EXHIBIT 99.1
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") is entered into as of September
18, 2001 by and among MSL Midwest Operations, Inc. (the "Buyer"), MCMS, Inc., a
Delaware corporation ("MCMS"), MCMS Customer Services, Inc., an Idaho
corporation ("MCMS Customer Services"), MCMS International, Inc., a British
Virgin Islands corporation ("MCMS International"), MCMS de Mexico, S de RL de
CV, a Mexico corporation ("MCMS Mexico"), MCMS Electronics (Xiamen) Co., Ltd. a
China corporation ("MCMS China"), and M.C.M.S. Sdn. Bhd., a Malaysia corporation
("MCMS Malaysia"). MCMS and MCMS Customer Services are referred to collectively
herein as the "Sellers." MCMS International, MCMS Mexico, MCMS China and MCMS
Malaysia are referred to collectively as the "Foreign Entities." The Buyer, the
Sellers and the Foreign Entities are referred to collectively herein as the
"Parties."
W I T N E S S E T H:
WHEREAS, it is agreed that on or about the date hereof (the "Filing Date"), the
Sellers and MCMS Holdings, LLC, an Idaho limited liability company ("MCMS
Holdings, and, together with the Sellers, collectively, the "U.S. Entities")
will each file a voluntary petition for relief under Chapter 11 of Title 11 of
the United States Bankruptcy Code (the "Bankruptcy Code") in the United States
Bankruptcy Court for the District of Delaware (the "Bankruptcy Court") (the
"Bankruptcy Case(s)" or "Chapter 11 Cases(s)", as appropriate);
WHEREAS, the U.S. Entities intend to seek an order of the Bankruptcy Court
approving this Agreement and authorizing the Sellers to consummate the
transactions contemplated hereby;
WHEREAS, subject to approval of the Bankruptcy Court, the Sellers desire to
sell, transfer and assign to the Buyer and the Buyer desires to purchase and
acquire from the Sellers all of the Sellers' assets (other than certain excluded
assets) free and clear of all liens, claims, encumbrances, liabilities and other
obligations and interests, and, in connection with such purchase and
acquisition, the Buyer desires to assume certain obligations and liabilities of
the Sellers, all in accordance with the terms and condition set forth herein;
and
WHEREAS, certain capitalized terms used herein have the meanings set forth in
Article X of this Agreement.
NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants and undertakings herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged and
with the intent to be bound, the Parties agree as follows.
ARTICLE I
THE PURCHASE
1.1 Purchase and Sale of Acquired Assets.
(a) Upon and subject to the terms and conditions of this Agreement, the
Buyer shall purchase from the Sellers, and the Sellers shall sell, transfer,
convey, assign and deliver to the Buyer as a good faith purchaser for value
within the meaning of Section 363(m) of the Bankruptcy Code and free and clear
of all liens, claims, encumbrances and interests, at the Closing, for the
aggregate consideration specified below in this Article I, all of the Sellers'
right, title and interest in and to all of the tangible and intangible assets of
the Sellers (other than the Excluded Assets) existing as of the Closing
regardless of whether such assets existed prior to the commencement of Sellers'
Chapter 11 Cases or arose thereafter (collectively, the "Acquired Assets", it
being acknowledged and agreed that the Buyer shall have the right in its sole
discretion from time to time prior to the Closing to identify and designate any
of such Acquired Assets as Excluded Assets), including, without limitation:
(i) (A) all inventory, raw materials, work in process, supplies,
parts, packaging materials, and accessories of the Sellers and the Subsidiaries
(the "Inventory") to the extent such Inventory is Quality Inventory; and
(B) Inventory other than Quality Inventory to the extent such
Inventory relates to a customer that prior to the Closing (1) has not notified
any of the Parties of its intention to disengage as a customer of the Sellers
(or the Buyer after the Closing) and (2) has supplied a forecast demonstrating
demand for products after the Closing (other than for repairs), which shall
exclude any Inventory relating to Cisco Systems, Inc. and any affiliates thereof
(collectively, "Cisco" and such Inventory, the "Cisco Inventory") or Nokia Corp.
and any affiliates thereof (collectively, "Nokia" and such Inventory, the "Nokia
Inventory") and (2) the value of which does not exceed five million dollars
($5,000,000) in the aggregate, which value shall be calculated at the
acquisition cost of such Inventory by the Sellers or the Subsidiaries, as
applicable (such Inventory actually acquired by the Buyer being the "Non-Quality
Inventory");
(ii) all personal property and interests, including but not limited to
machinery, equipment, tooling, dies, jigs, spare parts and supplies (including
expendable tooling), furniture, fixtures, leasehold improvements, motor vehicles
and those items set forth on the fixed asset property listing provided by
Sellers to the Buyer which is set forth as Schedule 1.1(a)(ii) hereto;
(iii) all (A) patents, patent applications, patent disclosures, all
related continuation, continuation-in-part, divisional, reissue, re-examination,
utility model, certificate of invention and design patents, patent applications,
registrations and applications for registrations and other industrial property
rights acquired or available under the laws of any jurisdiction, (B) trademarks,
service marks, trade dress, logos, tradenames and corporate names and
registrations and applications for registration thereof together with related
goodwill, (C) copyrights and registrations and applications for registration
thereof, (D) mask works and registrations and applications for registration
thereof, (E) computer software, (including without
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limitation, source code, object code, interpreted code, Java byte code,
firmware, middleware, programs, utilities, languages, subroutines or routines),
data, databases, compilations, documentation, data processing systems, networks
and network systems, website and other Internet and webcentric systems and
properties, domain names, content contained on any Internet or intranet site,
and descriptions, flowcharts and other work product used to design, plan,
organize and develop any of the foregoing, (F) trade secrets and confidential
business information, whether patentable or unpatentable and whether or not
reduced to practice, know-how, manufacturing and product processes and
techniques, research and development information, copyrightable works,
financial, marketing and business data, pricing and cost information, business
and marketing plans and customer and supplier lists and information, including,
without limitation, all membership lists and databases and related information
and profiles (which include all website and other content whether published by
the members or otherwise), and internet domain names (G) other proprietary
rights relating to any of the foregoing (including, without limitation, remedies
against infringements thereof and rights of protection of interest therein under
the laws of all jurisdictions), and (H) copies and tangible embodiments thereof
(collectively, "Intellectual Property"), subject to the limitations on the
transferability of certain patent licenses under the Bankruptcy Code. Included
within the definition of "Intellectual Property" are the items set forth in the
listing on Schedule 1.1(a)(iii) (the "Intellectual Property Listing");
(iv) all rights under all executory contracts and unexpired leases,
including leaseholds and subleaseholds in real property (and easements,
rights-of-way and other appurtenants thereto) of the Sellers (the "Leased Real
Property"), that are listed on Schedule 1.1(a)(iv)(A) hereto, as such schedule
hereafter may be supplemented or otherwise modified by the Buyer at or prior to
the Closing pursuant to Section 4.4(c) and all contract rights therein, except
for such contracts that are no longer in effect in accordance with their terms
and such contracts that are listed on Schedule 1.1(a)(iv)(B) hereto
(collectively, the "Assigned Contracts and Leases");
(v) all real property (and easements, rights-of-way, private electric
supply agreements and other appurtenants or rights thereto or in connection
therewith) owned by the Sellers or any Subsidiary, including but not limited to
the property set forth on Schedule 1.1(a)(v) hereto (the "Owned Real Property");
(vi) (A) all rights, claims, and causes of action against Buyer or any
subsidiary thereof, except for such rights and causes of action of the Sellers
relating to this Agreement, the Ancillary Agreements or the transaction
contemplated hereby or thereby, (B) all avoidance claims or comparable
non-bankruptcy fraudulent transfer causes of action against any party with which
the Buyer has (or may have as a result of the transactions contemplated by this
Agreement) a business relationship (including but not limited to under
'SS''SS'544, 547, 548 or 549 of the Bankruptcy Code) other than any such claims
or causes of action (i) referenced in Section 1.1(b)(ix) as Excluded Assets or
(ii) that relate to Excluded Assets and (C) all claims and causes of action
against any third party relating to any Intellectual Property including,
without limitation, rights under confidentiality or assignment of invention
agreements and any such claims for past, present or future infringement;
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(vii) other than those solely related to the Belgian Entities, all
permits, licenses, registrations, certificates, orders, approvals, franchises,
variances and similar rights issued by or obtained from any governmental,
regulatory or administrative authority or agency, court or arbitrational
tribunal (a "Governmental Entity"), including, without limitation, those
relating to the Leased Real Property and the Owned Real Property (collectively,
"Permits"), to the extent such Permits are transferable;
(viii) except as excluded in Section 1.1(b)(viii) below, all books,
records, files, documents, correspondence, lists, engineering drawings or
specifications, product testing procedures and test results, manufacturing and
procedural manuals, advertising and promotional materials, studies, reports and
other printed or written materials in whatever format relating to the items of
Acquired Assets listed in clauses (i) through (vii) above or in clauses (ix) and
(x) below, including, without limitation, any and all books, records or other
documentation relating to any and all undertakings, testing or compliance (or
lack thereof) with ISO certifications with respect to the Acquired Assets and
any and all original (or if the original cannot be located, then a copy thereof)
files, applications, assignments and other documentation relating to the
prosecution and/or maintenance of any Intellectual Property, provided that to
the extent any of the foregoing are necessary for the Buyer to get the benefit
of any Acquired Asset or Assigned Contracts and Leases, the Acquired Assets
shall include any and all originals and copies thereof;
(ix) the accounts receivable of the Sellers, excluding any accounts
receivable relating to Cisco or Nokia (collectively, the "Cisco/Nokia Accounts
Receivable") and excluding any Foreign Entity Inter-Company Payables (as defined
in Section 1.4(b)(iv)), that are valid receivables arising out of the sales of
inventory or services not earlier than 45 days prior to the Closing and in the
ordinary course of business subject to no setoffs or counterclaims (other than
the Assumed Payables), subject to the limitations set forth in Section
1.6(b)(iii) (as so determined, the "Included Receivables");
(x) the prepaid expenses and other current assets of the Sellers of
the type described in Schedule 1.1(a)(x) attached hereto relating to the
Acquired Assets (the "Included Current Assets");
(xi) any and all capital stock or other ownership interests of the
Sellers in MCMS International; and
(xii) all of the Sellers' rights in, to and under all nondisclosure
and confidentiality agreements between the Sellers (or any affiliates) and any
employees of the Sellers (or any affiliates).
(b) Notwithstanding the provisions of Section 1.1(a), the Acquired
Assets shall not include the following assets (collectively, the "Excluded
Assets"):
(i) the corporate charter, qualifications to conduct business as a
foreign corporation, arrangements with registered agents relating to foreign
qualifications, taxpayer and other identification numbers, seals, minute books,
stock transfer books and other documents relating to the organization and
existence of the Sellers;
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(ii) any of the rights of the Sellers under this Agreement or the
Ancillary Agreements (for purposes of this Agreement, "Ancillary Agreements"
shall mean the Escrow Agreement, ▇▇▇▇ of sale, assignment agreements and other
instruments of conveyance referred to in Section 1.5(b)(v), and the instrument
of assumption and other instruments referred to in Section 1.5(b)(vi));
(iii) any rights of the Sellers under any order of the Bankruptcy
Court relating to this Agreement, the Ancillary Agreements or the transactions
contemplated hereby and thereby;
(iv) (A) all cash, cash equivalents of the Sellers or similar type
investments, uncollected checks, marketable securities, investments, deposits,
bank accounts of the Sellers, and (B) all trade and other accounts receivable,
notes receivable and any other right to receive payment of the Sellers from any
other party to the extent that it arises from the sale of goods or the provision
of services earned prior to the Closing except for the Included Receivables (the
"Retained Receivables");
(v) any and all capital stock or other ownership interests owned by
the Sellers in any direct Subsidiary thereof (other than the ownership interests
of MCMS in MCMS International);
(vi) all of the Sellers' right, title and interest in, to and under
the assets, properties and business, of every kind and description, real,
personal or mixed, tangible or intangible, and owned, held or used solely in the
conduct of the business of MCMS Netherlands, B.V., MCMS Holdings, LLC and MCMS
Belgium, SPRL (the "Belgian Entities");
(vii) all rights under all executory contracts and unexpired leases
that are listed on Schedule 1.1(a)(iv)(B) and that are not listed on Schedule
1.1(a)(iv)(A) attached hereto, as such Schedule 1.1(a)(iv)(A) hereafter may be
supplemented or otherwise modified by the Buyer in its sole discretion at or
prior to the Closing (it being understood that no contracts or leases listed on
Schedule 1.1(a)(iv)(B) shall become part of Schedule 1.1(a)(iv)(A);
(viii) (A) all originals and copies of all books, records, files,
papers, whether in hard copy or computer format, prepared in connection with
this Agreement or the transactions contemplated hereby and (B) the items set
forth in Section 1.1(a)(viii) above to the extent they relate solely to the
Excluded Assets, the Retained Liabilities or the Retained Receivables, or,
except in the case of Intellectual Property files with respect to
non-infringement opinions, are the subject of attorney-client privilege between
the Sellers and their attorneys (the Sellers specifically reserving and not
waiving any and all such attorney-client privileges, and the Sellers reserving
the right to retain a copy of any other items set forth in Section 1.1 (a)(viii)
above to the extent they relate, but do not relate solely, to the Excluded
Assets or the Retained Liabilities); and
(ix) all rights, claims, causes of action and interests of MCMS in and
to the litigations set forth on Schedule 1.1(b)(ix) attached hereto and all
rights, claims and causes of action arising under contracts and agreements under
which any of such litigation arose;
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(x) all rights demands, actions and causes of action that the Sellers
may have against any third party that are not specifically identified as
Acquired Assets;
(xi) all of the Sellers' rights in and to any of the Sellers' tax
assets (including, without limitation, all refunds, credits or claims for
refunds or credits relating to the payment of taxes attributable to any period
ending on or before the Closing Date or any period beginning before the Closing
Date and ending after the Closing Date, but only with respect to that period up
to and including the Closing Date);
(xii) any records (including accounting records) related to taxes paid
or payable by the Sellers and all financial and tax records relating to the
business conducted by the Sellers that form part of the Sellers' general ledger;
(xiii) any insurance policy, insurance claims and proceeds not
relating to the Acquired Assets;
(xiv) prepaid assets, including prepayments on insurance and
maintenance agreements, not relating to the Acquired Assets;
(xv) Inventory (including the Cisco Inventory and the Nokia Inventory)
that is not Quality Inventory or Non-Quality Inventory;
(xvi) all assets specifically described in Section 1.1(a) as being
assets that are not Acquired Assets;
(xvii) all credits of the Sellers with suppliers; and
(xviii) the other assets specifically set forth on Schedule
1.1(b)(xviii) attached hereto.
1.2 Assumption of Liabilities.
(a) Upon and subject to the terms and conditions of this Agreement
(including but not limited to the Sellers' satisfaction of its assumption and
assignment obligations with respect to the Assigned Contracts and Leases
pursuant to Section 4.4(c) and the condition set forth in Section 5.1(b)), the
Buyer shall assume and become responsible for, from and after the Closing
(collectively, the "Assumed Liabilities"):
(i) all obligations of the Sellers under the Assigned Contracts and
Leases, including but not limited to the obligations of the Sellers for the
unexpired portion of the Sellers' warranty for parts and labor on goods sold by
the Sellers to customers that are party to the Assigned Contracts and Leases
prior to the Closing Date (the "Assumed Warranty Obligations");
(ii) all accepted orders from customers of the Sellers (excluding
orders relating to the Belgian Entities, Cisco or Nokia) and all the purchase
orders of the Sellers (excluding orders relating to the Belgian Entities, Cisco
and Nokia) issued in the ordinary course of business;
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(iii) the customer accounts payable and certain supplier accounts
payable of the Sellers (other than to any affiliates thereof), subject to the
next two succeeding sentences (the "Assumed Payables"). Within seven (7)
business days after the Filing Date, the Buyer shall deliver to the Sellers a
confidential memorandum (the "Confidential Memorandum") setting forth certain
supplier payables which the Buyer is willing to assume hereunder, which supplier
payables in the aggregate shall not exceed the lesser of (A) one million five
hundred thousand dollars ($1,500,000) and (B) the amount of the Included
Receivables (the "Supplier Payables"). In the event that the amount of the
Supplier Payables would have exceeded the amount of the Included Receivables,
the Buyer shall designate which of the accounts payable listed in the
Confidential Memorandum that shall be included within the definition of Supplier
Payables;
(iv) liabilities arising after the Closing out of the ownership and
operation of the Acquired Assets after the Closing, including, without
limitation, liability for personal injury of customers or employees;
(v) liabilities related to the termination of employment after the
Closing of any Continuing Employee, including, but not limited to any liability
arising under the WARN Act;
(vi) liabilities related to earned but unpaid salary, payroll and
related taxes and accrued but unpaid vacation and sick days (collectively, the
"Accrued Employee Liabilities"), of active employees of the Sellers employed by
the Buyer ("Continuing Employees") and, whether or not accrued, any obligations
under Section 4980B of the Internal Revenue Code to provide continuation of
group medical coverage with respect to any Continuing Employee or other
qualified beneficiary of any such Continuing Employee that occur after the
Closing;
(vii) the liabilities and obligations with respect to the Retention
Plan, the MCMS Plan and the Executive Employment Agreements up to the maximum
aggregate amount of $3,700,000, subject to the terms of Section 1.4(c)(ii) and
Section 1.8 hereof (the Assumed Liabilities described in clauses (v) through
this clause (vii) collectively, the "Assumed Employee Liabilities");
(viii) all liabilities and obligations relating to the Continuing
Employees arising after the Closing Date as set forth in the Buyer's Plans; and
(ix) all liabilities and obligations for taxes that the Buyer is
liable for pursuant to Section 6.6(b).
(b) The Buyer shall not assume or otherwise become responsible for,
and the Sellers shall remain liable for, any and all liabilities or obligations
(including but not limited to "claims" as defined under 'SS'101(5) of the
Bankruptcy Code) of the Sellers which are not Assumed Liabilities (whether known
or unknown, whether absolute or contingent, whether liquidated or unliquidated,
whether due or to become due, and whether claims with respect thereto are
asserted before or after the Closing) (collectively, the "Retained
Liabilities"). The Sellers agrees that the Retained Liabilities shall constitute
claims and alleged claims in the
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Sellers' Bankruptcy Cases; provided, however, that nothing herein shall grant or
create any rights in favor of the holders of Retained Liabilities or create any
priority to right of payment. It is expressly understood and agreed that the
Parties intend that the Buyer shall not be considered to be a successor to the
Sellers by reason of any theory of law or equity and that the Buyer shall have
no liability except as expressly provided in this Agreement for any liability of
the Sellers. The Retained Liabilities shall include, without limitation, the
following (for purposes of the following clauses, the term "Sellers" shall
include the Sellers and each of its direct and indirect subsidiaries):
(i) all liabilities and obligations of the Sellers for any federal,
state, foreign local or other taxes other than any liabilities and obligations
for taxes that the Buyer is liable for pursuant to Section 6.6(b);
(ii) all liabilities and obligations of the Sellers for costs and
expenses incurred by the Sellers in connection with this Agreement or the
consummation of the transactions contemplated by this Agreement;
(iii) all liabilities and obligations of the Sellers under this
Agreement or the Ancillary Agreements;
(iv) all liabilities and obligations of the Sellers under any
agreements, contracts, leases or licenses which are not Assumed Liabilities;
(v) all liabilities and obligations of the Sellers relating to the
design, manufacture, sale or distribution of products or the provision of
services, including, without limitation, claims for infringement, product
liability, customer support claims, or claims for repair, replacement or return
of products manufactured or sold or distributed by the Sellers prior to the
Closing (but excluding any of the foregoing liabilities or obligations arising
from the sale by the Buyer after the Closing of Acquired Assets consisting of
products produced by the Sellers, and excluding the Assumed Warranty
Obligations);
(vi) all liabilities and obligations of the Sellers arising out of
events, conduct or conditions to the extent existing or occurring prior to the
Closing that constitute a violation of or non-compliance with any law, rule or
regulation, any judgment, decree or order of any Governmental Entity, or any
Permit;
(vii) all liabilities and obligations of the Sellers related directly
or indirectly to the environmental condition (and any adverse consequences
arising therefrom) or operation of the facilities located on the Owned Real
Property or pursuant to the Leases (the "Facilities") under applicable
Environmental Laws, equipment and properties owned, leased or operated by the
Sellers (including but not limited to on- and off-site liabilities and
liabilities associated with the transportation or migration of hazardous
substances or environmental contaminants to an offsite location) or arising out
of events, conduct or conditions occurring prior to the Closing, regardless of
whether such condition or operation constitutes a violation of, or
non-compliance with, any Environmental Laws; provided, however, that to the
extent that the amount of any such liabilities or obligations with respect to
the environmental condition or operations of the Facilities which is known to
the Buyer is increased as a result of the Buyer's
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operations of the Facilities occurring after the Closing, such increased amount
of such liabilities or obligations shall not be a Retained Liability;
(viii) except for the Assumed Employee Liabilities, (A) all
liabilities and obligations of the Sellers to pay any wages, compensation,
bonus, incentives, accrued salary, accrued vacation, sick pay or severance
benefits, or unemployment compensation, employee welfare or pension benefits, in
each case to any current or former employee, agent, consultant, advisor or
independent contractor of the Sellers, (B) all liabilities and obligations
resulting from the termination of employment of employees of the Sellers that
arose under any federal, state, local or foreign law or regulation or under any
employee benefit plan established or maintained by the Sellers and (C) all
liabilities and obligations of the Sellers with respect to any stock option
plans or other equity benefit programs;
(ix) all liabilities and obligations of the Sellers for injury to or
death of persons or damage to or destruction of property arising out of events,
conduct or conditions to the extent occurring prior to the Closing (except for
obligations with respect to parts and labor as part of Assumed Warranty
Obligations);
(x) all liabilities and obligations of the Sellers for medical, dental
and disability (both long-term and short-term) benefits, whether insured or
self-insured, owed to employees or former employees of the Sellers;
(xi) all liabilities and obligations of the Sellers and each ERISA
affiliate arising out of or with respect to any "multiemployer plan" (as defined
in Section 3(37) of ERISA) or other employee benefit plan, including but not
limited to any Section 401(k) benefits or matching contribution obligations;
(xii) all liabilities and obligations of the Sellers arising out of
any claim, suit, action, arbitration, proceeding, investigation or other similar
matter which commenced prior to the Closing or relates to the ownership of the
Acquired Assets or the operation of the business of the Sellers on or prior to
the Closing;
(xiii) except for Assumed Liabilities, all liabilities and obligations
of the Sellers for any claims and administrative or other expenses of whatever
kind or nature, arising prior or subsequent to the commencement of the
Bankruptcy Case, whether or not asserted;
(xiv) all liabilities and obligations of the Sellers, or any of their
officers, directors or employees (in such capacities) to any person or entity as
a shareholder of the Sellers, including, without limitation, in connection with
any pending, threatened or future shareholder lawsuit; and
(xv) all liabilities and obligations of the Sellers for trade debt
(except for the Assumed Payables), borrowed money or other indebtedness,
including, without limitation, in connection with all notes, bonds or other
instruments or documents issued by the Sellers.
1.3 Purchase Price; Deposit.
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(a) The aggregate transaction consideration to be paid by the Buyer to
the Sellers in respect of the Acquired Assets shall consist of (i) the Purchase
Price (as defined below), which shall be paid in cash as provided in this
Article I and (ii) the Buyer's assumption of the Assumed Liabilities. The
"Purchase Price" shall be equal to the Preliminary Purchase Price, as adjusted
in accordance with Sections 1.4 and 1.6. The Parties have agreed that the
Preliminary Purchase Price shall equal Forty Three Million Five Hundred Thousand
Dollar ($43,500,000) less (i) an amount, up to $600,000, determined in
accordance with Schedule 1.3 on the date that is one day prior to the Closing
Date, less (ii) $200,000 which represents the amount of warranty reserves
credited to Buyer for the Assumed Warranty Obligations, less (iii) an amount
equal to the aggregate sum of the value of any material equipment that is the
subject of any of the Assigned Contracts and Leases (including, without
limitation, any debt or lease financing) and which cannot be located and
provided to the Buyer at Closing, as reasonably determined by the Buyer and the
Sellers on the date that is one day prior to the Closing Date, and less (iv) the
costs necessary to complete the Foreign Entities Audit, up to the maximum amount
of $100,000, but only in the event that the Sellers have not completed and paid
for the costs of the Foreign Entities Audit prior to the Closing. For the
purposes of clause (iii) of the preceding sentence, the "value" of such
equipment that cannot be located shall equal, with respect to owned equipment,
the then current replacement cost of such equipment or, with respect to leased
equipment, the cost to replace such leased equipment in accordance with the
terms of the applicable lease.
(b) On the date that is one business day after the entry of the
Provision Order, the Buyer shall deliver to the Escrow Agent $2,000,000 in cash
by wire transfer of immediately available funds (the "Deposit"), which Deposit
shall be held by the Escrow Agent as an ▇▇▇▇▇▇▇ money deposit in accordance with
an escrow agreement, in form and substance reasonably satisfactory to the
Parties, to be entered into among the Sellers, the Buyer and the Escrow Agent.
The Deposit shall be (i) retained by the Sellers pursuant to Section 1.5(b)(iii)
if the Closing takes place or, in accordance with Section 7.2, if this Agreement
is terminated by the Sellers pursuant to Section 7.1(b) hereto, or (ii) returned
to the Buyer in accordance with Section 7.2 if this Agreement is terminated by
the Sellers or the Buyer for any reason other than by the Sellers pursuant to
Section 7.1(b).
1.4 Estimated Purchase Price Adjustments; Escrow Amount.
(a) No later than five (5) business days (but in no event earlier than
ten (10) business days) prior to the Closing, the Buyer and the Sellers shall in
good faith jointly prepare, based on the books and records of the Sellers and
their Subsidiaries and, where applicable, with respect to all United States
assets and operations, in accordance with U.S. GAAP applied on a consistent
basis with the Financial Statements and the balance sheets of the Foreign
Entities, a certificate (the "Estimated Amounts Certificate") setting forth in
reasonable detail the calculations as of the date of such certificate of the
following: (i) the total amount of Accrued Employee Liabilities; (ii) the total
amount of the Assumed Payables; (iii) the total amount of Included Current
Assets; (iv) the total amount of the Foreign Entities Net Current Assets; (v)
the total amount of Included Receivables; (vi) the total amount of Quality
Inventory (as defined below); and (vii) the total amount of the Non-Quality
Inventory. For purposes of calculating the Estimated Amounts Certificate, all
references to the "Closing Date" in the definitions of capitalized terms used in
the preceding sentence shall mean the date of the Estimated Amounts Certificate.
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(b) The "Estimated Purchase Price Adjustment" shall be an amount equal
to the sum of:
(i) seven hundred fifty thousand dollars ($750,000); plus
(ii) (A) twenty million dollars ($20,000,000) (the "Net Working
Capital Target"); provided, however, that the Net Working Capital Target shall
be reduced to sixteen million dollars ($16,000,000) in the event that certain
actions have been taken and certain events have occurred as specified on
Schedule 1.4(b)(ii) attached hereto; minus
(B) the sum of the following (each of which shall, subject to
subsection (v) below, be as set forth on the Estimated Amounts Certificate):
(1) the Included Receivables; plus
(2) the Quality Inventory (as defined below); plus
(3) twenty percent (20%) of the total value of the
Non-Quality Inventory; plus
(4) the Included Current Assets; plus
(5) the Foreign Entities Net Current Assets, minus
(6) the Accrued Employee Liabilities; minus
(7) the Assumed Payables.
(iii) For purposes hereof, "Quality Inventory" shall mean Inventory
(excluding the Cisco Inventory and the Nokia Inventory), valued at the Sellers'
or the Subsidiaries', as applicable, (A) cost of acquisition with respect to raw
materials, (B) cost of acquisition plus 50% of the transformation costs with
respect to work in progress or (C) cost of acquisition plus 100% of the
transformation costs with respect to finished goods, (1) to be manufactured or
shipped pursuant to valid purchase orders placed with the Sellers or Foreign
Entities prior to the Closing, or (2) to be manufactured and shipped within 180
days of the Closing based upon forecasts supplied prior to the Closing by
customers that are party to contracts that are Assigned Contracts and Leases or
otherwise have previously established an ongoing customer relationship with the
Sellers or Foreign Entities, all as calculated in accordance with the
methodology currently used by the Sellers and as determined by the Buyer in its
sole but reasonable discretion. In exercising its discretion and making such
determination, the Buyer shall discuss with customers supplying such forecasts
the basis for such forecasts and shall take into account the accuracy of prior
forecasts provided by such customers as compared to products actually shipped.
(iv) For purposes hereof, the term "Foreign Entity Net Current Assets"
shall mean the difference between (A) the sum of cash and cash equivalents,
trade accounts receivable, prepaid expenses and other current assets of the
Foreign Entities and (B) the sum of the accrued expenses, deferred revenue,
trade payables, of the Foreign Entities; provided that the amount of any
accounts receivable owed by the Sellers or any Belgian Entity to any Foreign
Entity (the "Foreign Entity Inter-Company Receivables") and the amount of any
accounts payable owed by any Foreign Entity to the Sellers or any Belgian Entity
(the "Foreign Entity Inter-Company Payables") shall be disregarded for purposes
of calculating the Foreign Entities Net Current Assets.
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(v) In the event that the amount of the Quality Inventory as set forth
on the Estimated Closing Amounts Certificate is greater than twenty million
dollars ($20,000,000), then any amounts in excess of twenty million dollars
($20,000,000) shall be excluded from the amount of Quality Inventory for
purposes of Section 1.4(b)(ii)(B)(2) above, such exclusion not to exceed five
million dollars ($5,000,000). For purposes of the foregoing, twenty million
dollars ($20,000,000) in each instance above shall be reduced to sixteen million
dollars ($16,000,000) in the event that certain actions have been taken and
certain events have occurred as specified on Schedule 1.4(b)(ii) attached
hereto.
(c) The "Escrow Amount" shall be an amount equal to the sum of:
(i) the Estimated Purchase Price Adjustment (to the extent the same is
a positive number);
(ii) $3,000,000 (which shall be applied by the Buyer to fund the
obligations under the Retention Plan, the MCMS Plan and the Executive Employment
Agreements as described in Section 1.8 hereof), provided, however, that in the
event that the Sellers fail to pay any portion of the Retention Plan Payment in
accordance with Section 1.8 hereof, such amount shall be increased (up to the
maximum amount of $3,700,000) by an amount equal to the portion of the Retention
Plan Payment not so paid by the Sellers (as so increased, the "Plan Escrow
Amount"); and
(iii) $2,000,000 (which shall be applied by the Buyer to fund the
indemnity obligations of the Sellers pursuant to Article VIII hereof) (the
"Indemnity Escrow Amount").
1.5 The Closing.
(a) The closing of the transactions contemplated by this Agreement
(the "Closing") shall take place at the offices of ▇▇▇▇ and ▇▇▇▇ LLP in Boston,
MA, or such other location as may be mutually agreed upon by the Parties,
commencing at 9:00 a.m. Eastern Time on the first business day following the
satisfaction or waiver of all conditions to the obligations of the Parties to
consummate the transactions contemplated hereby, or on such other day as may be
mutually agreed by the Parties (the "Closing Date").
(b) At the Closing:
(i) the Sellers shall deliver to the Buyer the various certificates,
instruments and documents referred to in Section 5.1, as well as such other
certificates, instruments and documents as the Buyer may reasonably request;
(ii) the Buyer shall deliver to the Sellers the various certificates,
instruments and documents referred to in Section 5.2, as well as such other
certificates, instruments and documents as the Sellers may reasonably request;
(iii) the Sellers shall deliver by wire transfer of immediately
available funds to the Escrow Agent an amount equal to the Indemnity Escrow
Amount;
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(iv) upon confirmation from the Escrow Agent that the Sellers have
delivered the Indemnity Escrow Amount, then the Buyer shall deliver to an
account designated by the Sellers, by wire transfer of immediately available
funds, an amount equal to the Preliminary Purchase Price (excluding adjustments
pursuant to Sections 1.4 and 1.6 which are accounted for in the Escrow Amount)
less (A) the Deposit (which the Parties shall instruct the Escrow Agent to
deliver to the Sellers), less (B) the Estimated Purchase Price Adjustment and
less (C) the Plan Escrow Amount;
(v) the Buyer shall deliver by wire transfer of immediately available
funds to an account designated by the escrow agent (the "Escrow Agent") under an
escrow agreement, in form and substance reasonably satisfactory to the Parties,
to be entered into among the Sellers, the Buyer and the Escrow Agent (the
"Escrow Agreement"), an amount equal to the Estimated Purchase Price Adjustment
and the Plan Escrow Amount, to be held and disbursed along with the Indemnity
Escrow Amount in accordance with the Escrow Agreement and Section 1.6 hereof;
(vi) the Sellers shall execute and deliver to the Buyer (A) a ▇▇▇▇ of
sale in form and substance to be mutually agreed upon by the Parties, (B) an
assignment agreement with respect to the Assigned Contracts and Leases in form
and substance to be mutually agreed upon by the Parties, (C) a warranty deed in
form and substance to be mutually agreed upon by the Parties with respect to
each item of Owned Real Property; and (D) such other instruments of conveyance
as the Buyer may reasonably request in order to effect the sale, transfer,
conveyance and assignment to the Buyer of good title to the Acquired Assets;
(vii) the Buyer shall execute and deliver to the Sellers an instrument
of assumption in form and substance to be mutually agreed upon by the Parties
and such other instruments as the Sellers may reasonably request in order to
effect the assumption by the Buyer of the Assumed Liabilities;
(viii) the Sellers shall deliver or cause to be delivered to the Buyer
the Approval Order;
(ix) the Sellers shall deliver to the Buyer a certificate, as of a
date not earlier than the day of the entry of the Approval Order, of the Clerk
of the Bankruptcy Court certifying as to the absence of the filing of any stay
with respect to the Approval Order, or, if a certificate to such effect is not
provided by such Clerk, then a certified copy of the court docket for the
Bankruptcy Case establishing to the reasonable satisfaction of the Buyer the
absence of any such stay as of the Closing Date;
(x) the Sellers shall deliver to the Buyer patent, trademark, service
▇▇▇▇ and/or copyright assignments (which assignments shall be prepared by the
Buyer or its counsel with full cooperation of the Sellers, and the Sellers shall
request their intellectual property counsel to also cooperate with the Buyer or
its counsel, and such counsel shall be instructed by the Sellers to provide such
cooperation) duly executed by the Sellers and, if applicable, any party to which
a security interest was granted or assignment made with respect to the foregoing
providing for the assignment and transfer to the Buyer of all of such entity's
right,
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title and interest in and to all patents, copyrights, trademarks, service marks,
service names, trade names or any applications therefor and any other
Intellectual Property);
(xi) the Sellers shall deliver to the Buyer, or otherwise put the
Buyer in control of, all of the Acquired Assets of a tangible nature; and
(xii) the Buyer and the Sellers shall execute and deliver to each
other cross-receipts and such other instruments, documents or agreements, in
form and substance reasonable acceptable to the Buyer and the Sellers, as may be
necessary to effect and evidence the transactions contemplated by this
Agreement.
1.6 Post-Closing Adjustments; Release of Escrow.
(a) Within fifteen (15) business days after the Closing Date, the
Buyer and the Sellers shall each prepare in good faith, based on the books and
records of the Sellers and the Subsidiaries and, where applicable, with respect
to all United States assets and operations, in accordance with U.S. GAAP applied
on a consistent basis with the Financial Statements and the balance sheets of
the Foreign Entities, a certificate (each such certificate, a "Closing Amounts
Certificate") setting forth in reasonable detail the calculations as of the
Closing Date of the following: (i) the total amounts of each of the items that
are required to be set forth on the Estimated Amounts Certificate pursuant to
Section 1.4 and (ii) the differences, if any, between the total amounts of each
item set forth on the Estimated Amounts Certificate and the total amounts of
each corresponding item set out pursuant to clause (i) above. Within fifteen
(15) business days after the Closing Date, the Buyer and Sellers shall deliver
to each other such Party's Closing Amounts Certificate together with such
supporting work papers or other supporting information as may reasonably be
requested by the receiving Party. As promptly as practicable and no later than
five (5) business days from the date of the latest Closing Amounts Certificate,
the Buyer and the Sellers shall endeavor in good faith for a period not to
exceed ten (10) business days to resolve any differences (the "Differences")
between each Closing Amounts Certificate. If the Parties are unable to resolve
all their Differences and have not agreed in writing to extend the resolution
period, the parties agree that the independent certified public accounting firm
of Deloitte and Touche LLP (the "Neutral Auditor") shall be employed to resolve
any Differences after the end of such ten (10) business day period or such
extension of the resolution period (all such other items relating to the Closing
Amounts Certificate shall be deemed to be final and binding on the Parties).
Both Parties shall cooperate with the Neutral Auditor and its representatives by
providing access to all relevant books and records and access at reasonable
times to personnel having relevant information. The Parties shall direct the
Neutral Auditor to resolve the Differences as soon as reasonably practicable,
but in no event later than 30 days, and the decision of the Neutral Auditor
shall be final and binding upon the Parties. Such decision may be entered
thereon as an arbitration award pursuant to 9 U.S.C. 'SS'9 in any court of
competent jurisdiction. The fees and expenses of the Neutral Auditor shall be
borne 50% by the Buyer and 50% by the Sellers and the employment of the Neutral
Auditor shall be deemed in the ordinary course of the Sellers' business. If the
Parties resolve all of their Differences without employing the Neutral Auditor,
the Parties shall, as soon as possible after such resolution, jointly prepare a
final Closing Amounts Certificate that shall be deemed to be the "Final Closing
Amounts Certificate." If the Neutral Auditor is employed to resolve any
Differences, the Neutral
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Auditor shall prepare a final Closing Amounts Certificate that shall be deemed
to be the "Final Closing Amounts Certificate."
(b) Subject to the limitations set forth in Sections 1.6(b)(ii) and
1.6(b)(iii) below, the "Purchase Price Adjustment Amount" shall be equal to:
(i) (A) the Net Working Capital Target; minus
(B) the sum of the following (each of which, subject to
subsection (ii) below, shall be as set forth on the Final Closing Amounts
Certificate) (as so calculated, the "Net Working Capital"):
(1) the Included Receivables; plus
(2) the Quality Inventory; plus
(3) twenty percent (20%) of the total value of the
Non-Quality Inventory; plus
(4) the Included Current Assets; plus
(5) the Foreign Entities Net Current Assets, minus
(6) the Accrued Employee Liabilities; minus
(7) the Assumed Payables.
(ii) In the event that the amount of the Quality Inventory as set
forth on the Final Closing Amounts Certificate is greater than twenty million
dollars ($20,000,000), then any amounts in excess of twenty million dollars
($20,000,000) shall be excluded from the amount of Quality Inventory for
purposes of Section 1.6(b)(i)(B)(2) above, such exclusion not to exceed five
million dollars ($5,000,000). For purposes of the foregoing, twenty million
dollars ($20,000,000) in each instance above shall be reduced to sixteen million
dollars ($16,000,000) in the event that certain actions have been taken and
certain events have occurred as specified on Schedule 1.4(b)(ii) attached
hereto.
(iii) In the event that the Net Working Capital exceeds the Net
Working Capital Target by an amount greater than three million dollars
($3,000,000) (any such excess over $3,000,000 being the "Excess Receivables
Amount"), then certain accounts receivable of the Sellers shall be excluded from
the Included Receivables, such excluded accounts receivable to be in an amount
equal to the Excess Receivables Amount. In such event, the Buyer shall designate
those accounts receivable of the Sellers which shall be excluded from the
Included Receivables.
(c) The Buyer and the Sellers shall jointly instruct the Escrow Agent
pursuant to the Escrow Agreement to release the Escrow Amount as follows:
(i) (A) Within one (1) business day following the date the Final
Closing Amounts Certificate is prepared, the Escrow Agent shall be instructed to
release (1) to the Buyer, an amount equal to the Purchase Price Adjustment
Amount (or so much as shall be available up to the Estimated Purchase Price
Adjustment), if such amount is a positive number and (2) to the Sellers, an
amount, if any, by which the Estimated Purchase Price Adjustment
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exceeds the Purchase Price Adjustment Amount (or so much as shall be available
up to the Estimated Purchase Price Adjustment).
(B) In the event that the Estimated Purchase Price Adjustment is
less than the Purchase Price Adjustment Amount, then, immediately following the
release by the Escrow Agent of the Purchase Price Adjustment Amount to the Buyer
pursuant to Section 1.6(c)(i)(A)(1) above, the Sellers shall deliver by wire
transfer of immediately available funds to an account designated by the Buyer an
amount equal to the difference between the Purchase Price Adjustment Amount and
the Estimated Purchase Price Adjustment. In the event that the Purchase Price
Adjustment Amount is a negative number, then, immediately following the release
by the Escrow Agent of the Estimated Purchase Price Adjustment to the Sellers
pursuant to Section 1.6(c)(i)(A)(2) above, the Buyer shall deliver by wire
transfer of immediately available funds to an account designated by the Sellers
an amount equal to the absolute value of the Purchase Price Adjustment Amount.
Any wire transfer required to be made pursuant to this Section 1.6(c)(i)(B) is
referred to herein as the "Purchase Price Adjustment Wire";
(ii) the Escrow Agent shall be instructed to release the Plan Escrow
Amount as follows: (A) to the Buyer, periodically, in the amount of the payments
made by Buyer pursuant to the Retention Plan, the MCMS Plan and the Executive
Severance Payments, upon presentation of the evidence of such payments and (B)
to the Sellers, on the one year anniversary of the Closing Date, in the amount
equal the difference between the Plan Escrow Amount and all amounts released to
Buyer pursuant to clause (A); and
(iii) the Escrow Agent shall be instructed to release the Indemnity
Escrow Amount as follows: (A) to the Buyer, periodically, in the amount of the
indemnification obligations due to Buyer in accordance with Article VIII of this
Agreement and the terms of the Escrow Agreement and (B) to the Sellers, on the
one year anniversary of the Closing Date, in the amount equal the difference
between the Indemnity Escrow Amount and all amounts released to Buyer pursuant
to clause (A); provided, that, if at the one year anniversary of the Closing
Date, Buyer has an outstanding claim or claims for indemnification against
Sellers under Article VIII of this Agreement, the date of release under this
clause (B) with respect to any amounts subject to such outstanding
indemnification claim(s) shall be extended until the date when such claim(s) is
(are) settled and any amounts due under clause (A) have been released to the
Buyer.
1.7 Allocation. The Buyer and the Sellers agree that as soon as reasonably
practical after the date hereof and prior to the Closing Date, the Buyer and the
Sellers shall discuss the allocation of the Preliminary Purchase Price and the
Assumed Liabilities among the Acquired Assets and attempt in good faith to reach
agreement with respect thereto. If the Buyer and the Sellers reach agreement
with respect to the allocation of the Preliminary Purchase Price and Assumed
Liabilities, the Buyer and the Sellers shall make all required non-U.S.,
federal, state and local income tax filings consistent with such allocation
(giving effect to mutually agreed upon adjustments to the allocation as a result
of any adjustment to the Preliminary Purchase Price in accordance with Sections
1.4 and 1.6) and such allocation shall be used for all purposes (including
financial accounting purposes).
1.8 Employees. At the Closing, the Sellers shall pay certain retention
obligations under the Retention Plan previously delivered to the Buyer (the
"Retention Plan") to the
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Continuing Employees in an amount equal to $700,000 (the "Retention Plan
Payment"). Provided that Buyer is the successful bidder for the Acquired Assets,
the Buyer will pay the severance obligations under the MCMS Plan previously
delivered to the Buyer (the "MCMS Plan") following the Closing in the total
aggregate amount of up to $1,600,000, which shall be funded out of the Plan
Escrow Amount. In the event that the Sellers fail to make any portion of the
Retention Plan Payment at the Closing, the Buyer will pay such amount, which
shall also be funded out of the Plan Escrow Amount. At the Closing, the Buyer
shall assume and become responsible for payment of any severance or other
similar compensation and benefits under the executive employment agreements set
forth on Schedule 1.8 (the "Executive Employment Agreements") up to $1,400,000,
which shall paid to the employees under the Executive Employment Agreements
within thirty (30) days after the Closing and which shall be funded out of the
Plan Escrow Amount (the "Executive Severance Payments").
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Sellers and the Subsidiaries represent and warrant to the Buyer that the
statements contained in this Article II are true and correct, except as
disclosed in the schedules attached hereto (the "Schedules"). The disclosures in
any Schedule shall qualify only the corresponding paragraph in this Article II
unless and to the extent such disclosure is reasonably apparent on its face.
2.1 Organization, Qualification and Corporate Power. Each of the Sellers
and the Subsidiaries is duly organized and validly existing under the laws of
its respective jurisdictions of organization. Attached hereto as Schedule 2.1 is
a true and correct organizational chart of MCMS and each corporation,
partnership, limited liability company, joint venture or other business
association or entity in which MCMS has, directly or indirectly, an equity
interest representing 50% or more of the capital stock thereof or other equity
interests therein or voting power thereof (excluding the Belgian Entities and ,
each a "Subsidiary" and collectively, the "Subsidiaries"), which chart shows as
to each, among other things, its exact legal name, its jurisdiction of
organization, all equity holders and their respective ownership percentages. The
Sellers and the Subsidiaries are in good standing under the laws of their
respective jurisdictions of organization. The Sellers and the Subsidiaries are
duly qualified to conduct their respective businesses and are in good standing
under the laws of each jurisdiction in which the nature of their respective
businesses or the ownership or leasing of their respective properties require
such qualification except for jurisdictions where the failure to so qualify
would not have a Material Adverse Effect. The Sellers and the Subsidiaries have
all requisite corporate power and authority to carry on the businesses in which
they are engaged and to own and use the properties owned and used by them.
2.2 Authority. (a) The Sellers and the Subsidiaries have all requisite
power and authority to execute and deliver this Agreement and the Ancillary
Agreements and to perform its obligations hereunder and thereunder (subject to
entry of the Provision Order and the Approval Order with respect to the Sellers'
obligations dependent thereon); (b) this Agreement has been duly and validly
executed and delivered by the Sellers and the Subsidiaries and constitutes a
valid and binding obligation of the Sellers and the Subsidiaries, enforceable
against the Sellers and the Subsidiaries in accordance with its terms (subject
to entry of the Provision Order and the
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Approval Order with respect to the Sellers' and the Subsidiaries' obligations
dependent thereon), except as such enforceability may be limited by principles
of public policy and subject to the laws of general application relating to
bankruptcy, insolvency and the relief of debtors and rules of laws governing
specific performance, injunctive relief or other equitable remedies
(collectively, the "Enforceability Exceptions"); and (c) the Ancillary
Agreements, when delivered by the Sellers and the Subsidiaries at Closing, will
constitute valid and binding obligations of the Sellers and the Subsidiaries,
enforceable against the Sellers and the Subsidiaries in accordance with their
respective terms (subject to entry of the Provision Order and the Approval Order
with respect to the Sellers' obligations dependent thereon), except as such
enforceability may be limited by the Enforceability Exceptions. To the knowledge
of the Sellers, as of the date of this Agreement, the Sellers' senior secured
lenders (other than ▇▇▇▇▇▇ Brothers Inc. and its affiliates) support the
approval and consummation of the sale of the Acquired Assets to the Buyer as
provided for herein.
2.3 Non-Contravention. Subject to compliance with the applicable
requirements of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act, except as set forth on Schedule 2.3,
upon entry of the Provision Order and the Approval Order, neither the execution
and delivery of this Agreement or the Ancillary Agreements by the Sellers and
the Subsidiaries, nor the consummation by the Sellers and the Subsidiaries of
the transactions contemplated hereby or thereby, will (a) conflict with or
violate any provision of the charter, By-laws or governing documents of the
Sellers or any of the Subsidiaries, (b) require on the part of the Sellers or
any Subsidiary, any filing with, or any permit, authorization, consent or
approval of, any Governmental Entity or (c) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to the Sellers or the
Subsidiaries, or any of their properties or assets.
2.4 Financial Statements; Absence of Certain Changes.
(a) The Sellers have provided the Buyer with copies of its
consolidated audited balance sheet and statement of income, changes in
stockholders' equity and cash flows for the year ended August 31, 2000 and
unaudited balance sheets and statements of income and cash flows for the
quarters ended November 30, 2000, February 28, 2001 and May 31, 2001. Such
financial statements (collectively, the "Financial Statements") have been
prepared in accordance with United States generally accepted accounting
principles ("U.S. GAAP") applied on a consistent basis throughout the periods
covered thereby, fairly present in all material respects, as of the dates and
for the periods indicated, the financial condition, the results of operation and
cash flows of the Sellers and the Subsidiaries and are consistent with the books
and records of the Sellers and the Subsidiaries.
(b) Except as set forth on Schedule 2.4(b), since May 31, 2001, neither the
Sellers nor any Subsidiary have incurred, to their knowledge, any liabilities
(whether known or unknown, absolute or contingent, liquidated or unliquidated or
due or to become due), other than (i) the liabilities shown on the May 31, 2001
balance sheet included in the Financial Statements and (ii) contractual
liabilities that arise in the ordinary course of the Sellers' and the
Subsidiaries' business, including with respect to frequency and amount, and that
are not material to the business of the Sellers and the Subsidiaries
individually and taken as a whole. There are no amounts outstanding under that
certain loan agreement by and between Affin Bank Berhad (formerly known as
Perwira Affin Bank Berhad) and MCMS Malaysia (the "Malaysian Loan").
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(c) Since August 31, 2000, the Sellers and the Subsidiaries have not
changed, or agreed to change, in any material respect, their accounting methods,
principles or practices, except insofar as required by a generally applicable
change in U.S. GAAP or as disclosed in reports and public filings of MCMS made
with the United States Securities and Exchange Commission after August 31, 2000
through the date hereof (the "Public Filings").
2.5 Ownership and Condition of Assets. The Sellers and the Subsidiaries
have good title to all of the Acquired Assets and all of the material assets of
the Subsidiaries free and clear of all Security Interests, except as set forth
in Schedule 2.5. For purposes of this Agreement, "Security Interest" means any
mortgage, pledge, security interest, encumbrance, charge, lien, claim or
interest (whether arising by contract or by operation of law). Upon execution of
the Ancillary Agreements by the Sellers and the Subsidiaries at the Closing, the
Buyer will become the true and lawful owner of, and will receive good title to,
the Acquired Assets, free and clear of all Security Interests. The Acquired
Assets and the assets of the Subsidiaries constitute all material assets and
properties of the Sellers and the Subsidiaries, except for Excluded Assets,
currently in use or held for use in the conduct of the Sellers' and the
Subsidiaries' business.
2.6 Intellectual Property.
(a) The Intellectual Property Listing (A) is a true and complete list of
each patent, copyright, trademark, service ▇▇▇▇, or tradename registration which
has been issued to any of the Sellers or the Subsidiaries with respect to any of
their Intellectual Property, (B) identifies each pending patent, copyright,
trademark, service ▇▇▇▇ or tradename application or application for registration
which any of the Sellers or the Subsidiaries has made with respect to any of
their Intellectual Property, (C) identifies each unregistered trademark, service
▇▇▇▇ or tradename of any of the Sellers and the Subsidiaries and (D) identifies
each license or other agreement pursuant to which any of the Sellers or the
Subsidiaries has granted to any third party (i) rights to sublicense any
Intellectual Property to another, (ii) rights to source code, or (iii) rights to
patents, or been granted any rights by any third party with respect to any of
its Intellectual Property (other than commercially available, "shrink-wrap" type
software or other off the shelf materials that are paid or prepaid in full). The
Sellers and the Subsidiaries own or have the right to use all Intellectual
Property used in the businesses of the Sellers or the Subsidiaries utilizing the
Acquired Assets or necessary for the operation of the locations relating
thereto. Except to the extent the failure to own any items of Intellectual
Property would not have a material effect on the ability of the Buyer to operate
the Facilities after the Closing, each item of the Sellers' and the
Subsidiaries' Intellectual Property will be owned or available for use by the
Buyer on identical terms and conditions immediately following the Closing. The
Sellers and the Subsidiaries have taken all reasonable measures to protect the
proprietary nature of their Intellectual Property, and to maintain in confidence
all trade secrets and confidential information, that they own or use. The
Sellers and the Subsidiaries have not granted to any third-party, and to the
knowledge of the Sellers and the Subsidiaries, no other person or entity has,
any rights to any of the Intellectual Property owned or used by the Sellers or
the Subsidiaries (except pursuant to agreements or licenses specified in the
Intellectual Property Listing), and to the knowledge of the Sellers and the
Subsidiaries, no person or entity is infringing, violating or misappropriating
any of the Intellectual Property except as specified in Schedule 2.6(a) attached
hereto. The Sellers and the Subsidiaries have made reasonable best efforts to
receive from all employees and contractors who may assert or have asserted any
right in or claim to any Intellectual Property as
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an inventor or otherwise an invention assignment form, assigning such person's
or entity's rights in the Intellectual Property to the Sellers, as appropriate.
(b) Except as set forth on Schedule 2.6(b) attached hereto, none of the
activities or businesses presently conducted by the Sellers or the Subsidiaries
violates or constitutes a misappropriation of any Intellectual Property rights
of any other person or entity. Except as set forth in Schedule 2.6(b) attached
hereto, the Sellers and the Subsidiaries have not received any written
complaint, claim or notice alleging any infringement, violation or
misappropriation of any Intellectual Property rights of any third party.
(c) The Sellers and the Subsidiaries have made available to the Buyer true,
correct and complete copies of all the patents, copyrights, trademarks, service
marks, registrations, applications, licenses and agreements (as amended to date)
listed on the Intellectual Property Listing and all working files relating
thereto and all other written documentation evidencing ownership of, and any
claims or disputes relating to, each such item listed on the Intellectual
Property Listing. Except as set forth in the Intellectual Property Listing, with
respect to each such item of Intellectual Property (i) the license, sublicense
or other agreement (whether to or from the Seller and the Subsidiaries),
covering such item is legal, valid, binding, enforceable and in full force and
effect and (ii) to the knowledge of the Sellers and the Subsidiaries, the
underlying item of Intellectual Property is not subject to any outstanding
judgment, order, decree, stipulation or injunction.
2.7 Contracts. The Sellers and the Subsidiaries have made available to the
Buyer a true, correct and complete copy of each of the Assigned Contracts and
Leases and all other material contracts of the Sellers and the Subsidiaries.
With respect to each Assigned Contract and Lease: (i) the Assigned Contract or
Lease is legal, valid, binding and enforceable against the Sellers, as the case
may be, except as such enforceability may be limited by Enforceability
Exception, and in full force and effect; (ii) except as set forth on Schedule
2.7 attached hereto, neither the Sellers nor any Subsidiary nor, to the
knowledge of the Sellers and the Subsidiaries, any other party, is in breach or
violation of, or default under, any such Assigned Contract or Lease (except for
any overdue amounts that are prepetition claims and that will be cured by the
Sellers in connection with the assumption and assignment to the Buyer), and no
event has occurred, is pending or, to the knowledge of the Sellers and the
Subsidiaries, is threatened, which, after the giving of notice, with lapse of
time, or otherwise, would constitute a breach or default by the Sellers or any
Subsidiary or, to the knowledge of the Sellers and the Subsidiaries, any other
party under such Assigned Contract or Lease; and (iii) except as set forth on
Schedule 2.7, no party to such Assigned Contract or Lease has verbally or in
writing threatened to terminate such Assigned Contract or Leases, notified the
Sellers or any Subsidiary of an intent to terminate such Assigned Contract or
Lease or attempted to terminate such Assigned Contract or Lease.
2.8 Litigation. Except as disclosed in Schedule 2.8 attached hereto and
except for the Bankruptcy cases, there is no pending litigation, or to Sellers'
and the Subsidiaries' knowledge, any litigation or investigation threatened
against the Sellers or any Subsidiary which litigation or investigation could
reasonably be expected to have a Material Adverse Effect.
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2.9 Legal Compliance. Except as set forth on Schedule 2.9 and except with
respect to compliance with Environmental Laws (which is covered in Section
2.15), the Sellers and the Subsidiaries are conducting and have conducted their
businesses in compliance with each law (including rules and regulations
thereunder) of any federal, state, local or foreign government, or any
Governmental Entity, which affects or relates to this Agreement or the
transactions contemplated hereby except as would not have a Material Adverse
Effect.
2.10 Customers and Suppliers. Schedule 2.10 attached hereto sets forth a
complete, true and correct listing of (a) each customer of the Sellers and the
Subsidiaries that accounted for more than 5% of the consolidated revenues of the
Sellers and the Subsidiaries during the last twelve (12) months and (b) each
supplier that accounted for more than 5% of the purchases of materials by the
Sellers and the Subsidiaries during the last twelve (12) months.
2.11 Subsidiaries. Except as set forth in Schedule 2.11(A) attached hereto,
none of the Subsidiaries of the Sellers owns any patents or patent applications
or copyrights, trademarks or other material Intellectual Property. The Belgian
Entities do not own any of the items set forth on the Intellectual Property
Listing. Except as set forth on Schedule 2.11(B) attached hereto, none of MCMS
International, M.C.M.S. Asia Pacific Pte Ltd or M.C.M.S. Singapore Pte Ltd owns
or has owned any material property or assets or conducts or has conducted any
operations other than their ownership of equity interests in other Subsidiaries.
2.12 Employees. The Sellers and the Subsidiaries have used their reasonable
best efforts to cause all employees to enter into a confidentiality/assignment
of inventions agreement with the Sellers, the form of which has previously been
delivered to the Buyer. The Sellers and the Subsidiaries are not a party to or
bound by any collective bargaining agreement, nor has it experienced any
strikes, grievances, claims of unfair labor practices or other collective
bargaining disputes, except with respect to MCMS Mexico (and true and correct
copies of all such agreements, material correspondence and other material
writings relating thereto have been previously delivered to the Buyer). The
Sellers and the Subsidiaries have no knowledge of any other organizational
effort presently being made or threatened by or on behalf of any labor union
with respect to employees of the Sellers and the Subsidiaries.
2.13 Owned Real Property. Schedule 1.1(a)(v) attached hereto lists the
property address and the legal description of all Owned Real Property. With
respect to each piece of Owned Real Property, except as set forth on Schedule
2.13 attached hereto:
(a) the Sellers have good and marketable title to such Owned Real Property,
free and clear of any Security Interest, easement, covenant or other
restriction, except for (i) recorded easements, covenants and other
non-environmental restrictions which do not impair the uses, occupancy or value
of such Owned Real Property; (ii) liens constituting leases, subleases or
occupancy agreements that give only their party the right to occupy any portion
of the premises and (iii) liens reflected on any survey or in any title report
delivered to Buyer prior to the date hereof;
(b) there are no (i) pending or, to the knowledge of the Sellers,
threatened condemnation proceedings relating to such Owned Real Property, (ii)
pending or, to the knowledge of the Sellers, threatened litigation or
administrative actions relating to such Owned
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Real Property, or (iii) other matters affecting materially and adversely the
occupancy or value thereof (which shall be deemed not to include general market
conditions);
(c) the legal description for such Owned Real Property contained in the
deed thereof describes such Owned Real Property fully and adequately in all
material respects and, to the knowledge of the Seller, the buildings and
improvements may be used as of right under applicable zoning and land use laws
for the current uses in all material respects;
(d) there are no leases, subleases, licenses or agreements, written or
oral, granting to any party or parties (other than the Sellers or a Subsidiary)
the right of use or occupancy of any portion of such Owned Real Property;
(e) there are no outstanding options or rights of first refusal to purchase
such Owned Real Property, or any portion thereof or interest therein;
(f) all facilities located on such Owned Real Property are supplied with
utilities and other services necessary for the operation of such facilities,
including gas, electricity (including but not limited to all necessary private
electric supply agreements), water, telephone, sanitary sewer and storm sewer;
(g) neither any of the Sellers nor any Subsidiary has received notice of
any proposed or pending proceeding to change or redefine the zoning
classification of all or any portion of such Owned Real Property;
(h) such Owned Real Property abuts on and has direct vehicular access to a
public road or access to a public road via a permanent, irrevocable, appurtenant
easement benefiting such property;
(i) to the knowledge of the Sellers, the improvements constructed on such
Owned Real Property are in good condition and proper order, free of roof leaks,
insect infestation, and material construction defects, and all mechanical and
utility systems servicing such improvements are in good condition and proper
working order, in each case free of material defects; and
(j) the Sellers have delivered to the Buyer complete and accurate copies of
all of the following materials relating to such Owned Real Property, to the
extent in the Sellers' possession or control: title insurance policies and
commitments; deeds; encumbrance and easement documents and other documents and
agreements affecting title to or for operation of such Owned Real Property;
surveys; appraisals; structural inspection, soils, environmental assessment and
similar reports.
2.14 Real Property Leases. Schedule 2.14 attached hereto lists all leases
and subleases pursuant to which the Sellers or a Subsidiary leases or subleases
from another party any real property (the "Leases"). The Sellers have delivered
to the Buyer complete and accurate copies of the Leases. With respect to each
Lease, except as set forth on Schedule 2.14 attached hereto:
(a) such Lease is legal, valid, binding, enforceable and in full force and
effect;
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(b) such Lease is assignable by the Sellers or a Subsidiary to the Buyer
without the consent or approval of any party (except as set forth in Schedule
2.14);
(c) none of the Sellers or any Subsidiary and, to the knowledge of the
Sellers and the Subsidiaries, no other party, is in breach or violation of, or
default under, any such Lease, and no event has occurred, is pending or, to the
knowledge of the Sellers and the Subsidiaries, is threatened, which, after the
giving of notice, with lapse of time, or otherwise, would constitute a breach or
default by the Sellers or any Subsidiary or, to the knowledge of the Sellers and
the Subsidiaries, any other party under such Lease;
(d) none of the Sellers or any Subsidiary has assigned, transferred,
conveyed, mortgaged, deeded in trust or encumbered any interest in the leasehold
or subleasehold;
(e) to the knowledge of the Sellers and the Subsidiaries, all facilities
leased or subleased thereunder are supplied with utilities and other services
adequate for the operation of said facilities in all material respects; and
(f) the Sellers and the Subsidiaries are not aware of any Security
Interest, easement, covenant or other restriction applicable to the real
property subject to such lease which would reasonably be expected to materially
impair the current uses or the occupancy by the Sellers or a Subsidiary of the
property subject thereto.
2.15 Environmental.
(a) Except as set forth on Schedule 2.15, each of the Sellers and the
Subsidiaries has complied with all applicable Environmental Laws in all material
respects. There is no pending or, to the knowledge of the Sellers and the
Subsidiaries, threatened civil or criminal litigation, written notice of
violation, formal administrative proceeding, or investigation, inquiry or
information request by any Governmental Entity, relating to any Environmental
Law involving the Sellers or any Subsidiary.
(b) None of the Sellers or any Subsidiary has any material liabilities or
obligations arising from the release or threat of release of any Hazardous
Materials.
(c) None of the Sellers or any Subsidiary is a party to or bound by any
court order, administrative order, consent order or other agreement with any
Governmental Entity entered into in connection with any legal obligation or
liability arising under any Environmental Law.
(d) Set forth in Schedule 2.15 attached hereto is a list of all documents
(whether in hard copy or electronic form) that contain any material
environmental reports, investigations and audits relating to premises currently
or previously owned or operated by the Sellers or a Subsidiary (whether
conducted by or on behalf of the Sellers or a Subsidiary or a third party, and
whether done at the initiative of the Sellers or a Subsidiary or directed by a
Governmental Entity or other third party) which any of the Sellers or the
Subsidiaries has possession of or can obtain access to. A complete and accurate
copy of each such material document has been provided to the Buyer.
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(e) The Sellers and the Subsidiaries are not aware of any material
environmental liability of any solid or hazardous waste transporter, any
recycling facility or any treatment, storage or disposal facility that has been
used or is being used by the Sellers or any Subsidiary.
(f) For purposes of this Agreement:
(i) "Environmental Laws" shall mean any federal, state, local or
foreign law, statute, rule or regulation, any applicable international treaty,
agreement or standard, or the common law relating to the environment or
occupational health and safety, including but not limited to any statute,
regulation, administrative decision or order pertaining to (i) treatment,
storage, disposal, generation, manufacture, distribution in commerce or
transportation of industrial, toxic or hazardous materials or substances or
solid or hazardous waste; (ii) air, water and noise pollution; (iii) groundwater
and soil contamination; (iv) the release or threatened release into the
environment of industrial, toxic or hazardous materials or substances, or solid
or hazardous waste, including emissions, discharges, injections, spills, escapes
or dumping of pollutants, contaminants or chemicals; (v) the protection of wild
life, marine life and wetlands, including but not limited to all endangered and
threatened species; (vi) storage tanks, vessels, containers, abandoned or
discarded barrels and other closed receptacles; (vii) occupational health and
safety of employees and other persons; and (viii) manufacturing, processing,
using, distributing, treating, storing, recycling, disposing, transporting or
handling of materials regulated under any law as pollutants, contaminants, toxic
or hazardous materials or substances or oil or petroleum products or solid or
hazardous waste. As used above, the terms "release" and "environment" shall have
the meaning set forth in the U.S. Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. 'SS'9601 et seq. ("CERCLA").
(ii) "Hazardous Substances" shall mean any chemicals, pollutants or
contaminants, hazardous substances (as such term is defined under CERCLA), solid
wastes and hazardous wastes (as such terms are defined under the U.S. Resource
Conservation and Recovery Act, 42 U.S.C. 'SS'6901 et seq.), toxic materials, oil
or petroleum and petroleum products or any other material subject to regulation
under any Environmental Law.
2.16 Permits. Schedule 2.16 attached hereto sets forth a list of all
material Permits (including those issued or required under Environmental Laws
and those relating to the occupancy or use of Owned Real Property or Leased Real
Property) issued to or held by the Sellers or any Subsidiary and identifies
those Permits which are not transferable to the Buyer hereunder. Such listed
Permits are the only Permits that are required for the Sellers and the
Subsidiaries to conduct their respective businesses as presently conducted
except as would not have a Material Adverse Effect. Each material Permit is in
full force and effect except as would not have a Material Adverse Effect; the
Sellers or the applicable Subsidiary is in compliance with the material terms of
each such material Permit; and, to the knowledge of the Sellers and the
Subsidiaries, no suspension or cancellation of such Permit is threatened.
2.17 Disclosure. No representation or warranty by the Sellers or the
Subsidiaries contained in this Agreement and no statement contained in the
Schedules contains or will contain any untrue statement of a material fact or
omit or will omit to state any material fact necessary, in light of the
circumstances under which it was or will be made, in order to make the
statements herein or therein not misleading.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Sellers that the statements contained
in this Article III are true and correct except as set forth below.
3.1 Organization. The Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the state of its incorporation.
The Buyer is duly qualified to conduct business and is in good standing under
the laws of each jurisdiction in which the nature of its businesses or the
ownership or leasing of its properties requires such qualification, except where
the failure to be so qualified or in good standing would not have a material
adverse effect on the properties or assets of the Buyer. The Buyer has all
requisite corporate power and authority to carry on the businesses in which it
is engaged and to own and use the properties owned and used by it. The Buyer has
furnished or made available to the Sellers complete and accurate copies of its
Certificate of Incorporation and By-laws.
3.2 Authorization of Transaction. The Buyer has all requisite power and
authority to execute and deliver this Agreement and the Ancillary Agreements and
to perform its obligations hereunder and thereunder. The execution and delivery
of this Agreement and the Ancillary Agreements by the Buyer and the performance
of this Agreement and the consummation of the transactions contemplated hereby
and thereby by the Buyer have been duly and validly authorized by all necessary
corporate action on the part of the Buyer. This Agreement has been duly and
validly executed and delivered by the Buyer and constitutes a valid and binding
obligation of the Buyer, enforceable against it in accordance with its terms,
except as such enforceability may be limited by the Enforceability Exceptions.
The Ancillary Agreements, when delivered by the Buyer at Closing, will
constitute valid and binding obligations of the Buyer, enforceable against the
Buyer in accordance with their respective terms, except as such enforceability
may be limited by the Enforceability Exceptions.
3.3 Non-Contravention. Except for the applicable requirements of the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act and the Securities Exchange Act of 1934, as amended (the
"Exchange Act") or as set forth on Schedule 3.3 attached hereto, neither the
execution and delivery of this Agreement nor the Ancillary Agreements by the
Buyer, nor the consummation by the Buyer of the transactions contemplated hereby
or thereby, will (a) conflict or violate any provision of the charter or By-laws
of the Buyer, (b) require on the part of the Buyer any filing with, or permit,
authorization, consent or approval of, any Governmental Entity, (c) conflict
with, result in breach of, constitute (with or without due notice or lapse of
time or both) a default under, result in the acceleration of, create in any
party any right to accelerate, terminate, modify or cancel, or require any
notice, consent or waiver under, any contract, lease, sublease, license,
sublicense, franchise, permit, indenture, agreement or mortgage for borrowed
money, instrument of indebtedness, Security Interest or other arrangement to
which the Buyer is a party or by which it is bound or to which any of its assets
is subject or (d) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to the Buyer or any of its properties or assets.
3.4 Litigation. There is no litigation or investigation pending, or to
Buyer's knowledge, threatened, against Buyer which litigation or investigation
could reasonably be
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expected to have a material adverse effect on the Buyer's ability to consummate
the transactions contemplated hereby.
3.5 Financial Ability. The Buyer has the financial resources necessary to
consummate the transactions contemplated by this Agreement, including, without
limitation, the ability to pay the Purchase Price.
3.6 Buyer Acknowledgment. THE BUYER ACKNOWLEDGES THAT THE SELLERS AND THE
SUBSIDIARIES MAKE NO REPRESENTATIONS OR WARRANTIES CONCERNING THE SELLERS, THEIR
SUBSIDIARIES, THEIR RESPECTIVE ASSETS (INCLUDING, WITHOUT LIMITATION,
INTELLECTUAL PROPERTY) OR THE BUSINESS CONDUCTED BY ANY OF THEM OTHER THAN AS
EXPRESSLY SET FORTH IN ARTICLE II HEREOF AND THAT THE SELLERS AND THE
SUBSIDIARIES EXPRESSLY DISCLAIM ALL OTHER REPRESENTATIONS AND WARRANTIES,
INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE.
ARTICLE IV
PRE-CLOSING COVENANTS
4.1 Efforts. Each Party shall use commercially reasonable efforts to take
all actions and to do all things necessary, proper or advisable to consummate
the transactions contemplated by this Agreement.
4.2 Notices and Consents. (a) Each of the Parties shall use commercially
reasonable efforts to obtain all such waivers, permits, consents, approvals or
other authorizations from third parties and Governmental Entities, and to effect
all such registrations, filings and notices with or to third parties and
Governmental Entities, as may be necessary in order to permit the consummation
of the transactions contemplated by this Agreement and permit the Buyer
following the Closing to hold and employ the Acquired Assets in a manner
consistent with current usage (including, without limitation, those permits
listed on Schedule 2.16 attached hereto).
4.3 HSR Act. Each of the Parties hereto shall as promptly as practicable, but in
no event later than ten business days following the execution and delivery of
this Agreement, (i) file or cause to be filed with the United States Federal
Trade Commission (the "FTC") and the United States Department of Justice (the
"DOJ") the notification and report form required for the transactions
contemplated hereby and any supplemental information requested in connection
therewith pursuant to the HSR Act and (ii) make such other filings as are
necessary in other jurisdictions in order to comply with all applicable laws
relating to competition and, subject to the provisions in the last sentence of
this Section 4.3, shall promptly provide any supplemental information requested
by applicable Governmental Entities relating thereto. Any such filing,
notification and report form and supplemental information shall be in
substantial compliance with the requirements of the HSR Act or such other
applicable law. Each of the parties hereto shall furnish to the others such
necessary information and reasonable assistance as the others may request in
connection with its preparation of any filing or submission that is necessary
under the HSR Act or such other applicable law. Each of the parties hereto shall
keep the others
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apprised of the status of any communications with, and any inquiries or requests
for additional information from, the FTC, the DOJ and any other applicable
Governmental Entities and shall comply promptly with any such inquiry or
request. Each party shall use reasonable commercial efforts to obtain any
clearance required under the HSR Act or such other applicable law for the
consummation of the transactions contemplated by this Agreement; provided that,
notwithstanding anything to the contrary contained herein, the Buyer shall not
be obligated to (A) respond to formal requests for additional information or
documentary material pursuant to 16 C.F.R. 803.20 under the HSR Act except to
the extent it elects to do so in its sole discretion or (B) to sell or dispose
of or hold separately (through a trust or otherwise) any of the Acquired Assets
or any other assets or businesses of the Buyer or its affiliates.
4.4 Bankruptcy Covenants.
(a) Not later than two (2) business days subsequent to the execution of
this Agreement, the Sellers shall file (i) a motion, pursuant to 11 U.S.C.
'SS''SS'105, 363, and 365 to approve the sale of the Acquired Assets to the
Buyer pursuant to this Agreement (the "Approval Motion") and (ii) a motion (the
"Provision Motion") for approval of the Overbid Provisions, the Breakup Fee and
all of the other provisions of Article IV of this Agreement, each of such
motions in form and substance reasonably acceptable to the Buyer. The Sellers
shall use its best efforts to obtain orders (i) approving the Provision Motion
(the "Provision Order") within twenty (20) days of the date of the Filing Date
and (ii) approving the Approval Motion (the "Approval Order") within sixty-five
(65) days of the date of this Agreement, provided that the Provision Order shall
be in a form in conformity with the form of order attached hereto as Exhibit A
in all material respects and the Approval Order shall be in a form in conformity
with the form of order attached hereto as Exhibit B in all material respects,
with only such changes to such orders as shall be agreed to by the Sellers and
the Buyer. All of the Sellers' obligations and liabilities to the Buyer arising
upon the Buyer's termination of this Agreement in accordance with Article VII
hereof or in the event that the Buyer otherwise does not close on the purchase
of the Acquired Assets for any reason (including but not limited to the Sellers'
obligations to pay the Breakup Fee and return of the Deposit to the Buyer) shall
have administrative expense priority under 'SS''SS'503(b) and 507(a) of the
Bankruptcy Code.
(b) The Sellers shall promptly provide the Buyer with drafts of all
documents, motions, orders, filings or pleadings that the Sellers propose to
file with the Bankruptcy Court which relate to the consummation or approval of
this Agreement, the Ancillary Agreements, the Provision Motion or any provision
herein or therein, and will provide the Buyer with reasonable opportunity to
review and approve such filings as reasonably practical. The Sellers shall also
promptly (within 1 business day) provide the Buyer with facsimile copies of all
pleadings received by or served by or upon the Sellers in connection with its
Bankruptcy Case which have not otherwise been served on the Buyer (as shown on
the certificate of service filed therewith) and as otherwise requested by the
Buyer.
(c) The Sellers shall use their reasonable best efforts to obtain, at their
sole cost and expense, the entry of an order authorizing the Sellers to assume
and assign the Assigned Contracts and Leases to the Buyer at the Closing(the
"Assignment Order"), such order contemplated to be included as part of the
Approval Order in such other form as shall be reasonably satisfactory to the
Buyer. The Sellers shall be responsible for the payment of any
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amounts necessary to cure any defaults that exist on the Closing Date under the
Assigned Contracts and Leases. The Buyer shall, from time to time prior to the
Closing, have the right to add or delete any executory contract or unexpired
lease to or from, or otherwise modify, the list of the Assigned Contracts and
Leases, except by adding any of the contracts listed on Schedule 1.1(a)(iv)(B).
Notice of the proposed assumption and assignment of the Assigned Contracts and
Leases shall be provided in accordance with the Provision Order.
(d) From and after the date hereof, the Sellers shall not, and shall ensure
that none of the Subsidiaries, take any action or fail to take any action, which
action or failure to act would reasonably be expected to result in (A) the
reversal, avoidance, revocation, vacating or modification (in any manner which
would reasonably be expected to materially and adversely affect the Buyer's
rights hereunder) or (B) the entry of a stay pending appeal, in the cases of
each of sub-clauses (A) or (B) of this Section, with respect to the Approval
Order, the Assignment Order or the Provision Order; provided, however, that
nothing contained herein will in any way limit the Seller's ability to provide
notice of the Approval Motion and to comply with requests for information from
potential competing bidders for the Acquired Assets so long as it is in
compliance with the provisions of Section 4.8 hereof, or to comply with
applicable law; and
(e) From and after the commencement of the Chapter 11 Case, the Sellers
shall (A) continue to operate their businesses as debtors in possession pursuant
to Sections 1107 and 1108 of the Bankruptcy Code, (B) provide the Buyer with a
true and accurate copy of all monthly reports provided to the office of the
United States Trustee with respect to Seller in its Chapter 11 Case(s) and the
Seller shall not be delinquent in providing any such reports and (C) pay all of
their postpetition obligations when due.
4.5 Operation of Business. Except as contemplated by this Agreement or
consented to by the Buyer, which consent shall not be unreasonably withheld, and
to the extent not inconsistent with the Bankruptcy Code, the Bankruptcy Rules,
the operation and information requirements of the Office of United States
Trustee (the "OIRR"), or any orders entered by the Bankruptcy Court in the
Sellers' Chapter 11 Cases during the period from the date of this Agreement to
the Closing or otherwise required by applicable law, the Sellers and the
Subsidiaries shall conduct their operations in compliance with all applicable
laws and regulations in all material respects, and to the extent consistent
therewith so as to preserve the current value and integrity of the Acquired
Assets, pay all post-petition taxes as they become due and payable, maintain
insurance on the Acquired Assets (in amounts and types consistent with past
practice), use its best efforts to preserve its relationships with customers,
suppliers and others having business dealings with it and take all actions (or
refrain from taking any actions) to avoid the occurrence of a Material Adverse
Effect. Notwithstanding the foregoing, the Sellers and the Subsidiaries shall
consult with the Buyer prior to any transfer of any Acquired Assets or any other
assets of the Subsidiaries (except for Excluded Assets) from its locations as of
the date hereof (except for transfers in the ordinary course of business), to
determine a means of effectuating such transfer so as not to affect the value of
the Acquired Assets to the Buyer. Without limiting the generality of the
foregoing, prior to the Closing, the Sellers and the Subsidiaries shall, subject
to the requirements of the Bankruptcy Code, Bankruptcy Rules, the OIRR, and
orders entered by the Bankruptcy Court in the Sellers' Chapter 11 Cases, conduct
its operations in the ordinary and usual course of business and shall not,
without the prior written consent of the Buyer:
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(a) sell, lease, license, encumber or dispose of any material Acquired
Assets, except in the ordinary course of business consistent with past practices
both in frequency and amount and except for liens to secure debtor-in-possession
financing or providing adequate protection in connection with such
debtor-in-possession financing;
(b) pay any prepetition liabilities other than such prepetition liabilities
as are approved for payment by the Court;
(c) take any action or fail to take any action required by this Agreement
with the knowledge that such action or failure to take action would result in
any of the representations and warranties of the Sellers or the Subsidiaries set
forth in this Agreement becoming untrue in any material respect;
(d) take any action to waive or compromise any material claims (whether or
not asserted in any pending litigation) which are included in the Acquired
Assets;
(e) borrow any amounts under the Malaysian Loan; or
(f) agree in writing or otherwise to take any of the foregoing actions.
4.6 Full Access and Confidentiality. The Sellers and the Subsidiaries shall
permit representatives of the Buyer to have full access (at reasonable business
hours, and in a manner so as not to interfere with the normal business
operations of the Sellers and the Subsidiaries) to all premises, properties,
financial and accounting records, contracts, other records and documents, and
personnel, of or pertaining to the Sellers and the Subsidiaries. The Parties
hereto shall treat and hold as confidential any information obtained through the
diligence process or in connection with this Agreement in accordance with the
Confidentiality Agreement between MCMS and the Buyer dated as of May 21, 2001
(the "Confidentiality Agreement").
4.7 Notice of Breaches. Each Party hereto shall promptly deliver to the
other Parties written notice of any event or development that would (i) render
any statement, representation or warranty of such Party in this Agreement
(including exceptions set forth in the Schedules) inaccurate or incomplete in
any material respect, or (ii) constitute or result in a material breach by such
Party of, or a failure by such Party to comply with, any agreement or material
covenant in this Agreement applicable to such Party. No such disclosure shall be
deemed to avoid or cure any such misrepresentation or breach. In addition, the
Sellers and the Subsidiaries shall promptly provide the Buyer with any notice of
or advise the Buyer of any knowledge or communication regarding any alleged or
actual breaches by any of the Sellers or the Subsidiaries of any material
contract or agreement of the Sellers and the Subsidiaries relating to the
Acquired Assets.
4.8 Exclusivity.
(a) From the date hereof until the earlier of (1) the termination of this
Agreement in accordance with its terms and (2) the entry by the Bankruptcy Court
of the Provision Order (in which event the Provision Order shall govern) (the
"Exclusivity Period"), subject to Section 4.8(b) below, the Sellers shall not,
and shall use their best efforts to cause its Subsidiaries and each of its
directors, officers, employees, representatives and agents not to, directly or
indirectly:
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encourage, solicit, initiate, agree to, endorse or take any other action to
facilitate any proposal or offer from any person or entity (other than the Buyer
or an affiliate, associate, representative or agent of the Buyer) concerning any
merger, consolidation, sale of material assets, recapitalization acquisition of
shares of stock of the Sellers or the Subsidiaries or other business combination
involving Sellers or any division of the Sellers or any of their respective
businesses relating to the Acquired Assets and the Assigned Contracts and Leases
(an "Alternative Proposal") or provide any non-public information concerning the
business, properties or assets of any Seller or the Subsidiaries to any person
or entity (other than the Buyer) (the "Exclusivity Provision").
(b) Nothing contained in Section 4.8(a) above shall prohibit the directors
and officers of the Sellers and other senior employees designated by such
officers from providing information, including non-public information described
in Section 4.8(a), to any persons who may request such information in connection
with making a proposal as part of the Section 363 sale process contemplated by
this Agreement, or having discussions with such person with respect to such
information as it relates to the making of such proposal.
(c) During the Exclusivity Period and to the extent not prohibited by a
binding agreement in existence as of August 21, 2001, the Sellers shall
immediately notify the Buyer of, and shall provide to the Buyer a reasonably
detailed description of, any inquiries received by the Sellers, the Subsidiaries
or any of their agents or representatives (including, without limitation, the
date of such inquiry, the identity of the inquirer and the status of such
inquiry) with respect to the acquisition of any of the Acquired Assets, and the
Sellers shall provide the Buyer with copies of any written proposals and a
description of any verbal proposals which are received by the Sellers or any of
their agents or representatives. Following the entry by the Bankruptcy Court of
the Provision Order, this Section 4.8 shall be of no further force or effect
with respect to the Sellers' actions thereafter, and the solicitation and
acceptance of competing offers (including Alternative Proposals) shall be
governed by the Provision Order.
4.9 Competitive Bid Procedures. The Provisions Order shall provide for,
among other things, that any Alternative Proposal is (i) upon and subject to
substantially the same or more favorable terms and conditions as are contained
in this Agreement, in all material respects, except as to purchase price, and
(ii) includes a purchase price having a value at least $1,500,000 greater than
the value of the Purchase Price provided in this Agreement (collectively, the
"Overbid Provisions").
4.10 Breakup Fee and Expense Reimbursement Provisions.
(a) In the event that (i) the Sellers sell or otherwise transfer all or any
substantial portion of the Acquired Assets to any party other than the Buyer or
(ii) there is confirmed a Chapter 11 plan with respect to the Sellers that does
not provide for the sale of the Acquired Assets to the Buyer on substantially
the terms provided for herein, then the Sellers shall promptly pay to the Buyer
at the time of such sale, transfer or confirmation, $1,300,000 in immediately
available funds (the "Breakup Fee"). The claims of the Buyer to payment of the
Breakup Fee constitute an allowed administrative expense claim under Bankruptcy
Code 'SS''SS'503(b) and 507(a)(1), and shall have priority in right of
payment over all liens that attach to the proceeds of any sale or transfer of
such assets. The Breakup Fee provided for by this Section 4.10 is
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intended to cover the expenses and opportunity costs incurred by the Buyer in
pursuing and negotiating this Agreement and the transactions contemplated
hereby, and is considered by the Parties to be reasonable for such purposes.
(b) In the event that a chapter 7 trustee is appointed with respect to any
of the Sellers or the Closing does not occur for any other reason (other than as
set forth in subsection (a) above or as a result of the proper termination of
this Agreement by the Sellers pursuant to Section 7.1(b) hereof), then the
Sellers shall promptly pay to the Buyer up to nine hundred thousand dollars
($900,000) in immediately available funds (the "Reimbursement Claim"). The
claims of the Buyer to payment of the Reimbursement Claim constitute an allowed
administrative expense claim under Bankruptcy Code 'SS''SS'503(b) and
507(a)(1). The Reimbursement Claim provided for by this Section 4.10 is intended
to cover the expenses incurred by the Buyer in pursuing and negotiating this
Agreement and the transactions contemplated hereby, and is considered by the
Parties to be reasonable for such purposes.
(c) Subject to the next two succeeding sentences, a portion of the
Reimbursement Claim (except in the event that a chapter 7 trustee is appointed
with respect to any of the Sellers), in an amount equal to four hundred thousand
dollars ($400,000), shall have priority in right of payment over all liens that
attach to the proceeds of any sale or transfer of such assets (the "Priority
Reimbursement Claim"). In the event that the Closing has not occurred on or
before November 26, 2001 as a result of the failure to occur of any condition
precedent under Section 5.1 hereof, which failure in the Buyer's reasonable
judgment could be cured by the Sellers on or before December 31, 2001 (any such
event, a "Curable Closing Condition"), and the Buyer terminates this Agreement
pursuant to Section 7.1(c) hereof, then no portion of the Reimbursement Claim
shall have priority in right of payment over the liens on the assets of the
Sellers (and all liens that attach to the proceeds of any sale or transfer of
such assets). In the event there shall exist a Curable Closing Condition and the
Buyer elects not to terminate this Agreement pursuant to Section 7.1(c) hereof,
then the Buyer shall notify the Sellers of the same and the Sellers shall use
their best efforts to cure such Curable Closing Condition as soon as possible
thereafter to permit the Closing to occur. In the event that the Sellers have
not so cured such Curable Closing Condition to the satisfaction (or waiver) of
the Buyer on or before December 31, 2001, then the Buyer may terminate this
Agreement pursuant to Section 7.1(c) hereof, in which event the Priority
Reimbursement Claim shall have priority in right of payment over all liens on
the assets of the Sellers (and all liens that attach to the proceeds of any sale
or transfer of such assets).
4.11 Solicitation of Employees. Buyer shall comply with the restrictions
with respect to the solicitation of employees set forth in that certain
Confidentiality Agreement; provided that such agreement shall no longer apply to
the solicitation of employees of the Sellers as contemplated by this Agreement
in the event that the Approval Order is entered, or to the extent consented to
by the Sellers in writing.
4.12 Bringdown of Schedules. The Sellers shall, as of the Closing Date,
provide the Buyer with any and all revisions, modifications and updates to the
Schedules such that the Schedules shall be true and correct as of such date, and
shall include, without limitation, any and all executory contracts and leases
which the Sellers have entered into after the date hereof. Nothing contained in
this Section 4.12, and no such provision of any such revisions,
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modifications or updates, shall affect the Sellers' or the Subsidiaries'
liability for any breach of any representation or warranty in this Agreement,
and the Buyer's rights under this Agreement shall not be affected by its receipt
of any such revisions, modifications or updates.
4.13 Certain Employees. No later than thirty (30) days following the date
hereof, the Buyer shall deliver to the Sellers a list of up to 50 Continuing
Employees, which list shall become Schedule 4.13 hereto. As soon as practicable
following the delivery to the Sellers of such Schedule 4.13, but in any event no
later than five (5) business days following such delivery, the Buyer shall make
offers of employment, subject to the Closing, to all individuals listed on such
Schedule 4.13.
4.14 Buyer Audit. The Sellers shall cooperate with the Buyer in connection
with obtaining and delivering to the Buyer an audit of the books and records of
the Sellers and the Subsidiaries as of the fiscal year ended August 30, 2001,
including without limitation an audit of the Foreign Entities (the "Foreign
Entities Audit").
4.15 Certain Matters. Upon the entry of the Approval Motion, the Sellers
shall, at the request of the Buyer, cooperate with the Buyer with respect to the
matters described in Schedule 1.4(b)(ii) attached hereto.
4.16 Inter-Company Payables and Receivables. The Sellers hereby agree that
at the Closing, the Sellers shall waive all of their right, title and interest
in and to any Foreign Entity Inter-Company Payables. The Buyer hereby agrees
that at the Closing, the Buyer shall waive all of its right, title and interest
in and to any Foreign Entity Inter-Company Receivables.
4.17 Cisco/Nokia Assets.
(a) As soon as possible after the Filing Date, the Sellers and the Buyer
shall in good faith jointly prepare a plan (the "Cisco/Nokia Plan") pursuant to
which the Buyer will warehouse the Cisco Inventory (at no storage cost) and
build-out Cisco products using the Cisco Inventory under a mutually agreeable
sub-contracting arrangement to the extent necessary under the Sellers' existing
contracts with Cisco. Prior to the Closing, the Sellers shall segregate the
Cisco Inventory from all other Inventory and store the same in one Facility (and
in an area(s) within such Facility) to be mutually agreed upon by the Sellers
and the Buyer. The Sellers and the Buyer agree that in no event shall the Buyer
(i) be required to store the Cisco Inventory for a period greater than one
hundred twenty (120) days after the Closing Date (after which period the Sellers
shall remove the same at their sole cost and expense), (ii) assume any risk of
loss for any of the Cisco Inventory or (iii) assume any liabilities in
connection with any claims made by Cisco or any third parties relating to the
build-out of Cisco products using the Cisco Inventory ("Cisco Claims"). In the
event that the Sellers and the Buyer are unable to agree on the Cisco/Nokia Plan
prior to the Closing Date, then the Sellers shall, at their sole cost and
expense, promptly remove all Cisco Inventory from the Facilities.
(b) Prior to the Closing, the Sellers shall segregate the Nokia Inventory
and, at the Closing, all other Inventory which is not purchased by the Buyer
hereunder (the "Other Inventory") in one Facility (and in an area(s) within such
Facility) to be mutually agreed upon by the Sellers and the Buyer. The Buyer
will warehouse the Nokia Inventory and the Other
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Inventory for a period not to exceed one hundred twenty (120) days after the
Closing Date (after which period the Sellers shall remove the same at their sole
cost and expense) as further detailed in the Cisco/Nokia Plan. The Buyer shall
be paid an administrative fee for such storage equal to 1.5% of the value of the
Nokia Inventory and the Other Inventory (calculated at the acquisition cost of
such Nokia Inventory and Other Inventory by the Sellers or the Subsidiaries, as
applicable) as of the sixty-first (61st) day following the Closing Date. The
Buyer shall not assume any risk of loss for any of the Nokia Inventory or the
Other Inventory. In the event that the Sellers and the Buyer are unable to agree
on the Cisco/Nokia Plan prior to the Closing Date, then the Sellers shall, at
their sole cost and expense, promptly remove all Nokia Inventory and Other
Inventory from the Facilities.
ARTICLE V
CONDITIONS TO CLOSING
5.1 Conditions to Obligations of the Buyer. The obligation of the Buyer to
consummate the transactions to be performed by it in connection with the Closing
is subject to the satisfaction or waiver by the Buyer of the following
conditions:
(a) the sale of the Acquired Assets by the Sellers to the Buyer as a good
faith purchaser for value within the meaning of Section 363(m) of the Bankruptcy
Code and free and clear of all liens, claims, encumbrances and interests as
contemplated by this Agreement shall have been approved by the Bankruptcy Court
pursuant to the Approval Order which, as of the Closing Date, shall be in full
force and effect, and not stayed, modified, vacated, amended or revoked;
(b) the assumption and assignment by the Sellers of the Assigned Contracts
and Leases to the Buyer shall have been authorized and approved by an order of
the Bankruptcy Court and such order is in full force and effect without any
modification or amendment, as of the Closing Date;
(c) the Sellers or the Subsidiaries, as the case may be, shall have
obtained all of the waivers, permits, consents, approvals or other authorization
from Governmental Entities that are required to consummate the transactions
contemplated hereby and operate the Facilities, except to the extent the failure
to obtain such waivers, permits, consents, approvals or other authorization does
not have any material effect on the ability of the Buyer to operate the
Facilities, individually or taken as a whole;
(d) the Sellers and the Subsidiaries shall have obtained all of the
waivers, permits, consents, approvals or other authorization from any third
parties (other than Governmental Entities ) that are required to consummate the
transactions contemplated hereby and operate the Facilities, including, without
limitation, any consents necessary in connection with the assignment or deemed
assignment of any of the Leases, the Intellectual Property or the Permits,
except to the extent the failure to obtain such waivers, permits, consents,
approvals or other authorization does not have any material effect on the
ability of the Buyer to operate the Facilities, individually or taken as a
whole;
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(e) all of the representations and warranties of the Sellers and the
Subsidiaries set forth in Article II hereof as qualified by the Schedules
(without giving effect to any revisions, modifications or updates pursuant to
Section 4.12 hereof), shall be true and correct in all material respects as of
the date hereof and as of the Closing as if made as of the Closing (other than
those representations and warranties which are qualified as to materiality,
which shall be true and correct in accordance with their terms) regardless of
any examination or investigation made at any time by or on behalf of the Buyer
or the actual knowledge of any of the Buyer's officers, directors, employees or
agents at the time of the Buyer's execution of this Agreement, except to the
extent any of such representations and warranties are made as of a specific
date, in which case such representations and warranties shall be true and
correct in all material respects as of the specified date;
(f) the Sellers and the Subsidiaries shall have performed or complied in
all material respects with its agreements and covenants required to be performed
or complied with under this Agreement as of or prior to the Closing;
(g) (1) no action, suit or proceeding shall be pending before any
Governmental Entity, court or arbitrator wherein an unfavorable judgment, order,
decree, stipulation or injunction would (i) prevent consummation of any of the
transactions contemplated by this Agreement (except for the Bankruptcy Case, the
Provision Motion and the Approval Motion), (ii) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation or (iii)
materially and adversely affect the right of the Buyer to own, operate or
control the Acquired Assets following the Closing, and no such judgment, order,
decree, stipulation or injunction shall be in effect; (2) there shall be no
motions pending to convert or dismiss the Chapter 11 Cases or to appoint a
trustee for the Sellers or any Subsidiary; and (3) there shall be no injunctions
or insolvency proceedings involving any foreign Subsidiary.
(h) the Sellers and the Subsidiaries shall have delivered to the Buyer a
certificate (without qualification as to knowledge or materiality or otherwise)
to the effect that each of the conditions specified in clauses (d), (e) and (f)
of this Section 5.1 is satisfied in all respects;
(i) since the Filing Date, except for the commencement of the Chapter 11
Cases, there shall have been no Material Adverse Effect, and no event or
development has occurred which would reasonably be foreseen to result in a
Material Adverse Effect;
(j) since the Filing Date, except for the commencement of the Chapter 11
Cases, there shall have been no change or effect relating to the Acquired
Assets, individually or taken as a whole, that is or is reasonably likely to be
material and adverse to the ability of the Buyer to own, operate or control the
Acquired Assets following the Closing;
(k) the Sellers shall have provided to the Buyer the legal opinions of
counsel set forth on Schedule 5.1(k);
(l) (A) no customer of the Sellers that is listed on Schedule 5.1(l)
attached hereto shall have terminated its relationship with the Sellers or any
agreement relating thereto or given notice of its intent to do so, and (B) no
such customer shall have merged with or into or been acquired by another entity
or otherwise been subject to a change of control (or announced its
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intention or entered into an agreement to do any of the same) if such other
entity uses (1) Jabil Circuit Inc., (2) Solectron Corp., (3) SCI Systems Inc.,
(4) Celestica Inc. or (5) Sanmina Corp. as its primary contract manufacturer;
(m) no more than ten (10) individuals listed on Schedule 4.13 attached
hereto shall have terminated his or her employment with the Sellers or given
notice of his or her intent to do so; and
(n) the Sellers shall have achieved (1) if the Closing occurs on or before
October 31, 2001, aggregate revenue for the months ending August 31, 2001 and
September 30, 2001 of at least $28.5 million, (2) if the Closing occurs during
November, 2001, aggregate revenue for the months ending August 31, 2001,
September 30, 2001 and October 31, 2001 of at least $41 million and (3) if the
Closing occurs during December, 2001, aggregate revenue for the months ending
August 31, 2001, September 30, 2001, October 31, 2001 and November 30, 2001 of
at least $55 million. All revenue calculations shall be made in accordance with
U.S. GAAP applied on a consistent basis with past practices of the Sellers.
5.2 Conditions to Obligations of the Sellers. The obligation of the Sellers
to consummate the transactions to be performed in connection with the Closing is
subject to the satisfaction or waiver by the Sellers of the following
conditions:
(a) all of the representations and warranties of the Buyer set forth in
Article III hereof shall be true and correct in all material respects as of the
date hereof and as of the Closing as if made as of the Closing (other than those
representations and warranties which are qualified as to materiality, which
shall be true and correct in accordance with their terms), except to the extent
any of such representations and warranties are made as of a specific date, in
which case such representations and warranties shall be true and correct in all
material respects as of the specified date;
(b) the Buyer shall have performed or complied with its agreements and
covenants required to be performed or complied with under this Agreement as of
or prior to the Closing;
(c) the Buyer shall have delivered to the Sellers a certificate (without
qualification as to knowledge or materiality or otherwise) to the effect that
each of the conditions specified in clauses (a) and (b) of this Section 5.2 is
satisfied in all respects;
(d) the sale of the Acquired Assets by the Sellers to the Buyer as
contemplated by this Agreement shall have been approved by the Bankruptcy Court
pursuant to the Approval Order, which, as of the Closing Date, shall be in full
force and effect and not stayed, modified, vacated, amended, and revoked; and
(e) the Buyer shall have obtained all of the waivers, permits, consents,
approvals or other authorization from Governmental Entities that are required to
consummate the transactions contemplated hereby.
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ARTICLE VI
POST-CLOSING COVENANTS
6.1 Employees.
(a) As of the Closing Date, the Buyer will offer employment to the
Continuing Employees on such terms, at such salary or wage levels, and with such
employee benefits as are substantially similar to those provided to similarly
situated employees of the Buyer.
(b) Following the Closing Date, the Buyer shall cause all applicable
employee benefit plans, programs and arrangements of the Buyer to provide that a
Continuing Employee's period of employment with the Sellers shall be treated as
service for Buyer for purposes of eligibility and vesting under Buyer's employee
benefit plans, programs and arrangements (the "Buyer Plans") to the extent
permitted by law and applicable regulations. The Buyer further agrees to
recognize the vacation and sick leave days accumulated as of the Closing Date by
the Continuing Employees during the time they were employed by the Sellers.
(c) Buyer shall assume and become responsible for payment to any Continuing
Employee of any severance or other similar compensation and benefits under the
MCMS, Inc. Severance Plan which are or may become payable as a result of the
termination of any such Continuing Employee by the Buyer following the Closing
Date.
(d) Buyer shall not during the 90-day period beginning on the Closing Date
terminate the employment of Continuing Employees so as to cause any "plant
closing" or "mass layoff" (as those terms are defined in the WARN Act) such that
the Sellers have any obligation under the WARN Act that the Sellers otherwise
would not have had absent such terminations; provided, however, that in the
event of any breach by the Buyer of the foregoing, the Buyer shall indemnify the
Sellers for any such obligations.
(e) Any and all pre-existing condition limitations and eligibility waiting
periods under any Buyer Plan shall be waived with respect to the Continuing
Employees and their eligible dependents.
6.2 Collection of Additional Receivable. The Buyer shall use substantially
the same efforts which the Buyer uses with respect to the collection of the
Buyer's accounts receivable to collect any accounts receivable of the Sellers
which are not Included Receivables or Foreign Entity Inter-Company Payables (the
"Additional Receivables") on behalf of the Sellers, and the Buyer shall be paid
an administrative fee for such collections of 2% of the Additional Receivables
actually collected. The Buyer shall deliver any collected Additional Receivables
(less such administrative fee) to the Sellers promptly after receipt of the
same, provided, however, that in the event that the Sellers are required to make
a Purchase Price Adjustment Wire and fail to do so as provided herein, the Buyer
shall be entitled to deposit any Additional Receivables collected (in lieu of
paying the same to the Sellers) to restore any portion of the Indemnity Escrow
Amount which was used to reimburse the Buyer for the Sellers' failure to so make
a Purchase Price Adjustment Wire.
6.3 Use of Name. From and after the Closing, the Sellers agrees not to use or
allow any Subsidiary to use any trademarks or tradenames included within the
Acquired Assets or any
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names reasonably similar thereto after the Closing Date in connection with any
business related to, competitive with, or an outgrowth of, the business
conducted by the Sellers on the date of this Agreement. Sellers shall amend its
charters and other corporate records to comply with this provision on or prior
to the Closing; provided, however, that the Buyer agrees to grant a license for
a period not to exceed 180 days to the Sellers upon terms reasonably
satisfactory to the Buyer to use the MCMS name in connection with their Chapter
11 Bankruptcy Cases, the use, operation or disposition of the Retained Assets
and the Retained Liabilities, the winding down of the business of the Sellers
and the operation of the Belgian Entities.
6.4 Cooperation. (a) From and after the Closing, the Parties shall
cooperate with each other to give full effect to the terms and provisions of
this Agreement.
(b) Buyer shall provide, and shall cause its representatives and employees
to provide, including any Continuing Employees, reasonable cooperation (for
which the Sellers shall reimburse the Buyer to the extent such cooperation
requires the services of more than one person for greater than twenty (20) hours
in any week) in connection with any rights, claims, causes of action or
litigation involving Sellers or any potential litigation contemplated by the
Sellers relating to the Retained Assets or the operation of the business
conducted by the Sellers before Closing or any dispute involving the Sellers
concerning any Retained Asset, in each case against any third party. The Sellers
shall bear all of the out-of-pocket costs and expenses (including without
limitation, attorneys' fees, but excluding reimbursement for salaries and
employee benefits) reasonably incurred in connection with providing such
cooperation.
6.5 Post-Closing Assumption and Assignment. The Sellers shall use their
reasonable best efforts to obtain the entry of a final order authorizing the
Sellers to assume and assign to the Buyer any and all additional executory
contracts of Sellers which are not the subject of the Assignment Order, to the
extent that such executory contracts have not been included in Schedule
1.1(a)(iv)(B) and were discovered or disclosed by the Sellers or the Buyer after
the date hereof, entered into by the Sellers after the date hereof or otherwise
identified by the Buyer as an executory contract which the Sellers will assign
to the Buyer.
6.6 Taxes.
(a) The Sellers and the Buyer shall cooperate in timely making all filings,
returns, reports and forms as may be required in connection with the payment of
taxes in connection with the consummation of the transactions contemplated
hereby. The Sellers and the Buyer, as appropriate, shall execute and deliver all
instruments and certificates necessary to enable the other to comply with any
filing requirements relating to any such taxes.
(b) All real property taxes, personal property taxes and similar ad valorem
obligations levied with respect to the Acquired Assets for a taxable period
which includes (but does not end on) the Closing Date shall be apportioned
between the Sellers and the Buyer based on the number of days of such taxable
period which fall on or before the Closing Date (a "Pre-Closing Tax Period") and
the number of days of such taxable period after the Closing Date (a
"Post-Closing Tax Period"). The Sellers shall be liable for the proportionate
amount of such taxes that is attributable to the Pre-Closing Tax Period, and the
Buyer shall be liable for the proportionate amount of such taxes that is
attributable to the Post-Closing Tax Period.
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(c) The Buyer agrees (i) to retain all books and records with respect to
tax matters acquired pursuant to this Agreement ("Tax Records") until the
expiration of the applicable statute of limitations (including any extensions
thereof), and to abide by all record retention agreements entered into with any
taxing authority, and (ii) to give the Sellers reasonable written notice prior
to destroying or discarding any such Tax Records and, if the Sellers so request,
to allow the Sellers to take possession of such Tax Records to be discarded or
destroyed. The Buyer further agrees to permit the Sellers and its
representatives to have access (upon reasonable notice and at reasonable
business hours, and in a manner so as not to interfere with the normal business
operations of the Buyer) to all Tax Records.
ARTICLE VII
TERMINATION
7.1 Termination of Agreement. The Parties may terminate this Agreement prior
to the Closing (whether before or after the entry of the Approval Order) with
the prior authorization of their respective Boards of Directors, as provided
below:
(a) the Parties may terminate this Agreement by mutual written consent;
(b) the Buyer may terminate this Agreement by giving written notice to the
Sellers in the event the Sellers are in material breach of any representation,
warranty, or covenant contained in this Agreement, and the Sellers may terminate
this Agreement by giving written notice to the Buyer in the event the Buyer is
in material breach of any representation, warranty, or covenant contained in
this Agreement; provided, however, that in the case of any breach by any Party,
the Party in breach shall have five business days after written notice thereof
in which to cure such breach (as to any breach that is capable of being cured);
(c) the Buyer may terminate this Agreement by giving written notice to the
Sellers if the Closing shall not have occurred on or before November 26, 2001 by
reason of the failure of any condition precedent under Section 5.1 hereof
(unless the failure results primarily from a breach by the Buyer of any
representation, warranty or covenant contained in this Agreement);
(d) the Sellers may terminate this Agreement by giving written notice to
the Buyer if the Closing shall not have occurred on or before December 31, 2001
by reason of the failure of any condition precedent under Section 5.2 hereof
(unless the failure results primarily from a breach by the Sellers of any
representation, warranty or covenant contained in this Agreement);
(e) the Buyer may terminate this Agreement, by giving written notice to the
Sellers, if the Bankruptcy Court has not entered the Provision Order within 20
days after the Filing Date;
(f) the Buyer may terminate this Agreement by giving written notice to the
Sellers if the Bankruptcy Court has not entered either the Approval Order or the
Assignment Order within 65 days after the Filing Date;
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(g) the Buyer may terminate this Agreement by giving written notice to the
Sellers if a motion to dismiss the Bankruptcy Case or a motion to convert the
Bankruptcy Case or appoint a trustee or examiner has been granted in the
Bankruptcy Case;
(h) the Sellers may terminate this Agreement by giving written notice to
the Buyer if the Bankruptcy Court approves an Alternative Proposal;
(i) the Buyer may terminate this Agreement by giving written notice to the
Sellers if the Sellers fail to file the Approval Motion and the Provision Motion
as provided in Section 4.4 hereof; and
(j) the Buyer or the Sellers may terminate this Agreement by giving five
(5) days' written notice to the other Parties in the event that any condition to
the obligations of such terminating Party to close as set forth in Section 5.1
or 5.2 hereof, as the case may be, becomes incapable of being satisfied (and is
not susceptible to cure).
7.2 Effect of Termination. If this Agreement is terminated pursuant to
Section 7.1, all obligations of the Parties hereunder shall terminate without
any liability on the part of the Buyer to the Sellers or the Sellers to the
Buyer, as the case may be, except as set forth below in this Section 7.2 or in
Section 8.1; provided, however, that the confidentiality provisions contained in
Section 4.6 shall survive such termination and the provisions of Section 4.10
(Breakup Fee and Expense Reimbursement) shall survive any such termination
(other than a termination by the Sellers pursuant to Section 7.1(b)). In the
event of any breach by the Buyer of any of the terms and conditions of this
Agreement for which the Sellers have the right to terminate this Agreement
pursuant to Section 7.1(b) hereof, the Sellers' sole and exclusive remedy shall
be to terminate this Agreement, in which event the Deposit shall become the
property of the Sellers' bankruptcy estate and the Buyer shall pay the Sellers
an additional $1,000,000 (collectively, the "Liquidated Damages Amount"). Other
than payment of the Liquidated Damages Amount, the Sellers shall have no claim
against the Buyer for any breach by the Buyer of any of the terms and conditions
of this Agreement or in the event that the Sellers terminate this Agreement in
accordance with Section 7.1(b) of this Agreement. If the Sellers terminate this
Agreement for any reason other than in accordance with Section 7.1(b), within 5
days the Escrow Agent shall return the Deposit to the Buyer, and the Sellers
shall have no claim against the Buyer due to such termination. If the Buyer
terminates this Agreement in accordance with any subsection of Section 7.1, the
Escrow Agent shall within 5 days return the Deposit to the Buyer. If the Buyer
terminates this Agreement in accordance with Section 7.1(b), the Buyer shall be
entitled to pursue all available remedies at law or in equity.
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification.
(a) The Sellers shall indemnify the Buyer in respect of, and hold the Buyer
harmless against, any and all debts, obligations and other liabilities (whether
absolute, accrued, contingent, fixed or otherwise, or whether known or unknown,
or due or to become due or otherwise), monetary damages, fines, fees, penalties,
interest obligations, deficiencies, losses and
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expenses (including without limitation amounts paid in settlement, interest,
court costs, reasonable fees and expenses of attorneys, accountants, financial
advisors and other experts, and other reasonable expenses of litigation) net of
any insurance proceeds (less any deductibles) actually received ("Damages")
incurred or suffered by the Buyer or any affiliate thereof resulting from,
relating to or constituting:
(i) any misrepresentation, breach of representation or warranty
or failure to perform any covenant or agreement of the Sellers, in each case
contained in this Agreement or in any Ancillary Agreement; or
(ii) any Retained Liabilities.
(b) The Buyer shall indemnify the Sellers in respect of, and hold the
Sellers harmless against, any and all Damages incurred or suffered by the
Sellers or any affiliate thereof resulting from, relating to or constituting:
(i) any misrepresentation, breach of representation or warranty
or failure to perform any covenant or agreement of the Buyer in this Agreement
or in any Ancillary Agreement; or
(ii) any Assumed Liabilities.
8.2 Method of Asserting Claims.
(a) All claims for indemnification by any indemnified party pursuant to
this Article VIII shall be made in accordance with the provisions of this
Section 8.2.
(b) If a third party asserts that an indemnified party is liable to such
third party for a monetary or other obligation which may constitute or result in
Damages for which the indemnified party may be entitled to indemnification
pursuant to this Article VIII, and the indemnified party reasonably determines
that it has a valid business reason to fulfill such obligation, then (i) the
indemnified party shall be entitled to satisfy such obligation, (ii) the
indemnified party may make a claim for indemnification pursuant to this Article
VIII, and (iii) the indemnified party shall be reimbursed for any such Damages
for which it is entitled to indemnification pursuant to this Article VIII.
(c) The indemnified party shall give prompt written notification to the
indemnifying party of the commencement of any action, suit or proceeding
relating to a third party claim for which indemnification pursuant to this
Article VIII may be sought. Within 20 days after delivery of such notification,
the indemnifying party may, upon written notice thereof to the indemnified
party, assume control of the defense of such action, suit or proceeding with
counsel reasonably satisfactory to the indemnified party, provided each
indemnifying party acknowledges in writing to the indemnified party that any
damages, fines, costs or other liabilities that may be assessed against the
indemnified party in connection with such action, suit or proceeding constitute
Damages for which the indemnified party shall be entitled to indemnification
pursuant to this Article VIII. If no indemnifying party so assumes control of
such defense, the indemnified party shall control such defense. The party not
controlling such defense may participate therein at its own expense; provided
that if the indemnifying party
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assumes control of such defense and the indemnified party reasonably concludes
that the indemnifying party and the indemnified party have conflicting interests
or different defenses available with respect to such action, suit or proceeding,
the reasonable fees and expenses of counsel to the indemnified party shall be
considered "Damages" for purposes of this Agreement. The party controlling such
defense shall keep the other party advised of the status of such action, suit or
proceeding and the defense thereof and shall consider in good faith
recommendations made by the other party with respect thereto. The indemnified
party shall not agree to any settlement of such action, suit or proceeding
without the prior written consent of each indemnifying party, which shall not be
unreasonably withheld. No indemnifying party shall agree to any settlement of
such action, suit or proceeding without the prior written consent of each
indemnified party, which shall not be unreasonably withheld.
8.3 Threshold. Notwithstanding anything contained herein to the contrary
except the second sentence of this Section 8.3, neither the Sellers nor the
Buyer shall be obligated to make any indemnification payments under this
Agreement (other than indemnification for willful breaches of covenants, fraud,
Retained Liabilities (including, without limitation, any Cisco Claims or in
connection with the storage or removal of the Cisco Inventory, the Nokia
Inventory or the Other Inventory), Assumed Liabilities or a Party's failure to
make the Purchase Price Adjustment Wire) unless and until the aggregate Damages
sustained by the Buyer and its affiliates or the Sellers and their affiliates,
as the case may be, exceed on a cumulative basis $400,000 (the "Threshold"), at
which point the Sellers or the Buyer (as applicable) shall be obligated to
indemnify the Buyer and its affiliates or the Sellers and their affiliates (as
applicable) from and against all Damages in excess of the Threshold. The Sellers
acknowledge and agree that there shall be no Threshold with respect to any
claims for indemnification by the Buyer and its affiliates relating in any way
to the Foreign Entities or any of the operations thereof.
8.4 Indemnification Escrow. The Parties agree that (i) all claims for
indemnification by the Buyer against the Sellers (or any of them or their
affiliates) hereunder made by the Buyer following the Closing shall be solely
satisfied by the Buyer by recourse against the Indemnity Escrow Amount and (ii)
all claims for indemnification by the Sellers against the Buyer (or any
affiliate) hereunder made by the Seller shall not exceed $2,000,000, in the
aggregate (it being acknowledged and agreed that in no event shall the Sellers
be entitled to any claims for indemnification in the event that the Sellers have
received the Liquidated Damages Amount).
8.5 Consequential Damages. Notwithstanding anything contained herein to the
contrary, none of the Buyer, the Sellers or their respective affiliates will be
entitled to any recovery under this Agreement for their own special, punitive,
consequential, incidental or indirect damages or lost profits, it being
acknowledged that the Sellers' recovery of Liquidated Damages in accordance with
Section 7.2 shall not be prohibited hereby; provided, however, that nothing
herein shall prevent any of such parties from being indemnified for all
components of awards against them in claims by third parties, including special,
punitive, consequential, incidental or indirect damages or lost profits
components of such claims.
8.6 Exclusive Remedy. The remedies set forth in this Agreement shall be the
sole and exclusive remedy with respect to any and all claims relating, directly
or indirectly, to the subject mater of this Agreement or any Ancillary
Agreements (except for fraud or liability for
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Retained Liabilities or the Assumed Liabilities). Without limiting the
generality of the foregoing and subject to Article VII, each party hereby
waives, to the fullest extent permitted under applicable law, any and all
rights, claims and causes of action it or any of its affiliates may have against
the other parties or any of their affiliates with respect to the subject matter
of this Agreement or any Ancillary Agreement, whether arising under or based
upon any Federal, state, provincial, local or foreign statute, law, ordinance,
rule, regulation or common law (except as specifically provided for herein).
8.7 Treatment of Indemnity Payments. Any payment made to the Buyer pursuant
to this Article shall be treated as a reduction in the Purchase Price.
8.8 Survival. The representations, warranties, covenants and agreements of
the Sellers set forth in this Agreement shall survive the Closing and the
consummation of the transactions contemplated hereby and continue until the date
which is twelve (12) months from the Closing hereunder ("Indemnification
Termination Date"). The representations, warranties, covenants and agreements of
the Buyer set forth in this Agreement shall survive the Closing and the
consummation of the transactions contemplated hereby and continue until the
Indemnification Termination Date except for such covenants of the Buyer or the
Sellers contained in this Agreement that are to be performed after the
Indemnification Termination Date which shall survive until the applicable statue
of limitations relating thereto has expired.
ARTICLE IX
MISCELLANEOUS
9.1 Press Releases and Announcements. No Party shall issue any press release
or announcement relating to the subject matter of this Agreement without the
prior approval of the other Parties; provided, however, that any Party may make
any public disclosure that, upon the advice of legal counsel, is required by law
or regulation to be made (in which case the disclosing Party shall advise the
other Parties and provide it with a copy of the proposed disclosure prior to
making the disclosure).
9.2 No Third Party Beneficiaries. This Agreement shall not confer any rights
or remedies upon any person other than the Parties and their respective
successors and permitted assigns and the parties to the Executive Employment
Agreements in connection with the Buyer's obligations under Section 1.8 hereof.
9.3 Entire Agreement. This Agreement (including the documents referred to
herein, including, without limitation, the Confidentiality Agreement)
constitutes the entire agreement between the Parties and supersedes any prior
understandings, agreements, or representations by or between the Parties,
written or oral, that may have related in any way to the subject matter hereof.
9.4 Succession and Assignment. This Agreement shall be binding upon and inure
to the benefit of the Parties named herein and their respective successors and
permitted assigns. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other Parties; provided that the Buyer may assign all or any portion of
its rights, interests and/or obligations hereunder to one or more wholly owned
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subsidiaries of the Buyer, provided that the Buyer remains primarily liable
therefor, and the Buyer may assign or grant a security interest to its lender in
its rights in this Agreement.
9.5 Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same instrument.
9.6 Headings. The section headings contained in this Agreement are inserted
for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
9.7 Notices. All notices, requests, demands, claims, and other communications
hereunder shall be in writing. Any notice, request, demand, claim, or other
communication hereunder shall be deemed duly delivered two business days after
it is sent by registered or certified mail, return receipt requested, postage
prepaid, or one business day after it is sent via a reputable nationwide
overnight courier service, in each case to the intended recipient as set forth
below:
If to the Sellers: MCMS, Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy:
Attention:
Copy to: ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ Flics, Esq.
If to the Buyer: Manufacturers Services Limited
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Copy to: ▇▇▇▇ and ▇▇▇▇ LLP
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇. ▇▇▇▇ ▇▇▇▇▇, Esq.
Any Party may give any notice, request, demand, claim, or other communication
hereunder using any other means (including personal delivery, expedited courier,
messenger service, telecopy, telex, ordinary mail, or electronic mail), but no
such notice, request, demand, claim, or other communication shall be deemed to
have been duly given unless and until it actually is received by the individual
for whom it is intended. Either Party may change the address to which notices,
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requests, demands, claims, and other communications hereunder are to be
delivered by giving the other Party notice in the manner herein set forth.
9.8 Governing Law. Except to the extent governed by the federal bankruptcy
law, this Agreement shall be governed by and construed in accordance with the
internal laws (and not the law of conflicts) of the State of Delaware.
9.9 Amendments and Waivers. The Parties may mutually amend any provision of
this Agreement at any time prior to the Closing; provided, however, that any
amendment effected subsequent to the Approval Order shall be subject to the
restrictions contained in the Approval Order. No amendment of any provision of
this Agreement shall be valid unless the same shall be in writing and signed by
all of the Parties. No waiver by any Party of any default, misrepresentation, or
breach of warranty or covenant hereunder, whether intentional or not, shall be
deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
9.10 Severability. Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not affect the validity
or enforceability of the remaining terms and provisions hereof or the validity
or enforceability of the offending term or provision in any other situation or
in any other jurisdiction. If the final judgment of a court of competent
jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the expiration of the time within
which the judgment may be appealed.
9.11 Expenses. Each Party shall bear its own costs and expenses (including
legal fees and expenses) incurred in connection with this Agreement and the
transactions contemplated hereby; provided that this Section 9.11 shall not be
deemed to affect the Buyer's right to be paid the Breakup Fee and other rights
in this Agreement.
9.12 Specific Performance. Each Party acknowledges and agrees that the other
Parties would be damaged irreparably in the event any of the provisions of this
Agreement are not performed in accordance with their specific terms or otherwise
are breached. Accordingly, each Party agrees that the other Parties shall be
entitled to an injunction or injunctions to prevent breaches of the provisions
of this Agreement and to enforce specifically this Agreement and the terms and
provisions hereof in any action instituted in the United States Bankruptcy Court
for the District of Delaware, in addition to any other remedy to which it may be
entitled, at law or in equity.
9.13 Survival of Representations. Except as specifically provided for in this
Agreement, none of the representations and warranties made by the Parties herein
or the documents or certificates contemplated hereby, nor the covenants set
forth in Article IV hereof, shall survive the Indemnification Termination Date.
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9.14 Construction. The language used in this Agreement shall be deemed to be
the language chosen by the Parties hereto to express their mutual intent, and no
rule of strict construction shall be applied against any Party. Any reference to
any federal, state, local, or foreign statute or law shall be deemed also to
refer to all rules and regulations promulgated thereunder, unless the context
requires otherwise. Accounting terms not otherwise defined herein shall have the
meanings assigned to the by generally accepted accounting principles
consistently applied in the United States of America as promulgated by the
Financial Accounting Standards Board.
9.15 Incorporation of Exhibits and Schedules. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
9.16 Bulk Sales Laws. The Buyer and the Sellers each hereby waive compliance
by Sellers with the provisions of the "bulk sales", "bulk transfer" or similar
laws of any state.
ARTICLE X
DEFINITIONS
For purposes of this Agreement, the following terms shall have the respective
meanings set forth below:
10.1 "Accrued Employee Liabilities" shall have the meaning set forth in
Section 1.2(a)(vi) of this Agreement.
10.2 "Acquired Assets" shall have the meaning set forth in Section 1.1(a) of
this Agreement.
10.3 "Additional Receivables" shall have the meaning set forth in Section 6.2
of this Agreement.
10.4 "Agreement" shall have the meaning set forth in the first paragraph of
this Agreement.
10.5 "Alternative Proposal" shall have the meaning set forth in Sections 4.8
of this Agreement.
10.6 "Ancillary Agreements" shall have the meaning set forth in Section
1.1(b)(ii) of this Agreement.
10.7 "Approval Motion" shall have the meaning set forth in Section 4.4(a) of
this Agreement.
10.8 "Approval Order" shall have the meaning set forth in Section 4.4(a) of
this Agreement.
10.9 "Assigned Contracts and Leases" shall have the meaning set forth in
Section 1.1(a)(iv) of this Agreement.
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10.10 "Assignment Order" shall have the meaning set forth in Section 4.4(c)
of this Agreement.
10.11 "Assumed Employee Liabilities" shall have the meaning set forth in
Section 1.2(a)(vii) of this Agreement.
10.12 "Assumed Liabilities" shall have the meaning set forth in Section
1.2(a) of this Agreement.
10.13 "Assumed Payables" shall have the meaning set forth in Section
1.2(a)(iii) of this Agreement.
10.14 "Assumed Warranty Obligations" shall have the meaning set forth in
Section 1.2(a)(i).
10.15 "Bankruptcy Case" shall have the meaning set forth in the first recital
of this Agreement.
10.16 "Bankruptcy Code" shall have the meaning set forth in the first recital
of this Agreement.
10.17 "Bankruptcy Court" shall have the meaning set forth in the first
recital of this Agreement.
10.18 "Belgian Entities" shall have the meaning set forth in Section
1.1(b)(vi) of this Agreement.
10.19 "Breakup Fee" shall have the meaning set forth in Section 4.10 of this
Agreement.
10.20 "Buyer" shall have the meaning set forth in the first paragraph of this
Agreement.
10.21 "Buyer Plans" shall have the meaning set forth in Section 6.1(b) of
this Agreement.
10.22 "CERCLA" shall have the meaning set forth in Section 2.15(f)(i) of this
Agreement.
10.23 "Chapter 11 Case" shall have the meaning set forth in the first recital
of this Agreement.
10.24 "Cisco" shall have the meaning set forth in Section 1.1(a)(i)(B) of
this Agreement.
10.25 "Cisco Claims" shall have the meaning set forth in Section 4.17(a) of
this Agreement.
10.26 "Cisco Inventory" shall have the meaning set forth in Section
1.1(a)(i)(B) of this Agreement.
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10.27 "Cisco/Nokia Accounts Receivable" shall have the meaning set forth in
Section 1.1(a)(ix) of this Agreement.
10.28 "Cisco/Nokia Plan" shall have the meaning set forth in Section 4.17(a)
of this Agreement.
10.29 "Closing" shall have the meaning set forth in Section 1.5(a) of this
Agreement.
10.30 "Closing Amounts Certificate" shall have the meaning set forth in
Section 1.6(a) of this Agreement.
10.31 "Closing Date" shall have the meaning set forth in Section 1.5(a) of
this Agreement.
10.32 "Confidentiality Agreement" shall have the meaning set forth in Section
4.6 of this Agreement.
10.33 "Continuing Employees" shall have the meaning set forth in Section
1.2(a)(vi) of this Agreement.
10.34 "Curable Closing Condition" shall have the meaning set forth in Section
4.10(c) of this Agreement.
10.35 "Damages" shall have the meaning set forth in Sections 8.1(a) of this
Agreement.
10.36 "Deposit" shall have the meaning set forth in Section 1.3(a) of this
Agreement.
10.37 "Differences" shall have the meaning set forth in Section 1.6(a) of
this Agreement.
10.38 "DOJ" shall have the meaning set forth in Section 4.3 of this
Agreement.
10.39 "Enforceability Exceptions" shall have the meaning set forth in Section
2.2 of this Agreement.
10.40 "Environmental Laws" shall have the meaning set forth in Section
2.15(f)(i) of this Agreement.
10.41 "Escrow Agent" shall have the meaning set forth in Section 1.5(b)(iv)
of this Agreement.
10.42 "Escrow Agreement" shall have the meaning set forth in Section
1.5(b)(iv) of this Agreement.
10.43 "Escrow Amount" shall have the meaning set forth in Section 1.4(c) of
this Agreement.
10.44 "Estimated Amounts Certificate" shall have the meaning set forth in
Section 1.4(a) of this Agreement.
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10.45 "Estimated Purchase Price Adjustment" shall have the meaning set forth
in Section 1.4(b) of this Agreement.
10.46 "Excess Receivables Amount" shall have the meaning set forth in Section
1.6(b)(iii) of this Agreement.
10.47 "Exchange Act" shall have the meaning set forth in Section 3.3 of this
Agreement.
10.48 "Excluded Assets" shall have the meaning set forth in Sections 1.1(b)
of this Agreement.
10.49 "Exclusivity Period" shall have the meaning set forth in Section 4.8(a)
of this Agreement.
10.50 "Exclusivity Provision" shall have the meaning set forth in Section
4.8(b) of this Agreement.
10.51 "Executive Employment Agreements" shall have the meaning set forth in
Section 1.8 of this Agreement.
10.52 "Executive Severance Payments" shall have the meaning set forth in
Section 1.8 of this Agreement.
10.53 "Facilities" shall have the meaning set forth in Section 1.2(b)(vii) of
this Agreement.
10.54 "Filing Date" shall have the meaning set forth in the first recital of
this Agreement.
10.55 "Final Closing Amounts Certificate" shall have the meaning set forth in
Section 1.6(a) of this Agreement.
10.56 "Financial Statements" shall have the meaning set forth in Section
2.4(a) of this Agreement.
10.57 "Foreign Entities" shall have the meaning set forth in the first
paragraph of this Agreement.
10.58 "Foreign Entities Audit" shall have the meaning set forth in Section
4.14 of this Agreement.
10.59 "Foreign Entity Inter-Company Payables" shall have the meaning set
forth in Section 1.4(b)(iv) of this Agreement.
10.60 "Foreign Entity Inter-Company Receivables" shall have the meaning set
forth in Section 1.4(b)(iv) of this Agreement.
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10.61 "Foreign Entity Net Current Assets" shall have the meaning set forth in
Section 1.4(b)(iv) of this Agreement.
10.62 "FTC" shall have the meaning set forth in Section 4.3 of this
Agreement.
10.63 "Governmental Entity" shall have the meaning set forth in Section
1.1(a)(vii) of this Agreement.
10.64 "Hazardous Substances" shall have the meaning set forth in Section
2.15(f)(ii) of this Agreement.
10.65 "Included Current Assets" shall have the meaning set forth in Section
1.1(a)(x) of this Agreement.
10.66 "Included Receivables" shall have the meaning set forth in Section
1.1(a)(ix) of this Agreement.
10.67 "Indemnification Termination Date" shall have the meaning set forth in
Section 8.8 of this Agreement.
10.68 "Indemnity Escrow Amount" shall have the meaning set forth in Section
1.4(c)(iii) of this Agreement.
10.69 "Intellectual Property" shall have the meaning set forth in Section
1.1(a)(iii) of this Agreement.
10.70 "Intellectual Property Listing" shall have the meaning set forth in
Section 1.1(a)(iii) of this Agreement.
10.71 "Inventory" shall have the meaning set forth in Section 1.1(a)(i) of
this Agreement.
10.72 "Leased Real Property" shall have the meaning set forth in Section
1.1(a)(iv) of this Agreement.
10.73 "Leases" shall have the meaning set forth in Section 2.14 of this
Agreement.
10.74 "Liquidated Damages Amount" shall have the meaning set forth in Section
7.2 of this Agreement.
10.75 "Malaysian Loan" shall have the meaning set forth in Section 2.4(b) of
this Agreement.
10.76 "Material Adverse Effect" shall mean any change or effect that is or is
reasonably likely to be material and adverse to (i) the Acquired Assets and
Assumed Liabilities, taken as a whole or (ii) the ability of the Sellers to
transfer to the Buyer the Acquired Assets or the Assigned Contracts and Leases,
in each case other than any change or effect arising out of (a) any change in
the economy of the United States or the other markets in which the Sellers or
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the Subsidiaries operate, or generally in the industry in which the Sellers or
the Subsidiaries operate, (b) the loss of customers as disclosed in the Public
Filings, or (c) this Agreement or the transactions contemplated hereby,
including filing the Chapter 11 Cases and the events and circumstances that
result therefrom, or the announcement or pendency of any of the actions
contemplated by this clause (c).
10.77 "MCMS" shall have the meaning set forth in the first paragraph of this
Agreement.
10.78 "MCMS China" shall have the meaning set forth in the first paragraph of
this Agreement.
10.79 "MCMS Customer Services" shall have the meaning set forth in the first
paragraph of this Agreement.
10.80 "MCMS Holdings" shall have the meaning set forth in the first recital
of this Agreement.
10.81 "MCMS International" shall have the meaning set forth in the first
paragraph of this Agreement.
10.82 "MCMS Malaysia" shall have the meaning set forth in the first paragraph
of this Agreement.
10.83 "MCMS Mexico" shall have the meaning set forth in the first paragraph
of this Agreement.
10.84 "MCMS Plan" shall have the meaning set forth in Section 1.8 of this
Agreement.
10.85 "Multiemployer Plan" shall have the meaning set forth in Section
1.2(b)(xi) of this Agreement.
10.86 "Net Working Capital" shall have the meaning set forth in Section
1.6(b)(ii)(B) of this Agreement.
10.87 "Net Working Capital Target" shall have the meaning set forth in
Section 1.4(b)(ii) of this Agreement.
10.88 "Neutral Auditor" shall have the meaning set forth in Section 1.6(a) of
this Agreement.
10.89 "Nokia" shall have the meaning set forth in Section 1.1(a)(i)(B) of
this Agreement.
10.90 "Nokia Inventory" shall have the meaning set forth in Section
1.1(a)(i)(B) of this Agreement.
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10.91 "Non-Quality Inventory" shall have the meaning set forth in Section
1.1(a)(i)(B) of this Agreement.
10.92 "OIRR" shall have the meaning set forth in Section 4.5 of this
Agreement.
10.93 "Other Inventory" shall have the meaning set forth in Section 4.17(b)
of this Agreement.
10.94 "Overbid Provisions" shall have the meaning set forth in Section 4.9 of
this Agreement.
10.95 "Owned Real Property" shall have the meaning set forth in Section
1.1(a)(v) of this Agreement.
10.96 "Parties" shall have the meaning set forth in the first paragraph of
this Agreement.
10.97 "Permits" shall have the meaning set forth in Section 1.1(a)(vii) of
this Agreement.
10.98 "Plan Escrow Amount" shall have the meaning set forth in Section
1.4(c)(ii) of this Agreement.
10.99 "Post-Closing Tax Period" shall have the meaning set forth in Section
6.6(b) of this Agreement.
10.100 "Pre-Closing Tax Period" shall have the meaning set forth in Section
6.6(b) of this Agreement.
10.101 "Preliminary Purchase Price" shall have the meaning set forth in
Section 1.3(a) of this Agreement.
10.102 "Priority Reimbursement Claim" shall have the meaning set forth in
Section 4.10(c) of this Agreement.
10.103 "Provision Motion" shall have the meaning set forth in Section 4.4(a)
of this Agreement.
10.104 "Provision Order" shall have the meaning set forth in Section 4.4(a)
of this Agreement.
10.105 "Public Filings" shall have the meaning set forth in Section 2.4(c) of
this Agreement.
10.106 "Purchase Price" shall have the meaning set forth in Section 1.3(a) of
this Agreement.
10.107 "Purchase Price Adjustment Amount" shall have the meaning set forth in
Section 1.6(b) of this Agreement.
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10.108 "Purchase Price Adjustment Wire" shall have the meaning set forth in
Section 1.6(c)(i)(B) of this Agreement.
10.109 "Quality Inventory" shall have the meaning set forth in Section
1.4(b)(iii) of this Agreement.
10.110 "Reimbursement Claim" shall have the meaning set forth in Section
4.10(b) of this Agreement.
10.111 "Retained Liabilities" shall have the meaning set forth in Section
1.2(b) of this Agreement.
10.112 "Retained Receivables" shall have the meaning set forth in Section
1.1(b)(iv) of this Agreement.
10.113 "Retention Plan" shall have the meaning set forth in Section 1.8 of
this Agreement.
10.114 "Retention Plan Payment" shall have the meaning set forth in Section
1.8 of this Agreement.
10.115 "Schedules" shall have the meaning set forth in the first paragraph of
Article II hereof.
10.116 "Security Interest" shall have the meaning set forth in Section 2.5 of
this Agreement.
10.117 "Sellers" shall have the meaning set forth in the first paragraph of
this Agreement.
10.118 "Subsidiary" shall have the meaning set forth in Section 2.1 of this
Agreement.
10.119 "Supplier Payables" shall have the meaning set forth in Section
1.2(a)(iii) of this Agreement.
10.120 "Threshold" shall have the meaning set forth in Section 8.3 of this
Agreement.
10.121 "U.S. Entities" shall have the meaning set forth in the first recital
of this Agreement.
10.122 "U.S. GAAP" shall have the meaning set forth in Section 2.4(a) of this
Agreement.
10.123 "Value" shall have the meaning set forth in Section 1.3(a) of this
Agreement.
[Signature pages follow]
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
date first above written.
MSL Midwest Operations, Inc.
By:
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Title:
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(Signature Page to Asset Purchase Agreement)
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
date first above written.
MCMS, Inc.
By:
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Title:
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MCMS Customer Services, Inc.
By:
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Title:
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MCMS International, B.V.
By:
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Title:
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MCMS de Mexico, S de RL de CV
By:
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Title:
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(Signature Page to Asset Purchase Agreement)
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
date first above written.
MCMS Electronics (Xiamen) Co., Ltd.
By:
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Title:
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M.C.M.S. Sdn. Bhd.
By:
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Title:
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(Signature Page to Asset Purchase Agreement)
LIST OF EXHIBITS AND SCHEDULES
Exhibit A - Form of Provision Order
Exhibit B - Form of Approval Order
Schedule 1.1(a)(ii) - Fixed Asset Property Listing
Schedule 1.1(a)(iii) - Intellectual Property Listing
Schedule 1.1(a)(iv)(A) - Assigned Contracts and Leases
Schedule 1.1(a)(iv)(B) - Contracts and Leases not to be Assigned
Schedule 1.1(a)(v) - Owned Real Property
Schedule 1.1(a)(x) - Included Current Assets
Schedule 1.1(b)(ix) - Retained Litigation
Schedule 1.1(b)(xviii) - Excluded Assets
Schedule 1.3 - Severance Adjustment
Schedule 1.4(b)(ii) - Certain Actions to be Taken
Schedule 1.8 - Executive Employment Agreements
Schedule 2.1 - Organizational Chart
Schedule 2.3 - Non-Contravention (as to Sellers)
Schedule 2.4(b) - Financial Statements; Absence of Certain Changes
Schedule 2.5 - Ownership and Condition of Assets
Schedule 2.6(a) - Intellectual Property Disclosures
Schedule 2.6(b) - Complaints re: Intellectual Property
Schedule 2.7 - Assigned Contracts and Leases Disclosures
Schedule 2.8 - Litigation
Schedule 2.9 - Legal Compliance
Schedule 2.10 - Customers and Suppliers
Schedule 2.11(A) - Subsidiary Ownership
Schedule 2.11(B) - Subsidiary Ownership
Schedule 2.13 - Owned Real Property Disclosures
Schedule 2.14 - Lease Disclosures
Schedule 2.15 - Environmental
Schedule 2.16 - Permits
Schedule 3.3 - Non-Contravention (as to Buyer)
Schedule 4.13 - Continuing Employees
Schedule 5.1(k) - Legal Opinions
Schedule 5.1(l) - Key Customers
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