<PAGE>
FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Date of Report (Date of Earliest Event Reported) February 28, 1996
CURRENT REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 0-5256
GREAT AMERICAN MANAGEMENT AND INVESTMENT, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 58-1351398
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
Two North Riverside Plaza
Chicago, Illinois 60606
(Address of Principal Executive Offices)
(312) 648-5656
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last
report)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On February 28, 1996, Great American Management and Investment, Inc.'s
subsidiary, Eagle Industries, Inc. ("Eagle") sold the stock of Mighty
Distributing System of America, Inc. ("Mighty") to Mighty Acquisition
Corporation for total proceeds of $11.4 million including a $3.0 million note
receivable. Eagle recorded a pretax loss of $2.4 million in December 1995 in
connection with the sale of Mighty.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
Not applicable.
(b) Pro Forma Financial Statements
The required pro forma financial information will be included
in the Company's Annual Report on Form 10-K.
(c) Exhibits
2.1 Stock Purchase Agreement dated February 28, 1996 between
North Riverside Venture, Inc. and Mighty Acquisition
Corporation.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GREAT AMERICAN MANAGEMENT AND
INVESTMENT, INC.
By: /s/ Sam A. Cottone
-------------------
Sam A. Cottone
Senior Vice President, Chief
Financial Officer and Treasurer
Dated: March 13, 1996
EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement") is entered into as of
the 28th day of February, 1996 by and among NORTH RIVERSIDE VENTURE, INC., a
Delaware corporation ("Seller"), and MIGHTY ACQUISITION CORPORATION, a
Georgia corporation ("Buyer").
WHEREAS, Seller is the owner of 50,000 shares of capital stock
(such shares being referred to as "the Stock") of Mighty Distributing System
of America, Inc., a Delaware corporation (the "Company").
WHEREAS, Seller desires to sell to Buyer and Buyer desires to
purchase from Seller the Stock, upon the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants of the parties as hereinafter set forth and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereby agree as follows:
ARTICLE I - PURCHASE AND SALE OF STOCK
1.1 PURCHASE AND SALE OF STOCK. Subject to the terms and conditions
set forth in this Agreement, Seller shall sell, assign, transfer and deliver
to Buyer at the Closing (as defined in Section 7.1 hereof), and Buyer shall
purchase from Seller at the Closing the Stock, for the purchase price set
forth in Article 2 hereof.
ARTICLE II - PURCHASE PRICE
2.1 PURCHASE PRICE.
(a) The purchase price ("Purchase Price") of the Stock shall be
Five Million Ninety Seven Thousand Dollars ($5,097,000.00) (such amount being
referred to herein as the "December 31, 1995 Stockholder's Equity"), to be
adjusted following the Closing in accordance with Section 2.3 hereof relative
to the amount by which the stockholder's equity of the Company
("Stockholder's Equity") as of the Closing Date (as determined in accordance
with Section 2.3 hereof) is greater than or less than, as the case may be,
the December 31, 1995 Stockholder's Equity.
(b) Attached hereto as Schedule 2.1 is the Consolidated Balance
Sheet for the Company (the "December 31, 1995 Consolidated Balance Sheet")
which also sets forth the December 31, 1995 Stockholder's Equity.
2.2 PAYMENT OF PURCHASE PRICE.
(a) At the Closing, Buyer shall pay the Purchase Price in the
following manner:
(i) by the execution and delivery by Mighty Distributing
System of America, Inc., a subsidiary of the Company, of a $3,000,000.00
Promissory Note in the form of Exhibit 2.2(a)(i) attached hereto (the
"Promissory Note"); and
(ii) the remainder of the Purchase Price shall be paid to
Seller by wire transfer of immediately available federal funds.
2.3 CLOSING FINANCIAL STATEMENTS. Within fifty-five (55) days after
the Closing Date, Seller shall prepare and deliver to Buyer (i) a
consolidated balance sheet of the Company as of the Closing Date (such
balance sheet being referred to as the "Closing Balance Sheet", and the
Stockholder's Equity of the Company as of the Closing Date set forth therein
being referred to as the "Closing Stockholder's Equity"). The Closing
Balance Sheet shall be prepared in accordance with generally accepted
accounting principles (except as otherwise indicated on Schedule 2.3) on a
basis consistent with the accounting methods and procedures used in the
preparation of the Consolidated Balance Sheet for the Company as of December
31, 1995 attached hereto as Schedule 2.1.
2.4 DISPUTE PERIOD.
(a) Buyer shall have thirty (30) days after its receipt of the
Closing Financial Statements ("Dispute Period") to give written notice
("Dispute Notice") to Seller of any good faith objection to any material
aspect of such Closing Balance Sheet setting forth in reasonable detail the
items and amounts with which it disagrees. If Buyer does not give a Dispute
Notice to Seller within the Dispute Period, the Closing Balance Sheet
(including the calculation of Closing Stockholder's Equity) shall be deemed
to have been accepted by Buyer.
(b) Seller and Buyer shall, within ten (10) business days after
receipt by either Seller or Buyer of a Dispute Notice, attempt to resolve
such dispute and agree in writing upon the Closing Financial Statements. In
the event that Seller and Buyer are unable to resolve such dispute within
such ten (10) business day period, then within five (5) business days
thereafter, the Atlanta or New York office of a nationally recognized firm of
certified public accountants among the six largest in the United States as
the parties may jointly select, which firm is not at the time engaged by
either Seller or Buyer in connection with any other matter ("the Arbitrating
Accountant") shall be employed as arbitrator hereunder to settle all
unresolved disputes with respect to the Closing Financial Statements. The
Arbitrating Accountant shall have access to all documents and facilities
necessary to perform its function as arbitrator. The Arbitrating Accountant
shall be instructed that its determination with respect to any dispute shall
be made in accordance with the provisions of this Agreement and that its
determination shall be made within forty-five (45) days of its selection.
The Arbitrating Accountant's determination with respect to any dispute shall
be in writing and be final and binding upon the parties hereto. The party
found to be in error shall pay the fees and expenses of the Arbitrating
Accountant, or if both parties are in error, the fees shall be allocated as
the Arbitrating Accountant shall direct.
2.5 POST-CLOSING ADJUSTMENT. Within two (2) business days following
the later of: (i) the resolution of all disputes in connection with the
Stockholder's Equity adjustment; or (ii) the expiration of the Dispute
Period, if Buyer failed to give a Dispute Notice to Seller within said
period, the Purchase Price shall be adjusted as follows: (x) in the event the
Closing Stockholder's Equity exceeds the December 31, 1995 Stockholder's
Equity (such amount being referred to as the "Excess"), Buyer shall pay to
Seller the amount of such Excess, or (y) in the event the Closing
Stockholder's Equity is less than the December 31, 1995 Stockholder's Equity
(such amount being referred to as the "Deficiency"), Seller shall pay to
Buyer the amount of such Deficiency. In either case, said payment shall be
made by wire transfer of immediately available federal funds, together with
interest thereon at the prime rate of Chemical Bank ("Prime Rate") per annum
from the Closing Date until the date of payment. If such adjustment
(including the interest component, if any) is not paid within five (5)
business days as set forth above, then such moneys shall accrue interest at
the Prime Rate plus three percent (3%) from the Closing Date until the date
of payment. In the event the Closing Stockholder's Equity is equal to the
December 31, 1995 Stockholder's Equity, no adjustment to the Purchase Price
shall be made.
2.6 ACCESS. After the Closing, Buyer shall give Seller and its
authorized representatives and the Arbitrating Accountant, if applicable,
reasonable access during normal business hours to the Company's personnel,
properties, books and records for the purpose of fulfilling its obligations
and rights hereunder.
ARTICLE III - SELLER'S REPRESENTATIONS AND WARRANTIES
Seller represents and warrants to Buyer on the date of this Agreement as
follows. Other than as set forth in this Agreement, Seller makes no other
representations or warranties with respect to the transactions contemplated
hereunder.
3.1 ORGANIZATION. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. The
Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware.
3.2 AUTHORITY. The execution, delivery, and performance of this
Agreement by Seller have been duly and properly authorized by proper
corporate action in accordance with applicable law and with its Articles of
Incorporation and By-Laws. Seller has the right, power and capacity to
execute, deliver and perform this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Seller and constitutes Seller's legal, valid and
binding obligation, enforceable in accordance with its terms.
3.3 TRANSACTION NOT A BREACH. Neither the execution and delivery of
this Agreement nor the performance by Seller of its obligations hereunder
will conflict with or result in a breach of the terms, conditions or
provisions of the Articles of Incorporation or By-Laws of Seller; or any
contract, agreement, mortgage or other instrument or obligation of any nature
to which Seller is a party or by which Seller is bound, and neither the
execution and delivery of this Agreement nor its performance by Seller will
contravene or violate any material statute or any material judicial or
governmental regulation, order, injunction judgment or decree or require the
approval, consent or permission of any governmental or regulatory body or
authority.
3.4 OWNERSHIP OF STOCK. Seller owns, of record and beneficially, good
and valid title to the Stock, and the shares of Stock (i) are validly issued,
fully paid and nonassessable; and (ii) are free and clear of any liens,
restrictions, claims, equities, charges, options, rights of first refusal or
encumbrances, with no defects of title whatsoever, other than a lien on the
Stock held by Chemical Bank ("Chemical"), which lien Seller shall cause to be
released at or prior to the Closing. Other than the Stock, Seller owns no
shares of capital stock of the Company or any other equity security of the
Company or any subsidiary thereof, and no right of any kind to have any such
equity security issued. Upon consummation of the Closing, Buyer shall have
obtained good and valid title to the Stock, free and clear of any liens,
restrictions, claims, equities, options, charges, rights of first refusal, or
encumbrances or other restrictions, and with no defects of title whatsoever.
Seller has full and exclusive power, right and authority to vote the Stock.
Seller is not a party to or bound by any agreement affecting or relating to
its right to transfer or vote the Stock. The Stock constitutes all of the
issued and outstanding capital stock of the Company, and, other than pursuant
to the Company's 1989 Stock Option Plan, no person or entity has any rights
by way of stock option, convertible security, subscription, warrant, contract
or other agreement or arrangement, written or oral, to purchase or acquire
any capital stock of the Company.
3.5 STATE AND LOCAL TAX RETURNS.
(a) Definitions. For purposes of this Agreement, the following
definitions shall apply:
(i) The term "Affiliated Group" shall mean, individually and
collectively, (A) the Company, (B) Seller, and (C) any individual,
trust, corporation, partnership or any other entity as to which the
Company is liable for Taxes incurred by such individual or entity either
as a transferee, or pursuant to Treasury Regulations section 1.1502-6,
or pursuant to any other provision of federal, territorial, state, local
or foreign law or regulations.
(ii) The term "Code" shall mean the Internal Revenue Code of
1986, as amended.
(iii) The term "Income Taxes" shall mean all federal, state or
local taxes based on or measured by income, including estimated income
taxes, alternative minimum taxes, add-on minimum taxes, and
environmental taxes described in Section 59A of the Code, and any
interest or penalties with respect to any of the foregoing.
(iv) The term "Income Tax Returns" shall mean all consolidated
or pro-forma federal Income Tax returns, separate state or local Income
Tax returns, claims for refund of Income Tax and declarations of
estimated Income Tax, or other statement relating to Income Taxes, and
any schedules or attachments, to any of the foregoing or any amendments
thereto.
(b) Income Tax Returns Filed and Income Taxes Paid. All Income
Tax Returns required to be filed by or on behalf of the Company as of the
date hereof have been duly filed on a timely basis and such Income Tax
Returns are true, complete and correct; all Income Tax Returns for all
periods ending on or before the Closing Date that are required to be filed
after the date hereof will be filed on a timely basis in accordance with
applicable laws and regulations; all Income Taxes shown to be payable on such
Income Tax Returns or on subsequent assessments with respect thereto have
been paid in full on a timely basis, and no other Income Taxes are payable by
the Company with respect to items or periods covered by such Income Tax
Returns (whether or not shown on or reportable on such Income Tax Returns) or
with respect to any period prior to the date of this Agreement.
All federal Income Tax Returns required to be filed by or on
behalf of the Affiliated Group as of the date hereof have been duly filed on
a timely basis and such federal Income Tax Returns are true, complete and
correct; all federal Income Tax Returns for all periods ending on or before
the Closing Date that are required to be filed by any member of the
Affiliated Group after the date hereof will be filed on a timely basis in
accordance with applicable laws and regulations; all federal Income Taxes
shown to be payable on such federal Income Tax Returns or on subsequent
assessments with respect thereto have been paid in full on a timely basis,
and no other Income Taxes are payable by the Company with respect to items or
periods covered by such federal Income Tax Returns (whether or not shown on
or reportable on such federal Income Tax Returns) or with respect to any
period prior to the date of this Agreement.
(c) Income Tax Deficiencies Audits; Statutes of Limitations.
Except as otherwise disclosed in Schedule 3.5(c): (i) there is no dispute or
claim asserted in writing by the Internal Revenue Service concerning any
Income Tax liability of any member of the Affiliated Group for any taxable
period during which the Company was a member of the Affiliated Group, (ii) no
member of the Affiliated Group has waived any statute of limitations
applicable to any Income Tax, nor has any member of the Affiliated Group
agreed to any extension of time with respect to an Income Tax assessment or
deficiency.
(d) Section 341(f). There is no agreement or consent made under
Section 341(f) of the Code affecting the Company.
(e) Section 1445. The purchase and sale of Stock contemplated by
this Agreement is not subject to withholding under Section 1445 of the Code.
(f) Tax Sharing Agreements. The Company is not and has not ever
been a party to a tax sharing agreement with any other corporation or entity
other than members of the Affiliated Group.
3.6 EMPLOYEE BENEFIT PLANS.
(a) All Employee Benefit Plans and Arrangements.
(1) List and Description of Plans and Arrangements.
Schedule 3.6(a)(1) sets forth a complete and accurate list of all
employee benefit plans as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") and
all other employee benefit plans, policies or arrangements,
including deferred compensation, early retirement, incentive,
profit-sharing, thrift, stock ownership, stock appreciation rights,
bonus, stock option, stock purchase, welfare or vacation or other
nonqualified benefit plans or arrangements of any kind (whether
written or oral) (i) which pertain to present or former employees,
retirees, directors or independent contractors (or their
beneficiaries, dependents or spouses) of the Company; and (ii)
which are currently maintained by, sponsored by, or contributed to
by the Company or any employer which, under Section 414 of the
Code, would constitute a single employer with the Company (a
"Company Affiliate") or as to which the Company or any Company
Affiliate has any ongoing liability or obligation whatsoever
(collectively, "Employee Benefit Plans").
(2) Compliance with ERISA and the Code. Except as set
forth on Schedule 3.6(a)(2), the Company and all Company Affiliates
have complied with all of their respective obligations with respect
to all Employee Benefit Plans (including, but not limited to, (i)
filing or distributing all reports or notices required by ERISA or
the Code and (ii) complying with all requirements of Part 6 of
ERISA and Code Section 4980B) and have maintained the Employee
Benefit Plans materially in compliance with all applicable laws and
regulations (including but not limited to ERISA and the Code).
Each Employee Benefit Plan intended to be qualified under Section
401(a) of the Code has received a favorable determination letter
from the Internal Revenue Service, and the Internal Revenue Service
has not threatened or taken any action to revoke any favorable
determination letter issued with respect to any such Employee
Benefit Plan. No amendment to any Employee Benefit Plan intended
to be qualified under Section 401(a) of the Code or related trust
has been adopted since receipt of the most recent determination
letter issued with respect to the Employee Benefit Plan or related
trust which would cause disqualification of the Employee Benefit
Plan or related trust. No action has been taken, and Seller has no
knowledge of any action or inaction, which could adversely affect
the previously determined qualified status of any Employee Benefit
Plan intended to be qualified under Section 401(a) of the Code.
(3) Copies of Documents Provided to Buyer. Seller has
made available to Buyer true, correct and complete copies of all
plan documents including amendments, trust instruments and other
agreements adopted or entered into in connection with each of the
Employee Benefit Plans and the most recently available Form 5500
annual reports, certified financial statements, actuarial reports,
summary plan descriptions and favorable determination letters, if
applicable, for each of the Employee Benefit Plans. Since the date
such documents were supplied to Buyer, no plan amendments have been
adopted, no changes to the documents have been made, and no such
amendments or changes shall be adopted or made prior to the Closing
Date.
(4) Agreements to Create, Continue or Terminate Plans.
Neither the Company nor any Company Affiliate has any agreement,
arrangement, commitment or understanding to create any additional
Employee Benefit Plan or to continue, modify, change in any
material respect, or terminate any existing Employee Benefit Plan.
(5) Agency Review, Taxes and Fiduciary Liability. None
of the Employee Benefit Plans is currently under investigation,
audit or review by the Department of Labor, the Internal Revenue
Service or any other federal or state agency or is liable for any
federal, state, local or foreign taxes. There is no transaction in
connection with which the Company, any Company Affiliate or any
fiduciary of any of the Employee Benefit Plans could be subject to
either a civil penalty assessed pursuant to ERISA Section 502, a
tax imposed by Code Section 4975 or liability for a breach of
fiduciary responsibility under ERISA.
(6) Claims Against Plans and Fiduciaries. Other than
routine claims for benefits payable to participants or
beneficiaries in accordance with the terms of the Employee Benefit
Plans, there are no claims, pending or threatened, by any
participant or beneficiary against any of the Employee Benefit
Plans or any fiduciary of any of the Employee Benefit Plans, and no
basis for any such claim or claims exists.
(7) (Intentionally Deleted).
(8) Retiree Welfare Benefits. Neither the Company nor
any Company Affiliate has maintained an Employee Benefit Plan
providing group health, dental, vision, life insurance or other
welfare benefits to employees following retirement or other
separation from service, except to the extent required under Part 6
of Title I of ERISA and Code Section 4980B.
(b) Defined Benefit Plan Matters.
(1) List of Defined Benefit Plans. Schedule 3.6(b)(1)
identifies by name all of the Employee Benefit Plans that are
pension plans within the meaning of ERISA Section 3(2) and that are
subject to Title IV of ERISA (the "Defined Benefit Plans"), and
specifically identifies each of such Defined Benefit Plans that is
a multiemployer plan within the meaning of ERISA Section 3(37)(A).
(2) PBGC Premiums and Termination Liability. No
liability to the Pension Benefit Guaranty Corporation ("PBGC") has
been incurred with respect to the Defined Benefit Plans. All
premiums due and payable to the PBGC with respect to the Defined
Benefit Plans have been paid in a timely manner. The PBGC has not
instituted proceedings to terminate any of the Defined Benefit
Plans. No event has occurred, and there exists no condition or set
of circumstances, which could result in the involuntary termination
of any of the Defined Benefit Plans by the PBGC pursuant to ERISA
Section 4042. Moreover, even if a Defined Benefit Plan were
terminated voluntarily pursuant to ERISA Section 4041, neither the
Company nor any Company Affiliate would have any liability to the
PBGC as a result of the termination.
(3) Reportable Events. No notice of a reportable event
has been filed with the PBGC by the plan administrator of any of
the Defined Benefit Plans, nor has any such reportable event
occurred for which a notice to the PBGC is required.
(4) (Intentionally Deleted).
(5) No Accumulated Funding Deficiency. No accumulated
funding deficiency, whether or not waived and regardless of the
reason arising, exists with respect to any Defined Benefit Plan.
(6) (Intentionally Deleted).
(7) Multiemployer Plan Withdrawal Liability. Except as
set forth on Schedule 3.6(b)(7), prior to the date hereof, no
action has been or will be taken, the effect of which would
constitute a withdrawal as described in ERISA Section 4063 or which
would subject the Company or any Company Affiliate to any
withdrawal liability as defined in ERISA Section 4201 or to any
increased annual liability as a result of a plan reorganization as
described in ERISA Section 4241.
(c) Controlled Group Benefit Plans and Arrangements.
(1) All Liabilities to Remain with Seller. The parties
hereto agree that after the Closing neither Buyer nor the Company
shall have any liability whatsoever which may arise with respect to
any "Controlled Group Employee Benefit Plan" (i.e., an employee
benefit plan (within the meaning of ERISA Section 3(3)), or any
other plan or arrangement, of, or contributed to by, Seller or any
other entity which would constitute a single employer with Seller
under Section 414 of the Code, ERISA Section 210(c) or ERISA
Section 4001(a)(14) (whether or not such plan or arrangement ever
provided benefits to any present or former employee, retiree,
director or independent contractor of the Company or their
beneficiaries, dependents or spouses)). The preceding sentence
applies to any liability with respect to a Controlled Group
Employee Benefit Plan, regardless of whether such liability
involves any employee of the Company, and regardless of when or how
such liability arose.
(2) Indemnification for Liabilities. To the extent that
there exists any liability whatsoever with respect to any
Controlled Group Employee Benefit Plan from and after the Closing
(whether such liability be liability imposed under ERISA, the Code,
or otherwise) (a "Controlled Group Employee Benefit Liability"),
the Seller and/or Eagle (as defined in Section 5.7(b) hereof) shall
take any action reasonably requested by the Company to prevent the
imposition of such liability on the Company; and shall indemnify
and hold harmless the "Indemnitees" (i.e., the Company, any
successors or assigns thereto, and all employees, officers,
directors, agents, independent contractors and other persons
affiliated with the Company or its successors or assigns) from and
against any and all such liabilities, and any losses, damages,
claims, liabilities, actions, suits, proceedings and costs and
expenses of defense thereof, including reasonable attorneys' fees.
Notwithstanding any provision of this Agreement to the contrary
(including, but not limited to, any provisions of Article VIII
hereof), the indemnification of the preceding sentence shall
survive the Closing and shall remain in effect until no Controlled
Group Employee Benefit Liability could possibly be asserted against
the Indemnitees.
3.7 OWNERSHIP OF ASSETS. The Company owns all of its assets free and
clear of any liens or encumbrances of any type whatsoever, except for (i)
liens of Chemical Bank, which shall be released at Closing, and (ii) such
other matters of record which encumber title to any real estate owned by the
Company.
ARTICLE IV - BUYER'S REPRESENTATIONS AND WARRANTIES
Buyer represents and warrants to Seller on the date of this Agreement as
follows. Other than as set forth in this Agreement, Buyer makes no other
representations or warranties with respect to the transactions contemplated
hereunder.
4.1 ORGANIZATION. Buyer is a corporation duly organized and existing
under the laws of the State of Georgia.
4.2 AUTHORITY. The execution, delivery, and performance of this
Agreement by Buyer have been duly and properly authorized by proper corporate
action in accordance with applicable law and with the Articles of
Incorporation and By-Laws of Buyer. Buyer has the right, power and capacity
to execute, deliver and perform this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Buyer and constitutes Buyer's legal, valid and
binding obligation, enforceable in accordance with its terms.
4.3 TRANSACTION NOT A BREACH. Neither the execution and delivery of
this Agreement nor the performance by Buyer of its obligations hereunder will
conflict with or result in a breach of the terms, conditions or provisions of
the Articles of Incorporation or By-Laws of Buyer or any contract, agreement,
mortgage or other instrument or obligation of any nature to which Buyer is a
party or by which Buyer is bound; and neither the execution and delivery of
this Agreement nor its performance by Buyer will contravene or violate any
material statute or any material judicial or governmental regulation, order,
injunction judgment or decree or require the approval, consent or permission
of any governmental or regulatory body or authority.
4.4 BUYER'S KNOWLEDGE. Buyer has no knowledge, and has received no
written notice, of a breach of any representation or warranty of Seller set
forth in Article III of this Agreement. As used herein, "Buyer's knowledge"
(or words of similar import or meaning) shall mean the knowledge of any of
Thomas R. Barry, Pelham Wilder, III, or Kenneth S. Voelker.
4.5 NO OTHER REPRESENTATIONS OR WARRANTIES. Except as specifically
provided in this Agreement, Buyer acknowledges that Seller has not made, and
Buyer is not relying on, any representation or warranty of Seller with
respect to the transactions contemplated hereby. Except as specifically
provided in this Agreement, and subject to the representations, warranties,
covenants and agreements of Seller set forth herein, Buyer is acquiring the
Company on an "AS-IS BASIS," and Buyer acknowledges and agrees that, except
as specifically provided in this Agreement, Seller has not made, does not
make and specifically disclaims any representations, warranties, promises,
covenants, agreements or guaranties of any kind or character whatsoever,
whether express or implied, oral or written, past, present or future, of, as
to, concerning or with respect to: (a) the nature, quality or condition of
the assets owned or leased by the Company, including, without limitation, the
water, soil and geology, (b) the income to be derived from the Company, (c)
the suitability of the Company for any and all activities and uses which
Buyer may conduct thereon, (d) the compliance of or by the Company or its
operation with any laws, rules, ordinances or regulations of any applicable
governmental authority or body, (e) the habitability, merchantability or
fitness for a particular purpose of the Company or any of its properties,
personal or real, or (f) any other matter with respect to the Company; and
specifically disclaims any representations regarding wastes, as defined by
the U.S. Environmental Protection Agency Regulations at 40 C.F.R., or any
hazardous substance, as defined by the Comprehensive Environmental Response
Compensation and Liability Act of 1980, as amended, and regulations
promulgated thereunder.
ARTICLE V - OTHER AGREEMENTS
5.1 ACCESS TO RECORDS. Buyer shall cause the Company to retain its
books and records as they physically exist on the Closing Date for a period
of seven (7) years from the Closing Date. During such period, Seller shall
have access to such books and records on reasonable notice during normal
business hours for any reasonable and necessary purpose. If Seller desires
copies of any such books and records after such retention period, it shall
notify Buyer and will be permitted to have copies or make copies of such
books and records, provided that Seller bears the costs and expenses of such
copying.
5.2 INCOME TAXES.
(a) Federal, State and Local Income Taxes. Seller will
include the Company in its consolidated federal income tax returns for
all periods up to and including the Closing Date. Seller will pay all
federal income tax liabilities resulting from the inclusion of the
Company in its consolidated returns for such periods. Seller and Buyer
agree that neither party will make an election under Section 338(h)(10)
of the Internal Revenue Code of 1986, as amended, with respect to the
transactions contemplated hereunder. Seller shall be responsible for
preparing and filing all state and local income tax returns for all
periods up to and including the Closing Date, and Seller shall be
responsible for making any required payments with respect to such state
and local income tax returns.
(b) Other Taxes. With respect to federal, state and local
tax returns (specifically excluding income tax returns) for periods
ending on, prior to or after the Closing Date (including, without
limitation, all state and local returns for sales, use, payroll,
withholding, employment, excise, property, intangible and franchise
taxes), Buyer shall be responsible for causing the Company to prepare
and file such returns, and the Company shall be responsible for making
any required payments with respect to such returns; provided, and only
on the condition that accruals for said taxes are included in the
December 31, 1995 Stockholder's Equity and shall be included in the
Closing Balance Sheet.
(c) Audits. After the Closing, Seller and Buyer agree to
cooperate with each other in connection with any official tax inquiry,
tax determination or tax-related legal proceeding affecting a tax
liability of the Company or in connection with a determination of any
tax liability or treatment and to make available to each other party a
reasonable amount of time, at no cost to such party, of its employees
and officers, together with documents, correspondence, reports and other
materials bearing on such tax inquiry, examination, proceeding or
determination of tax liability or treatment, provided that Seller and
Buyer shall be reimbursed by the other for any out-of-pocket expenses
they incur in assisting the other party hereunder. No party shall
request a tax audit of the Company, and Buyer shall not, without the
prior written consent of Seller, extend any statute of limitations with
respect to taxes.
(d) Tax Sharing Agreements. Any tax sharing agreements to
which the Company is a party shall terminate as of the Closing, and
thereafter, the Company shall have no liability or obligation under any
such tax sharing agreements, whether attributable to periods before or
subsequent to the Closing Date.
5.3 CHEMICAL BANK FINANCING. The Stock and substantially all of the
Company's assets are subject to liens held by Chemical. Chemical's interest
in the Stock and said assets shall be released at the Closing.
5.4 (INTENTIONALLY DELETED).
5.5 REPAYMENT OF INTERCOMPANY DEBT. At the Closing, and simultaneously
with the payment of the Purchase Price, the entire amount of intercompany
indebtedness owed by the Company to the Seller and/or its affiliates and the
entire amount of intercompany indebtedness owed by the Seller and/or its
affiliates to the Company, outstanding on the Closing Date, shall be paid by
Buyer to Seller by wire transfer of immediately available federal funds.
Buyer and Seller agree that the repayment of the intercompany indebtedness
shall be deemed to have occurred immediately preceding the Closing. Buyer
and Seller acknowledge that the amount of intercompany indebtedness paid to
Seller at Closing is based on estimated amounts, and that the post-closing
adjustment set forth in Section 2.5 above shall include an adjustment for the
difference between such estimated amount and the actual intercompany
indebtedness existing as of the Closing Date.
5.6 EMPLOYEE BENEFIT PLANS.
(a) Effective as of the Closing Date, Seller shall cause the
Company to withdraw from participation in, and its adoption of, the
Eagle Industrial Products Corporation Employee Savings Plan (the
"Savings Plan"), and shall cause each employee of the Company who is a
participant in the Savings Plan to become fully vested in his or her
account balances under the Savings Plan. Seller shall also cause the
Savings Plan to offer distributions to all employees of the Company to
the extent allowed by Code Section401(k)(10)(A)(iii) as soon as
practicable after the last day of the calendar month which next follows
the Closing Date.
(b) Effective as of the Closing Date, Seller shall cause the
Company to withdraw from participation in, and its adoption of, the
Eagle Industrial Products Corporation Cash Balance Pension Plan (the
"Pension Plan"), and shall cause each employee of the Company who is a
participant in the Pension Plan to become fully vested in his or her
account balances under the Pension Plan. Seller shall also cause the
Pension Plan to offer distributions to all employees of the Company as
soon as practicable after the last day of the calendar month which next
follows the Closing Date.
(c) Buyer or an entity which is treated as a single employer
with the Buyer pursuant to Code Section414(b), (c), (m) or (o) shall
establish and maintain a defined contribution plan (the "Buyer's Plan")
within ninety (90) days of the Closing Date which shall contain
provisions allowing the direct rollover (within the meaning of Code
Section401(a)(31)) of eligible rollover distributions into the Buyer's
Plan, and which Buyer will intend to be a qualified plan within the
meaning of Code Section401(a). After the plan administrator of the
Savings Plan and the Pension Plan obtains (i) a determination letter
issued by the Internal Revenue Service evidencing that the Buyer's Plan
is qualified under Code Section401(a), or (ii) such other evidence
reasonably satisfactory to the plan administrator that the Buyer's Plan
is qualified under Code Section401(a), eligible rollover distributions
from the Savings Plan and/or the Pension Plan may be rolled over into
the Buyer's Plan provided that all other requirements reasonably imposed
by the plan administrator of the Buyer's Plan are satisfied.
(d) Prior to the Closing Date, Seller shall cause the Company
to make contributions to the trustee of the Savings Plan and to the
trustee of the Pension Plan of any amounts which are shown on the books
of the Company (in accordance with the Company's normal methods of
keeping its books) as outstanding at such time. From and after the
Closing Date, no contributions of the Company shall be due or payable to
either the trustee of the Savings Plan or the trustee of the Pension
Plan, and neither Buyer nor the Company shall have any liability
whatsoever with respect to such Plan.
(e) Effective as of the Closing, Seller shall cause the
Company to withdraw from participation in, and to withdraw its adoption
of, all employee benefit plans (within the meaning of Section 3(3) of
ERISA) and other plans or arrangements which are sponsored by, or
contributed to by, an entity other than the Company. Schedule 5.6(e)
lists all such plans and arrangements.
5.7 RESPONSIBILITY FOR INSURANCE COVERAGE.
(a) Crime Insurance. Seller hereby represents and warrants
that the Company is an insured party under the Seller's current crime
insurance policy, which provides coverage on an "occurrence" basis (the
"Present Insurance"). Seller shall be responsible and liable for all
claims associated with occurrences prior to the Closing of a category or
type subject to coverage under the Present Insurance but only to the
extent it (or a third party on its behalf) actually receives insurance
proceeds or protection relating thereto (an "Insurance Covered
Occurrence"). To the extent such Insurance Covered Occurrence is
subject to a deductible or self-insured retention, the Company shall be
responsible and liable for said amount. Buyer acknowledges that the
Company is not an insured party under any policies of insurance
maintained by Seller other than the Present Insurance, and that Buyer
and the Company shall look to those insurance policies maintained by the
Company, if any, with respect to all claims arising prior to the
Closing.
(b) Medical Insurance. Buyer acknowledges that employees of
the Company shall be ineligible to participate in any employee welfare
benefit plans maintained by Seller or Eagle Industries, Inc. ("Eagle")
after the last day of the month in which the Closing occurs and agrees
that none of Seller, Eagle or any employee welfare benefit plan
maintained by Seller or Eagle shall be liable for any claim incurred by
an employee of the Company on or after the last day of the month in
which the Closing occurs except to the extent that such claim is
incurred while such employee (or dependent) is covered (or entitled to
coverage) under a group health plan of the Seller or Eagle pursuant to
Part 6 of Title I of ERISA and/or under Code Section4980B or incurred
while such employee (or dependent) is covered under any other plan,
policy or arrangement of the Seller or Eagle. For purposes of the
preceding sentence, a claim shall be deemed incurred when the service
which results in such claim is rendered, irrespective of when the
illness or injury giving rise to such service was first contracted or
incurred.
ARTICLE VI - CONDITIONS TO CLOSING
ARTICLE VII - CLOSING
7.1 TIME, DATE AND PLACE OF CLOSING. The transaction which is the
subject of this Agreement shall be closed (the "Closing") on February 28,
1996 at 9:00 a.m., or on such other date and time as the parties shall
mutually agree upon in writing (the "Closing Date"). The Closing shall take
place at the offices of Buyer's counsel in Atlanta, Georgia.
7.2 DELIVERIES BY SELLER AT CLOSING. At the Closing, Seller will
deliver to Buyer the following documents:
(a) Share certificates representing all of the Stock, duly
endorsed for transfer to Buyer or with separate stock transfer powers
duly endorsed by Seller for transfer of the Stock to Buyer.
(b) Such releases and other documents as are necessary to
evidence the release of Chemical's liens on the Stock and the assets of
the Company.
(c) Unless already in the possession of Buyer, the minute
book, stock records and corporate seal of the Company.
(d) Resignation of Anthony Navitsky as Vice President and
Assistant Secretary of the Company, to be effective as of the Closing.
(e) The opinion of Rosenberg & Liebentritt, P.C., counsel for
Seller, in substantially the form of Exhibit 7.2(e) attached hereto.
(f) A copy of a resolution of Seller's board of directors
certified by Seller's secretary as having been duly adopted and being in
full force and effect, authorizing Seller's execution and performance of
this Agreement.
7.3 DELIVERIES BY BUYER AT CLOSING. At the Closing, Buyer will deliver
to Seller:
(a) Bank wire transfers in the amounts required by Section
2.2(a)(ii) and Section 5.5 hereof.
(b) The opinion of Long Aldridge & Norman, counsel for Buyer,
in substantially the form of Exhibit 7.3(b) attached hereto.
(c) A copy of a resolution of Buyer's board of directors
certified by Buyer's Secretary as having been duly adopted and being in
full force and effect, authorizing Buyer's execution and performance of
this Agreement.
(d) The Promissory Note in the form of Exhibit 2.2(a)(i)
executed by Buyer.
(e) A copy of the Capital Appreciation Participation
Agreement executed by Buyer in the form of Exhibit 7.2(g) attached
hereto.
(f) Resignations of Tom Barry, Pelham Wilder, III and Kenneth
S. Voelker as an officer and member of the Board of Directors of Seller
and its affiliates (other than the Company and its subsidiaries), to be
effective as of the Closing.
ARTICLE XIII - INDEMNIFICATION
8.1 INDEMNIFICATION BY SELLER. Seller agrees to indemnify, defend and
hold harmless Buyer, the Company, any successors or assigns thereto, and
their respective officers, directors and employees (collectively, the "Buyer
Indemnitees") from and against and in respect of any and all losses, damages,
claims, liabilities, actions, suits, proceedings and costs and expenses of
defense thereof, including reasonable attorneys' fees (collectively,
"Losses"), suffered or incurred by reason of, or arising out of, or with
respect to (i) any breach or inaccuracy of Seller's representations and
warranties contained in this Agreement or any certificate or other document
delivered pursuant hereto or in connection herewith, and (ii) any breach or
noncompliance of Seller with any covenant or agreement of Seller contained in
this Agreement. Notwithstanding the foregoing, Seller shall be under no
obligation to indemnify or defend the Buyer Indemnitees if the fact, matter
or circumstance giving rise to an indemnity or defense claim hereunder also
constitutes a breach of Buyer's representation and warranty set forth in
Section 4.4 above.
8.2 INDEMNIFICATION BY BUYER.
(a) Buyer agrees to indemnify, defend and hold harmless
Seller, any of its successors or assigns, and their respective officers,
directors and employees (collectively, the "Seller Indemnitees") from and
against and in respect of any all Losses suffered or incurred by reason of,
or arising out of, or with respect to any (i) breach or inaccuracy of Buyer's
representations and warranties contained this Agreement or any certificate
or other document delivered pursuant hereto or in connection herewith, (ii)
any breach or noncompliance of Buyer with any covenant agreement of Buyer
contained in this Agreement, (iii) environmental, health, safety, pollution
and reclamation liabilities and obligations of, relating to, or associated
with, the Company and any of its assets, operations or properties which
presently exist, have existed or come into existence or accure in the future,
whether known or unknown, and whether attributable to past, present or future
assets or operations of the Company, under all applicable federal, state,
local and foreign laws, rules and regulations heretofore in effect or which
may come into effect in the future, or otherwise, including without limitation
any and all obligations under the Comprehensive Environmental Response
Compensation Liability Act of 1980 ("CERCLA") and the Resource Conservation
and Recovery Act of 1980 ("RCRA"), and any and all personal injuries,
property damage, contamination or pollution, known or unknown, claimed by any
person or entity subsequent to the Closing Date to have resulted from the
operation of the Company before, on or after the Closing Date, and (iv)
except for matters for which Buyer is entitled to indemnification against
pursuant to Section 8.1 above, any and all other liabilities, and obligations
of, relating to, or associated with, the Company and any of its assets,
operations or properties which presently exist, have existed or come into
existence or accrue in the future, whether known or unknown, and whether
attributable to past, present or future assets or operations of the Company.
8.3 TERMS OF INDEMNIFICATION. The foregoing indemnification
obligations are subject to the following:
(a) Notification of Claim. Promptly after the assertion of
any claim by a third party or occurrence of any event which may give
rise to a claim for indemnification from a party obligated to indemnify
another party (the "Indemnitor") under this Article VIII, the party
seeking indemnity hereunder (an "Indemnitee") shall notify the
Indemnitor in writing of such claim, with reasonable particularity, and,
with respect to claims by third parties, advise the Indemnitor whether
the Indemnitee intends to contest same; provided that the failure to
give any such notice shall not relieve the Indemnitor of its obligations
hereunder except to the extent that such failure to give notice actually
and materially prejudices the Indemnitor.
(b) Recoveries. The party shall be deemed to have suffered a
loss for which the other party shall be liable for indemnification only
to the extent that the party claiming indemnification has not received
any recovery or benefit with respect thereto from any third party,
person or entity (including without limitation the benefit of any
federal or state income or franchise tax benefit obtained as a result of
such loss); and if an indemnified party received such a recovery or
benefit after receipt of payment of a loss, then the amount of such
recovery or benefit (but not exceeding the amount of such loss), net of
reasonable expenses incurred in obtaining the recovery or benefit, shall
be paid to the party or parties who paid the loss. Without limiting the
foregoing, in the event that a claim or benefit is created in connection
with the occurrence of a loss which has not been collected or otherwise
enjoyed by the indemnified party at the time payment with respect to the
loss is made, the indemnified party shall assign such benefit or claim
to the indemnifying party as a condition to the payment of such loss,
or, if such claim or benefit is not assignable under applicable laws,
the indemnified party shall attempt in good faith to collect such claim
or benefit.
(c) Defense. With respect to any third party claim or action
that could give rise to indemnity under this Agreement, the indemnifying
party shall be entitled to assume the defense thereof with counsel
reasonably satisfactory to the indemnified party, and after notice from
the indemnifying party to the indemnified party of its election so to
assume the defense thereof, the indemnifying party shall not be liable
to the indemnified party under the foregoing indemnity agreement for any
legal or other expenses subsequently incurred by the indemnified party
in connection with the defense thereof.
8.4 SURVIVAL OF INDEMNITY CLAIMS.
(a) Survival. The representations and warranties contained
herein or in any certificate or other document delivered pursuant hereto
or in connection herewith shall not be extinguished by the Closing but
shall survive the Closing, subject to the limitations set forth in
Section 8.4(b) hereof with respect to the time periods within which
claims for indemnity must be asserted, and the covenants and agreements
contained herein shall survive without limitation as to time except as
may be otherwise specified herein.
(b) Time to Assert Claims. All claims for indemnification
hereunder shall be asserted no later than two (2) years after the
Closing Date, except as follows:
(i) claims with respect to Losses arising out of or
related in any way to the matters described in Sections 8. I (ii)
and 8.2(ii), (iii) and (iv) may be made without limitation, except
as limited by law; and
(ii) claims with respect to Losses arising out of or
related in any way to any breach of or inaccuracy in the
representations and warranties contained in Sections 3.4, 3.5 and
3.6 hereof may be made until, and shall be made no later than,
thirty (30) days after the expiration of the applicable statute of
limitations relative to the liability relating to such
representation or warranty.
ARTICLE IX - MISCELLANEOUS
9.1 NOTICES. Any notices hereunder shall be in writing and shall be
deemed to have been given and received when delivered by hand, the first
business day after sent by overnight courier with instructions for next day
delivery (such as Federal Express), or on the third business day after
deposit in the United States Mail, registered or certified, return receipt
requested, postage prepaid, addressed to:
IF TO SELLER:
c/o Eagle Industries, Inc.
Two North Riverside Plaza
Suite 1100
Chicago, Illinois 60606
Attn: Gus J. Athas
Senior Vice President and General Counsel
WITH A COPY TO:
Rosenberg & Liebentritt, P.C.
Two North Riverside Plaza
Suite 1515
Chicago, Illinois 60606
Attn: Ira Chaplik, Esq.
IF TO BUYER:
Thomas R. Barry
Mighty Distributing System of America, Inc.
50 Technology Park/Atlanta
Norcross, Georgia 30092
WITH A COPY TO:
Long, Aldridge & Norman
One Peachtree Center, Suite 5300
303 Peachtree Street
Atlanta, Georgia 30308
Attn: David Ivey, Esq.
or at such other address or addresses as the parties may from time to time
specify by notice in writing to the other parties, given in the manner
provided in this Section.
9.2 SEVERABILITY. The unenforceability or invalidity of any provision
of this Agreement shall not affect the enforceability or validity of any
other provision.
9.3 ASSIGNMENT. Neither this Agreement nor any interest hereunder
shall be assigned or transferred by Seller or Buyer. Subject to the
foregoing, this Agreement shall inure to the benefit of and shall be binding
upon Seller and Buyer and their respective successors and assigns.
9.4 ENTIRE AGREEMENT. This Agreement sets forth the entire
understanding of the parties with respect to the subject matter hereof and
may be modified only by instruments signed by both of the parties hereto.
Any and all prior or collateral representations, promises and conditions in
connection with the subject matter hereof and any representations, promise or
condition not incorporated herein or made a part hereof shall not be binding
upon either party.
9.5 DOCUMENTS. Each party will execute all documents and take such
other actions as the other party may reasonably request in order to
consummate the transactions provided for herein and to accomplish the
purposes of this Agreement. This Agreement may be executed simultaneously in
one or more counterparts, each of which shall be deemed an original but all
of which together shall constitute one and the same instrument.
9.6 THIRD PARTIES. Nothing in this Agreement is intended to confer any
right or remedy under or by reason of this Agreement on any person other than
the parties hereto and the Company and their respective successors and
assigns.
9.7 GOVERNING LAW. This Agreement shall be construed and governed in
accordance with the laws of the State of Illinois, without regard to
principles of conflicts of law. The venue for any action filed in connection
with this Agreement or the transactions contemplated hereunder shall be
exclusively in Cook County, Illinois.
9.8 EXPENSES. Each party hereto shall pay its own expenses and costs
incurred in connection with the negotiation and consummation of this
Agreement and the transactions contemplated hereby, except that Seller shall
be responsible for and pay all applicable sales, transfer, documentary, use,
filing and other taxes and fees (other than income taxes) that may become due
and payable as a result of the consummation of the transactions contemplated
hereby, whether levied on Buyer, Seller or the Company.
9.9 BROKERAGE. Seller and Buyer represent that they have not dealt
with any brokers in connection with this transaction. Seller and Buyer shall
indemnify and hold the other harmless from and against any and all claims of
all brokers and finders claiming by, through or under said party and in any
way related to this Agreement, including, without limitation, attorneys' fees
in connection with such claims.
9.10 SCHEDULES. The Schedules and Exhibits attached to this Agreement
are incorporated herein and shall be part of this Agreement for all purposes,
and any reference to this "Agreement" shall be deemed to include all such
schedules and Exhibits.
9.11 PRESS RELEASES. Neither Seller nor Buyer shall issue any press
release regarding the execution of this Agreement or the consummation of the
transactions contemplated hereby without the prior written consent of the
other. Notwithstanding the foregoing, either party may issue, upon prior
consultation with the other party, such press releases as the issuing party's
legal counsel deems required by the Securities Exchange Act of 1934, other
state or federal securities laws or by the rules of any exchange upon which
the issuing party's securities may be listed.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
BUYER: SELLER:
MIGHTY ACQUISITION CORPORATION, NORTH RIVERSIDE VENTURE, INC.,
a Georgia corporation a Delaware corporation
By: /s/ Thomas R. Barry By: /s/ Gus J. Athas
------------------- -----------------
Thomas R. Barry Gus J. Athas
Chairman Vice-President
Great American Management and Investment, Inc. hereby agrees to be bound
by the following provisions of this Agreement to the same extent as Seller is
bound: Seller's indemnification obligations pursuant to Section 8.1 in
connection with Losses suffered or incurred by reason of, or arising out of,
or with respect to (i) any breach of Seller's representations and warranties
contained in Sections 3.4, 3.5 and 3.6 of this Agreement and (ii) any breach
of noncompliance of Seller with any covenant or agreement of Seller contained
in Sections 3.6 and 5.2 of this Agreement.
GREAT AMERICAN MANAGEMENT AND INVESTMENT, INC.,
a Delaware corporation
By: /s/ Gus J. Athas
-----------------
Gus J. Athas
Senior Vice-President
