INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (this "Agreement"), dated September 30,
1997 is among the undersigned shareholders (each a "Shareholder") of Circuit
Test, Inc., a Florida corporation ("Circuit Test"), the undersigned members (the
"Airhub Members") of Airhub Services Group, L.C., a Kentucky limited liability
company ("Airhub"), and the members (the "CTLLC Members" and, together with the
Airhub Members and the Shareholders, the "Indemnitors") of Circuit Test
International, L.C., a Florida limited liability company ("CTLLC"), and EFTC
Corporation, a Colorado corporation ("Parent").
RECITALS
A. Pursuant to the Agreement and Plan of Reorganization, dated as of
July 9, 1997 (the "Reorganization Agreement") among Parent, CTI Acquisition
Corp., a Florida corporation and a wholly-owned subsidiary of Parent ("Merger
Sub"), and Circuit Test, the Shareholders will receive shares of Common Stock,
$.01 par value, of Parent ("Parent Common Stock") in exchange for their shares
of Class A and Class B Common Stock, $.01 par value, of Circuit Test ("Circuit
Test Common Stock"). In connection with the Reorganization Agreement, Parent has
granted the Shareholders demand and piggyback registration rights pursuant to
the Registration Rights Agreement of even date herewith (the "Registration
Rights Agreement").
B. Pursuant to that certain Limited Liability Company Unit Purchase
Agreement, dated as of July 9, 1997 (the "Purchase Agreement"), among Parent,
CTLLC Acquisition Corp., a Florida corporation and wholly owned subsidiary of
Parent ("LLC Acquisition"), Airhub, the Airhub Members, CTLLC and the CTLLC
Members, all of the outstanding interests in Airhub and CTLLC will be acquired
(the "Acquisition") and as a result of the Acquisition, all outstanding
interests in Airhub will be acquired by Parent and all of outstanding interests
in CTLLC will be acquired by Parent and LLC Acquisition.
C. In consideration of Parent entering the Reorganization Agreement,
the Purchase Agreement and the Registration Rights Agreement and to induce
Parent to consummate the transactions contemplated thereby, the Indemnitors are
making certain representations and warranties set forth herein and indemnifying
Parent with respect to certain matters under the Reorganization Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, covenants and agreements contained herein, the parties hereto
agree as follows:
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ARTICLE I
REPRESENTATIONS AND WARRANTIES
1.1 Due Authorization; Enforceability; No Conflict. Each of the
Indemnitors represents and warrants to Parent with respect to such Indemnitor
that the Indemnitor has the full power and authority to execute and deliver this
Agreement and to perform its obligations hereunder and has taken all actions
necessary to secure all approvals required in connection therewith. This
Agreement has been duly executed and delivered by the Indemnitor and constitutes
the valid and binding obligation of the Indemnitor enforceable against the
Indemnitor in accordance with its terms. The execution and delivery of this
Agreement does not, and the performance will not: (a) violate or conflict with
any permit, order, license, decree, judgment, statute, law, ordinance, rule or
regulation applicable to the Indemnitor or (b) result in any breach or violation
of, or constitute a default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of,
or result in the creation of any mortgage, pledge, lien, encumbrance, charge, or
other security interest (a "Lien") on any of the properties or assets of the
Indemnitor pursuant to, or require the consent of any party to any mortgage,
indenture, lease, contract or other agreement or instrument, bond, note,
concession or franchise applicable to the Indemnitor or any of its properties or
assets, except, in the case of this clause (c) only, where such conflict,
violation, default, termination, cancellation or acceleration would not have and
could not reasonably be expected to prevent the consummation of the transactions
contemplated hereby. No consent, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative agency or
commission or other governmental authority or instrumentality ("Governmental
Entity") is required by or with respect to the Indemnitor in connection with the
execution and delivery of this Agreement or the consummation of the transactions
contemplated by the Reorganization Agreement and the Purchase Agreement,
including the payment and performance of all payment and other obligations
hereunder.
1.2 Other Representations and Warranties of Circuit Test Shareholders.
Each of the Shareholders represents and warrants to Parent with respect to such
Shareholder that the representations and warranties in Sections 1 of the Voting
Agreement, dated as of July 9, 1997, among the Shareholders and Parent are true
and correct in all respects. The Shareholder has not incurred, and will not
incur, directly or indirectly, any liability for brokerage or finders' fees or
agents' commissions or investment bankers' fees or any similar charges (except
as specified in Section 4.28 of the Reorganization Agreement) in connection with
this Agreement or any transaction contemplated by the Reorganization Agreement
and the Purchase Agreement, including the payment and performance of all payment
and other obligations hereunder.
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ARTICLE II
SURVIVAL; INDEMNIFICATION
2.1 Indemnification. (a) In the event
(i) Circuit Test breaches a covenant, or if any representation or
warranty of Circuit Test in the Reorganization Agreement is
inaccurate (and, if there is an applicable survival period
pursuant to Section 11.1 (Survival of Representations and
Warranties) of the Reorganization Agreement, provided that
Parent makes a written claim for indemnification against any
Indemnitor within the applicable survival period),
(ii) Airhub, any Airhub Member, CTLLC or any CTLLC Member breaches
a covenant, or if any representation or warranty in the
Purchase Agreement is inaccurate (and, if there is an
applicable survival period pursuant to Section 10.1 (Survival
of Representations and Warranties) of the Purchase Agreement,
provided that Parent makes a written claim for indemnification
against any Indemnitor within the applicable survival period),
then each Indemnitor shall indemnify and hold Parent harmless from and against
such Indemnitor's Pro Rata Share (as defined in Section 2.1(b)) of any action,
suit, proceeding, hearing, investigation, charge, complaint, claim, demand,
injunction, judgment, order, decree, ruling, damage, dues, penalty, fines,
costs, amounts paid in settlement, liabilities, obligations, Taxes (as defined
in Section 2.1(b)), Liens, losses, expenses and fees, including court costs and
attorneys' fees and expenses (collectively, "Losses") that Parent or any of its
subsidiaries may suffer through and after the date of the claim for
indemnification (including any Losses Parent or its subsidiaries suffer after
the end of any applicable survival period) caused by or arising out of any such
breach or inaccuracy; except that the Indemnitors will not have any obligation
to indemnify Parent from and against any Losses caused by or arising out of any
such breach or inaccuracy: (i) until Parent or its subsidiaries have suffered
Losses by reason thereof in excess of a $100,000 aggregate threshold (at which
time the Indemnitors will indemnify Parent relating back to the first dollar of
such Losses and any further such Losses) or thereafter, and (ii) to the extent
the Losses Parent has suffered by reason of all such breaches and inaccuracies
exceeds a $2,500,000 aggregate ceiling (after which the Indemnitors will have no
obligation to indemnify Parent from and against any further such Losses) unless
such Losses are caused by or arise out of any breach or inaccuracy of which any
Indemnitor had actual knowledge at the time of the related agreement or
representation was made or deemed made, in which case there shall be no
limitation on the aggregate liability of the Indemnitors hereunder.
(b) The "Indemnitor's Pro Rata Share" means that fraction equal to the
amount of Consideration received by the Indemnitor over the Total Consideration,
where
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(i) "Consideration" with respect to (A) any Shareholder means the number of
shares of Parent Common Stock received by such Shareholder pursuant to the
Reorganization Agreement times the $7.80, plus the amount of cash, if any,
received by such Shareholder pursuant to the Reorganization Agreement and, (B)
any Airhub Member or CTLLC Member means such member's ratable portion
(determined by reference to such members proportionate ownership of Airhub and
CTLLC taken together) of the aggregate purchase price payable by Parent to the
Airhub Members and the CTLLC Members pursuant to the Purchase Agreement, and
(ii) "Total Consideration" means the sum of the Consideration received by
all Indemnitors.
(c) If Parent has a claim for Losses pursuant to this Article II that
does not involve a Third Party Claim (as defined in Section 2.2(a)), Parent
shall notify the Representative (as defined in Section 2.3(a)) of such claim,
specifying the nature of the Losses and the amount or estimated amount thereof
if feasible. If the Representative does not notify Parent within 30 days from
the date it receives such notice that the Representative disputes such claim,
the amount of such claim shall be conclusively deemed a liability of the
Indemnitors under this Agreement. Nothing herein shall be deemed to prevent
Parent from making a claim for potential or contingent Losses.
2.2 Third Party Claims. (a) If any third party notifies Parent with
respect to any matter that may give rise to a claim for indemnification against
any Indemnitor under this Article II (a "Third Party Claim"), then Parent shall
promptly notify the Representative thereof in writing (a "Notice of Claim"). The
Representative will have the right to assume and thereafter conduct the defense
of the Third Party Claim with counsel of the Representative's choice reasonably
satisfactory to Parent so long as: (i) the Representative notifies Parent in
writing within ten (10) days after Parent has given the Notice of Claim that the
Indemnitors will indemnify the Parent from and against the entirety of any
Losses Parent may suffer caused by or arising from the Third Party Claim, (ii)
the Representative provides Parent with evidence reasonably acceptable to Parent
that the Indemnitors will have the financial resources to defend against the
Third Party Claim and fulfill their indemnification obligations hereunder, (iii)
the Third Party Claim involves only money damages and does not seek an
injunction or other equitable relief, (iv) settlement of, or an adverse judgment
with respect to, the Third Party Claim is not, in the good faith judgment of
Parent, likely to establish a precedent, custom or practice materially adverse
to the continuing business, operations, assets, prospects or interests of Parent
or its subsidiaries, and (v) the Representative conducts the defense of the
Third Party Claim actively and diligently. In the event of a Third Party Claim
that seeks an injunction or other equitable relief, the Representative will be
entitled to participate with Parent in the defense of such Third Party Claim.
(b) While the Representative is conducting the defense of the Third
Party Claim: (i) Parent may retain separate co-counsel at its sole cost and
expense and participate in the defense of the Third Party Claim, (ii) Parent
will not consent to the entry of any judgment or
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enter into any settlement with respect to the Third Party Claim without the
prior written consent of the Representative, and (iii) the Representative will
not consent to the entry of any judgment or enter any settlement with respect to
the Third Party Claim without the prior written consent of Parent.
(c) If any condition under Section 2.2(a) is or becomes unsatisfied:
(i) Parent may defend against the Third Party Claim in any manner it reasonably
may deem appropriate, (ii) Parent may consent to entry of any judgment or enter
into any settlement that is consented to by the Representative or to which the
Indemnitors could not reasonably object, (iii) each Indemnitor will reimburse
Parent the Indemnitor's Pro Rata Share promptly and upon request of Parent for
the costs of defending against the Third Party Claim, including reasonable
attorneys' fees and expenses, and (iv) the Indemnitors will remain responsible
for any Losses Parent may suffer caused by or arising from the Third Party Claim
to the fullest extent provided by this Article II. The Indemnitors and the
Representative agree to consent to any entry of judgment or the entering into of
any settlement under clause (ii) above reasonably appropriate under the
circumstances.
2.3 Representative. (a) To the fullest extent permitted by law, each
Indemnitor hereby irrevocably constitutes and appoints ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. as
such Indemnitor's attorney-in-fact and legal and judicial representative (the
"Representative"), with full power of substitution, for the purposes of: (i)
receiving all notices and communications directed to any Indemnitor under this
Agreement and taking any action (or determining to take no action) with respect
thereto as the Representative may deem appropriate, including the settlement or
compromise on behalf of any Indemnitor of any Third Party Claim or Losses, and
(ii) executing and delivering on behalf of any Indemnitor all instruments and
documents of every kind the Representative may deem necessary or advisable to
accomplish the foregoing. Each Indemnitor hereby ratifies and confirms, as the
Indemnitor's own act, all that the Representative shall do or cause to be done
pursuant to this Agreement.
(b) If the Representative resigns, the resigning Representative shall
appoint as successor either another Indemnitor or a third party reasonably
acceptable to Parent (a "Successor Representative"). The resigning
Representative's resignation shall not be effective until a Successor
Representative shall have agreed in writing to accept such appointment. If the
Representative should die or become incapacitated, a Successor Representative
shall be appointed within 30 days of the Representative's death or incapacity by
Indemnitors that received a majority of Total Consideration. Upon acceptance by
a Successor Representative of the Successor Representative's appointment, the
appointment shall be final and binding on the Indemnitors.
(c) Each Indemnitor irrevocably agrees that with respect to any Third
Party Claim or any claim for indemnification hereunder, any service of process,
writ, judgment or other notice of legal process shall be deemed and held in
every respect to be effectively served upon the Indemnitor if delivered by
registered or certified mail, postage prepaid with return receipt
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requested to the Representative at such person's address set forth in Section
4.1, whom each Indemnitor irrevocably appoints as its authorized agent for
service of process.
(d) The death or incapacity of any Indemnitor shall not terminate the
authority and agency of the Representative.
(e) Each Indemnitor hereby agrees to indemnify the Representative and
to hold the Representative harmless against any loss, liability or expense
incurred without negligent conduct or bad faith on the part of the
Representative and arising out of or in connection with his duties as
Representative, including court costs and attorneys' fees and expenses incurred
by the Representative in defending against any Third Party Claim or Losses in
connection with this Agreement.
2.4 Payment Terms. If all or part of any indemnification obligation
under this Agreement is not paid when due, the Indemnitors shall pay Parent
interest thereon, payable on demand, for each day from the date the amount
became due until the date of payment in full at a rate of 10% per annum.
2.5 Other Indemnification Matters. Parent's claims pursuant to the
foregoing indemnification provisions shall not be limited by any examination
made by or on behalf of Parent or its subsidiaries, the knowledge of Parent or
it subsidiaries or any of their respective officers, directors, stockholders,
employees or agents, or the acceptance by Parent of any certificate or opinion.
ARTICLE III
DISPUTE RESOLUTION
3.1 Remedies. Parent may proceed to enforce the obligations of the
Indemnitors hereunder in any court or other tribunal by an action at law, suit
in equity or other appropriate proceedings, whether for damages, for the
specific performance of any term hereof, or otherwise, or in aid of the exercise
of any power granted hereby or by law. In the event of any such proceeding, the
prevailing party in such proceeding shall be entitled to receive from the losing
party all reasonable costs and expenses, including the reasonable fees of
attorneys, accountants, and other experts, incurred by the prevailing party in
investigating and prosecuting (or defending) such action at trial or upon any
appeal. The amount of any such costs or expenses awarded hereunder shall not be
subject to the limitations on liability contained in Section 2.1.
3.2 Jurisdiction and Consent to Suit. Any action, suit or proceeding by
Parent to enforce this Agreement may be brought in the District Court in and for
the City and County of Denver, State of Colorado, in the United States District
Court for the District of Colorado or in any other court in which venue and
jurisdiction are proper. Each Indemnitor and the
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Representative consent and submit to the non-exclusive jurisdiction in personam
of any such court in respect of any such action, suit or proceeding.
ARTICLE IV
GENERAL PROVISIONS
4.1 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by commercial
delivery service, or mailed by registered or certified mail, return receipt
requested, or sent via facsimile, with confirmation of receipt, to the parties
at the following address or at such other address for a party as shall be
specified by notice hereunder:
(a) if to Parent, to:
EFTC Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Holme ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇ ▇▇▇▇
(b) if to the Indemnitors, to the Representative:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, PLLC
▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Warner ▇. ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
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4.2 Interpretation. When a reference is made in this Agreement to
Articles or Sections, such reference shall be to an Article or Section to this
Agreement unless otherwise indicated. The words "include," "includes" and
"including" when used herein shall be deemed in each case to be followed by the
words "without limitation." The table of contents and Article and Section
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. In this
Agreement, any reference to any event, change, condition or effect being
"material" with respect to any entity or group of entities means any material
event, change, condition or effect related to the condition (financial or
otherwise), properties, assets (including intangible assets), liabilities,
business, operations or results of operations of such entity or group of
entities. In this Agreement, any reference to a party's "knowledge" means such
party's actual knowledge of a particular fact or matter after due and diligent
inquiry of officers, directors and other employees of such party reasonably
believed to have knowledge of such matters. Whenever the context may require,
any pronoun shall include the corresponding masculine, feminine and neuter
forms, and with respect to the parties shall include where the context does not
prohibit, their respective permitted successors and assigns.
4.3 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties hereto and delivered to the other parties hereto, it being
understood that all parties hereto need not sign the same counterpart.
4.4 Entire Agreement; Nonassignability; Parties in Interest. This
Agreement and the documents and instruments and other agreements specifically
referred to herein or delivered pursuant hereto: (a) constitute the entire
agreement among the parties hereto with respect to the subject matter hereof and
supersede all prior agreements and understandings, both written and oral, among
the parties hereto with respect to the subject matter hereof; (b) are not
intended to confer upon any other person any rights or remedies hereunder; and
(c) shall not be assigned by operation of law or otherwise except as otherwise
specifically provided. This Agreement will bind and inure to the benefit of the
respective successors and assigns of the parties hereto, whether so expressed.
4.5 Severability. In the event that any provision of this Agreement, or
the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The parties hereto further agree to
replace such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of such void or unenforceable provision.
4.6 Remedies Cumulative; No Waiver. Except as otherwise provided herein,
any and all remedies herein expressly conferred upon a party will be deemed
cumulative with and not exclusive of any other remedy conferred hereby, or by
law or equity upon such party, and the
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exercise by a party of any one remedy will not preclude the exercise of any
other remedy. No failure or delay on the part of any party hereto in the
exercise of any right hereunder shall impair such right or be construed to be a
waiver of, or acquiescence in, any breach of any representation, warranty or
agreement herein, nor shall any single or partial exercise of any such right
preclude other or further exercise thereof or of any other right.
4.7 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Colorado (without regard to the
principles of conflicts of law thereof).
4.8 Rules of Construction. The parties hereto agree that they have been
represented by counsel during the negotiation, preparation and execution of this
Agreement and, therefore, waive the application of any law, regulation, holding
or rule of construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such agreement or
document.
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SIGNATURE PAGE-INDEMNIFICATION AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this Indemnification
Agreement to be executed and delivered as of the date first written above.
Parent:
EFTC CORPORATION,
a Colorado corporation
By: /s/
Shareholders:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. Grantor Retained Income
Trust u/a/d 12/31/89
By /s/
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., Trustee
By /s/
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Trustee
/s/
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
/s/
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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SIGNATURE PAGE-INDEMNIFICATION AGREEMENT Continued
Airhub Members:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. REVOCABLE LIVING
TRUST
By /s/
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., Trustee
CIRCUIT TEST INTERNATIONAL LIMITED
PARTNERSHIP, a Florida limited
Partnership
By ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. LIVING TRUST
Its General Partner
/s/
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., Trustee
CTLLC Members:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. REVOCABLE LIVING
TRUST
By /s/
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., Trustee
CIRCUIT TEST INTERNATIONAL LIMITED
PARTNERSHIP, a Florida limited
Partnership
By ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. LIVING TRUST
Its General Partner
/s/
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., Trustee
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