REAL ESTATE AND ASSET PURCHASE AND SALE AGREEMENT
THIS REAL ESTATE AND ASSET PURCHASE AND SALE AGREEMENT
(hereinafter referred to as the "Agreement") is made and entered
into as of the 24th day of July, 1997, by and between CIRCUIT
SYSTEMS OF TENNESSEE, L.P., a Tennessee limited partnership (the
"Buyer"), and PHILIPS ELECTRONICS NORTH AMERICA CORPORATION, a
Delaware corporation with offices in Knoxville, Tennessee (the
"Seller").
W I T N E S S E T H :
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to
purchase from Seller, certain assets (the "Assets") described herein
and relating to the manufacture of printed circuit boards, and in
connection therewith Buyer is willing to assume certain liabilities
of Seller relating to such assets, all upon the terms, conditions
and provisions set forth herein; and
WHEREAS following the closing of the purchase sale of the
Assets, Buyer desires to manufacture and sell to Seller and Seller
desires to purchase from Buyer printed circuit boards ("PCB")
pursuant to a Printed Circuit Board Purchase Agreement between Buyer
and Seller, of even date (the "PCB Purchase Agreement");
NOW, THEREFORE, FOR AND IN CONSIDERATION of the foregoing and
the premises and covenants contained herein, the receipt and
sufficiency of which is hereby acknowledged, Buyer and Seller agree
as follows:
SECTION 1
PURCHASE, SALE, AND AGREEMENTS
S1. Assets Purchased. Buyer agrees to purchase and pay for
and Seller agrees to sell, assign, transfer and convey to Buyer on
the Closing (as defined in Section 6.1), for the consideration
specified in Section 3 hereof, the following Assets (as the same
shall exist at the time of Closing) except Excluded Assets (as
defined herein), as follows:
SA. Real Estate. All of Seller's right, title and
interest in and to those certain tracts of real property being
the site of the printed circuit board manufacturing facility
owned by Seller in Greeneville, Xxxxxx County, Tennessee
(hereinafter referred to as the "PCB Facility" or "Greeneville
Facility"), as more particularly described in various parcels
constituting Schedule 1.1A hereto, consisting of approximately
ten (10) acres, together with all and any rights and
appurtenances pertaining to such real property, including any
right, title, and interest of Seller in and to adjacent
streets, easements, alleys, and rights-of-way and subject to
the Permitted Encumbrances (all of such real property rights
and appurtenances being hereinafter referred to as the "Real
Property");
SB. Improvements. All improvements, structures and
fixtures currently situated upon the Real Property, including
without limitation the PCB manufacturing facilities of
approximately ninety-three thousand (93,000) square feet, and
all other properties or property interests normally included in
the sale of real estate, including but not being limited to
heating, air conditioning, electrical, plumbing fixtures,
drinking fountains, sprinkler systems, bus ducts, dock
levelers, signs, fire extinguishers, alarm and security systems
and motion detectors, environmental process equipment,
electrical disconnects and lines, kitchen equipment, and with
respect to such improvements, all building plans and
specifications, operating contracts, warranties, permits, soil
reports, surveys, maps, or environmental studies or
assessments, and all reports associated therewith (hereinafter
referred to as the "Improvements");
SC. Equipment. All equipment, machinery, furniture,
furnishings, and other tangible personal property owned by the
Seller currently situated upon the Real Property or
Improvements or used or to be used in connection therewith at
the PCB Facility, including without limitation those certain
items of tangible personal property identified in Schedule 1.1C
hereto (all of such tangible personal property to be sold
hereto being hereinafter referred to as the "Equipment"), but
excluding the tooling, dies, equipment and other intangible
personal property shown in Schedule 1.1C-1 (the "Excluded
Equipment"). The Equipment shall include, without limitation,
the paper phenolic machinery equipment described in
Section 1.1C-2;
SD. Inventory, Work in Progress. As such items are
located at the Greeneville Facility at the time of closing, all
right, title and interest of Seller in all inventory and work
in progress (collectively, the "Inventory"), as set forth in
Sections 1.6 and 4.1P hereof which shall be transferred at
Closing to Buyer. There will be no finished goods inventory
transferred to Buyer in this transaction.
SE. Personal Property Leases. All right, title and
interest of Seller as lessee (or sublessee), in, to and under
the leases of personal property (including without limitation
leases for certain manufacturing equipment) listed in Schedule
1.1E hereto (leases described in this paragraph being
individually a "Personal Property Lease" and collectively the
"Personal Property Leases"); at Closing Buyer will assume all
of Seller's obligations under any and all of the Personal
Property Leases;
SF. Other Contracts. All right, title and interest of
Seller in, to and under the sales orders, purchase orders and
other contracts described in Schedule 1.1F hereto (the "Other
Contracts").
All of the foregoing assets to be purchased by Buyer from
Seller are referred to herein as the "Assets". Buyer is not
purchasing any other assets of Seller. Any and all other assets of
Seller not expressly included herein, including the Excluded
Equipment, utility deposits, insurance deposits, any other
regulatory deposit (if any), and other excluded property
specifically listed in Schedule 1.1, shall be referred to as the
"Excluded Assets." A portion of the Excluded Assets consists of
certain know-how, patents, inventions, formulae, patterns, designs,
and other intangible property that is confidential and contains
trade secrets of Seller pertaining (i) to the operation and
maintenance of the Improvements and Equipment (the "Process IP"), and
(ii) specifically to the design and production of products for
Seller (the "Design IP"), all of which is more specifically
described in Schedule 1.1C (collectively, the "Intellectual
Property"). To the extent the Intellectual Property is necessary to
operate the Improvements and the Equipment or to produce products
for Seller under the PCB Purchase Agreement, Seller shall grant a
nonexclusive, non-transferable license to Buyer to use such
Intellectual Property, as further set forth in Section 1.7 hereof.
S1.2 Purchase Price. At Closing, Buyer agrees to pay in the
aggregate to Seller as the purchase price for the Assets an amount
equal to Ten Million Dollars ($10,000,000) (the "Purchase Price").
The full Purchase Price, plus or minus prorations, shall be paid to
Seller at Closing by certified check or wire transfer of immediately
available funds.
S1.3 Non-Refundable Exclusivity Fee. As consideration for
Seller's grant to Buyer of the exclusive right to purchase the
Assets, pursuant to the terms hereof, on or prior to July 25, 1997,
Buyer has, simultaneously with the execution of this Agreement, paid
to Seller a non-refundable xxxxxxx money fee of $250,000 (the
"Fee"). If Buyer does not close this transaction by July 25, 1997,
for any reason other than failure to sign a collective bargaining
agreement for a three (3) year period following a good faith effort
by Buyer to achieve such agreement and without regard to acts or
omissions of Buyer, then the Fee shall be retained by Seller and
this Agreement shall terminate. If the transaction contemplated by
this Agreement does close on or prior to July 25, 1997, then the
purchase price shall be reduced by the amount of the Fee.
S1.4 Additional Documents and Information. Seller shall furnish
to Buyer, at Seller's sole cost and expense, within ten (10) days
after the date of this Agreement, the following documents and
information which are in the possession of Seller:
SA. Copies of any plans and specifications for the
Improvements, surveys, maintenance, service, and operating
contracts, phase one environmental site assessments, notices,
correspondence from governmental or regulatory agencies or bodies
pertaining to the Real Property; and
SB. Copies of any warranties in Seller's possession
pertaining to the Improvements or the Equipment.
SC. Seller agrees to respond to the requests of Grant,
Thornton (Buyer's accountants) for certain lists of assets,
products, inventory, and other items; provided, however, that such
lists or any other similar data shall not be considered or construed
as financial statements of Seller. Seller expressly disclaims any
responsibility for producing any financial statements for Seller or
for the Printed Circuit Board operations of Seller, as Seller has no
such records. Buyer acknowledges that reference or utilization of
any similar lists or data or materials in the creation of any
financial forecasts, statements or other conclusory compilations are
made without any participation, direction or review by Seller, and
Buyer assumes sole responsibility for such forecasts.
S1.5 Permitted Encumbrances. As used in this Agreement, the term
"Permitted Encumbrances" shall mean:
SA. Current personal property, assessments, and real
property taxes for the year 1996; and
SB. Such covenants, conditions, restrictions, easements,
rights-of-way, title exceptions and other matters presently existing
and/or disclosed in the Preliminary Report and Survey, both as
defined hereinafter.
SC. Such mechanics, materialman, warehouseman, carrier or
similar liens, statutory or otherwise, which will not materially
impair the inventory or the use of the inventory in the production
of PCB at the PCB Facility.
S1.6 Inventory. Seller and Buyer agree to mutually determine by
physical inventory the raw material inventory and work-in-process
inventory at the PCB Facility as of the time of Closing.
S1.7 Grant of License.
SA. Subject to the terms hereof, Seller hereby grants to
Buyer and Buyer hereby accepts, a nonexclusive license (the
"License") to use the Process IP at the PCB Facility for the sole
purpose of operating and maintaining the PCB Facility and for the
purpose of manufacturing PCB products, and to use the Design IP
solely and exclusively for the manufacture of products for Seller.
SB. The License for use of the Design IP shall have a
term expiring upon the later of termination of the PCB Purchase
Agreement or at such time as Seller is no longer purchasing Products
from Buyer.
SC. Buyer acknowledges that the Design Intellectual
Property includes valuable confidential and secret information of
Seller, the development of which required the expenditure of
considerable time and money by Seller. Buyer shall treat the Design
Intellectual Property in confidence and shall not use, copy, or
disclose to any third party, or permit any of its personnel to use
the same to any extent or for any purpose that is not specifically
authorized under this Agreement. Buyer shall not disclose any
information about the Design Intellectual Property, including the
Intellectual Property itself, to any third party without the prior
written consent of Seller.
SD. Buyer shall not permit any personnel of Buyer to
remove any proprietary or other legend or restrictive notice
contained or included in the Intellectual Property, and Buyer shall
not permit Buyer personnel to copy the Intellectual Property except
as specifically authorized hereunder. Buyer will reproduce and
maintain Seller's copyright and proprietary notices on any copy
(whether complete or partial) of the Intellectual Property permitted
by this Agreement.
SE. Buyer shall limit use of and access to the
Intellectual Property to such personnel of Buyer directly involved
in the use thereof by Buyer. Buyer shall disclose such information
only to personnel of Buyer who Buyer has no reason to believe are
untrustworthy or may violate the provisions of this Section 1.6.
Buyer shall prevent all personnel of Buyer from having access to any
such information that is not required in the performance of their
duties for Buyer. Buyer shall adopt reasonable security practices
to prevent unauthorized access to or use of the Intellectual
Property.
SF. Buyer shall not in any event use any of the Design IP
in the production of printed circuit boards or any other products
for any person other than Seller or its designee.
SG. To the extent any Intellectual Property is not owned
by Seller but is used pursuant to a licensing or other use agreement
between Seller and a third party, Seller shall make a good faith
reasonable commercial effort to obtain the consent of such third
party to a sublicense or assignment of such Intellectual Property to
Buyer.
DUE DILIGENCE INVESTIGATION
S2.1 Access to the Property; Investigations. Buyer may, at any
time during regular business hours prior to the Closing, through its
own employees, advisors, consultants, and other representatives
(provided that such parties have executed appropriate
confidentiality agreements), make such inspection and investigation
of the Real Property, Improvements and Equipment as it deems
necessary or advisable to familiarize itself with the Real Property,
Improvements and Equipment, and all other matters pertaining to the
Assets. Such investigation may, but need not, include making an
independent environmental audit or investigation of the Real
Property and/or Improvements, the right to conduct such tests,
boring for water or soil samples, or conducting such other tests,
examinations, studies, assessments and analyses of the Real
Property, or any part or aspect thereof, as Buyer may deem or
determine necessary or advisable. Buyer shall indemnify and hold
Seller harmless from and against any liens, claims, costs or
liabilities arising from any activities of Buyer or its employees,
contractors, or agents upon the Real Property. If Buyer or its
agents or representatives causes any damage to any of the Assets
during its investigation thereof, and if for any reason the Closing
shall not occur, Buyer shall restore the Real Property,
Improvements, or Equipment, as the case may be, to the condition
that existed prior to such investigation.
CONDITIONS OF CLOSING
S3.1 Conditions to Buyer's Obligations. The obligations of Buyer
under this Agreement to purchase the Assets are subject to the
fulfillment of the following conditions prior to or at the Closing:
SA. Twenty (20) days prior to the Closing, Buyer shall
have received a current commitment for title insurance at Buyer's
expense (hereinafter the "Preliminary Report"), issued by a title
insurance company satisfactory Buyer (hereinafter the "Title
Company"), covering the Real Property. Buyer shall within ten
(10) days after Buyer's receipt of the Survey (defined in B. below)
and the Preliminary Report, give written notice to Seller specifying
any and each title exception contained in the Preliminary Report or
on the Survey which is objectionable to Buyer. If Buyer notifies
Seller of any objectionable title exception, then Seller may cause
each such objectionable title exception to be removed or cured prior
to the Closing; provided, however, that if any such objectionable
title exception cannot be so removed or cured by the date on which
the Closing is scheduled to occur, or should Seller elect not to
undertake such action as will cause the objectionable title
exception to be removed or cured, then Buyer shall elect (i) to
waive each such objectionable title exception which cannot be
removed and proceed with the Closing, or (ii) to terminate this
Agreement and all of the rights and obligations of the parties
hereunder. At the Closing, or as soon thereafter as practicable,
Title Company shall issue to Buyer an ALTA Owner's Policy of Title
Insurance in an amount as determined by Buyer, not less than the
then appraised value of the Real Property, insuring that title to
the Real Property is vested in Buyer, subject only to the Permitted
Encumbrances. Said title insurance policy shall provide extended
coverage over general exceptions and shall contain such endorsements
as Buyer's counsel shall reasonably require.
SB. Buyer shall commission at Buyer's cost and expense a
survey (hereinafter referred to as the "Survey"). The Survey shall
include the surveyors' certificate to Buyer in a form reasonably
acceptable to Buyer and Buyer's lender and as necessary for the
issuance of a policy of title insurance insuring Buyer and any
lender.
SC. Seller shall have performed and complied in all
respects with its obligations, covenants, and agreements contained
in this Agreement, to be performed and complied with prior to the
Closing.
SD. There is no suit or proceeding which seeks to
restrain, prohibit, challenge, or obtain damages or other relief in
connection with this Agreement or the consummation of the
transactions contemplated hereby.
SE. Seller shall have executed the PCB Purchase
Agreement, and such bills of sale, endorsements, assignments, deeds
and other good and sufficient instruments of conveyance and
transfer, as are provided for herein, subject to any Permitted
Encumbrances, including the following:
(1) general bills of sale and assumption and
assignment agreements vesting in Buyer title
to the Equipment and any other Asset of Seller
transferred herein;
(2) assignments of the Personal Property Leases;
(3) endorsements and assignments of the Other Contracts;
(4) a quality agreement by and between Seller and
Buyer in the form attached hereto as Schedule 3.1E(4)
(the "Quality Agreement");
SF. Seller shall have delivered or caused to be delivered
to Buyer all such written consents or waivers necessary to permit
the assignment to Buyer, on the terms provided herein, of the rights
and obligations of Seller under the Personal Property Leases and the
Other Contracts and the assumption of the liabilities thereunder by
Buyer.
SG. The Board of Directors of Seller shall have taken all
corporate action necessary to effectuate the Agreement and the
transactions contemplated hereby, and Seller shall have furnished
Buyer with certified copies of the resolutions duly adopted by
Seller's Board of Directors evidencing the same.
SH. Buyer shall have entered into an acceptable labor
contract/collective bargaining agreement of at least two years
duration with the International Union of Electronic, Electrical,
Salaried, Machine and Furniture Workers, AFL-CIO ("IUE") regarding
the provision of labor for the Greeneville Facility. Said agreement
must be endorsed by Local 796 of the IUE and/or its officers or the
Administrator acting on its behalf.
In the event that any of such conditions shall not have
been satisfied at or prior to the Closing, or waived by Buyer (and
provided Buyer shall have fulfilled its obligations in connection
with such condition), then Buyer shall have the right, at Buyer's
option, to terminate this Agreement by giving written notice of such
termination to Seller. Buyer shall return to Seller all of the
materials provided to Buyer (including, without limitation, those
provided pursuant to Section 1.3 hereof), and Buyer and Seller each
shall be released from all further obligations and liabilities
hereunder.
S3.2 Conditions to Seller's Obligations. The obligations of
Seller under this Agreement to sell the Assets are subject to the
fulfillment of the following conditions:
SA. Buyer shall have performed and complied in all
respects with its obligations, covenants, and agreements contained
in this Agreement to be performed and complied with prior to the
Closing.
SB. There is no suit or proceeding which seeks to
restrain, prohibit, challenge, or obtain damages or other relief in
connection with this Agreement or the consummation of the
transactions contemplated hereby.
SC. Buyer shall have executed the PCB Purchase Agreement,
and all agreements in connection therewith, including without
limitation, the Quality Agreement.
SD. All actions, proceedings, instruments and documents
required to carry out the transactions contemplated by this
Agreement or incidental hereto and all other related legal matters
shall be reasonably satisfactory to Seller and counsel for Seller.
Buyer shall have delivered to Seller at Closing such documents and
other evidence as Seller may reasonably request in order to
establish the consummation of transactions relating to the
execution, delivery and performance by Buyer of this Agreement, the
purchase, transfer and delivery of the Assets to be purchased
hereunder, the assumption by Buyer of all obligations and
liabilities contemplated by this Agreement, the taking of all
corporate and other proceedings in connection therewith and the
compliance with the conditions set forth herein, in form and
substance reasonably satisfactory to Seller.
SE. The General Partner of Buyer shall have taken all
action necessary to effectuate the Agreement and the other
transactions contemplated hereby, and Buyer shall have furnished the
Seller with certified copies of the resolutions duly adopted by
Buyer's General Partner evidencing the same.
In the event that any of such conditions shall not have
been satisfied at or prior to the Closing, or waived by Seller (and
provided Seller has fulfilled its obligations in connection with
such conditions), then Seller shall have the right, at Seller's
option, to terminate this Agreement by giving written notice of such
termination to Buyer. Buyer shall return to Seller the materials
provided to Buyer pursuant to Section 1.3 hereof, and Buyer and
Seller each shall be released from all further obligations and
liabilities hereunder.
S3.3 Casualty or Condemnation. Buyer shall be bound to purchase
the Assets for the full purchase price as required by the terms
hereof, without regard to the occurrence or effect of any damage to
or destruction of the Assets or partial condemnation of the Real
Property or Improvements occurring after the date hereof and prior
to the Closing, provided:
SA. The cost to repair any such damage or destruction
does not exceed ONE HUNDRED THOUSAND DOLLARS ($100,000.00) and is
repaired to the satisfaction of Buyer by Seller prior to the
Closing, or Seller assumes full responsibility for the repair and
restoration of the Real Property and Improvements in an agreement
satisfactory to Buyer at the Closing; and
SB. Any partial condemnation that does not affect Buyer's
intended operation and use of the PCB Facility; and
SC. If such damage or destruction exceeds ONE HUNDRED
THOUSAND DOLLARS ($100,000.00), or if any condemnation affects
Buyer's intended use of the Real Property and Improvements, then
Buyer may at its option either terminate this Agreement or
consummate the purchase at the purchase price specified in
Section 1.2 hereof, in which event Seller shall at Closing assign to
Buyer the insurance claims and proceeds thereof. Buyer's option
must be exercised within twenty (20) days from the date on which
Buyer receives written notice from Seller of such damage or
destruction or condemnation.
S3. Employees.
SA. (i) Buyer agrees to offer employment to all active
bargaining unit employees who are employed by Seller at Plant 4, on
the date of the Sale. If Buyer receives an insufficient number of
acceptances of its offers of employment from Seller's active
bargaining unit employees, Buyer will, to the extent necessary to
staff its operations, offer employment to Seller's employees who are
on the recall list at the time the sale occurs, who are qualified to
fill available openings and who make application to the Buyer.
(ii) Buyer agrees to offer employment to all of
Seller's salaried employees employed by Seller at Plant 4 on terms
to be established by Buyer.
(iii) So long as the affected applicant has given
written authorization to the review of his or her records in
Seller's possession, Seller will allow Buyer to have access to all
pertinent employment documents of Seller related to Seller's
employees including employment and disciplinary folders or records
at a corporate, plant, departmental or supervisory level, excluding
worker's compensation, medical information, or other information
protected by law.
SB. Employees of Seller who are offered and accept
employment with Buyer will cease to be employees of Seller and
become employees of Buyer. Buyer will have no obligation for
severance payments to any of Seller's former employees due to the
termination of employment by Seller and all obligations regarding
the employment relationship between Seller's former employees and
Seller shall be an obligation of Seller.
SC. Buyer shall be responsible for any and all
liabilities and obligations related to its offers of employment to
Seller's former employees and all matters of employment
relationships between it and Seller's former employees.
SD. Seller agrees to comply with all of its obligations
under the National Labor Relations Act, including, but not limited
to, its obligations to bargain over the decision and the effects of
the sale with the Union, bargaining agent for those in the
collective bargaining unit at the Greeneville Facility. Seller and
Buyer agree to comply with all of their obligations under the Worker
Adjustment and Retraining Notification Act ("WARN"). Seller will
hold Buyer harmless from and against any damages or liability
arising out of Seller's conduct under the National Labor Relations
Act and the WARN statute related to the sale of the Greeneville
Facility. Buyer will hold Seller harmless from and against any
damages or liability arising out of Buyer's conduct under the
National Labor Relations Act and the WARN statute related to the
sale of the Greeneville Facility.
SE. Should Seller incur any liability whatsoever due to
Buyer's handling of labor and employment issues, Buyer agrees to
indemnify, defend, and hold Seller harmless from and against any
such liability. Should Buyer incur any liability whatsoever, due to
Seller's handling of labor and employment issues, Seller agrees to
indemnify, defend and hold Buyer harmless from and against any such
liability.
SF. Buyer has determined that it will not be assuming the
collective bargaining agreement that currently exists between Seller
and the Union, but Buyer does recognize the Union as the bargaining
agents for its hourly employees. In anticipation of this
relationship, Buyer has entered into a collective bargaining
agreement with the International Union of Electronic, Electrical,
Salaried, Machine and Furniture Workers, AFL-CIO which has been
endorsed by Local 796 of the IUE, its officers, or the Administrator
acting on its behalf as referenced in Section 3.1 M supra prior to
the sale. This agreement covers wage rates and protects both Buyer
and Seller from interruption in the production and supply of
products because of strikes.
SG. As of the Closing, Buyer shall adopt, at its expense,
vacation, holiday and health insurance plans for its employees.
Buyer will have no liability or obligation to pay or provide and
Seller will assume all liabilities and expenses for any vacation,
holiday, severance, health insurance, pension or other benefits
earned or accrued by Seller's former employees prior to the Closing.
Buyer will assume all liability or obligations to pay for vacation,
holiday, severance or health insurance or other benefits claimed or
accruing by Seller's former employees for time worked after the
Closing. Assets relating to Seller's benefit plans shall be
retained by Seller.
SH. The covenants of Buyer and Seller in this Section 3.4
are solely for the benefit of Buyer and Seller and are not intended
to create any right in any current or former employee of Seller, or
any of their beneficiaries or personal representatives, or any other
third party, including the Union.
S4. WARRANTIES
S4.1 Seller's Warranties. Seller hereby represents and warrants
to Buyer that except as disclosed on Schedule 4.1:
SA. Seller has good title to the Assets, subject only to
the Permitted Encumbrances.
SB. Seller is a corporation duly organized, validly
existing, and in good standing under the laws of the State of
Delaware, and is qualified to do business in the State of Tennessee.
SC. Seller has all corporate and legal right, power, and
authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of
this Agreement by Seller and consummation by Seller of the
transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on behalf of Seller.
This Agreement has been duly executed and delivered by Seller and
together with all other instruments and documents executed and
delivered by Seller at the Closing, constitute and will constitute
legal, valid, and binding agreements of Seller, enforceable in
accordance with their respective terms, except that: (i) enforcement
may be subject to bankruptcy, insolvency, reorganization, moratorium,
or other similar laws now or hereafter in effect relating to creditors'
rights generally; and (ii) the remedies of specific performance and
injunctive relief and other forms of equitable relief may be subject to
equitable defenses and other discretion of the court before which any
proceeding therefor may be brought.
SD. Seller does not know and Seller has received no
notice of any litigation, proceeding, or investigation currently
pending or threatened, before any forum, court, body, department, or
agency, which may reasonably be expected to have a material adverse
effect on the transactions contemplated hereby or that might affect
Seller's authority to consummate such transactions.
SE. Seller has received no notice that the occupancy,
operation, and use of the Real Property and/or the Improvements
violate any applicable law, statute, ordinance, rule, regulation,
policy order, or determination of any federal, state, local, or
other governmental authority ("Governmental Authority") or any board
of fire underwriters (or other body exercising similar functions),
or any restrictive covenant or deed restriction affecting any
portion of the Real Property and/or Improvements including, without
limitation, any applicable zoning ordinances and building codes,
flood disaster laws, wetlands laws or regulations.
SF. Except as disclosed on Schedule 4.1, Seller has
received no notice that the Real Property is not in compliance with
applicable environmental laws, regulation or policy relating to
environmental matters, including but not limited to the Clean Air
Act as amended, the Clean Water Act as amended, the Resource
Conservation Recovery Act of 1976 as amended, and the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 as
amended, and applicable state and local environmental requirements.
SG. Seller has received no notice that the Real Property,
or any portion thereof, is listed, proposed for listing, or eligible
for listing on the National Priority List under the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C.
9601 Section et seq.), as amended, nor under any comparable listing
or designation of the State of Tennessee.
SH. There are no maintenance, management, leasing,
service agreements, or other contracts or agreements of any nature
relating to the Real Property which will be in effect at the
Closing, other than those provided by Seller to Buyer pursuant to
Section 1.3 hereof.
SI. There is no pending or threatened litigation or
pending or contemplated condemnation proceedings known to Seller
which affect the Assets or any part thereof.
SJ. There are no municipal or other government
assessments against the Real Property other than current real
property taxes and Seller has not entered into any understanding or
agreement with any taxing or assessing authority with respect to the
imposition or deferment of any taxes or assessment relating to the
Real Property, except as disclosed in the Preliminary Report.
SK. No person, firm, or entity has rights in or to
acquire the Assets or any part thereof, and there is no agreement
other than this Agreement to sell the Assets.
SL. Seller has not received any notice of structural
defects or dangerous mechanical conditions which exist with respect
to the PCB Facility. With respect to the Improvements and
Equipment, all mechanical equipment (including but not limited to
the air conditioning, heating, and electrical systems, and
plumbing), structural members, and utilities are in good condition,
ordinary wear and tear excepted, and all mechanical equipment and
utilities are presently in serviceable and safe operating condition.
SM. Seller has not engaged any broker or finder in
connection with the transactions contemplated hereby and no broker's
or finder's fees or commissions are due or payable in connection
with the transactions contemplated hereby.
SN. Seller has received no notice from any lessor or
third party of any condition of default in any term of the Personal
Property Lease(s) and Other Contract(s).
SO. Seller has good and marketable title to all of the
Equipment, free and clear of all liens, claims, charges, security
interests, encumbrances or other interests of any third party other
than Permitted Encumbrances. All of the Equipment is in good
condition and repair, ordinary wear and tear excepted, and is
suitable for the present uses thereof.
SP. The inventories of Seller to be sold to Buyer will
consist of items of a quality and quantity which are good, usable
and saleable in the usual and ordinary course of business of Seller
at customary prices therefor and will not include any items which
are damaged, obsolete or below standard quality.
SQ. Set forth on Schedule 4.1(Q) hereto is a true and
correct list of all permits, licenses, certificates, consents and
other authorizations (herein collectively called "Permits")
possessed or used by Seller that relate to and are necessary for the
operation of its business as presently conducted or to own the Real
Property and Improvements owned by it. Seller is in compliance with
all such Permits, and all such Permits are in full force and effect.
At the Closing Seller shall transfer and assign to Buyer all such
Permits that are transferable as indicated by an asterisk on said
Schedule 4.1(Q).
The above representations and warranties of Seller shall
survive the Closing and transfer of title to the Assets to Buyer.
S4.2 Representations and Warranties of Buyer.
SA. Buyer is a Tennessee limited partnership duly
organized, validly existing, and in good standing under the laws of
the State of Tennessee, and will be, by the Closing, qualified to do
business in the State of Tennessee.
SB. Buyer has all legal right, power, and authority to
enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement
by Buyer and consummation by Buyer of the transactions contemplated
hereby have been duly and validly authorized by all necessary action
on behalf of Buyer. This Agreement has been duly executed and
delivered by Buyer and it, together with all other instruments and
documents executed and delivered by Buyer at the Closing, constitute
and will constitute legal, valid, and binding agreements of Buyer,
enforceable in accordance with their respective terms, except that:
(i) enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium, or other similar laws now or hereafter
in effect relating to creditors' rights generally; and (ii) the
remedies of specific performance and injunctive relief and other
forms of equitable relief may be subject to equitable defenses and
other discretion of the court before which any proceedings therefor
may be brought.
SC. To the best of Buyer's knowledge, there is no
litigation, proceeding, or investigation currently pending or
threatened, before any forum, court, body, department, or agency,
which may reasonably be expected to have a material adverse affect
on the transactions contemplated hereby or that might affect Buyer's
authority to consummate such transactions, and Buyer does not know
of any basis for any such litigation, proceeding, or investigation.
SD. Buyer has not engaged any broker or finder in
connection with the transactions contemplated hereby and no broker's
or finder's fees or commissions are due or payable in connection
with the transactions contemplated hereby.
SECTION 5
INDEMNIFICATION
S5.1 Nature and Survival of Representations and Warranties.
Except as otherwise specifically provided in this Agreement to the
contrary, all of the representations, warranties and covenants made
by Seller and Buyer under this Agreement shall survive the Closing
until the second (2nd) anniversary following closing hereof.
S5.2 Indemnification of Buyer. Seller shall indemnify and hold
Buyer harmless from and against, and reimburse Buyer on demand for,
any actual damage, loss, cost or expense (including reasonable
attorneys' fees) incurred by Buyer resulting from any breach of
Seller's representations or warranties.
S5.3 Indemnification of Seller. Buyer shall indemnify and hold
Seller harmless against, and reimburse Seller on demand for, any
actual damage, loss, cost or expense (including reasonable
attorneys' fees) incurred by Seller resulting from any breach of
Buyer's representations or warranties.
S5.4 Notice of Claims. If any claim is made against a party
hereto that, if sustained, would give rise to a right of indemnity
under this Section 5, the party having the claim made against it
("Indemnitee") shall give the other party ("Indemnitor") written
notice thereof (specifying the nature and amount of the claim and
giving Indemnitor the right to contest the claim) within thirty (30)
days of becoming aware of such claim ("Notice of Claim").
S5.5 Right to Contest. Indemnitee shall afford Indemnitor the
opportunity, at Indemnitor's own expense, to assume the defense or
settlement of any such Notice of Claim, with its own counsel. In
connection therewith, the Indemnitee shall cooperate fully to make
available all pertinent information under its control and shall have
the right to join in the defense, at its own expense, with its own
counsel. If Indemnitor does not elect to undertake the defense of a
claim under a Notice of Claim on the terms provided below,
Indemnitee shall be entitled to undertake the defense or settlement
of the claim at the expense of and for the account and risk of
Indemnitor.
Indemnitor shall have the right to assume the entire
defense of a claim hereunder provided that (i) Indemnitor gives
written notice of such desire (the "Notice of Defense") to
Indemnitee within fifteen (15) days after Indemnitor's receipt of
the Notice of Claim; (ii) Indemnitor's defense of such claim shall
be without cost to Indemnitee or prejudice to Indemnitee's rights
under this Section 5; (iii) counsel chosen by Indemnitor to defend
such claim shall be reasonably acceptable to Indemnitee; (iv)
Indemnitor shall bear all costs and expenses in connection with the
defense and settlement of such claim; (v) Indemnitee shall have the
right to receive periodic reports from Indemnitor and Indemnitor's
counsel; and (vi) Indemnitor will not, without Indemnitee's written
consent, settle or compromise any claim or consent to any entry of
judgment which does not include the unconditional release by
claimant or plaintiff of all liability with respect to the claim.
Notwithstanding anything contained herein to the contrary, if
Indemnitor assumes the defense of a claim, Indemnitor shall
thereafter be estopped from asserting that indemnity was not proper
with respect to such claim, provided, however, this shall not
relieve Indemnitee of its obligation to cooperate and make available
pertinent information under this Section 5.5.
S5.6 Limitation of Liability. Buyer shall not have any
liability to indemnify Seller in respect of losses incurred by
Seller pursuant to Section 5.3, and Seller shall not have any
liability to indemnify Buyer in respect of Losses incurred by Buyer
pursuant to Section 5.2, in either case unless and until the
aggregate amount of such losses exceeds $50,000, in which event the
party seeking indemnity may recover the full amount of such Losses,
other than the initial $50,000, provided that recovery by Buyer in
respect of such Losses shall be limited to $10,000,000.
SECTION 6
CLOSING
S6.1 Closing. Closing of the purchase and sale of the Assets and
the execution of the PCB Purchase Agreement, the Quality Agreement,
and the Warranty Deed and Xxxx of Sale conveying the Assets to
Buyer, and any lease assignments related to the foregoing shall be
held on or before July 25, 1997, or a date prior thereto mutually
agreed by Buyer and Seller, at the offices of Seller (or its
counsel) in Atlanta, Georgia or at such other time and date or place
as shall be mutually agreed by Seller and Buyer. The date on which
the Closing actually takes place or, if more than one day is
required to complete the Closing, the date on which the Closing is
actually accomplished is herein referred to and designated as the
"Closing."
S6.2 Deliveries at Closing. At the Closing the following shall
occur, each action being considered a condition precedent to the
others and all being considered as taking place simultaneously, and
each party covenanting to perform or cause to be performed each such
action to be performed on its part:
SA. Seller and Buyer shall execute (or have previously
executed) the PCB Purchase Agreement and the Quality Agreement.
SB. Seller shall execute, acknowledge, and deliver to
Buyer a Warranty Deed, in the form attached hereto as Schedule
6.2(B), conveying and warranting to Buyer title to the Real Property
and Improvements, subject only to the Permitted Encumbrances.
SC. Seller shall execute, acknowledge, and deliver to
Buyer such Bills of Sale, in the form attached hereto as Schedule
6.2C, selling, assigning, and transferring to Buyer the Equipment
and Inventory to be herein conveyed, subject to the Permitted
Encumbrances.
SD. Seller shall execute, acknowledge and deliver to
Buyer such assignments of lease or other documents as are necessary
to transfer any Personal Property Leases comprising portions of the
Assets.
SE. Buyer shall pay to the Seller in current funds the
sum of TEN MILLION DOLLARS ($10,000,000), subject to adjustments for
prorations and/or the Fee, as set forth herein.
SF. All reasonable and customary prorations shall be made
as of the Closing and appropriate credit shall be given for real
property taxes, assessments, utilities, deposits and other matters,
the nature of which properly require such treatment at the Closing.
SG. Seller and Buyer shall each pay one-half of the taxes
(if any), sales and excise taxes (if any), title insurance, and
survey for the subject transaction. Buyer shall pay all recording
fees and taxes or other fees relating to any mortgage of the Real
Property.
SH. Seller shall execute, acknowledge, and deliver to
Buyer a Non-Foreign Affidavit of Buyer, in a form reasonably
satisfactory to Buyer, in accordance with Section 1445 of the
Internal Revenue Code.
SI. Each party shall execute, acknowledge, and deliver
such other documents and instruments and take such other action as
the other party or its legal counsel may reasonably require in order
to document and carry out the transaction contemplated in this
Agreement.
S6.3 Closing Deadline. If Buyer is unable to close before
July 25, 1997, then this Agreement shall terminate; Seller shall retain
the Fee; each party shall bear its own costs arising from such
termination; and Sections 7.1, 7.2 and 7.3 shall have no effect.
SECTION 7
DEFAULT AND REMEDIES
S7.1 Default by Seller. In the event of a default by Seller in
the performance of its obligations hereunder, Buyer shall give
written notice to Seller designating such default. Seller shall
have a period of ten (10) days following the effective date of said
notice within which to correct, or in the case of a default which is
of a nature that cannot reasonably be corrected within such ten
(10) day period, within which to commence action to correct, the
default of which Seller has received notice. In the event that
Seller shall fail to correct such default within said ten (10) day
period or, if applicable, to commence action to correct such default
within said ten (10) day period and thereafter diligently to pursue
the same to completion, Buyer shall have the right: (a) If such
default occurs prior to the Closing, to forfeit the Fee, and to
terminate this Agreement and all rights, duties, and obligations of
the parties hereunder by giving written notice thereof to Seller; or
(b) compel specific performance by Seller of its obligations
hereunder or recover damages from Seller resulting from said default.
S7.2 Default by Buyer. In the event of a default by Buyer in the
performance of its obligations hereunder, Seller shall give written
notice to Buyer designating such default. Buyer shall have a period
of ten (10) days following the effective date of said notice within
which to correct, or in the case of a default which is of a nature
that cannot reasonably be corrected within such ten (10) day period,
within which to commence action to correct, the default of which
Buyer has received notice. In the event that Buyer shall fail to
correct such default within said ten (10) day period or, if
applicable, to commence action to correct such default within said ten
(10) day period and thereafter diligently to pursue the same to
completion, Seller shall have the right: (a) If such default occurs
prior to the Closing, to retain the Fee and to terminate this
Agreement and all rights, duties, and obligations of the parties
hereunder by giving written notice thereof to Buyer; or (b) by legal
action recover damages from Buyer resulting from said default.
S7.3 Remedies.
SA. The rights and remedies of any of the parties hereto
shall not be exclusive, and the exercise of any rights or remedies
with respect to one or more of the provisions of this Agreement
shall not preclude the exercise of rights or remedies with respect
to any other provisions; provided, however, the indemnification
provisions of Section shall be the exclusive remedy with respect 5
to any breach of the representations and warranties, and neither
Buyer nor Seller shall be entitled to any remedies other than those
set forth herein with respect to the breach of any such
representation or warranty.
SB. In the event of any claim or controversy under or
otherwise relating to this Agreement, except as set forth in Section
5 and/or Section 7.3(C), the parties shall attempt to resolve the
claim or controversy by good faith participation in nonbinding
mediation in Xxxx County, Tennessee, prior to the commencement of
litigation in any forum. The mediator and the rules of mediation
shall be agreed upon by the parties within ten (10) days following
notice of an intent to mediate. In the absence of the parties'
agreement, the mediator and the rules for the mediation shall be
determined by the Federal Mediation and Conciliation Service or, if
that Service is unable or unwilling to serve, the American
Arbitration Association. The mediation shall continue until the
claim or controversy is resolved or the mediator makes a finding
that there is no possibility of settlement through mediation.
SC. Seller acknowledges that the breach by Seller of any
obligation relating to Intellectual Property would cause immediate
and irreparable harm to Buyer, for Buyer would have no adequate
remedy at law. Notwithstanding the provisions of Section 1.7, in
the event of a breach or threatened breach of any obligation of
Seller relating to Intellectual Property, Buyer shall be entitled
(upon reasonable proof thereof by affidavit executed by an officer
or managing agent of Buyer, but without notice or delivery of a
bond) to such temporary restraining and seizure orders as may be
appropriate to prevent the breach or further breach of the
obligation and to protect the rights of Buyer in and to the
Intellectual Property. Furthermore, in the event of a breach or
threatened breach of any obligation relating to Intellectual
Property, Buyer shall also be entitled to such preliminary and
permanent injunctions as may be appropriate to prevent the breach or
further breach of the obligation or to protect the rights of Buyer
in and to the Intellectual Property. Nothing in this paragraph
shall be construed to prevent Buyer from pursuing any other remedy
for the breach or threatened breach of the obligation.
SECTION 8
GENERAL PROVISIONS
S8.1 Notices. All notices and other communications provided for
in this Agreement shall be in writing and shall be sufficient for
all purposes if personally delivered or if mailed by certified or
registered U.S. mail, return receipt requested, postage prepaid,
sent by facsimile with confirmation and addressed to the respective
party at the address set forth below or at such other address as
such party may hereafter designate by written notice to the other
party as herein provided.
To Seller:
Philips Electronics North America Corporation
Attention: Xxxx Xxxxxx, Esq.
X.X. Xxx 00000
Xxxxxxxxx, Xxxxxxxxx 00000-0000
Facsimile (000) 000-0000
With a copy to each of:
Philips Electronic North America Corporation
Attention: Xxxxxx X. Xxxxxx, Esq.
00 Xxxxxxxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000-0000
Facsimile (000) 000-0000
and
Hunton & Xxxxxxxx
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
2000 Riverview Tower, 000 X. Xxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Facsimile (000) 000-0000
To Buyer:
Circuit Systems, Inc.
Attention: Xxxxx X. Xxxx
0000 Xxxx Xxxx Xxxxxx
Xxx Xxxxx Xxxxxxx, Xxxxxxxx 00000
Facsimile (000) 000-0000
With a copy to:
Xxxxx and Xxxxxx, P.C.
Attention: Xxxxxx X. Xxxxx, Esq.
00 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Facsimile (000) 000-0000
Facsimile notices and other communications shall be deemed to have
been given and received upon confirmation.
S8.2 Costs. Except as otherwise specifically provided in this
Agreement, Seller and Buyer each shall pay their own costs and
expenses incurred in preparation and execution of and performance
under this Agreement.
S8.3 Entire Agreement. This Agreement, including the schedules
hereto, constitutes the entire agreement between the parties hereto
relative to the subject matter hereof and shall supersede any prior
negotiations, correspondence, agreements, or understandings relative
to the subject matter hereof. This Agreement may not be amended or
modified except in writing executed by both of the parties hereto.
S8.4 Interpretation. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of
Tennessee. Whenever the context requires, the singular shall
include the plural, the plural shall include the singular, the whole
shall include any part thereof, any gender shall include both other
genders, the term "person" shall include an individual, partnership
(general or limited), corporation, trust, or other entity or
association or combination thereof. The captions and section
headings contained in this Agreement are for purposes of reference
only and shall not limit, expand, or otherwise affect the
construction of any provisions of this Agreement. This Agreement
shall bind and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. The respective rights
and obligations of any party hereto shall not be assignable without
the consent of the other party. Time is of the essence as to each
and every provision of this Agreement. The provisions of this
Agreement shall be construed both as covenants and conditions in the
same manner as though the words importing such covenants and
conditions were used in each separate provision hereof. Schedules
1.1A through 6.2(C) hereto are by this reference incorporated herein
and made a part hereof for all purposes. As used herein, the
expression "this Agreement" means the body of this Agreement and
such Schedules, and the expressions "herein," "hereof," and
"hereunder" and other words of similar import refer to this
Agreement and such Schedules as a whole and not to any particular
part or subdivision thereof.
S8.5 No Assumption of Liabilities. Except as set forth in this
Agreement, Buyer shall not become liable for and is not assuming any
debt, duty, liability, or obligation (of any nature) of Seller by
entering into this Agreement or by consummating the transaction
contemplated hereby, specifically including, but not limited to any
liability covered by any applicable bulk sales law. Seller shall
indemnify and hold Buyer harmless against and from any and all
liabilities and all costs, including, but not limited to fees and
expenses of counsel, incurred by Buyer and arising out of or
attributable to any liabilities under applicable bulk sales law.
Seller agrees that it will pay or otherwise provide for the payment
and discharge of all such liabilities, including without limitation
any liabilities or obligations, tax or otherwise, imposed on or
incurred by Seller as a result of the transactions contemplated by
this Agreement.
S8.6 Waiver. Either party hereto may to the extent permitted by
applicable law (i) extend the time for the performance of any of the
obligations or other acts of the other party, (ii) waive any
inaccuracies in the representations and warranties of the other
party contained herein or in any document delivered pursuant hereto,
or (iii) waive compliance with any of the covenants, agreements or
conditions of the other party contained herein. No such extension
or waiver shall be effective unless set forth in a written
instrument duly executed by or on behalf of the party extending the
time of performance or waiving any such inaccuracy or non-
compliance.
S8.7 Invalidity of Provision. If any provisions of this Agreement
as applied to either party or to any circumstance shall be adjudged
by a court of competent jurisdiction to be void or unenforceable for
any reason, the same shall in no way affect (to the maximum extent
permitted by applicable law) any other provision of this Agreement,
the application of any such provision under circumstances different
from those adjudicated by the court, or the validity or
enforceability of the Agreement as a whole.
S8.8 No Recordation. Buyer covenants and agrees that neither this
Agreement nor any memorandum or other notice of this Agreement
(other than the Warranty Deed) shall be recorded in any real
property records of any Tennessee county, without the prior written
consent of Seller.
S8.9 Tax Allocation. The parties hereby agree that the allocation
of the Purchase Price among the Assets to ensure such allocation
complies with the provisions of Section 1060 of the Internal Revenue
Code of 1986 is as follows, unless modified at Closing by a separate
schedule:
Real Property and - $7,000,000
Improvements
Inventory - $ 400,000
Equipment - $2,600,000
S8.10 Multiple Counterparts. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original for
all purposes and all of which shall be deemed, collectively, one
agreement.
S8.11 Governing Law; Choice of Forum. This Agreement shall be
governed by the laws of the State of Tennessee and the Buyer and
Seller acknowledge that the only forum and venue for resolution of
any judicial proceeding in connection with any matter pertaining to
this Agreement shall be in the United States District Court for the
Eastern District of Tennessee located at Knoxville, Tennessee.
S8.12 Announcements. Neither party shall make any initial public
or third party announcement of this transaction, or the pendency or
execution of any agreements in connection herewith, without the
prior approval of the other party.
[Remainder of page intentionally left blank.]
IN WITNESS WHEREOF, Seller and Buyer have executed this
Agreement as of the day and year first above written.
PHILIPS ELECTRONICS NORTH
AMERICA CORPORATION
By:/s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
Vice President and General Counsel,
Philips Consumer Electronics Company,
a division of Philips Electronics
North America Corporation
[Signature page to Real Estate and Asset
Purchase and Sale Agreement]
CIRCUIT SYSTEMS OF TENNESSEE, L.P.,
a Tennessee limited partnership
CIRCUIT SYSTEMS OF TENNESSEE, INC.
a Tennessee corporation, general partner
By:/s/ Xxxxx X. Xxxx
Xxxxx X. Xxxx
Vice President
[Signature page to Real Estate and Asset
Purchase and Sale Agreement]
SCHEDULE
1.1A
REAL PROPERTY
SCHEDULE 1.1C
EQUIPMENT
SCHEDULE 1.1C-1
INTELLECTUAL PROPERTY
Excluded Assets includes the following Intellectual Property
owned by Seller: corporate names, brand names, trade names,
trademarks, servicemarks, copyrights, patents, inventions,
processes, know-how, formulae, patterns, designs, trade secrets and
interests thereunder; licenses; software, design work, and any and
all other Intellectual Property. That portion of the Intellectual
Property that consists of inventories, processes, know-how, and
software that are an integral part of the Improvements and
Equipment, and are necessary for the operation of the Improvements
and Equipment is referred to as "Process IP." That portion of the
Intellectual Property consisting of corporate names, brand names,
trade names, trademarks, servicemarks, copyrights, patents,
inventions, processes, know-how, formulae, patterns, designs, trade
secrets and interests thereunder; licenses; software, and design
work that specifically relates to or contains information about the
specifications for, design and manufacture of products for Seller is
referred to as "Design IP." The Design IP and the Process IP
collectively make up the Intellectual Property.
AND
All Philips product specific tooling and dies.
SCHEDULE 1.1E
REAL PROPERTY LEASES
[Expected to be none]
SCHEDULE 1.1F
OTHER CONTRACTS
SCHEDULE 3.1G(5)
QUALITY AGREEMENT
SCHEDULE 4.1
DISCLOSURE
SCHEDULE 4.1(Q)
PERMITS
SCHEDULE 6.2B
FORM OF WARRANTY DEED
SCHEDULE 6.2C
FORM OF XXXX OF SALE
