ASSET PURCHASE AGREEMENT
by and among
Banner Aerospace, Inc.,
the Sellers listed on Annex A,
AlliedSignal Inc.
and
AS BAR LLC
dated as of December 8, 1997
_______________________________________________
TABLE OF CONTENTS
Page
ARTICLE I
The Transaction
1.1Purchase and Transfer 1
1.2Acquisition of Assets 2
1.3Assumption of Assumed Liabilities 5
1.4Initial Purchase Price 9
1.5Escrow of Shares 9
1.6Purchase Price Adjustment 10
1.7Accounts Receivable 13
1.8Closing 14
1.9Deliveries and Proceedings at the Closing 15
1.10 Stock Legend 17
1.11 Prorations 17
ARTICLE II
Representations And Warranties Of Parent And Sellers
2.1Qualification 18
2.2Ownership of the Companies 18
2.3Authorization and Enforceability 19
2.4No Violation of Laws or Agreements 19
2.5Consents 20
2.6Financial Statements 20
2.7No Changes 21
2.8Contracts 22
2.9Permits and Compliance With Laws Generally 23
2.10 Environmental Matters 24
2.11 Transactions with Affiliates 25
2.12 Title 25
2.13 Acquired Real Property 26
2.14 Taxes 27
2.15 Intellectual Property and Technology 28
2.16 Brokerage 29
2.17 Product Warranties and Guarantees 30
2.18 Products Liability 30
2.19 Labor Matters 30
2.20 Employee Benefits 31
2.21 No Pending Litigation or Proceedings 33
2.22 Insurance 33
2.23 Customers; Suppliers 34
2.24 Condition of Assets 34
2.25 All Assets 34
2.26 Undisclosed Liabilities 34
2.27 Securities Matters 35
2.28 SEC Filings 35
2.29 Bank Accounts 35
2.30 Business Conduct 35
ARTICLE III
Representations And Warranties Of AlliedSignal and Buyer
3.1Organization and Good Standing 36
3.2Authorization and Enforceability 36
3.3No Violation of Laws or Agreements 36
3.4Consents 37
3.5AlliedSignal Common Stock 37
3.6SEC Filings 37
3.7Financial Statements 38
3.8Brokerage 38
ARTICLE IV
Additional Covenants
4.1Conduct of Business 38
4.2Mutual Covenants 41
4.3Filings and Authorizations 41
4.4Public Announcement 42
4.5Investigation 42
4.6Taxes 42
4.7Certain Deliveries 44
4.8Consents 45
4.9Releases 45
4.10 Real Property 45
4.11 Environmental 45
4.12 Ancillary Agreements 46
4.13 Reasonable Best Efforts 46
4.14 Negotiations 46
4.15 U.S. Government Contracts 47
4.16 NYSE Listing 47
4.17 Continued Existence 47
4.18 Company Debt 48
4.19 Side Letters 48
4.20 Product Liability Insurance 48
4.21 Harco Northern Ireland, Ltd. 48
ARTICLE V
Conditions Precedent
5.1Conditions Precedent to Obligations of Allied
Signal and Buyer 49
5.2Conditions Precedent to Obligations of Parent and
Sellers 51
ARTICLE VI
Certain Additional Covenants
6.1Expenses 52
6.2Maintenance of Books and Records 53
6.3Financial Statements 53
6.4Non-Competition/Non-Solicitation 53
6.5Confidential Information 53
ARTICLE VII
Survival; Indemnification
7.1Survival 55
7.2Indemnification by Parent, Sellers and Xxxxxxx
Sellers 56
7.3Indemnification by AlliedSignal and Buyer 57
7.4Notification of Claims 58
ARTICLE VIII
Employees And Employee Benefits
8.1Scope of Article 60
8.2U.S. Employees 60
8.3Foreign Employees 62
ARTICLE IX
Termination; Miscellaneous
9.1Termination 63
9.2Further Assurances 64
9.3Entire Agreement; Amendments; Waivers 64
9.4Benefit; Assignment 64
9.5No Presumption 65
9.6Notices 65
9.7Terms Generally 65
9.8Counterparts; Headings 66
9.9Severability 66
9.10 No Reliance 66
9.11 Governing Law 66
9.12 Submission to Jurisdiction; Waivers 66
9.13 Bulk Transfer 67
9.14 Use of Names 67
9.15 Xxxxxxx Price Allocation 67
9.16 Relationship with Xxxxxxx Agreement 67
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of December 8, 1997,
by and among Banner Aerospace, Inc., a Delaware corporation
("Parent"), the seven companies listed on Annex A hereto
(individually, a "Seller" and, collectively, "Sellers"),
AlliedSignal Inc., a Delaware corporation ("AlliedSignal") and AS
BAR LLC, a Delaware limited liability company ("Buyer"). Sellers
and the Subsidiaries of Sellers listed on Annex B hereto (the
"Seller Subsidiaries") are referred to herein collectively as the
"Companies".
The Companies are engaged in, among other things, the
businesses of supplying to the aerospace industry (i) aircraft
hardware (including bearings, nuts, bolts, screws, rivets and
other types of fasteners), (ii) chemical products (including
adhesives, sealants, lubricants, cleaners and paint) and (iii)
related support services (including Inventory management
services). The term "Business", as used herein, shall mean the
compilation of all the businesses of all of the Companies, except
that when this Agreement refers to a single Company and the
Business, it refers to that portion of the Business which is
conducted by that particular Company.
Buyer desires to purchase, and AlliedSignal desires to
cause the purchase of, substantially all of the Assets of Sellers
(including all of the Subsidiary Shares (as hereinafter
defined)), and Sellers desire to transfer, and Parent desires to
cause the transfer of, such Assets to Buyer, all on the terms and
subject to the conditions set forth in this Agreement.
Capitalized terms used herein without definition shall
have the meanings assigned to them in Annex C hereto, which is
hereby incorporated into this Agreement as if set forth in full
herein.
NOW, THEREFORE, in consideration of the mutual
representations, warranties, covenants and agreements contained
herein and intending to be legally bound hereby, the parties
hereto agree as follows:
ARTICLE I
The Transaction
1.1 Purchase and Transfer. Upon the terms and subject
to the conditions set forth in this Agreement, at the Closing,
(i) Sellers shall, and Parent shall cause Sellers to, transfer,
convey, assign and deliver to Buyer, and Buyer shall purchase,
acquire and accept from the Sellers, all of Sellers' right, title
and interest in and to the Purchased Assets, and (ii) Buyer shall
pay to Sellers the Initial Purchase Price and shall assume, and
agree to thereafter pay, perform and discharge when due, the
Assumed Liabilities.
1.2 Acquisition of Assets.
(a) Subject to Section 1.2(b), "Purchased Assets"
means all of the Assets of Sellers owned, used or held for use in
connection with, or that are otherwise related to or required for
the conduct of, the Business including, without limitation, all
of the Assets set forth below:
(i) all Subsidiary Shares;
(ii) all Owned Real Property;
(iii) all Equipment;
(iv) all Inventory;
(v) all Accounts Receivable;
(vi) all credits, prepaid expenses, deferred
charges, advance payments, security deposits and deposits
owned, used or held for use by any Company with respect to
the Business ("Prepaid Expenses") to the extent that such
items will accrue to the benefit of Buyer immediately
following the Closing;
(vii) all Intellectual Property;
(viii) all Technology;
(ix) all Contracts;
(x) all Permits;
(xi) all books, records, ledgers, files, documents
(including originally executed copies of written Contracts,
customer and supplier lists (past, present or future),
correspondence, memoranda, forms, lists, plats,
architectural plans, drawings and specifications, copies of
documents evidencing Intellectual Property or Technology,
new product development materials, creative materials,
advertising and promotional materials, studies, reports,
sales and purchase correspondence, books of account and
records relating to the employees of the Business,
photographs, records of plant operations and materials used,
quality control records and procedures, equipment
maintenance records, manuals and warranty information,
research and development files, data and laboratory books,
inspection processes, in each case, whether in hard copy or
magnetic format, in each instance, to the extent used or
held for use with respect to the Business or the employees
of the Business;
(xii) all rights or choses in action arising
out of occurrences before or after the Closing Date and
related to any portion of the Business, including third
party warranties and guarantees and all related claims,
credits, rights of recovery and set-off and other similar
contractual rights, as to third parties held by or in favor
of Sellers and arising out of, resulting from or relating to
the Business or the Acquired Assets, other than as a result
of the allegations of Xxxxx Xxxxxxxxx of wrongful
termination by Burbank Aircraft Supply, Inc. (collectively,
"Third Party Rights");
(xiii) all rights to insurance and condemnation
proceeds relating to the damage, destruction, taking or
other impairment of the Acquired Assets which damage,
destruction, taking or other impairment occurs on or prior
to the Closing Date, except to the extent Buyer receives a
credit against the Initial Purchase Price pursuant to
Section 1.2(d)(i)(y) or 1.2(d)(ii)(y);
(xiv) all Assets (other than Subsidiary
Assets) that (A) are reflected on the Balance Sheet (other
than Assets reflected on the Balance Sheet that are disposed
of prior to the Closing Date in accordance with this
Agreement) or (B) have been or are acquired by the Companies
after the date of the Balance Sheet and would be reflected
on a balance sheet for the Business prepared on a basis
consistent with that on which the Balance Sheet was prepared
(other than any such Assets that are disposed of prior to
the Closing Date in accordance with this Agreement); and
(xv) the Business and the goodwill thereof.
(b) Notwithstanding anything to the contrary contained
herein, Purchased Assets shall not include any Excluded Assets.
"Excluded Assets" means:
(i) cash and cash equivalents on hand or in bank
accounts;
(ii) all accounts owing between and among each
Company and its Affiliates, other than trade receivables;
(iii) except as otherwise set forth herein,
Assets attributable or related to any Plan;
(iv) all rights of Parent and each Seller under
this Agreement;
(v) all stock and minute books and similar
records of the Sellers;
(vi) all Third Party Rights arising out of Non-
Assumed Liabilities or Excluded Assets;
(vii) all shares of capital stock of (or other
ownership interests in) Burbank Aircraft International,
Inc., Banner Aero (Australia) Pty, Ltd. and TriFast S.a.r.l;
(viii) all Prepaid Expenses to the extent that
such items will not accrue to the benefit of Buyer
immediately following the Closing;
(ix) all Plans of Sellers (including, without
limitation, the deferred compensation agreement with Xxxxxxx
Xxxxx (the "Lovin Agreement"), the two non-competition
agreements with Xxx Xxxxxxx (the "Xxxxxxx Agreements") and
those referenced on Schedule 2.20(a)(iii));
(x) all Contracts referenced on
Schedule 2.8(a)(i) other than (i) the purchase orders
described thereon and (ii) distributorship agreements with
Xxxxxxxxx Fasteners that are terminable by the Companies on
not more than 60 days notice without any penalty;
(xi) all Contracts pursuant to which any business
included in the Business or any Company was purchased; and
(xii) all rights of any Seller under the
Second Amended and Restated Credit Agreement, dated as of
December 12, 1996, among Parent, Burbank Aircraft Supply,
Inc. and other Subsidiaries of Parent, Citicorp USA, Inc.
(as Administrative Agent and Arranger), NationsBank, N.A.
(as Co-Arranger) and the Institutions as Lenders and Issuing
Banks thereunder.
(c) Nonassignable Rights. Anything in this Agreement
to the contrary notwithstanding, but subject to AS's and Buyer's
rights under Section 7.2, this Agreement shall not constitute an
agreement to assign any of the Contracts, Intellectual Property,
Technology or Permits or any claim or right or any benefit
arising thereunder or resulting therefrom if an attempted
assignment thereof, without the consent of a third Person
thereto, would constitute a breach or other contravention thereof
or in any way adversely affect the rights of Buyer thereunder.
(Any Asset that, but for this Section 1.2(c) would be sold and
assigned at the Closing shall remain a "Purchased Asset" for
purposes of this Agreement.) Parent and Sellers will use all
reasonable best efforts to obtain the consent of the other
parties to any such Contract or Permit for the assignment thereof
to Buyer and Buyer shall reasonably cooperate with such efforts.
If such consent is not obtained prior to the Closing, or if an
attempted assignment thereof would be ineffective or would
adversely affect the rights of Parent and Sellers thereunder so
that Buyer would not in fact receive all such rights, subject to
Section 5.1(d), the Closing shall nevertheless take place and,
thereafter, Parent, Sellers and Buyer will cooperate in a
mutually agreeable arrangement under which Buyer would obtain the
benefits and assume the obligations thereunder (but only to the
extent such obligations would have constituted Assumed
Liabilities if such assignment occurred on the Closing Date) from
and after the Closing Date in accordance with this Agreement,
including subcontracting, sublicensing or subleasing to Buyer, or
under which Parent and each Seller would enforce for the benefit
of Buyer, with Buyer assuming each Seller's obligations to the
same extent as if it would have constituted an Assumed Liability
and any and all rights of Parent or any Seller against a third
Person thereto. Parent and each Seller will pay promptly to
Buyer when received all monies received by Parent or any Seller
after the Closing Date under any of the Contracts or any claim or
right or any benefit arising thereunder to the extent that Buyer
would be entitled thereto pursuant hereto. The provisions of
this Section 1.2 shall in no way limit the Closing condition set
forth in Section 5.1(d).
(d) Damage; Condemnation.
(i) If, prior to the Closing, any Acquired Real
Property is damaged by fire, vandalism, acts of God, or
other casualty or cause (and such damage is not repaired by
the Closing), Buyer shall have the option of (x) accepting
such property as it is together with the insurance proceeds,
if any, and the right to receive the same, in which case no
adjustment shall be made in respect of the decreased value
of such Asset pursuant to Section 1.4(b), or (y) excluding
such Acquired Real Property from the Acquired Assets and
receiving a credit against the Initial Purchase Price equal
to the fair market value thereof, in which case no
adjustment shall be made in respect of the decreased value
of such Asset pursuant to Section 1.4(b) other than such
credit against the Initial Purchase Price. If Buyer elects
option (x) above, Parent hereby agrees to cooperate with
Buyer in any loss adjustment negotiations, legal actions and
agreements with the insurance company, and to assign
(pursuant to a writing in form satisfactory to Buyer,) to
Buyer at Closing its rights to such insurance proceeds (and
pay over to Buyer any such proceeds already received), and
Parent will not settle any insurance claims or legal actions
relating thereto without Buyer's prior written consent.
(ii) If, prior to the Closing, all or any portion
of any Acquired Real Property is taken by eminent domain,
Buyer shall have the option of (x) proceeding with the
Closing and accepting the property as affected by such
taking, together with all compensation and damages awarded,
if any, and the right to receive the same, in which case, no
adjustment shall be made in respect of the decreased value
of such Asset pursuant to Section 1.4(b), or (y) excluding
such Acquired Real Property from the Acquired Assets and
receiving credit against the Initial Purchase Price equal to
the fair market value thereof, in which case no adjustment
shall be made in respect of the decreased value of such
Asset pursuant to Section 1.4(b) other than such credit
against the Initial Purchase Price. If Buyer elects option
(x) above, Parent hereby agrees to assign to Buyer at
Closing its rights to such compensation and damages (and pay
over to Buyer any such compensation and damages already
received), and will not settle any proceedings relating to
such taking without Buyer's prior written consent.
(iii) Parent shall promptly notify
AlliedSignal of any material casualty or any actual or
threatened condemnation affecting all or any portion of any
Acquired Real Property. Any such notice relating to
casualty shall be accompanied by Parent's selection of an
architect or engineer to determine the cost of repair and/or
replacement.
(iv) Nothing in this Section 1.2(d) limits the
condition to Closing set forth in Section 5.1(a).
1.3 Assumption of Assumed Liabilities.
(a) "Assumed Liabilities" shall mean (i) all
Liabilities of the Business (including bank overdrafts, if any)
to the extent included on the Closing Date Balance Sheet, (ii)
Liabilities under the Contracts, Permits, Intellectual Property
or Technology to the extent (but not only to the extent) arising
from, and accruing with respect to, the operation of the Business
after the Closing, and (iii) Liabilities relating to the
employees of the Business expressly assumed pursuant to Article
VIII.
(b) Notwithstanding anything to the contrary contained
herein, neither Buyer nor AlliedSignal shall assume or be bound
by, or be obligated or responsible for, any Non-Assumed
Liabilities. "Non-Assumed Liabilities" shall mean (x) all
Liabilities of Sellers relating to the Purchased Assets or the
Business and any claims in respect thereof, other than the
Assumed Liabilities, and (y) any Liabilities or claims which may
be asserted against or imposed upon Buyer by reason of its being
a successor or transferee of Sellers or as an acquiror of the
Purchased Assets or the Business or otherwise as a matter of law.
Without limitation of the foregoing, all of the following shall
be Non-Assumed Liabilities for the purposes of this Agreement:
(i) any product Liability, or Liability relating
to any toxic tort or similar claim for injury to person or
property, regardless of when made or asserted that arises
out of or is based upon any express or implied
representation, warranty, agreement or guarantee made by any
Company or any of its Affiliates, or alleged to have been
made by any of such Persons, or that it is imposed or
asserted to be imposed by operation of law, in connection
with any service performed or product manufactured,
distributed or sold by or on behalf of any Company or any of
its Affiliates (in the case of the Seller Subsidiaries prior
to the Closing) or which arises out of any condition
existing as of the Closing, including any claim relating to
any product delivered, manufactured or distributed by any
Company or any of its Affiliates (in the case of the Seller
Subsidiaries prior to the Closing) and any claim seeking
recovery for consequential damages, lost revenue or income;
(ii) except for Assumed Tax Liabilities, any
Liability of Parent or any Company (including under any
Contract) for Taxes, including without limitation, any
(1) Tax payable (A) with respect to the Business, Assets or
operations of Parent or Sellers, (B) by any member of any
consolidated, affiliated or unitary group of which Parent or
any Company is a member, or (C) by any other person for
whose Tax Parent or any Company may be liable under Contract
or otherwise, and (2) Tax incident to or arising as a
consequence of the negotiation or consummation by Parent or
any Seller or any member of any affiliate group of which
Parent or Sellers is a member of this Agreement and the
transactions contemplated hereby;
(iii) except as expressly provided in clause
(iii) of the definition of Assumed Liabilities, any
Liability with respect to compensation or employee benefits
of any nature owed to any employees, agents or independent
contractors of any Company or any of its Affiliates, whether
or not employed by Buyer after the Closing, or any of their
beneficiaries, heirs or assigns, that arises out of or
relates to events or conditions to the extent occurring
before the Closing, including, but not limited to,
Liabilities for supplemental unemployment benefits, vacation
pay, sick pay, severance benefits, Liabilities under any
Plan whether arising prior to, on or after the Closing Date,
Liabilities to provide any retiree benefits to former hourly
and/or salaried employees of the Business or any retiree
benefits to be provided to current hourly and/or salaried
employees of the Business, and any other benefits,
withholding tax Liabilities, workers compensation or
unemployment compensation premiums, hospitalization or
medical claims, occupational injury, disease or disability
claims or claims for discrimination, unfair labor practices,
violations of the collective bargaining agreements or
wrongful discharge;
(iv) Liabilities relating to the operation of the
Business prior to the Closing arising by operation of law
under any common law or statutory doctrine (including
successor Liability or de facto merger);
(v) any Liability with respect to or arising out
of any Contract (A) that is not capable of being assigned to
Buyer at the Closing (except to the extent provided in
Section 1.2(c)) (B) to the extent arising out of any breach
or default thereof by Parent or any Company on or prior to
the Closing Date (including any event occurring on or prior
to the Closing Date that, with the passing of time or the
giving of notice, or both, would become a breach or default)
under any Contract, or (C) required by the terms thereof to
be discharged on or prior to the Closing Date;
(vi) any Liability of Parent or any of the
Companies or any of their predecessors (including under any
Contract) with respect to any claim, action, suit or
proceeding made or threatened (whether prior to, at or after
the Closing Date) which asserts Losses arising from (x) the
presence, at any time prior to the Closing Date, of asbestos
at the Acquired Real Property, any other real property owned
or leased at any time by Parent, Sellers or any of their
past, present or future Subsidiaries or any other third-
party location or (y) the presence of asbestos in any
product at any time prior to the Closing Date manufactured,
used, sold or serviced by Parent, Sellers or any of their
past, present or future Subsidiaries, or which otherwise
asserts any asbestos-related personal injury or property
damage.
(vii) any Liability to the extent the
existence of such Liability constitutes a breach of any
representation or warranty of Parent or any Seller contained
in or made pursuant to this Agreement;
(viii) any Environmental Liability, including,
without limitation, any Environmental Claim that relates to
or arises in connection with the Business, the Acquired
Assets, or any other Assets (including, but not limited to
facilities used for the off-site disposal of waste) formerly
owned, leased, operated or used by any of the Companies or
any predecessors-in-interest to any of the Companies, if the
Environmental Claim is based on any act or omission of the
Business or any of the Companies on or prior to the Closing
Date;
(ix) any Liability in respect of the Excluded
Assets;
(x) any Debt or other amounts (except to the
extent reflected on the Closing Date Balance Sheet) owing by
the Companies to Parent or any of Parent's Affiliates (other
than the Companies) including, without limitation, any
negative balances in intercompany accounts, but excluding
any trade payables incurred in the ordinary course of
business consistent with past practice;
(xi) any Liability that arises out of or relates
to the employment or termination of employment of any
employees, agents or independent contractors by Parent,
Sellers or any of their Affiliates, except any such
Liability caused by Buyer's failure to perform its
obligations under Article VIII;
(xii) any Liability to past, present or future
stockholders of Parent or Sellers;
(xiii) any Liability arising out of the Lovin
Agreement or the Xxxxxxx Agreements;
(xiv) any Liability that arises out of or
relates to any claim, action, suit, proceeding or
investigation, whether civil or criminal, pending or
threatened as of the Closing Date, relating to the conduct
or activities of the Business, or the ownership, use or
possession of the Acquired Assets, on or prior to the
Closing Date;
(xv) any Liability relating to any broker's or
finder's fee or commission incurred by Parent, any of the
Companies or any of their Affiliates as a result of the
transactions contemplated hereunder;
(xvi) any Liability arising under, resulting
from or relating to the matters referred to on
Schedule 2.20(a)(iii), including, without limitation, the
Plans described thereon;
(xvii) any Liability arising under, resulting
from, or relating to matters set forth on Schedule 2.8(a)(i)
(other than with respect to the purchase orders described
thereon and distributorship agreements with Xxxxxxxxx
Fasteners that are terminable by the Companies on not more
than 60 days notice without any penalty) including, without
limitation, the agreement with Shared Technologies
Xxxxxxxxx, Inc. and the tax sharing agreement described
thereon, except to the extent reflected on the Closing Date
Balance Sheet; and
(xviii) except for the Assumed Liabilities, any
Liability arising out of or relating to the conduct or
activities of the Business (including any predecessor
operations) or the ownership, use or possession of the
Acquired Assets on or prior to the Closing Date, any
Liabilities or claims arising out of or relating to events,
circumstances or conditions occurring on or before the
Closing Date, and any Liability associated with any other
business of Parent, Sellers and their Affiliates.
Parent and each Seller hereby irrevocably waives and releases,
and has caused the Parent Subsidiaries to waive and release,
AlliedSignal and Buyer from all Non-Assumed Liabilities,
including any Liabilities created or which arise by statute or
common law.
1.4 Initial Purchase Price.
(a) No later than the third Business Day prior to the
Closing Date, Parent shall deliver to AlliedSignal a written
notice setting forth Parent's good faith estimate of the Closing
Date Net Worth (without giving effect to the proviso in the
second sentence of Section 1.6(a)) (the "Estimated Closing Date
Net Worth") and the basis for the calculation thereof.
(b) The initial purchase price for the Purchased
Assets to be paid at the Closing (the "Initial Purchase Price")
shall consist of a number of shares of AlliedSignal Common Stock
(the "Closing Date Shares") equal to (1) the number (rounded to
the nearest whole share) (the "Estimated Share Number") obtained
by dividing (A) an amount equal to Three Hundred Twenty-Two
Million Dollars ($322,000,000) plus (x) the Adjustment Amount if
Estimated Closing Date Net Worth exceeds Target Net Worth and
minus (y) the Adjustment Amount if Estimated Closing Date Net
Worth is less than Target Net Worth, by (B) the Average Trading
Price as of the Closing Date, minus (2) the sum of the Purchase
Price Escrow Shares and the Indemnification Escrow Shares, to be
delivered by Buyer to Sellers in the proportions set forth on
Annex 1.6(f) hereto.
1.5 Escrow of Shares.
(a) At the Closing, Buyer shall deliver to the Escrow
Agent (i) the Purchase Price Escrow Shares, to be held in an
escrow account pursuant to the terms of the Escrow Agreement
until released from escrow pursuant to the terms of Section
1.6(f), and (ii) the Indemnification Escrow Shares, to be held in
an escrow account pursuant to the terms of the Escrow Agreement
until released as set forth in Section 1.5(b) or (d).
(b) At any time on or after the Closing Date, Parent
shall have the right, upon not less than 10 Business Days'
written notice to Buyer and the Escrow Agent, to deliver Escrow
Cash to the Escrow Agent to be held pursuant to the terms of the
Escrow Agreement in lieu of the Indemnification Escrow Shares.
Upon delivery by Parent of Escrow Cash to the Escrow Agent, the
Escrow Agent shall release to Parent the number of
Indemnification Escrow Shares (rounded to the nearest whole
share) obtained by dividing (i) the face amount of the Escrow
Cash by (ii) the Average Trading Price as of the date the shares
are released. Any notice delivered pursuant to this Section
1.5(b) shall set forth either the face amount of the Escrow Cash
to be delivered by Parent or the number of Indemnification Escrow
Shares to be released by the Escrow Agent.
(c) If, on or prior to the first anniversary of the
Closing Date (the "Escrow Release Date"), a Buyer Indemnified
Party has given notice of a claim for indemnification for Losses
in accordance with Section 7.4 (all such claims, the "Buyer
Escrow Claims"), Buyer shall give written notice thereof to
Parent on or prior to such date setting forth Buyer's good faith
estimate of the aggregate amount of such Losses in reasonable
detail for which Buyer has not been reimbursed (the "Buyer Escrow
Claim Loss Estimate"); provided, however, Buyer's failure to
deliver a notice pursuant to this Section 1.5(c) shall not
relieve any party from any liability that it may have to such
Buyer Indemnified Party in respect of any matter under
Section 7.2(a);
(d) The Indemnification Escrow Shares shall be
released from escrow as follows:
(i) On the Escrow Release Date a number of shares
of AlliedSignal Common Stock (rounded to the nearest whole
share) equal to (1) the number of Indemnification Escrow
Shares minus (2) a number (which shall not be less than
zero) equal to the quotient of (A) an amount equal to
(x) the Buyer Escrow Claim Loss Estimate for which
AlliedSignal or Buyer has not been reimbursed minus (y) the
amount of the Basket (to the extent not previously applied),
divided by (B) the Average Trading Price as of the Escrow
Release Date, shall be released from escrow and delivered to
Parent;
(ii) Upon resolution of a Buyer Escrow Claim
following the Escrow Release Date, to the extent it is
determined pursuant to Article VII that such Losses are
payable by Parent or Sellers to a Buyer Indemnified Party
with respect to such claim, a number of shares of
AlliedSignal Common Stock (rounded to the nearest whole
share) equal to the lesser of (1) the quotient of (x) the
amount of Losses for which Parent and Sellers must indemnify
Buyer Indemnified Parties in respect of such claim, divided
by (y) the Average Trading Price as of the date of the
release of such shares, and (2) the number of
Indemnification Escrow Shares that remain in escrow, shall
be released to Buyer; and
(iii) Upon resolution of all Buyer Escrow
Claims and release to Buyer of all Indemnification Escrow
Shares to which it is entitled pursuant to clause (ii)
above, all remaining Indemnification Escrow Shares shall be
released to Parent.
(e) Notwithstanding anything to the contrary contained
herein, any party entitled to have Indemnification Escrow Shares
released and delivered to it in accordance with Section 1.5(d)
may elect, by written notice to the Escrow Agent not less than
two Business Days prior to the release, to receive the value (or
any portion thereof) of the Indemnification Escrow Shares to
which the party is entitled (based on the Average Trading Price
as of the date the collateral is to be released) in Escrow Cash
to the extent Escrow Cash is being held as collateral pursuant to
the Escrow Agreement.
1.6 Purchase Price Adjustment.
(a) Within sixty (60) days after the Closing Date,
Buyer shall prepare and deliver to Parent a proposed Closing Date
Balance Sheet conforming to the requirements set forth in this
Section 1.6 (the "Proposed Closing Date Balance Sheet"). The
Proposed Closing Date Balance Sheet shall be a pro forma
unaudited consolidated balance sheet of the Combined Business as
of the Closing Date reflecting only Acquired Assets, Assumed
Liabilities, Xxxxxxx Purchased Assets and Xxxxxxx Assumed
Liabilities, prepared in accordance with GAAP on a basis
consistent with the Balance Sheet (including, without limitation,
accounting for Inventory in accordance with the procedures and
criteria set forth on Schedule 1.6(a)) and presenting fairly the
financial condition of the Combined Business as of the Closing
Date; provided, however, that the Proposed Closing Date Balance
Sheet shall not include (i) as an asset any future tax benefits
that relate to the allowance for doubtful accounts or (ii) as a
Liability any allowance for doubtful accounts (which is
$2,263,000 on Schedule 2.6). During the period following the
Closing Date and prior to the delivery of the Closing Date
Balance Sheet, Parent shall make available to Buyer the
appropriate personnel and the books and records of the Companies
to assist in the preparation of the Closing Date Balance Sheet.
The Proposed Closing Date Balance Sheet shall include appropriate
adjustments as if it were prepared for a fiscal year-end and will
set forth and designate the net worth, on a combined basis, of
the Combined Business as of the Closing Date ("Closing Date Net
Worth").
(b) In connection with the preparation of the Proposed
Closing Date Balance Sheet, Sellers, the Xxxxxxx Sellers, Parent
and Buyer shall, at Buyer's option upon notice to Parent as
provided in Schedule 1.6(b), cooperate with each other in the
taking of a physical count of the Inventory in accordance with
the procedures set forth in Schedule 1.6(b). Parent and Sellers
shall be entitled to have a representative present to observe the
taking of the physical count of the inventory described in this
Section 1.6(b).
(c) Following the Closing, Buyer shall provide to
Parent and Sellers, and their respective employees, agents and
advisers, upon not less than two business days prior written
request, reasonable access during regular business hours to the
financial books and records, personnel and facilities relating to
the Combined Business necessary for the review and analysis of
the Proposed Closing Date Balance Sheet. If Parent fails to give
written notice of its disagreement with any item on such Proposed
Closing Date Balance Sheet within sixty (60) days after receipt
of such Proposed Closing Date Balance Sheet (the "Review
Period"), such Proposed Closing Date Balance Sheet shall be
deemed accepted and shall become the Closing Date Balance Sheet
and be final and binding upon the parties hereto. If, before the
expiration of the Review Period, Parent provides Buyer with a
written notice setting forth in reasonable detail its
disagreement with one or more items on the Proposed Closing Date
Balance Sheet (a "Dispute Notice"), Buyer and Parent shall
negotiate in good faith to resolve all matters set forth in the
Dispute Notice ("Disputes") during the sixty (60) day period
following receipt of the Dispute Notice by Parent (the
"Resolution Period"). Items on the Proposed Closing Date Balance
Sheet shall be deemed final to the extent they are not referenced
in the Dispute Notice. To the extent Disputes are resolved to
the mutual satisfaction of Buyer and Parent during the Resolution
Period, such resolutions shall be reflected on the Proposed
Closing Date Balance Sheet and deemed final, and if all Disputes
are so resolved, the Proposed Closing Date Balance Sheet, as
modified to reflect the resolution of such Disputes shall be
deemed final and become the Closing Date Balance Sheet.
(d) If all Disputes cannot be resolved within the
Resolution Period, then within fifteen (15) days of the end of
the Resolution Period, Parent and Buyer (i) shall set forth in
writing their respective positions on the Disputes still at issue
and (ii) shall submit the unresolved Disputes to a Big Six
accounting firm (other than the principal outside accountants for
either Parent or Buyer or any of their Affiliates) mutually
acceptable to Parent and Buyer (the "Firm").
(e) The Firm shall make a determination with respect
to the Disputes so submitted as well as such modifications, if
any, to be made to the Proposed Closing Date Balance Sheet in
accordance with such determination within thirty (30) days after
the engagement of the Firm and the Proposed Closing Date Balance
Sheet as so modified shall be deemed final and shall become the
Closing Date Balance Sheet; provided, however, that in no event
shall the Firm determine, with respect to any Dispute submitted
to it, an amount that is outside of the range of the amounts
submitted by Parent and Buyer nor shall it address or consider
any issue other than the issues involved in the Disputes. Such
determinations by the Firm shall be conclusive and binding upon,
and shall not be appealable by the parties hereto. The fees and
expenses of the Firm shall be shared equally by Parent and Buyer.
(f) Promptly, and in any event within five Business
Days, after the Closing Date Balance Sheet becomes final and
binding on the parties hereto:
(i) If Closing Date Net Worth is equal to the
Estimated Closing Date Net Worth, Buyer shall take all steps
reasonably practical (including, without limitation, giving
notice to the Escrow Agent), to cause the release and
delivery to Sellers, in the proportions set forth on Annex A
to the Escrow Agreement, of all the Purchase Price Escrow
Shares.
(ii) If Closing Date Net Worth is more than
Estimated Closing Date Net Worth, (A) Buyer shall take all
steps reasonably practical (including, without limitation,
giving notice to the Escrow Agent), to cause the release and
delivery to Sellers, in the proportions set forth on Annex A
to the Escrow Agreement, of all the Purchase Price Escrow
Shares and (B) AlliedSignal shall issue and Buyer shall
deliver to Sellers, in the proportions set forth on Annex A
to the Escrow Agreement, an additional number of shares of
AlliedSignal Common Stock having a value (based on the
Average Trading Price as of the Closing Date) (rounded to
the nearest whole share) equal to the excess of Closing Date
Net Worth over Estimated Closing Date Net Worth.
(iii) If Estimated Closing Date Net Worth is
more than Closing Date Net Worth, (A) a number of Purchase
Price Escrow Shares having a value (based on the Average
Trading Price) (rounded to the nearest whole share) equal to
the excess of Estimated Closing Date Net Worth over Closing
Date Net Worth (the "Shortfall Amount") shall be released
from escrow and returned to AlliedSignal, and Buyer shall
take all steps reasonably practical (including, without
limitation, giving notice to the Escrow Agent), to cause the
release and delivery to the Sellers, in the proportions set
forth on Annex A to the Escrow Agreement, of the balance, if
any, of the Purchase Price Escrow Shares and (B) if the
value (based on the Average Trading Price as of the Closing
Date) of all of the Purchase Price Escrow Shares is less
than the Shortfall Amount, (x) all of the Purchase Price
Escrow Shares shall be released from escrow and returned to
AlliedSignal and (y) Parent shall indemnify AlliedSignal
for, and shall promptly pay to AlliedSignal in cash, an
amount equal to the excess of the Shortfall Amount over the
value (based on the Average Trading Price as of the Closing
Date) of the Purchase Price Escrow Shares. Such payment
shall be made by wire transfer of immediately available
funds to a bank account designated by AlliedSignal to Parent
within five Business Days after the Closing Date Balance
Sheet has become final and binding upon the parties hereto.
1.7 Accounts Receivable.
(a) After the Closing, Buyer shall have full right and
authority to collect for its own account all Accounts Receivable
reflected on in the Closing Date Balance Sheet without any
allowance for doubtful accounts ("Closing Accounts Receivable").
Each Seller and each Xxxxxxx Seller shall immediately pay to
Buyer any amount received by such Seller after the Closing
attributable to payment of any Closing Accounts Receivable,
except with respect to Assigned Receivables after assignment
thereof to Parent as provided below. In the event that as of the
date that is 180 days after the Closing Date (the "Adjustment
Date") Buyer shall not have been paid in full in respect of
Closing Accounts Receivable an amount equal to the Closing
Accounts Receivable, Buyer shall give Parent written notice (the
"Receivables Notice") specifying the sum of (i) the aggregate
amount of Closing Accounts Receivable collected by Buyer during
the period from the Closing Date through the Adjustment Date and
(ii) the aggregate amount of Inventory (valued at original cost)
that (x) is the subject of a Closing Accounts Receivable, (y) has
been returned to Buyer during the period from the Closing Date
through the Adjustment Date and (z) is not Defective Inventory
(the "Collected Amount"). If the face amount of the Closing
Accounts Receivable exceeds the Collected Amount, (i) such excess
(the "Receivables Deficiency"), plus interest accrued on the
amount thereof from and including the Closing Date to but
excluding the date of payment at a rate per annum equal to the
Prime Rate in effect from time to time, shall be paid by Parent
to Buyer within five Business Days after the date that the
Receivables Notice is given in immediately available funds and
(ii) upon receipt of such payment, Buyer shall assign to Parent
any Closing Accounts Receivable that were not collected during
the period from the Closing Date through the Adjustment Date (the
"Assigned Receivables"). Upon an assignment to Parent of
Assigned Receivables pursuant to this Section, Buyer shall have
no further responsibility with respect to any such Assigned
Receivables and shall not be entitled to receive any portion of
any amounts collected by Parent with respect thereto, and Parent
shall be entitled to undertake any and all collection efforts
with respect to any such Assigned Receivables. Buyer shall
promptly pay to Seller any amount received by Buyer after the
Adjustment Date attributable to payment of any Assigned
Receivables. In calculating the amount, if any, which Parent
must pay to Buyer pursuant to this Section 1.7, payments received
by Buyer on account of receivables from a particular customer
shall be credited first to the oldest account receivable of that
customer until all accounts receivable with respect to that
customer are paid in full; provided, however, that no such
payment shall be so credited to any pre-Closing account
receivable with respect to a Disputed Account Receivable of such
customer (as defined below) unless such customer shall have
specifically advised Buyer to credit such payment to such Closing
Account Receivable. For purposes of this Agreement, "Disputed
Account Receivable" means any Closing Account Receivable owed:
(i) by a customer who is bankrupt;
(ii) by a customer who has asserted in writing a
bona fide claim that the products or services sold and which
are the subject matter of the Closing Account Receivable
were defective or that the cost of the products or services
received from Seller were less than the amount invoiced;
(iii) by a customer who, in the reasonable
opinion of Buyer, has a bona fide claim that an error has
been made on the invoice to such customer; or
(iv) by a customer who has asserted that the
invoice and shipping documentation did not comply with the
customer's requirement
In connection with such acquisition of Closing Accounts
Receivable by Parent, Buyer agrees to execute assignments, in
form and substance reasonably satisfactory to Buyer, as are
reasonably requested by Parent in order to effectively transfer
to Parent such Closing Accounts Receivable.
(b) From and after the Closing, Buyer shall use
reasonable efforts to collect all of the Closing Accounts
Receivable at their full face value and shall be prompt, and
shall exercise reasonable diligence, in such efforts, but in no
event shall Buyer be required to resort to litigation to try to
collect any such Closing Accounts Receivable. Parent and each
Seller shall provide reasonable assistance to Buyer with respect
to the collection of the Closing Accounts Receivable. Buyer
shall provide to Parent and each Seller reasonable access during
regular business hours to all books and records relating to the
Closing Accounts Receivable and any payments made with respect
thereto. Prior to the Adjustment Date, neither Parent nor any
Seller shall contact directly or indirectly any customer from
which a Closing Accounts Receivable is due with respect to any
matters contemplated by this Agreement, including any outstanding
Closing Account Receivable, without Buyer's prior consent in each
case.
(c) Commencing 60 days after the Closing Date, and
continuing not less frequently than monthly during the 120 days
thereafter, Buyer shall deliver written reports to Parent setting
forth in reasonable detail the status of the collection of the
Closing Accounts Receivable, on a customer by customer basis, the
collection efforts made by Buyer relating thereto and the status
of the payment of any other receivables from such customers to
Buyer. Buyer shall in all respects, including its collection
efforts, treat the Closing Accounts Receivable in the same manner
as it treats its other accounts receivable.
1.8 Closing.
(a) Closing Date. The closing of the transactions
contemplated under this Agreement (the "Closing") shall take
place at 10:00 a.m. Eastern Time at the offices of Xxxxxx Xxxxxxx
& Xxxx LLP, One Battery Park Plaza, New York, New York, on the
fifth Business Day after all conditions to the obligations of the
parties under Article V and under Article V of the Xxxxxxx
Agreement shall have been satisfied or waived (other than those
requiring a delivery of a certificate or other document, or the
taking of other action, at the Closing and the conditions set
forth in Sections 5.1(j) and 5.2(g) and in Sections 5.1(g) and
5.2(g) of the Xxxxxxx Agreement), or at such other place and on
such other date as the parties may mutually agree in writing
(such date on which the Closing occurs hereinafter is referred to
as the "Closing Date"). Each of the parties acknowledges that,
with respect to the Closing Date, time is of the essence.
(b) Effectiveness. The consummation of the
transactions contemplated by this Agreement and the Closing shall
be deemed to take place at 11:59 p.m., Eastern Time, on the
Closing Date and no transaction shall be deemed to have been
completed and no document or certificate shall be deemed to have
been delivered until all transactions are completed and all
documents are delivered.
1.9 Deliveries and Proceedings at the Closing.
Subject to the terms and conditions of this Agreement, at the
Closing:
(a) Deliveries to AlliedSignal and Buyer. Parent and
Sellers shall deliver to AlliedSignal and Buyer:
(i) bills of sale and instruments of assignment,
in forms reasonably satisfactory to Buyer, to evidence the
transfer to Buyer of the Purchased Assets (other than the
Owned Real Property) in accordance herewith, duly executed
by Sellers;
(ii) certificates (or other appropriate evidence
of transfer) representing all of the Subsidiary Shares
accompanied, except with respect to the certificates
representing shares of Banner Aircraft International, GmbH
and Harco Northern Ireland, Ltd., by stock powers duly
executed in blank with all necessary stock transfer and
other documentary stamps attached;
(iii) any consents to transfer of all
transferable or assignable Contracts and Permits obtained by
Parent and the Companies as of Closing and all consents
referred to in Section 5.1(d);
(iv) title certificates to any motor vehicles
included in the Purchased Assets, duly executed by each
Seller with any interest therein (together with any other
transfer forms necessary to transfer title to such
vehicles);
(v) one or more deeds of conveyance to Buyer of
the Owned Real Property, in forms customarily delivered for
similar Real Property conveyances and reasonably
satisfactory to Buyer, sufficient to transfer to Buyer good
and marketable, and insurable, fee simple title to the Owned
Real Property included in the Purchased Assets in accordance
herewith, duly executed and acknowledged by each Seller with
any interest therein and in recordable form;
(vi) one or more title insurance policies, in
form, substance and amount, and issued by title insurance
companies reasonably acceptable to Buyer, and containing
such endorsements and affirmative coverage as Buyer shall
reasonably request (including, with respect to Owned Real
Property that is a Purchased Asset, nonimputation
endorsements), insuring Buyer's fee simple title to the
Owned Real Property subject only to the Permitted Liens, the
cost of which shall be paid 50% by Parent and Sellers and
50% by AlliedSignal and Buyer;
(vii) U.C.C. termination statements in
recordable form and other appropriate releases, in form and
substance reasonably satisfactory to Buyer, with respect to
all recorded Liens in the Purchased Assets;
(viii) the Foreign Investment in Real Property
Tax Act Certification and Affidavit for each parcel of Owned
Real Property, in form reasonably satisfactory to Buyer,
duly executed by each Seller transferring Owned Real
Property (the "FIRPTA Affidavit");
(ix) the certificates and other documents required
to be delivered by Parent and Sellers pursuant to
Section 5.1 hereof and certified resolutions evidencing the
authority of Parent and Sellers as set forth in Section 2.3
hereof;
(x) the Release contemplated by Section 4.9;
(xi) an opinion of Potter Xxxxxxxx & Xxxxxxx,
Delaware counsel, substantially in the form of Exhibit
1.9(a)(xi), to the effect that no approval of the holders of
Parent Common Stock is required in connection with the
execution, delivery and performance of this Agreement by
Parent and Sellers;
(xii) the Escrow Agreement, duly executed by
Parent;
(xiii) the letters of Xxxxxxx Xxxxxxx and
Xxxxxxxxx, dated as of the Closing Date, substantially in
the form of Exhibit 1.9(a)(xiii)(A-C) (the "Side Letters");
and
(xiv) all such other documents and instruments
as shall, in the reasonable opinion of Buyer or its title
insurance company (including affidavits and indemnities in
connection with nonimputation endorsements), be necessary in
connection with the transfer to Buyer of the Purchased
Assets in accordance herewith and, where necessary or
desirable, in recordable form.
(b) Deliveries to Parent and Sellers. AlliedSignal
and Buyer will deliver to Parent and Sellers, as applicable:
(i) the Closing Date Shares, issued by
AlliedSignal and delivered by Buyer to Sellers in the
proportions set forth in Annex 1.6(f) hereto;
(ii) an assumption agreement, in form reasonably
satisfactory to Parent, to evidence the assumption by Buyer
of the Assumed Liabilities in accordance with Section 1.3,
duly executed by Buyer;
(iii) the certificates and other documents
required to be delivered by AlliedSignal and Buyer pursuant
to Section 5.2 hereof and certified resolutions evidencing
the authority of AlliedSignal and Buyer as set forth in
Section 3.2 hereof;
(iv) the Escrow Agreement duly executed by Buyer;
(v) all such other documents and instruments of
assumption as shall, in the reasonable opinion of Parent, be
necessary for Buyer to assume the Assumed Liabilities in
accordance herewith; and
(vi) the Registration Rights Agreement, in the
form attached as Exhibit 1.9(b)(vi), duly executed by
AlliedSignal.
(c) Escrow Agreement. Parent and Buyer shall use
their reasonable best efforts to cause the Escrow Agent to
execute and deliver an escrow agreement substantially in the form
of Exhibit 1.9(c) at the Closing (the "Escrow Agreement").
1.10 Stock Legend.
(a) Each certificate representing the shares of
AlliedSignal Common Stock issued to Sellers at the Closing shall
be endorsed with a legend in substantially the following form:
THE SECURITIES EVIDENCED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND
MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR
HYPOTHECATED UNLESS THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT
COVERING SUCH SECURITIES, THE TRANSFER IS
MADE IN COMPLIANCE WITH RULE 144
PROMULGATED UNDER SUCH ACT OR THE
CORPORATION RECEIVES AN OPINION OF COUNSEL
FOR THE HOLDERS OF THESE SECURITIES
REASONABLY SATISFACTORY TO THE CORPORATION
STATING THAT SUCH SALE, TRANSFER,
ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM
THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENT OF SUCH ACT.
1.11 Prorations. The parties hereto agree that the
following expenses shall be calculated and pro rated as of the
Closing Date, with Parent and Sellers jointly responsible for
such expenses for the period up to the Closing Date (it being
understood that any such expense not paid prior to the Closing
shall be reflected as a liability on the Closing Date Balance
Sheet), and Buyer to be responsible for the period on and after
the Closing Date:
(a) personal property, real property and payroll
taxes (on the basis on which the same were assessed and
paid), in each case to the extent relating to the Combined
Business and except as otherwise provided in Section 4.6(i);
(b) electric, fuel, gas, telephone, sewer and
utility charges, in each case to the extent relating to the
Combined Business;
(c) rentals and other charges under Combined
Contracts to be assumed by Buyer pursuant hereto; and
(d) charges under maintenance and service
contracts and other Combined Contracts, and fees under
Permits to be transferred to Buyer as part of the Purchased
Assets or the Xxxxxxx Purchased Assets.
ARTICLE II
Representations And Warranties Of Parent And Sellers
Parent and each Seller hereby jointly and severally
represent and warrant to AlliedSignal and Buyer as follows:
2.1 Qualification. Parent is a corporation duly
organized, validly existing and in good standing under the laws
of the State of Delaware. Each Company is a legal entity of the
type described on Annex A or Annex B, as the case may be, duly
organized, validly existing and in good standing under the laws
of the jurisdiction set forth next to such Company's name on such
Annex, and has all requisite corporate power and authority to own
and lease its Assets and to conduct its Business as presently
being conducted. Each Company is qualified to do business and is
in good standing as a foreign corporation in all jurisdictions
wherein the nature of its Business or such Company's ownership or
use of its Assets make such qualification necessary, except such
failures to be qualified or to be in good standing, if any, which
when taken together with all such other failures of such Company
would not have a Material Adverse Effect on such Company. None
of the Companies is currently insolvent, has suspended payments,
is subject to any judicial receivership or liquidation
proceedings or is in bankruptcy, nor has any such similar
proceedings been commenced with respect to any of them.
2.2 Ownership of the Companies.
(a) Except as set forth on Schedule 2.2, all of the
outstanding shares of capital stock of (or other ownership
interests in) each of the Sellers are owned of record and
beneficially solely by Parent free and clear of any Liens. The
ownership of the Subsidiary Shares is described on Schedule 2.2.
All of the Subsidiary Shares are (i) duly authorized, validly
issued, fully paid and nonassessable and free of preemptive
rights and were issued in compliance with all applicable Laws and
(ii) except for nominal or qualifying shares identified on
Schedule 2.2, owned of record and beneficially solely by one or
more Sellers and/or other Seller Subsidiaries, free and clear of
any Liens. There are no options, warrants, calls, rights or
agreements to which Parent or any of the Companies is a party
obligating any of them to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital stock of
(or other ownership interests in) any of the Companies or
obligating Parent or any of the Companies to grant, extend or
enter into any such option, warrant, call, right or agreement.
There are no agreements, voting trusts or proxies with respect to
the voting of the Subsidiary Shares. The transfer of the nominal
or qualifying shares of the Seller Subsidiaries not owned by any
of the Companies to Persons designated by Buyer (i) shall be
accomplished at or prior to the Closing and (ii) shall not
require any payment by AlliedSignal or Buyer to any Person or
result in the creation of any Liability of AlliedSignal or Buyer
to any Person.
(b) Except for the Subsidiary Shares and except as set
forth on Schedule 2.2, none of the Companies owns any shares of
capital stock of (or other ownership interests in) any other
Person, including any joint venture.
2.3 Authorization and Enforceability. With respect to
each of Parent and the Sellers: (a) such entity has full
corporate power and authority to execute, deliver and perform
this Agreement and all other agreements, instruments and
documents to be executed in connection herewith (such other
agreements and instruments being hereinafter referred to
collectively as the "Transaction Documents") to which such entity
is a party, (b) the execution, delivery and performance by such
entity of this Agreement and the Transaction Documents to which
such entity is a party have been duly authorized by all necessary
corporate action on the part of such entity and no approval by
the holders of any security issued by Parent is required in
connection therewith, (c) this Agreement has been duly executed
and delivered by such entity, and, as of the Closing Date, the
other Transaction Documents to which any such entity is a party
will be duly executed and delivered by such entity, (d) this
Agreement is a legal, valid and binding obligation of such
entity, enforceable against such entity in accordance with its
terms, and (e) as of the Closing Date, each of the other
Transaction Documents to which such entity is a party will
constitute the legal, valid and binding obligations of such
entity, enforceable against such entity in accordance with its
terms.
2.4 No Violation of Laws or Agreements. The
execution, delivery, and performance by Parent and each Seller of
this Agreement and the Transaction Documents to which such
entities (as applicable) are parties do not, and the consummation
by Parent and each Seller (as applicable) of the transactions
contemplated hereby and thereby, will not, (a) contravene any
provision of the charter, bylaws or any other organizational
documents of Parent or any Company, or (b) except as set forth on
Schedule 2.4 and subject, in the case of clause (i) below, to
such exceptions as would not in the aggregate have a Material
Adverse Effect, violate, conflict with, result in a breach of, or
constitute a default (or an event which would, with the passage
of time or the giving of notice or both, constitute a default)
under, or result in or permit the termination, modification,
acceleration, or cancellation of, or result in the creation or
imposition of any Lien of any nature whatsoever upon any of the
Acquired Assets or give to others any interests or rights therein
under, (i) any personal property lease with payments in excess of
$50,000 per year, lease of Real Property, indenture, mortgage,
loan or credit agreement, license, instrument, contract, plan,
permit or other agreement or commitment, oral or written, to
which Parent or any Company is a party, other than such
agreements or commitments involving any customer or supplier of
the Business (including any supplier of Intellectual Property),
or by which the Business or any of the Acquired Assets may be
bound or affected (including without limitation any agreement or
instrument pertaining to Debt), or (ii) any judgment, injunction,
writ, award, decree, restriction, ruling, or order of any
arbitrator or Governmental Entity or any applicable Law to which
Parent, any Company or the Acquired Assets is subject.
2.5 Consents. Except (i) as set forth on Schedule 2.5
or (ii) for agreements or commitments involving any customer or
supplier of the Business (including any supplier of Intellectual
Property), no consent, approval or authorization of, or
registration or filing with, any Person (governmental or private)
is required in connection with the execution, delivery and
performance by Parent or any Seller of this Agreement, the other
Transaction Documents to which Parent or any Seller is a party,
or the consummation by Parent and each Seller (as applicable) of
the transactions contemplated hereby or thereby, including
without limitation in connection with the assignment of the
Contracts and Permits contemplated hereby, except as required by
the HSR Act and except for any required, consent, approval or
authorization of, or registration or filing with, any foreign
governmental authority.
2.6 Financial Statements.
(a) Schedule 2.6(a) sets forth (i) an unaudited
combined pro forma balance sheet of the Combined Business as of
September 30, 1997 (the "Balance Sheet") and related unaudited
combined pro forma statement of income of the Combined Business
for the six months ended September 30, 1997 (together with the
Balance Sheet, the "Financial Statements"). The Excluded Assets,
the Xxxxxxx Excluded Assets, the Non-Assumed Liabilities, and the
Xxxxxxx Non-Assumed Liabilities are excluded from the Balance
Sheet. The Financial Statements are in accordance with the books
and records of the Companies and the Xxxxxxx Sellers and except
for the Excluded Assets, the Xxxxxxx Excluded Assets, the Non-
Assumed Liabilities, the Xxxxxxx Non-Assumed Liabilities, and as
set forth in Schedule 2.6(a), fairly present the financial
position and results of operations of the Combined Business on a
stand-alone basis as of the date and for the period indicated, in
conformity with GAAP throughout the period specified and in
accordance with the procedures and criteria set forth on
Schedule 1.6(a), except as expressly set forth therein and except
that the Financial Statements may omit notes and are subject to
normal year-end adjustments which are not, in the aggregate,
material. Except as described on Schedule 2.6(a), all fees,
charges, costs and expenses associated with the ownership,
leasing, operation, maintenance and management of the Combined
Business and the Assets owned, used or held for use by the
Combined Business have been fully and properly reflected and
charged on the Financial Statements in accordance with GAAP (to
the extent such items are required to be so reflected and charged
in accordance with GAAP). All Acquired Assets, Assumed
Liabilities, Xxxxxxx Purchased Assets and Xxxxxxx Assumed
Liabilities are disclosed on or reflected in the Balance Sheet
except (i) as disclosed on Schedule 2.6(a), and (ii) as disposed
of or transferred between September 30, 1997 and the Closing Date
in the ordinary course of business consistent with past practice
and in accordance with this Agreement.
(b) The future tax benefits set forth in the Balance
Sheet as of the date hereof ("Preliminary Future Tax Benefits")
represent future tax benefits as of March 31, 1997. No later
than 30 days after the date hereof, Parent shall deliver written
notice to AlliedSignal of the amount of future tax benefits as of
September 30, 1997 ("Final Future Tax Benefits"), and the Balance
Sheet shall be adjusted accordingly.
2.7 No Changes. Since September 30, 1997, the
Companies have conducted the Business only in the ordinary course
of business consistent with past practice and, except as set
forth on Schedule 2.7, there has not been:
(a) any Material Adverse Effect;
(b) any change in the salaries or other
compensation payable or to become payable to, or any advance
(excluding advances for ordinary business expenses) or loan
to, any employee of the Business, or material change or
material addition to, or material modification of, other
benefits (including any bonus, profit-sharing, pension or
other plan in which any of the employees of the Business
participate) to which any of the employees of the Business
may be entitled, other than in the ordinary course of the
Business consistent with past practice;
(c) any material change or modification in any
manner of the Companies' existing Inventory management and
collection and payment policies, procedures and practices
with respect to Inventory and accounts receivable and
accounts payable, respectively, of the Business,
acceleration of payment of payables or failure to pay or
delay in payment of payables and any change in the
Companies' existing policies, procedures and practices, with
respect to the provision of discounts, rebates or allowances
insofar as they relate to the Business;
(d) any cancellation or waiver by any Company of
any right material to the Business or any cancellation or
waiver of any material Debts of or claims of the Business
against Parent or any other Affiliate of any Company or any
disposition of or failure to keep in effect any rights in,
to or for the use of any Permit material to the Business;
(e) any damage, destruction or loss, or eminent
domain or other condemnation proceeding affecting the
distribution center located in Salt Lake City, Utah, or the
Business which individually or in the aggregate has had a
Material Adverse Effect, whether or not covered by
insurance;
(f) any change by any Company in its method of
accounting or keeping its books of account or accounting
practices with respect to the Business except as required by
GAAP;
(g) any acquisition, sale, transfer or other
disposition of any material Assets of the Business other
than the disposition of (i) Inventory in the ordinary course
of the Business consistent with past practice or (ii) Assets
not used or useful in the Business;
(h) any commencement or termination of any line
of business;
(i) any action that would be prohibited to be
taken after the date of this Agreement under Section 4.1(c);
or
(j) any agreement in writing or otherwise to take
any of the foregoing actions.
2.8 Contracts.
(a) As of the date of this Agreement, Schedule 2.8(a)
contains a true, correct and complete list of (i) all Contracts
(other than any guarantee of any Seller that does not directly or
indirectly support or benefit the Business) to which Parent or
any of its Affiliates (other than the Companies) is a party or
which benefit Parent or any of its Affiliates (other than the
Companies); (ii) all Contracts under which any Company is a
licensee or licensor of Intellectual Property or Technology which
are material to the Business; (iii) all Contracts under which any
Company is a lessee or lessor of (or has an obligation to lease)
Real Property; (iv) all Contracts providing for the formation or
operation of a partnership or other joint venture; (v) all
material Contracts which afford customers any right to return
Inventories at the option of the customer; (vi) all Government
Contracts with a backlog in excess of $100,000; (vii) all
Contracts requiring forward stocking locations; and (viii) except
for agreements or commitments involving any customer or supplier
of the Business (including any supplier of Intellectual
Property), all other Contracts (other than with respect to which
the Business' total annual Liability or expense is less than
$1,000,000 per such non-listed Contract). Parent and Sellers
have made available to AlliedSignal a correct and complete copy
of each written agreement.
(b) Except as set forth on Part A of Schedule 2.8(b),
with respect to each Contract described in Schedule 2.8(a),
neither any Company nor, to the best of Parent's and each
Seller's knowledge, any other party thereto, is in material
breach or default and no event has occurred which with notice or
lapse of time would constitute a material breach or default, or
permit termination, modification, or acceleration, under such
Contract. Except as set forth on Part B of Schedule 2.8(b),
there are no disputes pending or, to the best of Parent's and
each Seller's knowledge, threatened, under or in respect of any
of the Contracts described in Schedule 2.8(a) and no counterparty
to any such Contract has given notice to any Company or Affiliate
thereof with respect to any material breach or default hereunder.
Each of the Contracts described in Schedule 2.8(a) is in full
force and effect and constitutes the legal and binding obligation
of, and is legally enforceable against, such Company as the
Contracts relate, and, to the best of Parent's and each Seller's
knowledge, any other party thereto, in accordance with its terms.
(c) Except as identified with an asterisk on
Schedule 2.8(a), each of the Contracts listed thereon is fully
assignable to Buyer (or, in the case of Contracts of the Seller
Subsidiaries, will remain in full force and effect upon the sale
of the Subsidiary Shares to Buyer) without the consent, approval
or waiver of any other Person. None of such Contracts contains
any provision which, after the Closing, will restrict Buyer or
any of the Seller Subsidiaries from conducting any portion of the
Business in any jurisdiction, except such Contracts which may be
terminated by Buyer or the applicable Seller Subsidiary without
penalty or Liability on no more than 30 days' notice. With
respect to those Contracts that were assigned, novated or
subleased to any Company by a third party, all necessary consents
to such assignments, novations or subleases have been obtained.
(d) Subject to such exceptions as would not in the
aggregate have a Material Adverse Effect, with respect to each
and every Government Contract that has a backlog in excess of
$100,000 or binding or non-binding bid for such a Government
Contract ("Bid") to which any Company is a party: (i) such
Company has fully complied with all material terms and conditions
of such Government Contract or Bid, including all clauses,
provisions and requirements incorporated expressly, by reference
or by operation of law therein; (ii) such Company has fully
complied with all requirements of Law applicable to such
Government Contract or Bid and no Government Contract is subject
to any adjustment in price as a result of a claim by the U.S.
Government or U.S. Government prime contractor or subcontractor
on the basis of (w) defective pricing pursuant to FAR 52.215-22,
FAR 52.215-23, FAR 52.215-24, FAR 52.215-25, (x) CAS violations
pursuant to FAR 52.230-2, (y) any submission for progress
payments of invoices or (z) any claims arising out of or related
to the Government Contracts occurring on or before the Closing
Date; (iii) all representations and certifications executed,
acknowledged or set forth in or pertaining to such Government
Contract or bid for a Government Contract were current, accurate
and complete as of their effective date, and such Company has
fully complied with all such representations and certifications;
(iv) neither the U.S. Government nor any prime contractor,
subcontractor or other Person has notified such Company, either
orally or in writing, that such Company has breached or violated
any Law, certification, representation, clause, provision or
requirement, (v) no termination for convenience, termination for
default, cure notice or show cause notice has been issued;
(vi) no cost incurred by such Company has been questioned or
disallowed; and (vii) no money due to such Company has been (or
has attempted to be) withheld or set off.
2.9 Permits and Compliance With Laws Generally.
(a) Subject to such exceptions as would not in the
aggregate have a Material Adverse Effect, (i) except as set forth
on Part A of Schedule 2.9(a), the Companies possess and are in
compliance with all Permits required to operate the Business as
presently operated and to own, lease or otherwise hold the
Acquired Assets under all applicable Laws and (ii) except as set
forth on Part B of Schedule 2.9(a), to the best of Parent's and
each Seller's knowledge, the Business is conducted by the
Companies in compliance with, and the use, construction and
operation of all Real Property constituting any part of the
Acquired Assets conforms to, all applicable Laws (including the
Occupational Safety and Health Act and the rules and regulations
thereunder ("OSHA") and other similar Laws, and zoning, building
and other similar Laws) and all restrictions and conditions
affecting title. All material Permits of the Companies are in
full force and effect. There are no proceedings pending or, to
the best of Parent's and each Seller's knowledge, threatened that
seek the revocation, cancellation, suspension or any adverse
modification of any material Permits presently possessed by the
Companies. Parent and Sellers are aware of no facts, conditions
or circumstances reasonably likely to result in the revocation,
cancellation, suspension, or adverse modification of any material
Permit. Except as set forth on Part C of Schedule 2.9(a), all
material Permits of the Companies are assignable to and at the
Closing will be assigned to Buyer (or, in the case of Permits of
the Seller Subsidiaries, will continue to be possessed by the
Seller Subsidiaries upon the sale of the Subsidiary Shares to
Buyer) and no approvals or consents are required for such
assignment (or continued possession) and the sale of the Business
or Acquired Assets hereunder will not result in a default under
or termination of any such material Permit.
(b) Except as set forth on Schedule 2.9(b), no
outstanding notice, citation, summons or order has been issued,
no outstanding complaint has been filed, no outstanding penalty
has been assessed and no investigation or review is pending or,
to the best of Parent's and each Seller's knowledge, threatened,
by any Governmental Entity or other Person with respect to any
alleged (i) violation by any Company relating to the Business or
the Acquired Assets of any Law or (ii) failure by any Company to
have any Permit required in connection with the conduct of the
Business or otherwise applicable to the Business (including the
Acquired Assets) except in such cases as would not in the
aggregate have a Material Adverse Effect.
2.10 Environmental Matters. As of the Closing Date,
except as set forth on Schedule 2.10,
(a) There are no reports in Parent's, the Companies'
or any of their respective Affiliates' possession or control of
environmental site assessments or audits of the Business, the
Acquired Assets or any other Assets (including but not limited to
facilities used for the off-site disposal of waste) formerly
owned, leased, operated or used by the Companies, or any
predecessor-in-interest to the Companies.
(b) The Companies possess and are in compliance with
all Environmental Permits required to operate the Business as
presently operated and to own, lease or otherwise hold the
Acquired Assets under all Environmental Laws. The operations of
the Business and Acquired Assets (including the use, construction
and operation of all Real Property constituting any part of the
Acquired Assets) are in compliance with all Environmental Laws
and are conducted in a manner that does not pose a risk to the
safety or health of workers or other individuals or to the
environment. All Environmental Permits of the Companies relating
to the operation of the Business are in full force and effect.
There are no proceedings pending or, to the best of Parent's and
each Seller's knowledge, threatened that seek the revocation,
cancellation, suspension or any adverse modification of any such
Environmental Permits presently possessed by the Companies.
Parent and Sellers are aware of no facts, conditions or
circumstances reasonably likely to result in the revocation,
cancellation, suspension or adverse modification of any
Environmental Permits.
(c) There are no environmental conditions with respect
to the Business, Acquired Assets or any other Assets (including
but not limited to facilities used for the off-site disposal of
waste) formerly owned, leased, operated or used by any of the
Companies, or any predecessor-in-interest to any of the
Companies that (i) pose a risk to human health or the
environment, or (ii) are otherwise required to be remediated
under applicable Environmental Laws due to evidence of soil or
groundwater contamination on, under or migrating onto or from the
Business, Acquired Assets or any such other Assets.
(d) There are no Environmental Claims currently
pending nor has Parent, any of the Companies or any of their
respective Affiliates received any notice of an Environmental
Claim with respect to the Business, the Acquired Assets, or any
other Assets (including, but not limited to, facilities used for
the off-site disposal of waste) formerly owned, leased, operated
or used by the Companies or any predecessors-in-interest to the
Companies that a Hazardous Material has been (i) disposed,
released, or discharged or (ii) produced, stored, handled, used
or emitted onto, under, or from the Business, Acquired Assets or
any such other Assets.
(e) Neither the Business nor the Acquired Assets are
subject to the requirements of any Laws that condition, restrict,
prohibit or require notification or disclosure upon the transfer,
sale, lease or closure of certain property for environmental
reasons.
(f) No outstanding notice, citation, summons or order
has been issued, no outstanding complaint has been filed, no
outstanding penalty has been assessed and no investigation or
review is pending or, to the best of Parent's and each Seller's
knowledge, threatened, by any Governmental Entity or other Person
with respect to any alleged (i) violation by any Company or any
of its Affiliates relating to the Business or the Acquired Assets
of any Environmental Law or (ii) failure by any Company or any of
its Affiliates to have any Environmental Permit required in
connection with the conduct of the Business or otherwise
applicable to the Business (including the Acquired Assets).
2.11 Transactions with Affiliates
(a) Set forth on Schedule 2.11(a) is a true, correct
and complete list and description of (a) all services and other
support provided to the Business by Parent and its Affiliates
(other than the Companies) since April 1, 1996, (b) all other
overhead charges allocated to the Companies since April 1, 1996,
and (c) all other transactions between one or more Companies, on
the one hand, and Parent or any of its Affiliates (other than the
Companies), on the other hand, since April 1, 1996 (other than
payment of compensation or other benefits to employees).
(b) To the best of Parent's and each Seller's
knowledge, except as set forth on Schedule 2.11(b), (i) as of the
Closing, no employee, officer or director (or any member of his
or her immediate family) of Parent or of any Company or any of
their Affiliates will be indebted to any Company, nor is any
Company indebted (or committed to make loans or extend or
guarantee credit) to any of such individuals, (ii) no such
individual, except Xxxx Xxxxxxx and Xxxxxxx Xxxxxxx and any such
individual whose position is with Xxxxxxxxx or any of its
Affiliates (other than Parent or any of the Companies) has any
direct or indirect ownership interest in any Person with which
any Company has a business relationship, or any Person that
competes with any Company and (iii) no member of the immediate
family of any officer or director of any Company is an interested
party with respect to any Contract.
2.12 Title. The Sellers have, and at the Closing will
transfer to the Buyer, good and marketable title to all personal
property owned by them respectively, good and marketable title to
all Owned Real Property, valid and enforceable leasehold
interests in Leased Real Property and personal property leased by
them, and good and valid title to or rights to use, all
intangible properties and rights used by them, in each case free
and clear of all Liens, except Permitted Liens. The Seller
Subsidiaries have good and marketable title to all Subsidiary
Assets free and clear of all Liens, except Permitted Liens.
2.13 Acquired Real Property.
(a) Part A of Schedule 2.13(a) sets forth a true,
correct and complete list and legal descriptions of all Real
Property owned (beneficially or of record) by any of the
Companies in the conduct of the Business, and Part B of
Schedule 2.13(a) sets forth a true, correct and complete list of
all Real Property leased by any of the Companies in the conduct
of the Business, and in each case identifies the street address
thereof.
(b) Except in such cases as would not in the aggregate
have a Material Adverse Effect, all structures and other
improvements on such properties are within the lot lines and do
not encroach on the properties of any other Person (and
improvements on adjacent Real Property do not encroach on any of
the Real Property constituting any part of the Acquired Assets),
and the use, construction and operation of all Real Property
constituting any part of the Acquired Assets or otherwise owned
or leased by the Companies in the conduct of the Business conform
to all applicable building, zoning, safety, environmental and
other Laws, permits, licenses and certificates and all
restrictions and conditions affecting title.
(c) Other than as set forth on of Schedule 2.13(c),
there are no leases, subleases, options or other agreements,
written or oral, granting to any Person (other than the
Companies) the right to purchase, use or occupy the Acquired Real
Property or any portion thereof. None of Parent, the Companies
and any of their respective Affiliates has received any written
or oral notice or order by any Governmental Entity, any insurance
company which has issued a policy with respect to any of such
properties or any board of fire underwriters or other body
exercising similar functions which (i) relates to violations of
building, safety, fire or other ordinances or regulations,
(ii) claims any defect or deficiency with respect to any of such
properties or (iii) requests the performance of any repairs,
alterations or other work to or in any of such properties or in
the streets bounding the same, except such as would not
individually or in the aggregate have a Material Adverse Effect.
Parent and Sellers have made available to Buyer true, correct and
complete copies of all leases and financing documents affecting
all or any portion of the Acquired Real Property.
(d) None of Parent, the Companies and any of their
respective Affiliates has received any written or oral notice for
assessments for public improvements against the Acquired Real
Property which remains unpaid, and, to the best of Parent's and
each Seller's knowledge, no such assessment has been proposed.
Except as set forth on Schedule 2.13(d), there is no pending
condemnation, expropriation, eminent domain or similar proceeding
affecting all or any portion of any of the Acquired Real Property
and, to the best of Parent's and each Seller's knowledge, no such
proceeding is threatened.
(e) Except as set forth on Schedule 2.13(e), no Person
other than the Companies is in possession of (or has any right,
absolute or contingent, to possess which is superior to any
Company's right to possess) all or any portion of the Acquired
Real Property.
(f) Except as set forth on Schedule 2.13(f), all
Acquired Real Property has direct and unrestricted access over
currently utilized facilities and land to such public roads,
owned roads and driveways presently in use, and such utilities
and other services, as are necessary for the uses thereof and the
conduct of the Business, and neither any Company nor any other
Person has applied for any change in the zoning or land use
classification of any such Real Property.
(g) Except as set forth on Part A of Schedule 2.13(g),
the Acquired Real Property has adequate arrangements for supplies
of water, electricity, gas and/or oil for all operations at the
1996 or current operating levels, whichever is greater. Except
as set forth on Part B of Schedule 2.13(g), there are no actions
or proceedings pending or, to the best of Parent's and each
Seller's knowledge, threatened that would adversely affect the
supply of water, electricity, gas and/or oil to the Acquired Real
Property except for those which individually and in the aggregate
would not have a Material Adverse Effect.
2.14 Taxes.
(a) Parent and each Company has (i) timely filed all
returns and reports for Taxes, including information returns,
that are required to have been filed in connection with, relating
to, or arising out of the Business or the Acquired Assets, (ii)
paid to the appropriate Tax Authority all Taxes that are shown to
have come due pursuant to such returns or reports and (iii) paid
to the appropriate Tax Authority all other Taxes not required to
be reported on returns in connection with, relating to, or
arising out of, or imposed on the property of the Business for
which a notice of assessment or demand for payment has been
received or which have otherwise become due except for Taxes
being properly contested in good faith.
(b) All such returns or reports were complete and
accurate in all material respects at the time of filing and such
returns which have not been audited do not contain a disclosure
statement under Code Section 6662 (or any predecessor provision
or comparable provision of any Law).
(c) There are no unpaid Taxes with respect to any
period ending on or before the Closing Date which are or could
give rise to a lien on the Acquired Assets or the Business,
except for current Taxes not yet due and payable.
(d) Except as set forth on Schedule 2.14(d), (i) there
are no pending audits or, to the best of Parent's and each
Seller's knowledge, threatened audits or assessments relating to
Taxes with respect to the Business or the Acquired Assets and
(ii) there is no unassessed Tax deficiency proposed or to the
best of Parent and each Seller's knowledge threatened against
Parent or any Company relating to or affecting the Acquired
Assets or the Business, nor is any action or proceeding pending,
or to the best of Parent's and each Seller's knowledge,
threatened by any Governmental Entity for assessment,
reassessment or collection of Taxes.
(e) Except as set forth on Schedule 2.14(e), none of
the Acquired Assets (i) is property that is required to be
treated as owned by another Person pursuant to the "safe harbor
lease" provisions of former Section 168(f)(8) of the Code, (ii)
is "tax-exempt use property" within the meaning of Code Section
168(h) or (iii) directly or indirectly secures any Debt the
interest on which is tax-exempt under Code Section 103(a).
(f) Except as set forth on Schedule 2.14(f), no
Company has agreed to make, or is required to make, any
adjustment under Code Section 263A or 481(a) or any comparable
provision of state or foreign Tax Laws by reason of a change in
accounting method or otherwise and no Company has changed a
method of accounting or Inventory method, made or changed a tax
election, or otherwise taken any action which is not in
accordance with past practice that could accelerate a tax
deduction from a period after the Closing Date to a period before
the Closing Date or defer income from a period before the Closing
Date to a period after the Closing Date.
(g) Except as set forth on Schedule 2.14(g), no
Company is a party to any agreement, contract, arrangement or
plan that has resulted or would or could result, separately or in
the aggregate, in connection with this Agreement or any change of
control of the Company, in the payment of any "excess parachute
payment" within the meaning of Code Section 280G.
(h) The aggregate adjusted tax basis in the Inventory,
the accounts receivable and the property, plant and equipment
that constitute the Purchased Assets for federal Tax purposes as
of March 31, 1997, was at least $150,000,000, $29,000,000 and
$8,000,000, respectively.
(i) The amount of the reserves for value-added Taxes,
real property Taxes, property Taxes and payroll Taxes reflected
on the Closing Date Balance Sheet will be adequate to pay all
Assumed Tax Liabilities.
2.15 Intellectual Property and Technology.
(a) Schedule 2.15(a) contains a true, correct and
complete list of all patents, trademarks, trade names, service
marks and applications for the foregoing owned, used or held for
use by any Company with respect to the Business, except for
matters listed on Schedule 2.15(b).
(b) Schedule 2.15(b) contains a true, correct and
complete list of all Intellectual Property which has been
registered in, filed in or issued by the PTO, the United States
Copyright Office, any state trademark offices and the patent,
trademark, copyright and other corresponding offices of foreign
jurisdictions. All such registrations have been duly filed,
registered and issued and are in full force and effect.
(c) Except as set forth on Schedule 2.15(c), Section 8
and 15 declarations and applications for renewal with respect to
all U.S. registered trademarks and service marks listed in
Schedule 2.15(b) were timely filed in and accepted by the PTO.
No trademarks or service marks listed in Schedule 2.15(b) have
been abandoned.
(d) Schedule 2.15(d) sets forth all licenses or other
agreements from or with third Persons under which any Company
uses or exercises any rights with respect to any of the
Intellectual Property or Technology, other than such licenses and
other agreements that involve payments of no more than $25,000
per year ("Small Licenses"). At the Closing, Sellers will
transfer to Buyer all Intellectual Property and Technology
without payment of royalties, free and clear of any Liens.
(e) Except (i) as set forth on Schedule 2.15(e) or
(ii) with respect to Small Licenses, the Companies (as
applicable) are the sole and exclusive owners of the Intellectual
Property and Technology, free and clear of any Liens.
(f) Except as set forth on Schedule 2.15(f), no
Company has received (and Parent and Sellers have no knowledge
of) any written notice from any other Person pertaining to or
challenging the right of any Company (or any other Person) to use
any of the Intellectual Property or any Technology, and there is
no interference, opposition, cancellation, reexamination or other
contest proceeding, administrative or judicial, pending or
threatened with respect to any Intellectual Property or
Technology.
(g) Except as set forth on Schedule 2.15(g), no
licenses have been granted by any Company and no Company has any
obligation to grant licenses with respect to any Intellectual
Property or Technology. No written claims have been made by any
Company of any violation or infringement by others of rights with
respect to any Intellectual Property or Technology, and neither
Parent nor Sellers know of any basis for the making of any such
claim. Except in such cases as would not in the aggregate have a
Material Adverse Effect, the use by each Company of the
Intellectual Property and Technology (past and present) has not
violated or infringed any rights of other Persons, or constituted
a breach of any Contract (or other agreement or commitment).
(h) The Intellectual Property and Technology includes
all such rights necessary to conduct the Business as now
conducted and, except (i) as set forth on Schedule 2.15(d) or
(ii) with respect to Small Licenses, such rights will not be
adversely affected by the execution and delivery of this
Agreement or the consummation of the transactions contemplated
hereby.
(i) There are no licenses or service, maintenance or
other agreements or obligations of any nature whatsoever
regarding the Intellectual Property or Technology between or
among any such Company, on the one hand, and any Affiliate(s) of
such Company, on the other hand. All statements and
representations made by each Company or any of its Affiliates in
any pending patent, copyright and trademark applications with
respect to the Intellectual Property were true in all material
respects as of the time they were made.
2.16 Brokerage. Neither Parent nor any Company nor any
of their respective Affiliates has made any agreement or taken
any other action which might cause AlliedSignal or Buyer to
become liable for a broker's or finder's fee or commission as a
result of the transactions contemplated hereunder.
2.17 Product Warranties and Guarantees. Parent and
each Company has provided Buyer with true and correct copies of
all written product and service warranties and guarantees in
connection with Contracts listed on Schedule 2.8(a).
2.18 Products Liability. There are no Liabilities of
any Company, fixed or contingent, asserted or, to the best of
Parent's and each Seller's knowledge, unasserted, (a) with
respect to any product Liability or any similar claim that
relates to any product sold by any of the Companies to others
prior to the Closing, or (b) with respect to any claim for the
breach of any express or implied product warranty or any other
similar claim with respect to any product sold by any of the
Companies to others prior to the Closing, other than standard
warranty obligations (to replace, repair or refund) made by any
Company in the ordinary course of the conduct of the Business to
buyers of the respective products, and except in the case of the
preceding clauses (a) and (b) where such Liabilities would not
exceed $500,000 in the aggregate for the Combined Business.
2.19 Labor Matters.
(a) To the best of Parent's and each Seller's
knowledge, there have been no union organizing efforts with
respect to any Company conducted within the last three years and
there are none now being conducted with respect to any Company.
The Companies have not at any time during the three years prior
to the date of this Agreement had, nor, to the best of Parent's
and each Seller's knowledge, is there now threatened, a strike,
work stoppage, work slowdown or other material labor dispute with
respect to or affecting the Business. Except as set forth on
Schedule 2.19, (i) no employee of any Company is represented by
any union or other labor organization; (ii) there is no charge or
complaint, including any unfair labor practice charge or any
claim of discrimination, which is pending with any Governmental
Entity or, to the best of Parent's and each Seller's knowledge,
threatened against any Company relating to any of its employees;
and (iii) there is no commitment or agreement to increase wages
or modify the terms and conditions of employment of employees of
any Company other than ordinary course of the Business consistent
with past practice. Parent and Sellers have provided Buyer with
copies of any collective bargaining agreement or other agreement
with any union or other labor organization representing employees
of any Company.
(b) Within six months prior to the date hereof, (i) no
Company has effectuated (x) a "plant closing" (as defined in the
WARN Act) affecting any site of employment or one or more
facilities or operating units within any site of employment or
facility of the Business or (y) a "mass layoff" (as defined in
the WARN Act) affecting any site of employment or one or more
facilities or operating units within any site of employment or
facility of the Business, (ii) no Company has been affected by
any transaction or engaged in layoffs or employment terminations
with respect to the Business sufficient in number to trigger
application of any similar foreign, state or local law, and
(iii) none of the Companies' employees has suffered an
"employment loss" (as defined in the WARN Act).
2.20 Employee Benefits.
(a) Set forth on Schedule 2.20(a) is a true, correct
and complete list of the following:
(i) Separately by location, the names, job titles
and current salary or wage rates of all employees of each
Company and their hourly or yearly salary, together with a
summary of all bonus, incentive compensation or other
additional compensation or similar benefits paid to such
persons for the 1997 fiscal year and estimated for the 1998
fiscal year;
(ii) Separately by location, the names, job titles
and current salary or wage rates of all independent
contractors, including any consultants, and leased employees
who perform services for a Company; and
(iii) All of (x) the employee benefit plans,
arrangements or policies (whether or not written, whether
U.S. or foreign, and whether or not subject to ERISA),
including, without limitation, any stock option, stock
purchase, stock award, retirement, pension, deferred
compensation, profit sharing, savings, incentive, bonus,
health, dental, hearing, vision, drug, life insurance,
cafeteria, flexible spending, dependent care, fringe
benefit, vacation pay, holiday pay, disability, sick pay,
workers compensation, unemployment, severance pay, employee
loan, educational assistance plan, policy or arrangement,
and (y) any employment, indemnification, consulting or
severance agreement, under which any employee or former
employee of a Company has any present or future right to
benefits or under which a Company has any present or future
Liability (collectively, the "Plans"). Schedule 2.20(a)
indicates which Plans are maintained for employees employed
in the United States (collectively, "U.S. Plans"); which
Plans are maintained for employees employed outside of the
United States (collectively, "Foreign Plans"); and which
Plans cover only employees of one or more Seller
Subsidiaries (collectively, "Free-Standing Plans").
(b) Parent or Sellers have made available to Buyer a
complete and correct copy of each Plan document or a written
description of any unwritten plan; the most recent summary plan
description or similar booklet for any Plan; any employee
handbook applicable to employees of a Company; and with respect
to any Free-Standing Plan, any related trust agreement or
insurance contract, the most recent actuarial valuation report,
and the most recent financial statements.
(c) Except (i) as set forth on Schedule 2.20(c) or
(ii) in such cases as would not in the aggregate have a Material
Adverse Effect:
(i) Neither Parent nor any Company nor any of
their Affiliates has communicated to present or former
employees of a Company, or formally adopted or authorized,
any additional Plan or any change in or termination of any
existing Plan.
(ii) Each Plan has been operated and administered
in accordance with its terms, the terms of any applicable
collective bargaining agreement, and all applicable Laws.
(iii) Each U.S. Plan which is a "group health
plan" subject to the continuation coverage requirements of
Section 4980B of the Code and Part 6 of Title I of ERISA
("COBRA") which is maintained by a Company or any of its
Affiliates has been operated and administered, in all
material respects, in accordance with such requirements.
(d) Schedule 2.20(d) identifies each U.S. Plan which
provides health, life insurance or other welfare benefits to
retired or other terminated employees of a Company other than
continuation coverage required by COBRA and the Companies have
the ability to amend or terminate any such Plan.
(e) Except in such cases as would not in the aggregate
have a Material Adverse Effect, with respect to any Plan, no
actions, suits, claims or proceedings (other than routine claims
for benefits) are pending or, to the best of Parent's and each
Seller's knowledge, threatened, and no facts or circumstances
exist which could be reasonably expected to give rise to any such
actions, suits, claims or proceedings.
(f) Except in such cases as would not in the aggregate
have a Material Adverse Effect, no Plan is currently under
governmental investigation or audit, and to the best of Parent's
and each Seller's knowledge, no such investigation or audit is
contemplated or under consideration.
(g) Except (i) for benefits payable under the terms of
any Free-Standing Plan or (ii) in such cases as would not in the
aggregate have a Material Adverse Effect, no event has occurred
and no condition exists that could be reasonably expected to
subject AlliedSignal, Buyer or any Seller Subsidiary, directly or
indirectly, to any tax, fine, penalty or other Liability arising
under, or with respect to, any employee benefit plan currently or
previously maintained by any Company or any Person that is or was
a member of a controlled group with, under common control with,
or otherwise required to be aggregated with, any Company under
Section 414(b), (c), (m) or (o) of the Code.
(h) No lien has arisen or is expected to arise under
the Code or ERISA on the Purchased Assets.
(i) No U.S. Plan is a "multiemployer plan" within the
meaning of Section 3(37)(A) of ERISA, and no Company has any
outstanding Liability with respect to any such plan (contingent
or otherwise).
(j) Except (i) as set forth on Schedule 2.20(j) or
(ii) in such cases as would not in the aggregate have a Material
Adverse Effect, neither the execution of this Agreement nor the
consummation of the transactions contemplated by this Agreement,
will (x) increase the amounts of benefits otherwise payable under
any Plan, (y) result in the acceleration of the time of payment,
exercisability, funding or vesting of any such benefits, or (z)
result in any payment (whether severance pay or otherwise)
becoming due to, or with respect to, any employee or director of
a Company.
(k) Except in such cases as would not in the aggregate
have a Material Adverse Effect, with respect to each Foreign
Plan:
(i) All contributions and premium payments
required to have been made under or with respect to each
Foreign Plan have been timely paid; and
(ii) Each Foreign Plan is either fully funded (or
fully insured) based upon generally accepted local actuarial
and accounting practice and procedure.
(l) No employee benefits are provided to any employee
of a Company who is employed outside of the United States except
to the extent required by law.
(m) Each Foreign Plan has been operated, in all
material respects, in compliance with all applicable Laws with
such exceptions as would not individually or in the aggregate
result in a Material Adverse Effect..
(n) Each Foreign Plan is a Free-Standing Plan.
2.21 No Pending Litigation or Proceedings. Except as
set forth on Part A of Schedule 2.21, there are no actions,
suits, investigations or proceedings pending against or
affecting, or, to the best of Parent's and each Seller's
knowledge, threatened against, Parent, any Company, the Business
or any of the Acquired Assets before any arbitrator or
Governmental Entity (including the United States Environmental
Protection Agency, the United States Equal Employment Opportunity
Commission or any similar Governmental Entity) that would
materially and adversely affect their ability to perform their
obligations under this Agreement. Except as set forth on Part B
of Schedule 2.21, there are no outstanding judgments, decrees,
writs, injunctions or orders of any arbitrator or Governmental
Entity against Parent or any Company which relate to or arise out
of the conduct of the Business or the ownership, condition or
operation of the Business or the Acquired Assets except in such
cases as would not in the aggregate have a Material Adverse
Effect.
2.22 Insurance. Schedule 2.22 lists each Company's
policies and contracts in effect as of the date hereof for
insurance covering the Acquired Assets or Assumed Liabilities and
the operation of the facilities constituting the Business owned
or held by the Companies, together with the risks insured
against, coverage limits and deductible amounts. Sellers have
made available to Buyer complete and correct copies of all such
policies together with all riders and amendments thereto. Such
policies are in full force and effect and all premiums due
thereon have been paid. Each of the Companies has complied in
all material respects with the terms and conditions of such
policies. The Companies have made available to Buyer all books
and records relating to workers compensation claims and all
claims made by the Companies under any policy of insurance during
the five years prior to the date hereof with respect to the
Business other than employee claims under health or medical
insurance policies or coverage.
2.23 Customers; Suppliers. As of the date of this
Agreement, Part A of Schedule 2.23 contains a true, correct and
complete list of (i) all Contracts to which any Major Customer is
a party and (ii) all Major Suppliers, together with an estimate
of all purchases from each Major Supplier for the last 12 months.
Except as identified with an asterisk on Part A of Schedule 2.23,
each of the Contracts listed thereon is fully assignable to Buyer
(or, in the case of Contracts of the Seller Subsidiaries, will
remain in full force and effect upon the sale of the Subsidiary
Shares to Buyer) without the consent, approval or waiver of any
other Person. Except as set forth on Part B of Schedule 2.23, as
of the date of this Agreement, neither Parent nor any Company has
received written notice within the preceding 12 months of any
development (a) which could reasonably be expected to result in a
Material Adverse Effect or (b) which indicates that a Major
Customer will not purchase products of the Combined Business from
Buyer during the 1998 fiscal year in amounts substantially
equivalent (on a pro rata basis) to such purchases from such
Company in the 1997 fiscal year. Except as set forth on Part C
of Schedule 2.23, as of the date hereof, no supplier of the
Business (including any supplier of Intellectual Property) has
threatened to refuse to sell its products or services to the
Business except in such cases as would not in the aggregate have
a Material Adverse Effect.
2.24 Condition of Assets. Except as set forth on
Schedule 2.24, the buildings, machinery, equipment, tools,
furniture, improvements, sewers, pipes, transportation equipment
and other fixed tangible Assets of the Business (a) included in
the Acquired Assets or (b) subject to any Contract included in
the Acquired Assets are in sufficiently good operating condition
and repair to conduct the Business as presently conducted,
reasonable wear and tear excepted.
2.25 All Assets. Except as set forth on Schedule 2.25
and for the Excluded Assets, the Acquired Assets (including any
Assets, properties and rights subject to any Contract included in
the Acquired Assets) constitute all the assets, properties and
rights owned, used, or held for use in connection with, or that
are otherwise related to or required for the conduct of, the
Business as currently conducted by the Companies on the date of
this Agreement. Except as set forth on Schedule 2.25, none of
the Acquired Assets are owned, in whole or in part, by any Person
other than the Companies.
2.26 Undisclosed Liabilities. None of the Seller
Subsidiaries has any Liability of any nature, mixed, contingent
or otherwise, liquidated or unliquidated and whether due or to
become due, except for Non-Assumed Liabilities and except for
(i) Liabilities reflected on the Balance Sheet, other than those
discharged since September 30, 1997, (ii) Liabilities under
Contracts, (iii) Liabilities disclosed on Schedule 2.26 and
(iv) Liabilities incurred in the ordinary course of business
since the date of the Balance Sheet, none of which would
constitute a violation of any covenant herein or give rise to the
failure of any condition herein. None of the Seller Subsidiaries
has any Liability of any nature, mixed, contingent or otherwise,
liquidated or unliquidated and whether due or to become due,
which does not relate to the Business.
2.27 Securities Matters. Except as set forth on
Schedule 2.27, Sellers are acquiring the AlliedSignal Common
Stock for their own account and without a present view to any
distribution thereof or any present intention of distributing or
selling the AlliedSignal Common Stock in violation of the federal
securities laws. Each Seller is an "accredited investor" as such
term is defined in Regulation D promulgated under the Securities
Act. In evaluating the suitability of an investment in the
AlliedSignal Common Stock, each Seller has relied solely upon the
representations, warranties, covenants and agreements made by
AlliedSignal herein and has not relied upon any other
representations or other information (whether oral or written and
including any estimates, projections or supplemental data) made
or supplied by or on behalf of AlliedSignal or any Affiliate,
employee, agent or other representative of AlliedSignal. Each
Seller understands and agrees that it may not sell or dispose of
any of the AlliedSignal Common Stock other than pursuant to a
registered offering or in a transaction exempt from the
registration requirements of the Securities Act.
2.28 SEC Filings. Parent has heretofore delivered to
Buyer and Buyer acknowledges receipt of the following documents
(the "Parent Reports"): (a) Parent's Annual Report on Form 10-K
for the fiscal year ended Xxxxx 00, 0000, (x) Parent's Quarterly
Reports on Form 10-Q for the fiscal quarters ended June 30, and
September 30, 1997, (c) Parent's proxy statement relating to its
1997 Annual Meeting of Stockholders, (d) Parent's Annual Report
to Stockholders for 1997, and (e) any other report filed during
1997, and prior to the date of this Agreement, with the
Securities and Exchange Commission under the Securities Act or
the Exchange Act. Each Parent Report, as of its filing date,
insofar as it relates to the Business, did not contain any untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in light of
circumstances under which they were made, not misleading.
2.29 Bank Accounts. Schedule 2.29 contains a true,
correct and complete list of all bank accounts used or held for
use by the Seller Subsidiaries and the authorized signatures
associated therewith.
2.30 Business Conduct. Except as discussed between
Parent and Buyer on December 7, 1997, to the best of Parent's and
each Seller's knowledge, during the past three years neither any
Company, nor any director, officer, employee or third party
acting on behalf thereof, has, in violation of any Law: (i) made
any bribes, kickbacks or other payments, directly or indirectly,
to any Person or any representative thereof, to obtain favorable
treatment in securing business or otherwise to obtain special
concessions for any Company; (ii) made any bribes, kickbacks or
other payments, directly or indirectly, to or for the benefit of
any Governmental Entity or any official, employee or agent
thereof, for the purpose of affecting his or her action or the
action of the Governmental Entity that he or she represents to
obtain favorable treatment in securing business or to obtain
special concessions for the Company or any Subsidiary; (iii) made
any unlawful political contributions on behalf of any Company; or
(iv) otherwise used corporate funds of any Company for any
illegal purpose, including without limitation, any violation of
the Foreign Corrupt Practices Act.
ARTICLE III
Representations And Warranties Of AlliedSignal and Buyer
AlliedSignal and Buyer hereby jointly and severally
represent and warrant to Parent and Sellers as follows:
3.1 Organization and Good Standing. (a) AlliedSignal
is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware.
(b) Buyer is a limited liability company duly
organized, validly existing and in good standing under the laws
of the State of Delaware. AlliedSignal is the sole member of
Buyer. AlliedSignal owns all of the outstanding equity and
profit interests in Buyer, free and clear of all Liens. Buyer is
disregarded as an entity separate from AlliedSignal for federal
tax purposes.
3.2 Authorization and Enforceability. With respect to
each of AlliedSignal and Buyer: (a) such entity has full power
and authority to execute, deliver and perform this Agreement and
Transaction Documents to which such entity is a party, (b) the
execution, delivery and performance by such entity of this
Agreement and the Transaction Documents to which such entity is a
party have been duly authorized by all necessary action on the
part of such entity, (c) this Agreement has been duly executed
and delivered by such entity, and, as of the Closing Date, the
other Transaction Documents to which either entity is a party
will be duly executed and delivered by such entity, (d) this
Agreement is a legal, valid and binding obligation of such
entity, enforceable against such entity in accordance with its
terms, and (e) as of the Closing Date, each of the other
Transaction Documents to which such entity is a party will
constitute the legal, valid and binding obligations of such
entity, enforceable against such entity in accordance with its
terms.
3.3 No Violation of Laws or Agreements. The
execution, delivery, and performance by AlliedSignal and Buyer of
this Agreement and the Transaction Documents to which such
entities (as applicable) are parties do not, and the consummation
by AlliedSignal and Buyer (as applicable) of the transactions
contemplated hereby and thereby, will not, (a) contravene any
provision of the Certificate of Incorporation or Bylaws of
AlliedSignal nor the Certificate of Formation or Limited
Liability Company Agreement of Buyer, or (b) violate, conflict
with, result in a breach of, or constitute a default (or an event
which would, with the passage of time or the giving of notice or
both, constitute a default) under, or result in or permit the
termination, modification, acceleration, or cancellation of,
(i) any indenture, mortgage, loan or credit agreement, license,
instrument, lease, contract, plan, permit or other agreement or
commitment, oral or written, to which either AlliedSignal or
Buyer is a party, or by which any of either entity's Assets may
be bound or affected, or (ii) any judgment, injunction, writ,
award, decree, restriction, ruling, or order of any arbitrator or
Governmental Entity or any applicable Law to which AlliedSignal
or Buyer is subject.
3.4 Consents. No consent, approval or authorization
of, or registration or filing with, any Person (governmental or
private) is required in connection with the execution, delivery
and performance by AlliedSignal or Buyer of this Agreement, the
other Transaction Documents to which AlliedSignal or Buyer is a
party, or the consummation by AlliedSignal or Buyer of the
transactions contemplated hereby or thereby except (a) as
required by the HSR Act, (b) as required by the NYSE to list
AlliedSignal Common Stock and (c) any required consent, approval
of, or authorization of, or registration or filing with, any
foreign governmental authority.
3.5 AlliedSignal Common Stock. As of the date hereof,
1,000,000,000 shares of AlliedSignal Common Stock are authorized
for issuance. As of November 30, 1997, 562,554,971 shares of
AlliedSignal Common Stock were issued and outstanding and
153,902,513 shares of AlliedSignal Common Stock were held in the
treasury of AlliedSignal or owned by any Subsidiary of
AlliedSignal. AlliedSignal has a sufficient number of unreserved
shares of AlliedSignal Common Stock to perform the transactions
contemplated hereby. All shares of AlliedSignal Common Stock to
be issued at the Closing, when so issued, will be duly
authorized, validly issued, fully paid and non-assessable, free
of preemptive rights and all Liens and will be issued in
compliance with all applicable Laws. Parent acknowledges that
AlliedSignal has disclosed to Parent that AlliedSignal will be
making open market and/or block purchases of AlliedSignal Common
Stock during the period between the date hereof and the Closing
Date. All such purchases shall comply with Rule 10b-18 under
Exchange Act.
3.6 SEC Filings. AlliedSignal has heretofore
delivered to Parent, and Parent acknowledges receipt of, the
following documents (the "AlliedSignal Reports"): (a) AS's
Annual Report on Form 10-K for the fiscal year ended December 31,
1996, (b) AS's Quarterly Reports on Form 10-Q for the fiscal
quarters ended March 31, 1997, June 30, 1997 and September 30,
1997, (c) AS's proxy statement relating to its 1997 Annual
Meeting of Stockholders, (d) AS's Annual Report to Stockholders
for 1996, and (e) any other report filed during 1997, and prior
to the date of this Agreement, with the Securities and Exchange
Commission under the Securities Act or the Exchange Act. As of
their respective dates, each of the AlliedSignal Reports complied
in all material respects with the requirements of the Securities
Act or the Exchange Act, as the case may be, and none contained
an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under
which they were made, not misleading. Since January 1, 1996,
AlliedSignal has timely filed all reports, registration
statements and made all filings required to be filed with the SEC
under the rules and regulations of the SEC.
3.7 Financial Statements. The audited consolidated
financial statements and unaudited consolidated interim financial
statements of AlliedSignal and its consolidated Subsidiaries
included in or incorporated by reference into the AlliedSignal
Reports (including any related notes and schedules) have been
prepared in accordance with GAAP (except as may be indicated in
the notes thereto or as permitted by the Securities Act or the
Exchange Act in the case of unaudited financial statements
included in or incorporated by reference into the AlliedSignal
Reports) and fairly present the consolidated financial position
of AlliedSignal and its consolidated Subsidiaries as of the dates
thereof and the consolidated results of their operations for the
periods then ended, subject, in the case of the unaudited
consolidated interim financial statements, to normal year-end
adjustments and any other adjustments described therein.
3.8 Brokerage. Neither AlliedSignal, Buyer nor any of
their respective Affiliates has made any agreement or taken any
other action which might cause Parent or any Seller to become
liable for a broker's or finder's fee or commission as a result
of the transactions contemplated hereunder.
ARTICLE IV
Additional Covenants
4.1 Conduct of Business. Except (i) as otherwise
specifically permitted by this Agreement or (ii) with the prior
written consent of Buyer, from and after the date of this
Agreement and until the Closing Date, Parent and Sellers agree
that:
(a) Sellers shall, and Parent and Sellers shall
cause the Seller Subsidiaries to:
(i) conduct the Business as presently
conducted and only in the ordinary course of business
consistent with past practice; and
(ii) use their reasonable best efforts to
preserve the business organization of the Business
substantially intact, to keep available to Buyer the
services of their respective employees, and to preserve
for Buyer the goodwill of the suppliers, distributors,
customers and others having business relationships with
the Business.
(b) Parent and Sellers shall promptly inform
AlliedSignal in writing of any specific event or
circumstance (including, without limitation, any consecutive
two week period in which any Major Customer fails to place
orders with the Company or Companies with which it transacts
business) of which any of them (or any Seller Subsidiary) is
aware, or of which any of them (or any Seller Subsidiary)
receives written or oral notice, that (i) has or is likely
to have, individually or in the aggregate, taken together
with other events or circumstances, a Material Adverse
Effect, (ii) indicates that any Major Customer is
terminating or intends to terminate any Contract (excluding
termination upon expiration of the term of any Contract so
long as such customer continues to purchase goods from the
Combined Business) and/or indicates that any such customer
intends to reduce its purchases from any Company or (iii)
indicates that any Major Supplier is terminating or intends
to terminate any Contract (excluding termination upon
expiration of the term of any Contract so long as such
supplier continues to sell goods to the Combined Business)
and/or indicates that any such Major Supplier intends to
reduce its sales to any Company, provided that any such oral
notice reportable under this Section 4.1(b) shall be
directed to a responsible management Person at Parent or any
Company; and
(c) Sellers shall not, and Parent and Sellers
shall cause the Seller Subsidiaries not to:
(i) change or modify in any material
respect existing Inventory management or credit and
collection policies, procedures and practices with
respect to accounts receivable in any case relating to
the Business;
(ii) enter into any Contracts, waive any
rights or enter into any other transactions which
individually or in the aggregate would have a Material
Adverse Effect;
(iii) mortgage, pledge or subject to any
Lien (other than Permitted Liens) any of the Acquired
Assets;
(iv) change any compensation or benefits or
grant any material new compensation or benefits payable
to or in respect of any employee of the Business
(except, for regularly scheduled merit increases in the
ordinary course of business consistent with past
practice);
(v) sell, lease or otherwise transfer any
Assets, except Inventory in the ordinary course of the
Business, necessary, or otherwise material to the
conduct of, the Business which would constitute
Acquired Assets;
(vi) change any Company's method of
accounting or keeping its books of account or
accounting practices with respect to the Business,
except as required by GAAP;
(vii) take or omit to take any action
which if taken or omitted prior to the date hereof
would constitute or result in a breach of any
representations or warranties of Parent or Sellers set
forth herein;
(viii) enter into any Contract (except
sales contracts with customers in the ordinary course
of the Business and except for such Contracts which may
be terminated by Buyer or the applicable Seller
Subsidiary without penalty or Liability on no more than
30 days' notice) that would create a Liability for the
Business in excess of $200,000 per year without
obtaining AS's prior written consent, such consent not
to be unreasonably withheld;
(ix) create, incur or assume any Debt not
currently outstanding, other than current Liabilities
incurred in the ordinary course of business;
(x) amend their charters, bylaws or other
organizational documents;
(xi) authorize, issue, sell or otherwise
dispose of any capital stock of any Company or amend
the terms thereof;
(xii) split, combine or reclassify any
shares of capital stock of any of the Seller
Subsidiaries, declare, set aside or pay any dividend or
other distribution (whether in cash, stock or property
or any combination thereof) in respect of the capital
stock of any of the Companies, or redeem or otherwise
acquire any of the capital stock of any of the
Companies;
(xiii) make any loans, advances or capital
contributions to, or investments in, any Person;
(xiv) acquire, sell, lease or dispose of
any Assets used or held for use in the Business, other
than (x) sales of Inventory in the ordinary and usual
course of business consistent with past practice or (y)
purchases of goods for use in the Business in the
ordinary and usual course of business consistent with
past practice;
(xv) with respect to the Business, pay,
discharge or satisfy any claims, Liabilities (absolute,
accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or
satisfaction in the ordinary course of business of
Liabilities reflected or reserved against in, or
contemplated by, the Balance Sheet or incurred in the
ordinary course of business consistent with past
practice;
(xvi) disclose to any third party or
enter into any Technology license or agreement to
disclose to any third party any Intellectual Property,
except in the ordinary and usual course of business and
pursuant to written confidentiality agreements;
(xvii) enter into any labor agreement;
(xviii) sell or dispose of any significant
amount of old or obsolete Inventory; or
(xix) make capital expenditures in excess
of $50,000 individually or $250,000 in the aggregate
for the Combined Business;
(xx) agree in writing or otherwise to take
any of the foregoing actions.
4.2 Mutual Covenants. The parties hereto mutually
covenant from the date of this Agreement to the Closing Date (and
subject to the other terms of this Agreement):
(a) to cooperate with each other in determining
whether filings are required to be made or consents required
to be obtained in any jurisdiction in connection with the
consummation of the transactions contemplated by this
Agreement and in making or causing to be made any such
filings promptly and in seeking to obtain timely any such
consents (each party hereto shall furnish to the other and
to the other's counsel all such information as may be
reasonably required in order to effectuate the foregoing
action); and
(b) to advise the other parties promptly if such
party determines that any condition precedent to its
obligations hereunder will not be satisfied in a timely
manner.
4.3 Filings and Authorizations. The parties hereto
will, as promptly as practicable, and in the case of filings
under the HSR Act no later than five Business Days after the date
of this Agreement, make or cause to be made all such filings and
submissions under Laws applicable to them or their Affiliates as
may be required to consummate the terms of this Agreement,
including all notifications and information to be filed or
supplied pursuant to the HSR Act. The parties hereto shall also
provide as promptly as possible full responses to any requests
for additional information made of them under the HSR Act. Any
such filings, including any supplemental information and requests
for additional information under the HSR Act, will be in
substantial compliance with the requirements of the applicable
Law. Each of AlliedSignal and Buyer, on the one hand, and Parent
and Sellers, on the other hand, shall furnish to the other such
necessary information and reasonable assistance as the other may
request in connection with its preparation of any filing or
submission which is necessary under the HSR Act. Parent,
Sellers, AlliedSignal and Buyer shall keep each other apprised of
the status of any communications with, and inquiries or requests
for additional information from, any Governmental Entity,
including the FTC and the Antitrust Division, and shall comply
promptly with any such inquiry or request. Each of Parent and
AlliedSignal shall use its reasonable efforts to obtain any
clearance required under the HSR Act for the purchase and sale of
the Purchased Assets in accordance with the terms and conditions
hereof. Nothing contained in this Agreement, including under
this Section 4.3 and Sections 4.8 and 4.13, will require or
obligate (a) Parent, the Companies, AlliedSignal, Buyer or their
respective Affiliates to initiate, pursue or defend any
litigation to which any Governmental Entity (including the
Antitrust Division and the FTC) is a party or (b) AlliedSignal,
Buyer or their respective Affiliates (i) to agree or otherwise
become subject to any limitations on (x) the right of
AlliedSignal, Buyer or their respective Affiliates effectively to
control or operate the Business, (y) the right of AlliedSignal,
Buyer or their respective Affiliates to acquire or hold the
Business, or (z) the right of AlliedSignal or Buyer to exercise
full rights of ownership of the Business or all or any portion of
the Acquired Assets, or (ii) to agree or otherwise be required to
sell or otherwise dispose of, hold separate (through the
establishment of a trust or otherwise), or divest itself of all
or any portion of the business, Assets or operations of
AlliedSignal, Buyer, any Affiliate of AlliedSignal or Buyer or
the Business. The parties agree that no representation, warranty
or covenant of Parent, Sellers, AlliedSignal or Buyer contained
in this Agreement shall be breached or deemed breached as a
result of the failure by any party hereto or any of its
Affiliates to take any of the actions specified in the preceding
sentence.
4.4 Public Announcement. No party hereto shall make
or issue, or cause to be made or issued, any public announcement
or written statement concerning this Agreement or the
transactions contemplated hereby without the prior written
consent of the other party hereto (which will not be unreasonably
withheld or delayed), unless counsel to such party advises that
such announcement or statement is required by law or the rules of
any securities exchange on which securities of any Affiliate of
Parent are traded (in which case the parties hereto shall make
reasonable efforts to consult with each other prior to such
required announcement).
4.5 Investigation. Sellers shall, and Parent and
Sellers shall cause the Seller Subsidiaries to, give AlliedSignal
and its representatives (including AS's accountants, consultants,
counsel and employees), upon reasonable notice and during normal
business hours, reasonable access to the properties (including
any Equipment and any Acquired Real Property), Contracts,
employees, books, records and affairs of the Companies to the
extent relating to the Business and the Acquired Assets (provided
that such access does not unreasonably disrupt the conduct of the
Business), and shall cause their respective officers, employees,
agents and representatives to furnish to AlliedSignal all
documents, records and information (and copies thereof), to the
extent relating to the Business and the Acquired Assets, as
AlliedSignal may reasonably request. Parent and Sellers may
reasonably limit the number of representatives of AlliedSignal
provided access hereby. No investigation or receipt of
information by AlliedSignal pursuant to, or in connection with,
this Agreement, shall diminish or obviate any of the
representations, warranties, covenants or agreements of Parent or
Sellers under this Agreement or the conditions to the obligations
of Buyer under this Agreement. All information provided to
AlliedSignal or Buyer under this Agreement shall be held subject
to the terms and conditions of the Confidentiality Agreement.
4.6 Taxes.
(a) Parent and each Seller shall jointly and severally
be responsible for and shall pay any and all Taxes arising or
resulting from the conduct of the Business or the ownership of
the Acquired Assets on or prior to the Closing Date, which
Liability shall be a Non-Assumed Liability (including, without
limitation, the sale of the Business and the Purchased Assets on
the Closing Date pursuant to this Agreement).
(b) Buyer shall be responsible for and shall pay any
and all Taxes arising or resulting from the conduct of the
Business or the ownership of the Acquired Assets after the
Closing Date (excluding without limitation, the sale of the
Business and the Purchased Assets or the Closing Date pursuant to
this Agreement), which Liability shall be an Assumed Liability.
(c) Each Seller hereby acknowledges that for FICA and
FUTA purposes, Buyer qualifies as a successor employer with
respect to the retained employees. In connection with the
foregoing, the parties agree to follow the "Alternative
Procedures" set forth in Section 5 of the Revenue Procedure 96-
60, 1996-2C.B.399. Each affected Seller and Buyer understands
that Buyer shall assume the affected Seller's entire obligation
to furnish a Form W-2, Wage and Tax Statement to the employees of
the Business for calendar year ending December 31, 1998.
(d) In addition to all personnel files and records
relating to employees of the Business that each Seller shall
deliver to the Buyer when their employment commences with Buyer
as otherwise required by this Agreement, each Seller shall timely
provide Buyer with any and all other information it needs to
properly comply with the requirements of the final sentence of
Section 4.6(c).
(e) Each Seller acknowledges that for state
unemployment Tax purposes, each Seller will permit Buyer to apply
for a transfer of such Seller's rating account with respect to
its Business. Each Seller shall deliver to Buyer within a
reasonable time after request therefor, with respect to its
Business, copies of such Seller's (i) Form 940, Employer's Annual
Federal Unemployment Tax Returns for 1995 and 1996, (ii) state
unemployment tax rate notices for 1995 and 1996, and (iii)
benefit change statements that itemize claims charged against the
state account of such Seller in each state in which the Business
is operated for the four most recent calendar quarters.
(f) Parent, Sellers and Buyer shall (i) each provide
the other with such assistance as may reasonably be requested by
any of them in connection with the preparation of any Tax return,
any audit or other examination by any Taxing Authority or any
judicial or administrative proceeding with respect to Taxes, (ii)
each retain and provide to the other any records or other
information which may be relevant to such return, audit
examination or proceeding, and (iii) each provide to the other
any final determination of any such audit or examination,
proceeding or determination that affects any amount required to
be shown on any Tax return of the other for any period (which
shall be maintained confidentially). Without limiting the
generality of the foregoing, Buyer, Sellers and Parent shall
retain, until the applicable statutes of limitations (including
all extensions) have expired, copies of all Tax returns,
supporting workpapers, and other books and records or information
which may be relevant to such returns for all Tax periods or
portions thereof ending before or including the Closing Date, and
shall not destroy or dispose of such records or information
without first providing the other party with a reasonable
opportunity to review and copy the same.
(g) AlliedSignal, Buyer, Parent and Sellers intend
that Buyer's acquisition of the Business and Purchased Assets
from each Seller pursuant to this Agreement shall qualify as and
constitute a reorganization under Code Section 368 (a)(1)(C) and
each of the parties agrees to treat such acquisitions in such
manner for all tax purposes, including, without limitation, for
all purposes on any federal or state income or franchise tax
return filed by any party after the Closing Date.
(h) Neither Parent nor any Company shall make a new or
change any existing Tax election, change a method of accounting
or Inventory method, file any amended Tax return, enter into any
closing agreement, settle any Tax claim or assessment, or take or
omit to take any other action not consistent with past practice,
if any such action or omission would have the effect of
increasing the Tax Liability of AlliedSignal or Buyer with
respect to the Business and Acquired Assets for any period after
the Closing Date.
(i) AlliedSignal and Buyer, on the one hand, and
Parent and Sellers, on the other hand, shall equally bear all
Transfer Taxes. Parent, Sellers and Buyer shall cooperate in
timely making and filing all Tax Returns as may be required to
comply with the provisions of any Transfer Tax laws. To the
extent legally able to do so, Buyer shall deliver to Parent and
Sellers exemption certificates satisfactory in form and substance
to Parent and Sellers with respect to Transfer Taxes if such
delivery would reduce the amount of Transfer Taxes that would
otherwise be imposed.
(j) AlliedSignal, Buyer, Parent and each Seller
acknowledge that no affirmative election under Code Section 338
can be made with respect to any Subsidiary Shares.
(k) No later than 10 days prior to the due date for
filing, Buyer shall provide to Parent copies of Tax Returns for
taxable periods that include but do not end on the Closing Date
to be filed by any Seller Subsidiary and shall provide Parent the
opportunity to comment on such Tax Returns.
(l) Buyer shall cause Harco Aerospace Fasteners Ltd.
and Burbank Aircraft International, GmbH not to make any
distribution of property during the period beginning on the
Closing Date and ending March 31, 1998 that would result in a
diminution of the earnings and profits of such entity for Federal
income tax purposes.
4.7 Certain Deliveries.
(a) Within thirty (30) days after the end of each
month ending after the date of this Agreement and prior to the
Closing Date, Parent and Sellers shall prepare and furnish to or
cause to be furnished to AlliedSignal a copy of the monthly
financial reports for the Combined Business after September 30,
1997 (including unaudited balance sheet and income statements)
for each such month and the fiscal year to the end of such
month). All of the foregoing financial statements shall comply
with the requirements concerning unaudited financial statements
set forth in Section 2.6. In addition, Parent and Sellers shall
furnish AlliedSignal, upon request, with copies of regular
management reports, if any, concerning the operation of the
Business within ten (10) days after such reports are prepared.
(b) Each Seller shall, and Parent and Sellers shall
cause the Seller Subsidiaries to, provide AlliedSignal, within
five days of the execution or the date of receipt thereof, a copy
of each Contract entered into by any Company after the date
hereof and prior to the Closing Date which, if entered into prior
to the date hereof would have been required to be disclosed on
Part A of Schedule 2.8(a).
(c) Within five days after the date of filing thereof,
AlliedSignal or Parent, as the case may be, shall furnish to the
other a copy of each report filed by AlliedSignal or Parent, as
the case may be, after the date of this Agreement and prior to
the Closing Date under the Securities Act or the Exchange Act.
4.8 Consents. Prior to the Closing, Parent and
Sellers shall give any notices and obtain all waivers, licenses,
agreements, permits, consents, approvals or authorizations of any
Governmental Authority that are required to be obtained by any
Company pursuant to any Contract or Permit or otherwise in order
to consummate the transactions contemplated hereunder, and all of
such shall be in a written form agreeable to AlliedSignal and in
full force and effect and without conditions or limitations that
restrict the ability of the parties hereto to carry out the
transactions contemplated hereby. Concurrently with or
immediately prior to the Closing, Parent and Sellers shall cause
the Seller Subsidiaries to be released from any guarantees made
by any Seller Subsidiary of any indebtedness or other Liabilities
of Parents, Sellers or any of their Affiliates.
4.9 Releases. At the Closing, all intercompany Debt
(other than receivables and payables arising from ordinary course
commercial transactions) between the Companies, on the one hand,
and the Parent and its Subsidiaries other than the Companies, on
the other hand, shall be canceled and all such amounts shall be
deemed to be capital contributions to the entity owing such Debt.
Parent, Sellers and their Affiliates shall release any and all
claims, causes of action, demands of any kind, Liabilities,
Debts, damages, suits, or offsets, whether known or unknown,
suspected or unsuspected, that any of them have or may have
against any Seller Subsidiary (other than receivables and
payables arising from ordinary course commercial transactions).
4.10 Real Property. Within thirty (30) days after the
date hereof, Parent and Sellers shall deliver or cause to be
delivered to Buyer current, as-built ALTA surveys of the Owned
Real Property (the cost of which shall be borne 50% by Parent and
50% by Buyer); such surveys to be dated within thirty (30) days
of the date hereof and to be reasonably acceptable to Buyer.
Such surveys shall be performed by licensed surveyors designated
by Buyer and shall be certified to Buyer, Buyer's title insurance
companies and others as Buyer shall request. The surveys shall
be in form sufficient to cause Buyer's title insurance companies
to insure such surveys, and shall be an ALTA/ACSM Land Title
Survey, prepared in accordance with the "Minimum Standard Detail
Requirements for ALTA/ACSM Land Title Surveys as adopted by
American Land Title Association and American Congress on
Surveying & Mapping", and shall meet the currently effective
Accuracy Standards for an Urban Survey adopted by said
organizations and shall include such optional survey
responsibilities and specifications as Buyer reasonably shall
select.
4.11 Environmental. At or prior to Closing, Parent and
Sellers shall deliver or cause to be delivered all such necessary
applications, approvals or consents required to transfer (or, in
the case of the Seller Subsidiaries, required to permit the
Seller Subsidiaries to continue to hold) all Permits required for
the continued operation of the Business and the Acquired Assets
after the Closing Date in compliance with Environmental Laws.
Within thirty (30) days after execution of this Agreement,
Sellers shall identify to Buyer any of the Acquired Assets that
are subject to the requirements of any Laws that condition,
restrict, prohibit or require notification or disclosure for
environmental reasons upon the transfer, sale, lease or closure
of certain property; and Sellers shall deliver on or prior to the
Closing Date, all necessary applications, approvals, or consents
required by such Laws.
4.12 Ancillary Agreements. At or prior to the Closing,
the applicable parties shall enter into each of the Ancillary
Agreements.
4.13 Reasonable Best Efforts. Without limiting the
specific obligations of any party hereto under any covenant or
agreement hereunder, each party hereto shall use reasonable best
efforts to take all action and do all things necessary in order
to promptly consummate the transactions contemplated hereby,
including, without limitation, satisfaction, but not waiver, of
the Closing conditions set forth in Article V.
4.14 Negotiations. From the date hereof until the
termination of this Agreement in accordance with its terms,
Parent and Sellers, on behalf of themselves and their Affiliates,
agree that Parent, Sellers and their Affiliates will deal
exclusively and in good faith with AlliedSignal and Buyer with
respect to any transaction involving the sale, transfer or other
disposition of the Acquired Assets or the Business; and neither
Parent, Sellers, their Affiliates nor any of their officers,
directors, employees, lenders, investment banking firms, advisors
or other agents, or any Person acting on their behalf, will
solicit any inquiries or proposals by, or engage in any
discussions or negotiations with, or furnish any nonpublic
information to or enter into any agreement with, any Person other
than AlliedSignal or Buyer concerning the sale or other
disposition of the Acquired Assets or the Business or the merger,
consolidation, sale of securities or other transaction involving
Parent or any of the Companies, if such merger, consolidation,
sale or other transaction would be inconsistent, in any respect,
with the transactions contemplated by this Agreement, and will
promptly notify AlliedSignal of the substance of any inquiry or
proposal concerning any such transaction that may be received by
Parent, Sellers or their Affiliates; provided, however, that
notwithstanding any other provision hereof, Parent may (i) engage
in discussions or negotiations with a third party who (without
any solicitation, initiation, encouragement, discussion or
negotiation, directly or indirectly, by or with Parent or Sellers
after the date hereof) seeks to initiate such discussions or
negotiations and may furnish such third party information
concerning the Combined Business, the Acquired Assets and the
Xxxxxxx Purchased Assets if, and only to the extent that, (A)(x)
the third party has first made an Acquisition Proposal that is
financially superior to the transactions contemplated by this
Agreement and has demonstrated that the funds necessary for the
Acquisition Proposal are reasonably likely to be available (as
determined in good faith in each case by Parent's Board of
Directors after consultation with its financial advisors) and
(y) Parent's Board of Directors shall conclude in good faith,
after considering applicable provisions of state law, on the
basis of advice of outside counsel, that such action is necessary
for the Board of Directors to act in a manner consistent with its
fiduciary duties under applicable law and (B) prior to furnishing
such information to or entering into discussions or negotiations
with such Person, Parent (x) provides prompt notice to
AlliedSignal to the effect that it is furnishing information to
or entering into discussions or negotiations with such Person and
(y) receives from such Person an executed confidentiality
agreement in reasonably customary form and (ii) provided Parent
terminates this Agreement pursuant to Section 9.1(a)(iv), accept
an Acquisition Proposal from a third party. Parent shall notify
AlliedSignal in writing of any such inquiries, offers or
proposals (including, without limitation, the terms and
conditions of any such proposal and the identity of the Person
making it), within 24 hours of the receipt thereof, shall keep
AlliedSignal informed of the status and details of any such
inquiry, offer or proposal, and shall give AlliedSignal five
days' advance notice of any agreement to be entered into with, or
any information to be supplied to, any Person making such
inquiry, offer or proposal. As used herein, "Acquisition
Proposal" shall mean a proposal or offer (other than by
AlliedSignal) for a purchase of Assets, merger or other business
combination involving Sellers and the Xxxxxxx Sellers, or any
proposal to acquire in any manner a substantial equity interest
in, or all or substantially all of the Assets of, Sellers and the
Xxxxxxx Sellers or otherwise relating to the Combined Business.
4.15 U.S. Government Contracts. As soon as practicable
following the date of this Agreement and only after Buyer's
written request, with respect to each Government Contract,
AlliedSignal and Buyer shall assist Parent and Sellers to either
obtain written confirmation reasonably satisfactory in form and
substance to Buyer that novation of such Government Contract is
not required, or, if not received prior to the Closing Date,
submit to the cognizant responsible contracting officer, as soon
as practicable after the Closing Date (i) a written request that
the U.S. Government enter into a novation agreement contemplated
by FAR 42.1204 (a "Novation Agreement") with Buyer with respect
to each Government Contract and (ii) a Novation Agreement
executed by the Company or any Subsidiary party thereto for each
Government Contract. Parent, Sellers, AlliedSignal and Buyer
shall coordinate their efforts to facilitate the actions required
by this Section 4.15 and Parent agrees to take all necessary
action to assist Sellers prior to and after the Closing in
connection therewith, including without limitation, upon Buyer's
written request, obtaining such consents after the Closing,
informing the appropriate governmental personnel of the pending
transaction and of the planned novation.
4.16 NYSE Listing. AlliedSignal shall take all
reasonable action required to obtain from the NYSE, prior to the
Closing Date to have duly approved for listing, subject to
official notice of issuance, the shares of AlliedSignal Common
Stock to be issued hereunder at the Closing.
4.17 Continued Existence. Unless Parent makes other
provisions for its obligations under Article VII that are
reasonably satisfactory to AlliedSignal, (A) for a period of
three years after the Closing Date, Parent shall (i) maintain its
corporate existence, (ii) not authorize or take any other action
to implement a dissolution of Parent, and (iii) maintain a
minimum net worth of Fifty Million Dollars ($50,000,000) and (B)
following such three year period, for so long as any claim by a
Buyer Indemnified Party for indemnification pursuant to Article
VII remains unresolved, Parent shall (i) maintain its corporate
existence, (ii) not authorize or take any other action to
implement a dissolution of Parent, and (iii) maintain a minimum
net worth equal to the lesser of (x) Fifty Million Dollars
($50,000,000) or (y) the amount of such unresolved claims then
outstanding; provided, however, that nothing in this Section 4.17
shall (i) prevent Parent from engaging in a merger, sale of
substantially all its assets or other business combination after
the Closing Date if (x) prior to the consummation of such
transaction, the successor in interest to Parent (or the
purchaser of such assets, as the case may be) in such transaction
agrees in writing (for the benefit of the Buyer Indemnified
Parties) to assume and become fully responsible for, pursuant to
an agreement reasonably satisfactory in form and substance to
AlliedSignal, all of Parent's obligations under this Agreement
(including, without limitation, Parent's obligations under
Article VII) and (y) immediately after consummation of such
transaction, such successor in interest (or purchaser, as the
case may be) has a net worth of not less than the net worth then
required to be maintained by Parent pursuant to this Section 4.17
or (ii) limit the rights of the parties under Section 4.14.
4.18 Company Debt. Prior to the Closing, Parent shall
(i) cause the Debt which is secured by a mortgage on the
distribution center located in Salt Lake City, Utah, to be
repaid, (ii) cause all remaining payments on all capitalized
leases of the Companies to be paid and (iii) use its reasonable
best efforts to cause all cash accounts of the Companies to be
reduced to zero with no negative or positive balances. Buyer
acknowledges that the funding of negative balances will increase
Closing Date Net Worth.
4.19 Side Letters. At or prior to the Closing, Parent
shall deliver or cause to be delivered, to AlliedSignal, the Side
Letters.
4.20 Product Liability Insurance. At Parent's request,
AlliedSignal shall use reasonable commercial efforts to procure,
to the extent available, at Parent's expense, product liability
insurance covering products manufactured or distributed by the
Companies prior to the Closing Date. Upon receipt of any premium
notice relating to such insurance, AlliedSignal shall notify
Parent and Parent shall promptly pay to AlliedSignal the amount
of the premium due. Parent acknowledges and agrees that
AlliedSignal is free to ascribe any adverse claim experience, to
the extent reasonably identifiable to products manufactured or
distributed by the Companies prior to the Closing Date, to such
policy, so that (to such extent) such adverse claim experience
does not adversely affect other product liability premiums being
paid by AlliedSignal.
4.21 Harco Northern Ireland, Ltd. At or prior to the
Closing, Parent will cause Xxxx Xxxxxxx to convey to Buyer or
Buyer's designee the share of capital stock of (or other equity
interest in) Harco Northern Ireland, Ltd. owned by him, free and
clear of all Liens.
ARTICLE V
Conditions Precedent
5.1 Conditions Precedent to Obligations of
AlliedSignal and Buyer. The obligations of Buyer to purchase
(and of AlliedSignal to cause Buyer to purchase) the Purchased
Assets and assume (and of AlliedSignal to cause Buyer to assume)
the Assumed Liabilities and to consummate the other transactions
contemplated hereby are subject to the satisfaction, on or prior
to the Closing Date, of each of the following conditions (any one
or more of which may be waived in writing in whole or in part by
Buyer in its sole discretion):
(a) Representations, Warranties and Covenants. Each
of the representations and warranties of Parent and Sellers
contained in this Agreement or in any Transaction Document
delivered in connection herewith shall be true and correct in all
material respects on and as of the date of this Agreement and at
and as of the Closing with the same effect as though such
representations and warranties had been made at and as of the
Closing, except for representations and warranties that speak as
of a specific date or time other than the Closing (which need
only be true and correct in all material respects as of such date
or time); provided, however, that if any such representation or
warranty is already qualified by materiality, for purposes of
determining whether this condition has been satisfied, such
representation or warranty as so qualified shall be true and
correct in all respects. Parent and Sellers shall have performed
and complied in all material respects with each covenant and
agreement required by this Agreement to be performed or complied
with by them at or prior to the Closing. Parent and each Seller
shall furnish AlliedSignal and Buyer with a certificate of such
company dated the Closing Date and signed by a senior executive
officer of Parent or such Seller, as the case may be, to the
effect that the conditions set forth in this Section 5.1(a) have
been satisfied.
(b) HSR Act. The applicable waiting period under the
HSR Act (including any extensions thereof) with respect to the
transactions contemplated hereby shall have expired or been
terminated.
(c) Stock Exchange Listing. The NYSE shall have duly
approved for listing, subject to official notice of issuance, the
shares of AlliedSignal Common Stock to be issued hereunder at the
Closing.
(d) Required Consents. Parent and the Companies shall
have obtained all statutory and regulatory consents and approvals
which are required under any applicable Laws in order to
consummate the transactions contemplated hereby and to permit
Buyer to conduct the Business as conducted as of the date of this
Agreement and all other necessary consents and approvals of third
parties (other than any customer or supplier of the Business) to
the transactions contemplated hereby, other than those the
failure of which to obtain, individually and in the aggregate,
would not have a Material Adverse Effect.
(e) Customer/Supplier Concurrence. During the period
from November 1, 1997 through the date immediately preceding the
Closing Date, Parent, Sellers, Xxxxxxx Sellers, AlliedSignal
and/or Buyer shall not have received written notice from (i)
customers indicating that such customers are terminating or
intend to terminate Combined Contracts (excluding termination
upon expiration of the term of any Combined Contract so long as
such customer continues to purchase goods from the Combined
Business) and/or indicating that any such customer intends to
reduce its purchases from any Company or any Xxxxxxx Seller,
which terminations and/or reductions in the aggregate would
reasonably be expected to result in the revenues of the Combined
Business for the 12 months immediately following the Closing Date
being $40 million or more less than the revenues of the Combined
Business for the 12 months immediately preceding the Closing Date
or (ii) suppliers (including suppliers of Intellectual Property)
indicating that such suppliers are terminating or intend to
terminate Combined Contracts (excluding termination upon
expiration of the term of any Combined Contract so long as such
supplier continues to provide goods or Intellectual Property to
the Combined Business) and/or indicating that any such supplier
intends to reduce its sales to any Company or any Xxxxxxx Seller,
which terminations and/or reductions in the aggregate would
reasonably be expected to result in supplier sales to the
Combined Business for the 12 months immediately following the
Closing Date being $10 million or more less than supplier sales
to the Combined Business for the 12 months immediately preceding
the Closing Date.
(f) Injunction; Litigation; Legislation. (i) Parent,
the Companies, AlliedSignal and Buyer shall not be subject to any
order or injunction by any Governmental Entity restraining or
prohibiting the consummation of the transactions contemplated
hereby, (ii) no action or proceeding shall have been instituted
before any Governmental Entity to restrain or prohibit, or to
obtain substantial damages in respect of, the consummation of the
transactions contemplated hereby, (iii) none of the parties
hereto or any Seller Subsidiary shall have received written
notice from any Governmental Entity of (x) its intention to
institute any action or proceeding to restrain, enjoin or nullify
this Agreement or the transactions contemplated hereby, or to
commence any investigation (other than a routine letter of
inquiry, including a routine civil investigative demand) into the
consummation of the transactions contemplated hereby or (y) the
actual commencement of such investigation, (iv) there shall not
be any pending or threatened litigation, suit, action or
proceeding by any party which would reasonably be expected to
limit or materially adversely affect Buyer's ownership of the
Acquired Assets or the Buyer under the Xxxxxxx Agreement's
ownership of and the Xxxxxxx Purchased Assets, and (v) no Law
shall have been promulgated or enacted by any Governmental
Entity, which would prevent or make illegal the consummation of
the transactions contemplated hereby.
(g) Transition Services Agreement. Parent, Sellers
and Buyer shall have entered into a mutually satisfactory
transition services agreement provided that charges for services
rendered shall be customary and reasonable.
(h) Side Letters. Xxxxxxxxx and Xxxxxxx Xxxxxxx, as
appropriate, shall have executed and delivered to AlliedSignal
the three Side Letters substantially in the form of
Exhibits 1.9(xiii)(A-C).
(i) Documents. Parent and the Companies shall have
delivered to Buyer at the Closing such other documents and
instruments as shall be reasonably necessary to transfer to Buyer
the Purchased Assets as contemplated by this Agreement. Parent
and Sellers shall have delivered all the certificates,
instruments, contracts and other documents specified to be
delivered by each of them hereunder.
(j) Xxxxxxx Closing. (i) All conditions to the
Closing (as defined in the Xxxxxxx Agreement) shall have been
satisfied or waived and (ii) the Closing (as defined in the
Xxxxxxx Agreement) shall be consummated simultaneously with the
consummation of the Closing hereunder.
(k) Harco Northern Ireland, Ltd. Xxxx Xxxxxxx shall
have conveyed to Buyer or Buyer's designees the share of capital
stock of (or other equity interest in) Harco Northern Ireland,
Ltd. owned by him, free and clear of all Liens.
(l) Escrow Agreement. Parent and the Escrow Agent
shall have executed and delivered to AlliedSignal the Escrow
Agreement.
5.2 Conditions Precedent to Obligations of Parent and
Sellers. The obligations of Sellers to sell, and Parent to cause
to be sold, the Purchased Assets and to consummate the other
transactions contemplated hereby are subject to the satisfaction,
on or prior to the Closing Date, of each of the following
conditions (any one or more of which may be waived in writing in
whole or in part by Parent (acting on its own behalf and on
behalf of Sellers) in its sole discretion):
(a) Representations, Warranties and Covenants. Each
of the representations and warranties of AlliedSignal and Buyer
contained in this Agreement and in any Transaction Document
delivered in connection herewith shall be true and correct in all
material respects on and as of the date of this Agreement and at
and as of the Closing with the same effect as though such
representations and warranties had been made at and as of the
Closing, except for representations and warranties that speak as
of a specific date or time other than the Closing (which need
only be true and correct in all material respects as of such date
or time); provided, however, that if any such representation or
warranty is already qualified by materiality, for purposes of
determining whether this condition has been satisfied, such
representation or warranty as so qualified shall be true and
correct in all respects. AlliedSignal and Buyer shall have
performed or complied in all material respects with each covenant
and agreement required by this Agreement to be performed or
complied with by it at or prior to the Closing. AlliedSignal or
Buyer, as the case may be, shall furnish Sellers with a
certificate of such company dated the Closing Date and signed by
a senior executive officer of Buyer to the effect that the
conditions set forth in this Section 5.2(a) have been satisfied.
(b) HSR Act. The applicable waiting period under the
HSR Act (including any extensions thereof) with respect to the
transactions contemplated hereby shall have expired or been
terminated.
(c) Stock Exchange Listing. The NYSE shall have duly
approved for listing, subject to official notice of issuance, the
shares of AlliedSignal Common Stock to be issued hereunder at the
Closing.
(d) Injunction; Litigation; Legislation. (i) Parent,
the Companies, AlliedSignal and Buyer shall not be subject to any
order or injunction by any Governmental Entity restraining or
prohibiting the consummation of the transactions contemplated
hereby, (ii) no action or proceeding shall have been instituted
before any Governmental Entity to restrain or prohibit, or to
obtain substantial damages in respect of, the consummation of the
transactions contemplated hereby, (iii) none of the parties
hereto or any Seller Subsidiary shall have received written
notice from any Governmental Entity of (x) its intention to
institute any action or proceeding to restrain, enjoin or nullify
this Agreement or the transactions contemplated hereby, or to
commence any investigation (other than a routine letter of
inquiry, including a routine civil investigative demand) into the
consummation of the transactions contemplated hereby or (y) the
actual commencement of such investigation and (iv) no Law shall
have been promulgated or enacted by any Governmental Entity,
which would prevent or make illegal the consummation of the
transactions contemplated hereby.
(e) Registration Rights Agreement. AlliedSignal shall
have executed and delivered to Parent a registration rights
agreement substantially in the form of Exhibit 1.9(b)(vi) with
such changes as may reasonably be requested by Citicorp USA, Inc.
provided that such changes shall not provide for (i) more than a
single demand registration right, (ii) a period of longer than
180 days during which the Registration Statement must be kept in
effect or (iii) the payment of expenses by a party other than
Citicorp USA, Inc. or Parent.
(f) Documents. AlliedSignal and Buyer shall have
delivered to Sellers at the Closing such other documents and
instruments as shall be reasonably necessary for the assumption
by Buyer of the Assumed Liabilities as contemplated by this
Agreement. AlliedSignal and Buyer shall have delivered all the
certificates, instruments, contracts and other documents
specified to be delivered by it hereunder.
(g) Xxxxxxx Closing. (i) All conditions to the
Closing (as defined in the Xxxxxxx Agreement) shall have been
satisfied or waived and (ii) the Closing (as defined in the
Xxxxxxx Agreement) shall be consummated simultaneously with the
consummation of the Closing hereunder.
(h) Escrow Agreement. AlliedSignal and the Escrow
Agent shall have executed and delivered to Parent the Escrow
Agreement.
ARTICLE VI
Certain Additional Covenants
6.1 Expenses. Except as otherwise expressly provided
in this Agreement, each of the parties hereto shall each bear its
respective accounting, legal and other expenses incurred in
connection with the transactions contemplated by this Agreement.
6.2 Maintenance of Books and Records. Parent, Sellers
and Buyer shall cooperate fully with each other after the Closing
so that (subject to any limitations that are reasonably required
to preserve any applicable attorney-client privilege) each party
hereto has access to the business records, contracts and other
information existing at the Closing Date and relating in any
manner to the Acquired Assets, the Assumed Liabilities or the
conduct of the Business (whether in the possession of Parent,
Sellers or Buyer). No files, books or records existing at the
Closing Date and relating in any manner to the Acquired Assets or
the conduct of the Business prior to the Closing Date shall be
destroyed by any party hereto for a period of six years after the
Closing Date without giving the other party at least 30 days'
prior written notice, during which time such other party shall
have the right (subject to the provisions hereof) to examine and
to remove any such files, books and records prior to their
destruction. The access to files, books and records contemplated
by this Section 6.2 shall be during normal business hours and
upon not less than two business days' prior written request,
shall be subject to such reasonable limitations as the party
having custody or control thereof may impose to preserve the
confidentiality of information contained therein, and shall not
extend to material subject to a claim of privilege unless
expressly waived by the party entitled to claim the same.
6.3 Financial Statements. Upon the request of
AlliedSignal, Parent and Sellers shall, as promptly as
practicable (but in no event later than 30 days after such
request), provide AlliedSignal with such financial statements
relating to the Combined Business as may be required under Rule 3-
05, Article 11 of Regulation S-X or other rule or regulation
promulgated under the Securities Act or the Exchange Act in
connection with the preparation and filing of any registration
statement or periodic report of AlliedSignal pursuant to such
laws, including unqualified opinions thereon of independent
public accountants and consents therefor as required by such laws
and the rules and regulations thereunder.
6.4 Non-Competition/Non-Solicitation.
(a) Parent and each Seller covenants and agrees that,
if the Closing is consummated, for a period of three years after
the Closing Date, it will not, and will cause Parent Subsidiaries
not to, engage in the business of supplying to the aerospace
industry aircraft hardware, chemicals or related support services
(or any portion thereof) anywhere in the world (the "Competitive
Activities"), except for (i) the sale of any Inventory of such
hardware or chemicals owned by such Person or consigned to such
Person as of the date hereof, the value of which Inventory is
estimated to be approximately $5,000,000 or (ii) the sale of any
Inventory of such hardware or chemicals hereafter acquired by
such Person as part of a bulk purchase or hereafter consigned to
such person as part of a bulk consignment, but only after such
Person has offered to sell such hardware or chemicals to Buyer at
commercially reasonable prices for such quantities as would be
charged to distributors of such products; provided, however, that
nothing herein shall be construed to prevent Parent, Sellers
and/or any of their respective Affiliates from owning, in the
aggregate, up to 10% of the stock or equity interest in any
Person that engages in such business or any portion thereof. It
is the desire and intent of the parties hereto that the
provisions of this Section 6.4 shall be enforced to the fullest
extent permitted under the laws and public policies of each
jurisdiction in which enforcement is sought. If any court
determines that any provision of this Section 6.4 is
unenforceable, such court shall have the power to reduce the
duration or scope of such provision, as the case may be, or
terminate such provision and, in reduced form, such provision
shall be enforceable; it is the intention of the parties that the
foregoing restrictions shall not be terminated, unless so
terminated by a court, but shall be deemed amended to the extent
required to render them valid and enforceable, such amendment to
only apply with respect to the operation of this Section 6.4 in
the jurisdiction of the court that has made the adjudication.
Notwithstanding the foregoing, nothing in this Section 6.4(a)
shall prohibit Parent, any Seller or any of their respective
Affiliates from acquiring any Person or business that engages in
Competitive Activities provided that (x) such activities do not
constitute the principal activities of the Person or business to
be acquired (based on the sales of such business during the
preceding four (4) full calendar quarters) and (y) if Competitive
Activities constitute in excess of fifteen percent (15%) of the
revenues of the Person or business acquired, Sellers use their
reasonable efforts to divest that portion of such Person or
business that engages in Competitive Activities within twelve
(12) months after the acquisition thereof.
(b) Each of Parent and each Seller covenants and
agrees that, if the Closing is consummated, for a period of one
year after the Closing Date, it will not, and will cause Parent
Subsidiaries not to, directly or indirectly, solicit for
employment, either as an employee or a consultant, any employee
or independent contractor of AlliedSignal, Buyer or any of their
respective Affiliates who is engaged in the Business and was an
employee or independent contractor of any Company engaged in the
Business as of the Closing Date to become an employee or
consultant or otherwise provide services to Parent, such Seller
or any Parent Subsidiary, except for persons whose employment is
solicited or procured through general media advertisements.
(c) The parties acknowledge and agree that the
restrictions contained in Sections 6.4(a) and 6.4(b) are a
reasonable and necessary protection of the immediate interests of
AlliedSignal and Buyer, and any violation of these restrictions
would cause substantial injury to AlliedSignal or Buyer, as the
case may be and that AlliedSignal and Buyer would not have
entered into this Agreement without receiving the additional
consideration offered by Parent and each Seller in binding itself
to these restrictions. In the event of a breach or a threatened
breach by Parent, any Seller or any Parent Subsidiary of these
restrictions, AlliedSignal and Buyer shall be entitled to apply
to any court of competent jurisdiction for an injunction
restraining such Person from such breach or threatened breach
(without the necessity of proving the inadequacy of money damages
as a remedy); provided, however, that the right to apply for
injunctive relief shall not be construed as prohibiting
AlliedSignal or Buyer, as the case may be, from pursuing any
other available remedies for such breach or threatened breach.
(d) Each of AlliedSignal and Buyer covenant and agree
that, if the Closing is consummated, for a period of one year
after the Closing Date, and if not consummated for a period of
one year from the date of termination of this Agreement, it will
not, and will cause its Affiliates not to, directly or
indirectly, solicit for employment, either as an employee or a
consultant, any employee or independent contractor of Parent or
any Parent Subsidiary (other than any employee or independent
contractor of any of the Companies) to become an employee or
consultant or otherwise provide services to AlliedSignal, Buyer
or any of their respective Affiliates, except for persons whose
employment is solicited or procured through general media
advertisements.
(e) The parties acknowledge and agree that the
restrictions contained in Section 6.4(d) are a reasonable and
necessary protection of the immediate interests of Parent and
Sellers, and any violation of these restrictions would cause
substantial injury to Parent or Sellers, as the case may be, and
that Parent and Sellers would not have entered into this
Agreement without receiving the additional consideration offered
by AlliedSignal and Buyer in binding itself to these
restrictions. In the event of a breach or a threatened breach by
AlliedSignal, Buyer or any of their respective Affiliates of
these restrictions, Parent and any such Seller shall be entitled
to apply to any court of competent jurisdiction for an injunction
restraining such Person from such breach or threatened breach
(without the necessity of proving inadequacy of money damages as
a remedy); provided, however, that the right to apply for
injunctive relief shall not be construed as prohibiting Parent or
such Seller from pursuing any other available remedies for such
breach or threatened breach.
6.5 Confidential Information. Parent and Sellers
shall, and shall cause Parent Subsidiaries to, maintain the
confidentiality of, and shall not use, and shall cause Parent
Subsidiaries not to use, for the benefit of itself or others, any
confidential information concerning the Business or the Acquired
Assets, including any information with respect to the
Intellectual Property or Technology (the "Confidential
Information"); provided, however, that this Section 6.5 shall not
restrict (a) any disclosure by any such Person of any
Confidential Information required by applicable Law, securities
exchange or any court of competent jurisdiction; provided, that
AlliedSignal and Buyer are given notice and an adequate
opportunity to contest such disclosure, (b) any disclosure on a
confidential basis to any such Person's attorneys, accountants,
lenders and investment bankers and (c) any disclosure of
information (i) which is available publicly as of the date of
this Agreement, (ii) which, after the date of this Agreement,
becomes available publicly through no fault of the disclosing
party or any of its Affiliates or (iii) which is received by such
Person from a third party not, to the best of such Person's
knowledge, subject to any obligation of confidentiality with
respect thereto.
ARTICLE VII
Survival; Indemnification
7.1 Survival. All representations, warranties,
covenants and agreements contained in this Agreement or the
Transaction Documents shall survive (and not be affected in any
respect by) the Closing, any investigation conducted by any party
hereto and any information which any party may receive.
Notwithstanding the foregoing, the representations and warranties
contained in or made pursuant to this Agreement and the related
indemnity obligations set forth in Sections 7.2(a)(i) and
7.3(a)(i) shall terminate on, and no claim or action with respect
thereto may be brought after, the date three years after the
Closing Date, except that (a) the representations and warranties
contained in Sections 2.3 and 2.12 and the related indemnity
obligations contained in Section 7.2 shall survive indefinitely
and (b) the representations and warranties contained in
Sections 2.10, 2.14 and 2.20 and the related indemnity
obligations contained in Section 7.2 shall survive until 30 days
after the expiration of the applicable statute of limitations (or
extensions or waivers thereof). The representations and
warranties which terminate on the date three years after the
Closing Date and the representations and warranties referred to
in the foregoing clause (b), and the Liability of any party
hereto with respect thereto pursuant to this Article VII, shall
not terminate with respect to any claim, whether or not fixed as
to Liability or liquidated as to amount, with respect to which
the Indemnifying Party has been given written notice prior to the
date three years after the Closing Date or such 30th day after
the expiration of the applicable statute of limitations (or
extensions or waivers thereof), as the case may be.
7.2 Indemnification by Parent, Sellers and Xxxxxxx
Sellers.
(a) Subject to Section 7.1 Parent, Sellers and Xxxxxxx
Sellers shall jointly and severally indemnify and hold
AlliedSignal, Buyer, Buyer as defined in the Xxxxxxx Agreement,
and their respective employees, officers, directors, agents and
Affiliates (collectively, the "Buyer Indemnified Parties")
harmless from and against, and agree promptly to defend any Buyer
Indemnified Party from and reimburse any Buyer Indemnified Party
for, any and all Losses which any Buyer Indemnified Party may at
any time suffer or incur, or become subject to, as a result of or
in connection with:
(i) any breach or inaccuracy as of the date of
this Agreement, the date of the Xxxxxxx Agreement or the
Closing Date of any of the representations and warranties
made (w) by Parent or Sellers in or pursuant to this
Agreement, (x) in any Transaction Document delivered by
Parent or any Seller at the Closing in accordance herewith,
(y) made by Parent or the Xxxxxxx Sellers in or pursuant to
the Xxxxxxx Agreement or (z) in any Transaction Document
delivered by Parent or any Xxxxxxx Seller at the Closing
under the Xxxxxxx Agreement in accordance with the Xxxxxxx
Agreement (it being understood and agreed that,
notwithstanding anything to the contrary contained in this
Agreement or the Xxxxxxx Agreement, to determine if there
had been an inaccuracy or breach of a representation or
warranty of Parent, any Seller or any Xxxxxxx Seller and the
Losses arising from such inaccuracy or breach, such
representation and warranty shall be read as if it were not
qualified by materiality, including, without limitation,
qualifications indicating accuracy in all material respects,
or accuracy except to the extent the inaccuracy would not
have a Material Adverse Effect);
(ii) any failure by Parent, any Seller or any
Xxxxxxx Seller to carry out, perform, satisfy and discharge
any of their respective covenants, agreements, undertakings
or Liabilities under (w) this Agreement, (x) any of the
Transaction Documents delivered by Parent or any Seller
pursuant to this Agreement, (y) the Xxxxxxx Agreement or
(z) any of the Transaction Documents delivered by Parent or
any Xxxxxxx Seller pursuant to the Xxxxxxx Agreement;
(iii) the Non-Assumed Liabilities and the
Xxxxxxx Non-Assumed Liabilities; and
(iv) the ownership, use and possession of the
Excluded Assets or the Xxxxxxx Excluded Assets prior to, on
or after the Closing Date.
(b) Notwithstanding any other provision herein to the
contrary, (i) neither Parent, Sellers nor the Xxxxxxx Sellers
shall be required to indemnify and hold harmless any Buyer
Indemnified Party pursuant to Section 7.2(a)(i) unless the
applicable Buyer Indemnified Party has asserted a claim with
respect to such matters within the applicable survival period set
forth in Section 7.1 hereof, (ii) neither Parent, Sellers nor the
Xxxxxxx Sellers shall have any Liability pursuant to
Section 7.2(a)(i) until the cumulative aggregate amount of all
Losses which are otherwise recoverable thereunder by Buyer
Indemnified Parties exceed an amount equal to Six Million Nine
Hundred Thousand Dollars ($6,900,000) (the "Basket"), and then
only for the amount by which such Losses exceed the Basket,
(iii) the cumulative indemnification obligation of Parent,
Sellers and the Xxxxxxx Sellers under Section 7.2(a)(i), except
as it applies to a breach of the representations and warranties
contained in Section 2.3, shall in no event exceed 50% of the
Cash Equivalent Purchase Price, (iv) the cumulative
indemnification obligation of Parent and Sellers under Section
7.2(a)(i) with respect to a breach of the representations and
warranties contained in Section 2.3 shall in no event exceed the
Cash Equivalent Purchase Price, (v) the amount of any Loss for
which indemnification is provided under this Section 7.2 shall be
net of any amount actually recovered by AlliedSignal or Buyer
under insurance policies with respect to such Losses, and
(vi) neither Parent, Sellers, nor the Xxxxxxx Sellers shall have
any Liability for consequential damages, except that the
provisions of this clause (vi) shall not apply to the breach of
the representations and warranties contained in Section 2.3 or
the breach of any covenant contained in Section 4.19.
Notwithstanding anything in this Agreement to the contrary,
neither Parent, Sellers, nor the Xxxxxxx Sellers shall have any
obligation to indemnify any Buyer Indemnified Party for any
Special Claims (as defined in Section 7.4(b)) that are less than
$20,000 per claim (a "Small Claim") and Losses in respect of
Small Claims shall be disregarded for purposes of determining
whether Losses pursuant to Sections 7.2(a)(i) and 7.2(a)(iv)
exceed the Basket.
7.3 Indemnification by AlliedSignal and Buyer.
(a) Subject to Section 7.1 AlliedSignal and Buyer
shall jointly and severally indemnify and hold Parent, Sellers,
the Xxxxxxx Sellers and their respective employees, officers,
directors, agents and Affiliates (collectively, the "Seller
Indemnified Parties") harmless from and against, and agree
promptly to defend any Seller Indemnified Party from and
reimburse any Seller Indemnified Party for, any and all Losses
which any Seller Indemnified Party may at any time suffer or
incur, or become subject to, as a result of or in connection
with:
(i) any breach or inaccuracy as of the date of
this Agreement, or the Xxxxxxx Agreement or the Closing Date
of any of the representations and warranties made (w) by
AlliedSignal or Buyer in or pursuant to this Agreement, (x)
in any Transaction Document delivered by AlliedSignal or
Buyer at the Closing in accordance herewith, (y) made by
AlliedSignal or the Buyer under the Xxxxxxx Agreement in or
pursuant to the Xxxxxxx Agreement or (z) in any Transaction
Document delivered by AlliedSignal or the Buyer under the
Xxxxxxx Agreement at the Closing under the Xxxxxxx Agreement
in accordance with the Xxxxxxx Agreement (it being
understood and agreed that, notwithstanding anything to the
contrary contained in this Agreement or the Xxxxxxx
Agreement, to determine if there had been an inaccuracy or
breach of a representation or warranty of AlliedSignal,
Buyer or the Buyer under the Xxxxxxx Agreement and the
Losses arising from such inaccuracy or breach, such
representation and warranty shall be read as if it were not
qualified by materiality, including, without limitation,
qualifications indicating accuracy in all material respects,
or accuracy except to the extent the inaccuracy will not
have a material adverse effect on the ability of
AlliedSignal or Buyer to perform its obligations under this
Agreement and the other Transaction Documents to which it is
a party);
(ii) any failure by AlliedSignal, Buyer or the
Buyer under the Xxxxxxx Agreement to carry out, perform,
satisfy and discharge any of their respective covenants,
agreements, undertakings, Liabilities under (w) this
Agreement, (x) any of the Transaction Documents delivered by
AlliedSignal or Buyer, as the case may be, pursuant to this
Agreement, (y) the Xxxxxxx Agreement or (z) any of the
Transaction Documents delivered by AlliedSignal or the Buyer
under the Xxxxxxx Agreement, as the case may be, pursuant to
the Xxxxxxx Agreement;
(iii) the Assumed Liabilities and the Xxxxxxx
Assumed Liabilities; and
(iv) the operation of the Combined Business after
the Closing.
(b) Notwithstanding any other provision herein to the
contrary, (i) neither AlliedSignal nor Buyer shall be required to
indemnify and hold harmless any Seller Indemnified Party pursuant
to Section 7.3(a)(i) unless the applicable Seller Indemnified
Party has asserted a claim with respect to such matters within
the applicable survival period set forth in Section 7.1 hereof,
(ii) the cumulative indemnification obligation of AlliedSignal
and Buyer under Section 7.3(a)(i) shall in no event exceed 50% of
the Cash Equivalent Purchase Price, and (iii) neither
AlliedSignal nor Buyer shall have any Liability for consequential
damages.
7.4 Notification of Claims.
(a) If any Buyer Indemnified Party, on the one hand,
or Seller Indemnified Party, on the other hand (an "Indemnified
Party"), has a claim or potential claim or receives notice of any
claim, potential claim or the commencement of any action or
proceeding which could give rise to an obligation on the part of
Parent or Sellers, on the one hand, or AlliedSignal or Buyer, on
the other hand, to provide indemnification (the "Indemnifying
Party") pursuant to Section 7.2 or 7.3, respectively, the
Indemnified Party shall promptly give the Indemnifying Party
notice setting forth in reasonable detail the facts giving rise
to the claim to the extent known (an "Indemnification Claim");
provided, however, that the failure to give such prompt notice
shall not prevent any Indemnified Party from being indemnified
hereunder for any Losses, except to the extent that the failure
to so promptly notify the Indemnifying Party actually damages the
Indemnifying Party or except to the extent such notice is not
received during the applicable survival period set forth in
Section 7.1.
(b) In the event of a claim, a potential claim or the
commencement of any action or proceeding by a third party which
could give rise to an obligation to provide indemnification
pursuant to Section 7.2 or 7.3, the Indemnified Party shall give
the Indemnifying Party prompt written notice thereof setting
forth in reasonable detail the facts giving rise to the claim to
the extent known (the "Third Party Indemnification Claim");
provided, however, that the failure of the Indemnified Party to
so promptly notify the Indemnifying Party shall not prevent any
Indemnified Party from being indemnified for any Losses, except
to the extent that the failure to so promptly notify actually
damages the Indemnifying Party or except to the extent such
notice is not received during the applicable survival period set
forth in Section 7.1. If the Indemnifying Party confirms in
writing (the "Confirmation of Indemnification") to the
Indemnified Party within fifteen (15) days after receipt of the
Third Party Indemnification Claim the Indemnifying Party's
responsibility to indemnify and hold harmless the Indemnified
Party therefor in accordance herewith and within such fifteen
(15) day period demonstrates to the Indemnified Party's
reasonable satisfaction that as of such time (i) in the event the
Indemnifying Party is Parent and Sellers, Parent is in compliance
with the covenants set forth in Section 4.17 and the face value
of the Third Party Indemnification Claim, when aggregated with
the face value of all other outstanding claims of Buyer
Indemnified Parties, does not exceed the net worth of Parent, or
(ii) in the event the Indemnifying Party is AlliedSignal and
Buyer, AlliedSignal and Buyer have sufficient financial resources
in order to indemnify for the full amount of any potential
Liability in connection with such claim, the Indemnifying Party
may elect to compromise or defend, at such Indemnifying Party's
own expense and by such Indemnifying Party's own counsel, which
counsel shall be reasonably satisfactory to the Indemnified
Party, any such matter involving the asserted Liability of the
Indemnified Party. If the Indemnifying Party elects to
compromise or defend any such asserted Liability, it shall within
fifteen (15) days (or sooner, if the nature of the asserted
Liability so requires) notify the Indemnified Party of its intent
to do so, and the Indemnified Party shall cooperate, at the
expense of the Indemnifying Party, in the compromise of, or
defense against, any such asserted Liability; provided that
(i) the Indemnified Party may, if it so desires, employ counsel
at its own expense to assist in the handling of any such third
party claim, (ii) the Indemnifying Party shall keep the
Indemnified Party advised of all material events with respect to
any such third party claim, (iii) the Indemnifying Party shall
obtain the prior written approval of the Indemnified Party (which
approval may not be unreasonably withheld) before ceasing to
defend against such third party claim or entering into any
settlement, adjustment or compromise of such third party claim
involving injunctive or similar equitable relief being asserted
against any Indemnified Party or any Affiliate thereof and
(iv) no Indemnifying Party shall, without the prior written
consent of each Indemnified Party, settle or compromise or
consent to the entry of any judgment in any pending or threatened
demand, claim, action or cause of action, suit or proceeding in
respect of which indemnification may be sought hereunder (whether
or not any such Indemnified Party is a party to such demand,
claim, action or cause of action, suit or proceeding), unless
such settlement, compromise or consent includes an unconditional
release of all such Indemnified Parties from all Liability
arising out of such claim, action, suit or proceeding. With
respect to claims for indemnification arising out of or relating
to trade disputes, warranty claims, ordinary course returns and
allowances disputes and similar contractual disputes (including
late deliveries or delivery of non-conforming goods) ("Special
Claims"), (i) if the Special Claim or Claims related to a single
third party aggregates less than $1,000,000 on the face of such
Special Claim or Claims, AlliedSignal and Buyer shall control the
defense and settlement of such claims with such third party, and
(ii) if the Special Claim or Claims related to a single third
party aggregates more than $1,000,000 on the face of such Special
Claim or Claims, Parent and Sellers shall control the defense of
such claims, provided that Parent shall have delivered a
Confirmation of Indemnification and demonstrated that Parent has
sufficient financial resources in accordance with clause (i) of
the second sentence of this Section 7.4(b). Notwithstanding
anything contained herein to the contrary, the Indemnifying Party
shall not be entitled to have sole control over the defense,
settlement, adjustment or compromise of any third party non-
monetary claim that seeks an order, injunction or other equitable
relief against any Indemnified Party or any Affiliate thereof,
which, if successful, could materially interfere with the
business, Assets, Liabilities, financial condition or results of
operations of the Indemnified Party or any of its Affiliates. If
the Indemnifying Party elects not to compromise or defend against
the asserted Liability, or fails to notify the Indemnified Party
of its election as herein provided, the Indemnified Party may, at
the Indemnifying Party's expense, pay, compromise or defend
against such asserted Liability.
ARTICLE VIII
Employees And Employee Benefits
8.1 Scope of Article. This Article VIII contains the
covenants and agreements of the parties with respect to (a) the
status of employment of the employees of Sellers and the Seller
Subsidiaries employed in the Business ("Employees") upon the sale
of the Business to Buyer, and (b) the employee benefits and
employee benefit plans provided or covering such Employees and
former employees of Sellers and the Seller Subsidiaries who
terminated employment with the Sellers or the Seller Subsidiaries
while employed in the Business or who retired from the Business
("Former Employees"). Nothing herein expressed or implied
confers upon any Employee or Former Employee of Sellers or the
Seller Subsidiaries any rights or remedies of any nature or kind
whatsoever.
8.2 U.S. Employees. This Section 8.2 applies only to
Employees and Former Employees employed or previously employed by
Sellers in the United States.
(a) Employment. Buyer shall offer employment
effective as of the Closing Date to each Employee of a Seller who
is employed in the United States (a "U.S. Employee") and is
actively at work immediately prior to the Closing Date or is not
actively at work immediately prior to the Closing Date due solely
to vacation, holiday or jury duty. Such initial offer of
employment shall be for a position and for base salary or wages
which are comparable to that which Employee had with Sellers
immediately prior to the Closing and shall include employee
benefits which are comparable in the aggregate to that which such
Employees had with Sellers immediately prior to the Closing;
provided, however, that no such employment shall be offered to
Xxxxxx X. Xxxxx, Xxxxx Xxxxxxxx and Xxxxx Xxxxxxxxx. Buyer shall
offer employment to each other U.S. Employee who is not actively
at work immediately prior to the Closing Date (including, but not
limited to, any such employee who is not actively at work due to
medical leave, sick leave, short-term disability, long-term
disability, layoff or leave of absence) (an "Inactive Employee")
who is willing and able to return to work within 90 days after
the Closing Date or such later date as may be required by law,
with such employment with Buyer to commence on the date the
Inactive Employee first commences active employment with Buyer.
Sellers shall be responsible for any obligation to provide
employee benefits to an Inactive Employee prior to such
employee's date of hire by Buyer. U.S. Employees who accept
Buyer's offer of employment and become employees of Buyer shall
be referred to herein as "U.S. Transferred Employees."
Notwithstanding the foregoing, nothing herein shall be construed
to limit Buyer's ability to thereafter terminate the employment
of any Employee or to amend or terminate any employee benefit
plan or to otherwise change the terms and conditions of
employment of any Employee.
(b) Past Service Credit. Buyer shall credit the
service of all U.S. Transferred Employees with Sellers and their
Affiliates prior to the Closing Date for purposes of eligibility
and vesting under all employee benefit plans provided by Buyer
for U.S. Transferred Employees (but not for purposes of benefit
accrual). Buyer shall also: (i) cause to be waived any pre-
existing condition limitation under any Buyer medical plans
applicable to U.S. Transferred Employees or their dependents
(except to the extent that any such pre-existing condition
limitation would not have been waived under Sellers' medical
plans), and (ii) recognize (or cause to be recognized) the dollar
amount of all covered expenses incurred by U.S. Transferred
Employees and their dependents under Sellers' applicable medical
plans during the calendar year in which the Closing Date occurs
for purposes of satisfying such calendar year's deductibles and
co-payment limitations under any applicable Buyer medical plans;
provided, that the U.S. Transferred Employee enrolls in the
applicable Buyer medical plan at such time and in such manner as
is reasonably specified by Buyer.
(c) Severance; WARN Act. Sellers shall pay and be
solely liable for, and shall indemnify and hold AlliedSignal and
Buyer harmless against, any obligation, cost or expense for (i)
severance pay, termination indemnity pay, salary continuation,
special bonuses or like compensation under Sellers' plans,
policies or arrangements and (ii) liability under the WARN Act,
or any similar state or local law, arising from, relating to or
claimed by reason of the Closing or the transactions contemplated
by this Agreement or which result from or relate to actions taken
by Sellers on or before the Closing Date.
(d) Vacation. Buyer shall adopt and assume Sellers'
liability for accrued, unused vacation entitlement of U.S.
Transferred Employees as of the Closing to the extent listed on
the Balance Sheet.
(e) Workers Compensation. Sellers shall be
responsible for all workers compensation claims filed by or on
behalf of a U.S. Transferred Employee to the extent attributable
to events, occurrences or exposures prior to the Closing. Buyer
shall be responsible for all workers compensation claims filed by
or on behalf of a U.S. Transferred Employee to the extent
attributable to events, occurrences or exposures following the
Closing.
(f) Employment and Plan Liabilities. It is understood
and agreed that neither AlliedSignal nor Buyer is assuming any
obligations or liabilities arising under any Plan (except to the
extent provided in Sections 8.2(d) above and 8.2(g) below) or as
a result of any Employee's or Former Employee's employment with,
or termination of employment, from Sellers, and Sellers shall
remain responsible for any such obligations and liabilities.
(g) Employment Agreements. Buyer shall reimburse
Sellers for any Liabilities incurred after the Closing Date under
the employee agreements listed under "Employee Agreement" on
Schedule 2.20(a), other than the agreement relating to the
employment of Xxxxxx X. Xxxxx.
(h) Post-Closing Liability. AlliedSignal and Buyer
shall pay and be solely liable for, and shall indemnify and hold
Parent and Sellers harmless against, any obligation, cost or
expense for severance pay, termination pay, salary continuation,
special bonuses or like compensation under any Buyer plan, policy
or arrangement which result from, or relate to, actions taken by
AlliedSignal or Buyer or any Affiliate thereof after the Closing
Date.
(i) Cooperation. The parties agree to furnish each
other with such information concerning employees and employee
benefit plans, and to take all such other action, as is necessary
or appropriate to effect the transactions contemplated by this
Article VIII.
8.3 Foreign Employees. This Section 8.3 applies only
to Employees and Former Employees employed or previously employed
by Sellers or the Seller Subsidiaries outside of the United
States.
(a) Employment. Buyer shall continue the employment
without changes in terms immediately after the Closing of each
Employee of a Seller Subsidiary who is employed outside of the
United States (a "Foreign Employee"). Nothing herein shall be
construed to limit Buyer's ability to terminate the employment of
any Foreign Employee or to amend or terminate any employee
benefit plan applicable to Foreign Employees or to otherwise
change the terms and conditions of employment.
(b) Severance. Sellers shall pay and be solely liable
for, and shall indemnify and hold AlliedSignal and Buyer harmless
against, any obligation, cost or expense for severance pay,
termination indemnity pay, salary continuation, special bonuses
or like compensation under (i) any Seller or Seller Subsidiary
plan, policy or arrangement or (ii) any applicable Laws, which
result from or relate to actions taken by any Seller or Seller
Subsidiary on or before the Closing Date (other than the
consummation of the Closing, which shall be the responsibility of
Buyer and Allied Signal).
(c) Cooperation. The parties agree to furnish each
other with such information concerning employees and employee
benefit plans, and to take all such other action, as is necessary
or appropriate to effect the transactions contemplated by this
Article VIII.
ARTICLE IX
Termination; Miscellaneous
9.1 Termination.
(a) This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time
prior to the Closing Date, as follows:
(i) by the mutual written agreement of Buyer and
Parent;
(ii) by Buyer or Parent if the Closing has not
occurred on or before September 30, 1998; provided, however,
that the right to terminate this Agreement pursuant to this
Section 9.1(a)(ii) shall be suspended as to any party whose
failure to fulfill any material obligation under this
Agreement shall have been the cause of, or shall have
resulted in, the failure of the Closing to occur prior to
such date until the fifth Business Day after such failure
has been cured;
(iii) by Buyer or Parent in the event of the
issuance by any Governmental Entity of a final,
nonappealable order or injunction restraining or prohibiting
the consummation of the transactions contemplated hereby; or
(iv) by Parent, upon five days' prior notice to
AlliedSignal, if, as a result of an Acquisition Proposal
received by Parent from a person other than a party to this
Agreement or any of its Affiliates, the Board of Directors
of Parent determines in good faith that their fiduciary
obligations under applicable law require that such
Acquisition Proposal be accepted; provided, however, that
(x) the Board of Directors of Parent shall have concluded in
good faith, after considering applicable provisions of state
law and after giving effect to all concessions which may be
offered by AlliedSignal pursuant to clause (y) below, on the
basis of advice of outside counsel, that such action is
necessary for the Board of Directors to act in a manner
consistent with its fiduciary duties under applicable law
and (y) prior to any such termination, Parent shall, and
shall cause its respective financial and legal advisors to,
negotiate with AlliedSignal to make such adjustments in the
terms and conditions of this Agreement as would enable
AlliedSignal to proceed with the transactions contemplated
hereby; provided further, however, that no termination shall
be effective pursuant to this clause (iv) unless
concurrently with such termination a termination fee of
Thirty-Four Million Five Hundred Thousand Dollars
($34,500,000) is paid in cash by Parent to AlliedSignal.
(b) Except for the obligations contained in
Section 6.1, the last sentence of Section 4.5 and this Article IX
(other than Sections 9.2, 9.13 and 9.14) and the representations
and warranties contained in Sections 2.16 and 3.8 (and the
related indemnity obligations under Sections 7.2(a)(i) and
7.3(a)(i), respectively), all of which shall survive any
termination of this Agreement, upon the termination of this
Agreement pursuant to Section 9.1(a), this Agreement shall
forthwith become null and void, and no party hereto or any of its
officers, directors, employees, agents, consultants, stockholders
or principals shall have any rights or Liabilities hereunder or
with respect hereto, including without limitation for any breach
of warranty or representation; provided, however, that nothing
contained herein shall relieve any party hereto from Liability
for any willful failure to comply with any covenant or agreement
contained herein.
9.2 Further Assurances. From time to time after the
Closing, AlliedSignal, Buyer, Parent and Sellers shall execute
and deliver or cause to be executed and delivered such further
documents, certificates, instruments of conveyance, assignment
and transfer and take such further action as AlliedSignal, Buyer,
Parent or Sellers may reasonably request in order to more
effectively to sell, assign, convey, transfer, reduce to
possession and record title to any of the Purchased Assets to
Buyer or to better enable Buyer to complete, perform and
discharge any of the Assumed Liabilities. AlliedSignal, Buyer,
Parent and Sellers agree to cooperate with each other in all
reasonable respects to assure to Buyer the continued title to and
possession of the Purchased Assets in the condition and manner
contemplated by this Agreement. Each party hereto shall
cooperate and deliver such instruments and take such action as
may be reasonably requested by any other party hereto in order to
carry out the provisions and purposes of this Agreement and the
transactions contemplated hereby. AlliedSignal, Buyer, Parent
and Sellers shall cooperate and shall cause their respective
Affiliates, officers, employees, agents and representatives to
cooperate to ensure the orderly transition of the Business from
Sellers to Buyer and to minimize the disruption to the Business
resulting from the transactions contemplated hereby.
9.3 Entire Agreement; Amendments; Waivers. This
Agreement, the Confidentiality Agreement, and the documents
referred to herein and to be delivered pursuant hereto constitute
the entire agreement between the parties hereto pertaining to the
subject matter hereof, and supersede all prior and
contemporaneous agreements, understandings, negotiations and
discussions of the parties, whether oral or written. No
amendment, supplement, modification, waiver or termination of
this Agreement shall be binding unless executed in writing by the
party to be bound thereby. No waiver of any of the provisions of
this Agreement shall be deemed or shall constitute a waiver of
any other provision or breach of this Agreement, whether or not
similar, unless otherwise expressly provided.
9.4 Benefit; Assignment. This Agreement shall be
binding upon and inure to the benefit of, and shall be
enforceable by, the parties hereto and their respective
successors and permitted assigns. This Agreement shall not be
assigned by any party hereto without the prior written consent of
the other party hereto; provided, however, that AlliedSignal or
Buyer may assign any or all of their respective rights hereunder
to one or more Affiliates of AlliedSignal or Buyer, as the case
may be, without the consent of Parent or Sellers provided that
AlliedSignal or Buyer, as the case may be, shall continue to be
obligated to perform all of its obligations hereunder.
9.5 No Presumption. AlliedSignal, Buyer, Parent and
Sellers have participated jointly in the negotiation and drafting
of this Agreement. In the event any ambiguity or question of
intent or interpretation arises, this Agreement shall be
construed as if drafted jointly by AlliedSignal, Buyer, Parent
and Sellers, and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of
any of the provisions of this Agreement.
9.6 Notices. Notices and other communications
provided for herein shall be in writing and shall be deemed given
only if delivered to the party personally or sent to the party by
telecopy, by registered or certified mail (return receipt
requested) with postage and registration or certification fees
thereon prepaid, or by any nationally recognized overnight
courier, addressed to the party at its address set forth below:
If to Parent or Banner Aerospace
Sellers:
X.X. Xxx 00000
Xxxxxxxxxx, XX 00000
Attention: Chief Financial
Officer
Telecopy No.: 000-000-0000
with copy to: Xxxxxx X. Xxxxxx
00000 Xxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
If to AlliedSignal or AlliedSignal Inc.
Buyer:
X.X. Xxx 0000
000 Xxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000-0000
Attention: General Counsel
Telecopy No.: 000-000-0000
or to such other address as a party may from time to time
designate in writing in accordance with this section. All
notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed
to have been given on the date of receipt.
9.7 Terms Generally.
(a)(i) Words in the singular shall be held to
include the plural and vice versa and words of one gender shall
be held to include the other genders as the context requires,
(ii) the terms "hereof," "herein," and "herewith" and words of
similar import shall, unless otherwise stated, be construed to
refer to this Agreement as a whole (including all of the Annexes,
Schedules and Exhibits hereto) and not to any particular
provision of this Agreement, and Article, Section, paragraph,
Exhibit and Schedule references are to the Articles, Sections,
paragraphs, Exhibits and Schedules to this Agreement unless
otherwise specified, (iii) the word "including" and words of
similar import when used in this Agreement shall mean "including,
without limitation," unless otherwise specified, (iv) the word
"or" shall not be exclusive, and (v) provisions shall apply, when
appropriate, to successive events and transactions.
(b) Each reference in this Agreement (or in any other
document or instrument furnished to AlliedSignal or Buyer by
Parent or any Seller pursuant to this Agreement) to "the best of
Parent's and each Seller's knowledge", or words of similar import
referring to Parent and Sellers (including Parent and Sellers not
being aware of a particular event or other matter), means the
actual knowledge, after due inquiry, of each executive officer of
Parent and each of the Companies.
9.8 Counterparts; Headings. This Agreement may be
executed in several counterparts, each of which shall be deemed
an original, but such counterparts shall together constitute but
one and the same Agreement. The Article and Section headings in
this Agreement are inserted for convenience of reference only and
shall not constitute a part hereof.
9.9 Severability. If any provision, clause or part of
this Agreement or the application thereof under certain
circumstances is held invalid or unenforceable, the remainder of
this Agreement, or the application of such provision, clause or
part under other circumstances, shall not be affected thereby.
9.10 No Reliance. Except for any assignees permitted
by Section 9.4 of this Agreement and the indemnified persons
pursuant to Sections 7.2 and 7.3: (i) no third party is entitled
to rely on any of the representations, warranties or agreements
of the parties hereto contained in this Agreement; and (ii) the
parties hereto assume no Liability to any third party because of
any reliance on the representations, warranties or agreements of
such parties contained in this Agreement.
9.11 Governing Law. This Agreement shall be construed
and interpreted according to the laws of the State of New York,
without regard to the conflict of law principles thereof.
9.12 Submission to Jurisdiction; Waivers. The parties
hereto hereby irrevocably and unconditionally agree that:
(a) All actions and proceedings arising out of or
relating to this Agreement shall be heard and determined in a New
York state or federal court sitting in the City of New York, and
the parties hereto hereby irrevocably submit to the exclusive
jurisdiction of such courts in any such action or proceedings and
irrevocably waive the defense of an inconvenient forum to the
maintenance of any such action or proceeding.
(b) Service of process in any such action or
proceeding may be effected by mailing a copy thereof by
registered or certified mail (or any substantially similar form
of mail), postage prepaid, to such party at its address as
provided in Section 9.6.
9.13 Bulk Transfer. The parties hereto hereby waive
compliance with the provisions of any applicable bulk sales law
of any jurisdiction in connection with the transactions
contemplated hereby and no representation, warranty or covenant
contained in this Agreement shall be deemed to have been breached
as a result of such non-compliance. Parent and Sellers hereby
agree, jointly and severally, to indemnify, defend and hold
AlliedSignal and Buyer harmless from and against any and all
Losses arising out of or relating to claims which may be asserted
by third Persons, including Governmental Entities, against the
Acquired Assets or any Buyer Indemnified Parties as a result of
non-compliance with any applicable bulk sales law. Nothing in
this Agreement shall be construed as an admission by any party as
to the applicability of any bulk sales laws.
9.14 Use of Names. During the first 180 days after the
Closing Date, Buyer shall have the right to use all of the logos,
trademarks and trade identification of Parent as are located at
the Acquired Real Property or on the Acquired Assets
(collectively, the "Trademarks"). Buyer's use of the Trademarks
shall be in accordance with such reasonable quality control
standards as shall be promulgated by Parent and provided to
Buyer. If Parent shall notify Buyer in writing of Buyer's
material failure to comply with such reasonable quality control
standards and Buyer continues to not comply with such reasonable
quality control standards for more than 20 days after receipt of
such notice, Parent shall have the right to terminate Buyer's
right under this Section 9.14 to use the Trademarks.
9.15 Xxxxxxx Price Allocation. In connection with the
purchase price adjustment contemplated by Section 1.6, Parent and
AlliedSignal shall agree on an appropriate allocation of the
Adjustment Amount to the Initial Purchase Price under the Xxxxxxx
Agreement (expressed as a positive or negative number) and the
Initial Purchase Prices under this Agreement and the Xxxxxxx
Agreement shall be adjusted accordingly. Similarly, Parent and
AlliedSignal shall agree on an appropriate allocation of any post-
Closing adjustments of the purchase price required under
Section 1.6(f).
9.16 Relationship with Xxxxxxx Agreement. The parties
acknowledge and agree that it is the intent of the parties that,
notwithstanding any other provision of this Agreement or the
Xxxxxxx Agreement, the representations, warranties and covenants
contained in this Agreement and in the Xxxxxxx Agreement that (i)
have substantially the same language (without regard to the
identity of the parties making such representation or warranty or
about whom such representation or warranty is made) and (ii)
contain either the language "in the aggregate" or a similar
combining concept or a reference to a Material Adverse Effect (a
"Collective Representation" or a "Collective Covenant", as the
case may be) shall be deemed to be a single representation and
warranty or a single covenant, as the case may be, for purposes
of determining whether such representation and warranty has been
breached or such covenant has been complied with and all relevant
facts relating to such Collective Representation or Collective
Covenant in both agreements shall be considered. As examples, if
there should be an issue regarding whether a Collective
Representation contained in this Agreement has been breached, the
parties would consider inaccuracies in such Collective
Representation as well as inaccuracies in the corresponding
Collective Representation in the Xxxxxxx Agreement in determining
whether a breach of such Collective Representation had occurred
and in determining the materiality of any breach of a Collective
Representation relating to the Business, reference shall be made
to the Combined Business.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the day and year first above written.
BANNER AEROSPACE, INC. ALLIEDSIGNAL INC.
By: /s/ Xxxxxx X. Xxxxxxxxx By: /s/ Xxx Xxxxxxx
Name: Xxxxxx X. Xxxxxxxxx Name: Xxx Xxxxxxx
Title: Senior Vice President Title: Senior Vice President
XXXXX INDUSTRIES, INC. AS BAR LLC
By: /s/ Xxxxxx X. Xxxxxxxxx By: ALLIED SIGNAL INC.
Name: Xxxxxx X. Xxxxxxxxx
Title: Vice President
By: /s/ Xxx Xxxxxxx
Name: Xxx Xxxxxxx
AEROSPACE BEARING SUPPORT, INC. Title: Senior Vice
President
By: /s/ Xxxxxx X. Xxxxxxxxx
Name: Xxxxxx X. Xxxxxxxxx
Title: Vice President
AIRCRAFT BEARING SUPPORT, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
Name: Xxxxxx X. Xxxxxxxxx
Title: Vice President
BANNER DISTRIBUTION, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
Name: Xxxxxx X. Xxxxxxxxx
Title: Vice President
BURBANK AIRCRAFT SUPPLY, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
Name: Xxxxxx X. Xxxxxxxxx
Title: Vice President
HARCO, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
Name: Xxxxxx X. Xxxxxxxxx
Title: Vice President
PACAERO
By: /s/ Xxxxxx X. Xxxxxxxxx
Name: Xxxxxx X. Xxxxxxxxx
Title: Vice President
SELLERS
Name of Entity Jurisdiction of Organization
Xxxxx Industries, Inc. Connecticut
Aerospace Bearing Support, Inc. California
Aircraft Bearing Corporation California
Banner Distribution, Inc. Delaware
Burbank Aircraft Supply, Inc. Delaware
Harco, Inc. Delaware
PacAero California
SELLER SUBSIDIARIES
Name of Entity Jurisdiction of Organization
Burbank Aircraft International, Germany
GmbH
Harco Aerospace Fasteners, Ltd. Canada
Harco Northern Ireland, Ltd. United Kingdom
ANNEX C
DEFINITIONS
The following terms shall have the respective meanings
ascribed to them in this Annex C. References to Sections
constitute references to Sections of the Agreement.
"Accounts Receivable" means all billed and unbilled accounts
receivable and all trade notes receivable relating to the
Combined Business whether recorded or unrecorded, including,
without limitation, all trade receivable from other divisions or
Affiliates of Parent and the Companies.
"Acquired Assets" means the Purchased Assets and the
Subsidiary Assets.
"Acquired Real Property" means, collectively, the Leased
Real Property and Owned Real Property.
"Acquisition Proposal" has the meaning set forth in Section
4.14.
"Adjustment Amount" means an amount equal to the difference
between Estimated Closing Date Net Worth and Target Net Worth
expressed as a positive number, as adjusted pursuant to Section
9.15.
"Adjustment Date" has the meaning set forth in Section
1.7(a).
"Affiliate" of any Person means any Person directly or
indirectly controlling, controlled by or under common control
with such Person.
"Agreement" means the Asset Purchase Agreement, dated as of
December ___, 1997, by and among Parent, Sellers, AlliedSignal
and Buyer, together with the Annexes, Schedules and Exhibits
attached thereto, as the same may be amended from time to time in
accordance with the terms thereof.
"AlliedSignal" had the meaning set forth in the Preamble of
the Agreement.
"AlliedSignal Common Stock" means the common stock, par
value $1 per share, of AlliedSignal.
"AlliedSignal Reports" has the meaning set forth in Section
3.6.
"Ancillary Agreements" means the agreements to be delivered
pursuant to Sections 5.1 and 5.2.
"Antitrust Division" means the Antitrust Division of the
United States Department of Justice.
"Assets" means businesses, properties, assets, goodwill,
rights, interests and privileges of every kind, nature or
description, wherever located, whether real, personal or mixed,
tangible or intangible, and without regard to whether they have
value for accounting purposes or are carried on or reflected in
relevant books and records or financial statements.
"Assigned Receivables" has the meaning set forth in Section
1.7(a).
"Assumed Liabilities" has the meaning set forth in Section
1.3(a).
"Assumed Tax Liabilities" means Tax liabilities for value-
added Taxes, real property Taxes, personal and intangible
property Taxes and payroll Taxes, in each case only to the extent
included on the Closing Balance Sheet.
"Average Trading Price" means, as of a specified date, the
average of the daily high and low closing prices of AlliedSignal
Common Stock as reported on the NYSE Composite Tape on each of
the twenty (20) consecutive trading days immediately preceding
(and not including) such date.
"Balance Sheet" has the meaning set forth in Section 2.6.
"Basket" has the meaning set forth in Section 7.2(b).
"Bid" has the meaning set forth in Section 2.8(d).
"Business" has the meaning set forth in the Recitals of the
Agreement.
"Business Day" or "business day" means any day other than a
Saturday, Sunday, or a day on which banking institutions in the
City of New York are authorized or obligated by law or executive
order to close.
"Buyer" has the meaning set forth in the Preamble of the
Agreement.
"Buyer Escrow Claims" has the meaning set forth in
Section 1.5(c).
"Buyer Escrow Claim Loss Estimate" has the meaning set forth
in Section 1.5(c).
"Buyer Indemnified Parties" has the meaning set forth in
Section 7.2(a).
"Cash Equivalent Purchase Price" means an amount equal to
Three Hundred Forty-Four Million Seven Hundred Seventy-Four
Thousand Dollars ($344,774,000) plus (x) the excess, if any, of
the Closing Date Net Worth over the Target Net Worth and minus
(y) the excess, if any, of the Target Net Worth over the Closing
Date Net Worth.
"Closing" has the meaning set forth in Section 1.8(a).
"Closing Accounts Receivable" has the meaning set forth in
Section 1.7(a).
"Closing Date" has the meaning set forth in Section 1.8(a).
"Closing Date Balance Sheet" shall mean the Proposed Closing
Date Balance Sheet as accepted or deemed final pursuant to
Section 1.6(d) or (f), as the case may be.
"Closing Date Net Worth" has the meaning set forth in
Section 1.6(a).
"Closing Date Shares" has the meaning set forth in Section
1.4(b).
"COBRA" has the meaning set forth in Section 2.20(c)(iii).
"Code" means the Internal Revenue Code of 1986, as amended.
"Collected Amount" has the meaning set forth in Section
1.7(a).
"Combined Business" means collectively the Business and the
Business as defined in the Xxxxxxx Agreement.
"Combined Contracts" means, collectively, all Contracts and
all Contracts as defined in the Xxxxxxx Agreement.
"Companies" has the meaning set forth in the Preamble of the
Agreement, and "Company" means any one of the Companies.
"Competitive Activities" has the meaning set forth in
Section 6.4(a).
"Confidentiality Agreement" means that certain
confidentiality agreement dated June 27, 1997 between
AlliedSignal and Parent.
"Confidential Information" has the meaning set forth in
Section 6.5.
"Confirmation of Indemnification" has the meaning set forth
in Section 7.4(b).
"Contracts" means (a) all written and oral contracts,
licenses, commitments, agreements and instruments, including all
customer contracts, operating contracts and distribution
contracts relating to the Business, (b) all sales and purchase
orders and supply agreements and other agreements relating to the
Business, (c) all leases of Equipment and Real Property relating
to the Business and (d) all other contracts, licenses, agreements
and instruments relating to the Business; provided, however, that
the term "Contract" shall not include any collective bargaining
agreement or any employment agreement or other Plan.
"Debt" means, with respect to any Person, the following
Liabilities, whether incurred by such Person, directly or
indirectly, without duplication:
(i) its Liabilities for borrowed money;
(ii) its Liabilities for the deferred purchase
price of property acquired by it (excluding accounts
payable arising in the ordinary course of business but
including, without limitation, all liabilities created
or arising under any conditional sale or other title
retention agreement with respect to any such property);
(iii) the amount of the obligation of such
Person as the lessee under any Capital Lease that
would, in accordance with GAAP, appear as a Liability
on a balance sheet of such Person ("Capital Lease"
meaning, at any time, a lease with respect to which
such Person, as lessee, is required concurrently to
recognize the acquisition of an asset and the
incurrence of a Liability in accordance with GAAP);
(iv) amounts secured by any Lien with respect to
any property owned by such Person (whether or not it
has assumed or otherwise become liable for such
amounts);
(v) all of its Liabilities in respect of letters
of credit or instruments serving a similar function
issued or accepted for its account by banks and other
financial institutions (whether or not representing
obligations for borrowed money);
(vi) any Guarantee of such Person with respect to
Liabilities of any Person of the character described in
any of the clauses described in (i) through (vi) above
("Guarantee" meaning, with respect to any Person, any
obligation (except the endorsement in the ordinary
course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or
in effect guaranteeing any indebtedness, dividend or
other Debt or obligation of any other Person in any
manner, whether directly or indirectly, including
(without limitation) obligations incurred through an
agreement, contingent or otherwise, by such Person);
(vii) all Liabilities of any Subsidiary of
such Person of the character described in clauses (i)
through (vii) above; and
(viii) all Liabilities of the character
described in clauses (i) through (vii) above with
respect to which, and to the extent that, such Person
remains legally liable, notwithstanding that such
Liability or obligation is deemed extinguished under
GAAP.
"Defective Inventory" means the aggregate of all (i) excess
Inventory, (ii) obsolete or substandard Inventory, and (iii)
Inventory that is not Traceable Inventory, in each case
determined in accordance with the procedures and criteria set
forth on Schedule 1.6(a).
"Disputed Account Receivable" has the meaning set forth in
Section 1.7(a).
"Dispute Notice" has the meaning set forth in Section
1.6(c).
"Disputes" has the meaning set forth in Section 1.6(c).
"Employees" has the meaning set forth in Section 8.1.
"Environmental Claim" shall mean any third party or
governmental written claim, notice, request for information,
demand, investigation, lawsuit, proceeding, judgment, award,
penalty, order or other action that could expose Parent, the
Companies, AlliedSignal or Buyer to Losses under any
Environmental Law or to Losses for personal injuries (including
death) or property damage relating to or arising from the
presence of, or exposure to, Hazardous Materials.
"Environmental Law" means all applicable Laws relating to
the protection of the environment (including, but not limited to,
natural resources) and human health and safety, including,
without limitation (a) all requirements pertaining to reporting,
licensing, permitting, investigation and remediation of
emissions, discharges, releases or threatened releases of
Hazardous Materials or other environmental conditions into the
air, surface water, groundwater or land or relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials, and (b)
all requirements pertaining to the protection of the health and
safety of employees and other workers, and the protection of or
compensation to individuals from or related to exposures to
Hazardous Materials.
"Environmental Liability" means any Liability (existing at,
or arising after, the Closing) under Environmental Law, or any
remedial action (at or after the Closing), in connection with the
Acquired Assets or the Business to the extent arising from any
condition (including any Hazardous Materials condition) existing,
or any act or omission the Companies or any of their predecessors
or any of their past, present or future Subsidiaries, at or prior
to the Closing Date, including claims, demands, assessments,
judgments, orders, causes of action (including toxic tort suits),
notices of actual or alleged violations or Liability (including
such notices regarding the disposal or release of Hazardous
Materials on the Acquired Real Property or elsewhere),
proceedings and any associated Losses.
"Environmental Permit" means any Permit issued under any
Environmental Law or issued by any Governmental Entity
responsible for environmental matters.
"Equipment" means all tangible assets and properties, except
Real Property, owned, used or held for use by any Company,
including cars, trucks and other transportation equipment,
machinery and equipment, tools, spare parts, furniture, office
equipment, furnishings and fixtures and machinery and equipment
under order or construction.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Escrow Agent" means the escrow agent under the Escrow
Agreement.
"Escrow Agreement" has the meaning set forth in
Section 1.9(c).
"Escrow Cash" means any of the following: (i) any
investment in Government Obligations; (ii) investments in time
deposit accounts, certificates of deposit and money market
deposits maturing within 180 days of the date of acquisition
issued by a bank or trust issuer which is organized under the
laws of the United States of America, any state thereof or any
foreign country recognized by the United States, and which bank
or trust issuer has capital, surplus and undivided profits
aggregating in excess of $50,000,000 (or the foreign currency
equivalent thereof) and has outstanding debt which is rated "A"
(or such similar equivalent rating) or higher by at least one
nationally recognized statistical rating organization (as defined
in Rule 436 under the Securities Act) or any money market fund
sponsored by a registered broker dealer or mutual fund
distributor; (iii) repurchase obligations with a term of not more
than 30 days for underlying securities of the types described in
clause (ii) above; and (iv) investments in securities with
maturities of six months or less from the date of acquisition
issued or fully guaranteed by any state, commonwealth or
territory of the United States of America, or by any political
subdivision or taxing authority thereof, and rated at least "A"
by Standard & Poor's Ratings Group or "A" by Xxxxx'x Investors
Service, Inc.
"Escrow Release Date" has the meaning set forth in
Section 1.5(c).
"Estimated Closing Date Net Worth" has the meaning set forth
in Section 1.4(a).
"Estimated Share Number" has the meaning set forth in
Section 1.4(b).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Excluded Assets" has the meaning set forth in Section
1.2(b).
"FAA" means the Federal Aviation Administration.
"Fairchild" means The Xxxxxxxxx Corporation, a Delaware
corporation.
"Final Future Tax Benefits" has the meaning set forth in
Section 2.6(b).
"Financial Statements" has the meaning set forth in
Section 2.6.
"Firm" has the meaning set forth in Section 1.6(d).
"FIRPTA Affidavit" has the meaning set forth in Section
1.9(a)(viii).
"Foreign Employees" has the meaning set forth in
Section 8.3(a).
"Foreign Plan" has the meaning set forth in
Section 2.20(a)(iii).
"Former Employees" has the meaning set forth in Section 8.1.
"Free-Standing Plan" has the meaning set forth in
Section 2.20(a)(iii).
"FTC" means the United States Federal Trade Commission.
"GAAP" means United States generally accepted accounting
principles, consistently applied.
"Government Contract" shall mean any written prime contract,
subcontract, grant or cooperative agreement with (i) the US
Government, (ii) any prime contractor of the US Government or
(iii) any subcontractor with respect to any contract described in
clauses (i) or (ii) above.
"Governmental Entity" means (a) any multinational, federal,
provincial, state, municipal, local or other governmental or
public department, court, commission, board, bureau, agency,
legislative or quasi-legislative body or instrumentality,
domestic or foreign; (b) any subdivision, agent, commission,
board, or department, authority, or similar body or
instrumentality of any of the foregoing; or (c) any quasi-
governmental or private body exercising any regulatory,
expropriation or taxing governmental authority under or for the
account of any of the foregoing.
"Government Obligations" means direct obligations (or
certificates representing an ownership interest in such
obligations) of the United States of America (including any
agency or instrumentality thereof) for the payment of which the
full faith and credit of the United States of America is pledged.
"Hazardous Material" means any substance, material or waste
(a) the presence of which requires investigation or remediation
under any Environmental Law, (b) which is regulated by an
applicable Governmental Entity, which substance, material or
waste includes, without limitation, petroleum and its by-
products, friable asbestos, and any material or substance which
is defined as a "hazardous waste," "hazardous substance,"
"hazardous material," "restricted hazardous waste," "industrial
waste," "solid waste," "contaminant," "pollutant," "toxic waste"
or "toxic substance" under any provision of Environmental Law,
(c) which is toxic, explosive, corrosive, flammable, infectious,
radioactive, carcinogenic, mutagenic or otherwise hazardous, or
(d) the presence of which causes or threatens to cause a nuisance
or trespass to any property or poses or threatens to pose a
hazard to the health or safety of individuals on or about any
such property.
"Xxxxxxx" means XX Xxxxxxx Aerospace, Inc., a Missouri
corporation.
"Xxxxxxx Agreement" means the Asset Purchase Agreement,
dated as of the date of this Agreement, by and among Parent,
Xxxxxxx, Banner Aerospace Services, Inc., AlliedSignal and AS BAR
PBH LLC, as the same may be amended form time to time in
accordance with the terms thereof.
"Xxxxxxx Assumed Liabilities" means Assumed Liabilities as
defined in the Xxxxxxx Agreement.
"Xxxxxxx Excluded Assets" means the Excluded Assets as
defined in the Xxxxxxx Agreement.
"Xxxxxxx Non-Assumed Liabilities" means the Non-Assumed
Liabilities as defined in the Xxxxxxx Agreement.
"Xxxxxxx Purchased Assets" means the Purchased Assets as
defined in the Xxxxxxx Agreement.
"Xxxxxxx Sellers" means the Sellers under the Xxxxxxx
Agreement.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended.
"Inactive Employee" has the meaning set forth in Section
8.2(a).
"Indemnification Claim" has the meaning set forth in
Section 7.4(a).
"Indemnification Escrow Shares" means (i) as of the Closing
Date, a number of shares of AlliedSignal Common Stock equal to
five percent (5%) of the Estimated Share Number and (ii)
thereafter, the initial number of Indemnification Escrow Shares
less any Indemnification Escrow Shares from time to time released
from escrow pursuant to Section 1.5(b) or (d).
"Indemnified Party" has the meaning set forth in Section
7.4(a).
"Indemnifying Party" has the meaning set forth in Section
7.4(a).
"Initial Purchase Price" has the meaning set forth in
Section 1.4(b).
"Intellectual Property" means all foreign and domestic
patents (including all reissues, divisions, continuations and
extensions thereof), patent rights, service marks, trademarks and
tradenames, trade dress, all product names, all assumed or
fictitious names and the logos associated therewith, copyrights,
applications for the foregoing, licenses and other contractual
rights with respect to the foregoing and other such property and
intangible rights owned, used or held for use by any Company,
including financial and marketing business data, pricing and cost
information, business and marketing plans and customer and
suppliers lists, together with the goodwill of the Business in
connection with which such trademarks, tradenames, product names
and service marks are used.
"Inventory" means all inventory of the Combined Business,
including finished goods, work-in-progress, raw materials,
operating chemical and catalysts, parts, accessories, packaging,
manufacturing, administrative and other supplies on hand, goods
held for sale or lease or to be furnished under Assumed
Contracts, and other inventory owned, used or held for use by any
Company.
"IRS" means the United States Internal Revenue Service.
"Laws" means all laws, constitutions, statutes, codes,
ordinances, decrees, rules, regulations, municipal by-laws,
judicial or arbitral or administrative or ministerial or
departmental or regulatory judgments, orders, decisions, rulings
or awards, consent orders, consent decrees, policies, voluntary
restraints, guidelines, or any provisions or interpretations of
the foregoing, including general principles of common and civil
law and equity, binding on or affecting the Person referred to in
the context in which such word is used.
"Leased Real Property" means all leased Real Property
relating to the Business including, without limitation, all Real
Property listed on Part B of Schedule 2.13(a).
"Liabilities" means, as to any Person, all debts,
liabilities, obligations and responsibilities of any kind or
nature whatsoever of such Person, whether direct or indirect,
fixed or contingent, known or unknown, accrued, vested or
otherwise, whether in contract, tort, strict Liability or
otherwise, and whether or not actually reflected, or required by
GAAP to be reflected, in such Person's balance sheets or other
books and records.
"Lien" means any lien, charge, claim, pledge, security
interest, conditional sale agreement or other title retention
agreement, lease, mortgage, security agreement, right of first
refusal, option, restriction, tenancy, license, covenant, right
of way, easement or other encumbrance (including the filing of,
or agreement to give, any financing statement under the Uniform
Commercial Code or statute or law of any jurisdiction).
"Losses" means any losses, costs, expenses, damages
including compensatory, exemplary, or punitive damages, Taxes,
penalties, fines, charges, demands, Liabilities and claims of any
kind (including interest, penalties and reasonable attorneys' and
consultants' fees, expenses and disbursements), except that
Losses shall not include attorneys' fees of AlliedSignal or Buyer
if Parent has delivered a Confirmation of Indemnification in
respect of a Third Party arbitration claim and offered to assume
the defense thereof which offer was not accepted because the
amount of such indemnification claim exceeded Parent's net worth
and Parent was in compliance with 4.17 of the Agreement.
"Major Customer" means any customer of the Combined Business
that accounted for $500,000 or more in revenues of the Combined
Business in the 1997 fiscal year or could reasonably be expected
to account for more than $500,000 or more in revenues of the
Combined Business in the 1998 fiscal year.
"Major Supplier" means any supplier of the Combined Business
(including any supplier of Intellectual Property) that accounted
for $1,000,000 or more in sales to the Combined Business in the
1997 fiscal year or could reasonably be expected to account for
more than $1,000,000 or more in sales to the Combined Business
in the 1998 fiscal year.
"Material Adverse Effect" means (i) a material adverse
effect upon, or material adverse change in, the operations,
Assets, Liabilities, condition (financial or otherwise), or
results of operations of the Combined Business, taken as a whole
(ii) any event, condition, circumstance or change that is
reasonably likely to have a Material Adverse Effect referred to
in preceding clause (i), or (iii) a significant risk that Buyer
and the Buyer under the Xxxxxxx Agreement, in any material
respect, will not be able after the Closing to operate the
Combined Business substantially as operated by, or to own,
possess and use the Acquired Assets and the Xxxxxxx Purchased
Assets substantially as owned, possessed and used by, the
Companies and the Xxxxxxx Sellers, taken as a whole, as of the
date hereof; provided, however, that the loss of business from
customers and suppliers of the Combined Business (including
through termination of contracts or reduction of purchases) shall
not be deemed a Material Adverse Effect unless the condition in
Section 5.1(e) of the Agreement has not been satisfied.
"Non-Assumed Liabilities" has the meaning set forth in
Section 1.3(b).
"Novation Agreement" has the meaning set forth in Section
4.15.
"NYSE" means the New York Stock Exchange, Inc.
"OSHA" has the meaning set forth in Section 2.9(a) hereof.
"Owned Real Property" means all Real Property owned by
Sellers or any Seller Subsidiary, including, without limitation,
all Real Property listed on Part A of Schedule 2.13(a).
"Parent" has the meaning set forth in the Preamble of the
Agreement.
"Parent Common Stock" means the common stock, par value $1
per share, of Parent.
"Parent Subsidiaries" means the direct or indirect
Subsidiaries of Parent or any other corporation or entity in
which Parent owns a majority of the capital stock or other equity
interest.
"Parent Reports" has the meaning set forth in Section 2.28.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permits" means all franchises, approvals, permits,
authorizations, licenses, orders, registrations, certificates,
variances, exemptions and other similar permits or rights
obtained from any Governmental Entity relating to the conduct of
the Business or the Acquired Real Properties and all pending
applications therefor.
"Permitted Liens" means (a) Liens securing Taxes,
assessments, governmental charges or levies, all of which are not
yet due and payable, (b) Liens (other than any Lien imposed by
ERISA) incurred or deposits made in the ordinary course of the
Business and on a basis consistent with past practice in
connection with worker's compensation, unemployment insurance or
other types of social security, (c) mechanics, materialman's,
carrier's, warehousemen's, landlords and other similar Liens
under state or common law or (d) such other Liens which,
individually and in the aggregate, do not and would not detract
from the value of or impair the use of any Acquired Asset; it
being understood that to the extent a Permitted Lien relates to
or arises from a Non-Assumed Liability, the applicable Company
shall still be liable for such Non-Assumed Liability to the
extent set forth herein.
"Person" means an individual, a corporation, a partnership,
a limited Liability company, an association, a firm, a
Governmental Entity, a trust or other entity or organization.
"Plans" has the meaning set forth in Section 2.20(a)(iii).
"Preliminary Future Tax Benefits" has the meaning set forth
in Section 2.6(b).
"Prime Rate" means the rate of interest publicly announced
by Citicorp USA, Inc. in New York, New York from time to time as
its base rate.
"Proposed Closing Date Balance Sheet" has the meaning set
forth in Section 1.6(a)
"PTO" means the United States Patent and Trademark Office.
"Purchase Price Escrow Shares" means a number of shares of
AlliedSignal Common Stock equal to one percent (1%) of the
Estimated Share Number.
"Purchased Assets" has the meaning set forth in
Section 1.2(a).
"Real Property" means all real property, together with all
fixtures, fittings, buildings, structures and other improvements
erected thereon, and easements, rights of way, water lines,
rights of use, licenses, hereditaments, tenements, privileges and
other appurtenances thereto (such as appurtenant rights in and to
public streets).
"Receivables Deficiency" has the meaning set forth in
Section 1.7(a).
"Receivables Excess" has the meaning set forth in Section
1.7(a).
"Receivables Notice" has the meaning set forth in Section
1.7(a).
"Receivables Reserve" has the meaning set forth in Section
1.7(a).
"Registration Rights Agreement" means an agreement
substantially in the form of Exhibit 1.9(b)(vi).
"Resolution Period" has the meaning set forth in Section
1.6(c).
"Review Period" has the meaning set forth in Section 1.6(c).
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as
amended.
"Seller" and "Sellers" have the respective meanings set
forth in the Preamble of the Agreement.
"Seller Indemnified Parties" has the meaning set forth in
Section 7.3(a).
"Seller Subsidiaries" has the meaning set forth in the
Preamble of the Agreement, and "Seller Subsidiary" means any one
of the Seller Subsidiaries.
"Shortfall Amount" has the meaning set forth in
Section 1.6(f)(iii).
"Side Letters" has the meaning set forth in
Section 1.9(a)(xiii).
"Small Claim" has the meaning set forth in Section 7.2(b).
"Small Licenses" has the meaning set forth in
Section 2.15(d).
"Special Claim" has the meaning set forth in Section 7.4(b).
"Subsidiary" of any Person means any corporation,
partnership, joint venture, limited liability company, trust or
other entity with respect to which such Person directly or
indirectly owns or controls more than 50% of (i) the issued and
outstanding capital stock having ordinary voting power to elect a
majority of the board of directors or other governing body of
such corporation (irrespective of whether at the time capital
stock of any other class or classes of such corporation shall or
might have voting power upon the occurrence of any contingency),
(ii) the interest in the capital or profits of such partnership,
joint venture or limited liability company or (iii) the
beneficial interest in such trust.
"Subsidiary Assets" means all Assets of the Seller
Subsidiaries.
"Subsidiary Shares" means all of the outstanding shares of
capital stock of (or other ownership interests in) the Seller
Subsidiaries.
"Target Net Worth" means Two Hundred Twenty Million Twenty
Five Thousand Dollars ($220,025,000) plus the amount, if any, by
which Final Future Tax Benefits exceeds Preliminary Future Tax
Benefits, but in any event not less than $220,025,000.
"Tax" means any tax imposed under Subtitle A of the Code and
any net income, alternative or add-on minimum tax, gross income,
gross receipts, sales, use, ad valorem, value added, transfer,
franchise, profits, license, lease, service, service use,
withholding on amounts paid to or by any Company, payroll,
employment, excise, severance, stamp, capital stock, occupation,
property, environmental or windfall profits tax, premium, custom
duty or other tax, governmental fee or other like assessment or
charge of any kind whatsoever, together with any interest,
penalty, addition to tax or additional amount imposed by any
Governmental Entity responsible for the imposition of any such
tax (domestic or foreign) (a "Tax Authority").
"Tax Authority" has the meaning set forth in the definition
of "Tax".
"Technology" means all formulae, processes, procedures,
designs, ideas, research records, inventions (whether or not
patentable), records of inventions, test information, technical
information, engineering data, marketing know-how, proprietary
information, manufacturing information, know-how, and trade
secrets (and all related manuals, books, files, journals, models,
instructions, patterns, drawings, blueprints, plans, designs
specifications, equipment lists, parts lists, descriptions, data,
art work, software, computer programs and source code data
related thereto including all current and historical data bases)
owned, used or held for use by any Company ( it being understood
that, to the extent any such technology is licensed to a Company,
"Technology" shall mean any and all rights of such Company under
such license).
"Third Party Indemnification Claim" has the meaning set
forth in Section 7.4(b).
"Third Party Rights" has the meaning set forth in Section
1.2(a)(xiii).
"Traceable Inventory" means Inventory held pursuant to good
and valid parts manufacturer approvals issued by the FAA,
supplemental type certificates issued by the FAA or other
certificates required by applicable Laws including, without
limitation, those promulgated by the FAA.
"Trademarks" has the meaning set forth in Section 9.14.
"Transaction Documents" has the meaning set forth in
Section 2.3.
"Transfer Taxes" means all state, local and foreign sales,
use, transfer, real property transfer, documentary stamp,
recording and other similar taxes arising from and with respect
to the sale and purchase of the Purchased Assets.
"U.S. Employee" has the meaning set forth in Section 8.2(a).
"US Government" shall mean the United States Government and
any agencies, instrumentalities and departments thereof.
"U.S. Plans" has the meaning set forth in
Section 2.20(a)(iii).
"U.S. Transferred Employees" has the meaning set forth in
Section 8.2(a).
"WARN Act" means the Worker Adjustment and Retraining
Notification Act, as codified at 29 U.S.C. 2101 - 2109, as
amended.
Exhibit 1.9(a)(xiii)(A)
[Closing Date]
AlliedSignal Inc.
AS BAR LLC
AS XXX Xxxxxxx LLC
000 Xxxxxxxx Xxxx
Xxxxxxxxxx, XX
I refer to the Asset Purchase Agreement (the "Purchase
Agreement") by and among AlliedSignal Inc. ("AlliedSignal"), AS
BAR LLC ("Buyer"), Banner Aerospace, Inc. and the Sellers listed
on Annex A thereto ("Sellers"), relating to the acquisition of
all the assets of Sellers and the Business (as defined therein),
and to the Xxxxxxx Agreement (as defined therein).
This will confirm that, as of December 1, 1997 and at all times
through and including the date hereof, I personally have not had
and do not have any plan or intention of entering into the
business of distributing aerospace hardware parts and will not do
so through any entity which I control, other than The Xxxxxxxxx
Corporation and its subsidiaries and affiliates (other than
Banner Aerospace, Inc. and its subsidiaries), during the thirty
month period from today's date.
I understand that you are relying upon the assurances provided in
this letter as a material inducement to your consummating the
transactions contemplated by the Purchase Agreement.
Sincerely,
Xxxxxxx X. Xxxxxxx
Exhibit 1.9(a)(xiii)(B)
[Closing Date]
AlliedSignal Inc.
AS BAR LLC
AS XXX Xxxxxxx LLC
000 Xxxxxxxx Xxxx
Xxxxxxxxxx, XX
The undersigned, on behalf of The Xxxxxxxxx Corporation
("Xxxxxxxxx") confirms as follows:
We refer to the Asset Purchase Agreement (the "Purchase
Agreement") by and among AlliedSignal Inc. ("AlliedSignal"), AS
BAR LLC ("Buyer"), Banner Aerospace, Inc. and the Sellers listed
on Annex A thereto ("Sellers"), relating to the acquisition of
all the assets of Sellers and the Business (as defined therein)
and to the Xxxxxxx Agreement (as defined therein).
This will confirm that, as of December 1, 1997 and at all times
through and including the date hereof, neither Xxxxxxxxx nor any
subsidiary or controlled entity of Xxxxxxxxx has had or has any
plan or intention to acquire all or any substantial part of the
stock, assets or business of Tri-Star Aerospace, Inc., M & M
Aerospace Hardware, Inc. or WESCO Aircraft Hardware Corporation.
We understand that you are relying upon the assurances provided
in this letter as a material inducement to your consummating the
transactions contemplated by the Purchase Agreement.
THE XXXXXXXXX CORPORATION
By_________________________
Exhibit 1.9(a)(xiii)(C)
THE XXXXXXXXX CORPORATION
[Closing Date]
AlliedSignal Inc.
AS BAR LLC
AS XXX Xxxxxxx LLC
000 Xxxxxxxx Xxxx
Xxxxxxxxxx, XX
We refer to the Asset Purchase Agreement (the "Purchase
Agreement") by and among AlliedSignal Inc. ("AlliedSignal"), AS
BAR LLC ("Buyer"), Banner Aerospace, Inc. ("Banner") and the
Sellers listed on Annex A thereto ("Sellers"), relating to the
acquisition of all the assets of Sellers and the Business (as
such terms are defined therein) and to the Xxxxxxx Agreement (as
defined therein).
In consideration of the benefits to be derived by The Xxxxxxxxx
Corporation ("Xxxxxxxxx") from the transactions contemplated by
the Purchase Agreement, this will confirm the agreement of
Xxxxxxxxx that, during the period Banner is required to maintain
its corporate existence pursuant to Section 4.17 of the Purchase
Agreement, Xxxxxxxxx shall take no action to authorize or
implement (including, without limitation, voting for) any
dissolution of Banner or other termination of Banner's corporate
existence; provided, however, that (i) Xxxxxxxxx may take action
to dissolve Banner or otherwise terminate its existence if, prior
to the consummation of such transaction, Xxxxxxxxx agrees in
writing (for the benefit of the Buyer Indemnified Parties as
defined in the Purchase Agreement) to assume and become fully
responsible for, pursuant to an agreement reasonably satisfactory
in form and substance to AlliedSignal, all obligations of Banner
under Article VII of the Purchase Agreement and (ii) Xxxxxxxxx
may vote in favor of, or otherwise take action to implement a
merger or other business combination of Banner or a sale of
substantially all its assets if (x) upon the consummation of such
transaction, the successor in interest to Banner (or the
purchaser of such assets, as the case may be) in such transaction
assumes in writing (for the benefit of the Buyer Indemnified
Parties as defined in the Purchase Agreement) and becomes fully
responsible for, pursuant to an agreement reasonably satisfactory
in form and substance to AlliedSignal, all of Banner's
obligations under the Agreement (including, without limitation,
Banner's obligations under Article VII) and (y) immediately after
consummation of such transaction, such successor in interest (or
purchaser, as the case may be) has a net worth of not less than
the net worth then required to be maintained by Banner pursuant
to Section 4.17 of the Purchase Agreement.
We understand that you are relying upon the obligations set forth
in this letter as a material inducement to your consummating the
transactions contemplated by the Purchase Agreement.
THE XXXXXXXXX CORPORATION
By_________________________
AMENDMENT TO ASSET PURCHASE AGREEMENT
AMENDMENT ("Amendment") dated as of January 13, 1998 to
the Asset Purchase Agreement ("Purchase Agreement") dated as of
December 8, 1997 by and among AlliedSignal Inc., a Delaware
corporation ("AlliedSignal"), AS BAR LLC, a Delaware limited
liability company ("Buyer"), Banner Aerospace, Inc., a Delaware
corporation ("Parent"), and the other parties thereto.
AlliedSignal, Parent and the other parties to the Purchase
Agreement desire to amend the Purchase Agreement on the terms set
forth herein. Accordingly, this Amendment shall be deemed to be
part of the Purchase Agreement and all references in the Purchase
Agreement to "this Agreement" (or similar terminology) shall be
deemed to refer to the Purchase Agreement after giving effect to
the amendments set forth in this Amendment. All capitalized
terms used herein, unless otherwise defined herein, are used as
defined in the Purchase Agreement.
In consideration of the mutual covenants and agreements
contained in the Purchase Agreement and in this Amendment, and
notwithstanding anything in the Purchase Agreement or any
Ancillary Agreement to the contrary, Parent, Sellers,
AlliedSignal and Buyer agree as follows:
1. Non-Competition/Non-Solicitation. Section 6.4(a)
of the Purchase Agreement is hereby amended by deleting "of their
respective Affiliates", set forth in the twelfth and twenty-
fourth lines of Section 6.4(a), and inserting in place thereof
the following: "Parent Subsidiary".
2. Average Trading Price. The definition of Average
Trading Price, set forth in Annex C to the Purchase Agreement, is
hereby amended and restated in its entirety as follows:
"Average Trading Price" means, as of a specified date,
the average of the daily closing prices of AlliedSignal
Common Stock as reported on the NYSE Composite Tape on each
of the twenty (20) consecutive trading days immediately
preceding (and not including) such date.
3. Harco Northern Ireland, Ltd
(a) Section 1.9(a)(ii) of the Purchase Agreement is
hereby amended by deleting the phrase "and Harco Northern
Ireland, Ltd.", set forth in the third line of Section
1.9(a)(ii).
(b) Section 4.21 of the Purchase Agreement is hereby
deleted in its entirety.
(c) Section 5.1 of the Purchase Agreement is hereby
amended by deleting Section 5.1(k) in its entirety.
(d) Annex B of the Purchase Agreement is hereby
amended by deleting the phrases "Harco Northern Ireland, Ltd."
and "United Kingdom" from the last line of Annex B.
4. Miscellaneous. In the event of any conflict or
inconsistency between the terms of this Amendment and the
Purchase Agreement, the terms of this Amendment shall govern.
IN WITNESS WHEREOF, the duly authorized officers or
representatives of the parties hereto have duly executed this
Amendment on the date first written above.
BANNER AEROSPACE, INC. ALLIEDSIGNAL INC.
By: By:
Name: Xxxxxx X. Xxxxxxxxx Name: Xxxxxxxx X. Xxxxxxx
Title: Senior Vice President Title: Assistant Secretary
XXXXX INDUSTRIES, INC. AS BAR LLC
By: By: ALLIED SIGNAL INC.
Name: Xxxxxx X. Xxxxxxxxx
Title: Vice President
By:
Name: Xxxxxxxx X. Xxxxxxx
AEROSPACE BEARING SUPPORT, INC. Title: Assistant
Secretary
By:
Name: Xxxxxx X. Xxxxxxxxx
Title: Vice President
AIRCRAFT BEARING SUPPORT, INC.
By:
Name: Xxxxxx X. Xxxxxxxxx
Title: Vice President
BANNER DISTRIBUTION, INC.
By:
Name: Xxxxxx X. Xxxxxxxxx
Title: Vice President
BURBANK AIRCRAFT SUPPLY, INC.
By:
Name: Xxxxxx X. Xxxxxxxxx
Title: Vice President
HARCO, INC.
By:
Name: Xxxxxx X. Xxxxxxxxx
Title: Vice President
PACAERO
By:
Name: Xxxxxx X. Xxxxxxxxx
Title: Vice President
