Exhibit 2.3
HOLDBACK AGREEMENT
THIS HOLDBACK AGREEMENT (this "Agreement") made the ____ day of
_______, 2001, by and among Tyco Electronics Corp., a Pennsylvania corporation
("Purchaser"), and Quad Systems Corporation, a Delaware Corporation and debtor
and debtor in possession, (the "Seller").
R E C I T A L S
WHEREAS, Purchaser and Seller have entered into that certain Asset
Purchase Agreement, dated as of May 4, 2001 (the "U.S. Purchase Agreement"),
providing for the purchase by Purchaser of certain of the assets of Seller's
advanced SMT and ATP assembly and processing equipment business located in the
United States of America as more particularly described in the U.S. Purchase
Agreement (the "Business");
WHEREAS, the Purchaser has entered into an asset purchase
agreement (the "U.K. Purchase Agreement") for the purchase by Purchaser
of certain of the European assets of Seller's subsidiary Quad Europe
Ltd. ("QEL");
WHEREAS, Section 2.3 of the Purchase Agreement provides that at the
closing Purchaser will hold back a portion of the purchase price for the
Business and pay such portion to Seller upon the terms and conditions
hereinafter set forth; and
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein set forth, the parties hereto hereby agree as
follows:
1. Defined Terms. Capitalized terms not otherwise defined herein
shall have the meanings given to them in the U.S. Purchase Agreement.
2. Establishment of Holdback Amount.
2.1 Simultaneous with the execution of this Agreement, Purchaser is
establishing a fund in the amount of $1.25 million pursuant to Section
2.3 of the U.S. Purchase Agreement (the "Holdback Amount").
2.2 Seller hereby irrevocably authorizes Purchaser, and Purchaser hereby agrees,
to hold, transfer, deliver and otherwise act with respect to the Holdback Amount
strictly in accordance with the provisions of this Agreement.
3. Liabilities Secured by the Holdback Amount. The Holdback Amount is being held
as partial security for (A) any Purchase Price Adjustment (as defined below) in
Purchaser's favor pursuant to Section 2.5 of the U.S. Purchase Agreement (the
"Asset Adjustment") and (B) the Indemnification by Seller of Purchaser's
Indemnified Persons under Section 11.1 of the U.S. Purchase Agreement
("Indemnified Losses").
4. Interest on Holdback Amount. Purchaser shall pay to Seller interest on the
Holdback Amount existing from time to time at a rate per annum established by
Xxxxxx Guaranty Trust Company as its prime rate in effect on the Closing Date
(the "Interest Rate"). Such interest shall be paid on the Termination Date,
provided, however, that if this Agreement shall remain in effect after the
applicable Termination Date as provided in Section 6.2 hereof as a result of any
Unresolved Claims (as defined in Section 6.2 hereof), then Purchaser shall pay
to Seller interest on the date of final settlement or determination of any such
Unresolved Claims.
5. Deductions from the Holdback Amount. Deductions from the Holdback Amount in
respect of an Asset Adjustment shall be made in accordance with Section 2.5 of
the Purchase Agreement and Section 6.1 hereof. In the event that Purchaser
believes that it has suffered, sustained, incurred or become subject to
Indemnified Losses, Purchaser shall deliver written notice thereof to Seller,
which notice shall contain a statement as to the specifics of the particular
Indemnified Losses being asserted. If Seller does not notify Purchaser that it
disputes the claim for Indemnified Losses within thirty (30) days after the
delivery of written notice thereof by Purchaser, then Purchaser shall have the
right to deduct from the Indemnification Holdback (as defined below) (including
any interest earned thereon) the full amount claimed as loss, damage, and
expense in Purchaser's notice.
6. Allocation of the Holdback Amount.
6.1 (a) $1,000,000 of the Holdback Amount (the "Asset Adjustment Holdback")
shall be allocated to the Purchase Price adjustment pursuant to the terms and
conditions hereof and Section 2.5 of the Purchase Agreement (a "Purchase Price
Adjustment"). Subject to the provisions of Section 6.2 hereof, this Agreement
shall terminate with respect to the Asset Adjustment Holdback, together with
interest thereon, on the date it is fully disbursed (either to Purchaser or to
Seller) in accordance with this Agreement. In the event that there is a Purchase
Price Adjustment in Purchaser's favor, the amount of such Purchase Price
Adjustment shall be paid to Purchaser from the Asset Adjustment Holdback
(together with interest thereon). To the extent that any portion of the Asset
Adjustment Holdback (together with interest thereon) is not paid to Purchaser in
accordance with the preceding sentence, such portion shall promptly be paid to
Seller.
(b) $250,000 of the Holdback Amount shall be allocated to
claims in respect of Indemnified Losses (the "Indemnification Holdback"). This
Agreement shall terminate with respect to the Indemnification Holdback (together
with interest thereon) on the earlier of (i) March 31, 2002; or (ii) the date
upon which such amount becomes nil as a result of the Purchaser using such
amount to satisfy Indemnified Losses. Such dates are sometimes hereinafter
referred to as the "Termination Date." On the final Termination Date, Purchaser
shall, subject to Section 6.2 hereof, pay over to Seller the then remaining
Holdback Amount, if any, plus any interest thereon, pursuant to the provisions
of Section 4 of this Agreement.
6.2 Notwithstanding the provisions of Section 6.1 hereof, this Agreement shall
not terminate with respect to claims by Purchaser, if any, under Section 5 which
remain unresolved at the applicable Termination Date ("Unresolved Claims"), and
Purchaser shall retain a portion of the remaining Holdback Amount equal in
amount to the aggregate of all such Unresolved Claims. At the time of final
settlement or determination of all Unresolved Claims, Purchaser shall deduct
from the Holdback Amount its portion of the retained funds in accordance with
said final settlement or determination and pay over to Seller the then remaining
Holdback Amount, if any, plus interest thereon pursuant to the provisions of
Section 4 hereof. 6.3 The remedies of the Purchaser under this Agreement are
cumulative and in addition to the remedies of the Purchaser pursuant to the U.S.
Purchase Agreement or the U.K. Purchase Agreement. The termination of this
Agreement shall in no way waive, alter, restrict, alter, or prejudice
Purchaser's entitlement to recourse or remedies against the Seller for any
breaches by the Seller of the representations, warranties and covenants of
Seller under the Purchase Agreement or breaches by QEL of the representations,
warranties and covenants of QEL under the U.K. Purchase Agreement.
7. Miscellaneous.
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7.1 Notices. Any notice or communication required or permitted to be given
hereunder shall be in writing and shall be mailed by registered mail, return
receipt requested, or hand delivered against receipt showing time of delivery,
as follows:
If to Purchaser to: TycoElectronics Corporation
0000 Xxxxxxx Xxxx Xxxx
Xxxxxxxxxx, XX
Attention: Xxxxxx Xxxxxx, Controller
With a copy to: Tyco Electronics Corporation
Mailstop R20-2B
000 Xxxxxxxxxxxx Xxxxxx
Xxxxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx, General Counsel
Telecopier: 000-000-0000
If to Sellers to: Prior to Closing: At the Seller's regular
business address
Post Closing: At an address to be provided
by Seller prior to Closing.
With a copy to: Hangley, Aronchick, Xxxxx & Xxxxxx
Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
or such other address as the parties shall have furnished in writing in
accordance with the provisions of this Section 7.1. Any notice or other
communication mailed by registered mail shall be deemed given or delivered at
the time of registration thereof.
7.2 Entire Agreement. This Agreement sets forth the entire agreement
among the parties with respect to the subject matter hereof.
7.3 Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective heirs, legal
representatives, successors and assigns.
7.4 Amendment. This Agreement may be amended only by written agreement of the
parties hereto, duly executed by an authorized representative of each of the
parties hereto.
7.5 Non-Waiver. A waiver by any party of any breach or breaches by any other
party of any one or more of the covenants of this Agreement shall not bar the
enforcement of any other rights or remedies of that party for subsequent breach
of any such or other covenants.
7.6 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania applicable to
contracts made in that State, except its choice of law or conflicts of law rules
which would select the law of another jurisdiction.
7.7 Consent to Jurisdiction and Service of Process; Waiver of Jury Trial. All
disputes arising out of or related to this Agreement, including, without
limitation, any dispute relating to the interpretation, meaning or effect of any
provision hereof, will be resolved by the Bankruptcy Court and the parties
hereto each submit to the exclusive jurisdiction of the Bankruptcy Court for the
purpose of adjudicating any such dispute; provided, however, that the parties
agree that if the Bankruptcy Court does not accept jurisdiction over any such
dispute, such dispute shall then be brought exclusively in the courts of the
Commonwealth of Pennsylvania located in the city of Philadelphia or of the
United States of America for the Eastern District of Pennsylvania and each party
hereby expressly submits to the personal jurisdiction and venue of such courts
for the purposes thereof and expressly waives any claim of improper venue and
any claim that such courts are an inconvenient forum.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the day and year first above written.
QUAD SYSTEMS CORPORATION,
debtor and debtor in possession
By: /s/ Xxxxxxxx Xxxxxxx
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Title: President and Chief Executive Officer
TYCO ELECTRONICS CORP.
By: /s/ Xxxx Xxxxxxxxxx
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Title: Vice President
