<PAGE>
<PAGE>
As filed with the Securities and Exchange Commission on April 6, 1998.
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
AlliedSignal Inc.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 22-2640650
- --------------------------------- ----------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
101 Columbia Road
P.O. Box 4000
Morristown, New Jersey 07962-2497
- --------------------------------------- --------------
(Address of Principal Executive Offices) (Zip Code)
PETER M. KREINDLER, ESQ.
Senior Vice President, General Counsel and Secretary
AlliedSignal Inc.
101 Columbia Road
Morris Township, New Jersey 07962-2497
------------------------------------------
(Name and address of agent for service)
(973) 455-2000
------------------------------------------------------------
(Telephone number, including area code, of registrant and agent for service)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: FROM TIME
TO TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
IF THE ONLY SECURITIES BEING REGISTERED ON THIS FORM ARE BEING OFFERED
PURSUANT TO DIVIDEND OR INTEREST REINVESTMENT PLANS, PLEASE CHECK THE FOLLOWING
BOX. [ ]
IF ANY OF THE SECURITIES BEING REGISTERED ON THIS FORM ARE TO BE OFFERED ON
A DELAYED OR CONTINUOUS BASIS PURSUANT TO RULE 415 UNDER THE SECURITIES ACT OF
1933, OTHER THAN SECURITIES OFFERED ONLY IN CONNECTION WITH DIVIDEND OR INTEREST
REINVESTMENT PLANS, CHECK THE FOLLOWING BOX. [X]
<PAGE>
<PAGE>
IF THIS FORM IS FILED TO REGISTER ADDITIONAL SECURITIES FOR AN OFFERING
PURSUANT TO RULE 462(b) UNDER THE SECURITIES ACT, PLEASE CHECK THE FOLLOWING BOX
AND LIST THE SECURITIES ACT REGISTRATION STATEMENT NUMBER OF THE EARLIER
EFFECTIVE REGISTRATION STATEMENT FOR THE SAME OFFERING. [ ]
IF THIS FORM IS A POST-EFFECTIVE AMENDMENT FILED PURSUANT TO RULE 462(c)
UNDER THE SECURITIES ACT, CHECK THE FOLLOWING BOX AND LIST THE SECURITIES ACT
REGISTRATION STATEMENT NUMBER OF THE EARLIER EFFECTIVE REGISTRATION STATEMENT
FOR THE SAME OFFERING. [ ]
IF DELIVERY OF THE PROSPECTUS IS EXPECTED TO BE MADE PURSUANT TO RULE 434,
PLEASE CHECK THE FOLLOWING BOX. [ ]
----------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Title of each class maximum maximum
of offering aggregate Amount of
securities Amount to be price offering registration
to be registered per price (1) fee
registered share(1)
<S> <C> <C> <C> <C>
Common Stock, 1,049,764 $42.4063 $44,516,607 $13,132.40
par value shares
$1.00 per share
</TABLE>
(1) Estimated in accordance with Rule 457(h) of the Securities Act of 1933
solely for the purpose of calculating the registration fee based upon an assumed
price of $42.4063, the average of the high and low sales prices of the Common
Stock of AlliedSignal Inc. on the New York Stock Exchange Composite Tape on
March 31, 1998.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
<PAGE>
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
<PAGE>
SUBJECT TO COMPLETION, DATED APRIL 6, 1998
PROSPECTUS
1,049,764 Shares
AlliedSignal Inc.
Common Stock, Par Value $1.00 Per Share
------------
This Prospectus relates to the offering for resale of 1,049,764 shares of
Common Stock, par value $1.00 per share (the "Common Stock"), of AlliedSignal
Inc., a Delaware corporation ("AlliedSignal" or the "Company"). All of the
Common Stock being registered may be offered and sold from time to time by
certain selling stockholders of the Company. See "Selling Stockholders" and
"Manner of Offering". The Company will not receive any proceeds from the sale of
the Common Stock by the Selling Stockholders.
The Company's Common Stock is traded on the New York Stock Exchange under
the symbol "ALD". On April 3, 1998, the last reported sales price for the Common
Stock was $44.75 per share.
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------
No person has been authorized to give any information or make any
representation other than those contained in this Prospectus (including material
incorporated by reference therein) and, if given or made, any such information
or representation must not be relied upon as having been authorized by the
Company or by any other person deemed to be an underwriter. Neither the delivery
of this Prospectus nor any sale made hereunder shall, under any circumstances,
create an implication that there has been no change in the affairs of the
Company since the date hereof. This Prospectus does not constitute an offer or
solicitation by anyone in any jurisdiction in which such offer or solicitation
is not authorized or in which the person making such offer or solicitation is
not qualified to do so or to anyone to whom it is unlawful to make such offer or
solicitation.
------------
The date of this Prospectus is , 1998.
<PAGE>
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and in accordance therewith files
reports and other information with the Securities and Exchange Commission (the
"Commission"). Reports, proxy statements and other information filed by the
Company with the Commission can be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Washington,
DC 20549 and at the following Regional Offices of the Commission: 7 World Trade
Center, New York, New York 10048; and Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. Copies of such material can be obtained
from the Public Reference Section of the Commission, 450 Fifth Street, N.W.,
Washington, DC 20549, at prescribed rates. The Commission maintains an Internet
web site at http://www.sec.gov/ that contains such reports, proxy statements and
other information. Such reports, proxy statements and other information of the
Company should also be available for inspection at the offices of the New York
Stock Exchange Inc., 20 Broad Street, New York, New York 10005; the Chicago
Stock Exchange, One Financial Place, 440 South LaSalle Street, Chicago,
Illinois, 60605; and the Pacific Stock Exchange, 301 Pine Street, San Francisco,
California 94104.
The Company has filed with the Commission a Registration Statement on Form
S-3 (including all amendments thereto, the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
Common Stock offered hereby. As permitted by the rules and regulations of the
Commission, this Prospectus does not contain all the information set forth in
the Registration Statement and the exhibits thereto and to which reference is
hereby made.
-----------------------------------------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by the Company are
incorporated by reference in this Prospectus:
(1) the Company's Annual Report on Form 10-K for the year ended December
31, 1997;
(2) the Company's Current Reports on Form 8-K filed on January 15, February
2, February 5, February 18, February 23, and March 18, 1998; and
(3) the description of the Company's Common Stock contained in the
Company's registration statement on Form 8-B filed on August 16, 1985, including
any amendment or report filed for the purposes of updating such description.
All reports and other documents filed by the Company pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
2
<PAGE>
<PAGE>
Prospectus and prior to the termination of the offering of the Common Stock
shall be deemed to be incorporated by reference in this Prospectus and to be
part hereof from the date of filing of such documents. Any statement contained
herein or in a document incorporated or deemed to be incorporated by reference
herein shall be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein,
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Prospectus.
A copy of the documents incorporated by reference (other than exhibits
thereto) will be forwarded without charge to each person to whom this prospectus
is delivered, upon such person's written or oral request to AlliedSignal Inc.,
Office of the Secretary, P.O. Box 4000, Morristown, New Jersey 07962, telephone
number (973)455-5067.
FORWARD-LOOKING STATEMENTS
This Prospectus contains, or incorporates by reference, certain statements
that may be deemed "forward-looking statements" within the meaning of Section
27A of the Securities Act and Section 21E of the Exchange Act. All statements,
other than statements of historical facts, that address activities, events or
developments that the Company intends, expects, projects, believes or
anticipates will or may occur in the future are forward-looking statements. Such
statements are based on certain assumptions and assessments made by management
of the Company in light of its experience and its perception of historical
trends, current conditions, expected future developments and other factors it
believes to be appropriate. The forward-looking statements included in this
Prospectus are also subject to a number of material risks and uncertainties,
including but not limited to economic, competitive, governmental and
technological factors affecting the Company's operations, markets, products,
services and prices, and other factors discussed in the Company's filings under
the Securities Act and the Exchange Act. Prospective investors are cautioned
that such forward-looking statements are not guarantees of future performance
and that actual results, developments and business decisions may differ from
those envisaged by such forward-looking statements.
THE COMPANY
The Company's operations are conducted in three principal industries:
aerospace; automotive; and engineered materials. The Company's products are used
by many major industries, including textiles, construction, plastics,
electronics, automotive, chemicals, housing, telecommunications, utilities,
packaging, military and commercial aviation and aerospace and in agriculture and
the space program.
The principal executive offices of the Company are located at 101 Columbia
Road, Morris Township, New Jersey 07962. The telephone number is (973)455-2000.
3
<PAGE>
<PAGE>
SELLING STOCKHOLDERS
The following table sets forth certain information, as of April 1, 1998,
with respect to the shares of Common Stock beneficially owned and being offered
hereby by the stockholders listed below (the "Selling Stockholders"). All of the
shares of Common Stock offered hereby were issued to or for the benefit of the
stockholders of Tensor, Inc., a Texas corporation ("Tensor"), in accordance with
an Agreement and Plan of Reorganization between Tensor and the Company dated
March 31, 1998 (the "Acquisition Agreement"). The shares of Common Stock offered
hereby were issued on March 31, 1998 in exchange for substantially all of the
assets of Tensor in accordance with the Acquisition Agreement. The offer and
sale of the shares of Common Stock offered hereby are being registered pursuant
to registration rights granted the Selling Stockholders in connection with the
Company's acquisition of Tensor's assets.
<TABLE>
<CAPTION>
SHARES OF SHARES OF
COMMON STOCK COMMON STOCK
BENEFICIALLY OFFERED
NAME OWNED (1) HEREBY (2)
<S> <C> <C>
George F. Roberts (3)............................596,389 596,389
Robert L. Waters (4).............................298,194 298,194
John L. Marsh (5)................................ 33,159 33,159
Edward C. Fraser and Marjorie E. Fraser,
Trustees of The Fraser Revocable Inter
Vivos Trust dated June 30, 1982 (6)............ 33,159 33,159
Henry S. More and Adelle A. More, Trustees
of the More Family 1998 Trust dated
March 20, 1998 (7)............................. 28,150 28,150
Lawrence R. Bulduc and Shirley A. Bulduc,
Trustees of the Lawrence R. Bulduc and
Shirley A. Bulduc 1996 Revocable Trust
dated April 24, 1996 (8)....................... 26,480 26,480
Hart-Wood & Co., a Professional Corporation (9).. 24,691 24,691
Sarah Heather (10)............................... 9,542 9,542
</TABLE>
- --------
(1) Less than 1% of Common Stock outstanding.
(2) Assumes all shares of Common Stock offered hereby are sold in this
offering. There is no assurance that the Selling Stockholders will sell any
or all of the shares of Common Stock offered hereby. If all shares of
Common Stock offered hereby are sold by the Selling Stockholders, none of
the Selling Stockholders would own shares of Common Stock after such sale
based on their holdings as of April 1, 1998.
(3) Includes 63,898 shares of Common Stock held in escrow subject to certain
contingencies in connection with the Acquisition Agreement.
(4) Includes 31,949 shares of Common Stock held in escrow subject to certain
contingencies in connection with the Acquisition Agreement.
(5) Includes 3,553 shares of Common Stock held in escrow subject to certain
contingencies in connection with the Acquisition Agreement.
4
<PAGE>
<PAGE>
(6) Includes 3,553 shares of Common Stock held in escrow subject to certain
contingencies in connection with the Acquisition Agreement.
(7) Includes 3,016 shares of Common Stock held in escrow subject to certain
contingencies in connection with the Acquisition Agreement.
(8) Includes 2,837 shares of Common Stock held in escrow subject to certain
contingencies in connection with the Acquisition Agreement.
(9) Includes 2,646 shares of Common Stock held in escrow subject to certain
contingencies in connection with the Acquisition Agreement.
(10) Includes 1,022 shares of Common Stock held in escrow subject to certain
contingencies in connection with the Acquisition Agreement.
Messrs. Roberts, Waters, Fraser, More and Bulduc became employees of
AlliedSignal at the time of the acquisition of Tensor assets by AlliedSignal, at
which time such individuals entered into retention agreements with AlliedSignal.
MANNER OF OFFERING
The shares of Common Stock offered hereby may be sold from time to time by
the Selling Stockholders, or by pledgees, donees, transferees or other
successors in interest. Such sales may be made on one or more stock exchanges or
in the over-the-counter market or otherwise, at prices and at terms then
prevailing or at prices related to the then current market price, or in
negotiated transactions. The shares of Common Stock may be sold in one or more
of the following: (a) a block trade in which the broker-dealer so engaged will
attempt to sell the shares as agent but may position and resell a portion of the
block as principal to facilitate the transaction; (b) purchases by a
broker-dealer as principal and resale by such broker-dealer for its account
pursuant to this Prospectus; (c) an exchange distribution in accordance with the
rules of such exchange; and (d) ordinary brokerage transactions and transactions
in which the broker solicits purchasers. In effecting sales, broker-dealers
engaged by the Selling Stockholders may arrange for other broker-dealers to
participate in resales.
In connection with distribution of the shares of Common Stock offered
hereby or otherwise, the Selling Stockholders may enter into hedging
transactions with broker-dealers. In connection with such transactions,
broker-dealers may engage in short sales of shares of Common Stock registered
hereunder in the course of hedging the positions they assume with the Selling
Stockholders. The Selling Stockholders may also sell shares of Common Stock
short and redeliver the shares of Common Stock registered hereunder to close out
such short positions. The Selling Stockholders may also enter into option or
other transactions with broker-dealers which require the delivery to the
broker-dealer of the shares of Common Stock registered hereunder, which the
broker-dealer may resell or otherwise transfer pursuant to this Prospectus. The
Selling Stockholder may also loan or pledge the shares of Common Stock
registered hereunder to a broker-dealer and the broker-dealer may sell the
5
<PAGE>
<PAGE>
shares of Common Stock so loaned or upon default the broker-dealer may effect
sales of the pledged shares pursuant to this Prospectus. The Selling
Stockholders may also pledge shares of Common Stock registered hereunder to a
lender other than a broker-dealer, and upon default such lender may sell the
shares of Common Stock so pledged pursuant to this Prospectus. The Selling
Stockholders may also contribute or sell shares of Common Stock offered
hereunder to trusts or other entities for the benefit of the contributing
Selling Stockholder and members of his or her family.
Broker-dealers or agents may receive compensation in the form of
commissions, discounts or concessions from the Selling Stockholders in amounts
to be negotiated in connection with the sale of Common Stock. Such
broker-dealers and any other participating broker-dealers may be deemed to be
"underwriters" within the meaning of the Securities Act in connection with such
sales and any such commission, discount or concession may be deemed to be
underwriting discounts or commissions under the Securities Act. In addition, any
securities covered by the prospectus which qualify for sale under Rule 144 under
the Securities Act may be sold pursuant to Rule 144 rather than pursuant to this
Prospectus.
All costs, expenses and fees in connection with the registration of the
shares of Common Stock offered hereby shall be borne by the Company. Commissions
and discounts, if any, attributable to the sales of shares of Common Stock
hereunder will be borne by the Selling Stockholders. The Selling Stockholders
may agree to indemnify any broker-dealer or agent that participates in
transaction involving sales of shares of Common Stock against certain
liabilities, including liabilities arising under the Securities Act. The Company
has agreed to indemnify the Selling Stockholders against certain liabilities in
connection with the offering of the shares of Common Stock hereunder, including
liabilities arising under the Securities Act.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby have been passed
upon for the Company by J. Edward Smith, Senior Counsel, Corporate and Finance,
of AlliedSignal.
EXPERTS
The consolidated financial statements of the Company incorporated in this
Prospectus by reference to the Company's Annual Report on Form 10-K for the year
ended December 31, 1997 have been so incorporated in reliance on the report of
Price Waterhouse LLP, independent accountants, given on the authority of said
firm as experts in auditing and accounting.
6
<PAGE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee..........$ 13,133
Printing..................................................... 1,000*
Accountants' Fees and Expenses............................... 5,000*
Miscellaneous Expenses....................................... 1,000*
--------
Total..................................................$ 20,133*
========
</TABLE>
- -----------
*Estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Under Article ELEVENTH of the Company's Restated Certificate of
Incorporation, each person who is or was a director or officer of the Company,
and each director or officer of the Company who serves or served any other
enterprise or organization at the request of the Company, shall be indemnified
by the Company to the full extent permitted by the Delaware General Corporation
Law.
Under such law, to the extent that such a person is successful on the
merits or otherwise in defense of a suit or proceeding brought against such
person by reason of the fact that such person is or was a director or officer of
the Company, or serves or served any other enterprise or organization at the
request of the Company, such person shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred in connection with
such action.
If unsuccessful in defense of a third-party civil suit or a criminal suit,
or if such a suit is settled, such a person shall be indemnified under such law
against both (1) expenses (including attorneys' fees) and (2) judgments, fines
and amounts paid in settlement if such person acted in good faith and in a
manner such person reasonably believed to be in, or not opposed to, the best
interests of the Company, and with respect to any criminal action, had no
reasonable cause to believe such person's conduct was unlawful.
If unsuccessful in defense of a suit brought by or in the right of the
Company, or if such suit is settled, such a person shall be indemnified under
such law only against expenses (including attorneys' fees) actually and
reasonably incurred in the defense or settlement of such suit if such person
acted in good faith and in a manner such person reasonably believed to be in, or
not opposed to, the best interests of the Company except that if such a person
is adjudged to be liable in such suit to the Company, such person
II-1
<PAGE>
<PAGE>
cannot be made whole even for expenses unless the court determines that such
person is fairly and reasonably entitled to indemnity for such expenses.
In addition, the Company maintains directors' and officers' reimbursement
and liability insurance pursuant to standard form policies. The risks covered by
such policies include certain liabilities under the securities laws.
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT NO.
- -----------
<C> <S>
2 Agreement and Plan of Reorganization between Tensor, Inc. and the
Company dated March 31, 1998.
4.1 The Company's Restated Certificate of Incorporation (incorporated
by reference to Exhibit 3(i) to the Company's Form 10-Q for the
quarter ended March 31, 1997).
4.2 The Company's By-laws, as amended (incorporated by reference to
Exhibit 3(ii) to the Company's Form 10-Q for the quarter ended
March 31, 1996).
5 Opinion of J. Edward Smith, Esq., with respect to the legality of the
securities being registered hereby.
23.1 Consent of Price Waterhouse LLP.
23.2 The consent of J. Edward Smith, Esq. is contained in his opinion filed as
Exhibit 5 to this registration statement.
24 Powers of Attorney.
</TABLE>
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
II-2
<PAGE>
<PAGE>
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed by the registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(4) For purposes of determining any liability under the Act, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(b)
under the Act shall be deemed to be part of this registration statement as of
the time it was declared effective.
(5) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
II-3
<PAGE>
<PAGE>
Signatures
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the Township of Morris, State of New Jersey, on the 6th day of
April, 1998.
ALLIEDSIGNAL INC.
By: /s/ Richard F. Wallman
------------------------
Richard F. Wallman
Senior Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Name Title Date
<S> <C> <C>
* Director, Chairman of the
- ---------------------------- Board and Chief Executive Officer
(Lawrence A. Bossidy)
*
- ---------------------------- Director
(Hans W. Becherer)
*
- ---------------------------- Director
(Daniel P. Burnham)
*
- ---------------------------- Director
(Ann M. Fudge)
*
- ---------------------------- Director
(Paul X. Kelley)
*
- ---------------------------- Director
(Robert P. Luciano)
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<S> <C> <C>
*
- ---------------------------- Director
(Robert B. Palmer)
*
- ---------------------------- Director
(Russell E. Palmer)
*
- ---------------------------- Director
(Frederic M. Poses)
*
- ---------------------------- Director
(Ivan G. Seidenberg)
*
- ---------------------------- Director
(Andrew C. Sigler)
*
- ---------------------------- Director
(John R. Stafford)
*
- ---------------------------- Director
(Thomas P. Stafford)
*
- ---------------------------- Director
(Robert C. Winters)
*
- ---------------------------- Director
(Henry T. Yang)
/s/ Richard F. Wallman
- ---------------------------- Senior Vice President and April 6, 1998
(Richard F. Wallman) Chief Financial Officer
(Principal Financial Officer
and Principal Accounting
Officer)
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<S> <C>
*By: /s/ Richard F. Wallman
- ---------------------------- April 6, 1998
(Richard F. Wallman,
Attorney-in-Fact)
</TABLE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
<S> <C>
1 Omitted (inapplicable).
2 Agreement and Plan of Reorganization between Tensor, Inc. and the
Company dated March 31, 1998.
4.1 The Company's Restated Certificate of Incorporation (incorporated by
reference to Exhibit 3(i) to the Company's Form 10-Q for the quarter
ended March 31, 1997).
4.2 The Company's By-laws, as amended (incorporated by reference to
Exhibit 3(ii) to the Company's Form 10-Q for the quarter ended March
31, 1996).
5 Opinion of J. Edward Smith, Esq., with respect to the legality of the securities
being registered hereby.
8 Omitted (inapplicable).
12 Omitted (inapplicable).
15 Omitted (inapplicable).
23.1 Consent of Price Waterhouse LLP.
23.2 The consent of J. Edward Smith, Esq. is contained in his opinion filed as Exhibit
5 to this registration statement.
24 Powers of Attorney.
25 Omitted (inapplicable).
26 Omitted (inapplicable).
27 Omitted (inapplicable).
28 Omitted (inapplicable).
99 Omitted (inapplicable).
</TABLE>
STATEMENT OF DIFFERENCES
------------------------
The section symbol shall be expressed as.............................. 'SS'
<PAGE>
<PAGE>
EXECUTION COPY
AGREEMENT AND PLAN OF REORGANIZATION
DATED MARCH 31, 1998
BETWEEN
TENSOR, INC., A TEXAS CORPORATION
("SELLER")
AND
ALLIEDSIGNAL INC., A DELAWARE CORPORATION
("PURCHASER")
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TABLE OF CONTENTS
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1. CLOSING..............................................................................1
2. PURCHASE AND SALE....................................................................1
2.1 Purchase and Sale.............................................................1
2.2 Excluded Assets...............................................................3
2.3 Transfer of Title to the Assets...............................................4
2.4 C Reorganization..............................................................4
3. PAYMENT AND ADJUSTMENT OF PURCHASE PRICE; ALLOCATION.................................5
3.1 Initial Purchase Price........................................................5
3.2 Post-Closing Adjustment.......................................................6
3.3 Final Adjustment..............................................................7
3.4 Maximum Shares to be Issued...................................................7
3.5 Non-Assignment................................................................8
4. ASSUMPTION OF LIABILITIES AND OBLIGATIONS............................................8
4.1 Assumption of Certain Liabilities and Obligations by Purchaser................8
4.2 Excluded Liabilities..........................................................8
5. PENSION AND EMPLOYEE MATTERS........................................................10
5.1 Scope of Section.............................................................10
5.2 Employment Status............................................................10
5.3 Retiree Benefits.............................................................11
5.4 Employee Benefit Plans.......................................................11
5.5 Welfare Plans................................................................12
5.6 Other Compensation...........................................................12
5.7 Severance....................................................................12
5.8 Health Care Continuation Coverage............................................12
5.9 Purchaser Incentive Bonus Plan...............................................13
5.10 Purchaser's Stock Bonus Plan for Certain Transferred Employees...............13
5.11 Pre-existing Patent Royalty Obligations......................................14
5.12 Employment Taxes.............................................................14
6. REPRESENTATIONS AND WARRANTIES OF SELLER............................................15
6.1 Corporate Status.............................................................15
6.2 Authority....................................................................15
6.3 No Conflict..................................................................15
6.4 Financial Statements.........................................................15
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6.5 Shareholder and Subsidiaries.................................................16
6.6 Real Property................................................................16
6.7 Personal Property............................................................16
6.8 Inventory....................................................................17
6.9 Accounts Receivable..........................................................17
6.10 Title to Personal Property...................................................17
6.11 Contracts....................................................................17
6.12 Patents and Technology; Trademarks...........................................19
6.13 Litigation, Claims and Proceedings...........................................20
6.14 Environmental Conditions.....................................................21
6.15 Permits and Licenses.........................................................23
6.16 Compliance with Law..........................................................23
6.17 Consents.....................................................................23
6.18 Labor and Employment Matters.................................................24
6.19 Employee Benefits............................................................24
6.20 Health and Safety Conditions.................................................26
6.21 Bank Accounts................................................................27
6.22 Customers and Suppliers......................................................27
6.23 Insurance....................................................................28
6.24 Oral Contracts...............................................................28
6.25 Taxes........................................................................28
6.26 Business Conduct.............................................................29
6.27 Undisclosed Liabilities......................................................30
6.28 No Material Adverse Change...................................................30
6.29 Finder's Fee.................................................................31
6.30 Full Disclosure..............................................................31
6.31 [Reserved]...................................................................31
6.32 Warranty Claims..............................................................31
6.33 Product Liability............................................................31
6.34 Related Party Transactions...................................................32
6.35 Investment Purposes..........................................................32
6.36 Developmental Products.......................................................32
6.37 C Reorganization.............................................................32
6.38 No Other Warranties and Representations......................................33
7. REPRESENTATIONS AND WARRANTIES OF PURCHASER.........................................33
7.1 Due Organization.............................................................33
7.2 Authority....................................................................33
7.3 Compliance with Law..........................................................33
7.4 No Conflict..................................................................33
7.5 Finder's Fee.................................................................34
7.6 Voting Rights of Purchaser Stock.............................................34
7.7 Open Market Purchases........................................................34
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7.8 C Reorganization.............................................................34
7.9 Full Disclosure..............................................................35
7.10 Consents.....................................................................35
8. PRE-CLOSING COVENANTS...............................................................35
8.1 Conduct of Business..........................................................35
8.2 Access to Records and Properties - Confidentiality...........................37
8.3 Consents.....................................................................37
8.4 Public Announcements.........................................................37
8.5 Title Insurance..............................................................38
8.6 Purchaser Actions............................................................38
8.7 Filings......................................................................38
9. CONDITIONS TO OBLIGATIONS OF PURCHASER..............................................38
9.1 Injunctions..................................................................38
9.2 Continuation and Truth of Representations and Warranties.....................38
9.3 Fulfillment of Covenants.....................................................38
9.4 Certificates of Seller.......................................................39
9.5 Documents....................................................................39
9.6 Consents.....................................................................39
9.7 Opinion of Counsel to Seller.................................................39
9.8 H-R-A Act Waiting Periods....................................................39
9.9 No Material Adverse Change...................................................39
9.10 Key Employees................................................................39
9.11 Covenants Not to Compete.....................................................39
10. CONDITIONS TO OBLIGATIONS OF SELLER.................................................40
10.1 Injunction...................................................................40
10.2 Continuation and Truth of Representations and Warranties.....................40
10.3 Fulfillment of Covenants.....................................................40
10.4 Certificates of Purchaser....................................................40
10.5 Opinion of Counsel to Purchaser..............................................41
10.6 H-R-A Act Waiting Periods....................................................41
10.7 No Material Adverse Change...................................................41
10.8 Registration Rights Agreement................................................41
11. TERMINATION; SURVIVAL...............................................................41
11.1 Termination..................................................................41
11.2 Survival.....................................................................41
12. DOCUMENTS TO BE DELIVERED BY SELLER AT THE CLOSING..................................41
13. DOCUMENTS TO BE DELIVERED BY PURCHASER AT THE CLOSING...............................43
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14. POST-CLOSING OBLIGATIONS............................................................44
14.1 Covenant Not to Compete......................................................44
14.2 Allocation of Taxes..........................................................44
14.3 Further Assurances...........................................................45
14.4 Reports; Access to Books and Records.........................................45
14.5 Cooperation in Litigation....................................................45
14.6 C Reorganization.............................................................45
15. INDEMNIFICATION.....................................................................46
15.1 Indemnification by Seller....................................................46
15.2 Indemnification by Purchaser.................................................46
15.3 Limitations on Liability.....................................................47
15.4 Survival.....................................................................48
15.5 Indemnification Procedure....................................................48
15.6 Dispute Resolution...........................................................50
15.7 Shareholders of Seller not Liable to Purchaser...............................53
16. SECURITIES LAW MATTERS..............................................................54
16.1 Regulation D Disclosure Materials............................................54
16.2. Shareholder Meeting..........................................................54
17. MISCELLANEOUS.......................................................................54
17.1 Expenses.....................................................................54
17.2 Bulk Sales...................................................................54
17.3 Assignability................................................................54
17.4 Binding Effect...............................................................54
17.5 Notices......................................................................54
17.6 Counterparts.................................................................55
17.7 Schedules and Exhibits.......................................................55
17.8 Governing Law and Forum......................................................56
17.9 Definitions..................................................................56
17.10 Headings.....................................................................58
17.11 Amendment....................................................................58
17.12 Entire Agreement.............................................................58
17.13 Waivers......................................................................58
17.14 Third Party Rights...........................................................58
17.15 Severability.................................................................58
17.16 Construction.................................................................58
17.17 Rounding of Share Amounts....................................................58
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION is made this 31st day of
March, 1998, between TENSOR, INC., a Texas corporation ("SELLER") and
ALLIEDSIGNAL INC., a Delaware corporation ("PURCHASER").
W I T N E S S E T H:
WHEREAS, Seller, its subsidiaries Quality Drilling Technology, Inc., a
Texas corporation ("QDT"), Quantum Solutions, Inc., a California corporation
("QSI"), and Magrange, Inc., a Texas corporation ("MAGRANGE") (collectively, the
"SUBSIDIARIES"), are engaged in the business of researching, developing,
manufacturing, marketing, distributing and selling drilling tools using downhole
navigation technology (the "BUSINESS").
WHEREAS, Seller desires to sell and Purchaser desires to purchase all of
the tangible and intangible assets of Seller and the Subsidiaries utilized in
the conduct of the Business except for certain assets, rights, interests or
properties described in the Excluded Assets Schedule attached hereto (the
"EXCLUDED ASSETS").
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, Seller and Purchaser hereby agree as follows:
1. CLOSING. The Closing of the transactions contemplated under this
Agreement (the "CLOSING") shall take place at the offices of Locke Purnell Rain
Harrell, located at Austin, Texas effective at the commencement of business on
the fifth business day following the date on which all conditions in Sections 9
and 10 shall have been fulfilled or waived, or at such other place and on such
other date as the parties may mutually agree. (The time and date on which the
Closing occurs hereinafter is referred to as the "CLOSING DATE.")
2. PURCHASE AND SALE.
2.1 PURCHASE AND SALE. Subject to the terms and conditions contained
herein, at the Closing, Seller shall (and shall cause the Subsidiaries to) sell,
convey, transfer, assign and deliver to Purchaser and Purchaser shall purchase
and accept from Seller, all of Seller's right, title and interest in and to all
of the assets owned by Seller or any Subsidiary and used or held for use in the
Business, except for the Excluded Assets, with such changes, deletions or
additions occurring between the respective dates of the Schedules and Exhibits
attached hereto and the Closing Date consistent with the terms and conditions of
this Agreement (the "ASSETS"), including without limitation all right, title and
interest of Seller to the following:
AGREEMENT AND
PLAN OF REORGANIZATION PAGE 1
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(a) all real property owned by Seller or any Subsidiary and used
or held for use in the Business (including all buildings, improvements and
structures located thereon and all appurtenances belonging thereto) listed in
the Real Property Schedule attached hereto (the "REAL PROPERTY");
(b) all fixtures, furnishings, furniture, office equipment and
supplies, vehicles, tools, machinery and equipment, and other tangible personal
property, including construction-in-progress, owned by Seller or any Subsidiary
and used or held for use in the Business, substantially all of which with a book
value in excess of $10,000 are listed in the Personal Property Schedule attached
hereto (the "PERSONAL PROPERTY");
(c) all quantities of inventory, including raw materials,
work-in-process, finished goods, owned by Seller or any Subsidiary and used or
held for use in the Business (the inventory to be transferred to Purchaser is
hereinafter called the "INVENTORY");
(d) all transferable patents, patent applications and patent
rights to inventions owned by Seller or any Subsidiary and used or held for use
in the Business, including but not limited to those listed in the Patents and
Technology Schedule attached hereto (the "PATENTS"); all transferable patent
and/or technology licenses and immunity from suit agreements between Seller and
third parties used or held for use in or otherwise directly affecting the
Business, including but not limited to those listed in the Patents and
Technology Schedule (the "PATENT AND TECHNOLOGY LICENSES"); all other
transferable intellectual property (except that property as set forth in Clause
(e) below), including, without limitation, processes, products, apparatus,
formulas, trade secrets, know-how, discoveries, inventions, and design,
manufacturing, engineering and other technical information owned by Seller or
any Subsidiary and used or held for use in the Business, including but not
limited to those listed in the Patents and Technology Schedule (the
"TECHNOLOGY"); and all notebooks, records, reports and data relating to the
Technology; all patents, patent applications, patent and/or technology licenses
and other intellectual property that are non-transferable are listed and
designated as such on the Patents and Technology Schedule;
(e) all transferable trademarks, trade names and service marks,
and registrations and applications therefor, owned by Seller or any Subsidiary
and used or held for use in the Business, including but not limited to those
listed in the Trademarks and Copyrights Schedule attached hereto (the
"TRADEMARKS"); all transferable trademark license agreements used or held for
use in the Business, including but not limited to those listed in the Trademarks
and Copyrights Schedule (the "TRADEMARK LICENSES"); and all transferable
copyrights, and registrations and applications therefor, owned by Seller or any
Subsidiary and used or held for use in the Business, including but not limited
to those listed in the Trademarks and Copyrights Schedule (the "COPYRIGHTS");
all trademarks, trade names, service marks, license agreements and copyrights
that are non-transferable are listed and designated as such on the Trademarks
and Copyrights Schedule;
AGREEMENT AND
PLAN OF REORGANIZATION PAGE 2
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(f) all transferable contracts, agreements, arrangements and/or
commitments relating to the Business or the Assets listed in the Contracts
Schedule attached hereto or which are not required pursuant to Section 6.11 to
be listed therein (the "CONTRACTS"); all non-transferable Contracts are listed
and designated as such on the Contracts Schedule;
(g) all accounts receivable of any nature whatsoever, relating to
the Business or the Assets, whether recorded or unrecorded (the accounts
receivable to be transferred to Purchaser are hereinafter called the "ACCOUNTS
RECEIVABLE");
(h) all customer and vendor lists relating to the Business, all
files and documents (including credit information) relating to customers and
vendors of the Business; and all production data, equipment maintenance data,
accounting records, inventory records, sales and sales promotional data,
advertising materials, cost and pricing information, business plans, reference
catalogs and any other data and records used in connection with the Business;
(i) all transferable governmental and other permits, licenses,
approvals, certificates of inspection, filings, franchises and other
authorizations used or held for use in the Business including, but not limited
to those listed in the Permits and Licenses Schedule attached hereto; all
non-transferable permits, licenses and certificates are listed and designated as
such on the Permits and Licenses Schedule;
(j) all prepaid expenses and utility deposits relating to the
Business;
(k) all rights of Seller pursuant to any express or implied
warranties, representations or guarantees made by suppliers furnishing goods or
services to Seller;
(l) all other assets, rights, interests and properties of Seller,
used or held for use in the Business; provided, however, if such other assets,
rights, interests and properties are not described in the Schedules hereto and
are required to be so described, Purchaser shall have the option not to accept
them;
(m) all cash held by Seller and/or its Subsidiaries, including
all bank accounts, certificates of deposit or other financial instruments and/or
accounts, exclusive of cash in the amount of $1,500,000.00 (the "RETAINED
CASH"), which shall be retained by Seller, which retention shall be reflected on
the Closing Balance Sheet (defined below), subject to the provisions of Section
3.3.
2.2 EXCLUDED ASSETS. Notwithstanding anything to the contrary contained
in this Agreement, the Excluded Assets listed on the Excluded Assets Schedule,
are not intended to be sold, assigned, transferred or conveyed to Purchaser
hereunder, and Purchaser shall accept no responsibility for the Excluded Assets
except as set forth herein.
AGREEMENT AND
PLAN OF REORGANIZATION PAGE 3
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The following provisions shall be applicable to those certain Excluded
Assets described below:
(a) Subject to the provisions of Section 3.3, Seller shall be entitled
to retain the Retained Cash as an Excluded Asset.
(b) Those certain Sales Agreements (the "ASFAHL AGREEMENTS") between
Seller or any Subsidiary and Charles M. Asfahl, dba C.M. Asfahl Agency
("ASFAHL") shall be deemed an Excluded Asset.
(c) The corporate minute book, stock transfer records, and other
documents and records of Seller and the Subsidiaries that are not related to the
Business shall be deemed Excluded Assets.
(d) In the event any of Seller's shareholders exercises his or her
rights to dissent to the transactions that are the subject of this Agreement
pursuant to Part Five of the Texas Business Corporation Act ("TBCA"), Purchaser
and Seller agree that in addition to the Excluded Assets described in this
Section 2.2 and listed on the Excluded Assets Schedule, Seller shall retain for
the purpose of purchasing the shares of any dissenting shareholder(s), and
defraying the related expenses, additional cash (the "DISSENTER'S FUND") in an
amount equal to the percentage of issued and outstanding shares of stock of the
Seller owned by the dissenting shareholder(s) multiplied by the Initial Purchase
Price, plus an additional one hundred percent of such amount, and the Adjusted
Purchase Price shall be decreased by such amount. After completion of the
procedures for dissent by shareholders to corporate actions pursuant to TBCA
Article 5.12, but in no event later than the fourth anniversary of the Closing,
Seller shall remit to Purchaser any portion of the Dissenter's Fund that has not
been expended. The Adjusted Purchase Price shall be increased by the amount of
such remittance and any such increase shall be paid by the delivery to Seller
(or Seller's shareholders as designated by Seller) within thirty (30) days after
such remittance of additional shares of issued and outstanding Purchaser Stock
with a Market Value equal to the remittance.
2.3 TRANSFER OF TITLE TO THE ASSETS. Seller shall sell, assign, convey,
transfer and deliver the Assets to Purchaser at the Closing by means of deeds,
bills of sale, assignments, endorsements, certificates and such other
instruments of transfer and conveyance as shall be necessary or appropriate to
vest good and indefeasible title to the Assets in Purchaser, free and clear of
any liens, charges and encumbrances (except for those covenants, easements,
restrictions and other matters of record affecting title to the Real Property as
set forth on the Real Property Schedule.) Title to the Assets of the
Subsidiaries shall be transferred to Seller by liquidation of the Subsidiaries
and distribution to Seller, or merger of the Subsidiaries into Seller, prior to
Closing, and Seller shall then transfer title to such Assets to Purchaser at
Closing pursuant to this Section 2.3.
2.4 C REORGANIZATION. The parties intend and agree that the transactions
contemplated herein will qualify as a "C Reorganization" as provided in Internal
Revenue Code ("CODE") Section 368(a)(1)(C) and the Treasury Regulations and
Internal Revenue Service ("IRS") rulings promulgated thereunder. This agreement
contains the operative provisions of the Plan of
AGREEMENT AND
PLAN OF REORGANIZATION PAGE 4
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Reorganization. Accordingly, under this Agreement, Seller will transfer
substantially all of its assets to Purchaser in exchange for the Purchaser
Stock, as more particularly detailed under the terms of this Agreement, which
will be followed by Seller's distribution of the Purchaser Stock to Seller's
shareholders in a complete liquidation of Seller. In all respects, the terms and
provisions of this Agreement will be interpreted in such a manner that is
consistent with the requirements for qualification as a C Reorganization, to the
extent that such interpretation does not change the economics, the risk of loss,
or the material structure of the transactions contemplated hereby. Purchaser and
Seller also agree to cooperate in amending the terms and provisions of this
Agreement to the extent the same may be required to qualify the transactions
contemplated herein as a C Reorganization to the extent that such amendments do
not change the economics, the risk of loss, or the material structure of the
transactions contemplated herein.
3. PAYMENT AND ADJUSTMENT OF PURCHASE PRICE; ALLOCATION.
3.1 INITIAL PURCHASE PRICE.
(a) The initial purchase price to be paid by Purchaser for the
Assets (the "INITIAL PURCHASE PRICE") shall be $43,867,000, subject to
adjustment as hereinafter set forth in Section 3.2, which shall be payable in
issued and outstanding shares of Purchaser's common stock (the "PURCHASER
STOCK").
(b) At the Closing, Purchaser shall issue in the name of Seller's
shareholders or a nominee for such shareholders as directed by Seller that
number of shares of the Purchaser Stock as shall have a Market Value of
$43,867,000. For purposes of this Agreement, the "MARKET VALUE" of the Purchaser
Stock shall be equal to the average closing price of a share of the Purchaser
Stock on the New York Stock Exchange for the forty (40) trading days ending five
(5) days before the Closing Date, and as adjusted thereafter to compensate for
any stock split or similar event. Certificates representing all of the shares of
Purchaser Stock issued hereunder shall be delivered to Seller's shareholders at
Closing, except for that number of shares having an aggregate Market Value of
$4,700,000 (the "HOLDBACK SHARES"). For purposes of any transaction involving
the Holdback Shares pursuant to this Agreement or the Escrow Agreement (defined
below), the value of the Holdback Shares shall be deemed to be equal to the
Market Value. The Holdback Shares shall be issued in the name of a nominee for
the benefit of Seller's shareholders and will be placed in escrow in accordance
with the "ESCROW AGREEMENT" (herein so called) attached hereto as Exhibit 4, and
shall serve as security for the post-Closing adjustment pursuant to Section 3.2
and for Seller's indemnification pursuant to Section 15.1. The Holdback Shares,
less such number of Holdback Shares with a Market Value equal to amounts owed by
Seller to Purchaser pursuant to Section 3.2 and Section 15.1, will be released
to the nominee for Seller's shareholders or, at such nominee's direction,
Seller's shareholders eighteen (18) months from the Closing Date in accordance
with the Escrow Agreement. Seller's shareholders shall be entitled to receive
any dividends paid or declared with respect to the Holdback Shares and shall be
entitled to full voting rights with respect to such Holdback Shares during the
time they are subject to the Escrow Agreement, but shall not receive dividends
AGREEMENT AND
PLAN OF REORGANIZATION PAGE 5
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or have voting rights with respect to Holdback Shares from and after the date
any such Holdback Shares are released to Purchaser.
3.2 POST-CLOSING ADJUSTMENT.
(a) The Initial Purchase Price shall be adjusted by the amount,
if any, by which the Net Book Value (defined below) of Seller on the Closing
Date (the "FINAL NET BOOK VALUE") is greater or less than the Net Book Value as
of September 30, 1997 (the "INITIAL NET BOOK VALUE"). "NET BOOK VALUE" means the
net worth of Seller as determined in accordance with Generally Accepted
Accounting Principles in the United States consistently applied ("GAAP"). The
Initial Purchase Price as adjusted pursuant to this Section 3.2(a) hereinafter
shall be referred to as the "ADJUSTED PURCHASE PRICE."
(b) A balance sheet of Seller as of the Closing Date (the
"CLOSING BALANCE SHEET") shall be jointly prepared by Purchaser and Seller in
accordance with GAAP applied consistently with GAAP as utilized in preparing the
balance sheet as of September 30, 1997, prepared by Seller, and attached as
Exhibit 1 (the "INITIAL BALANCE SHEET").
(c) Not later than ninety days (90) after the Closing Date,
Seller and Purchaser will complete the Closing Balance Sheet, which will show
the Final Net Book Value and which will not include any Excluded Assets or
Excluded Liabilities. Seller will give Purchaser access to Seller's books and
records not included in the Assets to the extent reasonably requested by
Purchaser for purposes of joint preparation of the proposed Closing Balance
Sheet and will assist Purchaser and its representatives in the preparation of
the proposed Closing Balance Sheet. Purchaser and Seller shall conduct a joint
physical inventory count as of the Closing. If the parties cannot agree on the
proposed Closing Balance Sheet, any disputes not resolved by Seller and
Purchaser within one hundred and twenty (120) days after the Closing will be
resolved by an accounting firm mutually acceptable to both parties or, in the
absence of agreement within fifteen (15) days, by a "big-six" accounting firm
selected by lot after eliminating Purchaser's and Seller's principal outside
accountants (in either case, the "FIRM"). The Firm shall make a determination on
the disputes so submitted, using such investigative and other means as the Firm
deems appropriate, as well as such modifications, if any, to the Closing Balance
Sheet and the Final Net Book Value as reflect such determination and the same
shall be conclusive and binding upon the parties. The Firm's determination shall
not exceed the amount proposed by Seller nor fall below the amount proposed by
Purchaser for the Final Net Book Value. The fees and expenses of the Firm shall
be shared equally by and invoiced separately to Seller and Purchaser.
(d) Not later than thirty (30) days after the engagement of the
Firm (as evidenced by its written acceptance by facsimile or otherwise to either
or both parties), the parties shall submit simultaneous briefs to the Firm (with
a copy to the other party) setting forth their respective positions regarding
the issues in dispute, and not later than thirty (30) days after the submittal
of such briefs, the parties shall submit simultaneous reply briefs (with a copy
to the other party). The Firm shall render its decision resolving all disputes
within thirty (30) days after submittal of the reply briefs.
AGREEMENT AND
PLAN OF REORGANIZATION PAGE 6
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If additional briefing, a hearing, or other information is required by the Firm,
the Firm shall give notice thereof to the parties as soon as practicable before
the expiration of such latter thirty (30) day period, and the parties shall
promptly respond with a view to minimizing any delay in the decision date.
(e) Any adjustment required hereunder shall be payable as
follows:
(i) If the Final Net Book Value is less than the Initial
Net Book Value, then the Initial Purchase Price shall be reduced
dollar-for-dollar for the difference and the number of shares of Purchaser Stock
payable to Seller shall be reduced accordingly, based on the Market Value of the
shares. Such reduction shall be applied to the Holdback Shares in accordance
with the Escrow Agreement or shall be paid by Seller to the extent that the
reduction exceeds the value of the then remaining Holdback Shares.
(ii) If the Final Net Book Value is greater than the
Initial Net Book Value, then the Initial Purchase Price shall be increased
dollar-for-dollar for the difference and the number of shares of Purchaser Stock
payable to Seller shall be increased accordingly, based on the Market Value of
the shares. In the event of such an increase, Purchaser shall, within 45 days of
the determination of the Adjusted Purchase Price, issue and deliver share
certificates to Seller's shareholders in the percentages directed by Seller
representing the additional shares of Purchaser Stock payable hereunder.
Seller's shareholders shall be deemed to be shareholders of record of such
additional shares of Purchaser Stock as of the Closing Date. No shares to be
issued to Seller's shareholders pursuant to this paragraph shall become Holdback
Shares.
(f) The purpose of this Section 3.2 is to determine the purchase
price to be paid by Purchaser under this Agreement. Accordingly, any
determination pursuant to subparagraph 3.2 (c) above made by the Firm shall not
be deemed to be an Indemnification by either Seller or Purchaser, as the case
may be, pursuant to Section 15, nor subject to the limitation on indemnities set
forth in Section 15.3 hereof.
3.3 FINAL ADJUSTMENT. The Adjusted Purchase Price shall be further
adjusted as follows: On the second anniversary of the Closing Date, Seller shall
remit to Purchaser any portion of the Retained Cash that has not been expended
before that date. The Adjusted Purchase Price shall be increased by the amount
of such remittance, and any such increase shall be paid by the delivery to
Seller (or Seller's shareholders as designated by Seller) within thirty (30)
days after such remittance of additional shares of issued and outstanding
Purchaser Stock with a Market Value equal to the remittance. This adjustment
shall be in addition to any adjustment made pursuant to the remittance of the
remaining Dissenter's Fund as provided in Section 2.2(d).
3.4 MAXIMUM SHARES TO BE ISSUED. In no event shall the total number of
shares of Purchaser Stock to be issued pursuant to Sections 2.2(d), 3.2 and 3.3
hereof, plus any shares issued pursuant to the Registration Rights Agreement as
a result of Purchaser's delay in registering the Purchaser Stock, exceed 600,000
shares.
AGREEMENT AND
PLAN OF REORGANIZATION PAGE 7
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3.5 NON-ASSIGNMENT. The rights of Seller and Seller's shareholders to
receive additional shares of Purchaser Stock pursuant to Sections 2.2(d), 3.2
and 3.3, and pursuant to the Registration Rights Agreement as a result of
Purchaser's delay in registering the Purchaser Stock, are non-assignable.
4. ASSUMPTION OF LIABILITIES AND OBLIGATIONS.
4.1 ASSUMPTION OF CERTAIN LIABILITIES AND OBLIGATIONS BY PURCHASER.
Upon, from and after the Closing Date, and except for the Excluded Liabilities
(defined below), Purchaser shall, without any further responsibility or
liability of, or recourse to, Seller, or any of its directors, shareholders,
officers, employees, agents, consultants, representatives, affiliates,
successors, or assigns, absolutely and irrevocably assume, promise to pay, and
be liable and responsible solely for the following liabilities and obligations
of Seller (the "ASSUMED LIABILITIES"):
(a) The liabilities outstanding as of the Closing Date, as
subsequently accrued or reserved for on the Closing Balance Sheet (including but
not limited to liability for Taxes accrued as of the Closing Date).
(b) Seller's obligations to fill purchase orders received from
its customers to the extent such orders are unfilled on the Closing Date. To the
extent that any purchase order exceeds $100,000 it is set forth on the Purchase
Order Schedule and Purchaser will not assume any purchase order exceeding
$100,000 that is not so scheduled.
(c) Seller's obligations to purchase or pay for goods and
services incurred, contracted for, or ordered through the Closing Date.
(d) Seller's obligations and liabilities relating to periods on
or after the Closing Date under the Contracts listed in the Contracts Schedule
and Real Property Schedule attached hereto. Purchaser will not assume any
Contract with an obligation exceeding $100,000 that is not listed on the
Contracts Schedule.
(e) Seller's obligations to perform warranty repairs on products
of Seller.
(f) Seller's obligations to pay commissions to Asfahl to the
extent accrued or reserved for on the Closing Balance Sheet.
(g) All other obligations of Seller assumed by Purchaser pursuant
to any other provision of this Agreement.
4.2 EXCLUDED LIABILITIES. Except for the Assumed Liabilities, and except
as otherwise provided in this Agreement, Seller shall, without any
responsibility or liability of, or recourse to Purchaser or any of its
directors, shareholders, officers, employees, agents, consultants,
representatives, affiliates, successors, or assigns, absolutely and irrevocably
retain any and all
AGREEMENT AND
PLAN OF REORGANIZATION PAGE 8
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liabilities and obligations of any kind or nature, whether foreseen or
unforeseen, known or unknown, existing or which may arise in the future, fixed
or contingent, matured or unmatured of Seller arising out of (a) the ownership,
use or possession of the Assets, or the operation or conduct of the Business,
prior to the Closing Date (the "EXCLUDED LIABILITIES"). The Excluded Liabilities
shall include, but not be limited to:
(a) all litigation and claims described in the Schedules to this
Agreement or hereafter commenced based on the acts or omissions of Seller or the
Subsidiaries or the condition of the Assets prior to the Closing Date;
(b) any patent infringement claims, or product liability claims
with respect to any products shipped by Seller prior to the Closing Date;
(c) any claims asserted against Seller, any Subsidiary, or
Purchaser arising from the spilling, leaking, pumping, pouring, emitting,
emptying, discharging, releasing, injecting, escaping, leaching, dumping,
disposing, storing or placing materials or substances into, or otherwise causing
damage to the environment based on acts or omissions of Seller prior to the
Closing Date, and any claims asserted against Seller, any Subsidiary, or
Purchaser under any federal, state or local statute, regulation or ordinance in
any way related to the protection of the environment based on acts or omissions
of Seller prior to the Closing Date;
(d) except as otherwise provided in Article 5, all liabilities or
obligations of any nature to any of Seller's employees or former employees or
consultants or former consultants, including those employed or formerly employed
or engaged in the Business by Seller or the Subsidiaries, including without
limitation workers compensation, disability and medical benefits payable as a
matter of law, contract or pursuant to benefit programs or otherwise with
respect to any injury, illness or medical conditions arising out of events or
exposures prior to the Closing Date, any retiree and inactive employee benefits
described in Section 5.3, any wages, commissions, vacations, severance pay or
other benefits under Seller's Plans (defined below) with respect to any
employee, beneficiary, former employee or retiree of Seller;
(e) any and all liabilities to the extent not accrued or reserved
for on the Closing Balance Sheet, except as otherwise expressly provided in
Section 4.1.
(f) any Taxes, except to the extent accrued for in the Closing
Balance Sheet;
(g) the liabilities described in the Other Excluded Liabilities
Schedule attached hereto;
(h) any design defect claims with respect to any product units
shipped prior to the Closing Date;
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PLAN OF REORGANIZATION PAGE 9
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(i) any product warranty claims with respect to any product units
shipped prior to the Closing Date, except that Purchaser expressly agrees to
make repairs to such products; or
(j) unless otherwise specifically agreed by Seller, any
obligation that would fail to be treated as a "liability" for purposes of
Section 368(a)(1)(C) of the Code.
5. PENSION AND EMPLOYEE MATTERS.
5.1 SCOPE OF SECTION. This Article 5 contains the covenants and
agreements of the parties with respect to (a) the status of employment of the
employees of Seller or the Subsidiaries employed in the Business upon the sale
of the Business to Purchaser ("EMPLOYEES"), and (b) employee benefit plans.
Nothing herein expressed or implied confers upon any Employee or former employee
of Seller or the Subsidiaries any rights or remedies of any nature or kind
whatsoever under or by reason of this Article 5, including, without limitation,
any rights of employment by Purchaser or any of Purchaser's affiliates for a
specific period or any additional rights under or with respect to any benefit
plans or policies.
5.2 EMPLOYMENT STATUS. Effective as of the Closing Date, Purchaser shall
offer full-time employment to those Employees who are actively employed in the
Business on the Closing Date and listed on the Labor and Benefits Schedule. It
is agreed that employees on medical disability or other leaves of absence
related to pregnancy or disability shall be shown on the Labor and Benefits
Schedule in a separate category; and if these employees would have been entitled
to be rehired upon the termination of their disability or pregnancy leave under
the terms and conditions of the Americans with Disabilities Act (or any other
law requiring reemployment under certain circumstances), then Purchaser shall
assume the same responsibilities that Seller would have had under the applicable
laws. That is, if Seller would have been obligated to have made a reasonable
accommodation in rehiring these individuals, then Purchaser shall stand in the
shoes of Seller for this purpose. Employees whose employment has terminated or
will terminate prior to the Closing Date are not to be considered actively
employed. Seller agrees to use reasonable efforts to encourage its Employees to
become employees of Purchaser as of the Closing Date, which reasonable efforts
shall include affording Purchaser reasonable opportunities to review employment
and personnel records of Employees, to discuss with Employees terms and
conditions of employment with Purchaser as of the Closing Date and to distribute
to the Transferred Employees (defined below) forms and documents relating to
employment with Purchaser. Unless required by law, Purchaser shall have no
obligation to offer employment to or hire Employees not actively employed in the
Business on the Closing Date or not listed on the Labor and Benefits Schedule.
Employees who accept Purchaser's offer of employment are hereinafter
collectively called "TRANSFERRED EMPLOYEES." Seller shall deliver to Purchaser
as of the Closing Date all personnel files and records relating to Transferred
Employees. To employees offered employment, Purchaser shall offer benefits
substantially similar those it offers its former Bendix employees in Torrance,
California, which such benefits are specifically set forth on the Transferred
Employee Benefits Schedule. Purchaser shall raise the base salaries (as listed
in the Labor and Benefits Schedule) and/or provide a one-time bonus to all
AGREEMENT AND
PLAN OF REORGANIZATION PAGE 10
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Transferred Employees effective as of the Closing Date, in the amounts set forth
on the Transferred Employee Benefits Schedule.
5.3 RETIREE BENEFITS. Seller and the Subsidiaries shall retain
responsibility for and provide any benefit to persons who are in retirement
status and beneficiaries of persons who were receiving any benefits as of the
Closing Date. With respect to former employees or the beneficiaries of former
employees who are either exercising their rights to continuation health care
coverage under COBRA (defined below) or who are entitled to exercise a right to
continuation of health care coverage under COBRA as of the Closing Date,
Purchaser shall accept responsibility for providing this health care coverage,
providing notice to those employees identified by Seller in the Labor and
Benefits Schedule who are eligible for COBRA continuation health care coverage,
and meeting the requirements of the law for providing notice (if such notice has
not already been given) and continuation coverage under Purchaser's health plan.
Provided that nothing herein shall change the ability of Purchaser to require
that the said former employees pay for such health care coverage in accordance
with the provisions of COBRA.
5.4 EMPLOYEE BENEFIT PLANS.
(a) Effective on the Closing Date, each Transferred Employee
shall cease to be an active participant in Seller's Plans (defined below) and
shall become eligible to participate in the benefit plans, policies and
arrangements of Purchaser subject to the terms and conditions of this Agreement
and of such plans, policies and arrangements. Except as otherwise specifically
provided herein, Purchaser assumes no liability or obligation with respect to,
and receives no right or interest in, any of Seller's Plans.
(b) Each such plan is described on the Transferred Employee
Benefits Schedule. Purchaser shall grant to each Transferred Employee credit for
his or her service with Seller or any Subsidiary prior to the Closing Date for
purposes of participation eligibility, vesting, retirement eligibility, and
benefit accrual under any "employee pension benefit plan" maintained by
Purchaser and for determining "months of participation" under the AlliedSignal
Savings Plan or the AlliedSignal Thrift Plan. For purposes of this paragraph,
each Transferred Employee's service with QSI, whether before or after QSI became
a Subsidiary of Seller, shall be considered "service with Seller."
(c) Purchaser shall take such action as is necessary to assume
the Tensor, Inc. Money Purchase Pension Plan as of the Closing Date.
(d) Seller shall take such action as is necessary to terminate
the Seller's Profit Sharing Plan within 30 days after the Closing Date and shall
within 30 days after such termination submit such plan to the IRS for a
favorable determination letter upon its termination. Subject to receipt of a
favorable IRS determination and applicable law, Seller's employees participating
in such plan shall be entitled to (i) take a distribution from the plan subject
to any Tax withholding and penalty applicable to such distribution, (ii)
transfer their accounts to the applicable Purchaser savings
AGREEMENT AND
PLAN OF REORGANIZATION PAGE 11
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plan as a rollover contribution, or (iii) transfer their account to an
Individual Retirement Account (IRA).
5.5 WELFARE PLANS. Seller shall remain solely responsible for all claims
incurred by any Employee or Transferred Employee under any of Seller's "employee
welfare benefit plans," as defined in Section 3(1) of Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), on or before the Closing Date,
whether or not such claims have been submitted prior to the Closing Date, and
Purchaser shall have no liability for any such claims incurred.
5.6 OTHER COMPENSATION. All accrued but unpaid holiday, vacation, sick
pay, wages, salaries, and bonuses of any Transferred Employee shall be paid by
Seller prior to the Closing Date, and Purchaser shall have no liability or
obligation for any such pay to any Transferred Employee.
5.7 SEVERANCE.
(a) Seller shall pay and be solely liable for and shall indemnify
and hold Purchaser harmless for all obligation, cost or expense for severance
pay, termination indemnity pay, salary continuation, special bonuses or like
compensation under Seller's Plans (defined below), policies or arrangements.
(b) Purchaser shall pay and be solely liable for and shall
indemnify and hold Seller harmless for all obligation, cost or expense for (a)
severance pay, termination indemnity pay, salary continuation, special bonuses
or like compensation under Purchaser's plans, policies or arrangements and (b)
liability under the Worker Adjustment and Retraining Notification Act, arising
from, relating to or claimed by reason of actions required by this Agreement or
which result from or relate to actions taken or omissions by Purchaser.
5.8 HEALTH CARE CONTINUATION COVERAGE. Seller shall pay and be solely
liable for and shall indemnify and hold Purchaser harmless from and against and
in respect of any and all losses, damages, liabilities, Taxes, and sanctions
that arise under Section 4980B of the Code, interest and penalties, and costs
and expenses (including, without limitation, disbursements and reasonable legal
fees incurred in connection therewith and in seeking indemnification therefor,
and any amounts or expenses required to be paid or incurred in connection with
any action, suit, proceeding, claim, appeal, demand, assessment or judgment)
imposed upon, incurred by, or assessed against Purchaser arising by reason of or
relating to any failure of Seller to comply with the continuation health care
coverage requirements of Section 4980B of the Code and Sections 601 through 608
of ERISA which failure occurred with respect to any current or prior Employee or
any qualified beneficiary of such Employee (as defined in Section 4980B(g)(l) of
the Code) prior to the Closing Date. Provided however, this indemnity and hold
harmless does not include those former Employees or the qualified beneficiaries
of those former Employees of Seller identified on the Labor and Benefits
Schedule who have exercised their COBRA (defined below) rights and whose
continuation health care coverage has been assumed by Purchaser or are entitled
to exercise such rights as of the Closing Date. In the event that a former
employee was not afforded proper notice of his/her rights to continuation health
AGREEMENT AND
PLAN OF REORGANIZATION PAGE 12
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care coverage pursuant to the terms of COBRA and part of the correction of
failure to give notice is to offer a new notice and allow the former Employee or
any qualified beneficiary of such employee to exercise the right to health care
continuation coverage, then Purchaser shall cooperate with Seller and offer such
continuation health care coverage, at Purchaser's expense, to the affected
Employees or the qualified beneficiaries of such employees in order to mitigate
the potential costs and losses to Seller.
5.9 PURCHASER INCENTIVE BONUS PLAN. Purchaser shall establish a
performance incentive bonus plan for the benefit of all Transferred Employees,
including the "KEY EMPLOYEES" identified on the Transferred Employee Benefits
Schedule. Under such plan, each Transferred Employee shall be eligible for a
bonus within a target range of 20% to 35% of base annual compensation upon
meeting certain performance goals to be established by Purchaser, which
performance goals are listed and specifically set forth on the Transferred
Employee Benefits Schedule. The plan shall continue in effect for three years
following the Closing Date for all Transferred Employees. Following this three
year period, Purchaser shall have the option to terminate the plan provided that
it increases the then base annual compensation of all plan participants by 15%,
which increase shall be separate from and in addition to any other increases
granted pursuant to this Agreement. Purchaser employees hired after Closing to
work in the business previously conducted by Seller shall participate in such
plan in the sole discretion of Purchaser.
5.10 PURCHASER'S STOCK BONUS PLAN FOR CERTAIN TRANSFERRED EMPLOYEES.
Immediately after the Closing, to provide an enhanced level of compensation to
Transferred Employees for services to be rendered by them to Purchaser and to
provide those Transferred Employees with an incentive to continue their
employment with Purchaser, Purchaser will set aside a sufficient number of
shares of Purchaser's common stock to be valued at $3,133,000 based on Market
Value (the "BONUS SHARES") to be used in a nonqualified stock bonus plan for
certain Transferred Employees in amounts set forth on the Employee Stock Bonus
Schedule. Purchaser's nonqualified stock bonus plan shall provide that the Bonus
Shares shall be paid out in two equal installments and that the first
installment and the second installment of the Bonus Shares will be paid by
Purchaser in Purchaser Stock that has been fully registered on Form S-8 and is
tradable on the New York Stock Exchange, or cash, at Purchaser's option, on the
first and second anniversaries of the Closing, respectively. A Transferred
Employee who is employed by Purchaser on an installment date or becomes disabled
before that installment date or who is terminated for no reason or for reasons
other than cause before that installment date and the beneficiaries of the
estate of any Transferred Employee who dies before that installment date shall
otherwise be entitled to receive the Transferred Employee's full share of that
installment and any subsequent installments. A Transferred Employee who retires,
voluntarily terminates employment or is terminated for cause shall forfeit any
bonus not yet payable as of the date of such Transferred Employee's termination.
Any bonus that lapses for any reason shall be retained by Purchaser; provided,
however, that if any portion of Philip Walters' bonus lapses, the amount of such
lapsed bonus shall be placed in escrow by Purchaser for a four year period from
the date of lapse or until such date as Walters provides Purchaser with a
written release of any such claims, whichever occurs earlier, and, if not used
to pay any claim by Walters related to such bonus, shall be shared among the
remaining employees in proportion to the amounts due to each of the remaining
employees on the respective payment dates.
AGREEMENT AND
PLAN OF REORGANIZATION PAGE 13
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Payments will be "grossed up" by an additional cash payment to
cover the federal and state income taxes due on the bonus amounts using an
assumed effective federal income tax rate of 35% and an assumed effective state
income tax rate (for those employees that are subject to state income tax) of
5%.
Any dividend declared or paid on the Bonus Shares from the
Closing Date to the date of payment to the Transferred Employees shall become a
part of the Bonus Shares. Except as set forth above, in order to receive any
installment of the Purchaser bonus, a Transferred Employee must be an employee
of Purchaser at the time of payment.
5.11 PRE-EXISTING PATENT ROYALTY OBLIGATIONS. Purchaser will assume and
continue any agreements between Seller and its employees set forth on the Labor
and Benefits Schedule for the payment of royalties on Patents issued prior to
Closing. All employee rights in Patents issued subsequent to the Closing Date
shall be governed by Purchaser's policies regarding employee generated patents.
5.12 EMPLOYMENT TAXES.
(a) Seller hereby acknowledges that for FICA and FUTA purposes,
Purchaser qualifies as a successor employer with respect to the Transferred
Employees. In connection with the foregoing, the parties agree to follow the
"Alternate Procedures" set forth in section 5 of Revenue Procedure 96-60 1996-2
C.B. 399. Seller and Purchaser understand that Purchaser shall assume Seller's
entire obligation to furnish a Form W-2, Wage and Tax Statement to the
Transferred Employees for the entire year in which the Closing Date occurs.
Purchaser shall, pursuant to Revenue Procedure 96-60 retain the responsibility
for furnishing the said Form W-2 to those employees who are not retained by, or
who do not accept employment with, Purchaser.
(b) In addition to all personnel files and records relating to
Transferred Employees that Seller shall deliver to Purchaser when their
employment commences with Purchaser as otherwise required by this Agreement,
Seller shall timely provide Purchaser with any and all other information it
needs to properly comply with federal and state employment Tax requirements,
which in no event shall be more than 10 business days from the date of a written
request for such information.
(c) Seller will permit Purchaser to apply for a transfer of the
rating account of Seller and each of the Subsidiaries with respect to the
Business. With respect to Seller and each of the Subsidiaries, Seller shall
deliver to Purchaser within 5 business days from the date hereof copies of (i)
Form 940, Employer's Annual Federal Unemployment Tax Returns for 1996 and 1997,
(ii) state unemployment Tax rate notices for 1996 and 1997, and (iii) benefit
change statements that itemize claims charged against the state account of
Seller and each of the Subsidiaries in each state in which the Business is
operated for the four most recent calendar quarters.
AGREEMENT AND
PLAN OF REORGANIZATION PAGE 14
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6. REPRESENTATIONS AND WARRANTIES OF SELLER.
Seller represents and warrants to Purchaser as follows:
6.1 CORPORATE STATUS. Seller is a corporation duly organized, validly
existing and in good standing under the laws of Texas. Each of the Subsidiaries
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction in which it is incorporated. Each of Seller and the
Subsidiaries is duly qualified to transact business as a foreign corporation in
those jurisdictions where required to be so qualified. Each of Seller and the
Subsidiaries has full corporate power and authority to conduct the Business as
it has been and is now being conducted.
6.2 AUTHORITY. Except for obtaining the approval of the board of
directors and the shareholders of Seller and the Subsidiaries to the
transactions contemplated hereby, no other corporate action must be taken to
make this Agreement and all other agreements, instruments and documents to be
executed and delivered hereunder, valid and legally binding upon Seller and the
Subsidiaries in accordance with their respective terms, subject to general
principles of equity and except as the enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization or other similar laws of
general application relating to creditors' rights.
6.3 NO CONFLICT. The consummation of the transactions contemplated by
this Agreement and all other agreements, instruments and documents to be
delivered hereunder will not result in the breach of any term or provision of
the Articles of Incorporation or Bylaws of Seller or any of the Subsidiaries,
except as disclosed on the Consents Schedule, or result in the breach of any
term or provision of, or constitute a default (or an event that with notice or
lapse of time or both would become a breach or default) under or result in a
violation of, any agreement, contract, instrument, order, judgment or decree, or
result in any lien, third-party right of termination, cancellation, or
acceleration of any obligation under any agreement or other instrument of any
kind to which Seller or any of the Subsidiaries is a party. Except as disclosed
on the Patents and Technology Schedule, neither Seller nor any of the
Subsidiaries is a party to or bound by any agreement that restricts or purports
to restrict the ability of any of them to engage in the Business in any location
currently engaged in by Seller or the Subsidiaries.
6.4 FINANCIAL STATEMENTS. Exhibit 1 sets forth true and complete copies
of:
(a) the Initial Balance Sheet and related statements of income
and cash flow of the Business for the six (6) month period ended September 30,
1997, and
(b) the balance sheets of the Business for the fiscal years ended
March 31, 1994, March 31, 1995, March 31, 1996 and March 31, 1997, and the
related statements of income and cash flow for each year then ended.
The Initial Balance Sheet contained in Exhibit 1 presents fairly the financial
position of the Business as of the respective date thereof in conformity with
GAAP consistently applied throughout the
AGREEMENT AND
PLAN OF REORGANIZATION PAGE 15
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periods covered thereby. Each of the income statements and statements of cash
flow and changes in financial position are not in accordance with GAAP, but
accurately present the information set forth therein.
6.5 SHAREHOLDER AND SUBSIDIARIES. Seller directly or indirectly owns
100% of the issued and outstanding capital stock of each of the Subsidiaries.
6.6 REAL PROPERTY. The Real Property Schedule lists all of the Real
Property (a) owned or leased by Seller and (b) owned or leased by one of the
Subsidiaries and used or held for use in the operation of the Business as it is
currently being operated, including all easements, rights of way, and other
appurtenant rights, and, as to Owned Real Property (defined below), sets forth
all easements, covenants, restrictions and other matters of record in the
official public records of the county in which any Real Property is located. As
to each particular parcel of Real Property, the Real Property Schedule
identifies the entity owning or leasing the parcel. Seller or one of the
Subsidiaries has good and indefeasible title to each parcel of Real Property
listed on Part A of the Real Property Schedule (collectively, the "OWNED REAL
PROPERTY") free and clear of all mortgages, liens, deeds of trust, security
interests or other encumbrances (including without limitation third party leases
or subleases, easements and rights of way), except (a) liens for Taxes and
general and special assessments not yet due and payable or being contested in
good faith by appropriate proceedings, or (b) such imperfections of title,
easements, restrictions and encumbrances which are described in Part A of the
Real Property Schedule and which do not materially interfere with the present
use of any of the Owned Real Property or otherwise impair the operations of the
Business in any material respect.
Except as otherwise set forth in Part B of the Real Property Schedule,
Seller or one of the Subsidiaries holds by valid and outstanding lease or
sublease each Real Property interest listed on Part B of the Real Property
Schedule (collectively, the "LEASED REAL PROPERTY"). The leases and subleases
identified in Part B of the Real Property Schedule are in full force and effect
and neither Seller nor the Subsidiaries has received written notice of any
default thereunder, or has knowledge of any condition, event or circumstance
which with notice or lapse of time, or both, would constitute a default
thereunder. Seller's and the Subsidiaries' activities on the Owned Real Property
are in compliance with applicable zoning regulations and Seller is not aware of
any proposed changes in applicable zoning regulations that would materially
adversely affect such activities.
Except as specifically set forth herein, the Real Property will be
conveyed to Purchaser "AS IS, WHERE IS" and "WITH ALL FAULTS."
6.7 PERSONAL PROPERTY. The Personal Property Schedule contains a list of
all items of Personal Property with a book value in excess of $10,000 that is
used or held for use by Seller or one of the Subsidiaries in the operation of
the Business and includes all items reflected in Net Plant and Equipment on the
Initial Balance Sheet. As to each item of Personal Property listed, the name of
the entity owning or leasing that item is also set forth. None of the Personal
Property is in need of replacement, maintenance or repair, except for
replacement, maintenance or repair in the ordinary course of business. Except as
set forth in the Contracts Schedule attached hereto, all leases,
AGREEMENT AND
PLAN OF REORGANIZATION PAGE 16
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conditional sale contracts or licenses pursuant to which Seller may hold or use
any interest owned or claimed in or to tangible personal property are in full
force and effect and, with respect to the performance of Seller, Seller has
received no written notice of default thereunder, and has no knowledge of any
default, or event of default, or event, which with notice or lapse of time or
both, constitutes a default.
6.8 INVENTORY. The Initial Balance Sheet reflects all of the Inventory
of Seller and the Subsidiaries which is used and held for use in the operation
of the Business. The value of the Inventory shown on the Initial Balance Sheet
has been established in accordance with GAAP consistently applied. Since the
date of the Initial Balance Sheet, the Inventory has been maintained, and orders
for Inventory items have been made, only in the ordinary course of business.
6.9 ACCOUNTS RECEIVABLE. The Initial Balance Sheet reflects all of the
Accounts Receivable of Seller and the Subsidiaries. All Accounts Receivable are
bona fide, enforceable, and collectible in accordance with their terms (except
as may be limited by applicable bankruptcy, insolvency, reorganization or other
similar laws of general application relating to creditors' rights), and are not
subject to any claims, disputes or offsets. The Initial Balance Sheet and the
Closing Balance Sheet will contain no reserve for uncollectible Accounts
Receivable. Solely for the purposes of determining whether an Account Receivable
proves to be collectible within the meaning of this Section 6.9, all receipts
from a customer shall be deemed to have been applied to outstanding invoices in
chronological order.
6.10 TITLE TO PERSONAL PROPERTY. Except as otherwise set forth in this
Agreement or in the Schedules hereto, Seller or one of the Subsidiaries has good
and indefeasible title to all Personal Property, Inventory and Accounts
Receivable, free and clear of all liens, deeds of trust, mortgages, contractual
restrictions, security interests, claims and similar encumbrances, except: (a)
liens for Taxes and general and special assessments not yet due and payable or
being contested in good faith by appropriate proceedings; or (b) such
imperfections of title, easements, restrictions and encumbrances which are
disclosed in the Personal Property Schedule and which do not materially impair
the operations of the Business.
6.11 CONTRACTS. The Contracts Schedule attached hereto lists all written
contracts (including purchase orders), written commitments and other written
agreements of the Business which meet any of the following criteria:
(a) involve future expenditures or receipts with respect to goods
or services in connection with the Business having cash payments in excess of
$10,000 annually; or
(b) involve a lease, sublease, installment purchase or similar
arrangement for the use of personal property in connection with the Business
having cash payments in excess of $100,000 annually; or
AGREEMENT AND
PLAN OF REORGANIZATION PAGE 17
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(c) contain commitments of suretyship, guaranty or
indemnification by Seller or any of the Subsidiaries in connection with the
Business (except for guarantees, warranties and indemnities in connection with
the sale of goods and/or services of the Business in the ordinary course of
business); or
(d) contain an indenture, mortgage, pledge, extension of credit
(other than credit terms offered to customers in connection with the sale of
goods and/or services of the Business in the ordinary course of business), or
other financing commitment for the borrowing or lending of funds by or from
Seller or its Subsidiaries from or to any person in connection with the Business
or which is binding upon the Business or the Assets; or
(e) create agency or distributorship relationships relating to
the Business; or
(f) are proposed to be transferred hereunder and will require
consent to assign by any third party; or
(g) involve confidentiality or secrecy relating to the Business.
Except as otherwise indicated in the Contracts Schedule:
(a) each of the Contracts is legal, valid and binding upon all
parties thereto and enforceable against all parties thereto in accordance with
its terms (except as may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws of general application relating to
creditors' rights);
(b) no party to any of the Contracts has been given or has given
notice of default to any other party thereunder;
(c) no condition exists which with notice or lapse of time or
both would constitute a default under any Contract or cause any waiver of rights
thereunder;
(d) there is no reasonable basis for any claim against Seller
with respect to any Contract relating to the Assets;
(e) the transfer of the Assets to Purchaser pursuant to this
Agreement will not cause a violation of or default under, and, except as set
forth in the Consents Schedule, does not require the consent of any party to,
any Contract; and
(f) the Contracts are capable of being performed with the Assets
being transferred hereunder or later acquired in the ordinary course of
business.
AGREEMENT AND
PLAN OF REORGANIZATION PAGE 18
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6.12 PATENTS AND TECHNOLOGY; TRADEMARKS.
(a) The Patents and Technology Schedule attached hereto lists
with respect to the Business:
(i) all patents, patent applications, technical drawings
and software owned by Seller or any Subsidiary and used or held for use by the
Business;
(ii) all licenses and non-assertion rights granted to
Seller or any Subsidiary by others for the practice of a patented invention
and/or for the use of proprietary technology;
(iii) all licenses and non-assertion rights granted to
others by Seller or any Subsidiary for the practice of a patented invention
and/or for the use of proprietary technology;
(iv) all orders, decrees, judgments, claims, proceedings
(including, for example, opposition, nullity, revocation or conflict
proceedings), mortgages, liens or encumbrances or demands of any other person,
pertaining to patents and/or proprietary technology since January 1, 1993 to the
date of the Patents and Technology Schedule;
(v) all patents, patent applications and/or technology
shared by Seller and its affiliates other than Subsidiaries;
(vi) all interferences pending before the United States
Patent and Trademark offices;
(vii) all patent and/or technology settlement agreements
in effect;
(viii) all joint or sponsored research or technology or
development agreements having current obligations;
(ix) all consulting agreements relating to technical or
business matters having current obligations; and
(x) all other contracts relating to intellectual property
in effect or currently being negotiated.
Except as disclosed in the Patents and Technology Schedule, the current
conduct of the Business does not infringe (directly, indirectly, or
contributorily), violate, conflict with or result in a misappropriation or
unauthorized use of the intellectual property of any other person and there are
no United States or other foreign patents or patent applications the claims of
which prevent or would prevent Purchaser from operating the Business or the
Assets as currently operated.
AGREEMENT AND
PLAN OF REORGANIZATION PAGE 19
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Except as otherwise provided in this Agreement or in the Patents and
Technology Schedule, all of the trade secrets, know-how, inventions, processes,
manufacturing, engineering and other technical information used by Seller or the
Subsidiaries are included in and are a part of the Technology or are in the
public domain. The Patents and Technology Schedule accurately describes the
owner of each of the patents. Except as set forth on the Patents and Technology
Schedule, the patents are free and clear of any mortgages, liens, encumbrances
and obligations to other persons of whatever kind and character, except as set
forth in the Patents and Technology Schedule. Except as set forth in the Patents
and Technology Schedule, there are no claims or demands of any other person,
firm or corporation pertaining to any of the Patents, Technology or Patent and
Technology Licenses, and no proceedings have been instituted, are pending, or
are threatened which challenge any of Seller's or the Subsidiaries' rights in
respect thereto, and none is subject to any outstanding order, decree, judgment
or stipulation.
(b) The Trademarks and Copyrights Schedule sets forth all
registered trademarks, service marks, trade names and copyrights owned and/or
used in the Business, all trademark license agreements or rights as licensee
under trademark agreements, in each case duly noted as registered, or pending
registration in the countries listed and any limitations on ownership, liens, or
encumbrances, and claims, demands, infringements or proceedings which challenge
these rights. Seller is the sole and exclusive owner, to the extent shown in the
Trademarks and Copyrights Schedule, of each of the trademarks listed in the
Trademarks and Copyrights Schedule, and the holder of the full record title to
the trademark registrations listed in the Trademarks and Copyrights Schedule,
and all the aforesaid are free and clear of any mortgages, liens and
encumbrances to other persons of whatever kind and character, except as set
forth in the Trademarks and Copyrights Schedule. Except as disclosed in the
Trademarks and Copyrights Schedule, there are no claims or demands of any other
person, firm or corporation pertaining to the aforesaid, and no proceedings have
been instituted, are pending, or are threatened which challenge Seller's or the
Subsidiaries' rights in respect thereto and none is subject to any outstanding
order, decree, judgment or stipulation.
6.13 LITIGATION, CLAIMS AND PROCEEDINGS. The Litigation Schedule
attached hereto lists all civil fines, penalties, claims, actions, suits,
administrative or arbitration proceedings or investigations and any final order,
writ, judgment, injunction, decree, determination or other award of any court or
any governmental agency, which is related to the Business or the Assets, from
January 1, 1994 to the date hereof. Except as set forth in the Litigation
Schedule, there are no judgments, orders, writs, or injunctions of any foreign,
federal, state or local court or governmental authority, lawsuits, arbitrations,
claims, governmental proceedings or notices of violation presently pending, or
to Seller's or the Subsidiaries' knowledge, threatened, against Seller or the
Subsidiaries, or by which Seller is bound, and which is related to the Business
or the Assets. Except as otherwise provided in this Agreement, Purchaser shall
have no liability with respect to any fines, penalties, claims, actions, suits,
administration or arbitration proceedings relating to facts, circumstances or
conditions existing or occurring before the Closing Date.
AGREEMENT AND
PLAN OF REORGANIZATION PAGE 20
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6.14 ENVIRONMENTAL CONDITIONS. The Environmental Disclosure Schedule
attached hereto sets forth the following information:
(a) Map(s) showing the location of any current and former (i)
landfills, surface impoundments, pits, ponds, lagoons, underground injection
wells, waste piles, land treatment units and other land-based units used for the
handling, treatment, recycling, reuse, storage and disposal (hereinafter,
"MANAGEMENT") of wastes and (ii) all underground, in-ground or on-ground storage
tanks, on property which has been or is currently owned by Seller or the
Subsidiaries in connection with the Assets or the Business;
(b) For any land-based units identified in Clause (a),
identification of the time period used, type, frequency and volume of waste,
method of waste Management, and whether, based on currently available
information, there is any evidence of releases of pollutants or contaminants
from such units onto the ground or subsurface or into groundwater or surface
waters;
(c) For any tanks identified in Clause (a), identification of the
time period used, material being stored, status of compliance with applicable
regulations and when and what tests, if any, have been conducted regarding tank
integrity and test results, and whether, based on currently available
information, there is any evidence of releases of material from such units onto
the ground or subsurface or into groundwater or surface waters;
(d) A list and description of any evidence of soil or groundwater
contamination caused by Seller or the Subsidiaries on or migrating from property
which has been or is currently owned by Seller or the Subsidiaries in connection
with the Assets or the Business which is not addressed by Clauses (b) and (c);
(e) A list of any sites to which wastes generated by Seller or
the Subsidiaries from the property that has been or is currently owned or leased
by Seller or the Subsidiaries have been sent for Management, the owner or
operator of such off-site facilities, method of waste Management used, and time
period of use;
(f) Reports of releases (including continuous release reports) of
hazardous or extremely hazardous substances, if any, occurring on or from the
Real Property since January 1, 1986 and reported to the National Response
Center, State Emergency Response Commission or Local Emergency Planning
Committee pursuant to requirements of the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended by the Superfund Amendments
and Reauthorization Act of 1986 ("CERCLA"), or to any other foreign, federal, or
federal governmental agency or authority;
(g) A list and brief description of any known non-compliance, if
any, occurring on or from facilities of the Business since January 1, 1986 with
conditions of environmental permits, licenses or requirements of the Clean Air
Act, Clean Water Act, Resource Conservation and Recovery Act or Section 6(e) of
the Toxic Substances Control Act or similar foreign state or local
AGREEMENT AND
PLAN OF REORGANIZATION PAGE 21
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statutes, laws, ordinances, rules or regulations and reported to or identified
by any governmental authority;
(h) Reports of environmental audits of facilities, if any,
currently owned by the Business conducted since January 1, 1986, audit reports
and action plans;
(i) A list and brief description of environmental claims,
litigation and other legal proceedings (including notices of violation,
citations, orders, consent orders, and administrative or judicial enforcement
proceedings), if any, initiated since January 1, 1986 or currently pending in
connection with the Business. This item includes all legal proceedings which
have been concluded (e.g., a judgment or consent decree has been entered), if
any, but pursuant to which work is on-going (e.g., a decree requiring remedial
activity to be undertaken) or other obligations remain pending;
(j) Any permits and licenses and pending applications for permits
and licenses for facilities which are currently owned by the Business. For U.S.
facilities, this item includes notifications to governmental agencies required
by Sections 3010(a) (notice of hazardous waste activity) and 9002 (underground
storage tanks) of RCRA and notices and reports required pursuant to Sections
302, 311, 312 and 313 of Title III of the Superfund Amendments and
Reauthorization Act of 1986 ("SARA");
(k) A list of any contracts involving the off-site transportation
or Management of hazardous wastes generated by the Business since January 1,
1986;
(l) Any CERCLA Section 104(e) requests for information, or
requests under analogous state statutes and responses, correspondence and other
communications relating thereto;
(m) A list of any contracts involving the Management of hazardous
wastes generated by the Business at facilities other than those currently owned
or leased by the Business;
(n) A list of any facilities currently owned or leased by the
Business which are known by Seller to contain asbestos and a description of the
location and condition of the asbestos, if such location and condition are known
to Seller;
(o) A list of any PCB Transformers, PCB-Contaminated
Transformers and PCB Large High or Low Voltage Capacitors, as these terms are
defined in 40 CFR 761 on facilities which are currently owned by the Business
and annual documents required by 40 CFR 761.180 since 1986 for the Business'
U.S. facilities;
The information contained in the Environmental Disclosure Schedule is
true, correct and complete in all material respects. Purchaser shall have no
liability with respect to any environmental matter set forth in the
Environmental Disclosure Schedule.
AGREEMENT AND
PLAN OF REORGANIZATION PAGE 22
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Except as set forth in the Environmental Disclosure Schedule, the
Business has been and currently is operated in compliance with all environmental
requirements, there has been no discharge, emission, release, disposal, or
exposure of employees to any hazardous material that exposes Seller or any
Subsidiary to environmental damages, Seller and the Subsidiaries have all
permits and licenses required under any environmental requirements and is in
compliance with the terms and conditions of such permits and licenses and there
is not pending, nor is there now, to Seller's or any of the Subsidiaries'
knowledge, threatened, any suit, complaint, administrative action or other
formal or informal administrative investigation or proceeding alleging that
Seller or any of the Subsidiaries is in violation of foreign, federal, state or
local environmental laws, rules or regulations in connection with the operation
of the Business or that Seller or any of the Subsidiaries is a party responsible
for remedial investigation or action in connection with the operation of the
Business pursuant to any statutes, laws, ordinances, rules and regulations.
6.15 PERMITS AND LICENSES. The Permits and Licenses Schedule attached
hereto lists all governmental or other permits, licenses, approvals,
certificates of inspection, and other authorizations which are issued to, held
or used by Seller or any of the Subsidiaries in connection with the current
operation of the Business, and any limitations thereto. Except as listed in the
Permits and Licenses Schedule, Seller and the Subsidiaries have all 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. Neither
Seller nor any of the Subsidiaries has received notice alleging that any other
governmental or other permits, licenses, approvals, certificates of inspection,
filings, franchises and other authorizations are required.
6.16 COMPLIANCE WITH LAW. Except as otherwise disclosed in any of the
Schedules hereto, neither Seller nor any of the Subsidiaries is in default under
or 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
nor has Seller nor any of the Subsidiaries received notice alleging any such
defaults or violations or knowledge of any events or conditions which may
constitute potential defaults or violations, except where the failure to so
comply would not have a material adverse effect on the Business.
6.17 CONSENTS. Except as set forth in Section 6.2 or the Consents
Schedule attached hereto and as required by the H-R-A Act (defined below), 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 (a) to make this Agreement or any of the
agreements or instruments to be executed and delivered pursuant hereto a legal,
valid and binding obligation of Seller or any of the Subsidiaries, or (b) for
Seller or the Subsidiaries to consummate the transactions contemplated
hereunder.
AGREEMENT AND
PLAN OF REORGANIZATION PAGE 23
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6.18 LABOR AND EMPLOYMENT MATTERS. There have been no union organizing
efforts with respect to Seller or any Subsidiary (each, a "COMPANY") conducted
within the last three years and there are none now being conducted with respect
to any Company. The Companies have not at any time during the three years prior
to the date of this Agreement had, nor is there now threatened, a strike, work
stoppage, work slowdown or other material labor dispute with respect to or
affecting the Business. Except as set forth on the Labor and Benefits Schedule,
(i) no employee of any Company is represented by any union or other labor
organization; (ii) there is no charge or complaint, including any unfair labor
practice charge or any claim of discrimination or claim of wrongful, illegal,
unethical or retaliatory treatment or discharge, which is pending with any
Governmental Entity or threatened against any Company relating to any of its
employees; and (iii) other than in the ordinary course of business, there is no
commitment or agreement to increase wages or modify the terms and conditions of
employment of employees of any Company, however, the Company reserves the right
to pay fiscal year end bonuses. Seller has provided Purchaser with copies of any
collective bargaining agreement or other agreement with any union or other labor
organization representing employees of any Company.
6.19 EMPLOYEE BENEFITS.
(a) Set forth on the Labor and Benefits Schedule is a true and
complete list of the following:
(i) Separately by location, the names, job titles and
current salary or wage rates of all employees of each Company and their hourly
or yearly salary, together with a summary of all bonus, incentive compensation
or other additional compensation or similar benefits paid to such persons for
the 1997 calendar year;
(ii) Separately by location, the names, job titles and
current salary or wage rates of all independent contractors, including any
consultants, and leased employees, as defined in Section 414(n) of the Code, who
perform services for a Company (accountants and attorneys are excluded); and
(iii) All of (x) the employee benefit plans, arrangements
or policies (whether or not written, whether U.S. or foreign, and whether or not
subject to ERISA), including, without limitation, any stock option, stock
purchase, stock award, retirement, pension, deferred compensation, profit
sharing, savings, incentive, bonus, health, dental, hearing, vision, drug, life
insurance, cafeteria, flexible spending, dependent care, fringe benefit,
vacation pay, holiday pay, disability, sick pay, workers compensation,
unemployment, severance pay, employee loan, educational assistance plan, policy
or arrangement, and (y) any employment, indemnification, consulting or severance
agreement, under which any employee of former employee of a Company has any
present or future right to benefits or under which a Company has any present or
future liability (collectively, the "SELLER'S PLANS").
AGREEMENT AND
PLAN OF REORGANIZATION PAGE 24
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(b) Seller has made available to Purchaser a complete and current
copy of each Seller's Plan document or a written description of any unwritten
plan; any trust agreement or insurance contract related to a plan; the most
recent employee handbooks, policies and statements of practices and, for each
plan subject to ERISA, the most recent summary plan description, the most recent
IRS determination letter for each plan intended to be Tax-qualified; and the two
most recent (i) Forms 5500 and attached schedules and (ii) PBGC Forms 1 and, if
applicable, Forms 1-ES.
(c) Except as set forth on the Labor and Benefits Schedule:
(i) No Seller's Plan covers employees other than employees
or former employees of a Company. For the purpose of this subsection (i), an
"employee" may include a "leased employee" (as that term is defined in Section
414(n) of the Code) in certain circumstances. Neither any Company nor any entity
that is or was a member of a controlled group with, under common control with,
or otherwise required to be aggregated with, any Company as set forth in Section
414(b), (c), (m) or (o) of the Code (an "Affiliate") has communicated to present
or former employees of a Company, or formally adopted or authorized, any
additional plan or any change in or termination of any existing plan, other than
as required by this Agreement.
(ii) Each Seller's Plan has been operated and administered
in accordance with its terms and, the applicable provisions of ERISA, the Code
and other applicable Laws.
(iii) Each Seller's Plan which is a "group health plan"
subject to the continuation coverage requirements of Section 4980B of the Code
and Part 6 of Title I of ERISA ("COBRA") which is maintained by a Company or any
of its Affiliates has, to the best knowledge of Seller, been operated and
administered, in all material respects, in accordance with such requirements.
(iv) Each Seller's Plan subject to the Health Insurance
Portability and Accountability Act of 1996, the Newborns' and Mother's Health
Protection Act of 1996, or the Mental Health Parity Act of 1996 complies with
the applicable requirements of such acts.
(v) Each Seller's Plan intended to be Tax-qualified under
Section 401(a) of the Code is a prototype plan; and such prototype plan has
received a favorable determination letter from the IRS as to its Tax-qualified
status under the Code. Except for amendments to the prototype plans that are
required under the various income tax law changes enacted since 1994, and, to
the best of Seller's knowledge, nothing has occurred since the date of such
favorable determination letter which would have a material adverse effect on the
qualified status of such Seller's Plan. Seller has not sought a determination
letter on its own with respect to each such prototype plan on the basis that
such action was not required for the prototype plans adopted by Seller.
(vi) All contributions and premiums required to have been
paid under or with respect to any Seller's Plan have been timely paid.
AGREEMENT AND
PLAN OF REORGANIZATION PAGE 25
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(vii) Each individual who is characterized by Seller as an
independent contractor for purposes of income Tax withholding or employment or
unemployment Taxes has been appropriately classified up to the Closing Date as
an independent contractor under IRS Rev. Rul. 87-41 or Section 530 of the
Revenue Act of 1978.
(d) The Labor and Benefits Schedule identifies each Seller's
Plan, if any, which provides health, life insurance or other welfare benefits to
retired or other terminated employees of a Company other than continuation
coverage required by COBRA.
(e) With respect to any Seller's Plan, no actions, suits, claims
or proceedings (other than claims for benefits) specific to any of Seller's
Plans are pending and solely with respect to any Seller's Plan threatened and no
facts or circumstances exist which could be reasonably expected to give rise to
any such actions, suits, claims or proceedings.
(f) No Seller's Plan is currently under governmental
investigation or audit, and, no such investigation or audit is contemplated or
under consideration.
(g) No event has occurred and no condition exists that could be
reasonably expected to subject any Company or any Seller's Plan to any Tax,
fine, penalty or other liability arising under, or with respect to, any Seller's
Plan or any employee benefit plan of an Affiliate.
(h) Seller does not have and has never maintained a defined
benefit plan.
(i) No Seller's Plan is a "multi-employer plan" within the
meaning of Section 3(37)(A) of ERISA, and no Company has any outstanding
liability with respect to any such plan (contingent or otherwise).
6.20 HEALTH AND SAFETY CONDITIONS. The Health and Safety Conditions
Schedule attached hereto lists the following with respect to the Business:
(a) A list of material safety data sheets relating to the
products of the Business and any chemical substances or mixtures used by the
Business;
(b) A list of product labels for the products of the Business;
(c) summaries of corporate, group, divisional, or plant safety,
health and TSCA audits relating to the Business and action plans for responding
to audit findings since January 1, 1993 to the date of the Health and Safety
Conditions Schedule, and audits conducted before such date if action plans have
not been completed; and summaries of all reports, assessments, medical
surveillance programs, surveys or analyses addressing the operational safety of
facilities and/or activities (e.g., transportation) of the Business and/or
hazards and risks including risk of episodic releases and impact of routine,
continuous releases associated therewith, including but not limited to process
risk surveys, operational safety surveys, air emissions modeling, and risk
assessments;
AGREEMENT AND
PLAN OF REORGANIZATION PAGE 26
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(d) a summary of toxicological studies conducted by or on behalf
of the Business or with respect to the Assets;
(e) industrial hygiene surveys in the files of Seller related to
the Business or the Assets since January 1, 1993;
(f) all OSHA Form 200s for the Business since January 1, 1993;
(g) citations, notices of violations, orders, consent orders,
administrative or judicial enforcement proceedings from governmental agencies on
Health and Safety concerning the Business since January 1, 1986 or which are
currently pending;
(h) all current health and safety permits and licenses;
(i) copies of reports, if any, of each OSHA, State OSHA or TSCA
inspection concerning the Business since January 1, 1993;
(j) copies of any submissions to EPA or other governmental bodies
or agencies concerning the Business since January 1, 1993 with respect to any
health and safety laws and copies of all records relating to such laws,
including TSCA Sec. 8(a) and (c); and
(k) copies of all TSCA Section 5 PMNs, notices of commencement of
manufacture or import, or consent orders relating to the Business.
The information contained in the documents listed in the Health and
Safety Conditions Schedule is true, correct and complete in all material
respects. Purchaser shall have no liability with respect to any matter set forth
on the Health and Safety Conditions Schedule.
Except for the facts set forth in the Health and Safety Conditions
Schedule, the operation of the Business and the condition of the Assets are in
compliance with all applicable federal, state and local occupational health and
safety laws, rules and regulations.
6.21 BANK ACCOUNTS. The Bank Account Schedule contains a complete list
of all Bank Accounts used or held by Seller or the Subsidiaries for use in the
Business and the authorized signatories associated therewith.
6.22 CUSTOMERS AND SUPPLIERS. The Customers and Suppliers Schedule
contains a current and complete list of all customers and suppliers of the
Business since January 1, 1994. Neither Seller nor any Subsidiary has received
any notice that any customer or supplier representing more than 1% of the sales
or purchases made by the Business during the most recent fiscal year has ceased
or will cease to do business with Seller or the Subsidiaries or has reduced or
intends to reduce the level of its business with Seller or the Subsidiaries or
has threatened to take any action against Seller or the Subsidiaries as a result
of its business with them.
AGREEMENT AND
PLAN OF REORGANIZATION PAGE 27
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6.23 INSURANCE. The Insurance Schedule lists all insurance policies in
force with respect to the Business, including product liability and automobile
liability, and all historical loss runs of workers compensation claims and
general liability from January 1, 1994 to the present. Seller has made available
to Purchaser true and correct copies of all such policies with riders or
amendments thereto. Current period policies are in full force and effect, and
all premiums currently due and payable thereon have been paid.
6.24 ORAL CONTRACTS. Except for those arrangements disclosed as Oral
Contracts on the Oral Contracts Schedule, there are no material oral contracts
enforceable against Seller and/or its Subsidiaries.
6.25 TAXES.
(a) Seller and each of the Subsidiaries have (i) timely filed all
returns and reports for Taxes, including information returns, that are required
to have been filed in connection with, relating to, or arising out of the
Business or the Assets, (ii) paid to the appropriate Taxing Authority all Taxes
that are shown to have come due pursuant to such returns or reports and (iii)
paid to the appropriate Taxing Authority all other Taxes not required to be
reported on returns in connection with, relating to, or arising out of, or
imposed on the property of the Business for which a notice of assessment or
demand for payment has been received or which have otherwise become due.
(b) All such returns or reports were complete and accurate in all
material respects at the time of filing and do not contain a disclosure
statement under Code Section 6662 (or any predecessor provision or comparable
provision of any Law).
(c) There are no unpaid Taxes with respect to any period ending
on or before the Closing Date which are or could give rise to a lien on the
Assets or the Business, except for current Taxes not yet due and payable.
(d) Except as set forth on the Tax Schedule, there are no pending
audits or, to the knowledge of Seller or any of the Subsidiaries threatened
audits or assessments relating to Taxes with respect to the Business or the
Assets. There is no unassessed Tax deficiency proposed or threatened against
Seller or any of the Subsidiaries relating to or affecting the Assets or the
Business, nor is any action or proceeding pending, or to the knowledge of Seller
or any of the Subsidiaries threatened by any Taxing Authority for assessment,
reassessment or collection of Taxes.
(e) Neither Seller nor any Subsidiary is bound by any closing
agreement or offer in compromise with any Taxing Authority. There are no
requests for rulings or determinations in respect of Tax pending between Seller
or any Subsidiary and any Taxing Authority.
(f) Except as set forth on the Tax Schedule, none of the Assets
(i) is property that is required to be treated as owned by another person
pursuant to the "safe harbor lease" provisions of former Code Section 168(f)(8),
(ii) is "Tax-exempt use property" within the meaning of Code
AGREEMENT AND
PLAN OF REORGANIZATION PAGE 28
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Section 168(h) or (iii) directly or indirectly secures any debt the interest on
which is Tax-exempt under Code Section 103(a).
(g) Neither Seller nor any Subsidiary is a party to any
agreement, contract, arrangement or plan that has resulted or would result,
separately or in the aggregate, in connection with this Agreement or any change
of control of Seller or any Subsidiary, in the payment of any non-exempt "excess
parachute payments" by Seller within the meaning of Code Section 280G.
(h) Neither Seller nor any Subsidiary has agreed to make, or is
required to make, any adjustment under Code Section 263A or 481(a) or any
comparable provision of state or foreign Tax laws by reason of a change in
accounting method or otherwise and neither Seller nor any Subsidiary has taken
action which is not in accordance with past practice that could defer a
liability for Taxes of Seller or any Subsidiary from any period prior to the
Closing Date to any period on or after the Closing Date; except for ordinary and
routine Code Section 263A inventory adjustments reflected in the federal income
Tax returns of Seller.
(h) The Tax Schedule contains a complete and accurate list of all
jurisdictions to which any material Tax is properly payable by Seller or any
Subsidiary.
(i) "TAX" or "TAXES" means (i) any tax imposed under Subtitle A
of the Code and any net income, alternative or add-on minimum tax, gross income,
gross receipts, sales, use, ad valorem, value added, transfer, franchise,
profits, license, lease, service, service use, withholding on amounts paid to or
by Seller, payroll, employment, excise, severance, stamp, capital stock,
occupation, property, environmental or windfall profit tax, premium, custom,
duty or other tax, governmental fee or other like assessment or charge of any
kind whatsoever, together with any interest, penalty, addition to tax or
additional amount imposed by any governmental authority (a "TAXING AUTHORITY")
responsible for the imposition of any such tax (domestic or foreign), (ii)
liability of Seller or any Subsidiary for the payment of any amounts of the type
described in (i) as a result of being a member of an affiliated, consolidated,
combined or unitary group, or being a party to any agreement or arrangement
whereby liability of Seller or any Subsidiary for payments of such amounts was
determined or taken into account with reference to the liability of any other,
and (iii) liability of Seller or any Subsidiary for the payment of any amounts
as a result of being party to any tax sharing agreement or with respect to the
payment of any amounts of the type described in (i) or (ii) as a result of any
express or implied obligation to indemnify any other person.
(j) Purchaser shall have no liability for Taxes relating to the
Business prior to the Closing Date, except to the extent accrued for on the
Closing Balance Sheet.
6.26 BUSINESS CONDUCT. During the past five years neither Seller nor the
Subsidiaries, nor any director, officer, employee or third party acting on
behalf thereof, has, in violation of the laws of the United States or any other
country:
AGREEMENT AND
PLAN OF REORGANIZATION PAGE 29
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(a) made any bribes, kickbacks or other payments, directly or
indirectly, to any person or organization, or any representative thereof, to
obtain favorable treatment in securing business or otherwise to obtain special
concessions for the Business;
(b) made any bribes, kickbacks or other payments, directly or
indirectly, to or for the benefit of any governmental official, employee or
agent, for the purpose of affecting his or her action or the action of the
government that or she represents to obtain favorable treatment in securing
business or to obtain special concessions for the Business;
(c) made any unlawful political contributions on behalf of the
Business; or
(d) otherwise used corporate funds of Seller or the Subsidiaries
for illegal purposes in connection with or on behalf of the Business.
6.27 UNDISCLOSED LIABILITIES. There are no liabilities or obligations of
the Business, either accrued, absolute, contingent or otherwise, except:
(a) those reflected or otherwise provided for in the Initial
Balance Sheet;
(b) those arising subsequent to the date of the Initial Balance
Sheet in the ordinary course of business, none of which would constitute a
violation or breach of any condition or covenant in this Agreement;
(c) those set forth in the Schedules attached hereto, as they may
be amended at Closing; or
(d) those not required to be set forth in the Schedules attached
hereto because of an express exception contained in the Section requiring such
Schedule.
6.28 NO MATERIAL ADVERSE CHANGE. Since the date of the Initial Balance
Sheet, except as otherwise set forth in this Agreement (including the Schedules
attached hereto), there has not been:
(a) any material adverse change in the financial condition or in
the operations, business, prospects, properties or assets of Seller or of the
Subsidiaries, or
(b) any damage, destruction or loss to any of the properties or
assets of Seller, whether or not covered by insurance, which has materially and
adversely affected or impaired or which could reasonably be expected to
materially and adversely affect or impair the ability of Seller to conduct the
Business consistently with Seller's practice, or
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(c) any labor trouble (including, without limitation, any
negotiation or request for negotiation, for any representation or any labor
contract) or any event or condition of any character which has materially and
adversely affected or which could reasonably be expected to materially and
adversely affect or impair the Business.
6.29 FINDER'S FEE. Seller has done nothing to cause Purchaser to incur
any liability to any party for any brokerage or finder's fee or agent's
commission, or the like, in connection with this Agreement or any transaction
provided for herein.
6.30 FULL DISCLOSURE. Each representation and warranty made or to be
made by Seller pursuant to this Agreement is true, accurate and complete in all
material respects. No representation or warranty of Seller in this Agreement or
in any writing furnished or to be furnished pursuant hereto contains or will
contain any untrue statement of a material fact or omits or will omit to state
any material fact required to make the statements herein or therein contained in
light of the circumstances not misleading.
6.31 [RESERVED].
6.32 WARRANTY CLAIMS. Seller has made available to Purchaser copies of
the standard terms and conditions of sale, delivery or lease for each of Seller
and its Subsidiaries (containing applicable guaranty, warranty, and indemnity
provisions) and, except as contained therein or as provided by law, there are no
warranties, express or implied, written or oral, with respect to the products of
the Business. Except for warranty and repair claims arising in the ordinary
course of business, there is no existing or threatened claim against Seller or
any Subsidiary for breach of any express or implied warranty (including, without
limitation, the implied warranty of merchantability and fitness for a particular
purpose) in connection with any product manufactured, sold, leased or delivered
by Seller or any Subsidiary or finished goods in inventory. Except for warranty
and repair claims arising in the ordinary course of business, each product
manufactured, sold, leased or delivered by Seller or any Subsidiary has been
manufactured, sold, leased, or delivered in conformity with all applicable
contractual commitments and all express and implied warranties, and none of the
Seller or any Subsidiary has any liability, and there is no basis for any
current or future action, suit, proceeding, hearing, investigation, charge,
complaint, claim, recall claim or demand against any of them giving rise to any
liability for replacement or repair thereof or other damages in connection
therewith. Except as may be provided by law, no product manufactured, sold,
leased or delivered by Seller or any Subsidiary is subject to any guaranty,
warranty, or other indemnity beyond the applicable standard terms and conditions
of sale or lease.
6.33 PRODUCT LIABILITY. Except as set forth on the Litigation Schedule,
there is no existing or, threatened claim, demand or cause of action asserted or
brought by any individual or entity (including those in direct contractual
relationship with Seller or any Subsidiary) for physical injury to or death of
or property damage suffered by such Person or any other Person which was caused
by any products manufactured and sold by Seller or any Subsidiary at any time
prior to the date of this Agreement. Seller is not aware of any bases for such a
claim, demand or cause of action. Except
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as otherwise provided in this Agreement, Purchaser shall have no liability with
respect to any product liability matters arising prior to the Closing Date.
6.34 RELATED PARTY TRANSACTIONS. No shareholder, employee, officer or
director of Seller or any Subsidiary or member of his or her immediate family is
indebted to Seller or any Subsidiary, nor is Seller or any Subsidiary indebted
(or committed to make loans or extend or guarantee credit) to any of such
persons, except with respect to patent royalties as set forth in Section 5.11
and the Labor and Benefits Schedule. No member of the immediate family of any
officer or director of Seller or any Subsidiary is directly interested in any
contract of the Business.
6.35 INVESTMENT PURPOSES. The Purchaser Stock is being acquired by
Seller in a transaction intended to meet the requirements of Section
368(a)(1)(C) and 368(a)(2)(G) of the Code. Accordingly, Seller intends to
transfer the Purchaser Stock to Seller's shareholders. Seller's shareholders
will thereby acquire the Purchaser Stock for investment for their own accounts,
respectively, and not with a view to, or for resale in connection with, any
distribution of any part of such securities within the meaning of such terms as
used in the Securities Act of 1933, as amended ("SECURITIES ACT"), and such
securities will not be sold, transferred or otherwise disposed of without
registration under the Securities Act or exemption therefrom. Seller has no
present intention of selling, granting any participation in, or otherwise
distributing the Purchaser Stock except in connection with a distribution to its
stockholders. By executing this Agreement, Seller further represents that Seller
does not have any contract, undertaking, agreement or arrangement with any
person to sell, transfer or grant participation to such person or to any third
person, with respect to any of the Purchaser Stock, except in connection with a
distribution to its shareholders. Seller recognizes that the offering, sale and
delivery of such securities has not been registered by Purchaser pursuant to the
registration provisions of the Securities Act in reliance upon the availability
of an exemption under the Securities Act which depends, in part, on Seller's
representations contained herein.
6.36 DEVELOPMENTAL PRODUCTS. The products listed on the Developmental
Products Schedule ("DEVELOPMENTAL PRODUCTS") are transferred to Purchaser
without any representation or warranty, including without limitation warranties
of merchantability and fitness for a particular purpose, and Purchaser takes the
Developmental Products "AS IS, WHERE IS AND WITH ALL FAULTS." For itself and its
affiliates, successors, and assigns, Purchaser hereby waives any rights it may
have or acquire to make any claim against Seller arising out of or relating to
the Developmental Products or their performance or failure to perform, any
Contract related to the Developmental Products (all of which Contracts are
listed on the Contracts Schedule and are expressly assumed by Purchaser), or any
damage the Developmental Products may cause to any third party after the Closing
Date.
6.37 C REORGANIZATION. Seller will not take any action that would be
inconsistent with or fail to take any action that is reasonably necessary or
appropriate to ensure, the qualification or treatment of the transactions
contemplated herein as a C Reorganization.
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6.38 NO OTHER WARRANTIES AND REPRESENTATIONS. Except as expressly set
forth above in this Article Six, Seller makes no warranties or representations
whatsoever concerning the Assets, the Business, or the transaction described in
this Agreement. In particular, Seller makes no representations or warranties
with respect to the results of operations of the Business or the Assets for any
period on or after the Closing Date.
7. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
Purchaser represents and warrants to Seller as follows:
7.1 DUE ORGANIZATION. Purchaser is a corporation duly organized and
validly existing and in good standing under the laws of Delaware and has all
corporate power and authority to enter into and perform its obligations under
this Agreement and all other agreements, instruments and documents to be
delivered hereunder.
7.2 AUTHORITY. Purchaser has all requisite corporate power and authority
to enter into this Agreement and to consummate the transactions contemplated
hereby. The execution, delivery and performance of this Agreement and all other
agreements, instruments and documents to be delivered hereunder have been duly
and validly authorized by the board of directors of Purchaser. No other
corporate action must be taken prior to Closing to make this Agreement, and all
other agreements, instruments and documents to be executed and delivered
hereunder valid and legally binding upon Purchaser in accordance with their
respective terms, subject to general principles of equity and except as the
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization or other similarly laws of general application relating to
creditor's rights. No consent, approval, order or authorization of, or
registration, declaration or filing with, any governmental entity is required by
or with respect to Purchaser or any of its subsidiaries in connection with the
execution and delivery of this Agreement by Purchaser or the consummation by
Purchaser of the transactions contemplated hereby, except for (i) the filing of
a pre-merger notification report by Purchaser under the H-R-A Act (defined
below), (ii) such reports under the Securities Exchange Act of 1934, as amended
(the "EXCHANGE ACT"), as may be required in connection with this Agreement and
the transactions contemplated hereby, (iii) and (iii) the requirements of any
federal or state securities laws; all of which approvals will be obtained and
requirements complied with by Purchaser on or prior to Closing Date.
7.3 COMPLIANCE WITH LAW. Purchaser has complied with and is not in
violation of applicable statutes, laws and regulations which would affect its
ability to perform its respective obligations hereunder. There is no claim,
suit, action, arbitration, administrative or other proceeding, or governmental
investigation, pending, or to the best of Purchaser's knowledge, threatened
against Purchaser affecting its ability to perform its obligations hereunder.
7.4 NO CONFLICT. The consummation of the transactions contemplated by
this Agreement and all other agreements, instruments and documents to be
delivered hereunder will not result in the breach of any term or provision of
the Articles of Incorporation or Bylaws of Purchaser or result in
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the breach of any term or provision of, or constitute a default (or an event
that with notice or lapse of time or both would become a breach or default)
under or result in a violation of, any agreement, contract, instrument, order,
judgment or decree, or result in any lien, third-party right of termination,
cancellation, or acceleration of any obligation under any agreement or other
instrument of any kind to which Purchaser is a party or by which it or any of
its property is bound.
7.5 FINDER'S FEE. Purchaser has done nothing to cause Seller to incur
any liability to any party for any brokerage or finder's fee or agent's
commission, or the like, in connection with this Agreement or any transaction
provided for herein.
7.6 VOTING RIGHTS OF PURCHASER STOCK. The shares of stock comprising the
Purchaser Stock, Holdback Shares, and shares to be issued pursuant to Sections
2.2(d), 3.2 and 3.3 hereof, and shares issued pursuant to the Registration
Rights Agreement as a result of purchaser's delay in registering the Purchaser
Stock, shall be shares of the $1.00 par value common voting stock of Purchaser,
which class of stock has the greatest voting rights of any class of Purchaser
Stock.
7.7 OPEN MARKET PURCHASES. Purchaser will be making open market and/or
block purchases of Purchaser common stock during the period between the date
hereof and the Closing Date. All such purchases shall comply with Rule 10b-18
under the Exchange Act.
7.8 C REORGANIZATION.
(a) To the best of Purchaser's knowledge in reliance on
information provided by Seller, Purchaser will acquire as a result of the
transactions contemplated herein at least ninety percent (90%) of the fair
market value of the net assets of Seller and at least seventy percent (70%) of
the fair market value of the gross assets held by Seller immediately prior to
Closing. For purposes of this representation, amounts paid by Seller to
dissenters, amounts paid by Seller to its shareholders who receive cash or other
property, amounts paid in respect of Seller's expenses of reorganization, and
all redemptions and distributions (except for regular, normal dividends) made by
Seller immediately preceding the Closing will be included as assets of Seller
held immediately prior to the Closing.
(b) Purchaser has no plan or intention to reacquire any of its
stock issued in the transactions contemplated herein.
(c) Purchaser has no plan or intention to sell or otherwise
dispose of any of the assets of Seller acquired in the transactions contemplated
herein, except for dispositions made in the ordinary course of business or
transfers described in Section 368(a)(2)(C) of the Code.
(d) Following the Closing, Purchaser will continue the historic
business of Seller and the Subsidiaries or use a significant portion of Seller's
and the Subsidiaries' historic business assets in a business.
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(e) Purchaser will pay its expenses incurred in connection with
the transactions contemplated herein.
(f) There is no intercorporate indebtedness existing between
Purchaser and Seller that was issued, acquired, or will be settled at a
discount.
(g) Purchaser is not an Investment Company as defined in Section
368(a)(2)(F)(iii) and (iv) of the Code.
(h) Purchaser does not own, directly or indirectly, nor has it
owned during the past five (5) years, directly or indirectly, any stock of
Seller.
(i) Purchaser will not take any action that would be inconsistent
with or fail to take any action that is reasonably necessary or appropriate to
ensure, the qualification or treatment of the transactions contemplated herein
as a C Reorganization.
7.9 FULL DISCLOSURE. Each representation and warranty made or to be made
by Purchaser pursuant to this Agreement is true, accurate and complete in all
material respects. No representation or warranty of Purchaser in this Agreement
or in any writing furnished or to be furnished pursuant hereto contains or will
contain any untrue statement of a material fact or omits or will omit to state
any material fact required to make the statements herein or therein contained in
light of the circumstances not misleading.
7.10 CONSENTS. Except as set forth in Section 7.2 or the Consents
Schedule attached hereto and as required by the H-R-A Act (defined below), 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 (a) to make this Agreement or any of the
agreements or instruments to be executed and delivered pursuant hereto a legal,
valid and binding obligation of Purchaser, or (b) for Purchaser to consummate
the transactions contemplated hereunder.
8. PRE-CLOSING COVENANTS.
8.1 CONDUCT OF BUSINESS. During the period from the date hereof through
the Closing Date, except as otherwise contemplated by this Agreement or as
consented to in writing by Purchaser (which consent shall not be unreasonably
withheld), Seller shall and shall cause the Subsidiaries to:
(a) Conduct the Business and utilize the Assets in the ordinary
and usual course and refrain from making capital expenditures exceeding in the
aggregate $100,000;
(b) Refrain from disclosing or entering into any license or
agreement to disclose any Patents, Technology, Trademarks, or Copyrights;
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(c) Refrain from transferring any of the Assets, except in the
ordinary course of business;
(d) Refrain from entering into any contract or other commitment
except in the ordinary course of business and for a term not exceeding ninety
(90) days and involving a commitment to pay more than $100,000;
(e) Continue to meet its contractual obligations and to pay its
obligations as they mature in the ordinary course of business, except as
contested in good faith and for which adequate reserves have been provided;
(f) Use commercially reasonable efforts to maintain the Business
intact as it is currently being operated, to retain the present employees, and
to preserve the good relations of its suppliers, customers and others with whom
it has business relations;
(g) Maintain the Assets in good working order and repair,
ordinary wear and tear excepted;
(h) Maintain levels of inventory of the Business consistent with
the past practice for the Business;
(i) Maintain accounts payable of the Business at a level that is
consistent with or below past practice for the Business;
(j) Notify Purchaser of any material adverse change with respect
to the condition of the Assets, the Assumed Liabilities, the Business, or the
prospects for the Business;
(k) Promptly deliver to Purchaser at the Closing Date, schedules
showing any changed facts or circumstances from the matters disclosed in each of
the Schedules in which Seller makes disclosures pursuant to Article 6, which
could reasonably be expected to have a material adverse effect on the Business,
each of which updated disclosures shall be subject to the terms and conditions
of this Agreement as the same were in effect immediately prior to such
disclosures and none of which disclosures shall be deemed to modify in any way
the condition stated in Section 9.2 which is based solely upon such Schedules as
set forth on the date of this Agreement;
(l) Account for, make appropriate filings with respect to, and
pay or accrue for all Taxes, assessments and other governmental charges relating
to the Business or the Assets, except as contested in good faith and for which
adequate reserves have been provided; and
(m) Refrain from increasing the amount of compensation or
benefits payable or available or to become payable or available to any Employee
and, except as specifically contemplated herein, refrain from making or
declaring any bonus payment to any Employee, except in the ordinary course of
business or consistent with past practice.
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8.2 ACCESS TO RECORDS AND PROPERTIES - CONFIDENTIALITY.
(a) From the date hereof until the Closing Date or earlier
termination of this Agreement, Seller will, and will cause the Subsidiaries to:
(i) provide Purchaser, its officers, counsel and other
representatives with access to the facilities of the Business, its principal
personnel and representatives, and such books and records pertaining to the
Business as Purchaser may reasonably request, provided 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 or any
of the Subsidiaries 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 or contract with a third party.
(b) Purchaser agrees to preserve the confidentiality of all
information about Seller, its Subsidiaries, and the Business acquired by
Purchaser in connection with this Agreement and the transactions contemplated
hereby, except for such disclosures as are reasonably necessary to enable the
attorneys, accountants and other consultants of Purchaser to effectively assist
Purchaser in connection with its rights and obligations pursuant to this
Agreement.
8.3 CONSENTS. Seller and Purchaser will each promptly make any required
filings (including responses to requests for additional information) with the
Federal Trade Commission ("FTC") and U.S. Department of Justice ("DOJ") pursuant
to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"H-R-A ACT"). Seller will use best reasonable efforts to obtain the consents set
forth in the Consents Schedule and the Contracts Schedule. The parties shall not
consummate the transactions contemplated by this Agreement unless and until all
applicable waiting periods under the H-R-A Act have expired or are otherwise
terminated and shall use best reasonable efforts to demonstrate that such
transactions should not be opposed by the FTC or DOJ and to contest applications
for preliminary injunctions.
8.4 PUBLIC ANNOUNCEMENTS. On and after the date hereof and through the
Closing Date, Seller and Purchaser shall consult with each other before issuing
any press releases or otherwise making any public statements with respect to
this Agreement and the transactions contemplated hereby. Neither Seller nor
Purchaser shall issue any press release or make any public statement prior to
obtaining the other party's approval, except that no such approval shall be
necessary to the extent disclosure may be required by law. Provided, however, in
the event disclosure is required by law,
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the party obligated to make the disclosure shall provide the other party with
notice that the disclosure will be made as soon as possible, but in no event
later that five business days before the required disclosure is made.
8.5 TITLE INSURANCE. Seller shall order, at its expense, title insurance
binders or commitments, together with legible copies of all matters of record
cited as requirements or as exceptions therein, to be issued by Chicago Title
Insurance Corporation, or such other nationally recognized title insurance
company licensed to do business in the states in which the Real Property is
located and acceptable to Purchaser, evidencing title to those parcels of Real
Property which Purchaser has designated as owned by Seller in the Real Property
Schedule, to be in a condition required for the performance of this Agreement
and agreeing to insure title for the amount of the current Tax appraisal for
each designated parcel of Real Property.
8.6 PURCHASER ACTIONS. Purchaser shall not, nor shall it permit any of
its subsidiaries to, take any action that would or is reasonably likely to
result (i) in any of its representations and warranties set forth in this
Agreement being untrue as of the date made, or (ii) in any of the conditions to
the Closing of the transactions contemplated by this Agreement not being
satisfied.
8.7 FILINGS. Purchaser shall promptly provide Seller copies of all
filings made by Purchaser with any state or federal governmental entity in
connection with this Agreement and the transactions contemplated hereby.
9. CONDITIONS TO OBLIGATIONS OF PURCHASER.
The consummation of the transactions contemplated by this Agreement is
subject to the fulfillment of each of the following conditions by Seller on or
before the Closing Date, unless waived by Purchaser:
9.1 INJUNCTIONS. 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.
9.2 CONTINUATION AND TRUTH OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Seller contained in this Agreement or in any
certificate or document 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.
9.3 FULFILLMENT OF COVENANTS. Seller shall have performed all of its
covenants, obligations and agreements contained in this Agreement to be
performed and complied with by it prior to the Closing Date.
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9.4 CERTIFICATES OF SELLER. 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.
9.5 DOCUMENTS. All documents and instruments of transfer delivered to
Purchaser at the Closing shall be in form and substance satisfactory to
Purchaser, in Purchaser's reasonable judgment, and shall be legally sufficient
to convey the Assets to Purchaser.
9.6 CONSENTS. Seller shall have obtained and delivered to Purchaser all
consents necessary for the consummation of the transactions contemplated
hereunder, including satisfactory evidence that all consents disclosed in the
Consents Schedule or the Contracts Schedule have been obtained.
9.7 OPINION OF COUNSEL TO SELLER. Purchaser shall have been furnished
with an opinion of counsel for Seller, dated as of the Closing Date, in the form
of Exhibit 2 attached hereto.
9.8 H-R-A ACT WAITING PERIODS. The waiting periods under the H-R-A Act
applicable to the purchase of the Business shall have expired or otherwise been
terminated without the threat or initiation of legal action by the FTC or the
DOJ.
9.9 NO MATERIAL ADVERSE CHANGE. There shall not have been any material
and adverse change in the financial condition, results of operation or prospects
of the Business, or in the condition of the Assets from the date hereof to the
Closing Date.
9.10 KEY EMPLOYEES. Each of the Key Employees who accepts continued
employment with Purchaser shall enter into a "RETENTION LETTER" in the form of
Exhibit 5 hereto.
9.11 COVENANTS NOT TO COMPETE. Seller shall have delivered to Purchaser
the following:
(a) The written agreements of George Roberts and Robert Waters
providing that neither shall for a period of five (5) years from the Closing
Date, engage in, invest in or provide advice to any business or sell any
products which would compete in any way with the Business as currently conducted
or solicit for employment or hire any person who was an employee of Seller, QDT,
QSI, Magrange or Purchaser on the Closing Date or at any time during such five
(5) year period. This Section 9.11 shall not prohibit Roberts or Waters from
owning the stock or other securities of any entity listed on any national or
regional stock exchange or where securities are publicly traded through any
national quotation system so long as Roberts or Waters, as the case may be, owns
less than 5% of any class of that entities' securities and does not serve as an
employee, officer or director of or independent contractor to, that entity. If
Purchaser breaches the Registration Rights Agreement, in addition to whatever
other remedies may be available to Roberts and Waters, Roberts and Waters shall
be released from such covenants.
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(b) A written agreement of (1) each shareholder employee of
Seller, other than George Roberts and Robert Waters, and (2) as a condition to
their participation in the stock bonus plan pursuant to Section 5.10 hereof,
each Key Employee who is not a shareholder of Seller, providing that such
person, for a period of three years from the Closing Date, will not (i) engage
in any business that competes with the business currently conducted by Seller or
its Subsidiaries and (ii) solicit for employment or hire any employees of
Seller, its Subsidiaries, or Purchaser; provided, however, if any Seller
shareholder employee or employee receiving the minimum compensation set forth
above is terminated for other than cause, the employee shall be released from
such covenants. For purposes of this paragraph, "cause" shall mean (1) the
conviction of such employee of a felony, (2) the willful violation by such
employee of any law, rule, regulation or order of any governmental authority
which exposes Purchaser to material civil or criminal penalties, (3) a material
breach of any covenant or condition contained in such employees' employment
contract, if any, (4) the willful failure or refusal by the employee to obey any
proper direction of Purchaser's management, consistent with the employee's
pre-Closing duties, or (5) willful under performance by such employee of his or
her employment duties. For the purposes of this paragraph, "cause" shall not
include termination of an employee because of his or her refusal to accept a
position, transfer or a change in responsibilities that would require the
employee to move or report to work in a location over fifty miles from his or
her primary jobsite as of the Closing.
10. CONDITIONS TO OBLIGATIONS OF SELLER.
The consummation of the transactions contemplated by this Agreement is
subject to the fulfillment of each of the following conditions by Purchaser on
or before the Closing Date, unless waived by Seller:
10.1 INJUNCTION. 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.
10.2 CONTINUATION AND TRUTH OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Purchaser contained in this Agreement or in
any certificates or documents delivered to Seller pursuant hereto shall 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.
10.3 FULFILLMENT OF COVENANTS. Purchaser shall have performed all of its
covenants, obligations and agreements contained in this Agreement to be
performed and complied with by the Closing Date.
10.4 CERTIFICATES OF PURCHASER. 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.
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PLAN OF REORGANIZATION PAGE 40
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10.5 OPINION OF COUNSEL TO PURCHASER. Seller shall have been furnished
with an opinion of counsel for Purchaser, dated as of the Closing Date, in the
form of Exhibit 3 attached hereto.
10.6 H-R-A ACT WAITING PERIODS. The waiting periods under the H-R-A Act
applicable to the purchase of the Business shall have expired or otherwise been
terminated without the threat or initiation of legal action by the FTC or the
DOJ.
10.7 NO MATERIAL ADVERSE CHANGE. There shall not have been any material
and adverse change in the financial condition, results of operation or prospects
of Purchaser.
10.8 REGISTRATION RIGHTS AGREEMENT. Seller, each of Seller's
shareholders and Purchaser shall have entered into a Registration Rights
Agreement, substantially in the form of Exhibit 6 attached hereto, providing
Seller's shareholders with demand registration rights with respect to their
Purchaser Stock, exercisable on the Closing Date.
11. TERMINATION; SURVIVAL.
11.1 TERMINATION. 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 consent of Purchaser and Seller upon express
approval of their respective boards of directors; or
(b) by Purchaser or Seller, if the transactions contemplated
hereby are not consummated on or before June 1, 1998.
11.2 SURVIVAL. If this Agreement is terminated pursuant to Section 11.1,
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, except
for Purchaser's covenant's regarding confidentiality as set forth in Section
8.2(b).
12. DOCUMENTS TO BE DELIVERED BY SELLER AT THE CLOSING.
At the Closing, Seller shall deliver to Purchaser:
(a) Certified copies of resolutions adopted by Seller and each of
the Subsidiaries' Boards of Directors evidencing the authorizations described in
Section 6.2;
(b) One executed and acknowledged Special Warranty Deed, in a
form reasonably acceptable to the parties hereto, with respect to each parcel of
Owned Real Property listed in Part A of the Real Property Schedule;
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(c) Executed Assignment and Assumption Agreements, in forms
reasonably acceptable to the parties hereto, with respect to any rights
appurtenant to the Owned Real Property listed in Part A of the Real Property
Schedule which cannot be transferred by deed;
(d) One executed Assignment and Assumption Agreement in a form
reasonably acceptable to the parties hereto, with respect to each parcel of
Leased Real Property listed in Part B of the Real Property Schedule;
(e) Executed bills of sale or other appropriate instruments of
transfer, in form reasonably acceptable to the parties hereto, with respect to
all of the Personal Property, Inventory, Accounts Receivable and any other
Assets owned by Seller or any Subsidiaries not transferred or assigned by any
other documents or instrument described in this Section;
(f) Executed and acknowledged Assignments, in recordable form and
reasonably acceptable to Purchaser, sufficient to transfer title to the Patents
listed as owned by Seller in the Patents and Technology Schedule;
(g) Executed and acknowledged Assignments, in forms reasonably
acceptable to the parties hereto, with respect to the Technology;
(h) Executed copies of each Assignment and Assumption Agreement,
in forms reasonably acceptable to the parties hereto, with respect to the
assignable and assumable Patent and Technology Licenses granted to Seller by
third parties and granted to third parties by Seller;
(i) Executed and acknowledged Assignments, in forms reasonably
acceptable to the parties hereto, with respect to the assumable and assignable
Trademarks owned by Seller listed in the Trademarks and Copyrights Schedule;
(j) Executed copies of Assignment and Assumption Agreements, in
forms reasonably acceptable to the parties hereto, with respect to the
assignable and assumable Trademark Licenses granted to Seller by third parties
and granted third parties by Seller;
(k) Executed and acknowledged Assignments, in forms reasonably
acceptable to the parties hereto, with respect to the Copyrights owned by Seller
listed in the Trademarks and Copyrights Schedule;
(l) Executed Assignment and Assumption Agreements in a form
reasonably acceptable to the parties hereto, with respect to the assignable and
assumable Contracts to which Seller or any of the Subsidiaries is a party;
(m) Executed documents of assignment or transfer in a form
reasonably acceptable to the parties hereto, with respect to each of the
transferable permits, licenses and authorizations listed in the Permits and
Licenses Schedule;
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(n) All consents listed in the Consents Schedule;
(o) A certificate of an appropriate officer of Seller relating to
the representations, warranties and covenants of Seller made herein as provided
in Section 9.2 and 9.3;
(p) The opinion of counsel for Seller in the form attached hereto
as Exhibit 2;
(q) Executed copies of all individual agreements containing
covenants not to compete required pursuant to Section 14.1 hereof.
(r) Copies of the Registration Rights Agreement, substantially in
the form attached hereto as Exhibit 6, executed by Purchaser, Seller and each of
Seller's shareholders.
13. DOCUMENTS TO BE DELIVERED BY PURCHASER AT THE CLOSING.
At the Closing, Purchaser shall issue and deliver the stock certificates
called for by Section 3.1 and shall execute where applicable and deliver to
Seller:
(a) An undertaking of Purchaser whereby certain obligations are
assumed by it in accordance with Section 4.1 hereof;
(b) A certified copy of resolutions adopted by Purchaser's Board
of Directors evidencing the authorizations described in Section 7.2;
(c) A certificate of an appropriate officer of Purchaser relating
to the representations, warranties and covenants made herein by Purchaser, as
provided in Sections 10.2 and 10.3;
(d) The opinion of counsel for Purchaser in the form attached
hereto as Exhibit 3.
(e) Executed Agreement of Purchaser to assume the Assumed
Liabilities.
(f) Executed Assignment and Assumption Agreements, in forms
reasonably acceptable to the parties hereto, with respect to any rights
appurtenant to the Owned Real Property listed in Part A of the Real Property
Schedule which cannot be transferred by deed;
(g) One executed Assignment and Assumption Agreement in a form
reasonably acceptable to the parties hereto, with respect to each parcel of
Leased Real Property listed in Part B of the Real Property Schedule;
(h) Executed copies of each Assignment and Assumption Agreement,
in forms reasonably acceptable to the parties hereto, with respect to the
assumable and assignable Patent and Technology Licenses granted to Seller by
third parties and granted to third parties by Seller;
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(i) Executed copies of Assignment and Assumption Agreements, in
forms reasonably acceptable to the parties hereto, with respect to the assumable
and assignable Trademark Licenses granted to Seller by third parties and granted
third parties by Seller;
(j) Executed Assignment and Assumption Agreements in a form
reasonably acceptable to the parties hereto, with respect to the assumable and
assignable Contracts to which Seller or any of the Subsidiaries is a party; and
(k) A copy of the Registration Rights Agreement substantially in
the form attached hereto as Exhibit 6 that has been executed by Purchaser.
14. POST-CLOSING OBLIGATIONS.
14.1 COVENANT NOT TO COMPETE.
(a) Seller agrees that Seller shall not, for a period of five (5)
years from the Closing Date, engage in, invest in or provide advice to any
business or sell any products which would compete in any way with the Business
as currently conducted or solicit for employment or hire any person who was an
employee of Seller, QDT, QSI, Magrange or Purchaser on the Closing Date or at
any time during such five (5) year period.
14.2 ALLOCATION OF TAXES.
(a) Seller shall be responsible for, and shall pay (or accrue for
the payment of), any and all Taxes arising or resulting from the conduct of the
Business or the ownership of the Assets prior to the Closing Date.
(b) Purchaser shall be responsible for and shall pay any and all
Taxes arising or resulting from the conduct of the Business or the ownership of
the Assets on and after the Closing Date, excluding, without limitation, all
Taxes arising or resulting from the sale of the Business and the Assets on the
Closing Date pursuant to this Agreement.
(c) All state, county or local real and personal property Tax or
other similar ad valorem state, county or local Tax on the Assets for the then
current calendar year or other current Tax period not yet due and payable shall
be prorated as of the Closing Date. If the Closing Date occurs prior to the
receipt by Seller of the Tax bill for the calendar year or other applicable tax
period in which the Closing occurs, Purchaser and Seller shall prorate such
Taxes for such calendar year or other applicable Tax period based upon the most
recent ascertainable assessed values and applying the Tax rates for the previous
calendar year or other applicable Tax period. Seller shall accrue or pay
Seller's proportionate amount of such Taxes from the beginning of such calendar
year or other applicable Tax period to the Closing Date, and Purchaser shall
assume liability for all such Taxes accrued by Seller as of the Closing Date, on
Seller's Closing Balance Sheet, as provided in
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Section 4.1(a). Further, Purchaser shall assume liability for and pay all Taxes
prorated to Purchaser and all Taxes which otherwise are not yet due and payable
as of the Closing Date.
(d) Seller shall be responsible for all transfer, documentary,
sales, use, stamp, registration, value added and other such Taxes and fees
(including any penalties, interest or additions to Tax) incurred in connection
with this Agreement (including any real property transfer Tax and any similar
Tax). Seller shall, at its own expense, file all necessary returns, reports and
other documentation with respect to all such Taxes and fees.
(e) Purchaser shall be responsible for all transfer, documentary,
sales, use, stamp, registration, value added and other such Taxes and fees
(including any penalties, interest or additions to Tax) incurred in connection
with the issuance of the Purchaser Stock or any shares of the Purchaser Stock
issued pursuant to this Agreement.
14.3 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 party as such other party reasonably may request to
evidence or perfect Purchaser's and Purchaser's subsidiaries' right, title and
interest to the Assets, or the Seller's or Seller's shareholders' or Transferred
Employees' right, title and interest to the Purchaser Stock or any shares of
Purchaser securities issued pursuant to this Agreement, and otherwise carry out
the transactions contemplated by this Agreement.
14.4 REPORTS; ACCESS TO BOOKS AND RECORDS. After the Closing, Purchaser
shall permit Seller to have reasonable access to and the right to make copies of
such of Seller's and the Subsidiaries' books, records and files as constitute
part of the Assets for any reasonable purpose of Seller, including but not
limited to, use in litigation or financial reporting, Tax return preparation, or
Tax compliance matters. Prior to disposing of any such information, Purchaser
shall afford Seller a reasonable opportunity to segregate, remove or copy such
books, records and files as Seller may select. Seller shall also permit
Purchaser reasonable access to Seller's and the Subsidiaries' corporate books
and records pertaining to the Business.
14.5 COOPERATION IN LITIGATION. Purchaser and Seller 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.
14.6 C REORGANIZATION. Neither Seller nor Purchaser will take any action
(except as required by this Agreement), nor will Seller or Purchaser fail to
take any action, that would be inconsistent with the qualification or treatment
of the transactions contemplated herein as a C Reorganization, except for such
actions as may be taken by Seller, Seller's shareholders, or Purchaser with the
consent of the other parties' Tax counsel. After Closing, Seller shall not
engage in any trade or business, but shall work to settle its affairs, and shall
distribute all of the Purchaser Stock to Seller's shareholders, shall distribute
all of its other assets to its shareholders, said distributions to be in
liquidation of Seller under Seller's Plan of Reorganization.
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15. INDEMNIFICATION.
15.1 INDEMNIFICATION BY SELLER. Except as limited by Section 15.3,
Seller shall indemnify and hold harmless Purchaser and its directors,
shareholders, officers, employees, agents, consultants, representatives,
affiliates, successors, and assigns from and against any and all claims,
liabilities, obligations, losses, costs, expenses (including without limitation,
reasonable legal, accounting and similar expenses), litigation, proceedings,
fines, Taxes, levies, imposts, duties, assessments, charges, penalties,
allegations, demands, damages (including but not limited to actual, punitive or
consequential damages), civil and criminal violations of law, settlements and
judgments of any kind or nature whatsoever (individually a "LOSS" and
collectively "LOSSES"), incurred, arising out of, or relating to any one or more
of the following:
(a) any breach or violation of any covenant made by Seller in
this Agreement;
(b) any breach of, or any inaccuracy or misrepresentation in, any
representation or warranty 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 of the Excluded Liabilities; and
(d) any proceedings or claims relating to product warranties
prior to the Closing Date.
15.2 INDEMNIFICATION BY PURCHASER. Purchaser shall indemnify and hold
harmless Seller and its directors, shareholders, officers, employees, agents,
consultants, representatives, affiliates, successors, and assigns from and
against any and all Losses incurred, arising out of, or relating to any one or
more of the following:
(a) any material breach or violation of any covenant made by
Purchaser in this Agreement;
(b) any breach of, or any inaccuracy or misrepresentation in any
representation or warranty made by Purchaser in this Agreement or in any
Schedule, agreement, instrument, certificate or similar document required to be
delivered pursuant to the terms hereof;
(c) Purchaser's operation or ownership of the Assets, and
Purchaser's obligations with respect to the Assumed Liabilities after the
Closing;
(d) subject to Section 15.3, any patent, copyright, trade secret,
or trademark infringement claim; and
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PLAN OF REORGANIZATION PAGE 46
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(e) any Losses, contractual or tort, that arise out of or relate
to the Asfahl Agreements, the exclusion of the Asfahl Agreements from the list
of Assets purchased pursuant to this Agreement, breach or termination of the
Asfahl Agreements, or any legal action commenced by Asfahl with respect to the
foregoing. Purchaser's indemnification obligations shall include the duty to
defend Seller, at Purchaser's expense, except for commissions due and payable
prior to Closing for which no reserve is provided on the Closing Balance Sheet.
15.3 LIMITATIONS ON LIABILITY.
(a) Seller and Purchaser shall equally share all amounts
including related court costs and legal fees required to be paid by Purchaser or
Seller, whether as a result of judgment or settlement, for patent, copyright,
trade secret and/or trademark infringement claims filed within 3 years following
the Closing Date arising out of or related to Seller's, any Subsidiary's or
Purchaser's use of the Assets or any part thereof, including but not limited to
the Patents and Technology. Seller's expenses pursuant to this paragraph shall
be credited to Seller for the purpose of Seller's limitation of liability to
Purchaser pursuant to Section 15.3(d). Purchaser's right to contribution from
Seller pursuant to this paragraph shall constitute Purchaser's sole and
exclusive remedy for any Loss incurred by Purchaser that arises out of or
relates to any such infringement claims.
(b) Seller's obligation to indemnify Purchaser pursuant to
Section 15.1 with respect to product liability claims shall be subject to the
following:
(i) Seller shall indemnify Purchaser for the cost of
remedying "DESIGN DEFECTS" present at the Closing Date and discovered and
reported by Purchaser to Seller in writing in accordance with Section 15.5 of
this Agreement, within 3 years following the Closing Date. For purposes of this
paragraph, "design defect" shall mean any condition that a court of competent
jurisdiction determines: (1) was present at the time of the sale of the product;
(2) prevented the product from fulfilling its intended purpose even though the
product was manufactured in accordance with applicable specifications and/or
designs with materials that were as required in the specifications; (3) was a
producing cause of the damage for which a customer of the Business seeks
recovery; and (4) that Seller reasonably should have identified and corrected
prior to sale of the product.
(ii) In the case of products shipped by Seller prior to
the Closing Date, Seller shall indemnify Purchaser for all costs of product
repair, to the extent of Seller's contractual warranty liability to Seller's
customer. For purposes of this indemnity, the cost of remedial actions shall be
deemed to include direct and indirect material, labor and general and
administrative costs (indirect material, indirect labor, and general and
administrative costs shall not, in the aggregate, exceed ten percent of direct
material and direct labor costs) of the remedial action. Purchaser will have
responsibility for all product repairs, including those repairs that will be
paid for by Seller under its indemnification obligations. Provided, however,
that Seller shall have no liability to Purchaser for product repairs that are:
(1) outside the scope of the written warranty provided by Seller in
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connection with Seller's original sale of the product; (2) made with respect to
products shipped on or after the Closing Date; or (3) within limits reserved for
in the Closing Balance Sheet.
(c) With respect to all claims for indemnification pursuant to
Section 15.1 above, except for the infringement indemnity set forth in Section
15.3(a), Seller shall have no liability or obligation to Purchaser with respect
to such claim unless and until all Losses related to such claims equal or exceed
$10,000. Claims resulting in Losses of less than $500 shall not be counted
toward the $10,000 threshold and shall be paid by Purchaser, and Seller shall
have no liability to Purchaser therefor. Purchaser shall notify Seller in
writing as provided in Section 16.5 of this Agreement of each and every claim in
excess of $500 within thirty (30) business days after Purchaser first learns of
the claim. If Seller disputes the claim, Seller may exercise its rights pursuant
to Section 15.6, Dispute Resolution.
Once claims in excess of $500 result in Losses equal to or
exceeding $10,000, Purchaser shall notify Seller and Seller shall be liable to
Purchaser for the full amount of such claims, including the first $10,000.
(d) Notwithstanding any other provision of this Agreement to the
contrary, Seller's liability to Purchaser shall in no event exceed $4,700,000.
(e) For itself and its affiliates, successors, and assigns,
Purchaser hereby waives any rights it may have or acquire to enforce any
indemnification claim, liability, or lien, charge or encumbrance against or
otherwise resort to the Retained Cash, as reduced from time-to-time by expenses
of Seller, in satisfaction of any claim Purchaser or any successors or assigns
of Purchaser pursuant to this Agreement. In exchange for the forbearance of
Purchaser, Seller agrees to account to Purchaser not less frequently than
quarterly regarding Seller's expenditure of the Retained Cash.
15.4 SURVIVAL. The representations, warranties and indemnities made by
Seller or Purchaser in this Agreement or in any Schedule, agreement, instrument
or similar document delivered pursuant hereto shall survive for a period of
three (3) years after the Closing Date, except that (a) the foregoing limitation
shall not apply to any claims for the breach of the title representations and
warranties of Seller made in Sections 6.6 and 6.10 of this Agreement which shall
survive until the expiration of the statute of limitations applicable to such
property; (b) the representations and warranties relating to Taxes made in
Section 6.25 of this Agreement shall survive until the expiration of the statute
of limitations applicable to such Taxes; and (c) the representations and
warranties relating to environmental matters made in Section 6.14 shall survive
for five years after Closing.
15.5 INDEMNIFICATION PROCEDURE.
(a) Any party seeking indemnification hereunder (the
"INDEMNITEE") shall notify the parties liable for such indemnification (each an
"INDEMNITOR") in writing of any event, omission or occurrence which the
Indemnitee has determined has given or could give rise to Losses which are
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indemnifiable hereunder (such written notice being hereinafter referred to as a
"NOTICE OF CLAIMS"). Such notice shall be given within five business days after
the Indemnitee becomes aware of its own claim or that of a third party. A Notice
of Claims 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, as the case may be, within
thirty (30) days of its receipt of a Notice of Claims, or alternatively may
contest the claim following the arbitration procedures set forth in Section
15.6; provided, however, that so long as the Indemnitor is in good faith
defending a claim pursuant to Paragraph 15.5(b) below, its obligation to
indemnify the Indemnitee with respect thereto shall be suspended.
(b) Except as provided in Sections 15.5(c) below relating to
product warranty matters, with respect to any third party claim, demand, suit,
action or proceeding which is the subject of a Notice of Claims, the Indemnitor
may, 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 cross claims 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 Indemnitor shall have exclusive control of the defense and
settlement thereof, and 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 cross claims 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 Indemnifying
Party shall require the prior written consent of the party seeking
indemnification, which consent shall not be unreasonably withheld.
(c) The following procedures shall apply to product warranty
claims for which Purchaser is entitled to indemnification hereunder: Purchaser
and Purchaser's subsidiaries shall have full responsibility to handle and settle
all product warranty claims. Not later than thirty (30) after the end of each
calendar quarter following the Closing Date, Purchaser shall submit to Seller an
invoice for product warranty claims paid in such quarter for which Purchaser is
entitled to indemnification hereunder along with appropriate supporting
documentation. If Seller does not provide Purchaser with a written Notice of
Dispute pursuant to Section 15.6 within thirty (30) days after its receipt of
Purchaser's invoice, then Purchaser shall be entitled, as its sole and exclusive
remedy, to debit the Holdback Shares in the amount of the invoice as provided in
Section 15.5(e).
(d) Notwithstanding any other provision of this Agreement to the
contrary, the amount of any indemnification claim that must be paid by Seller
during the time any Holdback Shares are held in escrow shall be paid through
Purchaser's debit against the Holdback Shares and
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shall result in a reduction in the number of Holdback Shares payable to Seller
pursuant to Section 3.1(b) hereof. Any defense or other out-of-pocket costs
incurred or required to be paid by Seller in connection with Seller's
indemnification obligations shall, after review and approval by Seller, be paid
by Purchaser and Purchaser shall obtain reimbursement by a reduction in the
number of Holdback Shares payable to Seller pursuant to Section 3.1(b) hereof,
and such reduction shall be credited to Seller for the purposes of Seller's
limitation of liability to Purchaser pursuant to Section 15.3(d).
15.6 DISPUTE RESOLUTION.
(a) DISPUTES. Any claim, dispute, or other matter in controversy
(herein called "DISPUTE"), whether based on contract, tort, statute, or other
legal theory (including but not limited to any claim of fraud or
misrepresentation), arising out of or related to the Agreement or the breach
thereof shall be settled according to the procedures set forth in this Section
15.6 exclusively; provided, however, that (a) either party may seek judicial
relief if, in its judgement, such action is necessary to avoid irreparable
damage during the pendency of such procedures, and (b) nothing in this Section
15.6 shall prevent either party from exercising any rights of termination or
suspension under applicable law.
(b) DIRECT NEGOTIATION. The parties shall endeavor in good faith
to promptly resolve the Dispute by direct negotiations between party
representatives who have authority to settle such Dispute.
(i) Any party may give the other party written notice of
any Dispute not resolved in the ordinary course of business ("NOTICE OF
DISPUTE"). Within ten (10) days after delivery of the Notice of Dispute, the
receiving party shall submit to the other a written response. The notice and
response shall include a summary of the Dispute and a statement of each party's
position. Within ten (10) days after delivery of the Notice of Dispute,
representatives of Seller and Purchaser shall meet at a mutually acceptable time
and place, or telephonically, and thereafter as often as they reasonably deem
necessary, to attempt to resolve the Dispute. All reasonable requests for
information made by one party to the other will be honored.
(ii) All negotiations pursuant to this Section are
confidential and shall be treated as compromise and settlement negotiations for
purposes of applicable rules of evidence.
(c) MEDIATION. If the Dispute has not been resolved by direct
negotiations within sixty (60) days of the response (or due date for the
response) to the disputing party's notice, or if the parties failed to meet
within twenty (20) days, the parties shall endeavor to settle the Dispute by
mediation in Austin, Texas administered pursuant to the Commercial Mediation
Rules of the American Arbitration Association ("AAA") in effect on the date of
the Notice of Dispute.
(i) Unless otherwise agreed in writing by the parties,
mediation will be commenced by notice of demand for mediation served by either
party upon the other in the same
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manner as otherwise provided for notice in this Agreement, within ten (10) days
after the expiration of the period set forth in this Section 15.6 or on such
other date as the parties mutually agree. The Notice of Demand for mediation
shall set forth with reasonable specificity the basis of the Dispute and the
performance or relief sought.
(ii) In the event either party to the Dispute has need for
material information in the possession of the other in order to prepare for
mediation, the parties shall attempt in good faith to agree on procedures for
the exchange of such information, with the help of the mediator, if required.
Any discovery disputes will be resolved by the mediator.
(iii) The mediation proceedings are confidential, and no
stenographic, visual or audio record shall be made. All conduct, statements,
promises, offers, views, documents, records, papers, and opinions, whether oral
or written, made or delivered in the course of the mediation proceedings by any
of the parties to the Dispute, their agents, employees or representatives, and
by the mediator (who will be the joint agent of the parties for the purpose of
the mediation proceedings), are confidential and shall be kept confidential by
all parties to the Dispute and the mediator. Such conduct, statements, promises,
offers, views, documents, records, papers, and opinions shall not be
discoverable or admissible for any purposes, and shall not be disclosed to
anyone not a party to the Dispute, unless required under applicable law;
provided, however, that by agreement of the parties, the settlement agreement
may be converted into an arbitration award, and the award, in turn, may be
enforced by any court having jurisdiction.
(d) ARBITRATION. If the parties have first attempted in good
faith to resolve the Dispute by direct negotiations as provided in this Section
15.6, mediation is initiated and the Dispute remains unresolved sixty (60) days
after mediation is initiated, or on whatever date the mediator sooner
determines, or the parties sooner agree in writing, that the Dispute cannot be
resolved by mediation, then the Dispute shall be settled by arbitration in
Austin, Texas in accordance with the then current Commercial Rules of
Arbitration ("ARBITRATION RULES") of the AAA in effect on the date of this
Agreement, as supplemented or modified by the following:
(i) Notice of demand for arbitration shall be filed with
the other party after the expiration of the period set forth in this Section
15.6 or such other date as the parties mutually agree.
(ii) Notwithstanding any choice of law or other provisions
of this Agreement to the contrary, the agreement to arbitrate set forth in this
Article 15.6 shall be governed by the Federal Arbitration Act, 9 U.S.C. 'SS'1 et
seq (the "ACT"), which shall not be superseded or supplemented by any other
arbitration act, statute or regulation.
(iii) In the event that all or a portion of the Dispute is
the responsibility in whole or in part of a person who is under no obligation to
arbitrate such matter with the parties in the same proceeding, then the parties
shall, in the absence of an agreement between them to the contrary, delay or
stay any arbitration between them pending the determination, in a separate
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proceeding, of the responsibility and liability of or to such person for the
Dispute or matter involved, provided that the parties shall use their best
efforts to cause any affiliate of such party to participate in such arbitration
proceedings. Each party agrees that any arbitration instituted by them under
this Section 15.6 may, at the election of the other party, be consolidated with
any other arbitration proceeding involving a common question of fact or law
between the electing party and any other persons. In any Dispute concerning the
application of this Section 15.6, the question of arbitrability shall be decided
by the appropriate court and not by arbitration.
(iv) A party who files a notice of demand for arbitration
must assert in the demand all claims, disputes or other matters then known to
that party on which arbitration is permitted to be demanded. When a party fails
to include a claim through oversight, inadvertence or excusable neglect, or when
the claim had not matured at the time of the notice of demand or was acquired
subsequently, the arbitration panel shall permit amendment. In no event shall a
demand for arbitration be made when the institution of legal or equitable
proceedings based on such Dispute would be barred by laches or any applicable
statute of limitations; and whether or not a Dispute is time-barred shall be
decided by an appropriate court having jurisdiction and not by arbitration.
(v) If the claim in the Dispute does not exceed $250,000,
there shall be a single arbitrator selected by mutual agreement of the parties
or, if the parties cannot agree on an arbitrator within ten (10) days, appointed
according to the Arbitration Rules. If the claim in the Dispute exceeds
$250,000, the arbitration panel shall consist of three (3) members, one of whom
shall be selected by each party and the third, who shall serve as chairman,
shall be selected by the two (2) so selected. If either party fails to select an
arbitrator within ten (10) days after a demand for arbitration, or if the two
arbitrators named by the parties fail to agree upon a third within ten (10) days
after the last of them have been appointed, then AAA shall select the
arbitrator(s) not selected by the parties or the selected arbitrators. All
arbitrators must be neutral and must be knowledgeable in the subject matter of
the Dispute. At least two (2) of the arbitrators on the panel (or the single
arbitrator, as the case may be) must be or have been a partner in a highly
respected law firm for at least fifteen (15) years specializing in either
general corporate or commercial transactional or litigation matters. The
mediator who has served in that capacity under this Section 15.6 or otherwise
shall not be eligible to serve as an arbitrator.
(vi) In advance of the hearing, the arbitrator(s) may
compel the parties to exchange a detailed statement of their claims, including
the names and addresses of the witnesses and a brief description of the
documents on which they intend to rely. The arbitrator(s) may exclude from the
hearing the introduction of any evidence or the testimony of any witness not
disclosed to the other party in advance as ordered by the arbitrator(s). The
arbitrator(s) may also permit the oral depositions of the parties to be taken.
However, there shall be no other pre-hearing discovery unless and then only to
the extent that all parties otherwise agree in writing.
(vii) Except for good cause, or in case of emergency, the
arbitration hearing shall commence within sixty (60) days after the notice of
demand for arbitration is given and shall proceed during each business day
thereafter until concluded.
AGREEMENT AND
PLAN OF REORGANIZATION PAGE 52
<PAGE>
<PAGE>
(viii) The award may not grant any relief that could not
be granted in court litigation to resolve the Dispute under Texas law. A
monetary award may only be made for compensatory damages, and if any other
damages (whether exemplary, punitive, consequential or other) are included, the
award shall be vacated and remanded, or modified or corrected as appropriate to
promote this damage limitation. The arbitration panel shall award the prevailing
party in the arbitration its reasonable attorneys' fees and costs incurred in
connection with the arbitration. Any party who succeeds, by claim or
counterclaim, in court proceedings to stay litigation or compel arbitration
shall also be entitled to recover all costs incurred in connection with such
proceedings, including attorneys' fees to be awarded by the court. In addition,
the arbitration panel shall award the costs of administration as it may in its
judgment decide.
(ix) The arbitration award shall be in writing and shall
include a statement of findings of fact and conclusions of law for the award.
Except as otherwise expressly provided in this Section 9.4, the award rendered
by the arbitrator(s) shall be final and judgment may be entered upon it in
accordance with the Act in any Texas court having jurisdiction.
(x) Within fifteen (15) days after the date of the
arbitration award, either party may request the arbitration panel to correct
clerical, typographical or computational errors in the award and to make an
additional award as to claims presented in the arbitration proceedings but not
dealt with in the award.
(xi) Either party can appeal, but only to a court sitting
in Texas having jurisdiction to vacate and remand, or modify or correct the
arbitration award for any of the grounds specified in the Act.
(xii) At the request of either party, but only if
contained in the initial written demand for arbitration or in the initial
response to the demand, the arbitration proceedings shall be conducted in
secrecy. In such case (a) the fact of the pending arbitration shall not be
disclosed or confirmed by the parties or the arbitration panel to any person who
is not a party to, or called to testify at, the proceedings until the
arbitration award has been made, (b) the proceedings shall not be recorded or
transcribed in any manner, and (c) all documents, testimony and records (other
than the contract documents out of which the Dispute arises) shall be received,
heard and maintained by the arbitrator in secrecy, available for inspection only
by the parties, their attorneys and by experts who shall agree, in advance and
in writing, to receive all such information in secrecy. Also in such case, the
information shall not be described in the arbitration award in such manner as to
be commercially useful.
15.7 SHAREHOLDERS OF SELLER NOT LIABLE TO PURCHASER. Under no
circumstances shall any shareholder, officer or director of Seller or any
Subsidiary, together with their representatives, heirs or assigns, be personally
liable to Purchaser and/or any of its subsidiaries, affiliates, successors, or
assigns for, nor shall any property of any shareholder, officer or director of
Seller or any Subsidiary, other than the Holdback Shares prior to their release
to Seller's shareholders pursuant to the Escrow Agreement, be subject to any
lien, charge or encumbrance of any kind with respect to, any liability
AGREEMENT AND
PLAN OF REORGANIZATION PAGE 53
<PAGE>
<PAGE>
of Seller or any Subsidiaries to Purchaser and/or any of its subsidiaries,
affiliates, successors, or assigns under this Agreement, it being understood
that Seller intends to liquidate and dissolve immediately after Closing and
distribute its net assets to its shareholders. For itself and its affiliates,
successors, and assigns, Purchaser hereby releases, discharges and waives any
rights it may have or acquire to enforce any such personal liability or lien,
charge or encumbrance.
16. SECURITIES LAW MATTERS.
16.1 REGULATION D DISCLOSURE MATERIALS. Purchaser has provided to Seller
(and Seller has, without review or comment, forwarded to Seller's shareholders)
the information concerning Purchaser required to be delivered to purchasers that
are not "accredited investors" (as defined in Rule 501(a) under the Securities
Act) by Rule 502(b) under the Securities Act.
16.2. SHAREHOLDER MEETING. Seller held a special meeting of Seller's
shareholders (the "SPECIAL MEETING") for the purpose of considering and acting
upon the transactions contemplated hereby. At the Special Meeting, all of
Seller's shareholders were present in person or by proxy and the transactions
contemplated hereby were approved.
17. MISCELLANEOUS.
17.1 EXPENSES. Except as otherwise provided herein and except for costs
associated with a breach hereof, whether or not the transactions contemplated
hereby are consummated, all costs, expenses and disbursements incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such costs and expenses.
17.2 BULK SALES. Purchaser hereby waives compliance with any applicable
bulk sales law; provided, however, that Seller hereby agrees to indemnify
Purchaser against, and to hold Purchaser harmless from, any and all loss, damage
or liability, and all expenses (including reasonable legal fees) incurred or
arising out of the failure to comply with such bulk sales laws, unless such
failure is the result of the act, omission, or financial condition of Purchaser.
17.3 ASSIGNABILITY. This Agreement shall not be assignable by either
party without the express written consent of the other.
17.4 BINDING EFFECT. This Agreement shall be binding upon, inure to the
benefit of, and be enforceable by the successors and permitted assigns of the
parties hereto.
17.5 NOTICES. All notices or other communications required or permitted
to be given hereunder shall be (as elected by the party giving such notice): (i)
personally delivered against receipt to the party to whom it is to be given with
copies to all others listed, or (ii) transmitted by postage prepaid certified
mail, return receipt requested, as follows:
AGREEMENT AND
PLAN OF REORGANIZATION PAGE 54
<PAGE>
<PAGE>
If to Seller:
Tensor, Inc.
1840 Royston Lane
Round Rock, Texas 78664
Attention: George F. Roberts
With a copy to:
Michael R. Perkins
Sneed, Vine & Perry, P.C.
901 Congress Avenue
Austin, Texas 78701
If to Purchaser:
AlliedSignal, Inc.
101 Columbia Road
Morristown, NJ 07962
Attention: General Counsel
With a copy to:
AlliedSignal Inc.
11300 Corporate Avenue
Lenexa, KS 66219
Attention: General Counsel
All notices and other communications shall be deemed to have been duly
given on (i) the date of receipt if delivered personally, or (ii) the day of
delivery as indicated on the return receipt if delivered by mail. Any party
hereto may change its address for purposes hereof by notice to all other
parties.
17.6 COUNTERPARTS. This Agreement may be executed simultaneously in two
(2) or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute and be the same instrument.
17.7 SCHEDULES AND EXHIBITS. All Schedules and Exhibits attached hereto
are incorporated herein and expressly made a part of this Agreement as though
completely set forth herein. All references to this Agreement herein or in any
of the Schedules or Exhibits shall be deemed to refer to this entire Agreement,
including all Schedules and Exhibits.
AGREEMENT AND
PLAN OF REORGANIZATION PAGE 55
<PAGE>
<PAGE>
17.8 GOVERNING LAW AND FORUM. This Agreement shall in all respects be
interpreted, construed, and governed by and in accordance with the laws of the
State of Texas, disregarding any conflict of laws provisions which may require
the application of the law of another jurisdiction. Any cause of action that
arises out of or that relates in any way to the transactions that are the
subject of this Agreement shall be filed and conducted in State or Federal Court
in Travis County, Texas.
17.9 DEFINITIONS. The following terms are defined in this Agreement at
the locations indicated below:
<TABLE>
<CAPTION>
Term Section
---- --------
<S> <C>
AAA 15.6(c)
Accounts Receivable 2.1(g)
Act 15.6(d)(ii)
Adjusted Purchase Price 3.2(a)
Arbitration Rules 15.6(d)
Affiliate 6.19(c)(i)
Asfahl 2.2(b)
Asfahl Agreements 2.2(b)
Assets 2.1
Assumed Liabilities 4.1
Bonus Shares 5.10
Business Page 1
CERCLA 6.14(f)
Closing 1
Closing Date 1
Closing Balance Sheet 3.2(b)
COBRA 6.19(c)(iii)
Code 2.4
Company 6.18
Contracts 2.1(f)
Copyrights 2.1(e)
Developmental Products 6.36
Dispute 15.6(a)
Dissenter's Fund 2.2(d)
DOJ 8.3
ERISA 5.5
Employees 5.1
Escrow Agreement 3.1(b)
Exchange Act 7.2
Excluded Assets Page 1
Excluded Liabilities 4.2
FTC 8.3
</TABLE>
AGREEMENT AND
PLAN OF REORGANIZATION PAGE 56
<PAGE>
<PAGE>
<TABLE>
<S> <C>
Final Net Book Value 3.2(a)
Firm 3.2(c)
GAAP 3.2(a)
Holdback Shares 3.1(b)
H-R-A Act 8.3
Indemnitee 15.5(a)
Indemnitor 15.5(a)
Initial Balance Sheet 3.2(b)
Initial Net Book Value 3.2(a)
Initial Purchase Price 3.1(a)
Inventory 2.1(c)
IRS 2.4
Key Employees 5.9
Leased Real Property 6.6
Loss/Losses 15.1
Magrange Page 1
Management 6.14(a)
Market Value 3.1(b)
Net Book Value 3.2(a)
Notice of Claims 15.5(a)
Notice of Dispute 15.6(b)(i)
Owned Real Property 6.6
Patents 2.1(d)
Patent and Technology Licenses 2.1(d)
Personal Property 2.1(b)
Purchaser Page 1
Purchaser Stock 3.1(a)
QDT Page 1
QSI Page 1
Real Property 2.1(a)
Retained Cash 2.1(m)
Retention Letter 9.10
SARA 6.14(j)
Securities Act 6.35
Seller Page 1
Seller's Plans 6.19(a)(iii)
Special Meeting 16.2
Subsidiaries Page 1
TCBA 2.2(d)
Taxes 6.25(i)
Taxing Authority 6.25(i)
Technology 2.1(d)
Trademarks 2.1(e)
</TABLE>
AGREEMENT AND
PLAN OF REORGANIZATION PAGE 57
<PAGE>
<PAGE>
<TABLE>
<S> <C>
Trademark Licenses 2.1(e)
Transferred Employees 5.2
</TABLE>
17.10 HEADINGS. The headings and subheadings hereof are inserted for
convenience of reference only and shall not affect the interpretation of this
Agreement.
17.11 AMENDMENT. This Agreement may be amended only in a writing signed
by all parties hereto.
17.12 ENTIRE AGREEMENT. This Agreement (including the Schedules and
Exhibits hereto) constitute the entire agreement and supersede all prior
agreements and understandings, both written and oral, between the parties with
respect to the subject matter hereof.
17.13 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.
17.14 THIRD PARTY RIGHTS. Except as otherwise provided in Article 15
hereof with respect to the indemnification obligations for the benefit of
directors, shareholders, officers, employees, agents, consultants,
representatives, and affiliates, the provisions of this Agreement are intended
for the sole benefit of Purchaser and Seller and, where the contest so
indicates, their respective subsidiaries and affiliates, and shall not inure to
the benefit of any other entity or person (other than permitted assigns of the
parties hereto) either as a third party beneficiary or otherwise.
17.15 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.
17.16 CONSTRUCTION. Wherever used in this agreement, the word
"including" means "including but not limited to."
17.17 ROUNDING OF SHARE AMOUNTS. Whenever shares of Purchaser Stock are
to be delivered hereunder, in the event the amount of shares required to be
delivered would result in the deliverance of a fraction of a share, such amount
shall be rounded to the next highest whole number.
AGREEMENT AND
PLAN OF REORGANIZATION PAGE 58
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the duly authorized officers or representatives of
the parties hereto have duly executed this Agreement on the date first written
above.
SELLER: TENSOR, INC.
By: /s/ George F. Roberts
_____________________________________
Name: George F. Roberts
____________________________
Title: President
____________________________
PURCHASER: ALLIEDSIGNAL INC.
By: /s/ Norman J. Klein
_____________________________________
Name: Norman J. Klein
____________________________
Title: General Manager
____________________________
AGREEMENT AND
PLAN OF REORGANIZATION PAGE 59
<PAGE>
<PAGE>
LIST OF SCHEDULES:
Bank Account
Consents
Contracts
Customers and Suppliers
Developmental Products
Employee Stock Bonus
Environmental Disclosure
Excluded Assets
Insurance
Health and Safety Conditions
Labor and Benefits
Litigation
Oral Contracts
Other Excluded Liabilities
Patents and Technology
Permits and Licenses
Personal Property
Purchase Order
Real Property
Trademarks and Copyrights
Transferred Employee Benefits
Tax
LIST OF EXHIBITS:
Exhibit 1 - Financial Statements
Exhibit 2 - Opinion of Seller's Counsel
Exhibit 3 - Opinion of Purchaser's Counsel
Exhibit 4 - Escrow Agreement
Exhibit 5 - Form of Retention Letter
Exhibit 6 - Registration Rights Agreement
AGREEMENT AND
PLAN OF REORGANIZATION PAGE 60
<PAGE>
<PAGE>
Exhibit 5
AlliedSignal Inc.
Law Department
P.O. Box 2245
Morristown, NJ 07962-2245
April 6, 1998
AlliedSignal Inc.
101 Columbia Road
Morristown, NJ 07962
Ladies and Gentlemen:
As Senior Counsel, Corporate and Finance, of AlliedSignal Inc., a
Delaware corporation (the "Company"), I have examined the Certificate of
Incorporation and Bylaws of the Company as well as such other documents and
proceedings as I have considered necessary for the purposes of this opinion. I
have also examined and am familiar with the Company's Registration Statement on
Form S-3 (the "Registration Statement") as filed with the Securities and
Exchange Commission under the Securities Act of 1933, as amended (the "Act"),
relating to 1,049,764 shares of the Company's Common Stock, par value $1.00 per
share (the "Common Shares"), which may be offered or sold by the selling
stockholders referred to in the Registration Statement.
Based upon the foregoing, and having regard to legal considerations
which I deem relevant, I am of the opinion that the Common Shares are legally
issued, fully paid and non-assessable.
I hereby consent to the inclusion of this opinion letter as an exhibit
to the Registration Statement and the reference to me under the caption "Legal
Matters". In giving such consent, I do not thereby admit that I am in the
category of persons whose consent is required under Section 7 of the Act.
Very truly yours,
/s/ J. Edward Smith
J. Edward Smith
Senior Counsel
Corporate and Finance
<PAGE>
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the
Prospectus constituting part of this Registration Statement on
Form S-3 of our report dated January 28, 1998, which appears in the 1997 Annual
Report to Shareowners of AlliedSignal Inc. (the "Company"), which is
incorporated by reference in the Company's Annual Report on Form 10-K for the
year ended December 31, 1997. We also consent to the reference to us under the
heading "Experts" in such Prospectus.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
Morristown, NJ
April 6, 1998
<PAGE>
<PAGE>
Exhibit 24
POWER OF ATTORNEY
I, Lawrence A. Bossidy, Chairman and Chief Executive Officer and a
director of AlliedSignal Inc., a Delaware corporation (the "Company"), hereby
appoint Peter M. Kreindler, Richard F. Wallman, Robert F. Friel and Nancy A.
Garvey, each with power to act without the other and with power of substitution
and resubstitution, as my attorney-in-fact to sign on my behalf in my capacity
as an officer or director of the Company one or more registration statements
under the Securities Act of 1933, or any amendment or post-effective amendment
to any registration statement heretofore or hereafter filed by the Company on
Form S-3 or other appropriate form for the registration of:
(i) debt securities of the Company (which may be convertible into or
exchangeable for or accompanied by warrants to purchase debt or equity
securities of the Company, its subsidiaries, joint ventures or affiliates or
another person or entity, provided the number of shares of the Company's Common
Stock into or for which such debt securities may be converted or exchanged or
which may be issued upon exercise of such warrants shall not exceed 66,800,000,
as adjusted for stock splits and dividends) with aggregate proceeds not to
exceed $600 million (or the equivalent thereof in any foreign currency), any
accompanying warrants and any guarantees by the Company of such debt securities
of its subsidiaries, joint ventures or affiliates;
(ii) preferred stock of the Company (which may be convertible into or
redeemable or exchangeable for Common Stock or other securities or property of
the Company) with proceeds not to exceed $600 million;
(iii) debt securities, Common Stock or preferred stock of the Company
or warrants to purchase such securities to be issued in exchange for debt or
equity securities of the Company, its subsidiaries, joint ventures or affiliates
with an aggregate principal amount, liquidation preference or value not to
exceed $600 million;
(iv) any securities into or for which any of the securities specified
in clauses (i), (ii) or (iii) are convertible or exchangeable or which may be
issued upon exercise thereof; and
(v) shares of Common Stock of the Company sold or otherwise disposed
of to carry out transactions (a) which have been specifically authorized by the
Board of Directors, and any warrants to purchase such shares, or (b) not
requiring specific authorization by the Board of Directors (not to exceed in any
one transaction the lesser of (1) two percent of the Common Stock of the Company
issued and outstanding at the end of the preceding fiscal year, as adjusted for
stock splits and stock dividends, or (2) shares having a market value of
$200,000,000), and any warrants to purchase such shares, granting to each such
attorney full power and authority to perform every act necessary to be done as
fully as I might do in person.
I hereby revoke any or all prior appointments of attorneys-in-fact to the
extent that they confer authority to sign the above-described documents.
/s/ Lawrence A. Bossidy
Lawrence A. Bossidy
Dated: January 16, 1998
<PAGE>
<PAGE>
POWER OF ATTORNEY
I, Hans W. Becherer, a director of AlliedSignal Inc., a Delaware
corporation (the "Company"), hereby appoint Lawrence A. Bossidy, Peter M.
Kreindler, Richard F. Wallman, Robert F. Friel and Nancy A. Garvey, each with
power to act without the other and with power of substitution and
resubstitution, as my attorney-in-fact to sign on my behalf in my capacity as a
director of the Company one or more registration statements under the Securities
Act of 1933, or any amendment or post-effective amendment to any registration
statement heretofore or hereafter filed by the Company on Form S-3 or other
appropriate form for the registration of:
(i) debt securities of the Company (which may be convertible into or
exchangeable for or accompanied by warrants to purchase debt or equity
securities of the Company, its subsidiaries, joint ventures or affiliates or
another person or entity, provided the number of shares of the Company's Common
Stock into or for which such debt securities may be converted or exchanged or
which may be issued upon exercise of such warrants shall not exceed 66,800,000,
as adjusted for stock splits and dividends) with aggregate proceeds not to
exceed $600 million (or the equivalent thereof in any foreign currency), any
accompanying warrants and any guarantees by the Company of such debt securities
of its subsidiaries, joint ventures or affiliates;
(ii) preferred stock of the Company (which may be convertible into or
redeemable or exchangeable for Common Stock or other securities or property of
the Company) with proceeds not to exceed $600 million;
(iii) debt securities, Common Stock or preferred stock of the Company
or warrants to purchase such securities to be issued in exchange for debt or
equity securities of the Company, its subsidiaries, joint ventures or affiliates
with an aggregate principal amount, liquidation preference or value not to
exceed $600 million;
(iv) any securities into or for which any of the securities specified
in clauses (i), (ii) or (iii) are convertible or exchangeable or which may be
issued upon exercise thereof; and
(v) shares of Common Stock of the Company sold or otherwise disposed
of to carry out transactions (a) which have been specifically authorized by the
Board of Directors, and any warrants to purchase such shares, or (b) not
requiring specific authorization by the Board of Directors (not to exceed in any
one transaction the lesser of (1) two percent of the Common Stock of the Company
issued and outstanding at the end of the preceding fiscal year, as adjusted for
stock splits and stock dividends, or (2) shares having a market value of
$200,000,000), and any warrants to purchase such shares, granting to each such
attorney full power and authority to perform every act necessary to be done as
fully as I might do in person.
I hereby revoke any or all prior appointments of attorneys-in-fact to the
extent that they confer authority to sign the above-described documents.
/s/ Hans W. Becherer
Hans W. Becherer
Dated: January 16, 1998
<PAGE>
<PAGE>
POWER OF ATTORNEY
I, Daniel P. Burnham, a director of AlliedSignal Inc., a Delaware
corporation (the "Company"), hereby appoint Lawrence A. Bossidy, Peter M.
Kreindler, Richard F. Wallman, Robert F. Friel and Nancy A. Garvey, each with
power to act without the other and with power of substitution and
resubstitution, as my attorney-in-fact to sign on my behalf in my capacity as a
director of the Company one or more registration statements under the Securities
Act of 1933, or any amendment or post-effective amendment to any registration
statement heretofore or hereafter filed by the Company on Form S-3 or other
appropriate form for the registration of:
(i) debt securities of the Company (which may be convertible into or
exchangeable for or accompanied by warrants to purchase debt or equity
securities of the Company, its subsidiaries, joint ventures or affiliates or
another person or entity, provided the number of shares of the Company's Common
Stock into or for which such debt securities may be converted or exchanged or
which may be issued upon exercise of such warrants shall not exceed 66,800,000,
as adjusted for stock splits and dividends) with aggregate proceeds not to
exceed $600 million (or the equivalent thereof in any foreign currency), any
accompanying warrants and any guarantees by the Company of such debt securities
of its subsidiaries, joint ventures or affiliates;
(ii) preferred stock of the Company (which may be convertible into or
redeemable or exchangeable for Common Stock or other securities or property of
the Company) with proceeds not to exceed $600 million;
(iii) debt securities, Common Stock or preferred stock of the Company
or warrants to purchase such securities to be issued in exchange for debt or
equity securities of the Company, its subsidiaries, joint ventures or affiliates
with an aggregate principal amount, liquidation preference or value not to
exceed $600 million;
(iv) any securities into or for which any of the securities specified
in clauses (i), (ii) or (iii) are convertible or exchangeable or which may be
issued upon exercise thereof; and
(v) shares of Common Stock of the Company sold or otherwise disposed
of to carry out transactions (a) which have been specifically authorized by the
Board of Directors, and any warrants to purchase such shares, or (b) not
requiring specific authorization by the Board of Directors (not to exceed in any
one transaction the lesser of (1) two percent of the Common Stock of the Company
issued and outstanding at the end of the preceding fiscal year, as adjusted for
stock splits and stock dividends, or (2) shares having a market value of
$200,000,000), and any warrants to purchase such shares, granting to each such
attorney full power and authority to perform every act necessary to be done as
fully as I might do in person.
I hereby revoke any or all prior appointments of attorneys-in-fact to the
extent that they confer authority to sign the above-described documents.
/s/ Daniel P. Burnham
Daniel P. Burnham
Dated: January 16, 1998
<PAGE>
<PAGE>
POWER OF ATTORNEY
I, Ann M. Fudge, a director of AlliedSignal Inc., a Delaware corporation
(the "Company"), hereby appoint Lawrence A. Bossidy, Peter M. Kreindler, Richard
F. Wallman, Robert F. Friel and Nancy A. Garvey, each with power to act without
the other and with power of substitution and resubstitution, as my
attorney-in-fact to sign on my behalf in my capacity as a director of the
Company one or more registration statements under the Securities Act of 1933, or
any amendment or post-effective amendment to any registration statement
heretofore or hereafter filed by the Company on Form S-3 or other appropriate
form for the registration of:
(i) debt securities of the Company (which may be convertible into or
exchangeable for or accompanied by warrants to purchase debt or equity
securities of the Company, its subsidiaries, joint ventures or affiliates or
another person or entity, provided the number of shares of the Company's Common
Stock into or for which such debt securities may be converted or exchanged or
which may be issued upon exercise of such warrants shall not exceed 66,800,000,
as adjusted for stock splits and dividends) with aggregate proceeds not to
exceed $600 million (or the equivalent thereof in any foreign currency), any
accompanying warrants and any guarantees by the Company of such debt securities
of its subsidiaries, joint ventures or affiliates;
(ii) preferred stock of the Company (which may be convertible into or
redeemable or exchangeable for Common Stock or other securities or property of
the Company) with proceeds not to exceed $600 million;
(iii) debt securities, Common Stock or preferred stock of the Company
or warrants to purchase such securities to be issued in exchange for debt or
equity securities of the Company, its subsidiaries, joint ventures or affiliates
with an aggregate principal amount, liquidation preference or value not to
exceed $600 million;
(iv) any securities into or for which any of the securities specified
in clauses (i), (ii) or (iii) are convertible or exchangeable or which may be
issued upon exercise thereof; and
(v) shares of Common Stock of the Company sold or otherwise disposed
of to carry out transactions (a) which have been specifically authorized by the
Board of Directors, and any warrants to purchase such shares, or (b) not
requiring specific authorization by the Board of Directors (not to exceed in any
one transaction the lesser of (1) two percent of the Common Stock of the Company
issued and outstanding at the end of the preceding fiscal year, as adjusted for
stock splits and stock dividends, or (2) shares having a market value of
$200,000,000), and any warrants to purchase such shares, granting to each such
attorney full power and authority to perform every act necessary to be done as
fully as I might do in person.
I hereby revoke any or all prior appointments of attorneys-in-fact to the
extent that they confer authority to sign the above-described documents.
/s/ Ann M. Fudge
Ann M. Fudge
Dated: January 16, 1998
<PAGE>
<PAGE>
POWER OF ATTORNEY
I, Paul X. Kelley, a director of AlliedSignal Inc., a Delaware corporation
(the "Company"), hereby appoint Lawrence A. Bossidy, Peter M. Kreindler, Richard
F. Wallman, Robert F. Friel and Nancy A. Garvey, each with power to act without
the other and with power of substitution and resubstitution, as my
attorney-in-fact to sign on my behalf in my capacity as a director of the
Company one or more registration statements under the Securities Act of 1933, or
any amendment or post-effective amendment to any registration statement
heretofore or hereafter filed by the Company on Form S-3 or other appropriate
form for the registration of:
(i) debt securities of the Company (which may be convertible into or
exchangeable for or accompanied by warrants to purchase debt or equity
securities of the Company, its subsidiaries, joint ventures or affiliates or
another person or entity, provided the number of shares of the Company's Common
Stock into or for which such debt securities may be converted or exchanged or
which may be issued upon exercise of such warrants shall not exceed 66,800,000,
as adjusted for stock splits and dividends) with aggregate proceeds not to
exceed $600 million (or the equivalent thereof in any foreign currency), any
accompanying warrants and any guarantees by the Company of such debt securities
of its subsidiaries, joint ventures or affiliates;
(ii) preferred stock of the Company (which may be convertible into or
redeemable or exchangeable for Common Stock or other securities or property of
the Company) with proceeds not to exceed $600 million;
(iii) debt securities, Common Stock or preferred stock of the Company
or warrants to purchase such securities to be issued in exchange for debt or
equity securities of the Company, its subsidiaries, joint ventures or affiliates
with an aggregate principal amount, liquidation preference or value not to
exceed $600 million;
(iv) any securities into or for which any of the securities specified
in clauses (i), (ii) or (iii) are convertible or exchangeable or which may be
issued upon exercise thereof; and
(v) shares of Common Stock of the Company sold or otherwise disposed
of to carry out transactions (a) which have been specifically authorized by the
Board of Directors, and any warrants to purchase such shares, or (b) not
requiring specific authorization by the Board of Directors (not to exceed in any
one transaction the lesser of (1) two percent of the Common Stock of the Company
issued and outstanding at the end of the preceding fiscal year, as adjusted for
stock splits and stock dividends, or (2) shares having a market value of
$200,000,000), and any warrants to purchase such shares, granting to each such
attorney full power and authority to perform every act necessary to be done as
fully as I might do in person.
I hereby revoke any or all prior appointments of attorneys-in-fact to the
extent that they confer authority to sign the above-described documents.
/s/ Paul X. Kelley
Paul X. Kelley
Dated: January 16, 1998
<PAGE>
<PAGE>
POWER OF ATTORNEY
I, Robert P. Luciano, a director of AlliedSignal Inc., a Delaware
corporation (the "Company"), hereby appoint Lawrence A. Bossidy, Peter M.
Kreindler, Richard F. Wallman, Robert F. Friel and Nancy A. Garvey, each with
power to act without the other and with power of substitution and
resubstitution, as my attorney-in-fact to sign on my behalf in my capacity as a
director of the Company one or more registration statements under the Securities
Act of 1933, or any amendment or post-effective amendment to any registration
statement heretofore or hereafter filed by the Company on Form S-3 or other
appropriate form for the registration of:
(i) debt securities of the Company (which may be convertible into or
exchangeable for or accompanied by warrants to purchase debt or equity
securities of the Company, its subsidiaries, joint ventures or affiliates or
another person or entity, provided the number of shares of the Company's Common
Stock into or for which such debt securities may be converted or exchanged or
which may be issued upon exercise of such warrants shall not exceed 66,800,000,
as adjusted for stock splits and dividends) with aggregate proceeds not to
exceed $600 million (or the equivalent thereof in any foreign currency), any
accompanying warrants and any guarantees by the Company of such debt securities
of its subsidiaries, joint ventures or affiliates;
(ii) preferred stock of the Company (which may be convertible into or
redeemable or exchangeable for Common Stock or other securities or property of
the Company) with proceeds not to exceed $600 million;
(iii) debt securities, Common Stock or preferred stock of the Company
or warrants to purchase such securities to be issued in exchange for debt or
equity securities of the Company, its subsidiaries, joint ventures or affiliates
with an aggregate principal amount, liquidation preference or value not to
exceed $600 million;
(iv) any securities into or for which any of the securities specified
in clauses (i), (ii) or (iii) are convertible or exchangeable or which may be
issued upon exercise thereof; and
(v) shares of Common Stock of the Company sold or otherwise disposed
of to carry out transactions (a) which have been specifically authorized by the
Board of Directors, and any warrants to purchase such shares, or (b) not
requiring specific authorization by the Board of Directors (not to exceed in any
one transaction the lesser of (1) two percent of the Common Stock of the Company
issued and outstanding at the end of the preceding fiscal year, as adjusted for
stock splits and stock dividends, or (2) shares having a market value of
$200,000,000), and any warrants to purchase such shares, granting to each such
attorney full power and authority to perform every act necessary to be done as
fully as I might do in person.
I hereby revoke any or all prior appointments of attorneys-in-fact to the
extent that they confer authority to sign the above-described documents.
/s/ Robert P. Luciano
Robert P. Luciano
Dated: January 16, 1998
<PAGE>
<PAGE>
POWER OF ATTORNEY
I, Robert B. Palmer, a director of AlliedSignal Inc., a Delaware
corporation (the "Company"), hereby appoint Lawrence A. Bossidy, Peter M.
Kreindler, Richard F. Wallman, Robert F. Friel and Nancy A. Garvey, each with
power to act without the other and with power of substitution and
resubstitution, as my attorney-in-fact to sign on my behalf in my capacity as a
director of the Company one or more registration statements under the Securities
Act of 1933, or any amendment or post-effective amendment to any registration
statement heretofore or hereafter filed by the Company on Form S-3 or other
appropriate form for the registration of:
(i) debt securities of the Company (which may be convertible into or
exchangeable for or accompanied by warrants to purchase debt or equity
securities of the Company, its subsidiaries, joint ventures or affiliates or
another person or entity, provided the number of shares of the Company's Common
Stock into or for which such debt securities may be converted or exchanged or
which may be issued upon exercise of such warrants shall not exceed 66,800,000,
as adjusted for stock splits and dividends) with aggregate proceeds not to
exceed $600 million (or the equivalent thereof in any foreign currency), any
accompanying warrants and any guarantees by the Company of such debt securities
of its subsidiaries, joint ventures or affiliates;
(ii) preferred stock of the Company (which may be convertible into or
redeemable or exchangeable for Common Stock or other securities or property of
the Company) with proceeds not to exceed $600 million;
(iii) debt securities, Common Stock or preferred stock of the Company
or warrants to purchase such securities to be issued in exchange for debt or
equity securities of the Company, its subsidiaries, joint ventures or affiliates
with an aggregate principal amount, liquidation preference or value not to
exceed $600 million;
(iv) any securities into or for which any of the securities specified
in clauses (i), (ii) or (iii) are convertible or exchangeable or which may be
issued upon exercise thereof; and
(v) shares of Common Stock of the Company sold or otherwise disposed
of to carry out transactions (a) which have been specifically authorized by the
Board of Directors, and any warrants to purchase such shares, or (b) not
requiring specific authorization by the Board of Directors (not to exceed in any
one transaction the lesser of (1) two percent of the Common Stock of the Company
issued and outstanding at the end of the preceding fiscal year, as adjusted for
stock splits and stock dividends, or (2) shares having a market value of
$200,000,000), and any warrants to purchase such shares, granting to each such
attorney full power and authority to perform every act necessary to be done as
fully as I might do in person.
I hereby revoke any or all prior appointments of attorneys-in-fact to the
extent that they confer authority to sign the above-described documents.
/s/ Robert B. Palmer
Robert B. Palmer
Dated: January 16, 1998
<PAGE>
<PAGE>
POWER OF ATTORNEY
I, Russell E. Palmer, a director of AlliedSignal Inc., a Delaware
corporation (the "Company"), hereby appoint Lawrence A. Bossidy, Peter M.
Kreindler, Richard F. Wallman, Robert F. Friel and Nancy A. Garvey, each with
power to act without the other and with power of substitution and
resubstitution, as my attorney-in-fact to sign on my behalf in my capacity as a
director of the Company one or more registration statements under the Securities
Act of 1933, or any amendment or post-effective amendment to any registration
statement heretofore or hereafter filed by the Company on Form S-3 or other
appropriate form for the registration of:
(i) debt securities of the Company (which may be convertible into or
exchangeable for or accompanied by warrants to purchase debt or equity
securities of the Company, its subsidiaries, joint ventures or affiliates or
another person or entity, provided the number of shares of the Company's Common
Stock into or for which such debt securities may be converted or exchanged or
which may be issued upon exercise of such warrants shall not exceed 66,800,000,
as adjusted for stock splits and dividends) with aggregate proceeds not to
exceed $600 million (or the equivalent thereof in any foreign currency), any
accompanying warrants and any guarantees by the Company of such debt securities
of its subsidiaries, joint ventures or affiliates;
(ii) preferred stock of the Company (which may be convertible into or
redeemable or exchangeable for Common Stock or other securities or property of
the Company) with proceeds not to exceed $600 million;
(iii) debt securities, Common Stock or preferred stock of the Company
or warrants to purchase such securities to be issued in exchange for debt or
equity securities of the Company, its subsidiaries, joint ventures or affiliates
with an aggregate principal amount, liquidation preference or value not to
exceed $600 million;
(iv) any securities into or for which any of the securities specified
in clauses (i), (ii) or (iii) are convertible or exchangeable or which may be
issued upon exercise thereof; and
(v) shares of Common Stock of the Company sold or otherwise disposed
of to carry out transactions (a) which have been specifically authorized by the
Board of Directors, and any warrants to purchase such shares, or (b) not
requiring specific authorization by the Board of Directors (not to exceed in any
one transaction the lesser of (1) two percent of the Common Stock of the Company
issued and outstanding at the end of the preceding fiscal year, as adjusted for
stock splits and stock dividends, or (2) shares having a market value of
$200,000,000), and any warrants to purchase such shares, granting to each such
attorney full power and authority to perform every act necessary to be done as
fully as I might do in person.
I hereby revoke any or all prior appointments of attorneys-in-fact to the
extent that they confer authority to sign the above-described documents.
/s/ Russell E. Palmer
Russell E. Palmer
Dated: January 16, 1998
<PAGE>
<PAGE>
POWER OF ATTORNEY
I, Frederic M. Poses, a director of AlliedSignal Inc., a Delaware
corporation (the "Company"), hereby appoint Lawrence A. Bossidy, Peter M.
Kreindler, Richard F. Wallman, Robert F. Friel and Nancy A. Garvey, each with
power to act without the other and with power of substitution and
resubstitution, as my attorney-in-fact to sign on my behalf in my capacity as a
director of the Company one or more registration statements under the Securities
Act of 1933, or any amendment or post-effective amendment to any registration
statement heretofore or hereafter filed by the Company on Form S-3 or other
appropriate form for the registration of:
(i) debt securities of the Company (which may be convertible into or
exchangeable for or accompanied by warrants to purchase debt or equity
securities of the Company, its subsidiaries, joint ventures or affiliates or
another person or entity, provided the number of shares of the Company's Common
Stock into or for which such debt securities may be converted or exchanged or
which may be issued upon exercise of such warrants shall not exceed 66,800,000,
as adjusted for stock splits and dividends) with aggregate proceeds not to
exceed $600 million (or the equivalent thereof in any foreign currency), any
accompanying warrants and any guarantees by the Company of such debt securities
of its subsidiaries, joint ventures or affiliates;
(ii) preferred stock of the Company (which may be convertible into or
redeemable or exchangeable for Common Stock or other securities or property of
the Company) with proceeds not to exceed $600 million;
(iii) debt securities, Common Stock or preferred stock of the Company
or warrants to purchase such securities to be issued in exchange for debt or
equity securities of the Company, its subsidiaries, joint ventures or affiliates
with an aggregate principal amount, liquidation preference or value not to
exceed $600 million;
(iv) any securities into or for which any of the securities specified
in clauses (i), (ii) or (iii) are convertible or exchangeable or which may be
issued upon exercise thereof; and
(v) shares of Common Stock of the Company sold or otherwise disposed
of to carry out transactions (a) which have been specifically authorized by the
Board of Directors, and any warrants to purchase such shares, or (b) not
requiring specific authorization by the Board of Directors (not to exceed in any
one transaction the lesser of (1) two percent of the Common Stock of the Company
issued and outstanding at the end of the preceding fiscal year, as adjusted for
stock splits and stock dividends, or (2) shares having a market value of
$200,000,000), and any warrants to purchase such shares, granting to each such
attorney full power and authority to perform every act necessary to be done as
fully as I might do in person.
I hereby revoke any or all prior appointments of attorneys-in-fact to the
extent that they confer authority to sign the above-described documents.
/s/ Frederic M. Poses
Frederic M. Poses
Dated: January 16, 1998
<PAGE>
<PAGE>
POWER OF ATTORNEY
I, Ivan G. Seidenberg, a director of AlliedSignal Inc., a Delaware
corporation (the "Company"), hereby appoint Lawrence A. Bossidy, Peter M.
Kreindler, Richard F. Wallman, Robert F. Friel and Nancy A. Garvey, each with
power to act without the other and with power of substitution and
resubstitution, as my attorney-in-fact to sign on my behalf in my capacity as a
director of the Company one or more registration statements under the Securities
Act of 1933, or any amendment or post-effective amendment to any registration
statement heretofore or hereafter filed by the Company on Form S-3 or other
appropriate form for the registration of:
(i) debt securities of the Company (which may be convertible into or
exchangeable for or accompanied by warrants to purchase debt or equity
securities of the Company, its subsidiaries, joint ventures or affiliates or
another person or entity, provided the number of shares of the Company's Common
Stock into or for which such debt securities may be converted or exchanged or
which may be issued upon exercise of such warrants shall not exceed 66,800,000,
as adjusted for stock splits and dividends) with aggregate proceeds not to
exceed $600 million (or the equivalent thereof in any foreign currency), any
accompanying warrants and any guarantees by the Company of such debt securities
of its subsidiaries, joint ventures or affiliates;
(ii) preferred stock of the Company (which may be convertible into or
redeemable or exchangeable for Common Stock or other securities or property of
the Company) with proceeds not to exceed $600 million;
(iii) debt securities, Common Stock or preferred stock of the Company
or warrants to purchase such securities to be issued in exchange for debt or
equity securities of the Company, its subsidiaries, joint ventures or affiliates
with an aggregate principal amount, liquidation preference or value not to
exceed $600 million;
(iv) any securities into or for which any of the securities specified
in clauses (i), (ii) or (iii) are convertible or exchangeable or which may be
issued upon exercise thereof; and
(v) shares of Common Stock of the Company sold or otherwise disposed
of to carry out transactions (a) which have been specifically authorized by the
Board of Directors, and any warrants to purchase such shares, or (b) not
requiring specific authorization by the Board of Directors (not to exceed in any
one transaction the lesser of (1) two percent of the Common Stock of the Company
issued and outstanding at the end of the preceding fiscal year, as adjusted for
stock splits and stock dividends, or (2) shares having a market value of
$200,000,000), and any warrants to purchase such shares, granting to each such
attorney full power and authority to perform every act necessary to be done as
fully as I might do in person.
I hereby revoke any or all prior appointments of attorneys-in-fact to the
extent that they confer authority to sign the above-described documents.
/s/ Ivan G. Seidenberg
Ivan G. Seidenberg
Dated: January 16, 1998
<PAGE>
<PAGE>
POWER OF ATTORNEY
I, Andrew C. Sigler, a director of AlliedSignal Inc., a Delaware
corporation (the "Company"), hereby appoint Lawrence A. Bossidy, Peter M.
Kreindler, Richard F. Wallman, Robert F. Friel and Nancy A. Garvey, each with
power to act without the other and with power of substitution and
resubstitution, as my attorney-in-fact to sign on my behalf in my capacity as a
director of the Company one or more registration statements under the Securities
Act of 1933, or any amendment or post-effective amendment to any registration
statement heretofore or hereafter filed by the Company on Form S-3 or other
appropriate form for the registration of:
(i) debt securities of the Company (which may be convertible into or
exchangeable for or accompanied by warrants to purchase debt or equity
securities of the Company, its subsidiaries, joint ventures or affiliates or
another person or entity, provided the number of shares of the Company's Common
Stock into or for which such debt securities may be converted or exchanged or
which may be issued upon exercise of such warrants shall not exceed 66,800,000,
as adjusted for stock splits and dividends) with aggregate proceeds not to
exceed $600 million (or the equivalent thereof in any foreign currency), any
accompanying warrants and any guarantees by the Company of such debt securities
of its subsidiaries, joint ventures or affiliates;
(ii) preferred stock of the Company (which may be convertible into or
redeemable or exchangeable for Common Stock or other securities or property of
the Company) with proceeds not to exceed $600 million;
(iii) debt securities, Common Stock or preferred stock of the Company
or warrants to purchase such securities to be issued in exchange for debt or
equity securities of the Company, its subsidiaries, joint ventures or affiliates
with an aggregate principal amount, liquidation preference or value not to
exceed $600 million;
(iv) any securities into or for which any of the securities specified
in clauses (i), (ii) or (iii) are convertible or exchangeable or which may be
issued upon exercise thereof; and
(v) shares of Common Stock of the Company sold or otherwise disposed
of to carry out transactions (a) which have been specifically authorized by the
Board of Directors, and any warrants to purchase such shares, or (b) not
requiring specific authorization by the Board of Directors (not to exceed in any
one transaction the lesser of (1) two percent of the Common Stock of the Company
issued and outstanding at the end of the preceding fiscal year, as adjusted for
stock splits and stock dividends, or (2) shares having a market value of
$200,000,000), and any warrants to purchase such shares, granting to each such
attorney full power and authority to perform every act necessary to be done as
fully as I might do in person.
I hereby revoke any or all prior appointments of attorneys-in-fact to the
extent that they confer authority to sign the above-described documents.
/s/ Andrew C. Sigler
Andrew C. Sigler
Dated: January 16, 1998
<PAGE>
<PAGE>
POWER OF ATTORNEY
I, John R. Stafford, a director of AlliedSignal Inc., a Delaware
corporation (the "Company"), hereby appoint Lawrence A. Bossidy, Peter M.
Kreindler, Richard F. Wallman, Robert f. Friel and Nancy A. Garvey, each with
power to act without the other and with power of substitution and
resubstitution, as my attorney-in-fact to sign on my behalf in my capacity as a
director of the Company one or more registration statements under the Securities
Act of 1933, or any amendment or post-effective amendment to any registration
statement heretofore or hereafter filed by the Company on Form S-3 or other
appropriate form for the registration of:
(i) debt securities of the Company (which may be convertible into or
exchangeable for or accompanied by warrants to purchase debt or equity
securities of the Company, its subsidiaries, joint ventures or affiliates or
another person or entity, provided the number of shares of the Company's Common
Stock into or for which such debt securities may be converted or exchanged or
which may be issued upon exercise of such warrants shall not exceed 66,800,000,
as adjusted for stock splits and dividends) with aggregate proceeds not to
exceed $600 million (or the equivalent thereof in any foreign currency), any
accompanying warrants and any guarantees by the Company of such debt securities
of its subsidiaries, joint ventures or affiliates;
(ii) preferred stock of the Company (which may be convertible into or
redeemable or exchangeable for Common Stock or other securities or property of
the Company) with proceeds not to exceed $600 million;
(iii) debt securities, Common Stock or preferred stock of the Company
or warrants to purchase such securities to be issued in exchange for debt or
equity securities of the Company, its subsidiaries, joint ventures or affiliates
with an aggregate principal amount, liquidation preference or value not to
exceed $600 million;
(iv) any securities into or for which any of the securities specified
in clauses (i), (ii) or (iii) are convertible or exchangeable or which may be
issued upon exercise thereof; and
(v) shares of Common Stock of the Company sold or otherwise disposed
of to carry out transactions (a) which have been specifically authorized by the
Board of Directors, and any warrants to purchase such shares, or (b) not
requiring specific authorization by the Board of Directors (not to exceed in any
one transaction the lesser of (1) two percent of the Common Stock of the Company
issued and outstanding at the end of the preceding fiscal year, as adjusted for
stock splits and stock dividends, or (2) shares having a market value of
$200,000,000), and any warrants to purchase such shares, granting to each such
attorney full power and authority to perform every act necessary to be done as
fully as I might do in person.
I hereby revoke any or all prior appointments of attorneys-in-fact to the
extent that they confer authority to sign the above-described documents.
/s/ John R. Stafford
John R. Stafford
Dated: January 16, 1998
<PAGE>
<PAGE>
POWER OF ATTORNEY
I, Thomas P. Stafford, a director of AlliedSignal Inc., a Delaware
corporation (the "Company"), hereby appoint Lawrence A. Bossidy, Peter M.
Kreindler, Richard F. Wallman, Robert F. Friel and Nancy A. Garvey, each with
power to act without the other and with power of substitution and
resubstitution, as my attorney-in-fact to sign on my behalf in my capacity as a
director of the Company one or more registration statements under the Securities
Act of 1933, or any amendment or post-effective amendment to any registration
statement heretofore or hereafter filed by the Company on Form S-3 or other
appropriate form for the registration of:
(i) debt securities of the Company (which may be convertible into or
exchangeable for or accompanied by warrants to purchase debt or equity
securities of the Company, its subsidiaries, joint ventures or affiliates or
another person or entity, provided the number of shares of the Company's Common
Stock into or for which such debt securities may be converted or exchanged or
which may be issued upon exercise of such warrants shall not exceed 66,800,000,
as adjusted for stock splits and dividends) with aggregate proceeds not to
exceed $600 million (or the equivalent thereof in any foreign currency), any
accompanying warrants and any guarantees by the Company of such debt securities
of its subsidiaries, joint ventures or affiliates;
(ii) preferred stock of the Company (which may be convertible into or
redeemable or exchangeable for Common Stock or other securities or property of
the Company) with proceeds not to exceed $600 million;
(iii) debt securities, Common Stock or preferred stock of the Company
or warrants to purchase such securities to be issued in exchange for debt or
equity securities of the Company, its subsidiaries, joint ventures or affiliates
with an aggregate principal amount, liquidation preference or value not to
exceed $600 million;
(iv) any securities into or for which any of the securities specified
in clauses (i), (ii) or (iii) are convertible or exchangeable or which may be
issued upon exercise thereof; and
(v) shares of Common Stock of the Company sold or otherwise disposed
of to carry out transactions (a) which have been specifically authorized by the
Board of Directors, and any warrants to purchase such shares, or (b) not
requiring specific authorization by the Board of Directors (not to exceed in any
one transaction the lesser of (1) two percent of the Common Stock of the Company
issued and outstanding at the end of the preceding fiscal year, as adjusted for
stock splits and stock dividends, or (2) shares having a market value of
$200,000,000), and any warrants to purchase such shares, granting to each such
attorney full power and authority to perform every act necessary to be done as
fully as I might do in person.
I hereby revoke any or all prior appointments of attorneys-in-fact to the
extent that they confer authority to sign the above-described documents.
/s/ Thomas P. Stafford
Thomas P. Stafford
Dated: January 16, 1998
<PAGE>
<PAGE>
POWER OF ATTORNEY
I, Robert C. Winters, a director of AlliedSignal Inc., a Delaware
corporation (the "Company"), hereby appoint Lawrence A. Bossidy, Peter M.
Kreindler, Richard F. Wallman, Robert f. Friel and Nancy A. Garvey, each with
power to act without the other and with power of substitution and
resubstitution, as my attorney-in-fact to sign on my behalf in my capacity as a
director of the Company one or more registration statements under the Securities
Act of 1933, or any amendment or post-effective amendment to any registration
statement heretofore or hereafter filed by the Company on Form S-3 or other
appropriate form for the registration of:
(i) debt securities of the Company (which may be convertible into or
exchangeable for or accompanied by warrants to purchase debt or equity
securities of the Company, its subsidiaries, joint ventures or affiliates or
another person or entity, provided the number of shares of the Company's Common
Stock into or for which such debt securities may be converted or exchanged or
which may be issued upon exercise of such warrants shall not exceed 66,800,000,
as adjusted for stock splits and dividends) with aggregate proceeds not to
exceed $600 million (or the equivalent thereof in any foreign currency), any
accompanying warrants and any guarantees by the Company of such debt securities
of its subsidiaries, joint ventures or affiliates;
(ii) preferred stock of the Company (which may be convertible into or
redeemable or exchangeable for Common Stock or other securities or property of
the Company) with proceeds not to exceed $600 million;
(iii) debt securities, Common Stock or preferred stock of the Company
or warrants to purchase such securities to be issued in exchange for debt or
equity securities of the Company, its subsidiaries, joint ventures or affiliates
with an aggregate principal amount, liquidation preference or value not to
exceed $600 million;
(iv) any securities into or for which any of the securities specified
in clauses (i), (ii) or (iii) are convertible or exchangeable or which may be
issued upon exercise thereof; and
(v) shares of Common Stock of the Company sold or otherwise disposed
of to carry out transactions (a) which have been specifically authorized by the
Board of Directors, and any warrants to purchase such shares, or (b) not
requiring specific authorization by the Board of Directors (not to exceed in any
one transaction the lesser of (1) two percent of the Common Stock of the Company
issued and outstanding at the end of the preceding fiscal year, as adjusted for
stock splits and stock dividends, or (2) shares having a market value of
$200,000,000), and any warrants to purchase such shares, granting to each such
attorney full power and authority to perform every act necessary to be done as
fully as I might do in person.
I hereby revoke any or all prior appointments of attorneys-in-fact to the
extent that they confer authority to sign the above-described documents.
/s/ Robert C. Winters
Robert C. Winters
Dated: January 19, 1998
<PAGE>
<PAGE>
POWER OF ATTORNEY
I, Henry T, Yang, a director of AlliedSignal Inc., a Delaware corporation
(the "Company"), hereby appoint Lawrence A. Bossidy, Peter M. Kreindler, Richard
F. Wallman, Robert F. Friel and Nancy A. Garvey, each with power to act without
the other and with power of substitution and resubstitution, as my
attorney-in-fact to sign on my behalf in my capacity as a director of the
Company one or more registration statements under the Securities Act of 1933, or
any amendment or post-effective amendment to any registration statement
heretofore or hereafter filed by the Company on Form S-3 or other appropriate
form for the registration of:
(i) debt securities of the Company (which may be convertible into or
exchangeable for or accompanied by warrants to purchase debt or equity
securities of the Company, its subsidiaries, joint ventures or affiliates or
another person or entity, provided the number of shares of the Company's Common
Stock into or for which such debt securities may be converted or exchanged or
which may be issued upon exercise of such warrants shall not exceed 66,800,000,
as adjusted for stock splits and dividends) with aggregate proceeds not to
exceed $600 million (or the equivalent thereof in any foreign currency), any
accompanying warrants and any guarantees by the Company of such debt securities
of its subsidiaries, joint ventures or affiliates;
(ii) preferred stock of the Company (which may be convertible into or
redeemable or exchangeable for Common Stock or other securities or property of
the Company) with proceeds not to exceed $600 million;
(iii) debt securities, Common Stock or preferred stock of the Company
or warrants to purchase such securities to be issued in exchange for debt or
equity securities of the Company, its subsidiaries, joint ventures or affiliates
with an aggregate principal amount, liquidation preference or value not to
exceed $600 million;
(iv) any securities into or for which any of the securities specified
in clauses (i), (ii) or (iii) are convertible or exchangeable or which may be
issued upon exercise thereof; and
(v) shares of Common Stock of the Company sold or otherwise disposed
of to carry out transactions (a) which have been specifically authorized by the
Board of Directors, and any warrants to purchase such shares, or (b) not
requiring specific authorization by the Board of Directors (not to exceed in any
one transaction the lesser of (1) two percent of the Common Stock of the Company
issued and outstanding at the end of the preceding fiscal year, as adjusted for
stock splits and stock dividends, or (2) shares having a market value of
$200,000,000), and any warrants to purchase such shares, granting to each such
attorney full power and authority to perform every act necessary to be done as
fully as I might do in person.
I hereby revoke any or all prior appointments of attorneys-in-fact to sign
the above-described documents.
/s/ Henry T. Yang
Henry T. Yang
Dated: January 16, 1998
<PAGE>
