EXHIBIT 10.1
SETTLEMENT AGREEMENT
This Settlement Agreement, entered into this 23rd day of September,
1999, is by and between Illinois Tool Works Inc., a Delaware corporation
("ITW"), on the one hand, and Xxxxx Corporation, a Delaware corporation
("Xxxxx"), on the other hand (hereinafter collectively referred to as "the
Parties"), by and through their respective undersigned representatives.
WHEREAS, the Parties entered into an Agreement of Purchase and Sales of
Assets and Stock ("the Purchase Agreement"), dated August 31, 1998, whereby
ITW purchased certain assets of Xxxxx (formerly Xxxxx-Xxxxx) used in the
conduct of its conventional spray coating business. Paragraph 2.3 of the
Purchase Agreement provided for a "Purchase Price Adjustment" under certain
circumstances. Paragraph 9 of the Purchase Agreement, provided for the
indemnification of ITW under certain circumstances with respect to
uncollected "Accounts Receivable" purchased by ITW. Sometime after the
execution of the Purchase Agreement, a dispute arose between the Parties
regarding these two provisions.
WHEREAS, contemporaneously with the Purchase Agreement, on September 30,
1998, the Parties entered into a Supply Agreement which provided for the
purchase of certain specified lines of products to be supplied by each of the
Parties to the other following the closing of the asset purchase under the
Purchase Agreement. A dispute has arisen between the Parties concerning their
respective compliance with the Supply Agreement.
WHEREAS, on Xxxxx 00, 0000, XXX filed suit seeking a preliminary
injunction against Xxxxx in the lawsuit encaptioned ILLINOIS TOOL WORKS INC.
VS. XXXXX CORPORATION, in the Circuit Court of Xxxx County, Illinois,
Chancery Division as Case No. 99CH 04122. This suit was voluntarily dismissed
under Illinois Rule of Civil Procedure Section 5/2-1009(a) on April 28,
1999.
WHEREAS, the Parties have continued to discuss and negotiate with
respect to these disputes in an effort to reach an amicable resolution of
some or all of them.
WHEREAS, the Parties believe that their respective positions have merit,
but recognize
and acknowledge the risks and uncertainties inherent in prosecuting any
action, and also the expense and length of continued proceedings necessary to
prosecute a civil action through trial and any appeals. Accordingly, it is
now the desire of the Parties to avoid continued or additional expenses and
protracted litigation, and to effect a full and final settlement of
controversies regarding the Purchase Price Adjustment and Accounts Receivable
on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants herein, the
Parties agree as follows:
PURCHASE PRICE ADJUSTMENT
1. Xxxxx agrees to pay to ITW and ITW agrees to accept in full
settlement of any claim for a Purchase Price Adjustment under the Purchase
Agreement, six million one hundred sixty-seven thousand three hundred
twenty-six dollars ($6,167,326) (the "Settlement Payment"). The Settlement
Payment shall be paid by Xxxxx in sixteen (16) quarterly installments in the
amounts and on the dates set forth below.
INSTALLMENT DUE AMOUNT DUE
----------------------------- -------------
1) September 30, 1999 $385,457.88
2) December 31, 1999 $385,457.88
3) March 31, 2000 $385,457.88
4) June 30, 2000 $385,457.88
5) September 30, 2000 $385,457.88
INSTALLMENT DUE AMOUNT DUE
---------------------------- --------------
6) December 31, 2000 $385,457.88
7) March 31, 2001 $385,457.88
8) June 30, 2001 $385,457.88
9) September 30, 2001 $385,457.88
10) December 31, 2001 $385,457.88
11) March 31, 2002 $385,457.88
12) June 30, 2002 $385,457.88
13) September 30, 2002 $385,457.88
14) December 31, 2002 $385,457.88
15) March 31, 2003 $385,457.88
16) June 30, 2003 $385,457.80
Payment shall be made by wire transfer to an account for the benefit of
Illinois Tool Works Inc. pursuant to instructions provided by ITW or as ITW
otherwise directs in writing. For purposes of this Settlement Agreement, the
Purchase Price Adjustment which is settled hereunder shall
include all of the issues heretofore raised or asserted by either Party which
are identified on Schedule A attached hereto.
2. Xxxxx agrees that within twenty (20) days after written demand by
ITW, the entire Settlement Payment shall be immediately due and payable in
full by cash, wire transfer or cashier's check made payable to Illinois Tool
Works Inc., if (i) Xxxxx is late in the payment of any installment of the
Settlement Payment, so long as it has been given notice of its nonpayment and
such payment has not been made within twenty (20) days after receipt by Xxxxx
of such notice or (ii) Xxxxx enters into and the closing of the transaction
takes place under an agreement for the sale of fifty-percent (50%) or more of
Xxxxx' assets or stock to an unrelated third party.
ACCOUNTS RECEIVABLE
3. In full settlement of any claim by ITW with respect to the
indemnification for uncollected Accounts Receivable under or with respect to
the Purchase Agreement:
(a) ITW agrees to and does hereby assign to Xxxxx all rights,
title and interest with respect to the Accounts Receivable listed on Schedule
B attached hereto.
(b) Xxxxx agrees to pay to ITW an amount calculated as shown on
page 1 of Schedule B in the sum of nine hundred eighty-one thousand six
hundred forty-two dollars ($981,642) within five (5) days of the execution of
this Agreement.
4. ITW represents and warrants that:
(a) ITW has allocated all cash or other payments with respect to
the said Accounts Receivable as contemporaneously directed by the customer
and, if not otherwise directed by the customer, to the oldest outstanding
invoices in chronological order.
(b) The amount shown on Schedule B as outstanding for each Account
Receivable is accurate to the extent that the information supplied to ITW by
Xxxxx on its books and records, as of September 30, 1998, is accurate, as
adjusted in accordance with GAAP or Paragraph 4(a) above for collections on
such Accounts by ITW. ITW has not forgiven any portion of any of the subject
Accounts Receivable. To the extent that ITW has not properly adjusted any
portion of the Accounts Receivable on Schedule B in accordance with GAAP or
Paragraph 4(a) above
Xxxxx is entitled to a reimbursement from ITW for such differences within 30
days of providing ITW proof of any such improper adjustment.
5. ITW will promptly report and turn over to Xxxxx any amounts and
provide copies of any communications received with respect to the Accounts
Receivable after the date hereof. ITW agrees to make available and allow
Xxxxx reasonable access during normal business hours upon reasonable notice
to ITW (including former Xxxxx-Xxxxx and Binks-ITW) the appropriate
personnel, correspondence, records, and files related to the Accounts
Receivable, and to provide such other assistance (including making ITW
personnel available to testify in related judicial or other proceedings) as
Xxxxx may reasonably request in furtherance of its collection of said
Accounts Receivable. If ITW replacement parts and/or related service is
reasonably requested by Xxxxx to facilitate collection of any Account
Receivable, ITW will provide such parts and/or service and xxxx Xxxxx for
ITW's standard affiliate pricing for such parts or service.
SPECIFIC RELEASE AND COVENANT NOT TO XXX
6. ITW, on behalf of itself and its respective successors and assigns,
shall be conclusively deemed to have fully, finally and forever released,
relinquished, remised and discharged Xxxxx, and its parents, subsidiaries,
affiliated companies, partners and joint venturers, and their successors and
assignees, and their past, present and future principals, agents, officers,
directors, employees, attorneys and representatives, and each of them, from
liability on or for any and all claims, actions, causes of action, suits,
covenants, contracts, representations, warranties, agreements, promises,
guarantees, indemnities, accounts, reckonings, bonds, controversies,
liabilities, obligations, damages, debts, sums of money bills, executions,
judgments and demands whatsoever, whether liquidated or unliquidated,
contingent or fixed, known or unknown, foreseen or unforeseen, past, present
or future, or at law or equity, that relate specifically to the Purchase
Price Adjustment and/or specifically to the indemnification of ITW for
uncollected Accounts Receivable as provided in this Agreement and no other
matters.
7. Xxxxx, on behalf of itself and its respective successors and
assigns, shall be conclusively deemed to have fully, finally and forever
released, relinquished, remised and
discharged ITW, and its parents, subsidiaries, affiliated companies, partners
and joint venturers, and their successors and assignees, and their past,
present and future principals, agents, officers, directors, employees,
attorneys and representatives, and each of them, from liability on or for any
and all claims, actions, causes of action, suits, covenants, contracts,
representations, warranties, agreements, promises, guarantees, indemnities,
accounts, reckonings, bonds, controversies, liabilities, obligations,
damages, debts, sums of money bills, executions, judgments and demands
whatsoever, whether liquidated or unliquidated, contingent or fixed, known or
unknown, foreseen or unforeseen, past, present or future, or at law or
equity, that relate specifically to the Purchase Price Adjustment and/or
specifically to the indemnification of ITW for uncollected Accounts
Receivable as provided in this Agreement and no other matters.
8. The Parties, and their respective successors and assigns, covenant
to not, at any time, xxx, instigate, institute, cause to institute, assist in
instituting or permit to be instituted, by, through or on their behalf, any
legal, equitable, or administrative proceedings or to otherwise allege or
assert any of the claims or causes of action covered by the specific releases
set forth in Paragraphs 6 and 7, above, against any other Party hereto,
including its parent companies, subsidiary companies, affiliated companies,
partners, joint venturers, and their successors and assigns, and their past,
present and future officers, directors, employees, agents, attorneys and
representatives, and each of them; save and except for the enforcement or the
determination of their respective rights or obligations under or with respect
to this Settlement Agreement.
9. Except for the matters expressly released by the terms thereof, no
release or covenant not to xxx contained herein shall be construed as a
waiver, release or covenant relating to any currently pending claim or to any
claim that may arise hereafter in the normal course and pursuant to the
Purchase Agreement, including but not limited to issues relating to the
Supply Agreement.
10. The Parties warrant and represent to each other that as of the date
of execution of this Settlement Agreement, they have no present intention of
instituting any litigation against each other with respect to any matter.
Notwithstanding the foregoing sentence, the Parties
acknowledge that they have raised certain issues under the Supply Agreement,
which each Party may elect to pursue under the remedies provided by the
Supply Agreement. In addition, the Parties acknowledge that certain claims
other than those resolved by this Settlement Agreement may arise under the
terms of the Purchase Agreement, which claims shall be resolved pursuant to
the Purchase Agreement. Further, this Settlement Agreement shall not preclude
any action by Xxxxx to recover claimed damages (for which ITW denies any
liability), if any, arising out of the commencement of said Case Xx. 00 XX
00000. If any amounts become due and payable to Xxxxx by ITW as a result of
any arbitration or judicial proceeding relating to such claims by Xxxxx, in
addition to all other remedies available to it, Xxxxx shall have the right,
upon written notice to ITW, to offset all or any portion of such unpaid
amounts against the next ensuing installment(s) of the Purchase Price
Adjustment.
OTHER PROVISIONS
11. This Settlement Agreement (including the specific release and
covenant not to xxx) shall bind and inure to the benefit of the parties
hereto, and their past, present and future officers, directors, employees,
predecessors, successors, parents, affiliates, subsidiaries, heirs,
executors, administrators, agents, attorneys, assigns and each of them.
12. Each of the Parties to this Settlement Agreement warrants,
covenants and agrees that the person executing this Settlement Agreement on
their behalf is authorized and has power to enter into and to execute this
Settlement Agreement for and on behalf of the Parties he or she represents.
13. Neither this Settlement Agreement nor any of its provisions nor any
negotiations or proceedings pursuant to the Parties' settlement is an
admission or concession of liability or wrongdoing of any nature on the part
of any Party hereto, or on the part of anyone acting on behalf of any Party
to this Settlement Agreement, and each Party has specifically denied any such
liability or wrongdoing.
14. This Settlement Agreement may be executed in separate counterpart
originals, each of which shall be considered a complete original agreement.
15. This Settlement Agreement shall be construed in accordance with the
laws of the State of Illinois.
16. This Settlement Agreement has been jointly negotiated and drafted.
The language of this Settlement Agreement shall be construed as a whole
according to its fair meaning and not strictly construed in favor of or
against any party hereto.
17. This Settlement Agreement sets forth the entire, fully-integrated
agreement between the Parties hereto regarding the subjects contained herein,
and supersedes any and all prior agreements or understandings among the
Parties pertaining to the subject matter hereof. No additional agreements or
understandings shall be inferred from any of the terms of this Settlement
Agreement, as all agreements and understandings are solely and expressly set
forth herein. No change, modification, amendment, waiver, termination or
discharge of this Settlement Agreement shall be effective or binding unless
made in writing and executed by each of the Parties hereto. Except as stated
herein, this Settlement Agreement does not modify or amend any provision of
the Purchase Agreement.
18. The Parties acknowledge receipt of consideration which they agree
and represent is good, fair and sufficient for the giving of the releases and
covenant not to xxx and their entering into this Settlement Agreement.
19. All notices and other communications hereunder shall be in writing
and shall be deemed given if delivered personally or mailed by registered or
certified mail (return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
If to Purchaser: Illinois Tool Works Inc.
Attention: Corporate Secretary
Telecopy: (847) 657-4392
0000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
With a copy to: Xxxxxxxx & Xxxxx
Attn: J. Xxxxxx Xxxxxxxxx
Telecopy: (000) 000-0000
000 X. Xxxxxxxx Xx.
Xxxxxxx, XX 00000
If to Seller: Binks Xxxxx Corporation
Attn: President
Telecopy: (000) 000-0000
0000 Xxxxxxx Xxxxxx
Xxxxxxxx Xxxx, Xxxxxxxx 00000
With a copy to: Vedder, Price, Xxxxxxx & Kammholz
Attn: Xxx X. Xxxxxx
Telecopy: (000) 000-0000
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
20. Each of the Parties agrees to execute and deliver such further
documents and perform such other actions as may be necessary or appropriate
to implement and carry out the intent of this Settlement Agreement and the
transactions contemplated hereunder, including the assignment and delivery to
Xxxxx of assets, if any, that were acquired by ITW and are to be returned to
Xxxxx in connection with the settlement of the Purchase Price Adjustment.
(SIGNATURES FOLLOW)
IN WITNESS WHEREOF, the Parties have caused this Settlement Agreement to be
executed (where applicable, by their duly authorized officers) as of the date
and year first above written.
ILLINOIS TOOL WORKS INC., XXXXX CORPORATION,
a Delaware corporation a Delaware corporation
By: /s/ Xxxxx Xxxxx By: /s/ Xxxxxx X. Xxxxx
Its: Executive Vice President Its: President
