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FACILITIES MANAGEMENT AND
TRANSITION SERVICES AGREEMENT
This FACILITIES MANAGEMENT AND TRANSITION SERVICES AGREEMENT (this
"Agreement") is made as of this 4th day of August, 1997 between AlliedSignal
Inc., a Delaware corporation operating through its Aerospace Equipment Systems
Business Unit ("Seller"), and EFTC Corporation, a Colorado corporation
("Purchaser").
WHEREAS, pursuant to that certain Master Agreement Regarding Asset Purchase
and Related Transactions dated July 15, 1997 (the "Master Agreement") between
AlliedSignal Avionics Inc., a Kansas corporation, Seller and Purchaser,
Purchaser has hired certain persons formerly employed by Seller in its business
of manufacturing electronic assemblies for use in aerospace applications (the
"Business"); capitalized terms used herein without definition shall have the
meanings ascribed thereto in the Master Agreement; and
WHEREAS, Purchaser has agreed to purchase from Seller pursuant to the
Master Agreement certain inventory and equipment used in the Business, such
acquisition to be effective upon the AES Asset Transfer Date;
WHEREAS, in order to permit Purchaser a period of time in which to
establish its own facility for the operation of the Business at the AES Asset
Transfer Date, and to permit Seller to continue to receive production of
electronic assemblies until such facility is operational, Seller and Purchaser
have agreed to enter into a special transition period arrangement for Purchaser
to provide certain services to Seller relating to the production of electronic
assemblies for Purchaser's account;
WHEREAS, the parties intend that AlliedSignal will own and provide to
Purchaser the means of production of electronic assemblies (space, equipment,
components), except labor and its supervision ("Means of Production") such that
Purchaser shall be able to perform services hereunder;
WHEREAS, the parties further intend that Purchaser will take such means of
production, apply supervised labor, and manufacture electronic assemblies per
Seller's schedule and specifications.
WHEREAS, Seller and Purchaser desire to ▇▇▇▇▇▇ the smooth operation of the
Business prior to the AES Asset Transfer Date and the establishment by
Purchaser of a facility in which to manufacture electronic assemblies for use
in aerospace applications after the AES Asset Transfer Date; accordingly,
Seller has agreed to provide certain transition services to Purchaser pursuant
to this Agreement; and
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WHEREAS, Seller has agreed to permit Purchaser to use on a non-exclusive
basis a portion of Seller's facility pursuant to that certain Premises License
Agreement entered into between Seller and Purchaser dated as of the date hereof
(the "Premises License Agreement").
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements hereinafter set forth, the parties hereto agree as follows:
1. FACILITIES MANAGEMENT AND OPERATION PROVIDED BY PURCHASER
1.1 Purpose. Purchaser shall provide the personnel and management
services necessary to manufacture electronic assemblies within Seller's
facility licensed to Purchaser pursuant to the Premises License Agreement using
the equipment specified in Exhibit B1.1.1 to the Master Agreement and the
inventory and component parts provided by Seller in accordance with Seller's
specifications. To that end, Purchaser is to provide the personnel to perform
the manufacturing services required by Seller, all as specified in Seller's
production schedules communicated to Purchaser from time to time by Seller.
The operations management and operation services to be provided by Purchaser to
Seller hereunder are referred to herein as the "Management Services." The
aggregate staffing levels of Purchaser engaged in the Management Services will
be subject to mutual agreement by the parties and are intended to be consistent
with the historical staffing levels of the Business.
1.2 Engagement of Purchaser by Seller. Purchaser shall provide the
Management Services as contemplated by Section 1.1 that are necessary to
conduct the Business and to produce electronic assemblies pursuant to Seller's
production schedules communicated to Purchaser from time to time by Seller
during the period from the date hereof until the AES Asset Transfer Date (the
"Transition Period") in accordance with the terms of this Agreement.
1.3 Compensation for Management Services. Seller shall pay Purchaser
for the Management Services during the Transition Period as follows:
1.3.1 Subject to the other provisions of this Section 1.3.1, the
total amount payable by Seller to Purchaser with respect to each payroll period
during the Transition Period shall be equal to the amount paid for direct and
indirect compensation (wages, salaries and benefits) by Purchaser for its
employees (including temporary employees) performing Management Services, plus
ten percent (10%) of such amount paid. For the purpose of this Section
Purchaser's benefits shall be deemed to be eighteen percent (18%) of base pay
for indirect employees and twenty-two percent (22%) of base pay for direct
employees. In the case of sub-contracted staffing the amount payable by Seller
shall be equal to the lesser of (i) the amount paid by Purchaser to the
subcontractor for such staffing or (ii) the amount paid by Seller prior to the
date hereof for comparable staffing, in each case plus ten percent (10%).
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1.3.2 Purchaser shall invoice Seller the amount payable under
Section 1.3.1 on a bi-weekly basis, payable within fifteen (15) days from
Seller's receipt of the invoice, or the parties may mutually agree upon an
alternate arrangement.
1.3.3 Purchaser agrees to use its best efforts to effect, during
the term hereof, a change in the ratio of subcontracted employees to permanent
employees from its current ratio of approximately 55/45, respectively, to a
ratio of 25/75, respectively.
1.4 Term. Purchaser's obligation to provide Management Services and
Seller's obligation to provide Means of Production shall commence on the date
of the closing of the transactions contemplated by the Master Agreement and
shall continue until the AES Asset Transfer Date. Purchaser shall not use the
Means of Production for any purpose other than as contemplated in this
Agreement.
1.5 Employee Transfer. From time to time prior to the Asset Transfer
Date, but in no event later than fifteen (15) business days prior to the Asset
Transfer Date, Seller may notify Purchaser of up to ten (10) employees who
indirectly support the Business at the AES Facility whose services are no
longer needed by Seller. Purchaser shall make offers of employment to such
persons within five (5) business days of notification. Such offers and
Purchaser's employment of such individuals shall be effected in a manner
otherwise consistent with the terms of Article 6 of the Master Agreement except
that all references to the "Closing Date" shall be deemed to be references to
the affected employee's start date.
2. TRANSITION SERVICES
2.1 Pre-Asset Transfer Date Services. Seller and Purchaser understand
that Purchaser may request that Seller use its best efforts to duplicate
certain business systems of Seller prior to the AES Asset Transfer Date.
Accordingly, Seller agrees that it will provide to Purchaser upon request the
services described on Schedule A hereto (such services being hereinafter
referred to individually as a "Pre-Asset Transfer Date Service" and
collectively as the "Pre-Asset Transfer Date Services"). Purchaser's use of
Pre-Asset Transfer Date Services shall be solely for purposes related to
Purchaser's preparation to conduct manufacturing operations using the employees
hired and equipment and inventory acquired from Seller pursuant to the Master
Agreement as of
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the AES Asset Transfer Date. Seller will provide Pre-Asset Transfer Date
Services to Purchaser pursuant to this Agreement until the AES Asset Transfer
Date. The terms of this Section shall not apply to services for which related
employees or equipment have been transferred to Purchaser pursuant to the terms
of the Master Agreement.
2.2 Plan of Transition. Within thirty (30) days after the date of
this Agreement, Purchaser shall provide Seller with a detailed plan of
Purchaser's actions required to complete the transition from the Premises to
Purchaser's facility.
2.3 Other Transition Services. Commencing on the AES Asset Transfer
Date, Seller will provide to Purchaser upon request the services described in
Schedule B of this Agreement (such services being hereinafter referred to
individually as a "Transition Service" and collectively as "Transition
Services"). Purchaser's use of Transition Services shall be solely for
purposes related to Purchaser's conduct of manufacturing operations using the
employees hired and equipment and inventory acquired from Seller pursuant to
the Master Agreement. Purchaser's acknowledges that Seller's ability to
provide Transition Services may be impaired and limited by Purchaser's hiring
of Seller's former workforce. Therefore, the terms of this Section shall not
apply to services for which related employees or equipment have been
transferred to Purchaser pursuant to the terms of the Master Agreement.
2.4 Term for Transition Services. Seller shall not be required to
provide Transition Services to Purchaser in an amount exceeding the limitations
set forth on Schedule B over a maximum period of ninety (90) days.
2.5 Special Requests. Seller and Purchaser have, by this Agreement,
attempted to provide for all services and facilities which may reasonably be
required by Purchaser to operate the Business during a transitional period
commencing on the date hereof. However, Seller and Purchaser acknowledge that
one or more services historically provided by Seller to the Business may have
been inadvertently omitted from this Agreement. Accordingly, if at any time
during the Transition Period Purchaser reasonably requires a service not
covered by this Agreement in order to operate the Business as it was operated
immediately prior to the AES Asset Transfer Date, then Purchaser may request
Seller to provide such service. In no event shall the term for any such
Additional Service extend beyond three (3) months after the AES Transfer Date.
The request shall be in writing and shall specify in reasonable detail the
nature of the service required and the duration of the requirement. The terms
of this Section shall not apply to services for which related employees or
equipment have been transferred to Purchaser pursuant to the terms of the
Master Agreement. If the requested service is a service that Seller provided
to the Business prior to the Closing, then Seller shall in good faith consider
whether to provide the service to Purchaser for a charge equal to Seller's cost
of providing the service plus ten percent (10%). If the requested service is
not a service that Seller provided to the Business prior to the date hereof,
then Seller may, in its sole discretion, either offer to provide the service
for a
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specified charge or decline to provide the service. Services provided by
Seller pursuant to this Section shall be referred to herein as "Additional
Services." Seller shall ▇▇▇▇ Purchaser for Additional Service and services not
included on Schedule D ("Billable Services") on a monthly basis.
2.6 Invoicing. Seller shall ▇▇▇▇ Purchaser for Additional Service and
services not included on Schedule B ("Billable Services") on a monthly basis.
Invoices for Billable Services shall be payable net forty five (45) days from
Purchaser's receipt of invoice.
3. STANDARD OF CARE
Seller and Purchaser each will use the same degree of care in providing
services to the other hereunder as it uses in performing the same or similar
services on its own behalf.
4. DISPUTE RESOLUTION
4.1 Arbitration. Any controversy, claim or dispute arising out of or
relating to this Agreement or the transactions contemplated hereby or the
breach, termination, enforcement, interpretation or validity hereof, including
the determination of the scope or applicability of this agreement to arbitrate
(collectively "Dispute"), shall be determined by arbitration in Phoenix,
Arizona before a sole arbitrator. The following shall apply to any such
arbitration:
4.1.1. The arbitration shall be administered by the American
Arbitration Association ("AAA") pursuant to its Commercial Rules and
Supplementary Procedures for Large, Complex Disputes.
4.1.2 The arbitrator shall not be an officer, employee, director
or affiliate of any party hereto or of its affiliates. If the parties are
unable to agree on an arbitrator within 30 days of the filing of the Demand for
Arbitration, an arbitrator shall be selected pursuant to the rules and
procedures of the AAA.
4.1.3 Any party may seek from any court interim or provisional
relief that is necessary to protect the rights or property of that party,
pending the appointment of the arbitrator or pending the arbitrator's
determination of the merits of the controversy.
4.1.4 The parties shall bear their own costs and expenses,
including attorneys' fees, but the arbitrator may, in the award, allocate all
of the administrative costs of the arbitration (and mediation, if applicable),
including the fees of the arbitrator and mediator, against the party who did
not prevail.
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4.1.5 The arbitration award shall be in writing and shall
specify the factual and legal bases for the award. Judgment on the award may
be entered in any court having jurisdiction.
5. LIABILITY
5.1 Indemnification. Each party hereto shall indemnify, defend and
hold the other party, its officers, directors, employees, agents and affiliated
entities, harmless from and against any and all claims, suits, liabilities and
expenses related to or arising from its negligence or willful misconduct. The
terms and conditions of this Section 5 shall survive the expiration or earlier
termination of this Agreement.
5.2 Consequential and Other Damages. Neither party shall be liable,
whether in contract, in tort (including negligence and strict liability), or
otherwise, for any special, indirect, incidental or consequential damages
whatsoever, including, but not limited to, loss of profits or revenue, business
interruptions, costs of capital and claims of customers which in any way arise
out of, relate to, or are a consequence of, its performance or nonperformance
hereunder, or the provision of or failure to provide any Service hereunder.
The terms of this Section shall not apply in the event of the willful
misconduct of either party.
5.3 Acknowledgment. The services provided under this Agreement are
intended to facilitate Purchaser's transition activities for a limited period
of time post-closing. Nothing contained in this Agreement shall be construed
as a guaranty to Purchaser of results or profitability; Purchaser assumes the
risk of the operation of the Business.
5.4 Conflict with Premises License Agreement. If any interpretation
or effect of this Section 5 could reasonably be viewed as contradicting the
interpretation or effect of Section 7.5 of the Premises License Agreement, the
terms of the Premises License Agreement shall control.
6. ACCESS TO PREMISES
6.1 The Premises of the Business. Seller shall at all times during
the term of this Agreement have the right to access and use the premises of the
Business, subject to Purchaser's reasonable control, for any purposes connected
with the delivery of Services hereunder during the Term and subject to the
terms of the Premises License Agreement.
6.2 The Premises of Seller. Employees of Purchaser shall have access
to Seller's facilities pursuant to the terms and conditions of the Premises
License Agreement.
7. MISCELLANEOUS
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7.1 Notices. Notices under this Agreement shall be in writing and sent
by confirmed facsimile, personal delivery or overnight delivery service to the
addresses specified in or pursuant to the terms of the Master Agreement and
shall be effective as specified in the Master Agreement.
7.2 Entire Agreement. This Agreement, the Master Agreement and the
Premises License Agreement constitute the entire agreement between the parties
with respect to the subject matter hereof and supersede all prior
communications, representations, agreements and understandings between the
parties hereto, whether oral or written.
7.3 Headings. The headings herein used are for convenience purposes
only and shall not be used to construe the meaning of this Agreement in any
respect.
7.4 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original instrument and all of
which together shall constitute the same instrument.
7.5 Construction. When the context so requires, references herein to
the singular number include the plural and vice versa and pronouns in the
masculine or neuter gender include the feminine. The headings contained in
this Agreement and the Schedules hereto are for reference purposes only and
shall not affect the meaning or interpretation of this Agreement.
7.6 Assignment. This Agreement, and all rights and obligations
hereunder, shall not be assignable by any party in whole or in part, except
that (a) either party may assign this Agreement and its rights and obligations
hereunder with the other party's prior written consent, (b) either party may
assign this Agreement without the prior written consent of the other party to a
subsidiary, parent or affiliated entity, (c) Seller may perform any of the
services required hereunder through a subsidiary or affiliate of Seller without
the prior written consent of Purchaser, and (d) Seller may subcontract any of
the services required of it hereunder to any party Seller contracts with for
services for its own account now or in the future without the prior written
consent of Purchaser. For any such assignment, Purchaser or Seller, as the
case may be, shall remain obligated hereunder unless the other party shall
consent otherwise. Any purported assignment inconsistent with this Section 7.6
shall be void and of no effect. This Agreement shall be binding upon and inure
to the benefit of the parties and their respective successors and permitted
assigns.
7.7 Amendment. This Agreement may be amended only by written
agreement duly executed by representatives of both the parties hereto.
7.8 Applicable Law. This Agreement shall be construed in accordance
with the laws of the State of Delaware, disregarding its conflicts of laws
principles which may require the application of the laws of another
jurisdiction.
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7.9 No Third Party Rights. This Agreement is not intended and shall
not be construed to create any rights in any parties other than Seller and
Purchaser and no other person shall assert any rights as a third party
beneficiary hereunder.
7.10 Schedules. The Schedules attached hereto are incorporated into
this Agreement and shall be deemed a part hereof as is set forth herein in
full. References to "this Agreement" and the words "herein", "hereof", and
words of similar import refer to this Agreement (including the Schedules) as an
entirety.
7.11 Waivers. Any waiver of rights hereunder must be set forth in
writing. A waiver of any breach or failure to enforce any of the terms or
conditions of this Agreement shall not in any way affect, limit or waive a
party's rights at any time to enforce strict compliance thereafter with every
term and condition of this Agreement.
7.12 Independent Contractor. The parties intend to create an
independent contractor relationship and nothing contained in this Agreement
shall be construed to make either Seller or Purchaser a partner, joint
venturer, principal, agent or employee of the other. Neither party shall have
any right, power or authority, express or implied, to bind the other.
7.13 Force Majeure. If a party is unable to meet its obligations under
this Agreement as a result of flood, earthquake, storm, other act of God, fire,
strike, war, riot, embargo, act of government or governmental agency or any
other similar cause beyond the reasonable control of such party ("Force
Majeure"), the obligations of the parties hereto shall be suspended for the
duration of the Force Majeure. The party claiming Force Majeure shall, within
five (5) days from the date of disability, excluding Saturdays, Sundays and
holidays, notify the other party of the existence of a Force Majeure condition
and will similarly notify the other party within a period of five (5) days,
excluding Saturdays, Sundays and holidays, when the Force Majeure has ended.
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IN WITNESS WHEREOF, Seller and Purchaser have duly executed and delivered
this Agreement as of the date first written above.
ALLIEDSIGNAL, INC., a Delaware
corporation, operating through its
Aerospace Equipment Systems Business Unit
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Title: Associate General Counsel and
Assistant Secretary
EFTC CORPORATION,
a Colorado corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
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Title: Chief Financial Officer
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SCHEDULE A
PRE ASSET TRANSFER DATE SERVICES
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SCHEDULE B
TRANSITION SERVICES
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FIRST AMENDMENT TO FACILITIES MANAGEMENT
AND TRANSITION SERVICES AGREEMENT
This First Amendment ("Amendment") dated as of July 31, 1997 is
entered into with respect to that certain Facilities Management and Transition
Services Agreement dated August 4, 1997 (the "Agreement") entered into and
between AlliedSignal Inc., a Delaware corporation operating through its
Aerospace Equipment Systems Business Unit ("AES"), and EFTC Corporation, a
Colorado corporation (EFTC").
The parties hereby agree to amend the Agreement in the manner set
forth in Exhibit A, attached hereto and incorporated herein. This Agreement
shall not otherwise change, amend, limit or affect any other provision of the
Agreement, which shall continue in full force and effect.
AlliedSignal Inc., a Delaware corporation
operating through its
Aerospace Equipment Systems Business Unit
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
----------------
▇▇▇▇ ▇▇▇▇▇▇▇
Title: Material Program Manager
EFTC Corporation,
a Colorado corporation
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
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Title: Treasurer
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EXHIBIT A
AMENDMENT TO FACILITIES MANAGEMENT
AND TRANSITION SERVICES AGREEMENT
(See Attached)
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percent (18%) of base pay for indirect employees and twenty-two percent (22%)
of base pay for direct employees. In the case of sub- contracted staffing the
amount payable by Seller shall be equal to the lesser of (i) the amount paid by
Purchaser to the subcontractor for such staffing or (ii) the amount paid by
Seller prior to the date hereof for comparable staffing, in each case plus ten
percent (10%).
1.3.2 Purchaser shall invoice Seller the amount payable
under Section 1.3.1 on a bi-weekly basis, payable within fifteen (15) days from
Seller's receipt of the invoice, or the parties may mutually agree upon an
alternate arrangement.
1.3.3 Purchaser agrees to use its best efforts to effect,
during the term hereof, a change in the ratio of subcontracted employees to
permit employees from its current ratio of approximately 55/45, respectively,
to a ratio of 25/75, respectively.
1.4 Term. Purchaser's obligation to provide Management Services
and Seller's obligation to provide Means of Production shall commence on the
date of the closing of the transactions contemplated by the Master Agreement
and shall continue until the AES Asset Transfer Date. Purchaser shall not use
the Means of Production for any purpose other than as contemplated in this
Agreement.
1.5 Employee Transfer. From time to time prior to the Asset
Transfer Date, but in no event later than fifteen (15) business days prior to
the Asset Transfer Date, Seller may notify Purchaser of up to ten (10)
employees who indirectly support the Business at the AES Facility whose
services are no longer needed by Seller. Purchaser shall make offers of
employment to such persons within five (5) business days of notification. Such
offers and Purchaser's employment of such individuals shall be effected in a
manner otherwise consistent with the terms of Article 6 of the Master Agreement
except that all references to the "Closing Date" shall be deemed to be
references to the affected employee's start date.
2. TRANSITION SERVICES
2.1 Pre-Asset Transfer Date Services. Seller and Purchaser
understand that Purchaser may request that Seller use its best efforts to
duplicate certain business systems of Seller prior to the AES Asset Transfer
Date. Accordingly, Seller agrees that it will provide to Purchaser upon
request the services described on Schedule A hereto (such services being
hereinafter referred to individually as a "Pre-Asset Transfer Date Service" and
collectively as the "Pre-Asset Transfer Date Services"). Purchaser's use of
Pre-Asset Transfer Date Services shall be solely for purposes related to
Purchaser's