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TANON MANUFACTURING, INC.
AMENDED AND RESTATED
AGREEMENT OF PURCHASE AND SALE
THIS AGREEMENT (the "Agreement"), dated as of the 2nd day of December,
1998, is made by and between Tanon Manufacturing, Inc., a California corporation
(the "Company"), and Smartflex Systems, Inc., a Delaware corporation or a
nominee who shall be a wholly-owned subsidiary of Smartflex Systems, Inc. (the
"Purchaser").
W I T N E S S E T H:
WHEREAS, the Company is engaged, among other things, in the business of
providing contract manufacturing electronic assembly services, including the
quick-turn, prototype and volume assembly and testing of a wide range of
products at a facility in West Long Branch, New Jersey and at a facility in
Fremont, California (such activities being hereinafter referred to as the
"Business"). The term Business as used in this Purchase Agreement includes all
revenues from the business of providing contract manufacturing electronic
assembly services, including quick turn prototype and volume assembly from (1)
any customer of the Company on or before the Closing Date, provided at any
location in the continental United States and, (2) from any other customer
provided at any location in the continental United States excluding the facility
located in the Meutheun Mass;
WHEREAS, on December 3, 1998, the Company intends to file a voluntary
petition (the "Bankruptcy Case") under Chapter 11 of the United States
Bankruptcy Code (the "Bankruptcy Code") in the United States Bankruptcy Court
for the Northern District of California (the "Bankruptcy Court"); and
WHEREAS, effective on the date of the Closing (as hereinafter defined)
and subject to and conditioned upon the Bankruptcy Court's approval, the
Purchaser desires to acquire from the Company certain assets of the Company as
described in Section I(c) hereof (the "Assets"), and the Company desires to sell
or assign the Assets, on the terms and subject to the conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter set forth, and intending to be legally
bound, the parties hereto hereby agree as follows:
SECTION I
PURCHASE AND SALE OF THE ASSETS
(a) Purchase and Sale of the Assets. Subject to the terms and conditions
of this Agreement and on the basis of the representations, warranties, covenants
and agreements herein contained:
(i) The Company hereby sells, assigns and conveys to the
Purchaser, and the Purchaser hereby purchases, acquires and accepts from the
Company, the Assets, free and clear of
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any liens, charges, security interests, encumbrances or liabilities, including
successor liabilities pursuant to Section 363 of the Bankruptcy Code
(collectively, "Liens or Encumbrances"). The Assets shall include the business,
all other assets used in connection with the Business, the Assigned Contracts
(as defined in Section I(a)(iv)), equipment (other than the Designated
Equipment, which shall be subject to the provisions of Section I(a)(iii) below),
the inventory (which shall be purchased pursuant to the terms of Section I(a)(v)
below and which shall not include the Raw Inventory (as defined in Section I(e)
below)), financial books and records, of every kind and nature, real, personal,
and mixed, tangible and intangible, wherever located, of the Company used in or
in any way related to the Business and as further described on Schedule I(a)(i)
to be delivered to the Purchaser and attached hereto within twenty one (21) days
from the date hereof, except for the assets also included on Schedule I(a)(i) to
be delivered to the Purchaser and attached hereto within ten (10) days from the
date hereof (the "Excluded Assets"), which Excluded Assets shall include,
without limitation, all accounts receivable (other than Purchaser Receivables
(as defined in Section XI(j) below)), Raw Inventory and the Leases (as defined
in Section I(g) below) and all other contract rights relating to the Business,
other than the Assigned Contracts.
(ii) Except to the extent expressly set forth in this Agreement,
in the order or orders of the Bankruptcy Court, or in any document, instrument
or agreement executed or entered into pursuant hereto or contemporaneously
herewith, the Purchaser shall not assume and shall have no responsibility with
respect to, any and all liabilities or obligations of the Company, known or
unknown, absolute or contingent, accrued or unaccrued, whether due or to become
due (collectively, "Liabilities").
(iii) Set forth in Schedule I(a)(iii) to be delivered to the
Purchaser and attached hereto within ten (10) days from the date hereof is a
list of all equipment designated as "Designated Equipment." As soon as possible
after the execution of this Agreement, the Company shall file in the Bankruptcy
Court its motion for an order approving the terms and conditions of this
Agreement (the "Motion"). The date for which a hearing is set on the Motion is
hereinafter referred to as the "Motion Date." On a date which is not less than
ten (10) days prior to the Motion Date, the Purchaser shall notify the Company
of any Designated Equipment that it desires to purchase and the purchase price
that the Purchaser is willing to pay for such Designated Equipment. On a date
which is seven (7) days prior to the Motion Date, the Company shall notify the
Purchaser if it accepts the offer for the Designated Equipment, and upon such
acceptance, the Company shall give notice to the Bankruptcy Court by filing a
notice in the Bankruptcy Case setting forth the Designated Equipment to be
purchased and the proposed purchase price therefor. The purchase price for the
Designated Equipment (the "Designated Equipment Price") shall be paid at the
same time and in the same manner as the Initial Purchase Price. The purchase
price for the Designated Equipment is One Million Two Hundred Fifty Thousand
Dollars ($1,250,000).
(iv) On a date which is not less than thirty (30) days prior to
the Motion Date (as defined above), the Purchaser shall notify the Company of
any contract rights relating to the Business that the Purchaser will want
assigned to it at the Closing. Any such contract rights shall be referred to
herein as the "Assigned Contracts." Upon receipt of such notice, the Company
shall make a timely motion to assume and assign the Assigned Contracts to the
Purchaser on the Motion Date.
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(v) At the Closing, the Company shall purchase all
Work-in-Process Inventory (as defined below) used in connection with the
Business at a purchase price (the "Inventory Purchase Price") which shall be
equal to one hundred percent (100%) of the labor and material costs ("Labor and
Material Costs") allocable to the Work-in-Process Inventory, as reflected in the
Company's books and records and as calculated in accordance with generally
accepted accounting principles ("GAAP"). The Company and the Purchaser shall
agree on what constitutes the Work-in-Process Inventory to be purchased at the
Closing and what constitutes the Raw Inventory (which shall be subject to the
provisions of Section I(e) below, as well as the aggregate Inventory Purchase
Price, not less than seven (7) days prior to the Motion Date. For purposes
hereof, the term "Work-in-Process Inventory" shall mean all inventory used in
the Business which is to be sold to an identified customer of the Company
following the Closing, pursuant to an existing order which is binding on such
customer as of the Closing Date. The Inventory Purchase Price shall be paid at
the same time and in the same manner as the Initial Purchase Price.
(b) Initial Purchase Price. The purchase price (the "Initial Purchase
Price") for the Assets is $7,650,000, plus the Inventory Purchase Price and the
Designated Equipment Price (if any). At the Closing, Purchaser shall pay to the
Company an amount (the "Closing Date Payment"), equal to the Initial Purchase
Price plus the Inventory Purchase Price and the Designated Equipment Price (if
any), less the Holdback Amount (as defined in Section I(d)) and less the amount
of any Loan Amount (as defined in Section I(h) below). The Closing Date Payment
shall be made by wire transfer of immediately available funds to an account
designated by the Company. At the Closing, the Purchaser shall assign to the
Company any note or participation interest relating to any Loan Amount for which
credit is so received.
(c) Additional Purchase Price.
(i) In addition to the amount to be paid to the Company pursuant
to Section I(b) hereof, the Purchaser shall pay the Company, or its successor in
interest, as the case may be, on and subject to the terms of this Agreement,
additional consideration (the "Additional Purchase Price") not exceeding Three
Million Dollars ($3,000,000), subject to reduction pursuant to the provisions of
Section I(c)(iv) below, at the noncumulative higher of one of the following
amounts, only if the indicated revenue level is achieved:
(A) Two Million Five Hundred Thousand Dollars
($2,500,000), if the gross revenues attributable to the Business are
less than $90 Million during fiscal year 1999; or
(B) Three Million Dollars ($3,000,000), if the gross
revenues attributable to the Business equal or exceed $90,000,000 during
fiscal year 1999.
"Fiscal Year" as used herein shall mean the year commencing April
1, 1999 and ending March 30, 2000.
(ii) The calculation of gross revenues for the Business during
calendar year 1999 shall be made net of returns and allowances. The
determination of the amount, if any, to be paid in the form of Additional
Purchase Price shall be made by the Purchaser together with its auditors
regularly employed to audit the books of account and financial statements of
Purchaser, and shall be made in
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accordance with GAAP. All determinations of Purchaser made pursuant to this
Section I(c)(ii) shall be deemed binding and conclusive.
(iii) The Additional Purchase Price shall be paid on or before
the expiration of thirty (30) days following the date upon which the final and
binding determinations are made or arrived at pursuant to Section I(c)(ii) above
by delivery of a bank cashier's check or wire transfer of funds to the Company.
(iv) On Closing, Purchaser shall execute and interest-free
negotiable promissory note in the amount of $2,500,000 to confirm the minimum
payment set forth herein.
(d) [Deletion.]
(e) Raw Inventory. At the Closing, the Company shall consign its rights
to the Raw Inventory (as defined below) of the Business to the Purchaser for a
period of at least ninety (90) days from the Closing Date. During such period,
such Raw Inventory shall remain on the Company's premises and the Purchaser
shall be entitled, but without obligation, and from time to time, to draw down
on the Raw Inventory for sale and use in connection with the Business as and
where conducted by Purchaser. During such ninety (90) day period, the purchase
price to be paid by the Purchaser for such Raw Inventory shall be sixty percent
(60%) of the lower of the Company's cost or the market price of such Raw
Inventory. On or prior to the expiration of such ninety (90) day period, the
Purchaser shall be entitled to purchase all or part of the remaining Raw
Inventory in bulk for a price and upon terms to be negotiated by the parties at
such time. Payments by Purchaser shall be within thirty (30) days of the draw
down of any such Raw Inventory. Following the expiration of such ninety (90) day
period, the Purchaser shall be entitled to purchase all or part of the remaining
Raw Inventory at a price and upon terms to be negotiated by the parties at such
time; provided that, if the parties are unable to negotiate a mutually
acceptable price at which such remaining Raw Inventory may be purchased by the
Purchaser, then the Company may sell any Raw Inventory after the expiration of
such ninety (90) day period to any third party other than the Purchaser. For
purposes hereof, the term "Raw Inventory" shall mean all inventory used in the
Business which is not Work-in-Process Inventory (as defined in Section I(a)(v)
above).
(f) Allocation. The Purchase Price for the Assets shall be allocated to
the Assets at their fair market values. The portion of the Purchase Price not
allocated to specific Assets shall be allocated to goodwill. The Purchase Price
shall be allocated as set forth in Schedule 1(f)(i) to be delivered to the
Purchaser and attached hereto within twenty one (21) days from the date hereof
and the Purchaser agrees to file Internal Revenue Service Form 8594 which shall
be prepared in accordance with the Internal Revenue Code of 1986, as amended and
all rules and regulations promulgated thereunder.
(g) Removal of Assets by Purchaser. The Company shall allow Purchaser up
to ninety (90) days from the Closing Date (as defined in Section VII hereof) in
which to transition the business and remove the Assets from the Company's
facilities located at 000 Xxxxxxxx Xxxxxxx, Xxxx, Xxxx Xxxxxx, Xxx Xxxxxx 00000
and 00000 Xxxxxxx Xxxxxxxxx, Xxxxxxx, Xxxxxxxxxx 00000 (the "Facilities").
Purchaser shall have full access and all rights of the Company to the
Facilities; provided, however, that the Purchaser hereby agrees that it shall
reimburse the Company for that portion of the rent and expenses paid by the
Company with respect to the Facilities, which are
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allocable to the portions of the Facilities used exclusively by the Purchaser to
store the Assets. This Section I(g) does not constitute a lease or sublease, and
nothing contained in this Section I(g) or elsewhere in this Agreement shall be
construed as subjecting Purchaser to or obligating Purchaser under any of the
terms and conditions of the leases relating to the Facilities and Purchaser
shall incur no liability in connection with such leases.
(h) Loan Amount. The Purchaser may, but shall not be obligated to, loan
money to the Company directly, or indirectly by participating in any loans made
to the Company by IBJ Xxxxxxxxx Bank & Trust Company. Any such amount loaned by
the Purchaser to the Company, either directly or indirectly, shall be referred
to herein as the "Loan Amount."
SECTION II
REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS OF THE COMPANY
There are no representations and warranties of the Company.
SECTION III
REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS OF THE PURCHASER
The Purchaser represents and warrants to the Company that the statements
contained in this Section III are correct and complete as of the date of this
Agreement:
(a) Organization. The Purchaser is a corporation duly incorporated,
validly existing, and in good standing under the laws of the State of Delaware.
(b) Authorization of Transaction. The Purchaser has full corporate power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder. This Agreement constitutes a valid and legal binding
obligation of the Purchaser, enforceable against it in accordance with its
terms. The Purchaser is not required to give any notice to, make any filing
with, or obtain any authorization, consent, or approval of any government or
governmental agency in order to consummate the transactions contemplated by this
Agreement.
(c) Non-Contravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Purchaser is subject or any provision
of its charter or by-laws, or (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, license, instrument or other arrangement
to which the Purchaser is bound or to which any of its assets is subject.
SECTION IV
BANKRUPTCY MATTERS
(a) Filing of Bankruptcy. The Company represents and warrants that the
Bankruptcy will be duly and promptly filed with the Bankruptcy Court, and that
the Company has not sold and
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hereby covenant to not sell or otherwise dispose of the Assets in a manner that
is inconsistent with the provisions of this Agreement.
(b) Bankruptcy Proceedings. The Company hereby covenants to cooperate
fully with the Bankruptcy Court and with the Purchasers to expedite the
Bankruptcy Case and to obtain an order or orders from the Bankruptcy Court
consistent with the intentions of the parties stated in this Agreement.
(c) Order for Overbid Procedures. Within a reasonable time after
entering into this Agreement and in advance of the Motion Date, the Company
shall seek from the Bankruptcy Court an order (the "Overbid Procedures Order")
providing for the procedure for the parties to follow in the event that the
Company receives, in writing, any offer or proposal relating to the sale of the
Assets other than the transactions contemplated by this Agreement (a "Competing
Proposal"). The Company agrees that the Overbid Procedures Order shall provide,
among other things, the following:
(i) The Bankruptcy Court will not consider any Competing Proposal
unless the Competing Proposal (a) provides for a purchase price consideration
for the Assets of at least One Hundred Percent (100%) of the aggregate
consideration being paid by the Purchaser hereunder, plus the topping fee of
Four Hundred Fifty Thousand Dollars ($450,000) described in Section IV(c)(vii)
below and the $25,000 overbid amount described in Section IV(c)(vi) below, (b)
is set forth in a written agreement containing other terms and conditions that
are at least as favorable to the Company as those set forth in this Agreement,
(c) is made by a person financially qualified to consummate the Competing
Proposal on a timely basis and to operate the Business or the Assets on a
financially viable basis, (d) is made by a person who has completed its due
diligence review of the Company's books and records, and is satisfied with the
results thereof, (e) is made by a person who is obligated to pay an initial
deposit in the amount of the greater of $450,000 or 10% of the aggregate
purchase price payable to the Company, and (f) the Competing Proposal is
delivered to the Company and filed with the Bankruptcy Court at least two (2)
court days prior to the Motion Date. A Competing Proposal that satisfies the
foregoing criteria shall be referred to as a "Qualifying Competing Proposal."
(ii) At the hearing on the Motion Date, only the Purchaser and
any party who has submitted a Qualifying Competing Proposal shall be entitled to
bid.
(iii) At the hearing on the Motion Date, the Bankruptcy Court
shall decide which of the bids are the highest and best bid, and such bid shall
be deemed to be the "High Bid." The bidder whose bid is definitively deemed by
the Bankruptcy Court to be the High Bid must pay all amounts reflected in the
High Bid in cash at the Closing.
(iv) If the Purchaser's bid is not the High Bid, then the
Purchaser shall be entitled to match the High Bid and the Purchaser's matching
bid shall be deemed to be the High Bid.
(v) Thereafter, bidding will be conducted as ordered by the
Bankruptcy Court with the Purchaser always entitled to meet and match the other
bids, and if the Purchaser matches another higher bid, its bid will be declared
the successful High Bid.
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(vi) Any counterbid in the bidding process will be at least
$25,000 higher than the prior bid or counterbid. For purposes hereof, the
topping fee payable to the Purchaser pursuant to Section IV(c)(vii) shall be
credited to the Purchaser as part of its bid.
(vii) If the Company terminates this Agreement because the
Purchaser's bid is not the High Bid, regardless of whether or not the Company
consummates a transaction with the successful bidder, then the Purchaser shall
be delivered a topping fee equal to Four Hundred Fifty Thousand Dollars
($450,000), which fee shall be paid within five (5) days of the date of such
termination and shall be paid solely from the deposit paid by the successful
bidder as part of such successful bidder's Qualifying Competing Proposal,
without any administrative liability therefor to the estate.
SECTION V
ADDITIONAL REPRESENTATIONS, WARRANTIES
AND COVENANTS OF THE COMPANY AND THE PURCHASER
(a) Post Closing Cooperation. In case at any time after the Closing any
further action is necessary or desirable to carry out the purposes of this
Agreement, each of the parties will take such further action (including the
execution and delivery of such further instruments and documents) as the other
may request, all at the sole cost and expense of the requesting party (unless
the requesting party is entitled to indemnification therefor under Section
VIII), so long as such documents do not increase the liability or risk of
liability of the party of whom action is requested.
(b) Discharge of Obligations. Consistent with and subject to an order of
the Bankruptcy Court, the Company covenants and agrees to pay promptly and
otherwise to fulfill and discharge all of the Liabilities of the Company arising
from and after the filing of the Bankruptcy Case, when due and payable and
otherwise prior to the time at which any of such Liabilities could in any way
result in or give rise to a claim against the Assets, the Business or the
Purchaser, result in the imposition of any lien, charge or encumbrance on any of
the Assets, or adversely affect the Purchaser's title to or use of any of the
Assets.
(c) Access. The Company shall give to the Purchaser and its
representatives, from and after the date of execution of this Agreement, on
prior reasonable request therefor from the Purchaser or such representatives,
such access to the premises, employees, agents and consultants of the Company,
and such copies of the Financial Statements, books and records, and contracts
and leases and other documentation, so as to enable the Purchaser to inspect and
evaluate all aspects of the Business and operations, assets, operating results,
financial condition, capitalization, ownership, and legal affairs thereof. This
shall include the right of the Purchaser to have Phase I environmental
evaluations conducted on the any real property owned or leased by the Company in
connection with the Business, at the Purchaser's sole expense. The Purchaser
agrees to conduct its review, and to cause its representatives to conduct their
review, in a manner designed to minimize any disruption of the operations of the
Company.
(d) Conduct of Business. From the date of this Agreement and until the
Closing or termination of this Agreement, whichever first occurs, the Company
shall use commercially reasonable best efforts, consistent with prior practice
(a) to preserve intact the business organization and employees and other
business relationships relating to the Business, (b) to continue to operate in
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the ordinary course of its business and to maintain its books, records and
accounts in accordance with GAAP and (c) to preserve and maintain the Assets,
ordinary wear and tear excepted.
(e) "No Shop". The Company agrees that during the period commencing on
the date hereof and ending on the Closing Date, or ending one hundred eighty
(180) days after the date hereof, whichever first occurs, the Company will not,
directly or indirectly (a) offer to sell any of the Business and/or the Assets
(other than sales of inventory in the ordinary course of the Business), in whole
or in part, (b) make or assist anyone else to make any proposal to purchase any
of the Business and/or the Assets (other than sales of inventory in the ordinary
course of the Business), (c) encourage, solicit or initiate discussions or
negotiations with any corporation, partnership, person, entity or group, other
than the Purchaser, concerning any merger, consolidation, sale of assets, sale
of securities or acquisition of beneficial ownership with respect to the
Business, or (d) otherwise initiate any action (unless in response to an
unsolicited offer) which would prejudice the ability of the Purchaser to
complete the transactions described in this Agreement; provided, however, that
notwithstanding the foregoing, nothing set forth in this Section V(e) shall
prohibit or limit in any way, the Company's ability to notify (including by
means of advertisement) any corporation, partnership, person, entity or group of
(1) the contents of the Overbid Procedure Order, (2) their ability to submit a
Qualifying Competing Proposal, (3) the procedures to be followed when submitting
a Qualifying Competing Proposal and (4) information relating to the Motion Date,
including the time and location thereof.
(f) Purchaser's Covenants Relating to Additional Purchase Price. During
the period for which the Additional Purchase Price is to be determined pursuant
to Section I(f), the Purchaser shall (a) maintain books and records and
accounting system reflecting the status of the Business for the purpose of
determining gross revenue of the Business and making all other determinations
necessary for determination of the amount of the Additional Purchase Price, if
any; (b) manage and operate the Business generally in accordance with the
business principles and practices employed in the management and operation of
Purchaser's own business, with a view to the achievement of reasonable growth
objectives in both sales and earnings; provided, however, that the Purchaser
shall only be obligated to operate the Business in a manner which is consistent
with its corporate policy considered on a consolidated basis, and in a manner
consistent with Purchaser's consolidated strategy, policies, practices and
resources.
(g) Notice Regarding Failure to Fulfill Condition Precedent. On the date
which is fourteen (14) days prior to the Motion Date, the Purchaser shall
deliver a notice to the Company setting forth either (i) that the Purchaser
currently has no actual knowledge of any condition precedent to the obligations
of the Purchaser to consummate the purchase of the Assets which has not been
fulfilled as of such date other than such conditions which are not to be
fulfilled until after such date or (ii) the conditions precedent to the
obligations of the Purchaser to consummate the purchase of the Assets which were
required to be fulfilled, but which have not been fulfilled, as of such date.
The delivery of such notice by the Purchaser shall in no way limit or otherwise
affect the Purchaser's ability to terminate this Agreement pursuant to the
provisions of Section X(a) in the event that there has been a failure of any
condition to which the obligations of the Purchaser are subject, other than a
failure which was actually known by the Purchaser on the date such notice was
delivered but which was not set forth in such notice.
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SECTION VI
CONDITIONS PRECEDENT
(a) Conditions Precedent to the Obligations of the Purchaser. The
obligation of the Purchaser to consummate the purchase of the Assets from the
Company shall be subject to the fulfillment, or the waiver by the Purchaser, at
or prior to the Closing, of each of the following conditions precedent:
(i) [Deletion.]
(ii) Bankruptcy Court Order. The Bankruptcy Court shall have
entered an order in form reasonably acceptable to Purchaser, approving the sale
or sales of the Assets on the terms specified in this Agreement.
(iii) Absence of Material Litigation. Except as set forth in
Section VI(a)(ii) above, there shall be (i) no pending or overtly threatened
litigation (other than litigation which is determined by the parties in good
faith, after consulting their respective attorneys, to be without legal or
factual substance or merit), whether brought against the Company or the
Purchaser, that seeks to enjoin the consummation of any of the transactions
contemplated by this Agreement, (ii) no order that has been issued by any court
or governmental agency having jurisdiction that restrains or prohibits the
consummation of the purchase and sale of the Assets hereunder and no proceedings
pending which are reasonably likely to result in the issuance of such an order;
and (iii) no pending or overtly threatened litigation, which has had or is
expected to have a material adverse affect on the Business or the Assets.
(iv) Performance of Obligations. The Company shall have performed
and complied with all of its covenants required by this Agreement to have been
performed on or prior to the Closing.
(v) No Material Adverse Change. Since October 31, 1998, there
shall not have been any change in or other event affecting the Business or the
condition (financial or other) or operating results of Company that has had or
is expected to have a material adverse effect on the Business or the Assets.
(vi) Certificates. Receipt of a certificate executed by the
Company's President or Chief Financial Officer, dated as of the Closing Date and
reasonably satisfactory in form and substance to the Purchaser, certifying that
(i) each of the representations and warranties of the Company contained herein
was true and correct when made and is true and correct on and as of the Closing
Date with the same force and effect as if such representations and warranties
had been made on the Closing Date, (ii) the Company has performed and complied
with all of its covenants required to have been performed or complied with by it
pursuant hereto on or prior to the Closing Date, and (iii) all of the conditions
precedent to the Purchaser's obligations the satisfaction of which was the
responsibility of the Company has been satisfied, except to the extent waived by
the Purchaser.
(vii) Consents Obtained. All consents, waivers, approvals,
authorizations or orders required to be obtained by the Company and the
Purchaser for the authorization, execution and delivery of this Agreement and
the consummation by it by the transactions contemplated hereby shall have been
obtained by the Company or the Purchaser, as the case may be, including, without
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limitation, all lease and equipment assignments and/or consents for the
assumption by, or assignment to, the Purchaser of the Assigned Contracts, in
form and substance acceptable to the Purchaser or the Purchaser's counsel in its
sole discretion.
(viii) Due Diligence; Phase I Evaluation. The results of the
Purchaser's business, legal and accounting due diligence with respect to the
Business shall be satisfactory to Purchaser in its sole discretion. Without
limiting the foregoing, the results of any Phase I environmental evaluation
conducted by the Purchaser on any of the real properties owned or leased by the
Company in connection with the Business shall be satisfactory to Purchaser in
its sole discretion. This condition shall be deemed waived if Purchaser does not
inform Company of the failure of its due diligence analysis on a date which is
fourteen (14) days prior to the Motion Date. If Purchaser does not exercise its
right to terminate this Agreement due to the failure of due diligence fourteen
(14) days prior to the Motion Date then it shall have no further right to
terminate based on its due diligence. Upon termination due to such due diligence
there shall be no further rights under this Agreement and Company shall have
absolutely no liability whatsoever to the Purchaser.
(ix) Compliance With Terms of Loan Amount. The Company shall have
complied with the terms under which the Loan Amount was made available to the
Company, including, without limitation, the mandated uses of the Loan Amount as
determined by the Purchaser.
(x) Delivery of Additional Instruments. On the Closing Date,
unless waived in writing by Purchaser, the Company shall deliver, or cause to be
delivered to the Purchaser, the documents and instruments referenced in Section
VI(b)(ii), in form and substance satisfactory to Purchaser and its counsel.
(xi) Board Approval. This Agreement and the transactions
contemplated hereby shall have been approved and adopted by the requisite vote
of the Board of Directors of the Purchaser at least fourteen (14) days prior to
the Motion Date.
(xii) Methuen Acquisition. EA Industries, Inc., a New Jersey
corporation ("EA") and the Purchaser shall have entered into an Agreement of
Purchase and Sale, dated December __, 1998, relating to the Purchaser's proposed
acquisition of certain assets used in connection with the business of the
"Methuen Division" of EA, or a definitive agreement relating to the subject
matter thereof, and each of EA and the Purchaser shall have performed their
respective obligations thereunder to the extent such obligations have become due
on or prior to the Closing Date.
(xiii) Consignment of Inventories. The parties shall have
established procedures for the Purchaser to pay the prices established pursuant
to Section I(f) above for the inventory of the Company used by the Purchaser in
the continued operations of the Business, as contemplated by Section V(c) above.
(xiv) Disclosure Schedules. The disclosure schedules to this
Agreement which are required to be delivered by the Company to the Purchaser and
attached by the Company hereto, shall have been so delivered and attached within
the time periods prescribed in this Agreement, and the contents of such
disclosure schedules shall be satisfactory to Purchaser in its sole discretion.
This condition shall be deemed waived with respect to any such disclosure
schedule if Purchaser does not
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inform the Company of the failure of its acceptance of such disclosure schedule
on a date which is ten (10) days from the date such disclosure schedule is
received by the Purchaser. If Purchaser does not exercise its right to terminate
this Agreement due to the failure of its acceptance of any disclosure schedule
within ten (10) days from the date such disclosure schedule is received by the
Purchaser, then the Purchaser shall have no further right to terminate based on
its failure to accept such disclosure schedule. Upon termination due to the
failure to accept a disclosure schedule, there shall be no further rights under
this Agreement and Company shall have absolutely no liability whatsoever to the
Purchaser.
(b) Conditions Precedent to the Obligations of the Company. The
obligation of the Company to consummate the sale of the Assets to Purchaser
shall be subject to the fulfillment, or the waiver by the Company, at or prior
to the Closing, of each of the following conditions precedent:
(i) Representations and Warranties. The representations and
warranties made by the Purchaser in this Agreement hereto shall have been true
and correct on the date hereof, and also at and as of the Closing Date with the
same force and effect as if made again at and as of that time.
(ii) Absence of Material Litigation. There shall be (i) no
pending or overtly threatened litigation (other than litigation which is
determined by the parties in good faith, after consulting their respective
attorneys, to be without legal or factual substance or merit), whether brought
against the Company or the Purchaser that seeks to enjoin the consummation of
any of the transactions contemplated by this Agreement, and (ii) no order that
has been issued by any court or governmental agency having jurisdiction that
restrains or prohibits the consummation of the purchase and sale of the Assets
hereunder or any proceedings pending which are reasonably likely to result in
the issuance of such an order.
(iii) Performance of Obligations. The Purchaser shall have
performed and complied with all of its covenants required by this Agreement to
have been performed by it at or prior to the Closing.
(iv) Certificates. Receipt from the Purchaser of a certificate,
dated as of the Closing Date and signed by the President or the Chief Financial
Officer of the Purchaser, certifying that (i) each of its representations and
warranties contained herein was true and correct when made and is true and
correct on and as of the Closing Date with the same force and effect as if such
representations and warranties had been made on the Closing Date, and (ii) it
has performed and complied with all agreements, obligations, covenants and
conditions required to be performed or complied with by it pursuant hereto on or
prior to the Closing Date, except as may be waived in writing by the Company.
(v) Delivery of Additional Instruments. On the Closing Date,
unless waived in writing by Company, the Purchaser shall deliver, or cause to be
delivered to Company, the Purchase Price and the documents and instruments
referenced in Section VI(b)(i), in form and substance satisfactory to Company
and its counsel.
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SECTION VII
CLOSING AND DELIVERIES
(a) Time and Place of Closing. The closing of the purchase and sale of
the Assets as set forth herein (the "Closing") shall be held at the offices of
Stradling, Yocca, Xxxxxxx & Xxxxx, 000 Xxxxxxx Xxxxxx Xxxxx, Xxxxxxx Xxxxx,
Xxxxxxxxxx 00000. The Closing shall occur on a date which is one (1) business
day after entry of the Bankruptcy Court order referenced in Section VI(a)(ii) is
issued, or at such later date and time upon which the Purchaser and the Company
shall mutually agree (the "Closing Date").
(b) Deliveries.
(i) At the Closing, the Purchaser shall deliver to the Company
the following:
(A) A wire transfer for the Closing Date Payment of the
Purchase Price, as described in Section I(b); and
(B) Such certificates, instruments and other documents, in
form and substance satisfactory to the Company and its counsel, as they
shall have reasonably requested in connection with the transactions
contemplated hereby.
(ii) At the Closing, the Company shall deliver to the Purchaser,
as a condition to Closing, the following:
(A) A Xxxx of Sale in the form attached hereto as Schedule
VI(b)(ii)(a), such other instruments of conveyance and transfer, and
such powers of attorney, as shall be effective to vest in the Purchaser
title to or other interest in, and the right to full custody and control
of, the Assets, free and clear of all Liens or Encumbrances whatsoever;
(B) The Assigned Contracts and the books and records of
the Company constituting a part of the Assets;
(C) Evidence that any and all sales or use taxes assessed
in connection with this transaction have been paid by the Company;
(D) Such certificates, instruments and other documents, in
form and substance satisfactory to the Purchaser and its counsel, as
they shall have reasonably requested in connection with the transactions
contemplated hereby;
(E) Either (i) all necessary consents of third parties
under the Assigned Contracts and other instruments of the Company to the
consummation of the transactions contemplated hereby, which consents
shall not provide for the acceleration of any liabilities or any other
detriment to the Purchaser or the Company, or, in the alternative, (ii)
an order or orders of the Bankruptcy Court authorizing the assumption of
such contracts by the Company and their assignment to Purchaser.
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SECTION VIII
INDEMNIFICATION
[Not used.]
SECTION IX
BROKERS AND FINDERS
(a) The Company's Obligation. Except as set forth in Schedule IX(a)
hereto, the Purchaser shall not have any obligation to pay any fee or other
compensation to any person, firm or corporation engaged by the Company in
connection with this Agreement and the transactions contemplated hereby, and the
Company, hereby agrees to indemnify and save the Purchaser harmless from any
liability, damage, cost or expense arising from any claim for any such fee or
other compensation.
(b) The Purchaser's Obligation. Except as set forth in Schedule IX(b)
hereto, the Company shall not have any obligation to pay any fee or other
compensation to any person, firm or corporation engaged by the Purchaser in
connection with this Agreement and the transactions contemplated hereby, and the
Purchaser hereby agrees to indemnify and save the Company harmless from any
liability, damage, cost or expense arising from any claim for any such fee or
other compensation.
SECTION X
TERMINATION
(a) This Agreement may be terminated and the transactions herein
contemplated may be abandoned at any time prior to the Closing:
(i) By mutual written consent of the Purchaser and the Company;
(ii) By the Purchaser, if there has been a material breach by the
Company of any of its material representations, warranties, agreements or
covenants set forth herein, or a failure of any condition to which the
obligations of the Purchaser are subject; or
(iii) By the Company, if there has been a material breach by the
Purchaser of any of its representations, warranties, agreements or covenants set
forth herein, or a failure of any condition to which the obligations of the
Company is subject or if the Purchaser's bid is not the High Bid, as provided in
Section IV above.
(b) Procedure Upon Termination. In the event of termination of this
Agreement by the Purchaser or the Company or by both the Purchaser and the
Company pursuant to Section X(a) hereof, written notice thereof shall forthwith
be given to the other party or parties hereto and the transactions contemplated
herein shall be abandoned without further action by the Purchaser or the
Company. In addition, if this Agreement is terminated as provided herein:
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(i) Each party will redeliver all documents, workpapers and other
material of any other party relating to the transactions contemplated hereby,
whether so obtained before or after the execution hereof, to the party
furnishing the same.
(ii) All information of a confidential nature received by any
party hereto with respect to the business of any other party (other than
information which is a matter of public knowledge or which has heretofore been
or is hereafter published in any publication for public distribution or filed as
public information with any governmental authority) shall continue to be kept
confidential for a period of two (2) years.
(iii) Upon any termination by the Purchaser upon the failure of
any condition to which the obligations of the Purchaser are subject, where such
failure is caused by the Company, the Company shall pay to the Purchaser, in
addition to any amounts required to be paid by the Company pursuant to Section
IV(c)(vii) above, an amount equal to the costs and expenses of the Purchaser
actually incurred in the preparation and negotiation of this Agreement
(including attorneys' fees) and the Purchaser's and its representatives' due
diligence review, which amount shall be paid within five (5) days of the date of
such termination; provided, however, that the provisions of this Section
X(b)(iii) shall not apply to any termination of this Agreement due to the fact
that the Purchaser's bid is not the High Bid, and the amounts specified herein
shall not be paid to the Purchaser in the event that the Purchaser is paid the
topping fee referenced in Section IV(c)(vii).
(iv) Upon any termination of this Agreement pursuant to Section
X(a) hereof the respective obligations of the parties hereto under this
Agreement shall terminate and no party shall have any liability whatsoever to
any other party hereto by reason of such termination, irrespective of the cause
of such termination, except as expressly provided to the contrary in this
Section X and in Section V(e) above.
SECTION XI
MISCELLANEOUS
(a) Notices. All notices, requests or instructions hereunder shall be in
writing and delivered personally, sent by telecopy or sent by registered or
certified mail, postage prepaid, as follows:
If to the Purchaser: Smartflex Systems, Inc.
00000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx,
President and Chief Executive Officer
Facsimile No. (000) 000-0000
with copies to: Xxxxxxxxx Xxxxx Xxxxxxx & Xxxxx
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxx X. Xxxxx, Esq.
Facsimile No. (000) 000-0000
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If to the Company: Tanon Manufacturing, Inc.
c/o EA Industries, Inc.
000 Xxxxxxxx Xxxxxxx
Xxxx Xxxx Xxxxxx, XX 00000
President: President
Telecopy No.: (000) 000-0000
Telephone No.: (000) 000-0000
in each case,
with a copy to: Mesirov Xxxxxx Xxxxx Xxxxxx & Xxxxxxxx
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx, Esquire
Telecopy No.: (000) 000-0000
Telephone No.: (000) 000-0000
and to: Sheppard, Mullin, Xxxxxxx & Xxxxxxx LLP
Xxxxxxxxxxx Xxxxx
Xxxx Xxxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxx, Esq.
Telecopy No.: (000) 000-0000
Telephone No.: (000) 000-0000
Any of the above addresses may be changed at any time by notice given as
provided above; provided, however, that any such notice of change of address
shall be effective only upon receipt. All notices, requests or instructions
given in accordance herewith shall be deemed received on the date of delivery,
if hand delivered or telecopied, and two business days after the date of
mailing, if mailed.
(b) Survival of Representations. Each representation, warranty, covenant
and agreement of the parties hereto herein contained shall survive Closing, for
a period of eighteen (18) months, notwithstanding any investigation at any time
made by or on behalf of any party hereto.
(c) Entire Agreement. This Agreement and the documents referred to
herein contain the entire agreement among the parties hereto with respect to the
transactions contemplated hereby, and no modification hereof shall be effective
unless in writing and signed by the party against which it is sought to be
enforced.
(d) Expenses. Each of the parties hereto shall bear such party's own
expenses in connection with this Agreement and the transactions contemplated
hereby.
(e) Dispute Resolution. Each of the parties to this Agreement agrees to
submit themselves to the jurisdiction of the Bankruptcy Court supervising the
Bankruptcy Case to interpret and enforce the terms and conditions of this
Agreement.
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(f) Invalidity. Should any provision of this Agreement be held by a
court or arbitration panel of competent jurisdiction to be enforceable only if
modified, such holding shall not affect the validity of the remainder of this
Agreement, the balance of which shall continue to be binding upon the parties
hereto with any such modification to become a part hereof and treated as though
originally set forth in this Agreement. The parties further agree that any such
court or arbitration panel is expressly authorized to modify any such
unenforceable provision of this Agreement in lieu of severing such unenforceable
provision from this Agreement in its entirety, whether by rewriting the
offending provision, deleting any or all of the offending provision, adding
additional language to this Agreement, or by making such other modifications as
it deems warranted to carry out the intent and agreement of the parties as
embodied herein to the maximum extent permitted by law. The parties expressly
agree that this Agreement as modified by the court or the arbitration panel
shall be binding upon and enforceable against each of them. In any event, should
one or more of the provisions of this Agreement be held to be invalid, illegal
or unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions hereof, and if such provision or
provisions are not modified as provided above, this Agreement shall be construed
as if such invalid, illegal or unenforceable provisions had never been set forth
herein.
(g) Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the successors and assigns of the Company and the
Purchaser.
(h) Governing Law. The validity of this Agreement and of any of its
terms or provisions, as well as the rights and duties of the parties under this
Agreement, shall be construed pursuant to and in accordance with the laws of the
State of California, without regard to conflict of laws principles.
(i) Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument.
(j) Accounts Receivable and Business Records. From and after the
Closing, Purchaser shall cooperate with Company, at the Company's sole expense,
in the collection by Company of the Company's Accounts Receivable. Any and all
books and records which may be deemed part of the Assets shall be made available
at no cost to the Company, upon reasonable prior notice and during normal
business hours, in connection with the collection by Company of its Accounts
Receivable and for any other valid business purpose. None of the business
records that constitute part of the Assets shall be destroyed by Purchasers
without the written consent of Company. The obligations set forth in this
subparagraph shall survive Closing. Without limiting the foregoing, the
Purchaser shall be entitled to collect and retain all accounts receivable
attributable to the sales of inventory purchased by the Purchaser hereunder, or
otherwise sold by the Purchaser after the Closing Date (such receivables shall
be deemed "Purchaser Receivables").
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IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto as of the date first above written.
PURCHASER: SMARTFLEX SYSTEMS, INC.
By: //s// Xxxxxxx X. Xxxxxx
----------------------------------------
Name: Xxxxxxx X. Xxxxxx
----------------------------------
Title: President
---------------------------------
COMPANY: TANON MANUFACTURING, INC.
By: //s// Xxxxxx Xxxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxxx
----------------------------------
Title: Vice President
---------------------------------
17
