SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
____________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) June 15, 1994
Moog Inc.
(Exact Name of Registrant as Specified in Charter)
New York 1-5129 16-0757636
(State or Other (Commission (IRS Employer
Jurisdiction File Number) Identification No.)
of Incorporation)
East Aurora, NY 14052
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (716) 652-2000
N/A
(Former Name or Former Address, if Changed Since Last Report)
Item 2. Acquisition or Disposition of Assets.
Effective June 17, 1994, the Company concluded the
acquisition of the hydraulic and mechanical actuation business of
AlliedSignal Inc. located in Torrance, California. The purchase
price was $71 million for the stock of a wholly-owned subsidiary
of AlliedSignal, now named Moog Torrance Inc. In addition,
AlliedSignal agreed to provide certain services and the use of
certain facilities, for which the Company prepaid $7 million.
The product lines acquired are used on a variety of domestic and
international commercial and military aircraft.
In connection with financing the acquisition, the
Company has restructured its existing debt with $152 million of
new credit facilities, which was used to pay for the AlliedSignal
product lines, closing costs related to the transaction, and $46
million to refinance existing domestic credit facilities. The
residual will be used for working capital. The financing package
included $67 million of seven year term loans with annual
principal payments beginning in 1995, and $85 million in five
year revolving credit facilities. Interest will initially be at
LIBOR plus 2.125%, subject to reduction upon the achievement of
certain operating ratios by the Company. This compares with
current domestic loan agreements which bear interest at LIBOR
plus 0.625%. The entire loan facility is secured by
substantially all of the Company's domestic assets, including
those acquired from AlliedSignal, in addition to a pledge of the
stock of all domestic and foreign subsidiaries. The loan
agreements include customary covenants for transactions of this
nature, including maintaining various ratios.
Item 7. Financial Statements, Pro Forma Financial Information
and
Exhibits.
(a) and (b). It was impracticable to file the required
financial statements for the business acquired, as well as the
required pro forma financial information respecting the
acquisition, at the time this report was filed. The omitted
information will be filed as soon as practicable, but in no event
later than 60 days after this report is required to be filed.
(c). The following exhibit is filed as a part of this
report:
Exhibit 2.1 Stock Purchase Agreement dated June 7,
1994 between AlliedSignal Inc., Moog Inc. and Moog Torrance Inc.
Pursuant to Rule 601(b)(2) of Regulation S-K, exhibits and
schedules to this agreement have been omitted. The Company
hereby agrees to supplementally provide to the Securities and
Exchange Commission copies of the schedules upon request.
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly authorized.
MOOG INC.
MOOG INC.
(Registrant)
Date: June 22, 1994 By: /s/ Robert R. Banta
Robert R. Banta
Executive Vice President
STOCK PURCHASE AGREEMENT
Between
MOOG INC.
MOOG TORRANCE INC.
and
ALLIEDSIGNAL INC.
Article 1. TRANSFER OF ASSETS TO NEWCO
1.1 Definition of Business
1.2 Purchase and Sale
1.3 Non-Assignable Contracts
1.4 Excluded Assets
1.5 Transfer of Title to the Assets
1.6 No Transfer of Liabilities to Newco
1.7 Intellectual Property License Agreement
Article 2. PURCHASE AND SALE
2.1 Sale of Stock
2.2 Purchase Price
2.3 Post-Closing Adjustment
2.4 Taxes
Article 3. ASSUMPTION OF LIABILITIES AND OBLIGATIONS
3.1 Assumed Liabilities
3.2 Warranty and Recall
3.3 Excluded Liabilities
Article 4. REPRESENTATIONS AND WARRANTIES OF SELLER
4.1 Corporate Status
4.2 Authorization
4.3 Compliance
4.4 Balance Sheet
4.5 Personal Property
4.6 Real Property
4.7 Intellectual Property
4.8 Contracts
4.9 Title
4.10 Litigation
4.11 Environmental Disclosure Statement
4.12 Employee Benefit Plans and Policies
4.13 Undisclosed Liabilities
4.14 Changes Since Date of Reference Balance Sheet
4.15 Compliance with Law
4.16 Consents
4.17 Permits and Licenses
4.18 Labor Matters
4.19 Finder's Fees
4.20 Other Entities
4.21 Inventory
4.22 Accounts Receivable
4.23 General Representation and Warranty
4.24 Government Contract
4.25 No Additional Representations
4.26 Construction of Certain Phrases
Article 5. REPRESENTATIONS AND WARRANTIES OF PURCHASER
5.1 Corporate Status
5.2 Authorization
5.3 Compliance
5.4 Financing
5.5 Finder's Fees
5.6 Due Diligence
Article 6. EMPLOYEES AND EMPLOYEE BENEFITS
6.1 Employment
6.2 Compensation and Benefits
6.3 Severance and WARN Act
6.4 Health Care Continuation Liability
6.5 Savings Plans
6.6 Definition to Purchaser
Article 7. REAL ESTATE AND FACILITIES MATTERS
7.1 Real Estate Agreements
7.2 Utilities
7.3 Electrical Service
7.4 Storm Drain Modification
7.5 Title Insurance and Survey
7.6 Environmental Cleanup of the Facility
7.7 Vesting Tentative Tract Map
Article 8. TRANSITION SERVICES AGREEMENT
8.1 Transition Services Agreement
Article 9. PRE-CLOSING COVENANTS
9.1 Conduct of Business
9.2 Audit
9.3 Access to Records and Properties
9.4 Public Announcements
9.5 Final Property List
9.6 Pre-Closing Discoveries
9.7 The Stock
Article 10. CLOSING
10.1 Closing Date and Place
Article 11. CONDITIONS TO CLOSING
11.1 Conditions to the Obligations of Purchaser
11.2 Conditions to the Obligations of Seller
Article 12. TERMINATION
12.1 Termination
12.2 Effect of Termination
Article 13. CLOSING DOCUMENTS
13.1 Documents to be Delivered by Seller
13.2 Documents to be Delivered by Purchaser
Article 14. POST CLOSING OBLIGATIONS
14.1 Further Assurances
14.2 Access to Books and Records
14.3 Cooperation in Litigation
14.4 Covenant Not to Compete
14.5 Assignments and Novations
14.6 Use of Seller's Trademarks
14.7 Confidentiality
14.8 Intellectual Property
14.9 Software
Article 15. INDEMNIFICATION
15.1 Indemnification by Seller
15.2 Indemnification by Purchaser
15.3 Indemnification Procedure
15.4 Survival and Limitations
15.5 Reduction for Insurance and Taxes
Article 16. MISCELLANEOUS
16.1 Expenses
16.2 Notices
16.3 Confidentiality
16.4 Counterparts
16.5 Entire Agreement
16.6 Construction
16.7 Assignment
16.8 Amendment
16.9 Applicable Law
16.10 Failure to Close
16.11 No Third Party Rights
16.12 Exhibits and Schedules
16.13 Waivers
16.14 Severability
EXHIBITS
A Bill of Transfer
B Deed
C Assignment and Assumption Agreement
D Patent Assignment
E WTF Easement Agreement
F Access and Parking License Agreement
G WAA Easement Agreement
H [Intentionally Omitted]
I Test Cell Easement Agreement
J SS Easement Agreement
K Patent License Agreements
L Transition Services Agreement
M [Intentionally Omitted]
N Seller's Officer's Certificate
O Purchaser's Officer's Certificate
SCHEDULES
1.1 Products Manufactured by Business
1.2(a) Preliminary Property List/Final Property List
1.2(c) Facility
1.2(i) Waste Water Treatment Facility
1.2(n) Government Property
1.4(a) Excluded Product Line
1.4(k) Advance Payment Liabilities
2.3 GAAP Exceptions
2.4 Allocation of the Purchase Price
4.1 Certificate of Incorporation of Newco
4.4 March 31, 1994 Balance Sheet
4.6 Actions and Proceedings Affecting the
Facility
4.7(a) Included Intellectual Property
4.7(b) Licensed Intellectual Property
4.8 Contracts
4.10 Litigation
4.11 Environmental Disclosure
4.12 Employee Benefits
4.16 Consents
4.17 Permits and Licenses
4.18 Employee Information and Policies
4.21 Valuation Policy
4.24 Government Investigations
4.26 Knowledge
6.1 Employees
7.2 Utilities
7.5 Permitted Exceptions
7.6 Cleanup Projects
7.7 Tract Map and Reconveyance Piece
14.4(a) Noncompetition Covenant
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT dated as of June 7, 1994
between AlliedSignal Inc., a Delaware corporation ("Seller"),
Moog Inc., a New York corporation ("Purchaser") and Moog Torrance
Inc., a Delaware corporation ("Newco").
WITNESSETH:
WHEREAS, Seller is, among other businesses, engaged in
the business of developing, manufacturing and selling mechanical
actuation systems and hydraulic actuation systems;
WHEREAS, Seller desires to sell and Purchaser desires
to purchase such business and certain assets of Seller used
primarily in such business and Purchaser has agreed to assume
certain liabilities related to such business;
WHEREAS, Seller is the owner of one hundred percent
(100%) of the outstanding shares of common stock of Newco;
WHEREAS, subject to the terms and conditions of this
Agreement, Seller will transfer to Newco certain assets, business
and properties, which are utilized primarily in connection with
the business of Seller's mechanical actuation systems and
hydraulic actuation systems business;
WHEREAS, Seller desires to sell and Purchaser desires
to purchase all of the outstanding shares of stock of Newco (the
"Stock") and thereby acquire control of the "Business", as
hereinafter defined, subject to the terms and conditions of this
Agreement;
WHEREAS, Purchaser will also assume from Seller certain
liabilities related to the Business, subject to the terms and
conditions of this Agreement; and
WHEREAS, Purchaser intends to continue the Business and
Seller, in order to induce Purchaser to enter into this
Agreement, will, among other things, agree not to engage in
competition with the Business in accordance with the terms of a
covenant not to compete as hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual
covenants, agreements, representations and warranties contained
herein, the parties agree as follows:
ARTICLE 1. TRANSFER OF ASSETS TO NEWCO
1.1 Definition of Business. For the purposes of this
Agreement, "Business" shall mean Seller's business of developing,
manufacturing, selling and servicing mechanical actuation systems
and hydraulic actuation systems. "Business" shall not include
Seller's business of developing, manufacturing, selling and
servicing electro-mechanical actuation systems. For the purpose
of further describing, but not limiting, the Business, products
manufactured by the Business are identified on Schedule 1.1
hereto.
1.2 Purchase and Sale. Effective June 10, 1994 at
11:58 p.m. Pacific Daylight Time or such other time prior to the
Closing as the parties shall agree upon (the "Transfer Date")
Seller shall transfer, convey and assign to Newco and Newco shall
accept from Seller all of Seller's right, title and interest in
and to the assets of the Business, except for the Excluded Assets
described in Section 1.4, such transfer to convey good and
marketable title, subject to no liens, encumbrances, or security
interests, in and to Seller's assets used in the Business,
wherever located, (the "Assets") including, without limitation,
the following:
(a) all machinery and equipment, fixtures,
furniture, office equipment, tools, test equipment, tooling,
vehicles, software and other tangible personal property
identified on Schedule 1.2(a) hereto (the "Preliminary Property
List") and such additional personal property, not otherwise
identified on Schedule 1.2(a), that is (i) customarily located by
Seller at the Facility (as hereinafter defined), or (ii)
exclusively used in the Business and located at Seller's other
facilities, including but not limited to, 190th Street, Torrance,
California, Rancho Dominguez, California and Toulouse, France
(collectively the "Personal Property");
(b) all inventory of the Business as of the
Closing Date (as hereinafter defined), wherever located,
including raw materials, work-in-process and finished goods and
such other inventory, wherever located, attributable to the
Business and held for sale by Seller's Airline Services division
(collectively the "Inventory") to be counted and valued on June
17, 1994 for purposes of the Closing Balance Sheet;
(c) the real estate, including but not limited to
the land, building, and improvements located at 20263 Western
Avenue, as more particularly described on Schedule 1.2(c) hereto
(the "Facility") and all easements, rights and licenses granted
to Purchaser and Newco with respect to Newco's ownership or use
of the Facility or the Waste Water Treatment Facility (as
hereinafter defined);
(d) the patents, patent applications and invention
disclosures specified in Schedule 4.7(a) hereto and the
copyrights, licenses and other intellectual property including,
without limitation, processes, products, apparatus, formulas,
trade secrets, know-how, discoveries, inventions (including
conceptions of inventions), and design, manufacturing,
engineering and other technical information used in the Business
(collectively the "Intellectual Property"), but not including any
patents, patent applications and invention disclosures set forth
in Schedule 4.7(b);
(e) all contracts, agreements, arrangements
and/or commitments of the Business which are identified on
Schedule 4.8 or are omitted pursuant to the terms of Section 4.8
(the "Contracts");
(f) all customer and vendor lists for the
Business;
(g) all transferable governmental and other
permits, licenses, approvals, certificates of inspection,
filings, franchises and other authorizations relating to the
Assets including, but not limited to those listed in Schedule
4.17 hereto (the "Permits and Licenses");
(h) all rights of Seller pursuant to any express
or implied warranties, representations or guarantees made by
suppliers furnishing goods or services to the Business;
(i) all of the buildings, improvements, fixtures,
machinery and equipment consisting of the waste water treatment
facility (the "Waste Water Treatment Facility") located on the
real property adjacent to the Facility, as more particularly
described on Schedule 1.2(i) but not including such real
property;
(j) all original books, records and other data of
Seller relating exclusively to the Business or the Assets or the
Contracts;
(k) cash or accounts receivable of the Business
("Accounts Receivable") but only to the extent they are
transferred to Purchaser or Newco at Closing and included on the
Closing Balance Sheet and are good and collectable within sixty
(60) days of the Closing Date; and
(l) the sum of Five Hundred Sixty-nine Thousand
Dollars ($569,000.00) which the parties have agreed offsets any
liability which Purchaser will assume pursuant to Section 3.1(h);
(m) goodwill associated with the Business as a
going concern; and
(n) government property assigned to the Business
as set forth in Schedule 1.2(n).
1.3 Non-Assignable Contracts. Notwithstanding
anything in this Agreement to the contrary, this Agreement shall
not constitute an agreement to assign any contract or agreement
if the attempted assignment thereof, without the consent of a
third party thereto, would constitute a material breach of any
material obligation of Seller or would in any way materially
adversely affect the rights of Purchaser, Newco or Seller
thereunder. If such consent is not obtained, or if an attempted
assignment thereof would be ineffective or would affect
materially the rights of Seller thereunder such that Newco or
Purchaser would not in fact receive all such rights, Seller will,
to the extent not prohibited by or not in violation of any such
contract or agreement, (a) cooperate with Purchaser or Newco in
any commercially reasonable arrangement designed to provide for
Purchaser or Newco the benefits (including the exercise of
Seller's rights) under any such contract or agreement, including
enforcement for the benefit of Purchaser or Newco of any and all
rights of Seller against a third party thereto arising out of the
breach or cancellation by such third party or otherwise, (b) hold
all monies paid to Seller thereunder on and after the Closing
Date in trust for the account of Purchaser or Newco, and (c)
remit such money to Purchaser or Newco as promptly as possible.
1.4 Excluded Assets. Notwithstanding anything to the
contrary contained in this Agreement, the following are not
intended to be assigned, transferred or conveyed to Newco
hereunder (the "Excluded Assets"):
(a) all assets and intellectual property
primarily used in Seller's electro-mechanical actuation systems
product line and business which, for purposes of description but
not in limitation of such product line and business, is
identified on Schedule 1.4(a);
(b) all cash, cash equivalents and overdrafts of
the Business as of the Closing Date unless Seller in its sole
discretion shall determine to transfer cash at Closing and to
include such cash on the Closing Balance Sheet as hereinafter
defined;
(c) all accounts receivable of the Business
unless Seller in its sole discretion shall determine to transfer
certain accounts receivable at Closing and to include such
accounts receivables on the Closing Balance Sheet as hereinafter
defined;
(d) the basic books and records of account and
all supporting vouchers, invoices and other records and materials
relating to any or all income taxes of Seller with respect to the
Business;
(e) all books, records and other data of Seller
which do not relate exclusively to the Business or the Assets or
the Contracts;
(f) subject to Section 14.6, any right to use any
name or logo of Seller or its affiliates or any variant or
derivative thereof, including but not limited to "Allied-Signal",
"AlliedSignal", "Signal", "Garrett", "AiResearch" or "Bendix"
whether or not such logo, name, variant or derivative was used by
the Business;
(g) the insurance policies of Seller pertaining
to the Business, the Facility, and the rights of Seller
thereunder;
(h) the patents and patent applications listed in
Schedule 4.7(b);
(i) any real estate other than the Facility;
(j) any right of any nature to any inventory or
claim arising out of the A-12 program;
(k) any cash related to the advance payment
liabilities identified on Schedule 1.4(k) hereto;
(l) any tax refund with respect to any period
prior to the Closing Date; and
(m) any personal or intellectual property related
primarily to services to be provided by Seller pursuant to the
Transition Services Agreement, as hereinafter defined; provided,
however, that such excluded personal or intellectual property
shall not consist of property which is conveyed in accordance
with Section 1.2 or to be transferred pursuant to the Transition
Services Agreement.
1.5 Transfer of Title to the Assets. Seller shall
sell, assign, convey, transfer and deliver the Assets by
execution and delivery of the following to Newco on the Transfer
Date:
(a) a transfer document in the form of Exhibit A
hereto (the "Bill of Transfer");
(b) a grant deed in the form of Exhibit B hereto
(the "Deed");
(c) a contract assignment agreement in the form
of Exhibit C hereto (the "Assignment Agreement");
(d) an assignment of patents and patent
applications in the form of Exhibit D hereto (the "Patent
Assignment");
(e) the WTF Easement Agreement (as defined in
Section 7.1 and which shall be in the form of Exhibit E);
(f) the Access and Parking License Agreement (as
defined in Section 7.1 and which shall be in the form of
Exhibit F);
(g) the WAA Easement Agreement (as defined in
Section 7.1 and which shall be in the form of Exhibit G);
(h) [intentionally omitted];
(i) the Test Cell Easement Agreement (as defined
in Section 7.1 and which shall be in the form of Exhibit I);
(j) the SS Easement Agreement (as defined in
Section 7.1 and which shall be in the form of Exhibit J); and
(k) such other agreements and instruments as
Purchaser or Newco shall reasonably request in order to
effectively transfer to and vest in Newco good and marketable
title to the Assets free and clear of all liens, encumbrances, or
security interests.
1.6 No Transfer of Liabilities to Newco. Seller shall
not transfer to Newco, nor shall Seller permit Newco to assume,
be liable for or become responsible for any liability of any
nature, whether accrued, absolute, contingent or otherwise.
1.7 Patent License Agreements. At Closing, Seller,
Newco and Purchaser shall enter into license agreements in the
forms attached hereto as Exhibit K, with respect to the patents,
patent applications and invention disclosures identified in
Schedules 4.7(a) and 4.7(b) (the "Patent License Agreements").
ARTICLE 2. PURCHASE AND SALE
2.1 Sale of Stock. Subject to the terms and
conditions of this Agreement, at the Closing, Seller shall sell,
convey, transfer, assign and deliver to Purchaser and Purchaser
shall purchase and accept from Seller, good and marketable title
to all of the Stock subject to no liens, encumbrances or security
interests.
2.2 Purchase Price. The purchase price to be paid by
Purchaser for the Stock and for Seller's performance of this
Agreement is Seventy One Million Dollars ($71,000,000.00) (the
"Purchase Price") payable in immediately available funds on the
Closing Date. The Purchase Price shall be paid by Purchaser in
full at Closing.
2.3 Post-Closing. The Assets and the Assumed
Liabilities (as hereinafter defined) shall be subject to a post-
closing adjustment in accordance with this Section 2.3 to the
extent that the difference between the net book value of the
Assets as of the Closing Date and the net book value of the
Assumed Liabilities as of the Closing Date (such difference being
hereinafter referred to as the "Net Asset Value") is more or less
than $55,800,000.00. A balance sheet shall be prepared by Seller
(at Seller's expense) as of the Closing Date (the "Closing
Balance Sheet") and furnished to Purchaser no later than sixty
(60) calendar days following the Closing Date. The Closing
Balance Sheet shall reflect the Net Asset Value of the Business
and shall be prepared in accordance with U.S. Generally Accepted
Accounting Principles ("GAAP") except as disclosed in a note to
such balance sheet which note shall be substantially the same in
form and content as Schedule 2.3 of this Agreement. Seller will
give representatives of Purchaser reasonable access to all books
and records relating to the Business not in Purchaser's
possession for the purposes of reviewing the Closing Balance
Sheet. Purchaser will cause appropriate personnel of Purchaser
to assist Seller (at no cost to Seller) in the determination of
the Closing Balance Sheet. Unless Purchaser notifies Seller to
the contrary within (30) calendar days after Purchaser's receipt
of Seller's Closing Balance Sheet, the determination of the Net
Asset Value shall be conclusive and binding on Purchaser and
Seller. If Purchaser so notifies Seller in writing of its
disagreement with the Net Asset Value as determined by Seller
within the thirty (30) day period (which notice shall include all
Purchaser's disagreements and a detailed explanation thereof,
including but not limited to the Dollar amount of each such
disagreement), then Purchaser and Seller shall attempt to resolve
their differences within thirty (30) days after Seller's receipt
of Purchaser's written notice of disagreement. Any difference
not resolved within the thirty (30) day period will be resolved
by Ernst & Young (the "Firm") whose determination shall be
conclusive and binding on Purchaser and Seller. Fees and
expenses of the Firm shall be shared equally by Purchaser and
Seller. Purchaser and Seller shall use their best efforts to
cause the Firm to render its decision within forty-five (45) days
after the parties submission of the dispute to the Firm.
Once the Net Asset Value is finally determined, whether
by agreement of the parties or determination by the Firm, the
Assets and Assumed Liabilities shall be adjusted as follows:
(a) if the Net Asset Value is greater than
$55,800,000.00 and less than $56,300,000.00, then Newco, within
five (5) days after the determination of the Net Asset Value,
shall return to Seller cash or such of the Accounts Receivable as
is equal to the difference between the Net Asset Value and
$55,800,000.00;
(b) if the Net Asset Value is greater than
$56,300,000.00, then Newco within fifteen (15) days after the
determination of the Net Asset Value shall return fixed assets or
Inventory, to be mutually agreed upon, in the amount required to
reduce the Net Asset Value to $55,800,000.00. Such fixed assets
or Inventory shall be repurchased from Seller as needed by Newco
at the value originally transferred;
(c) if the Net Asset Value is less than
$55,800,000.00, then Seller, within five (5) days after the
determination of the Net Asset Value, will transfer to Purchaser
cash as is equal to the difference between $55,800,000.00 and the
Net Asset Value.
2.4 Taxes.
(a) Notwithstanding anything otherwise provided
in this Agreement, except as set forth in Section 7.5, Purchaser
shall be responsible for all sales, use, transfer and other
similar taxes, and any interest, penalties or additions to such
taxes, assessed or payable in connection with the transfer of the
Business to Newco, the transfer of Newco to Purchaser, and any
subsequent liquidation of Newco. Purchaser and Seller shall
cooperate in a timely manner in making all filings, returns,
reports and forms as may be required to comply with the
provisions of applicable law in connection with the payment of
any such sales and transfer taxes.
(b) Purchaser shall assume as of the Closing Date
the portion of each and every liability for any state, county or
local real or personal property tax or other similar ad valorem
state, county or local tax on the Assets of the Business for any
taxable period that spans the Closing Date determined by
multiplying each such liability by a ratio, the numerator of
which is the total number of days in such taxable period after
the Closing Date, and the denominator of which is the total
number of days in such taxable period. Seller shall remain
liable for the remainder of such taxes.
(c) Seller and Purchaser each covenants and
agrees that it will timely make a joint election under Section
338(h)(10) of the Code, and any applicable corresponding or
similar provision of state or local law, with respect to the
acquisition of Newco. Seller and Purchaser shall jointly
prepare Internal Revenue Service Form 8023, and such other forms
and schedules as are necessary or required to timely make such
election under Section 338(h)(10) of the Code, and any applicable
corresponding or similar provision of state or local law, and
each covenants and agrees with the other that it shall execute
said Form 8023 and take all such other acts as are necessary to
timely make or perfect such election. Seller shall be solely
responsible for, shall cause to be paid, and shall indemnify and
hold harmless Purchaser and Newco with respect to all federal,
foreign, state and local income and franchise taxes payable by
reason of such election under Section 338(h)(10) of the Code, and
any applicable corresponding or similar provision of state or
local law.
(d) The allocation of the Purchase Price is set
forth in Schedule 2.4. Purchaser and Seller agree to adhere to
such allocation for all purposes of any federal, state or local
Tax return filed by them subsequent to the Closing Date,
including the determination by Seller of the taxable gain or loss
on the sale of the stock of Newco, the liabilities assumed by
Purchaser, the Covenant Not to Compete and the Patent License
Agreements. The portion of the Purchase Price allocated to the
stock of Newco shall also be allocated among Newco's assets as
set forth on Schedule 2.4. Purchaser and Seller agree that any
post-closing adjustment to the Purchase Price required by Section
2.3 shall be allocated in accordance with the nature of such
adjustment.
ARTICLE 3. ASSUMPTION OF LIABILITIES AND OBLIGATIONS
3.1 Assumed Liabilities. Purchaser shall not assume,
be liable for, or become responsible for any liability of Seller
of any nature, whether accrued, absolute, contingent or
otherwise, except the following (the "Assumed Liabilities"):
(a) Liabilities incurred in the ordinary course
of the Business which are reflected on the Closing Balance Sheet,
including advance payment liabilities and accrued vacation
liability.
(b) Seller's obligations and liabilities for
performance after the Effective Time (as hereinafter defined)
under the Contracts, including obligations to perform any
Contracts identified in Schedule 1.4(k) where advance payments
have been received.
(c) Liability for all workers' compensation
claims filed on or after the Effective Time by Transferred
Employees (as hereinafter defined) with respect to occurrences
after the Effective Time. Seller shall retain liability for all
workers' compensation claims with respect to occurrences on or
before the Effective Time (regardless of when any such claim is
filed) and all claims filed by employees not transferred with the
Business.
(d) Liability for product liability claims and
litigation exclusively relating to products of the Business
manufactured and shipped after the Effective Time. Seller shall
retain liability for product liability claims and litigation for
products manufactured or shipped on or prior to the Effective
Time.
(e) Except as otherwise provided in this
Agreement, liability for claims and litigation, whether insured
or uninsured, relating to or arising from (i) the operation of
the Business or the ownership of the Assets after the Effective
Time, and (ii) events, conditions or occurrences relating to the
Business or the Assets after the Effective Time. Seller shall
retain liability for all other claims and litigation, whether
insured or uninsured, and irrespective of when the claim or
litigation is made or filed, relating to or arising from (i) the
operation of the Business or the ownership of the Assets prior to
the Effective Time, and, (ii) events, conditions or occurrences
relating to the Business or the Assets on or prior to the
Effective Time.
(f) Except as otherwise provided in this
Agreement, those liabilities exclusively associated with the
Business which are: (i) incurred in the ordinary course in a
manner consistent with the past practices of the Business; and
(ii) not required to be disclosed or otherwise assumed by the
provisions of this Agreement; and (iii) not required to be
disclosed on the Closing Balance Sheet by GAAP; provided,
however, that in no event will such liabilities exceed, in the
aggregate, Five Hundred Thousand Dollars ($500,000.00).
(g) Except as otherwise provided in this
Agreement, each and every liability for Tax (as hereinafter
defined) of the Business incurred after the Closing Date. Seller
shall retain responsibility for each and every Tax liability of
the Business incurred on or before the Closing Date.
(h) The retiree medical liability assumed
pursuant to Section 6.2(b).
3.2 Warranty and Recall.
(a) Seller shall be responsible for and assume
all costs, expenses and remedial work ("Recall Costs") associated
with the following products of the Business (regardless of when
shipped): Boeing 757 elevator and rudder rod seal leakage; Boeing
757 spoiler manifold cracking and trunion bore wear; Gulfstream
trailing edge flap system dwell box gear shaft and horizontal
stabilizer actuator water intrusion damage; A333/340 Aileron
servo-control ECP 3/5 modifications; and Canadair Challenger Flap
control system. Except as indicated in the foregoing, Purchaser
and Seller shall apportion Recall Costs for products shipped on
or prior to the Closing Date depending on the period of the
recall on the following basis provided such recall obligation is
accepted by Seller pursuant to the procedures set forth in this
Section 3.2.
Allocation of Responsibility
Period Purchaser Seller
12 months from Closing 25% 75%
13-24 months from Closing 50% 50%
25-36 months from Closing 75% 25%
And thereafter 100% -0-
(b) Seller shall retain all warranty obligations
or commitments, including associated costs or damages, for
products of the Business shipped prior to the Effective Time, and
Purchaser agrees to assume all warranty obligations or
commitments, including associated costs or damages, for products
of the Business shipped after the Effective Time. The
responsibility for and allocation of warranty obligations shall
be determined in accordance with the procedures set forth in this
Section 3.2.
(c) Prior to taking any action pursuant to
Section 3.2(a) and (b) or as soon thereafter as is reasonable,
Purchaser shall provide to Seller prompt written notice of and a
complete description of any product warranty or product recall
claim or any circumstances which reasonably may lead to such a
claim, and shall permit Seller or its designee to participate in
the evaluation of the validity of such claim.
(d) In the event a product warranty or recall
claim is agreed by Purchaser and Seller to be valid, Seller shall
reimburse Purchaser for such replacement elements and warranty
repair services as are agreed. In the event that Purchaser and
Seller cannot agree on the validity of a product warranty or
recall claim or the Seller's reimbursement obligation therefor,
Purchaser shall proceed with the required work and services and
seek reimbursement from Seller. The prices for such replacement
elements and warranty repair services will be parts at their
fabrication cost and labor at the Purchaser's then approved
forward pricing rate for government contracts exclusive of
profit.
(e) Notwithstanding anything to the contrary
contained in this Section 3.2, Seller shall not be responsible
for and Purchaser shall bear any additional cost or expense
resulting from Purchaser's failure to properly perform Seller's
product warranty obligations or from Purchaser's or Newco's
provision of improper or defective replacement elements.
(f) In the event that the parties cannot agree on
a recall or warranty claim or the reimbursement arrangements
therefor, or in the event of any other dispute with respect to
the application of this Section 3.2, the parties will submit
their dispute or controversy to arbitration in Torrance,
California under the rules of the American Arbitration
Association.
3.3 Excluded Liabilities. Seller, without any
responsibility or liability of, or recourse to Purchaser or Newco
or any of Purchaser's or Newco's directors, shareholders,
officers, employees, agents, consultants, representatives,
affiliates, successors or assigns, shall absolutely and
irrevocably retain all liabilities of Seller not specifically
included in the Assumed Liabilities.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Purchaser and Newco
as follows:
4.1 Corporate Status. Seller is a corporation duly
organized and validly existing under the laws of Delaware, the
jurisdiction in which it is incorporated, and has full power and
authority to carry on the Business as now conducted. Seller has
all requisite corporate power and authority to enter into this
Agreement and all other agreements and instruments contemplated
hereby (collectively, the "Ancillary Agreements") and to perform
its obligations and consummate the transactions contemplated
hereby and thereby in accordance with the terms of this Agreement
and the Ancillary Agreements. Seller is duly qualified to do
business in each jurisdiction in which the failure to be so
qualified would have a material adverse effect on the Business.
Newco is a corporation duly organized and validly
existing under the laws of Delaware, the jurisdiction in which it
is incorporated. Newco was incorporated on June 6, 1994 and has
not engaged in any business whatsoever. Newco has all requisite
corporate power and authority to enter into this Agreement and
the Ancillary Agreements and to perform its obligations and
consummate the transactions contemplated hereby and thereby in
accordance with the terms of this Agreement and the Ancillary
Agreements. Newco is or will be duly qualified to do business in
California as of the Closing Date.
Schedule 4.1 hereto contains true and complete copies
of Newco's certificate of incorporation. All of the issued and
outstanding capital stock of Newco has been validly issued, is
fully paid and non-assessable, has not been issued in violation
of any preemptive or other right, and is owned by Seller free and
clear of any lien, pledge, claim, liability, encumbrance,
security interest or other restriction. There is no existing
option, warrant, call, right or commitment of any character
relating to the issued or unissued capital stock of Newco.
4.2 Authorization. All corporate and other
proceedings required to be taken by or on the part of Seller and
Newco including, without limitation, all action required to be
taken by the directors or shareholders of Seller and Newco to
authorize Seller and Newco to enter into and carry out this
Agreement and the Ancillary Agreements have been, or prior to the
Transfer Date will be, duly and properly taken. This Agreement
has been, and each of the Ancillary Agreements when executed will
be, duly executed and delivered by Seller and Newco and valid and
enforceable against Seller and Newco in accordance with its
terms, subject to laws of general application relating to
bankruptcy, insolvency and the relief of debtors and the rules of
law governing specific performance, injunctive relief and other
equitable remedies.
4.3 Compliance. The execution and delivery of this
Agreement and the Ancillary Agreements and the consummation of
the transactions contemplated hereby and thereby will not, in a
manner which could materially and adversely affect the Business
taken as a whole, result in the breach of any of the terms or
conditions of, or constitute a default under, or violate, or
result in the creation of a lien, security interest, or
encumbrance on any of the Assets pursuant to, as the case may be,
the articles of incorporation, by-laws or other organization
documents of Seller or Newco or any agreement, lease, mortgage,
note, bond, indenture, license or other document or undertaking,
oral or written, to which Seller or Newco is a party or by which
Seller or Newco is bound or by which any of the Assets or the
Business may be affected.
4.4 Balance Sheet. Schedule 4.4 is the balance sheet
of the Business as of March 31, 1994 ("March 31, 1994 Balance
Sheet"), including the notes thereto, which has been prepared
from the books and records of the AlliedSignal Aircraft Systems
and Equipment business unit as it was then constituted ("ASE") in
accordance with and consistent with historical accounting and
financial practices of ASE. Except as set forth in the footnotes
thereto, the March 31, 1994 Balance Sheet presents fairly in all
material respects the financial position of the Business taken as
a whole as of March 31, 1994 in accordance with historical
accounting and financial practices of ASE. Purchaser acknowledges
that the March 31, 1994 Balance Sheet has been prepared from the
financial statements of ASE as a whole and includes allocations
of various ASE debits and credits.
4.5 Personal Property. Schedule 1.2(a) lists all
material items of Personal Property. In all material respects,
all items of Personal Property have been maintained in accordance
with standard industry practices and are in reasonable working
condition (normal wear and tear excepted).
4.6 Real Property. Seller is the owner of the
Facility and the real property which is the subject of the
easements and licenses granted pursuant to this Agreement,
subject to the Permitted Exceptions (as hereinafter defined).
Except as set forth on Schedule 4.6, there are no actions, suits,
proceedings or investigations pending or, to the Knowledge of
Seller (as hereinafter defined), threatened before any federal,
state, municipal, regulatory or administrative authority
affecting the Facility. Seller is not in default with respect to
any order, judgment, injunction or decree of any court or other
governmental authority with respect to the Facility. To the
Knowledge of Seller, the improvements located on the Facility are
free from all structural defects. All mechanical systems in the
Facility, including, but not limited to the heating, ventilation,
air conditioning, plumbing and electrical systems, are in good
working order and are of adequate capacity to properly serve the
Facility at its present operating level. There are no leases or
subleases affecting the Facility.
4.7 Intellectual Property.
(a) Schedule 4.7(a) lists all patents, patent
applications and invention disclosures (including those granted
to, applied for, and owned by Seller), primarily used in the
Business.
(b) Schedule 4.7(b) lists patents, patent
applications and invention disclosures owned and used by Seller
primarily in product lines other than the Business but for which
Seller will grant to Purchaser and Newco a license pursuant to
Section 1.7.
(c) To the Knowledge of Seller, there are no
existing claims of infringement, and Seller has not received
written notice alleging any current infringement by Seller with
respect to any material patent, trademark, trade name, copyright
or any other intellectual property right relating to the Business
and to the Knowledge of Seller there is no current infringement
by any third party of any patent set forth on Schedule 4.7(a).
(d) Seller has granted no license to a third
party other than those identified in Schedule 4.8 with respect to
any patent or other Intellectual Property set forth on Schedules
4.7(a) or (b) which would permit such third party to compete with
the Business.
4.8 Contracts and Binding Commitments. Except as
otherwise provided in this Section 4.8, Schedule 4.8 lists the
Contracts, which include all contracts, leases, agreements,
intellectual property agreements and binding arrangements, which
are material to the operation of the Business taken as a whole.
To the Knowledge of Seller, Seller is not in material default
under any of the Contracts and there has not been any material
default under any of the Contracts by any other party thereto.
Seller is not obligated to list in Schedule 4.8 any agreement,
contract or commitment if (a) such agreement, contract or
commitment, is related to the sale or furnishing of products or
services by Seller in the ordinary course of the Business and has
a contract amount of less than $75,000; or (b) such agreement,
contract or commitment is related to the purchase of materials,
supplies, equipment, merchandise or services, usable in the
ordinary course of the Business and imposes a payment obligation
on the Seller of less than $75,000.
4.9 Title. Except as otherwise specifically set forth
in this Agreement or in the Schedules hereto, Seller has good and
marketable title to all of the Assets free and clear of all
liens, mortgages, pledges, security interests and encumbrances,
other than (i) liens for taxes not yet due and payable or being
contested in good faith, and (ii) with respect to the Facility,
the Permitted Exceptions.
4.10 Litigation. Except as disclosed in Schedule 4.10,
there is no action, suit, proceeding, arbitration or litigation,
pending or to the Knowledge of Seller, threatened against Seller,
which if determined adversely to Seller would have a material
adverse effect on Seller, Newco, Purchaser or the Business taken
as a whole. There is no action, suit, proceeding, arbitration,
or litigation pending or threatened against Newco. An action,
suit, proceeding, arbitration or litigation shall be considered
"threatened" for purposes of this Section 4.10 if any of the
persons listed on Schedule 4.26 has received a written notice or
communication reasonably indicating to a business person that an
action, suit or proceeding may be commenced.
4.11 Environmental Disclosure. To the Knowledge of
Seller, except as set forth in Schedule 4.11, Seller has complied
and is in compliance with all laws, regulations, rules, orders,
judgments, decrees, directives and other requirements imposed by
federal, state, or local governmental authorities applicable to
the Business or Assets and relating to matters of environmental
or human health protection or Hazardous Substances (as
hereinafter defined) (collectively, "Environmental Laws").
Except as set forth in Schedule 4.11, none of Seller's permits,
licenses, applications or other approvals, consents or
authorizations, issued or pending pursuant to any Environmental
Laws (collectively, the "Environmental Permits") will be
invalidated, terminated, or otherwise become subject to material
modification as a result of the consummation of the transactions
contemplated hereby, and, if applicable, the requisite federal,
state and local agencies and authorities have given their consent
to the transfer to Purchaser of Environmental Permits. Except as
set forth in Schedule 4.11, no environmental permit, interim
status or administrative order has been sought by or issued to
Seller in any way related to the Assets pursuant to Section 3004,
3005 or 3008 of the Resource Conservation and Recovery Act of
1976 ("RCRA") or any similar status, permit or order under any
similar state statute, rule or regulation. Except as set forth
in Schedule 4.11, neither the Business nor Seller has received
any notice, claim or citation for noncompliance with, any
Environmental Laws. Except as set forth in Schedule 4.11,
neither the Business nor Seller as related to the Business has
received any written notice, request, demand or inquiry from the
United States Environmental Protection Agency pursuant to
Section 104(e) of the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980 ("CERCLA"), or any
similar notice, request, demand or inquiry under any state
statute, rule or regulation. To the Knowledge of Seller, except
as set forth in Schedule 4.11, there have been no reportable
releases or threats of reportable releases of any Hazardous
Substances into the environment on, at, related to or affecting
the Assets. Except as set forth in Schedule 4.11, to the
Knowledge of Seller, the soil, sediments, subsurface strata or
groundwater underlying the Facility, the Wastewater Treatment
Facility and the Shared Parking Area (as defined in the Access
and Parking License Agreement as defined in Section 7.1 hereof)
are not contaminated with any Hazardous Substances in violation
of any Environmental Laws. Except as set forth in Schedule 4.11,
neither the Business nor Seller has received any written notice,
demand or claim from any governmental agency, commission, or
authority or private party or entity advising it that it is
responsible for or potentially responsible for the investigation
or remediation of Hazardous Substances or for response costs with
respect to a release or threatened release of Hazardous
Substances produced by, or resulting from, in whole or in part,
the activities, operations, ownership or processes of the
Business or Assets. To the Knowledge of Seller, except as set
forth in Schedule 7.6, no investigation and/or remediation is
required under Environmental Laws with respect to the soil,
sediments, subsurface strata or groundwater underlying the
Facility, the Wastewater Treatment Facility or the Shared Parking
Area. To the Knowledge of Seller, except as set forth in
Schedule 4.11, there exist no underground tanks at the Facility.
To the Knowledge of Seller, Seller has supplied Purchaser or its
lender's or either's contractors, representatives or agents, with
copies of all material written information, data, reports and
documents within Seller's custody and control which relate to the
environmental condition of the Assets.
As used herein, the term "Hazardous Substances" means
polychlorinated biphenyls which currently require removal or
remediation under Environmental Laws, petroleum or petroleum-
based substances or petroleum related substances, methane,
explosives, radioactive materials, asbestos containing materials
which currently require removal or remediation under
Environmental Laws, urea formaldehyde foam insulation, lead based
paint which currently requires removal or remediation under
Environmental Laws, hazardous materials, hazardous wastes,
hazardous or toxic substances or materials, any flammable
substance, or any other substance or material now or hereafter
(i) defined or regulated under Sections 25115, 25117 or 25122.7,
or listed or regulated pursuant to Section 25140, of the
California Health and Safety Code, Division 20, Chapter 6.5
(Hazardous Waste Control Law), (ii) defined or regulated under
Section 25316 of the California Health and Safety Code,
Division 20, Chapter 6.8 (Carpenter-Presly-Tanner Hazardous
Substance Account Act), (iii) defined or regulated under
Section 25501 of the California Health and Safety Code,
Division 20, Chapter 6.95 (Hazardous Materials Release Response
Plans and Inventory), (iv) defined or regulated under
Section 25281 of the California Health and Safety Code,
Division 20, Chapter 6.7 (Underground Storage of Hazardous
Substances), (v) listed or regulated under Article 9 and defined
or regulated pursuant to Article 11 of Title 22 of the California
Administrative Code, Division 4, Chapter 20, (vi) designated or
regulated pursuant to the Federal Water Pollution Control Act
(33 U.S.C. Section 1251 et seq.), (vii) defined or regulated
pursuant to the Federal Resource Conservation and Recovery Act,
42 U.S.C. Section 6903 et seq. (42 U.S.C. Section 6903), or
(viii) defined or regulated pursuant to the Comprehensive
Environmental Response, Compensation, and Liability Act, 42
U.S.C. Section 9601 et seq. (42 U.S.C. Section 9601), (ix)
defined or regulated pursuant to the Federal Safe Drinking Water
Act, 42 U.S.C. 300f et seq., or (x) defined or regulated pursuant
to the Federal Clean Air Act, 42 U.S.C. Section 7401 et seq.
4.12 Employee Benefit Plans and Policies. For the
purposes of this Agreement, "Seller's Benefit Plans" means all
employee benefit plans, policies and arrangements maintained or
contributed to by Seller or a member of the affiliated group of
corporations of which Seller is the common parent, as defined in
Section 1504 of the Internal Revenue Code of 1986, as amended
(the "Code"). Except as stated in Schedule 4.12: (a) Seller's
Benefit Plans comply in all material respects, to the extent
applicable, with the requirements of the Employee Retirement
Income Security of 1974, as amended ("ERISA") and the Internal
Revenue Code of 1986, as amended (the "Code") and have been
administered and operated in all material respects in accordance
with their terms and applicable federal and state law; (b) none
of Seller's Benefit Plans subject to Part 3 Subtitle B of Title I
of ERISA has incurred any "accumulated funding deficiency" within
the meaning of Section 302 of ERISA or Section 412 of the Code;
(c) no material liability to the Pension Benefit Guaranty
Corporation ("PBGC") has been incurred with respect to any of
Seller's Benefit Plans subject to Title IV of ERISA, and to the
Seller's knowledge, no event has occurred and no condition exists
which could reasonably be expected to give rise to any liability
of Seller to the PBGC; (d) no material liability for any tax
imposed under Section 4975 of the Code or Part 4 Subtitle B of
Title I of ERISA has been incurred with respect to any of
Seller's Benefit Plans; (e) none of the Seller's Benefit Plans is
a multiemployer plan within the meaning of Section 3(37) of ERISA
(a "Multiemployer Plan"); (f) Seller has not incurred any
material withdrawal liability under Section 4201 or 4204 of ERISA
with respect to any Multiemployer Plan; (g) each of Seller's
Benefit Plans which is intended to be "qualified" within the
meaning of Section 401(a) of the Code has received a favorable
determination letter from the Internal Revenue Service and, to
the Knowledge of Seller, no event has occurred and no condition
exists which could reasonably be expected to result in the
revocation of any such determination; (h) no "reportable event"
(within the meaning of Section 4043 of ERISA) has occurred with
respect to any of Seller's Benefit Plans since the effective date
of said Section 4043; (i) no suit, action, litigation or claim
(excluding claims for benefits incurred in the ordinary course of
plan activities) has been brought against or with respect to any
of Seller's Benefit Plans; (j) all contributions to Seller's
Benefit Plans that were required to be made under Seller's
Benefit Plans as of the Closing Date have been, or will have
been, paid, accrued or otherwise fully reserved as of the Closing
Date; and (k) Seller has performed, or will have performed, all
obligations required to be performed as of the Closing Date under
Seller's Benefit Plans. Newco does not maintain or contribute to,
and has never maintained or contributed to, any employee benefit
plan, policy, or arrangement.
4.13 Undisclosed Liabilities. To the Knowledge of
Seller, there are no liabilities or obligations of Seller, either
accrued, absolute, contingent or otherwise, which are material to
the Business taken as a whole, except (i) those set forth in this
Agreement, the Ancillary Agreements, or the Schedules attached
hereto except for those liabilities or obligations not required
to be set forth in such Schedules due to an express exception
contained in the Section requiring such Schedule or (ii) which,
pursuant to this Agreement, will be included on the Closing
Balance Sheet. As of the Closing Date, Newco has no liabilities
or obligations of any nature, whether accrued, absolute,
contingent or otherwise.
4.14 Changes Since March 31, 1994. Since March 31,
1994, Seller has not (a) undergone any change in the financial
condition, properties, assets, or liabilities, of the Business
except changes in the ordinary and usual course of the Business
and consistent with the past practice and which have not been,
either in any case or in the aggregate, materially adverse to the
Business; (b) mortgaged, pledged or subjected to any lien,
mortgage, lease, security interest, or encumbrance any of the
Assets; (c) acquired or disposed of any material interest in any
material asset or property except the purchase of materials and
supplies and the sale of inventory in the ordinary and usual
course of the Business and consistent with past practice;
(d) forgiven or canceled any material debt or claim of the
Business, waived any material right of the Business, or, except
in the ordinary and usual course of the Business and consistent
with past practice, incurred or paid any liability or obligation
of the Business; (e) suffered any damage, destruction or loss
(whether or not covered by insurance) which materially adversely
affected the financial condition, properties, assets, or
operations of the Business taken as a whole; (f) materially
amended or terminated any material contract; (g) entered into any
collective bargaining agreement which affects the Business;
(h) sold or granted or transferred to any party or parties any
license, or granted an option to acquire a license, to
manufacture or sell any of the products of the Business, or to
use any Intellectual Property; or (i) entered into any
transaction related exclusively to the Business except in the
ordinary and usual course of the Business and consistent with
past practice.
4.15 Compliance with Law. Except as otherwise
disclosed in any of the Schedules hereto, neither Seller nor
Newco is in violation of any foreign, federal, state or local
statutes, laws or regulations applicable to any of the Assets or
to the operation of the Business which would have a material
adverse effect on the operation of the Business taken as a whole,
and neither Seller nor Newco has received any notice alleging any
such defaults or violations or potential defaults or violations.
4.16 Consents. Except as set forth in Schedule 4.16,
no action, approval, consent or authorization, including but not
limited to any action, approval, consent or authorization by any
third party, financial institution, governmental or quasi-
governmental agency, commission, board, bureau or
instrumentality, is necessary to make this Agreement or any of
the Ancillary Agreements a legal, valid and binding obligation of
Seller or Newco or to consummate the transactions contemplated
hereunder.
4.17 Permits and Licenses. Schedule 4.17 attached
hereto lists all material governmental or other permits,
licenses, approvals, certificates of inspection, filings,
franchises and other authorizations which are issued to, held or
used by Seller, or for which Seller has applied in connection
with the current operation of the Business, and any limitations
thereto. Except as listed in Schedule 4.17, Seller has all
material governmental or other permits, licenses, approvals,
certificates of inspection, filings, franchises and other
authorizations which are necessary to own and operate the Assets
and to conduct the Business as it is presently being conducted.
To the Knowledge of Seller, Seller has not received any notice
alleging that any other material governmental or other permits,
licenses, approvals, certificates of inspection, filings,
franchises and other authorizations related to the Business are
required. "Material" for purposes of this Section 4.17 shall
include but not be limited to permits, licenses and other
authorizations which are required to own or operate the Assets
owned or operated by Seller and used for the production of
products in the Business.
4.18 Labor Matters. To the Knowledge of Seller, there
are no strikes, arbitrations, grievances, other labor disputes or
union organizational drives pending or threatened with respect to
the Business between Seller and any of its employees. Seller is
not a party to any union, collective bargaining or other similar
agreements affecting the Business. Seller has paid in full all
wages, salaries, commissions, bonuses and other compensation
(including severance pay and vacation benefits) for all services
performed by its employees. Seller is not liable for any arrears
of wages or any payroll taxes or any penalties or other damages
for failure to comply with any applicable foreign, federal, state
and local laws relating to the employment of labor. Seller has
previously delivered to Purchaser a list which identifies the
current annual salary or hourly wage rate of each Employee (as
hereinafter defined). Schedule 4.18 hereto identifies all human
resources policies and employee handbooks or manuals applicable
to the Business or the Employees.
4.19 Finders' Fees. No person acting on behalf of
Seller or Newco has claims to, or is entitled to, under any
contract or otherwise, any payment as a broker, finder or
intermediary in connection with the origin, negotiation,
execution or consummation of the transactions provided for in
this Agreement or the Ancillary Agreements.
4.20 Other Entities. The Assets do not include any
ownership interest in any other business organization or entity
including, without limitation, any corporation, partnership,
limited liability company, limited partnership or joint venture.
4.21 Inventory. The Inventory consists of items of
good and merchantable quality usable in the ordinary and usual
course of the Business and reflects Seller's normal valuation
policy as set forth in Schedule 4.21 of valuing inventory at the
lower of cost or market value net of any amount in progress
billings applied on a consistent basis with past practice.
4.22 Accounts Receivable. To the extent any Accounts
Receivable are transferred to Newco, such accounts will be good
and collectable in sixty (60) days and are not subject to any
claims or offsets.
4.23 General Representation and Warranty. Neither this
Agreement nor any Schedule or other documents furnished by or on
behalf of Seller in connection with this Agreement contains any
untrue statement of a material fact or omits to state any
material fact necessary to make the statements contained herein
or therein not misleading. The Assets, the services to be
purchased by Purchaser from Seller pursuant to the Transition
Services Agreement (as hereinafter defined), and the Excluded
Assets constitute all of the assets, facilities and services
which were used by Seller to conduct the Business prior to the
Closing.
4.24 Government Contracts. Seller's cost accumulation
system for the period prior to the Closing is accurate and to the
Knowledge of Seller is adequate to enable Purchaser or Newco
(whether as a prime contractor or subcontractor), to fulfill its
obligation to disclose current, accurate and complete cost and
pricing data when so required by the Truth in Negotiation Act,
10 U.S.C. Section 2306(f) and the regulations promulgated thereunder.
With respect to contracts concluded or ongoing at the
time of the Closing, there exist no facts or circumstances which
will subject Purchaser or Newco to criminal or civil liability or
administrative action, including without limitation, debarment
from contracting with the United States on account of
violation(s) of laws governing the sale of goods or services to
the United States, the sale to customers other than the United
States of defense articles or defense services as those terms are
defined in the International Traffic in Arms Regulations, 22 CFR
Ch 1 Sub Ch M Sections 120.7 and 120.8, or the improper payment of
compensation or gratuities, directly or indirectly, to
representatives, officers or employees of foreign governments.
Schedule 4.24 is a compilation of all currently
applicable correspondence, notices, subpoenas, summonses, civil
investigative demands, letters rogatory, international writs of
judicial assistance or other process or communication received
from or sent to the relevant government in connection with all
domestic or foreign government inquiries, investigations and
threatened or pending legal or administrative actions which
relate to the activities of the Business.
4.25 No Additional Representations. NOTWITHSTANDING
ANYTHING TO THE CONTRARY CONTAINED IN THIS ARTICLE 4 OR ANY OTHER
PROVISION OF THIS AGREEMENT, IT IS THE EXPLICIT INTENT OF EACH
PARTY HERETO THAT SELLER IS MAKING NO REPRESENTATION OR WARRANTY
WHATSOEVER, EXPRESS OR IMPLIED, BEYOND THOSE EXPRESSLY GIVEN IN
THIS AGREEMENT OR IN ANY ANCILLARY AGREEMENT, INCLUDING BUT NOT
LIMITED TO ANY IMPLIED WARRANTY OR REPRESENTATION AS TO
CONDITION, MERCHANTABILITY OR SUITABILITY AS TO ANY OF THE
PROPERTIES OR ASSETS OF THE SELLER. EXCEPT AS OTHERWISE
SPECIFICALLY PROVIDED IN THIS AGREEMENT, THE ASSETS ARE BEING
SOLD ON AN "AS IS, WHERE IS" BASIS.
4.26 Construction of Certain Phases. For purposes of
this Agreement, wherever the phrase "Knowledge of Seller" is
used, such phrase shall mean the knowledge of the persons set
forth on Schedule 4.26, in each case after due inquiry and
investigation. Seller represents and warrants that the persons
set forth on Schedule 4.26 constitute the employees of Seller
with sufficient knowledge to make the representations and
warranties being made by Seller.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller as follows:
5.1 Corporate Status. Purchaser is a corporation duly
organized and validly existing under the laws of the State of New
York, the jurisdiction in which it is incorporated, and has full
power and authority to carry on its business and to own all of
its properties and assets. Purchaser has all requisite corporate
power and authority to enter into, execute and deliver this
Agreement and the Ancillary Agreements and to perform its
obligations and consummate the transactions contemplated hereby
and thereby in accordance with the terms of this Agreement and
the Ancillary Agreements.
5.2 Authorization. All corporate and other
proceedings required to be taken by or on the part of Purchaser
including, without limitation, all action required to be taken by
the directors or shareholders of Purchaser to authorize Purchaser
to enter into and carry out this Agreement and the Ancillary
Agreements have been, or prior to the Closing will be, duly and
properly taken. This Agreement has been, and the Ancillary
Agreements when executed will be, duly executed and delivered by
Purchaser and valid and enforceable against Purchaser in
accordance with their respective terms, subject to laws of
general application relating to bankruptcy, insolvency and the
relief of debtors and the rules of law governing specific
performance, injunctive relief and other equitable remedies.
5.3 Compliance. The execution and delivery of this
Agreement and the Ancillary Agreements and the consummation of
the transactions contemplated hereby and thereby will not result
in the breach of any of the terms or conditions of, or constitute
a default under, or violate, as the case may be, the articles of
incorporation, by-laws or other organization documents of
Purchaser or any material agreement, lease, mortgage, note, bond,
indenture, license or other document or undertaking, oral or
written, to which Purchaser is a party or by which Purchaser is
bound or by which any of the Assets may be affected.
5.4 Financing. Purchaser has commitments from
responsible banks or other financial institutions to provide
funds to pay the Purchase Price, which commitments are subject to
the terms and conditions set forth therein.
5.5 Finder's Fees. No person acting on behalf of
Purchaser has claims to, or is entitled to, under any contract or
otherwise, any payment as a broker, finder or intermediary in
connection with the origin, negotiation, execution or
consummation of the transactions provided for in this Agreement
or the Ancillary Agreements.
5.6 Due Diligence. Purchaser has such knowledge and
experience in financial and business matters that it is capable
of evaluating the merits and risks of the transactions
contemplated by this Agreement. Purchaser confirms that Seller
provided to Purchaser the opportunity to ask questions of the
officers and management employees of Seller and to acquire such
additional information about the business and financial condition
of the Business as Purchaser requested and all such information
has been received. Notwithstanding the foregoing, Seller
acknowledges that Purchaser is relying on the accuracy and
completeness of Seller's representations and warranties.
Purchaser has no knowledge that any representation or warranty of
Seller in this Agreement and Schedules hereto is not true and
correct in all material respects.
ARTICLE 6. EMPLOYEES AND EMPLOYEE BENEFITS
6.1 Employment. Purchaser shall offer employment to
all employees listed on Schedule 6.1 ("Employees") who are
actively employed by Seller on the Closing Date or who are on
short term disability as of the Closing Date and recover from
such short term disability before short term disability benefits
would have ceased under Seller's plan had it been maintained by
Purchaser after the Closing Date. Purchaser shall continue the
employment of Employees listed in Schedule 6.1 who accept
Purchaser's offer of Employment ("the Transferred Employees"),
except that an Employee listed on Schedule 6.1 who is not
actively at work with Seller on the Closing Date will become a
Transferred Employee of Purchaser only as of the date such
Employee first reports for active work with Purchaser. Purchaser
and Seller agree to consider, in good faith, replacement
employees for Employees who refuse Purchaser's offer of
employment. Nothing herein expressed or implied confers upon any
Transferred Employee any rights or remedies of any nature or
kind, including, without limitation, any rights of employment
with Purchaser for a specified period of time.
6.2 Compensation and Benefits.
(a) Purchaser agrees to provide, as of the
Closing Date, each Transferred Employee with wages at least equal
to the base pay paid by Seller as of the Closing Date, and
benefits comparable to the benefits provided to employees of
Purchaser in similar positions provided that (i) no Employee
shall be covered under Purchaser's benefit programs until the
first date such Employee becomes a Transferred Employee and is
actively at work with Purchaser, (ii) severance benefits will be
provided as described in Section 6.3, and (iii) health care
benefits will be provided under a separate arrangement similar to
Seller's arrangement covering the Transferred Employees and may
not be comparable to the health care benefits provided to other
employees of Purchaser.
(b) Purchaser agrees to credit and to continue to
credit each Transferred Employee with service credited with
Seller under Seller's Benefit Plans for participation and
retirement eligibility and vesting purposes, under such employee
benefit plans or policies Purchaser maintains or will maintain
for or on behalf of the Transferred Employees. Seller shall not
in any manner be responsible for any liability, claim or
obligation due under any such plan maintained by Purchaser. In
addition, Purchaser shall provide Transferred Employees with
retiree medical benefits under the retiree medical plan provided
by Purchaser to its retirees, and all service with Seller or any
subsidiaries or affiliates of Seller shall be treated as service
with Purchaser under Purchaser's retiree medical plan. It is
understood between Seller and Purchaser that (i) a Transferred
Employee whose initial date of employment with Seller or any
subsidiaries or affiliates of Seller is on or after October 1,
1989, shall not be entitled to coverage under the retiree medical
plan maintained by Purchaser, and (ii) each other Transferred
Employee shall be entitled to coverage under the retiree medical
plan maintained by Purchaser if and only if such Transferred
Employee meets all terms and conditions of such retiree medical
plan.
6.3 Severance and WARN Act. It is agreed that:
(i) Purchaser is not responsible for any liability, cost or
expense with respect to an Employee who refuses Purchaser's offer
of employment, (ii) Purchaser will provide a severance program
for Transferred Employees comparable to the severance program
provided to employees of Purchaser in similar positions provided
that under such severance program for a period of six (6) months
following the Closing Date, Purchaser will make payments to any
Transferred Employee terminated by Purchaser during that period
equal in amount and form to the severance benefits that would
have been provided to each such Transferred Employee by Seller
under its Pay and Benefits Continuance Plan for Designated
Employees of Allied-Signal Aerospace Company (the "Pay and
Benefits Continuance Plan") as described in the Summary Plan
Description as revised as of March 1991, and calculated as of the
date of such Transferred Employee's termination by Purchaser if
such Transferred Employee was covered under the Pay and Benefits
Continuance Plan as of the Closing Date; and (iii) (A) with
respect to a cause of action commenced by a Transferred Employee
against Seller, Purchaser and Seller agree to share on an equal
basis the reasonable legal costs, including attorney's fees, of
such cause of action, provided (1) the cause of action is related
to the transfer of such Transferred Employee from Seller to
Purchaser pursuant to the transactions contemplated herein, (2)
the cause of action includes a claim for severance benefits, and
(3) Purchaser has not previously paid such Transferred Employee
severance benefits at least equal to the benefits that would have
been paid to such Transferred Employee as of the Closing Date
under the Pay and Benefits Continuance Plan as though such
Transferred Employee was terminated as of the Closing Date by
Seller with a right to benefits under such plan; and (B) with
respect to a cause of action described in clause (iii)(A),
Purchaser and Seller agree to share on an equal basis any
settlement or court awarded damages, provided that Purchaser's
obligation under this clause (B) is limited with respect to such
Transferred Employee, to the amount described in clause (A)(3),
and provided that Purchaser's obligations under this clause (B)
shall cease if the cause of action no longer includes a claim for
severance benefits or if the judgment relating to the cause of
action specifically provides for no award of severance benefits.
Purchaser agrees to pay and be responsible for all liability,
cost, expense and sanctions resulting from the failure to comply
with the Worker Adjustment and Retraining Notification Act ("WARN
Act"), and the regulations thereunder, in connection with the
consummation of the transactions described in or contemplated by
this Agreement.
6.4 Health Care Continuation Liability. Purchaser
agrees to pay and be responsible for all liability, cost,
expense, taxes and sanctions under Section 4980B of the Internal
Revenue Code (the "Code"), interest and penalties imposed upon,
incurred by, or assessed against Purchaser or Seller that arise
by reason of or relating to any failure to comply with the health
care continuation coverage requirements of Section 4980B of the
Code and Sections 601 through 608 of ERISA, as amended, which
failure occurs on or after the Closing Date with respect to any
Transferred Employee or any qualified beneficiary (as defined in
Section 4980B(g)( 1)) of such Transferred Employee.
6.5 Savings Plan. Seller shall provide that those
Transferred Employees participating in the AlliedSignal Savings
Plan ("Savings Plan") immediately prior to the Closing Date shall
fully vest on the Closing Date in their respective Savings Plan
Accounts (the "Accounts"). As promptly as practicable following
the Closing Date, Seller and Purchaser shall arrange for the
transfer of the Accounts and the corresponding liabilities with
respect to the Transferred Employees, from the Savings Plan to
one or more tax-qualified defined contribution plans established
or to be established by Purchaser. Such transfer shall take place
no earlier than 30 days after each plan involved in a transfer of
assets has filed any required IRS Form 5310-A notifying the IRS
of such transfer. With respect to the plan or plans receiving
assets from the Savings Plan, to the extent permitted by
applicable law, such plan or plans shall also (a) provide for
tax-deferred contributions and (b) meet all requirements for a
qualified cash or deferred arrangement under Section 401(k) of
the Code. The transfer of assets from the Savings Plan shall be
made in cash and promissory notes evidencing participant loans
from the Savings Plan ("Loans"). Without limiting the generality
of the foregoing, if Seller should determine to transfer assets
held in Accounts which, immediately prior to the Closing Date,
provide for holding common stock of Seller, Purchaser agrees to
accept transfer of such Accounts in Seller's common stock, and,
to the extent permitted by law for such reasonable period of time
as Purchaser may determine, to provide Transferred Employees with
an election to retain Seller's common stock in their respective
plan accounts or to dispose of such stock and have the proceeds
reinvested in other investment alternatives offered under each
such plan of Purchaser. Purchaser's plan(s) shall provide that
all Loans shall be paid by payroll deduction over the
amortization schedule in effect on the Closing Date. Prior to
the transfer date, Purchaser shall, to the satisfaction of
Seller's counsel, present Seller with such evidence and
information (which may include or be provided by an opinion of
Purchaser's counsel reasonably satisfactory to Seller) as is
necessary to establish that the tax-qualified plan or plans
established or to be established by Purchaser to which the
transfer or transfers described in this Section are to be made
are in full force and effect and are intended to meet all the
requirements for qualification under Section 401 and 411(d)(6) of
the Code.
6.6 Definition of Purchaser. For purposes of this
Article 6, "Purchaser" shall be deemed to include Moog Inc., Moog
Torrance Inc. or any of their subsidiaries or affiliates.
ARTICLE 7. REAL ESTATE AND FACILITIES MATTERS
7.1 Real Estate Agreements. On the Transfer Date,
Purchaser, Newco and Seller shall execute (i) a WTF Easement
Agreement (the "WTF Easement Agreement") pursuant to which Seller
will grant to Purchaser and Newco an easement to cross and make
use of Seller's land in order to access, operate, repair, monitor
and maintain the Wastewater Treatment Facility, (ii) a Western
Avenue Access Easement Agreement (the "WAA Easement Agreement")
pursuant to which Seller shall grant to Purchaser and Newco a
temporary easement of ingress and egress across a designated
portion of Seller's land in order for Purchaser's employees,
customers, suppliers and other invitees to access the Facility
consistent with past practices of the Business, (iii) a Test Cell
Access Easement Agreement (the "Test Cell Easement Agreement")
pursuant to which Newco shall grant to Seller an easement of
ingress and egress over the northwest portion of Newco's property
in order to access, use, maintain and repair the test cells
located on Seller's adjacent property in Building No. 1, and
(iv) a Temporary Sewer Easement Agreement (the "SS Easement
Agreement") pursuant to which the parties shall specifically
identify the location of the sanitary sewer line for the
discharge of sanitary wastewater and post-monitored (post-
Manhole) industrial wastewater through Seller's existing sanitary
sewer line as more particularly described in the SS Easement
Agreement. Also at the Closing, Purchaser, Newco and Seller
shall execute a Temporary, Non-Exclusive Access and Parking
License Agreement (the "Access and Parking License Agreement")
pursuant to which Seller will grant to Purchaser and Newco a
temporary, non-exclusive license (i) to use a portion of Seller's
land for parking purposes consistent with past practices of the
Business, and (ii) to access and use Seller's 190th Street
facility and Seller's Rancho Dominguez facility consistent with
past practices, all as more particularly described in said
agreement.
7.2 Utilities. Attached hereto as Schedule 7.2 are
two drawings depicting the locations of the utility installations
servicing the Facility and the Wastewater Treatment Facility.
All references to building numbers in this Article refer to the
building numbers depicted on the attached drawings. Within
18 months after the Closing Date, unless a different time period
is expressly identified below, Purchaser shall, at its sole cost
and expense, be responsible for severing all utility connections
between the Facility and Seller's adjacent property, so that the
Facility operates as a self-sufficient, stand-alone manufacturing
operation. It is the intent of the parties that until such work
is complete, Seller and Purchaser shall share equally the costs
of installing usage meters, and Purchaser shall promptly
reimburse Seller for the costs of all utilities consumed by
Purchaser. Seller shall control the design, specifications,
procurement and installation of the usage meters. The utility
connections referenced herein shall include, but are not limited
to the following:
7.2.1 Fire Protection Water System. In order to
service the North Addition of the Unit 100 building (the Unit 100
building is hereinafter referred to as "Unit 100" and the
recently constructed north addition to Unit 100 is referred to
herein as the "North Addition") and the Wastewater Treatment
Facility, Purchaser shall connect the existing fire suppression
water line located on the north side of Unit 100 to the existing
fire line on the north-east side of Unit 100. Until such time as
the foregoing improvements are completed, Purchaser shall
reimburse Seller for the cost of fire suppression water supplied
to the Facility.
7.2.2 Compressed Air. The Facility and the
Wastewater Treatment Facility are as of the Closing Date serviced
by two (2) 100-horsepower compressors (a main unit and a
redundant/back-up compressor) located at Building 3 on Seller's
property adjacent to the Facility. Until such time as Purchaser
obtains its own compressor(s), Purchaser and Seller shall share
in the cost to install a metering/usage station, and Purchaser
shall pay to Seller a fee of $.0038 per cfm for the compressed
air supplied to the Facility and the Wastewater Treatment
Facility.
7.2.3 Natural Gas Supply. In order to service
the North Addition and the Wastewater Treatment Facility,
Purchaser shall tie into the existing natural gas line supply at
the southeast corner of Unit 100. Until such time as the
foregoing improvements are completed, Purchaser and Seller shall
share equally in the cost to install meters from main Southern
California Gas Company gas main to monitor gas usage at the North
Addition and the Wastewater Treatment Facility. Purchaser shall
promptly reimburse Seller for the cost of all natural gas
consumed by the North Addition and the Wastewater Treatment
Facility.
7.2.4 Sanitary and Industrial Sewage Line
Isolation. The sanitary and industrial wastewater effluent from
the Facility, the Wastewater Treatment Facility and Seller's
other operations located on property adjacent to the Facility
will be commingled before reaching the nearest monitored sewer
outfall. Accordingly, Purchaser shall monitor, on a daily basis,
the volume and contaminant concentrations (metals, cyanide, pH)
in the wastewater discharged from the Wastewater Treatment
Facility and the North Addition. Copies of all monitoring
results shall be maintained by Purchaser at the Facility and
shall be made available to Seller upon Seller's request. If any
such sampling results indicate volume or contaminant levels in
excess of permitted levels, then such sampling results shall be
provided to Seller's Health, Safety and Environmental Engineering
Department within 48 hours of Purchaser's receipt of the sampling
results. Within eighty (80) days after the Closing, Purchaser
shall complete the design and construction of (i) a manhole and
wastewater monitoring station (the "Manhole") (to be located
between Wastewater Treatment Facility and the North Addition) in
order to monitor industrial wastewater discharges from the
Wastewater Treatment Facility and the North Addition, and (ii) a
sewer line from the Manhole to the nearest sanitary sewer line
and shall repair and restore the property to its pre-existing
condition (i.e., paving and fence replacement) (collectively, the
"Wastewater Sewer Work"). In the event and to the extent
Purchaser requests that Seller provide engineering, consulting,
construction or support services in connection with the
Wastewater Sewer Work, such services shall be provided as Plant
Engineering Services under the Transition Services Agreement.
Within 18 months after the Closing Date, Purchaser shall
construct such other improvements as are necessary to isolate and
prevent the commingling of the industrial wastewater effluent
from the Facility with any other industrial wastewater effluent
from Seller's activities located on property adjacent to the
Facility. To the extent said construction requires the placement
of sewer lines on Seller's retained property, Seller shall grant
reasonable easements to Purchaser to accommodate the same;
provided, however, that Seller may condition the granting of such
easements upon receiving adequate and reasonable protection for
itself and its property from any liabilities which may arise in
connection with said sewer lines or their construction,
operation, use and maintenance. Without limiting the protections
provided under Article 15 hereof, Seller and Purchaser shall
indemnify, defend and hold each other harmless from and against
any Losses (as hereinafter defined) related to the discharge of
wastewater after the Closing Date from their respective
facilities which are not in compliance with Environmental Laws.
As of the Closing Date, Seller shall transfer to Purchaser and
Newco, subject to the requirements of the cognizant governmental
agencies, one hundred forty (140) Sewer Capacity Units of
Seller's existing permit to discharge to the Los Angeles County's
sewer system. Should Purchaser desire or require additional
Sewer Capacity Units, it shall acquire them from the County of
Los Angeles at its sole cost and expense.
7.2.5 Domestic Water Supply. Purchaser shall tie
into the existing domestic water supply on the south side of Unit
100 in order to provide domestic water to the North Addition and
the Wastewater Treatment Facility. Until such time as the
foregoing improvements are completed, Purchaser and Seller shall
share in the cost to install water meters to the North Addition
and the Wastewater Treatment Facility. Purchaser shall promptly
reimburse Seller for the cost of all domestic water consumed by
the Facility and the Wastewater Treatment Facility.
7.3 Electrical Service. Purchaser and Seller shall
share equally in the cost to install meters on the existing
Southern California Edison electrical lines (P-Feed and L-Feed)
to monitor electrical usage and time of day demand at the
Facility and the Wastewater Treatment Facility. Purchaser shall
promptly reimburse Seller for the cost of all electricity
consumed by the Facility and the Wastewater Treatment Facility
and for a pro rata portion of the monthly maintenance fee charged
by Southern California Edison for maintenance of the electrical
substation located on Seller's adjacent property (the
"Substation"). Purchaser shall be responsible for maintaining,
repairing and replacing, as necessary, the L-Feed. Purchaser and
Seller shall share the cost, on a pro rata basis, of maintaining
and repairing the P-Feed. All pro rata calculations under this
subsection shall be based upon electrical usage and time of day
demand for the month during which the calculation is to be made.
Purchaser shall be disconnected from the Substation and be
responsible for obtaining electrical power directly from Southern
California Edison upon the earlier to occur of any of the
following:
(i) the expiration of one hundred twenty (120)
days after Seller gives written notice to Purchaser that it has
entered into an agreement to sell the land underlying the
Substation;
(ii) the expiration of one hundred twenty (120)
days after Seller gives written notice to Purchaser that it has
entered into an agreement to sell the land underlying any portion
of the electrical lines leading into or out of the Substation
unless the prospective purchaser is to purchase the subject
property subject to easements, in a form acceptable to Seller,
for said electrical lines;
(iii) the expiration of one hundred twenty (120)
days after the City of Torrance requires the relocation of the
substation or attached lines as a condition of the amending of
the Vested Tentative Tract Map;
(iv) the expiration of one hundred twenty (120)
days after Seller gives written notice to Purchaser that a
governmental agency is requiring that the Substation or the
electrical lines leading into or out of the Substation be
materially modified or improved so as to comply with the then
current law or code requirements;
(v) the expiration of one hundred twenty (120)
days after Seller gives written notice to Purchaser that Seller
has determined that it is in its best interest under its business
plans or development plans which include the relocation or
removal of the Substation; or
(vi) the expiration of sixty (60) months after the
Closing Date.
Notwithstanding anything else to the contrary contained in this
Agreement, in the event that the power, domestic water or fire
suppression water to the Facility, Wastewater Treatment Facility
or Seller's adjacent facilities are interrupted for any reason
whatsoever, including without limitation the failure of Seller or
Purchaser to maintain or repair the water lines, the P-Feed or
the L-Feed, but excluding, however, intentional misconduct
committed in bad faith by either party, Seller and Purchaser
shall not be liable to each other for any consequential damages
or lost profits, and Seller and Purchaser each hereby release and
waive any and all rights which either may have now or hereafter
acquire to recover the same. In the event power, domestic water
or fire suppression water to the Facility, the Wastewater
Treatment Facility or Seller's adjacent facilities will be
interrupted to perform scheduled maintenance or repairs to the
water lines, the P-Feed or the L-Feed, Seller and Purchaser shall
give each other not less than thirty (30) days prior written
notice of the scheduled interruption.
7.4 Storm Drain Modification. Purchaser and Seller
shall cooperate in the future to make any required modification
to the storm drain system servicing the Facility or the adjacent
property retained by Seller. Until such time as a drainage study
is prepared and any necessary improvements constructed, the
existing drainage flow shall be permitted to continue together
with any additional flow generated by the parking lot to be
constructed by Purchaser at the Facility. Without limiting the
protections provided under Article 15 hereof, Seller and
Purchaser shall indemnify, defend and hold each other harmless
from and against any Losses related to the discharge of storm
water from their respective facilities after the Closing Date
which are not in compliance with Environmental Laws.
7.5 Title Insurance and Survey.
7.5.1 As soon as practicable after the execution
of this Agreement, Seller shall furnish to Purchaser a
preliminary title report with respect to the Facility issued by a
Lawyers Title Insurance Company (the "Title Company"), which
shall provide for the issuance at Closing of an ALTA owner's
title insurance policy in the face amount as shall be agreed by
Purchaser and Seller as of the Closing Date (the "Title Policy").
The Title Policy shall show title to the Facility free and clear
of all exceptions other than the exceptions listed on Schedule
7.5 hereto (the "Permitted Exceptions"). Any additional
exceptions appearing subsequent to the execution of this
Agreement but prior to the Closing shall be subject to the
reasonable approval of Purchaser, and the schedule of Permitted
Exceptions (Schedule 7.5) shall be updated as of Closing to
reflect the same. All costs and expenses associated with the
transfer of title to the land underlying the Facility, including
without limitations all title insurance premiums for the Title
Policy, documentary transfer taxes, recording fees, etc. shall be
shared equally by Purchaser and Seller. Should Purchaser request
that the Title Company issue an ALTA Lender's Policy of title
insurance, Purchaser shall be solely responsible for all costs
and expenses, including title premiums, associated with the
issuance of said lender's policy.
7.5.2 As soon as practicable after the execution
of this Agreement, Seller will supply to Purchaser, an ALTA
survey of the Facility, sufficient to permit the Title Company to
issue an ALTA owner's title insurance policy. The cost of the
survey shall be shared equally by Purchaser and Seller.
7.6 Environmental Cleanup of the Facility.
7.6.1 With respect to any environmental
contamination or condition(s) related to the Facility or Assets
currently requiring investigation and/or remediation, as more
particularly described or identified at Schedule 7.6 hereto
("Cleanup Projects"), Seller covenants and agrees to implement
and complete the Cleanup Projects as and to the same extent
required by, and in accordance with, the then cognizant
governmental authorities and federal, state and local laws,
regulations, rules, directives and guidance ("Governmental
Authorities"). Seller shall have the exclusive right and
obligation to perform or cause its agents, consultants or
contractors to perform all work related to the Cleanup Projects,
including, without limitation, drafting investigation and/or
remediation plan(s), executing the plan(s), negotiating or
discussing with governmental representatives, and submitting
reports or notices in accordance with Governmental Authorities.
7.6.2 Seller shall be responsible for the costs,
expenses and liabilities related to the Cleanup Projects,
including without limitation, all cost of design, remediation,
construction, treatment, governmental permitting, oversight and
other work, analyses, operations and maintenance, projected
future costs and expenses, and any costs or liabilities related
to removal, treatment or disposal of substances or wastes arising
out of the Cleanup Projects, except to the extent such costs are
imposed due to the activities of Purchaser after the Closing
Date. Seller shall have the exclusive right and obligation to
negotiate, settle and/or contest any penalties or fines related
to Governmental Authorities and the Cleanup Projects, and Seller
is solely responsible for such penalties or fines. Without
limiting Seller's obligations to Purchaser hereunder, Seller
shall have the right to contest and/or challenge the
requirements, directives or guidance sought or imposed by
Governmental Authorities related to the Cleanup Projects. Should
any Cleanup Projects involve or potentially involve a materially
adverse impact on the use or value of, or title to, the Facility
or Assets, or the listing thereof on any site registry or other
listing or registry maintained by or in accordance with any
Governmental Authority, Seller shall promptly advise Purchaser of
same and Purchaser has the option to reasonably participate in
any such Cleanup Projects and any proceedings, discussions or
negotiations related thereto, all at Purchaser's sole cost and
expense.
7.6.3 The Cleanup Projects shall be undertaken
promptly by Seller and shall be concluded expeditiously using
commercially reasonable efforts, subject to the schedules and
approvals required by the applicable Governmental Authorities.
Purchaser is free to retain, at its sole cost and expense, and at
its sole election, experts or advisors with respect to the
Cleanup Projects. Seller shall transmit to Purchaser copies of
any reports, data or other information or documentation arising
from or related to the Cleanup Projects which are submitted to
any Governmental Authorities. Purchaser shall provide Seller,
its agents, consultants, or contractors, with reasonable access
to those areas of the Facility or Assets so as to allow for the
performance of Seller's obligations hereunder, upon reasonable
notice to Purchaser, and Seller shall use reasonable efforts to
conduct the Cleanup Projects in a manner which shall, to the
extent reasonably practicable, minimize interference with
Purchaser's use of the Facility or Assets. Seller's agents,
consultants or contractors shall have insurance coverage in
amounts reasonably satisfactory to Seller and Purchaser under
relevant facts and circumstances, and shall provide certificates
or other proof of such insurance coverages to Purchaser and name
Purchaser and its lenders as an additionally insured party
thereto, upon the request of Purchaser. Purchaser shall provide
Seller with any site specific information necessary to comply
with OSHA requirements as related to Seller's access to areas of
the Facility or Assets and Seller shall be responsible for
transmitting said information to its contractors, agents and
consultants.
7.6.4 Seller shall defend, indemnify and hold
harmless Purchaser and Newco and Purchaser's and Newco's
respective directors, shareholders, officers, employees, agents,
affiliates and their respective successors and assigns from and
against any and all claims, liabilities, obligations, losses,
costs, expenses (including, without limitation, reasonable legal,
accounting, and similar expenses), fines or damages, arising out
of the Cleanup Projects and Seller's obligations under this
Section 7.6 except to the extent arising out of the acts or
omissions of Purchaser. Should Purchaser seek indemnification
hereunder, Purchaser shall notify Seller for such indemnification
in writing of any event, omission or occurrence which Purchaser
has determined has given or could give rise to losses which are
indemnifiable hereunder. Seller and Purchaser agree that those
indemnification procedures set forth in Section 15.3(a), 15.3(b)
and 15.3(c) hereof shall be applicable to indemnification under
this Section 7.6 hereof.
7.6.5 Seller's obligations under this Section 7.6
hereof are in addition to and without limiting in any way the
obligations of Seller arising out of or related to Section 15.1
hereof. With respect to any environmental contamination or
condition(s) discovered in the future for which Seller has
provided to Purchaser or Newco an indemnification obligation
under Section 15.1 hereof, Seller covenants and agrees to
implement and complete the investigation and/or remediation to
the same extent, in the same manner, and with the same
obligations to Purchaser, as required by this Section 7.6.
7.7 Vested Tentative Tract Map. Seller has filed
with the City of Torrance Vested Tentative Tract Map No. 50593
(the "Tract Map"). As of execution of this Agreement, the land
underlying the Facility is included in the Tract Map. Seller
shall amend the Tract Map so that the land to be conveyed to
Purchaser hereunder is not included within the boundaries of the
amended Tract Map. A preliminary, draft copy of the amended
Tract Map is attached as Schedule 7.7. Purchaser agrees to
reimburse Seller for a portion of the costs incurred to construct
the roadway and cul-de-sac described on the amended Tract Map;
the reimbursed portion of said costs shall be equal to Seller's
total costs to construct the roadway and cul-de-sacs providing
access to Western Avenue (the roadway and cul-de-sac are
collectively referred to as the "Roadway") multiplied by a
fraction, the numerator of which is the square footage of the
roadway and cul-de-sac lying on the land conveyed to Purchaser
hereunder and the denominator of which is the total square
footage of the Roadway. At such time as Seller records the
amended Tract Map as a final tract map, Seller and Purchaser
shall cooperate to obtain the approval of the appropriate
governmental authorities for an appropriate lot line adjustment
to accommodate the reconveyance to Seller of the land identified
on Schedule 7.7 as Parcel 4A (the "Reconveyance Piece") and
Purchaser shall reconvey to Seller the Reconveyance Piece. The
reconveyance price shall be equal to the purchase price for the
land underlying the Facility, as listed in Schedule 2.4,
multiplied by a fraction, the numerator of which is the square
footage of the Reconveyance Piece and the denominator of which is
the total square footage of the land conveyed to Purchaser under
this Agreement.
ARTICLE 8. TRANSITION SERVICES AGREEMENT
8.1 Transition Services Agreement. On the Closing
Date, Seller, Purchaser and Newco shall execute the Transition
Services Agreement attached hereto as Exhibit L pursuant to which
Purchaser shall prepay at Closing the amount of Seven Million
($7,000,000) Dollars for various services to be provided by
Seller to Purchaser and Newco with respect to the Business.
ARTICLE 9. PRE-CLOSING COVENANTS
9.1 Conduct of Business. From the date of this
Agreement to the Closing Date, except as Purchaser may otherwise
consent to in writing, Seller shall not engage in any activity or
enter into any transaction with respect to the Business outside
the ordinary and usual course of the Business consistent with
past practice or which would be inconsistent with the terms of
this Agreement or which would render inaccurate as of the Closing
Date any of the representations and warranties set forth in
Article 4 as if such representations and warranties were made at
and as of the Closing Date. Without limiting the generality of
the foregoing, Seller shall not:
(a) undergo any material adverse change in the
financial condition, properties, assets, liabilities or
operations of the Business except changes in the usual and
ordinary course of the Business and consistent with past practice
and which are not, either in any case or in the aggregate,
materially adverse to it;
(b) mortgage, pledge or subject to any lien,
lease, security interest, encumbrance or other restriction, any
of the Assets except in the ordinary course of the Business;
(c) acquire or dispose of any material interest
in any asset or property exclusively relating to the Business
except the purchase of materials and supplies and the sale of
inventory in the ordinary and usual course of the Business
consistent with past practice;
(d) forgive or cancel any debt or claim of the
Business, waive any material right of the Business, or, except in
the ordinary and usual course of the Business and consistent with
past practice, incur or pay any liability or obligation of the
Business;
(e) adopt or amend any profit sharing plan,
agreement, arrangement, policy or practice for the benefit of any
employee of the Business or change the compensation or benefits
of any employee of the Business;
(f) suffer any damage, destruction or loss
(whether or not covered by insurance) which materially adversely
affects the financial condition, properties, assets or operations
of the Business;
(g) materially amend or terminate any Contract;
(h) enter into any collective bargaining
agreement which affects the Business;
(i) sell or grant or transfer to any party or
parties any license, or grant an option to acquire a license, to
manufacture or sell any of the products of the Business, or to
license any intellectual property used exclusively in the
Business; or
(j) without the limiting the generality of the
foregoing, enter into any material transaction except in the
ordinary and usual course of the Business and consistent with
past practice.
9.2 Audit. Prior to the Closing, Seller shall engage
Price Waterhouse to prepare audited financial statements of the
Business for fiscal years ending December 31, 1992 and 1993.
Seller agrees to engage Price Waterhouse to prepare up to three
(3) consents required by Purchaser to utilize Price Waterhouse's
reports on the aforementioned financial statements in future
periods for inclusion in Purchaser's SEC filing requirements for
its next three fiscal years. Seller will pay the actual cost
that Price Waterhouse bills for such services. Purchaser will
reimburse Seller $210,000.00 for these services upon delivery of
the final 1992 and 1993 financial statements including an
unqualified auditor's report thereon. The financial statements
and auditor's report must be of form and content satisfactory to
the SEC.
9.3 Access to Records and Properties. (a) From the
date hereof until the Closing Date or earlier termination of this
Agreement, Seller will:
(i) provide Purchaser, its officers, counsel and
other representatives with reasonable access to the Assets, the
principal personnel and representatives of the Business, and such
books and records pertaining to the Business as Purchaser may
reasonably request, during Seller's regular business hours,
provided that Purchaser has provided Seller with reasonable prior
notice, and provided further that Purchaser agrees that such
access will be requested and exercised with due regard to
minimizing interference with the operations of the Business;
(ii) furnish to Purchaser or its representatives
such additional financial and operating data and other
information relating to the Business as may be reasonably
requested, to the extent that such access and disclosure would
not violate the terms of any agreement to which Seller is bound
or any applicable law or regulation; and
(iii) make available to Purchaser for inspection
and review all documents, or copies thereof, listed in the
Schedules hereto, and all files, records and papers of any and
all proceedings and matters listed in the Schedules hereto,
except to the extent prohibited or restricted by law, regulation,
contract with a third party or where the documents are subject to
the attorney-client or work product privilege.
9.4 Public Announcements. On and after the date hereof
and through the Closing Date, neither of the parties shall issue
any press release or make any public statement regarding the
transactions contemplated by this Agreement prior to obtaining
the other party's approval, which approval shall not be
unreasonably withheld, except that no such approval shall be
necessary to the extent that in the opinion of counsel to the
party proposing to make such disclosure, disclosures are required
by law or any listing agreement of either party hereto. Such
opinion of counsel shall be confirmed in writing and promptly
delivered to the other party. The parties may disclose
information with respect to the transactions contemplated hereby
to their employees, agents and consultants only to the extent
such persons have a need to know and agree to be bound by the
terms hereof relative to the disclosure of such information.
9.5 Final Property List. On or before the Closing
Date, Seller will deliver to Purchaser a revised Schedule 1.2(a)
(the "Final Property List") which shall include such additional
Personal Property specifically identified by Seller since the
submission of the Preliminary Property List. The Final Property
List shall replace the Preliminary Property List as Schedule
1.2(a) hereto.
9.6 Pre-Closing Discoveries. If, prior to the
Closing, either party discovers that any representation or
warranty made by it or the other party has been breached or is
inaccurate, such discovering party will give prompt notice
thereof to the other party.
9.7 The Stock. Prior to the Closing, Seller shall not
sell, transfer, pledge or grant a security interest in or
otherwise dispose of or encumber any of the Stock.
ARTICLE 10. CLOSING
10.1 Closing Date and Place. The consummation of the
purchase and sale of the Stock contemplated hereby (the
"Closing") will take place at the offices of Seller in Torrance,
California at 8 a.m. PST on June 10, 1994 or on such other date
and time as may be mutually agreed upon by the parties in writing
and shall be deemed to be effective at 11:59 p.m. on the Closing
Date (the "Effective Time"). The date upon which the Closing
occurs is referred to herein as the "Closing Date".
ARTICLE 11. CONDITIONS TO CLOSING
11.1 Conditions to the Obligations of Purchaser. The
obligations of Purchaser under this Agreement are subject to the
fulfillment prior to or at the Closing of each of the following
conditions, any one or more of which may be waived in writing by
Purchaser in its sole discretion:
(a) No injunction or restraining order shall be
in effect to forbid or enjoin, and no suit, action or proceeding
shall be pending or threatened to prohibit, nullify or otherwise
adversely affect the consummation of the transactions
contemplated by this Agreement or Purchaser's ownership, use or
enjoyment of the Business or any part thereof.
(b) The representations and warranties of Seller
contained in this Agreement or the Ancillary Agreements delivered
to Purchaser pursuant hereto shall be complete, true and correct
in all material respects on the Closing Date, with the same force
and effect as though such representations and warranties had been
made on and as of the Closing Date.
(c) Seller shall have performed, in all material
respects, all of its covenants, obligations and agreements
contained in this Agreement and the Ancillary Agreements to be
performed and complied with by it prior to the Closing Date.
(d) Purchaser shall have received all
certificates, instruments, agreements, and other documents to be
delivered by Seller on or before the Closing Date pursuant to
this Agreement including the Final Property List in form and
substance satisfactory to Purchaser.
(e) Purchaser shall have closed its financing
transactions with its lenders and thereby obtained the proceeds
necessary to pay the Purchase Price.
(f) There shall have been, in the good faith
judgment of Purchaser, no material adverse change in the
business, properties, operations, financial condition, earnings
or contractual or business relationships with third parties of
the Business since the date of this Agreement.
(g) The Assets shall have been transferred from
Seller to Newco in accordance with Article 1 of this Agreement.
11.2 Conditions to the Obligations of Seller. The
obligations of Seller under this Agreement are subject to the
fulfillment, prior to the Closing, of each of the following
conditions, any one or more of which may be waived in writing by
Seller in its sole discretion:
(a) No injunction or restraining order shall be
in effect to forbid or enjoin, and no suit, action or proceeding
shall be pending or threatened to prohibit, nullify or otherwise
adversely affect, the consummation of the transactions
contemplated by this Agreement.
(b) The representations and warranties of
Purchaser contained in this Agreement or the Ancillary Agreements
delivered to Seller pursuant hereto shall in all material
respects be complete, true and correct on the Closing Date, as
updated through the Closing Date with the same force and effect
as though such representations and warranties, as updated, had
been made on and as of the Closing Date.
(c) Purchaser shall have performed, in all
material respects, all of its covenants, obligations and
agreements contained in this Agreement to be performed and
complied with by the Closing Date.
(d) Seller shall have received all certificates,
instruments, agreements and other documents to be delivered by
Purchaser on or before the Closing Date pursuant to this
Agreement.
ARTICLE 12. TERMINATION
12.1 Termination. Seller and Purchaser shall use
commercially reasonable efforts to bring about the satisfaction
of the conditions hereunder prior to and at Closing.
Notwithstanding anything to the contrary set forth herein, this
Agreement may be terminated and the transactions contemplated
hereby abandoned at any time prior to the Closing:
(a) by mutual written consent of Purchaser and
Seller; or
(b) by Purchaser or Seller, upon written notice
to the other, if such other party or its affiliate has breached
any material representation, warranty or covenant contained in
this Agreement in any material respect, if the non-breaching
party has notified the breaching party of the breach in writing
and the breach has continued without cure for a period of thirty
(30) days after notice of the breach; or
(c) by Purchaser or Seller, if any order to
restrain, enjoin or otherwise prevent a consummation of the
Agreement or the transactions contemplated hereby shall have been
entered or, on the Closing Date, there is any pending or
threatened litigation in any court, or any proceeding by or
before any governmental body, with a view to seeking to restrain
or prohibit consummation of this Agreement or in which damages
are sought in connection with this Agreement or if any
investigation by any governmental body is pending or threatened
which might result in any such litigation or other proceeding; or
(d) by Purchaser or Seller if the Closing has not
occurred by July 15, 1994.
12.2 Effect of Termination. If this Agreement is
terminated pursuant to Section 12.1, this Agreement shall become
void and of no further force and effect, and none of the parties
hereto (nor their respective affiliates, directors, shareholders,
officers, employees, agents, consultants, attorneys-in-fact or
other representatives) shall have any liability in respect of
such termination; provided, however, that if such termination is
effected pursuant to Section 12.1(b) and the failure to
consummate the transactions contemplated hereby was the result of
any of the conditions to Closing having not been fulfilled by
reason of the breach by any of the parties of its covenants,
representations and/or warranties set forth in this Agreement or
in any agreement, document or instrument ancillary hereto, the
party having so breached shall remain liable to the other parties
for all costs and expenses incurred by such other parties in
connection with the negotiation and execution of this Agreement,
including, but not limited to, reasonable attorneys' fees.
ARTICLE 13. CLOSING DOCUMENTS
13.1 Documents To Be Delivered By Seller. At the
Closing, Seller shall deliver to Purchaser the following
documents:
(a) copies of resolutions of Seller and Newco, in
each case, certified by a Secretary, Assistant Secretary or other
appropriate officer of the corporation, authorizing the
execution, delivery and performance of this Agreement and the
transactions contemplated hereby;
(b) the certificate or certificates evidencing
the Stock duly endorsed for transfer or with executed stock
powers attached and the minute book and stock transfer book of
Newco;
(c) the Bill of Transfer to Newco;
(d) the Assignment Agreement to Newco;
(e) the Deed to Newco;
(f) the Patent Assignment to Newco and Purchaser;
(g) One executed assumption of liability
agreement in the form of Exhibit M hereto, by which Purchaser
will assume the Assumed Liabilities pursuant to Section 3.1 (the
"Assumption of Liability Agreement");
(h) the Patent License Agreement to Newco and
Purchaser;
(i) a certificate of an appropriate officer of
Seller in the form of Exhibit N hereto relating to the
representations, warranties and covenants of Seller made herein
as provided in Section 11.1(b) and (c);
(j) all easements and licenses referred to in
Section 7.1; and
(k) any other document reasonably necessary to
effectuate the transactions contemplated hereby.
13.2 Documents To Be Delivered By Purchaser. At the
Closing, Purchaser shall pay the Purchase Price to Seller by wire
transfer and shall execute where applicable and deliver to Seller
the following documents:
(a) copies of resolutions of the Purchaser,
certified by the Secretary or Assistant Secretary of Purchaser,
authorizing the execution, delivery and performance of this
Agreement and the transactions contemplated hereby;
(b) the Assumption of Liability Agreement;
(c) a certificate of an appropriate officer of
Purchaser in the form of Exhibit O hereto relating to the
representations, warranties and covenants made herein by
Purchaser, as provided in Sections 11.2(b) and (c);
(d) the Patent License Agreement to Seller; and
(e) any other document reasonably necessary to
effectuate the transactions contemplated hereby.
ARTICLE 14. POST CLOSING OBLIGATIONS
14.1 Further Assurances. From time to time after the
Closing, without further consideration, the parties shall
cooperate with each other and shall execute and deliver
instruments of transfer or assignment, or such other documents to
the other parties as may be reasonably requested to evidence or
perfect Newco's right, title and interest to the Assets or
Purchaser's right, title and interest to the Stock, and otherwise
carry out the transactions contemplated by this Agreement.
14.2 Access to Books and Records. After the Closing,
Purchaser and Seller shall each permit the other to have access
to and the right to make copies of such of books, records and
files in its possession relating to the Business for any
reasonable purpose at any time during regular business hours,
such as for use in contract administration, engineering,
production or design, litigation or financial reporting, tax
return preparation, or tax compliance matters. Prior to
disposing of or destroying any such information or records, each
party shall afford the other a reasonable opportunity to
segregate, remove or copy such books, records and files as such
other party may select.
14.3 Cooperation in Litigation. The parties shall
reasonably cooperate with each other at the requesting party's
expense in the prosecution or defense of any litigation or other
proceeding arising from their respective operation of the
Business.
14.4 Covenant Not To Compete. Seller covenants that,
for a period of five (5) years after the Closing Date, neither it
nor any affiliate, as hereinafter defined, directly or
indirectly, shall enter into, engage in, represent, furnish
consultant services to, have any interest in or acquire control
of more than a 10% interest, in any business engaged in the
manufacture and sale of any mechanical/hydromechanical and
hydraulic actuators or actuation systems for aircraft flight
controls or aircraft utility applications of the types currently
manufactured or in development by ASE, or their derivatives,
including but not limited to those products set forth in Schedule
1.1. For purposes of this Section 14.4, affiliate shall mean any
entity which controls Seller, is controlled by Seller or is under
common control with Seller.
(a) For purposes of clarification but not in
limitation of the above, Schedule 14.4(a) provides examples of
products covered by the covenant not to compete as well as
products not covered by such covenant. Such chart is not
intended to be exhaustive but to provide representative examples
of products covered and not covered by such covenant.
(b) If Seller acquires control of any business
having operations, a significant portion of which sells or
manufactures for customers during such five (5) year period
products of the type or substantially similar to the type
manufactured or sold by the Business to its customers during such
period, Seller shall not be in violation of this Section 14.4 if
Seller divests such operations which sell or manufacture such
products as promptly as practicable and in any event no later
than 15 months following such acquisition. For the purposes of
this Section 14.4 the term "significant portion" of a business
shall mean an amount equal to more than 20% of such business'
total sales for its last fiscal year. In no event, however, will
Seller, whether itself or through the acquired business, compete
with respect to Seller's product line sold to Purchaser during
such five-year period.
(c) Notwithstanding anything set forth in this
Section 14.4, Seller is not prohibited from acquiring shares of
capital stock, partnership or other equity interests in any
entity as investments of Seller's pension funds or funds of any
other employee benefit plan whether or not such entity is engaged
in a business similar to the Business, provided that such
interests are acquired and held for investment purposes only.
(d) Seller acknowledges that (i) the restrictions
contained in this Section 14.4 are necessary, fundamental and
required for the protection of the Business, and (ii) a remedy at
law for any breach by Seller of the provisions of this Section
14.4 will be inadequate and that any breach or threatened breach
of these provisions will cause irreparable injury to Purchaser.
Seller hereby agrees that Purchaser shall be entitled to
injunctive relief in case of any breach or threatened breach,
without limiting any other relief to which Purchaser may be
entitled at law or equity or under this Agreement or otherwise,
and Seller expressly waives, to the fullest extent permitted by
law, the posting of any bond or security that might otherwise be
required in connection therewith by Purchaser.
(e) Purchaser's rights under this Section 14.4
shall be assignable by Purchaser to its lenders and any party
acquiring Purchaser through such lenders.
14.5 Assignments and Novations. If requested by
Purchaser, Seller will undertake all commercially reasonable
steps to cause the assignment or novation of any Contract.
14.6 Interim Use of Seller's Trademark or Trade Names
Garrett, AiResearch, Bendix, Electrodynamics, Actuation Systems
and AlliedSignal.
(a) Trade Name and Trademark Use on Products and
Product Packaging. Purchaser and Newco shall have the right to
continue to use the trade names AlliedSignal or the trademark
AlliedSignal, or the AlliedSignal mark (i) on inventory existing
on the Closing Date until the depletion of such inventory,
(ii) on packaging materials existing on the Closing Date until
the depletion of such inventory, (iii) on molds and tooling
existing on the Closing Date for a period of twelve (12) months
after the Closing Date, and (iv) on inventory manufactured by
Purchaser within a period of eighteen (18) months after the
Closing Date using the molds and tooling referred to in item
(iii) above, until the depletion of such inventory to the extent
that such trademarks are generated by existing molds and tooling
(but not nameplate making equipment where imprinting of such
trademarks shall cease within six (6) months). Notwithstanding
the foregoing, Purchaser and Newco may continue to use Seller's
nameplates with respect to the Contracts until such Contracts are
novated.
(b) Trade Name and Trademark Use on Sales Aids
and Literature. Purchaser shall delete or obliterate all use of
the word AlliedSignal as either a trademark or trade name and all
use of the AlliedSignal mark or other confusingly similar trade
identification from all sales literature within a reasonable
period after the Closing Date, but in no event later than six (6)
months after the Closing Date. Purchaser and Newco shall have
the right in such sales literature to indicate that they are
conducting the Business as successor to Seller.
(c) Trade Name, Trademark and Wordmark Use in
Trade Identification. Purchaser shall cease using and destroy
(or return to Seller) within a reasonable time not to exceed six
(6) months after the Closing Date (1) all documents (including
but not
limited to letterhead, envelopes, business cards, standard
business forms, invoices and purchase orders) bearing the trade
name AlliedSignal or the trademark AlliedSignal; and (2) all
trade signs at facilities or on vehicles that include the
wordmark AlliedSignal or the trademark AlliedSignal.
(d) Trade Names and Trademark Use on Drawings.
Purchaser shall delete or obliterate all reference to the trade
names Bendix, Garrett, AlliedSignal, AiResearch, Actuation
Systems, and Electrodynamics or the trademarks Bendix, Garrett,
AlliedSignal, AiResearch, Actuation Systems, and Electrodynamics
or the AlliedSignal mark within a reasonable time not to exceed
eighteen (18) months on all drawings still in active use within
the Business.
(e) Trade Name and Trademark Use in General.
Except as specifically provided in paragraph (a), (b), (c) and
(d) above, Purchaser shall not have any other rights to use the
trade names Bendix, Garrett, AlliedSignal, AiResearch, Actuation
Systems and Electrodynamics or the trademarks Bendix, Garrett,
AlliedSignal, AiResearch, Actuation Systems and Electrodynamics
or the AlliedSignal mark or any confusingly similar trade
identification or trademark.
14.7 Confidentiality. Seller and Purchaser acknowledge
that, after the Closing, Seller may continue to have access to
certain proprietary information relating to the Business
including, but not limited to, the Intellectual Property. After
the Closing, Seller shall maintain the confidentiality of any
proprietary information relating to the Business including, but
not limited to, the Intellectual Property and, except as
otherwise specifically permitted by this Agreement and the Patent
License Agreements, Seller will not, directly or indirectly,
disclose to others or permit such disclosure unless required to
make such disclosure by law, regulation or order, or make use of
or permit the use of, for its own benefit or the benefit of
others, any proprietary information of the Business.
14.8 Intellectual Property. Promptly after the
Closing, Seller and Purchaser shall determine that portion of the
Intellectual Property consisting of processes, products,
apparatus, formulas, trade secrets, know-how, discoveries,
inventions (including conceptions of inventions), and design,
manufacturing, engineering and other technical information which
is (a) used exclusively in the Business and (b) applicable to
both the Business and Seller's product lines other than the
Business. Seller and Purchaser shall thereupon take all
appropriate steps to put Purchaser or Newco in exclusive
possession and control of the materials identified in clause
"(a)" of this Section 14.8 and to enter into an agreement
providing for the delivery or license to Purchaser of the
materials identified in clause "(b)".
14.9 Software. With respect to the software referenced
in Section 1.2(a), Seller, Purchaser and Newco agree to the
following:
(a) All software resident on desktop computing
equipment or peripherals included in the Assets will be
transferred to Newco on the Transfer Date. If after the Closing
any licensor of such software shall make a claim for infringement
with respect to such software, Seller shall be responsible for
that portion of such claim which relates to periods prior to the
Effective Time and Newco shall be responsible for that portion of
such claim which relates to periods after the Effective Time.
(b) During such time as computer services are
provided under the Transition Services Agreement, Seller will
provide Purchaser and Newco with continuing use of all software
relating to the Business.
(c) If at any time within twelve (12) months
after the Closing Date, Purchaser or Newco identifies any
software which is required for Purchaser's or Newco's operation
of the Business, and Seller has not theretofore transferred to
Newco or Purchaser valid title to, or a valid license to use,
such software, then Seller will:
(i) if Seller owns such software, deliver to
Purchaser a copy of the source code to such software together
with the perpetual, unrestricted right to use and modify the
same; or
(ii) if Seller does not own the software,
reimburse Purchaser or Newco for the cost of acquiring a license
to use such software; provided, however, that Seller's obligation
under this clause (ii) shall not exceed $150,000.00 in the
aggregate.
ARTICLE 15. INDEMNIFICATION
15.1 Indemnification by Seller. Seller shall defend,
indemnify and hold harmless Purchaser and Newco and their
respective directors, shareholders, officers, employees, agents,
affiliates, and their respective successors and assigns from and
against any and all claims, liabilities, obligations, losses,
costs, expenses (including, without limitation, reasonable legal,
accounting and similar expenses), fines, damages (individually a
"Loss" and collectively "Losses"), arising out of:
(a) a breach or violation by Seller of any of the
provisions of this Agreement or any agreement, certificate or
instrument or similar documents delivered pursuant hereto;
(b) any breach of, or any inaccuracy or
misrepresentation in, any of the representations or warranties
made by Seller in this Agreement or in any Schedule, agreement,
instrument, certificate or similar document required to be
delivered pursuant to the terms hereof;
(c) any liability of Seller or Newco not
specifically included in the Assumed Liabilities;
(d) the violation or alleged violation of or
noncompliance with any Environmental Laws by the Business or in
any way involving the Assets on or prior to the Closing Date; the
release or threatened release of any Hazardous Substances into
the air, soil, sediments, subsurface strata, groundwater or
surface water at or beneath or from the Facility, the Wastewater
Treatment Facility or the Shared Parking Area to the extent
caused by or contributed to by Seller, the Business, the Assets,
Newco or Seller's operation thereof (or Seller's agents,
representatives or contractors) on or prior to the Closing Date;
or the treatment, disposal, storage at any location other than
the Facility, generation, refining, manufacture, transportation
to any location other than the Facility, production,
investigation, remediation, removal or processing of Hazardous
Substances by the Business, the Assets, Newco or Seller's
operation thereof (or Seller's agents, representatives or
contractors thereof) on or prior to the Closing Date;
(e) any Hazardous Substances existing as of the
Closing Date in the soil, sediments, subsurface strata, surface
water or groundwater at or beneath the Facility to the extent
caused by the operations of the gasoline station or certain
underground storage tanks thereat, which were formerly located at
the southeast corner of the Facility; provided, however, that the
foregoing indemnification shall apply and be effective only to
the extent that the Carson Estate Company, or any of its
successors or assigns, fails to fulfill its indemnification,
contribution, investigation or remediation obligations under law
or under that certain Agreement for Exchange of Real Property and
Joint Escrow Instructions, dated December 29, 1986, and the First
Amendment thereto, dated September 29, 1987, and then, only if
Purchaser receives an order or demand from a third party to
investigate or remediate contamination allegedly resulting from
operations at the former gasoline station;
(f) any Hazardous Substances existing as of the
Closing Date in the groundwater beneath the Facility to the
extent caused by the operations of any third party; provided,
however, that the foregoing indemnification shall apply and be
effective only to the extent that such third party, or any of its
successors or assigns, fails to fulfill its indemnification,
contribution, investigation or remediation obligations under law,
and then, only if Purchaser receives an order or demand to
investigate or remediate contamination allegedly resulting from
such third parties' activities. The indemnification provided
above shall not cover or apply to Losses or causes of action
related to diminution in value of the Facility or the real
property lying thereunder based upon the presence or existence of
Hazardous Substances at or beneath the Facility. Subject to the
limitation contained in the preceding sentence, any Losses
indemnifiable under this subsection (f) shall be shared by Seller
and Purchaser according to the following formula:
Settlement/ Share
Investigation/ Share to to
Legal Fees Remediation Costs Purchaser Seller
$0 to $500,000 $0 to $500,000 50% 50%
$500,001 to $1,000,000 $500,001 to $1,000,000 25% 75%
above $ 1,000,000 above $ 1,000,000 0% 100%
(g) any matter arising out of the conduct of the
Business or Newco prior to the Closing Date not specifically
included in the Assumed Liabilities or otherwise specifically
assumed by Purchaser pursuant to this Agreement or any Ancillary
Agreement;
(h) any taxes (including any net income,
alternative or add-on minimum tax, gross income, gross receipt,
sales, use, ad valorem, franchise, profits, license, withholding,
payroll, employment, excise, severance, stamp, occupation,
premium, property or windfall profit tax, customs duty, value
added or other tax, governmental fee or other like assessment or
charge of any kind whatsoever, together with any interest and any
penalty, addition to tax or additional amount imposed by any
governmental authority responsible for the imposition of any such
tax (domestic or foreign) ("Tax" or "Taxes") arising from (i) any
time period prior to the Effective Time, other than sales, use or
transfer taxes arising out of the transfer of assets to Newco
pursuant to Section 1.2 hereof, the transfer of Newco to
Purchaser and any subsequent liquidation of Newco; (ii) Newco
having been a member of the Seller's consolidated group for
federal income tax purposes or having joined in a consolidated or
combined state franchise or income tax return; or (iii) the
making of the Section 338(h)(10) election; or
(i) Seller shall defend, indemnify and hold
harmless Purchaser and Newco, each fiduciary of Purchaser's or
Newco's employee benefit plans, policies and arrangements, each
of Purchaser's and Newco's shareholders, directors, officers,
employees, agents, consultants, representatives, affiliates,
successors and assigns from and against each and every claim,
liability, obligation, loss, damages, cost and expense
(including, without limitation, interest, penalties, taxes, costs
of preparation and investigation, and the reasonable fee and
expenses of attorneys, accountants, and other professional
advisors) directly or indirectly relating to, resulting from or
arising out of any of Seller's Benefit Plans, except for (i)
matters specifically assumed by Purchaser or Newco under Article
6 of this Agreement or (ii) matters arising out of the conduct of
Purchaser or Newco after the Closing.
15.2 Indemnification by Purchaser and Newco. Purchaser
and Newco shall indemnify and hold harmless Seller and Seller's
directors, shareholders, officers, employees, agents,
representatives, affiliates, successors and assigns from and
against any and all Losses arising out of:
(a) any breach or violation by Purchaser or Newco
of any of the provisions of this Agreement or any agreement,
certificate or similar document delivered pursuant hereto;
(b) any breach of, or any inaccuracy in any of
the representations or warranties made by Purchaser in this
Agreement, or in any Schedule, agreement, certificate, instrument
or similar documents required to be delivered pursuant to the
terms hereof;
(c) any Assumed Liability;
(d) third party claims or allegations related to
the violation or alleged violation of or noncompliance with any
Environmental Laws by the Business or in any way involving the
Assets after the Closing Date; the release or threatened release
of any Hazardous Substances into the air, soil, sediments,
subsurface strata, groundwater or surface water at or beneath the
Facility, the Wastewater Treatment Facility or the Shared Parking
Area to the extent caused by or contributed to by Purchaser (or
its agents, representatives or contractors), the Business or the
Assets and affecting or impacting the Assets, the Wastewater
Treatment Facility or the Shared Parking Area after the Closing
Date; or the treatment, disposal, storage, generation, refining,
manufacture, transportation, production, investigation,
remediation, removal or processing of Hazardous Substances by the
Business, the Assets or Purchaser's operation thereof (or their
agents, representatives or contractors) after the Closing Date;
and
(e) any matter arising out of the conduct of the
Business after the Closing Date, unless specifically retained by
Seller pursuant to this Agreement or any Ancillary Agreement.
15.3 Indemnification Procedure.
(a) Any party seeking indemnification hereunder
(the "Indemnitee") shall notify the party liable for such
indemnification (the "Indemnitor") in writing of any event,
omission or occurrence which the Indemnitee has determined has
given or could give rise to Losses which are indemnifiable
hereunder (such written notice being hereinafter referred to as a
"Notice of Claim"). Any Notice of Claim shall be given promptly
after the Indemnitee becomes aware of such claim; provided, that
the failure of any Indemnitee to give notice as provided in this
Section 15.3 shall not relieve the Indemnitor of its obligations
under this Section 15.3, except to the extent that the Indemnitor
is actually prejudiced by such failure to give notice. A Notice
of Claim shall specify in reasonable detail the nature and any
particulars of the event, omission or occurrence giving rise to a
right of indemnification. The Indemnitor shall satisfy its
obligations hereunder, within thirty (30) days of its receipt of
a Notice of Claim; provided, however, that so long as the
Indemnitor is in good faith defending a claim pursuant to
Paragraph (b) below, its obligation to indemnify the Indemnitee
with respect thereto shall be suspended.
(b) Except as provided in Section 15.3(c) below,
with respect to any third party claim, demand, suit, action or
proceeding which is the subject of a Notice of Claim, the
Indemnitor shall, in good faith and at its own expense, defend,
contest or otherwise protect against any such claim, demand,
suit, action or proceeding with legal counsel of its own
selection. The Indemnitee shall have the right, but not the
obligation, to participate, at its own expense, in the defense
thereof through counsel of its own choice and shall have the
right, but not the obligation, to assert any and all crossclaims
or counterclaims it may have. So long as the Indemnitor is
defending in good faith any such third party claim, demand, suit,
action or proceeding, the Indemnitee shall at all times
cooperate, at its own expense, in all reasonable ways with, make
its relevant files and records available for inspection and
copying by, and make its employees available or otherwise render
reasonable assistance to, the Indemnitor. In the event that the
Indemnitor fails to timely defend, contest or otherwise protect
against any such third party claim, demand, suit, action or
proceeding, the Indemnitee shall have the right, but not the
obligation, to defend, contest, assert crossclaims or
counterclaims, or otherwise protect against, the same and may
make any compromise or settlement thereof and be entitled to all
amounts paid as a result of such third party claim, demand, suit
or action or any compromise or settlement thereof. Any
compromise of asserted liability by the Indemnitor shall require
the prior written consent of Indemnitee.
(c) This indemnity is conditioned on and subject
to Indemnitee giving its full cooperation in complying with any
applicable foreign, federal, state or local laws, rules or
regulations or any discovery or testimony necessary to
effectively carry out Indemnitor's obligations hereunder.
15.4 Survival and Limitations. The warranties and
representations of the parties contained in this Agreement or in
any Ancillary Agreement will survive the Closing and will remain
in full force and effect thereafter for a period of two (2) years
from the Closing Date and shall be effective with respect to any
inaccuracy therein or breach thereof, provided that a Notice of
Claim regarding such inaccuracy or breach is given within such
two (2) year period; provided, however, that the foregoing time
limitation shall not apply to a claim for an inaccuracy in or
breach of any warranty or representation contained in Section 4.9
or 4.11, which claim may be made at any time following the
Closing or in Section 4.10, which may be made at any time prior
to the expiration of the Statute of Limitations applicable to
such action, suit or proceeding. Anything to the contrary herein
notwithstanding, neither party shall assert any claim against the
other for indemnification hereunder with respect to an inaccuracy
in or breach of any such warranties or representations unless and
until the aggregate amount of all such claims for indemnification
hereunder asserted by such party exceeds $600,000.00 and then
only for any amount in excess of $600,000.00. The agreements,
undertakings, obligations and covenants of the parties contained
in this Agreement or any Ancillary Agreement will survive the
Closing and a claim for a breach thereof may be made at any time
after the Closing notwithstanding any statute of limitations that
may otherwise apply. The time limitations and dollar limitations
set forth in this Section 15.4 do not apply with respect to any
claim for a breach of any agreement, undertaking, obligation or
covenant in this Agreement.
15.5 Reduction for Insurance and Taxes. The amount (an
"Indemnity Payment") which an Indemnitor is required to pay on
behalf of any Indemnitee pursuant to this Article 15 shall be
reduced by the amount of any insurance proceeds theretofore or
thereafter actually received by or on behalf of the Indemnitee in
reduction of the related indemnifiable loss. An Indemnitee which
shall have received or on behalf of which there shall be paid an
Indemnity Payment and which shall subsequently receive, directly
or indirectly, insurance proceeds in respect of the related
indemnifiable loss, shall pay to the Indemnifying Party the
amount of such insurance proceeds or, if lesser, the amount of
the Indemnity Payment. Where any tax benefit is available to the
Indemnitee with respect to an indemnifiable event, the Indemnity
Payment shall be reduced dollar for dollar by the amount of such
tax benefit actually received.
ARTICLE 16. MISCELLANEOUS
16.1 Expenses. Except as specifically set forth
elsewhere herein and except that a party not in breach of this
Agreement shall be entitled to recover from a breaching party all
expenses and costs incurred by the non-breaching party by reason
of such breach (including, without limitation all legal expenses
and costs), each of the parties hereto shall pay its own expenses
and costs incurred or to be incurred by it in negotiating,
closing and carrying out this Agreement.
16.2 Notices. Any notice or communication given
pursuant to this Agreement by a party hereto to the other party
shall be in writing and hand delivered, or mailed by registered
or certified mail, postage prepaid, return receipt requested
(notices so mailed shall be deemed given when mailed), or sent
via facsimile, with an original mailed as follows:
If to Seller:
AlliedSignal Inc.
2525 West 190th Street
Torrance, California 90504
Attention: Vice President and General
Counsel - Aerospace
If to Purchaser or Newco:
Moog Inc.
East Aurora, New York 14052
Attention: President and Chief Executive Officer
16.3 Confidentiality. Seller and Purchaser have
entered into a Confidentiality Agreement dated August 6, 1993,
which notwithstanding any provision herein to the contrary shall
survive the execution and delivery of this Agreement and the
Closing hereunder. In the event of a conflict between the
Confidentiality Agreement and the terms of this Agreement, the
terms of this Agreement shall control.
16.4 Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute
one and the same instrument.
16.5 Entire Agreement. Except for the Confidentiality
Agreement referred to in Section 16.3, this Agreement is the
entire agreement between the parties hereto with respect to the
subject matter hereof and supersedes all prior communications,
representations, agreements and understandings between the
parties hereto, whether oral or written.
16.6 Construction. When the context so requires,
references herein to the singular number include the plural and
vice versa and pronouns in the masculine or neuter gender include
the feminine. The headings contained in this Agreement and the
tables of contents, exhibits and schedules are for reference
purposes only and shall not affect the meaning or interpretation
of this Agreement.
16.7 Assignment. This Agreement may not be assigned by
either party without the prior written consent of the other party
hereto.
16.8 Amendment. This Agreement may be amended only by
written agreement duly executed by representatives of both of the
parties hereto.
16.9 Applicable Law. This Agreement shall be construed
in accordance with the laws of the State of Delaware,
disregarding its conflicts of laws principles which may require
the application of the laws of another jurisdiction.
16.10 Failure to Close. If for any reason this
Agreement is terminated prior to Closing, Purchaser shall
promptly, upon the request of Seller, return to Seller all
documents and other information (or notes made therefrom),
including all originals and all copies thereof, theretofore
delivered to Purchaser by or on behalf of Seller. Purchaser
shall in any case comply with the terms of the Confidentiality
Agreement referred to in Section 16.3.
16.11 No Third Party Rights. This Agreement is not
intended and shall not be construed to create any rights in any
parties other than Seller and Purchaser and no other person shall
assert any rights as a third party beneficiary hereunder.
16.12 Exhibits and Schedules. The Exhibits and
Schedules attached hereto are incorporated into this Agreement
and shall be deemed a part hereof as if set forth herein in full.
References herein to "this Agreement" and the words "herein,"
"hereof" and words of similar import refer to this Agreement
(including Exhibits and Schedules) as an entirety. In the event
of any conflict between the provisions of this Agreement and any
such Exhibit, Schedule or the provisions of this Agreement shall
control.
16.13 Waivers. Any waiver of rights hereunder must
be set forth in writing. A waiver of any breach or failure to
enforce any of the terms or conditions of this Agreement shall
not in any way affect, limit or waive either party's rights at
any time to enforce strict compliance thereafter with every term
or condition of this Agreement.
16.14 Severability. If and to the extent that any
court of competent jurisdiction holds any provisions (or any part
thereof) of this Agreement to be invalid or unenforceable, such
holding shall in no way affect the validity of the remainder of
this Agreement.
IN WITNESS WHEREOF, Seller and Purchaser have duly
executed and delivered this Agreement as of the day and year
first above written.
AlliedSignal Inc.
By: ___________________________
Moog Inc.
By: ___________________________
Moog Torrance, Inc.
By: ___________________________