Asset Purchase Agreement

ASSET PURCHASE AGREEMENT


ASSET PURCHASE AGREEMENT dated as of November 9, 1995 by and among AlliedSignal Laminate Systems, Inc., a Delaware corporation ("SELLER"), Furon Company, a California corporation ("PURCHASER"), and AlliedSignal Inc., a Delaware corporation and the indirect parent of Seller ("PARENT").


WITNESSETH:


WHEREAS, Seller, through its Fluorglas division, is engaged in the business (the "BUSINESS") of developing, manufacturing and selling the products (the "PRODUCTS") listed in Schedule A hereto, including (i) pressure-sensitive adhesive tapes, PTFE flexible composites and fabrications and PTFE films (the "FLUORGLAS CORE BUSINESS") and (ii) metal-clad PTFE/glass laminates (the "FLUORGLAS MICROWAVE BUSINESS"); and


WHEREAS, Seller desires to sell and Purchaser desires to purchase certain assets of Seller used primarily in the Business;


NOW, THEREFORE, in consideration of the mutual covenants, agreements, representations and warranties contained herein, the parties agree as follows:


1. PURCHASE AND SALE


1.1 Purchase and Sale. Subject to the terms and conditions of this Agreement and except as otherwise provided herein, at the Closing, Seller and Parent shall sell, convey, transfer, assign and deliver to Purchaser, and Purchaser shall purchase and accept from Seller and Parent, all of Seller's and Parent's right, title and interest in and to (i) all of the assets of Seller and Parent primarily used in or primarily related to the Fluorglas Core Business and all assets of Seller and Parent which are exclusively used in the Fluorglas Microwave Business, in each case, together with such changes, deletions or additions occurring between the respective dates of the Schedules hereto and the Closing Date in the ordinary course of business, and (ii) such other assets as are identified in the schedules to this Agreement (the "ASSETS"), including without limitation all of Seller's and Parent's right, title and interest in and to the following:


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(a) "PERSONAL PROPERTY" of Seller, which term includes (i) the
machinery and equipment, fixtures, furniture, office equipment, vehicles,
tools and other tangible personal property which is located at the
Facilities (as defined in Section 4.18) and is used in or related to the
Business, including but not limited to those items listed in Schedule 4.5(a)
hereto; and (ii) the machinery and equipment listed in Schedule 4.5(a)
hereto located at Seller's plant in La Crosse, Wisconsin, utilized
exclusively to manufacture metal-clad PTFE/glass laminates for the Fluorglas
Microwave Business;


(b) accounts receivable of the Business as of the Closing Date, whether
recorded or unrecorded, provided that the accounts receivable of the
Fluorglas Microwave Business will be handled in accordance with the
provisions of Schedule 1.1(b) attached hereto (the "ACCOUNTS RECEIVABLE");


(c) inventory of the Business as of the Closing Date, wherever located,
including raw materials, work-in-process and finished goods (the
"INVENTORY");


(d) the patents and patent applications, trademarks, trade names,
copyrights and licenses specified in Schedule 4.6(a) hereto, and other
intellectual property exclusively used in the Business, including, without
limitation, processes, products, apparatus, formulae, drawings, trade
secrets, know-how, discoveries, inventions (including conceptions of
inventions), software, and design, manufacturing, engineering and other
technical information, except as otherwise expressly excluded pursuant to
Section 1.3 (the "INTELLECTUAL PROPERTY"); provided, however, that with
respect to such other intellectual property, except for the provisions of
Section 6.7(a), nothing in this Agreement shall prevent Seller from using
such other intellectual property which (1) is now or hereafter becomes
through no fault of Seller or its Affiliates part of the public domain, (2)
is independently developed by Seller without reference to Confidential
Information (as defined in Section 6.9) which Seller is obligated to
maintain in confidence under Section 6.9, or (3) is made available to Seller
by a third party not in violation of any confidential obligation to
Purchaser;


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(e) all contracts, agreements, arrangements, leases, purchase orders
and commitments of the Business, including those listed on Schedule 4.7
hereto (the "CONTRACTS") provided that Purchaser assumes the obligations
under such Contracts;


(f) all sales data and information, customer lists, supplier lists,
engineering and production records, mailing lists, catalogues, brochures,
sales literature, promotional material, advertising material and other
selling material of the Business;


(g) transferable governmental and other permits, licenses (other than
licenses encompassed within Intellectual Property), approvals, certificates
of inspection, filings, franchises and other authorizations relating to the
Assets including, but not limited to those listed in Schedule 4.17 hereto
(the "PERMITS AND LICENSES");


(h) all prepaid expenses of the Business except as set forth on
Schedule 1.1(h) hereto;


(i) rights of Seller pursuant to any express or implied warranties,
representations or guarantees made by suppliers furnishing goods or services
to the Business;


(j) the land identified in Schedule 1.4.2, including all buildings,
fixtures and improvements attached thereto, and all rights appurtenant
thereto (the "REAL PROPERTY");


(k) all books and records and all files, documents and papers
(including, but not limited to, those contained in computerized storage
media) pertaining to the Assets, the Assumed Liabilities (as defined below)
or otherwise relating to the Business and customarily located at the
Facilities prior to the Closing Date (excluding the corporate minute book,
stock transfer ledger and other corporate records of Seller, copies of which
will be available to Purchaser upon reasonable request); and


(l) the goodwill incident to the Business.


1.2 Non-Assignable Assets. Notwithstanding anything in this Agreement to the contrary, this Agreement shall not


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constitute an agreement to assign any Asset if the attempted assignment thereof, without the consent of a third party thereto, would constitute a breach of any obligation of Seller or would in any way adversely affect the rights of Purchaser or Seller thereunder. If such consent is not obtained, or if an attempted assignment thereof would be ineffective or would affect the rights of Seller thereunder so that Purchaser would not in fact receive all such rights, Seller will, to the extent not prohibited by or not in violation of any such agreement, (a) cooperate with Purchaser in any commercially-reasonable arrangement designed to provide for Purchaser the benefits (including the exercise of Seller's rights) under any such Asset, including enforcement for the benefit of Purchaser of any and all rights of Seller against a third party thereto arising out of the breach or cancellation by such third party or otherwise, (b) hold all funds paid to Seller thereunder on and after the Closing Date in trust for the account of Purchaser, and (c) remit such money to Purchaser as promptly as possible. Any transfer or assignment to Purchaser by Seller of any property or property rights or any agreement which shall require the consent or approval of any third party shall be made subject to such consent or approval being obtained.


1.3 Excluded Assets. Notwithstanding anything to the contrary contained in this Agreement, the following are not intended to be sold, assigned, transferred or conveyed to Purchaser hereunder (the "EXCLUDED ASSETS"):


(a) all cash, cash equivalents and overdrafts of the Business;


(b) the basic books and records of account and all supporting vouchers,
invoices and other records and materials relating to any or all income taxes
of Seller with respect to the Business;


(c) any books or records relating to the Assets or the Business, which
were not customarily located at the Facilities on or before the Closing
Date; provided, however, that Seller shall permit Purchaser to have
reasonable access to such books and records and permit Purchaser to copy the
same to the extent reasonably required for the operation of the Business
after the Closing;


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(d) except for any name or logo listed in Schedule 4.6(a), any right to
use any name or logo of Seller or its Affiliates (as defined in Section 4.7
hereof) or any variant or derivative thereof, including but not limited to
"Allied-Signal," "AlliedSignal," "Allied," "Allied Chemical," "Signal,"
"Oak Materials" or "Oak" whether or not such logo, name, variant or
derivative was used by the Business, other than in connection with the
Inventory being purchased hereunder;


(e) the insurance policies of Seller pertaining to the Business and/or
the Facilities, and the rights of Seller thereunder;


(f) all intellectual property not exclusively used in the Business;
provided, however, that with respect to any such intellectual property which
is used in the Business as of the Closing Date, Seller and Parent will grant
to Purchaser a non-exclusive, paid up, worldwide, royalty free, freely
assignable (without Seller's or Parent's consent) license to use such
intellectual property in the Business in the form attached as Schedule
1.3(f) hereto (the "LICENSE");


(g) all prepaid corporate insurance and taxes related to the Business
as set forth on Schedule 1.1(h);


(h) the real property and any other assets identified in Schedule
1.3(h) hereto; and


(i) any and all assets at Seller's LaCrosse, Wisconsin plant not
exclusively used in the Business.


1.4 Transfer of Title to the Assets. Seller shall sell, assign, convey, transfer and deliver the Assets to Purchaser at the Closing by means of bills of sale and assignments in the forms attached as Schedule 1.4.1 hereto and such other endorsements, certificates and instruments of transfer as shall be necessary or appropriate to vest good and marketable title to the Assets in Purchaser, free and clear of any liens, charges and encumbrances, except as otherwise set forth in this Agreement or in the Schedules hereto, provided that title to the


5 6 Real Property shall be transferred by deed in the form of Schedule 1.4.2 attached hereto.


1.5 Lease Agreement. At the Closing, Seller and Purchaser will enter into lease agreements (the "LEASE AGREEMENTS") in the forms of Schedules 1.5.1 and 1.5.2 attached hereto, pursuant to which Seller will lease to Purchaser the real property identified therein. The real property being leased pursuant to the Lease Agreements together with the Real Property being sold pursuant to this Agreement are sometimes collectively referred to herein as the "TRANSFERRED FACILITIES."


2. PURCHASE PRICE


2.1 Purchase Price. The purchase price to be paid by Purchaser for the Assets shall be Nineteen Million Dollars ($19,000,000) (the "PURCHASE PRICE") and shall be adjusted in accordance with Section 2.2. The Purchase Price shall be paid by Purchaser in full at Closing.


2.2 Post-Closing Adjustment.


(a) The Purchase Price shall be adjusted dollar-for-dollar following
the Closing Date to the extent that the Final Net Assets (as defined below)
of the Business as of the Closing Date do not equal the Reference Net Assets
(as defined below). The "FINAL NET ASSETS" means the aggregate amount of the
Assets, minus the aggregate amount of the Assumed Liabilities (as defined
below), recorded on the statement of assets and liabilities of the Business
as of the Closing Date prepared and audited in accordance with the
procedures set forth herein (the "CLOSING STATEMENT OF ASSETS AND
LIABILITIES"). The "REFERENCE NET ASSETS" means the amount identified as
"Assets in Excess of Liabilities" recorded on the audited statement of
assets and liabilities of the Business as of March 25, 1995 which is set
forth in Schedule 4.4(a)(1) (the "REFERENCE STATEMENT OF ASSETS AND
LIABILITIES"). It is agreed that the Reference Statement of Assets and
Liabilities does not reflect the items set forth on Schedule 2.2(a) which
are recorded on the audited balance sheet dated December 24, 1994 set forth
in Schedule 4.4(a)(1). The Purchase Price as adjusted pursuant to this


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Section 2.2 is hereinafter referred to as the "ADJUSTED PURCHASE PRICE."


(b) Seller shall prepare and furnish to Price Waterhouse LLP, Seller's
independent public accountants ("PRICE WATERHOUSE"), a proposed Closing
Statement of Assets and Liabilities no later than 90 days following the
Closing Date. The proposed Closing Statement of Assets and Liabilities shall
be audited by Price Waterhouse to establish that it has been prepared in
accordance with the accounting principles used in the Reference Statement of
Assets and Liabilities applied on a consistent basis, using the same
accounting principles, methods, practices, procedures and policies used in
preparing the Reference Statement of Assets and Liabilities except as
otherwise provided in Schedule 2.2(b) attached hereto and except for the
purchase accounting relating to Seller's purchase of Oak Materials Group.
Seller will retain Price Waterhouse to perform the audit of the Closing
Statement of Assets and Liabilities for such fees and expenses reasonably
acceptable to Purchaser. Purchaser shall be responsible for such fees and
expenses and will reimburse Seller for such fees and expenses within ten
(10) days after receipt from Seller of an invoice therefor. Price Waterhouse
will deliver the audited Closing Statement of Assets and Liabilities to
Purchaser and Seller within thirty (30) days of its receipt of the proposed
Closing Statement of Assets and Liabilities from Seller. Purchaser shall
give representatives of Seller access to the books and records of the
Business for purposes of preparing the Closing Statement of Assets and
Liabilities and will cause appropriate Purchaser personnel to assist Seller,
at no cost to Seller, in the preparation of such Closing Statement of Assets
and Liabilities. In connection with the preparation of the Closing Statement
of Assets and Liabilities, Seller and Purchaser will rely upon a roll
forward of the physical inventory observed by Price Waterhouse during the
period of August 17-19, 1995. The audited Closing Statement of Assets and
Liabilities shall be conclusive and binding upon Purchaser and Seller,
unless Purchaser or Seller notifies the other, in writing, within 30 days of
its receipt of the audited Closing Statement of Assets and Liabilities from
Price Waterhouse, of such party's disagreement with the audited Closing
Statement of


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Assets and Liabilities, setting forth all of such party's disagreements and
an explanation therefor including but not limited to the dollar amount of
each item in dispute. Purchaser and Seller shall promptly attempt to resolve
their differences with respect thereto within 30 days after receipt of
written notice of disagreement. If any such difference is not resolved
within such 30 day period, either party may refer the difference for
resolution to an accounting firm mutually acceptable to both Seller and
Purchaser or, in the absence of agreement, within 15 days, to a "national"
accounting firm selected by lot after eliminating Purchaser's and Seller's
principal outside accountants and one additional firm designated as
objectionable by each of Purchaser and Seller (hereinafter, the "FIRM"). The
Firm shall make a determination on the disputes so submitted and shall make
such modifications, if any, to the Closing Statement of Assets and
Liabilities and the Final Net Assets to reflect such determination, and the
same shall be conclusive and binding upon the parties, provided that the
Firm may not award an amount exceeding the amount in dispute. The fees and
expenses of the Firm shall be shared equally by Seller and Purchaser.


(c) Not later than 30 days after the engagement of the Firm (as
evidenced by the date of its written acceptance by facsimile or as otherwise
designated by the Firm to 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 15 days after the submittal of such briefs the parties shall
submit simultaneous reply briefs (with a copy to the other party). The Firm
shall issue its decision within 30 days after the due date for the reply
briefs. 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 30 day period, and the parties
shall promptly respond to all requests of the Firm with a view to minimizing
any delay in the decision date.


(d) If the Reference Net Assets are greater than the Final Net Assets,
then Seller shall pay to Purchaser an amount equal to the difference. If the
Final Net Assets are


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greater than the Reference Net Assets, Purchaser shall pay Seller an amount
equal to the difference. Any amount not in dispute under this Section 2.2
shall be due and payable immediately. Any amount in dispute under this
Section 2.2 shall be due and payable within five days of the resolution of
the dispute as set forth in this Section 2.2, and shall include any interest
required by Section 2.3.


2.3 Payments. All payments required to be made pursuant to this Article 2 and any other provisions of this Agreement shall be made in United States dollars in immediately available funds by wire transfer to an account designated, in writing, by the recipient. Interest shall accrue on any payment required to be paid pursuant to Article 2, beginning on the Closing Date, at a rate equal to the prime rate, as quoted by The Wall Street Journal, in effect from time-to-time, until the time of payment.


2.4 Allocation of Purchase Price.


(a) Seller and Purchaser agree that the Purchase Price shall be
allocated to the Assets pursuant to an allocation schedule to be agreed upon
by Seller and Purchaser after the Closing (the "ALLOCATION"). The parties
agree that the Allocation will be in accordance with Section 1060 of the
Internal Revenue Code of 1986, as amended (the "CODE"), and will be
reasonably determined in good faith pursuant to arm's-length bargaining
between the parties regarding the fair market value of the Assets. Seller
and Purchaser shall make any adjustments to the Allocation with respect to
the Purchase Price that are necessary to reflect any adjustments to the
Purchase Price made pursuant to Section 2.2 (the "ADJUSTMENTS"). In the
event the parties cannot agree on the Allocation or the Adjustments to the
Allocation, such dispute shall be resolved in accordance with the procedures
set forth in Section 2.2.


(b) Seller and Purchaser shall prepare and file their respective income
tax returns and Internal Revenue Service ("IRS") Form 8594, or such other
form or statement as may be required of the respective parties by law, and
any comparable state or local income tax form, in a manner consistent with
the Allocation and will not, in connection


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with the filing of such returns, make any allocation of the Purchase Price,
as the same may be adjusted herein, which is contrary to the Allocation.


3. ASSUMPTION OF LIABILITIES AND OBLIGATIONS


3.1 Assumed Liabilities. Upon the terms and subject to the conditions contained herein, on the Closing Date Purchaser shall assume the following liabilities and obligations of Seller (the "ASSUMED LIABILITIES"):


(1) all liabilities of the Business as of the Closing Date of the type
recorded in the Reference Statement of Assets and Liabilities as "Accounts
Payable - Trade", "Other Accrued Liabilities" and "Intercompany - Trade
Related", but only to the extent of the amount recorded on the Closing
Statement of Assets and Liabilities;


(2) all obligations of Seller to perform each of the Contracts in
accordance with their terms after the Closing Date to the extent (a) either
(x) such Contract is listed in Schedule 4.7 (as updated through the Closing
Date and which is reasonably acceptable to Purchaser) and a true and
complete copy has been provided to Purchaser or Purchaser's counsel on or
before the Closing Date or (y) such Contract is not required to be listed in
Schedule 4.7 pursuant to the terms of Section 4.7, provided that Purchaser
shall not be obligated to assume payment obligations under such undisclosed
Contracts (excluding any orders for the sale of Products or purchase of
goods or services entered into in the ordinary course of the Business and
consistent with past practices) to the extent that such obligations in the
aggregate exceed $50,000, and further provided that if Purchaser elects not
to assume any such obligation Purchaser shall not be entitled to any of the
rights or benefits under such Contract and Seller may take all steps to
minimize its obligations under any such Contract notwithstanding any other
provision of this Agreement, and (b) such obligations arise out of or
otherwise apply to the conduct of the Business subsequent to the Closing and
are not the result of a breach of any such Contract occurring on or prior to
the Closing Date;


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(3) all obligations to repair or replace any defective Product which is
returned following the Closing and was sold within 360 days prior to the
Closing, provided that the maximum aggregate liability assumed by Purchaser
pursuant to this Section 3.1(3) shall not exceed $164,000;


(4) any obligation or liability for any claim in which damages are
sought for defective Product and/or for bodily injury or death to any person
or for injury to or destruction of property or the like in respect of any
Product with respect to which the book value has been written down to zero
or scrap value on or before the Closing Date, which was manufactured by
Seller prior to the Closing Date and sold by Purchaser after the Closing
Date; and


(5) all sums payable pursuant to the retention bonus agreements
specified on Schedule 6.1(d) in respect of the period commencing on the
Closing Date, provided that in no event will Purchaser's obligations
therefor exceed $35,000 in the aggregate.


3.2 Excluded Liabilities. Except for the Assumed Liabilities, Purchaser shall not assume, or otherwise be responsible for, any liabilities or obligations (whether actual or contingent, matured or unmatured, liquidated or unliquidated, or known or unknown) of Parent, Seller, any other owner or operator of the Business or any Facility prior to the Closing Date, or any Affiliate of any of the foregoing (collectively, the "EXCLUDED LIABILITIES"), including but not limited to any liability or obligation as a result of, or based upon or arising out of the conduct of the Business on or prior to the Closing Date, including but not limited to the following:


(a) except as described in Section 3.1(4), any and all product
liability claims with respect to products manufactured by the Business (or,
in the case of Extruded PTFE Film-Unsintered, -Sintered, or -Low Density,
shipped by the Business) on or prior to the Closing Date, provided that no
act or omission by Purchaser after Closing is the primary cause of the
defect in such products;


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(b) the alleged or actual violation of any law, rule or regulation
(other than any Environmental Law (as hereinafter defined)), prior to the
Closing, by the Business;


(c) all claims, liabilities, or obligations, known or unknown (other
than those that constitute Assumed Liabilities), to the extent arising out
of the employment relationship existing prior to the Closing between the
Business and any and all current or former employees of the Business,
including but not limited to (i) work-related accidents or injuries, age and
sex discrimination, sexual harassment, violation of employment or safety
laws and wrongful discharge, where the act, omission, event, or occurrence
giving rise to the claim, obligation, or liability shall have taken place on
or prior to the Closing Date, (ii) medical or health care claims,
obligations and liabilities, under any plan, policy or program of the
Business or applicable law, and (iii) state workers' compensation claims
made against the Business by employees or former employees of the Business
arising from occurrences which took place on or prior to the Closing Date
but only to the extent caused by occurrences on or prior to the Closing
Date; and


(d) any liability or obligation under any Environmental Law as a result
of, or based upon or arising out of the operation of the Business or any
Facility prior to the Closing ("ENVIRONMENTAL EXCLUDED LIABILITIES").


4. REPRESENTATIONS AND WARRANTIES OF SELLER


Seller and Parent represent and warrant to Purchaser as follows:


4.1 Corporate Status. Seller is a corporation duly organized and validly existing under the laws of the State of Delaware, the jurisdiction in which it is incorporated, and has full power and authority to carry on the Business as now conducted. Seller has all requisite corporate power and authority to enter into this Agreement and to perform its obligations and consummate the transactions contemplated hereby


12 13 in accordance with the terms of this Agreement. Seller is duly qualified to do business in each jurisdiction in which the failure to be so qualified would have a material adverse effect on the Seller's conduct of the Business.


4.2 Authorization. All corporate and other proceedings required to be taken by or on the part of Seller, including, without limitation, all action required to be taken by the directors or stockholder of Seller to authorize Seller to enter into and carry out this Agreement and the related documents contemplated ...