Page 5
ASSET PURCHASE AGREEMENT
by and among
NATIONAL SERVICE INDUSTRIES, INC.,
a Delaware corporation
NATIONAL SERVICE INDUSTRIES, INC.,
a Georgia corporation
NSI ENTERPRISES, INC.,
a California corporation
and
G&K SERVICES, INC.
Dated as of May 30, 1997
Page 6
TABLE OF CONTENTS
ARTICLE 1 - PURCHASE AND SALE OF ASSETS ................................ 1
1.1 Purchased Assets ................................................ 1
1.2 Excluded Assets ................................................. 4
1.3 Certain Intellectual Property Rights of Seller and the
Affiliates ...................................................... 5
1.4 Nonassignable Contracts or Permits 6
1.5 Subcontract Agreement ........................................... 8
ARTICLE 2 - ASSUMPTION OF LIABILITIES ................................... 10
ARTICLE 3 - PURCHASE PRICE .............................................. 11
3.1 Purchase Price 11
3.2 Payment of Purchase Price ....................................... 12
3.3 Rental Revenue Adjustment ....................................... 12
3.4 New Inventory Procedures 16
3.5 Closing Schedules ............................................... 16
3.6 Dispute Resolution .............................................. 17
3.7 Gain Sharing on Subsequent Disposition of Linen Plants;
Payment of Linen Shortfall ...................................... 17
3.8 Method of Payment ............................................... 20
3.9 Exclusive Remedy ................................................ 20
3.10 Allocation of Purchase Price .................................... 20
3.11 Sales Taxes; Property Taxes; Expenses ........................... 21
3.12 Treatment of Hold Tickets ....................................... 22
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES ............................. 22
4.1 Organization and Authority ..................................... 22
4.2 Financial Information .......................................... 23
4.3 Compliance with Other Instruments .............................. 23
4.4 Title to Assets ................................................. 24
4.5 Real Property .................................................. 24
4.6 Personal Property Leases ....................................... 25
4.7 Intellectual Property .......................................... 25
4.8 Litigation ..................................................... 26
4.9 Court Orders, Decrees and Laws ................................. 26
4.10 Labor and Employment Agreements ................................. 26
4.11 Pension and Welfare Plans ....................................... 27
4.12 Environmental Matters ........................................... 28
4.13 Rental Invoices and List of Sale Accounts ....................... 29
4.14 Customer Contracts .............................................. 29
4.15 Customer Prices and Terms ....................................... 29
(i)
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4.16 Covered Accounts ................................................ 29
4.17 Consents ........................................................ 29
4.18 Conduct of Business ............................................. 30
4.19 Business Organization ........................................... 31
4.20 Other Contracts ................................................. 31
4.21 Restrictive Covenants ........................................... 32
4.22 Licenses and Permits ............................................ 32
4.23 Inventory ...................................................... 32
4.24 Accounts Receivable ........................................... 33
4.25 Brokers ......................................................... 33
4.26 General Warranties .............................................. 33
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF PURCHASER ................. 33
5.1 Organization and Authority ...................................... 33
5.2 Compliance with Other Instruments ............................... 33
5.3 Brokers ......................................................... 34
ARTICLE 6 - COVENANTS OF SELLER ......................................... 34
6.1 Conduct of Business; Performance ................................ 34
6.2 HSR Act Filing .................................................. 34
6.3 Consents ........................................................ 34
6.4 Access and Information .......................................... 36
6.5 Noncompetition; Nonsolicitation; and Confidentiality ............ 36
6.6 Monthly Financial Statements .................................... 39
6.7 Notification of Certain Matters ................................. 39
6.8 Continuation Obligations ....................................... 40
6.9 Environmental Remediation Obligations of Seller ................. 40
6.10 Subsequent Assignment of the Transition Services Agreement ...... 41
6.11 Zoning Assurances ............................................... 41
6.12 Permitted Encumbrances .......................................... 42
6.13 Real Property ................................................... 42
6.14 Supply Contracts ................................................ 42
ARTICLE 7 - COVENANTS OF PURCHASER ..................................... 43
7.1 HSR Act Filings ................................................. 43
7.2 Employee Matters ................................................ 43
7.3 Financing ..................................................... 45
7.4 Other Matters ................................................... 45
7.5 Title Policy .................................................... 45
ARTICLE 8 - CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATION ............. 45
8.1 Representations and Warranties .................................. 46
8.2 Absence of Litigation ........................................... 46
(ii)
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8.3 Consents and Approvals .......................................... 46
8.4 Opinion of Counsel to Seller .................................... 46
8.5 Absence of Changes .............................................. 46
8.6 Delivery of Financials .......................................... 47
8.7 Real Estate ..................................................... 47
8.8 Financing ....................................................... 47
ARTICLE 9 -CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS ................. 47
9.1 Representations and Warranties .................................. 47
9.2 Absence of Litigation .......................................... 48
9.3 Consents and Approvals ......................................... 48
9.4 Opinion of Counsel to Purchaser ................................ 48
ARTICLE 10 - CLOSING ................................................... 48
10.1 Closing ........................................................ 48
10.2 Deliveries by Seller .......................................... 48
10.3 Deliveries by Purchaser ......................................... 49
ARTICLE 11 -TERMINATION PRIOR TO CLOSING ............................... 49
11.1 Termination of Agreement ....................................... 49
11.2 Termination of Obligations .................................... 50
ARTICLE 12 - TRANSITION SERVICES AGREEMENT ............................. 50
ARTICLE 13 - INDEMNIFICATION ........................................... 50
13.1 Indemnification by Seller ..................................... 50
13.2 Indemnification by Purchaser ................................... 51
13.3 Definitions .................................................... 51
13.4 Third Party Claims ............................................. 51
13.5 Deductible for Seller's Obligations; Maximum Liability ......... 53
13.6 Claims Period .................................................. 53
ARTICLE 14 - MISCELLANEOUS ............................................. 53
14.1 Publicity ..................................................... 53
14.2 Bulk Sales Laws ................................................ 54
14.3 Best Efforts .................................................. 54
14.4 Further Acts and Assurances .................................... 54
14.5 Notices ....................................................... 54
14.6 Construction ................................................... 55
14.7 Knowledge ...................................................... 56
14.8 Attachments .................................................... 56
14.9 Dispute Resolution ............................................. 56
14.10 No Reliance .................................................... 57
(iii)
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14.11 Saturdays, Sundays and Legal Holidays .......................... 58
14.12 Confidentiality ................................................ 58
14.13 Parties Bound by Agreement ..................................... 58
14.14 Counterparts .................................................. 58
14.15 Headings ....................................................... 58
14.16 Modification and Waiver ........................................ 58
14.17 Severability .................................................. 58
14.18 Agreement as to Certain Matters ................................ 59
14.19 Access to Records ............................................. 59
14.20 Entire Agreement ................................................ 59
14.21 No Express or Implied Warranties ................................ 60
(iv)
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LIST 1
EXHIBITS
Exhibit A - Acquired Facilities
Exhibit B - Subcontract Agreement
Exhibit C - Term Sheet
Exhibit D - Opinion of Counsel to Seller
Exhibit E - Opinion of Counsel to Purchaser
Exhibit F - Assignment and Assumption of Leases
Exhibit G - Xxxx of Sale and General Assignment
Exhibit H - Assumption Agreement
Exhibit I - Transition Services Agreement
SCHEDULES
Schedule Description Schedule
Number
Owned Real Property ..................................... 1.1(b)
Vehicles ................................................ 1.1(h)
Purchase Orders, etc .................................... 1.1(i)(ii)
Certain Lease Agreements ................................ 1.1(i)(iii)
Real Property Leases .................................... 1.1(i)(iv)
Leases for Personal Property ............................ 1.1(i)(v)
Collective Bargaining Agreements ........................ 1.1(i)(vi)
Prepaid Items ........................................... 1.1(l)
Licenses, Trademarks and Tradenames ..................... 1.1(m)
National Accounts ....................................... 1.5
Contribution Obligations ................................ 2(e)
Gain Sharing; Revenue Adjustment ........................ 3.7
Foreign Qualifications of Seller ........................ 4.1
Financial Statements .................................... 4.2
Real Property ........................................... 4.5
Intellectual Property ................................... 4.7
Litigation .............................................. 4.8
Court Orders, Decrees, Laws ............................. 4.9
Labor Relations ......................................... 4.10
Benefit Plans ........................................... 4.11
Environmental Matters ................................... 4.12
Customer Prices & Terms ................................. 4.15
Consents ................................................ 4.17
(v)
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Conduct of Business ..................................... 4.18
Other Contracts ......................................... 4.20
Restrictive Covenants ................................... 4.21
Licenses & Permits ...................................... 4.22
Inventory ............................................... 4.23
Seller Brokers .......................................... 4.25
Buyer Brokers ........................................... 5.3
Certain Consents ........................................ 6.3
Access and Information .................................. 6.4
Environmental Remediation ............................... 6.9
Zoning .................................................. 6.11
Certain Employees ....................................... 7.2(a)
Severance Benefits ...................................... 7.2(c)
Delivery of Financials .................................. 8.6(a)
Knowledge ............................................... 14.7
(vi)
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement"), is made and entered
into as of this 30th day of May, 1997, by and among each of NATIONAL SERVICE
INDUSTRIES, INC., a Delaware corporation ("Parent"), NATIONAL SERVICE
INDUSTRIES, INC., a Georgia corporation ("Seller"), NSI ENTERPRISES, INC., a
California corporation ("Enterprises") (but only with respect to Article 4 and
Section 6.5 hereof) and G&K SERVICES, INC., a Minnesota corporation
("Purchaser");
RECITALS:
1. Seller is a direct, wholly owned subsidiary of Parent and conducts,
among other things, the businesses of the supply for hire of clean, laundered,
continuous towel, table linen, napkins, bar wipes, bed linen, aprons, chef coats
and pants, lab coats and other flat linens and kindred items, uniforms, rest
room service, dust control supply, commercial laundry and facility-based direct
sales in each case at the facilities listed on Exhibit A (the "Acquired
Facilities") (the foregoing businesses, exclusive of the sterile healthcare
supply and laundry businesses conducted through Seller's NPAC division (the
"NPAC Business"), are hereinafter referred to collectively as the "Business");
2. Purchaser desires to purchase from Seller and certain other direct or
indirect subsidiaries of Parent and other entities controlled by or under common
control with Parent (each an "Affiliate"), and Seller and each such Affiliate
desire to sell to Purchaser, the Business as a going concern and certain assets
and rights owned and/or used by Seller or the Affiliates in the Business, upon
the terms and conditions set forth in this Agreement; and
3. Purchaser also desires to assume from Seller and the Affiliates, and
Seller and the Affiliates desire to assign to Purchaser, certain liabilities and
obligations of Seller and such Affiliates relating to the Business, upon the
terms and conditions set forth in Article 2 of this Agreement;
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties, covenants and agreements contained herein, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:
ARTICLE 1
PURCHASE AND SALE OF ASSETS
1.1 Purchased Assets. Except as otherwise specifically provided in Section
1.2 hereof, subject to the terms and conditions hereof, Seller agrees to sell,
assign, transfer and deliver, and Parent agrees to cause any Affiliate to sell,
assign, transfer and deliver, to Purchaser, and Purchaser agrees to purchase and
accept from Seller or any such Affiliate, as applicable, at and as of the
Closing Date (as hereinafter defined), all of Seller's or such Affiliate's
Page 13
right, title and interest in and to the Business as a going concern and all of
the following properties, assets and rights, relating exclusively to the
Business and existing as of the Closing Date (collectively, the "Purchased
Assets"):
(a) all customer lists, customer files and route books relating to
customers of the Business (the accounts of such customers as related solely
to the Business, in addition to the customer accounts representing the
Jacksonville Volume (as defined below), are referred to hereinafter as the
"Covered Accounts");
(b) all Owned Real Property (as defined below) described on Schedule
1.1(b), which Schedule shall be revised on or prior to the Closing Date to
reflect the legal descriptions of each parcel of Owned Real Property set
forth on the respective Title Commitment (as defined below) relating
thereto;
(c) all linens, garments, mats, mops, towels and other rental items,
along with laundry bags and tie covers which are in used condition and
located at either (i) an Acquired Facility; (ii) any customer location
associated with a Covered Account; (iii) on any vehicle listed on Schedule
1.1(h) hereof or that are leased by Seller or an Affiliate pursuant to that
certain Lease by and between Xxxxxxx Leasing Corp. and Parent, dated
December 13, 1982 (collectively, the "Leased Vehicles"); or (iv) on the
premises of a third party processor of such items (a "Processor's
Premises") (collectively, the "In-Service Inventory");
(d) subject to the inventory guidelines set forth in Section 3.4
hereof, all new, never processed linens, garments, mats, mops, towels and
other rental items, laundry bags and tie covers, and all new, unopened
paper products located at an Acquired Facility (collectively, the "New
Inventory"). Together, the New Inventory and the In-Service Inventory are
referred to herein as the "Inventory;"
(e) all CRT cabinets, mop handles and frames, paper towel cabinets,
bag racks, air freshener dispensers and soap and tissue dispensers located
at either (i) an Acquired Facility; (ii) any customer location associated
with a Covered Account; or (iii) on any vehicle listed on Schedule 1.1(h)
hereof or on any Leased Vehicle (collectively, the "Restroom Service
Products");
(f) all machinery, fixtures, furniture, equipment, materials, parts,
supplies, tools and other tangible property owned by Seller and which are
located at either (i) an Acquired Facility; (ii) any customer location
associated with a Covered Account; (iii) on any vehicle listed on Schedule
1.1(h) hereof or on any Leased Vehicle; (iv) on a Processor's Premises; or
(v) in any third party repair shop;
(g) all rolling stock (exclusive of vehicles) used or held for use,
including, without limitation, delivery carts, hampers and buggies located
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at either (i) an Acquired Facility; (ii) any customer location associated
with a Covered Account; (iii) on any vehicle listed on Schedule 1.1(h)
hereof or on any Leased Vehicle; or (iv) on a Processor's Premises;
(h) all vehicles listed in Schedule 1.1(h) hereto;
(i) all rights under all contracts and agreements, oral or written,
used by Seller or any Affiliate in the conduct of the Business which are in
effect as of the Closing Date (all of such contracts and agreements being
hereinafter referred to collectively as the "Contracts"), including,
without limitation, (i) subject to the provisions of Section 1.5 hereof,
all customer contracts pertinent to the Covered Accounts; (ii) all purchase
orders, nonproprietary software license agreements listed on Schedule
1.1(i)(ii), and other license agreements, service agreements and
maintenance agreements; (iii) all lease agreements listed on Schedule
1.1(i)(iii) under which Seller is lessor of portions of the Owned Real
Property; (iv) all Real Property Leases (as defined below) listed on
Schedule 1.1(i)(iv); (v) all lease and sublease agreements for tangible
personal property located at the Acquired Facilities, including without
limitation, the Personal Property Leases (as defined below) listed on
Schedule 1.1(i)(v); and (vi) the Collective Bargaining Agreements (as
defined below) listed on Schedule 1.1(i)(vi);
(j) to the extent transferable, all permits,
authorizations and licenses used by Seller or an Affiliate
in the conduct of the Business (collectively, the
"Transferable Permits");
(k) all accounts receivable relating to the Covered Accounts and
other receivables relating exclusively to the Business which are
outstanding as of the Closing Date, without regard to whether or not such
accounts receivable have been fully reserved for as uncollected accounts
receivable or written off as uncollectible accounts, but exclusive of any
Hold Tickets (as defined below) (the "Accounts Receivable");
(l) all prepaid items that are listed in Schedule 1.1(l) to the
extent Purchaser is able to use such prepaid items in the ordinary course
of the Business following consummation of the transactions contemplated by
this Agreement (the "Prepaid Items");
(m) the intellectual property listed on Schedule 1.1(m) (the
"Intellectual Property"), and any federal and state registrations or
applications for registration relating thereto; and
(n) all of Seller's rights under all manufacturing warranties from
third parties relating solely to the Purchased Assets.
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1.2 Excluded Assets. Notwithstanding the provisions of Section 1.1, the
following properties, assets and rights (the "Excluded Assets") shall not be
transferred to Purchaser and therefore are not a part of the Purchased Assets:
(a) all cash (whether positive or negative), marketable securities
and other cash equivalents of Seller as of the Closing Date, inclusive of
any unbooked accounts receivable represented by uncollected C.O.D. accounts
outstanding as of the Closing Date (collectively, the "Hold Tickets"),
which Hold Tickets will be treated in the manner contemplated by Section
3.12 hereof;
(b) all rights under contracts relating to the NPAC Business (and,
accordingly, the term "Covered Accounts" shall not include any accounts of
Seller to the extent related to the NPAC Business);
(c) all trademarks, service marks, trade names, service names, logos
and other like proprietary rights of Seller or any Affiliates, except for
those set forth on Schedule 1.1(m);
(d) all rights of Seller or any Affiliate to tax refunds, however
arising, relating to the Purchased Assets and the Business for taxable
periods prior to and including the Closing Date;
(e) all rights of Seller to any reimbursements from governmental
entities for environmental remediation or condemnation relating to any
period prior to and including the Closing Date, as well as all rights of
Seller to reimbursement from governmental entities for environmental
remediation relating to payments actually made subsequent to the Closing
Date, except as otherwise contemplated by Section 6.9(c);
(f) all rights of Seller or its Affiliates in and to all of its
proprietary software (except to the extent such software is listed on
Schedule 1.1m), Seller's LinenHelper and LinenKeeper software package,
training and technical manuals and aids, handbooks, videos, sales training
materials, other proprietary materials relating generally to Seller or its
company-wide operations, and those items or instructional aids constituting
Seller's Xxxxx System driver training module;
(g) all rights of Seller or its Affiliates in and to (i) the Contract
relating to Xxxxxxxxx Xxxxx Company and identified on Schedule 4.20 as item
no. 1 thereon; and (ii) the Real Estate Leases relating to the property
located at Xxxxx 0, Xxx 0, Xxxxxxxx, Xxxxxxx and Xxxxx 00 Xxxx, Xxxxxxxxx,
Xxxxxxxxxxxx; except in the event Purchaser provides written notice to
Seller, on or prior to the Closing Date, of Purchaser's intention to
include such Contract or Real Estate Lease(s) in the definition of
Purchased Asset hereunder (to the extent such Real Estate Lease(s) are
excluded hereunder, such Real Estate Lease(s) shall be hereinafter referred
to as the "Excluded Leases");
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(h) all rights of Seller or its Affiliates in and to (i) any and all
contracts with American Print Towel, (ii) the Supply Agreement dated June
21, 1996 between Seller and Standard Textile Co., Inc. ("Standard
Agreement"), (iii) the Supply Agreement dated June 28, 1996 between Seller
and Artex International, Inc. ("Artex Agreement"), and (iv) the Agreement
to provide Wastewater treatment Services, dated June 28, 0000 xxxxxxx XX
Xxxxxxxx, Xxxxxxxxxx Xxxxx, XX and National Uniform Services Opa Locka, FL;
(i) all rights of Seller or its Affiliates in and to any and all
employment agreements for Employees of the Business including without
limitation those employment agreements identified on Schedule 4.10 hereto
and any and all severance agreements with Employees of the Business
including without limitation those severance agreements identified on
Schedule 4.10 hereto;
(j) all rights of Seller under this Agreement;
(k) any assets which are excluded prior to the
Closing in accordance with Section 1.5(c)(ii)(3); and
(l) any and all other properties, assets and rights of Seller or an
Affiliate which are not expressly listed or referred to in Section 1.1.
1.3 Certain Intellectual Property Rights of Seller and the
Affiliates.
(a) As noted in Section 1.2, except as set forth on Schedule 1.1(m),
Seller and its Affiliates are not selling pursuant to this Agreement, and
expressly reserve for their own exclusive use and benefit, all right, title
and interest in and to all trademarks, service marks, trade names, service
names, logos and other like proprietary rights of Seller and the
Affiliates. Notwithstanding the foregoing, as soon as practicable after the
Closing Date, Purchaser shall take, with respect to the plants identified
on Exhibit A as industrial plants (each an "Industrial Plant"), all
reasonably necessary and prompt action, including repainting the delivery
trucks utilized by the Industrial Plants and which are being conveyed
hereunder, to ensure that such marks, names, logos and other rights shall
no longer be used in connection with or be associated with the Business
conducted by the Industrial Plants; provided, that Seller hereby grants a
nonexclusive license (the "Industrial Plants License") to Purchaser to use
such marks, names, logos or other rights during a period which shall in no
event exceed nine (9) months from the Closing Date as to such delivery
trucks and sixty (60) days from the Closing Date as to all other Purchased
Assets utilized by the Industrial Plants, if Purchaser is diligently
proceeding to remove such association and undertakes reasonably necessary
and prompt efforts to inform the public that Purchaser is not affiliated
with Seller; and provided, further, that Purchaser shall be permitted to
use tools, Inventory, Restroom Service Products and other items to which
names other than those set forth on Schedule 1.1(m) and derivations thereof
are affixed (and cannot be removed practicably) for the remaining lives of
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such items. Except as hereinafter provided, the license granted herein
shall apply only to the Business conducted by the Industrial Plants and
only to the extent and in the manner that such rights were used in the
Business conducted by the Industrial Plants prior to the Closing Date.
(b) Notwithstanding the foregoing, for the one (1) year period
following the Closing Date (except in the case of Ft. Xxxxx' Branch #196,
in which case the applicable period will be nine (9) months from the
Closing Date), Seller hereby grants a nonexclusive license (the "Linen
Plants License") to Purchaser to use such marks, names, logos or other
rights of Seller or an Affiliate to the extent such marks, names, logos or
other rights appear on any Purchased Asset utilized by the plants
identified on Exhibit A as linen plants (each a "Linen Plant"), and
Purchaser shall not be required to take any affirmative steps whatsoever to
ensure that such marks, names, logos and other rights not conveyed
hereunder are not being used in connection with or associated with the
Business conducted by the Linen Plants. Upon expiration of the term of the
Linen Plants License, to the extent Purchaser has not entered into any
binding purchase agreement with respect to the sale of all or substantially
all of the assets and/or revenue base attributable to a Linen Plant (each,
a "Linen Plant Sale"), Purchaser shall thereafter diligently proceed to
take all reasonably necessary and prompt action, including repainting the
delivery trucks utilized by such Linen Plant and that are conveyed hereby,
so that such marks, names, logos and other rights shall not thereafter be
used in connection with or be associated with the Business conducted by
such Linen Plant. Purchaser shall further undertake such additional
reasonably necessary and prompt efforts to inform the public that Purchaser
is not affiliated with Seller; provided that Purchaser shall be permitted
to use tools, Inventory, Restroom Service Products and other items to which
names other than those set forth on Schedule 1.1(m) and derivations thereof
are affixed (and cannot be removed practicably) for the remaining lives of
such items. Except as hereinafter provided, the Linen Plants License
granted herein shall apply only to the Business conducted by the Linen
Plants and only to the extent and in the manner that such rights were used
in the Business conducted by the Linen Plants prior to the Closing Date.
Notwithstanding the foregoing, to the extent Purchaser has entered into any
binding purchase agreement with respect to a Linen Plant Sale during the
term of the Linen Plants License, Purchaser may sublicense its Linen Plants
License to any buyer in a Linen Plant Sale, to the extent, and on the same
terms as, the Industrial Plants License, provided that the term of such
sublicense shall not commence until the effective time of the Linen Plant
Sale pursuant to which such assets are conveyed to the buyer thereof.
1.4 Nonassignable Contracts or Permits. Except as otherwise provided in
Section 6.3 hereof:
(a) To the extent that assignment hereunder by Seller or any
Affiliate to Purchaser of any Contract is not permitted or is not permitted
without the consent of a third party, this Agreement shall not be deemed to
constitute an undertaking to assign the same if such consent is not given
or if such an undertaking otherwise would constitute a breach of or cause a
loss of benefits thereunder. Notwithstanding the foregoing, this Section
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1.4(a) shall not be read in derogation of Seller's or any Affiliate's
obligation to undertake all reasonable efforts to obtain such consents in
accordance with Section 6.3 hereof.
(b) If and to the extent that Seller or any Affiliate is unable to
obtain any third party consent required for assignment of a Contract prior
to Closing, Seller or such Affiliate shall continue to be bound by any such
Contract until such time as it is able to obtain such third party consent
(the "Non-Assigned Contract"). In such event, to the maximum extent
permitted by law or the terms of the Non- Assigned Contract, (i) Seller or
such Affiliate shall make the benefit of such Non-Assigned Contract
available to Purchaser, and (ii) the assignment provisions of this
Agreement shall operate to the extent permitted by law or the applicable
Non-Assigned Contract to create a subcontract, sublease or sublicense with
Purchaser to perform such Non-Assigned Contract at a fee equal to the
monies, rights and other consideration receivable or payable by Seller or
such Affiliate with respect to the performance by or enjoyment of Purchaser
under such subcontract, sublease or sublicense. To the extent such benefit
is made available, and/or such subcontract, sublease or sublicense is
created, (i) Purchaser shall pay, perform and discharge fully all
obligations of Seller or any Affiliate under any such Non-Assigned Contract
after the Closing Date, (ii) Seller or such Affiliate shall, without
further consideration therefor, pay and remit to Purchaser promptly any
monies, rights and other consideration received in respect of such
Non-Assigned Contract performance, and (iii) Seller or such Affiliate shall
exercise or exploit its rights and options under all such Non-Assigned
Contracts only as directed by Purchaser and at Purchaser's expense.
(c) In the event Seller or such Affiliate cannot subcontract,
sublease or sublicense such performance pursuant to the terms of such
Non-Assigned Contract, then Purchaser shall loan the necessary employees,
assets and property, including, without limitation, use of appropriate
corporate or trade names, to permit timely performance by Seller or such
Affiliate of such Non-Assigned Contract as provided therein. To the extent
such employees, assets and property are made available, (i) Seller or an
Affiliate shall pay, perform and discharge fully all obligations under any
such Non-Assigned Contract after the Closing Date, (ii) Seller or such
Affiliate shall, without further consideration therefor, pay and remit to
Purchaser promptly any monies, rights and other consideration received in
respect of such Non-Assigned Contract performance, and (iii) Seller or such
Affiliate shall exercise or exploit their rights and options under all such
Non-Assigned Contracts only as directed by Purchaser and at Purchaser's
expense.
(d) Purchaser agrees to indemnify and hold Seller or any Affiliate
harmless from and against any liabilities or damages (including personal
injury or property damage) incurred by them as a result of or in connection
with any performance or nonperformance of any Non-Assigned Contract by
Purchaser after the Closing Date under this Section 1.4, and Purchaser
shall reimburse Seller or any Affiliate for all costs and expenses
reasonably incurred after the Closing Date in connection with the
performance by Seller or any Affiliate of their respective obligations
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under this Section 1.4, but shall not be obligated to reimburse Seller for
any costs or expenses incurred in connection with Seller or such
Affiliate's seeking and or obtaining any such third party consents.
(e) If and when any third party consent to a Non- Assigned Contract
shall be obtained or any such Non-Assigned Contract shall otherwise become
assignable, Seller or any Affiliate shall promptly assign all of its rights
and obligations thereunder or in connection therewith to Purchaser without
payment of further consideration therefor, and Purchaser shall assume such
rights and obligations.
(f) To the extent any Permit is not assignable, either by its terms
or as a matter of law, Seller or any Affiliate shall use all reasonable
efforts to cooperate with and assist Purchaser in preparing and submitting
any information or filings required in connection with the reissuance to
Purchaser of any such Permit.
1.5 Subcontract Agreement.
(a) Notwithstanding anything contained in this Agreement to the
contrary, with respect to those Covered Accounts that are governed by a
multilocation or national account agreement between Seller and the owners
of such accounts and which are set forth on Schedule 1.5 (the
"Multilocation Linen Accounts"), Seller shall not assign any of its right,
title, and interest in and to such agreements to Purchaser, but, instead,
Purchaser and Seller will, at the Closing, enter into Subcontract
Agreements (each, a "Subcontract Agreement"), substantially in the form
attached hereto as Exhibit B, pursuant to which Purchaser shall provide
service to such accounts to the extent that service to such accounts
constituted a part of the Business. Notwithstanding the foregoing, in the
event any multilocation or national account relates exclusively to any
Covered Account(s) serviced solely by the Acquired Facilities, Seller or an
Affiliate shall assign all of their respective right, title, and interest
in and to such agreements to Purchaser in such multilocation or national
account pursuant to the terms of this Agreement.
(b) Any provision to the contrary notwithstanding, specifically
including Section 14.13 hereof, Seller and each Affiliate hereby
irrevocably consent to the assignment by Purchaser of all or a portion of
Purchaser's rights under this Section 1.5 or any Subcontract Agreement to
any other person or entity in connection with Purchaser's sale of all or
substantially all of the assets and/or any relevant portion of the revenue
base attributable to any Acquired Facility and such transferee shall
thereafter have all of Purchaser's rights and obligations hereunder for the
duration of the Subcontract Agreement.
(c) Notwithstanding anything in this Agreement to the contrary, it is
understood that the following provisions shall be applicable with respect
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to Covered Accounts for Industrial Items (as hereinafter defined) which are
governed by multilocation or national accounts ("Multilocation Industrial
Accounts"):
(i) In the case of Multilocation Industrial Accounts which
relate exclusively to Covered Accounts serviced solely by the
Acquired Facilities, Seller or an Affiliate shall assign all of their
respective right, title and interest in and to the agreements
relating to such Accounts pursuant to the terms of this Agreement.
(ii) Multilocation Industrial Accounts not otherwise covered by
Section 2.5(c)(i) (the "Special Industrial Accounts") shall be
subject to the following provisions:
(1) On or before June 12, 1997, Seller will furnish
Purchaser with two schedules, one of which (which will be
designated as Schedule 1.5(c) - Assignable Special Industrial
Accounts) will set forth those Special Industrial Accounts with
respect to which Seller is willing to assign all of its rights
with respect to the agreements relating thereto (subject to the
provisions hereof) (the "Assignable Special Industrial
Accounts"), and one of which (which will be designated as
Schedule 1.5(c) - Non-Assignable Special Industrial Accounts)
will set forth those Special Industrial Accounts with respect to
which Seller is unwilling to assign all of its rights with
respect to the agreements relating thereto (the "Non-Assignable
Special Industrial Accounts").
(2) On the Closing Date, Seller or an Affiliate will assign
all of its rights to the agreements relating to the Assignable
Special Industrial Accounts to Purchaser. All Assignable Special
Industrial Accounts will be considered Covered Accounts (and,
except to the extent subcontracted to Seller by Purchaser in
accordance with this paragraph (2), all revenue attributable
thereto during the Industrial Measuring Period will be included
as a part of the Average Weekly Industrial Revenue). To the
extent Purchaser elects not to service any such Accounts or
portions thereof included within the Assignable Special
Industrial Accounts then Seller will enter into a subcontract
agreement with Purchaser (on substantially the same terms as are
set forth in the Subcontract Agreement, except that the
respective roles of Seller and Purchaser shall be reversed),
pursuant to which Seller will provide service to such Accounts
or portions thereof.
(3) Prior to the Closing Date, Seller and Purchaser will
mutually determine to what extent, if any, and upon what terms,
the Non-Assignable Special Industrial Accounts will be
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considered as a part of the Business. Absent a mutual written
agreement to the contrary with respect to the Non-Assignable
Special Industrial Accounts, those Accounts will be excluded
from the Covered Accounts (and will be retained by Seller as
Excluded Assets) and there shall be a reduction in the Base
Price equal to the Average Weekly Industrial Revenue
attributable to such Non-Assignable Special Industrial Accounts
multiplied by 70 (and there shall be an appropriate
corresponding reduction in each of the Total Base Revenue Amount
and the Base Amount definitions).
(d) Seller shall hold Purchaser harmless with respect to the
subsequent resale of the Multilocation Linen Accounts in accordance with
Section 3.7(e) hereto.
ARTICLE 2
ASSUMPTION OF LIABILITIES
Subject to the terms and conditions hereof, Purchaser shall assume and
agree to perform the obligations of Seller set forth in clauses (a) through (g)
below of this Article 2, relating to the Business and which are to be performed
from and after the Closing Date (the "Assumed Liabilities"); provided that
Purchaser shall not assume any other obligation or liability of Seller or any
Affiliate that relates to or arises out of ownership of the Business prior to
the Closing Date, whether absolute or contingent, known or unknown, contractual
or otherwise (the "Excluded Liabilities"):
(a) the performance obligations of Seller, any Affiliate or the
Business under the Contracts, except that Purchaser is not assuming, and
Seller shall retain each and every restoration obligation, if any, related
to or arising out of (i) Seller's restoration obligations under that
certain Lease Agreement dated January 15, 1990, by and between Xxxxx Road,
Inc. and Seller related to the Acquired Facility identified on Exhibit A as
Xxxxxxxx Xxxxxx #000, or otherwise with respect to such Acquired Facility,
and (ii) Seller's or any Affiliate's restoration obligations under that
certain Agreement of Lease dated November 15, 1983, by and among X.X.
Xxxxxxx, Xx., X.X. Xxxxx, Xx. and Parent related to the Acquired Facility
identified on Exhibit A as Corpus Xxxxxxx Xxxxxx #424, or otherwise with
respect to such Acquired Facility, but only to the extent, in either case,
with respect to conditions that exist on the Closing Date;
(b) subject to the provisions of Section 6.9(b), all obligations of
Seller to conduct the Business in accordance with the compliance orders
described in Schedule 2(b);
(c) all obligations of Seller relating to the Hired Employees (as
hereinafter defined) for the Accrued Employee Credit (as hereinafter
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defined), in addition to all performance obligations of Seller to withhold
wages from any Hired Employee in satisfaction of any child support order or
garnishment obligation;
(d) with respect to the Employees of the Business only, all
liabilities and obligations of Seller under the Collective Bargaining
Agreements (and, in connection therewith, Purchaser hereby agrees to
recognize the labor organizations set forth in Schedule 1.1(i)(vi) as the
exclusive bargaining representatives of the Employees of the Business
covered by the Collective Bargaining Agreements), except in the case of
those employee benefit plans which by their terms Purchaser cannot assume;
(e) all liabilities for contributions with respect to the Hired
Employees for periods after the Closing Date, pursuant to the Collective
Bargaining Agreements described herein and payable to the "multiemployer
plans" (as defined under Section 4001(a)(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) described on Schedule
2(e) to which the Seller makes contributions on behalf of the Employees of
the Business; provided, however, that such liabilities do not include any
currently existing "withdrawal liability" (as described in Section 4201 of
ERISA) of Seller or any Affiliate that is owing to any of such plans as a
result of events occurring prior to the Closing Date;
(f) all purchase orders to the extent related to the
Business for goods not delivered or services not provided on
or prior to the Closing Date; and
(g) from and after the fourth anniversary of the Closing Date, but
subject to the provisions of Section 6.9 hereof, all liabilities and
obligations of Seller for environmental liabilities related to activities
that precede the Closing Date and which are unknown as of the fourth
anniversary of the Closing Date, to the extent they occur within the legal
property boundaries of an Acquired Facility. Notwithstanding the foregoing
limited assumption of Seller's environmental liabilities, or anything
contained in this Agreement to the contrary, Seller shall at all times
remain liable for any environmental liability that both (i) arises out of
or relates to Seller or an Affiliate's ownership of the Business prior to
the Closing Date and (ii) relates to off-site remediation obligations,
"superfund" or similar type liability, whether or not such liability is
known or unknown, contingent or otherwise.
ARTICLE 3
PURCHASE PRICE
3.1 Purchase Price. Subject to the terms and conditions contained herein,
in addition to Purchaser's assumption of the Assumed Liabilities, Purchaser
agrees to pay a purchase price (the "Purchase Price") for the Purchased Assets
in an amount equal to the total of: (a) Two Hundred Sixty-Three Million Five
Hundred Thousand Dollars ($263,500,000) (the "Base Price"), subject to
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adjustment as provided in Sections 3.3 and 6.3(b), if applicable, below, plus
(b) an amount equal to ninety-seven percent (97%) of the face amount of the
Accounts Receivable that are less than 91 days past due as of the Closing Date;
plus (c) Seller's cost of the New Inventory, determined in accordance with
Section 3.4 below; plus (d) the book value of the Prepaid Items; minus (e) the
accrued wages, bonuses and commissions, earned and accrued vacation and vested
sick pay for the Hired Employees as of the Closing Date (the "Accrued Employee
Credit").
3.2 Payment of Purchase Price. The Purchase Price shall be paid to
Seller as follows:
(a) At the Closing, Purchaser shall assume the Assumed Liabilities
pursuant to Article 2 above and shall pay Seller an amount (the "Cash
Purchase Price") equal to the total of: (i) the Base Price, as adjusted
pursuant to Sections 3.3 and 6.3(b), if applicable, below, plus (ii)
ninety-seven percent (97%) of the estimated amount of the face amount of
the Accounts Receivable that are less than 91 days past due as of the
Closing Date, plus (iii) the estimated value of the New Inventory, plus
(iv) the estimated book value of the Prepaid Items, minus (v) the estimated
amount of the Accrued Employee Credit. In the case of items (ii) through
(iv), such estimated amounts shall be determined based on the respective
amounts thereof reflected on the Monthly Statement (as defined below) for
the month immediately preceding the month in which the Closing occurs. With
respect to the Accrued Employee Credit, Seller and Purchaser agree to
jointly estimate at least one week prior to the anticipated Closing Date a
reasonable amount to be credited against the Base Price at Closing.
(b) Within fifteen (15) days after the Closing Schedules and the
Adjustment Schedule (as such terms are defined below) become final in
accordance with Section 3.6 below, (i) if the net amount payable for the
New Inventory, the Accounts Receivable and the Prepaid Items, less the
Accrued Employee Credit, as reflected on the Closing Schedules, plus or
minus (as appropriate) the final value of the Disputed Adjustment Amount
(as defined below) as resolved pursuant to Section 3.6 hereof, exceeds the
net amount paid (or credited) for such items in the Cash Purchase Price,
then Purchaser shall pay Seller the difference between such amounts, or
(ii) if the net amount payable for the New Inventory, the Accounts
Receivable and the Prepaid Items, less the Accrued Employee Credit, as
reflected on the Closing Schedules, plus or minus (as appropriate) the
final value of the Disputed Adjustment Amount as resolved pursuant to
Section 3.6 hereof, is less than the net amount paid (or credited ) for
such items in the Cash Purchase Price, then Seller shall pay Purchaser the
difference between such amounts.
3.3 Rental Revenue Adjustment.
(a) Subject to the terms of this Section 3.3, if the Total Actual
Revenue Value (as defined below) varies from the Total Base Revenue Value
(as defined below), the Base Price (and, therefore, the Purchase Price) and
the Deductible described in Section 13.5 below shall be adjusted as
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provided herein. If the variance between the Total Actual Revenue Value and
the Total Base Revenue Value is less than one percent of the Total Base
Revenue Value then no adjustment to the Base Price or the Deductible shall
be made. If the Total Actual Revenue Value exceeds the Total Base Revenue
Value by one percent or more of the Total Base Revenue Value, then the
Deductible shall be increased by an amount equal to one percent of the
Total Base Revenue Value and the Base Price shall be increased by the
amount of the excess of such variance over such one percent figure. If the
Total Base Revenue Value exceeds the Total Actual Revenue Value by at least
one percent of the Total Base Revenue Value, then the Deductible shall be
decreased by one percent of the Total Base Revenue Value, and the Base
Price shall be decreased by the amount of excess of such variance over such
one percent figure.
(b) As soon as possible after the end of the Linen Measuring Period
and the Industrial Measuring Period (as defined below), but in no event
less than five (5) days after the end of such periods, Seller shall deliver
to Purchaser a schedule showing those former customers of either an
Industrial Plant or Linen Plant who quit service with Seller at any time
between April 2, 1997, but prior to the normal contract maturity date of
such customer, and who Seller reasonably believes began service with
Purchaser thereafter. Upon receipt of such customer list, Purchaser shall
promptly attempt to identify any existing customer of Purchaser who was so
listed by Seller, and shall thereafter provide Seller with such supporting
invoice and revenue detail as shall enable Seller to calculate the revenue
amounts to be attributed to Migrated Linen Revenue and Migrated Industrial
Revenue (as defined below). In connection therewith, Seller shall have the
right to inspect all invoices and any of Purchaser's internal work papers
relating to the determination and preparation of such customer detail.
(c) As soon as possible after the end of the Linen Measuring Period
and the Industrial Measuring Period, but in no event less than five (5)
days before Closing, Seller shall deliver to Purchaser a schedule showing
Seller's calculation of any rental revenue adjustment hereunder, with
appropriate supporting back-up detail (the "Adjustment Schedule") and
Purchaser shall have the right to inspect all invoices and any of Seller's
internal work papers relating to the determination and preparation of the
Adjustment Schedule; provided however, in the event Purchaser disputes, in
good faith, the amount of any rental revenue adjustment as calculated by
Seller pursuant to this Section 3.3, Purchaser shall pay Seller at Closing
only that portion of the rental revenue adjustment as to which both Seller
and Purchaser agree, with any remaining differences with respect to such
adjustment (the "Disputed Adjustment Amount") being settled pursuant to the
provisions of Section 3.6.
(d) For purposes of this Section 3.3, the following
definitions apply:
(i) "Total Base Revenue Value" means the amount equal to
(1) the sum of the weekly volume of each Linen Plant identified on
Schedule 3.7 (after giving effect to the inclusion or exclusion of
the Acquired Facilities identified on Schedule 3.7 as Corpus Christi
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and Portland, as contemplated by Section 6.3(b) hereof), multiplied
by 25, plus (2) $140,293,200 which is the sum of the weekly volume
for the Acquired Facilities not identified on Schedule 3.7 (together
with the Acquired Facility identified on Schedule 3.7 as Huntington),
multiplied by 60. If each Acquired Facility identified on Schedule
3.7 (excluding the Acquired Facility identified on Schedule 3.7 as
Huntington) is included in the calculation of Total Base Revenue
Value, the parties hereto agree that the sum of the weekly volume to
be used for the purpose of clause (1) of the immediately preceding
sentence shall be $1,600,692 with the corresponding product of that
amount multiplied by 25 being $40,017,300, and, therefore, the Total
Base Revenue Value shall be $180,310,500;
(ii) "Total Actual Revenue Value" means the amount equal to
(1) the Average Weekly Linen Revenue multiplied by 25, plus (2) the
Average Weekly Industrial Revenue multiplied by 60;
(iii) "Average Weekly Linen Revenue" means the sum of gross
sales volume for service to customers of the Business of the Linen
Plants during the Linen Measuring Period (exclusive of the Excluded
Amounts) plus the Migrated Linen Revenue (as defined below) divided
by the number of calendar weeks that comprise the Linen Measuring
Period.
(iv) "Average Weekly Industrial Revenue" means the sum of
gross sales volume for service to customers of the Business of the
Industrial Plants, the gross sales volume for service to customers
representing the Jacksonville Volume, plus the Migrated Industrial
Revenue (as defined below), in each case during the Industrial
Measuring Period (exclusive of the Excluded Amounts) divided by four
(4);
(v) "Migrated Linen Revenue" means the gross sales volume, if
any, for service by Purchaser to former customers of the Business of
the Linen Plants who, at any time from and after April 2, 1997 and
prior to the end of the Linen Measuring Period, have quit service
with Seller prior to the normal contract maturity date of such
customers and who have actually begun service with Purchaser, as
determined pursuant to Section 3.3(b) hereof (each, a "Converted
Linen Customer"); provided, however, in connection with the
calculation of Migrated Linen Revenue, only the actual invoiced
amount attributable to a Converted Linen Customer from and after the
date such Converted Linen Customer begins service with Purchaser
through the end of the Linen Measuring Period (in each case,
exclusive of any corresponding Excluded Amounts) shall be used.
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(vi) "Migrated Industrial Revenue" means the gross sales volume,
if any, for service by Purchaser to former customers of the Business
of the Industrial Plants who, at any time from and after April 2,
1997, and prior to the end of the Industrial Measuring Period, have
quit service with Seller prior to the normal contract maturity date
of such customers and who have actually begun service with Purchaser,
as determined pursuant to Section 3.3(b) hereof (each, a "Converted
Industrial Customer"); provided, however, in connection with the
calculation of Migrated Industrial Revenue, only the actual invoiced
amount attributable to a Converted Industrial Customer from and after
the date such Converted Industrial Customer begins service with
Purchaser through the end of the Industrial Measuring Period (in each
case, exclusive of any corresponding Excluded Amounts) shall be used.
(vii) "Excluded Amounts" means with respect to any sales to
customers of the Business during either the Linen Measuring Period or
the Industrial Measuring Period, amounts derived from (1) discounts,
allowances and other miscellaneous amounts; (2) taxes; (3)
preparation charges; (4) rag sales; (5) linen replacement charges;
(6) industrial replacement charges; and (7) other replacement
charges;
(viii) "Linen Measuring Period" means the period of
consecutive calendar weeks, exclusive of any weeks in which a Holiday
occurs, commencing on the opening of business on February 3, 1997 and
ending at the close of business on the Friday that is at least two
(2) weeks prior to the Closing Date (so long as such week is a week
that contains no Holidays), but in no event later than June 15, 1997;
provided, however, in the event all of the Schedule 8.6 Statements
(as defined on Schedule 8.6) have not been finalized or if the
parties have not received clearance under the HSR Act prior to July
3, 1997, or both, such end date shall be automatically extended to
the earlier of (1) the Friday of the week as of which both the
Schedule 8.6 Statements have been finalized and the parties hereto
have received clearance under the HSR Act or (2) the Friday that is
at least two weeks prior to the Closing Date;
(ix) "Industrial Measuring Period" means the period of four
(4) consecutive calendar weeks, exclusive of any weeks in which a
Holiday occurs, ending at the close of business on the Friday that is
at least two (2) weeks prior to the Closing Date (so long as such
week is a week that contains no Holidays), but in no event later than
June 15, 1997; provided, however, in the event the Schedule 8.6
Statements have not been finalized or if the parties have not
received clearance under the HSR Act prior to July 3, 1997, or both,
such end date shall be automatically extended to the earlier of (1)
the Friday of the week as of which both the Schedule 8.6 Statements
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have been finalized and the parties hereto have received clearance
under the HSR Act or (2) the Friday that is at least two weeks prior
to the Closing Date; and
(x) "Holiday" means the following holidays: President's
Day, Memorial Day, the Fourth of July and any other legal bank
holiday in the City of New York, as the exclusive holidays within
either measuring period .
(xi) Notwithstanding anything in this Section 3.3(d) to the
contrary, (1) to the extent any sales volume has been transferred by
Seller on or after February 3, 1997 from any Acquired Facility and
such sales volume is not based at an Acquired Facility as of the
Closing Date, then such sales volume shall be excluded from the
Average Weekly Linen Revenue and the Average Weekly Industrial
Revenue, and (2) to the extent any sales volume has been transferred
by Seller on or after February 3, 1997 to an Acquired Facility and
such sales volume is based at an Acquired Facility as of the Closing
Date, the average weekly revenue related to such sales volume during
the Linen Measuring Period and the Industrial Measuring Period, as
applicable, shall be included in the calculation of the Average
Weekly Linen Revenue and the Average Weekly Industrial Revenue, as
applicable.
3.4 New Inventory Procedures. Representatives of Seller and Purchaser shall
take a physical inventory of the New Inventory as of the Closing Date. Such
physical inventory will be recorded in duplicate books, each of which the
representatives of Seller and Purchaser shall sign. The New Inventory shall be
valued at Seller's latest invoice cost, net of discounts but inclusive of
freight, based on Seller's most recent invoices. Any dispute as to the grade or
value of New Inventory items, or as to whether such items of New Inventory shall
be unusable (which items Purchaser shall not be acquiring) shall be determined
by Seller and Purchaser; provided, that in making such determination, any amount
of New Inventory with quantities in excess of a six (6) months supply, as
measured by each of Purchaser's and the Business' combined usage history with
respect to such SKU, shall be deemed unusable with respect to such excess
quantities, and shall not constitute a Purchased Asset, except that Purchaser
shall have the option, but not the obligation, to acquire any such unusable item
of New Inventory at a price and on terms that Seller and Purchaser may mutually
agree to.
3.5 Closing Schedules. Within forty-five (45) days after the Closing Date,
Seller shall deliver to Purchaser the following schedules (the "Closing
Schedules"), in each case as of the Closing Date: (i) a schedule of New
Inventory and Seller's latest invoice cost therefor, net of discounts, but
inclusive of freight; (ii) a schedule of the Accounts Receivable; (iii) a
schedule of the Prepaid Items; and (iv) a schedule of the Accrued Employee
Credit. Except as otherwise provided in Section 3.4 for the New Inventory, the
Closing Schedules shall be prepared by Seller in accordance with generally
accepted accounting principles on a basis consistent with the Financial
Statements.
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3.6 Dispute Resolution.
(a) Purchaser and its representatives and accountants, at Purchaser's
expense, shall have the right to review Seller's complete internal audit
work papers or other back-up detail and substantiation relating to the
Closing Schedules and the Adjustment Schedule until such time as the
Closing Schedules and the Adjustment Schedule become final as provided
herein.
(b) Purchaser shall notify Seller in writing of any disputes to the
Closing Schedules and the Adjustment Schedule within thirty (30) calendar
days following Purchaser's receipt of all of the Closing Schedules (the
"Review Period"). The parties shall attempt to resolve any such disputes
through good faith negotiations within thirty (30) calendar days following
the delivery of Purchaser's written notice thereof to Seller. If any
differences are not resolved by agreement of representatives of Seller and
Purchaser during the Review Period, such differences shall be submitted by
any affected party for resolution to the Chicago, Illinois office of Ernst
& Young. The determination of such independent accounting firm shall be set
forth in a written report delivered to the parties and shall be final and
binding upon all parties. Seller and Purchaser shall each be responsible
for one-half of the fees of any such independent accounting firm employed
pursuant to this paragraph.
3.7 Gain Sharing on Subsequent Disposition of Linen
Plants; Payment of Linen Shortfall.
(a) Seller shall be entitled to additional Purchase Price (the "Gain
Sharing Payment"), in an amount equal to the lesser of (i) one-half of the
Linen Surplus (as defined below) or (ii) Two Million Five Hundred Thousand
Dollars ($2,500,000), if, and to the extent, the Aggregate Value (as
hereinafter defined) exceeds the Base Amount (as hereinafter defined) (such
excess, if any, is hereinafter referred to as the "Linen Surplus.") The
Gain Sharing Payment, if any, shall be in addition to the Cash Purchase
Payment and shall be payable by Purchaser as promptly as possible after the
first anniversary of the Closing Date (the "First Anniversary") (and, in
any event, within ten (10) business days after its final determination
pursuant to this Section 3.7).
(b) As used in this Section 3.7, the following terms shall have the
following respective meanings:
(i) Aggregate Value shall mean (1) the sum of (A) the Sales
Proceeds plus (B) the Remaining Value less (2) Capital Investment.
(ii) Sales Proceeds shall mean, with respect to each Linen
Plant Sale that occurs on or prior to the First Anniversary, the sum
of all consideration payable to Purchaser, or any subsidiary or
affiliate thereof (including, without limitation, any assumption of
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liabilities in connection therewith), all as determined pursuant to
the terms of the contract governing such Linen Plant Sale, including
the net amount of any monies received or to be received by Purchaser
or any subsidiary or affiliate of Purchaser that represent either
condemnation or insurance proceeds with respect to a Linen Plant and
that relate to events that precede the First Anniversary, reduced by
(i) the value of any accounts receivable, all new, never processed
inventory, prepaid assets and any other current assets attributable
to such Linen Plant(s), in each case as of the closing date of the
transaction; (ii) the actual out of pocket costs incurred by
Purchaser in connection with or in anticipation of such Linen Plant
Sale, including by way of illustration, and not limitation, legal,
accounting, environmental assessment report, appraisal, real estate
brokerage, investment banking or finder's fees; and (iii) the cost of
any Withdrawal Liability (as defined in Section 7.2) that Purchaser
becomes liable for with respect to such Linen Plant Sale. For
purposes of calculating Sales Proceeds, any financing provided by
Purchaser in connection with a Linen Plant Sale shall be valued at
ninety-two percent (92%) of the face amount of such indebtedness as
of the closing date of such Linen Plant Sale. In the event Seller
elects to re-purchase any remaining Linen Plants from Purchaser, the
parties agree to calculate the net proceeds to be received by
Purchaser as a result of such sale in the manner set forth in the
calculation of Sales Proceeds.
(iii) Remaining Value shall mean, subject to the terms of
this Section 3.7(b)(iii), the aggregate value of any and all Linen
Plants that were included in the calculation of the Base Amount and
which are not sold by Purchaser on or prior to the First Anniversary,
as determined by Purchaser in its reasonable discretion with due
regard to all then existing facts and circumstances, including
without limitation, any sale of rental revenue volume at such
remaining Linen Plants, separate and apart from any corresponding
sale of such Linen Plant's property, plant or equipment. Purchaser
shall calculate its good faith estimate of the Remaining Value and
shall deliver the same to Seller in writing within 45 days of the
First Anniversary. With respect to those Linen Plants identified by
Purchaser in its calculation of Remaining Value as Linen Plants that
Purchaser intends to retain and operate from and after the First
Anniversary, the value of such Linen Plant(s) for purposes of the
Remaining Value calculation shall equal such Linen Plant'(s) total
value, as set forth on Schedule 3.7 hereto.
(iv) Capital Investment shall mean the amount that is equal
to the aggregate amount of any capital expenditures made by Purchaser
(or any subsidiary or affiliate thereof) with respect to any Linen
Plant that is disposed of prior to the First Anniversary or that
Purchaser is attempting to sell as of the First Anniversary. Any
capital expenditures made by Purchaser (or any subsidiary or
affiliate thereof) with respect to any Linen Plant that Purchaser
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elects to retain and not sell will not be a Capital Investment for
purposes of the calculation of Aggregate Value.
(v) Base Amount shall mean the sum of the total values of
each Linen Plant listed on Schedule 3.7 together with the Industrial
Plant identified on Schedule 3.7 as Huntington (after giving effect
to the inclusion or exclusion of the Acquired Facilities identified
on Schedule 3.7 as Corpus Christi and Portland, as contemplated by
Section 6.3(b) hereof ), as such total values are reflected on
Schedule 3.7 hereto, and reduced by the total value attributable to
the Acquired Facility identified on Schedule 3.7 as Huntington in the
event the assets or revenue attributable to such branch are not sold
on or prior to the First Anniversary.
(c) Within forty-five (45) days after the First Anniversary,
Purchaser shall deliver to Seller a schedule showing Purchaser's
calculation of the Gain Sharing Payment (if any) (the "Gain Sharing
Schedule"), together with appropriate supporting back-up detail, and Seller
shall have the right to inspect any of Purchaser's internal work papers
relating to the determination and preparation of the Gain Sharing Schedule.
In the event Seller disputes Purchaser's calculation of the Gain Sharing
Payment or the Total Linen Proceeds (as defined below), Seller shall notify
Purchaser in writing within thirty (30) calendar days following Purchaser's
receipt of the same (the "Gain Sharing Review Period"). The parties shall
attempt to resolve any such disputes through good faith negotiations within
thirty (30) calendar days following the delivery of Seller's written notice
thereof to Purchaser. If any differences are not resolved by agreement of
representatives of Seller and Purchaser during the Gain Sharing Review
Period, such differences shall be submitted by any affected party for
resolution to the Chicago, Illinois office of Ernst & Young. The
determination of such independent accounting firm shall be set forth in a
written report delivered to the parties and shall be final and binding upon
all parties. Seller and Purchaser shall each be responsible for one-half of
the fees of any such independent accounting firm employed pursuant to this
paragraph.
As a part of the Gain Sharing Schedule, Purchaser shall separately
set forth the Total Linen Proceeds attributable to the Multilocation Linen
Accounts. "Individual Linen Proceeds" shall mean with respect to each Linen
Plant Sale an amount equal to the Average Weekly Linen Revenue attributable
to the Multilocation Linen Accounts sold in connection with such Linen
Plant Sale multiplied by the multiplier generally applicable to the sale of
revenue in connection with such Linen Plant Sale (as determined in good
faith by Purchaser). "Total Linen Proceeds" shall mean the sum of all
Individual Linen Proceeds.
(d) Upon receipt of Purchaser's calculation of the Remaining Value,
as contemplated by Section 3.7(b)(iii) hereof, with respect to those Linen
Plants identified by Purchaser in its calculation as Linen Plants that
remain available for purchase as of the First Anniversary, Seller shall
have the option, and shall notify Purchaser in writing within twenty days
of receipt of Purchaser's calculation, if it so elects, to re-purchase the
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Linen Plant(s) indicated in the notice at a price that is equal to
Purchaser's valuation of such Linen Plant. In any event, Seller shall be
deemed to have accepted Purchaser's valuation of each such Linen Plant for
purposes of calculating the Remaining Value. With respect to any Linen
Plant that Seller elects to purchase, Seller and Purchaser agree that the
transfer of such Linen Plant shall be by the same type of deed, assignment
of lease and/or xxxx of sale pursuant to which Purchaser acquired such
Linen Plant in the first instance.
(e) If the Total Linen Proceeds are less than the "Minimum Sales
Price" (as hereinafter defined), then Seller shall pay to Purchaser an
amount (the "Linen Shortfall") equal to (i) the Minimum Sales Price less
(ii) the Total Linen Proceeds. As used herein, the term "Minimum Sales
Price" shall mean an amount equal to (1) the aggregate total of the Average
Weekly Linen Revenue attributable to the Multilocation Linen Accounts times
(2) thirty (30). The Linen Shortfall, if any, shall be payable by Seller as
promptly as possible after the First Anniversary (and, in any event within
ten (10) business days after its final determination pursuant to this
Section 3.7). Simultaneously with the payment of the Linen Shortfall,
Purchaser shall (at Seller's election) transfer to Seller all of the
Multilocation Linen Accounts which were not sold prior to the First
Anniversary together with all In-Service Inventory related thereto.
3.8 Method of Payment. Any amounts payable hereunder shall be paid by wire
transfer of immediately available funds to an account designated by the intended
recipient or otherwise as indicated. Any amounts payable under Sections 3.2 or
6.3 shall include interest on such amounts from the Closing Date to the date of
such payment at a rate per annum equal to eight percent (8%) and any amounts
payable under Section 3.7 shall include interest on such amounts from the First
Anniversary to the date of such payment at a rate per annum equal to eight
percent (8%).
3.9 Exclusive Remedy. Notwithstanding anything in this Agreement to the
contrary, the dispute resolution and remedy provisions set forth in this Article
3 shall constitute the sole and exclusive remedy of the parties hereto with
respect to the matters covered by this Article 3. Changes in rental revenues
shall not be considered in determining whether the conditions precedent set
forth in Article 8 have been satisfied (unless such change in rental revenue is
the result of any change in the Business that would have a material adverse
effect on the Business).
3.10 Allocation of Purchase Price. Each party hereto agrees to report to
the Internal Revenue Service such information concerning the allocation of
Purchase Price as may be required by Section 1060 of the Internal Revenue Code
of 1986, as amended (the "Code"). The Purchase Price, together with an amount
attributable to the Assumed Liabilities, shall be allocated among the Purchased
Assets based on the fair market values for the Purchased Assets in amount to be
agreed upon by Purchaser and Seller and each party agrees that it will adopt and
utilize such agreed values for purposes of completing and filing Form 8594 for
federal income tax purposes. Neither Purchaser, nor Seller will voluntarily take
any position inconsistent therewith upon examination of their respective federal
tax return, in any claim, in any litigation or otherwise with respect to such
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tax return. Purchaser and Seller each agree to use their reasonable best efforts
to mutually agree to the allocation contemplated by this Section 3.10 on or
prior to the Closing Date.
3.11 Sales Taxes; Property Taxes; Expenses.
(a) Notwithstanding anything in this Agreement to the contrary,
Purchaser shall pay all state and local sales and use taxes (if any),
transfer taxes and documentary stamp taxes associated with the sale and
conveyance of the Purchased Assets pursuant to this Agreement.
(b) Subject to the terms of the Transition Services Agreement (as
defined below), state and local real and personal property taxes, including
any utility, water and sewer charges at the Acquired Facilities shall be
prorated between Seller and Purchaser as of the Closing Date on the basis
of the tax bills payable during the year of the Closing or, as applicable,
utility bills for the billing period including the Closing Date. Purchaser
shall pay the full amount of such taxes and utility charges upon receipt of
any such bills after the Closing Date, and Seller, within 30 days of notice
from Purchaser, will reimburse Purchaser for the amount of Seller or an
Affiliate's pro rata share of such taxes and utility charges.
(c) Seller will pay the fees and expenses incurred with respect to
obtaining the Phase I Reports (as defined herein) for the Real Property,
surveys and title work on the Owned Real Property performed in connection
with the transactions contemplated hereunder, including, but not limited
to, recording fees (exclusive of transfer taxes and documentary stamp
taxes, if any), special assessments associated with the Purchased Assets or
the Business, and any title insurance premiums due in connection with the
Title Policy (as defined below) and any costs associated with the Title
Endorsements (as defined below). The title insurance premiums due in
connection with the Title Policy shall be based on a schedule of values for
the Owned Real Estate prepared by Purchaser, a copy of which shall be
delivered to Seller within five days prior to the Closing. To the extent
that in the aggregate title insurance premiums are increased as a result of
completion by Purchaser of appraisals of the Owned Real Property undertaken
within a reasonable period of time following the Closing Date, then Seller
shall reimburse Purchaser for any such additional costs and subject to the
"tie-in" endorsement requested by Purchaser from the Title Company, Seller
shall receive a credit for any decrease in such costs.
(d) All filing fees payable with respect to the filings to be made by
Purchaser and Seller under the Xxxx- Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended (the "HSR Act") shall be paid by Purchaser.
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(e) Seller and Purchaser agree to share equally the cost of preparing
and delivering the Schedule 8.6 Statements, provided that Purchaser's
obligation under this Section 3.11(e) shall not exceed $60,000.
(f) Except as otherwise expressly provided in this Agreement, Seller
and Purchaser shall each pay their own respective costs and expenses in
connection with this Agreement and the transactions contemplated by this
Agreement, including any finder's fees or brokerage or other commission
arising by reason of any services rendered or alleged to have been rendered
to such party in connection with this Agreement or the transactions
contemplated herein.
3.12 Treatment of Hold Tickets. At or as soon as practicable after the
Closing, Seller will provide Purchaser with a statement of Hold Tickets
outstanding as of the Closing Date. Purchaser agrees that for a period of 120
days after the Closing Date (the "Collection Period"), Purchaser will use
reasonable efforts to collect the Hold Tickets. All payments received from
customers having a Hold Ticket shall be applied to the invoice identified by
such customer with its payment and all collected amounts shall thereafter be
remitted to Seller by the fifteenth day of each month, until such Hold Tickets
have been collected in full or otherwise written off by Seller as uncollectible.
Notwithstanding the foregoing, Purchaser shall have no obligation to seek to
collect any Hold Tickets beyond the Collection Period.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
Parent, Seller and Enterprises, hereby represent and warrant to Purchaser,
with respect to themselves only, as follows:
4.1 Organization and Authority.
(a) Parent, Seller and each Affiliate are corporations or
partnerships, duly organized, validly existing and in good standing under
the laws of their respective jurisdictions of incorporation or formation;
and Seller and each Affiliate has the corporate or partnership power to
own, operate, use or lease the Purchased Assets and to conduct the
operations of the Business as presently being conducted. Seller and each
Affiliate is qualified or otherwise authorized to transact business as a
foreign corporation or partnership in each jurisdiction listed in Schedule
4.1 which constitute all jurisdictions in which the nature of the Business
requires such qualification.
(b) Each of Parent, Seller and Enterprises has all requisite
corporate power and authority to execute and deliver this Agreement and
perform their respective obligations hereunder. The execution and delivery
of this Agreement by each of Parent, Seller and Enterprises and the
performance by them of their respective covenants and agreements hereunder
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have been duly authorized by all necessary corporate or partnership action
on their part. This Agreement has been duly executed and delivered by each
of Parent, Seller and Enterprises and constitutes the valid and binding
obligation of each, enforceable against them in accordance with its terms.
4.2 Financial Information. Schedule 4.2(a) attached hereto contains the
unaudited statements of assets and selected liabilities of the Business as of
August 31, 1996, and August 31, 1995 and the related unaudited statements of
revenues and operating expenses for each of the fiscal years ended August 31,
1996, August 31, 1995 and August 31, 1994 (the "Financial Statements"). Schedule
4.2(b) attached hereto contains the unaudited statements of assets and selected
liabilities of the Business as of January 31, 1997 and January 31, 1996 and the
related unaudited statements of revenues and operating expenses for the
five-month period ended on each of such dates (the "Interim Statements"). The
Financial Statements and the Interim Statements (i) are correct and complete in
all material respects, (ii) have been prepared from the books and records of
Seller with respect to the Business, (iii) have been prepared in accordance with
generally accepted accounting principles consistently applied, except (A) as
otherwise set forth on Schedule 4.18, (B) that in the case of the statements of
revenues and operating expenses, there has been no allocation of the charges
outlined on Schedule 4.2(c) hereof, (C) the Financial Statements and the Interim
Statements have no footnotes, (D) with respect to the statements of assets and
selected liabilities as of August 31, 1996, and August 31, 1995 and January 31,
1996 the balances reflected in the line item for Assumed Liabilities are not
complete, and (E) in the case of the Interim Statements such statements are
subject to normal year-end adjustments consistent with those normal year-end
adjustments contained within the Financial Statements; and (iv) fairly present
in all material respects the Purchased Assets and Assumed Liabilities of the
Business on the dates indicated and the revenues and operating expenses of the
Business for the periods then ended. For purposes of this Agreement, "Latest
Balance Sheet" means the statement of assets and selected liabilities as of
January 31, 1997.
In addition to, and not in lieu of, the foregoing, upon delivery of the
Schedule 8.6 Statements, Seller shall be deemed to represent and warrant that
such Schedule 8.6 Statements (i) are correct and complete in all material
respects, (ii) have been prepared from the books and records of Seller with
respect to the Business, (iii) have been prepared in accordance with generally
accepted accounting principles consistently applied, and (iv) fairly present in
all material respects the Purchased Assets and Assumed Liabilities of the
Business on the dates indicated and the revenues and operating expenses of the
Business for the periods then ended.
4.3 Compliance with Other Instruments. The execution and delivery of this
Agreement by Seller and the performance by Seller of its obligations hereunder
will not: (a) conflict with or result in any violation of the charter documents
or partnership agreement or bylaws of Parent, Seller or any Affiliate, (b)
conflict with or result in (i) a breach of any agreement or instrument to which
Seller or such Affiliate is a party and which is required to be identified on
any Schedule delivered by Seller pursuant to this Agreement (except with respect
to any requirement for consent to the assignment of any such agreement or
instrument) or (ii) result in any violation of any federal, state or local law,
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regulation, ordinance or administrative order or any judgment or decree,
applicable to Seller or any Affiliate and affecting the operation of the
Business or the Purchased Assets (except with respect to the filing and
expiration of the waiting period under the HSR Act); or (c) result in the
creation of any material lien, charge or encumbrance of any kind or nature upon
any of the Purchased Assets.
4.4 Title to Assets.
(a) Seller or an Affiliate has good and marketable title to each
parcel of Owned Real Property and has good and valid title to each other
asset constituting the Purchased Assets, free and clear of any security
interest, mortgage, pledge, lien, charge, encumbrance, right of way,
easement or adverse claim of any kind or nature, except (i) liens for
current taxes not yet due and payable; and (ii) the imperfections of title,
restrictions, easements, encroachments or encumbrances described in
Schedule 4.4 (collectively, the "Permitted Encumbrances").
(b) As of the Closing Date, Parent will cause Seller and each
Affiliate to transfer good and marketable title to each parcel of Owned
Real Property and good and valid title to each other asset constituting the
Purchased Assets to Purchaser, free and clear of all liens and encumbrances
of any kind or nature, except for the Permitted Encumbrances. The Purchased
Assets, together with the assets described in the Transition Services
Agreement and the assets described in Sections 1.2(g) and 1.2(h), include
all assets necessary for the operation of the Business as it is currently
being operated by Seller, and all such Purchased Assets are owned by either
Seller, Enterprises or NSI Realty, L.P.
(c) The vehicles listed on Schedule 1.1(h) hereof, together with the
Leased Vehicles represent all of the vehicles that are used exclusively in
the Business. Neither Seller, nor an Affiliate owns any other machinery,
fixtures, furniture, equipment, materials, parts, supplies, tools or other
tangible property that are used exclusively in the Business except to the
extent such items are located at either (i) an Acquired Facility; (ii) any
customer location associated with a Covered Account; (iii) on any vehicle
listed on Schedule 1.1(h) hereof or on any Leased Vehicle; (iv) on a
Processor's Premises; or (v) in any third party repair shop.
(d) Schedule 4.4(d) identifies each asset of Seller or an Affiliate
that is used in the Business but that is not used exclusively in the
Business.
4.5 Real Property. There is listed on Schedule 4.5 (i) a description of all
real property owned by Seller or an Affiliate and used exclusively in the
Business (the "Owned Real Property"), (ii) a description of all lease agreements
under which Seller is lessor of portions of the Owned Real Property, and (iii) a
description of all lease and sublease agreements (other than the Excluded
Leases, the "Real Property Leases") for real property used by Seller in the
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Business (the "Leased Real Property") (the Leased Real Property and the Owned
Real Property are referred to herein collectively as the "Real Property"). True
and complete copies of the Real Property Leases have been delivered to
Purchaser, including all amendments, supplements and modifications thereof.
Except as indicated in Schedule 4.5:
(a) All Real Property Leases are valid, binding and enforceable
against Seller in accordance with their respective terms and there does not
exist under any such Real Property Lease any material default or any event
which with notice or the lapse of time or both would constitute a material
default thereunder against Seller, and to Seller's knowledge, against the
other parties thereto;
(b) None of the structures or improvements on the Owned Real Property
encroaches upon real property of another person, and no structure or
improvement of any other person substantially encroaches upon any of the
Real Property, except those encroachments identified as a Permitted
Encumbrance;
(c) There are no other matters affecting the Owned Real Property
pending, or, to the knowledge of Seller (i) there are no other matters
affecting the Leased Real Property pending or (ii) with respect to the Real
Property, threatened, which, either individually or in the aggregate, could
have a material adverse effect on any Acquired Facility or the Business or
the Purchased Assets taken as a whole (collectively, a "Material Adverse
Effect"); and
(d) All Real Property Leases are assignable to Purchaser without such
assignment constituting an event of default thereunder.
4.6 Personal Property Leases. There is listed in Schedule 1.1(i)(v) a
description of any leases relating to each item of tangible personal property
leased by Seller or any Affiliate for use exclusively in the operation of the
business and having rental payments in excess of $25,000 annually (the "Personal
Property Leases"). All Personal Property Leases are valid, binding and
enforceable against Seller, and to Seller's knowledge, against the other parties
thereto, in accordance with their respective terms and there does not exist
under any such Personal Property Lease any material default or any event which
with notice or the lapse of time or both would constitute a material default
thereunder against Seller, and to Seller's knowledge, against the other parties
thereto. True and complete copies of the Personal Property Leases have been made
available to Purchaser, including all amendments supplements and modifications
thereof.
4.7 Intellectual Property. With respect to the
Intellectual Property and the license agreements listed on
Schedule 1.1(i)(ii) and except as indicated on Schedule 4.7:
(a) No interference actions or other judicial or adversary
proceedings concerning the Intellectual Property is pending, and to
Seller's knowledge, no such action or proceeding is threatened and to
Seller's knowledge, there is no reasonable basis for any action or
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proceeding, which if adversely determined, would have a Material Adverse
Effect;
(b) Seller has the right and authority to use the Intellectual
Property in connection with the conduct of the Business in the manner
presently conducted, and Seller has not received written notice that such
use conflicts with, infringes upon or violates any rights of any other
person, firm or corporation; and
(c) There are no outstanding, nor to Seller's knowledge, any
threatened disputes involving Seller or an Affiliate with respect to any
licenses or similar agreements or arrangements described in Schedule
1.1(i)(ii).
4.8 Litigation. Except as set forth on Schedule 4.8, with respect to the
Business or the Purchased Assets, no suit, action, cause of action, claim for
relief, complaint, proceeding, hearing, governmental investigation,
administrative claim or charge is pending or, to the knowledge of Seller,
threatened in writing against Seller or any Affiliate and which could have a
Material Adverse Effect.
4.9 Court Orders, Decrees and Laws. Except as disclosed in Schedule 4.9,
with respect to the Business or the Purchased Assets: (a) there is no
outstanding nor, to the knowledge of Seller, any threatened, order, writ,
judgment, injunction or decree of any court or governmental agency against or
involving Seller or any Affiliate which could have a Material Adverse Effect;
(b) Seller is not operating under or subject to, or in default with respect to,
any order, writ, judgment, injunction or decree of any court or federal, state,
municipal or other governmental department, commission, board, agency, or
instrumentality, domestic or foreign which could have a Material Adverse Effect;
(c) Seller is not in violation of or in noncompliance with any statute, law,
ordinance or regulation of any government or department or agency thereof in the
conduct of the Business which could have a Material Adverse Effect; and (d)
Seller is not in violation of any applicable zoning regulation, ordinance or
other law, order, regulation or requirement relating to the Business or the
Purchased Assets which could have a Material Adverse Effect.
4.10 Labor and Employment Agreements. Schedule 4.10 identifies (i) each
collective bargaining agreement and other labor agreement to which Seller is a
party or by which it is bound with respect to the Business (the "Collective
Bargaining Agreements"); and (ii) each written or, to Seller's knowledge,
material oral agreement, providing a management-level Employee of the Business
with rights to employment, compensation or benefits related thereto (other than
benefits under Welfare Plans or Retirement Plans as defined in Section 4.11
hereof). Seller is not, and to Seller's knowledge, no other party to any such
agreement is in default with respect to any material term or condition thereof,
nor, to Seller's knowledge, has any event occurred which through the passage of
time or notice, or both, would constitute a material default thereunder by
Seller or any other party to such agreement, or would cause the acceleration of
any material obligation of Seller or any other party to such agreement. Seller
has delivered to Purchaser true and complete copies of all written agreements
identified in Schedule 4.10. Except as set forth in Schedule 4.10:
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(a) Since January 1, 1995, no unfair labor practice complaint has
been brought or, to Seller's knowledge, threatened, against Seller with
respect to any Hired Employees, former employees of the Business or labor
organization with respect to the Business, before any federal, state or
local agency, no labor strike affecting Seller has been brought nor, to
Seller's knowledge, is threatened, and no grievance has been brought since
January 1, 1997 that rises to step 3 or 4 of the relevant grievance
procedure, and to Seller's knowledge no basis for any such unfair labor
practice complaint exists which, if adversely determined, could have a
Material Adverse Effect;
(b) Since January 1, 1995, no organization or representation petition
has been filed or, to Seller's knowledge, threatened, respecting the
Employees of the Business, and no such proceeding has been brought since
January 1, 1995.
(c) Since January 1, 1995, no arbitration proceeding arising out of
or under any Collective Bargaining Agreement has been brought or, to
Seller's knowledge, is threatened with respect to the Employees of the
Business, and no basis for any such proceeding exists which, if adversely
determined, could have a Material Adverse Effect; and
(d) With respect to any Employee of the Business covered by a
Collective Bargaining Agreement, Seller has not engaged in any course of
conduct or otherwise pursued any practice of bestowing any benefits upon
such Employees of the Business which would be enforceable against Purchaser
and which are not required pursuant to any Collective Bargaining Agreement.
4.11 Pension and Welfare Plans.
(a) Attached hereto as Schedule 4.11(a) is a list of each group life
insurance, disability, medical, dental, severance pay and other plan that
is an "employee welfare benefit plan" (as defined in Section 3(1) of ERISA)
currently maintained or contributed to by Seller for the Employees of the
Business (each a "Welfare Plan").
(b) Schedule 4.11(b) lists each deferred profit sharing, deferred
compensation and pension plan (including without limitation each
multiemployer plan defined under Section 4001(a)(3) of ERISA) that is an
"employee pension benefit plan" (as defined in Section 3(2) of ERISA)
currently maintained or contributed to by Seller for the Employees of the
Business (each a "Retirement Plan").
(c) Seller has delivered to Purchaser true and complete copies of the
plan documents for each Welfare Plan and each Retirement Plan, as amended
to date (other than with respect to plan documents for a multiemployer plan
defined in Section 4001(a)(3) of ERISA).
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4.12 Environmental Matters. Except as disclosed on Schedule 4.12:
(a) With respect to each Acquired Facility, (i) Seller is not aware
of any citation, inquiry, notice or request by any governmental authority
indicating that Seller is in violation or that alleges any violation of any
applicable Environmental Laws (as defined below) in any material respect;
(ii) Seller is in material compliance with all other applicable
limitations, restrictions, conditions and prohibitions contained in any
Environmental Laws; (iii) Seller is not subject to or bound by any consent
decree or order concerning the operation of the Business or any of the
Purchased Assets with respect to environmental matters or the cleanup of
hazardous materials under any applicable Environmental Law; and (iv) Seller
is in compliance, in all material respects, with the compliance orders
described in Schedule 2(b).
(b) No hazardous materials have been generated, treated, stored,
released or disposed of, or otherwise placed, deposited in or located on
the Real Property by Seller, or to Seller's knowledge, any prior owner or
occupier of the Real Property, nor has any activity been undertaken on the
Real Property by Seller, or to Seller's knowledge, any prior owner or
occupier of the Real Property, that has caused any of the following: (i)
the Real Property to become a permitted treatment, storage or disposal
facility within the meaning of the Resource Conservation and Recovery Act
of 1976 ("RCRA"), 42 U.S.C. 6901 et seq., or any similar state law or local
ordinance, (ii) a release or threatened release of toxic or hazardous
wastes or substances, pollutants or contaminants from the Real Property
within the ambit of the Comprehensive Environmental Response, Compensation
and Liability Act of 1980 ("CERCLA"), 42 U.S.C. 9601-9657, as amended) or
any similar state law or local ordinance, or (iii) the discharge of
pollutants or effluents into any water source or system, the dredging or
filling of any waters or the discharge into the air of any emissions, that
would require a permit under the Federal Water Act, 33 U.S.C. 1251 et seq.,
or the Clean Air Act, 42 U.S.C. 7401 et seq., or any similar state law or
local ordinance.
(c) To Seller's knowledge, with respect to each Acquired Facility,
there currently are no above ground or underground tanks located under, in
or about the Real Property. The storage tanks listed on Schedule 4.12 have
been duly registered with all appropriate regulatory and governmental
bodies and are each otherwise in compliance in all material respects with
applicable Environmental Laws.
(d) As used in this Agreement, "Environmental Laws" means any
federal, state or local statute, law, code, ordinance, rule or regulation
relating to: (i) the emission of pollutants into the atmosphere, (ii) the
discharge of pollutants into the water or the ground water, (iii) the
disposal of solid or hazardous waste, or (iv) the release of hazardous
materials into the environment (the term "release" meaning any spilling,
leaking, pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, dumping or disposing into the environment and the term
"environment" meaning any surface or ground water, drinking water supply,
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soil, surface or subsurface strata or medium or the ambient air.") As used
in this Agreement "hazardous materials" means any waste, pollutant,
substance, by-product or other material regulated under the CERCLA, RCRA or
other federal environmental law, rule or regulation (or similar state or
local law, rule or regulation) as well as any petroleum or
petroleum-derived substance or waste.
4.13 Rental Invoices and List of Sale Accounts. Seller has heretofore made
available to Purchaser copies of all of Seller's customer invoices for the
Business for customers whose average weekly revenues exceed $500 for a one (1)
week period preceding April 18, 1997. Such customer invoices are correct in all
material respects (except that the identity and addresses of customers have been
deleted), are based upon actual delivery of services at prices agreed upon by
the respective customers and stated therein, any applicable discounts are stated
therein and such invoices fairly present in all material respects the weekly
xxxxxxxx to such customers for the period indicated.
4.14 Customer Contracts. At least 90% of the customers of the Business
whose average weekly revenues exceed $500 during the period from and after
February 3, 1997 are being serviced under written customer service agreements or
purchase orders, which are valid, binding, and in full force and effect. In
connection with any Covered Account that is to be governed by the terms of any
Subcontract Agreement, as contemplated by Section 1.5 hereof, Seller represents
and warrants that the provision of services to be made by Purchaser to any such
Covered Accounts shall not conflict with or result in a breach of any service
agreement to which Seller or such Affiliate is a party and which governs such
Covered Account.
4.15 Customer Prices and Terms. With respect to the customers of the
Business whose average weekly revenues exceed $500 during the period from and
after February 3, 1997, except as set forth in Schedule 4.15 (which shall
identify customer names and approximate weekly revenues with respect to each
exception), since January 1, 1997, no such customer has quit and Seller has
received no written notice, or to Seller's knowledge, verbal notice, from any
such customer of its intention to quit service with Seller; and there are no
customer accounts which have made deposits or prepayments which remain as
liabilities of Seller.
4.16 Covered Accounts. The Covered Accounts to be sold to Purchaser
hereunder will represent each and every customer agreement, whether oral or
written, arising out of the Business conducted at each Acquired Facility as of
the Closing Date, in addition to that number of customer agreements, whether
oral or written, representing not less than $27,000 in weekly revenue as of the
week ending May 2, 1997, and that arise out of Seller's Jacksonville Branch #336
(the "Jacksonville Volume"). Notwithstanding the foregoing, except as
contemplated by Section 3.3 hereof, Seller shall not be deemed to be making any
representation or warranty with respect to any minimum sales volume represented
by the Jacksonville Volume.
4.17 Consents. Except as disclosed in Schedule 4.17, there are no consents,
approvals or other authorizations of, orders or notifications of, registrations,
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declarations or filings with, any governmental or judicial authority (other than
as required pursuant to the HSR Act), or consents, approvals, authorizations or
notifications of any other third party pursuant to (i) the Real Property Leases,
(ii) the Personal Property Leases; (iii) the Other Contracts; (iv) customer
service agreements or purchase orders with any customer of the Business whose
average weekly revenues exceed $500 during the period from and after February 3,
1997; or (v) the Collective Bargaining Agreements (collectively, the "Material
Contracts") which are required in connection with the valid execution, delivery
or performance of this Agreement by Seller and the consummation by Seller of the
transactions contemplated hereby, other than those consents, approvals,
authorizations, orders, notifications, registrations, declarations or filings
the failure to obtain or make which could have a Material Adverse Effect.
4.18 Conduct of Business. Except as set forth on Schedule 4.18, since
January 31, 1997 there has not been:
(a) Any increase in encumbrance against the Owned Real Property, or
change in the condition (financial or other), properties, assets or
liabilities of the Business, except changes in the ordinary course of
business, none of which has had or will have a Material Adverse Effect;
(b) Any change in the billing or pricing methods or practices
followed by Seller in the Business or any change in depreciation or
amortization policies or rates theretofore adopted, except changes in the
ordinary course of business;
(c) Any sale, transfer, lease, abandonment or other disposition by
Seller, other than in the ordinary course of the Business, of any
inventory, supplies, vehicles, machinery, equipment or other operating
properties or other assets included among the Purchased Assets, including
any relocation or transfer of any Purchased Assets from an Acquired
Facility to any other facility of Seller or an Affiliate;
(d) Any change by Seller in its methods of accounting
with respect to the Business;
(e) Any change by Seller in its policies for timing and recognition
of allowances, rebates, concessions from vendors and similar items with
respect to the Business;
(f) Any business interruption, damage, loss or other occurrence
having a Material Adverse Effect, whether or not covered by insurance, as a
result of any accident, fire, casualty, act of God or the public enemy, or
any labor dispute or disturbance;
(g) Any conduct of the Business other than in the ordinary course (or
otherwise contemplated hereunder), including without limitation any change
in or implementation of severance compensation benefits for any Employee of
the Business, any material change in the prices charged by Seller in the
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Business, any material deviation from past standards of quality of products
and services or any material reduction in efforts or funds expended by
Seller to (i) repair and maintain vehicles and other equipment to be sold
to Purchaser hereunder, (ii) replace inventories of merchandise held for
sale to customers, (iii) promote and sell new items and accounts, (iv)
purchase and maintain inventories of supplies and repair parts, and (v)
perform all other activities required to maintain the long-term viability
and quality of the Business;
(h) Any terminations, changes or violations by Seller of any of the
leases, including without limitation, the Real Property Leases, Material
Contracts, commitments, licenses or other arrangements of the Business,
except as required hereunder or as such changes or terminations occur in
the ordinary course of business, none of which terminations, changes or
violations shall have had a Material Adverse Effect;
(i) Any violations by Seller of any permits, licenses, restrictive
covenants, laws or regulations binding on Seller which could have a
Material Adverse Effect; and
(j) Any other occurrence, event or condition with respect to Seller
or otherwise to Seller's knowledge which could have a Material Adverse
Effect.
4.19 Business Organization. During the period beginning on the date of the
Latest Balance Sheet and continuing up to and including the Closing Date, Seller
has used and will use its best efforts to preserve the Business intact, and to
keep available to Purchaser the services of the present Employees of the
Business, to the extent that Purchaser may retain such services pursuant to this
Agreement.
4.20 Other Contracts. Attached hereto as Schedule 4.20 is a true and
complete list of the Contracts (other than the Real Property Leases, Contracts
with customers of the Business, the Personal Property Leases, employment
agreements, purchase orders issued in the ordinary course of the Business and
the Collective Bargaining Agreements) which require a payment to or a payment
from Seller of $50,000 per year or more (collectively, the "Other Contracts").
Except as set forth on Schedule 4.20:
(a) With respect to Other Contracts with Seller's suppliers no such
supplier has given Seller any written notice of intent to cancel any such
contract.
(b) (i) all of the Other Contracts are in full force and effect; (ii)
Seller has performed in all material respects all of the obligations
required to be performed by it under the Other Contracts; (iii) neither
Seller nor, to Seller's knowledge, any of the other parties to the Other
Contracts are in default in any material respect which, under the terms of
such Other Contracts, constitutes an event of default; (iv) to Seller's
knowledge, there is no existing state of facts that would give rise, by the
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passage of time or the giving of notice, to an event of default thereunder;
and (v) the Other Contracts are assignable to Purchaser without such
assignment constituting an event of default thereunder, except where such
event of default would not have a Material Adverse Effect.
True and complete copies of the Other Contracts have been made available,
or prior to the Closing Date, will be made available to Purchaser, including all
amendments supplements and modifications thereof.
4.21 Restrictive Covenants. Except as disclosed on Schedule 4.21, Seller is
not a party to any written contract, license agreement or restriction which
limits the scope of Seller's operation of the Business or the sale or use of the
Purchased Assets and which has a material adverse effect on the Business or the
Purchased Assets.
4.22 Licenses and Permits. Seller or an Affiliate has obtained all material
licenses, permits, franchises, approvals and governmental authorizations
(collectively the "Licenses and Permits") required in the operation of the
Business. Except for such Licenses and Permits, no other material licenses,
permits, franchises, approvals or governmental authorizations are required for
Seller or the operation of the Business. Except as set forth on Schedule 4.22,
(i) all Licenses and Permits are in full force and effect; (ii) Seller is
performing in all material respects all obligations required to be performed by
it to date under any Licenses and Permits; (iii) Seller is not in default in any
material respect under any Licenses or Permits or the laws, regulations and
requirements of the licensing and permit authorities; and (iv) all such
Transferable Permits, to the extent assignable, will be assigned to Purchaser on
the Closing Date.
4.23 Inventory.
(a) Except as disclosed in Schedule 4.23, the New Inventory included
among the Purchased Assets is new, good and merchantable, has never been
laundered or used in any manner whatsoever and is useable or saleable, as
the case may be, in the ordinary course of business, and the quantities of
all Inventory are reasonable and warranted in the present circumstances of
the Business.
(b) The In-Service Inventory is sufficient in quantity to provide
timely and adequate service to the customers of the Business in accordance
with Seller's historic methods and practices. The amounts of consumable
supplies (including without limitation hangers and washroom chemicals,
packaging and other production supplies) included in the Purchased Assets
shall be in amounts equal to the amounts of such consumable supplies held
in accordance with Seller's past practices for use in the Business.
(c) The branch inventory reports to be delivered by Seller to
Purchaser at Closing and to be identified as Schedule 4.23(c) will be true,
correct and a complete list of all of Seller's New Inventory by each stock
keeping unit (SKU) as of the date indicated on such report.
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(d) All Inventory that is owned either by Seller or an Affiliate and
that is used exclusively in the Business as of the Closing Date will be
located at either (i) an Acquired Facility; (ii) a customer location
associated with a Covered Account; (iii) on any vehicle listed on Schedule
1.1(h) hereof or on a Leased Vehicle or (iv) on a Processor's Premises.
4.24 Accounts Receivable. All of the Accounts Receivable of Seller related
to the Business constitute the valid and bona fide claims of Seller against
third parties for sales, services or other charges arising in the ordinary
course of the Business. All Accounts Receivable of Seller which are greater than
ninety days past due as of the Closing Date will have been fully reserved or
written off against the reserve for uncollected accounts.
4.25 Brokers. Except as disclosed on Schedule 4.25, no finder, broker,
agent or other intermediary has acted for or on behalf of Seller in connection
with the negotiation or consummation of this Agreement or the transactions
contemplated hereby.
4.26 General Warranties. Neither this Agreement, any of the Exhibits
hereto, any Schedule or any of the other documents delivered by or on behalf of
Parent, Seller or any Affiliate pursuant to Article 10, contain any untrue
statement of a material fact regarding Parent, Seller or any Affiliate, or the
Business or any of the other matters dealt with in this Article IV or omit to
state any material fact necessary to make the statements contained herein or
therein, not misleading.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller as follows:
5.1 Organization and Authority.
(a) Purchaser is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Minnesota. Purchaser
has all requisite corporate power and authority to execute and deliver this
Agreement and perform its obligations hereunder.
(b) The execution and delivery of this Agreement by Purchaser, and
the performance of its obligations hereunder, have been duly authorized by
all necessary corporate action on the part of Purchaser. This Agreement has
been duly executed and delivered by Purchaser and constitutes a valid and
binding obligation of Purchaser, enforceable against Purchaser in
accordance with its terms.
5.2 Compliance with Other Instruments. The execution and delivery of this
Agreement by Purchaser and the performance by Purchaser of its obligations
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hereunder will not (a) conflict with or result in any violation of the articles
of incorporation or bylaws of Purchaser or (b) conflict with or result in a
breach of any judgment, decree, law or order applicable to Purchaser, except
that the filing and expiration of the waiting period is required under the HSR
Act.
5.3 Brokers. Except as disclosed on Schedule 5.3, no finder, broker, agent
or other intermediary has acted for or on behalf of Purchaser in connection with
the negotiation and consummation of this Agreement or the transactions
contemplated hereby.
ARTICLE 6
COVENANTS OF SELLER
Seller covenants and agrees with Purchaser as follows:
6.1 Conduct of Business; Performance. Between the date hereof and the
Closing Date, Seller shall, except as otherwise specifically consented to in
writing by Purchaser conduct the operations of the Business in the manner
required pursuant to Section 4.18 hereof.
6.2 HSR Act Filing. Seller shall promptly make any filing required under
the HSR Act relating to this transaction and shall use its best efforts to
respond promptly to any request for additional information under the HSR Act.
6.3 Consents. Seller shall use its reasonable efforts (which shall not
require payments of money to third parties in order to obtain waivers or
consents from such third parties (except as otherwise required by the relevant
contract)) to obtain any consents required under the Contracts to be listed on
Schedule 6.3, which is to be prepared and delivered by Purchaser to Seller not
later than two weeks from the date hereof. In addition, Seller agrees that:
(a) With respect to any customer of the Business whose average weekly
revenues exceed $500 during the period from and after February 3, 1997 and
whose customer service contract requires the consent of such customer prior
to its assignment to Purchaser (exclusive, however, of any Multilocation
Linen Accounts), if Seller is unable to obtain such consent on or prior to
the Closing Date, and at any time during the six month period subsequent to
the Closing Date, any such customer terminates such contract prior to its
scheduled expiration date because of Seller's failure to obtain such
customer's consent to the contract assignment (whether or not such
termination is valid under the terms of such customer's contract), Seller
will pay Purchaser, with respect to any such customer of the Linen Plants,
an amount of money equal to the product of (X) the Average Weekly Linen
Revenue of such customer under such customer's service contract during the
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Linen Measuring Period and (Y) 25, or, with respect to any such customer of
the Industrial Plants, an amount of money equal to the product of (X) the
Average Weekly Industrial Revenue of such customer under such customer's
service contract during the Industrial Measuring Period and (Y) 60. Any
amounts that become owing pursuant to this Section 6.3(a) shall be paid by
Seller as promptly as possible following Seller's receipt of written notice
from Purchaser of any such customer termination, and in any event, not
later than thirty (30) days thereafter.
(b) With respect to the consents to assignment required under each
Real Property Lease covering the Acquired Facilities identified on Exhibit
A as Corpus Xxxxxxx Xxxxxx #424 and Xxxxxxxx Xxxxxx #000, in the event
Seller is unable to obtain the respective landlord's consent to Seller's
assignment of any such Real Property Lease on or prior to the Closing Date,
and if Seller is otherwise unable or unwilling to make such Acquired
Facilities available to Purchaser by any other commercially available
means, whether through valid sublease, Seller's acquisition of such
properties and subsequent sale or lease to Purchaser, in any such case,
under terms substantially equivalent to the current Real Property Leases
for such Acquired Facilities, such Acquired Facilities may be excluded from
the transactions contemplated by this Agreement in the sole and absolute
discretion of Purchaser. In the event of any such exclusion, there shall be
a corresponding reduction in each of the Base Price, Total Base Revenue
Value and the Base Amount definitions, in each case, to the full extent of
the related revenue and/or asset values for such Acquired Facilities, as
the same are set forth on Exhibit A hereto.
(c) With respect to the Real Property Lease covering the Acquired
Facility identified on Exhibit A as Xxxxxxx Xxxxxx #0000, Seller will
undertake to sublease such Acquired Facility to Purchaser, with the
landlord's consent, for the remainder of the lease term. In the event
Seller is unable to obtain the consent to any such sublease on or prior to
the Closing Date, and Seller is otherwise unable or unwilling to make such
Acquired Facility available to Purchaser by any other commercially
available means, whether through Seller's acquisition of such property and
subsequent leasing of it to Purchaser through May 1998 (but not longer),
under terms substantially equivalent to the current Real Property Lease for
such Acquired Facility, Seller will provide Purchaser with such reasonable
assistance as Purchaser may require in connection with locating suitable
alternative facilities, but Seller shall not have any responsibility for
any relocation costs incurred by Purchaser in connection with such
relocation.
(d) With respect to the consent to assignment required under the Real
Property Lease covering the Acquired Facility identified on Exhibit A as
Xxxxxxxxx Xxxxxx #0000, in the event Seller is unable to obtain the
landlord's consent to Seller's assignment of such Real Property Lease on or
prior to the Closing Date, and Seller is otherwise unable or unwilling to
make such Acquired Facility available to Purchaser under terms
substantially equivalent to the current Real Property Lease for such
Acquired Facility, Seller will provide Purchaser with such reasonable
assistance as Purchaser may require in connection with locating suitable
alternative facilities, and shall also pay Purchaser up to $100,000 to
cover expenses incurred in connection with Purchaser's relocation.
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(e) With respect to the consents to assignment required under each
Real Property Lease covering the Acquired Facilities identified on Exhibit
A as Xxxxxxxx Xxxxxx #0000 and Xxxxxxxxxx Xxxxxx #000, in the event Seller
is unable to obtain the respective landlord's consent to Seller's
assignment of such Real Property Leases on or prior to the Closing Date,
Seller shall exercise its purchase options with respect to either or both
such Acquired Facilities and shall thereafter either assign its purchase
rights and obligations to Purchaser in a valid assignment or shall
otherwise consummate the purchase of such properties and thereafter,
Purchaser shall be irrevocably obligated to buy such Acquired Facilities
from Seller at the identical purchase price, and otherwise on the same
terms and conditions, as Seller shall have paid for such Acquired
Facilities pursuant to its purchase options.
(f) Seller will comply with all requirements under the National Labor
Relations Act and the Labor Management Relations Act related to sale of the
Business to Purchaser. Seller will notify Purchaser in advance of any
meetings with any union party to the Collective Bargaining Agreements
relating to the transactions contemplated by this Agreement and provide
Purchaser with an opportunity to attend and direct any discussion at such
meetings related to Purchaser's operation of the Business after the
Closing. Seller will inform any union party to the Collective Bargaining
Agreement that it may be necessary for Purchaser to replace certain
employee benefit plans under the Collective Bargaining Agreements. Seller
will use its reasonable best efforts prior to the Closing to obtain
executed successorship agreements from any union party to a Collective
Bargaining Agreement so as to secure such union party's consent to
Purchaser succeeding Seller under such Collective Bargaining Agreement.
6.4 Access and Information. Seller shall permit Purchaser and Purchaser's
counsel, accountants and other representatives full access upon reasonable
notice during normal business hours to all the properties, assets, books,
records, agreements, commitments and other documents of Seller concerning the
Business or the Purchased Assets; provided, however, that such access shall not
interfere with the operation of the Business. Seller shall furnish to Purchaser
and its representatives all available information with respect to the Purchased
Assets as Purchaser may reasonably request, and, in connection therewith, shall
specifically cooperate in the exchange of data processing information in the
manner and to the extent contemplated by Schedule 6.4 hereof.
6.5 Noncompetition; Nonsolicitation; and Confidentiality.
(a) As used in this Section 6.5, the following terms shall have the
following meanings:
(i) "Person" means any individual, firm, partnership,
association, corporation, limited liability entity, trust, venture or
other business organization, entity or enterprise;
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(ii) "Industrial Supply Business" means the
supply for hire and facility-based direct sales of
Industrial Items;
(iii) "Industrial Items" means industrial shirts, pants,
coveralls, jumpsuits, shop coats, counter coats, shop towels and
printer towels;
(iv) "Restricted Period" means the period commencing on the
Closing Date and ending on the fifth anniversary of the Closing Date;
provided that, if Seller or Enterprises violate the covenant not to
compete, the Restricted Period shall be extended for an added period
equal to the duration of the period of such violation.
(v) "Restricted Territory" means the geographic service
areas covered by the zip code listings set forth on Schedule 6.5.
(vi) The term "engage or be interested, directly or indirectly"
as used herein, shall include, without limitation, giving advice or
technical or financial assistance by loan, guarantees, stock
transactions or in any other manner to any Person doing or about to
engage in the Industrial Supply Business within the Restricted
Territory.
(b) During the Restricted Period, neither Seller nor Enterprises
will, without Purchaser's prior written consent, (which may be withheld
with or without reason), directly or indirectly, for itself or together or
on behalf of any other Person, engage or be interested in, directly or
indirectly, the Industrial Supply Business, as partner, investor,
shareholder, principal, agent, officer, director, employee, technical
advisor, lender, trustee, beneficiary or otherwise, anywhere within the
Restricted Territory. In connection with the foregoing covenant, Seller and
Enterprises agree that, following the Closing Date, they will not use any
of the trademarks licensed under the Service Xxxx License Agreement dated
October 1, 1990 from Xxxxxxxxxx-Xxxxxx Manufacturing Company in the
Industrial Supply Business or otherwise. Nothing contained in this Section
6.5(b) shall prohibit or be construed as prohibiting Seller from selling or
renting or soliciting the sale or rental of any Industrial Items to any
customer where the net revenue attributable to sales or rental of linen
items, such as bed linens, table linens, bath and hand towels, aprons, chef
coats, xxxx pants and like items, at any single customer delivery location
represents more than fifty percent (50%) of the net revenue derived by
Seller from such single customer delivery location in any rolling three
month period.
(c) During the Restricted Period, Seller and Enterprises hereby agree
that they shall not, without Purchaser's prior written consent (which may
be withheld with or without reason), either directly or indirectly, for
themselves or on behalf of any other Person, (except Purchaser) (i) sell or
rent or solicit the sale or rental of any items or products or services to
any Covered Account of a Linen Plant which items, products or services are
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similar to those offered for sale or rental by Seller or any Affiliate in
the conduct of the Business at any time within the period of twelve (12)
months preceding the Closing Date or (ii) sell or rent or solicit the sale
or rental of any Industrial Items to any Covered Account of an Industrial
Plant.
(d) Nothing contained in this Agreement shall be construed as
prohibiting (i) the activities of Seller pursuant to the Subcontract
Agreement; (ii) sales and the solicitation of sales by Seller to the
Covered Accounts of chemical products; (iii) direct sales in the normal
course of conducting Seller's national direct sales business; or (iv) the
right of Seller to continue to service any accounts which exist on the
Closing Date and are not being sold to Purchaser pursuant to this
Agreement.
(e) From and after the Closing Date, neither Seller nor Enterprises
shall disclose any confidential information to any Person, (except
Purchaser), which confidential information relates to the Business or the
Purchased Assets, excluding confidential information related to or used in
servicing multilocation or national accounts, but, including, without
limitation, the identity of, prices charged to or business done with any
Covered Account as of the Closing Date, except (i) in response to a request
of a governmental agency, (ii) pursuant to court order, (iii) as otherwise
provided in Section 1.5 hereof, or (iv) as otherwise required by law. In
the event that Seller is requested or required (by oral questions,
interrogatories, requests for information or documents in legal
proceedings, subpoena, civil investigative demand or other similar process)
to disclose any such confidential information, Seller shall provide
Purchaser with prompt written notice of any such request or requirement so
that Purchaser may seek a protective order or other appropriate remedy
and/or waive compliance with the provisions of this Agreement. If, in the
absence of a protective order or other remedy or the receipt of a waiver
from Purchaser, Seller is nonetheless, in the written opinion of outside
counsel, legally compelled to disclose such confidential information,
Seller may, without liability hereunder, disclose such confidential
information.
(f) Seller hereby agrees that for a period of five (5) years from and
after the Closing Date, without Purchaser's prior written consent (which
may be withheld with or without reason), it shall not directly or
indirectly or acting alone or together with or on behalf of or through any
other person, affiliate or entity: (i) hire as employee, consultant or
other independent contractor; (ii) enter into any other business
relationship (including, without limitation, as partners, joint venturers,
guarantors, business associates, investors, financiers, owners of a
corporation or other business organization, entity or enterprise) with; or
(iii) request, induce, advise or encourage a termination of employment by,
any Hired Employee (so long as such Hired Employee continues as an employee
of Purchaser).
(g) Because the breach or anticipated breach of the restrictive
covenants set forth in this Section 6.5 could result in immediate and
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irreparable harm and injury to Purchaser, for which it will not have an
adequate remedy at law, Seller and Enterprises agree that Purchaser shall
be entitled to relief in equity to enjoin temporarily and/or permanently
such breach or anticipated breach and to seek any and all other legal and
equitable remedies to which Purchaser may be entitled. In the event that
the foregoing restrictive covenants are considered by a court of competent
jurisdiction or arbitrator to be excessive in its duration or scope, it
shall be considered modified and valid for such duration and for such
business and area as such court or arbitrator may determine reasonable
under the circumstances.
(h) Any provision to the contrary notwithstanding, specifically
including Section 14.13 hereof, Seller and Enterprises hereby irrevocably
consent to the assignment by Purchaser of all or a portion of Purchaser's
rights under this Section 6.5 to any other person or entity in connection
with Purchaser's sale of all or substantially all of the assets and/or any
portion of the revenue base attributable to any Acquired Facility and such
transferee shall thereafter have all of Purchaser's rights hereunder for
the duration of the Restricted Period.
6.6 Monthly Financial Statements. From and after the date hereof and
through the end of each month prior to the Closing Date, within twenty days
after the end of each such month, Seller will provide unaudited statements of
net assets (i.e., Purchased Assets and Assumed Liabilities) of the Business as
of the month then ended and the related unaudited statements of revenue and
operating expenses of the Business (which will reflect earnings before interest
and taxes) for the period from February 1, 1997 through the end of such month.
The financial statements delivered pursuant to the preceding sentence (exclusive
of any line items below the line item thereon for adjusted operating income) are
hereinafter referred to as the "Monthly Statements." Upon delivery of each
Monthly Statement, Seller shall be deemed to have made the same representations
and warranties with respect to such Monthly Statements as Seller made about the
Interim Statements, and the definition of Interim Statements for purposes of
this Agreement shall be deemed to include such Monthly Statement.
6.7 Notification of Certain Matters.
(a) Seller shall give prompt written notice to Purchaser of (i) the
occurrence, or failure to occur, of any event which occurrence or failure
would be likely to cause a Material Adverse Effect, (ii) any material
claims, actions, proceedings or investigations commenced or, to Seller's
knowledge, threatened, involving or affecting Seller or any Affiliate and
any of the Purchased Assets and which would be likely to cause a Material
Adverse Effect, and (iii) any material adverse change in the condition
(financial or other), properties, assets, or liabilities of the Business,
taken as a whole, which, so far as reasonably can be foreseen at the time
of its occurrence, would be likely to cause a Material Adverse Effect;
provided, however, that no such notification shall affect the
representations or warranties of the parties or the conditions to the
obligations to the parties hereunder.
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(b) In addition to, and not in lieu of, the foregoing, Seller shall
deliver to Purchaser a true and complete schedule of changes (the "Update
Schedule") to any of the information contained in any of the Schedules to
this Agreement (including, without limitation, changes to any other
representations or warranties of Seller in Article 4 hereof as to which no
Schedules have been created as of the date hereof but as to which a
Schedule would have been required hereunder to have been created on or
before the date hereof if such changes had existed on the date hereof) in
writing to Purchaser, dated within five business days of the Closing Date,
with a certificate executed by Seller's Executive Vice President and Chief
Financial Officer, stating that he has supervised or conducted a reasonable
investigation necessary for purposes of this certificate and certifying as
to the accuracy and completeness of such Update Schedule.
6.8 Continuation Obligations. Seller shall be solely responsible for
satisfying any employee benefit continuation obligations Seller may have before
or after the Closing Date relating to "qualifying events" (as defined in Section
603 of ERISA) occurring on or prior to the Closing Date with respect to the
Employees of the Business, or former Employees of the Business and their
beneficiaries under its Welfare Plans, Sections 601 through 609 of ERISA and any
applicable state law, as a result of the transactions contemplated by this
Agreement or otherwise.
6.9 Environmental Remediation Obligations of Seller.
(a) Seller has heretofore prepared at its own expense and delivered
to Purchaser or will prepare at its own expense and deliver prior to the
Closing Date, full Phase I environmental studies for each of the Acquired
Facilities (collectively, the "Phase I Reports"). Seller agrees that from
and after the date hereof, it will either (i) pay the cost of any
environmental remediation identified on Schedule 6.9, as Schedule 6.9 may
be updated or supplemented pursuant to Schedule 6.9 and/or Section 6.7
hereof (the "Environmental Remediation") or (ii) in Seller's reasonable
discretion, reimburse Purchaser the full cost of completing the
Environmental Remediation, inclusive of any and all direct labor costs
reasonably incurred by Purchaser in effecting any such remediation
obligation, as the same may be reasonably demonstrated by Purchaser.
(b) Notwithstanding Purchaser's assumption of those compliance
obligations pursuant to Section 2(b) hereof, Seller shall be solely liable
for any and all costs and expenses related to any environmental remediation
obligations with respect to those monitoring and compliance obligations
which are reasonably related to conduct, activities or conditions existing
on or prior to the Closing Date. Any such remediation obligations so
identified shall thereafter be treated in the manner contemplated by the
provisions of Section 6.9(a).
(c) From and after the Closing and through the fourth anniversary of
the Closing Date (but subject to Schedule 6.9), Seller and Purchaser agree
to split equally the cost of any other environmental remediation work
required under any then existing Environmental Law for unknown and
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contingent environmental liabilities that relate to conduct, activities or
conditions existing on or prior to the Closing Date to the extent they
occur within the legal property boundaries of an Acquired Facility and
which are not identified or referenced in the Phase I Reports.
Notwithstanding the foregoing, the maximum amount which Purchaser shall be
required to pay pursuant to the foregoing sentence shall be $250,000, at
which time, Seller shall be solely responsible for all amounts in excess
thereof. From and after the fourth anniversary of the Closing Date,
Purchaser shall thereafter have the obligations contemplated by Section
2(g) hereof. To the extent that Seller receives reimbursement from
governmental entities for environmental remediation contemplated by this
paragraph 6.9(c), and Purchaser has previously made payment for such
remediation as required by this paragraph 6.9(c), Seller will promptly
reimburse Purchaser for any payment so made in an amount equal to (i) the
amount of the reimbursement, multiplied by (ii) a fraction, (x) the
numerator of which is the amount paid by Purchaser with respect to such
remediation, and (y) the denominator of which is the total amount paid by
Seller and Purchaser with respect to such remediation.
(d) Purchaser will allow Seller access to the applicable Real
Property, and will provide any other third parties such additional
reasonable access as may be reasonably necessary to perform remediation
required pursuant to this Agreement, and Seller will use its reasonable
best efforts, and will use such reasonable best efforts to cause any third
parties, not to interfere with the operation of the Business on such Real
Property in connection with the performance of such remediation. In the
event Purchaser sells or transfers any Real Property at any time while
Seller remains liable for remediation pursuant to this Agreement with
respect to such Real Property, Purchaser will ensure in its contract of
sale for any Owned Real Property that Seller or such third parties
continues to have such reasonable access as may be reasonably necessary to
perform remediation required pursuant to this Agreement, and, with respect
to any Leased Real Property, will undertake its reasonable best efforts to
ensure that Seller or such third parties continues to have reasonable
access as may be reasonably necessary to perform remediation required
pursuant to this Agreement.
6.10 Subsequent Assignment of the Transition Services Agreement. Seller
shall, at any time and from time to time at and after the Closing, upon request
of Purchaser and without additional consideration, provide those services as
will be provided to Purchaser under the Transition Services Agreement to any
purchaser in any Linen Plant Sale; provided however, Seller shall not be
required to provide any such transition services to any purchaser of a Linen
Plant(s) for a period of time in excess of six (6) months.
6.11 Zoning Assurances. Seller shall use reasonable best efforts to provide
Purchaser at its sole cost and expense with written evidence (in the form of a
zoning endorsement (ALTA Form 3.1) or a letter from the applicable city) that
the parcels of Owned Real Property described in Schedule 6.11 comply as of the
Closing Date with all applicable laws, ordinances, rules and regulations
relating to zoning for such parcel of Owned Real Property. Seller shall use
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reasonable best efforts to provide such zoning assurances to Purchaser no later
than one hundred twenty (120) days after the Closing Date.
6.12 Permitted Encumbrances. To the extent that Purchaser has not received
the Title Commitment and/or survey or to the extent issues are marked "open" on
Schedule 4.4 for each parcel of Owned Real Property as of the date of this
Agreement, title to each parcel of such Owned Real Property will be good and
marketable, free and clear of any security interest, mortgage, pledge, lien,
charge, encumbrance, right of way, easement or adverse claim of any kind or
nature except (i) liens for current taxes not yet due and payable; and (ii)
those encumbrances, rights of way, easements or adverse claims (collectively,
the "Restrictions") of a type and kind consistent with the Permitted
Encumbrances described on Schedule 4.4 as of the date of this Agreement which
Restrictions shall be added to Schedule 4.4 on or prior to the Closing Date;
provided, however, should Purchaser and Seller be unable to agree whether a
Restriction shall be a Permitted Encumbrance, then such Restriction shall be
deemed a Permitted Encumbrance and Seller shall indemnify and hold a Purchaser
Indemnified Party (as hereinafter defined) harmless from, against and in respect
of any and all loss, liability, and expense (including without limitation,
reasonable expenses and attorney's fees) suffered or incurred by a Purchaser
Indemnified Party by reason of such Restriction (the "Section 6.12 Losses").
Notwithstanding the foregoing, Seller shall have no liability under this Section
6.12 to indemnify a Purchaser Indemnified Party for any Section 6.12 Losses
related to an Acquired Facility until the aggregate costs for such Section 6.12
Losses related to such Acquired Facility exceed $5,000.
6.13 Real Property. Seller shall obtain at its own cost and expense a
commitment for an ALTA Owner's policy of title insurance for each parcel of
Owned Real Property dated subsequent to the date hereof (the "Title
Commitments") which shall be issued by Lawyers Title Insurance Corporation (the
"Title Company"), showing all exceptions to title including, but not limited to,
all covenants, conditions, restrictions, reservations, easements, rights and
rights-of-way, liens and other matters of record, in each case, as are
reasonably acceptable to Purchaser, and shall include proper searches for
bankruptcies, judgments and state and federal tax liens affecting such Owned
Real Property or Seller or any Affiliate and shall also include a commitment to
endorse the final policy of title insurance to be issued to Purchaser by the
Title Company (the "Title Policy") so as to (i) delete the standard exceptions
(including exceptions for parties in possession, except for tenants under the
Real Property Leases; unrecorded instruments; survey matters; and mechanic's
liens); (ii) insure that certain parcels of real estate comprising such Owned
Real Property are contiguous, as applicable and available; and (iii) insure that
the Owned Real Property complies with all existing covenants, conditions and
restrictions of record and that the instruments creating any such restrictions
do not contain any forfeiture of title or right of re-entry provisions, as
applicable and available (collectively, the "Title Endorsements"). All such
endorsements and agreements shall be customary and standard and in form and
substance reasonably satisfactory to Purchaser.
6.14 Supply Contracts. Following the Closing, Seller will provide Purchaser
with the opportunity to purchase under the Standard Agreement and Artex
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Agreement during the terms thereof at the prices thereunder, provided that
Purchaser shall have no obligation to purchase any amounts under either such
Agreement.
ARTICLE 7
COVENANTS OF PURCHASER
Purchaser covenants and agrees with Seller as follows:
7.1 HSR Act Filings. Purchaser shall promptly make any filing required
under the HSR Act and shall use its best efforts to promptly respond to any
request for additional information under the HSR Act.
7.2 Employee Matters.
(a) Purchaser shall offer employment, on an at-will basis (except
that any Employee of the Business covered by any Collective Bargaining
Agreement shall be hired pursuant to the terms and conditions set forth in
that Collective Bargaining Agreement) effective on the Closing Date, to all
regular full-time and part-time employees of the Business who are actively
employed at an Acquired Facility and to those sales representatives who are
assigned to an Acquired Facility in addition to those employees identified
on Schedule 7.2(a), in each case, as of the Closing Date (the "Employees of
the Business"). Purchaser also may interview any of the individuals named
on the list provided by Seller to Purchaser prior to the date hereof (the
"Home Office Employees") and may hire any such Home Office Employees as it
shall determine in its sole discretion. (The Employees of the Business and
those Home Office Employees hired by Purchaser as of the Closing Date are
referred to collectively herein as the "Hired Employees"). Purchaser shall
not be required to assume any compensation, fringe benefit or retirement
plan heretofore provided by Seller or retain for a certain time any
Employees of the Business hired by Purchaser.
(b) With respect to Employees of the Business who are not actively
employed in the Business on the Closing Date for any reason (other than
routine illness, vacation or personal days), Purchaser agrees to hire each
such Employee of the Business at such time as they are medically authorized
to return to full time employment, as evidenced by appropriate physician
authorization or, in the case of any leave of absence unrelated to a
medical condition, upon expiration of such leave of absence. In connection
therewith, from and after the Closing Date, and until such time as any such
Employee of the Business is able to return to full time employment with
Purchaser as contemplated by the preceding sentence, Seller agrees that it
will continue to pay the costs of those fringe benefits as to which such
employee is otherwise entitled as of the Closing Date and with respect to
which Seller is making such payments as of the Closing Date; provided,
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however, with respect to any Employee of the Business who is receiving
workers' compensation benefits as of the Closing Date, Seller shall pay or
reimburse to Purchaser the full cost of any wage differential adjustment
such employee might otherwise be entitled to upon his or her commencement
of employment with Purchaser, if such return is on any restricted status or
modified duty, with Seller's payment or reimbursement obligation to
continue from and after the date that Purchaser hires any such employee
through the date such employee is able to work without any such
restriction.
(c) Purchaser agrees, with respect to the Hired Employees only, to
provide the severance benefits set forth on Schedule 7.2(c) hereto to any
salaried, exempt employees of the Business who are terminated by Purchaser
within the first year following the Closing, except with respect to any
such salaried, exempt employees of the Business who become employed for at
least 180 days by another business entity that has acquired from Purchaser
the Acquired Facility at which such employees worked.
(d) To the extent any "withdrawal liability" (as described in Section
4201 of ERISA) would otherwise be due from Seller as a result of the
purchase and sale of the Business and the Purchased Assets as contemplated
hereby, Purchaser and Seller shall comply with the requirements of Section
4204 of ERISA, in order that no "complete withdrawal" (as described in
Section 4203 of ERISA) or "partial withdrawal" (as described in Section
4205 of ERISA) by Seller from any of the "multiemployer plans" (as defined
in Section 4001(a)(3) of ERISA, listed on Schedule 4.12) to which Seller
contributes on behalf of certain of the Employees of the Business pursuant
to the Collective Bargaining Agreements, occurs as a result of such
purchase and sale. After the Closing Date, but only to the extent required
to comply with Section 4204 of ERISA, Purchaser shall incur an "obligation
to contribute" (as described in Section 4212 of ERISA) to each of such
multiemployer plans with respect to the Business and the Purchased Assets,
for substantially the same number of "contribution base units" (as
described in Section 4001(a)(11) of ERISA) for which Seller had such an
obligation to contribute with respect thereto on or before the Closing
Date. If Purchaser decides to obtain from the PBGC and/or any of such
multiemployer plans an exemption or variance from the requirements of
Section 4204(a)(1)(B) of ERISA, Seller shall use reasonable efforts to
assist Purchaser, including the timely delivery to Purchaser of any
information held by or available to Seller and required by PBGC or any such
plan in connection with Purchaser's request for such exemption or variance.
If a satisfactory exemption or variance is not obtained, Purchaser shall
post a bond, establish an escrow or provide other security acceptable to
such multiemployer plans, and the amount and terms and conditions of such
security shall satisfy the requirements of Section 4204 of ERISA. Until
such a satisfactory exemption or variance is obtained, Purchaser shall post
a bond, establish an escrow, or provide other security acceptable to the
multiemployer plans, if required. If Purchaser withdraws from any of such
plans in a complete or partial withdrawal with respect to the Business and
the Purchased Assets during the first five plan years commencing with the
first plan year beginning after the Closing and is required, but fails to
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make a withdrawal liability payment as a result thereof, Seller shall be
secondarily liable to such multiemployer plan, to the extent required by
Section 4204(a)(2) of ERISA, but not to exceed the amount of any withdrawal
liability Seller would have had to such plan with respect to the sale of
the Business, but for Section 4204 of ERISA (the "Withdrawal Liability").
However, as between Purchaser and Seller, Purchaser shall be liable for
such Withdrawal Liability, and Purchaser shall also indemnify and hold
harmless Seller against any payment to any of such multiemployer plans,
either by Seller or through any bond or escrow provided by Seller, of
Seller's secondary withdrawal liability under Section 4204(a)(2) that is
caused by Purchaser's failure to make any withdrawal liability payment to
such a plan when due; provided, however, that the aggregate amount for
which Purchaser shall be required to indemnify Seller under this Section
7.2(d) shall not exceed $5,000,000, and Seller shall be liable for any
Withdrawal Liability in excess of such amount and shall indemnify and hold
harmless Purchaser against liability in excess of $5,000,000.
(e) Effective as of the Closing Date, Purchaser will make available
to the Hired Employees, health insurance coverage that will provide health
insurance to each such Hired Employee and, with respect to their
dependents, if so elected, immediately upon employment with Purchaser,
without regard to any preexisting condition, exclusion or other limitation,
but otherwise subject to the terms and conditions of such plan or policy.
7.3 Financing. Purchaser shall use its reasonable best efforts to have
finalized all documentation relating to its financing arrangements (but
excluding actual funding) two weeks prior to the Closing Date, on substantially
the terms and subject to the conditions set forth on Exhibit C hereto.
7.4 Other Matters. Purchaser agrees to use its reasonable best efforts to
have any purchaser in any Linen Plant Sale assume each and every Real Estate
Lease relating to any Acquired Facility included within such transaction.
7.5 Title Policy. To the extent Purchaser has any claim against Seller with
respect to any parcel of Owned Real Property and such claim may otherwise be
insured against under a Title Policy, Purchaser agrees that it will seek to
recover such claim against Seller only if, and only to the extent that such
claim is denied by the Title Company.
ARTICLE 8
CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATIONS
The obligations of Purchaser to consummate the transactions contemplated by
this Agreement are subject to the satisfaction of each of the following
conditions prior to or at the Closing, unless specifically waived in writing by
Purchaser in advance:
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8.1 Representations and Warranties. The representations and warranties of
Seller contained in this Agreement shall be true and correct in all material
respects as of the date of this Agreement and as of the Closing Date as though
the Closing Date had been substituted for the date of this Agreement throughout
such representations and warranties, except that any such representation or
warranty made as of a specified date (other than the date hereof) need only be
true as of such date, Seller shall have duly performed and complied in all
material respects with all covenants and agreements and satisfied all conditions
required by this Agreement to be performed, complied with or satisfied by Seller
prior to or at the Closing, including without limitation delivery of the Update
Schedule, and Seller shall have delivered its certificate to Purchaser to such
effect.
8.2 Absence of Litigation. No order, writ, injunction or decree which is
binding on Purchaser and/or Seller or the Real Property and which prohibits
Purchaser and/or Seller from consummating the transactions contemplated hereby
shall be in effect, provided that Purchaser shall have used its reasonable
efforts to have any such order, writ, injunction or decree lifted and the same
shall not have been lifted by any such court or governmental or regulatory
agency. No claim, action, suit or proceeding shall be pending or threatened
against Purchaser or Seller, the Business or the Real Property which, if
adversely determined, would prevent the consummation of the transaction and
other actions contemplated hereby or result in the payment of substantial
damages as a result of such action and for which the other party is not willing
to provide indemnification.
8.3 Consents and Approvals. All governmental and regulatory approvals
requisite or appropriate to the consummation of the transactions contemplated
herein shall have been obtained (or all applicable waiting periods shall have
expired) including, without limitation, those approvals required under HSR, but
excluding any customer Contract with any governmental agency or entity, and such
consents or approvals shall remain in full force and effect.
8.4 Opinion of Counsel to Seller. Purchaser shall have received from King &
Spalding, an opinion, dated the Closing Date, substantially in the form of
Exhibit D ("Seller Counsel's Legal Opinion").
8.5 Absence of Changes. During the period from January 31, 1997 to and
including the Closing Date, there will not have been (i) any increase in
encumbrances against the Owned Real Property (which is not an Excluded
Liability) or (ii) subject to Section 3.9, change in the condition (financial or
other), properties, assets, or liabilities representing Assumed Liabilities,
whether or not insured, which increases or changes would have a Material Adverse
Effect. For purposes of the preceding sentence, the parties acknowledge that:
(i) no Material Adverse Effect shall be deemed to have occurred if any Acquired
Facility representing all or part, or otherwise associated with a Linen Plant
shall be damaged or destroyed by fire or other casualty prior to the Closing;
(ii) there shall be no resulting violation of Section 4.18 (a) or (f) hereof by
reason of such fire or casualty; and (iii) with respect to such damage or
destruction only, the condition set forth in this Section 8.5 shall be deemed
satisfied. Notwithstanding the foregoing, in the event of any such fire or
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casualty involving an Acquired Facility representing all or part, or otherwise
associated with a Linen Plant, Purchaser thereafter have the option, in its sole
and absolute discretion, to exclude such Acquired Facilities from the
transactions contemplated by this Agreement with a corresponding reduction in
each of the Base Price, Total Base Revenue Value and the Base Amount
definitions, in each case, to the full extent of the related revenue and/or
total values for such Acquired Facilities, as derived from Schedule 3.7 hereto.
8.6 Delivery of Financials.
(a) Seller shall have prepared and delivered those financial
statements described on Schedule 8.6(a) hereof, and shall also provide
Purchaser with such additional reasonable detail or supporting information
to support any pro forma adjustments that would be necessary in connection
with the presentation of the Audited Financial Statements and Reviewed
Financial Statements (as such terms are defined on Schedule 8.6(a)) and
would further enable Purchaser to make a reasonable comparison of Seller's
adjusted operating profit as set forth in the Financial Statements and the
Interim Statements.
(b) The Statement of Revenue and Operating Expenses included as a
part of each of the Audited Financial Statements and the Reviewed Financial
Statements shall not reflect any material adjustments, restatements or
reclassifications as compared to the corresponding Financial Statements and
the Interim Statements, except for: accruals for compensation, commission
or bonuses that exceed a twelve month period with respect to any fiscal
year covered by the Audited Financial Statements, but only with respect to
the portion of such accruals in excess of a twelve month period.
8.7 Real Estate. Purchaser shall have received special or limited warranty
deeds conveying the Owned Real Property (collectively, the "Deeds") to Purchaser
and such Deeds shall be customary and standard and in form and substance
reasonably satisfactory to Purchaser.
8.8 Financing. Purchaser shall have received financing on substantially the
terms and subject to the conditions set forth on Exhibit C hereto.
ARTICLE 9
CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS
The obligations of Seller to consummate the transactions contemplated by
this Agreement are subject to the satisfaction prior to or at the Closing of
each of the following conditions, unless specifically waived in writing by
Seller in advance:
9.1 Representations and Warranties. The representations and warranties of
Purchaser contained in this Agreement shall be true and complete in all material
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respects as of the date of this Agreement and as of the Closing Date as though
the Closing Date had been substituted for the date of this Agreement throughout
such representations and warranties, except that any such representation or
warranty made as of a specified date (other than the date hereof) need only be
true as of such date, Purchaser shall have duly performed and complied in all
material respects with all covenants, agreements and satisfied all conditions
required by this Agreement to be performed and complied with or satisfied by it
prior to or at the Closing, and Purchaser shall have delivered its certificate
to Seller to such effects.
9.2 Absence of Litigation. No order, writ, injunction or decree which is
binding on Purchaser and/or Seller and which prohibits Purchaser and/or Seller
from consummating the transactions contemplated hereby shall be in effect;
provided that Seller shall have used its reasonable efforts to have any such
order, writ, injunction or decree lifted and the same shall not have been lifted
by any such court or governmental or regulatory agency. No claim, action, suit
or proceeding shall be pending or threatened against Purchaser or Seller which,
if adversely determined, would prevent the consummation of the transaction and
other actions contemplated hereby or result in the payment of substantial
damages as a result of such action and for which the other party is not willing
to provide indemnification.
9.3 Consents and Approvals. All governmental and regulatory approvals
requisite or appropriate to the consummation of the transactions contemplated
herein shall have been obtained (or all applicable waiting periods shall have
expired) including, without limitation, those approvals required under HSR, and
shall remain in full force and effect.
9.4 Opinion of Counsel to Purchaser. Seller shall have received from Xxxxxx
Xxxxxxx Xxxxxx & Brand, a Professional Limited Liability Partnership, counsel to
Purchaser, an opinion, dated the Closing Date, in the form of Exhibit E
("Purchaser Counsel's Legal Opinion").
ARTICLE 10
CLOSING
10.1 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Seller, NSI Center,
0000 Xxxxxxxxx Xxxxxx, X.X., Xxxxxxx, Xxxxxxx, xx July 15, 1997 at 9:00 a.m.,
local time, or at such other location or later date or time as mutually agreed
upon by the parties. The date of the Closing is referred to herein as the
"Closing Date."
10.2 Deliveries by Seller. At the Closing, provided all conditions
described in Article 9 have been satisfied, Seller shall execute and deliver to
Purchaser the following: (i) the Deeds; (ii) the Title Commitments in the form
previously delivered to Purchaser with respect to the Owned Real Property, with
appropriate changes to conform to the title insurance practices in each state,
as reasonably required by the Title Company; (iii) an Assignment and Assumption
of Leases (the "Assignment and Assumption of Leases") in the form of Exhibit F
with respect to the Real Property Leases; (iv) transfer tax forms, withholding
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forms and similar documents required to be completed and submitted in connection
with the transfer of the Owned Real Property; (v) a Xxxx of Sale and General
Assignment in the form of Exhibit G hereto; (vi) the Subcontract Agreements;
(vii) the Transition Services Agreement; (viii) Seller Counsel's Legal Opinion;
(ix) the certificate required by Section 8.1 hereof; (x) consents, approvals and
authorizations obtained by Seller pursuant to Section 6.3 as of the Closing
Date; and (xi) such other instruments of conveyance reasonably requested by
Purchaser or the Title Company.
10.3 Deliveries by Purchaser. At the Closing, provided all conditions
described in Article 8 have been satisfied, Purchaser shall deliver to Seller a
wire transfer of immediately available federal funds in an aggregate amount
equal to the Cash Purchase Price as calculated pursuant to Section 3.2 and
execute and deliver to Seller (i) an Assumption Agreement in the form attached
hereto as Exhibit H; (ii) the Subcontract Agreements; (iii) the Transition
Services Agreement; (iv) transfer tax forms and similar documents required to be
completed and submitted in connection with the transfer of the Owned Real
Property; (v) Purchaser Counsel's Legal Opinion; (vi) the certificate required
by Section 9.1 hereof; and (vii) such other instruments or documents as may be
reasonably requested by Seller to reflect the assumption of the Assumed
Liabilities and the consummation of the transactions contemplated hereunder.
ARTICLE 11
TERMINATION PRIOR TO CLOSING
11.1 Termination of Agreement. This Agreement may be
terminated at any time prior to the Closing:
(a) by the mutual written consent of Seller and
Purchaser;
(b) by Seller, if the conditions set forth in Article 9 hereof (to
the extent compliance or performance thereunder is not within the control
of Seller) shall not have been complied with or performed and such
noncompliance or nonperformance shall not have been cured or eliminated (or
by its nature cannot be cured or eliminated) by Purchaser on or before
August 31, 1997 (or such later date as may be mutually agreed upon by the
parties);
(c) by Purchaser, if the conditions set forth in Article 8 hereof (to
the extent compliance or performance thereunder is not within the control
of Purchaser) shall not have been complied with or performed and such
noncompliance or nonperformance shall not have been cured or eliminated (or
by its nature cannot be cured or eliminated) by Seller on or before August
31, 1997 (or such later date as may be mutually agreed upon by the
parties);
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(d) by either Seller or Purchaser, if there shall be any order, writ,
injunction or decree of any court or govern mental or regulatory agency
binding on Purchaser and/or Seller, which prohibits Purchaser and/or Seller
from consummating the transactions contemplated hereby, provided that
Purchaser and Seller shall have used reasonable efforts to have any such
order, writ, injunction or decree lifted and the same shall not have been
lifted within ninety (90) days after entry, by any such court or
governmental or regulatory agency; or
(e) by either Seller or Purchaser, if the Closing has not occurred on
or prior to August 31, 1997 for any reason other than delay or
nonperformance of the party seeking such termination.
11.2 Termination of Obligations. Termination of this Agreement pursuant to
this Article 11 shall terminate all obligations of the parties hereunder, except
for the obligations under this Section 11.2 and Section 14.1 and except that
such termination shall not constitute a waiver of any rights any party may have
by reason of a breach by the other party of any agreement or covenant in this
Agreement which occurs prior to such termination.
ARTICLE 12
TRANSITION SERVICES AGREEMENT
Seller and Purchaser shall enter into and execute at and as of the Closing
Date, a Transition Services Agreement substantially in accordance with Exhibit I
(the "Transition Services Agreement"). In connection therewith, and because any
breach or anticipated breach of the Transition Services Agreement, when
executed, could result in immediate and irreparable harm and injury to either
Purchaser or Seller, and for which no adequate remedy at law exists, Seller and
Purchaser agree that the non-breaching party shall be entitled to relief in
equity to enjoin temporarily and/or permanently such breach or anticipated
breach and to seek any and all other legal and equitable remedies to which such
non-breaching party may be entitled.
ARTICLE 13
INDEMNIFICATION
13.1 Indemnification by Seller. Seller shall indemnify and hold Purchaser
and each of its successors, assigns and affiliates and each officer and director
thereof (a "Purchaser Indemnified Party") harmless from, against and in respect
of any and all loss, liability, expense (including, without limitation,
reasonable expenses of investigation and reasonable attorney's fees and expenses
in connection with any action, suit or proceeding brought against a Purchaser
Indemnified Party) or "Damage" (as hereinafter defined) suffered or incurred by
a Purchaser Indemnified Party ("Purchaser Losses") by reason of (i) any breach
of a representation or warranty by Seller contained herein or in any
certificate, list, Exhibit or Schedule or other document delivered to Purchaser
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under or pursuant to Section 10.2 of this Agreement; (ii) failure of Seller to
fulfill or perform any covenant, agreement or obligation of Seller contained
herein; (iii) any Withdrawal Liability in excess of the limitations set forth in
Section 7.2; or (iv) any Excluded Liability.
13.2 Indemnification by Purchaser. Purchaser shall indemnify and hold
Seller and each of its successors, assigns and affiliates and each officer and
director thereof (a "Seller Indemnified Party") harmless from, against and in
respect of any and all loss, liability, expense (including, without limitation,
reasonable expenses of investigation and reasonable attorney's fees and expenses
in connection with any action, suit or proceeding brought against a Seller
Indemnified Party) or Damage suffered or incurred by a Seller Indemnified Party
("Seller Losses") by reason of (i) any material breach of a representation or
warranty by Purchaser contained herein or in any certificate, list, Exhibit or
Schedule or other document delivered to Seller pursuant to Section 10.3 of this
Agreement; (ii) failure of Purchaser to fulfill or perform any covenant,
agreement or obligation of Purchaser contained herein; (iii) any Assumed
Liability; (iv) any Withdrawal Liability, but subject to the limitations set
forth in Section 7.2; or (v) Purchaser's operation of the Business subsequent to
the Closing Date.
13.3 Definitions. As used in this Article 13, the term "Damages" means all
actual damages suffered or incurred by a Purchaser Indemnified Party or a Seller
Indemnified Party (as applicable) including, without limitation, all
compensatory damages, but excluding any consequential or punitive damages.
13.4 Third Party Claims.
(a) In order for any Purchaser Indemnified Party or any Seller
Indemnified Party to be entitled to any indemnification provided for under
this Article 13 in respect of, arising out of or involving a claim made by
any person other than Seller or Purchaser or their respective successors,
assigns or affiliates (a "Third Party Claim") against such indemnified
party, such indemnified party must notify the indemnifying party in writing
of the Third Party Claim promptly after receipt by such indemnified party
of written notice of the Third Party Claim; provided, however, that failure
of any indemnified party to give notice as provided in this Section 13.4
shall not relieve an indemnifying party of its obligations hereunder except
to the extent that the indemnifying party actually has been prejudiced by
such failure to give notice. Thereafter, the indemnified party shall
deliver to the indemnifying party, as promptly as practicable and, in any
event, within ten (10) days after such indemnified party's receipt thereof,
copies of all notices and other documents relating to the Third Party
Claim.
(b) If a Third Party Claim is made against an indemnified party, the
indemnifying party shall be entitled to participate in the defense thereof
and, if it so chooses within thirty (30) days after receipt of notice of
the Third Party Claim, to assume or cause the assumption of the defense
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thereof with counsel selected by the indemnifying party (provided such
counsel is not reasonably objected to by the indemnified party). Should the
indemnifying party elect to assume or cause the assumption of the defense
of a Third Party Claim, the indemnifying party will not be liable to the
indemnified party for any legal expenses subsequently incurred by the
indemnified party in connection with the defense thereof unless the
indemnifying party has agreed in writing to pay such fees and expenses or,
in the reasonable judgment of the indemnified party, a conflict of interest
between the indemnified party and the indemnifying party exists with
respect to such claim. If the indemnifying party elects so to participate
in or assume the defense of a Third Party Claim, the indemnified party will
fully cooperate with the indemnifying party in connection with such
defense.
(c) If the indemnifying party assumes the defense of a Third Party
Claim, then, as long as the indemnifying party is reasonably contesting
such claim in good faith, the indemnified party shall not admit any
liability with respect to, or settle, compromise or discharge, any Third
Party Claim without the indemnifying party's prior written consent, and the
indemnified party will agree to any settlement, compromise or discharge of
the Third Party Claim the indemnifying party may recommend which releases
the indemnified party unconditionally and completely in connection with
such Third Party Claim and which does not materially adversely affect the
indemnified party. Notwithstanding the foregoing, the indemnified party
shall have the right to pay or settle any such claim, provided that in such
event it shall waive any right to indemnity therefor by the indemnifying
party. If the indemnifying party assumes the defense of a Third Party
Claim, then the indemnifying party shall not, without the indemnified
party's prior written consent, settle or compromise any Third Party Claim
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 Third Party Claim.
(d) If the indemnifying party does not assume the defense of any such
Third Party Claim, the indemnified party may defend the same in such manner
as it may reasonably deem appropriate, including, but not limited to,
settling such claim or litigation after giving five (5) business days'
prior written notice to the indemnifying party setting forth the terms and
conditions of settlement.
(e) The indemnifying party shall in no case settle or compromise any
Third Party Claim or consent to the entry of any judgment, in either case
for other than solely money damages, without the consent of the indemnified
party if such settlement, compromise or judgment would adversely affect the
rights of the indemnified party in any continuing manner.
(f) The amount that an indemnifying party shall be obligated to
reimburse an indemnified party in connection with any Third Party Claim
shall be reduced by the amount of the insurance benefits, if any, obtained
by the indemnified party by reason of the matter giving rise to such claim.
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13.5 Deductible for Seller's Obligations; Maximum Liability. Subject to
adjustment as provided in Section 3.3 hereof, Seller's obligations under Section
13.1 shall not be payable by Seller unless and until the amount thereof exceeds
$3,000,000 Dollars ($3,000,000) (the "Deductible") in the aggregate and
thereafter only to the extent of such excess, provided however that there shall
be no Deductible and Seller shall be liable in full with respect to Purchaser
Losses as a result of (a) intentional misrepresentation (b) fraud, (c) any
breach of Seller's representation in Section 4.12(a)(iv) and 4.10(d) hereof, (d)
any Withdrawal Liability in excess of the limitations set forth in Section
7.2(d); (e) Seller's failure to comply with Section 7.2(b); and (e) the Excluded
Liabilities. In no event shall the liability of Seller under Section 13.1 exceed
One Hundred Forty-Five Million Dollars ($145,000,000).
13.6 Claims Period. For purposes of this Agreement, a "Claims Period" shall
be the period during which a claim for indemnification may be asserted under
this Agreement by an indemnified party, which period shall (i) begin on the
earlier of the Closing Date or the date of any termination of this Agreement
pursuant to Article 11, and (ii) terminate as follows:
(a) with respect to Purchaser Losses arising under Section 13.1(i) or
13.1(ii), the Claims Period shall terminate on the second anniversary of
the Closing Date;
(b) with respect to Purchaser Losses arising under Section 13.1(iii)
or (iv) or as a result of intentional misrepresentation or fraud by Seller,
the Claims Period shall remain open indefinitely;
(c) with respect to Seller Losses arising under Section 13.2 (i) or
13.2(ii), the Claims Period shall terminate on the second anniversary of
the Closing Date;
(d) with respect to Seller Losses arising under Section 13.2 (iii),
13.2 (iv) or 13.2 (v) or as a result of intentional misrepresentation or
fraud by Purchaser, the Claims Period shall remain open indefinitely.
Any claims for indemnification pursuant to this Article 13 must be made in
writing by the indemnified party to the indemnifying party on or prior to the
termination of the applicable Claims Period. All claims for indemnification for
which proper notification of the indemnifying party shall have been made by the
indemnified party prior to the close of business on the last day of the
applicable Claims Period shall continue to survive and shall remain a basis for
indemnity hereunder until such claim is finally resolved or disposed of in
accordance with the terms hereof.
ARTICLE 14
MISCELLANEOUS
14.1 Publicity. Seller and Purchaser agree that they will not make any
press releases or other announcements prior to or at the time of Closing with
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respect to the transactions contemplated hereby, except as required by
applicable law, without the prior approval of the other party, which approval
will not be unreasonably withheld.
14.2 Bulk Sales Laws. Purchaser hereby waives compliance by Seller with
the provisions of any bulk sales or similar transfer laws, to the extent
applicable.
14.3 Best Efforts. Each party hereto agrees to use best efforts to cause
the conditions to its obligations hereunder to be satisfied on or prior to the
Closing Date and otherwise to consummate the transactions contemplated by the
Agreement.
14.4 Further Acts and Assurances. Seller shall, at any time and from time
to time at and after the Closing, upon request of Purchaser and without
additional consideration, take any and all steps reasonably necessary to place
Purchaser in possession and operating control of the Purchased Assets, and
Seller will do, execute, acknowledge and deliver, or will cause to be done,
executed, acknowledged and delivered, all such further acts, deeds, assignments,
transfers, conveyances and assurances as may be reasonably required for (i) the
more effective transferring and confirming to Purchaser or for reducing to its
possession, any or all of the Purchased Assets or (ii) in connection with any
Linen Plant Sale, including by way of illustration, the execution of any
document evidencing any sublicense under Section 1.3, the assignment of
Purchaser's rights under Section 6.5 hereof or any assignment of the Transition
Services Agreement as contemplated under Section 6.10. Purchaser shall, at any
time and from time to time at and after the Closing, upon request of Seller and
without additional consideration, take any and all steps reasonably necessary to
evidence completely the assumption of the Assumed Liabilities and the Withdrawal
Liability, and Purchaser will do, execute, acknowledge and deliver, or will
cause to be done, executed, acknowledged and delivered, all such further
assumption agreements and documents as may be reasonably necessary or desirable
to evidence more effectively the assumption of the Assumed Liabilities and the
Withdrawal Liability by Purchaser. In addition to the foregoing, Seller shall,
without additional consideration, provide access to information and such other
reasonable assistance and cooperation as will assist Purchaser in connection
with any Linen Plant Sale.
Purchaser shall, at any time and from time to time, at and after the
Closing, upon request of Seller and without additional consideration execute and
deliver all such documents as may be reasonably necessary to terminate Seller's
liability for any unemployment compensation payments required to be made to any
state (or a fund maintained by it) after the Closing Date with respect to any
Hired Employees.
14.5 Notices. Any notice or other document to be given hereunder by any
party hereto to any other party hereto shall be in writing and delivered by
courier or by facsimile transmission, receipt confirmed, or sent by any express
mail service, postage or fees prepaid,
If to Seller:
National Service Industries, Inc.
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NSI Center
0000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxxxx
Executive Vice President and Chief Financial Officer
Facsimile No: (000) 000-0000
With a copy to:
National Service Industries, Inc.
NSI Center
0000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Attention: Mr. Xxxxx Xxxx
Executive Vice President, Administration and Counsel
Facsimile No: (000) 000-0000
If to Purchaser:
G&K Services, Inc.
0000 Xxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xx. Xxxxxxx Hope,
President and Chief Executive Officer
Facsimile No: (000) 000-0000
With a copy to:
Xxxxxx Xxxxxxx Xxxxxx & Brand,
a Professional Limited Liability Partnership
0000 Xxxxxxx Xxxxxx
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxx X. Sell, Esq.
Facsimile No: (000) 000-0000
or at such other address or number for a party as shall be specified by like
notice. Any notice which is delivered in the manner provided herein shall be
deemed to have been duly given to the party to whom it is directed upon actual
receipt by such party or its agent.
14.6 Construction. This Agreement shall be construed in accordance with and
governed by the laws of the State of Minnesota. No provision of this Agreement
shall be construed against or interpreted to the disadvantage of any party
hereto by any court or other governmental or judicial authority or by any board
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of arbitrators by reason of such party or its counsel having or being deemed to
have structured or drafted such provision. All references in this Agreement to
Article(s), Section(s), Schedule(s) or Exhibit(s) shall refer to Article(s),
Section(s), Schedule(s) or Exhibit(s) of this Agreement. The parties have
participated jointly in the negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties, and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any of the provisions of this Agreement.
14.7 Knowledge. Whenever used herein, the term "knowledge" with respect to
any subject matter shall mean the actual knowledge of any one of the persons
identified on Schedule 14.7, after due and diligent inquiry which included (i)
appropriate review of Seller or an Affiliate's physical operation and records
and (ii) making inquiry of any employees who had or would have been likely to
have information with respect to such subject matter, including, without
limitation, inquiry of regional vice presidents of Seller and each branch
manager of any Acquired Facility.
14.8 Attachments. Every Schedule and Exhibit referred to in this Agreement
is incorporated in this Agreement by this reference. List 1 immediately
following the table of contents hereto contains a list of such Schedules and
Exhibits.
14.9 Dispute Resolution. Any dispute among the parties hereto before the
Closing, other than any dispute arising under Sections 3.3 (which shall be
resolved in accordance with Section 3.6), may be resolved by application to any
court of competent jurisdiction. Any dispute among the parties hereto arising on
or after the Closing Date, other than any dispute arising under Sections 3.3,
3.5 and 3.7 which shall be resolved in accordance with Section 3.6, shall be
resolved in accordance with the arbitration provisions of this Section 14.9.
(a) The parties shall attempt in good faith to resolve any dispute
arising out of or relating to this Agreement, the breach, termination or
validity thereof promptly by negotiation between executives who have
authority to settle the controversy. Any party may give the other written
notice that a dispute exists (a "Notice of Dispute"). The Notice of Dispute
shall include a statement of such party's position. Within twenty (20)
business days of the delivery of the Notice of Dispute, executives of both
parties shall meet at a mutually acceptable time and place, and thereafter
as long as they both reasonably deem necessary, to exchange relevant
information and attempt to resolve the dispute. If the matter has not been
resolved within 45 days of the disputing party's Notice of Dispute, or if
the parties fail to meet within 20 days, either party may initiate
arbitration of the controversy or claim as provided hereinafter.
If a negotiator intends to be accompanied at a meeting by an
attorney, the other negotiator shall be given at least three working days'
notice of such intention and may also be accompanied by an attorney. All
negotiations pursuant to this clause are confidential and shall be treated
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as compromise and settlement negotiations for purposes of the Federal Rules
of Evidence and state rules of evidence.
(b) Any controversy or claim arising out of or relating to this
Agreement, the breach, termination or validity thereof, or the transactions
contemplated herein, if not settled by negotiation as provided in paragraph
(a) of this Section 14.9, shall be settled by arbitration in Chicago,
Illinois, in accordance with the CPR Rules for Non- Administered
Arbitration of Business Disputes, by three arbitrators. Each party shall
choose one arbitrator and the two arbitrators so chosen shall choose a
third arbitrator who must be a retired judge of a state or federal court of
the United States. The arbitrators shall be appointed as provided by CPR
Rule 5, Selection of Arbitrators by the parties. The arbitration procedure
shall be governed by the United States Arbitration Act, 9 U.S.C. 1-16, and
the award rendered by the arbitrators shall be final and binding on the
parties and may be entered in any court having jurisdiction thereof.
(c) Each party shall have discovery rights as provided by the Federal
Rules of Civil Procedure within the limits imposed by the arbitrators;
provided, however, that all such discovery shall be commenced and concluded
within ninety (90) days of the selection of the third arbitrator.
(d) It is the intent of the parties that any arbitration shall be
concluded as quickly as reasonably practicable. Unless the parties
otherwise agree, once commenced, the hearing on the disputed matters shall
be held four days a week until concluded, with each hearing date to begin
at 9:00 a.m. and to conclude at 5:00 p.m. The arbitrator shall use all
reasonable efforts to issue the final award or awards within a period of
five (5) business days after closure of the proceedings. Failure of the
arbitrator to meet the time limits of this Section 14.9(d) shall not be a
basis for challenging the award.
(e) The arbitrators shall instruct the non-prevailing parties to pay
all costs of the proceedings, including the fees and expenses of the
arbitrators and the reasonable attorneys' fees and expenses of the
prevailing parties. If the arbitrators determine that there is not a
prevailing party, each party shall be instructed to bear its own costs and
to pay one-half of the fees and expenses of the arbitrators.
14.10 No Reliance. Except for the parties hereto and their assignees
permitted under Section 14.13:
(a) no third party is entitled to rely on any of the representations,
warranties and agreements of Seller contained in this Agreement;
(b) Seller assumes no liability to any third party because of any
reliance on the representations, warranties and agreements of any of the
parties contained in this Agreement; and
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(c) no other person or entity shall acquire any legal or equitable
rights or remedies under this Agreement.
14.11 Saturdays, Sundays and Legal Holidays. If the time period by which
any acts or payments required hereunder must be performed or paid expires on a
Saturday, Sunday or legal holiday, then such time period shall be automatically
extended to the close of business on the next regularly scheduled business day.
14.12 Confidentiality. The provisions of that certain Confidentiality
Agreement between Seller and Purchaser dated January 15, 1997, shall remain in
full force and effect; provided, however, that upon consummation of the Closing,
the Confidentiality Agreement shall be terminated.
14.13 Parties Bound by Agreement. The terms, conditions and obligations of
this Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective successors and assigns. Except as hereinafter
provided, without the prior written consent of the other party, no party hereto
may assign such party's rights, duties or obligations hereunder or any part
thereof to any other person or entity prior to Closing, except that Purchaser
may assign any or all of its rights, duties or obligations hereunder or any part
thereof to any wholly owned subsidiary, including without limitation, G&K
Services Co. Notwithstanding the foregoing, Purchaser shall continue to be
primarily responsible for the performance of any obligations under this
Agreement irrespective of any such permitted assignment.
14.14 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
and all of which shall constitute the same instrument.
14.15 Headings. The headings of the Articles and Sections of this Agreement
are inserted for convenience only and shall not be deemed to constitute part of
this Agreement or to affect the construction hereof.
14.16 Modification and Waiver. Any of the terms or conditions of this
Agreement may be waived in writing at any time by the party which is entitled to
the benefits thereof. No waiver of any of the provisions of this Agreement shall
be deemed to or shall constitute a waiver of any other provision hereof. No
delay or failure on the part of any party hereto to exercise any right, power or
privilege hereunder shall operate as a waiver thereof; nor shall any waiver on
the part of any party hereto of any right, power or privilege hereunder operate
as a waiver of any other right, power or privilege hereunder; nor shall any
single or partial exercise of any right, power, or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege hereunder.
14.17 Severability. Any provision hereof which is prohibited or
unenforceable in any jurisdiction will, as to such jurisdiction, be ineffective
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to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction will not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by law, the parties hereto waive any
provision of law which renders any such provision prohibited or unenforceable in
any respect.
14.18 Agreement as to Certain Matters. The parties understand and agree
that, for purposes of the attorney-client privilege and attorney work product
doctrine, the parties have a common legal interest in the review of the proposed
transaction by the Department of Justice and in matters in which Seller is
involved in litigation or in which Seller anticipates litigation with a third
party. Specifically, each party expects that there will be (A) communications to
or discussions with or under the direction of the attorneys of the other party
in connection with the preparation of material to be submitted to the Department
of Justice or other governmental agency in response to any request for
information by said Department or other governmental agency , which
communications or discussions are for the purpose of obtaining legal advice in
connection therewith, and (B) communications between Seller's attorneys and
Purchaser or its attorneys, concerning matters in which Seller is involved in
litigation or in which Seller anticipates litigation with a third party, in
connection with due diligence investigations conducted by Purchaser's attorneys.
No such activity shall constitute a waiver of the attorney-client privilege or
attorney work product doctrine with respect to information disclosed thereby,
and such information shall not be disclosed to any third party unless authorized
by the parties hereto or required by law.
14.19 Access to Records. For a period of six (6) years after the Closing
Date, Seller and its attorneys, accountants and representatives shall, upon
reasonable advance notice to Purchaser during normal business hours and without
disruption of the business of Purchaser, have reasonable access to all books,
accounts, records, documents and information relating to Seller for any periods
prior to the Closing Date in the possession or custody of Purchaser (or
Purchaser's agents) for the purpose of examining and making copies of all or any
portion of such properties relating to Seller. In addition, Seller and its
attorneys and representatives shall, upon reasonable advance notice to
Purchaser, during normal business hours and without disruption to the business
of Purchaser, have reasonable access to the Hired Employees with respect to the
defense of any on-going litigation or future claim against Seller. A
representative of Purchaser may be present at all times during such access and
investigation by Seller or its attorneys, accountants and representatives.
14.20 Entire Agreement. This Agreement and the Schedules and Exhibits
hereto, together with the documents and instruments delivered pursuant hereto,
constitute the entire agreement between the parties hereto pertaining to the
subject matter hereof and supersede all prior and contemporaneous agreements,
understandings, negotiations and discussions, whether written or oral, of the
parties hereto; provided, however, that this provision is not intended to
abrogate any other written agreement between the parties executed with or after
this Agreement or any written agreement pertaining to another subject matter. No
supplement, modification or waiver of the terms or conditions of this Agreement
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shall be binding unless executed in writing by authorized representatives of the
parties hereto.
14.21 No Express or Implied Warranties. Except for the express
representations or warranties set forth in this Agreement, Purchaser
acknowledges and agrees that the Purchased Assets are being conveyed to
Purchaser hereunder "AS IS, WHERE IS AND WITH ALL FAULTS," without any other
representation or warranty by Seller.
[THE BALANCE OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered, all on and as of the date first written above.
NATIONAL SERVICE INDUSTRIES, INC.
a Delaware corporation
By: s/ Xxxxx Xxxxxx
Name: Xxxxx Xxxxxx
Title Executive Vice President and
Chief Financial Officer
NATIONAL SERVICE INDUSTRIES, INC.
a Georgia corporation
By: s/ Xxxxx Xxxxxx
Name: Xxxxx Xxxxxx
Title Executive Vice President and
Chief Financial Officer
NSI ENTERPRISES, INC.
a California corporation
By: s/ Xxxxx Xxxxxx
Name: Xxxxx Xxxxxx
Title Executive Vice President and
Chief Financial Officer
G&K SERVICES, INC.
a Minnesota corporation
By: s/ Xxxxxxx Hope
Name: Xxxxxxx Hope
Title: President
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Exhibit A
Acquired Facilities
Industrial Plants:
Plant Plant # Service Centers
Abilene, TX 706 Brownwood, TX (drop point)
San Angelo, TX
Atlanta, GA 000 Xxxxxxxx, XX
Xxxxx, XX
Xxxxxxx, XX 615 Cartersville, GA
Chattanooga, TN
Oakwood (Gainesville), GA
Augusta, GA 000 Xxxxxxxxx (Xxxxxxxx), XX
Xxxxxxxxxx, XX (drop point)
Birmingham, AL 000 Xxxxxxxxxx, XX
Xxxxxxxxxx, XX (8 13th Street)
Fort Xxxxx, FL 0000
Xxxx Xxxxx, XX 000
Xxxx Xxxxx, XX 000 Xxxxxxxxx, XX
Xxxxxx, XX
Xxxxxx, XX 357
Xxxxxxxxxx, XX 0000 Xxxxxxxxxx, XX
Xxxxxxxxx, XX 0000
Xxxxxxxx, XX 4710 Lakeland, FL (4345 US 92)
Louisville, KY 3010 Cookeville, TN
Lexington, KY
Nashville, TN
Memphis, TN 791
Mobile, AL 614 Laurel, MS
Xxxxxx, XX 0000
Xxxxxxxxxx, XX 618 *Headland (Dothan), AL
Montgomery, AL (Coosa St.)
Opelika, AL
Odessa, TX 000 Xxxxx, XX
Xxx Xxxxx, XX 5910
Xxxxxxx, XX 0000
Xxxxxxxxxx, XX 560
Page 74
Linen Plants:
Plant Plant # Service Centers
Xxxxxx, XX 000 Xxxxx, XX (drop point)
Houston, TX
San Antonio, TX
Columbus, IN 000 Xxxxxxxxxxxx, XX
Xxxxxx Xxxxxxx, XX 000 XxXxxxx, XX
Xxxx Xxxxx, XX 000
Xxxxxxx, XX 461
Portland, ME 133 2 Portland, ME locations
(35 & 34 Diamond)
Hampden (Bangor), ME
Tewksbury (Lowell), MA
Utica, NY 000 XxXxxx (Xxxxxxxx), XX
Xxxxxx, XX
Oneonta, NY
Schenectady, NY
Warsaw, IN 000 Xxxx Xxxxxxx, XX
Xxxxxxxxxx, XX 3910 Brooklin Heights (Cleveland), OH
Canton, OH
Columbus, OH
XxXxxx, PA
Erie, PA
Pittsburgh, PA
Zanesville, OH
*Ebensburg, PA
* "Excluded Asset" unless Purchaser provides notice to Seller in accordance
with Section 1.2(g) of its intention to include in the "Purchased Assets."
2
