Metrics, Sampey shall cause the assignment thereof to
Nu-Metrics, at the sole cost and expense of Quixote and/or Nu-Metrics,
promptly after closing. The Intellectual Property is valid, in good standing
and not the subject of any challenge. Nu-Metrics represents and warrants
that no intellectual property other than the Intellectual Property is
necessary for the conduct of the present businesses of Nu-Metrics. None of
the products manufactured, distributed or sold by Nu-Metrics, nor any of the
Intellectual Property or other intellectual property (including without
limitation, technology, inventions, processes, designs, formulae, know-how,
trade secrets)
9
<PAGE>
(collectively, with the Intellectual Property, the "Intellectual Assets"), or
any of Nu-Metrics' activities that may include the disclosing, copying,
making, using or selling of such Intellectual Assets, or products or services
embodying such Intellectual Assets, conflict with, infringe or otherwise
violate any patents, trademarks or copyrights, or any other rights, of any
individual or entity, nor require payments to be made to any individual or
entity and no third party security interests therein are outstanding.
Nu-Metrics or a Nu-Metrics Entity has the sole and exclusive right to use,
has the right and power to sell, and has taken reasonable measures to
maintain and protect the Intellectual Assets; no claims have been asserted by
any individual or entity with respect thereto or challenging or questioning
the validity or effectiveness of any license or agreement with respect
thereto, and there is no valid basis for any such claim. Nu-Metrics is not
using confidential information or trade secrets of any former employer of any
past or present employees engaged in the business of Nu-Metrics. Nu-Metrics
owns rights in all pre-existing copyright works upon which derivatives works
are based. The items described in SCHEDULE 3.12 and the other Intellectual
Assets are adequate to conduct the business of Nu-Metrics as presently
conducted. Upon consummation of the transactions contemplated hereby,
Quixote will acquire good and marketable title to all of the Intellectual
Assets and the goodwill associated therewith.
3.13 EMPLOYEES. All personnel, including employees, agents,
consultants and contractors, who have contributed to or participated in the
conception and development of the Intellectual Assets on behalf of Nu-Metrics
either (a) were at such time parties to "work-for-hire" arrangements or
agreements with Nu-Metrics, in accordance with applicable federal and state
law, that have accorded Nu-Metrics full, effective, exclusive and original
ownership of all intellectual property thereby arising, or (b) have executed
appropriate instruments of assignment, which are still in full force and
effect, in favor of Nu-Metrics, as assignee, that have conveyed to Nu-Metrics
full, effective and exclusive ownership of all intellectual property thereby
arising. Nu-Metrics neither owns nor has any right, license or interest,
whether as a licensee, licenser or otherwise, in any copyrights, patents,
applications for copyrights or patents, trade secrets, inventions, processes
and designs or in any trademarks, service marks, trade names, or applications
for them, except as listed or described in SCHEDULE 3.12. No employee of
Nu-Metrics is in violation of (i) any term of any employment contract, any
"work for hire" arrangement or agreement, or any patent or invention
disclosure agreement or (ii) any other contract or agreement, or any
restrictive covenant relating to the rights of any such employee to be
employed by Nu-Metrics or to use trade secrets or proprietary information of
others.
3.14 CONTRACTS AND COMMITMENTS.
(a) Other than standard form customer and distributor contracts
entered into in the ordinary course of business, and except as set forth in
SCHEDULES 3.11(a), 3.14(a), 3.15, 3.24 and 3.28 hereto, Nu-Metrics is not a
party to any agreements, contracts, guarantees, commitments, restrictions or
instruments of any kind ("Contracts"). True and correct copies of all
Contracts listed on SCHEDULES 3.11(a), 3.14(a), 3.15, 3.24 and 3.28 hereto
have been made available to Quixote at a reasonable time prior to Closing.
All of the
10
<PAGE>
Contracts are valid and binding obligations of Nu-Metrics, enforceable in
accordance with their respective terms to the extent permitted by applicable
law, and are in full force and effect and complied with. No other party to
any of the Contracts is in default or breach thereof. True and correct
copies of each standard form customer and distributor contract currently in
use by Nu-Metrics in the conduct of its business are attached to
SCHEDULE 3.14(a). All non-standard form customer and distributor contracts
are listed on SCHEDULE 3.14(a). Nu-Metrics has not agreed with any customer
or distributor to make any variation in any such contract which could have a
material adverse effect on Nu-Metrics' assets, properties, businesses,
financial condition or prospects. As used herein, "material adverse effect"
shall mean any adverse effect in excess of $100,000.00.
(b) Nu-Metrics has not given any power of attorney (whether
revocable or irrevocable) to any individual or entity.
(c) Nu-Metrics is not in default, and there is no basis for any
valid claim of default, in any respect under any of the Contracts.
3.15 LICENSES AND ROYALTIES. Except as set forth on SCHEDULE 3.15
hereto, Nu-Metrics is not a licensee under any license, including, without
limitation, licenses with respect to technology used or to be used in
Nu-Metrics' products, and has no obligation to pay royalties to any third
party in connection therewith. Nu-Metrics has not granted to any individual
or entity any rights or security interests with respect to the technology for
Nu-Metrics' products.
3.16 GOVERNMENT CONTRACTS. Nu-Metrics does not have knowledge of any
acts, omissions or noncompliance with regard to any applicable public
contracting statute, regulation or contract requirement (whether express or
incorporated by reference) to any contracts relating to Nu-Metrics, its
businesses or any of its assets with any Government Contract Party (as
defined below) in either case that have led to or could lead to (a) any claim
or dispute involving Nu-Metrics, its businesses, or any of its assets and any
Government Contract Party or (b) any suspension, debarment or contract
termination, or proceeding related thereto. Nu-Metrics has no knowledge of
any act or omission related to the marketing, licensing, or selling of any
technology related to Nu-Metrics, or its business that has led to or could
have any material adverse affects on Nu-Metrics' rights or on any of its
assets. All of Nu-Metrics' development of technology was developed
exclusively at private expense. For purposes of this SECTION 3.16, the term
"Government Contract Party" means any independent or executive agency,
division, subdivision, audit group or procuring office of the federal
government, including any prime contractor of the federal government and any
higher level subcontractor of a prime contractor of the federal government,
and including any employees or agents thereof, in each case acting in such
capacity.
3.17 PRODUCT WARRANTIES AND LIABILITIES. Nu-Metrics has not given or
made any express or implied warranties with respect to any products licensed,
distributed, offered or sold or services performed by them, except for the
limited warranties stated in standard form
11
<PAGE>
customer contracts, in the forms attached to SCHEDULE 3.14, with
modifications that, in the aggregate, would not have a material adverse
effect on business, prospects or financial condition of Nu-Metrics.
Nu-Metrics does not have any knowledge of any fact or of the occurrence of
any event forming the basis of any present or future claim against
Nu-Metrics, whether or not fully covered by insurance, for liability on
account of products liability or on account of any express or implied product
warranty, except for warranty obligations and product returns in the ordinary
course of business and as set forth in SCHEDULE 3.17.
3.18 INSURANCE. Nu-Metrics keeps all of its businesses, operations
and properties insured against loss or damage, with responsible insurers.
SCHEDULE 3.18 hereto is a description of all insurance policies held by
Nu-Metrics concerning its businesses, operations and properties, true,
complete and correct copies of which have been previously provided to
Quixote. All these policies are in the respective face amounts set forth in
SCHEDULE 3.18, and such insurance is adequate and appropriate in accordance
with sound business practices. Each of the insurance policies referred to in
SCHEDULE 3.18 is in force and the premiums with respect thereto are fully
paid through the dates indicated thereon. No insurer has denied coverage or
reserved rights for any claim made by Nu-Metrics, Subsidiary or any other
individual or entity under any insurance policies.
3.19 LITIGATION AND ADMINISTRATIVE PROCEEDINGS. Except as set forth
in SCHEDULE 3.19 hereto, there is no claim, action, suit, proceeding or
investigation in any court or before any governmental or regulatory authority
pending or threatened against or affecting Nu-Metrics or which seeks to
enjoin or obtain damages in respect of the transactions contemplated hereby.
Nu-Metrics does not know nor have any reason to know of any basis for any
such claim, action, suit, proceeding or investigation. No claim, action,
suit, proceeding or investigation set forth in SCHEDULE 3.19 could, if
adversely decided, have a material adverse effect on the business,
properties, condition (financial or otherwise) or prospects of Nu-Metrics.
3.20 TAX MATTERS. For purposes of this Agreement:
(a) The term "Taxes" means all federal, state, local, foreign,
and other net income, gross income, gross receipts, sales, use, ad valorem,
transfer, franchise, profits, license, lease, service, service use,
withholding, payroll, employment, excise, severance, stamp, occupation,
premium, property, windfall profits, customs, duties or other taxes, fees,
assessments, or charges of any kind whatever, together with any interest and
any penalties, additions to tax, or additional amounts with respect thereto,
and the term "Tax" means any one of the foregoing Taxes;
(b) The term "Returns" means all returns, declarations,
reports, statements, and other documents required to be filed in respect of
Taxes, and the term "Return" means any one of the foregoing Returns;
12
<PAGE>
(c) The term "Code" means the Internal Revenue Code of 1986, as
amended. All citations to the Code or to the regulations promulgated
thereunder shall include any amendments or any substitute or successor
provisions thereto.
3.20.1 CORPORATION MATTERS. Nu-Metrics has qualified as an
"S" corporation as such term is defined in Section 1361(a)(1) of the Code for
each taxable year since October 1, 1991 and will continue to so qualify until
the Closing Date. Neither Nu-Metrics, the Shareholders nor any former
shareholder of Nu-Metrics has engaged in any action which would result in
Nu-Metrics failing to qualify as an "S" corporation under any provision of
the Code.
3.20.2 ALL RETURNS FILED. All Returns required to be filed
by or on behalf of Nu-Metrics on or before the Closing Date have been filed,
or proper extensions for the filing of such Returns have been filed, and such
Returns are complete and accurate and disclose all Taxes (and other charges)
for the periods covered thereby. Except as set forth in SCHEDULE 3.20.2, no
extension of time in which to file any such Returns is currently in effect
and there are not outstanding agreements or waivers extending the statutory
period of limitation applicable to such Returns.
3.20.3 ALL TAXES PAID. All Taxes (and other charges) shown
on such Returns or otherwise required to be paid, and any deficiency
assessments, penalties, interest and other charges with respect thereto, have
been paid, and there is otherwise no current liability for any unpaid taxes
(or other charges) due in connection with such Returns or otherwise. There
are no tax liens (other than for taxes not yet due) on any of the assets or
properties of Nu-Metrics, and, to the best knowledge of the Shareholder and
Nu-Metrics, no basis exists for the imposition of any such liens.
3.20.4 EXAMINATIONS, ETC. Except for the 1995 and 1996
federal Returns of Nu-Metrics which have been audited by the IRS (which
audits resulted in no material change), no federal, state, local, foreign or
other Returns of Nu-Metrics for tax years that remain open under any
applicable statute of limitations have been examined by the IRS or other
pertinent tax authorities and no deficiencies have been asserted or
assessments made as a result of examinations (including all penalties and
interest). Nu-Metrics has not been notified that any issues have been raised
by (or are currently pending before) the IRS or any other taxing authority in
connection with any of the Returns which could reasonably be expected to have
a material adverse effect on the financial condition of Nu-Metrics, taken as
a whole, if decided adversely to Nu-Metrics, nor are there any such issues
which have not been so raised but, if so raised by the IRS or any other
taxing authority in connection with any of the Returns could, in the
aggregate, reasonably be expected to have a material adverse effect on the
financial condition of Nu-Metrics.
3.20.5 WITHHOLDING. Nu-Metrics has withheld from its
employees and others (and timely remitted to the appropriate taxing
authorities) proper and accurate amounts for all periods in compliance with
all tax withholding provisions of applicable federal, state,
13
<PAGE>
foreign, local and other laws (including, without limitation, income,
withholding, social security, employment and other payroll taxes).
3.20.6 FOREIGN PERSON, ETC. No Shareholder is a "foreign
person" as defined in Section 1445(f)(3) of the Code. Nu-Metrics does not
have a permanent establishment in any foreign country, as defined in the
applicable tax treaty, if any, between the United States and such foreign
country. Nu-Metrics is not, and never has been, a United States real
property holding corporation within the meaning Section 897(c)(1)(A)(ii) of
the Code and Quixote is not required to withhold tax on the purchase of the
Shares by reason of Section 1445 or any other provisions of the Code.
Nu-Metrics has not participated in an international boycott within the
meaning of Section 999 of the Code. Nu-Metrics has no foreign assets.
3.20.7 PARACHUTE PAYMENTS. Nu-Metrics has not made, has not
become obligated to make nor will, as a result of any event connected with
the acquisition of Nu-Metrics by Quixote or any other transaction
contemplated herein, make or become obligated to make any "excess parachute
payment" as defined in Section 280G of the Code.
3.20.8 ACCOUNTING; TAX ATTRIBUTES. None of the assets or
properties of Nu-Metrics (a) is tax-exempt use property within the meaning of
Section 168(h) of the Code, (b) directly or indirectly secures any debt the
interest on which is tax-exempt under Section 103(a) of the Code, or (c) is
required to be treated as property owned by another under the provisions of
former Section 168(f)(8) of the Code. Nu-Metrics has not agreed to make, nor
is it required to make, any adjustment under Section 481(a) of the Code. To
the best knowledge of the Shareholders and Nu-Metrics, the basis of
Nu-Metrics in its assets is as set forth in its financial and tax records.
Nu-Metrics is not a party to or bound by any tax indemnity, tax sharing or
tax allocation agreement.
3.20.9 PRIOR CONSOLIDATED GROUPS. Except as set forth on
SCHEDULE 3.20.9, Nu-Metrics is not, and has never been, an includible
corporation in an affiliated group of corporations within the meaning of
Section 1504 of the Code.
3.21 COMPLIANCE WITH LAWS. Except as disclosed in SCHEDULE 3.21,
Nu-Metrics has not in the past been nor is it presently in violation of, in
respect of its operations, real property, machinery, equipment, all other
property, practices and all other aspects of its businesses, any applicable
law (whether statutory or otherwise), rule, regulation, order, ordinance,
judgment or decree of any governmental authority (federal, state, local or
otherwise) (collectively, "Laws"). Except as disclosed in SCHEDULE 3.21,
neither the Shareholders nor Nu-Metrics has received any notification of any
asserted present or past failure of Nu-Metrics to comply with any of such
Laws.
3.22 ENVIRONMENTAL MATTERS. (a) Except as otherwise disclosed in
SCHEDULE 3.22 hereto, (i) Nu-Metrics and its predecessors and the
subsidiaries of either, if any, have obtained all Environmental Permits (as
defined herein) that are required with respect to the
14
<PAGE>
business, operations and properties of Nu-Metrics and its predecessors and
the subsidiaries of either; (ii) Nu-Metrics and its predecessors and their
respective subsidiaries have been, and Nu-Metrics is, in compliance with all
terms and conditions of all Environmental Laws (as defined herein) and
Environmental Permits; (iii) neither Nu-Metrics nor its predecessors or their
respective subsidiaries have received any notice from a governmental
authority or third party of any violation of or potential liability arising
under any Environmental Law or Environmental Permit in connection with the
business of Nu-Metrics or its predecessors or their respective subsidiaries
or the operation thereof, nor is any such notice pending or to the best of
Nu-Metrics' knowledge, threatened; (iv) no underground or above ground
storage tanks are or have been located on the real properties described in
SCHEDULE 3.11(a) attached hereto or previously owned or operated by
Nu-Metrics; and (v) Nu-Metrics is not aware of any generation, treatment,
storage, transfer, disposal, release or threatened release in, at, from or on
such real properties of toxic or hazardous substances by any current or
previous owner or tenant of such real properties. Nu-Metrics has delivered
to Quixote all environmental records and material safety data sheets relating
to its business and operations. Nu-Metrics shall permit Quixote and its
agents access at all reasonable times to Nu-Metrics' property for the purpose
of conducting a Phase I environmental audit thereof.
(b) Except as set forth in SCHEDULE 3.22, there is no condition
or any set of facts or circumstances that could give rise to an Environmental
Claim (as defined herein).
(c) Except as set forth in SCHEDULE 3.22, to the best of the
Shareholders' and Nu-Metric's knowledge, there have been no releases of
Hazardous Material into the soil, surface water or ground water at its
production facility.
(d) For purposes of this Agreement, the following terms shall
have the respective meanings set forth herein:
"Environmental Permit" shall mean any permit, license, approval
or other authorization with respect to the business of Nu-Metrics or its
predecessors or their respective subsidiaries or the operation thereof under
any applicable Environmental Law (as defined herein), including laws,
regulations or other requirements relating to emissions, discharges or
releases of Hazardous Material (as defined herein) into ambient air, surface
water, ground water, or land, or otherwise arising from the manufacture,
processing, distribution, use, treatment, storage, disposal, transport, or
handling of Hazardous Material by Nu-Metrics or its predecessors or their
respective subsidiaries or the employees, representatives, contractors or
actual agents of any of such entities.
"Environmental Claim" shall mean any action, lawsuit, claim or
proceeding relating to the business of Nu-Metrics or its predecessors or
their respective subsidiaries or the operation thereof which seeks to impose
liability, for (i) violation of any Environmental Law, (ii) release of any
Hazardous Material, (iii) noise, (iv) pollution or contamination of the air,
surface water, groundwater or land; (v) solid, gaseous or liquid waste
generation, handling, treatment, storage, disposal or transportation;
(vi) exposure to hazardous or toxic
15
<PAGE>
substances; or (vii) the manufacture, processing, distribution in commerce,
use (by Nu-Metrics or its predecessors or their respective subsidiaries or
the employees, representatives, contractors or actual agents of any of such
entities), or storage (by Nu-Metrics or its predecessors or their respective
subsidiaries or the employees, representatives, contractors or actual agents
of any of such entities) of chemical substances. An "Environmental Claim"
includes, but is not limited to, a proceeding to issue, modify or terminate a
permit or license, or to adopt or amend a law or regulation to the extent
that such a proceeding attempts to redress violations of the applicable
permit, license, law or regulation which occurred on or prior to the Closing
Date as alleged by any federal, state or local executive, legislative,
judicial regulatory or administrative agency, board or authority.
"Hazardous Material" shall mean the following: (i) All
"hazardous substances," as such term is defined in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C.A.
Sec. 9601(14); (ii) all "hazardous wastes," as such term is defined in the
Resource Conservation and Recovery Act, 42 U.S.C.A. Sec. 6903(5); (iii) all
materials that are classified as hazardous or toxic under any Environmental
Law, as defined below; (iv) petroleum products, including gasoline, diesel
fuel, fuel oil, crude oil, and motor oil, and the constituents of those
products; or (v) medical wastes.
"Environmental Laws" shall mean, without limitation, the
following: the Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C.A. Sec. 9601 ET SEQ.); the Resource Conservation and
Recovery Act (42 U.S.C.A. Sec. 6901 ET SEQ.); the Clean Water Act (33
U.S.C.A. Sec. 1251 ET SEQ.); the Clean Air Act (42 U.S.C.A. Sec. 7401 ET
SEQ.); the Toxic Substance Control Act (15 U.S.C.A. Sec. 2601 ET SEQ.); the
Occupational Safety and Health Act (29 U.S.C. 651 ET SEQ.); and all other
federal, state and local statutes and ordinances pertaining to protection of
the environment, health or safety, and all amendments made to, and
regulations promulgated under, the foregoing laws effective at the time of
Closing.
3.23 EMPLOYEE BENEFITS.
3.23.1 Attached hereto as SCHEDULE 3.23 is a written list of
all employee benefit plans relating to employee benefits with respect to
which Nu-Metrics has incurred or may incur any future or contingent
obligations, including, without limitation, all plans, agreements or
arrangements relating to deferred compensation, pensions, profit sharing,
retirement income or other benefits, stock purchase, stock ownership and
stock option plans, stock appreciation rights, bonuses, severance
arrangements, health and welfare benefits, insurance benefits and all other
employee benefits or fringe benefits whether or not committed to writing and
whether or not any such plan is an "employee benefit plan" as defined in
Section 3.3 of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") (collectively referred to as the "Plans"). Except as may
be indicated on SCHEDULE 3.23, Nu-Metrics does not contribute, nor has it
ever contributed, to any multi-employer plan within the meaning of Section
4001(a)(3) ERISA, nor is Nu-Metrics affiliated with any entity
16
<PAGE>
such that Nu-Metrics has, or might have in the future, any multi-employer
plan withdrawal liability under Subtitle E of Part IV of ERISA.
3.23.2 Nu-Metrics has, with respect to each Plan, delivered
to Quixote true and complete copies of: (i) all plan texts and agreements
and related trust agreements or annuity contracts; (ii) all summary plan
descriptions and material employee communications; (iii) the annual reports
(Form 5500 series) (including all schedules thereto) for the most recent
three (3) plan years; (iv) the actuarial valuations for the most recent three
(3) plan years; (v) the audited financial statement and opinions for the most
recent three (3) plan years; (vi) if the Plan is intended to qualify under
Code Sections 401(a), the most recent determination letter received from the
IRS; and (vii) any and all communications with any governmental entity or
agency including, without limitation, the IRS, Department of Labor and the
Pension Benefit Guaranty Corporation ("PBGC").
3.23.3 Each Plan (and each trust forming a part of such
Plan) has been administered and operated in all respects in accordance with
its terms and applicable law. Where designated on SCHEDULE 3.23, each Plan
is "qualified" within the meaning of Section 401(a) of the Code and each
related trust is exempt from tax under Section 501(a) of the Code.
3.23.4 With respect to each Plan, no person: (i) has
entered into any non-exempt "prohibited transaction," as such term is defined
in ERISA and the Code; (ii) has breached a fiduciary obligation or violated
Sections 402, 403, 405, 503, 510 or 511 of ERISA; (iii) has any liability for
any failure to act or comply with the administration or investment of the
assets of such Plan; (iv) has engaged in any transactions or otherwise acted
with respect to such Plan in a manner which could subject Nu-Metrics or any
fiduciary or plan administrator or other person dealing with such Plan, to
liability under Sections 409 or 502 of ERISA or Sections 4972 or 4976 through
4980 of the Code.
3.23.5 With respect to any Plan subject to Title IV of
ERISA: (i) No liability to PBGC has been, or to the best knowledge of
Nu-Metrics is expected to be, incurred with respect to any such Plan, except
for liabilities for PBGC premiums which may be expected to be incurred in the
ordinary course of business; (ii) no such Plan has been terminated; (iii) no
filing of a notice to terminate any such Plan has been made; (iv) PBGC has
not instituted proceedings to terminate any such Plan; (v) no "reportable
event," as defined in Section 4043(b) for ERISA, for which the obligation to
report to the PBGC within 30 days has not been waived by the PBGC, has
occurred with respect to any such Plan; (vi) there exists no condition or set
of circumstances which presents a risk of termination or partial termination
of any Plan and which could result in a liability on the part of Nu-Metrics
to PBGC; and (vii) the present value of accrued benefits under each such Plan
does not presently exceed the current value of the assets of such Plan
allocable to such accrued benefits, and for this purpose the terms "current
value" and "accrued benefit" have the meanings specified in Sections 3(26)
and 3(23), respectively, of ERISA and "present value" shall be determined
using the actuarial assumptions which would be used by the enrolled
17
<PAGE>
actuary for each such Plan in connection with determining whether such Plan
satisfies the requirements of Section 412 of the Code, determined without
regard to Subsection (b)(5)(B) thereof.
3.23.6 Full payment has been made of all amounts which
Nu-Metrics was required under the terms of any of the Plans to have paid as
contributions to such Plans on or prior to the Closing Date, and no
"accumulated funding deficiency" (as defined in Section 302(a)(2) of ERISA
and Section 412(a) of the Code), whether or not waived, exists with respect
to any such Plan. No assets of Nu-Metrics are subject to any lien under
ERISA Section 302(f) or Code Section 412(n). Except as set forth on SCHEDULE
3.23, with respect to each Plan, there are no funded benefit obligations for
which contributions have not been made or properly accrued and there are no
unfunded benefit obligations that have not been accounted for by reserves, or
otherwise properly footnoted in accordance with generally accepted accounting
principles, on the financial statements of Nu-Metrics.
3.23.7 Other than for claims in the ordinary course of
business for benefits under the Plans, there are no actions, suits, claims or
proceedings, pending or threatened, nor to the best knowledge of Nu-Metrics
does there exist any basis therefor, which may result in any liability with
respect to any Plan to Nu-Metrics or any Plan or trust thereof.
3.23.8 Except for continuation coverage under Sections 601
ET SEQ. of ERISA, no former employee of Nu-Metrics or any affiliate thereof,
nor any dependent of any such former employee, is entitled to any medical,
dental benefits or other welfare benefits under any Plan.
3.23.9 No Plan is described in Code Section 413(c) or ERISA
Sections 4063, 4064 or 4066. No Plan which is a "welfare plan" as defined in
Section 3(1) of ERISA is a "multiple employer welfare arrangement" as defined
in ERISA Section 3(40).
3.23.10 Each Plan which is a "pension plan" as defined in
ERISA Section 3(2) and which is not qualified under Code Section 401(a) is
exempt from Parts 2, 3 and 4 of Title I of ERISA as an unfunded plan that is
maintained primarily for the purpose of providing deferred compensation for a
select group of management or highly compensated employees, pursuant to ERISA
Sections 201(2), 301(a)(3) and 401(a)(1). No assets of Nu-Metrics are
allocated to or held in a "rabbi trust" or similar funding vehicle.
3.23.11 Except as disclosed on SCHEDULE 3.23, the
consummation of the transactions contemplated by this Agreement will not:
(i) entitle any current or former employee of Nu-Metrics to severance pay,
unemployment compensation or any similar payment; (ii) accelerate the time of
payment or vesting, or increase the amount of any compensation due to, or in
respect of, any current or former employee, (ii) constitute or involve a
prohibited transaction; or (iv) constitute or involve a breach of fiduciary
18
<PAGE>
responsibility within the meaning of ERISA Section 502(1) or otherwise
violate Part 4 of Subtitle B of Title I of ERISA.
3.24 LICENSES AND PERMITS. Nu-Metrics has all governmental licenses
and permits and other governmental authorizations and approvals required for
the conduct of its business as presently conducted ("Permits"). SCHEDULE
3.24 hereto includes a list of all Permits.
3.25 RELATIONS WITH SUPPLIERS AND CUSTOMERS. Neither Nu-Metrics nor
the Shareholders is required to provide any bonding or other financial
security arrangements in connection with any transaction with any customer or
supplier. Neither Nu-Metrics nor the Shareholders has received any notice
that any customer or supplier of Nu-Metrics will cease to do business with
Nu-Metrics or refuse to do business with Quixote after the consummation of
the transactions contemplated hereby.
3.26 INTERESTS IN COMPETITORS, SUPPLIERS AND CUSTOMERS. Neither the
Shareholders nor any officer or director of Nu-Metrics nor any entity
controlled by or under common control with Nu-Metrics have any ownership
interest in any competitor, supplier or customer of Nu-Metrics or any
property used in the operation of their businesses.
3.27 EMPLOYMENT MATTERS. SCHEDULE 3.27 hereto is a list of all oral
and written employment or consulting contracts or other agreements or
arrangements providing for remuneration to which Nu-Metrics is a party or by
which it is bound, and all these contracts and arrangements are in full force
and effect. There are no oral contracts or arrangements of the type described
in the preceding sentence which, individually or in the aggregate, exceed
$20,000.00 in value. There have been no claims of defaults and there are no
facts or conditions which if continued, or with the giving of notice, will
result in a default under these contracts or arrangements.
3.28 DISCRIMINATION: OCCUPATIONAL SAFETY; LABOR. No person or party
(including, but not limited to, governmental agencies of any kind) has any
claim, or basis for any action or proceeding, against Nu-Metrics arising out
of any statute, ordinance or regulation relating to discrimination in
employment or employment practices or occupational safety and health
standards (including, but without limiting the foregoing, The Fair Labor
Standards Act, as amended; Title VII of the Civil Rights Act of 1964, as
amended; 42 U.S.C. 1981 or the Age Discrimination in Employment Act of 1967,
as amended), which, if upheld, would have an adverse effect on the assets,
properties, businesses or conditions, financial or otherwise, of Nu-Metrics.
There is no pending or threatened federal or state equal employment
opportunity enforcement action or labor dispute, strike, or work stoppage
affecting any business of Nu-Metrics. Nu-Metrics has no collective
bargaining or similar agreements, nor does it have any obligation to bargain
with any labor organization as the representative of their employees, and
there is neither pending, or to Nu-Metrics' knowledge threatened, any labor
dispute, strike or work stoppage which affects or which may affect
Nu-Metrics' business or which may interfere with the continued operations of
Nu-Metrics. No present or former employee of Nu-Metrics has any claim
against it for (a) overtime pay, other than overtime
19
<PAGE>
pay for the current payroll period, (b) wages or salary (excluding bonuses
and amounts accruing under pension and profit sharing plans) for any period
other than the current payroll period, (c) vacation, time off or pay in lieu
of vacation or time off, except as set forth on SCHEDULE 3.28, or (d) any
violation of any statute, ordinance or regulation relating to minimum wages
or maximum hours of work.
3.29 RELATED TRANSACTIONS. Nu-Metrics has not made or entered into
any loan, contract, lease, commitment, arrangement or understanding with any
of its officers, directors, employees, shareholders or any entity controlled
by or under common control with Nu-Metrics, except normal compensation
arrangements with officers, all of which are reasonable in amount and
terminable by Nu-Metrics on 30 days' notice.
3.30 BROKERS AND FINDERS. Neither Nu-Metrics, nor the Shareholders
(nor any of their respective officers, directors, employees, affiliates,
associates, or family members), have employed any broker, finder or
investment banker, or incurred any liability for any brokerage fees,
commissions or finders' fees in connection with this Agreement or the
transactions contemplated hereby.
3.31 QUESTIONABLE PAYMENTS. Neither Nu-Metrics nor the Shareholders,
nor any director, officer, agent, employee or other person associated with or
acting on behalf of Nu-Metrics have directly or indirectly: (a) used any
corporate funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity; (b) made any unlawful
payment to government officials or employees or to political parties or
campaigns from corporate funds; (c) violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended; (d) established or maintained any
unlawful or unrecorded fund of corporate monies or other assets; (e)
intentionally made any false or fictitious entry on the books or records of
Nu-Metrics; (f) made any bribe, payoff, influence payment, kickback or other
unlawful payment; or (g) made any bribe or other payment of a similar or
comparable nature to any person or entity, private or public, regardless of
form, to obtain favorable treatment in securing business or to obtain special
concessions or treatment. Except for those listed on SCHEDULE 3.31,
Nu-Metrics has no foreign assets.
3.32 BOOKS AND RECORDS. The books and records of Nu-Metrics have been
maintained in accordance with commercially reasonable business and
bookkeeping practices and accurately reflect in all respects the business,
assets, properties, rights, obligations, liabilities and operations of
Nu-Metrics.
3.33 BANK ACCOUNTS; SAFE DEPOSIT BOXES. SCHEDULE 3.33 hereto sets
forth the names and locations of all banks in which Nu-Metrics has accounts
or safe deposit boxes and the names of all persons authorized to draw thereon
or to have access thereto.
3.34 FULL DISCLOSURE. Nu-Metrics and the Shareholders have disclosed
in writing in, or pursuant to, this Agreement all facts material to the
business, operations, assets or condition (financial or otherwise) of
Nu-Metrics. No representation or warranty to Quixote
20
<PAGE>
contained in this Agreement, and no statement contained in the disclosure,
schedules to this Agreement, any certificate, list or other writing furnished
to Quixote pursuant to the provisions hereof, contains any untrue statement
of a material fact or omits to state a material fact necessary in order to
make the statements herein or therein not misleading.
3.35 EFFECT OF CERTIFICATES. All representations and warranties made
in certificates of Nu-Metrics and the officers of Nu-Metrics and/or the
Shareholders delivered hereunder shall be deemed to be additional
representations and warranties of Nu-Metrics and the Shareholders,
respectively.
3.36 SOURCE CODE. Except as set forth in SCHEDULE 3.36, Nu-Metrics
owns all rights, title and interest in and to the source codes for all of its
software products and has not distributed any copies of such source codes to
any third parties, and Nu-Metrics has not agreed to pay to any individual or
entity any royalty, commission or other amount on account of sales of their
software products.
3.37 LICENSES AND ROYALTIES. Except as set forth on SCHEDULE 3.37
hereto, Nu-Metrics is not a licensee under any license, including, without
limitation, licenses with respect to source codes used or to be used in
Nu-Metrics' software products, and has no obligation to pay royalties to any
third party in connection therewith. Nu-Metrics has not granted to any
individual or entity any rights or security interests with respect to the
source codes for Nu-Metrics' software products.
3.38 ADEQUACY OF DOCUMENTATION. Except as set forth in SCHEDULE 3.38,
the technical documentation includes the annotated source code, system
documentation, statements or principles of operation, and schematics for all
of the software products currently maintained or licensed Nu-Metrics, as well
as any pertinent commentary or explanation that may be necessary to render
such materials understandable and usable by a trained computer programmer
familiar with the relevant compilers, tools and platform (the "Technical
Documentation").
3.39 THIRD-PARTY COMPONENTS IN SOFTWARE PROGRAMS. Nu-Metrics has
validly and effectively obtained the right and license to use, copy, modify
and distribute any third-party programming and materials contained in
Nu-Metrics' software products and the Technical Documentation pursuant to
licenses from third parties as set forth in SCHEDULE 3.39.
Except as otherwise provided in SCHEDULE 3.39, Nu-Metrics' software
products and the Technical Documentation contains no other programming or
materials in which any third party may claim superior, joint or common
ownership, including any right or license, and, do not contain derivative
works of any programming or materials not owned in their entirety by
Nu-Metrics.
3.40 THIRD-PARTY INTERESTS OR MARKETING RIGHTS IN SOFTWARE PROGRAMS.
All of Nu-Metrics' standard form customer contracts constitute only end-user
agreements, each of
21
<PAGE>
which grants the end-user thereunder solely the non-exclusive right and
license to use an identified software product of Nu-Metrics and related user
documentation, for internal purposes only. There are no contracts,
agreements, licenses or other commitments or arrangements in effect with
respect to the development, marketing, distribution, licensing, or promotion
of Nu-Metrics' software products or any other inventory, the Technical
Documentation, or Nu-Metrics' Intellectual Assets with any independent
salesperson, distributor, sublicensor, or other remarketer or sales
organization, except for Contracts identified in SCHEDULES 3.14 and 3.36 and
3.39.
3.41 NO VIRUS WARRANTIES. The software products, as delivered to
Quixote, shall be free of any computer instructions (including, but not
limited to, computer instructions commonly referred to as Trojan Horses,
anomalies, worms, self-destruct mechanisms, or time/logic bombs) which are
intended to interfere with or frustrate the use of the software products, any
portion thereof, or other software or computer hardware, whether or not
currently in effect with respect to any copy of Nu-Metrics' software products.
3.42 SOFTWARE: PHYSICAL MEDIA. Nu-Metrics' software products, other
than that currently under development, will operate in accordance with the
Technical Documentation. The software products and any licenses or other
rights connected therewith, express or implied, will not infringe any other
person's or entity's intellectual property rights. Each copy of the software
product is free from physical defects in the media that tangibly embodies the
copy.
3.43 YEAR 2000 COMPLIANCE. Nu-Metrics' business, operations and
products, including, without limitation, its Information Technology (as
hereinafter defined) are Year 2000 Compliant (as hereinafter defined).
Nu-Metrics has made appropriate inquiry of its material suppliers,
distributors and vendors as to whether such parties are Year 2000 Compliant
and, to the best of Nu-Metrics' knowledge, such parties are Year 2000
Compliant. "Year 2000 Compliant" means that Information Technology is
designed to be used prior to, during and after the calendar Year 2000 A.D.,
and Information Technology used during each such time period will accurately
receive, provide and process date/time data (including, but not limited to,
calculating, comparing and sequencing) from, into and between the 20th and
21st centuries, including the years 1999 and 2000, and leap-year calculations
and will not malfunction, cease to function, or provide invalid or incorrect
results as a result of date/time data. "Information Technology" means
computer software, computer firmware, computer hardware (whether general or
specific purpose), and other similar or related items of automated,
computerized, or software system(s) that comprise any portion of its products
or are used or relied on by Nu-Metrics in the conduct of its business.
3.44 MATERIAL MISSTATEMENTS OR OMISSIONS. No representation or
warranty by either Nu-Metrics or the Shareholders in this Agreement nor any
documents, exhibits, certificates or schedules furnished to Quixote pursuant
hereto, contains or will contain any untrue statement of a material fact, or
omits or will omit to state any material fact necessary to make the
statements or facts contained therein not misleading. The copies of all
documents
22
<PAGE>
furnished to Quixote hereunder are true and complete copies of the originals
thereof in all material respects.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF QUIXOTE
Quixote represents and warrants to Nu-Metrics and the Shareholders as
follows:
4.1 ORGANIZATION AND QUALIFICATION. Quixote is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Delaware and has the corporate power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby.
4.2 AUTHORITY. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and
validly authorized by Quixote, and no other corporate proceedings on the part
of Quixote are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Quixote and constitutes legal, valid and binding
agreements of Quixote.
4.3 CONSENTS AND APPROVALS. Except as set forth on SCHEDULE 4.3,
there is no authorization, consent, order or approval of, or notice to or
filing with, any individual or entity required to be obtained or given in
order for Quixote to consummate the transactions contemplated hereby and
fully perform its obligations hereunder.
4.4 ABSENCE OF CONFLICTS. The execution, delivery and performance by
Quixote of this Agreement (including, without limitation, the offering,
issuance and sale of the Acquisition Stock) and the consummation by Quixote
of the transactions contemplated hereby will not, with or without the giving
of notice or the lapse of time, or both, (i) violate any provision of law,
statute, rule or regulation to which Quixote is or was subject, (ii) violate
any order, judgment or decree which is or was applicable to Quixote or (iii)
conflict with, or result in a breach or default under, any term or condition
of the Certificates of Incorporation or By-Laws of Quixote or any agreement
or other instrument to which it is a party or by it is bound.
4.5 LITIGATION AND ADMINISTRATIVE PROCEEDINGS. There is no claim,
action, suit, proceeding or investigation in any court or before any
governmental or regulatory authority pending or, to the best knowledge of
Quixote, threatened against or affecting Quixote which seeks to enjoin or
obtain damages in respect of the transactions contemplated hereby.
4.6 BROKERS AND FINDERS. Quixote has not employed any broker, finder
or investment banker, or incurred any liability for any brokerage fees,
commissions or finders' fees in connection with this Agreement or the
transactions contemplated by this Agreement.
23
<PAGE>
4.7 CONDUCT OF BUSINESS. Quixote presently intends to conduct
business it acquires from Nu-Metrics in Uniontown, Pennsylvania.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 CONDUCT OF BUSINESS.
(a) CONDUCT OF BUSINESS BY NU-METRICS. During the period from
the date of this Agreement to the Closing Date, Nu-Metrics shall carry on its
business in the usual, regular and ordinary course in substantially the same
manner as heretofore conducted and, to the extent consistent therewith, use
all reasonable efforts to preserve intact its current business organizations,
keep available the services of its current officers and employees, preserve
its relationships with customers, suppliers, licensors, licensees,
distributors and others having business dealings with it to the end that its
goodwill and ongoing businesses shall be unimpaired at the Closing Date.
Without limiting the generality of the foregoing, during the period from the
date of this Agreement to the Closing Date, Nu-Metrics shall not:
(i) (x) declare, set aside or pay any dividends on, or make any
other distributions in respect of, any of its capital stock (other than
the distribution of Retained Assets set forth in Section 1.4 hereof), (y)
split, combine or reclassify any of its capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu of
or in substitution for shares of its capital stock or (z) purchase, redeem
or otherwise acquire any shares of capital stock of Nu-Metrics or any
other securities thereof or any rights, warrants or options to acquire any
such shares or other securities;
(ii) issue, deliver, sell, pledge or otherwise encumber any shares
of its capital stock, any other voting securities or any securities
convertible into, or any rights, warrants, or options to acquire, any such
shares, voting securities or convertible securities;
(iii) amend its articles of incorporation, by-laws or other
comparable charter or organizational documents;
(iv) acquire or agree to acquire (x) by merging or consolidating
with, or by purchasing a substantial portion of the assets of, or by any
other manner, any business or any corporation, partnership, joint venture,
association or other business organization or division thereof or (y) any
assets that individual or in the aggregate are material to Nu-Metrics,
except purchases of inventory in the ordinary course of business
consistent with past practice;
24
<PAGE>
(v) sell, lease, license, mortgage or otherwise encumber or
subject to any lien or otherwise dispose of any of its properties or
assets;
(vi) (x) incur any indebtedness, except for short term borrowings
incurred in the ordinary course of business consistent with past practice,
(y) make any loans, advances or capital contributions to, or investments
in, any other person;
(vii) make or agree to make any equipment leases or any new capital
expenditure or capital expenditures which are individually in excess of
$2,000.00 or in the aggregate are in excess of $5,000.00;
(viii) make any tax election that could reasonably be expected
to have a material adverse effect or settle or compromise any income tax
liability;
(ix) pay, discharge, settle or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unassorted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the
ordinary course of business consistent with past practice or in accordance
with their terms, of liabilities reflected or reserved against in, or
contemplated by, the most recent Financial Statements or incurred since
the date of such financial statements in the ordinary course of business
consistent with past practice;
(x) except in the ordinary course of business, modify, amend or
terminate any material contract or agreement to which Nu-Metrics is a
party or waive, release or assign any material rights or claims
thereunder;
(xi) take any action that would prevent Quixote from making an
election under Section 338(h)(10) of the Code (and any comparable election
under state, local or foreign tax law) with respect to the acquisition of
Nu-Metrics by Quixote;
(xii) take any action to institute any new severance or
termination pay practices with respect to any directors, officers or
employees of Nu-Metrics or to increase the benefits payable under its
severance or termination pay practices in effect on the date hereof;
(xiii) adopt or amend, in any material respect, except as may
be required by applicable law or regulation, any collective bargaining,
bonus, profit sharing, compensation, stock option, restricted stock,
pension, retirement, deferred compensation, employment or other employee
benefit plan, agreement, trust, fund, plan or arrangement for the benefit
or welfare of any directors, officers or employees; or
(xiv) authorize any of, or commit or agree to take any of, the
foregoing actions.
25
<PAGE>
(b) NEGOTIATIONS WITH OTHERS. Neither the Shareholders nor
Nu-Metrics shall, directly or indirectly, through any officer, director,
employee, representative or agent thereof, solicit or encourage (including by
way of furnishing nonpublic information) or take other action to facilitate
any inquiries or the making of any proposal that constitutes or may
reasonably be expected to lead to an Acquisition Proposal (as defined below)
from any person, or engage in any discussions or negotiations relating
thereto or in furtherance thereof or accept any acquisition proposal. For
the purposes of this Agreement, "Acquisition Proposal" means inquiries or
proposals regarding (i) any merger, consolidation, sale of substantial assets
or similar transactions involving Nu-Metrics, (ii) sale of 10% or more of the
outstanding shares of capital stock of Nu-Metrics or similar transactions
involving Nu-Metrics, or (iii) any public announcement of a proposal, plan or
intention to do any of the foregoing or any agreement to engage in any of the
foregoing. Nu-Metrics and the Shareholders shall immediately cease and cause
to be terminated any existing discussions or negotiations with any parties
conducted prior to the date of this Agreement with respect to any of the
foregoing.
(c) NOTIFICATION OF CERTAIN MATTERS. Nu-Metrics and the
Shareholders shall give prompt notice to Quixote, and Quixote shall give
prompt notice to Nu-Metrics and the Shareholders of: (i) the occurrence or
failure to occur, of any event which such party believes would be likely to
cause any of its representations or warranties contained in this Agreement to
be untrue or inaccurate at any time from the date hereof to the Closing Date
and (ii) any failure of Nu-Metrics and any of the Shareholders on the one
hand or Quixote on the other hand, as the case may be, or of any officer,
director, employee or agent thereof, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder;
PROVIDED, HOWEVER, that failure to give such notice shall not constitute a
waiver of any defense that may be validly asserted.
ARTICLE VI
COVENANTS OF NU-METRICS AND THE SHAREHOLDERS
Nu-Metrics and each of the Shareholders, jointly and severally,
covenant as follows:
6.1 CONSENTS AND APPROVALS. Nu-Metrics and the Shareholders agree to
use all reasonable efforts to make all registrations, filings and
applications, and give all notices and obtain all governmental and other
consents, approvals, orders, qualifications and waivers necessary for the
consummation of the transactions contemplated by, or the performance by
Nu-Metrics and the Shareholders of any of their obligations under, this
Agreement, or which may become reasonably necessary or desirable in
connection with any of the foregoing, in each case upon terms and conditions
reasonably satisfactory to Quixote and its counsel.
6.2 CLOSING RETURNS. Quixote will cooperate with the Shareholders to
file, or cause to be prepared and filed, on a timely basis all Returns of
Nu-Metrics due after the Closing Date and attributable to periods ending on
or before the Closing Date (the "Pre-
26
<PAGE>
Closing Periods"), including without limitation, federal and state income tax
returns for the short period ending on the Closing Date (the "Closing
Returns"), which Closing Returns shall include any income or gains
attributable to the Section 338(h)(10) election and the distribution of the
Retained Assets. Quixote shall direct the preparation and filing of the
Closing Returns; PROVIDED, HOWEVER, that the Shareholders shall be
responsible for paying any Taxes shown on such Closing Returns or otherwise
attributable to the Pre-Closing Periods. The Closing Returns shall be
prepared by SLCC subject to the review and approval of PWC.
6.3 ACCESS TO INFORMATION.
(a) Nu-Metrics and the Shareholders shall allow Quixote to have
complete access at all reasonable times to its officers, employees, agents,
properties, books and records, and shall furnish Quixote all financial,
operating and other data and information as Quixote, through its officers,
employees or agents, may reasonably request.
(b) No investigation pursuant to this Section 6.3 shall affect,
add to or subtract from any representations or warranties or the conditions
to the obligations of the parties hereto to effect the Acquisition.
6.4 NON-COMPETITION AND RIGHT OF FIRST REFUSAL. For the purposes of
this Section 6.4, the business of Quixote or Nu-Metrics or any of their
respective affiliates shall include: marking, sensors, detection and
measuring devices, crash barriers, safety and warning devices, access and
access-blocking devices, energy absorption, anti-icing, de-icing, directional
devices, signage, glare screening, telemetric control, or radio or other
information transmission systems for the highway, parking lot, airport,
railroad and motor sports industries (collectively, the "Business")
(a) Sampey hereby covenants and agrees that, for a period of
five (5) years from the Closing Date (the "Non-Compete Period"), he shall not
directly or indirectly (i) license, assign, transfer, convey, sell or grant
any rights whatsoever in any technology or intellectual property of any kind
(including, without limitation, patents, trademarks, service marks, trademark
registrations, service mark registrations, logos, trade names, assumed names,
copyrights and copyright registrations and all applications therefor) in any
way related to, or engage in, any business competitive with the Business of
Quixote or Nu-Metrics, or any of their respective affiliates, (ii) solicit or
otherwise engage with any customers or clients of Quixote or Nu-Metrics in
any transactions which are in competition with the Business of Quixote or
Nu-Metrics, (iii) assist any person in the development, maintenance,
manufacture, sale, licensing, distribution or marketing of products or
technology in competition with the Business of Quixote, Nu-Metrics or any of
their respective affiliates, (iv) act as a consultant to or advisor for any
entity, other than Quixote, engaged in whole or in part in a business in
competition with the Business of Quixote or Nu-Metrics or any of their
respective affiliates, or (v) solicit for himself or herself or on behalf of
a competing organization the employment of any employee of Quixote or
Nu-Metrics, in
27
<PAGE>
each case in the United States of America, Canada, Australia, New Zealand,
Western Europe and Japan, and in each case excluding passive investment
interests of less than two percent (2%) in corporations whose stock is
registered under the Securities Exchange Act of 1934, as amended.
During the Non-Compete Period, Quixote and Sampey shall negotiate
in good faith on licensing terms for any such technology and intellectual
property (including, without limitation, patents, trademarks, service marks,
trademark registrations, service mark registrations, logos, trade names,
assumed names, copyrights and copyright registrations and all applications
therefor) developed, in whole or in part by Sampey, relating to the Business
of Quixote or Nu-Metrics or any of their respective affiliates (collectively,
"Sampey Inventions"); and if such negotiations result in a mutually
acceptable agreement, Sampey shall assign to Quixote all rights relating to
such Sampey Inventions. Notwithstanding any failure of Quixote and Sampey to
agree on assignment or licensing terms for such Sampey Inventions, Sampey's
obligations and covenants in this Section 6.4(a) shall remain in full force
and effect.
In consideration of the non-compete covenant stated in this
Section 6.4, on January 5, 1999, Quixote shall deliver to Sampey $100,000 in
immediately available funds by wire transfer to such bank account as Sampey
shall specify.
(b) After the Non-Compete Period, Quixote shall have a right of
first refusal to obtain licenses with respect to all Sampey Inventions (the
"Right of First Refusal"). If, after the Non-Compete Period, Sampey receives
a legitimate offer from a third party to obtain licenses with respect to
Sampey Inventions, Sampey shall require such offer, containing all material
terms thereof, to be submitted to Sampey in writing (such written offer is
hereinafter referred to as an "Offer"). Upon receipt of an Offer, Sampey
shall notify Quixote thereof, and provide Quixote a complete and fully
legible copy of the Offer accompanied by Sampey's irrevocable statement that
he is prepared to accept said Offer (collectively, the "Offer Notice"), and
Quixote shall have sixty (60) days thereafter within which to notify Sampey
whether it elects to exercise its Right of First Refusal with respect to such
Sampey Invention (the "Quixote Notice"). If Quixote notifies Sampey that it
does not wish to exercise its Right of First Refusal with respect to such
Sampey Invention, or if Quixote fails to exercise its Right of First Refusal
then Sampey may proceed to consummate the transaction contemplated by the
Offer, provided that such transaction may only be consummated upon the exact
terms of the Offer to the party identified therein, without substitutions of
terms, conditions or payment methods. If such transaction is not consummated
in such manner, then prior to the closing thereof, Sampey shall notify
Quixote, and the procedures set forth above shall again apply. If Quixote
elects to exercise its Right of First Refusal, Quixote and Sampey shall
consummate the transaction upon the same terms as are contained in the Offer,
provided however that the date of closing of such transaction shall be the
later of the date of closing set forth in the Offer or thirty (30) days after
the date of the Quixote Notice. Notwithstanding the foregoing, the Right of
First Refusal will not
28
<PAGE>
prevent Sampey from developing and marketing a Sampey Invention himself or
through an entity directly controlled by Sampey so long as no license to an
unrelated entity is involved.
(c) In the event that the provisions of this Section 6.4 should
ever be deemed to exceed the scope of business, time or geographic
limitations permitted by applicable law, then such provisions shall be and
are hereby reformed to the maximum scope, time or geographic limitations
permitted by such applicable law.
6.5 338(h)(10) ELECTION. The Shareholders agree to cooperate with
Quixote in making an election under Section 338(h)(10) of the Code (and any
comparable election under state, local or foreign tax law) with respect to
the acquisition of Nu-Metrics by Quixote. In particular, and not by way of
limitation, in order to effect such election, the Shareholders will, jointly
with Quixote, execute all necessary copies of Internal Revenue Form 8023 and
all attachments required to be filed therewith pursuant to applicable
Treasury Regulations within the time period prescribed for filing such form
by law.
6.6 CONSULTING. After Closing, Sampey shall remain as a consultant
to Quixote for a period of one year to insure an orderly transition. During
such period, Sampey shall, upon Quixote's request, devote up to (25%) of his
time to consulting activities and be paid on a per diem basis, based on his
current direct compensation, prorated for the consulting period. The actual
dates and times during which Sampey devotes his efforts to consulting
activities shall be in Sampey's reasonable discretion.
6.7 FURTHER ASSURANCES. The Shareholders shall from time to time, at
the request of Quixote and at Quixote's sole cost and expense, execute and
deliver such other documents and take such other actions as shall be
reasonably necessary or appropriate to consummate fully the transactions
contemplated hereby; PROVIDED, HOWEVER, in all events, each party will pay
its own attorney fees in connection therewith.
ARTICLE VII
COVENANTS OF QUIXOTE
Quixote covenants as follows:
7.1 RETENTION OF RECORDS. After the Closing Date, Quixote will
retain all of Nu-Metrics' books and records in accordance with Quixote's
policies for retention of its own books and records, and upon reasonable
notice and during Quixote's regular business hours and at reasonable
intervals, will provide the Shareholders, and their respective agents and
representatives designated in writing, access to such books and records,
concerning periods prior to the Closing Date.
7.2 TERMINATION AGREEMENTS. From the Closing Date through and
including December 31, 1999, Quixote shall use best efforts to continue to
employ or maintain
29
<PAGE>
contractual arrangements with key Nu-Metrics personnel in positions
comparable to their current responsibilities and compensation; PROVIDED,
HOWEVER, that Quixote may modify the positions of any such key personnel
(including, without limitation, their responsibilities and compensation) with
their consent and may terminate any such key personnel with payment (a) as
specified in such individual's employment contract, or (b) of an amount equal
to the base salary which such employee would have received pursuant to such
employment contract from the date of such termination to December 31, 1999.
Subsequent to December 31, 1999, Quixote may terminate all existing
employment contracts or other agreements with key personnel, if such
termination is consistent with the terms of such employment contracts or
other agreements, and place such personnel under the same conditions of
employment as other comparable Quixote employees.
7.3 FURTHER ASSURANCES. Quixote shall from time to time execute and
deliver such other documents and take such other actions as shall be
reasonably necessary or appropriate to consummate fully the transactions
contemplated hereby.
ARTICLE VIII
MUTUAL COVENANTS
Each of the parties hereto covenants as follows:
8.1 CONFIDENTIALITY. Except as otherwise required by law or judicial
or administrative proceedings, including proceedings between the parties with
respect to the transactions contemplated hereby, and then only to the extent
specifically required by such proceedings, and except for public
announcements on the advice of counsel, each of the parties agrees not to (i)
disclose any Confidential Information (defined hereinbelow) of any other
party, or the terms of this Agreement, to any individual or entity (other
than its directors, officers, employees, agents and representatives with a
need to know such Confidential Information in order to consummate the
transactions contemplated hereby and then only if reasonable steps are taken
with such parties to preserve the confidentiality thereof) or (ii) use any
Confidential Information for any purpose other than, with respect to Quixote,
operating the acquired business. "Confidential Information" shall mean any
secret or confidential information of the business of designing and
developing electronic instruments for the highway transportation industry,
Nu-Metrics or Quixote, including, but not limited to, customer information,
financial information, technical information, details or information
concerning contracts, trade secrets, marketing information or any other data,
information or proprietary information of or relating to the such business,
Nu-Metrics, Quixote or any affiliate thereof, or their respective products or
services. No obligations shall exist under this Agreement with respect to
Confidential Information that (i) is publicly known at the time of the
disclosure or becomes publicly known through no wrongful act or failure of
Nu-Metrics, the Shareholders, or Quixote, (ii) is disclosed by a third party
which does not have
30
<PAGE>
a confidential relationship with either Nu-Metrics, the Shareholders, or
Quixote, and which was rightfully acquired by third party, or (iii) is
legally compelled to be disclosed pursuant to a subpoena, summons, order or
other judicial or governmental process, provided that the parties hereto
provide prompt notice of any such subpoena, summons, order or other judicial
or governmental process to such other parties of the Confidential
Information, so as to allow the parties an opportunity to oppose such process.
8.2 CONSISTENT TAX REPORTING. The parties agree for tax purposes to
report the transactions contemplated by this Agreement, and to treat any
subsequent related transactions or items, in a manner consistent in all
respects with the terms and provisions of this Agreement. Each party shall
cooperate with the other parties as appropriate for all relevant tax purposes
relating to the transactions contemplated by this Agreement.
8.3 COOPERATION. The parties agree to cooperate for all other
reasonable purposes after the Closing, including with respect to any audit by
any taxing authority of any of the income tax or other tax returns of
Nu-Metrics.
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF NU-METRICS
AND THE SHAREHOLDERS
The obligations of Nu-Metrics and the Shareholders to consummate the
transactions contemplated hereby is subject to the satisfaction on or prior
to the Closing Date of the following conditions:
9.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Quixote shall be true and accurate on and as of the Closing
Date with the same effect as though such representations and warranties had
been made on and as of such date.
9.2 PERFORMANCE. Quixote shall have performed in all material
respects all covenants and agreements required by this Agreement to be
performed by them on or before the Closing Date.
9.3 FILINGS; CONSENTS: WAITING PERIODS. All registrations, filings,
applications, notices, transfers, consents, approvals, orders,
qualifications, waivers and other actions listed on SCHEDULE 4.3 hereto or
otherwise required of any persons or governmental authorities or private
agencies in connection with the consummation of the transactions contemplated
by and the performance by Quixote of its obligations under this Agreement
shall have been made or obtained and all applicable waiting periods shall
have expired or been terminated.
9.4 NO INJUNCTION. At the Closing Date, there shall be no
injunction, restraining order or decree of any nature of any court or
governmental body in effect which restricts or prohibits the consummation of
the transactions contemplated by this Agreement.
31
<PAGE>
ARTICLE X
CONDITIONS TO OBLIGATIONS OF QUIXOTE
The obligation of Quixote to consummate the transactions contemplated
hereby is subject to the satisfaction on or prior to the Closing Date of the
following conditions:
10.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Nu-Metrics and the Shareholders shall be true and accurate on
and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of such date.
10.2 PERFORMANCE. Nu-Metrics and the Shareholders shall have
performed all covenants and agreements required by this Agreement to be
performed by them on or before the Closing Date.
10.3 FILINGS: CONSENTS; WAITING PERIODS. All registrations, filings,
applications, notices, transfers, consents, approvals, orders,
qualifications, waivers and other actions of any kind listed on SCHEDULE 3.5
hereto, including, without limitation, approval of Quixote's board of
directors to the transactions contemplated by this Agreement, or otherwise
required of any persons or governmental authorities or private agencies in
connection with the consummation of the transactions contemplated by, and the
performance by Nu-Metrics and the Shareholders of their respective
obligations under this Agreement shall have been made or obtained and all
applicable waiting periods shall have expired or been terminated, in each
case upon terms and conditions reasonably satisfactory to Quixote.
10.4 NO LITIGATION. No action, suit or proceeding shall have been
instituted by any person or entity, or threatened by any governmental agency
or body, before a court or governmental body, to restrain or prevent the
consummation of the transactions contemplated by, or the performance by
Nu-Metrics or the Shareholders of their respective obligations under, this
Agreement or which seeks other relief with respect to any of such
transactions or which could reasonably be expected to have a materially
adverse effect on the businesses, results of operations, assets, financial
condition or prospects of Nu-Metrics. At the Closing Date, there shall be no
injunction, restraining order or decree of any nature of any court or
governmental agency or body in effect which restrains or prohibits the
consummation of the transactions contemplated by this Agreement.
10.5 LEGAL OPINION. Quixote shall have received the written opinion,
dated the Closing Date, of Leskinen & Cook, substantially in the form
attached hereto as EXHIBIT B.
10.6 DUE DILIGENCE INVESTIGATION. Quixote shall have completed a due
diligence investigation of Nu-Metrics, the results of which shall have been
satisfactory to Quixote in its sole discretion.
32
<PAGE>
10.7 SHAREHOLDER APPROVAL. This Agreement and the Acquisition shall
have been approved and adopted by the consent of the Shareholders in
accordance with applicable law and the Articles of Incorporation and By-laws
of Nu-Metrics.
10.8 DELIVERY. At the Closing, the documents referenced in ARTICLE XI
shall be delivered to Quixote.
10.9 338(h)(10) ELECTION. The acquisition of Nu-Metrics by Quixote
shall qualify for election under Section 338(h)(10) of the Code (and any
comparable election under state, local or foreign tax law).
10.10 ACCOUNTANT'S CONSENT. Nu-Metrics shall cause SLCC to consent to
the release of Nu-Metrics' audited financials for the year ended December 31,
1997 in Quixote's Form 8-K Current Report to be filed with the SEC in
connection with the transactions contemplated hereby.
ARTICLE XI
CLOSING DELIVERIES
The following deliveries shall be made at the Closing:
11.1 STOCK. The Shareholders shall duly execute and deliver stock
certificates to Quixote representing all of the Shares with any required
stock transfer stamps affixed, duly endorsed for transfer or with stock
powers duly executed in blank attached, in good form for delivery.
11.2 BOOKS AND RECORDS. Nu-Metrics shall have caused to be delivered
to Quixote all of Nu-Metrics' books and records, including without limitation
the stock transfer and minute books and financial records.
11.3 LEGAL OPINION. Nu-Metrics shall cause to be delivered to Quixote
the written legal opinion of Leskinen & Cook to Nu-Metrics, in substantially
the form attached hereto as EXHIBIT B.
11.4 CONSENTS. Nu-Metrics shall deliver to Quixote all consents and
approvals required in connection with the performance by Nu-Metrics of its
obligations under this Agreement and the consummation by Nu-Metrics of the
transactions contemplated hereby and thereby.
11.5 CLOSING CERTIFICATES AND RELEASES. Nu-Metrics shall deliver, or
cause to be delivered, to Quixote such closing certificates and documents as
Quixote and its counsel shall reasonably request.
33
<PAGE>
11.6 CHARTER: GOOD STANDING CERTIFICATES. Nu-Metrics shall cause to
be delivered to Quixote Nu-Metrics' Articles of Incorporation, as amended to
the Closing Date, certified by the Secretary of State of the State of
Pennsylvania, and good standing and tax certificates from such office, as
well as from each other jurisdiction in which Nu-Metrics is required to be
qualified.
11.7 RESIGNATIONS OF NU-METRICS' OFFICERS AND DIRECTORS. Nu-Metrics
shall have caused to be delivered to Quixote resignations, operative as of
the Closing Date, of all the officers and directors of Nu-Metrics.
11.8 PERFORMANCE. The parties hereto shall have performed in all
material respects all covenants and agreements required by this Agreement to
be performed by them on or before the Closing Date.
11.9 PURCHASE PRICE. Quixote shall deliver the Purchase Price as set
forth in Section 1.3 hereof upon receipt of all of the closing deliveries and
satisfaction of all of the closing conditions set forth herein and the
execution and delivery by all of the parties hereto of this Agreement and the
other documents, instruments and certificates contemplated hereby and thereby.
11.10 BANK ACCOUNTS. Nu-Metrics shall deliver to Quixote evidence
reasonably satisfactory to Quixote of the removal of all Nu-Metrics personnel
and Shareholders as authorized signatories or agents from all bank accounts
of Nu-Metrics.
11.11 FURTHER ASSURANCES. Each party shall deliver, or cause to be
delivered, all other documents required to be delivered at the Closing by the
other party and shall take all other actions which the other parties may
reasonably determine necessary or appropriate in order to consummate fully
the transactions contemplated hereby.
ARTICLE XII
SURVIVAL AND INDEMNIFICATION
12.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES: COVENANTS. All
representations and warranties contained herein or made in writing by any
party in connection herewith shall survive the Closing Date for a period of
five (5) years, regardless of any investigation made by or on behalf of any
party, except for the representations and warranties contained in Section 3.3
and 3.4, which shall survive indefinitely, and the representations and
warranties contained in Sections 3.12, 3.19, 3.20, 3.21 and 3.22, or a
representation or warranty which shall prove to be untrue due to the fraud of
Nu-Metrics or which in each case shall survive until the expiration of the
applicable statute of limitations with respect to the subject matter thereof.
All covenants contained herein shall survive until performed fully.
34
<PAGE>
12.2 INDEMNIFICATION.
(a) Sampey agrees to indemnify and hold Quixote and their
affiliates and the respective officers, directors, employees, agents and
representatives of each of the foregoing (collectively, the
"Representatives") harmless from and against any and all costs, expenses,
losses, claims, damages, penalties, fines, liabilities and obligations
whenever arising or incurred (including, without limitation, amounts paid in
settlement, costs of investigation and attorneys' fees and expenses)
(individually, a "Loss," and collectively, "Losses") arising out of or
relating to (i) any breach of any representation or warranty made by
Nu-Metrics or the Shareholders and (A) set forth herein or in any related
schedule or (B) set forth in any closing certificate or other document
entered into or delivered by Nu-Metrics or the Shareholders in connection
with this Agreement; (ii) any breach of any covenant, obligation or agreement
of Nu-Metrics or the Shareholders contained in this Agreement, or set forth
in any closing certificate or other document entered into or delivered in
connection with this Agreement; (iii) any fraudulent representation or
intentional misrepresentation on the part of Nu-Metrics or the Shareholders;
(iv) any Taxes asserted against Nu-Metrics or Quixote and arising out of or
related to tax periods ending on or prior to the Closing Date; (v) the
Shareholders' pro rata share of any Taxes asserted against Nu-Metrics for any
period beginning before and ending after the Closing Date; (vi) any Tax under
Code Section 1374 resulting from the transactions contemplated herein
(including the distribution of the Retained Assets contemplated in Section
1.4 hereof (and the Section 338(h)(10) election) and (vii) obligations and
liabilities relating to the Retained Assets and Aircraft Debt. For purposes
of this Subparagraph 12.2(a), in the case of any taxable period beginning
before and ending after the Closing Date, for purposes of determining the
amount of liability for Taxes attributable to the portion of the taxable
period ending on or before the Closing Date: (A) in the case of sales, use,
payroll or excise Taxes or Taxes based upon or related to income, such
portion of the taxable period shall be deemed to be a separate taxable year
and Sampey's liability shall be determined by taking into account all items
of income, gain, loss, deduction or credit on a basis consistent with that
employed in preparing the federal income tax return of Nu-Metrics for the
taxable year ending on the Closing Date and the relevant state or local tax
return for prior years, and (B) in the case of other Taxes, Sampey's
liability shall equal a pro-rata portion of the liability for taxes for the
entire taxable period based on the ratio of the number of days from the
beginning of such taxable period through the Closing Date to the total number
of days included in such taxable period.
(b) Except as otherwise specifically set forth herein, the
indemnity provided in this Agreement shall not commence until the cumulative
amount of all Losses shall exceed One Hundred Thousand Dollars ($100,000.00)
in the aggregate (the "Basket"); PROVIDED, HOWEVER, that if the Basket is
reached, the indemnity provided for herein shall apply to all Losses,
including, without limitation, the Basket. Notwithstanding the foregoing,
the Basket shall not apply to the indemnities provided in this Agreement for
breach of any non-competition or confidentiality obligation contained herein
or in any other closing document, any failure of title to the Shares, or any
fraud, willful misconduct, gross negligence or criminal action on the part of
the Shareholders or Nu-Metrics, and shall not
35
<PAGE>
apply to any liability under Section 12.7, Subparagraph 12.2(a)(iv),
Subparagraph 12.2(a)(v) or Subparagraph 12.2(a)(vi) hereof, and
notwithstanding anything contained or implied in this Agreement, the
indemnity obligations set forth herein above this sentence shall survive the
Closing without limitation except as provided by the applicable statue of
limitations (including any extension of said statue of limitations).
12.3 INDEMNIFICATION BY QUIXOTE. Quixote agrees to indemnify and hold
the Shareholders and Nu-Metrics and its affiliates and the respective
officers, directors, employees, agents and representatives of each of the
foregoing harmless from and against any and all Losses relating to (i) any
breach of any representation or warranty of Quixote set forth herein or in
any related schedule, or set forth in any closing certificate or other
document entered into or delivered by Quixote in connection with this
Agreement; (ii) any breach of any covenant, obligation or agreement of
Quixote contained in this Agreement or in any other closing document; and
(iii) any fraudulent representation or intentional misrepresentation on the
part of Quixote, unless the claim or cause of action with respect thereto
arises out of or is related to actions or omissions of Nu-Metrics or the
Shareholders prior to the Closing Date.
12.4 INDEMNIFICATION PROCEDURE. (a) An indemnified party under this
ARTICLE XII shall give prompt written notice to the indemnifying party (when
and to the extent that the indemnified party has actual knowledge thereof) of
any condition, event or occurrence or the commencement of any action, suit or
proceeding for which indemnification may be sought (each an "Indemnification
Event"), and through counsel reasonably satisfactory to the indemnified
party, shall assume the defense thereof or other indemnification obligation
with respect thereto; PROVIDED, HOWEVER, that any indemnified party shall be
entitled to participate in any such action, suit or proceeding with counsel
of its own choice but at its own expense; and PROVIDED, FURTHER, that any
indemnified party shall be entitled to participate in any such action, suit
or proceeding with counsel of its own choice at the expense of the
indemnifying party, if, under applicable canons of ethics, joint
representation of the indemnifying party and the indemnified party presents a
conflict of interest.
In any event, if the indemnifying party fails to assume the defense
within a reasonable time, the indemnified party may assume such defense or
other indemnification obligation and the reasonable fees and expenses of its
attorneys will be covered by the indemnity provided for hereunder. No
action, suit or proceeding for which indemnification may be sought shall be
compromised or settled in any manner which might adversely affect the
interests of the indemnifying party without the prior written consent of the
indemnifying party (which shall not be unreasonably withheld); PROVIDED,
HOWEVER, that the indemnified party may settle any claim or cause of action
without the indemnifying party's consent, but in such case the indemnifying
party shall not be required to reimburse the indemnified party for its Losses
except and to the extent that a court of competent jurisdiction finally
determines on appeal that the indemnifying party must indemnify the
indemnified party therefor. Notwithstanding anything in this Section 12.4 to
the contrary, the indemnifying party shall not, without the prior written
consent of the indemnified party, (i) settle or compromise any action, suit
or
36
<PAGE>
proceeding or consent to the entry of any judgment which does not include as
an unconditional term thereof the delivery by the claimant or plaintiff to
the indemnified party of a written release from all liability in respect of
such action, suit or proceeding or (ii) settle or compromise any action, suit
or proceeding in any manner that may materially and adversely affect the
indemnified party other than as a result of money damages or other money
payments. The indemnifying party shall pay all expenses, including
attorneys' fees, that may be incurred by any indemnified party in enforcing
the indemnity provided for hereunder.
(b) In the case of any proposed or actual assessment of tax
liabilities for which Quixote is entitled to indemnification from Sampey as
provided in Section 12.2(a), Quixote shall give written notice to Sampey as
provided in subparagraph (a) hereof and shall contest such proposed or actual
assessment through the administrative review or appeal procedures available
under the relevant tax laws and regulations, PROVIDED, HOWEVER, that Quixote
shall not be required to contest such proposed or actual assessment unless
Sampey shall first provide an opinion of counsel, reasonably acceptable to
Quixote, stating that Nu-Metrics had a reasonable basis for its position.
Quixote shall keep Sampey fully informed as to the progress of such contest.
If at any point prior to the termination of the administrative review
process, Sampey notifies Quixote in writing that he is willing to accept a
settlement proposed by the IRS or any other tax authority or agency with
respect to such proposed or actual assessment of tax liabilities, Quixote
will settle the proposed or actual tax assessment, and Quixote shall
immediately be entitled to indemnification from Sampey. If Sampey never
elects to request Quixote to settle and such administrative review process is
unsuccessful at eliminating the proposed tax, Quixote shall be entitled to
pay the tax (and any penalties and interest) and be entitled to
indemnification from Sampey; provided, that if within ten (10) days of
receipt from Quixote of notice that it is paying the tax, Sampey notifies
Quixote of his desire to contest the proposed or assessed tax deficiency in
the courts, the Sampey shall be entitled to do so provided that (a) if the
proposed or actual tax deficiency is contested in tax court, Sampey shall pay
from his own sources any amount of taxes, penalties and interest determined
to be due and (b) if the proposed or actual tax deficiency is contested by
suit for refund in any other court, funds shall be provided to Quixote by
Sampey, Quixote shall pay the tax and if the outcome of the contest
determines that the tax paid should be refunded, such refund shall be
returned to Sampey. Any contest (whether during the administrative review
process or otherwise) shall be conducted at the sole cost and expense of
Sampey.
12.5 OFFSET AGAINST UNPAID AMOUNTS. Without limiting such other
rights as Quixote may have and subject to the survival period of the
representation and warranties contained in Section 12.1, if, prior to the
time that any payment of the Purchase Price, or any payments under any
consulting arrangement between Quixote and Sampey is to be delivered, and
after the Basket has been reached, Quixote has learned of a breach of any
representation, warranty, covenant or agreement of the Shareholders or
Nu-Metrics contained in this Agreement, Quixote in its sole discretion may by
written notice to Sampey deduct from the amount of such payment otherwise
owed an amount equal to the aggregate of (a) the amount necessary to cure or
make it whole for such breach or (b) the amount of losses,
37
<PAGE>
damages and expenses incurred or demonstrably in prospect of being incurred
in connection with or caused by such breach.
12.6 TREATMENT AS ADJUSTMENT OF PURCHASE PRICE. Any indemnity payment
received by a party hereunder shall be treated as an adjustment of the
Purchase Price. However, in the event that the Internal Revenue Service or
any other taxing authority determines that such indemnity payment constitutes
taxable gain or income to the indemnified party, the indemnifying party shall
increase the amount otherwise required to be paid so that the indemnified
party, receives, on an after-tax basis, an amount equal to the amount it
would have received had the indemnity not resulted in taxable gain or income.
12.7 LOANS. With respect to those loans listed on SCHEDULE 12.7
hereof (the "Loans"), Quixote shall use best efforts to cause the lenders
thereof to release Sampey from any personal guaranty or surety agreement
related thereto to which he is a party. In the event the lenders thereof
refuse to so release Sampey, Quixote shall indemnify and hold Sampey harmless
from and against any and all costs, expenses, losses, claims, damages,
penalties, fines, liabilities and obligations arising from and after the
Closing Date arising out of or related to any such guaranty or surety
agreement which has been signed by Sampey for any of the Loans.
(a) One or more of the Loans are subject to the restriction and
condition that the subject Loan or Loans may be declared to be in default in
the event that Nu-Metrics, inter alia: (i) merges or consolidates with
another corporation, (ii) sells, transfers, conveys, or disposes of all or
any part of its assets except in the ordinary course of business, (iii)
effects a reorganization, recapitalization, or reclassification of its
capital stock or equity securities, or (iv) permits a change in its ownership
of its capital stock or equity securities from that which currently exists.
Quixote hereby assumes the risk of any such default being declared by any
lender; and, Quixote shall indemnify and hold Sampey and the Shareholders
harmless from and against any and all costs, expenses, losses, claims,
damages, penalties, fines, liabilities, and obligations whatsoever arising
out of or relating to any such default. Notwithstanding the provisions of
the preceding sentence, in all events, Sampey shall pay to the lenders
thereof (and Sampey shall indemnify and hold Quixote harmless from and
against) any and all prepayment penalties and other charges arising from any
such default.
(b) Except for any prepayment penalty and other charges as
mentioned in the last sentence of the preceding paragraph, to the extent that
Sampey is required to make any payment as the guarantor or surety for any of
the Loans, Sampey shall be subrogated to the rights of the lender to enforce
the collection thereof from Nu-Metrics including the rights which any such
lender might have as a mortgagee and/or secured party.
38
<PAGE>
ARTICLE XIII
TERMINATION, AMENDMENT AND WAIVERS
13.1 TERMINATION. This Agreement may be terminated at any time prior
to the Closing Date, whether before or after approval by the Shareholders:
(a) by mutual consent of the Boards of Directors of the parties
hereto;
(b) by Nu-Metrics or Quixote if a material breach of any
provision of this Agreement has been committed and such breach is not waived;
(c) by Quixote, if the conditions set forth in Section X hereof
shall not have been complied with or performed in any material respect and
such noncompliance or nonperformance shall not have been cured or eliminated
(or by its nature cannot be cured or eliminated) by Nu-Metrics on or before
December 31, 1998; or
(d) by Nu-Metrics, if the conditions set forth in Section IX
hereof shall not have been complied with or performed in any material respect
and such noncompliance or nonperformance shall not have been cured or
eliminated (or by its nature cannot be cured or eliminated) by Quixote or
before December 31, 1998; or
(e) by Quixote or Nu-Metrics if the Acquisition shall not have
been consummated on or before December 31, 1998 or such later date as the
parties hereto agree in writing.
13.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement as provided above, this Agreement shall hereafter become void and
there shall be no liability or further obligation on the part of Nu-Metrics,
the Shareholders, Quixote or their respective officers or directors, except
as set forth in Section 8.1 and Section 14.3 and except that nothing herein
will relieve any party from liability for breach of this Agreement.
ARTICLE XIV
MISCELLANEOUS
14.1 AMENDMENT AND MODIFICATION. Subject to applicable law, this
Agreement may be amended, modified and supplemented by written agreement of
the parties.
14.2 WAIVER OF COMPLIANCE. Any failure of Nu-Metrics or the
Shareholders on the one hand, or Quixote, on the other, to comply with any
obligation herein may be expressly waived hereunder, but such waiver shall
not operate as a waiver of, or estoppel with respect to, any subsequent or
other failure. Any waiver must be in writing and duly executed by the
appropriate parties.
39
<PAGE>
14.3 EXPENSES. Whether or not the transactions contemplated by this
Agreement shall be consummated, the parties hereto agree that all fees and
expenses incurred by Nu-Metrics or the Shareholders, on the one hand, and
Quixote on the other, in connection with this Agreement, and the transactions
and other actions contemplated thereby or taken in connection therewith,
shall be borne by Nu-Metrics and the Shareholders, and by Quixote,
respectively, including, without limitation, all fees of counsel and
accountants. Notwithstanding the foregoing, in no event shall the costs of
the Shareholders be passed on to, or paid by Nu-Metrics.
14.4 NOTICES. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be deemed to
have been duly given when delivered by hand or by facsimile transmission
(receipt confirmed), one day after being sent by recognized overnight courier
or delivery service, freight prepaid, or five days after being mailed,
certified or registered mail, postage prepaid, return receipt requested:
(a) If to Nu-Metrics or the Shareholders to:
Nu-Metrics, Inc.
University Drive
Box 518
Uniontown, Pennsylvania 15401
Attention: Mr. Harry R. Sampey, Ph.D
Facsimile No.: 412-438-8769
with a copy to:
Leskinen & Cook
55 East Church Street
Uniontown, Pennsylvania 15401
Attention: Nicholas J. Cook, Esq.
Facsimile No.: 724-437-5760
or to such other person or address as Nu-Metrics or the Shareholders shall
furnish to Quixote in writing by notice given in the manner set forth in (a)
above.
(b) If to Quixote, to:
Quixote Corporation
One East Wacker Drive
Chicago, Illinois 60601
Attention: Joan Riley, Esq., General Counsel
Facsimile No.: 312-467-1356
40
<PAGE>
with a copy to:
Ross & Hardies
150 North Michigan Avenue, Suite 2500
Chicago, Illinois 60601
Attention: Lawrence R. Samuels, Esq.
Facsimile No.: 312-750-8600
or to such other person or address as Quixote shall furnish to Nu-Metrics in
writing by notice given in the manner set forth above.
14.5 ASSIGNMENT. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns, but neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned
by any of the parties hereto without the prior written consent of the other
parties, except by operation of law and except that Quixote may assign its
rights and obligations under this Agreement to any other entity wholly owned
by Quixote. If such assignment shall be made by Quixote, the assignee shall
be entitled to all of the rights and shall assume all of the obligations of
Quixote hereunder, PROVIDED, that Quixote shall remain liable for and
guarantee the performance of such entity's obligations under this Agreement.
14.6 PUBLICITY. Neither Nu-Metrics, the Shareholders nor Quixote
shall make or issue, or cause to be made or issued, any announcement or
written statement concerning this Agreement or the transactions contemplated
hereby for dissemination to the general public, without the prior written
consent of the other parties. This provision shall not apply, however, to any
announcement or written statement required to be made by law, the regulations
of any federal or state governmental agency or any stock exchange, except
that the party required to make such announcement shall, whenever
practicable, consult with the other party concerning the timing and content
of such announcement before such announcement is made.
14.7 HEADINGS. The Article and Section headings contained in this
Agreement are inserted for convenience only and shall not affect in any way
the meaning or interpretation of this Agreement.
14.8 SEVERABILITY. If any provision of this Agreement shall be
determined to be contrary to law and unenforceable by any court of law, the
remaining provisions shall be severable and enforceable in accordance with
their terms.
14.9 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Pennsylvania, without regard to
its conflicts of law doctrine. The parties hereto expressly submit
themselves to the non-exclusive jurisdictions of the State and Federal Courts
of Pennsylvania for the resolution of any disputes which may arise under or
with respect to compliance with this Agreement.
41
<PAGE>
14.10 COUNTERPARTS. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
14.11 THIRD PARTIES. Nothing herein shall be construed to confer upon
or give to any party other than the parties hereto and their successors or
permitted assigns, any rights or remedies under or by reason of this
Agreement.
14.12 ARBITRATION. Any dispute as to any claims under this Agreement
shall be settled by arbitration in Pittsburgh, Pennsylvania by three
arbitrators, one of whom shall be appointed by Sampey, one by Quixote and the
third of whom shall be appointed by the first two arbitrators. If either
party fails to appoint an arbitrator within 30 days of a request in writing
by the other party to do so or if the first two arbitrators cannot agree on
the appointment of a third arbitrator within 20 days of their designation,
then such arbitrator shall be appointed by the Chief Judge of the United
States District Court for the Western District of Pennsylvania. Except as to
the selection of arbitrators which shall be as set forth above, the
arbitration shall be conducted promptly and expeditiously in accordance with
the commercial arbitration rules of the American Arbitration Association so
as to enable the arbitrators to render an award within 90 days of the
commencement of the arbitration proceedings. Any award issued as a result of
arbitration shall be final and binding on the parties, and judgment upon the
award rendered by the arbitrators may be entered in any court having
jurisdiction thereof; PROVIDED, HOWEVER, that any award issued as a result of
arbitration shall be reviewable DE NOVO by a court of competent jurisdiction
for errors of law. The costs of the arbitration and the arbitrator shall be
allocated as provided in the results of the arbitration.
14.13 REVIEW OF ACCOUNTING MATTERS. If PWC and SLCC cannot agree on any
matter which requires approval under the provisions of Section 1.6, Article
II or Section 6.2 hereof, PWC and SLCC shall mutually select a "Big Five"
accounting firm to review the matters and, the decision of the "Big Five"
accounting firm shall be binding and conclusive on all parties. The costs
and expenses of such "Big Five" accounting firm shall be divided equally
among Sampey and Quixote.
14.14 ENTIRE AGREEMENT. This Agreement, including the Exhibits and
Schedules hereto, sets forth the entire agreement and understanding of the
parties hereto in respect of the subject matter contained herein, and
supersedes all prior agreements, covenants, representations or warranties,
whether oral or written, by any party hereto.
42
<PAGE>
IN WITNESS WHEREOF, the parties hereto, have caused this Agreement to
be duly executed, all as of the day and year first written above.
QUIXOTE CORPORATION, a Delaware corporation
By: /s/ Leslie Jezuit
_______________________________________
Name: LESLIE JEZUIT
Title: President & COO
NU-METRICS, INC., a Pennsylvania corporation
By: /s/ Harry R. Sampey
_______________________________________
Name: HARRY R. SAMPEY
Title: President
/s/ Harry R. Sampey
_______________________________________
HARRY R. SAMPEY, Ph.D
/s/ Brenda J. Auer
_______________________________________
BRENDA J. AUER
/s/ Christine C. Sampey
_______________________________________
CHRISTINE C. SAMPEY
/s/ Kim A. Sampey
_______________________________________
KIM A. SAMPEY
/s/ Vicki L. Sampey
_______________________________________
VICKI L. SAMPEY
/s/ Karen Singo
_______________________________________
KAREN SINGO
<PAGE>
EXHIBIT 2.2
FOR: QUIXOTE CORPORATION
CONTACT: Joan R. Riley
Daniel P. Gorey
(312) 467-6755
FOR IMMEDIATE RELEASE
Morgen-Walke Associates
June Filingeri, John Blackwell
Media contact: Eileen King
(212) 850-5600
QUIXOTE CORPORATION ACQUIRES NU-METRICS, INC.
CHICAGO, IL, December 11, 1998 -- Quixote Corporation (Nasdaq:QUIX)
today announced that its wholly owned subsidiary, TranSafe Corporation, has
acquired Nu-Metrics, Inc., (www.nu-metrics.com), a Uniontown, Pennsylvania
based developer and manufacturer of traffic sensing and distance measuring
devices, for approximately $15 million in cash, subject to certain
adjustments. Nu-Metrics had revenues of approximately $7 million during the
twelve-month period ended September 30, 1998. The acquisition is expected to
be immediately accretive to earnings.
Nu-Metrics is a leading manufacturer of electronic measuring devices for
highway safety and traffic monitoring. Its products are distributed
worldwide and include the Hi-Star-Registered Trademark- portable traffic
counter used to measure traffic flow; the Groundhog-Registered Trademark-, a
permanent, wireless, in-pavement traffic analyzer which transmits data on
vehicle class, speed and volume; and the Nitestar-Registered Trademark-, a
vehicle-installed distance measuring system used by highway departments,
utilities, and cable and telephone companies. An advanced version of the
Groundhog-Registered Trademark-, the RTWIN-TM- (Roadway Traffic and Weather
Information Networks), measures road surface conditions such as temperature
and can be used in conjunction with highway anti-icing systems. Nu-Metrics'
products are used in a number of applications to monitor traffic patterns not
only on highways, but also in shopping malls and parking complexes.
- MORE -
<PAGE>
QUIXOTE CORPORATION ACQUIRES NU-METRICS, INC. Page 2
Philip E. Rollhaus, Jr., Quixote's Chairman and Chief Executive Officer,
commented: "With the acquisition of Nu-Metrics, Quixote furthers its program
of becoming a larger factor in the developing intelligent transportation
industry. With Nu-Metrics comes advanced technologies and devices which are
used to sense, measure and communicate information which can increase traffic
flow as well as assess road surface conditions during inclement weather. It
strengthens our technology platform with innovative products which complement
our existing lines of products and services. The addition of Nu-Metrics
allows us to provide wireless monitoring of road conditions and increases the
scope of information we can make available to motorists through our highway
advisory radio systems. As highway safety and traffic monitoring grow
increasingly more sophisticated and technologically driven, we will be in an
ideal position to benefit with the most advanced and complete line of
products and services in the industry."
Quixote Corporation, (www.quixotecorp.com), through its wholly-owned
subsidiaries, Energy Absorption Systems, Inc. and the TranSafe Corporation,
is the world's leading manufacturer of energy-absorbing highway crash
cushions, truck-mounted impact attenuators, computerized highway advisory
radio transmitting systems, electronic wireless sensing devices and other
highway safety products and services.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995: EXCEPT FOR HISTORICAL INFORMATION CONTAINED HEREIN, THE MATTERS SET
FORTH IN THIS NEWS RELEASE ARE FORWARD-LOOKING STATEMENTS. THE
FORWARD-LOOKING STATEMENTS SET FORTH ABOVE INVOLVE A NUMBER OF RISKS AND
UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM ANY
SUCH STATEMENT, INCLUDING THE RISKS AND UNCERTAINTIES DISCUSSED IN THE
COMPANY'S ANNUAL REPORT ON FORM 10-K FOR ITS FISCAL YEAR ENDED JUNE 30, 1998,
UNDER THE CAPTION "FORWARD-LOOKING STATEMENTS" IN MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, WHICH DISCUSSION
IS INCORPORATED HEREIN BY THIS REFERENCE.
# # #
<PAGE>
EXHIBIT 2.3
FOR: QUIXOTE CORPORATION
CONTACT: Joan R. Riley
Daniel P. Gorey
(312) 467-6755
FOR IMMEDIATE RELEASE
- ----------------------- Morgen-Walke Associates
June Filingeri, John Blackwell
Media contact: Eileen King
(212) 850-5600
QUIXOTE CORPORATION ANNOUNCES SETTLEMENT OF LAWSUIT
ASSOCIATED WITH PREVIOUSLY OWNED BUSINESS
CHICAGO, IL, December 15, 1998--Quixote Corporation (Nasdaq:QUIX)
announced today the settlement of litigation involving its formerly owned
subsidiary, Disc Manufacturing, Inc. ("DMI"), which it sold in April 1997.
The litigation, initiated in 1995, includes a lawsuit brought by Discovision
Associates against DMI for infringement of certain patents related to optical
disc technology as well as a lawsuit brought by DMI against Discovision
Associates, Pioneer Electronic Corporation, Pioneer Electronics (USA) Inc.
and Pioneer Electronics Capital Inc. for violations of the antitrust laws and
acts of unfair competition. The settlement involves a payment previously
accrued in the financial statements and, therefore, there will be no
additional charge to Quixote's earnings related to this matter. No other
terms were disclosed.
Philip E. Rollhaus, Jr., Quixote's Chairman and Chief Executive Officer,
commented: "The settlement of the litigation between our discontinued
operation, DMI, and Discovision and its affiliates resolves lawsuits which
have been an ongoing expense and drain on management's time over the past
several years. The settlement avoids a potentially protracted trial and
appellate process. We choose to concentrate our efforts and time on our
highway safety businesses and the opportunities they present to continue
Quixote's profitable growth."
Quixote Corporation, (www.quixotecorp.com), through its wholly-owned
subsidiaries, Energy Absorption Systems, Inc. and the TranSafe Corporation,
is the world's leading manufacturer of energy-absorbing highway crash
cushions, truck-mounted impact attenuators, computerized highway advisory
radio transmitting systems, electronic wireless sensing devices and other
highway safety products and services.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995: EXCEPT FOR HISTORICAL INFORMATION CONTAINED HEREIN, THE MATTERS SET
FORTH IN THIS NEWS RELEASE ARE FORWARD-LOOKING STATEMENTS. THE
FORWARD-LOOKING STATEMENTS SET FORTH ABOVE INVOLVE A NUMBER OF RISKS AND
UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM ANY
SUCH STATEMENT, INCLUDING THE RISKS AND UNCERTAINTIES DISCUSSED IN THE
COMPANY'S ANNUAL REPORT ON FORM 10-K FOR ITS FISCAL YEAR ENDED JUNE 30, 1998,
UNDER THE CAPTION "FORWARD-LOOKING STATEMENTS" IN MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, WHICH DISCUSSION
IS INCORPORATED HEREIN BY THIS REFERENCE.
# # #
