-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UCQbuOPgR9JyU8ht6JjKXI/cBYy/pRCrVoMSnh36V4JM+0MAe2fZsmtodLzXcf/3 8Br4obzF7Vwt0xYrYrA+FA== 0001035704-97-000153.txt : 19970827 0001035704-97-000153.hdr.sgml : 19970827 ACCESSION NUMBER: 0001035704-97-000153 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 19970811 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19970826 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ELECTRONIC FAB TECHNOLOGY CORP CENTRAL INDEX KEY: 0000916797 STANDARD INDUSTRIAL CLASSIFICATION: PRINTED CIRCUIT BOARDS [3672] IRS NUMBER: 840854616 STATE OF INCORPORATION: CO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-23332 FILM NUMBER: 97670097 BUSINESS ADDRESS: STREET 1: 7251 WEST 4TH ST CITY: GREELEY STATE: CO ZIP: 80634-9763 BUSINESS PHONE: 3033533100 8-K 1 FORM 8-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 AUGUST 11, 1997 (Date of earliest event reported) EFTC CORPORATION (Exact name of registrant as specified in its charter) Commission file number: 0-23332 COLORADO 84-0854616 (State or other jurisdiction (I.R.S. Employer of Identification No.) incorporation or organization)
9351 GRANT STREET DENVER, COLORADO 80229 (Address of principal executive offices) (303) 451-8200 (Registrant's telephone number, including area code) 2 ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. On July 15, 1997, EFTC Corporation, a Colorado corporation (together with its subsidiaries, the "Company"), entered into a Master Agreement (as amended through the date hereof, the "Master Agreement") with AlliedSignal Avionics, Inc., a Kansas corporation ("Avionics"), and AlliedSignal Inc., a Delaware corporation, operating through its Aerospace Equipment Systems Unit ("AES," and together with Avionics, "AlliedSignal"). Pursuant to the Master Agreement, the Company agreed (i) to purchase certain assets owned by AlliedSignal that are located at AlliedSignal production facilities located in Tucson, Arizona, and Fort Lauderdale, Florida, (ii) to enter into certain related transactions with respect to each location and (iii) to enter into a Supplier Partnering Agreement with AlliedSignal to manufacture electronic assemblies for it at those facilities (the "Supplier Partnering Agreement"). The acquisition of assets by the Company from AES at the Tucson facility and related matters are referred to herein as the "Arizona Transaction," and the acquisition of assets by the Company from Avionics at the Fort Lauderdale facility and related matters are referred to as the "Florida Transaction." The Arizona Transaction and the Florida Transaction are referred to collectively as the "Transactions." The aggregate amount to the paid by the Company for the assets acquired approximates AlliedSignal's book value of those assets. Prior to the Transactions, AlliedSignal used the assets sold to the Company to provide electronic assembly services to certain of its own operations. At the time the Master Agreement was executed, AlliedSignal was a substantial customer of the Company. The discussion of the Master Agreement, the Supplier Partnering Agreement, the License Agreement referred to below and the other agreements related to each of them contained in this Report are qualified in their entirety by reference to the terms of such agreements, which constitute exhibits hereto and are incorporated herein by reference. FLORIDA The transaction triggering the Company's obligation to file this Report on Form 8-K is the closing of the initial portion of the Florida Transaction, which occurred on August 11, 1997. Effective on that date, the Company (i) acquired from AlliedSignal approximately $11.3 million in raw material and work-in-process inventory previously used in the manufacture of certain electronic assemblies by AlliedSignal at its Fort Lauderdale facility, (ii) employed certain persons who were formerly employed by AlliedSignal at its Fort Lauderdale facility, (iii) subleased from AlliedSignal the approximately 95,000 square foot portion of its Fort Lauderdale manufacturing facility formerly used in the manufacture of such electronic assemblies, and (iv) acquired from AlliedSignal the right to use on a temporary basis certain equipment used in the manufacture of such electronic assemblies. A total of approximately $5.2 million was paid to AlliedSignal on August 11, 1997. An additional portion of the purchase price of approximately $2.7 million is to be paid on or before August 29, 1997, and the balance is to be paid on or before December 31, 1997. The Company and AlliedSignal had entered into the Supplier Partnering Agreement as of July 15, 1997, but the Company did not begin to perform thereunder until it closed the initial portion of the Florida Transaction on August 11, 1997. Under the Master Agreement, the Company is obligated to acquire on September 2, 1997 the equipment it obtained the right to use on a temporary basis on August 11, 1997 and to license certain intellectual property. The aggregate purchase price and license fee to be paid that the time is approximately $2.8 million. ARIZONA Certain matters relating to the Arizona Transaction occurred on August 4, 1997. Effective on that date, the Company (i) made a payment to AlliedSignal of approximately $300,000 toward the licensing of certain intellectual property and the purchase of certain equipment located at the AES manufacturing facility in Tucson that is to be acquired by the Company at the time it establishes it own manufacturing facility in Tucson as described below, (ii) employed certain persons who were formerly employed by AlliedSignal at its Tucson facility, and (iii) contracted with AlliedSignal to provide the personnel and management services necessary to manufacture electronic assemblies 3 at its Tucson facility. The second stage of the Arizona Transaction is to occur at the time the Company establishes a new Tucson manufacturing facility, which is currently expected to occur during the first quarter of 1998. At that time, the Company will (i) pay to AlliedSignal the remaining approximately $300,000 for purchase of the equipment and license of the intellectual property, (ii) accept delivery from AlliedSignal of the equipment used at the Tucson facility and move that equipment to the Company's new manufacturing facility there, and (iii) acquire from AlliedSignal the remaining raw material and work-in-process inventory used by it in the manufacture of electronic assemblies at its Tucson facility. The Company has entered into contracts for the purchase of land and the purchase and remodel of a 65,000 square foot building in the Tucson area for a total cost of approximately $2.5 million (the "Real Property Purchase"). The building will house the assets and operations to be acquired from AlliedSignal when the Company removes such assets and operations from AlliedSignal's Tucson facility at the second stage of the Arizona Transaction. LICENSE AGREEMENT The Company entered into a License Agreement (the "License Agreement") with AlliedSignal Technologies Inc. ("ASTI") as part of the Transactions. Effectiveness of the License Agreement has been suspended pending further discussions with respect thereto between the Company and AlliedSignal. Pending resolution of those matters, AlliedSignal has undertaken to cause its subsidiary, ASTI, to grant a temporary license to the Company for matters relating to the Fort Lauderdale facility. It is anticipated that the final form of License Agreement to be entered into will provide for the payment to ASTI of an amount equal to one percent of gross revenues received by the Company from the sale to third parties of products manufactured at its Fort Lauderdale or Tucson facilities through December 31, 2001. FINANCING The Company has funded payment of the purchase price though borrowings under its existing credit facility with Bank One Colorado, N.A. ("Bank One"). Payment of additional amounts to AlliedSignal for the purchase of assets under the Master Agreement and the funding of the Real Estate Purchase may be funded by borrowings under the Company's existing line of credit or one of the following replacement or additional credit facilities. The Company has received a commitment for a loan from Bank One consisting of a $30 million revolving line of credit maturing on September 30, 2000 and a $15 million term loan maturing on September 30, 2002. In addition, the Company has agreed to issue $15 million in subordinated notes to Richard L. Monfort, a director of the Company. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. The following exhibits are filed herewith: 2.1 Master Agreement Regarding Asset Purchase and Related Transactions by and between the Company, Avionics and AES, Inc., dated as of July 15, 1997 as amended by the First Amendment to the Master Agreement Regarding Asset Purchase and Related Transactions dated as of July 31, 1997 and as further amended by the Second Amendment to the Master Agreement Regarding Asset Purchase and Related Transactions dated as of August 11, 1997. 2.2 AlliedSignal Aerospace Supplier Partnering Agreement, dated as of July 15, 1997, by and between the Company and AlliedSignal, Inc.1
____________________ 1 A portion of the text of this agreement has been redacted from this agreement and filed separately with the Commission pursuant to a Confidential Treatment Request. 4 2.3 License Agreement dated as of August 4, 1997 by and between the Company and ASTI. 2.4 Premises License Agreement, dated as of August 4, 1997, by and between the Company and AES. 2.5 Facilities Management and Transition Services Agreement dated as of August 4, 1997, between the Company and AES and as amended by a First Amendment to Facilities Management and Transition Services Agreement dated as of July 31, 1997. 2.6 Sublease Agreement dated as of August 11, 1997 between the Company and AlliedSignal, Inc. 2.7 Transition Services Agreement dated as of August 11, 1997 between the Company and Avionics. 2.8 Agreement Regarding Use of Personal Property dated as of August 11, 1997 by and between the Company and Avionics. 2.9 Agreement to Extend Avionics Personal Property Asset Transfer Date dated August 15, 1997 by and between the Company, Avionics and AES.
(Pursuant to Item 601(b)(2) of Regulation S-K, the Company agrees to furnish supplementally to the Commission upon request a copy of any schedule or exhibit omitted from any of the foregoing agreements.) 5 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. EFTC Corporation /s/ Stuart W. Fuhlendorf Date: August 26, 1997 Stuart W. Fuhlendorf Chief Financial Officer EX-2.1 2 MASTER AGREEMENT 1 MASTER AGREEMENT REGARDING ASSET PURCHASE AND RELATED TRANSACTIONS BY AND BETWEEN ALLIEDSIGNAL AVIONICS, INC, A KANSAS CORPORATION ALLIEDSIGNAL INC., A DELAWARE CORPORATION, OPERATING THROUGH ITS AEROSPACE EQUIPMENT SYSTEMS BUSINESS UNIT AND EFTC CORPORATION, A COLORADO CORPORATION 2 MASTER AGREEMENT REGARDING ASSET PURCHASE AND RELATED TRANSACTIONS THIS MASTER AGREEMENT (the "Agreement") dated as of July 15, 1997 is entered into by and between AlliedSignal Avionics Inc., a Kansas corporation ("Avionics"), AlliedSignal Inc., a Delaware corporation, operating through its Aerospace Equipment Systems Business Unit ("AES") and EFTC Corporation, a Colorado corporation ("Purchaser") with reference to the following facts: WHEREAS, Avionics and AES (individually, "Seller," and collectively "Sellers") are engaged in a line of business consisting of the manufacture of electronic assemblies for use in avionics and aerospace equipment produced by Avionics and AES, respectively, for general, commercial and military aircraft applications (the "Business"); WHEREAS, Purchaser has unique capabilities in the mass production of electronic circuit cards for aerospace and military applications; WHEREAS, Sellers desire to sell and Purchaser desires to purchase certain assets of Sellers used primarily in the Business as described herein such that Purchaser may assume the operations of the Business; and WHEREAS, in connection with the sale of such assets, Sellers and Purchaser desire to enter into a Long Term Agreement whereby Purchaser will manufacture and sell computer circuit cards to Sellers and their parent and affiliated entities. NOW, THEREFORE, in consideration of the mutual covenants, agreements representations and warranties contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows: 1. PURCHASE AND SALE OF ASSETS 1.1 Purchase and Sale. Subject to the terms and conditions of this Agreement and except as otherwise provided herein, on their respective Asset Transfer Dates, as defined in Section 9.1.2 below, Sellers shall sell, convey, transfer, assign and deliver to Purchaser and Purchaser shall purchase and accept from Sellers, all of Sellers' right, title and interest the following assets, together with such changes, deletions or additions as are reasonably acceptable to Purchaser and occur between the respective dates of such Exhibits and the applicable Asset Transfer Dates in the ordinary course of business (the "Assets"): 1.1.1 Certain machinery and equipment, office equipment, tools and other tangible personal property as listed in Exhibit A1.1.1, with respect to Avionics, and Exhibit B1.1.1, with respect to AES (the "Personal Property"); 1.1.2 All inventory of the Business, including raw materials, parts and components, work-in-process and finished goods (the "Inventory"), such Inventory to be 2 3 identified in accordance with the procedures specified in Exhibit A2.1, with respect to Avionics, and Exhibit B2.1, with respect to AES; and 1.1.3 The contracts, agreements, arrangements and/or commitments of the Business with vendors specified in Exhibit A1.1.3, with respect to Avionics, and Exhibit B1.1.3, with respect to AES (the "Contracts"). Notwithstanding anything to the contrary set forth herein or in any Exhibit hereto, no contracts for third party sales are to transfer to Purchaser under this Agreement. 1.2 Non-Assignable Assets. Notwithstanding anything in this Agreement to the contrary, this Agreement shall not constitute an agreement to assign any Asset if the attempted assignment thereof, without the consent of a third party thereto, would constitute a breach of any obligation of the respective Seller or is otherwise not permitted by the terms of any agreement or instrument governing or affecting such Asset or by applicable law. Any transfer or assignment to Purchaser by Sellers of any property or property rights or any agreement which shall require the consent or approval of any third party shall be made subject to such consent or approval being obtained; provided that the Sellers shall hold such property, property rights or agreement for the exclusive benefit of Purchaser until such consent or approval is obtained. 1.3 Transfer of Title to the Assets. Sellers shall sell, assign, convey, transfer and deliver the Assets to Purchaser at the Asset Transfer Date by means of bills of sale, assignments, endorsements, certificates and such other instruments of transfer as shall be necessary or appropriate to vest good title to the Assets in Purchaser, free and clear of any liens, charges and encumbrances, except as otherwise set forth in this Agreement. 1.4 License Agreement. At the Avionics Closing, as hereinafter defined, Sellers shall cause AlliedSignal Technology Inc. ("ASTI") to enter into a license agreement in the form attached hereto as Exhibit C1.4, (the "License Agreement") covering certain intellectual property of the Business as described in such agreement (the "Licensed Intellectual Property"). At the Avionics Closing Purchaser shall execute and deliver the License Agreement. 2. PURCHASE PRICE 2.1 Purchase Price. The method of calculating the purchase price to be paid by Purchaser for the Assets (the "Purchase Price") and the applicable payment terms are set forth in Exhibit A2.1, with respect to Avionics, and Exhibit B2.1, with respect to AES. 2.2 Payments. All payments required to be made pursuant to this Article 2 and other provisions of this Agreement shall be made in United States dollars immediately available funds by wire transfer to an account designated by the party to receive payment in writing to the party making payment. In the event of Purchaser's failure to pay timely any portion of the Purchase Price, the applicable Seller (the "Creditor Seller") may offset all or any part of such amounts against any amounts due Purchaser by (i) the Creditor Seller under the Long Term Agreement (as hereinafter defined) or otherwise, and/or (ii) by the other Seller or parent or affiliated entities of either Seller, either case, upon assignment to the Creditor Seller of the applicable 3 4 amounts due by the other Seller or such parent or affiliated entities. Purchaser hereby consents to any such assignment. Any such offset shall constitute payment of the amounts due to the extent of such offset. 2.3 Transfer Taxes. Purchaser shall be responsible for all sales, transfer and similar taxes, duties or levies assessed or payable in connection with the transfer of the Assets to Purchaser. Purchaser shall obtain and furnish to Sellers all required resale or other exemption certificates with respect to the Assets. 3. ASSUMPTION OF LIABILITIES AND OBLIGATIONS 3.1 Assumed Liabilities. Upon, from and after the separate Asset Transfer Dates with respect to AES and Avionics, Purchaser shall, without any further responsibility or liability of, or recourse to, Sellers or any of their directors, shareholders, officers, employees, agents, consultants, representatives, parent entities, affiliates, successors or assigns, absolutely and irrevocably assume and be solely liable and responsible for any and all liabilities and obligations of any kind or nature of the applicable Seller (whether fixed or contingent, matured or unmatured, foreseen or unforeseen, known or unknown), which may arise on or after the respective Asset Transfer Dates arising out of the following (the "Assumed Liabilities"): 3.1.1 The ownership, use or possession or condition of the Assets, or the operation or conduct of the Business after the applicable Asset Transfer Date; 3.1.2 Sellers' respective obligations to purchase goods and services incurred through the applicable Asset Transfer Date, to the extent such obligations relate to goods and services to be received on or after such Asset Transfer Date by Purchaser; 3.1.3 Sellers' respective obligations under the Contracts to be performed after the applicable Asset Transfer Date; 3.1.4 Liability for all federal, state, local and foreign taxes relating to the Assets or the Business with respect to any period or part thereof commencing immediately after the transfer of the Assets; and 3.1.5 Any other liability specifically and expressly assumed by the Purchaser herein or in the Exhibits hereto as the responsibility of Purchaser. The assumption by Purchaser of all such liabilities shall be effective upon the applicable Asset Transfer Date, relating to the underlying Assets or portion of the Business, unless the terms hereof or of the applicable Exhibit hereto expressly state that such liability or obligation shall transfer at another time, including, but not limited to, the obligations set forth in Article 6. Nothing contained in this Section shall be deemed to limit any obligations of Seller under this Agreement, including but not limited to, the representations and warranties made by Seller in Section 4. 3.2 Retained Liabilities. Sellers shall at all times, without any responsibility or liability of, or recourse to, Purchaser or any of its directors, shareholders, officers, employees, agents, consultants, representatives, parent entities, affiliates, successors 4 5 or assigns, absolutely and irrevocably be and remain solely liable and responsible for any and all liabilities and obligations of any kind or nature (whether fixed or contingent, matured or unmatured, foreseen or unforeseen, known or unknown) existing or arising from or in connection with the conduct of the Business prior to the respective Asset Transfer Dates of the Sellers (collectively the "Retained Liabilities") unless the terms hereof or of the applicable Exhibit hereto expressly state that such liability or obligation shall transfer to Purchaser at another time, including, but not limited to, the obligations set forth in Article 6. 4. REPRESENTATIONS AND WARRANTIES OF SELLERS Each Seller represents and warrants to Purchaser as follows with respect to itself and its Assets only, and not with respect to the other Seller or the Assets of the other Seller: 4.1 Corporate Status. Seller is a corporation duly organized and validly existing under the laws of Kansas, in the case of Avionics, and Delaware, in the case of AES, the jurisdiction in which it is incorporated, and has full power and authority to carry on the Business as now conducted. Seller has all requisite corporate power and authority to enter into this Agreement and to perform its obligations and consummate the transactions contemplated hereby in accordance with the terms of this Agreement. Seller is duly qualified to do business in each jurisdiction in which the failure to be so qualified would have a material adverse effect on the Seller's conduct of the Business. 4.2 Authorization. All corporate and other proceedings required to be taken by or on the part of Seller including, without limitation, all action required to be taken by the directors or shareholders of Seller to authorize Seller to enter into and carry out this Agreement has been, or prior to the applicable Closing will be, duly and properly taken. This Agreement has been duly executed and delivered by Seller and is valid and enforceable against Seller in accordance with its terms, subject to laws of general application relating to bankruptcy, insolvency and the relief of debtors and the rules of law governing specific performance, injunctive relief and other equitable remedies. 4.3 Compliance. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby will not (a) result in the material breach of any of the terms or conditions of, or constitute a default under, or violate, as the case may be, the articles of incorporation, by-laws or other organization documents of Seller or any material agreement, lease, mortgage, note, bond, indenture, license or other document or undertaking, oral or written, to which Seller is a party or by which Seller is bound or by which any of the Assets may be affected, in a manner which could materially and adversely affect the Business taken as a whole, or (b) result in the creation of a lien or encumbrance on Seller's interest in any of the Assets. 4.4 Contracts. Seller is not in material default or defaults under any of the Contracts and there does not exist any material default under any of the Contracts by any other party thereto that, in either case, would in the aggregate materially and adversely affect the Business taken as a whole. 4.5 Title. Except as otherwise set forth in this Agreement, Seller has good and marketable title to, or valid leasehold interests in, as the case may be, all of its 5 6 respective Assets free and clear of all liens, mortgages, pledges and encumbrances, other than (i) liens for taxes not yet due and payable or being contested in good faith, and (ii) encumbrances which do not materially adversely affect the marketability of any such Asset or the ability of the Seller to use such Asset for its currently intended use in the conduct the Business as it is now being conducted. 4.6 Taxes. 4.6.1 General. All Taxes (as hereinafter defined) with respect to the Assets that are or become due and payable or accrue with respect to any period or portion thereof ending on or prior to the Asset Transfer Date have been or will be duly and properly computed, reported, fully paid and discharged by Sellers. As used herein, the terms "Tax" and "Taxes" shall include all federal, state, local and foreign taxes, assessments or other governmental charges (including, without limitation, net income, gross income, excise, franchise, sales and value added taxes, taxes withheld from employees' salaries and other withholding taxes and obligations and all deposits required to be made with respect thereto), levies, assessments, deficiencies, import duties, licenses and registration fees and charges of any nature whatsoever, including any interest, penalties, additions to tax or additional amounts with respect thereto, imposed by any government or taxing authority which are levied upon the Assets. 4.6.2 Unpaid Taxes, Liens, etc. There are no unpaid Taxes with respect to any period or portion thereof ending on or before the Asset Transfer Date that could become a lien on the Assets, except for current Taxes not yet due and payable. There are no unpaid Taxes with respect to any or all "employee benefit plans" within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), bonus, retirement, pension, profit-sharing, stock bonus, thrift, stock option, stock purchase, incentive, severance, deferred or other compensation or welfare benefit plans, programs, agreements or arrangements of, or applicable to employees of, either Seller (the "Benefit Plans"), nor have any events occurred with respect to any such Benefit Plans that could, in any case, give rise to a lien on the Assets. There are no liens for Taxes on the purchased assets Seller is not required to treat any asset as owned by another person for federal income tax purposes or as tax-exempt bond financed property or tax-exempt use property within the meaning of Section 168 of the Internal Revenue Code (the "Code"). None of the purchased assets is subject to any joint venture, partnership or other agreement or arrangement that is treated as a partnership for federal income tax purposes. The transactions contemplated herein are not subject to the tax withholding provisions of Section 3406 of the Code, or of Subchapter A of Chapter 3 of the Code or any other provision of law. 4.7 Sufficiency of Assets. To the best knowledge of Seller, the Inventory and Personal Property represent substantially all of the Inventory and Personal Property used by the applicable Seller directly for the operations of the Business. To the best knowledge of Seller, the Licensed Intellectual Property represents all of the intellectual property used by the applicable Seller directly for the operations of the Business. 4.8 Brokers. No broker, investment banker, financial advisor or other Person is entitled to any broker's, finder's, financial advisor's or other similar fee or commission in connection with the transactions contemplated by this Agreement based on arrangements made by or on behalf of Sellers. 6 7 4.9 Financial Information. Exhibit A1.1.1, with respect to Avionics, Exhibit B1.1.1, with respect to AES, and the statements to be provided pursuant to the terms of Exhibits A2.1 and B2.1, reflect or will reflect the book value of the Inventory and Personal Property, which has been calculated in accordance with generally accepted accounting principles as historically applied by the applicable Seller. 4.10 No Additional Representations. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS ARTICLE, ANY OTHER PROVISION OF THIS AGREEMENT, OR ANY OTHER COMMUNICATIONS BETWEEN THE PARTIES ORALLY OR IN WRITING, IT IS THE EXPLICIT INTENT OF EACH PARTY HERETO THAT SELLERS ARE MAKING NO REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, BEYOND THOSE EXPRESSLY GIVEN IN THIS AGREEMENT OR ANY OF THE DOCUMENTS DELIVERED PURSUANT TO SECTION 12, INCLUDING BUT NOT LIMITED TO ANY IMPLIED WARRANTY OR REPRESENTATION AS TO CONDITION, MERCHANTABILITY OR SUITABILITY AS TO ANY OF THE PROPERTIES OR ASSETS OF THE SELLER. EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED IN THIS AGREEMENT, OR ANY OF THE DOCUMENTS DELIVERED PURSUANT TO SECTION 12, THE ASSETS ARE BEING SOLD ON AN "AS IS, WHERE IS" BASIS. IN CONNECTION WITH THE LONG TERM AGREEMENT TO BE ENTERED INTO BETWEEN THE PARTIES HEREUNDER, IT IS THE PARTIES' INTENTION TO MAINTAIN PRODUCTION VOLUMES CONSISTENT WITH THE LONG TERM AGREEMENT, SELLERS MAKE NO REPRESENTATION OR WARRANTY AS TO ORDER QUANTITY, FREQUENCY OR COMPOSITION. THE PARTIES ACKNOWLEDGE THE VOLATILITY OF THE SELLER'S RESPECTIVE MARKETS AND THAT EACH SELLER MAY ACQUIRE OR DEVELOP NEW PRODUCT LINES AND/OR DIVEST PRODUCT LINES IN ITS SOLE DISCRETION. 5. REPRESENTATIONS AND WARRANTIES OF PURCHASER Purchaser represents and warrants to Sellers as follows: 5.1 Corporate Status. Purchaser is a corporation duly organized and validly existing under the laws of the State of Colorado, the jurisdiction in which it is incorporated and has full power and authority to carry on its business and to own all of its properties and assets. Purchaser has all requisite corporate power and authority to enter into, execute and deliver this Agreement and to perform its obligations and consummate the transactions contemplated hereby in accordance with the terms of this Agreement. 5.2 Authorization. All corporate and other proceedings required to be taken by or on the part of Purchaser including, without limitation, all action required to be taken by the directors or shareholders of Purchaser to authorize Purchaser to enter into and carry out this Agreement, have been, or prior to the applicable Closing will be, duly and properly taken. This Agreement has been duly executed and delivered by Purchaser and is valid and enforceable against Purchaser in accordance with its terms, subject to laws of general application relating to bankruptcy, insolvency and the relief of debtors and the rules of law governing specific performance, injunctive relief and other equitable remedies. 7 8 5.3 Compliance. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby will not result in the breach of any of the terms or conditions of, or constitute a default under, or violate, as the case may be, the articles of incorporation, by-laws or other organization documents of Purchaser or any material agreement, lease, mortgage, note, bond, indenture, license or other document or undertaking, oral or written, to which Purchaser is a party or by which Purchaser is bound or by which any of the Assets may be affected. 5.4 Financing. Purchaser has funds of its own, or has binding commitments from responsible banks or other financial institutions to provide funds, which will be sufficient and available to pay the Purchase Price and any up front payments under the License Agreement payable at the applicable Closing. On or before the applicable Closing Date, Purchaser will provide to Sellers written evidence of such financing in form and substance reasonably acceptable to Sellers. 5.5 Brokers. No broker, investment banker, financial advisor or other Person is entitled to any broker's, finder's, financial advisor's or other similar fee or commission in connection with the transactions contemplated by this Agreement based on arrangements made by or on behalf of Purchaser. 6. EMPLOYEES AND EMPLOYEE BENEFITS 6.1 Employment with the Purchaser. Purchaser shall within five (5) business days after the date hereof offer employment unconditionally to those employees of the Business of each Seller listed on Exhibit A6.1, with respect to Avionics, and Exhibit B6.1, with respect to AES (the "Employees") who are employed by the respective Seller on the applicable Closing Date, including any Employee who is on an approved leave of absence as described on each such Exhibit. Employees shall have at least five (5) business days to consider the offers made to them. Employees who accept Purchaser's offer of employment (the "Transferred Employees") shall become employees of the Purchaser effective on the applicable Closing Date or on their date of return to work from the approved leave of absence, as the case may be, and shall no longer be employees of either of the Sellers or their parent or affiliated entities. Commencing upon the applicable date of employment of each Transferred Employee, Purchaser shall have sole responsibility for the payment of all wages, overtime, sick pay, taxes, withholdings, and employee benefits with respect to the Transferred Employees. Notwithstanding the previous sentence, Transferred Employees shall continue to be covered by Sellers' medical and dental plans through August 31, 1997 at Sellers' cost. Nothing contained in this Agreement shall be construed as a guaranty to Purchaser that any number of the Employees will accept offers of employment with Purchaser or as a representation or warranty regarding the skill level or performance of any of the Employees. 6.2 Hiring Requirements. Purchaser shall offer employment to the Transferred Employees for positions comparable to the positions in which such Transferred Employees are employed by the applicable Sellers immediately prior to the applicable Closing Date. Sellers shall not provide Employees' personnel files to the Purchaser. Purchaser shall have an individual, signed agreement with each Transferred Employee providing that he or she is an employee of Purchaser and not the applicable Seller. 8 9 6.3 Compensation and Benefits. 6.3.1 Purchaser agrees to provide the Transferred Employees compensation at 90% or more of that paid to them by the applicable Seller immediately prior to the applicable Closing Date, with compensation defined as base pay plus incentive compensation target, if applicable. Purchaser agrees to provide the Transferred Employees employee benefits and policies comparable to the employee benefits and policies provided to the other employees of Purchaser, except as additionally required in this Section 6.3, Section 6.4, or elsewhere in this Agreement. 6.3.2 Purchaser agrees to credit and to continue to credit each Transferred Employee with the service credited with the applicable Seller for all purposes, including, but not limited to, the Purchaser's policies on vacation eligibility, savings plan participation, health care enrollment, severance benefits, seniority and any applicable vesting or waiting periods under any benefit plan. 6.3.3 To the extent that Purchaser's benefit plans provide medical or dental welfare benefits after the applicable Closing Date, Purchaser shall provide that expenses incurred on or before the applicable Closing Date under the applicable Seller's medical and dental welfare plans with respect to the Transferred Employees and their covered dependents shall be credited under the Purchaser's medical and dental welfare benefit plans for purposes of satisfying the initial general deductible, co-insurance and maximum out-of-pocket provisions for such Transferred Employees and their covered dependents, provided, however, that no credit shall be given for purposes of satisfying specific deductible, co-insurance and maximum out-of-pocket requirements applicable to specific conditions or procedures. Pre-existing condition restrictions imposed in connection with medical and dental insurance benefits shall not apply to the Transferred Employees to the extent that any such pre-existing conditions with respect to Transferred Employees (or their dependents) were covered under the medical and dental welfare benefit plans of the applicable Seller on the applicable Closing Date and to the extent that such condition is otherwise covered under the Purchaser plan. Except as set forth in Section 6.1, Transferred Employee coverage under Purchaser's benefit plans shall commence as of the applicable Closing Date. 6.3.4 All course work of a Transferred Employee currently in progress for which either Seller has approved tuition aid shall be paid for by the applicable Seller. Course work that has been approved by the applicable Seller and paid for by the employee by the applicable Closing Date but not yet started and is subject to reimbursement to the employee under the applicable Seller's tuition aid policy shall be reimbursed by the applicable Seller. "Course work" does not mean a degree program, but only refers to the specific class in progress during a particular term in that school. 6.4 Minimum Employment Period. Purchaser shall not relocate any of the Transferred Employees for a minimum period of twelve (12) months after the applicable Closing Date. Although Purchaser does not currently anticipate any reductions-in-force ("RIF"), if within twelve (12) months after the applicable Closing Date the Purchaser engages in a RIF, Purchaser will provide to those Transferred Employees who are subject to a RIF severance pay in an amount equal to six (6) months of the affected Transferred Employee's base pay and continuation of coverage under Purchaser's 9 10 benefits for a period of six (6) months. Such severance pay shall not apply to Purchaser's termination of a Transferred Employee's employment for cause. 6.5 Hiring Process. Purchaser shall be solely responsible for any and all communications it makes to any employees of either Seller during the process of making offers of employment regardless of Sellers' involvement in such process or receipt of documents and materials to be distributed to any employees of either Seller. Purchaser shall comply with all laws in connection with its communications to Sellers' employees, the process of offering employment to them, and the hiring and transition of such employees. Between the date hereof and the applicable Closing Date, the Purchaser shall, maintain adequate trained human resources staff on site at each of the Sellers' facilities who shall be responsible for the offer process and the transition of the Transferred Employees from each Seller to Purchaser. The Purchaser shall maintain a full time human resources representative on site at each facility commencing on the applicable Closing Date. In addition, Purchaser shall maintain a toll free hotline Monday through Friday on an eight (8) hour per day basis for a period of thirty (30) days after the applicable Closing Date dedicated to responding to Transferred Employee questions and concerns. 6.6 Solicitation. For a period of twelve (12) months from and after the applicable Closing Date, Purchaser shall not directly or indirectly, or by action in concert with others, solicit or attempt to solicit any employee of either the Commercial Avionics Systems Division of AlliedSignal Avionics Inc. or the Aerospace Equipment Systems Business Unit of AlliedSignal Inc. without the prior written authorization of the applicable Seller, other than the Employees listed on Exhibit A6.1 and Exhibit B6.1. Purchaser acknowledges that any violation of the restriction contained in this Section will result in irreparable injury to the applicable Seller for which monetary damages will not be an adequate remedy. Purchaser therefore acknowledges that, if such restriction is violated, the applicable Seller shall be entitled to equitable relief, including, but not limited to a temporary restraining order and preliminary or permanent injunctive relief, in addition to any other remedies which it may have. For a period of twelve (12) months from and after the applicable Closing Date, neither Seller shall directly or indirectly, or by action in concert with others, solicit or attempt to solicit any employee of Purchaser without the prior written authorization of the Purchaser. Each Seller acknowledges that any violation of the restriction contained in this Section will result in irreparable injury to Purchaser for which monetary damages will not be an adequate remedy. Each Seller therefore acknowledges that, if such restriction is violated, the Purchaser shall be entitled to equitable relief, including, but not limited to a temporary restraining order and preliminary or permanent injunctive relief, in addition to any other remedies which it may have. 6.7 Confidentiality. In addition to Purchaser's standard employee confidentiality agreement, a separate confidentiality agreement will be required of all employees and contractors of Purchaser working in the Avionics Facility, as defined below, or in the AES Facility, as defined below, due to the shared tenancy relationship at those sites. This separate confidentiality agreement will be subject to approval by the applicable Seller. 6.8 Control. Purchaser shall have and maintain complete control over its employees, including but not limited to the Transferred Employees, including the right to 10 11 hire, discharge, replace, evaluate and direct their activities subject to the limited restriction on termination contained in Section 6.4. 6.9 Health Care Continuation Liability. Purchaser agrees to pay and be responsible for all liability, cost, expense, taxes and sanctions under Section 4980B of the Internal Revenue Code (the "Code"), interest and penalties imposed upon, incurred by, or assessed against Purchaser or any Seller that arise by reason of or relate to any failure to comply with the health care continuation coverage requirements of Section 4980B of the Code and Sections 601 through 608 of ERISA, as amended, which failure occurs after the applicable Closing Date with respect to any Transferred Employee or any qualified beneficiary (as defined in Section 4980B(g)(1)) of such Transferred Employee. 6.10 Indemnification. 6.10.1 Neither Seller shall in any manner be responsible for any liability, claim or obligation which in any way arises out of the Purchaser's employment of the Transferred Employees, except as may arise from or relate to Sellers' communications with or treatment of the Employees prior to the applicable Closing Date. Purchaser agrees to indemnify and hold each Seller harmless from any liability, claim or obligation arising from or relating to the Transferred Employees or beneficiaries of Transferred Employees which in any way arises from or relates to Purchaser's employment of the Transferred Employees, except as may arise from or relate to Sellers' communications with or treatment of the Employees prior to the applicable Closing Date. 6.10.2 Purchaser shall not in any manner be responsible for any liability, claim or obligation which in any way arises out of the applicable Seller's employment of the Transferred Employees prior to the applicable Closing Date, except as may arise from or relate to Purchaser's communications with or treatment of the Employees prior to the applicable Closing Date. Each Seller agrees to indemnify and hold Purchaser harmless from any liability, claim or obligation arising from or relating to the Transferred Employees or beneficiaries of Transferred Employees which in any way arises from or relates to the applicable Seller's employment of the Transferred Employees prior to the applicable Closing Date, except as may arise from or relate to Purchaser's communications with or treatment of the Employees prior to the applicable Closing Date. 6.11 Special Payments. 6.11.1 Purchaser and Sellers have agreed that they will offer a special payment (the "Special Payment") to Transferred Employees as consideration for the execution and delivery of a release agreement in the form of Exhibit C6.11 ("Employee Release"). The Special Payment shall be equal in the aggregate to eight (8) weeks of the Transferred Employee's base salary at the time of termination of the Transferred Employee's employment with the applicable Seller, minus legally required payroll and income tax deductions, and shall be paid in two equal lump sum payments. The first payment (four weeks of base salary) will be made eight (8) calendar days after Purchaser receives the signed Employee Release or eight (8) calendar days after the Transferred Employee commences work with Purchaser, whichever is later. The 11 12 second payment (four weeks of base salary) will be made ninety (90) calendar days after the Transferred Employee commences work with Purchaser, provided that the Transferred Employee is still employed by Purchaser at that date. 6.11.2 The parties agree that the execution of the Employee Release is not a condition to an Employee's offer of employment with Purchaser or a Transferred Employee's continued employment with Purchaser, nor does it affect Purchaser's ability to terminate a Transferred Employee for cause. 6.11.3 The Special Payment will be funded by the Sellers with whom each particular Transferred Employee receiving a Special Payment was employed immediately prior to the applicable Closing. Such amounts will be paid within thirty (30) days after the applicable Seller's receipt of invoice from Purchaser. Along with any such invoice, Purchaser shall provide each Seller with a report of the aggregate amount of the Special Payment paid to such Transferred Employees, along with supporting data as reasonably requested by Sellers. Sellers shall have the right to audit Purchaser's records and reports with respect to the Special Payment. 6.11.4 Administration of the execution of the Employee Release will be conducted by Purchaser in accordance with Sellers' instructions. If Purchaser disagrees with any aspect of Sellers' instructions, Purchaser and Seller shall discuss and use good faith efforts to resolve the disagreement. Each Seller, as applicable, will indemnify, defend and hold Purchaser harmless from and against any claims against Purchaser arising from or in connection with the administration of the Employee Releases obtained from such Seller's Employees, except to the extent that Purchaser does not follow Sellers' instructions in the administration process. 7. REAL PROPERTY AND TRANSITION 7.1 Sublease Agreement. At the Avionics Closing, Purchaser and AlliedSignal Inc. shall execute the sublease agreement attached hereto as Exhibit A7.1, pursuant to which Purchaser will lease a portion of Avionics' building located at 2100 Northwest 62 Street, Ft. Lauderdale, Florida (the "Avionics Facility") commencing upon the Closing Date, (the "Sublease Agreement"). The Sublease Agreement will also provide for the allocation of cost and responsibility of certain shared services during the term of the Sublease Agreement. 7.2 License Agreement. At the AES Closing, Purchaser and AES shall execute the real property license agreement attached hereto as Exhibit B7.2, pursuant to which Purchaser will receive a license to use a portion of AES's facility located at 11100 N. Oracle Road, Tucson, Arizona 85737-9588 (the "AES Facility") for a term to end no later than March 31, 1998 (the "Premises License"). 7.3 Transition Agreement. At the applicable Closing, Purchaser and Sellers shall execute the transition agreement attached hereto as Exhibit A7.3, with respect to Avionics and Exhibit B7.3 with respect to AES, pursuant to which Sellers will provide Purchaser with certain services in connection with the transition of the Business to Purchaser (the "Transition Agreement"). Prior to the applicable Closing, Purchaser and the applicable Seller shall finalize the project implementation plan to be attached as an exhibit to the respective Transition Agreement (in the form of Gannt charts). 12 13 8. PRE-CLOSING COVENANTS 8.1 Access to Records and Properties. From the date hereof until the latest Closing Date or earlier termination of this Agreement, Sellers will: 8.1.1 provide Purchaser, its officers, counsel and other representatives with reasonable access to the Assets, the principal personnel and representatives of Seller, and such books and records pertaining to the Business as Purchaser may reasonably request, during Seller's regular business hours, provided that Purchaser has provided Sellers with reasonable prior notice, and provided further that Purchaser agrees that such access will be requested and exercised with due regard to minimizing interference with the operations of the Business and provided that disclosure would not violate the terms of any agreement to which either Seller is bound or any applicable law or regulation; and 8.1.2 make available to Purchaser for inspection and review all documents, or copies thereof, listed in the Schedules hereto, and all files, records and papers of any and all proceedings and matters listed in the Schedules hereto, except to the extent prohibited or restricted by law, regulation, contract with a third party or where the documents are subject to the attorney-client or work product privilege. 8.2 Public Announcements. On and after the date hereof and through the latest Closing Date, neither of the parties shall issue any press release or make any public statement relating to the subject matter of this Agreement (other than communications with persons in the ordinary course of business relating to a press release otherwise permitted by this Agreement) prior to obtaining the other party's approval, which approval shall not be unreasonably withheld, except that no such approval shall be necessary to the extent that counsel to the party proposing to make such disclosure advises such party that such disclosure is required by law or a listing agreement or such disclosure is reasonably prudent to avoid potential liability on the part of any person under the federal securities laws. Any advice of counsel shall be confirmed in writing and promptly delivered to the other party. 8.3 Consents. Prior to the Avionics Closing: (i) Purchaser, at its sole cost and expense shall have obtained any and all material governmental permits, licenses approvals, certifications of inspection , filings, franchise and other authorizations or shall have received such other concurrences as may be required in order for it to conduct the Avionics Business and use and operate the Avionics Assets on the Avionics Closing Date; and (ii) Avionics shall at its sole cost and expense obtain any third party consents required for the assignment of the Avionics Contracts and transfer of the Avionics Assets to Purchaser. 8.4 Operation of the Business. From and after the date of this Agreement and until the respective Closing Date or as otherwise contemplated by this Agreement or as Purchaser shall otherwise consent in writing, each Seller: 8.4.1 will carry on the Business in the ordinary course and in substantially the same manner as heretofore, including without limitation keeping in full force and effect insurance comparable in amount and scope to the coverage maintained by it (or on behalf of it) on the date hereof, and will not acquire any assets or properties, or enter 13 14 into any other transaction, other than in the ordinary course of business consistent with past practice; 8.4.2 will not permit all or any of the Assets (real or personal, tangible or intangible) to be sold, licensed or subjected to any lien or other encumbrance except in dispositions of inventory or of worn-out or obsolete equipment for fair value in the ordinary course of business consistent with past practices; 8.4.3 will operate the Business in compliance in all material respects with all applicable federal, state and local laws and regulations; 8.4.4 will maintain its inventory levels in a manner and in an amount consistent with past practice; 8.4.5 will not grant any general increase in the compensation of Transferred Employees (including any such increase pursuant to any bonus, pension, profit-sharing, vacation or other plan or commitment) or grant any increase in the compensation payable or to become payable to any Transferred Employee, except with the prior consent of Buyer; 8.4.6 will not take any action that would cause any of the representations and warranties made by Sellers in this Agreement not to remain true and correct; 8.4.7 will not modify, amend in any material respect or terminate any Contract; and 8.4.8 will continue to maintain, in all material respects, the Assets in accordance with present practice in a condition suitable for their current use. 9. CLOSING 9.1 Closing and Asset Transfer Dates; Risk of Loss. 9.1.1 Avionics Closing and Closing Date. The consummation of the transactions contemplated hereby with respect to Avionics, will take place at the offices of Klein & Martin, 2029 Century Park East, Suite 2550, Los Angeles, California 90067 on August 11, 1997 or on such other date and time as may be mutually agreed upon by the parties in writing (the "Avionics Closing"). The date upon which the Avionics Closing occurs is referred to herein as the "Avionics Closing Date". With respect to Avionics, the Asset Transfer Date will occur on the Avionics Closing Date. The Avionics Closing shall be effective as of 12:01 a.m. Florida time on August 11, 1997 or such other date and time as the parties may agree in writing. Any amounts payable by Purchaser to Avionics at the Avionics Closing shall be wire transferred to Avionics' account by the close of the last business day immediately preceding the Avionics Closing Date. The parties agree to maintain a period of at least two (2) weeks between the date hereof and the Avionics Closing Date. 9.1.2 AES Closing and Closing Date. The consummation of the transactions contemplated hereby with respect to AES, other than the actual transfer of Assets and Assumed Liabilities, will take place at the offices of Klein & Martin, 2029 14 15 Century Park East, Suite 2550, Los Angeles, California 90067 on August 4, 1997 or on such other date and time as may be mutually agreed upon by the parties in writing (the "AES Closing"). The date upon which the AES Closing occurs is referred to herein as the "AES Closing Date". The AES Closing shall be effective as of 12:01 a.m. local time on August 4, 1997 or such other date and time as the parties may agree in writing. Any amounts payable by Purchaser to AES at the AES Closing shall be wire transferred to AES' account by the close of the last business day immediately preceding the AES Closing Date. The parties agree to maintain a period of at least two (2) weeks between the date hereof and the AES Closing Date. 9.1.3 AES Asset Transfer Date. The transfer of Assets and Assumed Liabilities with respect to AES ("AES Asset Transfer") will take place on the date specified by Purchaser in connection with the establishment of a facility at which Purchaser shall continue the portion of the Business theretofore operated by AES, unless otherwise specified in the AES Transition Agreement (the "Asset Transfer Date"). Such facility shall be in or within fifty miles of Tucson, Arizona. Purchaser shall use its best efforts to cause the Asset Transfer Date to occur on or before December 31, 1997, but the Asset Transfer Date shall in no event extend later than April 30, 1998. 9.1.4 Avionics. With respect to Avionics, the Asset Transfer Date will occur on the Avionics Closing Date. 9.1.5 Risk of Loss. Any contrary statement or provision herein or in any Exhibit hereto or any other document or instrument delivered in connection with the transactions contemplated hereby notwithstanding, risk of loss with respect to the Assets of each Seller shall remain with and be borne by such Seller until the Asset Transfer Date with respect to such Seller. 15 16 10. CONDITIONS TO CLOSING 10.1 Conditions to the Obligations of Purchaser. The obligations of Purchaser under this Agreement are subject to the fulfillment prior to or at their respective Closing of each of the following conditions, any one or more of which may be waived by Purchaser in its sole discretion: 10.1.1 No injunction or restraining order shall be in effect to forbid or enjoin, and no suit, action or proceeding shall be pending or threatened to prohibit, nullify or otherwise adversely affect the consummation of the transactions contemplated by this Agreement and the Exhibits hereto or Purchaser's ownership, use or enjoyment of the Business or any part thereof. 10.1.2 The representations and warranties of Sellers contained in this Agreement or in any Exhibit hereto or certificate, document or other instrument delivered pursuant hereto or in connection with the transactions contemplated hereby shall be complete, true and correct in all material respects, without regard to materiality limitations contained in such representations and warranties, on the respective Closing Date, with the same force and effect as though such representations and warranties had been made on and as of the respective Closing Date, except to the extent any such representation or warranty are made as of a specified date, in which case such representation or warranty shall be complete, true and correct in all material respects as of the date specified. 10.1.3 Each Seller shall have performed all of its material covenants, obligations and agreements contained in this Agreement to be performed and complied with by it prior to the respective Closing Date. 10.1.4 Purchaser shall have received all certificates, instruments, agreements, and other documents to be delivered pursuant to Section 12.1. 10.1.5 Purchaser shall have obtained any and all material governmental permits, licenses approvals, certifications of inspection , filings, franchise and other authorizations or shall have received such other concurrences as may be required in order for it to conduct the Avionics Business and use and operate the Avionics Assets on the Avionics Closing Date. 10.1.6 Avionics shall have obtained any third party consents required for the assignment of the Avionics Contracts and transfer of the Avionics Assets to Purchaser. 10.2 Conditions to the Obligations of Sellers. The obligations of each Seller under this Agreement are subject to the fulfillment, prior to their respective Closing, of each of the following conditions, any one or more of which may be waived by the respective Seller in its sole discretion: 10.2.1 No injunction or restraining order shall be in effect to forbid or enjoin, and no suit, action or proceeding shall be pending or threatened to prohibit, 16 17 nullify or otherwise adversely affect, the consummation of the transactions contemplated by this Agreement. 10.2.2 The representations and warranties of Purchaser contained in this Agreement or in any Exhibit hereto or certificate, document or other instrument delivered pursuant hereto or in connection with the transactions contemplated hereby shall be complete, true and correct in all material respects, without regard to materiality limitations contained in such representations and warranties, on the applicable Closing Date, with the same force and effect as though such representations and warranties had been made on and as of the applicable Closing Date, except to the extent any such representation or warranty are made as of a specified date, in which case such representation or warranty shall be complete, true and correct in all material respects as of the date specified. 10.2.3 Purchaser shall have performed all of its material covenants, obligations and agreements contained in this Agreement to be performed and complied with by the applicable Closing Date. 10.2.4 Sellers shall have received all certificates, instruments, agreements and other documents to be delivered pursuant to Section 12.2. 10.2.5 Sellers shall have received that portion of the Purchase Price payable at the applicable Closing. 10.2.6 Purchaser shall have obtained any and all material governmental permits, licenses approvals, certifications of inspection , filings, franchise and other authorizations or shall have received such other concurrences as may be required in order for it to conduct the Avionics Business and use and operate the Avionics Assets on the Avionics Closing Date. 10.2.7 Avionics shall have obtained any third party consents required for the assignment of the Avionics Contracts and transfer of the Avionics Assets to Purchaser. 11. TERMINATION AND SURVIVAL 11.1 Termination. Both of the parties hereto shall use reasonable efforts to bring about the satisfaction of the conditions hereunder prior to and at respective Closings. Notwithstanding anything to the contrary set forth herein, this Agreement may be terminated and the transactions contemplated hereby abandoned at any time prior to the Avionics Closing: 11.1.1 by mutual written consent of Purchaser and Seller; or 11.1.2 by Purchaser or Seller, upon written notice to the other, if such other party or its affiliate has breached any material representation, warranty or covenant contained in this Agreement in any material respect, if the non-breaching party has notified the breaching party of the breach in writing and the breach has continued without cure for a period of thirty days after notice of the breach; or 17 18 11.1.3 by Purchaser or Seller, upon the earlier of September 30, 1997 or the issuance of a preliminary injunction enjoining the Closing of the transactions contemplated herein with an outcome adverse to the parties. 11.2 Effect of Termination. If this Agreement is terminated pursuant to Section 11.1, this Agreement shall become void and of no further force and effect, and neither of the parties hereto (nor their respective affiliates, directors, shareholders, officers, employees, agents, consultants, attorneys-in-fact or other representatives) shall have any liability in respect of such termination; provided, however, that if such termination is effected pursuant to Section 11.1.2 and the failure to consummate the transactions contemplated hereby was the result of any of the conditions to the applicable Closing having not been fulfilled by reason of the breach by either of the parties of its covenants, representations and/or warranties set forth in this Agreement or in any agreement, document or instrument ancillary hereto, the party having so breached shall remain liable to the other party. 12. CLOSING DOCUMENTS 12.1 Documents to be Delivered by Sellers. At the respective Closings (except as otherwise specified in this Section 12.1), the applicable Seller shall deliver to Purchaser the following documents as appropriate: 12.1.1 A Secretary's Certificate attaching copies of Seller's corporate action authorizing the execution, delivery and performance of this Agreement and the transactions contemplated hereby, providing evidence of the signatures and incumbency of each person signing any document or instrument delivered by Sellers to Purchaser in connection with the transactions contemplated hereby, and such other information and certifications relevant to the due authorization, execution and delivery of this Agreement as Purchaser may reasonably request, all certified by a Secretary, Assistant Secretary or other appropriate officer of Seller; 12.1.2 Executed bills of sale or other appropriate instruments of transfer with respect to all of the Assets not transferred or assigned by any other documents or instruments described in this Section in the form of Exhibit A12.1.2, with respect to Avionics; 12.1.3 Executed assignment and assumption agreements with respect to the Contracts in the form of Exhibit A12.1.3, with respect to Avionics; 12.1.4 Executed assumptions of liability by which Purchaser will assume the Assumed Liabilities pursuant to Section 3.1 in the form of Exhibit A12.1.5, with respect to Avionics; 12.1.5 An executed License Agreement covering the Licensed Intellectual Property in the form attached hereto as Exhibit C1.4 (to be delivered at the AES Closing); 12.1.6 A certificate of an appropriate officer of each Seller relating to the representations, warranties and covenants of each Seller made herein. 18 19 12.1.7 An executed Sublease Agreement in the form attached hereto as Exhibit A7.1 (to be delivered at the Avionics Closing); 12.1.8 An executed Premises License in the form attached hereto as Exhibit B7.2 (to be delivered at the AES Closing); 12.1.9 An executed Transition Services Agreement in the form attached hereto as Exhibit A7.3, with respect to Avionics, and Exhibit B7.3, with respect to AES; 12.1.10 An executed Long Term Agreement in the form of Exhibit C12.1.11 (to be delivered at the AES Closing); 12.1.11 Any other document reasonably necessary to effectuate the transactions contemplated hereby. 12.2 Documents to be Delivered by Purchaser. At the respective Closings, Purchaser shall pay the Purchase Price to Sellers by wire transfer as directed in writing by the Sellers and shall execute where applicable and deliver to Sellers the following documents (except as otherwise specified in this Section 12.2): 19 20 12.2.1 A Secretary's Certificate attaching copies of resolutions of Purchaser authorizing the execution, delivery and performance of this Agreement and the transactions contemplated hereby, providing evidence of the signatures and incumbency of each person signing any document or instrument delivered by Purchaser to Sellers in connection with the transactions contemplated hereby and such other information and certifications relevant to the due authorization, execution and delivery of this Agreement as Seller's may reasonably request, all certified by a Secretary, Assistant Secretary or other appropriate officer of Purchaser; 12.2.2 Executed assignment and assumption agreements with respect to the Contracts in the form of Exhibits A12.1.3; 12.2.3 Executed documents of assignment with respect to each of the permits, licenses and authorizations listed in Exhibits A1.1.4 in form and content mutually agreeable to the parties; 12.2.4 Executed assumptions of liability by which Purchaser will assume the Assumed Liabilities pursuant to Section 3.1 in the form of Exhibit A12.1.5; 12.2.5 An executed License Agreement covering the Licensed Intellectual Property in the form attached hereto as Exhibit C1.4 (to be delivered at the AES Closing); 12.2.6 A certificate of an appropriate officer of Purchaser relating to the representations, warranties and covenants of Purchaser made herein. 12.2.7 An executed Sublease Agreement in the form attached hereto as Exhibit A7.1 (to be delivered at the Avionics Closing); 12.2.8 An executed Premises License in the form attached hereto as Exhibit B7.2 (to be delivered at the AES Closing); 12.2.9 An executed Transition Services Agreement in the form attached hereto as Exhibit A7.3, with respect to Avionics, and Exhibit B7.3, with respect to AES; 12.2.10 An executed Long Term Agreement in the form of Exhibit C12.1.11 (to be delivered at the AES Closing); 12.2.11 Evidence of financing as required by Section 5.4. 20 21 12.2.12 Any other document reasonably necessary to effectuate the transactions contemplated hereby. 13. POST CLOSING OBLIGATIONS 13.1 Further Assurances. From time to time after the respective Closings, without further consideration, the parties shall cooperate with each other and shall execute and deliver instruments of transfer or assignment, or such other documents to the other party as such other party reasonably may request to evidence or perfect Purchaser's right, title and interest to the Assets, and otherwise carry out the transactions contemplated by this Agreement. 13.2 Access to Books and Records. After the respective Closing, Purchaser shall permit each Seller to have access to and the right to make copies of such of each Seller's books, records and files as constitute part of the Assets for any reasonable purpose at any time during regular business hours, such as for use in litigation or financial reporting, tax return preparation, or tax compliance matters. Prior to disposing of or destroying any such information or records, Purchaser shall afford each Seller a reasonable opportunity to segregate, remove or copy such books, records and files as such Seller may select. 13.3 Cooperation. 13.3.1 Litigation. The parties shall reasonably cooperate with each other at the requesting party's expense in the prosecution or defense of any litigation or other proceeding arising from their respective operation of the Business. 13.3.2 Taxes. Sellers shall cooperate with Purchaser and shall provide Purchaser with such assistance as may reasonably be requested by Purchaser in connection with the preparation of any tax return and the conduct of any audit or other examination by any taxing authority or judicial or administrative proceedings relating to the Purchased Assets. 13.4 Proprietary Information. Prior to the applicable Closing Dates, the Business was routinely supplied copies of proprietary and confidential information relating to strategic, technical, and/or marketing plans of Sellers and their affiliates and their various operations. Although Sellers have attempted to recover such information from the Business, some may still be present within the Business. Purchaser therefore agrees that it will not use such information for any purpose whatsoever, and shall destroy any remaining copies. 13.5 Warranty Claims Assistance. Purchaser shall provide Sellers, their affiliated and parent entities, with such reasonable assistance as they may require with respect to warranty and products liability claims relating to the period prior to the Asset Transfer Date and arising from Sellers' use, sale or distribution of electronic assemblies prior to the Asset Transfer Date at the hourly rates set forth in the Long Term Agreement. 13.6 Conditions to AES Asset Transfer. The obligations of AES and Purchaser to effect the AES Asset Transfer are subject to the fulfillment of the following conditions 21 22 prior to the AES Asset Transfer Date: (i) Purchaser shall, at its sole cost and expense, obtain any and all material governmental permits, licenses approvals, certificates of inspection, filings, franchises and other authorizations as may be required in order for it to conduct the AES Business and use and operate the AES Assets on the AES Asset Transfer Date; and (ii) AES shall at its sole cost and expense obtain any third party consents required for the assignment of the AES Contracts and transfer of the AES Assets to Purchaser. 14. INDEMNIFICATION 14.1 Indemnification by Sellers. Each Seller shall defend, indemnify and hold harmless Purchaser and Purchaser's directors, shareholders, officers, employees, agents, affiliates, successors and assigns from and against any and all claims, liabilities, obligations, losses, costs, expenses (including, without limitation, reasonable legal, accounting and similar expenses), fines, damages (individually a "Loss" and collectively "Losses"), arising out of: 14.1.1 any breach or violation of any of the covenants made by Sellers in this Agreement or any agreement, certificate or similar document delivered pursuant hereto; 14.1.2 any breach of, or any inaccuracy or misrepresentation in, any of the representations or warranties made by Sellers in this Agreement or in any Schedule, agreement, instrument, certificate or similar document required to be delivered pursuant to the terms hereof; 14.1.3 any Retained Liability; or 14.1.4 any warranty or product liability claims with respect to electronic assemblies manufactured by Sellers prior to the applicable Closing Date. 14.2 Indemnification by Purchaser. Purchaser shall defend, indemnify and hold harmless each Seller and such Seller's directors, shareholders, officers, employees, agents, representatives, affiliates, successors and assigns from and against any and all Losses arising out of: 14.2.1 any breach or violation of any of the covenants made by Purchaser in this Agreement or any agreement, certificate or similar document delivered pursuant hereto; 14.2.2 any breach of, or any inaccuracy in any of the representations or warranties made by Purchaser in this Agreement, or in any Schedule, agreement, certificate, instrument or similar documents required to be delivered pursuant to the terms hereof; or 14.2.3 any Assumed Liability; 14.2.4 any breach of the terms of Article 6 and any communications to the Employees by Purchaser during the hiring process and the manner Purchaser conducts the hiring process; and 22 23 14.2.5 the hiring of the Transferred Employees by Purchaser, the Purchaser's employment practices post-Closing, including, but not limited to hiring and firing of employees, the compensation, benefits, employment taxes, and treatment of the Transferred Employees by Purchaser and any failure of Purchaser to comply with all applicable laws in connection with its employees, including, but not limited to, the Transferred Employees. 14.3 Indemnification Procedure. 14.3.1 Any party seeking indemnification hereunder (the "Indemnitee") shall notify the party liable for such indemnification (the "Indemnitor") in writing of any event, omission or occurrence which the Indemnitee has determined has given or could give rise to Losses which are indemnifiable hereunder (such written notice being hereinafter referred to as a "Notice of Claim"). Any Notice of Claim shall be given promptly after the Indemnitee becomes aware of such third party claim; provided, that the failure of any Indemnitee to give notice as provided in this Section 14.3 shall not relieve the Indemnitor of its obligations under this Section 14.3, except to the extent that the Indemnitor is actually prejudiced by such failure to give notice. A Notice of Claim shall specify in reasonable detail the nature and any particulars of the event, omission or occurrence giving rise to a right of indemnification. The Indemnitor shall satisfy its obligations hereunder, as the case may be, within thirty (30) days of its receipt of a Notice of Claim; provided, however, that so long as the Indemnitor is in good faith defending a claim pursuant to Section 14.3.2 below, its obligation to indemnify the Indemnitee with respect thereto shall be suspended. 14.3.2 Except as provided in Section 14.3.3 below, with respect to any third party claim, demand, suit, action or proceeding which is the subject of a Notice of Claim, the Indemnitor shall, in good faith and at its own expense, defend, contest or otherwise protect against any such claim, demand, suit, action or proceeding with legal counsel of its own selection. The Indemnitee shall have the right, but not the obligation, to participate, at its own expense, in the defense thereof through counsel of its own choice and shall have the right, but not the obligation, to assert any and all cross claims or counterclaims it may have. So long as the Indemnitor is defending in good faith any such third party claim, demand, suit, action or proceeding, the Indemnitee shall at all times cooperate, at its own expense, in all reasonable ways with, make its relevant files and records available for inspection and copying by, and make its employees available or otherwise render reasonable assistance to, the Indemnitor. In the event that the Indemnitor fails to timely defend, contest or otherwise protect against any such third party claim, demand, suit, action or proceeding, the Indemnitee shall have the right, but not the obligation, to defend, contest, assert crossclaims or counterclaims, or otherwise protect against, the same and may make any compromise or settlement thereof and be entitled to all amounts paid as a result of such third party claim, demand, suit or action or any compromise or settlement thereof. Neither Sellers nor Purchaser shall make any compromise of asserted liability for which indemnification is or may be sought pursuant to this Section 14.3.2 if such compromise includes the payment of money or creates any obligation of the other party hereto, unless such other party shall have given its prior written consent to such compromise. 14.4 Survival and Limitations. The provisions of this Article 14 shall survive the Closing Date. The warranties and representations of the Sellers contained in this 23 24 Agreement or in any instrument delivered pursuant hereto will survive the Closing Date and will remain in full force and effect thereafter for a period of one year after the Closing Date and shall be effective with respect to any inaccuracy therein or breach thereof, notice of which shall have been duly given within such one year period, in accordance with Section 14.3 hereof. Anything to the contrary contained herein notwithstanding, (i) Purchaser shall not assert any claim against either of the Sellers for indemnification hereunder unless and until the amount of such claim or claims shall exceed Two Hundred Thousand Dollars ($200,000) calculated on a cumulative basis and not a per item basis; (ii) Purchaser shall not be entitled to recover from the Sellers more than an aggregate of an amount equal to twenty five percent (25%) of the total Purchase Price with respect to all claims for indemnity or damages whether such claims are brought under this Article 14 or otherwise. The terms of the foregoing sentence shall not apply to Sellers' obligation to provide indemnification to Purchaser with respect to the matters set forth in Section 3.2 (Retained Liabilities), Article 6 (Employees and Employee Benefits), and Section 14.6 (Environmental) and any matter to be performed by Sellers subsequent to the applicable Closing Date pursuant to this Agreement or any document delivered by Sellers pursuant to Section 12. 14.5 Reduction for Insurance and Taxes. The amount (an "Indemnity Payment") which an Indemnifying Party is required to pay on behalf of any other party ("Indemnitee") pursuant to this Article 14 shall be reduced by the amount of any insurance proceeds actually received by or on behalf of the Indemnitee in reduction of the related indemnifiable loss. An Indemnitee which shall have received or on behalf of which there shall be paid an Indemnity Payment and which shall subsequently receive, directly or indirectly, insurance proceeds in respect of the related indemnifiable loss, shall pay to the Indemnifying Party the amount of such insurance proceeds or, if lesser, the amount of the Indemnity Payment. 14.6 Environmental. Representations and warranties regarding, indemnifications for, and other provisions relating to, environmental matters are contained in the Sublease Agreement and the Premises License, and are expressly incorporated into this Agreement. For purposes of Section 4.10, the parties intend that the representations and warranties relating to environmental matters in the Sublease Agreement and Premises License, as such, are "expressly given" and "specifically provided" in this Agreement. Except for this Section 14.6, nothing in this Agreement shall be interpreted to diminish the effectiveness, limit the scope, or add to the obligations of such provisions. With respect to indemnifications, Sellers expressly assume the responsibilities and liabilities under the indemnifications applicable to Lessor under the Sublease Agreement and the Company under the Premises License. None of the limitations of Section 14.4(i) regarding the amount of claims, or 14.4(ii) regarding the amount of recovery, shall apply to environmental matters. 15. MISCELLANEOUS 15.1 Expenses. Except as specifically set forth elsewhere herein each of the parties hereto shall pay its own expenses and costs incurred or to be incurred by it in negotiating, closing and carrying out this Agreement. 15.2 Notices. Any notice or communication given pursuant to this Agreement by a party hereto to the other party shall be in writing and hand delivered, or mailed by 24 25 registered or certified mail, postage prepaid, return receipt requested (notices so mailed shall be deemed given when mailed), or sent via facsimile, with an original mailed as follows: If to Avionics: AlliedSignal Avionics, Inc. 11300 Corporate Avenue Lenexa, Kansas 66285-5995 Attn: Director of Materials If to AES: AlliedSignal Aerospace Equipment Systems 1300 Warner Road Tempe, Arizona 85205 Attn: Director of Materials If to Purchaser: EFTC Corporation 7251 West th Street Greeley, Colorado 80634 Attn: Chief Administrative Officer Fax: (970) 346-1706 15.3 Confidentiality. Avionics and Purchaser have entered into a confidentiality agreement dated __________________ and AES and Purchaser have entered into a confidentiality agreement dated February 12, 1997. Notwithstanding any provision herein to the contrary, such confidentiality agreements shall survive the execution and delivery of this Agreement and the Closings except for Section 3 of each such agreement which shall terminate on the date hereof. 15.4 Counterparts. This Agreement may be executed simultaneously 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. 15.5 Entire Agreement. Except for the Confidentiality Agreement referred to in Section 15.3, this Agreement is the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior communications, representations, agreements and understandings between the parties hereto, whether oral or written, including, without limitation, any financial or other projections or predictions regarding the Sellers or the Business. 15.6 Construction. When the context so requires, references herein to the singular number include the plural and vice versa and pronouns in the masculine or neuter gender include the feminine. The headings contained in this Agreement and the tables of contents, exhibits and schedules are for reference purposes only and shall not affect the meaning or interpretation of this Agreement. 15.7 Assignment. This Agreement may not be assigned without the prior written consent of the other party hereto, which consent shall not unreasonably be withheld; except that Avionics may assign this Agreement to its parent entity without the prior written consent of any other party. 25 26 15.8 Amendment. This Agreement may be amended only by written agreement duly executed by representatives of all parties hereto. 15.9 Applicable Law. This Agreement shall be construed in accordance with the laws of the State of Delaware, disregarding its conflicts of laws principles which may require the application of the laws of another jurisdiction. 15.10 Failure to Close. If for any reason this Agreement is terminated prior to Closing, each party shall promptly upon the request of any other party return to such other party all documents and other information (or notes made therefrom), including all originals and all copies thereof, theretofore delivered by or on behalf of such other party. Purchaser shall in any case comply with the terms of the Confidentiality Agreement referred to in Section 15.3. 15.11 No Third Party Rights. This Agreement is not intended and shall not be construed to create any rights in any parties other than Sellers and Purchaser and no other person shall assert any rights as a third party beneficiary hereunder. 15.12 Exhibits. The Exhibits attached hereto are incorporated into this Agreement and shall be deemed a part hereof as if set forth herein in full. References herein to "this Agreement" and the words "herein," "hereof" and words of similar import refer to this Agreement (including Exhibits) as an entirety. In the event of any conflict between the provisions of this Agreement and any such Exhibit, the provisions of this Agreement shall control. 15.13 Waivers. Any waiver of rights hereunder must be set forth in writing. A waiver of any breach or failure to enforce any of the terms or conditions of this Agreement shall not in any way affect, limit or waive either party's rights at any time to enforce strict compliance thereafter with every term or condition of this Agreement. 15.14 Severability. If and to the extent that any court of competent jurisdiction holds any provisions (or any part thereof) of this Agreement to be invalid or unenforceable, such holding shall in no way affect the validity of the remainder of this Agreement. 15.15 Arbitration. Any controversy, claim or dispute arising out of or relating to this Agreement or the transactions contemplated hereby or the breach, termination, enforcement, interpretation or validity hereof, including the determination of the scope or applicability of this agreement to arbitrate (collectively "Dispute"), shall be determined by arbitration in Phoenix, Arizona before a sole arbitrator. The following shall apply to any such arbitration: 15.15.1 The arbitration shall be administered by the American Arbitration Association ("AAA") pursuant to its Commercial Rules and Supplementary Procedures for Large, Complex Disputes. 15.15.2 The arbitrator shall not be an officer, employee, director or affiliate of any party hereto or of its affiliates. If the parties are unable to agree on an arbitrator within 30 days of the filing of the Demand for Arbitration, an arbitrator shall be selected pursuant to the rules and procedures of the AAA. 26 27 15.15.3 Any party may seek from any court interim or provisional relief that is necessary to protect the rights or property of that party, pending the appointment of the arbitrator or pending the arbitrator's determination of the merits of the controversy. 15.15.4 The parties shall bear their own costs and expenses, including attorneys' fees, but the arbitrator may, in the award, allocate all of the administrative costs of the arbitration (and mediation, if applicable), including the fees of the arbitrator and mediator, against the party who did not prevail. 15.15.5 The arbitration award shall be in writing and shall specify the factual and legal bases for the award. Judgment on the award may be entered in any court having jurisdiction. 27 28 IN WITNESS WHEREOF, Sellers and Purchaser have duly executed and delivered this Agreement as of the day and year first above written. "AVIONICS" ALLIEDSIGNAL AVIONICS INC., a Kansas corporation By: /s/ David Dittemore Title: President "AES" ALLIEDSIGNAL INC., a Delaware corporation, operating through its Aerospace Equipment Systems Business Unit By: /s/ Daniel Burnham Title: Executive Vice President "PURCHASER" EFTC CORPORATION, a Colorado corporation By: /s/ Stuart Fuhlendorf Title: Chief Financial Officer i 29 TABLE OF EXHIBITS "A" SERIES OF EXHIBITS RELATING TO AVIONICS 1.1.1 List of Personal Property 1.1.3 List of Contracts 2.1 Purchase Price and Payment Terms (and Attachment A thereto) 6.1 Employees 7.1 Sublease Agreement 7.3 Transition Agreement 12.1.2 Bill of Sale 12.1.3 Assignment Agreement 12.1.5 Assumption Agreement ii 30 EXHIBIT A2.1 AVIONICS PURCHASE PRICE 1. Avionics Assets Purchase Price. The purchase price to be paid for the Avionics portion of the Assets (the "Avionics Asset Purchase Price"), including the Avionics Raw Material Inventory and the Avionics Remaining Assets, as defined below, shall be established and paid in themanner set forth below: (a) Raw Material Inventory. The Avionics Raw Material Invetory shall be valued at its unburdened cost, which shall be equal to its book value, calculated in accordance with generally accepted accounting principles as in effect on the date hereof as consistently applied by Avionics ("Avionics GAAP"), divided by 1.175 (the "Avionics Raw Material Inventory Value"). (b) Work-in-Process Inventory. The portion of the Avionics Work-in-Process Inventory attributable to material shall be calculated in the same fashion as the value of the Raw Material Inventory. The portion of value for the Avionics Work-in-Process Inventory attributable to any electronic assembly for labor shall be equal to the product of (i) one half of the Avionics labor standard hours, as described in Attachment A to this Exhibit A2.1, for that electronic assembly, (ii) Purchaser's quoted hourly labor rate and (iii) the quantity of electronic assemblies with that labor standard. The value of the Avionics Work-in-Process Inventory shall be the sum of the material value plus the labor value (the "Avionics WIP Value"). (c) Finished Goods Inventory. The Avionics Finished Goods Inventory shall mean electronic assemblies described in Exhibit A to the Long Term Agreement that are not the subject of an open work order. The Avionics Finished Goods Inventory shall be valued at 95% of Purchaser's sale price to Avionics under the Long Term Agreement for the number of electronic assemblies to be purchased by Purchaser (the "Avionics Finished Goods Value"). (d) Personal Property. The Avionics Personal Property shall be valued at its aggregate net book value as of the Closing Date, calculated in accordance with Avionics GAAP, less $1,150,000 (attributable to the Avionics License Fee (as defined below) (the "Avionics Personal Property Value"). (e) Intellectual Property License Fee. An Intellectual Property License Fee of $1,150,000 (of an aggregate $1,250,000 fee) will be paid by Purchaser to AlliedSignal Technologies, Inc. ("ASTI") (the "Avionics License Fee") in conjunction with the Avionics Asset Purchase, with the balance to be paid in conjunction with the AES Asset Purchase Price described in Exhibit B2.1. The Avionics Assets to be acquired that are described in paragraphs (b) though (d) of this Section 1 are referred to herein as the "Avionics Remaining Assets." 1 31 2. Payment Terms. At the Avionics Closing, the following amounts shall be due and payable in accordance with the Avionics Closing Statement: the sum of 50% of the Avionics Raw Material Inventory Value; the Avionics WIP Value; the Avionics Finished Goods Value; the Avionics Personal Property Value; and the Avionics License Fee (payable to ASTI). On December 31, 1997, the remaining 50% of the Avionics Raw Material Value shall be due and payable. The purchase price for the Avionics Assets is subject to final determination and adjustment as described in Sections 3 and 4 below. 3. Purchase Price Calulation and Adjustment. (a) Initial Statement. Within two (2) days after the date of this Agreement, Avionics shall provide Purchaser with a statement separately specifying, in reasonable detail, the value of the Avionics Raw Material Inventory and the value of the Avionics Remaining Assets as of such date, each as specified above (the "Initial Statement") (b) Closing Statement. Within fifteen (15) days after the date of this Agreement, Purchaser and Avionics shall conduct a joint inventory and tangible personal property count to verify the accuracy of the Avionics Raw Materials Inventory and Avionics Remaining Assets listings set forth in the Initial Statement as of a date within two (2) days prior to the Avionics Closing Date and the parties shall mutually agree upon a written statement (the "Avionics Closing Statement") as to such count. The Avionics Closing Statement shall also contain the value of the Avionics Raw Material Inventory and the value of the Avionics Remaining Assets as calculated by Avionics as of such date. (c) Final Statement. Not more thann five (5) days after the Closing, Avionics shall provide Purchaser with a final statement (the "Final Statement") separately specifying, in reasonable detail, the final value of the Avionics Raw Material Inventory and any applicable adjustments to the final value of the Avionics Remaining Assets, which will constitute the "Final Statement Valuation" and will reflect all changes to the Closing Statement from the date of the Closing Statement to the Avionics Closing Date. Purchaser shall have seven (7) days to review and agree upon the Final Statement Valuation. If Purchaser notifies Avionics of any disagreement with all or part of the Final Statement then the parties shall negotiate in good faith for a period of fifteen (15) days to mutually agree upon any resulting adjustment, which adjustment shall result in a corresponding adjustment to the Final Statement If the parties are unable to reach agreement within such fifteen (15) days, such dispute shall be resolved byarbitration as provided in Section 15 of the Agreement. Purchaser shall pay Avionics or Avionics shall pay Purchaser the amount of the Avionics Purchase Price underpaid or overpaid the Avionics Closing, as the case may be, such payment to be made within thirty (30) days after final agreement or determination. 4. Post Closing Adjustment. (a) Adjustment at 12 Months After Closing. Any Avionics Raw Material Inventory Subject to Repurchase, as defined below, that has not been used or consumed by Purchaser within twelve (12) months after the Avionics Closing Date and that is not forecast for use in connection 2 32 with the Long Term Agreement at the end of such twelve (12) month period for the subsequent twelve (12) month period shall be repurchased by Avionics. Purchaser shall provide Avionics with written notice of any such repurchase obligation within forty-five (45) days after the expiration of such twelve (12) month period. Avionics shall have the right to audit any such report, and Purchaser agrees to cooperate in any such audit. Avionics shall pay any undisputed amounts resulting from such calculations by Purchaser within thirty (30) days from receipt of notice. If the parties are unable to reach agreement within thirty (30) days, any such dispute shall be resolved by arbitration as provided in Section 15 of the Agreement, and payment shall be made within thirty (30) days after resolution. (b) Adjustment at 24 Months After Closing. Any Avionics Raw Material Inventory Subject to Repurchase, as defined below, that was not used or consumed by Purchaser within twelve (12) months after the Avionics Closing Date not repurchased by Avionics because its use was forecast in connection with the Long Term Agreement and that has not been used or consumed by Purchaser within twenty-four (24) months after the Avionics Closing Date shall be repurchased by Avionics under procedures comparable to those provided above for repurchases at the end of the first twelve (12) month period. (c) Method of Calculation. For the purposes of calculating the amount of any post-closing adjustment pursuant to Paragraph 4(a), the following formula shall apply: Avionics Raw Material = Starting Quantity Less Amount Used Inventory Subject to Less Forecast Amounts Repurchase "Starting Quantity" = The count of the applicable item of Raw Material inventory as shown on the Final Statement "Amount Used" = The quantities of such item (i) actually used by Purchaser in its operations at its Fort Lauderdale facility, regardless of whether production was for Avionics or another customer, or (ii) reallocated by Purchaser for use in another facility "Forecast Amount" = The quantity of such item shown on Avionics' most recent forecast supplied to Purchaser of its requirements for electronic assemblies during the period between twelve (12) months after the Avionics Closing and twenty four (24) months after Avionics Closing.
3 33 Purchaser shall use its best efforts to minimize the amount of the adjustment contemplated by this Section through the internal reallocation of such inventory to other areas of Purchaser's business. (d) Repurchase Price. The price at which Avioncs shall repurchase any Raw Materials Inventory shall be equal to the same price paid by Purchaser for such Raw Materials Inventory at the Avionics Closing plus an amount equal to interest calculated on such amount at the rate of 9% per annum. 5. Audit. If there is a good faith dispute regarding the calculation of the Avionics Asset Purchase Price or any adjustment thereto made pursuant to the terms of this Exhibit A2.1, Purchaser shall have the right to conduct an audit of the relevant aspects of Avionics' books and records, and Avionics agrees to cooperate in any such audit. 4 34 TABLE OF EXHIBITS "B" SERIES OF EXHIBITS RELATING TO AES 1.1.1 List of Personal Property 1.1.3 List of Contracts 2.1 Purchase Price and Payment Terms (and Attachment A thereto) 6.1 Employees 7.2 Premises License 7.3 Transition Agreement 12.1.2 Bill of Sale 12.1.3 Assignment Agreement 12.1.5 Assumption Agreement iii 35 EXHIBIT B2.1 AES PURCHASE PRICE 1. AES Asset Purchase Price. The purchase price to be paid for the AES portion of the Assets (the "AES Asset Purchase Price"), including any AES Raw Material Inventory and the AES Remaining Assets, as defined below, shall be established and paid in the manner set forth below: (a) Raw Material Inventory. The AES Raw Material Invetory shall be valued at its unburdened cost, which shall be equal to its book value, calculated in accordance with generally accepted accounting principles as in effect on the AES Asset Transfer Date as consistently applied by AES ("AES GAAP), divided by AES' material overhead, calculated in accordance with AES GAAP, as of the AES Asset Transfer Date (the "AES Raw Material Inventory Value"). The AES Raw Material Inventory shall be picked, transferred and purchased on or about the AES Asset Transfer Date. (b) Work-in-Process Inventory. The portion of the value of the AES Work-in-Process Inventory attributable to material shall be calculated in the same fashion as the value of the Raw Material Inventory. The portion of value of the AES Work-in-Process Inventory attributable to any electronic assembly for labor shall be equal to the product of (i) one half the AES labor standard hours, as described in Attachment A to this Exhibit B2.1 for that electronic assembly, (ii) Purchaser's quoted hourly labor rate, and (iii) the quantity of electronic assemblies with that labor standard. It is the intention of the parties to minimize the AES Work-in-Process Inventory to be purchased by Purchaser. The AES Work-in-Process Inventory shall be transferred and purchased by Purchaser on or about the AES Asset Transfer Date. The value of the AES Work-in-Process Inventory shall be the sum of the material value plus the labor value (the "AES WIP Value"). (c) Finished Goods Inventory. The Avionics Finished Goods Inventory shall mean electronic assemblies described in Exhibit A to the Long Term Agreement that are not the subject of an open work order. The AES Finished Goods Inventory shall be valued at the product of 95% of Purchaser's sale price to AES under the Long Term Agreement for the number of electronic assemblies to be purchased by Purchaser (the "AES Finished Goods Value"). It is the intention of the parties to minimize the AES Finished Goods Inventory to be purchased. The AES Finished Goods Inventory shall be transferred and purchased on or about the AES Asset Transfer Date. (d) Personal Property. The AES Personal Property shall be valued at its aggregate net book value as of the Asset Transfer Date, calculated in accordance with AES GAAP, less $100,000 (attributable to the AES License Fee as defined below) (the "AES Personal Property Value"). 1 36 (e) Intellectual Property License Fee. An Intellectual Property License Fee of $100,000 (of an aggregate $1,250,000 fee) will be paid by Purchaser to ASTI (the "AES License Fee") in conjunction with the AES Asset Purchase Price described herein, with the balance to be paid in conjunction with the Avionics Purchase Price described in Exhibit A2.1. The AES Assets to be acquired that are described in paragraphs (b) though (d) of this Section 1 are referred to herein as the "AES Remaining Assets." 2. Payment Terms. Purchaser shall pay to AES at Closing (i) one-half of the projected AES Personal Property Value as of the AES Asset Transfer Date and (ii) the AES License Fee (payable to ASTI). On or about the AES Asset Transfer Date (in any event not later than ten (10) days after the AES Asset Transfer Date), Purchaser shall pay to AES the AES Raw Material Inventory Value, the AES WIP Value, the AES Finished Goods Value and the remaining one-half of the AES Personal Property Value. The purchase price for the AES Assets is subject to final determination and adjustment as described in Sections 3 and 4 below. 3. Purchase Price Calculation and Adjustment. (a) Initial Statement. Within two (2) days after the date of this Agreement, AES shall provide Purchaser with a statement separately specifying, in reasonable detail, the items and net book value of the AES Personal Property as of such date, together with a projection of such net book value as of December 31, 1997. (b) Closing Statement. Within two (2) days prior to the AES Closing Date, Purchaser and AES shall mutually verify the identification of the items of AES Personal Property and AES shall provide Purchaser with a written statement (the "AES Closing Statement") reflecting the value of such items, the portion thereof to be paid at the AES Closing Date. Purchaser will make payment at the AES Closing in a manner consistent with the AES Closing Statement. (c) Inventory. Prior to the AES Asset Transfer Date, AES shall issue the AES Raw Material Inventory and shall prepare for shipment the AES Raw Material Inventory, AES Work-in-Process Inventory and the AES Finished Goods Inventory to be transferred to Purchaser. Purchaser shall participate in the process so described, such participation constituting its final audit of the AES count and identification of the material to be transferred. AES shall prepare an Asset Transfer Valuation Statement dated within two (2) days prior to the Asset Transfer Date which shall include the valuation of such Assets. In addition, the Asset Transfer Valuation Statement shall also include a statement specifying the net book value of the AES Personal Property as of the actual Asset Transfer Date. (d) Final Statement. Within two (2) days after the AES Asset Transfer Date, Purchaser shall verify that the Asset Transfer Valuation Statement is consistent with the determination of its final audit. If no discrepancies are raised by Purchaser in writing within such period, the Asset Transfer Valuation Statement shall become the "Final Asset Transfer Statement". If Purchaser notifies AES of any disagreement with the Final Statement within such 2 37 period, the parties shall negotiate in good faith for a period of fifteen (15) days to mutually agree on any resulting adjustment. If the parties cannot agree on a Final Asset Transfer Valuation Statement within fifteen (15) days after the AES Asset Transfer Date, such dispute shall be resolved by arbitration as provided in Section 15 of the Master Agreement. Purchaser shall pay AES the Final Asset Valuation within five (5) days of the mutual agreement as to the counts contained in the Final Asset Transfer Valuation Statement. Purchaser shall pay AES or AES shall pay Purchaser the amount of the AES Purchase Price underpaid or overpaid the AES Closing, as the case may be, such payment to be made within thirty (30) days after final agreement or determination. 4. Post Closing Adjustment. (a) Adjustment at 12 Months After the AES Asset Transfer. Any AES RawMaterial Inventory Subject to Repurchase, as defined below, that has not been used or consumed by Purchaser within twelve (12) months after the AES Asset Transfer Date and that is not forecast for use in connection with the Long Term Agreement at the end of such twelve (12) month period for the subsequent twelve (12) month period shall be repurchased by AES. Purchaser shall provide AES with written notice of any such repurchase obligation within forty-five (45) days after the expiration of such twelve (12) month period. AES shall have the right to audit any such report, and Purchaser agrees to cooperate in any such audit. AES shall pay any undisputed amounts resulting from such calculations by Purchaser within thirty (30) days from receipt of notice. If the parties are unable to reach agreement within thirty (30) days, any such dispute shall be resolved by arbitration as provided in Section 15 of the Agreement, and payment shall be made within thirty (30) days after resolution. (b) Adjustment At 24 Months After AES Asset Transfer. Any AES Raw Material Inventory Subject to Repurchase, as defined below, that was not used or consumed by Purchaser within twelve (12) months after the AES Asset Transfer Date not repurchased by AES because its use was forecast in connection with the Long Term Agreement and that has not been used or consumed by Purchaser within twenty-four (24) months after the AES Asset Transfer Date shall be repurchased by AES under procedures comparable to those provided above for repurchases at the end of the first twelve (12) month period. (c) Method of Calculation. For purposes of calculatin the amount of any post-closing adjustment pursuant to Paragraph 4(a), the following formula shall apply: AES Raw Material = Starting Quantity Less Amount Used Inventory Subject to Less Forecast Amounts Repurchase "Starting Quantity" = The count of the applicable item of Raw Material inventory as shown on the Final Statement
3 38 "Amount Used" = The quantities of such item (i) actually used by Purchaser in its operations at its Arizona facility, regardless of whether production was for AES or another customer, or (ii) reallocated by Purchaser for use in another facility "Forecast Amount" = The quantity of such item shown on AES' most recent forecast supplied to Purchaser of its requirements for electronic assemblies during the period between twelve (12) months after the AES Asset Transfer and twenty four (24) months after AES Asset Transfer.
Purchaser shall use its best efforts to minimize the amount of the adjustment contemplated by this Section through the internal reallocation of such inventory to other areas of Purchaser's business. (d) Repurchase Price. The price at which AES shall repurchase any Raw Materials Inventory shall be equal to the same price paid by Purchaser for such Raw Materials Inventory at the AES Asset Transfer plus an amount equal to interest calculated on such amount at the rate of 9% per annum. 5. Audit. If there is a good faith dispute regarding the calculation of the AES Asset Purchase Price or any adjustment thereto made pursuant to the terms of this Exhibit B2.1, Purchaser shall have the right to conduct an audit of the relevant aspects of AES' books and records, and AES agrees to cooperate in any such audit. 4 39 TABLE OF EXHIBITS "C" SERIES OF EXHIBITS RELATING TO BOTH PARTIES 1.4 License Agreement (Intellectual Property) 6.11 Employee Release 12.1.11 Long Term Agreement 1 40 FIRST AMENDMENT TO MASTER AGREEMENT REGARDING ASSET PURCHASE AND RELATED TRANSACTIONS This First Amendment ("Amendment") dated as of July 31, 1997 is entered into with respect to that certain Master Agreement Regarding Asset Purchase and Related Transactions dated July 15, 1997 (the "Master Agreement") entered into and between AlliedSignal Avionics, Inc., a Kansas corporation ("Avionics"), AlliedSignal Inc., a Delaware corporation operating through its Aerospace Equipment Systems Business Unit ("AES"), and EFTC Corporation, a Colorado corporation (EFTC"). The parties hereby agree to amend the Master Agreement in the manner set forth in Exhibit A, attached hereto and incorporated herein. This Amendment shall not otherwise change, amend, limit or affect any other provision of the Agreement, which shall continue in full force and effect. AlliedSignal Avionics, Inc., a Kansas corporation By: /s/ Tim Bibens -------------- Tim Bibens Title: Subcontracts Program Manager AlliedSignal Inc., a Delaware corporation operating through its Aerospace Equipment Systems Business Unit By: /s/ John DeRusso ---------------- John DeRusso Title: Material Program Manager EFTC Corporation, a Colorado corporation By: /s/ Stuart Fuhlendorf --------------------- Title: Chief Financial Officer 41 EXHIBIT A AMENDMENTS TO MASTER AGREEMENT [SEE ATTACHED PAGES] 42 8.4.7 will not modify, amend in any material respect or terminate any Contract; and 8.4.8 will continue to maintain, in all material respects, the Assets in accordance with present practice in a condition suitable for their current use. 9. CLOSING 9.1 Closing and Asset Transfer Dates; Risk of Loss. 9.1.1 Avionics Closing and Closing Date. The consummation of the transactions contemplated hereby with respect to Avionics, will take place at the offices of Klein & Martin, 2029 Century Park East, Suite 2550, Los Angeles, California 90067 on August 11, 1997 or on such other date and time as may be mutually agreed upon by the parties in writing (the "Avionics Closing"). The date upon which the Avionics Closing occurs is referred to herein as the "Avionics Closing Date". With respect to Avionics, the Asset Transfer Date will occur on the Avionics Closing Date. The Avionics Closing shall be effective as of 12:01 a.m. Florida time on August 11, 1997 or such other date and time as the parties may agree in writing. Any amounts payable by Purchaser to Avionics at the Avionics Closing shall be wire transferred to Avionics' account by the close of the last business day immediately preceding the Avionics Closing Date. The parties agree to maintain a period of at least two (2) weeks between the date hereof and the Avionics Closing Date. 9.1.2 AES Closing and Closing Date. The consummation of the transactions contemplated hereby with respect to AES, other than the actual transfer of Assets and Assumed Liabilities, will take place at the offices of Klein & Martin, 2029 Century Park East, Suite 2550, Los Angeles, California 90067 on August 4, 1997 or on such other date and time as may be mutually agreed upon by the parties in writing (the "AES Closing"). The date upon which the AES Closing occurs is referred to herein as the "AES Closing Date". The AES Closing shall be effective as of 12:01 a.m. local time on August 4, 1997 or such other date and time as the parties may agree in writing. Any amounts payable by Purchaser to AES at the AES Closing shall be wire transferred to AES' account by the close of the last business day immediately preceding the AES Closing Date. The parties agree to maintain a period of at least two (2) weeks between the date hereof and the AES Closing Date. 9.1.3 AES Asset Transfer Date. The transfer of Assets and Assumed Liabilities with respect to AES ("AES Asset Transfer") will take place on the date specified by Purchaser in connection with the establishment of a facility at which Purchaser shall continue the portion of the Business theretofore operated by AES, unless otherwise specified in the AES Transition Agreement (the "Asset Transfer 16 43 of this Agreement as Purchaser may reasonably request, all certified by a Secretary, Assistant Secretary or other appropriate officer of Seller; 12.1.2 Executed bills of sale or other appropriate instruments of transfer with respect to all of the Assets not transferred or assigned by any other documents or instruments described in this Section in the form of Exhibit A12.1.2, with respect to Avionics; 12.1.3 Executed assignment and assumption agreements with respect to the Contracts in the form of Exhibit A12.1.3, with respect to Avionics; 12.1.4 Executed assumptions of liability by which Purchaser will assume the Assumed Liabilities pursuant to Section 3.1 in the form of Exhibit A12.1.5, with respect to Avionics; 12.1.5 An executed License Agreement covering the Licensed Intellectual Property in the form attached hereto as Exhibit C1.4 (to be delivered at the AES Closing); 12.1.6 A certificate of an appropriate officer of each Seller relating to the representations, warranties and covenants of each Seller made herein. 12.1.7 An executed Sublease Agreement in the form attached hereto as Exhibit A7.1 (to be delivered at the Avionics Closing); 12.1.8 An executed Premises License in the form attached hereto as Exhibit B7.2 (to be delivered at the AES Closing); 12.1.9 An executed Transition Services Agreement in the form attached hereto as Exhibit A7.3, with respect to Avionics, and Exhibit B7.3, with respect to AES; 12.1.10 An executed Long Term Agreement in the form of Exhibit C12.1.11 (to be delivered at the AES Closing); 12.1.11 Any other document reasonably necessary to effectuate the transactions contemplated hereby. 12.2 Documents to be Delivered by Purchaser. At the respective Closings, Purchaser shall pay the Purchase Price to Sellers by wire transfer as directed in writing 21 44 by the Sellers and shall execute where applicable and deliver to Sellers the following documents (except as otherwise specified in this Section 12.2): 12.2.1 A Secretary's Certificate attaching copies of resolutions of Purchaser authorizing the execution, delivery and performance of this Agreement and the transactions contemplated hereby, providing evidence of the signatures and incumbency of each person signing any document or instrument delivered by Purchaser to Sellers in connection with the transactions contemplated hereby and such other information and certifications relevant to the due authorization, execution and delivery of this Agreement as Seller's may reasonably request, all certified by a Secretary, Assistant Secretary or other appropriate officer of Purchaser; 12.2.2 Executed assignment and assumption agreements with respect to the Contracts in the form of Exhibits A12.1.3; 12.2.3 Executed documents of assignment with respect to each of the permits, licenses and authorizations listed in Exhibits A1.1.4 in form and content mutually agreeable to the parties; 12.2.4 Executed assumptions of liability by which Purchaser will assume the Assumed Liabilities pursuant to Section 3.1 in the form of Exhibit A12.1.5; 12.2.5 An executed License Agreement covering the Licensed Intellectual Property in the form attached hereto as Exhibit C1.4 (to be delivered at the AES Closing); 12.2.6 A certificate of an appropriate officer of Purchaser relating to the representations, warranties and covenants of Purchaser made herein. 12.2.7 An executed Sublease Agreement in the form attached hereto as Exhibit A7.1 (to b delivered at the Avionics Closing); 12.2.8 An executed Premises License in the form attached hereto as Exhibit B7.2 (to be delivered at the AES Closing); 12.2.9 An executed Transition Services Agreement in the form attached hereto as Exhibit A7.3, with respect to Avionics, and Exhibit B7.3, with respect to AES; 12.2.10 An executed Long Term Agreement in the form of Exhibit C12.1.11 (to be delivered at the AES Closing); 22 45 (d) Personal Property. The AES Personal Property shall be valued at its aggregate net book value as of the Asset Transfer Date, calculated in accordance with AES GAAP, less $100,000 (attributable to the AES License Fee as defined below) (the "AES Personal Property Value"). (e) Intellectual Property License Fee. An Intellectual Property License Fee of $100,000 (of an aggregate $1,250,000 fee) will be paid by Purchaser to AlliedSignal Technologies, Inc. (the "AES License Fee") in conjunction with the AES Asset Purchase Price described herein, with the balance to be paid in conjunction with the Avionics Purchase Price described in Exhibit A2.1. The AES Assets to be acquired that are described in paragraphs (b) though (d) of this Section 1 are referred to herein as the "AES Remaining Assets." 2. Payment Terms. Purchaser shall pay to AES AT THE AES CLOSING (i) one-half of the projected AES Personal Property Value as of the AES Asset Transfer Date AND (II) the AES LICENSE FEE. On or about the AES Asset Transfer Date (in any event not later than ten (10) days after the AES Asset Transfer Date), Purchaser shall pay to AES the AES Raw Material Inventory Value, the AES WIP Value, the AES Finished Goods Value and the remaining one-half of the AES Personal Property Value. The purchase price for the AES Assets is subject to final determination and adjustment as described in Sections 3 and 4 below. 3. Purchase Price Calculation and Adjustment. (a) Initial Statement. Within two (2) days after the date of this Agreement, AES shall provide Purchaser with a statement separately specifying, in reasonable detail, the items and net book value of the AES Personal Property as of such date, together with a projection of such net book value as of December 31, 1997. (b) Closing Statement. Within two (2) days prior to the AES Closing Date, Purchaser and AES shall mutually verify the identification of the items of AES Personal Property and AES shall provide Purchaser with a written statement (the "AES Closing Statement") reflecting the value of such items, the portion thereof to be paid at the AES Closing Date. Purchaser will make payment at the AES Closing in a manner consistent with the AES Closing Statement. (c) Inventory. Prior to the AES Asset Transfer Date, AES shall issue the AES Raw Material Inventory and shall prepare for shipment the AES Raw Material Inventory, AES Work-in-Process Inventory and the AES Finished Goods 2 46 SECOND AMENDMENT TO MASTER AGREEMENT REGARDING ASSET PURCHASE AND RELATED TRANSACTIONS This Second Amendment ("Amendment") is entered into as of August 11, 1997 with respect to that certain Master Agreement Regarding Asset Purchase and Related Transactions dated July 15, 1997 (the "Master Agreement") entered into and between AlliedSignal Avionics, Inc., a Kansas corporation ("Avionics"), AlliedSignal Inc., a Delaware corporation operating through its Aerospace Equipment Systems Business Unit ("AES"), and EFTC Corporation, a Colorado corporation (EFTC"), as amended by that certain First Amendment to Master Agreement Regarding Asset Purchase and Related Transactions. WHEREAS, Avionics and EFTC have not reached agreement on the specific items of Avionics Personal Property to transfer to EFTC under the Master Agreement; WHEREAS, Avionics and EFTC nonetheless desire to effect a transfer of the other Avionics assets and of the Transferred Employees as of the Avionics Closing Date, as originally scheduled to take place as of 12:01 am August 11, 1997; WHEREAS, in order to permit the parties additional time to resolve the issue of the Personal Property assets to be transferred, they have determined to defer the Avionics Asset Transfer Date with respect to the Avionics Personal Property, and also to defer the corresponding Intellectual Property License Fee, pursuant to the terms and conditions of this Amendment. NOW, THEREFORE, the parties hereby agree to amend the Master Agreement as follows: 1. Inventory Transfer. The Asset Transfer Date with respect to the Avionics Inventory shall be deemed to be August 11, 1997 (the "Avionics Inventory Transfer Date"). All third party consents and governmental and other approvals required under Section 8.3 of the Master Agreement for the transfer of the Avionics Inventory and the performance by EFTC under the Long Term Agreement shall be obtained prior to the Avionics Inventory Transfer Date. Risk of loss of the Avionics Inventory will pass to EFTC on the Avionics Inventory Transfer Date. 2. Personal Property Transfer. The Avionics Personal Property shall transfer to EFTC at such time as the parties have determined the exact items of Personal Property to be transferred and have agreed upon the valuation of such Personal Property in writing. The Asset Transfer Date with respect to the Avionics Personal Property shall be August 18, 1997 or such other date as the parties may agree upon in writing (the "Avionics Personal Property Transfer Date"). All third party consents and governmental and other approvals required under Section 8.3 of the Master Agreement for the transfer of the Avionics Personal Property and the performance by EFTC under the Long Term Agreement shall be obtained prior to the Avionics Personal Property Transfer Date. Risk of loss of the Avionics Personal Property will pass to EFTC on the 47 Avionics Personal Property Transfer Date. 3. Assumed Liabilities. Assumed Liabilities and Contracts shall transfer to EFTC as of the Inventory Transfer Date except those Assumed Liabilities that relate solely to the Avionics Personal Property, which shall transfer to EFTC as of the Avionics Personal Property Transfer Date. 4. Employee Transfer. The Avionics Transferred Employees shall become EFTC employees upon the Avionics Inventory Transfer Date and such date shall be deemed to be the "Closing Date" for purposes of the Master Agreement. 5. Related Transactions. The Sublease Agreement and Avionics Transition Agreement shall be executed and delivered upon the Avionics Inventory Transfer Date. 6. Payment Terms. Exhibit A2.1 setting forth the payment terms with respect to the Avionics transactions is hereby amended and restated as set forth in Exhibit B, attached hereto and incorporated herein by this reference. 7. Use of Personal Property. Avionics shall provide to Purchaser the right to use any and all of the Avionics Personal Property on a non-exclusive basis pursuant to a short term agreement in the form of Exhibit C, attached hereto and incorporated herein by this reference (the "Equipment License"). The Equipment License shall be executed and delivered at the Avionics Inventory Transfer Date. 8. Intellectual Property License. The License Agreement between AlliedSignal Technologies Inc. and EFTC with respect to the Avionics Technical Data and Technical Information, as defined therein, will not be effective until the Avionics Personal Property Transfer Date, including, but not limited to, the provisions of such agreement regarding the right of EFTC to use the Avionics Technical Data and Technical Information and the payment obligations of EFTC with respect thereto. In the interim, AlliedSignal, Inc. will cause AlliedSignal Technologies Inc. to grant to EFTC a temporary license to use the Avionics Technical Data and Technical Information for the limited purpose of performing its obligations under the Master Agreement at the Ft. Lauderdale, Florida site. This Amendment shall not otherwise change, amend, limit or affect any other provision of the Agreement, which shall continue in full force and effect. Any capitalized terms used in this Agreement which are not defined herein shall have the meanings ascribed to them under the Master Agreement. 2 48 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first set forth above. AlliedSignal Avionics, Inc., a Kansas corporation By: /s/ Tim Bibens -------------- Tim Bibens Title: Subcontracts Program Manager AlliedSignal Inc., a Delaware corporation, operating through its Aerospace Equipment Systems Business Unit By: /s/ John DeRusso ---------------- John DeRusso Title: Material Program Manager EFTC Corporation, a Colorado corporation By: /s/ Brian White --------------- Title: Treasurer 3 49 EXHIBIT A2.1 AVIONICS PURCHASE PRICE 1. Avionics Assets Purchase Price. The purchase price to be paid for the Avionics portion of the Assets (the "Avionics Asset Purchase Price"), including the Avionics Raw Material Inventory and the Avionics Remaining Assets, as defined below, shall be established and paid in the manner set forth below: (a) Raw Material Inventory. The Avionics Raw Material Inventory shall be valued at its unburdened cost, which shall be equal to its book value, calculated in accordance with generally accepted accounting principles as in effect on the date hereof as consistently applied by Avionics ("Avionics GAAP"), divided by 1.175 (the "Avionics Raw Material Inventory Value"). (b) Work-in-Process Inventory. The portion of the value of the Avionics Work-in-Process Inventory attributable to material shall be calculated in the same fashion as the value of the Raw Material Inventory. The portion of value for the Avionics Work-in-Process Inventory attributable to any electronic assembly for labor shall be equal to the product of (i) one half of the Avionics labor standard hours, as described in Attachment A to this Exhibit A2.1, for that electronic assembly, (ii) Purchaser's quoted hourly labor rate and (iii) the quantity of electronic assemblies with that labor standard. The value of the Avionics Work-in-Process Inventory shall be the sum of the material value plus the labor value (the "Avionics WIP Value"). (c) Finished Goods Inventory. The Avionics Finished Goods Inventory shall mean electronic assemblies described in Exhibit A to the Long Term Agreement that are not the subject of an open work order. The Avionics Finished Goods Inventory shall be valued at 95% of Purchaser's sale price to Avionics under the Long Term Agreement for the number of electronic assemblies to be purchased by Purchaser (the "Avionics Finished Goods Value"). (d) Personal Property. The Avionics Personal Property shall be valued at its aggregate net book value as of the Avionics Personal Property Transfer Date, calculated in accordance with Avionics GAAP, less $1,150,000 (attributable to the Avionics License Fee (as defined below)) (the "Avionics Personal Property Value"). (e) Intellectual Property License Fee. An Intellectual Property License Fee of $1,150,000 (of an aggregate $1,250,000 fee) will be paid by Purchaser to AlliedSignal Technologies, Inc. ("ASTI") (the "Avionics License Fee") in conjunction with the Avionics Personal Property purchase, with the balance to be paid in conjunction with the AES Asset Purchase Price described in Exhibit B2.1. The Avionics License Fee will be paid with respect to the license of the Intellectual Property attributable to the Avionics Business (the "Avionics Intellectual Property") 4 50 The Avionics Assets to be acquired that are described in paragraphs (b) though (d) of this Section 1 are referred to herein as the "Avionics Remaining Assets." 2. Payment Terms. At the Avionics Closing, the following amount shall be due and payable in accordance with the Avionics Closing Statement: the Combined Inventory Value less $2,650,000. The Combined Inventory Value shall be defined as the sum of 50% of the Avionics Raw Material Inventory Value; the Avionics WIP Value; and the Avionics Finished Goods Value. At the Avionics Personal Property Transfer Date, the following amounts shall be due and payable in accordance with the Avionics Personal Property Transfer Statement: (i) the Avionics Personal Property Value; and (ii) the Avionics License Fee (payable to ASTI). On or before August 29, 1997, Purchaser shall pay Avionics $2,650,000. On or before December 31, 1997, the remaining 50% of the Avionics Raw Material Value shall be due and payable. The purchase price for the Avionics Assets is subject to final determination and adjustment as described in Sections 3 and 4 below. 3. Purchase Price Calculation and Adjustment. (a) Initial Statement. Within two (2) days after the date of this Agreement, Avionics shall provide Purchaser with a statement separately specifying, in reasonable detail, the items and net book value of the Avionics Raw Material Inventory, Work in Process Inventory, and Finished Goods Inventory as of such date. (b) Closing Statement. Within fifteen (15) days after the date of this Agreement, Purchaser and Avionics shall conduct a joint inventory count to verify the accuracy of the Avionics Raw Materials Inventory listings set forth in the Initial Statement as of a date within two (2) days prior to the Avionics Closing Date and the parties shall mutually agree upon a written statement (the "Avionics Closing Statement") as to such count. The Avionics Closing Statement shall also contain the value of the Avionics Raw Material Inventory, Work in Process Inventory, and Finished Goods Inventory as calculated by Avionics as of such date. (c) Final Statement. Not more than five (5) days after Closing, Avionics shall provide Purchaser with a final statement (the "Final Statement") separately specifying, in reasonable detail, the final value of the Avionics Raw Material Inventory, Work in Process Inventory, and Finished Goods Inventory , which will constitute the "Final Statement Valuation" and will reflect all changes to the Closing Statement from the date of the Closing Statement to the Avionics Closing Date. Purchaser shall have seven (7) days to review and agree upon the Final Statement Valuation. If Purchaser notifies Avionics of any disagreement with all or part of the Final Statement then the parties shall negotiate in good faith for a period of fifteen (15) days to mutually agree upon any resulting adjustment, which adjustment shall result in a corresponding adjustment to the Final Statement. If the parties are unable to reach agreement 5 51 within such fifteen (15) days, such dispute shall be resolved by arbitration as provided in Section 15 of the Agreement. Purchaser shall pay Avionics or Avionics shall pay Purchaser the amount of the Avionics Purchase Price underpaid or overpaid the Avionics Closing, as the case may be, such payment to be made within thirty (30) days after final agreement or determination. (d) Personal Property. The parties shall review the Avionics Personal Property available for purchase and negotiate in good faith to determine the exact items of personal property to be transferred to Purchaser. Within two (2) days prior to the Avionics Personal Property Transfer Date the parties shall agree upon an Avionics Personal Property Transfer Statement which shall set forth the specific items to be transferred and the net book value thereof as of the Avionics Personal Property Transfer Date. 4. Post Closing Adjustment. (a) Adjustment at 12 Months After Closing. Any Avionics Raw Material Inventory Subject to Repurchase, as defined below, that has not been used or consumed by Purchaser within twelve (12) months after the Avionics Closing Date and that is not forecast for use in connection with the Long Term Agreement at the end of such twelve (12) month period for the subsequent twelve (12) month period shall be repurchased by Avionics. Purchaser shall provide Avionics with written notice of any such repurchase obligation within forty-five (45) days after the expiration of such twelve (12) month period. Avionics shall have the right to audit any such report, and Purchaser agrees to cooperate in any such audit. Avionics shall pay any undisputed amounts resulting from such calculations by Purchaser within thirty (30) days from receipt of notice. If the parties are unable to reach agreement within thirty (30) days, any such dispute shall be resolved by arbitration as provided in Section 15 of the Agreement, and payment shall be made within thirty (30) days after resolution. (b) Adjustment at 24 Months After Closing. Any Avionics Raw Material Inventory Subject to Repurchase, as defined below, that was not used or consumed by Purchaser within twelve (12) months after the Avionics Closing Date not repurchased by Avionics because its use was forecast in connection with the Long Term Agreement and that has not been used or consumed by Purchaser within twenty-four (24) months after the Avionics Closing Date shall be repurchased by Avionics under procedures comparable to those provided above for repurchases at the end of the first twelve (12) month period. (c) Method of Calculation. For the purposes of calculating the amount of any post-closing adjustment pursuant to Paragraph 4(a), the following formula shall apply: "Avionics Raw Material = Starting Quantity less Amount Used Inventory Subject to less Forecast Amounts Repurchase 6 52 "Starting Quantity" = The count of the applicable item of Raw Material inventory as shown on the Final Statement "Amount Used" = The quantities of such item (i) actually used by Purchaser in its operations at its Fort Lauderdale facility, regardless of whether production was for Avionics or another customer, or (ii) reallocated by Purchaser for use in another facility "Forecast Amount" = The quantity of such item shown on Avionics' most recent forecast supplied to Purchaser of its requirements for electronic assemblies during the period between twelve (12) months after the Avionics Closing and twenty four (24) months after Avionics Closing. Purchaser shall use its best efforts to minimize the amount of the adjustment contemplated by this Section through the internal reallocation of such inventory to other areas of Purchaser's business. (d) Repurchase Price. The price at which Avionics shall repurchase any Raw Materials Inventory shall be equal to the same price paid by Purchaser for such Raw Materials Inventory at the Avionics Closing plus an amount equal to interest calculated on such amount at the rate of 9% per annum. 5. Audit. If there is a good faith dispute regarding the calculation of the Avionics Asset Purchase Price or any adjustment thereto made pursuant to the terms of this Exhibit A2.1, Purchaser shall have the right to conduct an audit of the relevant aspects of Avionics' books and records, and Avionics agrees to cooperate in any such audit. 7 EX-2.2 3 PARTNER AGREEMENT 1 SUPPLIER PARTNERING AGREEMENT PAGE 1 OF 4 ALLIEDSIGNAL AEROSPACE SUPPLIER PARTNERING AGREEMENT Agreement No. R20046 This agreement made and entered into as of July 15, 1997, written by and between AlliedSignal Inc., a Delaware Corporation, acting on behalf of its various divisions and subsidiaries (hereinafter collectively referred to as AlliedSignal) having its principal offices at Columbia Road and Park Avenue, Morristown, New Jersey 07960 and EFTC Corporation (EFTC), a Colorado Corporation (hereinafter referred to as Supplier). This agreement is entered into with the purpose of establishing a long term relationship based on a continuous improvement process leading toward world class benchmarks in quality, cost, delivery, technology and service and shall be characterized by mutually beneficial goals, trust and benefits. It is agreed and understood by Supplier and AlliedSignal that: TERM OF AGREEMENT The term of this agreement shall commence on July 15, 1997 and shall run for the period of four (4) years from January 1, 1998 with automatic extensions of successive one (1) year duration unless a) either Party informs the other in writing one year in advance of their desire to terminate or, b) Supplier, at the reasonable determination of AlliedSignal, fails to maintain competitive quality, delivery and cost performance as specified herein in which case AlliedSignal shall provide reasonable notice. Releases will be by the using business unit(s) on individual purchase orders. THIRD PARTY SALES Supplier agrees not to sell to any third party (except the United States Government) any items covered by this contract for which the sole known application is for use in any aircraft product unless Supplier or its customer has obtained from the FAA either a Type Certificate, Technical Standard Order Approval or Parts Manufacturing Approval (PMA) pursuant to Section 21.303 of the Federal Aviation Regulations, covering said items. In no event shall Supplier use any information or tooling provided by AlliedSignal for the purpose of manufacturing and/or repairing the product for sale to any such third party, except as provided in the terms and conditions of the individual purchase orders issued, or as otherwise agreed in writing by the Parties. TERMS AND CONDITIONS Standard Form GP/FFP (1/97), General Purchase Order Provisions, is included in this agreement by reference but may be modified as necessary for specific business unit transactions. Any future revisions to these provisions will occur through business unit transactions. In the event of a conflict between the terms and conditions of an AlliedSignal issued purchase order and those appearing in this Agreement, the terms and conditions of this Agreement shall prevail. Payment terms NET 45 unless otherwise indicated. PRICING Wherever applicable, the prices for Products shall be the prices shown in Attachment I. 2 SUPPLIER PARTNERING AGREEMENT PAGE 2 OF 4 MOST FAVORED CUSTOMER The Supplier warrants the prices shown in this Agreement are no higher than those which would be charged other customers or the United States Government in similar transactions. USE OF ALLIEDSIGNAL AGREEMENTS Supplier agrees that any products, materials, or services acquired under the provisions of AlliedSignal agreements with other suppliers will be for the sole use of Supplier in the manufacturing process, and will not be for resale to any party other than an AlliedSignal business unit or subsidiary unless otherwise agreed by the Parties in writing. COMMUNICATION Periodic program reviews will be conducted in a timely manner between AlliedSignal and Supplier to facilitate future partnering arrangements using guidelines established below. In addition, AlliedSignal shall inform Supplier of its planned production rates for the product(s) and derivative(s) to facilitate production planning. Every notice under this Agreement shall be given in writing to the following address: ALLIEDSIGNAL SUPPLIER - ------------ -------- JOHN BRIANT CHIEF ADMINISTRATION OFFICER ALLIEDSIGNAL AEROSPACE EFTC CORPORATION 400 N. ROGERS RD. 6 TH FLOOR OLATHE, KS 66062-1212 HORIZON TERRACE 9351 GRANT ST. DENVER, CO 80229 F.A.R. REQUIREMENTS Individual purchase orders may be subject to regulations under United States Government Contracts. In such a case, Supplier will accept the inclusion of Standard Form SP/FFP (9/96), Supplemental Purchase Order Provisions under U.S. Government Contracts (and successor forms as required by U.S. Government regulations) in such purchase orders. Any future revisions to these provisions will occur through business unit transactions. SHIPMENTS Mode of transportation and carrier are to be in accordance with business unit purchase order instructions. In case of domestic shipment, terms of purchase shall ordinarily by FOB Origin, collect. International shipments shall ordinarily use INCOTERMS FCA (shipping point). In the absence of shipping instructions or for clarification contact Aerospace Transportation. SUPPLIER AGREES TO: o Have in place or be actively implementing a JIT (Just In Time) program which incorporates measurements and reporting ability in quality control and improvement process. These areas include, but are not limited to: x 3 SUPPLIER PARTNERING AGREEMENT PAGE 3 OF 4 x o On Time Delivery o Price Reductions o Benchmarking o Lead Time Reduction to meet Benchmarks o Statistical Process Control (SPC) in Critical Process Areas x o Be in compliance with documented plans to achieve: x o Quality: Achieve 50% reduction in quality defects year over year with a goal to achieve industry benchmark levels. A quality level shall be developed during the first six months of operations. Achieve increasing levels of Proven Quality Supplier (PQS) to reduce and eliminate ASA over-inspection and enable increasing percentage of Direct Line Delivery (DLD). Quality performance objective is no line fallout during processing at AlliedSignal with no ASA over-inspection required. o Delivery (as measured to initial contract date, 3 days early and 0 days late) to be 100% on time. o Product lead times on products to industry benchmark level of (4) weeks o Cost productivity improvement of 6% year over year on price with a goal of 8% to include 2% in productivity improvement through dock to stock, quality improvements, etc. *[TEXT REDACTED] x o Have in place a documented continuous improvement strategy for product quality, cost, delivery and service. Participate in AlliedSignal training and On-site Supplier Development (OSD) programs as appropriate to supplement Supplier's own continuous improvement efforts. x o Implement a quality system in compliance with: o ISO-9002 OR ISO-9001 if Supplier builds to own design o PC-001 Process Control - Variation Reduction o A program to permit Electronic Data Interchange (EDI) with AlliedSignal prior to year end 1997. o Participate in early supplier involvement on AlliedSignal new product development programs. o Meet with AlliedSignal on a regular basis to review programs, performance measurements and barriers to progress and to review appropriate corrective action to eliminate barriers. The parties recognize that AlliedSignal reserves the right to have specific part number products covered by this Agreement manufactured in its own facilities. In addition, AlliedSignal may have requirements in its contracts with specific customers, such as offset requirements and directed sources, to purchase certain material from sources other than Supplier, which right is also reserved by AlliedSignal. In the event of such a determination or requirement, the parties agree to use their best efforts to find and add to this - ------------------------- The portion of this agreement marked "*[TEXT REDACTED]" indicates that the portion has been omitted from this agreement and filed separately with the Commission pursuant to a Confidential Treatment Request. 4 SUPPLIER PARTNERING AGREEMENT PAGE 4 OF 4 Agreement alternative part numbers having the same total dollar value as the covered part numbers being manufactured by AlliedSignal or purchased from other sources. This Agreement plus those additional terms or conditions incorporated herein by reference which appear in Attachment I attached hereto and made a part hereof, constitutes the entire Agreement between the Parties with respect to the matters contained herein. No modification of the Agreement or waiver or addition to any of its terms and conditions shall be binding upon either Party unless made in writing and signed by the Parties' authorized representatives. Supplier will honor terms of this Agreement with any AlliedSignal entity or supplier designated by AlliedSignal. In witness whereof the Parties hereto have caused this Agreement to be executed July 15, 1997. EFTC CORPORATION ALLIEDSIGNAL AEROSPACE By /s/ Stuart Fuhlendorf By /s/ Tim Bibens ------------------------ ------------- NAME NAME Chief Financial Officer Subcontracts Program Manager TITLE TITLE Enclosures: Attachment 1 Appendix 1 AES Product Appendix 2 Responsibilities of Each Party EX-2.3 4 LICENSE AGREEMENT 1 LICENSE AGREEMENT THIS LICENSE AGREEMENT entered into as of the Effective Date set out below by and between ALLIEDSIGNAL TECHNOLOGIES INC., an Arizona corporation, with offices at 8440 South Hardy Drive, Tempe, AZ 85284 (hereinafter referred to as Licensor), and EFTC CORPORATION, a Colorado corporation with offices at 7251 West 4th Street, Greeley, CO 80634, (hereinafter referred to as Licensee). RECITALS WHEREAS, the Licensee and AlliedSignal Inc., acting through its Aerospace Equipment Systems business ("AES") and AlliedSignal Avionics Inc. ("Avionics") have entered into a certain Master Agreement Regarding Asset Purchase and Related Transactions dated July 15, 1997 (the "Master Agreement") whereby AES and Avionics agreed to transfer certain assets and employees relating to the manufacture of electronic assemblies to Licensee; and WHEREAS, in connection with the Master Agreement, Licensee agreed to manufacture electronic assemblies for AES, Avionics and their affiliated entities; and WHEREAS, Licensor is the owner of certain intellectual property rights relating to the manufacture of electronic assemblies by AES and Avionics, which rights Licensor has licensed to AES and Avionics; and WHEREAS, Licensee desires to acquire a license to this intellectual property under the terms and conditions that follow for the purpose of manufacturing electronic assemblies for AES, Avionics, their affiliated entities, and others. NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements hereinafter set forth, the parties hereto agree as follows: 1. Definitions 1.1 The term "AlliedSignal" as used herein means AlliedSignal Inc., any division or subsidiary thereof, including but not limited to AES and Avionics, and any company directly or indirectly owned or controlled by any one or more of the foregoing. 1.2 The term "AlliedSignal Gross Revenue" as used herein means Gross Revenue from Licensed Product and parts therefor made for AlliedSignal by Licensee, but does not include Licensed Product made by Licensee at AES's facility located at 11100 N. Oracle Road, Tucson, Arizona 85737-9588 pursuant to Section 7.2 of the Master Agreement. 1.3 The term "AES Asset Transfer Date" as used herein means the Asset Transfer Date as set forth in Section 9.1.3 of the "Master Agreement". -1- 2 1.4 The term "Closing Date" as used herein means the Closing Date, for Avionics and AES as applicable, as set forth in Sections 9.1.1 and 9.1.2 of the "Master Agreement". 1.5 The term "Gross Revenue" as used herein means all invoice amounts received by Licensee on all sales and leases of product and parts therefor, provided, however, that with respect to product and parts therefor which are (a) sold or leased by Licensee to any customer other than AlliedSignal, having a special relationship with or enjoying a favored position for dealing with Licensee as a result of which invoice prices billed by Licensee are less than the invoice prices billed to ordinary customers, (b) sold or leased by Licensee for other than monetary payments, (c) used rather than sold or leased by Licensee, or (d) shipped or delivered by Licensee to a party and Licensee does not bill such party, the term "Gross Revenue" means an amount equal to the most recent invoice price billed by Licensee for such product and parts therefor to ordinary customers. 1.6 The term "Licensed Product" as used herein means an electronic assembly made or manufactured for AlliedSignal using Technical Data or Technical Information. 1.7 The term "Licensee Subleased Facility" as used herein means the facility subleased by Licensee from Avionics as set forth in Section 7.1 of the "Master Agreement". 1.8 The term "Licensee Tucson Facility" as used herein means the Licensee operated facility as set forth in Section 7.2 of the "Master Agreement". 1.9 The term "Technical Data" as used herein means information and data in written, graphic, or machine readable form and source code and supporting documentation to the extent available received from Licensor, AES or Avionics including such information and data contained in the documents and software listed on Schedule A for AES and Schedule B for Avionics. 1.10 The term "Technical Information" means all know-how that Licensee receives through transferred AES and Avionics employees or through technical assistance provided by Licensor, AES or Avionics. -2- 3 2. Licenses Granted 2.1 Licensor grants to Licensee, under all applicable intellectual property rights held by Licensor, a nonexclusive, irrevocable, worldwide license to use Technical Data and Technical Information to manufacture, have manufactured, use and sell electronic assemblies and parts therefor. 2.2 All right, title and interest in and to Technical Data and Technical Information shall remain in Licensor. 2.3 Licensee may copy, alter, modify, and merge with its own technology Technical Data and Technical Information, subject to the other terms and conditions of this License Agreement including the obligation to pay the compensation of Section 5. 2.4 If any copyright or proprietary rights notice appears on Technical Data, Licensee agrees to the extent reasonably practical to include such notice on any modifications of Technical Data made by Licensee under Section 2.3 of this License Agreement. 2.5 No license, either express or implied, is granted by Licensor to Licensee hereunder with respect to any patent or information except as specifically stated above. 2.6 No license, either express or implied, is granted hereunder to use any trademark, or logo, or trade or product name of Licensor or AlliedSignal Inc., or Avionics, or any word or mark similar thereto. 2.7 Licensee may indicate that Licensed Products and parts therefor are made under license from Licensor by a suitable legend, if the form of such legend and the extent of Licensee's use thereof have received prior written approval of Licensor. Licensor may amend or revoke prior approvals to use such legends at any time during the term of this License Agreement, and all rights to use such legends shall terminate with this License Agreement. 2.8 Nothing contained in this License Agreement shall constitute, or be construed to be, a limitation or restriction upon any right otherwise possessed by Licensee or Licensor, or AlliedSignal, or Avionics to make, use or sell any product, or part therefor, in any country, provided, however, that the payments required by this License Agreement to be made by Licensee to Licensor with respect to sales and other dispositions of Licensed Product and parts therefor shall not be deemed to constitute such a limitation or restriction. -3- 4 3. Delivery of Technical Data 3.1 Within thirty (30) days of the Avionic's Closing Date, Licensor shall cause Avionics to deliver to Licensee one copy each of the documents and software, in machine readable form and source code and supporting documentation to the extent available, listed on Schedule B. 3.2 On or before the AES Asset Transfer Date, Licensor shall cause AES to deliver to Licensee one copy each of the documents and software, in machine readable form and source code and supporting documentation to the extent available, listed on Schedule A. 3.3 Licensor agrees to provide such additional information as may be reasonably necessary or desirable for Licensee to continue the business of manufacturing electronic assemblies as previously conducted by AES and Avionics, provided such additional information is in existence and in a tangible medium as of the Effective Date. 4. Warranty 4.1 Licensor warrants that the Technical Information and Technical Data provided to Licensee hereunder is the same as that which is used by AES and Avionics respectfully as of the Effective Date in their manufacture of electronic assemblies, and that to the best of Licensor's knowledge Licensee's use of Technical Data and Technical Information in a manner previously utilized by AES and Avionics prior to the Effective Date hereof will not violate any third party rights in existence as of the Effective Date, but Licensor does not make any other warranty, either expressed or implied, including warranties of merchantability and fitness for a particular purpose and shall have no liability with respect to the Technical Information or Technical Data, or the use thereof; nor does Licensor assume any responsibility or make any warranty with respect to electronic assemblies or Licensed Product, or parts therefor, manufactured, sold or used under this License Agreement. 4.2 With respect to electronic assemblies manufactured, sold, or used under this License Agreement that are not Licensed Product, Licensee shall hold Licensor harmless from any patent infringement liability and product liability arising from such electronic assemblies and shall maintain appropriate product liability insurance to cover such electronic assemblies. 4.3 With respect to Licensed Product, all indemnity shall be governed by the purchase order under which the Licensed Product was ordered from Licensee. -4- 5 4.4 If a part of the data delivered hereunder does not meet the warranty specified above, Licensor will, upon discovery of such discrepancy or upon notification thereof by Licensee correct the discrepancy in that part of the data by supplying amended or additional data. 4.5 All Technical Information and Technical Data is supplied in confidence solely for the use of Licensee under this License Agreement and Licensee agrees to handle the Technical Information and Technical Data in the same manner that it handles its own proprietary information, but shall use at least reasonable care in keeping the Technical Information and Technical Data confidential. Licensee agrees: (a) not to use or permit use of any Technical Data or Technical Information except in accordance with the licenses herein granted; and (b) not to disclose any Technical Data or Technical Information to others (including affiliates of Licensee) except to the extent such disclosure is reasonably necessary in connection with Licensee's operations under this License Agreement and only then if such disclosure is subject to the same limitations on the recipient as on Licensee hereunder; and except as required by law or legal process. The obligations under this Section 4.5 shall not apply to (i) information already known to Licensee prior to receipt from Licensor; (ii) information in the public domain including information that can be reversed engineered from a Licensed Product; (iii) information received from a third-party without similar restrictions; or (iv) information developed independently by or for Licensee. 5. Compensation 5.1. Licensee shall pay to Licensor a nonrefundable, noncreditable down payment of one million two hundred fifty thousand dollars ($1,250,000.00) to be paid on the Closing Date. 5.2 For the period starting with the Effective Date and ending on December 31, 2001, Licensee shall pay to Licensor a running royalty of one percent (1.0%) of AlliedSignal Gross Revenue for Licensed Product delivered to AlliedSignal and Avionics. Such running royalty shall be paid as follows: Licensee shall pay an installment payment of thirty two thousand dollars ($32,000.00) for each calendar month in which Licensed Product is delivered to AlliedSignal to be paid on or before the twentieth (20th) day of the month following the calendar month covered thereby, except that the royalty payment due on January 20th hereunder shall be calculated by multiplying the AlliedSignal Gross Revenue for the preceding calendar year by one percent (1.0%) and then subtracting all installment payments made to Licensor for the calendar months of February through December of the preceding calendar year. If this calculation results in an amount which is less than zero, then Licensee may credit this amount against future installment payments. During January of each calendar year, the parties shall mutually agree to a projected AlliedSignal Gross Revenue for that calendar year and the monthly installment payment due in February through December of that calendar year shall be one twelfth (1/12) of the product of the agreed to projected AlliedSignal Gross Revenue multiplied by one percent (1.0%). -5- 6 5.3 For a period starting with the Effective Date and ending on December 31, 2001, for all electronic assemblies and parts therefor made for a customer other than AlliedSignal at the Licensee Subleased Facility or the Licensee Tucson Facility, or at any successor Licensee facility within fifty (50) miles of either of these Facilities, Licensee shall pay to Licensor a running royalty of one percent (1.0%) of Gross Revenue for all such electronic assemblies to be paid on or before the twentieth (20th) day of the month following the calendar quarter covered thereby. 5.4 Along with January 20th payment under Section 5.2 and the quarterly running royalty payments under Sections 5.3, Licensee shall provide to Licensor a report showing for the period covered by the payment: (a) a list of all separately identifiable types (i.e., by model numbers or equivalent) of Licensed Product and electronic assemblies delivered, leased or otherwise utilized, (b) the quantity of such Licensed Product and electronic assemblies of each type sold, leased, or otherwise disposed of, (c) the Gross Revenue and AlliedSignal Gross Revenue for Licensed Product and electronic assemblies of each type, (d) the quantities of, and Gross Revenue and AlliedSignal Gross Revenue for, parts sold, leased or otherwise utilized, identified by the Licensed Product types and electronic assembly type, and (e) the derivation of the amount payable to Licensor from the foregoing information. Licensor agrees to keep such reports confidential even as to other AlliedSignal businesses, unless otherwise requested by Licensee. 5.5 In addition to the obligation to pay royalties under Sections 5.2, and 5.3, Licensee shall pay such royalties for all Licensed Product and electronic assemblies shipped by December 31, 2001 for which payment has not been received by Licensor. This payment shall be made on January 20, 2002. The parties agree that the licenses granted by Licensor to Licensee hereunder will be fully-paid upon receipt and acceptance by Licensor of all royalty payments due by January 20, 2002 under this License Agreement, and a final corresponding report. 5.6. Licensee shall pay interest to Licensor at a rate of two percent (2%) over the prime per annum interest rate quoted by Chase Manhattan Bank on any and all amounts that are at any time overdue and payable to Licensor under this License Agreement, such interest being calculated on each such overdue amount from the date when such amount became due to the date of actual payment thereof. The payment of such interest shall not replace any of Licensor's other rights under this License Agreement resulting from Licensee's default by failure to pay any amounts due hereunder. 5.7 All amounts payable to Licensor under this License Agreement are to be paid in U.S.A. currency. -6- 7 5.8 Licensee shall keep such records that will enable, under generally accepted accounting principles, the royalties due hereunder to be accurately determined. Licensor shall have the right to select an independent representative or accountant to inspect Licensee's records once a year on reasonable notice and during regular business hours to verify Licensee's reports and payments. Such inspections shall be at the expense of Licensor unless a variation or error exceeding Ten Thousand U.S. Dollars (U.S. $10,000.00) of royalty due, is discovered in the course of the inspection, whereupon, Licensee shall reimburse Licensor for the expense. 5.9 All payments to be made to Licensor shall be made by wire transfer to: Mellon Bank Pittsburgh, PA ABA 043000261 AlliedSignal Technologies Inc. Account Number 009-7594 Advice-AE-O-144 5.10 In the event that Licensee is terminated for default under the Long Term Agreement, or any purchase order thereunder, between AlliedSignal and Licensee relating to Licensed Product and upon written request by Licensor, Licensee shall provide to Licensor any and all improvements and modifications Licensee has made to Technical Information and Technical Data relating to Licensee's manufacture of Licensed Product for AES and Avionics and Licensor shall have a royalty free, irrevocable license, with right to sublicense to AlliedSignal and to AlliedSignal Avionics Inc., to use all of these improvements and modifications strictly to make or have made Licensed Product for AlliedSignal. In the event Licensor exercises rights pursuant to this Section 5.10, any remaining obligations of Licensee under Section 5 shall automatically terminate. Licensor agrees that its obligations with respect to all information provided under this Section 5.10 shall be commensurate with Licensee's obligations under Section 4.5 hereof. 6. Term and Termination 6.1 This License Agreement is effective as of the Effective Date and shall expire on December 31, 2003. 6.2 Neither party can terminate this License Agreement. Each party's sole and exclusive remedy for any alleged breach of this License Agreement shall be an action for monetary damages and/or specific performance, except that a party may seek injunctive relief for breach of Section 4.3 of this License Agreement. Failure on the part of either party to notify the other party of any violation of this License Agreement shall not constitute a waiver of that party's right to pursue the stipulated remedies hereof because of such violation or any like or different subsequent violation. -7- 8 6.3 Expiration of this License Agreement shall not excuse Licensee from paying Licensor all royalties earned pursuant to Article 5 of this License Agreement prior to expiration, and all royalties thus earned, but unpaid, shall immediately become due and payable. 6.4 Licensor agrees that the licenses granted to Licensee hereunder shall not, under any circumstances, be subject to revocation or termination for any reason by Licensor. 7. Notices 7.1 Any notice or report under this License Agreement shall be deemed given when sent registered mail, telex, facsimile, or telegram to the parties hereto at the following addresses: To Licensor: To Licensee: Gaylord P. Haas, Jr. August Bruehlman Vice President Chief Administrative Officer AlliedSignal Technologies Inc. EFTC Corporation 8440 South Hardy Drive 7251 West 4th Street Tempe, Arizona 85284 Greeley, Colorado 80634 Either party may, at any time, substitute for its previous record address any other address by giving written notice of the substitution. 8. Assignment 8.1 This License Agreement may not be assigned by Licensee and the Technical Data and Technical Information may not be sublicensed, in either case without the prior written consent of Licensor which shall not be unreasonably withheld; provided however, that Licensee may assign this License Agreement without prior consent to a wholly owned subsidiary of Licensee, to a purchaser of all or substantially all assets to which this License Agreement relates or to a corporation surviving Licensee in the event of a merger. 9. Entire Agreement 9.1 This License Agreement shall be binding upon and inure to the benefit of the parties hereto and the successors to substantially the entire assets and business of the parties hereto, to which this License Agreement relates. This License Agreement is not for the benefit of any third person, firm, government, or corporation, and nothing herein contained shall be construed to create any rights to any third parties hereunder as a result of, or in connection with this License Agreement. This License Agreement contains the entire and only agreement between the parties, and supersedes all pre-existing agreements between such parties pertaining to the subject -8- 9 matter hereof; and any representation, promise, or condition in connection therewith not incorporated herein shall not be binding upon the party. No modification, renewal, extension or waiver of this License Agreement or any of the provisions herein contained shall be binding upon the party against whom enforcement of such modification, renewal, extension or waiver is sought, unless it is made in writing and signed on behalf of Licensor and Licensee by their respective representatives who have been delegated such authority. 10. Governing Law 10.1 This License Agreement shall be construed and interpreted in accordance with the laws of the State of Arizona, United States of America without regard to its provisions as to choice of law. 11. Severability of Provisions 11.1 If any of the provisions of this License Agreement shall be declared to be invalid or unenforceable by judicial or administrative decisions, any such provision shall be modified by negotiation to the extent necessary to avoid such violation and in a manner that does not affect the validity or enforceability of any other provisions of this License Agreement, which shall be valid and enforceable to the fullest extent of the law. 12. Waiver 12.1 Failure of either party to insist upon the strict performance of any provisions hereof or to exercise any right or remedy shall not be deemed a waiver of any right or remedy with respect to any existing or subsequent breach or default; the election by either party of any particular right or remedy shall not be deemed to exclude any other; and all rights and remedies of either party shall be cumulative. 13. Headings 13.1 The headings to the Sections of this License Agreement are inserted for convenience only and shall not be deemed a part hereof or affect the construction or interpretation of any provision. 14. Survivability 14.1 Sections 4.1, 4.3, 6.4 and Articles 2., 5., 7., 8., 10., 11., 12., and this Article 14. will survive the expiration of this License Agreement IN WITNESS HEREOF Licensor and Licensee have executed this License Agreement as of this 4th day of August, 1997 ("Effective Date"). -9- 10 ALLIEDSIGNAL TECHNOLOGIES INC. EFTC Corporation By: /s/ Gaylord P. Haas, Jr. By: /s/ Stuart Fuhlendorf ------------------------ --------------------- Name: Gaylord P. Haas, Jr. Name: Stuart Fuhlendorf Title: Vice President Title: Chief Financial Officer -10- 11 Schedule A Technical Data - AES -11- 12 Schedule B Technical Data - Avionics -1- EX-2.4 5 LICENSE AGREEMENT 1 PREMISES LICENSE AGREEMENT This LICENSE AGREEMENT ("Agreement") is made and entered into as of August 4, 1997 by and between AlliedSignal Inc., a Delaware corporation, operating through its Aerospace Equipment Systems Business Unit (the "Company"), and EFTC Corporation, a Colorado corporation ("Licensee"), with reference to the following: WHEREAS, the Company, Licensee and AlliedSignal Avionics, Inc. entered into that certain Master Agreement Regarding Asset Purchase and Related Transactions dated July 15, 1997 (the "Master Agreement") whereby the Company agreed to transfer certain assets related to the manufacture of electronic assemblies to Licensee, Licensee agreed to enter into a Long Term Supply Agreement with the Company providing for the manufacture by Licensee of electronic assemblies for the Company and its affiliated entities, and the Company and Licensee entered into that certain Facilities Management and Transition Services Agreement, dated the date hereof (the "Facilities Agreement") relating to the provision of manufacturing and other services by Licensee to the Company at the Premises (as defined below); WHEREAS, the Company and Licensee desire to foster a smooth transition of the electronic assembly operations from the Company to Licensee, and in the interests of facilitating such transition and to permit Licensee to perform services under the Facilities Agreement, the Company shall allow Licensee to occupy a portion of the Company facility located at 11100 North Oracle Road, Tucson, Arizona (the "Building"), more specifically described in Exhibit A, attached hereto and incorporated herein by this reference (the "Premises") and to use certain of its equipment and tools, including, but not limited to, those described in Exhibit B1.1.1 of the Master Agreement (the "Equipment"); and WHEREAS, the Company is willing to grant Licensee a license to use the Premises and the Equipment for the purposes stated above. Capitalized terms used herein without definition shall have the meanings ascribed thereto in the Master Agreement. NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements hereinafter set forth, and in consideration of the execution and performance of the Master Agreement, the parties hereto agree as follows: 1. The License. 1.1 Grant of License. Subject to the terms and conditions hereinafter contained, the Company hereby grants to Licensee free of charge for the Term (as hereinafter defined), and any extension thereof, a non-exclusive and non-sublicensable right and license to utilize the Premises and the Equipment for the limited purposes set forth in Sections 2 and 3 below. Except as permitted by Section 9 hereof, such license shall be 2 non-transferable. This Agreement creates a license to use the Premises and the Equipment only and does not create or constitute a lease. Licensee shall have no real property interest in or rights to assign the Premises and no interest in or right to assign the Equipment. 1.2 Irrevocability. During the Term, the Company shall not revoke the License granted hereby and shall not unreasonably interfere with Licensee's use and enjoyment of the privileges of the License with respect to the provision of services by Licensee to the Company as contemplated hereby and by the Facilities Agreement. 2. Scope of License. Licensee shall use the Premises solely for the provision of services to the Company relating to the manufacture and production of electronic assemblies and other activities reasonably incidental thereto for the Company and its affiliated entities (the "Services"). Licensee may not use the Premises to engage in other activities. 3. Occupancy. 3.1 The Premises. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT, OR ANY OTHER COMMUNICATIONS BETWEEN THE PARTIES ORALLY OR IN WRITING, IT IS THE EXPLICIT INTENT OF EACH PARTY HERETO THAT THE COMPANY MAKES NO REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, BEYOND THOSE EXPRESSLY GIVEN IN THIS AGREEMENT, THE MASTER AGREEMENT OR THE FACILITIES AGREEMENT, INCLUDING BUT NOT LIMITED TO ANY IMPLIED WARRANTY OR REPRESENTATION AS TO CONDITION, MERCHANTABILITY OR SUITABILITY AS TO ANY OF THE PROPERTIES OR ASSETS OF THE COMPANY. EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED IN THIS AGREEMENT, THE MASTER AGREEMENT OR THE FACILITIES AGREEMENT, THE PREMISES, THE BUILDING AND THE EQUIPMENT ARE BEING PROVIDED ON AN "AS IS" BASIS. 3.2 Repairs, Modifications. (a) Except as expressly set forth herein, the Company shall be responsible for all repair, maintenance and necessary modifications and improvements to the Building, the Premises and the Equipment required to maintain, consistent with reasonable industry standards, a safe and sound workplace for the continued use of the Premises by Licensee as contemplated hereby and to enable Licensee to perform the Services for the Company pursuant to the Facilities Agreement. Subject to the Company's compliance with respect to its obligations to repair, maintain, modify and improve the Building, the Premises and the Equipment, Licensee is obligated to pay for the repair of any damage to the Premises, the Building, any of the Company's personal property, fixtures or improvements located thereon or the Equipment caused by the negligence or willful misconduct of Licensee or any of its employees, agents, or invitees. 2 3 (b) Licensee shall not make any alterations, additions or improvements to the Premises or to the Equipment without the prior written consent of the Company. Subject to the terms of the Master Agreement, all alterations, additions and improvements that may be made by either of the parties hereto to the Premises or the Equipment shall be the property of the Company and shall remain upon and be surrendered with the Premises and the Equipment. The Equipment may not be removed from the Premises without the prior written consent of the Company, except in conjunction with the AES Asset Transfer Date. 3.3 Rules and Regulations. Licensee agrees that it will cause its employees, agents, contractors and invitees to comply with any and all of the Company's reasonable rules, regulations and procedures, including, but not limited, to those pertaining to security, parking, access, use of the Equipment and use of common areas, as may be established by the Company from time to time. Whenever Licensee's employees are in the Company's facilities or on the Company's Premises, such employees shall observe the Company's rules and policies and may be removed by the Company in the event of noncompliance. Licensee shall use the Equipment for its intended use only and in accordance with manufacturer's and Company's instructions. 4. Term. The term of this Agreement (the "Term") shall commence on the date of the closing of the transactions contemplated by the Master Agreement with respect to the Company ("Closing") and shall terminate on the AES Asset Transfer Date. Upon the termination of this Agreement, Licensee will return to the Company any and all keys or access cards for the Premises and any other equipment or materials of the Company in Licensee's possession or control. Licensee agrees that if the AES Asset Transfer Date has not occurred by March 31, 1998 as a result of not having established its own manufacturing facility, it will take all actions necessary for the AES Asset Transfer Date to occur by April 30, 1998, including establishing such manufacturing facility at a third party's facilities. 5. Liability for Misuse or Damage. Licensee assumes responsibility for any negligent or willful misuse of or damage to the Equipment, the Premises and any other portions of the Building that Licensee or its employees, agents and invitees may from time to time use, to the extent of the actual damages to the Company caused thereby. Licensee agrees to indemnify, defend and hold the Company, its officers, directors and affiliated entities harmless from and against any liability arising from or related to any such negligent or willful misuse or damage, including, but not limited to property damage and personal injury not compensated under applicable workers' compensation laws. To the extent that any loss of any property by theft or otherwise, for personal injury or property damage is proximately caused by the joint negligence or willful misconduct of the Company and Licensee or their respective employees, agents or invitees, the Company and Licensee shall be ratably responsible for such loss or damage based upon their relative fault as determined by agreement of the parties or pursuant to Section 17, as the case may be. It is expressly understood by the parties that Licensee shall have no liability or other responsibility for any misuse of or damage to the Premises, the Building 3 4 or the Equipment including, but not limited to property damage and personal injury not compensated under applicable workers' compensation laws, to the extent that such misuse, damage or injury results from actions of Licensee, its employees, agents or invitees acting in accordance with the specific directions of the Company (including any rules, regulations, policies, procedures or other instructions of the Company relating to health, safety or environmental matters). 6. Representations, Warranties and Covenant with Respect to the Condition of the Premises. 6.1 Representations and Warranties. The Company represents and warrants to Licensee as follows: (a) To the Company's knowledge, the Company holds and is in compliance in all material respects with all permits, certificates, licenses, approvals, registrations and authorizations ("Permits") required under all Environmental Laws (as defined below) applicable to the Equipment and operations that have been conducted by the Company on the Premises and common areas, including those relating to any Hazardous Substance (as defined below), and all such Permits are in full force and effect and are listed in Exhibit B hereto. The Company has made timely applications for renewal of all such Permits to maintain such permits in full force and effect. (b) To the Company's knowledge, on the date hereof the Premises and all Equipment and operations that are being conducted by the Company on the Premises and common areas are in compliance in all material respects with all applicable Environmental Laws. (c) To the Company's knowledge, the Premises, the Equipment and common areas, and the Company in connection with any location at 11100 North Oracle Road, Tucson, Arizona, are not subject to any notice, enforcement, proceeding, investigation or action relating to violations of, or that create liability under, Environmental Laws by any governmental entity or third party. (d) To the Company's knowledge, neither the Company nor any of its affiliates have caused, and the Premises and the common areas do not contain, any release or threatened release of any Hazardous Substance that requires response, removal, remedial, or corrective actions under any Environmental Laws, and neither the Company nor the Premises are subject to any notice, enforcement, proceeding, investigation or action relating to any such releases or threatened releases at the Premises or common areas. (e) To the Company's knowledge, the Premises and common areas and facilities contain no polychlorinated biphenyls or asbestos. 4 5 (f) To the Company's knowledge, the Company has received no notification that it may be responsible or liable for any off-site treatment or disposal of materials from the Premises at an off-site location. (g) To the Company's knowledge, there are no conditions or occurrences at the Premises, the Building or any underlying property, including groundwater or soil, that could materially adversely affect Licensee's operations at the Premises. (h) The Company's environmental, health and safety policies and procedures applicable to the Building and the Premises are not in conflict with applicable Environmental Laws. (i) The environmental controls, the Equipment and the permits at the Premises, are adequate to comply with all Environmental Laws based on the operating volume and requirements employed by the Company as of the date hereof. 6.2 Certain Definitions. For purposes of this Agreement, "Environmental Law" means any federal, state, or local statute, regulation, order, directive or other requirement of a governmental authority, as well as common law, relating to protection of public health, safety, and the indoor or outdoor environment or to the management of Hazardous Substances, and includes by way of example and without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq.; The Clean Air Act, 42 U.S.C. Section 7401 et seq.; The Solid Waste Disposal Act, 42 U.S.C. Section 6901 et seq.; and The Federal Water Pollution Control Act, 33 U.S.C. Section 1251 et seq. For purposes of this Agreement, "Hazardous Substances" shall mean any substance, chemical, compound, product, solid, gas, liquid, waste, byproduct, pollutant, contaminant, or material that is regulated by, or creates liability under, Environmental Law, or is hazardous or toxic and includes, without limitation, petroleum (including crude oil or any fraction thereof). 7. Health, Safety and Environmental 7.1 General Compliance Obligation. The Company, with respect to the common areas of the Building that could materially adversely affect the Licensee's operations (the "Company's respective area"), and Licensee, with respect to the Premises and the common areas to be used by Licensee (the "Licensee's respective area"), shall each comply with all health, safety and environmental laws, regulations, permits and licenses. In addition, with respect to their respective areas, the Company and Licensee shall comply, to the extent applicable, with the requirements of the Company's health, safety and environmental policies and practices. The Company shall have the right to review and/or audit Licensee's health, safety and environmental procedures and policies, including the right to inspect permits, reports, manuals, equipment, work areas and storage areas, and to interview employees. Licensee shall reasonably cooperate with any such reviews or audits. In the event a compliance problem is discovered in one of the parties' respective areas, the party discovering such problem shall notify the 5 6 other party hereto as soon as reasonably possible and take all necessary and appropriate steps to correct the problem, including, but not limited, if applicable, notifying the appropriate parties, implementing corrective actions, remediating any contaminated areas and defending itself against any type of enforcement action, lawsuit or claim by any person or entity not a party to this Agreement (collectively referred to as "Response Actions.") Each party shall keep the other apprised in a timely manner with all Response Actions being taken. If the party responsible for a compliance problem fails to take such appropriate steps, following reasonable notice by the other party, such other party shall have the option to perform necessary and appropriate Response Actions and to seek indemnity from such other party under the terms of this Agreement. 7.2 Permits. Licensee acknowledges the existence of various environmental permits related to operations at the Premises, which permits will remain in the name of the Company after the date of this Agreement. As required in paragraph 7.1 hereof, Licensee shall take all necessary steps to ensure its operations comply with the terms of these environmental permits. 7.3 Treiber Cleaning Unit. Licensee acknowledges that during the period of this Agreement, the Company will need access to and use of the Treiber Cleaning Unit located at the Building. Following reasonable prior notice from the Company, Licensee shall make reasonable provision for the Company to have access to and use of the Treiber Cleaning Unit, when and upon the terms reasonably requested by the Company. Licensee agrees to indemnify and hold the Company harmless for any costs, damages, losses or liabilities resulting from failure of Licensee to provide Company with access to and use of the Treiber Cleaning Unit, so long as such access and use does not unreasonably interfere with Licensee's provision of the Services to the Company on the Premises. 7.4 Wastewater Neutralization Systems. Operation of the two (2) wastewater neutralization systems in the Building, as identified on Exhibit C to this Agreement, shall remain the responsibility of the Company. Following reasonable prior notice from the Company, Licensee agrees to provide all reasonably necessary access to the neutralization systems required by the Company to meet the wastewater permit obligations. Nothing in this paragraph shall be interpreted to excuse or limit Licensee's obligations under Sections 7.1 through 7.3 hereof. 7.5 Indemnification for Environmental Matters. Licensee agrees to indemnify, protect, hold harmless and defend the Company from and against all liabilities, losses, claims, demands, costs and expenses ("Liability"), including, but not limited to, fines, court costs, reasonable attorneys' fees and costs of investigation, remediation and repairs, that are caused by or arise out of Licensee's (or Licensee's employees, agents, contractors or anyone acting on Licensee's behalf) use, handling, generation, storage, spillage, release or discharge of any hazardous substance, at, on or under, the Premises or the Building, or any other action or operation by Licensee (or Licensee's employees, agents, contractors or anyone acting on Licensee's behalf) that constitutes 6 7 a violation of Environmental Law, except for such Liability directly caused by the Company's instructions, directions, rules, regulations or policies, or by the Company's failure to comply with its obligations under this Agreement or the Facilities Agreement. The Company agrees to indemnify, protect, hold harmless and defend Licensee from and against all liabilities, losses, claims, demands, costs and expenses, including, but not limited to, fines, court costs, reasonable attorneys' fees and costs of investigation, remediation and repairs, that are caused by or arise from the Company's breach of any representation or warranty in Section 6.1 or from any reason that does not require Licensee to indemnify, protect, hold harmless and defend the Company, set forth in the previous sentence. The Company and the Licensee acknowledge that liabilities for environmental matters could arise that are jointly caused by the Company and the Licensee, in which case, the relative responsibility for any indemnification hereunder shall be determined on the basis of relative fault of the parties. 7.6 Right of Access. In addition to the right of review and/or audit in paragraph 7.1 hereof, the Company shall have an irrevocable right of access to the Building for the purpose of performing any necessary investigations, tests or remedial activities related to confirmed or suspected violations of any applicable Environmental Law at, on or under the Building. In exercising its right of access under this paragraph, the Company shall use its best efforts not to interfere unreasonably with Licensee's provision of the Services to the Company and to indemnify, hold harmless and defend Licensee from injury or damage to persons or property, not including consequential damages, caused by or arising from such access, investigations, tests or remedial activities. 7.7 OSHA. Licensee acknowledges that its employees are not employees of the Company and that Licensee shall have the sole obligation to comply with the requirements of the federal Occupational Health and Safety Act ("OSHA") with respect to Licensee's employees, including, but not limited to recording all OSHA-recordable incidents on Licensee's log except to the extent the Company is otherwise responsible under this Agreement. 7.8 Survival. The parties' obligations under this Section 7 shall survive any assignment, transfer or termination of this Agreement. 7.9 Environmental Cooperation. The Company shall cooperate reasonably in providing to Licensee all documents and information reasonably requested by Licensee regarding environmental compliance or liabilities relating to the Premises, the common areas and the underlying property that could materially adversely affect Licensee's operations of the Business or could result in a claim against Licensee. 8. Insurance. 8.1 Employer. Licensee shall maintain at all times during the Term (i) workers' compensation insurance that shall fully comply with the statutory requirements of all applicable state and federal laws covering all personnel employed by Licensee at the 7 8 Premises; (ii) employers' liability insurance coverage on all personnel employed by Licensee at the Premises in the following minimum amounts: at least one million dollars ($1,000,000) per accident for bodily injury and one million dollars ($1,000,000) per employee/aggregate for disease; and (iii) unemployment insurance for all personnel employed by Licensee at the Premises in full compliance with state and federal law. 8.2 General Liability Insurance. Licensee represents and warrants that it has in effect, and agrees to maintain in effect during the Term, comprehensive general liability insurance to protect it and the Company and the Company's directors, officers, employees and affiliates in connection with matters for which Licensee is responsible hereunder. The Company represents and warrants that it has in effect, and agrees to maintain in effect during the Term, comprehensive general liability insurance to protect it and Licensee and Licensee's directors, officers, employees and affiliates in connection with matters for which the Company is responsible hereunder. Limits for such general liability insurance shall in no event be less than one million dollars ($1,000,000) per occurrence and five million dollars ($5,000,000) in aggregate for bodily injury and property damage, combined single limit coverage. 8.3 Endorsements. Other than the worker's compensation policy, each insurance policy shall name the Company or Licensee, as the case may be, as an additional insured, and all policies shall contain a provision whereby the insurer agrees not to alter or cancel the coverage without at least thirty (30) days' prior written notice to the Company or Licensee, as the case may be. Neither the Company nor Licensee shall be liable for the payment of any premiums associated with the insurance to be required of the other hereunder. 8.4 Certificates of Insurance. The Company and Licensee shall each provide to the other certificates, in duplicate, evidencing the above-required insurance promptly upon execution of this Agreement. 9. Assignment. This Agreement, and all rights and obligations hereunder, shall not be assignable by any party in whole or in part, except that (a) either party may assign this Agreement and its rights and obligations hereunder with the other party's prior written consent, and (ii) Lessee may assign this Agreement without the prior written consent of the Company to a subsidiary or affiliated entity. For any such assignment, the assigning party shall remain obligated hereunder unless the other party shall consent otherwise. 10. Entire Agreement. This Agreement, together with the Exhibits hereto, the Facilities Agreement and the Master Agreement constitute the parties' entire agreement with respect to the subject matter hereof and supersede all prior statements or agreements, both written and oral. This Agreement may be amended only by a writing signed by each party hereto. 8 9 11. Governing Law. The validity, interpretation and construction of this Agreement, and all other matters related to the Agreement, shall be interpreted and governed by the laws of the State of Arizona. 12. Notices. Notices under this Agreement shall be in writing and sent by confirmed facsimile, personal delivery or overnight delivery service to the addresses specified in or pursuant to the terms of the Master Agreement and shall be effective as specified in the Master Agreement. 13. Severability. If any term or provision of this Agreement, or the application thereof to any person or circumstance, shall to any extent be found to be invalid, void, or unenforceable, the remaining provisions of this Agreement and any application thereof shall, nevertheless, continue in full force and effect without being impaired or invalidated in any way. 14. Waiver. No waiver of any term, provision or condition of this Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed to be or be construed as a further or continuing waiver of any such term, provision or condition or as a waiver of any other term, provision or condition of this Agreement. 15. Independence. The parties shall at all times act independently. Nothing contained in this Agreement, shall be construed to make one party the partner, joint venturer, principal, agent or employee of the other party hereto. Neither party shall have any express or implied authority to act for or on behalf of the other or bind the other contractually. Each party is solely responsible for payment of (i) all income, disability, withholding, and other employment taxes as well as (ii) all medical benefit premiums, vacation pay, sick pay or other fringe benefits resulting from its retention of its officers, directors, employees, agents, affiliates and contractors. Each party shall indemnify, defend, and hold the other harmless from any claim for any such tax or benefit payment. 16. Headings. The headings herein used are for convenience purposes only and shall not be used to construe the meaning of this Agreement in any respect. 17. Arbitration. [Except for any controversy, claim or dispute arising under Section 7], any controversy, claim or dispute arising out of or relating to this Agreement or the transactions contemplated hereby or the breach, termination, enforcement, interpretation or validity hereof, including the determination of the scope or applicability of this agreement to arbitrate (collectively "Dispute"), shall be determined by arbitration in Phoenix, Arizona before a sole arbitrator. The following shall apply to any such arbitration: 17.1 The arbitration shall be administered by the American Arbitration Association ("AAA") pursuant to its Commercial Rules and Supplementary Procedures for Large, Complex Disputes. 17.2 The arbitrator shall not be an officer, employee, director or affiliate of any party hereto or of its affiliates. If the parties are unable to agree on an arbitrator within 30 days of 9 10 the filing of the Demand for Arbitration, an arbitrator shall be selected pursuant to the rules and procedures of the AAA. 17.3 Any party may seek from any court interim or provisional relief that is necessary to protect the rights or property of that party, pending the appointment of the arbitrator or pending the arbitrator's determination of the merits of the controversy. 17.4 The parties shall bear their own costs and expenses, including attorneys' fees, but the arbitrator may, in the award, allocate all of the administrative costs of the arbitration (and mediation, if applicable), including the fees of the arbitrator and mediator, against the party who did not prevail. 17.5 The arbitration award shall be in writing and shall specify the factual and legal bases for the award. Judgment on the award may be entered in any court having jurisdiction. 18. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall constitute an original instrument and all of which together shall constitute the same instrument. IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written. ALLIEDSIGNAL INC., a Delaware corporation operating through its Aerospace Equipment Systems Business Unit By: /s/ Terrance Carlson -------------------- Title: Associate General Counsel and Assistant Secretary EFTC Corporation, a Colorado corporation By: /s/ Stuart Fuhlendorf --------------------- Title: Chief Financial Officer 10 11 EXHIBIT A The Premises 11 12 EXHIBIT B Permits 12 13 EXHIBIT C Wastewater Neutralization Systems 13 EX-2.5 6 SERVICES AGREEMENT 1 FACILITIES MANAGEMENT AND TRANSITION SERVICES AGREEMENT This FACILITIES MANAGEMENT AND TRANSITION SERVICES AGREEMENT (this "Agreement") is made as of this 4th day of August, 1997 between AlliedSignal Inc., a Delaware corporation operating through its Aerospace Equipment Systems Business Unit ("Seller"), and EFTC Corporation, a Colorado corporation ("Purchaser"). WHEREAS, pursuant to that certain Master Agreement Regarding Asset Purchase and Related Transactions dated July 15, 1997 (the "Master Agreement") between AlliedSignal Avionics Inc., a Kansas corporation, Seller and Purchaser, Purchaser has hired certain persons formerly employed by Seller in its business of manufacturing electronic assemblies for use in aerospace applications (the "Business"); capitalized terms used herein without definition shall have the meanings ascribed thereto in the Master Agreement; and WHEREAS, Purchaser has agreed to purchase from Seller pursuant to the Master Agreement certain inventory and equipment used in the Business, such acquisition to be effective upon the AES Asset Transfer Date; WHEREAS, in order to permit Purchaser a period of time in which to establish its own facility for the operation of the Business at the AES Asset Transfer Date, and to permit Seller to continue to receive production of electronic assemblies until such facility is operational, Seller and Purchaser have agreed to enter into a special transition period arrangement for Purchaser to provide certain services to Seller relating to the production of electronic assemblies for Purchaser's account; WHEREAS, the parties intend that AlliedSignal will own and provide to Purchaser the means of production of electronic assemblies (space, equipment, components), except labor and its supervision ("Means of Production") such that Purchaser shall be able to perform services hereunder; WHEREAS, the parties further intend that Purchaser will take such means of production, apply supervised labor, and manufacture electronic assemblies per Seller's schedule and specifications. WHEREAS, Seller and Purchaser desire to foster the smooth operation of the Business prior to the AES Asset Transfer Date and the establishment by Purchaser of a facility in which to manufacture electronic assemblies for use in aerospace applications after the AES Asset Transfer Date; accordingly, Seller has agreed to provide certain transition services to Purchaser pursuant to this Agreement; and 2 WHEREAS, Seller has agreed to permit Purchaser to use on a non-exclusive basis a portion of Seller's facility pursuant to that certain Premises License Agreement entered into between Seller and Purchaser dated as of the date hereof (the "Premises License Agreement"). NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements hereinafter set forth, the parties hereto agree as follows: 1. FACILITIES MANAGEMENT AND OPERATION PROVIDED BY PURCHASER 1.1 Purpose. Purchaser shall provide the personnel and management services necessary to manufacture electronic assemblies within Seller's facility licensed to Purchaser pursuant to the Premises License Agreement using the equipment specified in Exhibit B1.1.1 to the Master Agreement and the inventory and component parts provided by Seller in accordance with Seller's specifications. To that end, Purchaser is to provide the personnel to perform the manufacturing services required by Seller, all as specified in Seller's production schedules communicated to Purchaser from time to time by Seller. The operations management and operation services to be provided by Purchaser to Seller hereunder are referred to herein as the "Management Services." The aggregate staffing levels of Purchaser engaged in the Management Services will be subject to mutual agreement by the parties and are intended to be consistent with the historical staffing levels of the Business. 1.2 Engagement of Purchaser by Seller. Purchaser shall provide the Management Services as contemplated by Section 1.1 that are necessary to conduct the Business and to produce electronic assemblies pursuant to Seller's production schedules communicated to Purchaser from time to time by Seller during the period from the date hereof until the AES Asset Transfer Date (the "Transition Period") in accordance with the terms of this Agreement. 1.3 Compensation for Management Services. Seller shall pay Purchaser for the Management Services during the Transition Period as follows: 1.3.1 Subject to the other provisions of this Section 1.3.1, the total amount payable by Seller to Purchaser with respect to each payroll period during the Transition Period shall be equal to the amount paid for direct and indirect compensation (wages, salaries and benefits) by Purchaser for its employees (including temporary employees) performing Management Services, plus ten percent (10%) of such amount paid. For the purpose of this Section Purchaser's benefits shall be deemed to be eighteen percent (18%) of base pay for indirect employees and twenty-two percent (22%) of base pay for direct employees. In the case of sub-contracted staffing the amount payable by Seller shall be equal to the lesser of (i) the amount paid by Purchaser to the subcontractor for such staffing or (ii) the amount paid by Seller prior to the date hereof for comparable staffing, in each case plus ten percent (10%). 2 3 1.3.2 Purchaser shall invoice Seller the amount payable under Section 1.3.1 on a bi-weekly basis, payable within fifteen (15) days from Seller's receipt of the invoice, or the parties may mutually agree upon an alternate arrangement. 1.3.3 Purchaser agrees to use its best efforts to effect, during the term hereof, a change in the ratio of subcontracted employees to permanent employees from its current ratio of approximately 55/45, respectively, to a ratio of 25/75, respectively. 1.4 Term. Purchaser's obligation to provide Management Services and Seller's obligation to provide Means of Production shall commence on the date of the closing of the transactions contemplated by the Master Agreement and shall continue until the AES Asset Transfer Date. Purchaser shall not use the Means of Production for any purpose other than as contemplated in this Agreement. 1.5 Employee Transfer. From time to time prior to the Asset Transfer Date, but in no event later than fifteen (15) business days prior to the Asset Transfer Date, Seller may notify Purchaser of up to ten (10) employees who indirectly support the Business at the AES Facility whose services are no longer needed by Seller. Purchaser shall make offers of employment to such persons within five (5) business days of notification. Such offers and Purchaser's employment of such individuals shall be effected in a manner otherwise consistent with the terms of Article 6 of the Master Agreement except that all references to the "Closing Date" shall be deemed to be references to the affected employee's start date. 2. TRANSITION SERVICES 2.1 Pre-Asset Transfer Date Services. Seller and Purchaser understand that Purchaser may request that Seller use its best efforts to duplicate certain business systems of Seller prior to the AES Asset Transfer Date. Accordingly, Seller agrees that it will provide to Purchaser upon request the services described on Schedule A hereto (such services being hereinafter referred to individually as a "Pre-Asset Transfer Date Service" and collectively as the "Pre-Asset Transfer Date Services"). Purchaser's use of Pre-Asset Transfer Date Services shall be solely for purposes related to Purchaser's preparation to conduct manufacturing operations using the employees hired and equipment and inventory acquired from Seller pursuant to the Master Agreement as of 3 4 the AES Asset Transfer Date. Seller will provide Pre-Asset Transfer Date Services to Purchaser pursuant to this Agreement until the AES Asset Transfer Date. The terms of this Section shall not apply to services for which related employees or equipment have been transferred to Purchaser pursuant to the terms of the Master Agreement. 2.2 Plan of Transition. Within thirty (30) days after the date of this Agreement, Purchaser shall provide Seller with a detailed plan of Purchaser's actions required to complete the transition from the Premises to Purchaser's facility. 2.3 Other Transition Services. Commencing on the AES Asset Transfer Date, Seller will provide to Purchaser upon request the services described in Schedule B of this Agreement (such services being hereinafter referred to individually as a "Transition Service" and collectively as "Transition Services"). Purchaser's use of Transition Services shall be solely for purposes related to Purchaser's conduct of manufacturing operations using the employees hired and equipment and inventory acquired from Seller pursuant to the Master Agreement. Purchaser's acknowledges that Seller's ability to provide Transition Services may be impaired and limited by Purchaser's hiring of Seller's former workforce. Therefore, the terms of this Section shall not apply to services for which related employees or equipment have been transferred to Purchaser pursuant to the terms of the Master Agreement. 2.4 Term for Transition Services. Seller shall not be required to provide Transition Services to Purchaser in an amount exceeding the limitations set forth on Schedule B over a maximum period of ninety (90) days. 2.5 Special Requests. Seller and Purchaser have, by this Agreement, attempted to provide for all services and facilities which may reasonably be required by Purchaser to operate the Business during a transitional period commencing on the date hereof. However, Seller and Purchaser acknowledge that one or more services historically provided by Seller to the Business may have been inadvertently omitted from this Agreement. Accordingly, if at any time during the Transition Period Purchaser reasonably requires a service not covered by this Agreement in order to operate the Business as it was operated immediately prior to the AES Asset Transfer Date, then Purchaser may request Seller to provide such service. In no event shall the term for any such Additional Service extend beyond three (3) months after the AES Transfer Date. The request shall be in writing and shall specify in reasonable detail the nature of the service required and the duration of the requirement. The terms of this Section shall not apply to services for which related employees or equipment have been transferred to Purchaser pursuant to the terms of the Master Agreement. If the requested service is a service that Seller provided to the Business prior to the Closing, then Seller shall in good faith consider whether to provide the service to Purchaser for a charge equal to Seller's cost of providing the service plus ten percent (10%). If the requested service is not a service that Seller provided to the Business prior to the date hereof, then Seller may, in its sole discretion, either offer to provide the service for a 4 5 specified charge or decline to provide the service. Services provided by Seller pursuant to this Section shall be referred to herein as "Additional Services." Seller shall bill Purchaser for Additional Service and services not included on Schedule D ("Billable Services") on a monthly basis. 2.6 Invoicing. Seller shall bill Purchaser for Additional Service and services not included on Schedule B ("Billable Services") on a monthly basis. Invoices for Billable Services shall be payable net forty five (45) days from Purchaser's receipt of invoice. 3. STANDARD OF CARE Seller and Purchaser each will use the same degree of care in providing services to the other hereunder as it uses in performing the same or similar services on its own behalf. 4. DISPUTE RESOLUTION 4.1 Arbitration. Any controversy, claim or dispute arising out of or relating to this Agreement or the transactions contemplated hereby or the breach, termination, enforcement, interpretation or validity hereof, including the determination of the scope or applicability of this agreement to arbitrate (collectively "Dispute"), shall be determined by arbitration in Phoenix, Arizona before a sole arbitrator. The following shall apply to any such arbitration: 4.1.1. The arbitration shall be administered by the American Arbitration Association ("AAA") pursuant to its Commercial Rules and Supplementary Procedures for Large, Complex Disputes. 4.1.2 The arbitrator shall not be an officer, employee, director or affiliate of any party hereto or of its affiliates. If the parties are unable to agree on an arbitrator within 30 days of the filing of the Demand for Arbitration, an arbitrator shall be selected pursuant to the rules and procedures of the AAA. 4.1.3 Any party may seek from any court interim or provisional relief that is necessary to protect the rights or property of that party, pending the appointment of the arbitrator or pending the arbitrator's determination of the merits of the controversy. 4.1.4 The parties shall bear their own costs and expenses, including attorneys' fees, but the arbitrator may, in the award, allocate all of the administrative costs of the arbitration (and mediation, if applicable), including the fees of the arbitrator and mediator, against the party who did not prevail. 5 6 4.1.5 The arbitration award shall be in writing and shall specify the factual and legal bases for the award. Judgment on the award may be entered in any court having jurisdiction. 5. LIABILITY 5.1 Indemnification. Each party hereto shall indemnify, defend and hold the other party, its officers, directors, employees, agents and affiliated entities, harmless from and against any and all claims, suits, liabilities and expenses related to or arising from its negligence or willful misconduct. The terms and conditions of this Section 5 shall survive the expiration or earlier termination of this Agreement. 5.2 Consequential and Other Damages. Neither party shall be liable, whether in contract, in tort (including negligence and strict liability), or otherwise, for any special, indirect, incidental or consequential damages whatsoever, including, but not limited to, loss of profits or revenue, business interruptions, costs of capital and claims of customers which in any way arise out of, relate to, or are a consequence of, its performance or nonperformance hereunder, or the provision of or failure to provide any Service hereunder. The terms of this Section shall not apply in the event of the willful misconduct of either party. 5.3 Acknowledgment. The services provided under this Agreement are intended to facilitate Purchaser's transition activities for a limited period of time post-closing. Nothing contained in this Agreement shall be construed as a guaranty to Purchaser of results or profitability; Purchaser assumes the risk of the operation of the Business. 5.4 Conflict with Premises License Agreement. If any interpretation or effect of this Section 5 could reasonably be viewed as contradicting the interpretation or effect of Section 7.5 of the Premises License Agreement, the terms of the Premises License Agreement shall control. 6. ACCESS TO PREMISES 6.1 The Premises of the Business. Seller shall at all times during the term of this Agreement have the right to access and use the premises of the Business, subject to Purchaser's reasonable control, for any purposes connected with the delivery of Services hereunder during the Term and subject to the terms of the Premises License Agreement. 6.2 The Premises of Seller. Employees of Purchaser shall have access to Seller's facilities pursuant to the terms and conditions of the Premises License Agreement. 7. MISCELLANEOUS 6 7 7.1 Notices. Notices under this Agreement shall be in writing and sent by confirmed facsimile, personal delivery or overnight delivery service to the addresses specified in or pursuant to the terms of the Master Agreement and shall be effective as specified in the Master Agreement. 7.2 Entire Agreement. This Agreement, the Master Agreement and the Premises License Agreement constitute the entire agreement between the parties with respect to the subject matter hereof and supersede all prior communications, representations, agreements and understandings between the parties hereto, whether oral or written. 7.3 Headings. The headings herein used are for convenience purposes only and shall not be used to construe the meaning of this Agreement in any respect. 7.4 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall constitute an original instrument and all of which together shall constitute the same instrument. 7.5 Construction. When the context so requires, references herein to the singular number include the plural and vice versa and pronouns in the masculine or neuter gender include the feminine. The headings contained in this Agreement and the Schedules hereto are for reference purposes only and shall not affect the meaning or interpretation of this Agreement. 7.6 Assignment. This Agreement, and all rights and obligations hereunder, shall not be assignable by any party in whole or in part, except that (a) either party may assign this Agreement and its rights and obligations hereunder with the other party's prior written consent, (b) either party may assign this Agreement without the prior written consent of the other party to a subsidiary, parent or affiliated entity, (c) Seller may perform any of the services required hereunder through a subsidiary or affiliate of Seller without the prior written consent of Purchaser, and (d) Seller may subcontract any of the services required of it hereunder to any party Seller contracts with for services for its own account now or in the future without the prior written consent of Purchaser. For any such assignment, Purchaser or Seller, as the case may be, shall remain obligated hereunder unless the other party shall consent otherwise. Any purported assignment inconsistent with this Section 7.6 shall be void and of no effect. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and permitted assigns. 7.7 Amendment. This Agreement may be amended only by written agreement duly executed by representatives of both the parties hereto. 7.8 Applicable Law. This Agreement shall be construed in accordance with the laws of the State of Delaware, disregarding its conflicts of laws principles which may require the application of the laws of another jurisdiction. 7 8 7.9 No Third Party Rights. This Agreement is not intended and shall not be construed to create any rights in any parties other than Seller and Purchaser and no other person shall assert any rights as a third party beneficiary hereunder. 7.10 Schedules. The Schedules attached hereto are incorporated into this Agreement and shall be deemed a part hereof as is set forth herein in full. References to "this Agreement" and the words "herein", "hereof", and words of similar import refer to this Agreement (including the Schedules) as an entirety. 7.11 Waivers. Any waiver of rights hereunder must be set forth in writing. A waiver of any breach or failure to enforce any of the terms or conditions of this Agreement shall not in any way affect, limit or waive a party's rights at any time to enforce strict compliance thereafter with every term and condition of this Agreement. 7.12 Independent Contractor. The parties intend to create an independent contractor relationship and nothing contained in this Agreement shall be construed to make either Seller or Purchaser a partner, joint venturer, principal, agent or employee of the other. Neither party shall have any right, power or authority, express or implied, to bind the other. 7.13 Force Majeure. If a party is unable to meet its obligations under this Agreement as a result of flood, earthquake, storm, other act of God, fire, strike, war, riot, embargo, act of government or governmental agency or any other similar cause beyond the reasonable control of such party ("Force Majeure"), the obligations of the parties hereto shall be suspended for the duration of the Force Majeure. The party claiming Force Majeure shall, within five (5) days from the date of disability, excluding Saturdays, Sundays and holidays, notify the other party of the existence of a Force Majeure condition and will similarly notify the other party within a period of five (5) days, excluding Saturdays, Sundays and holidays, when the Force Majeure has ended. 8 9 IN WITNESS WHEREOF, Seller and Purchaser have duly executed and delivered this Agreement as of the date first written above. ALLIEDSIGNAL, INC., a Delaware corporation, operating through its Aerospace Equipment Systems Business Unit By: /s/ Terrance Carlson -------------------- Title: Associate General Counsel and Assistant Secretary EFTC CORPORATION, a Colorado corporation By: /s/ Stuart Fuhlendorf --------------------- Title: Chief Financial Officer 9 10 SCHEDULE A PRE ASSET TRANSFER DATE SERVICES 10 11 SCHEDULE B TRANSITION SERVICES 11 12 FIRST AMENDMENT TO FACILITIES MANAGEMENT AND TRANSITION SERVICES AGREEMENT This First Amendment ("Amendment") dated as of July 31, 1997 is entered into with respect to that certain Facilities Management and Transition Services Agreement dated August 4, 1997 (the "Agreement") entered into and between AlliedSignal Inc., a Delaware corporation operating through its Aerospace Equipment Systems Business Unit ("AES"), and EFTC Corporation, a Colorado corporation (EFTC"). The parties hereby agree to amend the Agreement in the manner set forth in Exhibit A, attached hereto and incorporated herein. This Agreement shall not otherwise change, amend, limit or affect any other provision of the Agreement, which shall continue in full force and effect. AlliedSignal Inc., a Delaware corporation operating through its Aerospace Equipment Systems Business Unit By: /s/ John DeRusso ---------------- John DeRusso Title: Material Program Manager EFTC Corporation, a Colorado corporation By: /s/ Brian White --------------- Title: Treasurer 13 EXHIBIT A AMENDMENT TO FACILITIES MANAGEMENT AND TRANSITION SERVICES AGREEMENT (See Attached) 14 percent (18%) of base pay for indirect employees and twenty-two percent (22%) of base pay for direct employees. In the case of sub- contracted staffing the amount payable by Seller shall be equal to the lesser of (i) the amount paid by Purchaser to the subcontractor for such staffing or (ii) the amount paid by Seller prior to the date hereof for comparable staffing, in each case plus ten percent (10%). 1.3.2 Purchaser shall invoice Seller the amount payable under Section 1.3.1 on a bi-weekly basis, payable within fifteen (15) days from Seller's receipt of the invoice, or the parties may mutually agree upon an alternate arrangement. 1.3.3 Purchaser agrees to use its best efforts to effect, during the term hereof, a change in the ratio of subcontracted employees to permit employees from its current ratio of approximately 55/45, respectively, to a ratio of 25/75, respectively. 1.4 Term. Purchaser's obligation to provide Management Services and Seller's obligation to provide Means of Production shall commence on the date of the closing of the transactions contemplated by the Master Agreement and shall continue until the AES Asset Transfer Date. Purchaser shall not use the Means of Production for any purpose other than as contemplated in this Agreement. 1.5 Employee Transfer. From time to time prior to the Asset Transfer Date, but in no event later than fifteen (15) business days prior to the Asset Transfer Date, Seller may notify Purchaser of up to ten (10) employees who indirectly support the Business at the AES Facility whose services are no longer needed by Seller. Purchaser shall make offers of employment to such persons within five (5) business days of notification. Such offers and Purchaser's employment of such individuals shall be effected in a manner otherwise consistent with the terms of Article 6 of the Master Agreement except that all references to the "Closing Date" shall be deemed to be references to the affected employee's start date. 2. TRANSITION SERVICES 2.1 Pre-Asset Transfer Date Services. Seller and Purchaser understand that Purchaser may request that Seller use its best efforts to duplicate certain business systems of Seller prior to the AES Asset Transfer Date. Accordingly, Seller agrees that it will provide to Purchaser upon request the services described on Schedule A hereto (such services being hereinafter referred to individually as a "Pre-Asset Transfer Date Service" and collectively as the "Pre-Asset Transfer Date Services"). Purchaser's use of Pre-Asset Transfer Date Services shall be solely for purposes related to Purchaser's EX-2.6 7 SUBLEASE AGREEMENT 1 SUBLEASE AGREEMENT This SUBLEASE AGREEMENT (this "Sublease") is made on August 11, 1997, between AlliedSignal Inc., a Delaware corporation ("Lessor"), and EFTC Corporation, a Colorado corporation ("Lessee"), with reference to the following facts: A. Lessor has entered into that certain Purchase and Sale Agreement attached hereto and incorporated herein as Exhibit A (the "Master Lease") with Aero Toy Store, Inc., a Florida corporation (the "Original Master Lessor"), dated September 30, 1996 which provides for the lease by Lessor of Building #1 located at 2100 Northwest 62 Street, Ft. Lauderdale, Florida (the "Building"). B. The Master Lease has been amended by that certain Amendment to Purchase and Sale Agreement dated December 12, 1996, that certain Second Amendment to Purchase and Sale Agreement dated December 23, 1996, and assigned by that certain Assignment of Purchase and Sale Agreement dated September 30, 1996 which assigned the Original Master Lessor's obligations to Free Trade, Ltd. (the "Master Lessor") C. Lessee is acquiring from AlliedSignal Avionics, Inc. ("ASA") certain assets of the business of manufacturing electronic assemblies for use in aerospace applications formerly operated by ASA, such acquisition to be effected pursuant to that certain Master Agreement Regarding Asset Purchase and Related Transactions dated July 15, 1997 (the "Master Agreement"), between AlliedSignal Inc., a Delaware corporation, operating through its Aerospace Equipment Systems Business Unit, ASA and Lessee. D. In connection with the transactions under the Master Agreement Lessee desires to sublease from Lessor a certain portion of the Building for the purpose of conducting Lessee's business together with rights in common to the "common areas" of the Building. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows: 1. Leased Premises. Lessor agrees to lease to Lessee and Lessee agrees to lease from Lessor, as more specifically described on Exhibit B, attached hereto and incorporated herein by this reference: (i) certain portions of the Building; (ii) certain waste storage facilities; and (iii) a waste water treatment facility (collectively, the "Premises"). The Premises shall not include waste storage facility C as shown on Exhibit B. In addition to the use of the Premises, Lessee shall have the use of certain common areas and facilities under the control of Lessee as described on Exhibit B (the "Lessee Controlled Area") and of the common areas and facilities under the control of 2 Lessor as described on Exhibit B. Each party shall permit the other to have access to the common areas under its control. Lessee takes the Premises in its presently existing "as is" condition except as set forth in Sections 10 and 19. Lessee shall be prohibited from using or occupying any premises other than those designated in this Sublease as the Premises except as otherwise set forth herein. 2. Shared Tenancy. Notwithstanding anything to the contrary in this Sublease, Lessor shall have the right for a period of up to one hundred and twenty (120) days after the commencement of the term, to occupy and use certain portions of the Premises for its business operations as it may determine from time to time; provided that such occupancy and use by Lessor shall not interfere with Lessee's use of the Premises or the Lessee Controlled Area in any material respect except in the case of emergency and as provided in Section 19.4. 3. Master Lease. This Sublease is subject to the provisions of the Master Lease covering the Building. The covenants, agreements, terms, provisions and conditions of the Master Lease insofar as they relate to the Building and, insofar as they are not inconsistent with the terms of this Sublease, are made a part of and incorporated into this Sublease as if recited herein in full, with references therein to Purchaser and Seller thereunder shall be deemed to refer to the Lessor and the Lessee, respectively. As between the Lessor and the Lessee only, in the event of a conflict between the terms of the Master Lease and the terms of this Sublease, the terms of this Sublease shall control with respect to the relations between the Lessor and the Lessee. As between the Lessor and the Master Lessor only, in the event of a conflict between the terms of the Master Lease and the terms of this Sublease, the terms of the Master Lease shall control with respect to the relations between the Master Lessor and the Lessor. Lessee and this Sublease shall be subject in all respects to the terms of, and the rights of the Master Lessor under, the Master Lease. Lessee and this Sublease shall also be entitled to all rights and benefits conferred by the Master Landlord with respect to the Premises pursuant to the Master Lease. 4. Rights of Lessee Under the Master Lease. 4.1 No Greater Rights. Lessee shall have no greater rights to the use and occupancy of the Building than Lessor has under Lessor's Master Lease. Lessor hereby represents and warrants to Lessee that the uses of the Premises and the Lessee Controlled Area described in Section 7.4 are within the rights to use and occupy the Building conferred upon Lessor pursuant to the terms of the Master Lease. As provided in Section 6, the term of this Sublease shall not extend beyond the term of the Master Lease. 4.2 No Transfer of Title. Lessee agrees and acknowledges that this Sublease shall not constitute a transfer of title to the Premises or the Lessee Controlled Area. 2 3 5. Master Lessor's Performance Under Master Lease; Performance of Sublease. Notwithstanding anything to the contrary contained in this Sublease, Lessee agrees that performance by Lessor of its obligations hereunder are conditioned upon due performance by the Master Lessor of its corresponding obligations under the Master Lease and Lessor shall not be liable to Lessee for any default of the Master Lessor under the Master Lease. Lessor shall take all actions necessary to perform Lessor's obligations under the Master Lease and shall cooperate with Lessee as necessary or advisable from time to time to cause the Master Lessor to perform its obligations under the Master Lease. Lessee shall not have any claim against Lessor by reason of the Master Lessor's failure or refusal to comply with any of the provisions of the Master Lease unless such failure or refusal is a direct result of Lessor's act or failure to act. This Sublease shall remain in full force and effect notwithstanding the Master Lessor's failure or refusal to comply with any such provisions of the Master Lease and Lessee shall pay the base rent and additional rent and all other charges provided for herein without any abatement, deduction or setoff whatsoever, unless Lessor shall be entitled to any such abatement, deduction or setoff, in which case Lessor shall reduce the obligations of Lessee hereunder by (or pay over to Lessee, if appropriate), Lessee's pro rata share of such abatement deduction or setoff based on the proration amount. Lessee covenants and warrants that it fully understands and agrees to be subject to and bound by all of the covenants, agreements, terms, provisions and conditions of the Master Lease, except as modified herein. Furthermore, Lessee and Lessor will not take any action or do or perform any act or fail to perform any act which would result in the failure or breach of any of the covenants, agreements, terms, provisions or conditions of the Master Lease on the part of the Lessor thereunder. Lessor will take all actions necessary to preserve the Master Lease in full force and effect and will not amend or permit any modification to the terms of the Master Lease that directly affects Lessee's use or occupancy of the Premises without Lessee's prior written consent, which shall not be unreasonably withheld or delayed. Lessor will not voluntarily terminate or agree to the early termination of the Master Lease. 6. Sublease Term. The term of this Sublease shall commence on the Avionics Closing (as defined in the Master Agreement) and shall expire on December 31, 1999 unless terminated earlier pursuant to the terms hereof. On or before the expiration date (on or before December 31, 1998 and, if applicable, each December 31 thereafter), the parties shall inform each other whether they desire to extend the term of this Sublease for an additional year. Any such extension shall be made upon the mutual agreement of the parties in writing and shall be subject to the terms of the Master Lease. Any provision of this Sublease to the contrary notwithstanding, the term of this Sublease shall not exceed the term of the Master Lease as the same may be extended from time to time. 3 4 7. Rent. 7.1 General Provisions. It is the intention of the parties that this Sublease be a "pass through" of Lessor's obligation to pay rent under the Master Lease. Therefore, Lessee agrees to pay Lessor as monthly rental for the Premises a sum equal to Lessor's rental obligations under the Master Lease, as it may change from time to time, multiplied by the Proration Amount. The "Proration Amount" shall be the ratio of (i) the sum of Lessee square footage (specified in Exhibit B as Lessee first floor and Lessee trailer) plus one half of all common areas to (ii) the total square footage of the Building (specified in Exhibit B as total rentable square footage). Rent shall be payable each and every calendar month during the term hereof in advance on the first business day of such month. The monthly rent for the period through December 31, 1997 shall be as specified in Exhibit D. Subject to Section 16, for each year subsequent to 1997, the rent shall be adjusted effective as of January 1 of such year based upon the actual expenses for the twelve months ended on the immediately preceding November 30 and the allocation basis specified on Exhibit D. If the term commences on a day other than the first day of a calendar month, rent for the first month shall be prorated based on the portion of the calendar month remaining. 7.2 Late Payments. Should Lessee not tender payment of any rent within ten (10) business days of the due date for the applicable month, an administrative charge shall be assessed such month, without prejudice to any other remedies of Master Lessor, in an amount of five cents ($0.05) for each dollar ($1.00) overdue for the purpose of defraying the expense incident to handling such delinquent payment. 7.3 Use. Lessee shall use the Building solely for the manufacture of electronic assemblies and other related operations and not for any other purpose without the prior written consent of Lessor. Lessee shall not do or permit anything to be done in or about the Premises which will in any way unreasonably obstruct or interfere with the right of other occupants of the Premises or the Building, or injure or annoy them, or use or allow the Premises to be used for any improper, immoral or unlawful purpose. Lessee shall not commit or suffer to be committed any waste in or upon the Premises. Lessee shall keep the Premises free and clear of any and all liens and encumbrances created by Lessee. Lessee shall remove any such lien or encumbrance within twenty (20) business days after notice by Lessor and, if Lessee shall fail to do so, Lessor may pay the amount necessary to remove such lien or encumbrance without being responsible for investigating the validity thereof. Neither Lessor nor Lessee shall do anything on the Premises which will conflict in any material way with any law, statute, ordinance or other governmental rule, regulation or requirement now in force or which may hereafter be enacted or promulgated that is applicable to the use or occupancy of the Premises or the operation of the Lessee's business in the Premises. 4 5 8. Defaults and Remedies. Any of the following occurrences shall constitute a material default by Lessee, if such occurrence shall continue for the period specified below: 8.1 If Lessee fails to make any payment of rent, or any other payment required to be made by Lessee hereunder, as and when due and such failure continues for a period of ten (10) days after written notice thereof from Lessor to Lessee; 8.2 If Lessee fails to observe or perform in any material respect any of the provisions of this Sublease or any applicable provisions of the Master Lease and such failure continues for a period of thirty (30) days after written notice thereof from Lessor to Lessee; and 8.3 If Lessee abandons the Premises for a period of not less than thirty (30) days. If Lessee defaults under this Sublease, (i) Lessor may terminate this Sublease, (ii) Lessor may recover, in addition to any rent and other charges already due and payable, all rent for the entire unexpired balance of the stated term of this Sublease (subject to Lessor's duty to take commercially reasonable steps to mitigate damages) and all costs incurred by Lessor to recover such sums from Lessee, including reasonable attorneys' fees, (iii) Lessor may recover actual damages from Lessee and/or (iv) Lessor may discontinue any and all services provided to Lessee hereunder. All rights and remedies of Lessor under this Sublease shall be cumulative and in addition to any other rights or remedies available at law or in equity. No failure by Lessor to exercise any right or remedy or to insist upon strict performance following a default by Lessee shall constitute a waiver of such default by Lessor. Lessee hereby releases Lessor, it affiliates, subsidiaries, employees, agents, principals and contractors from any liability for damages that Lessee may suffer as a result or Lessor's suspension or services under this Section 8. 9. Subletting, Assignment. Lessee shall not assign this Sublease or sublet the Premises or any part thereof for any period of time except that (i) Lessee may assign this Sublease or sublet the Premises with Lessor's and Master Lessor's prior written consent, and (ii) Lessee may assign this Sublease or sublet the Premises without the prior written consent of Lessor (but subject to any applicable consent or approval of Master Lessor under the Master Lease) (a) to a purchaser of all or substantially all the assets of Lessee located at the Premises, (b) to a corporation surviving Lessee in the event of a merger and (c) to a subsidiary or affiliated entity. For any assignment, Lessee shall remain obligated hereunder unless Lessor shall consent otherwise. Any subletting or assignment of this Sublease in a manner inconsistent herewith shall be void and shall, at the option of Lessor, terminate this Sublease. In such event, Lessee 5 6 shall be liable for any expenses Lessor may incur in regaining possession of the Premises. 10. Representations and Warranties of Lessor 10.1 Lessor represents and warrants to Lessee as of the date hereof that the copy of the Master Lease attached hereto as Exhibit A is true and correct and contains all amendments or modifications thereto, the Master Lease is in full force and effect and all material obligations of both Master Lessor and Lessor thereunder that have accrued to date have been satisfied. 10.2 Lessor represents that this Sublease does not violate any provision of the Master Lease, and that no provisions of this Sublease are in conflict with any of the provisions of the Master Lease. 10.3 Lessor represents and warrants the following with respect to environmental matters affecting the Premises: (a) To Lessor's knowledge, Lessor holds and is in material compliance with all permits, certificates, licenses, approvals, registrations and authorizations ("Permits") required under all Environmental Laws applicable to all equipment and operations being conducted by Lessor on the Premises, Lessee Controlled Area, and common areas and facilities under the control of Lessor that Lessee will be entitled to use, including those relating to any Hazardous Substances, and all such Permits are in full force and effect and are listed in Exhibit C. The Lessor has made timely applications for renewal of all such Permits to maintain such permits in full force and effect. (b) To Lessor's knowledge, as of the date hereof the Premises and all equipment and operations being conducted by Lessor on the Premises, the Lessee Controlled Area, and common areas and facilities under the control of Lessor that Lessee will be entitled to use are in material compliance with applicable Environmental Laws. (c) To Lessor's knowledge, none of the Premises, the Lessee Controlled Area, the common areas and facilities under the control of Lessor and the Lessor in connection with any location at 2100 Northwest 62 Street are subject to any notice, enforcement, proceeding, investigation or action relating to violations of, or that create liability under, Environmental Laws by any governmental entity or third party, except as noted in the Phase I Environmental Site Assessment dated November 1996 prepared for AlliedSignal, Inc. by Geraghty & Miller, Inc. (the "Phase I Report"). (d) To Lessor's knowledge, Lessor has not caused, and 2100 Northwest 62 Street does not contain, any release or threatened release of Hazardous 6 7 Substances that requires response, removal, remedial, or corrective actions under any Environmental Laws, and 2100 Northwest 62 Street is not subject to any notice, enforcement, proceeding, investigation or action relating to any such releases or threatened releases, except as noted in the Phase I Report. (e) To Lessor's knowledge, the Premises, the Lessee Controlled Area, and common areas and facilities under the control of Lessor that Lessee will be entitled to use have no polychlorinated biphenyls, except as noted in the Phase I Report. (f) To Lessor's knowledge, Lessor has received no notification that it may be responsible or liable for any off-site treatment or disposal of materials from the Premises at an off-site location, except for the Wingate Road Landfill Superfund Site. (g) To Lessor's knowledge, there are no conditions or occurrences at the Premises, Lessee Controlled Area, or common areas and facilities under control of Lessor or elsewhere in the Building, or at any other location at 2100 Northwest 62 Street, including groundwater or soil, which could materially adversely affect Lessee's operations, except as noted in the Phase I Report. Nothing in this representation shall detract from Lessor's rights under Section 19.4. (h) Lessor's environmental health and safety policies (as applicable to the Building and the Premises) are not in conflict with applicable Environmental Laws. (i) The environmental controls, equipment and permits at the Premises, including the wastewater treatment plant, are adequate to comply with Environmental Laws based on the operating requirements and volumes currently employed by Lessor. For purposes of this Sublease, "Environmental Law" shall mean any federal, state, or local statute, regulation, order, directive or other requirement of a governmental authority, as well as common law, relating to protection of public health, safety, and the indoor or outdoor environment or to the management of Hazardous Substances, and includes by way of example and without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq.; The Clean Air Act, 42 U.S.C. Section 7401 et seq.; The Solid Waste Disposal Act, 42 U.S.C. Section 6901 et seq.; The Federal Water Pollution Control Act, 33 U.S.C. Section 1251 et seq.; The Florida Environmental Control Statute, Fla. Stat. Section 403, and the Florida Pollutant Discharge Prevention and Removal Statute, Fla. Stat. Section 376. For purposes of this Sublease, "Hazardous Substances" shall mean any substance, chemical, compound, product, solid, gas, liquid, waste, byproduct, pollutant, contaminant, or material which is regulated by, or creates liability under, Environmental Law, or is hazardous or toxic and includes, without limitation, petroleum (including crude oil or any fraction thereof). 7 8 10.4 NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS SUBLEASE, OR IN ANY OTHER COMMUNICATIONS BETWEEN THE PARTIES ORALLY OR IN WRITING, IT IS THE EXPLICIT INTENT OF EACH PARTY HERETO THAT LESSOR MAKES NO REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, BEYOND THOSE EXPRESSLY GIVEN IN THIS SUBLEASE OR THE MASTER AGREEMENT, INCLUDING BUT NOT LIMITED TO ANY IMPLIED WARRANTY OR REPRESENTATION AS TO CONDITION, MERCHANTABILITY OR SUITABILITY AS TO THE BUILDING, PREMISES, OR ANY OTHER PROPERTIES OR ASSETS OF LESSOR. EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED IN THIS SUBLEASE OR THE MASTER AGREEMENT, THE BUILDING AND THE PREMISES ARE BEING PROVIDED ON AN "AS IS" BASIS. 11. Representations and Warranties of Lessee and Lessor. Lessee and Lessor each represents and warrants to the other that it has full right, power, and authority, without the consent of any person, to execute and deliver this Sublease. All actions required to be taken to authorize the execution, delivery and performance of this Sublease have been duly and properly taken. 12. Notices. Notices provided under this Sublease shall be in writing and sent by confirmed facsimile, personal delivery or overnight delivery service to the addresses specified in or pursuant to the terms of the Master Agreement and shall be effective as specified in the Master Agreement. Lessor shall promptly, and in any event within 48 hours of Lessor's receipt thereof, forward to Lessee any notice or communication received from the Master Lessor under or relating to the Master Lease that is applicable to this Sublease. 13. Successors and Assigns. The provisions of this Sublease shall apply to and bind the heirs, successors, executors, administrators and assigns of the parties hereto, subject to the terms of Section 9. 14. Repairs. Lessee is obligated to pay for the repair of any damage to the Premises, any personal property, fixtures or improvements located therein caused by it or by any of its employees, agents, or invitees. Lessee shall quit and surrender the Premises at the expiration or earlier termination of this Sublease, without further notice, in as good condition as when received, ordinary wear and tear only excepted, and shall not make any alterations, additions or improvements to the Premises without the prior written consent of Lessor and Master Lessor, which shall not be unreasonably withheld or delayed. All alterations, additions and improvements which may be made by either of the parties hereto upon the Premises shall be the property of Lessor and shall remain upon and be surrendered with the Premises without cost to Lessor, or at Lessor's election, shall be removed by Lessee and the Premises restored to its condition as when received. Lessor shall restore to its original condition all alterations, 8 9 additions and improvements to the Lessee Controlled Area upon the request of Lessee. Lessee may not deduct or offset any amount from rent due herein because of any problem regarding construction, maintenance, repairs or lack thereof to the Building or the Premises. Lessee is responsible for, and shall indemnify and hold Lessor and Master Lessor harmless from and against, any damage to persons or property caused by Lessee, or Lessee's employees, agents, clients, guests or invitees. Lessor is responsible for and shall indemnify and hold Lessee harmless from and against any damage to persons or property caused by Lessor, Lessor's employees, agents, clients, guests or invitees (other than Lessee or Lessee's employee, agents, clients, guests or invitees). Neither party shall be liable to the other for consequential damages or lost profits. 15. Right of Entry. Lessor reserves the right at all reasonable times, following notice given by Lessor to Lessee a reasonable time in advance, to enter the Premises to: (i) inspect, alter, improve or repair the Premises or permit Master Lessor to alter, improve or repair the Building or the Premises; (ii) permit the performance of janitorial services and other services of Lessor and Master Lessor; (iii) take possession due to any breach of this Sublease; (iv) perform any covenants which Lessee fails to perform; and (v) act in the case of an emergency. Notwithstanding the foregoing, prior notice shall not be required for emergencies or for maintenance or other personnel requiring regular access to the Premises, subject to reasonable mutually agreed upon access procedures such as key cards or badges. 16. Utilities, Services, Maintenance and Construction. During the term of this Sublease, Lessor shall be responsible for and shall provide to Lessee and the Premises the shared services identified on Exhibit D. Lessee may terminate the provision of any such shared service during the term of this Sublease upon sixty (60) days prior written notice to Lessor. Lessor shall be compensated for such shared services through the payment of rent as provided in Section 7.1. If Lessee terminates the provision of any shared service as specified above, the rent payable under Section 7.1 shall be appropriately reduced for the period after such service is no longer provided. 17. Other Shared Services. Lessee hereby agrees to provide during the term of this Sublease receiving dock services for Lessor which services shall include, but not be limited to, the following: 17.1 Receiving and labeling on behalf of Lessor any and all incoming goods; 17.2 Entering all incoming goods into the tracking system provided by Lessor; and 17.3 Identifying and segregating Lessor's incoming goods. 9 10 Lessee agrees to utilize third party shipping services currently contracted by Lessor and described on Exhibit E for all shipping requirements. Lessor shall reimburse Lessee for Lessor's proportionate use (based on Lessee's actual cost) of such receiving dock services and shipping services within forty-five (45) business days of Lessor's receipt of Lessee's invoice for such services. 18. Indemnity. The following indemnification provision shall not apply to environmental and related matters; indemnity for all such matters is addressed in Section 19: Lessee hereby agrees to indemnify, defend and hold harmless Lessor and Master Lessor from and against any loss, cost, damage or expense, net of any reimbursement or recovery of any such loss, cost, damage or expense received by Lessor or Master Lessor from any source, and attorneys' fees, that Lessor or Master Lessor may incur, directly or indirectly, as a result of or by virtue of any breach of or inaccuracy in any representation or warranty, covenant, or agreement of Lessee herein. Lessor hereby agrees to indemnify, defend and hold harmless Lessee and Master Lessor from and against any loss, cost, damage or expense, net of any reimbursement or recovery of any such loss, cost, damage or expense received by Lessee or Master Lessor from any source, and attorneys' fees, that Lessee or Master Lessor may incur, directly or indirectly, as a result of or by virtue of any breach of or inaccuracy in any representation or warranty, covenant, or agreement of Lessor herein. The parties' obligations under this Section 18 shall survive any assignment, transfer or termination of this Sublease. 19. Environmental Provisions. 19.1 General Compliance Obligation. Lessee shall, at its sole cost and expense, materially comply with all federal, state and local Environmental Laws applicable to the Lessee's equipment and operations at the Premises and in Common Areas Controlled by Lessee. Lessee shall take all reasonable actions necessary to timely respond to any violation of Environmental Laws caused by Lessee, including, but not limited to, if applicable, notifying the appropriate parties, obtaining proper permits or licenses, implementing actions to correct a violation, remediating any contaminated areas required to be remediated by Environmental Laws or Lessor's health, safety and environmental policies, and defending itself against any type of enforcement action, lawsuit or claim by any person or entity not a party to this Sublease. 19.2 Permits. Lessee shall obtain all necessary permits, licenses or other approvals or concurrences from the proper permitting authorities required under all applicable Environmental Laws for the conduct of any of Lessee's operations at the Premises by the effective date of this Sublease. To the extent allowed by law and with the consent of Lessor, Lessee may, at its sole cost and expense, seek the transfer from Lessor of any existing permits that will be required for Lessee to lawfully continue operations at the Premises on the effective date of this lease. 10 11 19.3 Indemnification. Lessee agrees to indemnify, protect, hold harmless and defend Lessor and Master Lessor from and against all liabilities, losses, claims, demands, costs and expenses (collectively, "Liability"), including, but not limited to, fines, court costs, reasonable attorneys' fees, and costs of remediation and repairs, that are caused by or arise out of Lessee's (or Lessee's employees, agents, contractors or anyone acting on Lessee's behalf) use, handling, generation, storage, spillage, release or discharge of any Hazardous Substance at, on or under the Premises or the Building, or any other action or operation by Lessee (or Lessee's employees, agents, contractors or anyone acting on Lessee's behalf) that constitutes a violation of Environment Law, except for Liability directly caused by Lessor's or Master Lessor's instructions, directions, rules, regulations or policies or by Lessor's or Master Lessor's failure to comply with its obligations under this Sublease. Lessor agrees to indemnify, protect, and hold harmless, and defend Lessee from and against all liabilities, losses, claims, demands, costs, and expenses, including, but not limited to, fines, court costs, reasonable attorneys' fees, and costs of investigation, remediation and repairs, relating to: (i) breaches of the Lessor's representations or warranties in Section 10.3, or (ii) actions, operations, violations, events, or conditions relating to environmental matters, including, but not limited to, on-site or off-site releases or threatened releases, or arrangements for off-site treatment or disposal (including but not limited to all liability and responsibility for the Wingate Landfill): (a) which exist prior to the date hereof, whether caused by on-site or off-site sources; (b) which arise subsequent to the date hereof and are caused by Lessor or any person (whether on-site or off-site) other than Lessee (or Lessee's employees, agents, contractors or other persons acting on Lessee's behalf). This indemnification shall supersede any provisions of permits to be obtained by Lessee to the effect that a transferee retains liability for violations resulting from a transferors activities. Lessor and Lessee acknowledge that liabilities for environmental matters could arise that are jointly caused by Lessor and Lessee, in which case, the relative responsibility for any indemnification hereunder shall be determined on the basis of relative fault of the parties. 19.4 Right of Access. Lessor shall have an irrevocable right of reasonable access to the Premises and Lessee Controlled Area, after reasonable notice to Lessee, for the purpose of performing any necessary investigations, tests or remedial actions related to confirmed or suspected violations of Environmental Laws at, on or under the Premises or the Lessee Controlled Area. In exercising its right of access under this paragraph, Lessor agrees to use its best efforts not to interfere unreasonably with Lessee's operations and to indemnify and hold harmless Lessee from damage to persons or property, not including any consequential damages, caused by or arising from such access, investigations, tests or remediation work. 19.5 Hazardous Waste Storage Area. As noted in Section 1, the Premises shall not include the Storage Area C indicated on Exhibit B. Lessee shall ensure that access to Storage Area C is not impeded by any of Lessee's equipment or operations. 11 12 Lessee and Lessor acknowledge that at Closing, the area intended to be used by Lessee for the storage of hazardous substances (Storage Areas A and B on Exhibit B) may not be ready for immediate use. Lessor hereby temporarily grants Lessee a limited right to the use of Storage Area C under the following conditions: (a) Lessee shall comply with all federal, state and local Environmental Laws, as well as with Lessor's procedures and policies, applicable to the handling and storage of hazardous materials in Storage Area C. Lessee shall, at its sole cost and expense, arrange for the proper disposal of all of its hazardous wastes under its own United States Environmental Protection Identification Number. (b) the indemnification rights in Section 19.3 hereof shall apply to Lessee's and Lessor's use of Storage Area C under this Section 19.5. (c) Lessor shall have the right to inspect, review and audit Lessee's practices and procedures regarding the handling and storage of hazardous materials in Storage Area C. (d) In the event Lessor or Lessee observes any violations or potential violations by Lessee, or Lessee's agents, of federal, state or local Environmental Laws, or of Lessor's procedures and policies, applicable to the handling and storage of hazardous materials in Storage Area C, Lessee shall take immediate steps to correct or to prevent such violations. (e) Lessee shall diligently proceed with the preparation of Storage Areas A and B for use as Lessee's own hazardous substance storage area. Upon the request of the Lessor, shall inform Lessor of the status of such preparations. (f) Lessee' right to the use of Storage Area C shall terminate when Storage Areas A and B are ready and approved for use by Lessee, or four (4) months from Closing, whichever is earlier. 19.6 Waste Water Treatment Facility. As provided for in Section 1, part of the Premises includes a waste water treatment facility, identified on Exhibit B hereto (hereinafter referred to as the "Waste Water Treatment Facility" or the "Facility"). As required by Sections 19.2 and 19.1, Lessee shall obtain the necessary permits or transfer the existing permit to operate the Facility and shall operate the Facility in material compliance with all applicable Environmental and other laws. Lessee hereby acknowledges that certain portions of the Building are connected to the sewer servicing the property. In the event that Lessee's non-compliance with any Environmental Laws results in Lessor being unable to use the sewer lines servicing the property, Lessee shall immediately take all actions necessary to correct the problem and to restore Lessor's ability to use the sewer lines and indemnify and hold harmless Lessor as 12 13 provided in Section 19.3. If the use of the sewer lines by Lessor or any other occupant of the Building other than Lessee (or Lessee's employees, agents, contractors or invitees) results in Lessee being unable to use the sewer lines servicing the Premises, Lessor shall immediately take all actions necessary to correct the problem and to restore Lessee's ability to use the sewer lines and indemnify and hold harmless Lessee as provided in Section 19.3. 19.7 Asbestos. The parties acknowledge the presence on the Premises of various asbestos-containing materials ("ACMs"). During the "Fitup Period" provided for in Exhibit F, attached hereto and incorporated herein by this reference, Lessor shall be responsible, at its sole cost and expense, for managing, abating or controlling any ACMs affected by the work specified in Exhibit F. Notwithstanding Section 19.3, after the work specified in Exhibit F is completed, Lessee shall be responsible, at its sole cost and expense, for managing, abating or controlling any ACMs remaining on the Premises if necessary as a result of physical changes to the Premises made by Lessee and if required by applicable Environmental Laws. Lessor shall indemnify Lessee and hold Lessee harmless from any and all liability and expense resulting from any injury or legal or regulatory action resulting from or arising in connection with the presence of ACMs in the Premises or the Lessee Controlled Area, unless Lessee has responsibility to manage, abate, and control ACMs pursuant to the previous sentence. Lessor shall indemnify Master Lessor and hold Master Lessor harmless from any and all liability and expense resulting from any injury or legal or regulatory action resulting from or arising in connection with the presence of ACMs in the Premises or the Lessee Controlled Area, unless Master Lessor has such responsibility under the Master Lease. 19.8 Permits on Termination. Upon termination of this Sublease, and if requested by Lessor, Lessee shall take all necessary steps to ensure the timely transfer to Lessor of any then-existing permits, licenses or approvals under Environmental Laws, that are in Lessee's name and relate to the Premises. 19.9 Survival. The parties' obligations under this Section 19 shall survive any assignment, transfer or termination of this Sublease. 19.10 Cooperation. Lessor shall reasonably cooperate in providing to Lessee all documents and information regarding environmental compliance or liabilities relating to the Premises, Lessee Controlled Area, or common areas and facilities under the control of Lessor, the Building, and 2100 Northwest 62 Street reasonably requested by Lessee that could materially and adversely affect Lessee's operations of the Business (as defined in the Master Agreement) or could result in a claim against Lessee. 20. Health and Safety. Lessee and Lessor shall at all times comply with all health and/or safety laws, regulations and policies applicable to the Premises and Lessee Controlled Area. To further ensure a safe and healthy work environment, Lessee shall 13 14 comply in all material respects with the requirements of AlliedSignal's health, safety and environmental policies and practices, to the extent applicable to the Premises and Common Areas. Lessor shall have the right to review and/or audit Lessee's health, safety and environmental procedures and policies, including the right to inspect permits, reports, manuals, equipment, work areas and storage areas (including the chemical and hazardous waste storage areas) to determine Lessee's compliance with all applicable health, safety and environmental laws. Lessee shall reasonably cooperate with any such reviews or audits and shall work with Lessor to correct any deficiencies. 21. Entire Agreement, Merger and Waiver. This Agreement supersedes and cancels any and all previous negotiations, arrangements, offers, agreements or understandings, if any, between the parties hereto with respect to the lease of Lessor's facilities in Florida except for those contained in the Master Agreement and the Transition Services Agreement. This Agreement together with the Exhibits, which are incorporated herein, expresses and contains the entire agreement of the parties hereto and there are no express or implied representations, warranties or agreements between them, except as herein contained. This Agreement may not be modified, amended or supplemented except by a writing signed by both Lessor and Lessee. No consent given or waiver made by Lessor of any breach by Lessee of any provision of this Agreement shall operate or be construed in any manner as a waiver of any subsequent breach of the same or of any other provision. 22. Master Lessor Consent. The validity of this Sublease shall be subject to the Master Lessor's prior written consent and approval of the Lessee and of the terms of this Sublease pursuant to the terms of the Master Lease; such consent is a condition precedent to the effectiveness of this Sublease. If Master Lessor rejects the Lessee this Sublease shall be deemed to be canceled and shall be of no force or effect. Lessee agrees to cooperate with Lessor and promptly provide to Lessor all materials and information required by Master Lessor in connection with its determination of whether to consent to this Sublease. 23. Arbitration. Except for any controversy, claim or dispute arising under Section 19, any controversy, claim or dispute arising out of or relating to this Agreement or the transactions contemplated hereby or the breach, termination, enforcement, interpretation or validity hereof, including the determination of the scope or applicability of this agreement to arbitrate (collectively "Dispute"), shall be determined by arbitration in Phoenix, Arizona before a sole arbitrator. The following shall apply to any such arbitration: 23.1 The arbitration shall be administered by the American Arbitration Association ("AAA") pursuant to its Commercial Rules and Supplementary Procedures for Large, Complex Disputes. 14 15 23.2 The arbitrator shall not be an officer, employee, director or affiliate of any party hereto or of its affiliates. If the parties are unable to agree on an arbitrator within 30 days of the filing of the Demand for Arbitration, an arbitrator shall be selected pursuant to the rules and procedures of the AAA. 23.3 Any party may seek from any court interim or provisional relief that is necessary to protect the rights or property of that party, pending the appointment of the arbitrator or pending the arbitrator's determination of the merits of the controversy. 23.4 The parties shall bear their own costs and expenses, including attorneys' fees, but the arbitrator may, in the award, allocate all of the administrative costs of the arbitration, including the fees of the arbitrator and mediator, against the party who did not prevail. 23.5 The arbitration award shall be in writing and shall specify the factual and legal bases for the award. Judgment on the award may be entered in any court having jurisdiction. 24. Governing Law. The validity, interpretation and construction of this Agreement, and all other matters related to the Agreement, shall be interpreted and governed by the laws of the State of Florida. 25. Headings. The headings herein used are for convenience purposes only and shall not be used to construe the meaning of this Agreement in any respect. 26. Severability. If any term or provision of this Agreement, or the application thereof to any person or circumstance, shall to any extent be found to be invalid, void, or unenforceable, the remaining provisions of this Agreement and any application thereof shall, nevertheless, continue in full force and effect without being impaired or invalidated in any way. 27. No Waiver. No waiver of any term, provision or condition of this Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed to be or be construed as a further or continuing waiver of any such term, provision or condition or as a waiver of any other term, provision or condition of this Agreement. 28. Counterparts. This Sublease may be executed simultaneously 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. 29. Option to Terminate. Neither Lessor nor Lessee shall exercise the option to terminate the Master Lease contained in Paragraph C-21.1 of Exhibit C of the Master Lease with the prior written consent of the other party. 15 16 30. Insurance. 30.1 Employer. Lessee shall maintain at all times during the Term (i) workers' compensation insurance that shall fully comply with the statutory requirements of all applicable state and federal laws covering all personnel employed by Lessee at the Premises; (ii) employers' liability insurance coverage on all personnel employed by Lessee at the Premises in the following minimum amounts: at least one million dollars ($1,000,000) per accident for bodily injury and one million dollars ($1,000,000) per employee/aggregate for disease; and (iii) unemployment insurance for all personnel employed by Lessee at the Premises in full compliance with state and federal law. 30.2 General Liability Insurance. Lessor represents and warrants that it has in effect, and agrees to maintain in effect during the Term, comprehensive general liability insurance to protect it and Lessee and the Lessee's directors, officers, employees and affiliates in connection with matters for which Lessor is responsible hereunder. Lessee represents and warrants that it has in effect, and agrees to maintain in effect during the Term, comprehensive general liability insurance to protect it and Lessor and Lessor's directors, officers, employees and affiliates in connection with matters for which Lessee is responsible hereunder. Limits for such general liability insurance shall in no event be less than one million dollars ($1,000,000) per occurrence and five million dollars ($5,000,000) in aggregate for bodily injury and property damage, combined single limit coverage. 30.3 Endorsements. Other than the worker's compensation policy, each insurance policy shall name Lessor (and Master Lessor) or Lessee, as the case may be, as an additional insured, and all policies shall contain a provision whereby the insurer agrees not to alter or cancel the coverage without at least thirty (30) days' prior written notice to Lessor or Lessee, as the case may be. Neither Lessor nor Lessee shall be liable for the payment of any premiums associated with the insurance to be required of the other hereunder. 30.4 Certificates of Insurance. Lessor and Lessee shall each provide to the other certificates, in duplicate, evidencing the above-required insurance promptly upon execution of this Agreement. 16 17 IN WITNESS WHEREOF, the parties hereto have executed this Agreement, as of the date first above written, by their duly authorized representatives. "LESSOR" ALLIEDSIGNAL INC., a Delaware corporation, By: /s/ Phillip E. Hammond ---------------------- Title: Director, Real Estate "LESSEE" EFTC CORPORATION, a Colorado corporation By: /s/ Stuart Fuhlendorf --------------------- Title:Chief Financial Officer 17 18 EXHIBIT A MASTER LEASE 18 19 EXHIBIT B PREMISES 19 20 EXHIBIT C ENVIRONMENTAL PERMITS 20 21 EXHIBIT D EXPENSE SHARING 21 22 EXHIBIT E SHIPPING SERVICES CONTRACTS 22 23 EXHIBIT F FIT UP PROVISIONS 23 EX-2.7 8 TRANSITION SERVICES AGREEMENT 1 TRANSITION SERVICES AGREEMENT This TRANSITION SERVICES AGREEMENT ("Agreement") is made as of this 11th day of August, 1997 between AlliedSignal Avionics Inc., a Kansas corporation ("Seller") and EFTC Corporation, a Colorado corporation ("Purchaser"). WHEREAS, pursuant to that certain Master Agreement Regarding Asset Purchase and Related Transactions dated July 15, 1997 (the "Master Agreement") between AlliedSignal Inc., a Delaware corporation operating through its Aerospace Equipment Systems Business Unit, Seller and Purchaser, Purchaser is acquiring Seller's business of manufacturing electronic assemblies for use in aerospace applications (the "Business"); and WHEREAS, Seller and Purchaser desire to foster a smooth transition of the Business from Seller to Purchaser and, in the interests of facilitating such transition, Seller shall provide certain services to Purchaser and sublease to Purchaser Seller's facility pursuant to that Sublease Agreement entered into between Seller and Purchaser dated the date hereof (the "Sublease Agreement"). NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements hereinafter set forth, and in consideration of the execution and performance of the Master Agreement, the parties hereto agree as follows: 1. TRANSITION SERVICES 1.1 Transition Services. Commencing on the Asset Transfer Date and for up to two (2) months thereafter, Seller will provide to Purchaser upon request the services as described in Schedule A of this Agreement (such services being hereinafter referred to individually as a "Transition Service" and collectively as "Transition Services"); provided, however, that Seller shall provide the Transition Services related to the conversion of the material requirements planning information system as described in Schedule A, for a period of up to nine (9) months after the Asset Transfer Date. Purchaser's use of Transition Services shall be solely for purposes related to Purchaser's operation of the Business. Purchaser shall use the Transition Services for substantially the same purposes and in substantially the same manner as such Transition Services were historically used by Seller in operating the Business. Seller shall perform the Transition Services in substantially the same manner as performed for the Business prior to the Closing Date. 2 2. SPECIAL REQUESTS 2.1 Additional Services. Seller and Purchaser have, by this Agreement, attempted to provide for all services and facilities which may reasonably be required by Purchaser to operate the Business during a transitional period commencing on the date hereof. However, Seller and Purchaser acknowledge that one or more services historically provided by Seller to the Business may have been inadvertently omitted from this Agreement. Accordingly, if at any time during the six (6) month period commencing on the date hereof Purchaser reasonably requires a service not covered by this Agreement in order to operate the Business as it was operated immediately prior to the Closing, then Purchaser may request Seller to provide such service. In no event shall the term for any such Additional Service extend beyond two (2) months after they are identified or agreed upon, unless the parties shall otherwise agree. The request shall be in writing and shall specify in reasonable detail the nature of the service required and the duration of the requirement. The terms of this Section shall not apply to services for which related employees or equipment have been transferred to Purchaser pursuant to the terms of the Master Agreement. If the requested service is a service that Seller provided to the Business prior to the Closing, then Seller shall in good faith consider whether to provide the service to Purchaser for a charge equal to Seller's cost of providing the service plus ten percent (10%). If the requested service is not a service that Seller provided to the Business prior to the date hereof, then Seller may, in its sole discretion, either offer to provide the service for a specified charge or decline to provide the service. Services provided by Seller pursuant to this Section shall be referred to herein as "Additional Services." The Transition Services and the Additional Services shall be collectively referred to herein as the "Services." 2.2 Invoicing. Seller shall bill Purchaser for Additional Service and services not included on Schedule A ("Billable Services") on a monthly basis. Invoices for Billable Services shall be payable net forty five (45) days from Purchaser's receipt of invoice. 3. STANDARD OF CARE In providing Services to Purchaser, Seller will use the same degree of care as it uses in performing the same or similar services on its own behalf. 4. ARBITRATION 4.1 Arbitration. Any controversy, claim or dispute arising out of or relating to this Agreement or the transactions contemplated hereby or the breach, termination, enforcement, interpretation or validity hereof, including the determination of the scope or applicability of this agreement to arbitrate (collectively "Dispute"), shall be determined 2 3 by arbitration in Phoenix, Arizona before a sole arbitrator. The following shall apply to any such arbitration: 4.1.1 The arbitration shall be administered by the American Arbitration Association ("AAA") pursuant to its Commercial Rules and Supplementary Procedures for Large, Complex Disputes. 4.1.2 The arbitrator shall not be an officer, employee, director or affiliate of any party hereto or of its affiliates. If the parties are unable to agree on an arbitrator within 30 days of the filing of the Demand for Arbitration, an arbitrator shall be selected pursuant to the rules and procedures of the AAA. 4.1.3 Any party may seek from any court interim or provisional relief that is necessary to protect the rights or property of that party, pending the appointment of the arbitrator or pending the arbitrator's determination of the merits of the controversy. 4.1.4 The parties shall bear their own costs and expenses, including attorneys' fees, but the arbitrator may, in the award, allocate all of the administrative costs of the arbitration, including the fees of the arbitrator and mediator, against the party who did not prevail. 4.1.5 The arbitration award shall be in writing and shall specify the factual and legal bases for the award. Judgment on the award may be entered in any court having jurisdiction. 5. LIABILITY 5.1 Indemnification. Each party hereto shall indemnify, defend and hold the other party, such party's officers, directors, employees, agents and affiliated entities, harmless from and against any and all claims, suits, liabilities and expenses related to or arising from its negligence or willful misconduct. The terms and conditions of this Section 5.1 shall survive the expiration or earlier termination of this Agreement. 5.2 Consequential and Other Damages. Neither party shall be liable, whether in contract, in tort (including negligence and strict liability), or otherwise, for any special, indirect, incidental or consequential damages whatsoever, including, but not limited to, loss of profits or revenue, business interruptions, costs of capital and claims of customers which in any way arise out of, relate to, or are a consequence of, its performance or nonperformance hereunder, or the provision of or failure to provide any Service hereunder. The terms of this Section shall not apply in the event of the willful misconduct of either party. 3 4 5.3 Acknowledgment. The services provided under this Agreement are intended to facilitate Purchaser's transition activities for a limited period of time post-closing. Nothing contained in this Agreement shall be construed as a guaranty to Purchaser of results or profitability; Purchaser assumes the risk of the operation of the Business. 5.4 Conflict with Sublease Agreement. If any interpretation or effect of this Section 5 could reasonably be viewed as contradicting the interpretation or effect of Section 19.3 of the Sublease Agreement, the terms of the Sublease Agreement shall control. 6. ACCESS TO PREMISES 6.1 The Premises of the Business. Seller shall have the right to access and use the Purchaser's premises, subject to Purchaser's reasonable control, to the extent necessary to deliver the Services hereunder. 6.2 The Premises of Seller. Employees of Purchaser shall have access to Seller's facilities pursuant to the terms and conditions of the Sublease Agreement. 7. MISCELLANEOUS 7.1 Notices. Whenever notice is to be served hereunder, service shall be made personally, by facsimile transmission or by overnight courier. All delivery charges shall be prepaid by the party sending the notice. Notice shall be effective only upon receipt by the party being served. All notices shall be sent to the addresses described below the parties' signatures unless changed by written notice pursuant to the terms of this Section. 7.2 Entire Agreement. This Agreement, the Master Agreement and the Sublease Agreement constitute the entire agreement between the parties with respect to the subject matter hereof and supersede all prior communications, representations, agreements and understandings between the parties hereto, whether oral or written. 7.3 Construction. When the context so requires, references herein to the singular number include the plural and vice versa and pronouns in the masculine or neuter gender include the feminine. The headings contained in this Agreement and the Schedules hereto are for reference purposes only and shall not affect the meaning or interpretation of this Agreement. 7.4 Assignment. This Agreement, and all rights and obligations hereunder, shall not be assignable by any party in whole or in part, except that (a) either party may assign this Agreement and its rights and obligations hereunder with the other's prior 4 5 written consent, (b) either party may assign this Agreement without the prior written consent of the other party to a subsidiary, parent or affiliated entity, (c) Seller may perform any of the services required hereunder through a subsidiary or affiliate of Seller without the prior written consent of Purchaser, and (d) Seller may subcontract any of the services required of it hereunder to any party Seller contracts with for services for its own account now or in the future without the prior written consent of Purchaser. For any such assignment, Purchaser or Seller, as the case may be, shall remain obligated hereunder unless the other party shall consent otherwise. Any purported assignment inconsistent with this Section 7.4 shall be void and of no effect. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and permitted assigns. 7.5 Amendment. This Agreement may be amended only by written agreement duly executed by representatives of both the parties hereto. 7.6 Applicable Law. This Agreement shall be construed in accordance with the laws of the State of Florida, disregarding its conflicts of laws principles which may require the application of the laws of another jurisdiction. 7.7 No Third Party Rights. This Agreement is not intended and shall not be construed to create any rights in any parties other than Seller and Purchaser and no other person shall assert any rights as a third party beneficiary hereunder. 7.8 Schedules. The Schedules attached hereto are incorporated into this Agreement and shall be deemed a part hereof as is set forth herein in full. References to "this Agreement" and the words "herein", "hereof", and words of similar import refer to this Agreement (including the Schedules) as an entirety. 7.9 Waivers. Any waiver of rights hereunder must be set forth in writing. A waiver of any breach or failure to enforce any of the terms or conditions of this Agreement shall not in any way affect, limit or waive a party's rights at any time to enforce strict compliance thereafter with every term and condition of this Agreement. 7.10 Independent Contractor. The parties intend to create an independent contractor relationship and nothing contained in this Agreement shall be construed to make either Seller or Purchaser a partner, joint venturer, principal, agent or employee of the other. Neither party shall have any right, power or authority, express or implied, to bind the other. 7.11 Force Majeure. If a party is unable to meet its obligations under this Agreement as a result of flood, earthquake, storm, other act of God, fire, strike, war, riot, embargo, act of government or governmental agency or any other similar cause 5 6 beyond the reasonable control of such party ("Force Majeure"), the obligations of the parties hereto shall be suspended for the duration of the Force Majeure. The party claiming Force Majeure shall, within five (5) days from the date of disability, excluding Saturdays, Sundays and holidays, notify the other party of the existence of a Force Majeure condition and will similarly notify the other party within a period of five (5) days, excluding Saturdays, Sundays and holidays, when the Force Majeure has ended. IN WITNESS WHEREOF, Seller and Purchaser have duly executed and delivered this Agreement as of the date first written above. ALLIEDSIGNAL AVIONICS, INC., a Kansas corporation By: /s/Dominic A. Romeo --------------------- Title: Vice President, Finance EFTC CORPORATION, a Colorado corporation By: /s/ Stuart Fuhlendorf --------------------- Title: Chief Financial Officer 6 7 SCHEDULE A TRANSITION SERVICES 7 EX-2.8 9 PERSONAL PROPERTY AGREEMENT 1 AGREEMENT REGARDING USE OF PERSONAL PROPERTY This AGREEMENT REGARDING USE OF PERSONAL PROPERTY ("Agreement") is made and entered into as of August 11, 1997 by and between AlliedSignal Avionics Inc., a Kansas corporation (the "Company"), and EFTC Corporation, a Colorado corporation ("EFTC"), with reference to the following: WHEREAS, Avionics, EFTC and AlliedSignal, Inc. entered into that certain Master Agreement Regarding Asset Purchase and Related Transactions dated July 15, 1997 (the "Master Agreement"), as amended by that certain First Amendment to Master Agreement Regarding Asset Purchase and Related Transactions, and that Second Amendment to Master Agreement Regarding Asset Purchase and Related Transactions dated August 11, 1997, whereby Avionics agreed to transfer certain assets related to the manufacture of electronic assemblies to EFTC and EFTC agreed to enter into a Long Term Supply Agreement with Avionics providing for the manufacture by EFTC of electronic assemblies for Avionics and its affiliated entities; WHEREAS, the parties desire to provide for EFTC's right to use and operate certain equipment of Avionics described in Exhibit A, attached hereto and incorporated herein by this reference, (the "Equipment") until the Avionics Personal Property Transfer Date; and NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements hereinafter set forth, and in consideration of the execution and performance of the Master Agreement and the Long Term Agreement, the parties hereto agree as follows: 1. Right to Use Equipment. Subject to the terms and conditions of this Agreement, Avionics hereby grants to EFTC free of charge for the Term (as hereinafter defined), and any extension thereof, a non-exclusive, non-transferable (except as provided in Section 6 below) right to use and operate the Equipment for the limited purpose of performing its obligations under the Long Term Agreement. This Agreement creates a right to use the Equipment only and does not create or constitute a lease or sale of the Equipment. EFTC shall have no ownership interest or ownership rights in or to the Equipment. During the Term, Avionics shall not revoke the rights granted hereby and shall not unreasonably interfere with EFTC's use of the Equipment. This Agreement is intended to create a bailment relationship and not a sale, lease or other transaction. 2. Warranty. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT, OR ANY OTHER COMMUNICATIONS BETWEEN THE PARTIES ORALLY OR IN WRITING, IT IS THE EXPLICIT INTENT OF EACH PARTY HERETO THAT AVIONICS MAKES NO REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, BEYOND THOSE EXPRESSLY GIVEN IN THIS AGREEMENT OR THE MASTER AGREEMENT, INCLUDING BUT NOT LIMITED TO 2 ANY IMPLIED WARRANTY OR REPRESENTATION AS TO CONDITION, MERCHANTABILITY OR SUITABILITY AS TO ANY OF THE PROPERTIES OR ASSETS OF AVIONICS. EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED IN THIS AGREEMENT OR THE MASTER AGREEMENT THE EQUIPMENT IS BEING PROVIDED ON AN "AS IS" BASIS. 3. Use Restrictions. EFTC shall not make any modification to the Equipment without the prior written consent of Avionics. The Equipment may not be removed from the premises where it is currently located without the prior written consent of Avionics. EFTC shall use the Equipment for its intended use only and in accordance with manufacturer's and Avionic's instructions. EFTC agrees that it will cause its employees, agents, contractors and invitees to comply with any and all of the Avionics' reasonable rules, regulations and procedures pertaining to use of the Equipment as may be established by Avionics from time to time. 4. Term. The term of this Agreement (the "Term") shall commence on the date hereof and shall terminate on August 18, 1997 unless extended by mutual agreement of the parties in writing. Upon the termination of this Agreement, EFTC will return the Equipment to Avionics in the same condition as it was provided to EFTC, reasonable wear and tear excepted. 5. Liability for Misuse or Damage. EFTC assumes responsibility for any negligent or willful misuse of or damage to the Equipment by EFTC or its employees, agents and invitees. EFTC agrees to indemnify, defend and hold Avionics, its officers, directors and affiliated entities harmless from and against any liability arising from or related to any such negligent or willful misuse or damage, including, but not limited to property damage and personal injury not compensated under applicable workers' compensation laws. To the extent that any loss of any property by theft or otherwise, for personal injury or property damage is proximately caused by the joint negligence or willful misconduct of Avionics and EFTC or their respective employees, agents or invitees, Avionics and EFTC shall be ratably responsible for such loss or damage based upon their relative fault as determined by agreement of the parties or pursuant to Section 14, as the case may be. It is expressly understood by the parties that EFTC shall have no liability or other responsibility for any misuse of or damage to the Equipment including, but not limited to property damage and personal injury not compensated under applicable workers' compensation laws, to the extent that such misuse, damage or injury results from actions of EFTC, its employees, agents or invitees acting in accordance with the specific directions of Avionics (including any rules, regulations, policies, procedures or other instructions of Avionics relating to health, safety or environmental matters). Except as set forth above, Avionics bears the risk of loss of the Equipment. 6. Assignment. This Agreement, and all rights and obligations hereunder, shall not be assignable by any party in whole or in part, except that (a) either party may assign this Agreement and its rights and obligations hereunder with the other party's prior written 2 3 consent, and (ii) Lessee may assign this Agreement without the prior written consent of Avionics to a subsidiary or affiliated entity. For any such assignment, the assigning party shall remain obligated hereunder unless the other party shall consent otherwise. 7. Entire Agreement. This Agreement, together with the Exhibits hereto, and the Master Agreement constitute the parties' entire agreement with respect to the subject matter hereof and supersede all prior statements or agreements, both written and oral. This Agreement may be amended only by a writing signed by each party hereto. 8. Governing Law. The validity, interpretation and construction of this Agreement, and all other matters related to the Agreement, shall be interpreted and governed by the laws of the State of Florida. 9. Notices. Notices under this Agreement shall be in writing and sent by confirmed facsimile, personal delivery or overnight delivery service to the addresses specified in or pursuant to the terms of the Master Agreement and shall be effective as specified in the Master Agreement. 10. Severability. If any term or provision of this Agreement, or the application thereof to any person or circumstance, shall to any extent be found to be invalid, void, or unenforceable, the remaining provisions of this Agreement and any application thereof shall, nevertheless, continue in full force and effect without being impaired or invalidated in any way. 11. Waiver. No waiver of any term, provision or condition of this Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed to be or be construed as a further or continuing waiver of any such term, provision or condition or as a waiver of any other term, provision or condition of this Agreement. 12. Independence. The parties shall at all times act independently. Nothing contained in this Agreement, shall be construed to make one party the partner, joint venturer, principal, agent or employee of the other party hereto. Neither party shall have any express or implied authority to act for or on behalf of the other or bind the other contractually. Each party is solely responsible for payment of (i) all income, disability, withholding, and other employment taxes as well as (ii) all medical benefit premiums, vacation pay, sick pay or other fringe benefits resulting from its retention of its officers, directors, employees, agents, affiliates and contractors. Each party shall indemnify, defend, and hold the other harmless from any claim for any such tax or benefit payment. 13. Headings. The headings herein used are for convenience purposes only and shall not be used to construe the meaning of this Agreement in any respect. 14. Arbitration. Any controversy, claim or dispute arising out of or relating to this Agreement or the transactions contemplated hereby or the breach, termination, enforcement, interpretation or validity hereof, including the determination of the scope or applicability of this agreement to arbitrate (collectively "Dispute"), shall be determined by arbitration in Phoenix, Arizona before a sole arbitrator. The following shall apply to any such arbitration: 3 4 14.1 The arbitration shall be administered by the American Arbitration Association ("AAA") pursuant to its Commercial Rules and Supplementary Procedures for Large, Complex Disputes. 14.2 The arbitrator shall not be an officer, employee, director or affiliate of any party hereto or of its affiliates. If the parties are unable to agree on an arbitrator within 30 days of the filing of the Demand for Arbitration, an arbitrator shall be selected pursuant to the rules and procedures of the AAA. 14.3 Any party may seek from any court interim or provisional relief that is necessary to protect the rights or property of that party, pending the appointment of the arbitrator or pending the arbitrator's determination of the merits of the controversy. 14.4 The parties shall bear their own costs and expenses, including attorneys' fees, but the arbitrator may, in the award, allocate all of the administrative costs of the arbitration (and mediation, if applicable), including the fees of the arbitrator and mediator, against the party who did not prevail. 14.5 The arbitration award shall be in writing and shall specify the factual and legal bases for the award. Judgment on the award may be entered in any court having jurisdiction. 15. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall constitute an original instrument and all of which together shall constitute the same instrument. 16. Definitions. Capitalized terms used herein without definition shall have the meanings ascribed thereto in the Master Agreement. 4 5 IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written. ALLIEDSIGNAL AVIONICS INC., a Kansas corporation By: /s/ Tim Bibens ------------------------------------- Title: Subcontracts Program Manager EFTC Corporation, a Colorado corporation By: /s/ Brian White ------------------------------------- Title: Treasurer 5 6 EXHIBIT A The Equipment 6 EX-2.9 10 PERSONAL PROPERTY AGREEMENT 1 AGREEMENT TO EXTEND AVIONICS PERSONAL PROPERTY ASSET TRANSFER DATE DATED: AUGUST 15, 1997 AlliedSignal Avionics, Inc., a Kansas corporation ("Avionics"), AlliedSignal Inc., a Delaware corporation operating through its Aerospace Equipment Systems Business Unit ("AES"), and EFTC Corporation, a Colorado corporation ("EFTC") hereby agree to the following in connection with that certain Master Agreement Regarding Asset Purchase and Related Transactions dated July 15, 1997 (the "Master Agreement"), as amended by that certain First Amendment to Master Agreement Regarding Asset Purchase and Related Transactions and that certain Second Amendment to Master Agreement Regarding Asset Purchase and Related Transactions ("Second Amendment"): 1. Personal Property Transfer. The Avionics Personal Property Transfer Date shall be extended until September 2, 1997, unless otherwise agreed to in writing by the parties, and all other obligations to occur upon the Avionics Personal Property Transfer Date are extended until such date, unless otherwise agreed to in writing by the parties. 2. Use of Personal Property. The short term Equipment License between Avionics and EFTC shall also be extended until September 2, 1997 unless otherwise agreed to in writing by the parties. 3. Intellectual Property License. The License Agreement between AlliedSignal Technologies Inc. and EFTC with respect to the Avionics Technical Data and Technical Information, as defined therein, will not be effective until the Avionics Personal Property Transfer Date, as extended, including, but not limited to, the provisions of such agreement regarding the right of EFTC to use the Avionics Technical Data and Technical Information and the payment obligations of EFTC with respect thereto. In the interim, AlliedSignal, Inc. will cause AlliedSignal Technologies Inc. to grant to EFTC a temporary license to use the Avionics Technical Data and Technical Information for the limited purpose of performing its obligations under the Master Agreement at the Ft. Lauderdale, Florida site. 1 2 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first set forth above. AlliedSignal Avionics, Inc., a Kansas corporation By: /s/ Tim Bibens -------------- Title: Subcontracts Program Manager AlliedSignal Inc., a Delaware corporation, operating through its Aerospace Equipment Systems Business Unit By: /s/ John DeRusso ---------------- Title: Material Program Manager EFTC Corporation, a Colorado corporation By: /s/ Stuart Fuhlendorf --------------------- Title: Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----