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MASTER AGREEMENT REGARDING
ASSET PURCHASE AND RELATED TRANSACTIONS
BY AND BETWEEN
ALLIEDSIGNAL AVIONICS, INC, A KANSAS CORPORATION
ALLIEDSIGNAL INC., A DELAWARE CORPORATION,
OPERATING THROUGH ITS
AEROSPACE EQUIPMENT SYSTEMS BUSINESS UNIT
AND
EFTC CORPORATION, A COLORADO CORPORATION
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MASTER AGREEMENT REGARDING
ASSET PURCHASE AND RELATED TRANSACTIONS
THIS MASTER AGREEMENT (the "Agreement") dated as of July 15, 1997 is
entered into by and between AlliedSignal Avionics Inc., a Kansas corporation
("Avionics"), AlliedSignal Inc., a Delaware corporation, operating through its
Aerospace Equipment Systems Business Unit ("AES") and EFTC Corporation, a
Colorado corporation ("Purchaser") with reference to the following facts:
WHEREAS, Avionics and AES (individually, "Seller," and collectively
"Sellers") are engaged in a line of business consisting of the manufacture of
electronic assemblies for use in avionics and aerospace equipment produced by
Avionics and AES, respectively, for general, commercial and military aircraft
applications (the "Business");
WHEREAS, Purchaser has unique capabilities in the mass production of
electronic circuit cards for aerospace and military applications;
WHEREAS, Sellers desire to sell and Purchaser desires to purchase
certain assets of Sellers used primarily in the Business as described herein
such that Purchaser may assume the operations of the Business; and
WHEREAS, in connection with the sale of such assets, Sellers and
Purchaser desire to enter into a Long Term Agreement whereby Purchaser will
manufacture and sell computer circuit cards to Sellers and their parent and
affiliated entities.
NOW, THEREFORE, in consideration of the mutual covenants, agreements
representations and warranties contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. PURCHASE AND SALE OF ASSETS
1.1 Purchase and Sale. Subject to the terms and conditions of
this Agreement and except as otherwise provided herein, on their respective
Asset Transfer Dates, as defined in Section 9.1.2 below, Sellers shall sell,
convey, transfer, assign and deliver to Purchaser and Purchaser shall purchase
and accept from Sellers, all of Sellers' right, title and interest the
following assets, together with such changes, deletions or additions as are
reasonably acceptable to Purchaser and occur between the respective dates of
such Exhibits and the applicable Asset Transfer Dates in the ordinary course of
business (the "Assets"):
1.1.1 Certain machinery and equipment, office equipment,
tools and other tangible personal property as listed in Exhibit A1.1.1, with
respect to Avionics, and Exhibit B1.1.1, with respect to AES (the "Personal
Property");
1.1.2 All inventory of the Business, including raw
materials, parts and components, work-in-process and finished goods (the
"Inventory"), such Inventory to be
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identified in accordance with the procedures specified in Exhibit A2.1, with
respect to Avionics, and Exhibit B2.1, with respect to AES; and
1.1.3 The contracts, agreements, arrangements and/or
commitments of the Business with vendors specified in Exhibit A1.1.3, with
respect to Avionics, and Exhibit B1.1.3, with respect to AES (the "Contracts").
Notwithstanding anything to the contrary set forth herein or in any Exhibit
hereto, no contracts for third party sales are to transfer to Purchaser under
this Agreement.
1.2 Non-Assignable Assets. Notwithstanding anything in this
Agreement to the contrary, this Agreement shall not 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 the
respective Seller or is otherwise not permitted by the terms of any agreement
or instrument governing or affecting such Asset or by applicable law. Any
transfer or assignment to Purchaser by Sellers 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;
provided that the Sellers shall hold such property, property rights or
agreement for the exclusive benefit of Purchaser until such consent or approval
is obtained.
1.3 Transfer of Title to the Assets. Sellers shall sell, assign,
convey, transfer and deliver the Assets to Purchaser at the Asset Transfer Date
by means of bills of sale, assignments, endorsements, certificates and such
other instruments of transfer as shall be necessary or appropriate to vest good
title to the Assets in Purchaser, free and clear of any liens, charges and
encumbrances, except as otherwise set forth in this Agreement.
1.4 License Agreement. At the Avionics Closing, as hereinafter
defined, Sellers shall cause AlliedSignal Technology Inc. ("ASTI") to enter
into a license agreement in the form attached hereto as Exhibit C1.4, (the
"License Agreement") covering certain intellectual property of the Business as
described in such agreement (the "Licensed Intellectual Property"). At the
Avionics Closing Purchaser shall execute and deliver the License Agreement.
2. PURCHASE PRICE
2.1 Purchase Price. The method of calculating the purchase price
to be paid by Purchaser for the Assets (the "Purchase Price") and the
applicable payment terms are set forth in Exhibit A2.1, with respect to
Avionics, and Exhibit B2.1, with respect to AES.
2.2 Payments. All payments required to be made pursuant to this
Article 2 and other provisions of this Agreement shall be made in United States
dollars immediately available funds by wire transfer to an account designated
by the party to receive payment in writing to the party making payment. In the
event of Purchaser's failure to pay timely any portion of the Purchase Price,
the applicable Seller (the "Creditor Seller") may offset all or any part of
such amounts against any amounts due Purchaser by (i) the Creditor Seller under
the Long Term Agreement (as hereinafter defined) or otherwise, and/or (ii) by
the other Seller or parent or affiliated entities of either Seller, either
case, upon assignment to the Creditor Seller of the applicable
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amounts due by the other Seller or such parent or affiliated entities.
Purchaser hereby consents to any such assignment. Any such offset shall
constitute payment of the amounts due to the extent of such offset.
2.3 Transfer Taxes. Purchaser shall be responsible for all sales,
transfer and similar taxes, duties or levies assessed or payable in connection
with the transfer of the Assets to Purchaser. Purchaser shall obtain and
furnish to Sellers all required resale or other exemption certificates with
respect to the Assets.
3. ASSUMPTION OF LIABILITIES AND OBLIGATIONS
3.1 Assumed Liabilities. Upon, from and after the separate Asset
Transfer Dates with respect to AES and Avionics, Purchaser shall, without any
further responsibility or liability of, or recourse to, Sellers or any of their
directors, shareholders, officers, employees, agents, consultants,
representatives, parent entities, affiliates, successors or assigns, absolutely
and irrevocably assume and be solely liable and responsible for any and all
liabilities and obligations of any kind or nature of the applicable Seller
(whether fixed or contingent, matured or unmatured, foreseen or unforeseen,
known or unknown), which may arise on or after the respective Asset Transfer
Dates arising out of the following (the "Assumed Liabilities"):
3.1.1 The ownership, use or possession or condition of the
Assets, or the operation or conduct of the Business after the applicable Asset
Transfer Date;
3.1.2 Sellers' respective obligations to purchase goods and
services incurred through the applicable Asset Transfer Date, to the extent
such obligations relate to goods and services to be received on or after such
Asset Transfer Date by Purchaser;
3.1.3 Sellers' respective obligations under the Contracts
to be performed after the applicable Asset Transfer Date;
3.1.4 Liability for all federal, state, local and foreign
taxes relating to the Assets or the Business with respect to any period or part
thereof commencing immediately after the transfer of the Assets; and
3.1.5 Any other liability specifically and expressly
assumed by the Purchaser herein or in the Exhibits hereto as the responsibility
of Purchaser.
The assumption by Purchaser of all such liabilities shall be effective upon the
applicable Asset Transfer Date, relating to the underlying Assets or portion of
the Business, unless the terms hereof or of the applicable Exhibit hereto
expressly state that such liability or obligation shall transfer at another
time, including, but not limited to, the obligations set forth in Article 6.
Nothing contained in this Section shall be deemed to limit any obligations of
Seller under this Agreement, including but not limited to, the representations
and warranties made by Seller in Section 4.
3.2 Retained Liabilities. Sellers shall at all times, without any
responsibility or liability of, or recourse to, Purchaser or any of its
directors, shareholders, officers, employees, agents, consultants,
representatives, parent entities, affiliates, successors
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or assigns, absolutely and irrevocably be and remain solely liable and
responsible for any and all liabilities and obligations of any kind or nature
(whether fixed or contingent, matured or unmatured, foreseen or unforeseen,
known or unknown) existing or arising from or in connection with the conduct of
the Business prior to the respective Asset Transfer Dates of the Sellers
(collectively the "Retained Liabilities") unless the terms hereof or of the
applicable Exhibit hereto expressly state that such liability or obligation
shall transfer to Purchaser at another time, including, but not limited to, the
obligations set forth in Article 6.
4. REPRESENTATIONS AND WARRANTIES OF SELLERS
Each Seller represents and warrants to Purchaser as follows with
respect to itself and its Assets only, and not with respect to the other Seller
or the Assets of the other Seller:
4.1 Corporate Status. Seller is a corporation duly organized and
validly existing under the laws of Kansas, in the case of Avionics, and
Delaware, in the case of AES, 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 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 shareholders of Seller to
authorize Seller to enter into and carry out this Agreement has been, or prior
to the applicable Closing will be, duly and properly taken. This Agreement has
been duly executed and delivered by Seller and is valid and enforceable against
Seller in accordance with its terms, subject to laws of general application
relating to bankruptcy, insolvency and the relief of debtors and the rules of
law governing specific performance, injunctive relief and other equitable
remedies.
4.3 Compliance. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby will not (a) result in
the material breach of any of the terms or conditions of, or constitute a
default under, or violate, as the case may be, the articles of incorporation,
by-laws or other organization documents of Seller or any material agreement,
lease, mortgage, note, bond, indenture, license or other document or
undertaking, oral or written, to which Seller is a party or by which Seller is
bound or by which any of the Assets may be affected, in a manner which could
materially and adversely affect the Business taken as a whole, or (b) result in
the creation of a lien or encumbrance on Seller's interest in any of the
Assets.
4.4 Contracts. Seller is not in material default or defaults
under any of the Contracts and there does not exist any material default under
any of the Contracts by any other party thereto that, in either case, would in
the aggregate materially and adversely affect the Business taken as a whole.
4.5 Title. Except as otherwise set forth in this Agreement,
Seller has good and marketable title to, or valid leasehold interests in, as
the case may be, all of its
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respective Assets free and clear of all liens, mortgages, pledges and
encumbrances, other than (i) liens for taxes not yet due and payable or being
contested in good faith, and (ii) encumbrances which do not materially
adversely affect the marketability of any such Asset or the ability of the
Seller to use such Asset for its currently intended use in the conduct the
Business as it is now being conducted.
4.6 Taxes.
4.6.1 General. All Taxes (as hereinafter defined) with
respect to the Assets that are or become due and payable or accrue with respect
to any period or portion thereof ending on or prior to the Asset Transfer Date
have been or will be duly and properly computed, reported, fully paid and
discharged by Sellers. As used herein, the terms "Tax" and "Taxes" shall
include all federal, state, local and foreign taxes, assessments or other
governmental charges (including, without limitation, net income, gross income,
excise, franchise, sales and value added taxes, taxes withheld from employees'
salaries and other withholding taxes and obligations and all deposits required
to be made with respect thereto), levies, assessments, deficiencies, import
duties, licenses and registration fees and charges of any nature whatsoever,
including any interest, penalties, additions to tax or additional amounts with
respect thereto, imposed by any government or taxing authority which are levied
upon the Assets.
4.6.2 Unpaid Taxes, Liens, etc. There are no unpaid Taxes
with respect to any period or portion thereof ending on or before the Asset
Transfer Date that could become a lien on the Assets, except for current Taxes
not yet due and payable. There are no unpaid Taxes with respect to any or all
"employee benefit plans" within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), bonus,
retirement, pension, profit-sharing, stock bonus, thrift, stock option, stock
purchase, incentive, severance, deferred or other compensation or welfare
benefit plans, programs, agreements or arrangements of, or applicable to
employees of, either Seller (the "Benefit Plans"), nor have any events occurred
with respect to any such Benefit Plans that could, in any case, give rise to a
lien on the Assets. There are no liens for Taxes on the purchased assets
Seller is not required to treat any asset as owned by another person for
federal income tax purposes or as tax-exempt bond financed property or
tax-exempt use property within the meaning of Section 168 of the Internal
Revenue Code (the "Code"). None of the purchased assets is subject to any
joint venture, partnership or other agreement or arrangement that is treated as
a partnership for federal income tax purposes. The transactions contemplated
herein are not subject to the tax withholding provisions of Section 3406 of the
Code, or of Subchapter A of Chapter 3 of the Code or any other provision of
law.
4.7 Sufficiency of Assets. To the best knowledge of Seller, the
Inventory and Personal Property represent substantially all of the Inventory
and Personal Property used by the applicable Seller directly for the operations
of the Business. To the best knowledge of Seller, the Licensed Intellectual
Property represents all of the intellectual property used by the applicable
Seller directly for the operations of the Business.
4.8 Brokers. No broker, investment banker, financial advisor or
other Person is entitled to any broker's, finder's, financial advisor's or
other similar fee or commission in connection with the transactions
contemplated by this Agreement based on arrangements made by or on behalf of
Sellers.
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4.9 Financial Information. Exhibit A1.1.1, with respect to
Avionics, Exhibit B1.1.1, with respect to AES, and the statements to be
provided pursuant to the terms of Exhibits A2.1 and B2.1, reflect or will
reflect the book value of the Inventory and Personal Property, which has been
calculated in accordance with generally accepted accounting principles as
historically applied by the applicable Seller.
4.10 No Additional Representations. NOTWITHSTANDING ANYTHING TO
THE CONTRARY CONTAINED IN THIS ARTICLE, ANY OTHER PROVISION OF THIS AGREEMENT,
OR ANY OTHER COMMUNICATIONS BETWEEN THE PARTIES ORALLY OR IN WRITING, IT IS THE
EXPLICIT INTENT OF EACH PARTY HERETO THAT SELLERS ARE MAKING NO REPRESENTATION
OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, BEYOND THOSE EXPRESSLY GIVEN IN
THIS AGREEMENT OR ANY OF THE DOCUMENTS DELIVERED PURSUANT TO SECTION 12,
INCLUDING BUT NOT LIMITED TO ANY IMPLIED WARRANTY OR REPRESENTATION AS TO
CONDITION, MERCHANTABILITY OR SUITABILITY AS TO ANY OF THE PROPERTIES OR ASSETS
OF THE SELLER. EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED IN THIS AGREEMENT, OR
ANY OF THE DOCUMENTS DELIVERED PURSUANT TO SECTION 12, THE ASSETS ARE BEING
SOLD ON AN "AS IS, WHERE IS" BASIS.
IN CONNECTION WITH THE LONG TERM AGREEMENT TO BE ENTERED INTO BETWEEN
THE PARTIES HEREUNDER, IT IS THE PARTIES' INTENTION TO MAINTAIN PRODUCTION
VOLUMES CONSISTENT WITH THE LONG TERM AGREEMENT, SELLERS MAKE NO REPRESENTATION
OR WARRANTY AS TO ORDER QUANTITY, FREQUENCY OR COMPOSITION. THE PARTIES
ACKNOWLEDGE THE VOLATILITY OF THE SELLER'S RESPECTIVE MARKETS AND THAT EACH
SELLER MAY ACQUIRE OR DEVELOP NEW PRODUCT LINES AND/OR DIVEST PRODUCT LINES IN
ITS SOLE DISCRETION.
5. REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Sellers as follows:
5.1 Corporate Status. Purchaser is a corporation duly organized
and validly existing under the laws of the State of Colorado, the jurisdiction
in which it is incorporated and has full power and authority to carry on its
business and to own all of its properties and assets. Purchaser has all
requisite corporate power and authority to enter into, execute and deliver this
Agreement and to perform its obligations and consummate the transactions
contemplated hereby in accordance with the terms of this Agreement.
5.2 Authorization. All corporate and other proceedings required
to be taken by or on the part of Purchaser including, without limitation, all
action required to be taken by the directors or shareholders of Purchaser to
authorize Purchaser to enter into and carry out this Agreement, have been, or
prior to the applicable Closing will be, duly and properly taken. This
Agreement has been duly executed and delivered by Purchaser and is valid and
enforceable against Purchaser in accordance with its terms, subject to laws of
general application relating to bankruptcy, insolvency and the relief of
debtors and the rules of law governing specific performance, injunctive relief
and other equitable remedies.
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5.3 Compliance. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby will not result in the
breach of any of the terms or conditions of, or constitute a default under, or
violate, as the case may be, the articles of incorporation, by-laws or other
organization documents of Purchaser or any material agreement, lease, mortgage,
note, bond, indenture, license or other document or undertaking, oral or
written, to which Purchaser is a party or by which Purchaser is bound or by
which any of the Assets may be affected.
5.4 Financing. Purchaser has funds of its own, or has binding
commitments from responsible banks or other financial institutions to provide
funds, which will be sufficient and available to pay the Purchase Price and any
up front payments under the License Agreement payable at the applicable
Closing. On or before the applicable Closing Date, Purchaser will provide to
Sellers written evidence of such financing in form and substance reasonably
acceptable to Sellers.
5.5 Brokers. No broker, investment banker, financial advisor or
other Person is entitled to any broker's, finder's, financial advisor's or
other similar fee or commission in connection with the transactions
contemplated by this Agreement based on arrangements made by or on behalf of
Purchaser.
6. EMPLOYEES AND EMPLOYEE BENEFITS
6.1 Employment with the Purchaser. Purchaser shall within five (5)
business days after the date hereof offer employment unconditionally to those
employees of the Business of each Seller listed on Exhibit A6.1, with respect
to Avionics, and Exhibit B6.1, with respect to AES (the "Employees") who are
employed by the respective Seller on the applicable Closing Date, including any
Employee who is on an approved leave of absence as described on each such
Exhibit. Employees shall have at least five (5) business days to consider the
offers made to them. Employees who accept Purchaser's offer of employment (the
"Transferred Employees") shall become employees of the Purchaser effective on
the applicable Closing Date or on their date of return to work from the
approved leave of absence, as the case may be, and shall no longer be employees
of either of the Sellers or their parent or affiliated entities. Commencing
upon the applicable date of employment of each Transferred Employee, Purchaser
shall have sole responsibility for the payment of all wages, overtime, sick
pay, taxes, withholdings, and employee benefits with respect to the Transferred
Employees. Notwithstanding the previous sentence, Transferred Employees shall
continue to be covered by Sellers' medical and dental plans through August 31,
1997 at Sellers' cost. Nothing contained in this Agreement shall be construed
as a guaranty to Purchaser that any number of the Employees will accept offers
of employment with Purchaser or as a representation or warranty regarding the
skill level or performance of any of the Employees.
6.2 Hiring Requirements. Purchaser shall offer employment to the
Transferred Employees for positions comparable to the positions in which such
Transferred Employees are employed by the applicable Sellers immediately prior
to the applicable Closing Date. Sellers shall not provide Employees' personnel
files to the Purchaser. Purchaser shall have an individual, signed agreement
with each Transferred Employee providing that he or she is an employee of
Purchaser and not the applicable Seller.
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6.3 Compensation and Benefits.
6.3.1 Purchaser agrees to provide the Transferred Employees
compensation at 90% or more of that paid to them by the applicable Seller
immediately prior to the applicable Closing Date, with compensation defined as
base pay plus incentive compensation target, if applicable. Purchaser agrees
to provide the Transferred Employees employee benefits and policies comparable
to the employee benefits and policies provided to the other employees of
Purchaser, except as additionally required in this Section 6.3, Section 6.4, or
elsewhere in this Agreement.
6.3.2 Purchaser agrees to credit and to continue to credit
each Transferred Employee with the service credited with the applicable Seller
for all purposes, including, but not limited to, the Purchaser's policies on
vacation eligibility, savings plan participation, health care enrollment,
severance benefits, seniority and any applicable vesting or waiting periods
under any benefit plan.
6.3.3 To the extent that Purchaser's benefit plans provide
medical or dental welfare benefits after the applicable Closing Date, Purchaser
shall provide that expenses incurred on or before the applicable Closing Date
under the applicable Seller's medical and dental welfare plans with respect to
the Transferred Employees and their covered dependents shall be credited under
the Purchaser's medical and dental welfare benefit plans for purposes of
satisfying the initial general deductible, co-insurance and maximum
out-of-pocket provisions for such Transferred Employees and their covered
dependents, provided, however, that no credit shall be given for purposes of
satisfying specific deductible, co-insurance and maximum out-of-pocket
requirements applicable to specific conditions or procedures. Pre-existing
condition restrictions imposed in connection with medical and dental insurance
benefits shall not apply to the Transferred Employees to the extent that any
such pre-existing conditions with respect to Transferred Employees (or their
dependents) were covered under the medical and dental welfare benefit plans of
the applicable Seller on the applicable Closing Date and to the extent that
such condition is otherwise covered under the Purchaser plan. Except as set
forth in Section 6.1, Transferred Employee coverage under Purchaser's benefit
plans shall commence as of the applicable Closing Date.
6.3.4 All course work of a Transferred Employee currently
in progress for which either Seller has approved tuition aid shall be paid for
by the applicable Seller. Course work that has been approved by the applicable
Seller and paid for by the employee by the applicable Closing Date but not yet
started and is subject to reimbursement to the employee under the applicable
Seller's tuition aid policy shall be reimbursed by the applicable Seller.
"Course work" does not mean a degree program, but only refers to the specific
class in progress during a particular term in that school.
6.4 Minimum Employment Period. Purchaser shall not relocate any
of the Transferred Employees for a minimum period of twelve (12) months after
the applicable Closing Date. Although Purchaser does not currently anticipate
any reductions-in-force ("RIF"), if within twelve (12) months after the
applicable Closing Date the Purchaser engages in a RIF, Purchaser will provide
to those Transferred Employees who are subject to a RIF severance pay in an
amount equal to six (6) months of the affected Transferred Employee's base pay
and continuation of coverage under Purchaser's
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benefits for a period of six (6) months. Such severance pay shall not apply to
Purchaser's termination of a Transferred Employee's employment for cause.
6.5 Hiring Process. Purchaser shall be solely responsible for any
and all communications it makes to any employees of either Seller during the
process of making offers of employment regardless of Sellers' involvement in
such process or receipt of documents and materials to be distributed to any
employees of either Seller. Purchaser shall comply with all laws in connection
with its communications to Sellers' employees, the process of offering
employment to them, and the hiring and transition of such employees. Between
the date hereof and the applicable Closing Date, the Purchaser shall, maintain
adequate trained human resources staff on site at each of the Sellers'
facilities who shall be responsible for the offer process and the transition of
the Transferred Employees from each Seller to Purchaser. The Purchaser shall
maintain a full time human resources representative on site at each facility
commencing on the applicable Closing Date. In addition, Purchaser shall
maintain a toll free hotline Monday through Friday on an eight (8) hour per day
basis for a period of thirty (30) days after the applicable Closing Date
dedicated to responding to Transferred Employee questions and concerns.
6.6 Solicitation. For a period of twelve (12) months from and
after the applicable Closing Date, Purchaser shall not directly or indirectly,
or by action in concert with others, solicit or attempt to solicit any employee
of either the Commercial Avionics Systems Division of AlliedSignal Avionics
Inc. or the Aerospace Equipment Systems Business Unit of AlliedSignal Inc.
without the prior written authorization of the applicable Seller, other than
the Employees listed on Exhibit A6.1 and Exhibit B6.1. Purchaser acknowledges
that any violation of the restriction contained in this Section will result in
irreparable injury to the applicable Seller for which monetary damages will not
be an adequate remedy. Purchaser therefore acknowledges that, if such
restriction is violated, the applicable Seller shall be entitled to equitable
relief, including, but not limited to a temporary restraining order and
preliminary or permanent injunctive relief, in addition to any other remedies
which it may have. For a period of twelve (12) months from and after the
applicable Closing Date, neither Seller shall directly or indirectly, or by
action in concert with others, solicit or attempt to solicit any employee of
Purchaser without the prior written authorization of the Purchaser. Each
Seller acknowledges that any violation of the restriction contained in this
Section will result in irreparable injury to Purchaser for which monetary
damages will not be an adequate remedy. Each Seller therefore acknowledges
that, if such restriction is violated, the Purchaser shall be entitled to
equitable relief, including, but not limited to a temporary restraining order
and preliminary or permanent injunctive relief, in addition to any other
remedies which it may have.
6.7 Confidentiality. In addition to Purchaser's standard employee
confidentiality agreement, a separate confidentiality agreement will be
required of all employees and contractors of Purchaser working in the Avionics
Facility, as defined below, or in the AES Facility, as defined below, due to
the shared tenancy relationship at those sites. This separate confidentiality
agreement will be subject to approval by the applicable Seller.
6.8 Control. Purchaser shall have and maintain complete control
over its employees, including but not limited to the Transferred Employees,
including the right to
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hire, discharge, replace, evaluate and direct their activities subject to the
limited restriction on termination contained in Section 6.4.
6.9 Health Care Continuation Liability. Purchaser agrees to pay
and be responsible for all liability, cost, expense, taxes and sanctions under
Section 4980B of the Internal Revenue Code (the "Code"), interest and penalties
imposed upon, incurred by, or assessed against Purchaser or any Seller that
arise by reason of or relate to any failure to comply with the health care
continuation coverage requirements of Section 4980B of the Code and Sections
601 through 608 of ERISA, as amended, which failure occurs after the applicable
Closing Date with respect to any Transferred Employee or any qualified
beneficiary (as defined in Section 4980B(g)(1)) of such Transferred Employee.
6.10 Indemnification.
6.10.1 Neither Seller shall in any manner be responsible for
any liability, claim or obligation which in any way arises out of the
Purchaser's employment of the Transferred Employees, except as may arise from
or relate to Sellers' communications with or treatment of the Employees prior
to the applicable Closing Date. Purchaser agrees to indemnify and hold each
Seller harmless from any liability, claim or obligation arising from or
relating to the Transferred Employees or beneficiaries of Transferred Employees
which in any way arises from or relates to Purchaser's employment of the
Transferred Employees, except as may arise from or relate to Sellers'
communications with or treatment of the Employees prior to the applicable
Closing Date.
6.10.2 Purchaser shall not in any manner be responsible for
any liability, claim or obligation which in any way arises out of the
applicable Seller's employment of the Transferred Employees prior to the
applicable Closing Date, except as may arise from or relate to Purchaser's
communications with or treatment of the Employees prior to the applicable
Closing Date. Each Seller agrees to indemnify and hold Purchaser harmless from
any liability, claim or obligation arising from or relating to the Transferred
Employees or beneficiaries of Transferred Employees which in any way arises
from or relates to the applicable Seller's employment of the Transferred
Employees prior to the applicable Closing Date, except as may arise from or
relate to Purchaser's communications with or treatment of the Employees prior
to the applicable Closing Date.
6.11 Special Payments.
6.11.1 Purchaser and Sellers have agreed that they will
offer a special payment (the "Special Payment") to Transferred Employees as
consideration for the execution and delivery of a release agreement in the form
of Exhibit C6.11 ("Employee Release"). The Special Payment shall be equal in
the aggregate to eight (8) weeks of the Transferred Employee's base salary at
the time of termination of the Transferred Employee's employment with the
applicable Seller, minus legally required payroll and income tax deductions,
and shall be paid in two equal lump sum payments. The first payment (four
weeks of base salary) will be made eight (8) calendar days after Purchaser
receives the signed Employee Release or eight (8) calendar days after the
Transferred Employee commences work with Purchaser, whichever is later. The
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second payment (four weeks of base salary) will be made ninety (90) calendar
days after the Transferred Employee commences work with Purchaser, provided
that the Transferred Employee is still employed by Purchaser at that date.
6.11.2 The parties agree that the execution of the Employee
Release is not a condition to an Employee's offer of employment with Purchaser
or a Transferred Employee's continued employment with Purchaser, nor does it
affect Purchaser's ability to terminate a Transferred Employee for cause.
6.11.3 The Special Payment will be funded by the Sellers
with whom each particular Transferred Employee receiving a Special Payment was
employed immediately prior to the applicable Closing. Such amounts will be
paid within thirty (30) days after the applicable Seller's receipt of invoice
from Purchaser. Along with any such invoice, Purchaser shall provide each
Seller with a report of the aggregate amount of the Special Payment paid to
such Transferred Employees, along with supporting data as reasonably requested
by Sellers. Sellers shall have the right to audit Purchaser's records and
reports with respect to the Special Payment.
6.11.4 Administration of the execution of the Employee
Release will be conducted by Purchaser in accordance with Sellers'
instructions. If Purchaser disagrees with any aspect of Sellers' instructions,
Purchaser and Seller shall discuss and use good faith efforts to resolve the
disagreement. Each Seller, as applicable, will indemnify, defend and hold
Purchaser harmless from and against any claims against Purchaser arising from
or in connection with the administration of the Employee Releases obtained from
such Seller's Employees, except to the extent that Purchaser does not follow
Sellers' instructions in the administration process.
7. REAL PROPERTY AND TRANSITION
7.1 Sublease Agreement. At the Avionics Closing, Purchaser and
AlliedSignal Inc. shall execute the sublease agreement attached hereto as
Exhibit A7.1, pursuant to which Purchaser will lease a portion of Avionics'
building located at 0000 Xxxxxxxxx 00 Xxxxxx, Xx. Xxxxxxxxxx, Xxxxxxx (the
"Avionics Facility") commencing upon the Closing Date, (the "Sublease
Agreement"). The Sublease Agreement will also provide for the allocation of
cost and responsibility of certain shared services during the term of the
Sublease Agreement.
7.2 License Agreement. At the AES Closing, Purchaser and AES
shall execute the real property license agreement attached hereto as Exhibit
B7.2, pursuant to which Purchaser will receive a license to use a portion of
AES's facility located at 00000 X. Xxxxxx Xxxx, Xxxxxx, Xxxxxxx 00000-0000 (the
"AES Facility") for a term to end no later than March 31, 1998 (the "Premises
License").
7.3 Transition Agreement. At the applicable Closing, Purchaser
and Sellers shall execute the transition agreement attached hereto as Exhibit
A7.3, with respect to Avionics and Exhibit B7.3 with respect to AES, pursuant
to which Sellers will provide Purchaser with certain services in connection
with the transition of the Business to Purchaser (the "Transition Agreement").
Prior to the applicable Closing, Purchaser and the applicable Seller shall
finalize the project implementation plan to be attached as an exhibit to the
respective Transition Agreement (in the form of Gannt charts).
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8. PRE-CLOSING COVENANTS
8.1 Access to Records and Properties. From the date hereof until
the latest Closing Date or earlier termination of this Agreement, Sellers will:
8.1.1 provide Purchaser, its officers, counsel and other
representatives with reasonable access to the Assets, the principal personnel
and representatives of Seller, and such books and records pertaining to the
Business as Purchaser may reasonably request, during Seller's regular business
hours, provided that Purchaser has provided Sellers with reasonable prior
notice, and provided further that Purchaser agrees that such access will be
requested and exercised with due regard to minimizing interference with the
operations of the Business and provided that disclosure would not violate the
terms of any agreement to which either Seller is bound or any applicable law or
regulation; and
8.1.2 make available to Purchaser for inspection and review
all documents, or copies thereof, listed in the Schedules hereto, and all
files, records and papers of any and all proceedings and matters listed in the
Schedules hereto, except to the extent prohibited or restricted by law,
regulation, contract with a third party or where the documents are subject to
the attorney-client or work product privilege.
8.2 Public Announcements. On and after the date hereof and
through the latest Closing Date, neither of the parties shall issue any press
release or make any public statement relating to the subject matter of this
Agreement (other than communications with persons in the ordinary course of
business relating to a press release otherwise permitted by this Agreement)
prior to obtaining the other party's approval, which approval shall not be
unreasonably withheld, except that no such approval shall be necessary to the
extent that counsel to the party proposing to make such disclosure advises such
party that such disclosure is required by law or a listing agreement or such
disclosure is reasonably prudent to avoid potential liability on the part of
any person under the federal securities laws. Any advice of counsel shall be
confirmed in writing and promptly delivered to the other party.
8.3 Consents. Prior to the Avionics Closing: (i) Purchaser, at
its sole cost and expense shall have obtained any and all material governmental
permits, licenses approvals, certifications of inspection , filings, franchise
and other authorizations or shall have received such other concurrences as may
be required in order for it to conduct the Avionics Business and use and
operate the Avionics Assets on the Avionics Closing Date; and (ii) Avionics
shall at its sole cost and expense obtain any third party consents required for
the assignment of the Avionics Contracts and transfer of the Avionics Assets to
Purchaser.
8.4 Operation of the Business. From and after the date of this
Agreement and until the respective Closing Date or as otherwise contemplated by
this Agreement or as Purchaser shall otherwise consent in writing, each Seller:
8.4.1 will carry on the Business in the ordinary course and
in substantially the same manner as heretofore, including without limitation
keeping in full force and effect insurance comparable in amount and scope to
the coverage maintained by it (or on behalf of it) on the date hereof, and will
not acquire any assets or properties, or enter
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into any other transaction, other than in the ordinary course of business
consistent with past practice;
8.4.2 will not permit all or any of the Assets (real or
personal, tangible or intangible) to be sold, licensed or subjected to any lien
or other encumbrance except in dispositions of inventory or of worn-out or
obsolete equipment for fair value in the ordinary course of business consistent
with past practices;
8.4.3 will operate the Business in compliance in all material
respects with all applicable federal, state and local laws and regulations;
8.4.4 will maintain its inventory levels in a manner and in
an amount consistent with past practice;
8.4.5 will not grant any general increase in the compensation
of Transferred Employees (including any such increase pursuant to any bonus,
pension, profit-sharing, vacation or other plan or commitment) or grant any
increase in the compensation payable or to become payable to any Transferred
Employee, except with the prior consent of Buyer;
8.4.6 will not take any action that would cause any of the
representations and warranties made by Sellers in this Agreement not to remain
true and correct;
8.4.7 will not modify, amend in any material respect or
terminate any Contract; and
8.4.8 will continue to maintain, in all material respects,
the Assets in accordance with present practice in a condition suitable for
their current use.
9. CLOSING
9.1 Closing and Asset Transfer Dates; Risk of Loss.
9.1.1 Avionics Closing and Closing Date. The consummation
of the transactions contemplated hereby with respect to Avionics, will take
place at the offices of Xxxxx & Xxxxxx, 0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000, Xxx
Xxxxxxx, Xxxxxxxxxx 00000 on August 11, 1997 or on such other date and time as
may be mutually agreed upon by the parties in writing (the "Avionics Closing").
The date upon which the Avionics Closing occurs is referred to herein as the
"Avionics Closing Date". With respect to Avionics, the Asset Transfer Date
will occur on the Avionics Closing Date. The Avionics Closing shall be
effective as of 12:01 a.m. Florida time on August 11, 1997 or such other date
and time as the parties may agree in writing. Any amounts payable by Purchaser
to Avionics at the Avionics Closing shall be wire transferred to Avionics'
account by the close of the last business day immediately preceding the
Avionics Closing Date. The parties agree to maintain a period of at least two
(2) weeks between the date hereof and the Avionics Closing Date.
9.1.2 AES Closing and Closing Date. The consummation of
the transactions contemplated hereby with respect to AES, other than the actual
transfer of Assets and Assumed Liabilities, will take place at the offices of
Xxxxx & Xxxxxx, 2029
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Xxxxxxx Xxxx Xxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx 00000 on August 4, 1997
or on such other date and time as may be mutually agreed upon by the parties in
writing (the "AES Closing"). The date upon which the AES Closing occurs is
referred to herein as the "AES Closing Date". The AES Closing shall be
effective as of 12:01 a.m. local time on August 4, 1997 or such other date and
time as the parties may agree in writing. Any amounts payable by Purchaser to
AES at the AES Closing shall be wire transferred to AES' account by the close
of the last business day immediately preceding the AES Closing Date. The
parties agree to maintain a period of at least two (2) weeks between the date
hereof and the AES Closing Date.
9.1.3 AES Asset Transfer Date. The transfer of Assets and
Assumed Liabilities with respect to AES ("AES Asset Transfer") will take place
on the date specified by Purchaser in connection with the establishment of a
facility at which Purchaser shall continue the portion of the Business
theretofore operated by AES, unless otherwise specified in the AES Transition
Agreement (the "Asset Transfer Date"). Such facility shall be in or within
fifty miles of Tucson, Arizona. Purchaser shall use its best efforts to cause
the Asset Transfer Date to occur on or before December 31, 1997, but the Asset
Transfer Date shall in no event extend later than April 30, 1998.
9.1.4 Avionics. With respect to Avionics, the Asset
Transfer Date will occur on the Avionics Closing Date.
9.1.5 Risk of Loss. Any contrary statement or provision
herein or in any Exhibit hereto or any other document or instrument delivered
in connection with the transactions contemplated hereby notwithstanding, risk
of loss with respect to the Assets of each Seller shall remain with and be
borne by such Seller until the Asset Transfer Date with respect to such Seller.
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10. CONDITIONS TO CLOSING
10.1 Conditions to the Obligations of Purchaser. The obligations
of Purchaser under this Agreement are subject to the fulfillment prior to or
at their respective Closing of each of the following conditions, any one or
more of which may be waived by Purchaser in its sole discretion:
10.1.1 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 and the Exhibits hereto or
Purchaser's ownership, use or enjoyment of the Business or any part thereof.
10.1.2 The representations and warranties of Sellers
contained in this Agreement or in any Exhibit hereto or certificate, document
or other instrument delivered pursuant hereto or in connection with the
transactions contemplated hereby shall be complete, true and correct in all
material respects, without regard to materiality limitations contained in such
representations and warranties, on the respective Closing Date, with the same
force and effect as though such representations and warranties had been made on
and as of the respective Closing Date, except to the extent any such
representation or warranty are made as of a specified date, in which case such
representation or warranty shall be complete, true and correct in all material
respects as of the date specified.
10.1.3 Each Seller shall have performed all of its material
covenants, obligations and agreements contained in this Agreement to be
performed and complied with by it prior to the respective Closing Date.
10.1.4 Purchaser shall have received all certificates,
instruments, agreements, and other documents to be delivered pursuant to
Section 12.1.
10.1.5 Purchaser shall have obtained any and all material
governmental permits, licenses approvals, certifications of inspection ,
filings, franchise and other authorizations or shall have received such other
concurrences as may be required in order for it to conduct the Avionics
Business and use and operate the Avionics Assets on the Avionics Closing Date.
10.1.6 Avionics shall have obtained any third party consents
required for the assignment of the Avionics Contracts and transfer of the
Avionics Assets to Purchaser.
10.2 Conditions to the Obligations of Sellers. The obligations of
each Seller under this Agreement are subject to the fulfillment, prior to their
respective Closing, of each of the following conditions, any one or more of
which may be waived by the respective Seller in its sole discretion:
10.2.1 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,
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nullify or otherwise adversely affect, the consummation of the transactions
contemplated by this Agreement.
10.2.2 The representations and warranties of Purchaser
contained in this Agreement or in any Exhibit hereto or certificate, document
or other instrument delivered pursuant hereto or in connection with the
transactions contemplated hereby shall be complete, true and correct in all
material respects, without regard to materiality limitations contained in such
representations and warranties, on the applicable Closing Date, with the same
force and effect as though such representations and warranties had been made on
and as of the applicable Closing Date, except to the extent any such
representation or warranty are made as of a specified date, in which case such
representation or warranty shall be complete, true and correct in all material
respects as of the date specified.
10.2.3 Purchaser shall have performed all of its material
covenants, obligations and agreements contained in this Agreement to be
performed and complied with by the applicable Closing Date.
10.2.4 Sellers shall have received all certificates,
instruments, agreements and other documents to be delivered pursuant to Section
12.2.
10.2.5 Sellers shall have received that portion of the
Purchase Price payable at the applicable Closing.
10.2.6 Purchaser shall have obtained any and all material
governmental permits, licenses approvals, certifications of inspection ,
filings, franchise and other authorizations or shall have received such other
concurrences as may be required in order for it to conduct the Avionics
Business and use and operate the Avionics Assets on the Avionics Closing Date.
10.2.7 Avionics shall have obtained any third party consents
required for the assignment of the Avionics Contracts and transfer of the
Avionics Assets to Purchaser.
11. TERMINATION AND SURVIVAL
11.1 Termination. Both of the parties hereto shall use reasonable
efforts to bring about the satisfaction of the conditions hereunder prior to
and at respective Closings. 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 Avionics Closing:
11.1.1 by mutual written consent of Purchaser and Seller; or
11.1.2 by Purchaser or Seller, upon written notice to the
other, if such other party or its affiliate has breached any material
representation, warranty or covenant contained in this Agreement in any
material respect, if the non-breaching party has notified the breaching party
of the breach in writing and the breach has continued without cure for a period
of thirty days after notice of the breach; or
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11.1.3 by Purchaser or Seller, upon the earlier of September
30, 1997 or the issuance of a preliminary injunction enjoining the Closing of
the transactions contemplated herein with an outcome adverse to the parties.
11.2 Effect of Termination. If this Agreement is terminated
pursuant to Section 11.1, this Agreement shall become void and of no further
force and effect, and neither of the parties hereto (nor their respective
affiliates, directors, shareholders, officers, employees, agents, consultants,
attorneys-in-fact or other representatives) shall have any liability in respect
of such termination; provided, however, that if such termination is effected
pursuant to Section 11.1.2 and the failure to consummate the transactions
contemplated hereby was the result of any of the conditions to the applicable
Closing having not been fulfilled by reason of the breach by either of the
parties of its covenants, representations and/or warranties set forth in this
Agreement or in any agreement, document or instrument ancillary hereto, the
party having so breached shall remain liable to the other party.
12. CLOSING DOCUMENTS
12.1 Documents to be Delivered by Sellers. At the respective
Closings (except as otherwise specified in this Section 12.1), the applicable
Seller shall deliver to Purchaser the following documents as appropriate:
12.1.1 A Secretary's Certificate attaching copies of
Seller's corporate action authorizing the execution, delivery and performance
of this Agreement and the transactions contemplated hereby, providing evidence
of the signatures and incumbency of each person signing any document or
instrument delivered by Sellers to Purchaser in connection with the
transactions contemplated hereby, and such other information and certifications
relevant to the due authorization, execution and delivery of this Agreement as
Purchaser may reasonably request, all certified by a Secretary, Assistant
Secretary or other appropriate officer of Seller;
12.1.2 Executed bills of sale or other appropriate
instruments of transfer with respect to all of the Assets not transferred or
assigned by any other documents or instruments described in this Section in the
form of Exhibit A12.1.2, with respect to Avionics;
12.1.3 Executed assignment and assumption agreements
with respect to the Contracts in the form of Exhibit A12.1.3, with respect to
Avionics;
12.1.4 Executed assumptions of liability by which
Purchaser will assume the Assumed Liabilities pursuant to Section 3.1 in the
form of Exhibit A12.1.5, with respect to Avionics;
12.1.5 An executed License Agreement covering the
Licensed Intellectual Property in the form attached hereto as Exhibit C1.4 (to
be delivered at the AES Closing);
12.1.6 A certificate of an appropriate officer of
each Seller relating to the representations, warranties and covenants of each
Seller made herein.
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12.1.7 An executed Sublease Agreement in the form
attached hereto as Exhibit A7.1 (to be delivered at the Avionics Closing);
12.1.8 An executed Premises License in the form
attached hereto as Exhibit B7.2 (to be delivered at the AES Closing);
12.1.9 An executed Transition Services Agreement in
the form attached hereto as Exhibit A7.3, with respect to Avionics, and Exhibit
B7.3, with respect to AES;
12.1.10 An executed Long Term Agreement in the form of
Exhibit C12.1.11 (to be delivered at the AES Closing);
12.1.11 Any other document reasonably necessary to effectuate
the transactions contemplated hereby.
12.2 Documents to be Delivered by Purchaser. At the respective
Closings, Purchaser shall pay the Purchase Price to Sellers by wire transfer as
directed in writing by the Sellers and shall execute where applicable and
deliver to Sellers the following documents (except as otherwise specified in
this Section 12.2):
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12.2.1 A Secretary's Certificate attaching copies of
resolutions of Purchaser authorizing the execution, delivery and performance of
this Agreement and the transactions contemplated hereby, providing evidence of
the signatures and incumbency of each person signing any document or instrument
delivered by Purchaser to Sellers in connection with the transactions
contemplated hereby and such other information and certifications relevant to
the due authorization, execution and delivery of this Agreement as Seller's may
reasonably request, all certified by a Secretary, Assistant Secretary or other
appropriate officer of Purchaser;
12.2.2 Executed assignment and assumption agreements
with respect to the Contracts in the form of Exhibits A12.1.3;
12.2.3 Executed documents of assignment with respect
to each of the permits, licenses and authorizations listed in Exhibits A1.1.4
in form and content mutually agreeable to the parties;
12.2.4 Executed assumptions of liability by which
Purchaser will assume the Assumed Liabilities pursuant to Section 3.1 in the
form of Exhibit A12.1.5;
12.2.5 An executed License Agreement covering the
Licensed Intellectual Property in the form attached hereto as Exhibit C1.4 (to
be delivered at the AES Closing);
12.2.6 A certificate of an appropriate officer of
Purchaser relating to the representations, warranties and covenants of
Purchaser made herein.
12.2.7 An executed Sublease Agreement in the form
attached hereto as Exhibit A7.1 (to be delivered at the Avionics Closing);
12.2.8 An executed Premises License in the form
attached hereto as Exhibit B7.2 (to be delivered at the AES Closing);
12.2.9 An executed Transition Services Agreement in
the form attached hereto as Exhibit A7.3, with respect to Avionics, and Exhibit
B7.3, with respect to AES;
12.2.10 An executed Long Term Agreement in the form of
Exhibit C12.1.11 (to be delivered at the AES Closing);
12.2.11 Evidence of financing as required by Section 5.4.
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12.2.12 Any other document reasonably necessary to effectuate
the transactions contemplated hereby.
13. POST CLOSING OBLIGATIONS
13.1 Further Assurances. From time to time after the respective
Closings, 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 right, title and interest to the
Assets, and otherwise carry out the transactions contemplated by this
Agreement.
13.2 Access to Books and Records. After the respective Closing,
Purchaser shall permit each Seller to have access to and the right to make
copies of such of each Seller's books, records and files as constitute part of
the Assets for any reasonable purpose at any time during regular business
hours, such as for use in litigation or financial reporting, tax return
preparation, or tax compliance matters. Prior to disposing of or destroying
any such information or records, Purchaser shall afford each Seller a
reasonable opportunity to segregate, remove or copy such books, records and
files as such Seller may select.
13.3 Cooperation.
13.3.1 Litigation. The parties shall reasonably cooperate
with each other at the requesting party's expense in the prosecution or defense
of any litigation or other proceeding arising from their respective operation
of the Business.
13.3.2 Taxes. Sellers shall cooperate with Purchaser and
shall provide Purchaser with such assistance as may reasonably be requested by
Purchaser in connection with the preparation of any tax return and the conduct
of any audit or other examination by any taxing authority or judicial or
administrative proceedings relating to the Purchased Assets.
13.4 Proprietary Information. Prior to the applicable Closing
Dates, the Business was routinely supplied copies of proprietary and
confidential information relating to strategic, technical, and/or marketing
plans of Sellers and their affiliates and their various operations. Although
Sellers have attempted to recover such information from the Business, some may
still be present within the Business. Purchaser therefore agrees that it will
not use such information for any purpose whatsoever, and shall destroy any
remaining copies.
13.5 Warranty Claims Assistance. Purchaser shall provide Sellers,
their affiliated and parent entities, with such reasonable assistance as they
may require with respect to warranty and products liability claims relating to
the period prior to the Asset Transfer Date and arising from Sellers' use, sale
or distribution of electronic assemblies prior to the Asset Transfer Date at
the hourly rates set forth in the Long Term Agreement.
13.6 Conditions to AES Asset Transfer. The obligations of AES and
Purchaser to effect the AES Asset Transfer are subject to the fulfillment of
the following conditions
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prior to the AES Asset Transfer Date: (i) Purchaser shall, at its sole cost and
expense, obtain any and all material governmental permits, licenses approvals,
certificates of inspection, filings, franchises and other authorizations as may
be required in order for it to conduct the AES Business and use and operate the
AES Assets on the AES Asset Transfer Date; and (ii) AES shall at its sole cost
and expense obtain any third party consents required for the assignment of the
AES Contracts and transfer of the AES Assets to Purchaser.
14. INDEMNIFICATION
14.1 Indemnification by Sellers. Each Seller shall defend,
indemnify and hold harmless Purchaser and Purchaser's directors, shareholders,
officers, employees, agents, 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), fines, damages (individually a "Loss" and collectively "Losses"),
arising out of:
14.1.1 any breach or violation of any of the covenants made
by Sellers in this Agreement or any agreement, certificate or similar document
delivered pursuant hereto;
14.1.2 any breach of, or any inaccuracy or misrepresentation
in, any of the representations or warranties made by Sellers in this Agreement
or in any Schedule, agreement, instrument, certificate or similar document
required to be delivered pursuant to the terms hereof;
14.1.3 any Retained Liability; or
14.1.4 any warranty or product liability claims with respect
to electronic assemblies manufactured by Sellers prior to the applicable
Closing Date.
14.2 Indemnification by Purchaser. Purchaser shall defend,
indemnify and hold harmless each Seller and such Seller's directors,
shareholders, officers, employees, agents, representatives, affiliates,
successors and assigns from and against any and all Losses arising out of:
14.2.1 any breach or violation of any of the covenants made
by Purchaser in this Agreement or any agreement, certificate or similar
document delivered pursuant hereto;
14.2.2 any breach of, or any inaccuracy in any of the
representations or warranties made by Purchaser in this Agreement, or in any
Schedule, agreement, certificate, instrument or similar documents required to
be delivered pursuant to the terms hereof; or
14.2.3 any Assumed Liability;
14.2.4 any breach of the terms of Article 6 and any
communications to the Employees by Purchaser during the hiring process and the
manner Purchaser conducts the hiring process; and
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14.2.5 the hiring of the Transferred Employees by Purchaser,
the Purchaser's employment practices post-Closing, including, but not limited
to hiring and firing of employees, the compensation, benefits, employment
taxes, and treatment of the Transferred Employees by Purchaser and any failure
of Purchaser to comply with all applicable laws in connection with its
employees, including, but not limited to, the Transferred Employees.
14.3 Indemnification Procedure.
14.3.1 Any party seeking indemnification hereunder (the
"Indemnitee") shall notify the party liable for such indemnification (the
"Indemnitor") in writing of any event, omission or occurrence which the
Indemnitee has determined has given or could give rise to Losses which are
indemnifiable hereunder (such written notice being hereinafter referred to as a
"Notice of Claim"). Any Notice of Claim shall be given promptly after the
Indemnitee becomes aware of such third party claim; provided, that the failure
of any Indemnitee to give notice as provided in this Section 14.3 shall not
relieve the Indemnitor of its obligations under this Section 14.3, except to
the extent that the Indemnitor is actually prejudiced by such failure to give
notice. A Notice of Claim shall specify in reasonable detail the nature and
any particulars of the event, omission or occurrence giving rise to a right of
indemnification. The Indemnitor shall satisfy its obligations hereunder, as
the case may be, within thirty (30) days of its receipt of a Notice of Claim;
provided, however, that so long as the Indemnitor is in good faith defending a
claim pursuant to Section 14.3.2 below, its obligation to indemnify the
Indemnitee with respect thereto shall be suspended.
14.3.2 Except as provided in Section 14.3.3 below, with
respect to any third party claim, demand, suit, action or proceeding which is
the subject of a Notice of Claim, the Indemnitor shall, in good faith and at
its own expense, defend, contest or otherwise protect against any such claim,
demand, suit, action or proceeding with legal counsel of its own selection.
The Indemnitee shall have the right, but not the obligation, to participate, at
its own expense, in the defense thereof through counsel of its own choice and
shall have the right, but not the obligation, to assert any and all 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
Indemnitee shall at all times cooperate, at its own expense, in all reasonable
ways with, make its relevant files and records available for inspection and
copying by, and make its employees available or otherwise render reasonable
assistance to, the Indemnitor. In the event that the Indemnitor fails to
timely defend, contest or otherwise protect against any such third party claim,
demand, suit, action or proceeding, the Indemnitee shall have the right, but
not the obligation, to defend, contest, assert crossclaims or counterclaims, or
otherwise protect against, the same and may make any compromise or settlement
thereof and be entitled to all amounts paid as a result of such third party
claim, demand, suit or action or any compromise or settlement thereof. Neither
Sellers nor Purchaser shall make any compromise of asserted liability for which
indemnification is or may be sought pursuant to this Section 14.3.2 if such
compromise includes the payment of money or creates any obligation of the other
party hereto, unless such other party shall have given its prior written
consent to such compromise.
14.4 Survival and Limitations. The provisions of this Article 14
shall survive the Closing Date. The warranties and representations of the
Sellers contained in this
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Agreement or in any instrument delivered pursuant hereto will survive the
Closing Date and will remain in full force and effect thereafter for a period
of one year after the Closing Date and shall be effective with respect to any
inaccuracy therein or breach thereof, notice of which shall have been duly
given within such one year period, in accordance with Section 14.3 hereof.
Anything to the contrary contained herein notwithstanding, (i) Purchaser shall
not assert any claim against either of the Sellers for indemnification
hereunder unless and until the amount of such claim or claims shall exceed Two
Hundred Thousand Dollars ($200,000) calculated on a cumulative basis and not a
per item basis; (ii) Purchaser shall not be entitled to recover from the
Sellers more than an aggregate of an amount equal to twenty five percent (25%)
of the total Purchase Price with respect to all claims for indemnity or damages
whether such claims are brought under this Article 14 or otherwise. The terms
of the foregoing sentence shall not apply to Sellers' obligation to provide
indemnification to Purchaser with respect to the matters set forth in Section
3.2 (Retained Liabilities), Article 6 (Employees and Employee Benefits), and
Section 14.6 (Environmental) and any matter to be performed by Sellers
subsequent to the applicable Closing Date pursuant to this Agreement or any
document delivered by Sellers pursuant to Section 12.
14.5 Reduction for Insurance and Taxes. The amount (an "Indemnity
Payment") which an Indemnifying Party is required to pay on behalf of any other
party ("Indemnitee") pursuant to this Article 14 shall be reduced by the amount
of any insurance proceeds actually received by or on behalf of the Indemnitee
in reduction of the related indemnifiable loss. An Indemnitee which shall have
received or on behalf of which there shall be paid an Indemnity Payment and
which shall subsequently receive, directly or indirectly, insurance proceeds in
respect of the related indemnifiable loss, shall pay to the Indemnifying Party
the amount of such insurance proceeds or, if lesser, the amount of the
Indemnity Payment.
14.6 Environmental. Representations and warranties regarding,
indemnifications for, and other provisions relating to, environmental matters
are contained in the Sublease Agreement and the Premises License, and are
expressly incorporated into this Agreement. For purposes of Section 4.10, the
parties intend that the representations and warranties relating to
environmental matters in the Sublease Agreement and Premises License, as such,
are "expressly given" and "specifically provided" in this Agreement. Except
for this Section 14.6, nothing in this Agreement shall be interpreted to
diminish the effectiveness, limit the scope, or add to the obligations of such
provisions. With respect to indemnifications, Sellers expressly assume the
responsibilities and liabilities under the indemnifications applicable to
Lessor under the Sublease Agreement and the Company under the Premises License.
None of the limitations of Section 14.4(i) regarding the amount of claims, or
14.4(ii) regarding the amount of recovery, shall apply to environmental
matters.
15. MISCELLANEOUS
15.1 Expenses. Except as specifically set forth elsewhere herein
each of the parties hereto shall pay its own expenses and costs incurred or to
be incurred by it in negotiating, closing and carrying out this Agreement.
15.2 Notices. Any notice or communication given pursuant to this
Agreement by a party hereto to the other party shall be in writing and hand
delivered, or mailed by
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registered or certified mail, postage prepaid, return receipt requested
(notices so mailed shall be deemed given when mailed), or sent via facsimile,
with an original mailed as follows:
If to Avionics: AlliedSignal Avionics, Inc.
00000 Xxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxx 00000-0000
Attn: Director of Materials
If to AES: AlliedSignal Aerospace Equipment Systems
0000 Xxxxxx Xxxx
Xxxxx, Xxxxxxx 00000
Attn: Director of Materials
If to Purchaser: EFTC Corporation
0000 Xxxx xx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Chief Administrative Officer
Fax: (000) 000-0000
15.3 Confidentiality. Avionics and Purchaser have entered into a
confidentiality agreement dated __________________ and AES and Purchaser have
entered into a confidentiality agreement dated February 12, 1997.
Notwithstanding any provision herein to the contrary, such confidentiality
agreements shall survive the execution and delivery of this Agreement and the
Closings except for Section 3 of each such agreement which shall terminate on
the date hereof.
15.4 Counterparts. This Agreement may be executed simultaneously in
one or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
15.5 Entire Agreement. Except for the Confidentiality Agreement
referred to in Section 15.3, this Agreement is the entire agreement between the
parties hereto with respect to the subject matter hereof and supersedes all
prior communications, representations, agreements and understandings between
the parties hereto, whether oral or written, including, without limitation, any
financial or other projections or predictions regarding the Sellers or the
Business.
15.6 Construction. When the context so requires, references herein
to the singular number include the plural and vice versa and pronouns in the
masculine or neuter gender include the feminine. The headings contained in this
Agreement and the tables of contents, exhibits and schedules are for reference
purposes only and shall not affect the meaning or interpretation of this
Agreement.
15.7 Assignment. This Agreement may not be assigned without the
prior written consent of the other party hereto, which consent shall not
unreasonably be withheld; except that Avionics may assign this Agreement to its
parent entity without the prior written consent of any other party.
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15.8 Amendment. This Agreement may be amended only by written
agreement duly executed by representatives of all parties hereto.
15.9 Applicable Law. This Agreement shall be construed in
accordance with the laws of the State of Delaware, disregarding its conflicts
of laws principles which may require the application of the laws of another
jurisdiction.
15.10 Failure to Close. If for any reason this Agreement is
terminated prior to Closing, each party shall promptly upon the request of any
other party return to such other party all documents and other information (or
notes made therefrom), including all originals and all copies thereof,
theretofore delivered by or on behalf of such other party. Purchaser shall in
any case comply with the terms of the Confidentiality Agreement referred to in
Section 15.3.
15.11 No Third Party Rights. This Agreement is not intended and
shall not be construed to create any rights in any parties other than Sellers
and Purchaser and no other person shall assert any rights as a third party
beneficiary hereunder.
15.12 Exhibits. The Exhibits attached hereto are incorporated into
this Agreement and shall be deemed a part hereof as if set forth herein in
full. References herein to "this Agreement" and the words "herein," "hereof"
and words of similar import refer to this Agreement (including Exhibits) as an
entirety. In the event of any conflict between the provisions of this Agreement
and any such Exhibit, the provisions of this Agreement shall control.
15.13 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.
15.14 Severability. If and to the extent that any court of
competent jurisdiction holds any provisions (or any part thereof) of this
Agreement to be invalid or unenforceable, such holding shall in no way affect
the validity of the remainder of this Agreement.
15.15 Arbitration. Any controversy, claim or dispute arising out of
or relating to this Agreement or the transactions contemplated hereby or the
breach, termination, enforcement, interpretation or validity hereof, including
the determination of the scope or applicability of this agreement to arbitrate
(collectively "Dispute"), shall be determined by arbitration in Phoenix,
Arizona before a sole arbitrator. The following shall apply to any such
arbitration:
15.15.1 The arbitration shall be administered by the American
Arbitration Association ("AAA") pursuant to its Commercial Rules and
Supplementary Procedures for Large, Complex Disputes.
15.15.2 The arbitrator shall not be an officer, employee,
director or affiliate of any party hereto or of its affiliates. If the parties
are unable to agree on an arbitrator within 30 days of the filing of the Demand
for Arbitration, an arbitrator shall be selected pursuant to the rules and
procedures of the AAA.
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15.15.3 Any party may seek from any court interim or
provisional relief that is necessary to protect the rights or property of that
party, pending the appointment of the arbitrator or pending the arbitrator's
determination of the merits of the controversy.
15.15.4 The parties shall bear their own costs and expenses,
including attorneys' fees, but the arbitrator may, in the award, allocate all
of the administrative costs of the arbitration (and mediation, if applicable),
including the fees of the arbitrator and mediator, against the party who did
not prevail.
15.15.5 The arbitration award shall be in writing and shall
specify the factual and legal bases for the award. Judgment on the award may
be entered in any court having jurisdiction.
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IN WITNESS WHEREOF, Sellers and Purchaser have duly executed and delivered this
Agreement as of the day and year first above written.
"AVIONICS" ALLIEDSIGNAL AVIONICS INC.,
a Kansas corporation
By: /s/ Xxxxx Xxxxxxxxx
Title: President
"AES" ALLIEDSIGNAL INC.,
a Delaware corporation,
operating through its
Aerospace Equipment Systems
Business Unit
By: /s/ Xxxxxx Xxxxxxx
Title: Executive Vice President
"PURCHASER" EFTC CORPORATION,
a Colorado corporation
By: /s/ Xxxxxx Xxxxxxxxxx
Title: Chief Financial Officer
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TABLE OF EXHIBITS
"A" SERIES OF EXHIBITS RELATING TO
AVIONICS
1.1.1 List of Personal Property
1.1.3 List of Contracts
2.1 Purchase Price and Payment Terms (and Attachment A
thereto)
6.1 Employees
7.1 Sublease Agreement
7.3 Transition Agreement
12.1.2 Xxxx of Sale
12.1.3 Assignment Agreement
12.1.5 Assumption Agreement
ii
30
EXHIBIT A2.1
AVIONICS
PURCHASE PRICE
1. Avionics Assets Purchase Price. The purchase price to be paid for the
Avionics portion of the Assets (the "Avionics Asset Purchase Price"), including
the Avionics Raw Material Inventory and the Avionics Remaining Assets, as
defined below, shall be established and paid in themanner set forth below:
(a) Raw Material Inventory. The Avionics Raw Material Invetory
shall be valued at its unburdened cost, which shall be equal to its book value,
calculated in accordance with generally accepted accounting principles as in
effect on the date hereof as consistently applied by Avionics ("Avionics
GAAP"), divided by 1.175 (the "Avionics Raw Material Inventory Value").
(b) Work-in-Process Inventory. The portion of the
Avionics Work-in-Process Inventory attributable to material shall be calculated
in the same fashion as the value of the Raw Material Inventory. The portion of
value for the Avionics Work-in-Process Inventory attributable to any electronic
assembly for labor shall be equal to the product of (i) one half of the
Avionics labor standard hours, as described in Attachment A to this Exhibit
A2.1, for that electronic assembly, (ii) Purchaser's quoted hourly labor rate
and (iii) the quantity of electronic assemblies with that labor standard. The
value of the Avionics Work-in-Process Inventory shall be the sum of the
material value plus the labor value (the "Avionics WIP Value").
(c) Finished Goods Inventory. The Avionics Finished
Goods Inventory shall mean electronic assemblies described in Exhibit A to the
Long Term Agreement that are not the subject of an open work order. The
Avionics Finished Goods Inventory shall be valued at 95% of Purchaser's sale
price to Avionics under the Long Term Agreement for the number of electronic
assemblies to be purchased by Purchaser (the "Avionics Finished Goods Value").
(d) Personal Property. The Avionics Personal Property shall be
valued at its aggregate net book value as of the Closing Date, calculated in
accordance with Avionics GAAP, less $1,150,000 (attributable to the Avionics
License Fee (as defined below) (the "Avionics Personal Property Value").
(e) Intellectual Property License Fee. An Intellectual Property
License Fee of $1,150,000 (of an aggregate $1,250,000 fee) will be paid by
Purchaser to AlliedSignal Technologies, Inc. ("ASTI") (the "Avionics License
Fee") in conjunction with the Avionics Asset Purchase, with the balance to be
paid in conjunction with the AES Asset Purchase Price described in Exhibit
B2.1.
The Avionics Assets to be acquired that are described in paragraphs
(b) though (d) of this Section 1 are referred to herein as the "Avionics
Remaining Assets."
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2. Payment Terms. At the Avionics Closing, the following amounts shall
be due and payable in accordance with the Avionics Closing Statement: the sum
of 50% of the Avionics Raw Material Inventory Value; the Avionics WIP Value;
the Avionics Finished Goods Value; the Avionics Personal Property Value; and
the Avionics License Fee (payable to ASTI). On December 31, 1997, the
remaining 50% of the Avionics Raw Material Value shall be due and payable. The
purchase price for the Avionics Assets is subject to final determination and
adjustment as described in Sections 3 and 4 below.
3. Purchase Price Calulation and Adjustment.
(a) Initial Statement. Within two (2) days after the date of this
Agreement, Avionics shall provide Purchaser with a statement separately
specifying, in reasonable detail, the value of the Avionics Raw Material
Inventory and the value of the Avionics Remaining Assets as of such date, each
as specified above (the "Initial Statement")
(b) Closing Statement. Within fifteen (15) days after the date of
this Agreement, Purchaser and Avionics shall conduct a joint inventory and
tangible personal property count to verify the accuracy of the Avionics Raw
Materials Inventory and Avionics Remaining Assets listings set forth in the
Initial Statement as of a date within two (2) days prior to the Avionics
Closing Date and the parties shall mutually agree upon a written statement (the
"Avionics Closing Statement") as to such count. The Avionics Closing Statement
shall also contain the value of the Avionics Raw Material Inventory and the
value of the Avionics Remaining Assets as calculated by Avionics as of such
date.
(c) Final Statement. Not more thann five (5) days after the
Closing, Avionics shall provide Purchaser with a final statement (the "Final
Statement") separately specifying, in reasonable detail, the final value of the
Avionics Raw Material Inventory and any applicable adjustments to the final
value of the Avionics Remaining Assets, which will constitute the "Final
Statement Valuation" and will reflect all changes to the Closing Statement from
the date of the Closing Statement to the Avionics Closing Date. Purchaser
shall have seven (7) days to review and agree upon the Final Statement
Valuation. If Purchaser notifies Avionics of any disagreement with all or part
of the Final Statement then the parties shall negotiate in good faith for a
period of fifteen (15) days to mutually agree upon any resulting adjustment,
which adjustment shall result in a corresponding adjustment to the Final
Statement If the parties are unable to reach agreement within such fifteen
(15) days, such dispute shall be resolved byarbitration as provided in Section
15 of the Agreement. Purchaser shall pay Avionics or Avionics shall pay
Purchaser the amount of the Avionics Purchase Price underpaid or overpaid the
Avionics Closing, as the case may be, such payment to be made within thirty
(30) days after final agreement or determination.
4. Post Closing Adjustment.
(a) Adjustment at 12 Months After Closing. Any Avionics Raw
Material Inventory Subject to Repurchase, as defined below, that has not been
used or consumed by Purchaser within twelve (12) months after the Avionics
Closing Date and that is not forecast for use in connection
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32
with the Long Term Agreement at the end of such twelve (12) month period for
the subsequent twelve (12) month period shall be repurchased by Avionics.
Purchaser shall provide Avionics with written notice of any such repurchase
obligation within forty-five (45) days after the expiration of such twelve (12)
month period. Avionics shall have the right to audit any such report, and
Purchaser agrees to cooperate in any such audit. Avionics shall pay any
undisputed amounts resulting from such calculations by Purchaser within thirty
(30) days from receipt of notice. If the parties are unable to reach agreement
within thirty (30) days, any such dispute shall be resolved by arbitration as
provided in Section 15 of the Agreement, and payment shall be made within
thirty (30) days after resolution.
(b) Adjustment at 24 Months After Closing. Any Avionics Raw
Material Inventory Subject to Repurchase, as defined below, that was not used
or consumed by Purchaser within twelve (12) months after the Avionics Closing
Date not repurchased by Avionics because its use was forecast in connection
with the Long Term Agreement and that has not been used or consumed by
Purchaser within twenty-four (24) months after the Avionics Closing Date shall
be repurchased by Avionics under procedures comparable to those provided above
for repurchases at the end of the first twelve (12) month period.
(c) Method of Calculation. For the purposes of calculating the
amount of any post-closing adjustment pursuant to Paragraph 4(a), the following
formula shall apply:
Avionics Raw Material = Starting Quantity Less Amount Used
Inventory Subject to Less Forecast Amounts
Repurchase
"Starting Quantity" = The count of the applicable item of Raw
Material inventory as shown on the Final
Statement
"Amount Used" = The quantities of such item (i) actually used by
Purchaser in its operations at its Fort Lauderdale
facility, regardless of whether production was for
Avionics or another customer, or (ii) reallocated by
Purchaser for use in another facility
"Forecast Amount" = The quantity of such item shown on Avionics' most
recent forecast supplied to Purchaser of its
requirements for electronic assemblies during the period
between twelve (12) months after the Avionics Closing and
twenty four (24) months after Avionics Closing.
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Purchaser shall use its best efforts to minimize the amount of the
adjustment contemplated by this Section through the internal reallocation of
such inventory to other areas of Purchaser's business.
(d) Repurchase Price. The price at which Avioncs shall repurchase
any Raw Materials Inventory shall be equal to the same price paid by Purchaser
for such Raw Materials Inventory at the Avionics Closing plus an amount equal
to interest calculated on such amount at the rate of 9% per annum.
5. Audit. If there is a good faith dispute regarding the calculation of
the Avionics Asset Purchase Price or any adjustment thereto made pursuant to
the terms of this Exhibit A2.1, Purchaser shall have the right to conduct an
audit of the relevant aspects of Avionics' books and records, and Avionics
agrees to cooperate in any such audit.
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TABLE OF EXHIBITS
"B" SERIES OF EXHIBITS RELATING TO
AES
1.1.1 List of Personal Property
1.1.3 List of Contracts
2.1 Purchase Price and Payment Terms (and Attachment A
thereto)
6.1 Employees
7.2 Premises License
7.3 Transition Agreement
12.1.2 Xxxx of Sale
12.1.3 Assignment Agreement
12.1.5 Assumption Agreement
iii
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EXHIBIT B2.1
AES
PURCHASE PRICE
1. AES Asset Purchase Price. The purchase price to be paid for the AES
portion of the Assets (the "AES Asset Purchase Price"), including any AES Raw
Material Inventory and the AES Remaining Assets, as defined below, shall be
established and paid in the manner set forth below:
(a) Raw Material Inventory. The AES Raw Material
Invetory shall be valued at its unburdened cost, which shall be equal to its
book value, calculated in accordance with generally accepted accounting
principles as in effect on the AES Asset Transfer Date as consistently applied
by AES ("AES GAAP), divided by AES' material overhead, calculated in accordance
with AES GAAP, as of the AES Asset Transfer Date (the "AES Raw Material
Inventory Value"). The AES Raw Material Inventory shall be picked, transferred
and purchased on or about the AES Asset Transfer Date.
(b) Work-in-Process Inventory. The portion of the value of the
AES Work-in-Process Inventory attributable to material shall be calculated in
the same fashion as the value of the Raw Material Inventory. The portion of
value of the AES Work-in-Process Inventory attributable to any electronic
assembly for labor shall be equal to the product of (i) one half the AES labor
standard hours, as described in Attachment A to this Exhibit B2.1 for that
electronic assembly, (ii) Purchaser's quoted hourly labor rate, and (iii) the
quantity of electronic assemblies with that labor standard. It is the
intention of the parties to minimize the AES Work-in-Process Inventory to be
purchased by Purchaser. The AES Work-in-Process Inventory shall be transferred
and purchased by Purchaser on or about the AES Asset Transfer Date. The value
of the AES Work-in-Process Inventory shall be the sum of the material value
plus the labor value (the "AES WIP Value").
(c) Finished Goods Inventory. The Avionics Finished Goods
Inventory shall mean electronic assemblies described in Exhibit A to the Long
Term Agreement that are not the subject of an open work order. The AES
Finished Goods Inventory shall be valued at the product of 95% of Purchaser's
sale price to AES under the Long Term Agreement for the number of electronic
assemblies to be purchased by Purchaser (the "AES Finished Goods Value"). It
is the intention of the parties to minimize the AES Finished Goods Inventory to
be purchased. The AES Finished Goods Inventory shall be transferred and
purchased on or about the AES Asset Transfer Date.
(d) Personal Property. The AES Personal Property shall be valued
at its aggregate net book value as of the Asset Transfer Date, calculated in
accordance with AES GAAP, less $100,000 (attributable to the AES License Fee as
defined below) (the "AES Personal Property Value").
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(e) Intellectual Property License Fee. An Intellectual Property
License Fee of $100,000 (of an aggregate $1,250,000 fee) will be paid by
Purchaser to ASTI (the "AES License Fee") in conjunction with the AES Asset
Purchase Price described herein, with the balance to be paid in conjunction
with the Avionics Purchase Price described in Exhibit A2.1.
The AES Assets to be acquired that are described in paragraphs (b)
though (d) of this Section 1 are referred to herein as the "AES Remaining
Assets."
2. Payment Terms. Purchaser shall pay to AES at Closing (i) one-half of
the projected AES Personal Property Value as of the AES Asset Transfer Date and
(ii) the AES License Fee (payable to ASTI). On or about the AES Asset Transfer
Date (in any event not later than ten (10) days after the AES Asset Transfer
Date), Purchaser shall pay to AES the AES Raw Material Inventory Value, the AES
WIP Value, the AES Finished Goods Value and the remaining one-half of the AES
Personal Property Value. The purchase price for the AES Assets is subject to
final determination and adjustment as described in Sections 3 and 4 below.
3. Purchase Price Calculation and Adjustment.
(a) Initial Statement. Within two (2) days after the date of this
Agreement, AES shall provide Purchaser with a statement separately specifying,
in reasonable detail, the items and net book value of the AES Personal Property
as of such date, together with a projection of such net book value as of
December 31, 1997.
(b) Closing Statement. Within two (2) days prior to the AES
Closing Date, Purchaser and AES shall mutually verify the identification of the
items of AES Personal Property and AES shall provide Purchaser with a written
statement (the "AES Closing Statement") reflecting the value of such items, the
portion thereof to be paid at the AES Closing Date. Purchaser will make
payment at the AES Closing in a manner consistent with the AES Closing
Statement.
(c) Inventory. Prior to the AES Asset Transfer Date, AES shall
issue the AES Raw Material Inventory and shall prepare for shipment the AES Raw
Material Inventory, AES Work-in-Process Inventory and the AES Finished Goods
Inventory to be transferred to Purchaser. Purchaser shall participate in the
process so described, such participation constituting its final audit of the
AES count and identification of the material to be transferred. AES shall
prepare an Asset Transfer Valuation Statement dated within two (2) days prior
to the Asset Transfer Date which shall include the valuation of such Assets.
In addition, the Asset Transfer Valuation Statement shall also include a
statement specifying the net book value of the AES Personal Property as of the
actual Asset Transfer Date.
(d) Final Statement. Within two (2) days after the AES Asset
Transfer Date, Purchaser shall verify that the Asset Transfer Valuation
Statement is consistent with the determination of its final audit. If no
discrepancies are raised by Purchaser in writing within such period, the Asset
Transfer Valuation Statement shall become the "Final Asset Transfer Statement".
If Purchaser notifies AES of any disagreement with the Final Statement within
such
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period, the parties shall negotiate in good faith for a period of fifteen (15)
days to mutually agree on any resulting adjustment. If the parties cannot
agree on a Final Asset Transfer Valuation Statement within fifteen (15) days
after the AES Asset Transfer Date, such dispute shall be resolved by
arbitration as provided in Section 15 of the Master Agreement. Purchaser shall
pay AES the Final Asset Valuation within five (5) days of the mutual agreement
as to the counts contained in the Final Asset Transfer Valuation Statement.
Purchaser shall pay AES or AES shall pay Purchaser the amount of the AES
Purchase Price underpaid or overpaid the AES Closing, as the case may be, such
payment to be made within thirty (30) days after final agreement or
determination.
4. Post Closing Adjustment.
(a) Adjustment at 12 Months After the AES Asset Transfer. Any AES
RawMaterial Inventory Subject to Repurchase, as defined below, that has not
been used or consumed by Purchaser within twelve (12) months after the AES
Asset Transfer Date and that is not forecast for use in connection with the
Long Term Agreement at the end of such twelve (12) month period for the
subsequent twelve (12) month period shall be repurchased by AES. Purchaser
shall provide AES with written notice of any such repurchase obligation within
forty-five (45) days after the expiration of such twelve (12) month period.
AES shall have the right to audit any such report, and Purchaser agrees to
cooperate in any such audit. AES shall pay any undisputed amounts resulting
from such calculations by Purchaser within thirty (30) days from receipt of
notice. If the parties are unable to reach agreement within thirty (30) days,
any such dispute shall be resolved by arbitration as provided in Section 15 of
the Agreement, and payment shall be made within thirty (30) days after
resolution.
(b) Adjustment At 24 Months After AES Asset Transfer. Any AES Raw
Material Inventory Subject to Repurchase, as defined below, that was not used
or consumed by Purchaser within twelve (12) months after the AES Asset Transfer
Date not repurchased by AES because its use was forecast in connection with the
Long Term Agreement and that has not been used or consumed by Purchaser within
twenty-four (24) months after the AES Asset Transfer Date shall be repurchased
by AES under procedures comparable to those provided above for repurchases at
the end of the first twelve (12) month period.
(c) Method of Calculation. For purposes of calculatin the amount
of any post-closing adjustment pursuant to Paragraph 4(a), the following
formula shall apply:
AES Raw Material = Starting Quantity Less Amount Used
Inventory Subject to Less Forecast Amounts
Repurchase
"Starting Quantity" = The count of the applicable item of Raw
Material inventory as shown on the Final
Statement
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"Amount Used" = The quantities of such item (i) actually used
by Purchaser in its operations at its Arizona
facility, regardless of whether production was
for AES or another customer, or (ii) reallocated
by Purchaser for use in another facility
"Forecast Amount" = The quantity of such item shown on AES' most recent
forecast supplied to Purchaser of its requirements
for electronic assemblies during the period between
twelve (12) months after the AES Asset Transfer and
twenty four (24) months after AES Asset Transfer.
Purchaser shall use its best efforts to minimize the amount of the
adjustment contemplated by this Section through the internal reallocation of
such inventory to other areas of Purchaser's business.
(d) Repurchase Price. The price at which AES shall repurchase any
Raw Materials Inventory shall be equal to the same price paid by Purchaser for
such Raw Materials Inventory at the AES Asset Transfer plus an amount equal to
interest calculated on such amount at the rate of 9% per annum.
5. Audit. If there is a good faith dispute regarding the calculation of
the AES Asset Purchase Price or any adjustment thereto made pursuant to the
terms of this Exhibit B2.1, Purchaser shall have the right to conduct an audit
of the relevant aspects of AES' books and records, and AES agrees to cooperate
in any such audit.
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TABLE OF EXHIBITS "C"
SERIES OF EXHIBITS
RELATING TO BOTH PARTIES
1.4 License Agreement (Intellectual Property)
6.11 Employee Release
12.1.11 Long Term Agreement
1
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FIRST AMENDMENT TO
MASTER AGREEMENT REGARDING
ASSET PURCHASE AND RELATED TRANSACTIONS
This First Amendment ("Amendment") dated as of July 31, 1997 is
entered into with respect to that certain Master Agreement Regarding Asset
Purchase and Related Transactions dated July 15, 1997 (the "Master Agreement")
entered into and between AlliedSignal Avionics, Inc., a Kansas corporation
("Avionics"), AlliedSignal Inc., a Delaware corporation operating through its
Aerospace Equipment Systems Business Unit ("AES"), and EFTC Corporation, a
Colorado corporation (EFTC").
The parties hereby agree to amend the Master Agreement in the manner
set forth in Exhibit A, attached hereto and incorporated herein. This
Amendment shall not otherwise change, amend, limit or affect any other
provision of the Agreement, which shall continue in full force and effect.
AlliedSignal Avionics, Inc.,
a Kansas corporation
By: /s/ Xxx Xxxxxx
--------------
Xxx Xxxxxx
Title: Subcontracts Program Manager
AlliedSignal Inc., a Delaware
corporation operating through its
Aerospace Equipment Systems Business
Unit
By: /s/ Xxxx XxXxxxx
----------------
Xxxx XxXxxxx
Title: Material Program Manager
EFTC Corporation,
a Colorado corporation
By: /s/ Xxxxxx Xxxxxxxxxx
---------------------
Title: Chief Financial Officer
41
EXHIBIT A
AMENDMENTS TO MASTER AGREEMENT
[SEE ATTACHED PAGES]
42
8.4.7 will not modify, amend in any material respect or
terminate any Contract; and
8.4.8 will continue to maintain, in all material respects,
the Assets in accordance with present practice in a condition suitable for
their current use.
9. CLOSING
9.1 Closing and Asset Transfer Dates; Risk of Loss.
9.1.1 Avionics Closing and Closing Date. The consummation
of the transactions contemplated hereby with respect to Avionics, will take
place at the offices of Xxxxx & Xxxxxx, 0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000, Xxx
Xxxxxxx, Xxxxxxxxxx 00000 on August 11, 1997 or on such other date and time as
may be mutually agreed upon by the parties in writing (the "Avionics Closing").
The date upon which the Avionics Closing occurs is referred to herein as the
"Avionics Closing Date". With respect to Avionics, the Asset Transfer Date
will occur on the Avionics Closing Date. The Avionics Closing shall be
effective as of 12:01 a.m. Florida time on August 11, 1997 or such other date
and time as the parties may agree in writing. Any amounts payable by Purchaser
to Avionics at the Avionics Closing shall be wire transferred to Avionics'
account by the close of the last business day immediately preceding the
Avionics Closing Date. The parties agree to maintain a period of at least two
(2) weeks between the date hereof and the Avionics Closing Date.
9.1.2 AES Closing and Closing Date. The consummation of
the transactions contemplated hereby with respect to AES, other than the actual
transfer of Assets and Assumed Liabilities, will take place at the offices of
Xxxxx & Xxxxxx, 0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx
00000 on August 4, 1997 or on such other date and time as may be mutually
agreed upon by the parties in writing (the "AES Closing"). The date upon which
the AES Closing occurs is referred to herein as the "AES Closing Date". The
AES Closing shall be effective as of 12:01 a.m. local time on August 4,
1997 or such other date and time as the parties may agree in writing. Any
amounts payable by Purchaser to AES at the AES Closing shall be wire
transferred to AES' account by the close of the last business day immediately
preceding the AES Closing Date. The parties agree to maintain a period of at
least two (2) weeks between the date hereof and the AES Closing Date.
9.1.3 AES Asset Transfer Date. The transfer of Assets and
Assumed Liabilities with respect to AES ("AES Asset Transfer") will take place
on the date specified by Purchaser in connection with the establishment of a
facility at which Purchaser shall continue the portion of the Business
theretofore operated by AES, unless otherwise specified in the AES Transition
Agreement (the "Asset Transfer
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of this Agreement as Purchaser may reasonably request, all certified by a
Secretary, Assistant Secretary or other appropriate officer of Seller;
12.1.2 Executed bills of sale or other appropriate
instruments of transfer with respect to all of the Assets not transferred or
assigned by any other documents or instruments described in this Section in the
form of Exhibit A12.1.2, with respect to Avionics;
12.1.3 Executed assignment and assumption agreements with
respect to the Contracts in the form of Exhibit A12.1.3, with respect to
Avionics;
12.1.4 Executed assumptions of liability by which Purchaser
will assume the Assumed Liabilities pursuant to Section 3.1 in the form of
Exhibit A12.1.5, with respect to Avionics;
12.1.5 An executed License Agreement covering the Licensed
Intellectual Property in the form attached hereto as Exhibit C1.4 (to be
delivered at the AES Closing);
12.1.6 A certificate of an appropriate officer of each
Seller relating to the representations, warranties and covenants of each Seller
made herein.
12.1.7 An executed Sublease Agreement in the form attached
hereto as Exhibit A7.1 (to be delivered at the Avionics Closing);
12.1.8 An executed Premises License in the form attached
hereto as Exhibit B7.2 (to be delivered at the AES Closing);
12.1.9 An executed Transition Services Agreement in the form
attached hereto as Exhibit A7.3, with respect to Avionics, and Exhibit B7.3,
with respect to AES;
12.1.10 An executed Long Term Agreement in the form of
Exhibit C12.1.11 (to be delivered at the AES Closing);
12.1.11 Any other document reasonably necessary to effectuate
the transactions contemplated hereby.
12.2 Documents to be Delivered by Purchaser. At the respective
Closings, Purchaser shall pay the Purchase Price to Sellers by wire transfer as
directed in writing
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by the Sellers and shall execute where applicable and deliver to Sellers the
following documents (except as otherwise specified in this Section 12.2):
12.2.1 A Secretary's Certificate attaching copies of
resolutions of Purchaser authorizing the execution, delivery and performance of
this Agreement and the transactions contemplated hereby, providing evidence of
the signatures and incumbency of each person signing any document or instrument
delivered by Purchaser to Sellers in connection with the transactions
contemplated hereby and such other information and certifications relevant to
the due authorization, execution and delivery of this Agreement as Seller's may
reasonably request, all certified by a Secretary, Assistant Secretary or other
appropriate officer of Purchaser;
12.2.2 Executed assignment and assumption agreements with
respect to the Contracts in the form of Exhibits A12.1.3;
12.2.3 Executed documents of assignment with respect to each
of the permits, licenses and authorizations listed in Exhibits A1.1.4 in form
and content mutually agreeable to the parties;
12.2.4 Executed assumptions of liability by which Purchaser
will assume the Assumed Liabilities pursuant to Section 3.1 in the form of
Exhibit A12.1.5;
12.2.5 An executed License Agreement covering the Licensed
Intellectual Property in the form attached hereto as Exhibit C1.4 (to be
delivered at the AES Closing);
12.2.6 A certificate of an appropriate officer of Purchaser
relating to the representations, warranties and covenants of Purchaser made
herein.
12.2.7 An executed Sublease Agreement in the form attached
hereto as Exhibit A7.1 (to b delivered at the Avionics Closing);
12.2.8 An executed Premises License in the form attached
hereto as Exhibit B7.2 (to be delivered at the AES Closing);
12.2.9 An executed Transition Services Agreement in the form
attached hereto as Exhibit A7.3, with respect to Avionics, and Exhibit B7.3,
with respect to AES;
12.2.10 An executed Long Term Agreement in the form of
Exhibit C12.1.11 (to be delivered at the AES Closing);
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(d) Personal Property. The AES Personal Property shall be valued
at its aggregate net book value as of the Asset Transfer Date,
calculated in accordance with AES GAAP, less $100,000 (attributable to
the AES License Fee as defined below) (the "AES Personal Property
Value").
(e) Intellectual Property License Fee. An Intellectual Property
License Fee of $100,000 (of an aggregate $1,250,000 fee) will be paid
by Purchaser to AlliedSignal Technologies, Inc. (the "AES License
Fee") in conjunction with the AES Asset Purchase Price described
herein, with the balance to be paid in conjunction with the Avionics
Purchase Price described in Exhibit A2.1.
The AES Assets to be acquired that are described in paragraphs (b) though (d)
of this Section 1 are referred to herein as the "AES Remaining Assets."
2. Payment Terms. Purchaser shall pay to AES AT THE AES CLOSING (i)
one-half of the projected AES Personal Property Value as of the AES Asset
Transfer Date AND (II) the AES LICENSE FEE. On or about the AES Asset Transfer
Date (in any event not later than ten (10) days after the AES Asset Transfer
Date), Purchaser shall pay to AES the AES Raw Material Inventory Value, the AES
WIP Value, the AES Finished Goods Value and the remaining one-half of the AES
Personal Property Value. The purchase price for the AES Assets is subject to
final determination and adjustment as described in Sections 3 and 4 below.
3. Purchase Price Calculation and Adjustment.
(a) Initial Statement. Within two (2) days after the date of this
Agreement, AES shall provide Purchaser with a statement separately
specifying, in reasonable detail, the items and net book value of the
AES Personal Property as of such date, together with a projection of
such net book value as of December 31, 1997.
(b) Closing Statement. Within two (2) days prior to the AES
Closing Date, Purchaser and AES shall mutually verify the
identification of the items of AES Personal Property and AES shall
provide Purchaser with a written statement (the "AES Closing
Statement") reflecting the value of such items, the portion thereof to
be paid at the AES Closing Date. Purchaser will make payment at the
AES Closing in a manner consistent with the AES Closing Statement.
(c) Inventory. Prior to the AES Asset Transfer Date, AES shall
issue the AES Raw Material Inventory and shall prepare for shipment
the AES Raw Material Inventory, AES Work-in-Process Inventory and the
AES Finished Goods
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SECOND AMENDMENT TO
MASTER AGREEMENT REGARDING
ASSET PURCHASE AND RELATED TRANSACTIONS
This Second Amendment ("Amendment") is entered into as of August 11,
1997 with respect to that certain Master Agreement Regarding Asset Purchase and
Related Transactions dated July 15, 1997 (the "Master Agreement") entered into
and between AlliedSignal Avionics, Inc., a Kansas corporation ("Avionics"),
AlliedSignal Inc., a Delaware corporation operating through its Aerospace
Equipment Systems Business Unit ("AES"), and EFTC Corporation, a Colorado
corporation (EFTC"), as amended by that certain First Amendment to Master
Agreement Regarding Asset Purchase and Related Transactions.
WHEREAS, Avionics and EFTC have not reached agreement on the specific
items of Avionics Personal Property to transfer to EFTC under the Master
Agreement;
WHEREAS, Avionics and EFTC nonetheless desire to effect a transfer of
the other Avionics assets and of the Transferred Employees as of the Avionics
Closing Date, as originally scheduled to take place as of 12:01 am August 11,
1997;
WHEREAS, in order to permit the parties additional time to resolve the
issue of the Personal Property assets to be transferred, they have determined
to defer the Avionics Asset Transfer Date with respect to the Avionics Personal
Property, and also to defer the corresponding Intellectual Property License
Fee, pursuant to the terms and conditions of this Amendment.
NOW, THEREFORE, the parties hereby agree to amend the Master Agreement as
follows:
1. Inventory Transfer. The Asset Transfer Date with respect to
the Avionics Inventory shall be deemed to be August 11, 1997 (the "Avionics
Inventory Transfer Date"). All third party consents and governmental and other
approvals required under Section 8.3 of the Master Agreement for the transfer
of the Avionics Inventory and the performance by EFTC under the Long Term
Agreement shall be obtained prior to the Avionics Inventory Transfer Date.
Risk of loss of the Avionics Inventory will pass to EFTC on the Avionics
Inventory Transfer Date.
2. Personal Property Transfer. The Avionics Personal Property
shall transfer to EFTC at such time as the parties have determined the exact
items of Personal Property to be transferred and have agreed upon the valuation
of such Personal Property in writing. The Asset Transfer Date with respect to
the Avionics Personal Property shall be August 18, 1997 or such other date as
the parties may agree upon in writing (the "Avionics Personal Property Transfer
Date"). All third party consents and governmental and other approvals required
under Section 8.3 of the Master Agreement for the transfer of the Avionics
Personal Property and the performance by EFTC under the Long Term Agreement
shall be obtained prior to the Avionics Personal Property Transfer Date. Risk
of loss of the Avionics Personal Property will pass to EFTC on the
47
Avionics Personal Property Transfer Date.
3. Assumed Liabilities. Assumed Liabilities and Contracts shall
transfer to EFTC as of the Inventory Transfer Date except those Assumed
Liabilities that relate solely to the Avionics Personal Property, which shall
transfer to EFTC as of the Avionics Personal Property Transfer Date.
4. Employee Transfer. The Avionics Transferred Employees shall
become EFTC employees upon the Avionics Inventory Transfer Date and such date
shall be deemed to be the "Closing Date" for purposes of the Master Agreement.
5. Related Transactions. The Sublease Agreement and Avionics
Transition Agreement shall be executed and delivered upon the Avionics
Inventory Transfer Date.
6. Payment Terms. Exhibit A2.1 setting forth the payment terms
with respect to the Avionics transactions is hereby amended and restated as set
forth in Exhibit B, attached hereto and incorporated herein by this reference.
7. Use of Personal Property. Avionics shall provide to Purchaser
the right to use any and all of the Avionics Personal Property on a
non-exclusive basis pursuant to a short term agreement in the form of Exhibit
C, attached hereto and incorporated herein by this reference (the "Equipment
License"). The Equipment License shall be executed and delivered at the
Avionics Inventory Transfer Date.
8. Intellectual Property License. The License Agreement between
AlliedSignal Technologies Inc. and EFTC with respect to the Avionics Technical
Data and Technical Information, as defined therein, will not be effective until
the Avionics Personal Property Transfer Date, including, but not limited to,
the provisions of such agreement regarding the right of EFTC to use the
Avionics Technical Data and Technical Information and the payment obligations
of EFTC with respect thereto. In the interim, AlliedSignal, Inc. will cause
AlliedSignal Technologies Inc. to grant to EFTC a temporary license to use the
Avionics Technical Data and Technical Information for the limited purpose of
performing its obligations under the Master Agreement at the Ft. Lauderdale,
Florida site.
This Amendment shall not otherwise change, amend, limit or affect any
other provision of the Agreement, which shall continue in full force and
effect. Any capitalized terms used in this Agreement which are not defined
herein shall have the meanings ascribed to them under the Master Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
AlliedSignal Avionics, Inc.,
a Kansas corporation
By: /s/ Xxx Xxxxxx
--------------
Xxx Xxxxxx
Title: Subcontracts Program Manager
AlliedSignal Inc., a Delaware corporation,
operating through its Aerospace Equipment
Systems Business Unit
By: /s/ Xxxx XxXxxxx
----------------
Xxxx XxXxxxx
Title: Material Program Manager
EFTC Corporation,
a Colorado corporation
By: /s/ Xxxxx Xxxxx
---------------
Title: Treasurer
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EXHIBIT A2.1
AVIONICS
PURCHASE PRICE
1. Avionics Assets Purchase Price. The purchase price to be paid for the
Avionics portion of the Assets (the "Avionics Asset Purchase Price"), including
the Avionics Raw Material Inventory and the Avionics Remaining Assets, as
defined below, shall be established and paid in the manner set forth below:
(a) Raw Material Inventory. The Avionics Raw Material Inventory
shall be valued at its unburdened cost, which shall be equal to its
book value, calculated in accordance with generally accepted
accounting principles as in effect on the date hereof as consistently
applied by Avionics ("Avionics GAAP"), divided by 1.175 (the "Avionics
Raw Material Inventory Value").
(b) Work-in-Process Inventory. The portion of the value of the
Avionics Work-in-Process Inventory attributable to material shall be
calculated in the same fashion as the value of the Raw Material
Inventory. The portion of value for the Avionics Work-in-Process
Inventory attributable to any electronic assembly for labor shall be
equal to the product of (i) one half of the Avionics labor standard
hours, as described in Attachment A to this Exhibit A2.1, for that
electronic assembly, (ii) Purchaser's quoted hourly labor rate and
(iii) the quantity of electronic assemblies with that labor standard.
The value of the Avionics Work-in-Process Inventory shall be the sum
of the material value plus the labor value (the "Avionics WIP Value").
(c) Finished Goods Inventory. The Avionics Finished Goods
Inventory shall mean electronic assemblies described in Exhibit A to
the Long Term Agreement that are not the subject of an open work
order. The Avionics Finished Goods Inventory shall be valued at 95%
of Purchaser's sale price to Avionics under the Long Term Agreement
for the number of electronic assemblies to be purchased by Purchaser
(the "Avionics Finished Goods Value").
(d) Personal Property. The Avionics Personal Property shall be
valued at its aggregate net book value as of the Avionics Personal
Property Transfer Date, calculated in accordance with Avionics GAAP,
less $1,150,000 (attributable to the Avionics License Fee (as defined
below)) (the "Avionics Personal Property Value").
(e) Intellectual Property License Fee. An Intellectual Property
License Fee of $1,150,000 (of an aggregate $1,250,000 fee) will be
paid by Purchaser to AlliedSignal Technologies, Inc. ("ASTI") (the
"Avionics License Fee") in conjunction with the Avionics Personal
Property purchase, with the balance to be paid in conjunction with the
AES Asset Purchase Price described in Exhibit B2.1. The Avionics
License Fee will be paid with respect to the license of the
Intellectual Property attributable to the Avionics Business (the
"Avionics Intellectual Property")
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The Avionics Assets to be acquired that are described in paragraphs (b) though
(d) of this Section 1 are referred to herein as the "Avionics Remaining
Assets."
2. Payment Terms. At the Avionics Closing, the following amount shall be
due and payable in accordance with the Avionics Closing Statement: the Combined
Inventory Value less $2,650,000. The Combined Inventory Value shall be defined
as the sum of 50% of the Avionics Raw Material Inventory Value; the Avionics
WIP Value; and the Avionics Finished Goods Value. At the Avionics Personal
Property Transfer Date, the following amounts shall be due and payable in
accordance with the Avionics Personal Property Transfer Statement: (i) the
Avionics Personal Property Value; and (ii) the Avionics License Fee (payable to
ASTI). On or before August 29, 1997, Purchaser shall pay Avionics $2,650,000.
On or before December 31, 1997, the remaining 50% of the Avionics Raw Material
Value shall be due and payable. The purchase price for the Avionics Assets is
subject to final determination and adjustment as described in Sections 3 and 4
below.
3. Purchase Price Calculation and Adjustment.
(a) Initial Statement. Within two (2) days after the date of this
Agreement, Avionics shall provide Purchaser with a statement
separately specifying, in reasonable detail, the items and net book
value of the Avionics Raw Material Inventory, Work in Process
Inventory, and Finished Goods Inventory as of such date.
(b) Closing Statement. Within fifteen (15) days after the date of
this Agreement, Purchaser and Avionics shall conduct a joint inventory
count to verify the accuracy of the Avionics Raw Materials Inventory
listings set forth in the Initial Statement as of a date within two
(2) days prior to the Avionics Closing Date and the parties shall
mutually agree upon a written statement (the "Avionics Closing
Statement") as to such count. The Avionics Closing Statement shall
also contain the value of the Avionics Raw Material Inventory, Work in
Process Inventory, and Finished Goods Inventory as calculated by
Avionics as of such date.
(c) Final Statement. Not more than five (5) days after Closing,
Avionics shall provide Purchaser with a final statement (the "Final
Statement") separately specifying, in reasonable detail, the final
value of the Avionics Raw Material Inventory, Work in Process
Inventory, and Finished Goods Inventory , which will constitute the
"Final Statement Valuation" and will reflect all changes to the
Closing Statement from the date of the Closing Statement to the
Avionics Closing Date. Purchaser shall have seven (7) days to review
and agree upon the Final Statement Valuation. If Purchaser notifies
Avionics of any disagreement with all or part of the Final Statement
then the parties shall negotiate in good faith for a period of fifteen
(15) days to mutually agree upon any resulting adjustment, which
adjustment shall result in a corresponding adjustment to the Final
Statement. If the parties are unable to reach agreement
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within such fifteen (15) days, such dispute shall be resolved by
arbitration as provided in Section 15 of the Agreement. Purchaser
shall pay Avionics or Avionics shall pay Purchaser the amount of the
Avionics Purchase Price underpaid or overpaid the Avionics Closing, as
the case may be, such payment to be made within thirty (30) days after
final agreement or determination.
(d) Personal Property. The parties shall review the Avionics
Personal Property available for purchase and negotiate in good faith
to determine the exact items of personal property to be transferred to
Purchaser. Within two (2) days prior to the Avionics Personal
Property Transfer Date the parties shall agree upon an Avionics
Personal Property Transfer Statement which shall set forth the
specific items to be transferred and the net book value thereof as of
the Avionics Personal Property Transfer Date.
4. Post Closing Adjustment.
(a) Adjustment at 12 Months After Closing. Any Avionics Raw
Material Inventory Subject to Repurchase, as defined below, that has
not been used or consumed by Purchaser within twelve (12) months after
the Avionics Closing Date and that is not forecast for use in
connection with the Long Term Agreement at the end of such twelve (12)
month period for the subsequent twelve (12) month period shall be
repurchased by Avionics. Purchaser shall provide Avionics with
written notice of any such repurchase obligation within forty-five
(45) days after the expiration of such twelve (12) month period.
Avionics shall have the right to audit any such report, and Purchaser
agrees to cooperate in any such audit. Avionics shall pay any
undisputed amounts resulting from such calculations by Purchaser
within thirty (30) days from receipt of notice. If the parties are
unable to reach agreement within thirty (30) days, any such dispute
shall be resolved by arbitration as provided in Section 15 of the
Agreement, and payment shall be made within thirty (30) days after
resolution.
(b) Adjustment at 24 Months After Closing. Any Avionics Raw
Material Inventory Subject to Repurchase, as defined below, that was
not used or consumed by Purchaser within twelve (12) months after the
Avionics Closing Date not repurchased by Avionics because its use was
forecast in connection with the Long Term Agreement and that has not
been used or consumed by Purchaser within twenty-four (24) months
after the Avionics Closing Date shall be repurchased by Avionics under
procedures comparable to those provided above for repurchases at the
end of the first twelve (12) month period.
(c) Method of Calculation. For the purposes of calculating the
amount of any post-closing adjustment pursuant to Paragraph 4(a), the
following formula shall apply:
"Avionics Raw Material = Starting Quantity less Amount Used
Inventory Subject to less Forecast Amounts
Repurchase
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"Starting Quantity" = The count of the applicable
item of Raw Material
inventory as shown on the
Final Statement
"Amount Used" = The quantities of such item
(i) actually used by
Purchaser in its operations
at its Fort Lauderdale
facility, regardless of
whether production was for
Avionics or another customer,
or (ii) reallocated by
Purchaser for use in another
facility
"Forecast Amount" = The quantity of such item
shown on Avionics' most
recent forecast supplied to
Purchaser of its requirements
for electronic assemblies
during the period between
twelve (12) months after the
Avionics Closing and twenty
four (24) months after
Avionics Closing.
Purchaser shall use its best efforts to minimize the amount of the
adjustment contemplated by this Section through the internal
reallocation of such inventory to other areas of Purchaser's business.
(d) Repurchase Price. The price at which Avionics shall
repurchase any Raw Materials Inventory shall be equal to the same
price paid by Purchaser for such Raw Materials Inventory at the
Avionics Closing plus an amount equal to interest calculated on such
amount at the rate of 9% per annum.
5. Audit. If there is a good faith dispute regarding the calculation of
the Avionics Asset Purchase Price or any adjustment thereto made pursuant to
the terms of this Exhibit A2.1, Purchaser shall have the right to conduct an
audit of the relevant aspects of Avionics' books and records, and Avionics
agrees to cooperate in any such audit.
7
