-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BhbHN9rGaKkOcaT81Nf9OnPEpfX6qCEyajJnOn9PNwoLuqpzGw0qqb2HMKoZ3T+2 wLi/y34aH5ESga/bhf/0SA== 0001047469-97-001488.txt : 19971024 0001047469-97-001488.hdr.sgml : 19971024 ACCESSION NUMBER: 0001047469-97-001488 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19971023 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19971023 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: QUIXOTE CORP CENTRAL INDEX KEY: 0000032870 STANDARD INDUSTRIAL CLASSIFICATION: PHONOGRAPH RECORDS & PRERECORDED AUDIO TAPES & DISKS [3652] IRS NUMBER: 362675371 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-08123 FILM NUMBER: 97699763 BUSINESS ADDRESS: STREET 1: ONE E WACKER DR STREET 2: STE 3000 CITY: CHICAGO STATE: IL ZIP: 60601 BUSINESS PHONE: 3124676755 MAIL ADDRESS: STREET 1: ONE EAST WACKER DRIVE CITY: CHICAGO STATE: IL ZIP: 60601 FORMER COMPANY: FORMER CONFORMED NAME: ENERGY ABSORPTION SYSTEMS INC DATE OF NAME CHANGE: 19800815 8-K 1 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report: October 23, 1997 QUIXOTE CORPORATION ----------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware ----------------------------------------------------------------- (State or other jurisdiction of incorporation) 0-7903 36-2675371 - ------------------------ ------------------ (Commission File Number) (I.R.S. Employer Identification Number) One East Wacker Drive, Suite 3000, Chicago, IL 60601 ----------------------------------------------------------------- (Address of principal executive office) (zip code) (312)467-6755 ----------------------------------------------------------------- (Registrant's telephone number, including area code) Item. 2 Acquisition of Assets On October 10, 1997, the Registrant and its wholly-owned subsidiary, TranSafe Corporation, acquired certain assets and assumed certain contracts from Roadway Safety Service, Inc., Momentum Management, Inc., and Fitch Barrel Corporation with respect to the Fitch Universal Module, the React 350 Crash Cushion and the Dragnet Vehicle Arresting Barrier product lines. As part of this acquisition, TranSafe acquired certain Roadway distributorships and entered into a consulting agreement with the principal shareholder of the Roadway business. The purchased assets have been used by the sellers in the Roadway crash attenuating business, which competes with the Registrant's subsidiary, Energy Absorption Systems, Inc. In its fiscal year ended June 30, 1997, Roadway had $6,887,000 in sales. The purchase price for this business was $10,220,000, of which $4,685,000 was paid in cash at closing and other payments, the present value of which is $5,535,000, will be paid over the next 10 years using a discount rate of 8.5%. The Registrant used its own funds to make this acquisition. The Registrant intends to use the assets and rights TranSafe acquired to continue to operate the Roadway business separate from its Energy Absorption Systems operation. The purchase was effective October 1, 1997. In a separate transaction, TranSafe Corporation obtained certain licensing rights from Roadway Safety Systems, Inc. and Robert A. Mileti for the Fitch Universal Module. In connection with this acquisition, the Registrant's subsidiary, Energy Absorption Systems, Inc., agreed to settle litigation entitled Energy Absorption Systems, Inc. v. Roadway Safety Service, Inc., Roadway Safety Systems, Inc. and Robert A. Mileti, Northern District of Illinois (Civil Action No. 93 C 2147). This case was filed in 1993 involving allegations of patent infringement and a counterclaim of patent invalidity. The Registrant has also acquired a 30% interest in an early stage venture with the principal shareholder of Roadway Safety Service, Inc. to exploit energy absorbing technology in the motorized vehicle racetrack business. The Registrant has evaluated this acquisition under the significant subsidiary rules and, as a result, has determined that this is not considered to be the acquisition of a "significant subsidiary" and therefore no separate company financial statements or pro forma financial information will be filed. Item 7. Financial Statements and Exhibits. (c) Exhibits. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. QUIXOTE CORPORATION ------------------- /S/ Daniel P. Gorey ------------------- By: Daniel P. Gorey Its: Vice President, Chief Financial Officer & Treasurer Date: October 23, 1997 Index of Exhibits Exhibits Description - -------- --------------------------------------------------------------- 2.1 Asset Purchase Agreement made October 10, 1997, to be effective October 1, 1997, by and between Quixote Corporation, TranSafe Corporation, Roadway Safety Service, Inc., Momentum Management, Inc., and Fitch Barrier Corporation. 2.2 Exclusive License Agreement made October 10, 1997, to be effective October 1, 1997, by and between Robert A. Mileti, Roadway Safety Systems, Inc., Quixote Corporation and TranSafe Corporation. 2.3 Consulting Agreement made October 10, 1997, to be effective October 1, 1997, by and between TranSafe Corporation and E. Scott Walter. 2.4 Promissory Note dated October 10, 1997 from TranSafe Corporation to Jay Walter and J. C. Walter Company, Inc. in the amount of $900,000, issued in connection with the acquisition of distributorship. 2.5 Promissory Note dated October 10, 1997 from TranSafe Corporation to Rigg Warton and RFW Sales in the amount of $900,000, issued in connection with the acquisition of distributorship. EX-2.1 2 EX 2.1 ASSET PURCHASE AGREEMENT EXHIBIT 2.1 ASSET PURCHASE AGREEMENT Agreement entered into as of October 10, 1997, to be effective October 1, 1997, by and between Quixote Corporation, a Delaware corporation, and its wholly-owned subsidiary, Transafe Corporation, a Delaware corporation ("Transafe") (Quixote and Transafe, together are referred to as the "Buyer"), and Roadway Safety Service, Inc., a New York corporation ("Roadway"), Momentum Management, Inc., a New York corporation ("Momentum"), and Fitch Barrier Corporation, a New York corporation ("FBC") (Roadway, Momentum and FBC together are referred to as the "Seller"). RECITALS Roadway, Momentum and FBC own certain assets and have certain contractual rights and obligations utilized in connection with the highway safety business known as "Roadway". Buyer wishes to acquire Seller's Fitch Universal Module, the React 350 Crash Cushion and the Dragnet Vehicle Arresting Barrier product lines and the exclusive and world-wide rights to those product lines (the "Business"). The shareholders of Roadway, Momentum and FBC have agreed to sell the Business to Buyer. An Affiliate of the Buyer, Roadway and its Affiliates are currently involved in litigation which the Parties wish to settle. This Agreement contemplates a transaction in which the Buyer will purchase certain of the assets and assume certain of the liabilities of the Business in return for Cash, and the Parties and their Affiliates will settle certain litigation and enter into certain other arrangements all as provided in this Agreement. AGREEMENT Now, therefore, in consideration of the premises and the mutual promises herein made, and in consideration of the representations, warranties, and covenants herein contained, the Parties agree as follows. 1. Definitions. "Acquired Assets" means all of the right, title, and interest that the Seller possesses and has the right to transfer in and to all of the Seller's assets or the assets that the Seller uses in the Ordinary Course in the Business, including but not limited to, all of its (a) FHWA and state approvals, permits and licenses; (b) tangible personal property (such as machinery, equipment, inventories of raw materials and supplies, manufactured and purchased parts, goods in process and finished goods, finished goods, work-in process, automobiles, trucks, tractors, trailers, molds, tools, jigs, and dies) wherever located; (c) Intellectual Property, goodwill associated therewith, licenses and sublicenses granted and obtained with respect thereto, and rights thereunder, remedies against infringements thereof, and rights to protection of interests therein under the laws of all jurisdictions; (d) customer contracts in progress, purchase orders, quotes, manufacturer and supplier contracts, indentures, agreements and mortgages for borrowed money, instruments of indebtedness, Security Interests, guaranties, sales representative agreements, other similar arrangements, and rights thereunder, whether or not incurred in the Ordinary Course; (e) in- process engineering, design and test information; (f) customer and distributor information; (g) franchises, approvals, permits, licenses, orders, registrations, certificates, variances, and similar rights obtained from governments and governmental agencies; (h) books, records, ledgers, files, documents, correspondence, lists, blue prints, drawings, and specifications, creative materials, advertising and promotional materials, studies, reports, and other printed or written materials; (i) all computer software used in the Business; (j) the Roadway Web site; and (k) all other assets necessary to operate the Business other than Excluded Assets. "Adverse Consequences" means all charges, complaints, actions, suits, proceedings, hearings, investigations, claims, demands, judgments, orders, decrees, stipulations, injunctions, damages, dues, penalties, fines, costs, amounts paid in settlement, liabilities, obligations, Taxes, liens, losses, expenses, and fees, including all attorneys' fees and court costs. "Affiliate" has the meaning set forth in Rule 12b-2 of the regulations promulgated under the Securities Exchange Act. "Affiliated Group" means a group of Affiliates filing a consolidated Tax Return. "Assumed Contracts" means those contracts, whether written or oral, identified on Schedule 1. "Assumed Liabilities" means only those liabilities and obligations of the Seller post-Closing which arise pursuant to the Assumed Contracts, and the liabilities of the Business which have arisen in the Ordinary Course since August 31, 1997. "Basis" means any past or present fact, situation, circumstances, status, condition, activity, practice, plan, occurrence, event, incident, action, failure to act, or transaction that forms or could form the basis for any specified consequence. "Business" has the meaning set forth in the preface above. "Buyer" has the meaning set forth in the preface above. "Cash" means cash. "Closing" has the meaning set forth in Section 2(d) below. "Closing Date" has the meaning set forth in Section 2(d) below. "Code" means the Internal Revenue Code of 1986, as amended. "Confidential Information" means any information concerning the Business that the Seller has treated as confidential and proprietary. "Contracts" has the meaning set forth in Section 3(p) below. "Disclosure Schedule" has the meaning set forth in Section 3 below. "Employee Benefit Plan" means any (a) non-qualified deferred compensation or retirement plan or arrangement which is an Employee Pension Benefit Plan, (b) qualified defined contribution retirement plan or arrangement which is an Employee Pension Benefit Plan, (c) qualified defined benefit retirement plan or arrangement which is an Employee Pension Benefit Plan (including any Multi-employer Plan), or (d) Employee Welfare Benefit Plan or material fringe benefit plan or program. "Employee Pension Benefit Plan" has the meaning set forth in ERISA Sec. 3(2). "Employee Welfare Benefit Plan" has the meaning set forth in ERISA Sec. 3(1). "Environmental Laws" means any applicable federal, state, or local statutory or common law, ordinance, rule, or regulation relating to: (i) pollution or protection of the environment; (ii) nuisance or trespass; (iii) emissions, discharges, releases, or threatened releases of any hazardous substance into the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata); or (iv) the manufacture, processing, distribution, use, treatment, storage, disposal, transportation, or handling of hazardous substances. The term "Environmental Laws" shall include, but shall not be limited to: the Clean Air Act; the Clean Water Act; the Occupational Safety and Health Act; the Comprehensive Environmental Response, Compensation, and Liability Act of 1980; the Superfund Amendments and Reauthorization Act of 1986; the Resource Conservation and Recovery Act; the Hazardous and Solid Waste Amendments of 1984; and the Toxic Substances Control Act. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. "Excluded Assets" means all receivables generated by Seller from the Business through the Closing Date; Cash; the corporate name and trade "Momentum Management;" all real estate owned or used by the Seller; the corporate charter, qualifications to conduct business as a foreign corporation, arrangements with registered agents relating to foreign qualifications, taxpayer and other identification numbers, seals, minute books, stock transfer books, blank stock certificates, and other documents relating to the organization, maintenance, and existence of any of Roadway, Momentum or FBC, as a corporation; any of the rights of the Seller under this Agreement (or under any side agreement between the Seller on the one hand and the Buyer on the other hand entered into on or after the date of this Agreement); and rights in and with respect to the assets associated with Seller's Employee Benefit Plans. "FBC" has the meaning set forth in the preface above. "Financial Statements" has the meaning set forth in Section 3(e) below. "GAAP" means United States generally accepted accounting principles as in effect from time to time. "Indemnified Party" has the meaning set forth in Section 9(c) below. "Indemnifying Party" has the meaning set forth in Section 9(c) below. "Intellectual Property" means all (a) patents, patent applications, patent disclosures, and improvements thereto; (b) trademarks, service marks, trade dress, logos, trade names, and corporate names and registrations and applications for registration thereof; (c) copyrights and registrations and applications for registration thereof; (d) mask works and registrations and applications for registration thereof; (e) computer software, data, and documentation; (f) trade secrets and confidential business information (including ideas, formulas, compositions, inventions (whether patentable or unpatentable and whether or not reduced to practice), know-how, manufacturing and production processes and techniques, research and development information, shop rights, drawings, specifications, designs, plans, proposals, technical data, copyrightable works, financial, marketing, and business data, pricing and cost information, business and marketing plans, and customer and supplier lists and information); (g) other proprietary rights; (h) copies and tangible embodiments thereof (in whatever form or medium); and (i) the product names "Fitch Barrier", "Fitch Sand Barrel System", "Fitch Inertial Barrier", "Roadway", "React 350", and "Dragnet Vehicle Arresting Barrier". "Knowledge" means actual knowledge after reasonable investigation. "Momentum" has the meaning set forth in the preface above. 3 "Most Recent Fiscal Month End" has the meaning set forth in Section 3(e) below. "Most Recent Fiscal Year End" has the meaning set forth in Section 3(e) below. "Multi-employer Plan" has the meaning set forth in ERISA Sec. 3(37). "Ordinary Course" means the ordinary course of business consistent with past custom and practice (including with respect to quantity and frequency). "Parties" has the meaning set forth in the preface above. "Party" means any one of the Parties. "PBGC" means the Pension Benefit Guaranty Corporation. "Person" means any individual, corporation (including any non-profit corporation), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization, labor union, or other entity or governmental body. "Purchase Price" has the meaning set forth in Section 2(c) below. "Reportable Event" has the meaning set forth in ERISA Sec. 4043. "Retained Liabilities" means any liabilities of the Seller that are not Assumed Liabilities, including but not limited to: (a) all payables generated by Seller from the Business through the Closing Date; (b) all liabilities of the businesses of Roadway, Momentum, FBC and affiliates and predecessors, arising from the manufacture, sale and products by Roadway, Momentum and FBC as of the Closing Date, including but not limited to, product liability; (c) all liabilities and obligation of the Seller, whether known or unknown, whether absolute or contingent, whether liquidated or unliquidated, and whether due or to become due, that are not identified as "Assumed Liabilities"; (d) all liabilities of the Seller for sales, use and other taxes arising in the Seller's Ordinary Course of business; (e) all liabilities and obligations of the Seller under the licenses, sublicenses, leases, subleases, contracts and other arrangements referred to in the definition of "Acquired Assets" and the Assumed Contracts which are incurred prior to or on the Closing Date; (f) all product warranty obligations for products manufactured or sold prior to the Closing Date; (g) all liabilities to the employees of the Seller; (h) all other liabilities and obligations of the Seller set forth in the Disclosure Schedule represented in the Financial Statements that are not expressly identified as "Assumed Liabilities"; (i) any liability or obligation of the Seller under this Agreement or under any side agreement between the Seller on one hand and the Buyer on the other hand, entered into on or after the date of this Agreement; (j) all liabilities of the Seller for unpaid Taxes; (k) all liabilities of the Seller for costs and expenses (including legal fees and expenses) incurred in connection with this Agreement or the consummation of the transactions contemplated hereby; (l) any liability specifically retained by Seller in Section 8 hereof; (m) any and all debt owed by the Seller to the Seller Stockholders and its Affiliates; (n) all liabilities of Seller for transfer, sales, use and other Taxes arising in connection with the consummation of the transactions contemplated in this Agreement (including any Income Taxes arising because Seller is transferring the Acquired Assets); and (o) all liabilities and obligations of Seller under its Employee Benefit Plans. "Roadway" has the meaning set forth in the preface above. "Securities Act" means the Securities Act of 1933, as amended. 4 "Securities Exchange Act" means the Securities Exchange Act of 1934, as amended. "Security Interest" means any mortgage, pledge, security interest, encumbrance, charge, or other lien, other than (a) mechanic's, materialmen's, and similar liens, (b) liens for Taxes not yet due and payable or for Taxes that the taxpayer is contesting in good faith through appropriate proceedings, (c) liens arising under worker's compensation, unemployment insurance, social security, retirement, and similar legislation, (d) liens arising in connection with sales of foreign receivables, (e) liens on goods in transit incurred pursuant to documentary letters of credit, (f) purchase money liens and liens securing rental payments under capital lease arrangements, and (g) other liens arising in the Ordinary Course of Business and not incurred in connection with the borrowing of money. "Seller" has the meaning set forth in the preface above. "Seller 401(k) Plan" means the 401(k) Profit Sharing Plan of Seller in place prior to the Closing. "Seller Stockholders" means the stockholders of Roadway, Momentum and FBC. "Subsidiary" means any corporation, limited liability company, partnership or other entity with respect to which another person or entity has the power to vote or direct the voting of sufficient securities to elect a majority of directors, or managers or managing partners, or the equivalent persons. "Tax" means any federal, state, local, or foreign tax. "Tax Return" means any return, declaration, report, claim for refunds, or information return or statement relating to Taxes, including any schedule or attachment thereto. "Threatened" means, with respect to a claim, proceeding, dispute, action, or other matter, if any demand or statement has been made (orally or in writing) or any notice has been given (orally or in writing), or if any other event has occurred or any other circumstances exist, that would lead a prudent Person to conclude that such a claim, proceeding, dispute, action, or other matter is likely to be asserted, commenced, taken, or otherwise pursued in the future. 2. Purchase and Sale. (a) Purchase of Acquired Assets. On and subject to the terms and conditions of this Agreement, the Buyer agrees to purchase from the Seller, and the Seller agrees to sell, transfer, convey, and deliver to Buyer, all of the Acquired Assets, free and clear of all Security Interests, at the Closing for the consideration specified in this Section 2. The Seller shall retain the Excluded Assets. (b) Assumption of Assumed Contracts and the Assumed Liabilities. On and subject to the terms and conditions of this Agreement, the Buyer agrees to assume and become responsible for, and the Seller agrees to assign to Buyer, all of the Assumed Contracts and the Assumed Liabilities at the Closing. The Buyer shall not assume and shall not have any responsibility with respect to the Retained Liabilities. (c) Purchase Price. (i) Subject to the adjustments provided in this Section 2(c), the Buyer agrees to pay to the Seller at the Closing $3.85 million (the "Purchase Price") in Cash, payable by wire transfer or delivery of other immediately available funds. 5 (ii) The Cash payable at Closing shall be reduced by the amount of any earnest money deposited with the Seller by the Buyer. (iii) The Cash Purchase Price shall be reduced dollar-for- dollar for any monies the Buyer is required to pay third parties to obtain the Acquired Assets, including the Assumed Contracts, on the terms and conditions provided in this Agreement and Schedule 2. (d) The Closing. The closing of the transactions contemplated by this Agreement (the "Closing") shall take place at the offices of McBride Baker & Coles, 500 West Madison Street, 40th Floor, Chicago, Illinois 60661-2511, commencing at 9:00 a.m. local time on the second business day following the satisfaction or waiver of all conditions to the obligations of the Parties to consummate the transactions contemplated hereby or such other date as the Parties may mutually determine (the "Closing Date"); provided, however, that the Closing Date shall be no later than January 15, 1998. (e) Deliveries at the Closing. At the Closing, (i) the Seller will deliver to the Buyer the various certificates, instruments, and documents referred to in Section 6(a) below; (ii) the Buyer will deliver to the Seller the various certificates, instruments, and documents referred to in Section 6(b) below; (iii) the Seller will execute, acknowledge (if appropriate), and deliver to the Buyer (A) assignments (including personal property and Intellectual Property transfer documents) in the forms attached hereto as Exhibit A and Exhibit B and (B) such other instruments of sale, transfer, conveyance, and assignment as the Buyer and its counsel reasonably may request; (iv) the Buyer will execute, acknowledge (if appropriate), and deliver to the Seller (A) an assumption agreement in the form attached hereto as Exhibit C and (B) such other instruments of assumption as the Seller and its counsel reasonably may request; (v) the Buyer will deliver to the Seller the consideration as provided in Section 2(c) above; (vi) the Seller will deliver to the Buyer a fully-executed Post Closing Agreement with Seller Stockholders in the form of Exhibit D; executed Consulting Agreements in the form of Exhibits F-1, F-2, and F-3, executed Litigation Settlement Agreements in the form of Exhibits G-1 and G- 2, and executed agreements in the form of Exhibits H-1, H-2, I and J. (f) Allocation. The Parties agree to allocate the Purchase Price (and all other capitalizable costs) among the Acquired Assets for all purposes (including financial accounting and tax purposes) in accordance with the allocation schedule attached hereto as Exhibit E. 3. Representations and Warranties of the Seller. Each of Roadway, Momentum, and FBC represents and warrants to the Buyer that the statements contained in this Section 3 are correct and complete as of the date of this Agreement and will be correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this Section 3), except as set forth in the disclosure schedule accompanying this Agreement and initialed by the Parties (the "Disclosure Schedule"). The Disclosure Schedule will be arranged in paragraphs corresponding to the lettered and numbered paragraphs contained in this Section 3. (a) Organization, Qualification, and Corporate Power. Each of Roadway, Momentum, and FBC is a corporation, duly organized, validly existing, and in good standing under the laws of each jurisdiction in which the nature of its business or the ownership or leasing of its properties requires such qualification, except where the lack of such qualification would not have a material adverse effect on the financial condition of the Seller taken as a whole. Each of Roadway, Momentum, and FBC has full corporate power and authority to carry on the business in which it is engaged and to own and use the properties owned and used by it. Section 3(a) of the Disclosure Schedule lists the directors and officers of each of Roadway, Momentum, and FBC. 6 (b) Authorization of Transaction. Each of Roadway, Momentum, and FBC has full power and authority (including full corporate power and authority) to execute and deliver this Agreement and to perform its obligations hereunder. Without limiting the generality of the foregoing, the board of directors and the Stockholders of each of Roadway, Momentum, and FBC have duly authorized the execution, delivery, and performance of this Agreement by each of Roadway, Momentum, and FBC. This Agreement constitutes the valid and legally binding obligation of each of Roadway, Momentum, and FBC, enforceable in accordance with its terms and conditions. (c) Noncontravention. Neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby (including the assignments and assumptions referred to in Section 2 above), will (i) violate any statute, regulation, rule, judgment, order, decree, stipulation, injunction, charge, or other restriction of any government, governmental agency, or court to which Roadway, Momentum, or FBC is subject or any provision of its charter or bylaws, or (ii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any contract, lease, sublease, license, sublicense, franchise, permit, indenture, agreement or mortgage for borrowed money, instrument of indebtedness, Security Interest, or other arrangement to which Roadway, Momentum, or FBC is a party or by which it is bound or to which any of its assets is subject (or result in the imposition of any Security Interest upon any of its assets), except where the violation, conflict, breach, default, acceleration, termination, modification, cancellation, failure to give notice, or Security Interest would not have a material adverse effect on the financial condition of the Seller taken as a whole or on the ability of the Parties to consummate the transactions contemplated by this Agreement. Except as set forth in Section 5(b) hereof, none of Roadway, Momentum and FBC need give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency in order for the Parties to consummate the transactions contemplated by this Agreement (including the assignments and assumptions referred to in Section 2 above). (d) Seller Stockholders and Subsidiaries. Section 3(d) of the Disclosure Schedule sets forth the names of each Subsidiary of each of Roadway, Momentum and FBC, and for each of Roadway, Momentum and FBC, and for each of their Subsidiaries: (i) its name and jurisdiction of incorporation; (ii) the number of shares of authorized capital stock of each class of its capital stock; (iii) the number of issued and outstanding shares of each class of its capital stock, the names of the holders thereof, and the number of shares held by each such holder; (iv) the number of shares of its capital stock held in treasury; (v) its directors and officers; and (vi) each jurisdiction where it is qualified to do business. Each Subsidiary of the Seller is a corporation duly organized, validly existing, and in good standing under the laws of the jurisdiction of its incorporation. Each Subsidiary of the Seller is duly authorized to conduct business and is in good standing under the laws of each jurisdiction in which the nature of its businesses or the ownership or leasing of its properties requires such qualification. Each Subsidiary of the Seller has full corporate power and authority to carry on the businesses in which it is engaged and to own and use the properties owned and used by it. The Seller has delivered to the Buyer correct and complete copies of the charter and bylaws of each Seller and of each Subsidiary of the Seller (as amended to date). All of the issued and outstanding shares of capital stock of each Subsidiary and of Roadway, Momentum and FBC have been duly authorized and are validly issued, fully paid, and nonassessable. One of Roadway, Momentum or FBC holds of record and owns beneficially all of the outstanding shares of each Subsidiary, free and clear of any restrictions on transfer (other than restrictions under the Securities Act and state securities laws), claims, 7 Taxes, Security Interests, options, warrants, rights, contracts, calls, commitments, equities, and demands. There are no outstanding or authorized options, warrants, rights, contracts, calls, puts, rights to subscribe, conversion rights, or other agreements or commitments to which any of Roadway, Momentum, FBC and their Subsidiaries is a party or which are binding on any of them providing for the issuance, disposition, or acquisition of any capital stock of any Subsidiary or the Seller (other than this Agreement). There are not outstanding stock appreciation, phantom stock, or similar rights with respect to Roadway, Momentum, FBC, or any Subsidiary. There are no voting trusts, proxies, or other agreements or understandings with respect to the voting of any capital stock of Roadway, Momentum, FBC, or any Subsidiary. The minute books containing the records of meetings of the stockholders, the board of directors, and any committees of the board of directors, the stock certificate books, and the stock record books of Roadway, Momentum, FBC, or of each Subsidiary are correct and complete. None of Roadway, Momentum, FBC, or the Subsidiaries is in default under or in violation of any provision of its charter or bylaws. The Seller does not control directly or indirectly or have any direct or indirect equity participation in any corporation, partnership, trust, or other business association which is not a Subsidiary. (e) Financial Statements. Seller has delivered to Buyer the following financial statements (collectively the "Financial Statements") as Schedule 3: (i) audited balance sheets and statements of income, changes in stockholders' equity, and cash flow as of and for the fiscal year ended June 30, 1997 (the "Most Recent Fiscal Year End") for the Seller; (ii) unaudited balance sheets and statements of income, changes in stockholders' equity, and cash flow as of the fiscal years ended June 30, 1993, June 30, 1994, June 30, 1995, June 30, 1996 and June 30, 1997 for the Seller; and (iii) unaudited balance sheets and statements of income, changes in the stockholders' equity and cash flow as of and for the 2 months ended August 31, 1997 (the "Most Recent Fiscal Month End") for the Seller. The Financial Statements have been prepared in accordance with GAAP applied on a consistent basis throughout the periods covered thereby and present fairly the financial condition of the Seller as of such dates and the results of operations of the Seller for such periods; provided, however, that the financial statements for the Most Recent Fiscal Month End are subject to normal year-end adjustments and lack footnotes and other presentation items. (f) Events Subsequent to Most Recent Fiscal Month End. Since the Most Recent Fiscal Month End, there has not been (i) any material adverse change in the financial condition of the Seller taken as a whole or (ii) any fact, situation, circumstance, status, condition, activity, practice, plan, occurrence, event, incident, action, failure to act, or transaction outside the Ordinary Course. (g) Events Subsequent to Most Recent Fiscal Year End. Since the Most Recent Fiscal Year End, there has not been any adverse change in the assets, Liabilities, business, financial condition, operations, results of operations, or future prospects of the Seller and their Subsidiaries taken as a whole. Without limiting the generality of the foregoing, since that date: (i) none of the Seller or their Subsidiaries has sold, leased, transferred, or assigned any of its assets, tangible or intangible, other than for a fair consideration in the Ordinary Course; (ii) none of the Seller or their Subsidiaries has entered into any contract, lease, sublease, license, or sublicense (or series of related contracts, leases, subleases, licenses, and sublicenses) either involving more than $5,000 or outside the Ordinary Course; (iii) no party (including any of the Seller and their Subsidiaries) has accelerated, terminated, modified, or canceled any contract, lease, sublease, license, or sublicense (or series of related 8 contracts, leases, subleases, licenses, and sublicenses) involving more than $5,000 to which any of the Seller and their Subsidiaries is a party or by which any of them is bound; (iv) none of the Seller or their Subsidiaries has imposed any Security Interest upon any of their assets, tangible or intangible; (v) none of the Seller or their Subsidiaries has made any capital expenditure (or series of related capital expenditures) either involving more than $5,000 or outside the Ordinary Course; (vi) none of the Seller or their Subsidiaries has made any capital investment in, any loan to, or any acquisition of the securities or assets of any other person (or series of related capital investments, loans, and acquisitions) either involving more than $5,000 or outside the Ordinary Course; (vii) none of the Seller or their Subsidiaries has created, incurred, assumed, or guaranteed any indebtedness (including capitalized lease obligations) either involving more than $5,000 singly or $25,000 in the aggregate or outside the Ordinary Course; (viii) none of the Seller or their Subsidiaries has delayed or postponed (beyond its normal practice) the payment of accounts payable and other Liabilities; (ix) none of the Seller or their Subsidiaries has canceled, compromised, waived, or released any right or claim (or series or related rights and claims) either involving more than $5,000 or outside the Ordinary Course; (x) none of the Seller or their Subsidiaries has granted any license or sublicense of any rights under or with respect to any Intellectual Property; (xi) there has been no change made or authorized in the charter or bylaws of any of the Seller and their Subsidiaries; (xii) none of the Seller or their Subsidiaries has issued, sold, or otherwise disposed of any of its capital stock, or granted any options, warrants, or other rights to purchase or obtain (including upon conversion or exercise) any of its capital stock; (xiii) none of the Seller or their Subsidiaries has declared, set aside, or paid any dividend or distribution with respect to its capital stock or redeemed purchased or otherwise acquired any of its capital stock; (xiv) none of the Seller or their Subsidiaries has experienced any damage, destruction, or loss (whether or not covered by insurance) to its property; (xv) none of the Seller or their Subsidiaries has made any loan to, or entered into any other transaction with, any of its directors, officers, and employees outside the Ordinary Course giving rise to any claim or right on its part against the person or on the part of the person against it; (xvi) none of the Seller or their Subsidiaries has entered into any employment contract or collective bargaining agreement, written or oral, or modified the terms of any existing such contract or agreement; 9 (xvii) none of the Seller or their Subsidiaries has granted any increase outside the Ordinary Course in the base compensation of any of its directors, officers, and employees; (xviii) none of the Seller or their Subsidiaries has adopted any (A) bonus, (B) profit-sharing, (C) incentive compensation, (d) pension, (E) retirement, (F) medical, hospitalization, life, or other insurance, (G) severance, or (H) other plan, contract, or commitment for any of its directors, officers, and employees, or modified or terminated any existing such plan, contract, or commitment; (xix) none of the Seller or their Subsidiaries has made or pledged to make any charitable or other capital contribution outside the Ordinary Course; (xx) none of the Seller or their Subsidiaries has made or pledged to make any charitable or other capital contribution outside the Ordinary Course; (xxi) none of the Seller or their Subsidiaries has paid any amount to any third party with respect to any Liability or obligation (including any costs and expenses the Seller has incurred or may incur in connection with this Agreement or any of the transitions contemplated hereby) which would not constitute an Assumed Liability if in existence as of the Closing; (xxii) there has not been any other occurrence, event, incident, action, failure to act, or transaction outside the Ordinary Course involving any of the Seller or their Subsidiaries; and (xxiii) none of the Seller or their Subsidiaries has committed to any of the foregoing. (h) Undisclosed Liabilities. None of the Seller or their Subsidiaries has any Liability (and there is no Basis for any present or future charge, complaint, action, suit, proceeding, hearing, investigation, claim or demand against any of them giving rise to any Liability), except for (i) Liabilities set forth on the face of the Most Recent Balance Sheet (rather than in any notes thereto) and (ii) Liabilities which have arisen after the Most Recent Fiscal Month End in the Ordinary Course (none of which relates to any breach of contract, breach of warranty, tort, infringement, or violation of law or arose out any charge, complaint, action, suit, proceeding, hearing, investigation, claim, or demand). (i) Tax Matters. (i) The Seller has filed all Tax Returns that it was required to file, and has paid, or shall pay, all Taxes shown thereon as owing, except where the failure to file or to pay Taxes would not have a material adverse effect on the financial condition of the Seller taken as a whole. (ii) Section 3(i) of the Disclosure Schedule lists all Tax Returns filed with respect to the Seller for taxable periods ended on or after June 30, 1993, indicates those Tax Returns that have been audited, and indicates those Tax Returns that currently are the subject of audit. The Seller has delivered to the Buyer correct and complete copies of all federal Tax Returns, examination reports, and statements of deficiencies assessed against or agreed to by the Seller since June 30, 1994. (iii) The Seller has not waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency. 10 (iv) The Seller is not a party to any Tax allocation or sharing agreement. (v) The Seller has never been (or has any liability for unpaid Taxes because it once was) a member of an Affiliated Group. (j) Tangible Assets. Each of the Seller and their Subsidiaries owns or leases, and the Acquired Assets are, all the tangible assets necessary for the conduct of the Business as presently conducted and as presently proposed to be conducted. Each such tangible asset is free from defects, has been maintained in accordance with normal industry practice, is in good operating condition and repair (subject to normal wear and tear), and is suitable for the purposes for which it presently is used. (k) Owned Real Property. Section 3(i) of the Disclosure Schedule lists all real property that the Seller owns or has ever owned. With respect to each such parcel of owned real property, and except for matters which would not have a material adverse effect on the financial condition of the Seller taken as a whole: (i) the Seller has good and marketable title to the parcel of real property, free and clear of any Security Interest, easement, covenant, or other restriction, except for (A) installments of special assessments not yet delinquent, (B) recorded easements, covenants, and other restrictions, and (C) utility easements, building restrictions, zoning restrictions, and other easements and restrictions existing generally with respect to properties of a similar character; (ii) there are no leases, subleases licenses, concessions, or other agreements granting to any party or parties the right of use or occupancy of any portion of the parcel of real property; and (iii) there are no outstanding options or rights of first refusal to purchase the parcel of real property, or any portion thereof or interest therein. (l) Environmental Matters. To the Knowledge of the Seller, no condition exists at any real property owned by the Seller with respect to the storage or discharge into the earth or its atmosphere of effluents, waste or other materials, solid, liquid or gaseous, nor has any waste been disposed of in any way or manner which would or will in the future cause the Seller to be liable in any material respect for fines or penalties under Environmental Laws currently in effect or to incur material expenses of any sort to correct any condition of this type. The Seller has not received any notice from any governmental body claiming any material violations of any zoning, building, health, or safety law or ordinance, or requiring any material work, repairs, construction, alterations, noise reductions, clean- up, or installation with which the Seller has not fully complied. (m) Intellectual Property. (i) One of the Seller and their Subsidiaries owns or has the right to use pursuant to license, sublicense, agreement, or permission all Intellectual Property necessary for the operation of the Business as presently conducted and as presently proposed to be conducted. Each item of Intellectual Property owned or used by any of the Seller and Subsidiaries immediately prior to the Closing hereunder will be owned or available for use by the Buyer on identical terms and conditions immediately subsequent to the Closing hereunder. Each of the Seller and Subsidiaries has taken all necessary or desirable action to protect each item of Intellectual Property that it owns or uses. (ii) None of the Seller and its Subsidiaries has interfered with, infringed upon, misappropriated, or otherwise come into conflict with any Intellectual Property rights of third parties, and none of the 11 Seller Stockholders and the directors and officers of the Seller has ever received any charge, complaint, claim, or notice alleging any such interference, infringement, misappropriation, or violation. To the Knowledge of any of the Seller Stockholders and the directors and officers of the Seller, no third party has interfered with, infringed upon, misappropriated, or otherwise come into conflict with any Intellectual Property rights of any of the Seller and Subsidiaries. (iii) Section 3(m) of the Disclosure Schedule identifies each patent or registration which has been issued to any of the Seller with respect to any of its Intellectual Property, identifies each pending patent application or application for registration which any of the Seller had made with respect to any of its Intellectual Property, and identifies each license, agreement, or other permission which any of the Seller and Subsidiaries has granted to any third party with respect to any of its Intellectual Property (together with any exceptions). The Seller has delivered to the Buyer correct and complete copies of all such patents, registrations, applications, licenses, agreements, and permissions (as amended to date) and has made available to the Buyer correct and complete copies of all other written documentation evidencing ownership and prosecution (if applicable) of each such item. With respect to each item of Intellectual Property that any of the Seller and Subsidiaries owns: (A) the identified owner possesses all right, title, and interest in and to the item; (B) the item is not subject to any outstanding judgment, order, decree, stipulation, injunction, or charge; (C) no charge, complaint, action, suit, proceeding, hearing, investigation, claim, or demand is pending or is threatened which challenges the legality, validity, enforceability, use, or ownership of the items; and (D) none of the Seller and its Subsidiaries has ever agreed to indemnify any person or entity for or against any interference, infringement, misappropriation, or other conflict with respect to the item. (iv) Section 3(m) of the Disclosure Schedule also identifies each item of Intellectual Property that any third party owns and that any of the Seller and its Subsidiaries uses pursuant to license, sublicense, agreement, or permission. The Seller has supplied the Buyer with correct and complete copies of all such licenses, sublicenses, agreements, and permissions (as amended to date). With respect to each such item of used Intellectual Property: (A) the license, sublicense, agreement, or permission covering the item is legal, valid, binding, enforceable, and in full force and effect; (B) the license, sublicense, agreement, or permission will continue to be legal, valid, binding, enforceable, and in full force and effect; (C) no party to the license, sublicense, agreement, or permission is in breach or default, and no event has occurred which with notice or lapse of time would constitute a breach or default or permit termination, modification, or acceleration thereunder; (D) no party to the license, sublicense, agreement, or permission has repudiated any provision thereof; 12 (E) with respect to each sublicense, the representations and warranties set forth in subsections (A) through (D) above are true and correct with respect to the underlying license; (F) the underlying item of Intellectual Property is not subject to any outstanding judgment, order, decree, stipulation, injunction, or charge; (G) no charge, complaint, action, suit, proceeding, hearing, investigation, claim, or demand is pending, or is threatened which challenges the legality, validity, or enforceability of the underlying item of Intellectual Property; and (H) none of the Seller and its Subsidiaries has granted any sublicense or similar right with respect to the license, sublicense, agreement, or permission. (v) None of the Seller Stockholders and the directors and officers of the Seller has any Knowledge of any new products, inventions, procedures, or methods of manufacturing or processing that any competitors or other third parties have developed which reasonably could be expected to supersede or make obsolete any product or process of any of the Seller in the Business. (n) Inventory. The inventory of the Seller consists of raw materials and supplies, manufactured and purchased parts, goods in process, and finished goods, all of which is merchantable and fit for the purpose for which it was procured or manufactured, and none of which is slow-moving, obsolete, damaged, or defective, subject only to the reserve for inventory writedown set forth on the face of the Most Recent Balance Sheet (rather than in any notes thereto) as adjusted for the passage of time through the Closing Date in accordance with the past custom and practice of the Seller. (o) Real Property Leases. Section 3(o) of the Disclosure Schedule lists all real property leased or subleased to the Seller. The Seller has delivered to the Buyer correct and complete copies of the leases and subleases listed in Section 3(o) of the Disclosure Schedule (as amended to date). To the Knowledge of the Seller, each lease and sublease listed in Section 3(o) of the Disclosure Schedule is legal, valid, binding, enforceable, and in full force and effect, except where the illegality, invalidity, nonbinding nature, unenforceability, or ineffectiveness would not have a material adverse effect on the financial condition of the Seller taken as a whole. (p) Contracts. Section 3(p) of the Disclosure Schedule lists the following contracts, agreements, and other written and oral arrangements to which the Seller is a party ("Contracts"): (i) any arrangement (or group of related written arrangements) for the lease of personal property from or to third parties providing for lease payments in excess of $5,000 per annum; (ii) any arrangement (or group of related written arrangements) for the purchase or sale of raw materials, commodities, supplies, products, or other personal property or for the furnishing or receipt of services which either calls for performance over a period of more than one year or involves more than the sum of $5,000; (iii) any arrangement concerning a partnership or joint venture; 13 (iv) any arrangement (or group of related written arrangements) under which it has created, incurred, assumed, or guaranteed (or may create, incur, assume, or guarantee) indebtedness (including capitalized lease obligations) involving more than $5,000 under which it has imposed (or may impose) a Security Interest on any of its assets, tangible or intangible; (v) any arrangement concerning confidentiality or competition; (vi) any arrangement involving any of the Seller Stockholders and their Affiliates; (vii) any written arrangement with any of its directors, officers, and employees in the nature of a collective bargaining agreement, employment agreement, or severance agreement. (viii) any arrangement under which the consequences of a default or termination could have an adverse effect on the assets, Liabilities, business, financial condition, operations, results of operations, or future prospects of the Seller taken as a whole; or (ix) any other arrangement (or group of related arrangements) either involving more than $5,000 or not entered into in the Ordinary Course. The Seller has delivered to the Buyer a correct and complete copy of each written arrangement listed in Section 3(p) of the Disclosure Schedule (as amended to date) and written summary of every verbal contract, agreement, or other arrangement. With respect to each written arrangement so listed: (A) the written arrangement is legal, valid, binding, enforceable, and in full force and effect; (B) the written arrangement will continue to be legal, valid, binding, and enforceable and in full force and effect on identical terms following the Closing; (C) no party is in breach or default, and no event has occurred which with notice or lapse of time would constitute a breach or default or permit termination, modification, or acceleration, under the written arrangement; and (D) no party has repudiated any provision of the written arrangement. No filled customer order or commitment obligating the Seller to process, manufacture, or deliver products or perform services will result in a loss to the Seller upon completion of performance. No purchase order or commitment of the Seller is in excess of normal requirements, nor are prices provided therein in excess of current market prices for the products or services to be provided thereunder. No supplier of the Seller has indicated within the past year that it will stop, or decrease the rate of, supplying materials, products, or services to them and no customer of the Seller has indicated within the part year that it will stop, or decrease the rate of, buying materials, products, or services from them. The Seller is in full compliance with all applicable terms and requirements of each Contract under which the Seller has or had any obligation or liability or by which Seller or any of the assets owned or used by the Seller is or was bound. Each other Person that has or had any obligation or liability under any Contract under which the Seller has or had any rights is in full compliance with all applicable terms and requirements of such contract. No event has occurred or circumstance exists that (with or without notice or lapse of time) may contravene, conflict with, or result in a violation or breach of, or give the Seller or other Person the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of, or to cancel, terminate, or modify, any applicable Contract; and the Seller has not given to or received from any other Person any notice or other communication (whether oral or written) regarding any actual, alleged, possible, or potential violation or breach of, or default under, any Contract. 14 The Contracts are all the agreements, arrangements, and contracts necessary to operate the business as it is currently conducted and as it is currently proposed to be conducted. All of the Assumed Contracts can be assigned by Seller to Buyer without any other action, and such assignment will permit Buyer to operate under the Assumed Contracts on the same terms and conditions as Seller currently operates. (q) Notes and Accounts Receivable. All notes and accounts receivable of the Seller are reflected properly on their books and records, are valid receivables subject to no setoffs or counterclaims, are presently current and collectible, and will be collected in accordance with their terms at their recorded amounts, subject only to the reserve for bad debts set forth on the face of the Most Recent Balance Sheet (rather than in any notes thereto) as adjusted for the passage of time through the Closing Date in accordance with the past custom and practice of the Seller. (r) Insurance. Section 3(r) of the Disclosure Schedule sets forth the following information with respect to each insurance policy (including policies providing property, casualty, liability, and workers' compensation coverage and bond and surety arrangements) to which the Seller has been a party, a named insured, or otherwise the beneficiary of coverage at any time within the past five (5) years: (i) the name, address, and telephone number of the agent; (ii) the name of the insurer, the name of the policyholder, and the name of each covered insured; (iii) the policy number and the period of coverage; (iv) the scope (including an indication of whether the coverage was on a claim made, occurrence, or other basis and amount (including a description of how deductibles and ceilings are calculated and operate) of coverage; and (v) a description of any retroactive premium adjustments or other loss-sharing arrangements. With respect to each such insurance policy: (A) the policy is legal, valid, binding, and enforceable and in full force and effect; (B) neither the Seller nor any other party to the policy is in breach or default (including with respect to the payment of premiums or the giving of notices), and no event has occurred which, with notice or the lapse of time, would constitute such a breach or default or permit termination, modification, or acceleration, under the policy; and (C) no party to the policy has repudiated any provision thereof. Each of the Seller and its Subsidiaries has been covered during the past 15 years by insurance in scope and amount customary and reasonable for the business in which it has engaged during the aforementioned period. Section 3(r) of the Disclosure Schedule describes any self-insurance arrangements affecting any of the Seller. (s) Powers of Attorney. To the Knowledge of the Seller, there are no outstanding powers of attorney executed on behalf of any of the Seller. (t) Litigation. Section 3(t) of the Disclosure Schedule sets forth each instances in which the Seller (i) is subject to any unsatisfied judgment, order, decree, stipulation, injunction, or charge, or (ii) is a party to any charge, complaint, action, suit, proceeding, hearing, or investigation of or in any court or quasi-judicial or administrative agency of any federal, state, local or foreign jurisdiction, except where the judgment, order, decree, stipulation, injunction, charge, complaint, action, suit, proceeding, hearing, or investigation would not have a material adverse effect on the financial condition of the Business. To the Knowledge of the Seller (i) no such proceeding has been Threatened, and (ii) no event has occurred or 15 circumstance exists that may give rise to or serve as a Basis for the commencement of any such proceeding. The Seller has delivered to Buyer copies of all pleadings, correspondence, and other documents relating to each proceeding listed in Section 3(t) of the Disclosure Schedule. The proceedings listed in Section 3(t) of the Disclosure Schedule will not have a material adverse effect on the Business. (u) Product Warranty. Each product manufactured, sold, leased, or delivered by the Seller has been in conformity with all applicable contractual commitments and all express and implied warranties, and the Seller has no Liability (and there is no Basis for any present or future charge, complaint, action, suit, proceeding, hearing, investigation, claim, or demand against any of them giving rise to any Liability) for replacement or repair thereof or other damages in connection therewith, subject only to the reserve for product warranty claims set forth on the face of the Most Recent Balance Sheet (rather than in any notes thereto) as adjusted for the passage of time through the Closing Date in accordance with the past custom and practice of the Seller. No product manufactured, sold, leased, or delivered by the Seller is subject to any guaranty, warranty, or other indemnity beyond the applicable standard terms and conditions of sale or lease. Section 3(u) of the Disclosure Schedule includes copies of the standard terms and conditions of sale for the Seller (containing applicable guaranty, warranty, and indemnity provisions). (v) Product Liability. The Seller has no Liability (and there is no Basis for any present or future charge, complaint, action, suit, proceeding, hearing, investigation, claim, or demand against any of them giving rise to any Liability) arising out of any injury to persons or property as a result of the ownership, possession, or use of any product manufactured, sold, leased, or delivered by the Seller. (w) Employee Benefits. Section 3(w) of the Disclosure Schedule lists all Employee Benefit Plans that the Seller maintains or to which the Seller contributes for the benefit of any current or former employee of the Seller. (i) To the Knowledge of the Seller, each Employee Benefit Plan (and each related trust or insurance contract) complies in form and in operation in all respects with the applicable requirements of ERISA and the Code, except where the failure to comply would not have a material adverse effect on the financial condition of the Seller taken as a whole. (ii) All contributions (including all employer contributions and employee salary reduction contributions) which are due have been paid to each Employee Pension Benefit Plan. (iii) Each Employee Pension Benefit Plan has received a determination letter from the Internal Revenue Service to the effect that it meets the requirements of Code Sec. 401(a). (iv) As of the last day of the most recent prior plan year, the market value of assets under each Employee Pension Benefit Plan (other than any Multi-employer Plan) equaled or exceeded the present value of liabilities thereunder (determined in accordance with then current funding assumptions). No Employee Pension Benefit Plan (other than any Multi-employer Plan) has been completely or partially terminated or been the subject of a Reportable Event as to which notices would be required to be filed with the PBGC. No proceeding by the PBGC to terminate an Employee Pension Benefit Plan (other than any Multi-employer Plan) has been instituted. The Seller has not incurred any liability to the PBGC (other than PBGC premium payments) or otherwise under Title IV of ERISA (including any withdrawal liability) with respect to any Employee Pension Benefit Plan. 16 (v) No charge, complaint, action, suit, proceeding, hearing, investigation, claim, or demand with respect to the administration or the investment of the assets of any Employee Benefit Plan (other than routine claims for benefits) is pending, except where the charge, complaint, action, suit, proceeding, hearing, investigation, claim, or demand would not have a material adverse effect on the financial condition of the Seller taken as a whole. (vi) The Seller has delivered to the Buyer correct and complete copies of (A) the plan documents and summary plan descriptions, (B) the most recent determination letter received from the Internal Revenue Service, (C) the most recent Form 5500 Annual Report, and (D) all related trust agreements, insurance contracts, and other funding agreements which implement each Employee Benefit Plan. (x) Legal Compliance. To the Knowledge of the Seller, the Seller has complied with all laws (including rules and regulations thereunder) of federal, state, local, and foreign governments (and all agencies thereof), except where the failure to comply would not have a material adverse effect on the financial condition of the Seller taken as a whole. (y) Certain Business Relationships with the Seller. Neither the Seller Stockholders nor its Affiliates have been involved in any material business arrangement or relationship with the Seller within the past 12 months, and neither the Seller Stockholders nor its Affiliates owns any material property or right, tangible or intangible, which is used in the business of the Seller. (z) Brokers' Fees. The Seller has no liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement. (aa) Books and Records. The books of account, minute books, stock record books, and other records of the Seller, all of which have been made available to Buyer, are complete and correct and have been maintained in accordance with sound business practices and the requirements of Section 13(b)(2) of the Securities Exchange Act, including the maintenance of an adequate system of internal controls. The minute books of the Seller contain accurate and complete records of all meetings held of, and corporate action taken by, the stockholders, the boards of directors, and committees of the boards of directors of the Seller. (bb) Employees. No employee of the Seller is a party to, or is otherwise bound by, any agreement or arrangement, including any confidentiality, noncompetition, or proprietary rights agreement, between such employee and any other Person ("Proprietary Rights Agreement") that in any way adversely affects or will affect (i) the performance of his duties as an employee of the Seller, or (ii) the ability of the Seller to conduct its business, including any Proprietary Rights Agreement with Seller by any such employee. (cc) Disclosure. No representation or warranty made by Seller in this Agreement, the Schedules or the Exhibits attached hereto contains an untrue statement of a material fact or omits to state a material fact required to be stated herein or therein or necessary to make the statements contained herein or therein not misleading. 4. Representations and Warranties of the Buyer. The Buyer represents and warrants to the Seller that the statements contained in this Section 4 are correct and complete as of the date of this Agreement and will be correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this Section 4). (a) Organization of the Buyer. Each of Quixote and Transafe is a corporation duly organized, validly existing, and in good standing under the laws of the jurisdiction of its incorporation. 17 (b) Authorization of Transaction. Each of Quixote and Transafe has full power and authority (including full corporate power and authority) to execute and deliver this Agreement and to perform its obligations hereunder. This Agreement constitutes the valid and legally binding obligation of Quixote and Transafe, enforceable in accordance with its terms and conditions. (c) Noncontravention. Neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby (including the assignments and assumptions referred to in Section 2 above), will (i) violate any statute, regulation, rule, judgment, order, decree, stipulation, injunction, charge, or other restriction of any government, governmental agency, or court to which either Quixote or Transafe is subject or any provision of its charter or bylaws, or (ii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel or require any notice under any contract, lease, sublease, license, sublicense, franchise, permit, indenture, agreement or mortgage for borrowed money, instrument of indebtedness, Security Interest, or other arrangement to which either Quixote or Transafe is a party or by which it is bound or to which any of its assets is subject. Neither Quixote nor Transafe needs to give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency in order for the Parties to consummate the transactions contemplated by this Agreement (including the assignments and assumptions referred to in Section 2 above), except as set forth in Section 5(b) hereof. (d) Brokers' Fees. Neither Quixote nor Transafe has any liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement for which the Seller could become liable or obligated. 5. Pre-Closing Covenants. The Parties agree as follows with respect to the period between the execution of this Agreement and the Closing. (a) General. Each of the Parties will use its reasonable best efforts to take all action and to do all things necessary, proper, or advisable to consummate and make effective the transactions contemplated by this Agreement (including satisfying the Closing conditions set forth in Section 6 below). The Seller shall act diligently and reasonably to secure, before the Closing Date, the consent, approval or waiver, in form and substance reasonably satisfactory to Buyer, from any party to the Assumed Contracts required to be obtained to assign or transfer any such agreement to Buyer or to otherwise satisfy the conditions set forth in Section 6; provided, however, that neither Buyer nor Seller shall have any obligation to offer or pay any consideration in order to obtain any such consent, approval or waiver; and provided, further that Seller shall not make any agreement or enter into any understanding affecting the Acquired Assets or the Business as a condition for obtaining any such consent, approval or waiver, except with the prior written consent of Buyer. During the period prior to the Closing Date, Buyer shall act diligently and reasonably to cooperate with Seller to obtain the consents, approvals and waivers contemplated by this Section 5(a). (b) Notices and Consents. The Seller will give any notices to third parties and will use its reasonable best efforts to obtain any third party consents that the Buyer reasonably may request in connection with the matters pertaining to the Seller disclosed or required to be disclosed in the Disclosure Schedule. Each of the Parties will take any additional action that may be necessary, proper, or advisable in connection with any other notices to, filings with, and authorizations, consents, and approvals of governments, governmental agencies, and third parties that it may be required to give, make, or obtain. (c) Operation of Business. The Seller will not engage in any practice, take any action, embark on any course of inaction, or enter into any transaction outside the Ordinary Course prior to the Closing. The Seller will: use best efforts to preserve intact the current reputation of the Business, and maintain the relations and good will of the Business with suppliers, 18 customers, creditors and agents; confer with Buyer concerning operational matters of a material nature; and otherwise report periodically to Buyer concerning the status of the Business. Except as expressly contemplated by this Agreement or except with the express written approval of Buyer (which shall not be unreasonably withheld), Seller shall not: (i) make any change in the Business or in the operation of the Business or make or contract or commit to make any expenditure in respect of the Business which shall, in any case, exceed $5,000; (ii) enter into any contract, agreement, undertaking or commitment which would have been required to be set forth in Schedule 3(p) if in effect on the date hereof or enter into any contract which cannot be assigned to Buyer or a permitted assignee of Buyer under Section 2(b); (iii) sell, lease (as lessor), transfer or otherwise dispose of (including any transfers from the Business to Seller or any of its Affiliates), or mortgage, pledge, impose or suffer to be imposed any encumbrance on, any of the assets acquired for the Business, except for inventory and other insignificant items of personal property sold or otherwise disposed of for fair value in the Ordinary Course consistent with past practice; (iv) cancel any debts owed to or claims held for the benefit of the Business (including the settlement of any claims or litigation) other than in the Ordinary Course; (v) create, incur or assume, or agree to create, incur or assume, any indebtedness for borrowed money in respect of the business, or enter into, as lessee, any capitalized lease obligation (as defined in Statement of Financial Accounting Standards No. 13); (vi) accelerate or delay collection of any notes or accounts receivable generated by the Business in advance of or beyond their regular due dates or the dates when the same would have been collected in the Ordinary Course; (vii) delay or accelerate payment of any account payable or other liability of the Business beyond or in advance of its due date or the date when such liability would have been paid in the Ordinary Course; (viii) allow the levels of raw materials, supplies, work-in-process or other materials included in the inventory of the Business to vary in any material respect from the levels customarily maintained in the Business; (ix) make, or agree to make, any payment of Cash or distribution of assets to Seller Stockholders or Affiliates or any of its Affiliates whether pursuant to any management fee or service agreement or similar arrangement of the business; (x) enter in any agreement, commitment or arrangement in connection with or affecting the Business. (d) Full Access. The Seller will permit representatives of the Buyer to have full access at all reasonable times, and in a manner so as not to interfere with the normal business operations of the Seller, to all premises, properties, books, records, contracts, Tax records, and documents of or pertaining to the Seller. The Buyer will treat and hold as such any Confidential Information it receives from the Seller in the course of the reviews contemplated by this Section 5(d), will not use any of the 19 Confidential Information except in connection with this Agreement, and, if this Agreement is terminated for any reason whatsoever, will return to the Seller all tangible embodiments (and all copies) of the Confidential Information which are in its possession; provided, however, that this sentence shall not apply to any information (i) which, at the time of disclosure, is available publicly, (ii) which, after disclosure, becomes available publicly through no fault of the Buyer, or (iii) which the Buyer knew or to which the Buyer had access prior to disclosure. (e) Notice of Developments. The Seller will give prompt written notice to the Buyer of any material development affecting the Business. Each Party will give prompt written notice to the other of any material development affecting the ability of the Parties to consummate the transactions contemplated by this Agreement. The Buyer will have 10 business days after the Seller gives any written notice pursuant to this Section 5(e) within which to exercise any right the Buyer may have to terminate this Agreement pursuant to Section 7(a)(ii) below by reason of the material development, and the Seller likewise will have 10 business days after the Buyer gives any written notice pursuant to this Section 5(e) within which to exercise any right the Seller may have to terminate this Agreement pursuant to Section 7(a)(ii) below by reason of the material development. Unless the Buyer or the Seller terminates this Agreement within the aforementioned period, the written notice of a material development will be deemed to have amended the Disclosure Schedule, to have qualified the representations and warranties contained herein, and to have cured any misrepresentation or breach of warranty that otherwise might have existed hereunder by reason of the material development. (f) Exclusivity. The Seller will not solicit or initiate the submission of any proposal or offer from any person relating to any (i) liquidation, dissolution, or recapitalization, (ii) merger or consolidation, (iii) acquisition or purchase of securities or assets, or (iv) similar transactions or business combination involving the Seller. The Seller shall notify the Buyer immediately if any person makes any proposal, offer, inquiry, or contact with respect to any of the foregoing. 6. Conditions to Obligation to Close. (a) Conditions to Obligation of the Buyer. The obligation of the Buyer to consummate the transactions to be performed by it in connection with the Closing is subject to satisfaction of the following conditions: (i) the representations and warranties set forth in Section 3 above shall be true and correct in all material respects at and as of the Closing Date; (ii) the Seller shall have performed and complied with all of its covenants hereunder in all material respects through the Closing; (iii) all of the third party consents identified on Schedule 1 have been procured; (iv) no action, suit, or proceeding shall be pending or threatened before any court or quasi-judicial or administrative agency of any federal, state, local, or foreign jurisdiction wherein an unfavorable judgment, order, decree, stipulation, injunction, or charge would (A) prevent consummation of any of the transactions contemplated by this Agreement, (B) cause any of the transactions contemplated by this Agreement to be rescinded following consummation, or (C) affect adversely the right of the Buyer to own, operate, or control the Acquired Assets (and no such judgment, order, decree, stipulation, injunction, or charge shall be in effect); 20 (v) there shall not be any actual or Threatened judgment, order, decree, stipulation, injunction, or charge in effect preventing consummation of any of the transactions contemplated by this Agreement; (vi) the Seller shall have delivered to the Buyer a certificate (without qualification as to knowledge or materiality or otherwise) to the effect that each of the conditions specified above Section 6(a)(i)-(v) is satisfied in all respects; (vii) the Buyer shall have received from counsel to the Seller an opinion, addressed to the Buyer and dated as of the Closing Date in form acceptable to Buyer; (viii) the Board of Directors of Buyer shall have approved the transactions contemplated in this Agreement; (ix) the Seller Stockholders shall have executed and delivered the Post Closing Agreement with Seller Stockholders in form and substance set forth on Exhibit D attached hereto and the same shall be in full force and effect; (x) the Seller shall have delivered to Buyer the consulting agreements with E. Scott Walter, Jay Walter and Rigg Warton in the form and substance as set forth on Exhibit F-1, Exhibit F-2 and Exhibit F-3, respectively, each executed by the consultant; (xi) the Parties shall have executed and delivered the Litigation Settlement Agreements in form and substance set forth in Exhibit G-1 and Exhibit G-2 attached hereto and the same shall be in full force and effect; (xii) the Seller shall have delivered to Buyer the Agreements of Michael Kempen and John Fitch in the form and substance as set forth on Exhibit H-1 and Exhibit H-2, respectively, executed by Mr. Kempen or Mr. Fitch; (xiii) the Seller shall have delivered to Buyer the agreement between Buyer and Safety Quest in the form and substance as set forth on Exhibit I, executed by a duly authorized representative of Safety Quest, and evidence of such authorization; (xiv) the Seller shall have delivered to Buyer the Investment Agreement in form and substance set forth at Exhibit J, executed by a duly authorized representative of Impact Attenuation, Inc. and evidence of such authorization; and (xv) all actions to be taken by the Seller in connection with consummation of the transactions contemplated hereby and all certificates, opinions, instruments, and other documents required to effect the transactions contemplated hereby will be reasonably satisfactory in form and substance to the Buyer. The Buyer may waive any condition specified in this Section 6(a) if it executes a writing so stating at or prior to the Closing. (b) Conditions to Obligation of the Seller. The obligation of the Seller to consummate the transactions to be performed by it in connection with the Closing is subject to satisfaction of the following conditions: (i) the representations and warranties set forth in Section 4 above shall be true and correct in all material respects at and as of the Closing Date; (ii) the Buyer shall have performed and complied with all of its covenants hereunder in all material respects through the Closing; 21 (iii) all of the third party consents identified on Schedule 1 have been procured; (iv) no action, suit, or proceeding shall be pending or threatened before any court or quasi-judicial or administrative agency of any federal, state, local, or foreign jurisdiction wherein an unfavorable judgment, order, decree, stipulation, injunction, or charge would (A) prevent consummation of any of the transactions contemplated by this Agreement or (B) cause any of the transactions contemplated by this Agreement to be rescinded following consummation (and no such judgment, order, decree, stipulation, injunction, or charge shall be in effect); (v) there shall not be any actual or Threatened judgment, order, decree, stipulation, injunction, or charge in effect preventing consummation of any of the transactions contemplated by this Agreement; (vi) the Buyer shall have delivered to the Seller a certificate (without qualification as to knowledge or materiality or otherwise) to the effect that each of the conditions specified above in Section 6(b)(i)-(v) is satisfied in all respects; (vii) the Seller shall have received from counsel to the Buyer an opinion, addressed to the Seller and dated as of the Closing Date in a form acceptable to the Seller; (viii) the stockholders and Board of Directors of the Seller shall have approved the transaction contemplated by this Agreement; (ix) the Buyer shall have executed and delivered the Post Closing Agreement with Seller Stockholders in form and substance set forth on Exhibit D attached hereto and the same shall be in full force and effect; (x) the Buyer shall have executed and delivered the consulting agreements with E. Scott Walter, Jay Walter and Rigg Warton in the form and substance as set forth on Exhibit F-1, Exhibit F-2 and Exhibit F-3, respectively; (xi) the Parties shall have executed and delivered the Litigation Settlement Agreements in form and substance set forth in Exhibit G-1 and Exhibit G-2 attached hereto and the same shall be in full force and effect; (xii) the Buyer shall have executed and delivered the Agreements with Michael Kempen and John Fitch in the form and substance as set forth on Exhibit H-1 and Exhibit H-2, respectively; (xiii) the Buyer shall have executed and delivered the agreement between Buyer and Safety Quest in the form and substance as set forth on Exhibit I; (xiv) the Buyer shall have executed and delivered the Investment Agreement with Impact Attenuation, Inc. in form and substance set forth at Exhibit J; and (xv) all actions to be taken by the Buyer in connection with consummation of the transactions contemplated hereby and all certificates, opinions, instruments, and other documents required to effect the transactions contemplated hereby will be reasonably satisfactory in form and substance to the Seller. 22 The Seller may waive any condition specified in this Section 6(b) if it executes a writing so stating at or prior to the Closing. 7. Termination. (a) Termination of Agreement. The Parties may terminate this Agreement as provided below: (i) the Buyer and the Seller may terminate this Agreement by mutual written consent at any time prior to the Closing; (ii) the Buyer may terminate this Agreement by giving written notice to the Seller at any time prior to the Closing in the event the Seller is in breach of any material representation, warranty, or covenant contained in this Agreement in any material respect, and the Seller may terminate this Agreement by giving written notice to the Buyer at any time prior to the Closing in the event the Buyer is in breach, of any material representation, warranty, or covenant contained in this Agreement in any material respect; (iii) the Buyer may terminate this Agreement by giving written notice to the Seller at any time prior to the Closing if the Closing shall not have occurred on or before the 120th day following the date of this Agreement by reason of the failure of any condition precedent under Section 6(a) hereof (unless the failure results primarily from the Buyer itself breaching any representation, warranty, or covenant contained in this Agreement); or (iv) the Seller may terminate this Agreement by giving written notice to the Buyer at any time prior to the Closing if the Closing shall not have occurred on or before the 120th day following the date of this Agreement by reason of the failure of any condition precedent under Section 6(b) hereof (unless the failure results primarily from the Seller itself breaching any representation, warranty, or covenant contained in this Agreement). (b) Effect of Termination. If any Party terminates this Agreement pursuant to Section 7(a) above, all obligations of the Parties hereunder shall terminate without any liability of any Party to any other Party (except for any liability of any Party then in breach); provided, however, that the confidentiality provisions contained in Section 5(d) above shall survive termination. 8. Post-Closing Covenants. The Parties agree as follows with respect to the period following the Closing. (a) General. In case at any time after the Closing any further action is necessary or desirable to carry out the purposes of this Agreement, each of the Parties will take such further action (including the execution and delivery of such further instruments and documents) as any other Party reasonably may request, all at the sole cost and expense of the requesting Party (unless the requesting Party is entitled to indemnification therefor under Section 9 below). (b) Litigation Support. In the event and for so long as any Party actively is contesting or defending against any charge, complaint, action, suit, proceeding, hearing, investigation, claim, or demand in connection with (i) any transaction contemplated under this Agreement or (ii) any fact, situation, circumstance, status, condition, activity, practice, plan, occurrence, event, incident, action, failure to act, or transaction on or prior to the Closing Date involving the Seller, the other Party will cooperate with Seller and its counsel in the contest or defense, make available its personnel, and provide such testimony and access to its books and records as shall be necessary in connection with the contest or defense, all at the sole cost and expense of the contesting or defending Party (unless 23 the contesting or defending Party is entitled to indemnification therefor under Section 9 below). (c) Transition. The Seller will not take any action that primarily is designed or intended to have the effect of discouraging any licensor, customer, supplier, or other business associate of the Seller from maintaining the same business relationships with the Buyer after the Closing as it maintained with the Seller prior to the Closing. In addition, at Buyer's request, Seller will make available Seller's employees to assist Buyer in the transfer of the Business to Buyer, for a period not to exceed 60 days after Closing. Buyer shall reimburse Seller for services performed by Seller's employees. (d) Covenant Not to Compete. For a period of ten (10) years from and after the Closing Date, the Seller will not engage in any transportation safety systems business in any geographic area in which the Seller conducts that business as of the Closing Date; provided, however, that no owner of less than 5% of the outstanding stock of any publicly traded corporation shall be deemed to engage solely by reason thereof in any of its business; and provided further, Impact Dynamics, L.L.C., or another entity owned by E. Scott Walter and Transafe shall be entitled to conduct a transportation safety systems business limited to motorized vehicle racetracks and racecourses. (e) Employees. Buyer will not offer employment to any employees of the Seller as of the Closing Date. (f) Employee Benefit Plans. Buyer shall have no liability under any of Seller's Employee Benefit Plans maintained or contributed to for the benefit of any of the employees or other persons performing services for Seller. (g) Assistance. After the Closing, Buyer will cooperate with Seller to facilitate Seller's collection of its receivables. 9. Remedies for Breaches of this Agreement. (a) Survival of Representations and Warranties. All of the representations and warranties of the Seller contained in Section 3 above shall survive the Closing hereunder (unless the Buyer knew or had reason to know of any misrepresentation or breach of warranty at the time of Closing) and continue in full force and effect for a period of three years thereafter. All of the other representations, warranties, and covenants of the Parties contained in this Agreement shall survive the Closing (unless the damaged Party knew or had reason to know of any misrepresentation or breach of warranty or covenant at the time of Closing) and continue in full force and effect forever thereafter. (b) Indemnification Provisions. (i) In the event the Seller breaches any of its representations and warranties contained in Section 3, and provided that the Buyer makes a written claim for indemnification against the Seller pursuant to Section 10(g) below within the applicable survival period, then the Seller agrees to indemnify the Buyer from and against the entirety of any Adverse Consequences the Buyer may suffer through and after the date of the claim for indemnification (but not including any Adverse Consequences the Buyer may suffer after the end of the applicable survival period) resulting from, arising out of, relating to, in the nature of, or caused by the breach. (ii) In the event the Buyer suffers any Adverse Consequences arising from or relating to the Excluded Assets or the Retained Liabilities and the Buyer makes a written claim for indemnification against the Seller pursuant to Section 10(g) below, then 24 the Seller agrees to indemnify the Buyer from and against the entirety of any Adverse Consequences the Buyer may suffer through and after the date of the claim for indemnification resulting from, arising out of or relating to the Excluded Assets or the Retained Liabilities. (iii) In the event the Seller suffers any Adverse Consequences arising from or relating to the Acquired Assets or the Assumed Liabilities and the Seller makes a written claim for indemnification against the Buyer pursuant to Section 10(g) below, then the Buyer agrees to indemnify the Seller from and against the entirety of any Adverse Consequences the Seller may suffer through and after the date of the claim for indemnification resulting from, arising out of or relating to the Acquired Assets or the Assumed Liabilities. (c) Matters Involving Third Parties. If any third party shall notify any Party (the "Indemnified Party") with respect to any matter which may give rise to a claim for indemnification against the other Party (the "Indemnifying Party") under this Section 9, then the Indemnified Party shall notify the Indemnifying Party thereof promptly (and in any event within 30 days after receiving any written notice from a third party). Once the Indemnified Party has given notice of the matter to the Indemnifying Party, the Indemnified Party may defend against the matter in any manner it reasonably may deem appropriate. In the event the Indemnifying Party notifies the Indemnified Party at any time after the Indemnified Party has given notice of the matter that the Indemnifying Party is assuming the defense thereof, however, (A) the Indemnifying Party will defend the Indemnified Party against the matter with counsel of its choice reasonably satisfactory to the Indemnified Party, (B) the Indemnified Party may retain separate co-counsel at its sole cost and expense (except that the Indemnifying Party will be responsible for the fees and expenses of the separate co-counsel to the extent the Indemnified Party concludes reasonably that the counsel the Indemnifying Party has selected has a conflict of interest), (C) the Indemnified Party will not consent to the entry of any judgment or enter into any settlement with respect to the matter without the written consent of the Indemnifying Party (not to be unreasonably withheld), and (D) the Indemnifying Party will not consent to the entry of any judgment with respect to the matter, or enter into any settlement which does not include a provision whereby the plaintiff or claimant in the matter releases the Indemnified Party from all liability with respect thereto, without the written consent of the Indemnified Party (not to be withheld unreasonably). (d) Determination of Loss. The Parties shall make appropriate adjustments for Tax benefits and insurance proceeds (reasonably certain of receipt and utility in each case) and for the time cost of money (using the Applicable Rate as the discount rate) in determining the amount of loss for purposes of this Section 9. All indemnification payments under this Section 9 shall be deemed adjustments to the Purchase Price. (e) Other Indemnification Provisions; Set-Off. The foregoing indemnification provisions are in addition to, and not in derogation of, any statutory or common law remedy any Party may have for breach of representation, warranty, or covenant. The Parties agree that the Buyer may, to the extent the Seller fails to pay any claim for indemnification of Buyer within thirty (30) days of notice by Buyer requiring such indemnification, set-off said amounts claimed against any sums otherwise due and owing Seller and its Affiliates in any other capacity. 10. Miscellaneous. (a) Press Releases and Announcements. No Party shall issue any press release or announcement relating to the subject matter of this Agreement without the prior written approval of the other Party; provided, however, that any Party may make any public disclosure it believes in good faith is required by law or regulation (in which case the disclosing Party will advise the other Party prior to making the disclosure). 25 (b) No Third-Party Beneficiaries. This Agreement shall not confer any rights or remedies upon any person other than the Parties and their respective successors and permitted assigns. (c) Entire Agreement. This Agreement (including the documents referred to herein) constitutes the entire agreement between the Parties and supersedes any prior understandings, agreements, or representations by or between the Parties, written or oral, that may have related in any way to the subject matter hereof. (d) Succession and Assignment. This Agreement shall be binding upon and inure to the benefit of the Parties named herein and their respective successors and permitted assigns. No Party may assign either this Agreement or any of its rights, interests, or obligations hereunder without the prior written approval of the other Party; provided, however, that the Buyer may (i) assign any or all of its rights and interests hereunder to one or more of its Affiliates and (ii) designate one or more of its Affiliates to perform its obligations hereunder (in any or all of which cases the Buyer nonetheless shall remain liable and responsible for the performance of all of its obligations hereunder). (e) Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument. (f) Headings. The Section headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement. (g) Notices. All notices, requests, demands, claims, and other communications hereunder will be in writing. Any notice, request, demand, claim, or other communication hereunder shall be deemed duly given if (and then two business days after) it is sent by registered or certified mail, return receipt requested, postage prepaid, and addressed to the intended recipient as set forth below: If to the Seller: E. Scott Walter 80 Remington Boulevard Ronkonkoma, NY 11779 Facsimile No.: 516-588-6394 Copy to: Soberman, Shulman & Rosenberg 2001 Marcus Avenue Lake Success, NY 11042 Attention: Alan R. Soberman Facsimile No.: 516-437-7292 If to the Buyer: Quixote Corporation One East Wacker Drive Chicago, IL 60601 Attention: Leslie J. Jezuit Facsimile No.: 312-467-1356 Copy to: McBride Baker & Coles 500 West Madison Street - 40th Floor Chicago, IL 60661 Attention: Anne Hamblin Schiave Facsimile No.: 312-993-9350 Any Party may give any notice, request, demand, claim, or other communication hereunder using any other means (including personal delivery, expedited courier, messenger service, telecopy, telex, ordinary mail, or electronic mail), but no such notice, request, demand, claim, or other communication shall be deemed to have been duly given unless and until it actually is 26 received by the individual for whom it is intended. Any Party may change the address to which notices, requests, demands, claims, and other communications hereunder are to be delivered by giving other Party notice in the manner herein set forth. (h) Governing Law, Jurisdiction; Service of Process. This Agreement shall be governed by and construed in accordance with the internal laws (and not the law of conflicts) of the State of Illinois. Any action or proceeding seeking to enforce any provision of, or based on any right arising out of, this Agreement shall be brought against either of the Parties in the courts of the State of Illinois, County of Cook, or, if it has or can acquire jurisdiction, in the United States District Court for the Northern District of Illinois, and each of the Parties consents to the jurisdiction of such courts (and of the appropriate appellate courts) in any such action or proceeding and waives any objection to venue laid therein. Process in any action or proceeding referred to in the preceding sentence may be served on either Party anywhere in the world. (i) Amendments and Waivers. No amendment of any provision of this Agreement shall be valid unless the same shall be in writing and signed by the Buyer and the Seller. No waiver by any Party of any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence. (j) Severability. Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction. If the final judgment of a court of competent jurisdiction declares that any term or provision hereof is invalid or unenforceable, the Parties agree that the court making the determination of invalidity or unenforceability shall have the power to reduce the scope, duration, or area of the term or provision, to delete specific words or phrases, or to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision, and this Agreement shall be enforceable as so modified after the expiration of the time within which the judgment may be appealed. (k) Expenses. The Buyer and the Seller will each bear its own costs and expenses (including legal fees and expenses) incurred in connection with this Agreement and the transactions contemplated hereby. (l) Construction. The language used in this Agreement will be deemed to be the language chosen by the Parties to express their mutual intent, and no rule of strict construction shall be applied against any Party. Any reference to any federal, state, local, or foreign statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. (m) Incorporation of Exhibits and Schedules. The Exhibits and Schedules identified in this Agreement are incorporated herein by reference and made a part hereof. (n) Bulk Transfer Laws. The Buyer acknowledges that the Seller will not comply with the provisions of any bulk transfer laws of any jurisdiction in connection with the transactions contemplated by this Agreement. (o) Time of Essence. With regard to all dates and time periods set forth or referred to in this Agreement, time is of the essence. 27 (p) Counterparts. This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement. 28 IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date first above written. SELLERS: BUYER: ROADWAY SAFETY SERVICE, INC., a New QUIXOTE CORPORATION, a Delaware York corporation corporation By: /s/E. Scott Walter By: /s/ Leslie J. Jezuit - ------------------------ -------------------------------- Title: President & CEO Title: President & CEO MOMENTUM MANAGEMENT, INC., a New York TRANSAFE CORPORATION, a Delaware corporation corporation By: /s/ E. Scott Walter By: /s/ Leslie J. Jezuit - ------------------------ -------------------------------- Title: President & CEO Title: President & CEO FITCH BARRIER CORPORATION, a New York corporation By: /s/ E. Scott Walter - -------------------------- Title: President & CEO 29 ASSET PURCHASE AGREEMENT BY AND BETWEEN QUIXOTE CORPORATION and its wholly-owned subsidiary, TRANSAFE CORPORATION (together, "Buyer"), and ROADWAY SAFETY SERVICE, INC., MOMENTUM MANAGEMENT, INC. and FITCH BARRIER CORPORATION (together, "Seller") October 1, 1997 TABLE OF CONTENTS 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 2. PURCHASE AND SALE . . . . . . . . . . . . . . . . . . . . . . . . . . .6 (a) Purchase of Acquired Assets . . . . . . . . . . . . . . . . .6 (b) Assumption of Assumed Contracts and the Assumed Liabilities .6 (c) Purchase Price. . . . . . . . . . . . . . . . . . . . . . . .6 (d) The Closing . . . . . . . . . . . . . . . . . . . . . . . . .7 (e) Deliveries at the Closing . . . . . . . . . . . . . . . . . .7 (f) Allocation. . . . . . . . . . . . . . . . . . . . . . . . . .7 3. REPRESENTATIONS AND WARRANTIES OF THE SELLER. . . . . . . . . . . . . .7 (a) Organization, Qualification, and Corporate Power. . . . . . .8 (b) Authorization of Transaction. . . . . . . . . . . . . . . . .8 (c) Noncontravention. . . . . . . . . . . . . . . . . . . . . . .8 (d) Seller Stockholders and Subsidiaries. . . . . . . . . . . . .8 (e) Financial Statements. . . . . . . . . . . . . . . . . . . . .9 (f) Events Subsequent to Most Recent Fiscal Month End . . . . . 10 (g) Events Subsequent to Most Recent Fiscal Year End. . . . . . 10 (h) Undisclosed Liabilities . . . . . . . . . . . . . . . . . . 12 (i) Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . 12 (j) Tangible Assets . . . . . . . . . . . . . . . . . . . . . . 13 (k) Owned Real Property . . . . . . . . . . . . . . . . . . . . 13 (l) Environmental Matters . . . . . . . . . . . . . . . . . . . 13 (m) Intellectual Property . . . . . . . . . . . . . . . . . . . 13 (n) Inventory . . . . . . . . . . . . . . . . . . . . . . . . . 16 (o) Real Property Leases. . . . . . . . . . . . . . . . . . . . 16 (p) Contracts . . . . . . . . . . . . . . . . . . . . . . . . . 16 (q) Notes and Accounts Receivable . . . . . . . . . . . . . . . 18 (r) Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 18 (s) Powers of Attorney. . . . . . . . . . . . . . . . . . . . . 18 (t) Litigation. . . . . . . . . . . . . . . . . . . . . . . . . 18 (u) Product Warranty. . . . . . . . . . . . . . . . . . . . . . 19 (v) Product Liability . . . . . . . . . . . . . . . . . . . . . 19 (w) Employee Benefits . . . . . . . . . . . . . . . . . . . . . 19 (x) Legal Compliance. . . . . . . . . . . . . . . . . . . . . . 20 (y) Certain Business Relationships with the Seller. . . . . . . 20 (z) Brokers' Fees . . . . . . . . . . . . . . . . . . . . . . . 20 (aa) Books and Records. . . . . . . . . . . . . . . . . . . . . 20 (bb) Employees. . . . . . . . . . . . . . . . . . . . . . . . . 21 (cc) Disclosure . . . . . . . . . . . . . . . . . . . . . . . . 21 4. REPRESENTATIONS AND WARRANTIES OF THE BUYER . . . . . . . . . . . . . 21 (a) Organization of the Buyer . . . . . . . . . . . . . . . . . 21 (b) Authorization of Transaction. . . . . . . . . . . . . . . . 21 (c) Noncontravention. . . . . . . . . . . . . . . . . . . . . . 21 (d) Brokers' Fees . . . . . . . . . . . . . . . . . . . . . . . 22 5. PRE-CLOSING COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . 22 (a) General . . . . . . . . . . . . . . . . . . . . . . . . . . 22 (b) Notices and Consents. . . . . . . . . . . . . . . . . . . . 22 (c) Operation of Business . . . . . . . . . . . . . . . . . . . 22 (d) Full Access . . . . . . . . . . . . . . . . . . . . . . . . 23 (e) Notice of Developments. . . . . . . . . . . . . . . . . . . 24 (f) Exclusivity . . . . . . . . . . . . . . . . . . . . . . . . 24 6. CONDITIONS TO OBLIGATION TO CLOSE . . . . . . . . . . . . . . . . . . 24 (a) Conditions to Obligation of the Buyer . . . . . . . . . . . 24 (b) Conditions to Obligation of the Seller. . . . . . . . . . . 26 7. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 (a) Termination of Agreement. . . . . . . . . . . . . . . . . . 27 i (b) Effect of Termination . . . . . . . . . . . . . . . . . . . 28 8. POST-CLOSING COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . 28 (a) General . . . . . . . . . . . . . . . . . . . . . . . . . . 28 (b) Litigation Support. . . . . . . . . . . . . . . . . . . . . 28 (c) Transition. . . . . . . . . . . . . . . . . . . . . . . . . 28 (d) Covenant Not to Compete . . . . . . . . . . . . . . . . . . 29 (e) Employees . . . . . . . . . . . . . . . . . . . . . . . . . 29 (f) Employee Benefit Plans. . . . . . . . . . . . . . . . . . . 29 (g) ASSISTANCE.................................................................. ..........................................32 9. REMEDIES FOR BREACHES OF THIS AGREEMENT . . . . . . . . . . . . . . . 29 (a) Survival of Representations and Warranties. . . . . . . . . 29 (b) Indemnification Provisions. . . . . . . . . . . . . . . . . 29 (c) Matters Involving Third Parties . . . . . . . . . . . . . . 30 (d) Determination of Loss . . . . . . . . . . . . . . . . . . . 30 (e) Other Indemnification Provisions; Set-Off . . . . . . . . . 31 10. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 (a) Press Releases and Announcements. . . . . . . . . . . . . . 31 (b) No Third-Party Beneficiaries. . . . . . . . . . . . . . . . 31 (c) Entire Agreement. . . . . . . . . . . . . . . . . . . . . . 31 (d) Succession and Assignment . . . . . . . . . . . . . . . . . 31 (e) Counterparts. . . . . . . . . . . . . . . . . . . . . . . . 31 (f) Headings. . . . . . . . . . . . . . . . . . . . . . . . . . 31 (g) Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 31 (h) Governing Law, Jurisdiction; Service of Process . . . . . . 32 (i) Amendments and Waivers. . . . . . . . . . . . . . . . . . . 32 (j) Severability. . . . . . . . . . . . . . . . . . . . . . . . 33 (k) Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . 33 (l) Construction. . . . . . . . . . . . . . . . . . . . . . . . 33 (m) Incorporation of Exhibits and Schedules . . . . . . . . . . 33 (n) Bulk Transfer Laws. . . . . . . . . . . . . . . . . . . . . 33 (o) Time of Essence . . . . . . . . . . . . . . . . . . . . . . 33 (p) Counterparts. . . . . . . . . . . . . . . . . . . . . . . . 33 ii EXHIBITS AND SCHEDULES [AS REFERENCED IN AGREEMENT] EXHIBITS EXHIBIT A - BILL OF SALE EXHIBIT B - ASSIGNMENT AGREEMENT EXHIBIT C - ASSUMPTION AGREEMENT EXHIBIT D - POST CLOSING AGREEMENT WITH SELLER STOCKHOLDERS EXHIBIT E - ALLOCATION SCHEDULE EXHIBIT F-1 - CONSULTING AGREEMENT WITH E. SCOTT WALTER EXHIBIT F-2 - AGREEMENT WITH JAY WALTER EXHIBIT F-3 - AGREEMENT WITH RIGG WARTON EXHIBIT G-1 - ENERGY/ROADWAY LITIGATION SETTLEMENT AGREEMENT EXHIBIT G-2 - MILETI/ROADWAY LITIGATION SETTLEMENT AGREEMENT EXHIBIT H-1 - MICHAEL KEMPEN AGREEMENT - WAIVED EXHIBIT H-2 - JOHN FITCH AGREEMENT EXHIBIT I - SAFETY QUEST AGREEMENT EXHIBIT J - IMPACT DYNAMICS, L.L.C. INVESTMENT AGREEMENT SCHEDULES SCHEDULE 1 - ASSUMED CONTRACTS SCHEDULE 2 - ADJUSTMENTS TO PURCHASE PRICE SCHEDULE 3 - FINANCIAL STATEMENTS DISCLOSURE SCHEDULE EXCEPTIONS TO SELLER'S REPRESENTATIONS AND WARRANTIES iii EX-2.2 3 EX 2.2 EXCLUSINVE AGREEMENT EXHIBIT 2.2 EXCLUSIVE LICENSE AGREEMENT THIS EXCLUSIVE LICENSE AGREEMENT ("Agreement") is made and entered into as of this 10th day of October 1997, to be effective as of October 1, 1997, by and between ROBERT A. MILETI ("Mileti"), an individual, ROADWAY SAFETY SYSTEMS, INC. ("Systems"), a Massachusetts corporation, QUIXOTE CORPORATION, a Delaware corporation ("Quixote"), and TRANSAFE CORPORATION ("Transafe"), a Delaware corporation (Quixote and Transafe are referred to together as "Transafe"). WITNESSETH: WHEREAS, Mileti is the named inventor and holder of U.S. Patent No. 5,306,106 (the "'106 Patent"), applied for on August 14, 1992 and issued on April 26, 1994; and WHEREAS, Mileti is a shareholder, officer and director of Systems, and Systems has been engaged to provide engineering and consulting services in the transportation safety business; WHEREAS, Transafe wishes to acquire, and Mileti wishes to convey on an exclusive basis, all of Mileti's rights to the '106 Patent for its remaining effective life, including but not limited to, the right to manufacture and sell devices covered by the '106 Patent, pursuant to the compensation terms set forth below; and WHEREAS, Transafe, Mileti and Systems also wish to enter into an arrangement whereby Mileti and Systems will agree not to compete with Transafe or its affiliates in the transportation safety field(s); WHEREAS, the transactions contemplated hereby transfer all substantial rights in the '106 Patent as defined in Section 1235 of the Internal Revenue Code of 1986, as amended; NOW THEREFORE, in consideration of the mutual promises and covenants set forth herein, and for other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows. 1. Exclusive License of Patent. In exchange for the payments and other consideration described more fully below, Mileti hereby grants to Transafe, its subsidiaries, and affiliates, the sole and exclusive, worldwide right, use, and license (including the right to sublicense) (a) to make, have made, use, offer to sell, and sell all products covered by the 106 Patent, any and all divisions, continuations and continuations-in-part of such Patent and any and all reissues, renewals and extensions of such Patent, and any and all foreign patents corresponding thereto (the Licensed Patents ), (b) to practice and use the inventions covered by the Licensed Patents, and (c) otherwise to exploit and claim all rights under the Licensed Patents, (hereinafter the "License"). 2. Compensation for the License. In consideration for the exclusive license granted hereunder and for the other consideration provided hereunder, Transafe shall pay to Mileti the Non-contingent Payments and Contingent Payments set forth below, in accordance with the payment schedules, accounting procedures and audit rights set forth below. a. Non-contingent Payment. Transafe shall make non-contingent payments to Mileti (the "Non-contingent Payments") totaling Five Million Fifty-Five Thousand Dollars ($5,055,000.00), without interest, payable as follows: (1) One Hundred Sixty-Five Thousand Dollars ($165,000.00) by wire transfer at the Closing; (2) One Million Three Hundred Thousand Dollars ($1,300,000.00) by wire transfer, delivered to Mileti on January 2, 1998, of which Nine Hundred Thousand Dollars ($900,000.00) represents the prepayment of the annual Non-contingent Payments of Three Hundred Thousand Dollars ($300,000.00) for the years starting October 1, 1997, October 1, 1998, and October 1, 1999; and (3) Three Million Six Hundred Thousand Dollars ($3,600,000.00) in twelve equal annual installments of Three Hundred Thousand Dollars ($300,000.00) per year, without interest, starting on October 1, 2000 and continuing on the first day of October of each subsequent year up to and including October 1, 2011. b. Contingent Payments. In addition to the Non-Contingent Payments, Transafe shall make additional annual payments to Mileti contingent upon the net sales volume of devices covered by the subject matter of the Licensed Patents (the "Contingent Payments"), payable within the first seven days of each calendar year starting in January of 1999, and continuing through the January following expiration of the last to expire of the Licensed Patents, and calculated as follows; (1) All Contingent Payments shall be calculated based on the "Total Net Sales" of any highway safety crash barrel or other product or invention embodying the subject matter claimed in a Licensed Patent ("Covered Products"), sold by Transafe and any of its affiliates, assignees, licensees, or successor(s) in interest, and any of their agents, distributors or retailers. Contingent Payments shall only be due with respect to Covered Products that are covered by an issued and unexpired Licensed Patent in the country in which the Covered Product is either manufactured, sold, or used. If Transafe sells a Covered Product to an independent distributor who in turn makes a sale of Covered Product, the only payment to be made with respect to such sale shall relate to the sale of the Covered Product by Transafe to such independent distributor, and no Contingent Payment shall be due to Mileti with respect to subsequent sales by the independent distributor; provided that: (i) the independent distributor is not a corporate affiliate of Transafe; (ii) there is no common ownership between Transafe (or its affiliates) and the independent distributor (or its affiliates); (iii) the sale to the independent distributor is at a reasonable and fair market price in comparison to the price paid by other independent distributors; and (iv) arranging for the ultimate customer sale to occur through the distributor is not motivated by any attempt to reduce or reallocate payments which otherwise would be due to Mileti. For purposes of this calculation, "Total Net Sales" shall be defined to include total gross sales of Covered Products, when collected, minus: (i) any discounts or rebates on sales prices (such as volume discounts or rebates); (ii) shipping costs and freight; (iii) allowances; (iv) returns of previously sold Covered Products where the sales of those returned devices were otherwise included in total sales; (v) warranty chargebacks; and (vi) sales and use taxes. 2 (2) The calculation of Contingent Payments shall be based on Total Net Sales occurring in each of fifteen annual periods (the "Annual Periods"). The first Annual Period will run from October l, 1997 through September 30, 1998 and the second Annual Period will run from October 1, 1998 through September 30, 1999. Each subsequent annual period will likewise run from the October 1 immediately succeeding the end of the prior Annual Period, through the following September 30, until expiration of the last of the Licensed Patents (presently anticipated to occur on August 14, 2012). (3) No Contingent Payments shall be due or owing on the first Five Million Dollars ($5,000,000.00) of Total Net Sales in any Annual Period through September 30, 2012. From the date hereof through September 30, 2012, Contingent Payments will be due on all Total Net Sales in each Annual Period in excess of Five Million Dollars ($5,000,000.00) (the "Excess Total Net Sales"), based on Six Percent (6%) of such Excess Total Net Sales. For example, if Total Net Sales of Covered Products covered by the Licensed Patents were $6 million between October 1, 1997 and September 30, 1998, then Excess Total Net Sales for that Annual Period would total $1 million, and a Contingent Payment equal to 6% of that amount, $60,000, would be payable to Mileti within the first seven days of calendar year 1999. (4) Transafe shall accompany each annual Contingent Payment with an accounting certified as accurate by Transafe (the "Accounting") of the Total Net Sales for the immediately preceding Annual Period, which accounting shall fully and accurately reflect: (i) the gross sales volume of Covered Products for each month of that Annual Period, including units sold and total dollars; (ii) an itemization of all discounts, rebates, returns, exchanges or other deductions for each month from gross sales volume to arrive at the Total Net Sales calculation; (iii) the calculation of Mileti's Contingent Payment for that annual period; and (iv) a summary narrative explanation of any significant changes or trends in regard to Total Net Sales for that Annual Period, or anticipated for the next Annual Period. (5) Transafe grants Mileti and any professional accountants or auditors engaged by Mileti at his expense, the right to audit the books of Transafe within ninety (90) days after the receipt by Mileti of any Contingent Payment and Accounting, in order to test the accuracy of such Accounting. Transafe will cooperate fully with all reasonable requests for information from Mileti or his accountants or auditors in connection with such an audit. If any audit by Mileti discloses actual Total Net Sales is greater than reported Total Net Sales, then (i) Transafe shall reimburse Mileti for his overdue Contingent or Non-Contingent Payments; and (ii) if the difference between Total Net Sales and reported Total Net Sales is greater than one hundred thousand dollars ($100,000), then Transafe shall reimburse all costs of the audit, and Mileti shall have the right to extend the audit to the Accounting for the prior Annual Period, under the same terms set forth above. Should any dispute arise between Mileti's professional accountants or auditors and Transafe's professional accountants or auditors in connection with any audit performed hereunder, the parties to this Agreement hereby agree to submit such dispute to binding arbitration in Chicago, Illinois under the then-current rules of the American Arbitration Association, the arbitrator to be affiliated with a Big Five accounting firm. The costs of the arbitration will be assessed in the discretion of the arbitrator. (6) All Contingent Payments based on Net Sales effected in 3 countries other than the United States shall accrue in the currency of the country in which the sales are made. Transafe shall apply its best efforts to secure U.S. dollar transfers in respect of such payments, but solely for the convenience and account and at the expense and risk of Mileti, and any and all loss of exchange value, taxes or other expenses incurred in the transfer or conversion of foreign currency into U.S. dollars, and any income, remittance, or other taxes on such royalties required to be withheld at source shall be borne exclusively and solely by Mileti. In the event U.S. dollars are for any reason legally not available for transfer, Transafe may discharge the payment obligations hereunder by depositing said payments to the credit of Mileti, or his nominee, in any recognized banking institution to be designated by Mileti in the country in which the sales are made and in currency of that country. (7) In the event that currency regulations of a country in which sales are made prohibit payment or deposit of monies to Mileti or his nominee, no payment hereunder shall accrue or be due and payable for the period during which such currency restrictions prevail. 3. Maintenance Fees. Mileti shall retain legal title to the '106 Patent for the purpose of securing the performance of Transafe hereunder. As owner of the '106 Patent, Mileti agrees to pay all maintenance and annuity fees which may become due thereon, and all maintenance and annuity fees on any foreign patents corresponding thereto. 4. Enforcement of Patents. Each party will notify the other party of any infringements by third parties known to it. In the event that a third party appears to be infringing the Licensed Patents, Transafe shall have the right, by written notice to Mileti to bring suit for infringement, and to control such a suit through attorneys of its own choice at its own expense, joining Mileti as patent owner and party plaintiff, in order to pursue such suit. Mileti shall have the option of participating in the prosecution of such suit by Transafe by so notifying Transafe in writing within sixty (60) days of Transafe's notice, that he wishes to participate and specifying the percentage of his participation, which may be any percentage up to fifty percent. Thereupon, Mileti shall promptly pay Transafe the percentage of billed expenses involved, and then shall participate in the same percentage of any net damage or settlement recovery (after the deduction of all expenses including Contingent Payments due hereunder and those expenses incident to the efforts made to stop the infringement involved) but Transafe attorneys shall control the prosecution of such suit; provided, however, Transafe shall consult with Mileti with respect to selection of its counsel. Without additional compensation, Mileti agrees to perform all acts which may become necessary or desirable to vest in Transafe the right to institute any such suit and shall upon reasonable notice, cooperate to that end, to the extent agreed by these parties as reasonable, necessary or desirable. Transafe shall use reasonable efforts to insure that any settlement terms do not prejudice Mileti's rights hereunder, but it is expressly acknowledged that forbearance of claims for past infringement does not prejudice such rights. Mileti retains the right to bring suit against any third party who appears to be infringing one or more of the Licensed Patents against whom Transafe elects not to bring suit. 5. Third Party Claim of Infringement or Invalidity of Patents. In the event that a claim is made by a third party that a Covered Product infringes a patent or that a Licensed Patent is invalid, Transafe shall promptly advise Mileti of that fact, and Transafe may defend and/or settle such suit, when and if filed; provided, however, Transafe shall not settle any such suit without the consent of Mileti, which consent shall not be 4 unreasonably withheld. Transafe and Mileti shall share the expenses for defense of such suit (and any damages and settlements) as set forth below. In lieu of Mileti's advancing expenses (or damages), Transafe shall offset up to one third (1/3) of the expenses (or damages) against any payments including Non-Contingent Payments otherwise due or to become due to Mileti after the later of February 1, 1998 or the commencement of the suit, but such offset against the Non-Contingent Payments in any one year shall not exceed One Hundred Thousand Dollars ($100,000); provided, however, any unpaid portion of Mileti's share of expenses (or damages) arising in one year shall cumulate and shall be offset against future year's Contingent Payments and Non-Contingent Payments. Mileti, at Transafe's request and without cost to Transafe, will cooperate and render reasonable assistance to Transafe in the defense or settlement of any such claim or suit. If a Licensed Patent (or the claim or claims covering a product sold thereunder) is finally declared by any court of competent jurisdiction to be invalid or unenforceable for any reason, no Contingent Payments shall be due or owing for sales of products made subsequent to the date of such declaration; provided however, if such declaration of invalidity or unenforceability arises from litigation initiated by third parties unrelated to and unaffiliated with Transafe and Quixote, then, in addition, no Non-Contingent payments shall be due or owing for sales of products made subsequent to the date of such declaration. 6. Improvements and Technical Data. a. Mileti will disclose to Transafe all improvements relating to the Licensed Patents and products covered thereby which are invented, developed or otherwise acquired by Mileti during the term of this Agreement, and Transafe shall automatically have, subject to all the terms and conditions of this Agreement but without any additional payment, a worldwide exclusive license with respect to such improvements and any patents or patent applications which Mileti may secure or file thereon or in connection therewith. Mileti will obtain patent protection on any improvements at Transafe's cost, if Transafe requests. b. At Closing and from time to time thereafter, Mileti will make available to Transafe, without further payment, all of his laboratory, technical, manufacturing, and marketing data and information relating to Covered Products and the Licensed Patents, including all data or information made or acquired by Mileti prior to the date hereof with respect to manufacturing quotes and cost estimates; subject, however, to waiver of any confidentiality obligations between Mileti and Roadway Safety Services, Inc. 7. Non-Competition and Confidentiality Covenants a. Mileti Non-compete. In consideration of the compensation set forth above, Mileti hereby expressly covenants that he, directly or indirectly: (i) will not offer or perform, nor will he accept compensation for, any engineering or consulting services with regard to highway safety products, transportation safety issues, or related subjects within Mileti's range of experience or expertise, either on his own behalf or on behalf of any other person or entity who is or who may become, in direct or indirect competition with Transafe or its subsidiaries, affiliates or successors, in any respect of the highway safety or crash safety products market anywhere in the world; (ii) will not own, manage, operate, provide financing to, or join, control or participate in the ownership, management, operation or control of, or provision of financing to, any business wherever located (whether in corporate, proprietorship or partnership form or otherwise), if such business is competitive with the Business or Transafe, or with any other business operated by Transafe; (iii) will not do or say anything which is harmful to the reputation of the Business or which may lead any person to cease to deal with Transafe on substantially equivalent terms to those previously offered to Roadway or at all; or (iv) will not seek to contract with or engage in such a way as to adversely affect the Business any person who or which is party to an agreement with or has otherwise been engaged to manufacture, assemble, supply or deliver products, goods, materials or services to the Business or Transafe, 5 at any time. b. Systems Non-compete. In consideration for Transafe's payment to Systems of Thirty-Five Thousand Dollars ($35,000.00), Systems expressly covenants that it will: (i) not compete, directly or indirectly, with Transafe or its subsidiaries, affiliates or successors, in any aspect of the highway safety or transportation products market anywhere in the world, during the entire term that payments are being made to Mileti by Transafe in accordance with the terms of this Agreement; (ii) not use any trade name or continue to use the corporate name "Roadway," in any business relating to highway or transportation safety or products; and (iii) change its corporate name within thirty (30) days of Closing to "RSS, Inc." c. Confidentiality. Mileti and Systems agree to maintain in confidence and not to disclose to others, and not to directly or indirectly use for the benefit of anyone other than Transafe, any confidential information relating to or in connection with the Licensed Patents or the inventions covered thereby, including but not limited to plans and specifications, data, prototypes, processes, and other proprietary information and trade secrets, and any information with respect to payments made pursuant to this Agreement and other information learned from audits performed pursuant to Section 2b(6), without the prior written approval of Transafe. d. Remedies. Transafe, Mileti and Systems agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that Transafe, Mileti and Systems shall be entitled to apply to any court of law or equity of competent jurisdiction for specific performance and/or injunctive relief (without posting a bond or other security) in order to enforce or prevent any violation of the provisions of this Agreement. 8. Representations and Warranties, a. By Mileti. Mileti hereby expressly represents and warrants to Transafe the following: (1) He is the named Mileti and holder of the '106 Patent; he is the sole inventor of the invention covered by the '106 Patent; he has not assigned or licensed, nor has he agreed to assign or license, nor is required to assign or license, the '106 Patent or the Licensed Patents to any other party; and he is aware of no other party having any rights to the '106 Patent or Licensed Patents or claiming invalidity of the '106 Patent or Licensed Patents except as reflected in: (i) the allegations which have been made in litigation involving Mileti, Energy Absorption Systems, Inc. ("Energy"), Roadway Safety Service, Inc. ("Roadway") and Systems, currently pending in the United States District Court for the Northern District of Illinois, at Docket No. 93-C- 2147; and (ii) the allegations which have been made in litigation involving Mileti and Roadway currently pending in the United States District Court for the District of Massachusetts at Case No. 96-12158-RGS and the United States Court of Appeals for the Federal Circuit at Appeal No. 97-1378. (2) The application for the '106 Patent was filed with the United States Patent and Trademark Office on August 14, 1992, and the '106 Patent is not scheduled to expire until August 14, 2012; no applications for foreign patent protection were filed with respect to the '106 Patent, and no divisions, continuations, continuations-in-part, reissues, renewals, and extensions have been applied for or obtained, with respect to the '106 Patent. (3) He has sole and full right, power and authority to license the Licensed Patents and enter into this Agreement, and his entry into this Agreement does not violate or conflict with 6 any agreement to which he is a party or by which he is bound. (4) Except as alleged in the litigation referenced in paragraph (a)(1) above, Mileti: has conceived the invention covered by the 106 Patent entirely on his own time and the invention does not result from any work performed by him for his employer; has not used any equipment, supplies, facilities, or trade secret information of his employer, and the invention does not relate to the business of his employer or to his employer s actual or demonstrably anticipated research or development, and no claims have been made to such effect. b. By Systems. Systems represents and warrants to Transafe the following: (1) Systems is a corporation duly organized, validly existing and in good standing under the laws of each jurisdiction in which the nature of its business requires qualification, and has full corporate power and authority to carry on the business in which it is engaged and to use and own the properties owned and used by it. Mileti is a shareholder of Systems. (2) Systems has full power and authority to execute and deliver this License Agreement and to perform its obligations hereunder. (3) This Agreement constitutes the valid and legally binding obligation of Systems, enforceable in accordance with its terms and conditions. (4) Neither the execution and the delivery of this License Agreement nor the consummation of the transactions contemplated hereby will violate any statute, regulation, rule, judgment, order, decree, stipulation, injunction, charge or other restriction of any government, government agency or court to which Systems or Mileti is subject or bound or any provision of Systems charter or bylaws, or will conflict with, result in a breach of, constitute a default under, result in an acceleration of, or create in any party the right to accelerate, terminate, modify or cancel or require any notice under any contract, lease, sublease, license, sublicense, franchise, permit, indenture agreement or mortgage or other arrangement to which either Mileti or Systems is a party or by which it or he is bound, or to which any of its or his assets are subject. c. By Transafe. Transafe hereby expressly represents and warrants to Mileti and Systems the following: (1) Transafe is a corporation duly organized, validly existing and in good standing under the laws of each jurisdiction in which the nature of its business requires such qualification, and has the full power and authority to carry on the business in which it is engaged, and to own and use the properties owned and used by it. (2) Transafe has full power and authority to execute and deliver this License Agreement and to perform its obligations hereunder, and this License Agreement constitutes the valid and legally binding obligation of Transafe, enforceable in accordance with its terms and conditions. (3) Neither the execution and delivery of this License Agreement, nor the consummation of the transactions contemplated hereby will violate any statute, regulation, rule, judgment, order, decree, stipulation, injunction, charge or other restriction of any government, governmental agency or court to which Transafe is subject or bound or any provision of Transafe's charter or bylaws, or will conflict with, result in a breach of, constitute a default under, result in the 7 acceleration of, or create in any party the right to accelerate, terminate, modify or cancel or require any notice under any contract, lease, sublease, license, sublicense, franchise, permit, agreement or any other arrangement to which Transafe is a party or by which it is bound or to which any of its assets is subject. (4) Transafe intends to begin active marketing and sale of Covered Products promptly, including highway crash barrels which are the same or similar to the "Universal Module" crash barrels formerly sold by Roadway. Transafe intends to continue to actively market and sell Covered Products throughout the term of this Agreement absent presently unforeseen inventions or developments in the market likely to make such continued marketing and sales of Covered Products unprofitable. (5) Transafe will not during the term of this Agreement pursue a discounting or marketing strategy with respect to Covered Products that Transafe knows or should know will have the effect of significantly reducing the amount of total net sales as a percentage of total gross sales of Covered Products with the intent of reducing payments to Mileti, except as otherwise might be required to meet market demands of a competitive product. 9. Closing. The closing of the transactions contemplated by this License Agreement (the "Closing") shall take place at the offices of McBride Baker & Coles, 500 West Madison Street, 40th Floor, Chicago, Illinois 60661, commencing at 9:00 a.m. local time on the second business day following the satisfaction or waiver of all of the conditions to the obligations of the parties to consummate the transactions contemplated hereby, or such other date as the parties mutually determine ("Closing Date"). 10. Term and Termination. a. The term of this Agreement shall be for the life of the last to expire of the Licensed Patents unless terminated pursuant hereto. b. This Agreement and the parties' obligations hereunder shall terminate (1) upon the final declaration of a court of competent jurisdiction that the Licensed Patents are invalid or unenforceable except as referenced in Section 5; or (2) at such time as the Federal Highway Administration (or its successors or agents) determine(s) that frangible crash barrels are not approved apparatus or equipment for purpose of federal reimbursement. c. Termination of this Agreement shall not relieve the parties of any obligation accruing prior to such termination. d. Upon termination of this Agreement prior to its stated term, Transafe shall have the right to dispose of any inventory then on hand, for a period not to exceed 12 months. 11. Heirs, Successors and Assigns. Neither party shall have the right to assign the obligations provided under this Agreement, without the express written consent of the other party, provided that such consent shall not be unreasonably withheld. This Agreement shall be binding upon and shall inure to the benefit of the parties, as well as their respective heirs, successors and assigns. If death or disability prevents Mileti from exercising any of his rights hereunder, then those rights shall be exercisable by Mileti's heirs, representatives, executors, assigns or designees; provided, however, such heirs, representatives, executor, assigns or designees shall also be bound to perform and honor Mileti's obligations hereunder. 8 12. Legal Counsel. Each party represents that before the execution of this Agreement, such party had the benefit of legal counsel of such party's selection, and that such party executed this Agreement only after consulting with such legal counsel. 13. Consideration. Each signatory to this Agreement expressly states that he or it is enters into this Agreement for adequate consideration. 14. Construction; No Agency; No Waiver. The parties hereby expressly agree and acknowledge that this Agreement has been drafted jointly and is not to be construed against any party on the ground that such party was responsible for the preparation of this Agreement, or on any related ground. Nothing herein contained will be deemed to constitute the parties as joint venturers, partners or agents of each other. No failure on the part of either party to exercise, and no delay in exercising, and no course of dealing with respect to, any right, power or remedy under this Agreement shall operate as a waiver thereof. The express waiver by either party of a breach of any provision shall not be construed as a waiver of any succeeding breach of the same or another provision. The remedies in this Agreement are cumulative and are not exclusive of any other remedies provided by law or equity. 15. Severability. If any covenant or provision contained herein is determined to be void or unenforceable, in whole or in part, it shall not be deemed to affect or impair the validity of any other covenant or provision. 16. Counterparts. This Agreement may be executed in any number of duplicate counterparts, each of which shall be deemed to be an original, but all of which together shall constitute but one and same instrument. 17. Notices. All notices, requests, demands, claims, and other communication hereunder will be in writing. Any notice, request, demand, claim or other communication hereunder shall be deemed when: (a) delivered by hand (with written confirmation of receipt), (b) sent by facsimile (with written confirmation of receipt), provided that a copy is mailed by registered mail, return receipt requested, or (c) when received by the addressee, if sent by a nationally recognized overnight delivery service (receipt requested), in each case to the appropriate address and facsimile numbers set forth (or to such other addresses and facsimile numbers as a party may designate by notice to the other parties): If to Transafe: Leslie J. Jezuit Transafe Corporation One East Wacker Drive Chicago, IL 60601 Facsimile: (312) 467-1356 With a Copy To: Anne Hamblin Schiave McBride Baker & Coles 500 West Madison Street 40th Floor Chicago, IL 60661 Facsimile: (312) 993-9350 If to Mileti and Systems: Robert A. Mileti 9 Roadway Safety Systems, Inc. P.O. Box 436 Portsmouth, NH 03802 Facsimile: ( ) With a Copy To: David R. Cohen Kirkpatrick & Lockhart, L.L.P. 1500 Oliver Building Pittsburgh, PA 15222 Facsimile: (412) 355-6501 18. Choice of Law. This Agreement shall be governed and construed in accordance with the laws of the State of Illinois, without regard to its conflict of law principles. 19. Full Integration. This Agreement is an integrated agreement containing the entire understanding among the parties regarding the matters addressed herein and may not be amended, extended or otherwise modified except by written agreement of each of the parties. Except as set forth herein, no representation, warranty or promise has been made or relied upon by any of the parties in executing this Agreement. This License Agreement shall prevail over all prior communications between and among the parties or their representatives regarding the makers addressed herein. 10 IN WITNESS WHEREOF, the undersigned parties, each intending to be legally bound, hereby execute this License Agreement as of the day and date first written above. WITNESS: ROBERT A. MILETI /s/ Robert A. Mileti -------------------- Date: Date: October 8, 1997 ATTEST: ROADWAY SAFETY SYSTEMS, INC. By: /s/ Robert A. Mileti ------------------------- Date: Title: President Date: October 8, 1997 ATTEST: TRANSAFE CORPORATION By: /s/ Leslie J. Jezuit ------------------------- Date: Title: President & CEO Date: October 10, 1997 ATTEST: QUIXOTE CORPORATION By: /s/ Leslie J. Jezuit ------------------------- Date: Title: President & CEO Date: October 10, 1997 11 EX-2.3 4 EX 2.3 CONSULTING AGREEMENT (S WALTER) EXHIBIT 2.3 CONSULTING AGREEMENT THIS CONSULTING AGREEMENT (this "Agreement") is made and entered into as of October 10, 1997, to be effective October 1,1997, by and between Transafe Corporation, a Delaware Corporation ("Transafe"), and E. Scott Walter, an individual now residing in Southold, New York ("Consultant"). RECITALS A. Pursuant to an Asset Purchase Agreement, dated as of October 10, 1997 , effective October 1, 1997, (the "Acquisition Agreement"; capitalized terms used and not otherwise defined in this Consulting Agreement being used herein as defined in the Acquisition Agreement) Transafe acquired certain assets of Roadway Safety Services, Inc., Momentem Management, Inc. and Fitch Barrier Corporation (together, "Roadway"). B. Consultant is a shareholder, director and officer of Roadway and is experienced in matters related to the Business that would be beneficial to Transafe. C. Transafe desires to engage Consultant as a consultant in order to achieve certain objectives of the Business, and Consultant desires to accept the engagement, as provided in this Agreement. NOW, THEREFORE, in consideration of the mutual covenants herein contained and the mutual benefits provided, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. Certain Definitions. For the purposes of this Consulting Agreement: (a) "Authorized Representative" shall mean Leslie J. Jezuit or any other person designated from time to time by Mr. Jezuit. (b) "Product Information" shall mean all information, inventions (whether or not patented or patentable), writings (whether or not copyrighted or copyrightable) and discoveries, including improvements relating to Transafe Products or the technology or know-how of Transafe, Roadway or their Affiliates. (c) "Proprietary Material" shall mean information deemed by and treated by Transafe, Roadway or their Affiliates, in the ordinary course of business operations, as confidential to Transafe, Roadway or their Affiliates, such as but not limited to product pricing, cost information, profit margins, customer lists, market research, sales and market plans, design characteristics, manufacturing costs, strategic plans or financial plans or arrangements or any research, technical, manufacturing or commercial activities, strategic plans, or other information or discoveries of Roadway, Transafe or their Affiliates, which are known to or ascertainable by Consultant. (d) "Transafe Products" shall mean or refer to any current or planned products, services, apparatus or processes or uses thereof or therefor or products or services which any of Transafe, or Roadway or their Affiliates has developed or is actively engaged in developing, has acquired or will acquire, both prior to the date hereof and during the Consultation Period, and shall expressly include all products developed or designed by Roadway, whether or not commercially marketed, but shall expressly not include any Transafe Product designed for motorized racetrack and racecourse use. 2. Consulting Term. Transafe hereby retains Consultant as a consultant, and Consultant hereby accepts such engagement, in accordance with the terms and conditions of this Consulting Agreement for a term commencing on the date hereof and ending on September 30, 2007 (unless sooner terminated as provided in Section 9 below (the "Consultation Period"). 3. Consulting Services. (a) During the Consultation Period, Transafe shall employ Consultant as a consultant, within the range of his experience and expertise, to advise and assist Transafe with regard to highway safety products, inventions and improvements, transportation safety issues and other related projects, including but not limited to serving as a witness or an expert in a contested matter or in preparation therefor (the "Consulting Services"). Consultant agrees to be reasonably available for Transafe on an exclusive basis during normal business hours to perform the Consulting Services as assigned to him by the Authorized Representative from time to time. Consultant will perform the Consulting Services at such times and places as the Authorized Representative shall reasonably request. All Consulting Services will be performed by Consultant in accordance with Transafe's reasonable requests and in a manner consistent with appropriate ethical and professional standards. Consultant will at all times use his best efforts and in good faith act to promote the success of Transafe's business and will cooperate fully with the Authorized Representative. (b) During the Consultation Period, Consultant will report to Transafe from time to time regarding technological developments and marketing opportunities and strategies that may be of interest to Transafe with respect to its business. (c) Without limitation, Consultant shall (i) assist Transafe in the transition of the Roadway suppliers and customers to Transafe; (ii) supervise the conduct of the Business and its transition to Transafe if and to the extent requested by the Authorized Representative; (iii) utilize his contacts in the industry to assist Transafe's obtaining additional suppliers and customers; (iv) provide training to any Transafe employees responsible for aspects of the Business including the operations, marketing and administration of the Business; (v) make sales calls and participate in Transafe Product presentations; and (vi) develop marketing surveys and advertising programs. (d) During the first 90 days of the Consultation Period, Consultant agrees to be available to Transafe on an "as needed" basis (which shall not be limited to normal business days or working hours) at the Ronkonkoma facility, at Transafe's Chicago headquarters, at the Transafe office and facility and as otherwise requested by Transafe. Thereafter, for the remainder of the Consultation Period, Consultant shall be available for a minimum of 300 hours and a maximum of 400 hours of Consulting Services during each twelve-month period. (e) During the Consultation Period, Consultant will report to Transafe from time to time regarding technological developments that may be of interest to Transafe with respect to the Business. Consulting and advising via telephone, facsimile transmission and correspondence, as well as in person, shall constitute performance of Consultant's services hereunder if appropriate. 4. Compensation. (a) As compensation for the services rendered by Consultant pursuant to Section 3 of this Consulting Agreement and for the covenants of Consultant pursuant to Sections 5, 6 and 7, Transafe will pay Consultant the sum of $500,000 per annum during the Consultation Period, payable quarterly on or about the last day of each December, March, June and September during which this Consulting Agreement remains in effect. (b) Consultant shall be solely and fully responsible for paying any and all taxes, FICA, or other amounts required to be withheld by any governmental entity or authority having jurisdiction over the matter. Consultant shall hold Transafe harmless from any liability for such amounts. Consultant expressly agrees and understands that the benefits available to certain employees of Transafe, such as health insurance, disability benefits, pensions and annuities, death benefits, savings plans and others shall not be 2 available to Consultant hereunder. (c) Transafe shall reimburse Consultant for out-of-pocket expenses which Consultant incurs in the course of providing the Consulting Services in amounts which Transafe has approved in advance in writing and for which Consultant invoices Transafe in such reasonable detail and form and according to Transafe's policies and procedures. 5. Transafe Proprietary Rights. (a) Consultant agrees that all Proprietary Material and Product Information (collectively "Information") created by Consultant (alone or with others and regardless of whether or not such information was created during Transafe's customary business hours or at Transafe's place of business) during the term of this Consulting Agreement shall be and remain the sole property of Transafe and shall be considered "works made for hire" free and clear of any rights or claims that may be made by Consultant or any other entity. To the extent such Information created by Consultant may not be deemed "work for hire" under applicable law, Consultant hereby assigns to Transafe all right, title and interest in and to Consultant's copyrights for such Information. (b) Consultant shall not file any copyright or patent applications covering or claiming Information except with the prior written consent of Transafe (and any such filings made in violation hereof deemed void). At the request of Transafe, and without additional consideration for time spent in complying with this obligation, Consultant shall (i) promptly execute such documents and perform such other acts as Transafe deems necessary to vest in Transafe or its designate title to Information, or (ii) obtain, with respect to Information, copyrights and/or patents in any jurisdiction or jurisdictions, and assign to Transafe or its designees such copyright or patent applications, whether or not active, and the copyrights or patents relating thereto. (c) During the Consultation Period, Consultant agrees to disclose promptly in writing to the Authorized Representative all Information in Consultant's possession as to possible applications thereof to industry and other uses thereof or therefor and to keep a written record of Consultant's activities under this Agreement, such records being the sole property of Transafe. (d) The provisions of Section 5 shall survive the termination of this Consulting Agreement. 6. Confidentiality. (a) With respect to Information, Consultant agrees, unless (i) the Information to be disclosed has otherwise become public knowledge through no fault of Consultant where the disclosing person was not under an obligation not to disclose such information, or (ii) the Information to be disclosed was available to Consultant prior to its disclosure to Consultant, provided that Consultant informs Transafe of this fact in writing at the time of receiving the Information from Transafe: (i) To hold all Information in strict confidence forever and not publicize or otherwise disclose any thereof except to or with the prior written consent of the Authorized Representative or as required by law; (ii) Never to disclose or make any use of any Information and never copy any such Information or remove it from Transafe's premises, except such use as is required in the performance of Consultant's duties to Transafe or as permitted under licensing or other agreements with Transafe; and (iii) Always to use all reasonable precautions to assure that all the Information is properly protected and kept from unauthorized persons. 3 (b) Upon termination of the Consultation Period, or upon request of Transafe at any time, Consultant agrees to deliver to Transafe all written and recorded materials and all substances, models, mechanisms and the like, including customer lists, documents, research data, reports, equipment, software, tapes, discs, illustrations, samples, and manuals containing or relating to the Information, it being agreed that all such written materials and other things shall be and remain the sole property of Transafe. For this purpose, "written materials" shall be deemed to mean and include letters, memoranda, reports, notes, notebooks, books of account, data, drawings, prints, plans, specifications, formulae and all other documents or writings, and all copies thereof. (c) It is agreed that the provisions of Section 6 shall survive the termination of this Agreement. 7. Non-Compete. (a) Consultant expressly covenants that he and his Affiliates, directly or indirectly: (i) will not offer or perform, nor will he accept compensation for, any services with regard to highway safety products, transportation safety issues or other related subjects, either on his own behalf or on behalf of any other Person or entity who is or who may become in direct or indirect competition with Transafe, in any aspect of the highway safety products market anywhere in the world; (ii) will not own, manage, operate, provide financing to, or join, control or participate in the ownership, management, operation or control of, or provision of financing to, any business wherever located (whether in corporate, proprietorship or partnership form or otherwise), if such business is competitive with the Business or with any other business operated by Transafe; (iii) will not do or say anything which is harmful to the reputation of the Business or Transafe, or which may lead any Person to cease to deal with Transafe on substantially equivalent terms to those previously offered to Roadway or at all; or (iv) will not seek to contract with or engage in such a way as to adversely affect the Business any Person who or which is party to an agreement with or has otherwise been engaged to manufacture, assemble, supply or deliver products, goods, materials or services to the Business at any time; provided, however, Consultant shall be entitled to conduct and participate in a transportation safety systems business limited to motorized vehicle racetracks and racecourses, if such participation is done through Impact Dynamics, L.L.C. or another entity owned by Consultant and Transafe. (b) Consultant shall refrain, in any manner (other than as an agent of Transafe), directly or indirectly, from (i) soliciting or attempting to solicit, any business from any current or former customer of Transafe or Roadway for purposes of providing products or services that are competitive with the Business, Transafe Products, or Transafe's activities, or (ii) soliciting or attempting to solicit on his behalf or on behalf of any other person, firm, corporation or entity, any employee of Transafe or its Affiliates. (c) The provisions of Section 7 shall survive the termination of this Consulting Agreement. 8. Right to Injunctive Relief. Consultant acknowledges that Sections 5, 6 and 7 of this Consulting Agreement are of a special, unique, extraordinary and intellectual character, which gives them particular value, the loss of which will render irreparable harm to Transafe that cannot be adequately or reasonably compensated in damages in an action at law. Accordingly, Consultant further acknowledges that Transafe shall therefore be entitled to any and all equitable relief, including without limitation injunctive relief and specific performance, and to any other remedy that may be available under any applicable law or agreement between the parties, and to recover from Consultant all costs of litigation, including without limitation attorneys' fees and court costs. This provision shall not, however, be construed as a waiver of the rights of Transafe to obtain other remedies at law or in equity. 9. Termination 4 (a) The Consultation Period, Transafe's obligation to pay Consultant compensation as provided in Section 3, and any and all other rights of Consultant under this Consulting Agreement will terminate (except as otherwise provided in Sections 5, 6, and 7): (i) upon the death of Consultant; (ii) upon the disability of Consultant, immediately upon notice from either party to the other; or (iii) for cause, immediately upon notice from Transafe to Consultant, or at such later time as such notice may specify. (b) For purposes of this Section 9, Consultant will be deemed to have a "disability" if, for physical or mental reasons, Consultant is unable to perform the essential functions of Consultant's duties under this Consulting Agreement for 90 consecutive days, or 180 days during any twelve month period, as determined in accordance with this Section 9. The disability of Consultant may be determined by a medical doctor selected by written agreement of Transafe and Consultant upon the request of either party by notice to the other. If Transafe and Consultant cannot agree on the selection of a medical doctor, each of them will select a medical doctor and the two medical doctors will select a third medical doctor who will determine whether Consultant has a disability. (c) For purposes of Section 9, the phrase "for cause" means: (i) Consultant's breach of Sections 5, 6 and 7 of this Consulting Agreement or any other agreement between Consultant and Transafe or its Affiliates; or (ii) the appropriation (or attempted appropriation) of a material business opportunity of Transafe or its Affiliates, including attempting to secure or securing any personal profit in connection with any transaction entered into on behalf of Transafe or its Affiliates. (d) If this Consulting Agreement is terminated by either party as a result of Consultant's disability, as determined pursuant to Section 9, or death, Transafe will pay Consultant for Consulting Services through the remainder of the calendar month during which such termination is effective, and will then pay Consultant, his estate, heirs or designated beneficiary (as the case may be) the balance of the compensation as provided in Section 3 through September 30, 2007. If Transafe terminates this Consulting Agreement for cause, Consultant will be entitled to receive compensation only for Consulting Services through the effective date of such termination. 10. Independent Contractor. Notwithstanding anything in this Consulting Agreement, Consultant is an independent contractor with authority to select the means and method of performing the Consulting Services except as may otherwise be requested by Transafe. Consultant is not an employee or agent of Transafe and any action taken by Consultant which is not authorized by this Consulting Agreement or any other written agreement between Transafe and Consultant will not bind Transafe or create any claim against Transafe. Unless otherwise specifically authorized by this Agreement or any other written agreement between Transafe and Consultant, Consultant has no authority to transact any business or make any representations or promises in the name of Transafe or on behalf of Transafe. Consultant shall not represent to anyone that his relationship to Transafe under this Agreement is other than that of an independent contractor for limited purposes. 11. Set Off. Consultant agrees that Transafe may, to the extent Consultant and his Affiliates fail to pay any claim for indemnification to Transafe or its Affiliates pursuant to the Acquisition Agreement within thirty (30) days of notice by Transafe or its Affiliates requiring such indemnification, set off said amounts claimed against any sums otherwise due and owing Consultant pursuant to this Consulting Agreement, notwithstanding the amounts claimed arise from amounts due and owing by Consultant and his Affiliates in other capacities. 12. Warranties. Each party hereto represents and warrants that he or it has the right to enter into and fully perform his or its obligations under this Agreement and that this Agreement is his or its legal, valid and binding agreement enforceable against him or it in accordance with its terms. 5 13. Severability. If any covenant or provision contained herein is determined to be void or unenforceable, in whole or in part, it shall not be deemed to affect or impair the validity of any other covenant or provision. 14. Assignment. This Consulting Agreement shall inure to the benefit of and shall be binding upon the parties hereto and their heirs, devisees, successors and assigns. Transafe may assign this Consulting Agreement in whole or in part without the prior written consent of Consultant. Consultant may not assign or delegate any rights or responsibilities under this Consulting Agreement, in whole or in part. 15. Governing Law, Arbitration. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Illinois, without reference to the conflict of laws principles thereof. In the event a dispute arises between the parties with regard to the terms and conditions of this Consulting Agreement, the parties agree to submit such dispute to binding arbitration in Chicago, Illinois under the then-current rules of the American Arbitration Association. 16. Notices. All notices, consents, waivers, and other communications under this Agreement must be in writing and will be deemed to have been duly given when (a) delivered by hand (with written confirmation of receipt), (b) sent by facsimile (with written confirmation of receipt), provided that a copy is mailed by registered mail, return receipt requested, or (c) when received by the addressee, if sent by a nationally recognized overnight delivery service (receipt requested), in each case to the appropriate address and facsimile numbers set forth (or to such other addresses and facsimile numbers as a party may designate by notice to the other parties): If to Transafe: Transafe Corporation One East Wacker Drive Chicago, IL 60601 Attn: Leslie J. Jezuit Facsimile: (312) 467-1356 With a Copy To: McBride Baker & Coles 500 West Madison Street 40th Floor Chicago, IL 60661 Attn: Anne Hamblin Schiave Facsimile: (312) 993-9350 If to Consultant: E. Scott Walter 80 Remington Boulevard Ronkonkoma, NY 11779 Facsimile No. 516-588-6394 With a Copy To: Soberman, Shulman & Rosenberg 2001 Marcus Avenue Lake Success, NY 11042 Attn: Alan R. Soberman Facsimile No. 516-437-7292 17. Counterparts. This Consulting Agreement may be executed in one or more counterparts, each of which will be deemed to be one original copy of this Consulting Agreement, and all of which, when taken together, will be deemed to constitute one and the same agreement. 6 IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the date first set forth above. TRANSAFE CORPORATION By: /s/ Leslie J. Jezuit --------------------- Its: President & CEO /s/ E. Scott Walter ------------------------ E. Scott Walter Consultant 7 EX-2.4 5 EX 2.4 PROMISSORY NOTE (WALTER) EXHIBIT 2.4 PROMISSORY NOTE $900,000 October 10, 1997 Chicago, Illinois FOR VALUE RECEIVED, Transafe Corporation, a corporation duly organized and existing under the laws of the State of Delaware with a principal office located at One East Wacker Drive, Chicago, IL, 60601 ("Maker"), hereby promises to pay to the order of J. C. Walter Company, Inc., a Massachusetts corporation with a principal place of business at 163 East Washington Street, Hanson, Massachusetts 02341 and Jay C. Walter (together, "the Holders"), the principal sum of Nine Hundred Thousand ($900,000) Dollars, payable in twenty (20) consecutive installments of Forty-Five Thousand ($45,000) Dollars, payable without interest on December 31, March 31, June 30 and September 30 each year commencing December 31, 1997 and ending on September 30, 2002. Any amounts remaining outstanding shall be due and payable in full on September 30, 2002. This Note represents sums of money due Holders pursuant to an Agreement and a Non-Competition Agreement, both dated October 10, 1997, effective as of October 1, 1997 between the Holders and the Maker (the "Agreements"), and is subject to the provisions of the Agreements. All payments shall be payable to Holders, and shall be made at the above- stated address of the Holders, or at such other place as the Holders hereof may from time-to-time designate in writing, in lawful money of the United States of America in funds immediately available to Holders. From and after the occurrence of an Event of Default (as hereinafter defined) the entire principal hereof shall bear interest, from the date the same becomes due and payable, at an annual rate equal to twelve (12%) percent per annum, which interest shall continue to accrue until the obligations of Maker have been discharged. At the option of the Holders, the entire amount of this Note shall become immediately due and payable in full upon the occurrence at any time after the following events (herein defined as an "Event of Default"): 1. Default in any payment due hereunder, continuing for ten (10) days after Holders has given Maker written notice of such default in payment; 2. If any party liable hereon, whether as Maker, indorser, guarantor, surety or otherwise shall make an assignment for the benefit of creditors, or if a receiver of such party's property shall be appointed, or if a petition in bankruptcy or other similar proceeding under any law for relief of debtors shall be filed by or against any such party and such involuntary receivership or involuntary bankruptcy proceeding remains in effect in excess of sixty (60) days; 3. If Maker, voluntarily or involuntarily, liquidates as a matter of corporation law without having assigned this Note to a successor entity who agrees to be bound by the terms hereof. In the Event of a Default, in addition to the right to declare the entire amount of this Note immediately due made payable, Holders may exercise each and every other right and remedy available hereunder. Should the indebtedness evidenced by this Note or any part thereof be collected by action at law, or in bankruptcy, receivership or other event proceedings, or should this Note be placed in the hands of attorneys for collection after default, Maker shall pay on demand all court costs, reasonable attorney's fees and other reasonable collection costs, whether or not suit is commenced. Maker hereby: (1) waives presentment, demand, protest and notices of every kind and description (except as required by the Agreements), and all suretyship defenses and defenses in the nature thereof; and (2) waives any defenses based upon, and specifically assents to, any and all extensions and postponements of the time of payment and all other indulgences and forbearances which may be granted by the Holders to any party liable hereon and waives the right to require Holders to proceed against any party. No delay or omission on the part of the Holders in exercising any right hereunder shall operate as a waiver of such right or of any other right of such Holders, nor shall any delay, omission or waiver on any one occasion be deemed a bar to or waiver of the same or of any other right on any future occasion. No single or partial exercise of any power hereunder shall preclude any other or future exercise thereof or the exercise of any other power. All times of payment of principal, interest or any other monies due under or in respect to this Note shall be of the strict essence. Maker may prepay this Note in whole or in part, at any time, without premium or penalty. If any term or provision of this Note, or any portion of any such term or provision shall be held invalid or against public policy, or if the application of the same to any person or circumstance is held invalid or against public policy, then the remainder of this Note (or the remainder of such term or provision) and the application thereof to other persons or circumstances shall not be affected thereby and shall remain valid and in full force and effect to the fullest extent permitted by law. Any notice received hereunder to be sent to Maker shall be sufficient if sent by certified mail, return receipt requested, or delivered in hand to Maker at One East Wacker Drive, Chicago, IL, 60601, with a copy to Anne Hamblin Schiave, McBride, Baker & Coles, 500 West Madison Street, Chicago, IL 60661- 2511. To the maximum extent permitted by any applicable law, any action to enforce the provisions of this Note may be brought in such court or courts located in the Commonwealth of Massachusetts as may be provided by law and the undersigned consents to the jurisdiction of said court or courts located in Massachusetts and to the service of process by registered or certified mail, return receipt requested or by any other manner provided by law. All rights and obligations hereunder shall be governed by the laws of the Commonwealth of Massachusetts and this Note is executed as and shall have the effect of a sealed instrument. Executed under seal as of the date first above written. Witness: Transafe Corporation By: /S/ LESLIE J. JEZUIT - --------------------------- -------------------------------------- duly authorized EX-2.5 6 EX 2.5 PROMISSORY NOTE (WARTON) EXHIBIT 2.5 PROMISSORY NOTE $900,000 October 10, 1997 Chicago, Illinois FOR VALUE RECEIVED, Transafe Corporation, a corporation duly organized and existing under the laws of the State of Delaware with a principal office located at One East Wacker Drive, Chicago, IL, 60601 ("Maker"), hereby promises to pay to the order of RFW Sales, ___, a _____________ corporation with a principal place of business at ___________________, ____________, ______________, and Rigg F. Warton (together, "the Holders"), the principal sum of Nine Hundred Thousand ($900,000) Dollars, payable in twenty (20) consecutive installments of Forty- Five Thousand ($45,000) Dollars, payable without interest on December 31, March 31, June 30 and September 30 each year commencing December 31, 1997 and ending on September 30, 2002. Any amounts remaining outstanding shall be due and payable in full on September 30, 2002. This Note represents sums of money due Holders pursuant to an Agreement and a Non-Competition Agreement, both dated October 10, 1997, between the Holders and the Maker (the "Agreements"), and a breach of Sections 3, 4 and 5 of said Non-Competition Agreement by the Holders shall constitute a complete defense to Maker's failure to pay sums due hereunder as provided in said Agreement. All payments shall be payable to Holders, and shall be made at the above- stated address of the Holders, or at such other place as the Holders hereof may from time-to-time designate in writing, in lawful money of the United States of America in funds immediately available to Holders. From and after the occurrence of an Event of Default (as hereinafter defined) the entire principal hereof shall bear interest, from the date the same becomes due and payable, at an annual rate equal to twelve (12%) percent per annum, which interest shall continue to accrue until the obligations of Maker have been discharged. At the option of the Holders, the entire amount of this Note shall become immediately due and payable in full upon the occurrence at any time after the following events (herein defined as an "Event of Default"): 1. Default in any payment due hereunder, continuing for ten (10) days after Holders has given Maker written notice of such default in payment; 2. If any party liable hereon, whether as Maker, indorser, guarantor, surety or otherwise shall make an assignment for the benefit of creditors, or if a receiver of such party's property shall be appointed, or if a petition in bankruptcy or other similar proceeding under any law for relief of debtors shall be filed by or against any such party and such involuntary receivership or involuntary bankruptcy proceeding remains in effect in excess of sixty (60) days; 3. If Maker, voluntarily or involuntarily, liquidates as a matter of corporation law without having assigned this Note to a successor entity who agrees to be bound by the terms hereof. In the Event of a Default, in addition to the right to declare the entire amount of this Note immediately due made payable, Holders may exercise each and every other right and remedy available hereunder. Should the indebtedness evidenced by this Note or any part thereof be collected by action at law, or in bankruptcy, receivership or other event proceedings, or should this Note be placed in the hands of attorneys for collection after default, Maker shall pay on demand all court costs, reasonable attorney's fees and other reasonable collection costs, whether or not suit is commenced. Maker hereby: (1) waives presentment, demand, protest and notices of every kind and description (except as required by the Agreements), and all suretyship defenses and defenses in the nature thereof; and (2) waives any defenses based upon, and specifically assents to, any and all extensions and postponements of the time of payment and all other indulgences and forbearances which may be granted by the Holders to any party liable hereon and waives the right to require Holders to proceed against any party. No delay or omission on the part of the Holders in exercising any right hereunder shall operate as a waiver of such right or of any other right of such Holders, nor shall any delay, omission or waiver on any one occasion be deemed a bar to or waiver of the same or of any other right on any future occasion. No single or partial exercise of any power hereunder shall preclude any other or future exercise thereof or the exercise of any other power. All times of payment of principal, interest or any other monies due under or in respect to this Note shall be of the strict essence. Maker may prepay this Note in whole or in part, at any time, without premium or penalty. If any term or provision of this Note, or any portion of any such term or provision shall be held invalid or against public policy, or if the application of the same to any person or circumstance is held invalid or against public policy, then the remainder of this Note (or the remainder of such term or provision) and the application thereof to other persons or circumstances shall not be affected thereby and shall remain valid and in full force and effect to the fullest extent permitted by law. Any notice received hereunder to be sent to Maker shall be sufficient if sent by certified mail, return receipt requested, or delivered in hand to Maker at One East Wacker Drive, Chicago, IL, 60601, with a copy to Anne Hamblin Schiave, McBride, Baker & Coles, 500 West Madison Street, Chicago, IL 60661- 2511. To the maximum extent permitted by any applicable law, any action to enforce the provisions of this Note may be brought in such court or courts located in the State of Illinois as may be provided by law and the undersigned consents to the jurisdiction of said court or courts located in Illinois and to the service of process by registered or certified mail, return receipt requested or by any other manner provided by law. All rights and obligations hereunder shall be governed by the laws of the State of Illinois and this Note is executed as and shall have the effect of a sealed instrument. Executed under seal as of the date first above written. Witness: Transafe Corporation By: /S/ LESLIE J. JEZUIT - ----------------------------- ----------------------------- -----END PRIVACY-ENHANCED MESSAGE-----