SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: September 1, 1999
(date of earliest event reported)
EFTC Corporation
(Exact Name of Registrant as Specified in Charter)
Colorado 0-23332 84-0854616
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification #)
------------------------------ ---------------- -----------------
9351 Grant Street
Denver, Colorado 80229
(Address of Principal Executive Office)
(303) 451-8200
(Registrant's telephone number, including area code)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On September 1, 1999, EFTC Corporation, a Colorado corporation ("EFTC"),
together with certain of its directly and indirectly wholly owned subsidiaries,
sold substantially all of the assets used in the conduct of its business
providing hub-based logistics, repair and refurbishment services and "configure
to order" services (the "Assets" or the "CTI Companies") to Jabil Circuit, Inc.,
a Delaware corporation ("Jabil"). The sale of the Assets was made pursuant to
the terms of an Asset Purchase Agreement, dated as of August 31, 1999, by and
between EFTC, CTLLC Acquisition Corp., a Florida corporation, Circuit Test Inc.,
a Florida corporation, Airhub Service Group, L.C., a Kentucky limited liability
company, and Circuit Test International, L.C., a Florida limited liability
company, and Jabil. The terms of the Asset Purchase Agreement were negotiated
between the parties at arms' length. The base purchase price for the Assets was
$19,000,000, plus (i) a net book value adjustment (which may not exceed
$11,000,000) and (ii) an earn-out adjustment based on the earnings before
interest, taxes and amortization ("EBITA") in the 12 month period ending August
31, 2000 (not to exceed $2,500,000), both to be determined after the date
hereof. If EBITA is less than $4,455,000 (the "EBITA Target") for such
twelve-month period, then EFTC will be required to pay Jabil three times the
amount by which the EBITA Target exceeds EBITA. If EBITA exceeds the EBITA
Target for such twelve-month period, then Jabil will be required to pay EFTC
three times the amount of the excess. The maximum amount that either party would
be required to pay under the earn-out provision is capped at $2.5 million.
The estimated $20.4 million loss on the sale is based on the preliminary sale
proceeds of approximately $29.1 million, reduced for costs associated with the
transaction, and the net book value of the assets sold as of June 30, 1999
(including the related deferred tax assets and goodwill). In calculating the
loss on sale, EFTC also classified $2.5 million of the proceeds as a contingent
liability under the earn-out provisions of the Agreement, thereby increasing the
reported loss on sale.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Businesses Acquired
Not applicable.
(b) Pro Forma Financial Information
EFTC CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
The unaudited pro forma condensed consolidated financial information has been
derived from the historical financial statements of EFTC Corporation ("EFTC")
adjusted to reflect the disposition of the CTI Companies. The unaudited pro
forma condensed consolidated balance sheet presents the financial position of
EFTC as of June 30, 1999, assuming EFTC had completed the sale as of that date.
The unaudited condensed consolidated pro forma statements of operations for the
six months ended June 30, 1999 and the year ended December 31, 1998 assume the
sale of the CTI Companies occurred on January 1, 1998 and include the historical
operations of EFTC, adjusted for the pro forma effects of the disposition,
excluding the loss on the disposition.
The following unaudited condensed pro forma financial information has been
prepared based upon assumptions deemed appropriate by EFTC and is not
necessarily indicative of the consolidated financial position or results of
operations if the disposition of the CTI Companies had been consummated on the
assumed dates and are not necessarily indicative of the actual results of the
future operations of EFTC. The unaudited pro forma condensed financial
statements should be read in conjunction with the historical consolidated
financial statements and the notes thereto for the year ended December 31, 1998,
filed with the Company's Annual Report on Form 10-K for such year, and the
quarter ended June 30, 1999, filed with the Company's Quarterly Report on Form
10-Q for such quarter.
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<PAGE>
<TABLE>
<CAPTION>
EFTC CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 1999
(in thousands)
EFTC
Consolidated Pro Forma
Historical Adjustments Pro Forma
------------ ----------- ---------
ASSETS
Current assets
<S> <C> <C> <C>
Cash and cash equivalents $ 144 $ 28,739 (1) $ 28,883
Trade receivables 35,395 (4,745)(1) 30,650
Inventories 60,361 (3,388)(1) 56,973
Income taxes receivable 86 - 86
Deferred income taxes 5,144 (825)(1) 4,319
Prepaid expenses and other current assets 3,495 (42)(1) 3,453
--------- --------- ---------
Total current assets 104,625 19,739 124,364
Property, plant and equipment, at cost 42,673 (6,045)(1) 36,628
Less accumulated depreciation (8,856) 1,236 (1) (7,620)
--------- --------- ---------
Net property, plant and equipment 33,817 (4,809) 29,008
--------- --------- ---------
Other assets, net 6,072 (72)(1) 6,000
Goodwill, net 44,065 (36,668)(1) 7,397
Deferred income taxes 1,442 1,206 (1) 2,648
--------- -------- ---------
Total assets $190,021 $(20,604) $169,417
========= ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 33,120 $ (935)(1) $ 32,185
Current portion of long-term debt 4,330 - 4,330
Accrued compensation 4,791 (1,000)(1) 3,791
Deposit on inventory finance arrangement 4,000 - 4,000
2,500 (4)
Other accrued liabilities 1,106 (807)(1) 2,799
-------- --------- ---------
Total current 47,347 (242) 47,105
liabilities
Long-term debt, net of current portion 51,014 - 51,014
--------- --------- ---------
Total liabilities 98,361 (242) 98,119
Shareholders' equity
Preferred stock, $.01 par value.
Authorized
5,000 shares; none issued or outstanding - - -
Common stock, $.01 par value. Authorized
45,000 shares; issued 15,543 and outstanding 155 - 155
Additional paid-in capital 91,992 - 91,992
Accumulated deficit (487) (20,362)(1) (20,849)
--------- --------- ---------
Total shareholders' equity 91,660 (20,362) 71,298
--------- --------- --------
Total liabilities and shareholders' equity $190,021 $(20,604) $169,417
========= ========= ========
</TABLE>
See notes to unaudited pro forma condensed
consolidated financial statements.
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<TABLE>
<CAPTION>
EFTC CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(in thousands, except per share amounts)
EFTC
Consolidated Pro Forma
Historical Adjustments Pro Forma
------------ ----------- ---------
<S> <C> <C> <C>
Net sales $226,780 $(40,725)(2) $186,055
Cost of goods sold 200,581 (30,154)(2) 170,427
--------- --------- ---------
Gross profit 26,199 (10,571) 15,628
Selling, general, and administrative (600)(3)
expense 23,038 (6,657)(2) 15,781
Amortization of goodwill 1,564 (1,297)(2) 267
Impairment of fixed assets 3,342 - 3,342
Merger costs 1,048 - 1,048
--------- --------- ---------
Operating loss (2,793) (2,017) (4,810)
Other income (expense):
Interest expense (4,312) 2,315 (3) (1,997)
Gain on sale of assets 134 (131)(2) 3
Other, net 162 - 162
--------- --------- ----------
(4,016) 2,184 (1,832)
Income (loss) before income taxes (6,809) 167 (6,642)
Income tax (expense) benefit 2,631 (164)(5) 2,467
--------- --------- ----------
Net income (loss) $ (4,178) $ 3 $ (4,175)
========= ========== ==========
Pro forma information:
Historical net income (loss) ($4,178) $ 3 ($4,175)
Pro forma adjustment to income
tax expense 317 - 317
--------- --------- ----------
Pro forma net income (loss) ($4,495) $ 3 ($4,492)
========= ========== ==========
Pro forma loss per share:
Basic ($0.31) ($0.30)
========= ===========
Diluted ($0.31) ($0.30)
========= ===========
Weighted average shares
outstanding:
Basic 14,730 14,730
========= ===========
Diluted 14,730 14,730
========= ===========
</TABLE>
See notes to unaudited pro forma condensed
consolidated financial statements.
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<TABLE>
<CAPTION>
EFTC CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(in thousands, except per share amounts)
EFTC
Consolidated Pro Forma
Historical Adjustments Pro Forma
------------ ----------- ---------
<S> <C> <C> <C>
Net sales $109,016 $(18,469)(2) $ 90,547
Cost of goods sold 101,015 (15,114)(2) 85,901
--------- --------- ---------
Gross profit 8,001 (3,355) 4,646
Selling, general, and administrative (300)(3)
expense 10,066 (2,060)(2) 7,706
Amortization of goodwill 782 (649)(2) 133
--------- --------- ---------
Operating loss (2,847) (346) (3,193)
Other income (expense):
Interest expense (2,598) 1,158 (3) (1,440)
Other, net 90 - 90
--------- --------- ---------
(2,508) 1,158 (1,350)
Income (loss) before income taxes (5,355) 812 (4,543)
Income tax (expense) benefit 2,034 (366)(5) 1,668
--------- --------- ---------
Net income (loss) ($3,321) $ 446 ($2,875)
========= ========= ========
Loss per share:
Basic ($0.21) ($0.21)
========= =========
Diluted ($0.21) ($0.21)
========= =========
Weighted average shares outstanding:
Basic 15,543 15,543
========= =========
Diluted 15,543 15,543
========= =========
</TABLE>
See notes to unaudited pro forma condensed
consolidated financial statements.
5
<PAGE>
EFTC CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FROMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
A brief description of each pro forma adjustment is provided below and is
cross-referenced to the unaudited pro forma condensed consolidated financial
statements contained herein.
(1) To eliminate the accounts of the CTI Companies, including related deferred
tax assets and goodwill (which originated with the purchase of the CTI
Companies by EFTC in 1997), and to adjust cash for the estimated net
proceeds of the sale of $29.1 million, less cash included in the sale of
$274,000, and to adjust retained earnings for the estimated loss on sale of
$20.4 million.
(2) To eliminate the operations of the CTI Companies.
(3) To adjust for the decrease in interest expense as a result of sale proceeds
being used to repay debt, and decreases in corporate charges directly
attributable to the CTI Companies.
(4) To reflect earn out provision payable August 31, 2000.
(5) To adjust income taxes for effect of nondeductible goodwill.
(c) Exhibits
2.1 Asset Purchase Agreement, dated as of August 31, 1999, by and
between EFTC Corporation, a Colorado corporation, CTLLC
Acquisition Corp., a Florida corporation, Circuit Test Inc., a
Florida corporation, Airhub Service Group, L.C., a Kentucky
limited liability company, and Circuit Test International, L.C.,
a Florida limited liability company, and Jabil Circuit, Inc., a
Delaware corporation. (The Asset Purchase Agreement contains a
detailed list of the schedules and exhibits thereto. All such
schedules and exhibits have been intentionally omitted. EFTC will
furnish supplementally a copy of any omitted schedule or exhibit
to the Commission upon request.)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf of the
undersigned thereunto duly authorized.
EFTC CORPORATION
DATE: September 16, 1999 By: /s/ Stuart W. Fuhlendorf
-----------------------------
Name: Stuart W. Fuhlendorf
Title: Chief Financial Officer
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---------------------------------
ASSET PURCHASE AGREEMENT
-----------------------------
DATED AS OF AUGUST 31, 1999
BETWEEN
JABIL CIRCUIT, INC.,
AND
EFTC CORPORATION,
CTLLC ACQUISITION CORP.,
CIRCUIT TEST, INC.,
AIRHUB SERVICE GROUP, L.C.
AND
CIRCUIT TEST INTERNATIONAL, L.C.
<PAGE>
TABLE OF CONTENTS
ARTICLE 1. - GENERAL PROVISIONS............................................1
1.1 DEFINITIONS.......................................................1
1.2 OTHER DEFINITIONS AND MEANINGS; INTERPRETATIONS...................4
1.3. BUYER'S OR SELLER'S KNOWLEDGE.....................................4
ARTICLE 2 - PURCHASE AND SALE..............................................4
2.1 TRANSACTION.......................................................4
2.2 ACQUIRED ASSETS...................................................4
2.3 EXCLUDED ASSETS...................................................6
2.4 ASSUMED LIABILITIES...............................................6
2.5 EXCLUDED LIABILITIES..............................................7
2.6 THE PURCHASE PRICE................................................7
2.6.1 Base Purchase Price.........................................7
2.6.2 Base Purchase Price Adjustment..............................9
2.7 ALLOCATION OF BASE PURCHASE PRICE................................10
ARTICLE 3 - CLOSING, ITEMS TO BE DELIVERED, THIRD PARTY CONSENTS,
AND FURTHER ASSURANCES........................................10
3.1 CLOSING..........................................................10
3.2 ITEMS TO BE DELIVERED AT CLOSING.................................10
3.3 THIRD PARTY CONSENTS.............................................11
3.4 FURTHER ASSURANCES...............................................11
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES................................12
4.1 REPRESENTATIONS AND WARRANTIES OF SELLER.........................12
4.1.1 Corporate Existence........................................12
4.1.2 Corporate Power; Authorization; Enforceable Obligations....12
4.1.3 Validity of Contemplated Transactions, Etc.................12
4.1.4 Tax and Other Returns and Reports..........................12
4.1.5 Financial Statements.......................................13
4.1.6 Existing Condition.........................................13
4.1.7 Title to Properties........................................14
4.1.8 Condition of Tangible Assets...............................14
4.1.9 Compliance with Law; Authorizations........................14
4.1.10 Litigation.................................................14
4.1.11 Contracts and Commitments..................................15
4.1.12 Labor Matters..............................................16
4.1.13 Employee Benefit Plans and Arrangements....................16
4.1.14 Proprietary Rights.........................................17
4.1.15 Environmental Matters......................................18
4.1.16 Real Property..............................................19
4.2 REPRESENTATIONS AND WARRANTIES OF BUYER..........................19
4.2.1 Corporate Existence........................................19
4.2.2 Corporate Power and Authorization..........................19
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4.2.3 Validity of Contemplated Transactions, Etc.................19
4.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.......................19
ARTICLE 5 - AGREEMENTS PENDING CLOSING....................................19
5.1 AGREEMENTS OF SELLER PENDING THE CLOSING.........................19
5.1.1 Business in the Ordinary Course............................19
5.1.2 Capital Expenditures.......................................20
5.1.3 Maintenance of Physical Assets.............................20
5.1.4 Business Relations and Employees...........................20
5.1.5 Update of Schedules........................................20
5.1.6 Sale of Assets; Negotiations...............................20
5.1.7 Access.....................................................20
5.1.8 Public Announcements.......................................21
5.1.9 Consents to Assignment; Release of Liens...................21
5.2 AGREEMENTS OF BUYER PENDING THE CLOSING..........................21
5.2.1 Confidentiality............................................21
5.2.2 Public Announcements.......................................21
ARTICLE 6 - CONDITIONS PRECIDENT TO THE CLOSING...........................22
6.1 CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS......................22
6.1.1 Representations and Warranties True as of the
Closing Date...............................................22
6.1.2 Compliance with this Agreement.............................22
6.1.3 Opinion of Counsel for Seller..............................22
6.1.4 No Threatened or Pending Litigation........................22
6.1.5 Consents and Approvals.....................................22
6.1.6 Material Adverse Changes...................................22
6.1.7 HSR Act....................................................22
6.2 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER................23
6.2.1 Representations and Warranties True as of the
Closing Date...............................................23
6.2.2 Compliance with this Agreement.............................23
6.2.3 Opinion of Counsel for Buyer...............................23
6.2.4 No Threatened or Pending Litigation........................23
6.2.5 HSR Act....................................................23
ARTICLE 7 - INDEMNIFICATION...............................................23
7.1 GENERAL INDEMNIFICATION OBLIGATION OF SELLER.....................23
7.2 GENERAL INDEMNIFICATION OBLIGATION OF BUYER......................24
7.3 METHOD OF ASSERTING CLAIMS, ETC..................................24
7.4 PAYMENT..........................................................25
7.5 EXCLUSIVE REMEDY.................................................25
ARTICLE 8 - TERMINATION...................................................25
8.1 TERMINATION......................................................25
ARTICLE 9 - MISCELLANEOUS.................................................27
9.1 EMPLOYEE MATTERS.................................................27
9.2 MAINTENANCE OF BOOKS AND RECORDS.................................27
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9.3 PAYMENTS RECEIVED................................................28
9.4 BROKERS' AND FINDERS' FEES.......................................28
9.5 EXPENSES.........................................................28
9.6 CONTENTS OF AGREEMENT; PARTIES IN INTEREST; ETC..................28
9.7 ASSIGNMENT AND BINDING EFFECT....................................29
9.8 WAIVER...........................................................29
9.9 NOTICES..........................................................29
9.10 NO BENEFIT TO OTHERS..........................................30
9.11 EXHIBITS AND SCHEDULES........................................30
9.12 SEVERABILITY..................................................30
9.13 COUNTERPARTS..................................................30
9.14 APPLICABLE LAW................................................30
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EXHIBITS & SCHEDULES
Exhibits
Exhibit A - Noncompetition Agreement
Exhibit B - Individuals with Knowledge
Exhibit C - Excluded Assets
Exhibit D - Excluded Liabilities
Exhibit E - Form of Balance Sheet for Purchase Price Calculation
Exhibit F - Form of Honigman Miller Schwartz and Cohn Opinion
Exhibit G - Form of Holme Roberts & Owen LLP Opinion
Schedules
Schedule 2.6.2(a) -Customer Revenues and Expenses
Schedule 2.6.2(b) -Inventory Breakdown
Schedule 4.1.6. -Existing Conditions
Schedule 4.1.7. -Liens
Schedule 4.1.9. -Authorizations
Schedule 4.1.10. -Litigation
Schedule 4.1.11. -Contracts and Commitments; Consents
Schedule 4.1.12 -Labor Matters
Schedule 4.1.13. -Employee Benefit Plans
Schedule 4.1.14. -Proprietary Rights
Schedule 4.1.15. -Environmental Matters
Schedule 5.1.2. -Capital Expenditures
Schedule 9.1.1 -Active Employees
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of August 31, 1999, by and between
EFTC Corporation, a Colorado corporation ("EFTC"), CTLLC Acquisition Corp., a
Florida corporation ("CTLLC"), Circuit Test Inc., a Florida corporation ("CT"),
Airhub Service Group, L.C., a Kentucky limited liability company ("Airhub") and
Circuit Test International, L.C., a Florida limited liability company ("CTI"),
and Jabil Circuit, Inc., a Delaware corporation (together with any subsidiary to
which it may assign any of its rights or obligations pursuant to Section 9.8,
"Buyer"). EFTC, CTLLC, CT, Airhub and CTI are referred to collectively in this
Agreement as "Seller".
RECITALS:
A. EFTC owns, directly or indirectly, 100% of the equity
interest in each of CTLLC, CT, Airhub and CTI.
B. CT, Airhub and CTI are engaged, in part, in the business (the
"Business") of providing hub-based logistics, repair and refurbishment services
and "configure to order" services under the name "EFTC Services" (the
"Division"), and each such company owns certain assets and has incurred certain
liabilities in connection with the Business.
C. Jabil desires to purchase, and each of CT, Airhub and CTI desires to
sell, substantially all of the assets used in the conduct of the Business by
such company.
Therefore, the parties agree as follows:
ARTICLE 1.
GENERAL PROVISIONS
1.1 Definitions. Unless otherwise defined herein, the following terms
shall have the meanings set forth below:
"Acquired Assets" shall have the meaning set forth in Section 2.2.
"Active Employee" shall have the meaning set forth in Section 9.1(a).
"Affiliate" of any person shall mean any person directly or indirectly
controlling, controlled by or under common control with such person.
"Agreement" shall mean this Asset Purchase Agreement.
"Assumed Liabilities" shall have the meaning set forth in Section 2.4.
"Audited Financials" shall have the meaning set forth in Section 4.1.5.
<PAGE>
"Authorizations" shall have the meaning set forth in Section 4.1.9.
"Base Purchase Price" shall have the meaning set forth in Section 2.6.
"Business" shall have the meaning set forth in the Recitals of this
Agreement.
"Buyer" shall have the meaning set forth in the introductory paragraph
of this Agreement.
"Buyer's knowledge" shall have the meaning set forth in Section 1.3.
"Buyer's Welfare Plans" shall have the meaning set forth in Section
9.1(c).
"Claim Notice" shall have the meaning set forth in Section 7.3.
"Closing" shall have the meaning set forth in Section 3.1.
"Closing Date" shall have the meaning set forth in Section 3.1.
"Closing Date Balance Sheet" shall have the meaning set forth in
Section 2.6(d)(i).
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Collateral Documents" shall have the meaning set forth in Section
4.1.2.
"CPA Firm" shall have the meaning set forth in Section 2.6(c).
"Division" shall have the meaning set forth in the Recitals of this
Agreement.
"Division Welfare Benefit Plans" shall have the meaning set forth in
Section 4.1.13(a).
"Draft Balance Sheet" shall have the meaning set forth in Section
2.6(c).
"EBITA" shall have the meaning set forth in Section 2.6.2.
"EBITA Target" shall have the meaning set forth in Section 2.6.2.
"Employee Benefit Plan" shall have the meaning set forth in Section
4.1.13(a).
"Environmental Laws" shall mean the Toxic Substances Control Act, 15
USC 2601 et seq.; Coastal Zone Management Act of 1972, 16 USC 1451 et seq.;
Clean Water Act, 33 USC 1251 et seq.; Resource Conversation and Recovery Act of
1976 ("RCRA"), 42 USC 6901 et seq.; Clean Air Act, 42 USC 7401 et seq.;
Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"),
42 USC 9601 et seq.; Hazardous Materials Transportation Act, 49 USC 1801 et
seq.; Safe Drinking Water Act, 42 USC 300f et seq.; Emergency Planning and
Community Right-to-Know Act of 1986, 42 USC 11001 et seq.; Federal Insecticide
Fungicide, and Rodenticide Act, 7 USA 136 et seq.; Occupational Safety and
Health Act, 29 USC 651 et
2
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seq.; and all other federal, state, county, municipal
and local, foreign and other statutes, laws regulations, and ordinances that
relate to or deal with protection of human health or the environment, all as may
be amended from time to time.
"ERISA" shall have the meaning set forth in Section 4.1.13(a).
"Excluded Assets" shall have the meaning set forth in Section 2.3.
"Excluded Liabilities" shall have the meaning set forth in Section 2.5.
"GAAP" shall mean United States generally accepted accounting
principles, consistently applied.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, and the rules and regulations promulgated thereunder or
pursuant thereto.
"Indemnified Buyer Party" shall have the meaning set forth in Section
7.1.
"Indemnified Seller Party" shall have the meaning set forth in Section
7.2.
"Interim Financial Statements" shall have the meaning set forth in
Section 4.1.5.
"Material Adverse Effect" shall mean any event, change, occurrence or
condition, singly or together with any other event, change, occurrence or
condition, which would have a material adverse effect on the condition,
financial or otherwise, of the Acquired Assets or the Business, in each case
taken as a whole.
"Net Book Value" shall have the meaning set forth in Section 2.6(b).
"Noncompetition Agreement" shall mean that certain Noncompetition
Agreement between Buyer and each of EFTC, CTLLC, CT, Airhub and CTI dated the
Closing Date and attached hereto as Exhibit A.
"Notice Period" shall have the meaning set forth in Section 7.3.
"Permitted Liens" shall have the meaning set forth in Section 4.1.7.
"Proprietary Rights" shall mean the name "Circuit Test," all
proprietary know-how, all copyrights, patents, trade secrets, technology,
licenses, source codes, object codes and inventions used by Seller in the
conduct of the Business.
"Questionable Accounts" shall have the meaning set forth in Section
2.6.1(e).
"Regulations" shall have the meaning set forth in Section 4.1.9.
"Seller" shall have the meaning set forth in the introductory paragraph
3
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of this Agreement.
"Seller's knowledge" shall have the meaning set forth in Section 1.3.
"Taxes" shall have the meaning set forth in Section 4.1.4.
"Tax Returns" shall have the meaning set forth in Section 4.1.4.
"Total Consideration" shall have the meaning set forth in Section 2.7.
1.2 Other Definitions and Meanings; Interpretations. For purposes of
this Agreement, the term "parties" means (except where the context otherwise
requires) Seller and Buyer; the term "person" includes any natural person, firm,
association, trust, partnership, limited liability company, corporation,
governmental agency or other entity; the words "hereof," "herein," "hereby" and
other words of similar import refer to this Agreement as a whole; the term
"subsidiary" means any company of which at least 50% of the capital stock or
other equity interests having voting power under ordinary circumstances shall at
the time be held, directly or indirectly, by such person. The table of contents
and the headings of the Articles and Sections of this Agreement have been
included herein for convenience of reference only and shall not be deemed to
affect the meaning of the operative provisions of this Agreement. All dollar
amounts referred to herein are in United States Dollars.
1.3 Buyer's or Seller's Knowledge. Where a statement contained in this
Agreement is said to be to "Buyer's knowledge" or "Seller's knowledge" (or words
of similar import), such expression means that the management of Buyer or
Seller, as the case may be, consisting of the persons identified in Exhibit B
hereto, reasonably believes after due inquiry that the statement is true,
accurate and complete in all material respects.
ARTICLE 2
PURCHASE AND SALE
2.1 Transaction. On the terms and subject to the conditions of this
Agreement, at the Closing (a) Buyer agrees to purchase from Seller, and Seller
agrees to sell, transfer and assign to Buyer, all of the Acquired Assets; (b)
Buyer will assume and become directly and solely responsible for the payment or
discharge of all of the Assumed Liabilities; (c) Buyer will pay to Seller the
Base Purchase Price as herein provided; and (d) Buyer and Mr. Allen Braswell
will enter into an employment agreement. Notwithstanding such transactions,
Seller will retain the Excluded Assets and the Excluded Liabilities.
2.2 Acquired Assets. For purposes hereof, the term "Acquired Assets"
means all assets, properties and rights owned or held by Seller in the conduct
of the Business that are not Excluded Assets, including, without limitation, all
of Seller's rights, title and interests in and to the following assets used by
the Division in its conduct of the Business as of the Closing:
(a) All cash and cash equivalents, marketable securities, notes and
accounts receivable;
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(b) All prepaid and similar items, including, without limitation, all
prepaid expenses, advance payments, security deposits, employee travel
and expense advances and other prepaid items, all to the extent
assignable to Buyer (which items, if not assignable, will be deemed to
be Excluded Assets);
(c) All current, non-obsolete inventories (as described in Section
2.6.1(c) below), wherever located, including, without limitation,
inventories of raw materials, finished goods, operating supplies,
work-in-process, and packaging;
(d) All owned personal property, including, without limitation, all
machinery and equipment, tools and dies, computer equipment and
systems, software, materials, furniture, office equipment, cars,
trucks and other vehicles;
(e) All supplier lists and all orders, contracts and commitments for the
purchase of goods or services, including, without limitation, all such
items relating to the purchase of capital assets, products and
supplies;
(f) All customer lists and all purchase orders, contracts, commitments and
proposals for the provision of services to such customers;
(g) All other orders, contracts and commitments, including, without
limitation, all leases (whether or not capitalized), licenses,
conditional sale or title retention agreements and guarantees;
(h) All owned Proprietary Rights used exclusively by the Division in the
conduct of the Business, including, without limitation, the name
"Circuit Test," all patents, trade secrets, technical information and
other know-how, and the goodwill associated therewith, and all usable
and assignable technology licenses associated with the equipment
included among the Acquired Assets; in addition, Seller shall permit
Buyer to use on a non-exclusive basis (but shall not transfer to
Buyer) any of such Proprietary Rights that are used by the Division in
the conduct of the Business and also used by Seller for other
purposes;
(i) All permits, franchises, licenses, bonds, approvals, qualifications
and the like issued by any government or governmental unit, agency,
board, body or instrumentality, whether federal, state or local and
all applications therefor pertaining to the Business, all to the
extent assignable;
(j) All owned product specifications, drawings and information relating to
manufacturing and assembly specifications and formulations used by the
Division in its conduct of the Business; and
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(k) All business books and records of the Business, including, without
limitation, all financial, operating, inventory, personnel, payroll
and customer records and all sales and promotional literature,
correspondence and files; provided, however, that in the event that
any such books or records are subject to any legal privilege, the
parties agree to cooperate to protect such privilege to the extent
practicable.
Notwithstanding the above, any items listed in Schedule 4.1.11 to this
Agreement as requiring a consent for transfer or assignment and as to which
consent for such transfer or assignment has not been obtained by Seller prior to
the Closing shall be treated in accordance with Section 3.3 and shall not be
deemed to be transferred or assigned to Buyer as part of the Acquired Assets.
2.3 Excluded Assets. For purposes hereof, the term "Excluded Assets"
means the following rights, properties and assets of the Division as the same
shall exist as of the Closing:
(a) All intercompany or intracompany accounts or other receivables;
(b) All current and deferred federal, state and local income Tax assets
and refunds (including interest) arising out of the conduct of the
Business prior to the Closing;
(c) Any past, present or future claims and rights or actions by Seller
against third parties relating to the Excluded Liabilities or Excluded
Assets;
(d) Any corporate seal, minute books, charter or limited liability company
documents, corporate stock record books, and such other books and
records as pertain to the organization, existence or share
capitalization of Seller or as are necessary to enable Seller to file
its tax returns and reports and any books, records and information
related to the Excluded Liabilities and Excluded Assets (but access to
such items shall be provided by Seller to Buyer upon request following
the Closing);
(e) All assets, whether or not used in the conduct of the Business, which
are identified as Excluded Assets on Exhibit C to this Agreement; and
(f) "Black inventory" and "gray inventory" (as such terms are
used in Section 2.6.1(b)).
2.4 Assumed Liabilities. For purposes hereof, the term "Assumed
Liabilities" means the following liabilities and obligations of Seller to the
extent they relate to, arise or have arisen out of the conduct of the Business
and are properly reflected on the balance sheet of Seller (prepared in
accordance with GAAP) at the Closing and are not Excluded Liabilities:
(a) All liabilities and obligations incurred by Seller in the conduct of
the Business which are properly accrued on the divisional books of
Seller as
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of the Closing as consistently recorded by Seller with respect to the
Division, and to the extent such liabilities and obligations are
reflected as deductions in the calculation of the Purchase Price as
provided in Section 2.6.1(b) below; and
(b) All liabilities and obligations of Seller under orders, contracts,
leases and other commitments included in the Acquired Assets.
2.5 Excluded Liabilities. For the purposes hereof, the term "Excluded
Liabilities" means the following liabilities and obligations as the same shall
exist as of the Closing:
(a) All accounts or other payables or debt obligations of Seller in
connection with the operation of the Division owed to Seller or any
subsidiary or Affiliate of the foregoing;
(b) All liabilities for current and deferred federal, state and local
income Taxes of Seller for any period prior to the Closing;
(c) All liabilities and obligations to repay indebtedness for borrowed
money incurred by Seller, or any of its Affiliates;
(d) All liabilities and obligations related to or arising out of Excluded
Assets; and
(e) All liabilities and obligations, whether or not arising primarily out
of the conduct of the Business, which are not explicitly "Assumed
Liabilities", including specifically all claims of employees of the
Business with respect to periods prior to the Closing Date (except for
sick and vacation pay) and those items identified as Excluded
Liabilities on Exhibit D to this Agreement.
2.6 The Purchase Price.
2.6.1....Base Purchase Price. On the Closing Date, Buyer shall
pay to Seller the Base Purchase Price, less the amount of the Questionable
Accounts, by wire transfer of immediately available funds to such account as
Seller shall designate. The Base Purchase Price shall be an amount equal to the
following (the "Base Purchase Price"), subject to adjustment as provided in this
Section 2.6.1.
(a) The sum of (i) $19,000,000 plus (ii) the net book value (calculated in
accordance with GAAP) of the Acquired Assets as of the Closing Date
less the Assumed Liabilities as reflected on the balance sheet of
Seller as of the Closing Date (the "Net Book Value"); provided,
however, that the Base Purchase Price shall in no event exceed
$30,000,000.
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(b) With respect to the calculation of the Net Book Value of inventory in
the determination of the Base Purchase Price, the following method
shall be used: each item of inventory shall be categorized by Seller
and Buyer as "black inventory", "gray inventory", "yellow inventory"
and "green inventory". A list showing the breakdown of inventory into
categories as of August 31, 1999 is set forth as Schedule 2.6.2(b).
Black inventory shall be excluded from the Acquired Assets and shall
not be purchased by Buyer. Yellow inventory and green inventory shall
be included in the Acquired Assets and shall be purchased by Buyer.
Gray inventory shall be excluded from the Acquired Assets and shall
not be purchased by Buyer; provided, however, that on the Closing Date
such gray inventory shall be consigned to Buyer by Seller. Buyer shall
pay Seller within 20 days after the end of each calendar quarter an
amount equal to 75% of the net proceeds of any gray inventory sold, or
75% of the book value at the Closing Date of any gray inventory
consumed, by Buyer. Promptly following the first anniversary of the
Closing, Buyer shall, at Seller's cost and upon Seller's request,
return the remaining gray inventory to Seller.
(c) Within 15 days after the Closing Date, Seller shall prepare (in
accordance with the form of balance sheet attached to this Agreement
as Exhibit E) and deliver to Buyer a draft balance sheet (the "Draft
Balance Sheet") of the Business as at the Closing Date. Buyer shall
have 30 days after receipt to review the Draft Balance Sheet. At or
before the end of such 30 day period, Buyer shall either:
(i) accept the Draft Balance Sheet in its entirety, in which case the
Draft Balance Sheet shall be deemed the "Closing Date Balance
Sheet"; or
(ii) deliver to Seller written notice of those items in the Draft
Balance Sheet that Buyer disputes, in which case the undisputed
items shall be deemed final and the disputed items will, unless
the parties otherwise agree, be referred within 20 days after the
date of such notice to a nationally recognized certified public
accounting (the "CPA Firm") mutually acceptable to Seller and
Buyer for a final and binding resolution, which resolution
must be made as promptly as practical, and in any event within 30
days after the CPA Firm is retained by the parties. The fees of
the CPA Firm shall be borne by the party against whom such
disagreement is in large part resolved or, if the resolution does
not substantially favor either party, such costs shall be borne
equally by Seller and Buyer. In all events, such CPA Firm will
determine the assessment of such costs. In such case, the final
determination of the CPA Firm, together with the undisputed
items, shall be deemed to be the "Closing Date Balance
Sheet."
(d) Within 15 days after the final determination of the Closing Date
Balance Sheet, Buyer shall pay to Seller, or Seller shall pay to
Buyer, as appropriate, by wire transfer of immediately available
funds, the amount, if any, by which the Net Book Value of the Acquired
Assets reflected on the Closing Date Balance Sheet
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exceeds or is less than the estimate of the Net Book Value of the
Acquired Assets paid on the Closing Date pursuant to Section 2.6(a).
(e) After the Closing, Buyer shall use reasonable efforts to attempt to
collect all accounts receivable of Seller from Gateway, Gold Star and
Winbook which are 90 or more days past due as of the Closing Date (the
"Questionable Accounts"). Promptly following the end of the third
month and of the sixth month after the Closing Date, Buyer shall pay
to Seller all amounts collected with respect to the Questionable
Accounts. Promptly following the six month after the Closing Date, any
uncollected Questionable Accounts shall be assigned by Buyer to
Seller.
2.6.2....Base Purchase Price Adjustment.
(a) Promptly following the end of the 12th full calendar month after the
Closing Date, Buyer shall prepare an income statement of the
operations of the Business for such 12 month period for the customers
and programs listed on Schedule 2.6.2(a); provided, however, that the
portion of the revenue and expense included in such income statement
with respect to such customers and programs shall be only the
applicable percentage listed on Schedule 2.6.2(a). If earnings before
interest, taxes and amortization ("EBITA"), calculated in accordance
with GAAP but (i) using Seller's employee benefit costs (including
profit sharing) and without taking into account any increased employee
benefits costs of Buyer or potential changes to employee benefits by
Buyer or their resulting impact on cost and (ii) without regard to
extraordinary items, for such twelve month period exceeds $4,455,000
(the "EBITA Target"), then Buyer shall pay to Seller by wire transfer
of immediately available funds three times the amount by which EBITA
exceeds the EBITA Target. If EBITA for such twelve month period is
less than the EBITA Target, then EFTC shall pay to Buyer by wire
transfer of immediately available funds three times the amount by
which the EBITA Target exceeds EBITA. The amount of the payment to be
made by Buyer or EFTC, as appropriate, (i) shall in no event exceed
$2,500,000, (ii) shall be made by Buyer or EFTC, as appropriate,
within four months following the end of such twelve month period, and
(iii) shall not be limited by the proviso in Section 2.6.1(a).
(b) Within 30 days after receipt of the income statement referred to in
Section 2.6.2(a), Seller shall either:
(i) accept the draft income statement; or
(ii) deliver to Buyer written notice of those items in the draft
income statement that Seller disputes, in which case the
undisputed items shall be deemed final and the disputed items
will, unless the parties otherwise agree, be referred within 20
days after the date of such notice to a CPA Firm mutually
acceptable to Seller and Buyer for a final and binding
resolution, which resolution must be made as promptly as
practical, and in any event within 30 days after the CPA Firm is
retained by the parties.
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The fees of the CPA Firm shall be borne by the party against whom such
disagreement is in large part resolved or, if the resolution does not
substantially favor either party, such costs shall be borne equally by
Seller and Buyer. In all events, such CPA Firm will determine the
assessment of such costs.
2.7 Allocation of Base Purchase Price. The Base Purchase Price and the
Assumed Liabilities (together, the "Total Consideration") as finally determined
shall be allocated among the Acquired Assets as mutually agreed by Buyer and
EFTC no later than 60 days after the Closing Date. Buyer and Seller each hereby
covenant and agree that they will not take a position on any income tax return,
before any governmental agency charged with the collection of any income tax, or
in any judicial proceeding that is in any way inconsistent with the terms of
this Section 2.7.
ARTICLE 3
CLOSING, ITEMS TO BE DELIVERED, THIRD PARTY CONSENTS,
AND FURTHER ASSURANCES
3.1 Closing. The closing (the "Closing") of the sale and purchase of
the Acquired Assets shall take place on September 1, 1999, effective as of 12:01
A.M., EDT time, (the "Closing Date") at the offices of Buyer's counsel, or on
such other date and at such other location as may be mutually agreed upon by the
parties.
3.2 Items to be Delivered at Closing. At the Closing and subject to the
terms and conditions herein contained:
(a) Seller shall deliver to Buyer the following:
(i) such bills of sale, assignments, endorsements, and other good and
sufficient instruments and documents of conveyance and transfer,
in form reasonably satisfactory to counsel to Buyer and Seller,
as shall be necessary and effective to transfer and assign to,
and vest in, Buyer all of Seller's right, title and interest in
and to the Acquired Assets, including without limitation, (A)
good and valid title in and to all of the Acquired Assets, (B)
good and valid leasehold interests in and to all of the Acquired
Assets leased by Seller as lessee, and (C) all of Seller's rights
under all agreements, contracts, commitments, leases, plans,
bids, quotations, proposals, instruments and other documents
included in the Acquired Assets to which Seller is a party or by
which it has rights on the Closing Date; and
(ii) all of the agreements, contracts, commitments, leases, plans,
bids, quotations, proposals, instruments, computer programs and
software, data bases whether in the form of computer tapes or
otherwise, related object and source codes, manuals and
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guidebooks, price books and price lists, customer and subscriber
lists, supplier lists, sales records, files, correspondences,
legal opinions, rulings issued by governmental entities, and
other documents, books, records, papers, files, office supplies
and data belonging to Seller or the Division which are part of
the Acquired Assets;
(b) Buyer shall deliver to Seller the following:
(i) the Base Purchase Price in accordance with Section 2.6 hereof;
and
(ii) an undertaking whereby Buyer will assume and agree to pay,
discharge or perform, as appropriate, the Assumed Liabilities.
(c) At or prior to the Closing, the parties hereto shall also deliver to
each other the agreements, opinions, certificates and other documents
and instruments referred to in Article 6 hereof.
(d) At the Closing, Buyer and each of EFTC, CTLLC, CT, Airhub and CTI
shall execute and deliver the Noncompetition Agreement.
3.3 Third Party Consents. To the extent that Seller's rights under any
agreement, contract, commitment, lease, Authorization or other Acquired Asset to
be assigned to Buyer hereunder may not be assigned without the consent of
another person which has not been obtained, this Agreement shall not constitute
an agreement to assign the same if an attempted assignment would constitute a
breach thereof or be unlawful, and Seller and Buyer shall use reasonable
commercial efforts to obtain any such required consent as promptly as possible.
If any such consent shall not be obtained or if any attempted assignment would
be ineffective or would impair Buyer's rights under the Acquired Asset in
question so that Buyer would not in effect acquire the benefit of substantially
all such rights, Seller, to the maximum extent permitted by law and the Acquired
Asset, shall, if Buyer so requests, cooperate with Buyer in any reasonable
arrangement designed to provide such benefits thereunder to Buyer.
3.4 Further Assurances. Seller, from time to time after the Closing, at
Buyer's request, will execute, acknowledge and deliver to Buyer such other
instruments of conveyance and transfer and will take such other actions and
execute and deliver such other documents, certifications and further assurances
as Buyer may reasonably require in order to vest more effectively in Buyer, or
to put Buyer more fully in possession of, any of the Acquired Assets, or to
better enable Buyer to complete, perform or discharge any of the Assumed
Liabilities at the Closing. Each of the parties hereto will cooperate with the
other and execute and deliver to the other parties hereto such other instruments
and documents and take such other actions as may be reasonably requested from
time to time by any other party hereto as necessary to carry out, evidence and
confirm the intended purposes of this Agreement.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of Seller. In this Section 4.1,
"Seller" shall mean individually and collectively EFTC, CT, Airhub and CTI and
each representation and warranty shall be deemed to have been made jointly and
severally by each Seller. Seller hereby represents and warrants to Buyer as
follows:
4.1.1....Corporate Existence. Each of EFTC and CT is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Colorado, in the case of EFTC, and Florida, in the case of CT;
Airhub is a limited liability company duly organized, validly existing and in
good standing under the laws of the State of Kentucky; and CTI is a limited
liability company duly organized, validly existing and in good standing under
the laws of the State of Florida. Seller is duly qualified to do business and is
in good standing as a foreign corporation or limited liability company, as
appropriate, in each jurisdiction where the conduct of the Business by it
requires it to be so qualified.
4.1.2....Corporate Power; Authorization; Enforceable
Obligations. Seller has the requisite corporate or limited liability company, as
appropriate, power, authority and legal right to execute, deliver and perform
its obligations under this Agreement. The execution, delivery and performance of
this Agreement by Seller have been duly authorized by all necessary corporate or
limited liability company, as appropriate, action. This Agreement has been, and
the other agreements, documents and instruments (including the Noncompetition
Agreement) required to be delivered by Seller in accordance with the provisions
hereof (the "Collateral Documents") will be, duly executed and delivered on
behalf of Seller by duly authorized officers of Seller, and this Agreement
constitutes, and the Collateral Documents when executed and delivered will
constitute, the legal, valid and binding obligations of Seller (to the extent
each is a party thereto), enforceable against such party in accordance with
their respective terms.
4.1.3....Validity of Contemplated Transactions, Etc. Except
for the filing and approval requirements under the HSR Act, the execution,
delivery and performance of this Agreement by Seller do not and will not
violate, conflict with or result in the breach of any term, condition or
provision of, or require the consent of any other person under, (a) any existing
law, ordinance, or governmental rule or regulation to which Seller is subject,
(b) any judgment, order, writ, injunction, decree or award of any court,
arbitrator or governmental or regulatory official, body or authority which is
applicable to Seller, (c) the charter documents of Seller or any securities
issued by Seller, or (d) any mortgage, indenture, agreement, contract,
commitment, lease, plan, authorization, or other instrument, document or
understanding, oral or written, to which Seller is a party, by which Seller may
have rights or by which any of the Acquired Assets may be bound or affected, or
give any party with rights thereunder the right to terminate, modify, accelerate
or otherwise change the existing rights or obligations of Seller thereunder,
except in the case of clauses (a), (b), and (d) as would not reasonably be
expected to cause a Material Adverse Effect.
4.1.4....Tax and Other Returns and Reports. All federal,
state, local and foreign tax returns, reports, statements and other similar
filings required to be filed by Seller for or on
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behalf of Seller (the "Tax Returns") with respect to any federal, state, local
or foreign taxes, assessments, interest, penalties, deficiencies, fees and other
governmental charges or impositions (including without limitation all income
tax, unemployment compensation, social security, payroll, sales and use, excise,
privilege, property, ad valorem, franchise, license, school and any other tax or
similar governmental charge or imposition under laws of the United States or any
state or municipal or political subdivision thereof or any foreign country or
political subdivision thereof), customs and duties with respect to the Business
(the "Taxes") have been filed with the appropriate governmental agencies in all
jurisdictions in which such Tax Returns are required to be filed, and all such
Tax Returns properly reflect the liabilities of Seller with respect to the
Business for Taxes for the periods, property or events covered thereby. All
Taxes that are required to be paid under the Tax Returns have been properly
accrued or paid. Seller has not received any notice of assessment or proposed
assessment in connection with any Tax Returns and there are no pending tax
examinations of or tax claims asserted against Seller with respect to the
Business. There are no tax liens (other than any lien for current taxes not yet
due and payable) on any of the Acquired Assets.
4.1.5....Financial Statements. Seller has made available to
Buyer copies of (i) the audited consolidated financial statements of Seller as
of and for the period ended December 31, 1998, accompanied by the reports
thereon of Seller's independent public accountants (the "Audited Financials"),
and (ii) an unaudited balance sheet and income statement of the Division as of
July 31, 1999 (the "Interim Financial Statements"). The Audited Financials were
prepared in accordance with GAAP and present fairly in all material respects the
consolidated financial position, results of operations and cash flows of Seller.
The Interim Financial Statements present fairly in all material respects
(although not necessarily in accordance with GAAP) the financial position of the
Division as of its date and, to the extent possible, were prepared on a
consistent basis with the Audited Financials.
4.1.6....Existing Condition. Except as set forth on
Schedule 4.1.6, since the Interim Financial Statements date, Seller has not:
(a incurred any liabilities that would be required to be accrued on its
financial statements in accordance with its past practices, other than
liabilities incurred in the ordinary course of business, or discharged
or satisfied any lien or encumbrance, or paid any liabilities, other
than in the ordinary course of business consistent with past practice
or failed to pay or discharge when due any liabilities of which the
failure to pay or discharge has caused or will cause any material
damage or risk of material loss to it or any of its assets or
properties;
(b) created, incurred, assumed or guaranteed any indebtedness for money
borrowed, or mortgaged, pledged or subjected any of the Acquired
Assets to any mortgage, lien, pledge, security interest, conditional
sales contract or other encumbrance of any nature whatsoever, except
for Permitted Liens;
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(c) suffered any damage, destruction or loss, whether or not covered by
insurance, (i) that would reasonably be expected to have a Material
Adverse Effect (ii) of any item or items relating to the Division
carried on its books of account individually or in the aggregate at
more than $25,000 or suffered any repeated, recurring or prolonged
shortage, cessation or interruption of supplies or utility or other
services required to conduct the Business; or
(d) received notice or had knowledge of any actual or threatened labor
trouble, strike or other occurrence, event or condition of any similar
character which has had or might have a Material Adverse Effect.
4.1.7....Title to Properties. Seller has good, valid title to
all of the Acquired Assets, free and clear of all mortgages, liens, pledges,
security interests, charges, claims, restrictions and other encumbrances and
defects of title of any nature whatsoever, except for (i) liens for current
personal property taxes not yet due and payable, (ii) liens disclosed in
Schedule 4.1.7, (iii) worker's compensation, carrier's and materialman's liens
and (iv) liens that are immaterial in character, amount and extent ("Permitted
Liens").
4.1.8....Condition of Tangible Assets. All items of machinery,
equipment and other tangible property included in the Acquired Assets are in
good operating condition and state of repair, ordinary wear and tear excepted.
Except for the representations and warranties set forth in this Agreement or any
document executed in connection herewith, SELLER EXPRESSLY DISCLAIMS AND NEGATES
AS TO THE ACQUIRED ASSETS AND ALL PERSONAL PROPERTY AND FIXTURES INCLUDED IN THE
SALE OF THE ACQUIRED ASSETS (a) ANY IMPLIED OR EXPRESS WARRANTY OF
MERCHANTABILITY, (b) ANY IMPLIED OR EXPRESS WARRANTY OF FITNESS FOR A PARTICULAR
PURPOSE, (c) ANY IMPLIED OR EXPRESS WARRANTY OF CONFORMITY TO MODELS OR SAMPLES
OF MATERIALS, AND (d) ANY RIGHTS OF BUYER UNDER APPLICABLE STATUTES TO CLAIM
DIMINUTION OF CONSIDERATION. The parties hereto agree that, to the extent
required by applicable law to be operative, the disclaimers of warranties
contained in this Section 4.1.8 are "conspicuous" disclaimers for the purposes
of any applicable law, rule or order.
4.1.9....Compliance with Law; Authorizations. Seller has
complied in all material respects with each, and is not in material violation of
any, law, ordinance or governmental or regulatory rule or regulation, whether
federal, state, local or foreign, to which the Division is subject (the
"Regulations"). Seller owns, holds, possesses or lawfully uses in the operation
of the Business all franchises, licenses, permits, easements, rights,
applications, filings, registrations and other authorizations (the
"Authorizations") which are material to the conduct of the Business as now
conducted or for the ownership and use of the Acquired Assets. All such
Authorizations are listed and described in Schedule 4.1.9.
4.1.10...Litigation. Except as set forth on Schedule 4.1.10,
and except as may relate to litigation with respect to Excluded Liabilities, no
litigation, including any arbitration, investigation or other proceeding of or
before any court, arbitrator or governmental or regulatory
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official, body or authority is pending or, to the knowledge of Seller,
threatened against Seller relating to the Division, the result of which could
adversely affect the Division, its assets or the transactions contemplated
hereby. Seller is not a party to or subject to the provisions of any judgment,
order, writ, injunction, decree or award of any court, arbitrator or
governmental or regulatory official, body or authority that would reasonably be
expected to have a Material Adverse Effect.
4.1.11...Contracts and Commitments. Except as set forth on
Schedule 4.1.11, Seller is not, with respect to the Division, a party to any
written:
(a) agreement, contract or commitment with any present or former employee
or consultant, or for the employment of any person, including any
consultant, who is engaged in the conduct of the Business;
(b) agreement, contract or commitment for the required future purchase of,
or payment for, supplies or products, or for the performance of
services by a third party, used in the conduct of the Business
involving in any one case $25,000 or more;
(c) agreement, contract or commitment to sell or supply products or to
perform services in connection with the Business involving in any one
case $25,000 or more;
(d) distribution, dealer, representative or sales agency agreement,
contract or commitment relating to the Business;
(e) lease under which Seller is either lessor or lessee relating to the
Acquired Assets or any property at which the Acquired Assets are
located involving in any one case required annual payments of $25,000
or more;
(f) commitment or agreement for any required capital expenditure or
leasehold improvement in excess of $25,000 (individually or in the
aggregate) relating to the Business;
(g) agreement, contract or commitment limiting or restraining the Division
or any successor thereto from engaging or competing in any manner or
in any business, nor, to Seller's knowledge, is any employee of Seller
engaged in the conduct of the Business subject to any such agreement,
contract or commitment; or
(h) license, franchise, distributorship or other agreement including the
required payment or receipt of more than $25,000 which relates in
whole or in part to any software, trademark, patent, copyright, the
name "Circuit Test" or to any ideas, technical assistance or other
know-how of or used by Seller in the conduct of the Business.
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Each of the agreements, contracts, commitments, leases, plans and other
instruments, documents and undertakings listed in Schedule 4.1.11 or not
required to be listed therein because of the amount thereof under which Buyer is
to acquire rights or obligations hereunder is valid and enforceable in
accordance with its terms. Each agreement, contract or commitment described
therein which requires the consent of any party to its assignment in connection
with the transactions contemplated hereby is appropriately identified as such.
4.1.12 Labor Matters.
(a) The Division has never suffered any strike, slowdown, picketing or
work stoppage by any union or other group of employees affecting the
Business. No unfair labor practice charges or complaints are pending
concerning the Division or, to Seller's knowledge, threatened against
Seller concerning the Division before the National Labor Relations
Board or before any similar state or local agency. There is no
collective bargaining agreement in respect of the employees of the
Division.
(b) Except with respect to Employee Benefit Plans and except as disclosed
on Schedule 4.1.12, Seller is not obligated to make payments to any
employee of the Division under any written employment agreements,
deferred compensation agreements, bonus arrangements or severance
plans.
4.1.13 Employee Benefit Plans and Arrangements.
(a) Schedule 4.1.13 contains a complete list of all Employee Benefit Plans
sponsored or maintained by Seller or any of its Affiliates which is
available to former or current employees of the Division. The term
"Employee Benefit Plan" includes all plans, funds, programs, policies,
arrangements, practices, customs and understandings providing benefits
of economic value to any Division employee, former employee, or
present or former beneficiary, dependent or assignee of any such
employee or former employee other than regular salary, wages or
commissions paid substantially concurrently with the performance of
the services for which paid. Without limitation, the term "Employee
Benefit Plan" includes all employee welfare benefit plans within the
meaning of section 3(1) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA") ("Division Welfare Benefit Plans"), and
all employee pension benefit plans within the meaning of section 3(2)
of ERISA.
(b) Each of the Employee Benefit Plans is properly funded and has been
administered in accordance with its terms, and each of the Employee
Benefit Plans which is subject to ERISA is in substantial compliance
with ERISA; each of the Employee Benefit Plans intended to be
"qualified" within the meaning of
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Section 401(a) of the Code is so qualified; no plan has an accumulated
or waived funding deficiency within the meaning of Section 412 of the
Code; Seller with respect to the Division has not incurred, directly
or indirectly, any liability (including any material contingent
liability) to or on account of an Employee Benefit Plan which is
subject to ERISA pursuant to Title IV of ERISA; no "reportable event,"
as such term is defined in Section 4043(b) of ERISA or prohibited
transaction within the meaning of Section 406 of ERISA has occurred
with respect to any Employee Benefit Plan which is subject to ERISA
and no tax has been imposed pursuant to Section 4975 or 4976 of the
Code; and no condition exists which presents a material risk to Seller
with respect to the Division of incurring a liability to or on account
of an Employee Benefit Plan which is subject to ERISA pursuant to
Title IV of ERISA.
(c) There are no pending or, to Seller's knowledge, threatened claims
(other than routine claims for benefits) by, on behalf of or against
any of the Employee Benefit Plans or any trusts related thereto. None
of the Employee Benefit Plans is a multi-employer plan within the
meaning of Section 3(37) of ERISA, and Seller is not required to
contribute, with respect to any of the employees of the Division, to
any multi-employer plan.
4.1.14...Proprietary Rights. Any owned patents and technology
licenses included among the Proprietary Rights are listed or described on
Schedule 4.1.11 or Schedule 4.1.14 and, except as disclosed in Schedule 4.1.14:
(a) The Proprietary Rights listed on Schedule 4.1.14 are valid and in full
force and effect.
(b) Seller is the sole owner of, or licensee under a valid license for, or
otherwise rightfully possesses without restriction on use, free from
any liens, each of the Proprietary Rights. Schedule 4.1.14 lists any
Proprietary Rights licensed by Seller from any third parties. Seller
owns or has the right to use, and pursuant hereto Buyer will own or
have the right to use, all proprietary rights that are necessary for
the operation of its business as presently conducted, except where the
failure to own or have the right to use such proprietary rights does
not have a Material Adverse Effect.
(c) Schedule 4.1.14 contains a true and complete list or description of
all contracts, oral or written, pursuant to which Seller has
authorized any person or entity to use, or pursuant to which any
person or entity has the right to use, any of the Proprietary Rights,
including, without limitation, on a temporary or trial basis to be
transferred pursuant to this Agreement.
(d) Schedule 4.1.14 contains a true and complete list and description of
all royalty or contingent compensation arrangements or other
contracts, oral or written, regarding or pertaining to any Proprietary
Rights to be transferred pursuant to this Agreement.
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(e) To the knowledge of Seller, no Proprietary Right presently being used,
licensed or sold, or contemplated to be used, licensed or sold, by
Seller violates or infringes in any material respect any rights owned
or held by any other person or entity, enforceable in the United
States, and Seller has no knowledge of any claim of any of the
foregoing. (f) There is no pending or, to the knowledge of Seller,
threatened (in writing) claim or litigation against Seller or any
other person or entity contesting or, if decided adversely, affecting
the right of Seller to use, license or sell any Proprietary Right. (g)
To the knowledge of Seller, no patent, trade name, copyright, license,
trade secret, invention, intellectual property right, know-how or
other right presently being licensed, sold or employed, by any person
or entity violates or infringes on, or may violate or infringe on, any
Proprietary Right, nor is there any pending or proposed statute, law,
rule, regulation, standard or code that may materially adversely
affect any Proprietary Right presently being used, licensed or sold,
or proposed to be used, licensed or sold by Seller. (h) Seller uses
and has used reasonable efforts to secure and maintain its and its
customers' rights in its and its customers' proprietary rights.
4.1.15 Environmental Matters.
(a) Except as set forth in Schedule 4.1.15 and except as would not
reasonably be expected to have a Material Adverse Effect, Seller has
obtained all permits, licenses and other authorizations which are
required in connection with the conduct of the Business under
Environmental Laws.
(b) Except as set forth in Schedule 4.1.15 and except as would not
reasonably be expected to have a Material Adverse Effect, Seller is in
compliance in the conduct of the Business with all terms and
conditions of the required permits, licenses and authorizations issued
pursuant to any Environmental Laws, and is also in compliance with
such Environmental Laws and any regulation, order, decree, judgment or
injunction entered, promulgated or approved thereunder.
(c) Except as set forth in Schedule 4.1.15 and except as would not
reasonably be expected to have a Material Adverse Effect, Seller is
unaware of any criminal, civil, or administrative action, suit, claim,
notice of violation, or any investigation or proceeding by a federal,
state or local government agency or entity pending or overtly
threatened against Seller in connection with the conduct of the
Business relating in any way to Environmental Laws or any regulation,
order, decree, judgment or injunction, entered, promulgated or
approved thereunder.
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4.1.16 Real Property. Seller does not own any real property
that is used in connection with the Business or included in the
Acquired Assets.
4.2 Representations and Warranties of Buyer. Buyer represents and
warrants to Seller as follows:
4.2.1....Corporate Existence. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and is qualified to do business and in good standing in each
jurisdiction where the conduct of its business requires it to be so qualified.
4.2.2....Corporate Power and Authorization. Buyer has the
corporate power, authority and legal right to execute, deliver and perform this
Agreement. The execution, delivery and performance of this Agreement by Buyer
have been duly authorized by all necessary corporate action. This Agreement has
been duly executed and delivered by Buyer and constitutes the legal, valid and
binding obligation of Buyer enforceable against Buyer in accordance with its
terms.
4.2.3....Validity of Contemplated Transactions, Etc. Except
for the filing and approval requirements under the HSR Act, the execution,
delivery and performance of this Agreement by Buyer does not and will not
violate, conflict with or result in the breach of any term, condition or
provision of, or require the consent of any other party to, (a) any existing
law, ordinance, or governmental rule or regulation to which Buyer is subject,
(b) any judgment, order, writ, injunction, decree or award of any court,
arbitrator or governmental or regulatory official, body or authority which is
applicable to Buyer, (c) the charter documents or by-laws of, or any securities
issued by, Buyer, or (d) any mortgage, indenture, agreement, contract,
commitment, lease, plan or other instrument, document or understanding, oral or
written, to which Buyer is a party or by which Buyer is otherwise bound.
4.3 Survival of Representations and Warranties. All representations and
warranties made by the parties in this Agreement or in any Schedule furnished
hereunder shall survive the Closing for a period of eighteen months.
Notwithstanding any investigation or audit conducted before or after the Closing
Date or the decision of any party to complete the Closing, each party shall be
entitled to rely upon the representations and warranties set forth herein and
therein.
ARTICLE 5
AGREEMENTS PENDING CLOSING
5.1 Agreements of Seller Pending the Closing. Seller covenants and
agrees that, pending the Closing and except as otherwise agreed to in writing by
Buyer:
5.1.1....Business in the Ordinary Course. The Business
shall be conducted in the ordinary course consistent with past practice.
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5.1.2....Capital Expenditures. Seller shall not make any
single new commitment or increase any single previous commitment for capital
expenditures for the Business in an amount exceeding $50,000, except as set
forth in Schedule 5.1.2.
5.1.3....Maintenance of Physical Assets. Seller shall use its
best efforts to continue to maintain and service the physical assets used in the
conduct of the Business in substantially the same manner as has been its
consistent past practice.
5.1.4....Business Relations and Employees. Seller shall use
its best efforts to keep available the services of the present employees and
agents of the Division and to maintain the relations and goodwill with
suppliers, customers, warehouse and other distributors, commissioned
representatives and any others having business relations with the Division. In
addition, Seller shall not:
(a) increase the rate of compensation for any of the employees of the
Division or otherwise enter into or alter any employment, consulting
or managerial services agreement affecting the Business in any
material respect, except for such increases or agreements which are
consistent with past practice;
(b) commence, enter into or alter in any material respect any Employee
Benefit Plan affecting employees of the Division.
5.1.5....Update of Schedules. Seller shall promptly disclose
to Buyer any information contained in its representations and warranties or the
Schedules which, because of an event occurring after the date hereof, is
incomplete or is no longer correct as of all times after the date hereof until
the Closing Date; provided, however, that none of such disclosures shall be
deemed to modify, amend or supplement the representations and warranties of
Seller or the Schedules hereto for the purposes of Article 4 hereof, unless
Buyer shall have consented thereto in writing.
5.1.6....Sale of Assets; Negotiations. Seller shall not,
directly or indirectly, sell or encumber all or any material part of the
Acquired Assets, other than in the ordinary course of business consistent with
past practice, or initiate or participate in any discussions or negotiations or
enter into any agreement to do any of the foregoing. Seller shall not provide
any confidential information concerning the Business or its properties or assets
to any third party other than in the ordinary course of business or as may be
required by law which could have a material effect on the Business.
5.1.7....Access. Seller shall give to Buyer's officers,
employees, counsel, accountants and other representatives reasonable access to
and the right to inspect all of the premises, properties, assets, records,
contracts and other documents relating to the Business and shall permit them to
consult with the officers, employees, accountants, counsel and agents of Seller
for the purpose of making such investigation of the Business, including without
limitation the Interim Financial Statements, as Buyer shall reasonably request,
provided that such investigation shall not unreasonably interfere with Seller's
business operations. Furthermore, Seller shall furnish to Buyer all such
documents and copies of documents and records and
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information with respect to the affairs of the Business and copies of any
working papers relating thereto as Buyer shall from time to time reasonably
request and shall permit Buyer and its agents to make such physical inventories
and inspections of the Acquired Assets as Buyer may reasonably request from time
to time.
5.1.8....Public Announcements. Seller shall not give notice to
third parties or otherwise make any public statement or release concerning this
Agreement or the transactions contemplated hereby prior to Closing except for
such written information as shall have been approved in writing as to form and
content by Buyer, which approval shall not be unreasonably withheld or delayed,
except no such approval shall be necessary to the extent that (i) counsel to
Seller advises Seller that such disclosure is required by law or a listing
agreement or such disclosure is prudent to avoid potential liability on the part
of any person under the federal securities laws or (ii) such disclosure is
necessary or appropriate in obtaining any consent necessary to the transactions
contemplated hereby.
5.1.9....Consents to Assignment; Release of Liens. Seller
shall use its best efforts to obtain the consents or approvals (or effective
waivers thereof) of assignment from those persons whose consents or approvals
are required for the assignment of Seller's rights under those contracts,
leases, licenses, permits, approvals and other items identified in Schedule
4.1.11.
5.2 Agreements of Buyer Pending the Closing. Buyer covenants and agrees
that, pending the Closing and except as otherwise agreed to in writing by
Seller:
5.2.1....Confidentiality. Unless and until the Closing has
been consummated, Buyer will hold, and shall cause its counsel, independent
certified public accountants, appraisers and other advisors and employees to
hold in confidence any confidential data or information made available to Buyer
in connection with this Agreement with respect to the Business using the same
standard of care to protect such confidential data or information as is used to
protect Buyer's confidential data and information. If the transactions
contemplated by this Agreement are not consummated, at Seller's request Buyer
agrees that it shall, at its option, destroy or return or cause to be returned
to Seller all written materials and all copies thereof that were supplied to
Buyer by Seller or its representatives and that contain any such confidential
data or information.
5.2.2....Public Announcements. Except as required by
applicable law, Buyer shall not give notice to third parties or otherwise make
any public statement or releases concerning this Agreement or the transactions
contemplated hereby prior to Closing except for such written information as
shall have been approved in writing as to form and content by Seller, which
approval shall not be unreasonably withheld or delayed, except that no such
approval shall be necessary to the extent that counsel to Buyer advises Buyer
that such disclosure is required by law or a listing agreement or such
disclosure is prudent to avoid potential liability on the part of any person
under the federal securities laws.
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ARTICLE 6
CONDITIONS PRECEDENT TO THE CLOSING
6.1 Conditions Precedent to Buyer's Obligations. All obligations of
Buyer under this Agreement are subject to the fulfillment or satisfaction, prior
to or at the Closing, unless waived by Buyer at or prior to Closing, of each of
the following conditions precedent:
6.1.1....Representations and Warranties True as of the Closing
Date. The representations and warranties of Seller contained in this Agreement
or in any Schedule delivered by Seller to Buyer pursuant to the provisions
hereof shall have been true on the date hereof without regard to any Schedule
updates furnished by Seller after the date hereof (except such updates as are
approved by Buyer in writing) and shall be true on the Closing Date (as so
updated) with the same effect as though such representations and warranties were
made as of such date.
6.1.2....Compliance with this Agreement. Seller shall have
performed and complied with all agreements and conditions required by this
Agreement to be performed or complied with by it prior to or at the Closing.
6.1.3....Opinion of Counsel for Seller. Holme Roberts & Owen
LLP, counsel for Seller, shall have delivered to Buyer a written opinion, dated
the Closing Date, in the form of Exhibit F hereto.
6.1.4....No Threatened or Pending Litigation. On the Closing
Date, no suit, action or other proceeding, or injunction or final judgment
relating thereto, shall be threatened or be pending before any court or
governmental or regulatory official, body or authority in which it is sought to
restrain or prohibit or to obtain damages or other relief in connection with
this Agreement or the consummation of the transactions contemplated hereby, and
no investigation that might result in any such suit, action or proceeding shall
be pending or threatened that may materially adversely affect Buyer's right to
own, operate and control the Acquired Assets after Closing.
6.1.5....Consents and Approvals. Any consent or approval that
is required or necessary under any debt, lease, contract, commitment or
agreement or other document or instrument or under applicable orders, laws,
rules or regulations, for the consummation of the transactions contemplated
hereby in the manner herein provided, shall have been granted, except where the
failure to have so obtained the same would not be reasonably expected to have a
Material Adverse Effect.
6.1.6....Material Adverse Changes. There shall have not
occurred any Material Adverse Effect or any event which is reasonably likely
to have a Material Adverse Effect..
6.1.7....HSR Act. The waiting period under the HSR Act
shall have expired or been terminated early.
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6.1.8....Noncompetition Agreement and Employment Agreement.
Buyer and each of EFTC, CTLLC, CT, Airhub and CTI shall have executed and
delivered the Noncompetition Agreement, and Buyer and Mr. Allen Braswell
shall have executed and delivered a mutually satisfactory employment agreement.
6.2 Conditions Precedent to the Obligations of Seller. All obligations
of Seller under this Agreement are subject to the fulfillment or satisfaction,
prior to or at the Closing, unless waived by Seller at or prior to Closing, of
each of the following conditions precedent:
6.2.1....Representations and Warranties True as of the Closing
Date. The representations and warranties of Buyer contained in this Agreement or
in any Schedule delivered by Buyer to Seller pursuant to the provisions hereof
shall be true on the Closing Date with the same effect as though such
representations and warranties were made as of such date.
6.2.2....Compliance with this Agreement. Buyer shall have
performed and complied with all agreements and conditions required by this
Agreement to be performed or complied with by it prior to or at the Closing.
6.2.3....Opinion of Counsel for Buyer. Honigman Miller
Schwartz and Cohn, counsel to Buyer, shall have delivered to Seller a written
opinion, dated the Closing Date, in the form of Exhibit G hereto.
6.2.4....No Threatened or Pending Litigation. On the Closing
Date, no suit, action or other proceeding, or injunction or final judgment
relating thereto, shall be threatened or be pending before any court or
governmental or regulatory official, body or authority in which it is sought to
restrain or prohibit or to obtain damages or other relief in connection with
this Agreement or the consummation of the transactions contemplated hereby, and
no investigation that might result in any such suit, action or proceeding shall
be pending or threatened.
6.2.5....HSR Act. The waiting period under the HSR Act
shall have expired or been terminated early.
ARTICLE 7
INDEMNIFICATION
7.1 General Indemnification Obligation of Seller From and after the
Closing, Seller will reimburse, indemnify and hold harmless Buyer and its
successors and assigns (an "Indemnified Buyer Party") against and in respect of
any and all damages, losses, deficiencies, liabilities, costs and expenses
incurred or suffered by any Indemnified Buyer Party that result from, relate to
or arise out of:
(a) Seller's failure fully to pay or satisfy any of the Excluded
Liabilities; and
(b) any misrepresentation, breach of warranty or nonfulfillment of any
agreement or covenant on the part of Seller under this Agreement.
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Seller's indemnification obligations shall be limited as follows: Seller's
liability for breaches of representations and warranties shall only relate to
those items as to which Seller is given notice within the survival period set
forth in Section 4.3; Seller's maximum liability for breaches of representations
and warranties (other than in the event of fraud or a breach of Sections 4.1.2,
4.1.3 and 4.1.7) shall be limited to $10,000,000; and Seller shall have no
liability for breaches of representations and warranties unless Buyer's
aggregate damages with respect thereto exceeds $100,000, in which event Buyer
may claim all such damages.
7.2 General Indemnification Obligation of Buyer. From and after the
Closing, Buyer will reimburse, indemnify and hold harmless Seller and its
successors or assigns (an "Indemnified Seller Party") against and in respect of
any and all damages, losses, deficiencies, liabilities, costs and expenses
incurred or suffered by any Indemnified Seller Party that result from, relate to
or arise out of:
(a) Buyer's failure to pay or satisfy any of the Assumed Liabilities; or
(b) any misrepresentation, breach of warranty or non-fulfillment of any
agreement or covenant on the part of Buyer under this Agreement.
7.3 Method of Asserting Claims, Etc. In the event that any claim or
demand, for which Seller would be liable to an Indemnified Buyer Party
hereunder, is asserted against or sought to be collected from an Indemnified
Buyer Party by a third party, the Indemnified Buyer Party shall promptly notify
Seller of such claim or demand, specifying the nature of such claim or demand
and the amount or the estimated amount thereof to the extent then feasible
(which estimate shall not be conclusive of the final amount of such claim and
demand) (the "Claim Notice"). Seller shall have twenty days from the delivery of
the Claim Notice pursuant to Section 9.9 (the "Notice Period") to notify the
Indemnified Buyer Party, (A) whether or not Seller disputes its liability to the
Indemnified Buyer Party hereunder with respect to such claim or demand and (B)
notwithstanding any such dispute, whether or not they desire, at their sole cost
and expense, to defend the Indemnified Buyer Party against such claim or demand.
(a) If Seller notifies the Indemnified Buyer Party within the Notice
Period that it desires to defend the Indemnified Buyer Party against
such claim or demand, then, except as hereinafter provided, Seller
shall have the right to defend the Indemnified Buyer Party by
appropriate proceedings, which proceedings shall be promptly settled
or prosecuted by them to a final conclusion in such a manner as to
avoid any risk of the Indemnified Buyer Party becoming subject to
liability for any other matter; provided, however, that Seller shall
not, without the prior written consent of the Indemnified Buyer Party,
consent to the entry of any judgment against the Indemnified Buyer
Party or enter into any settlement or compromise which does not
include, as an unconditional term thereof, the giving by the claimant
or plaintiff to the Indemnified Buyer Party of a release, in form and
substance reasonably satisfactory to the Indemnified Buyer Party, from
all liability in respect of such claim or litigation. If any
Indemnified Buyer Party desires to participate in, but not control,
any such defense or
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settlement, it may do so at its sole cost and expense. If, in the
reasonable opinion of the Indemnified Buyer Party, any such claim or
demand or the litigation or resolution of any such claim or demand
involves an issue or matter which could have a materially adverse
effect on the business, operations, assets or properties of the
Indemnified Buyer Party, then the Indemnified Buyer Party shall have
the right to control the defense or settlement of any such claim or
demand; provided, however, that the Indemnified Buyer Party shall not
settle any such claim or demand without the prior written consent of
Seller which consent shall not be unreasonably withheld. If the
Indemnified Buyer Party should elect to exercise such right, Seller
shall have the right to participate in, but not control, the defense
or settlement of such claim or demand at its sole cost and expense.
(b) If an Indemnified Buyer Party has a claim against Seller hereunder
that does not involve a claim or demand being asserted against or
sought to be collected from it by a third party, the Indemnified Buyer
Party shall promptly send a Claim Notice with respect to such claim to
Seller. If Seller does not notify the Indemnified Buyer Party within
the Notice Period that it disputes such claim, the amount of such
claim shall be conclusively deemed a liability of Seller hereunder.
(c) All claims for indemnification by an Indemnified Seller Party under
this Agreement shall be asserted and resolved under the procedures set
forth above substituting in the appropriate place "Indemnified Seller
Party" for "Indemnified Buyer Party" and "Buyer" for "Seller".
7.4 Payment. Upon the determination of the liability under Section 7.3
hereof, the appropriate party shall pay to the other, within ten days after such
determination, the amount of any claim for indemnification made hereunder.
7.5 Exclusive Remedy. The parties acknowledge that their sole remedy
after the Closing for any breach of any representation, warranty or covenant
contained in this Agreement shall be the indemnification provisions set forth in
this Article 7. In addition, each party acknowledges that all of its obligations
in this Agreement to indemnify any other party are subject to and shall be in
accordance with this Article 7.
ARTICLE 8
TERMINATION
8.1 Termination.
(a) Anything herein or elsewhere to the contrary notwithstanding, this
Agreement may be terminated by written notice of termination at any
time before the Closing Date only as follows:
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(i) by written agreement of the parties;
(ii) by Buyer if there has been a material breach of any of the
representations or warranties set forth in this Agreement on the
part of Seller, and such breach by its nature cannot be cured
before the Closing;
(iii) by Buyer if there has been a breach of any of the covenants or
agreements set forth in this Agreement on the part of Seller, and
such breach is not cured within 10 business days after Seller
receives written notice of the breach from Buyer;
(iv) by Seller if there has been a material breach of any of the
representations or warranties set forth in this Agreement on the
part of Buyer, and such breach by its nature cannot be cured
before the Closing;
(v) by Seller if there has been a breach of any of the covenants or
agreements set forth in this Agreement on the part of Buyer, and
such breach is not cured within 10 business days after Buyer
receives written notice of the breach from Seller; and
(vi) by either Buyer or Seller if the Closing has not occurred by
September 30, 1999 for any reason other than such party's breach
hereof.
If terminated as provided in this Section 8.1(a), this Agreement shall
be void and have no further effect, provided that no party shall be relieved or
released from any liabilities or damages arising out of such party's breach of
any provision of this Agreement.
(b) In the event of the termination and abandonment
hereof pursuant to the provisions of this Section
8.1, this Agreement (except for Sections 5.2.1, 9.15,
8.1 and 9.6 which shall continue) shall become void
and have no effect, without any liability on the part
of any of the parties or their directors or officers
or stockholders in respect of this Agreement.
(c) In the event of termination of this Agreement, Buyer
shall promptly deliver or cause to be delivered to
Seller, all documents, reports, papers, schedules and
exhibits received or obtained in connection with the
investigation of the Business and the negotiation and
execution of this Agreement and Buyer shall not use
or make available to any other person (except as
required by law) any information received with
respect to the Business or the financial condition or
results of the operation of the Business received or
obtained by any of them.
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ARTICLE 9
MISCELLANEOUS
9.1 Employee Matters
(a) Effective immediately after the Closing, Buyer shall offer
employment to each person actively employed on the day
immediately preceding the Closing Date (that is, not on any leave
of absence on the Closing Date or within 30 days prior to the
Closing Date) by Seller in connection with the operations of the
Business (each, an "Active ------ Employee"). A current list of
those employees actively employed by Seller in connection with
the operations of the Business is set forth on Schedule 9.1.1.
Any --------------- employee of Seller who is on, or who within
30 days prior to the Closing Date has been on, an approved leave
of absence (a current list of which is set forth on Schedule
9.1.1) and who returns to work on or prior to the Closing Date
and stays at --------------- work continuously for at least 30
days shall also be deemed an Active Employee and shall be offered
employment by Buyer. Seller shall assist Buyer in Buyer's efforts
to employ the Active Employees, and Seller shall recommend to the
Active Employees that such employees accept Buyer's offer of
employment.
(b) Seller shall retain the obligation with respect to compensation,
benefits and other employment-related expenses with respect to
the Active Employees incurred or accrued prior to the Closing,
and Buyer shall have the obligation with respect to such
employment-related expenses with respect to the Active Employees
as of the Closing and for subsequent periods. Notwithstanding the
foregoing, effective as of the Closing, Buyer shall assume
Seller's obligations in respect of Active Employees for vacation
and sick pay.
(c) Buyer's welfare and fringe benefit plans, programs, policies or
arrangements ("Buyer's Welfare Plans") made available to Active
Employees shall treat service by Active Employees (as of July 2,
1999) with Seller in the same manner as service with Buyer for
purposes of seniority for participation in such plans, programs,
policies or arrangements.
(d) For a period of two years from and after the Closing Date, Seller
shall not, directly or indirectly, solicit the employment of any
former Seller employee employed by the Business and otherwise
performing substantial services in connection with operation of
the Business.
9.2 Maintenance of Books and Records. Each of Buyer and Seller shall
preserve until the seventh anniversary of the Closing Date all records possessed
or to be possessed by such party relating to any of the assets, liabilities or
business of the Business prior to the Closing Date.
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After the Closing Date, where there is a legitimate purpose (which shall be
deemed to include tax filings of either party), such party shall provide the
other parties with access, upon prior reasonably written request specifying the
need therefor, during regular business hours, to (a) the officers and employees
of such party and (b) the books of account and records of such party, but, in
each case, only to the extent relating to the assets, liabilities or business of
the Business prior to the Closing Date, and the other parties and their
representatives shall have the right to make copies of such books and records;
provided, however, that the foregoing right of access shall not be exercisable
in such a manner as to interfere unreasonably with the normal operations and
business of such party; and further provided that, as to so much of such
information as constitutes trade secrets or confidential business information of
such party, the requesting party and its officers, directors and representatives
will use due care to not disclose such information except (i) as required by
law, (ii) with the prior written consent of such party, which consent shall not
be unreasonably withheld, or (iii) where such information becomes available to
the public generally, or becomes generally known to competitors of such party,
through sources other than the requesting party, its Affiliates or its officers,
directors or representatives. Such records may nevertheless be destroyed by a
party if such party sends to the other parties written notice of its intent to
destroy records, specifying with particularity the contents of the records to be
destroyed. Such records may then be destroyed after the 30th day after such
notice is given unless another party objects to the destruction, in which case
the party seeking to destroy the records shall deliver such records to the
objecting party.
9.3 Payments Received. Buyer and Seller each agree that after the
Closing they will hold and will promptly transfer and deliver to the other, from
time to time as and when received by them, any cash, checks with appropriate
endorsements (using their reasonable commercial efforts not to convert such
checks into cash), or other property that they may receive on or after the
Closing which properly belongs to the other party, including without limitation
any insurance proceeds, and will account to the other for all such receipts.
From and after the Closing, Buyer shall have the right and authority to endorse
without recourse the name of Seller on any check or any other evidence of
indebtedness received by Buyer on account of the Business and the Assets
transferred to Buyer hereunder.
9.4 Brokers' and Finders' Fees. Each party shall be responsible for the
payment of any fees to brokers or finders engaged by such party in connection
herewith.
9.5 Expenses. Except as otherwise provided in this Agreement, each
party shall pay its own expenses incidental to the preparation of this
Agreement, the carrying out of the provisions of this Agreement and the
consummation of the transactions contemplated hereby.
9.6 Contents of Agreement; Parties in Interest; Etc. This Agreement,
together with the Noncompetition Agreement, sets forth the entire understanding
of the parties hereto with respect to the transactions contemplated hereby, and
supersedes all prior letters of intent, agreements or communications, whether
written or oral, by any officer, agent or representative of any party hereto. It
shall not be amended or modified except by written instrument duly executed by
each of the parties hereto. Any and all previous agreements and understandings
between or among the parties regarding the subject matter hereof, whether
written or oral, are superseded by this Agreement.
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9.7 Assignment and Binding Effect. This Agreement may not be assigned
prior to the Closing by any party hereto without the prior written consent of
the other party; provided that Buyer may assign all or part of its rights or
obligations hereunder to one or more direct or indirect subsidiaries of Buyer;
provided further that any such assignment will not relieve Buyer of any of its
obligations hereunder. All of the terms and provisions of this Agreement shall
be binding upon and inure to the benefit of and be enforceable by the successors
and assigns of Seller and Buyer.
9.8 Waiver. Any term or provision of this Agreement may be waived at
any time by the party entitled to the benefit thereof by a written instrument
duly executed by such party.
9.9 Notices. Any notice, request, demand, waiver, consent, approval or
other communication which is required or permitted hereunder shall be in writing
and shall be deemed given when delivered personally or sent by recognized
overnight courier or by telecopy (with an appropriate acknowledgment of receipt)
as follows:
If to Buyer, to:
Jabil Circuit, Inc.
10800 Roosevelt Blvd.
St. Petersburg, Florida 33716
Attention: President
Facsimile: (727) 577-9708
With a simultaneous copy to:
Honigman Miller Schwartz and Cohn
2290 First National Building
Detroit, Michigan 48226
Attention: Donald J. Kunz, Esq.
Facsimile: (313) 465-7455
If to Seller, to:
EFTC Corporation
9351 Grant Street, Sixth Floor
Denver, Colorado 80229
Attention: President
Telecopy Number: (303) 280-8358
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With a simultaneous copy to:
Holme Roberts & Owen LLP
1700 Lincoln Street, Suite 4100
Denver, Colorado 80203
Attention: Francis R. Wheeler
Facsimile: (303) 866-0200
or to such other address as the addressee may have specified in a notice duly
given to the sender as provided herein.
9.10 No Benefit to Others. The representations, warranties, covenants
and agreements contained in this Agreement are for the sole benefit of the
parties hereto and their permitted successors and assigns, and they shall not be
construed as conferring any rights on any other persons.
9.11 Exhibits and Schedules All Exhibits, Sections and Schedules
referred to herein are intended to be and hereby are specifically made a part of
this Agreement.
9.12 Severability. Any provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall be ineffective to the extent of such
invalidity or unenforceability without invalidating or rendering unenforceable
the remaining provisions hereof, and any such invalidity or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
9.13 Counterparts. This Agreement may be executed in any number of
counterparts and any party hereto may execute any such counterpart, each of
which when executed and delivered shall be deemed to be an original and all of
which counterparts taken together shall constitute but one and the same
instrument. This Agreement shall become binding when one or more counterparts
taken together shall have been executed and delivered by the parties.
. This Agreement shall be construed, interpreted and enforced in accordance
with, and the respective rights and obligations of the parties shall be governed
by, the laws of the State of Florida without reference to the conflict of laws
principles thereof.
[Remainder of this page intentionally left blank.]
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement on the date first written.
JABIL CIRCUIT, INC., a Delaware corporation
By: /s/ Timothy L. Main
Its: President
EFTC CORPORATION, a Colorado corporation
By: /s/ Stuart W. Fuhlendorf
Its: Vice President
CTLLC ACQUISITION CORP., a Florida corporation
By: /s/ Stuart W. Fuhlendorf
Its: Vice President
CIRCUIT TEST, INC., a Florida corporation
By: /s/ Stuart W. Fuhlendorf
Its: Vice President
AIRHUB SERVICE GROUP, L.C., a Kentucky
limited liability company
By: /s/ Stuart W. Fuhlendorf
Its: Vice President
CIRCUIT TEST INTERNATIONAL, L.C., a Florida
limited liability company
By: /s/ Stuart W. Fuhlendorf
Its: Vice President
