ASSET PURCHASE AGREEMENT
between
COMMUNICATIONS INSTRUMENTS, INC.
("Buyer")
and
CORNELL-DUBILIER ELECTRONICS, INC.
("Seller")
July 24, 1998
TABLE OF CONTENTS
Page
ARTICLE 1 - SALE AND PURCHASE OF ASSETS.....................................1
Section 1.1. Agreement to Sell Assets.........................1
Section 1.2. Excluded Assets..................................3
Section 1.3. Total Consideration..............................3
Section 1.4. Purchase Price, Purchase Price Adjustment........3
Section 1.5. Assumption of Certain Liabilities; Other
Liabilities Not Assumed..........................4
Section 1.6. Transfer of Title................................6
Section 1.7. Allocation of Consideration......................6
ARTICLE 2 - REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER.............6
Section 2.1. Organization and Standing........................7
Section 2.2. Financial Statements.............................7
Section 2.3. Absence of Undisclosed Liabilities, Accounts
Payable..........................................7
Section 2.4. Taxes............................................7
Section 2.5. Absence of Certain Changes or Events.............8
Section 2.6. Employee Relations...............................8
Section 2.7. Employee Benefit Plans...........................9
Section 2.8. Owned and Leased Personal Property;
Real Property....................................9
Section 2.9. Litigation......................................10
Section 2.10. No Conflict with Other Instruments or
Proceedings.....................................10
Section 2.11. Authorization and Enforceability; Power of
Attorney........................................10
Section 2.12. Ownership of Assets.............................11
Section 2.13. Material Contracts; Terms of Sale...............11
Section 2.14. Intellectual Property. ........................11
Section 2.15. Environmental Matters...........................12
Section 2.16. Brokers' Fees...................................13
Section 2.17. Customers and Suppliers.........................13
Section 2.18. Product Liabilities and Warranties..............13
Section 2.19. Permits and Licenses............................13
Section 2.20. Compliance with Law and Other Regulations.......14
Section 2.21. Seller Relationships, Intercompany Agreements
and Transactions................................14
Section 2.22. Customs or Port-of-Entry Registrations..........14
Section 2.23. Accuracy of Statements..........................15
Section 2.24. Representatives, Distributors and Sales Agents..15
ARTICLE 3 - REPRESENTATIONS, WARRANTIES AND COVENANTS OF BUYER.............15
Section 3.1. Organization and Standing of Buyer..............15
Section 3.2. Authorization and Enforceability................15
Section 3.3. Brokers' Fees...................................16
Section 3.4. No Conflict with Other Instruments or
Proceedings.....................................16
Section 3.5. Accuracy of Statements..........................16
ARTICLE 4 - CLOSING........................................................16
Section 4.1. Closing.........................................16
Section 4.2. Closing Obligations of Seller...................16
Section 4.3. Closing Obligations of Buyer....................17
Section 4.4. Obligations of Final Delivery Date..............17
Section 4.5. Further Documents or Necessary Action...........17
ARTICLE 5 - COVENANTS......................................................18
Section 5.1. Conduct of Business.............................18
Section 5.2. Access..........................................18
Section 5.3. Sales and Miscellaneous Taxes...................19
Section 5.4. Investigation by Buyer..........................19
Section 5.5. Seller Assistance...............................19
Section 5.6. Employees and Employee Benefit Plans............19
Section 5.7. Notice to Vendors and Customers.................20
Section 5.8. Post-Closing Operations.........................20
Section 5.9. Delivery of Property Received After Closing.....22
Section 5.10. Competition.....................................22
Section 5.11. Confidentiality.................................23
Section 5.12. Sales Representatives...........................24
Section 5.13. Slow Moving Inventory...........................24
Section 5.14. License of "Cornell-Dubilier" Name and Logo.....24
Section 5.15. Sales Representative Commissions................25
ARTICLE 6 - CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER...................25
Section 6.1. Representations and Warranties True at Closing;
Investigation...................................25
Section 6.2. Performance.....................................25
Section 6.3. Seller's Certificate............................25
Section 6.4. No Adverse Changes..............................25
Section 6.5. Litigation......................................25
Section 6.6. Opinion of Counsel for Seller...................26
Section 6.7. Necessary Consents; Notices.....................26
Section 6.8. Board Approval..................................26
Section 6.9. Financing.......................................26
Section 6.10. Employment Agreements...........................26
Section 6.11. Proceedings Satisfactory........................26
Section 6.12. Failure of Conditions...........................26
ARTICLE 7 - CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER..................27
Section 7.1. Representations and Warranties True at Closing..27
Section 7.2. Performance.....................................27
Section 7.3. Certificate of Buyer............................27
Section 7.4. Litigation......................................27
Section 7.5. Proceedings Satisfactory........................27
Section 7.6. Board Approval..................................27
Section 7.7. Opinion of Counsel for Buyer....................28
Section 7.8 Failure of Conditions...........................28
ARTICLE 8 - INDEMNIFICATION................................................28
Section 8.1. Indemnification by Seller.......................28
Section 8.2. Indemnification by Buyer........................29
Section 8.3. Environmental Liabilities.......................30
Section 8.4. Limitations on Indemnification..................30
Section 8.5. Third Party Claims..............................30
Section 8.6. Claims by Indemnified Party.....................32
ARTICLE 9 - TERMINATION....................................................32
Section 9.1. Termination by Mutual Consent...................32
Section 9.2. Termination Based Upon Failure of Conditions....32
ARTICLE 10 - GENERAL.......................................................32
Section 10.1. Risk of Loss....................................32
Section 10.2. Application/Survival of Representations,
Warranties and Covenants........................32
Section 10.3. Binding Effect; Benefits; Assignment............32
Section 10.4. Knowledge; Definition of "Ordinary and Usual
Course".........................................33
Section 10.5. Notices.........................................33
Section 10.6. Counterparts....................................34
Section 10.7. Expenses........................................34
Section 10.8. Entire Agreement................................34
Section 10.9. Amendment and Waiver............................34
Section 10.10. Severability....................................35
Section 10.11. Headings........................................35
Section 10.12. Governing Law...................................35
Section 10.13. Choice of Forum, Venue, and Consent to
Jurisdiction....................................35
EXHIBITS
Exhibit A Equipment and Other Tangible Personal Property
Exhibit B Contracts, Agreements, Leases and Commitments
Exhibit C Trademarks, Trade Names, Service Marks, Logos and Patents
Exhibit D Transferable Permits and Licenses
Exhibit E Allocation of Purchase Price to Particular Assets
Exhibit F Deposit Agreement
Exhibit G Seller's Certificate
Exhibit H Opinion of Counsel for Seller
Exhibit I Buyers' Certificate
Exhibit J Opinion of Counsel for Buyer
DISCLOSURE SCHEDULES
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Schedule 1.5-1 Order Backlog
Schedule 1.5-2 Other Obligations Being Assumed by Buyer
Schedule 1.5-3 Express Product Warranties
Schedule 1.5-4 Purchase Orders to be Assumed by Buyer
Schedule 2.1 Foreign Qualifications
Schedule 2.2 Financial Statements
Schedule 2.3 Undisclosed Liabilities
Schedule 2.4 Unfiled Tax Returns
Schedule 2.5 Absence of Certain Changes
Schedule 2.6-1 Employee Relations
Schedule 2.6-2 Labor Actions
Schedule 2.6-3 Employee Manuals
Schedule 2.7 Employee Benefit Plans
Schedule 2.8 Leased Property
Schedule 2.8-1 Property Owned or Leased But Not in the Possession of the
Seller or CD Mexico
Schedule 2.8-2 Assets Which Do Not Relate Exclusively to the Business
Schedule 2.9 Litigation, Claims and Governmental Action
Schedule 2.10 Conflicts with Other Instruments
Schedule 2.12 Liens and Encumbrances
Schedule 2.13 Material Contracts (Including List of Customers and
Suppliers)
Schedule 2.13-1 Terms and Conditions of Sale
Schedule 2.14 Intellectual Property
Schedule 2.15 Environmental Matters
Schedule 2.17 Customers and Supplies
Schedule 2.18 Product Liabilities and Warranties
Schedule 2.19 Permits and Licenses
Schedule 2.20 Compliance with Laws
Schedule 2.21 Seller Relationships
Schedule 2.22 Customs and Port of Entry Registrations
Schedule 2.24 Sales Representatives
Schedule 5.8 Description of Standard Man Hours for Completion of Work
in Process
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made as of July 24,
1998, by and between COMMUNICATIONS INSTRUMENTS, INC., a North Carolina
corporation ("Buyer"), and CORNELL-DUBILIER ELECTRONICS, INC. ("Seller"), a
Delaware corporation.
P R E A M B L E
A. Seller currently manufactures, directly or through its controlled
subsidiary C. D. Electronics De Mexico, S.A. De C.V., a Mexican corporation ("CD
Mexico"), and sells relays (hereinafter "the Relays"). Seller owns certain raw
materials, equipment, fixtures, inventories and other assets used in the
manufacture of the Relays, substantially all of which are located at CD Mexico
in Mexicali, Mexico and sells same throughout the United States and elsewhere
(the design, manufacturing, marketing, sale and distribution of Relays
hereinafter referred to as the "Business" or the "Seller Business").
B. Seller is also engaged in other business activities, including
through manufacturing and sales activities at CD Mexico, and the Business is a
small part of the overall business activities of Seller and CD Mexico.
C. Buyer is willing to purchase, and Seller is willing to sell to
Buyer, the assets of the Business, and Buyer is willing to assume certain
specific liabilities of the Business described below, all upon the terms and
subject to the conditions set forth in this Agreement.
NOW, THEREFORE, the parties agree as follows:
ARTICLE 1
SALE AND PURCHASE OF ASSETS
Section 1.1. Agreement to Sell Assets. On the terms and subject to the
conditions of this Agreement, Seller shall sell, convey, assign, transfer and
deliver to Buyer, and Buyer shall purchase and acquire from Seller, all of
Seller's right, title and interest in and to all of the assets and property of
the Business (collectively, the "Purchased Assets") as follows:
(a) all machinery, equipment, tooling, dies, tools, jigs,
moldings, presses, benches, furniture and fixtures, computer terminals,
office equipment, vehicles, spare parts for the foregoing, and all
other tangible personal property of Seller, wherever located, which
relate exclusively to the Business, including without limitation those
items listed on Exhibit A to this Agreement together with all express
and implied warranties by the manufacturers or sellers thereof, and all
maintenance records, brochures, catalogues and other documents relating
thereto or to the installation or functioning thereof;
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(b) all inventories (except Slow Moving Inventory as defined
in Section 1.2(b)) of raw materials, parts, sub-assemblies,
work-in-process, finished goods (including all inventories consigned to
dealers, sales representatives, vendors and others, or in transit),
materials and supplies, wherever located, which relate exclusively to
the Business;
(c) all security and other deposits made by Seller, all
credits due and owing to Seller, and all prepayments made to Seller by
customers for orders which are not shipped before Closing (i.e.: back
orders) which relate exclusively to the Business;
(d) all of Seller's right, title and interest in and to all
contracts (including exclusive supply contracts), agreements, leases,
licenses and commitments and any related security instruments or
agreements, including without limitation those identified on Exhibit B
to this Agreement, relating exclusively to the Business;
(e) all of the trademarks, trade names, service marks, and
logos and applications therefore, relating exclusively to the Business
and listed on Exhibit C, along with associated goodwill and all rights
and interests of Seller therein, relating exclusively to the Business,
all patents and patent applications listed on Exhibit C, along with
associated goodwill and all rights and interests of Seller therein,
relating exclusively to the Business, all know-how and trade secrets
used or owned by Seller and relating exclusively to the Business, and
all drawings, patterns, prints, test reports, engineering designs,
assembly instructions, operations, and other technical data and
documentation, and all know-how, trade secrets and other intellectual
property not otherwise set forth owned by Seller and relating
exclusively to the Business; provided, Seller is not selling and Buyer
is not purchasing the name "Cornell-Dubilier" (the "Intellectual
Property");
(f) all of the following, in tangible form or as computer
data, relating exclusively to the Business: records, customer and
supplier lists, pertinent payroll information and summary of relevant
information of each employee, product information, product drawings,
production documentation, material specifications, equipment lists,
formulae, patterns, specifications, drawings, plans, reports, data,
notes, correspondence, contracts, labels, catalogues, brochures, art
work, photographs, advertising materials, showroom models and displays,
marketing and production literature, files and other records and
documents, including the books of account, ledgers and other financial
records of Seller, but excluding Seller's corporate records and tax
records;
(g) to the extent transferrable, all permits, licenses,
orders, franchises and approvals maintained by Seller, relating
exclusively to the Business, including without limitation those
identified on Exhibit D to this Agreement;
(h) all choses in action, claims, causes or rights of action
and intangible property rights of Seller relating exclusively to the
Business, including without limitation restrictive covenants,
confidentiality obligations and similar obligations of present and
former employees;
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(i) the goodwill of Seller relating exclusively to the
Business.
The Purchased Assets shall be transferred to Buyer free and clear of
any and all claims, liens, security interests, encumbrances, charges,
obligations and other restrictions, other than Permitted Encumbrances. For
purposes of this Agreement, "Permitted Encumbrances" shall mean liens for
current taxes that are not yet due and payable.
Section 1.2. Excluded Assets. Seller shall not sell and convey to
Buyer, and Buyer shall not acquire any right or title to any of the following
assets:
(a) All of Seller's cash, tax refunds, insurance claims, real
estate leases, employee benefit plans, and accounts receivable of
Seller's Business for goods actually shipped before the Closing Date.
(b) All Slow Moving Inventory (which will be sold to Buyer
pursuant to Section 5.13). "Slow Moving Inventory" means all inventory
described in Section 1.1(b) which is not projected for use within two
(2) years after the date of this Agreement.
(c) All of the Seller's right, title and interest in, to and
under this Agreement.
Section 1.3. Total Consideration. The total consideration to be paid
by Buyer to Seller for the Purchased Assets and the covenants of Seller in this
Agreement shall be as follows (the "Purchase Price"):
(a) Payment by Buyer of the "Purchase Price" (as defined in
this Agreement);
(b) Assumption by Buyer of the Assumed Liabilities (as defined
in this Agreement).
Section 1.4. Purchase Price, Purchase Price Adjustment.
(a) The Purchase Price for all of the Purchased Assets shall
equal the sum of (i) the original cost less all accumulated
depreciation for those Purchased Assets under Section 1.1(a) (except
for certain assets described in Exhibit A for which Buyer will pay the
fair market value set forth thereon) plus (ii) the lesser of cost or
fair market value for those Purchased Assets under Section 1.1 (b)
(adjusted in the case of work in process to exclude all costs except
raw materials), all according to United States generally accepted
accounting principles, applied on a consistent basis with prior periods
("GAAP"), as of the Closing Date and established pursuant to Section
1.4 (b) (the "Purchase Price").
(b) Buyer shall pay at the Closing Eight Hundred Ninety-One
Thousand Six Hundred Sixty Dollars ($891,660.00), which is based on
Exhibits A and E (the "Pre-Closing Value"). The difference between the
Purchase Price and the Pre-Closing Value shall be paid
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by Seller or Buyer, as the case may be, within fifteen (15) days after
the Purchase Price is established. Within fifteen (15) days after the
Closing, Seller shall deliver to Buyer a balance sheet in accordance
with GAAP setting forth its statement of the Purchase Price. Buyer may
elect within fifteen (15) days thereafter to accept such Purchase Price
provided by Seller, which shall then be deemed to be the Purchase
Price, or to have Seller's financial records reviewed or audited, (as
selected by Buyer). Such review or audit shall be performed within
ninety (90) days after the Closing Date. If the Purchase Price
established pursuant to such review or audit is more than five percent
(5%) above or below the Purchase Price delivered by Seller, the
Purchase Price for purposes of this Agreement shall be that established
pursuant to such review or audit. Such review or audit shall be
performed by Deloitte & Touche or another accounting firm acceptable to
Seller and Buyer and shall be performed in accordance with GAAP. If the
Purchase Price established pursuant to such review or audit is more
than five percent (5%) below the Purchase Price delivered by Seller,
Seller shall pay the costs and fees of the accounting firm (otherwise
Buyer will pay those costs and fees). Seller and CD Mexico shall
provide reasonable information to Buyer in connection with its review
of the balance sheet delivered by Seller and its analysis of the
Purchase Price delivered by Seller, and shall also provide reasonable
assistance to the accounting firm in such time frame to enable the
completion of the audit or review within such ninety (90) day period.
All payments shall be by wire transfer of immediately available funds
in accordance with wire transfer instructions.
Section 1.5. Assumption of Certain Liabilities; Other Liabilities
Not Assumed.
(a) Buyer assumes no liabilities or obligations of Seller,
except as set forth in this Section 1.5.
(b) Upon the terms and subject to the conditions set forth in
this Agreement, on the Closing Date, Seller shall assign and Buyer
shall assume the following rights, liabilities and obligations of
Seller ("the Assumed Liabilities"):
(i) Buyer will assume all rights and obligations of
Seller to deliver the order backlog of the Business at prices
agreed to by Seller and its customers before Closing, said
backlog to be specifically determined at Closing and to be
identified in Schedule 1.5-1. It is understood by the parties
that any invoices relating to the Business issued after the
Closing Date shall be the property of Buyer to the extent they
relate to the Business.
(ii) Buyer will assume all rights and liabilities and
obligations of Seller arising with respect to periods from and
after the Closing Date under the contracts, agreements or
understandings of Seller to the extent relating to the
Business which Buyer has identified in Schedule 1.5-2.
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(iii) Buyer will assume for a period of twenty (24)
months after the Closing Date all rights and obligations of
Seller to honor all express product warranties given by Seller
(except no product liability or tort claims are being assumed)
on the Relays shipped by Seller prior to the Closing Date. The
last Relays shipped before the Closing Date shall be
identified by the last sequential date code or other
identifying number for each product series and agreed to in
writing thirty (30) days after the Closing Date. In addition,
all of the Seller's express warranties given by Seller on the
Relays are set forth in Schedule 1.5-3. Buyer does not,
however, assume any liabilities or obligations for any
incidental, consequential, special or punitive damages to
anyone (including without limitation customers of Seller)
arising out of or relating to such Relays. For each item
returned to Buyer pursuant to Buyer's undertaking under this
subparagraph 1.5(b)(iii), Buyer shall: (1) reasonably
determine that the claimed defect is one covered by a
warranty; (2) maintain a log of repairs and replacements; and
(3) notify Seller of said repairs and replacements. Without
limiting Buyer's rights, Seller shall reimburse Buyer within
thirty (30) days for the repairs and replacements performed by
Buyer pursuant to this section at Buyer's then standard costs
for said repairs or replacement of the item(s); provided, no
reimbursement shall be required until the total costs for said
repairs and replacements exceeds Ten Thousand Dollars
($10,000.00) in the aggregate (and then reimbursement shall
apply for the full amount of all repairs and replacements
starting from $0); and provided, further, that reimbursable
repair costs will not exceed the list price (plus all
reasonable shipping, insurance, duties and related actual out
of pocket costs) at which an applicable replacement Relay is
then sold by Buyer to its customers. To the extent repairs and
replacements under this section exceed $50,000 in the
aggregate, Seller may request that the parties shall discuss
alternative methods for resolving the defects; provided, Buyer
and its business must be protected from its obligations and
liabilities and any resolution must not adversely effect
Buyer's business activities or prospects.
(c) Upon the terms and subject to the conditions set forth in
this Agreement, on the Closing Date, Buyer shall assume to the extent
assignable, those vendor contracts and such other contractual
obligations of Seller set forth on Schedule 1.5-4, excluding the
payables for goods received by Seller pursuant to said vendor contracts
as of and before the Closing Date; provided, Seller will pay according
to the terms of such contracts for all such contracts existing at
Closing and Buyer will reimburse Seller within ten (10) days after
written notice from Seller (with information on the contract paid, to
whom paid, and the amount paid).
(d) Notwithstanding anything in this subparagraph 1.5 to the
contrary, Buyer does not assume any service contracts for the
maintenance of Seller's equipment; agreements for the storage of any of
Seller's assets; agreements to use any representatives, distributors,
or other sales agents of Seller; or any other of Seller's obligations
unless expressly identified in this Agreement and shown in a schedule
attached hereto.
5
(e) Except for the liabilities expressly assumed in this
Section 1.5, Buyer shall not assume or be obligated to pay, perform or
discharge any liability, obligation, debt, charge or expense of Seller
of any kind, description or character, whether accrued, absolute,
contingent or otherwise, and whether or not disclosed to Buyer or
otherwise. Without limiting the generality of the foregoing, and
notwithstanding anything to the contrary contained in this Agreement,
Buyer shall not assume or be obligated to pay, perform or discharge
(except as expressly set forth in this Section 1.5) any liability,
obligation, debt, charge or expense of Seller, even if imposed upon
Buyer as a successor to Seller, with respect to any action, suit,
proceeding or claim arising out of or relating to any event occurring,
or with respect to any cause of action arising, before the Closing
Date, whether or not asserted before or after the Closing Date,
including without limitation any such liability, obligation, debt,
charge or expense related to: taxes; the hiring, employment or
termination of employees of Seller (including without limitation
termination and severance pay, and accrued benefits and compensation);
Employee Benefit Plans (as defined in Section 2.7 below) or other
employee benefits, environmental matters; agreements with sales
representatives; obligations or policies; judgments; product warranty
claims; product liability claims; and contractual claims. Seller shall
be liable for all claims (except for warranty claims less than $10,000
in the aggregate, pursuant to Section 1.5(b) (iii)) arising from Relays
shipped by Seller on or before the Closing Date and Seller shall be
entitled to receive payment from its customers for such shipped Relays.
Seller shall be liable for all costs and expenses relating to or
arising from the presence of any Hazardous Material (defined below)
present before or after the Closing Date at, in or under any real
property now or previously owned, leased or used by Seller (including,
without limitation, the Premises), and for any violations of
Environmental Laws by Seller, and Buyer reserves all of its rights,
including those under CERCLA (defined below), to seek reimbursement of
any such costs or expenses; provided, however, that Buyer shall not be
reimbursed (and Seller shall have no liability) for damages, costs and
liabilities directly caused by and applicable to the Buyer's negligence
or the negligence of any employee or agent of the Buyer.
Section 1.6. Transfer of Title. All right, title and interest of all
Purchased Assets shall transfer to and vest in Buyer as of the Closing Date.
Section 1.7. Allocation of Consideration. The Purchase Price has been
agreed upon by the parties and the values assigned to the various assets which
constitute the Purchased Assets and to the covenant not to compete are listed on
Exhibit E attached hereto. The parties agree to furnish each other and the
Internal Revenue Service with such applicable information as may be required by
Section 1060 of the Internal Revenue Code or the Regulations thereunder and to
cooperate in the completion and timely filing of IRS Form 8594 (Asset
Acquisition Statement).
ARTICLE 2
REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER
Seller represents, warrants and covenants to Buyer as follows:
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Section 2.1. Organization and Standing. Seller is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware with its principal place of business at Wayne, New Jersey, and CD
Mexico is a corporation duly organized, validly existing, and in good standing
under the laws of Mexico. Seller and CD Mexico each have all requisite corporate
power and authority to own, lease and operate their respective properties now
owned or leased by them and to carry on the Business as presently conducted.
Neither the character of the Purchased Assets nor the nature of the Business
transacted by the Seller make the licensing or qualification of Seller as a
corporation necessary in any state or jurisdiction other than those states and
jurisdictions identified on Schedule 2.1 and Seller is duly qualified to do
business and in good standing as a corporation in each of the jurisdictions
identified on Schedule 2.1.
Section 2.2. Financial Statements. A copy of the statement of income,
of the Business as of and for the fiscal years ended August 31, 1996, and August
31,1997 (the "Financial Statements") has been provided by Seller to Buyer. The
Financial Statements are in accordance with the books and records of Seller,
have been prepared in conformity with GAAP applied on a basis consistent
throughout such periods and consistent with prior periods, and, except as set
forth in Schedule 2.2, present fairly the financial condition of the Business as
of the dates indicated and the results of operations and changes in financial
position for the periods then ended. Seller has also provided to Buyer copies of
the interim statement of income of the Business as of and for each month-end
during the current fiscal year to and including June 30, 1998, in each case
prepared internally by Seller (collectively, the "Interim Financial
Statements"). The Interim Financial Statements are in accordance with the books
and records of Seller, have been prepared in conformity with GAAP applied on a
basis consistent with similar statements for prior periods, and, except as set
forth in Schedule 2.2, present fairly the financial condition of the Business as
of the dates indicated and its results of operations and changes in financial
position for the periods then ended. The Financial Statements and Interim
Financial Statements accurately reflect all transactions and obligations between
Seller and CD Mexico relating to the Business.
Section 2.3. Absence of Undisclosed Liabilities, Accounts Payable.
Except as expressly disclosed or reserved against on the most recent balance
sheet included in the Interim Financial Statements or as specifically set forth
in Schedule 2.3, neither Seller nor CD Mexico have any debts, liabilities or
obligations of any material nature relating to or arising out of the Business,
whether accrued, absolute, contingent or otherwise, whether due or to become
due, including without limitation guarantees, liabilities or obligations on
account of taxes, other governmental charges, duties, penalties, interest or
fines, other than current liabilities for trade payables incurred in the
ordinary and usual course of business since the date of the most recent balance
sheet included in the Interim Financial Statements.
Section 2.4. Taxes. Except as disclosed in Schedule 2.4: (i) Seller and
CD Mexico have filed all federal, state, local and foreign tax returns when and
as Seller or CD Mexico has been or is required by law to file and such returns
are true and correct in all material respects; (ii) Seller and CD Mexico have
paid, and will pay for all periods ending on or before the Closing Date and the
Final Delivery Date, respectively, all taxes and assessments when and as the
same shall be due and
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payable, including without limitation income, excise, value added, unemployment,
social security, occupation, franchise, property, sales and use taxes and all
penalties and interest in respect thereof; (iii) Seller and CD Mexico have
withheld and paid over, and will withhold and pay over for all periods ending on
or before the Closing Date and the Final Delivery Date, respectively, all
federal, state, local and foreign withholdings required by law; and (iv) no tax
incentive, abatement or other similar credit exists which in any way relates to
the Purchased Assets, the Business, or the employees of Seller or CD Mexico
which contains provisions for the repayment of any tax benefit.
Section 2.5. Absence of Certain Changes or Events. Except as disclosed
in Schedule 2.5, since August 31, 1997: (i) the Business has been conducted in
the ordinary and usual course; and (ii) Seller has maintained complete records
and books of account for the Business in a manner that fairly and accurately
reflects Seller's transactions, assets and liabilities in accordance with GAAP.
Except as set forth in Schedule 2.5, since August 31, 1997, there has been no
adverse change in Seller's condition, financial or otherwise, the Purchased
Assets or in the Business which is not reflected in the Interim Financial
Statements.
Section 2.6. Employee Relations. Seller has identified on Schedule
2.6-1 all of the employees of CD Mexico engaged exclusively in the Business
("Employees") which for each listed individual gives his or her salary or wage
rate and fringe benefits and, for each Employee, his or her position. All
Employees are employed by CD Mexico. Except as disclosed in Schedule 2.6-2: (i)
there is not now in existence or threatened, nor has there been at any time,
since January 1, 1995, any strike, slowdown, work stoppage, or organizational
effort at CD Mexico, its premises at Blvd. Benito Juarez KM 5.5, Mexicali, Baja
CFA, Mexico (the "Premises") or relating to the Business; (ii) there is not now
in existence or threatened, nor has there been at any time in the prior four
years any grievance, arbitration, administrative hearing, claim of unfair labor
practice, wrongful discharge, employment discrimination or sexual harassment, or
other employment dispute of any nature, pending or threatened, against Seller or
CD Mexico by any Employees; (iii) CD Mexico is, and during all applicable
limitation periods has been, in compliance with all applicable federal, state,
local and foreign laws, executive orders and regulations respecting employment
and employment practices, terms and conditions of employment, occupational
health and safety, wages and hours; (iv) CD Mexico is not a party to any written
or oral, express or implied, collective bargaining agreement, union agreement or
other contract, agreement or arrangement with respect to the Business with any
labor union or any other similar arrangement that is not terminable at will by
CD Mexico without cost, liability or penalty and Seller has no knowledge of any
current union organizing activity; (v) CD Mexico is not a party to any written
or oral, express or implied, contract, agreement or arrangement with any of CD
Mexico's present or former officers, employees or consultants engaged in the
Business with respect to length, duration or conditions of employment (or the
termination thereof), salaries, bonuses, percentage compensation, deferred
compensation or any other form of remuneration which is not terminable at will
by CD Mexico without cost, liability or penalty; and (vi) there is no pending or
threatened claim against CD Mexico for violation of any contract, agreement or
arrangement described in (iv) or (v) above, nor is there any factual basis upon
which a claim could be sustained. A copy of each employee policy manual and
handbook provided to or governing the Employees is attached as Schedule 2.6-3.
No Employee of the Business has
8
notified CD Mexico or Seller of an intention to terminate employment (including,
without limitation, as a result of the transaction contemplated in this
Agreement) with CD Mexico.
Section 2.7. Employee Benefit Plans.
(a) Set forth in Schedule 2.7 is an accurate and complete list
of all Employee Benefit Plans (as defined below) established,
maintained or contributed to by Seller or CD Mexico applicable to any
Employees and former employees of the Business. The term "Employee
Benefit Plan" shall include all employee benefit plans within the
meaning of Section 3 (3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA") and any Mexican law or regulation
(including, without limitation, the Mexican Social Security law and the
Mexican Retirement Fund System (SAR)), whether or not any such Employee
Benefit Plans are otherwise exempt from the provisions of ERISA or any
Mexican law, and also shall include, without limitation, any
nonqualified deferred compensation plans, employee benefit plans for
former employees, any employment arrangement, and any other pension,
stock, vacation, disability or other benefit plan, policy or
arrangement, whether or not covered by ERISA or any Mexican law,
whether written or oral, whether funded or unfunded, covering Employees
or former employees of the Seller.
(b) Seller has delivered or caused to be delivered or made
available to Buyer or its counsel true and complete copies of (i) all
Employee Benefit Plans established, maintained or contributed to by the
Seller or CD Mexico relating to the Business, together with all
amendments thereto including those which will become effective at a
later date, and (ii) the most recent Summary Plan Description (plus all
subsequent Summaries of Material Modification) for each such Employee
Benefit Plan.
Section 2.8. Owned and Leased Personal Property; Real Property.
Schedule 2.8 identifies all assets relating exclusively to the Business which
are leased by Seller or CD Mexico (collectively the "Leased Property"). Except
as disclosed on Schedule 2.8, neither Seller nor any other party is in default
under the terms of any lease with respect to Leased Property, and all such
leases are in full force and effect. Schedule 2.8 includes an attached copy of
each such written lease or a description of each such oral lease. Schedule 2.8-1
describes all tangible personal property that Seller or CD Mexico uses or
possesses with respect to the Business but does not own or lease, and all
personal property that Seller owns or leases but does not possess and, in the
latter case, gives the location of the property. All assets relating exclusively
to the Business which Seller owns or which Seller or CD Mexico lease is, and
will be on the Closing Date, in possession of CD Mexico at the Premises or at
the location specified on Schedule 2.8-1. Except as disclosed on Schedule 2.8 or
Schedule 2.8-1, all of the Purchased Assets and all Leased Property are in
good-operating condition and repair and, in the case of inventory, in good,
salable condition. Except as discussed in the Side Agreement between the
parties, dated July 24, 1998, which is incorporated herein by reference, all
inventory, work in process and raw materials meet, and have been tested in
accordance with, the specifications and procedures used by CD Mexico immediately
prior to the date of this Agreement.
9
Except as set forth on Schedule 2.8-2, no tangible or intangible
property other than the Purchased Assets and the Leased Property will be needed
by Buyer to manufacture and sell the Relays after the Closing in the manner in
which the Business was operated immediately prior to the Closing.
Schedule 2.8-2, attached hereto, describes assets which do not relate
exclusively to the Business, but are used in connection with and material to the
Business.
Except as identified on Schedule 2.8 the Business is not operated from
any real property or premises and does not now and has not during the preceding
twelve (12) months operated from any real property or premises, other than the
Premises and the locations specified on Schedule 2.8.
Section 2.9. Litigation. Except as set forth in Schedule 2.9, there is
no suit, action, proceeding (legal, administrative, arbitration or otherwise),
claim, investigation or inquiry (by an administrative agency, governmental body
or otherwise) pending or, to the knowledge of Seller, threatened against Seller
or CD Mexico which (i) relates directly to the Business or the Purchased Assets
(excluding those which relate generally to Seller or CD Mexico and their assets,
but do not or will not materially adversely effect the Purchased Assets or the
Business) or (ii) prevents or might impair the transaction contemplated by this
Agreement. Except for the claim referenced in Schedule 2.9, Seller knows of no
factual basis upon which any such suit, action, proceeding, claim, investigation
or inquiry could reasonably likely be sustained. There is no outstanding
judgment, order, writ, injunction or decree of any court, administrative agency,
governmental body or arbitration tribunal against Seller or its Affiliates and
affecting the Purchased Assets or business prospects of the Business, except as
disclosed in Schedule 2.9.
Section 2.10. No Conflict with Other Instruments or Proceedings. Except
as disclosed in Schedule 2.10, the execution and delivery of this Agreement and
the consummation of the transactions contemplated by this Agreement will not:
(i) result in the breach of any of the terms or conditions of, or constitute a
default under, the respective Articles of Incorporation or the Bylaws of Seller
or CD Mexico or any contract, agreement, lease, commitment, indenture, mortgage,
pledge, note, bond, license or other instrument or obligation of Seller or CD
Mexico respectively and to which Seller or CD Mexico is now a party or by which
Seller or CD Mexico or any of Seller's or CD Mexico's properties or assets may
be bound or affected; or (ii) violate any law, rule or regulation of any
administrative agency or governmental body or any order, writ, injunction or
decree of any court, administrative agency or governmental body. All consents,
approvals or authorizations of, or declarations, filings or registrations with,
any third parties or governmental or regulatory authorities required of Seller
or CD Mexico in connection with the execution, delivery, and performance of this
Agreement and the consummation of the transactions contemplated by this
Agreement are set forth in Schedule 2.10. Seller or CD Mexico shall obtain or
make, as applicable, all such consents, approvals, authorizations, declaration,
filings and registrations before the Closing Date.
Section 2.11. Authorization and Enforceability; Power of Attorney.
Seller has full capacity, power and authority to enter into this Agreement and
all ancillary agreements and to carry out the
10
transactions contemplated by this Agreement, and this Agreement and all
ancillary agreements are binding upon Seller and are enforceable against Seller
in accordance with their respective terms, subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the rights and
remedies of creditors as well as general principles of equity (regardless of
whether such enforceability in considered in an action at law or in a suit in
equity). Neither Seller nor CD Mexico has given any power of attorney or
equivalent authority which relate to or encompass the Business or Purchased
Assets to any person (except officers of CDE and CD Mexico or attorneys
representing CD Mexico), firm or corporation for any purpose whatsoever.
Section 2.12. Ownership of Assets. Seller owns the Purchased Assets
free and clear of all liens, charges, pledges, security interests, encumbrances
or other claims whatsoever, save and except Permitted Encumbrances and those
liens, charges, pledges, security interests and encumbrances existing on the
date hereof as set forth in Schedule 2.12, all of which (other than Permitted
Encumbrances) shall be discharged by Seller at or before the Closing.
Section 2.13. Material Contracts; Terms of Sale. Schedule 2.13 contains
a list of (i) all customers of the Business; (ii) the ten (10) largest suppliers
of the Business, by dollar volume of purchases; (iii) a list of all other
contracts (including without limitation product sales or service documentation),
leases and other obligations of Seller relating exclusively to the Business
which involve amounts greater than $10,000 or with a term of greater than two
(2) years; and (iv) any contract relating to the Business out of the ordinary
and usual course of business (collectively, the "Material Contracts"). Except as
disclosed in Schedule 2.13, all of the Material Contracts are valid and
enforceable in accordance with their terms, subject to bankruptcy, insolvency,
reorganization and other similar laws affecting the rights and remedies of
creditors as well as general principles of equity, and Seller and CD Mexico and
all other parties to each of the Material Contracts have performed in all
respects all obligations required to be performed prior to the date hereof in
connection therewith. Except as disclosed in Schedule 2.13, neither Seller nor
any other party is in default or in arrears (except payment obligations of any
such party which are not more than thirty (30) days past due) under the terms of
any of the Material Contracts, and no condition exists or event has occurred
that, with the giving of notice or the lapse of time or both, would constitute a
default under any of them. Except for Buyer, no person, firm or corporation has
any written or oral agreement, option, understanding or commitment, or any right
or privilege capable of becoming such, for the purchase from Seller or CD Mexico
of any of the Purchased Assets (except the sale of inventory in the ordinary
course of business). Schedule 2.13-1, attached hereto, includes Seller's
standard terms of sale for the sale and servicing of all Relays. All contracts,
agreements, and understandings with suppliers to the Business of raw materials,
parts, sub-assemblies or finished Relays are on a purchase order by purchase
order basis and, except for existing purchase orders, are terminable at will by
Seller.
Section 2.14. Intellectual Property. Schedule 2.14 describes all
patents, patent applications, inventions upon which patent applications have not
yet been filed, service marks, trade names, trademarks, logos and registrations
and applications relating thereto, copyrighted works and copyright registrations
and applications that Seller or any Affiliate of Seller owns, possesses or uses
relating to the Business, and, unless otherwise indicated in Schedule 2.14,
Buyer will own the entire
11
right, title and interest in and to the same on the Closing Date, free and clear
of all claims, liens, licenses, sublicenses, charges or encumbrances. There is
no infringement or unlawful use by any person or entity of any such patents,
service marks, trade names, trademarks, logos or copyrights. Except as set forth
in Schedule 2.14, neither Seller nor any of Seller's Affiliates have infringed
or unlawfully used the patents, service marks, trade names, trademarks, logos,
copyrights or other proprietary rights of any other person or entity. Schedule
2.14 also sets forth a list of all licenses (including without limitation
relating to technology, know-how or procedures) that were granted to Seller or
its Affiliates by others or to others by Seller or its Affiliates relating to
the Business. No patents, patent applications, service marks, trade names,
trademarks, logos, trademark registrations or applications, copyrighted works,
copyright registrations or applications or grants of licenses set forth in
Schedule 2.14 are subject to any pending or, to the knowledge of Seller,
threatened, claim or challenge, and, to the knowledge of Seller, there is no
valid basis for sustaining any claim or challenge. The manufacturing and
engineering drawings, process sheets, specifications, bills of material, trade
secrets, "know how," and other like data of Seller or its Affiliates relating to
the Business are in such form and of such quality that Buyer can (assuming Buyer
is as capable as Seller), following the Closing, design, produce, manufacture,
assemble and sell the Relays and provide the services heretofore provided by the
Business in a manner that meets the applicable specifications and conforms with
the quality standards heretofore met by Seller and CD Mexico. Except for the
licenses and rights listed in Schedule 2.14, neither Seller nor its Affiliates
of Seller require a license or other proprietary right to operate the Business
or to manufacture or sell the Relays or perform any services associated with the
Purchased Assets or the Business.
Section 2.15. Environmental Matters. For purposes of this Section 2.15:
(i) "Seller" shall mean Seller, CD Mexico and each current, prior or subsequent
owner or operator of the Premises or any other location at which the Business
has been operated prior to the Closing Date; (ii) "Environmental Law" shall mean
any foreign, federal, state or local law (including common law), statute,
regulation, ordinance, published guideline or standard, or order, or agreement
or consent order to which Seller is or has been party, including a permit issued
pursuant to any of the foregoing, related to air quality, water quality, solid
waste management, hazardous or toxic substances or the protection of public
health, natural resources or the environment, including without limitation the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended and comparable foreign laws and regulations (collectively, "CERCLA");
and (iii) the term "Hazardous Material" shall mean any hazardous substances as
defined by CERCLA, petroleum or any petroleum derivative or by-product, and any
pollutant, contaminant, solid waste or hazardous or toxic waste or substance
which is defined or regulated as such by any Environmental Law.
(a) Except as set forth in Schedule 2.15, the Business and the
Purchased Assets are presently and at all times has been in compliance
with all applicable Environmental Laws;
(b) Except as set forth on Schedule 2.15, there are no writs,
injunctions, decrees, orders or judgments outstanding, and no lawsuits,
claims, or other proceedings pending or to the knowledge of Seller
threatened, relating to the ownership, use, maintenance or operation of
the Purchased Assets under any Environmental Law, nor is there any
agreement
12
or consent order to which the Business is a party in relation to any
environmental matter, nor is any such agreement or order necessary for
the continued compliance by the Business with any Environmental Law. In
addition, except as set forth in Schedule 2.15, there are no
investigations or inquiries pending or to the knowledge of Seller
threatened relating to the Business or the ownership, use, maintenance
or operation of the Purchased Assets under any Environmental Law; and
(c) Except as described on Schedule 2.15, the operations of
the Business or any employees, agents or contractors of Seller or any
Affiliate of Seller have not caused and will not cause: (i)
environmental contamination of any of the Purchased Assets; or (ii) any
other condition that could give rise to a claim against Buyer under any
Environmental Law. Except as described on Schedule 2.15, to the
knowledge of Seller, all such personal property is free of
environmental contamination.
Section 2.16. Brokers' Fees. Seller has not incurred any liability for
brokers' fees, finders' fees, agents' commissions, financial advisory fees or
other similar forms of compensation in connection with this Agreement or any
transaction contemplated by this Agreement.
Section 2.17. Customers and Suppliers. Except as set forth on Schedule
2.17, there has not been any material adverse change in the business
relationship of Seller or CD Mexico with any customer or supplier listed on
Schedule 2.13, nor, to the knowledge of Seller, could an adverse change be
reasonably anticipated as a result of the consummation of the transactions
contemplated by this Agreement. Except as disclosed in Schedule 2.17, all orders
and commitments relating to the Business and to be assumed by Buyer hereunder
were made in the ordinary and usual course of business. Except as disclosed on
Schedule 2.17, there are no pending or, to the knowledge of Seller threatened
claims against Seller or CD Mexico in excess of $2000 individually and $10,000
in the aggregate, to return Relays or to require repairs or replacement to
Relays sold or services rendered, by reason of alleged over shipments, defective
Relays or services or otherwise.
Section 2.18. Product Liabilities and Warranties. There are no express
or implied warranties or guaranties applicable to Relays sold by Seller or CD
Mexico, except as disclosed on Schedule 2.18. Except as disclosed on Schedule
2.18, there is no action, suit, proceeding or claim pending or, to the knowledge
of Seller, threatened against Seller or CD Mexico with respect to Relays sold or
services provided by Seller or CD Mexico under any warranty or guaranty, express
or implied, and, to the knowledge of Seller, there is no basis upon which any
claim is reasonably likely to be sustained. Schedule 2.18 also summarizes all
product liability and tort claims within the last five (5) years and all
warranty claims during the last three (3) years that have been asserted against
Seller or its Affiliates with respect to the Business or Relays sold or services
provided. All Relays being purchased by Buyer, pursuant to Section 1.1(b) or
hereafter as Slow Moving Inventory satisfy all express or implied warranties or
guaranties applicable to Relays sold by Seller or CD Mexico as of the date of
this Agreement.
Section 2.19. Permits and Licenses. All permits, licenses,
registrations, orders and other authority necessary or appropriate for Seller or
CD Mexico to operate the Purchased Assets and
13
Leased Property, to remove the Purchased Assets and Leased Property from Mexico
to the United States without restriction, duty, fee or tax to Buyer at the
Closing or anytime within twelve (12) months thereafter and to carry on the
Business as presently conducted are identified on Schedule 2.19, and are in full
force and effect (except as disclosed in Schedule 2.19), and have been complied
with by Seller and CD Mexico in all material respects. All fees and charges
incident to those permits, licenses, orders and approvals have been fully paid
and are current, and, to the knowledge of Seller, no suspension or cancellation
of any such permit, license, order, or approval has been threatened or is
reasonably likely to result by reason of the transactions contemplated by this
Agreement.
Section 2.20. Compliance with Law and Other Regulations. Except as set
forth on Schedule 2.20, Seller and CD Mexico are in material compliance with all
foreign, federal, state and local laws, statutes, regulations, ordinances,
policy, guideline and standard relating directly to the Business, the Relays,
the Purchased Assets and the Leased Property. Except as set forth on Schedule
2.20, neither Seller nor CD Mexico is subject to and, to Seller's knowledge,
neither Seller nor CD Mexico has been threatened with, any fine, penalty,
liability or disability as the result of a failure to comply with any
requirement of foreign, federal, state and local law, statute, regulation,
ordinance, policy, guideline or standard relating directly to the Business, the
Relays, the Purchased Assets, the Leased Property or any requirement of any
governmental body or agency having jurisdiction over Seller or CD Mexico and
which relates to the Business, the Relays, the Purchased Assets or the Leased
Property. There are no outstanding work orders relating to the Purchased Assets,
the Leased Property or the Business from or required by any police or fire
department, sanitation, health or factory authorities or from any foreign,
federal, state or local department or authority or any matters under discussion
with any such departments or authorities relating to work orders.
Section 2.21. Seller Relationships, Intercompany Agreements and
Transactions. Seller and CD Mexico are the only entities of Seller and its
Affiliates which are involved in the Business. Except as disclosed on Schedule
2.21, all Relays are manufactured by CD Mexico at the Premises and are all sold
to Seller. Seller sells all Relays to non-Affiliates. Schedule 2.21 also sets
forth a description of (i) all income and expenses allocated or charged to the
Business by the Seller or any Affiliate (defined below) of the Seller and (ii)
each agreement, contract and understanding between the Seller and Seller's
Affiliates which is material to the Business or which has resulted in or may
result in the payment of $25,000 thereunder. "Affiliate" means any person or
entity which now or hereafter directly or indirectly controls, or is under
common control with, or is controlled by, any party to this Agreement.
Section 2.22. Customs or Port-of-Entry Registrations. Each of the
specific Purchased Assets and each of the units of Leased Property which Buyer
is assuming which have been registered or duly reported to appropriate Mexican
customs officials or which have been listed with port-of-entry officials are so
designated on Schedule 2.22 with concomitant dates and numbers. All of the
Purchased Assets and each of the units of Leased Property which Buyer is
assuming which are required to have been registered, reported or listed with
Mexican government officials have been so registered, reported or listed. All
valuations of the Purchased Assets and each of the units of Leased Property
which Buyer is assuming were at all times, are now and will be in compliance
with
14
Mexican and U.S. laws and regulations. Seller and CD Mexico each have all
registrations, permits, licenses, orders and other authority necessary or
appropriate for the exportation of the Purchased Assets and each of the units of
Leased Property which Buyer is assuming to the United States, and such
registrations, permits, licenses, orders and authorizations are valid for at
least twelve (12) months after the Closing Date and are transferrable to Buyer
without governmental approval or consent.
Section 2.23. Accuracy of Statements. No representation or warranty
made by Seller in this Agreement, the disclosure schedules, or any statement,
certificate or schedule furnished, or to be furnished, to Buyer pursuant to this
Agreement, or in connection with the transactions contemplated by this
Agreement, contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact necessary to make the statements
contained therein not materially misleading. The foregoing representations,
warranties and covenants shall be deemed to be made by Seller and CD Mexico as
of the date of this Agreement, again as of the Closing Date and again as of the
Final Delivery Date.
Section 2.24. Representatives, Distributors and Sales Agents. Schedule
2.24 contains a complete list of representatives, distributors and sales agents
for the Business, together with commissions to become due to each for the order
backlog being transferred to the Buyer. All of those listed on Schedule 2.24 are
representatives, distributors or sales agents for Seller. Except for the
commissions set forth on Schedule 2.24, all commissions relating to the Business
and payable by Seller as of the date hereof are, and all commissions payable by
Seller as of the Closing Date shall have been paid by Seller. A form of
agreement with such representatives and sales agents of the Business has been
provided to Buyer, and represents in all material respects the terms of
agreement between Seller and the representatives and sales agents for the
Business.
ARTICLE 3
REPRESENTATIONS, WARRANTIES AND COVENANTS OF BUYER
Buyer represents, warrants and covenants to Seller as follows:
Section 3.1. Organization and Standing of Buyer. Buyer is a
corporation duly organized, validly existing and in good standing under the laws
of the State of North Carolina.
Section 3.2. Authorization and Enforceability. Buyer has full capacity,
power and authority to enter into this Agreement and to carry out the
transactions contemplated by this Agreement, and this Agreement and all
ancillary agreements are binding upon Buyer and are enforceable against Buyer in
accordance with their terms, subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the rights and remedies of creditors
as well as general principles of equity (regardless of whether such
enforceability in considered in an action at law or in a suit in equity).
15
Section 3.3. Brokers' Fees. Buyer has not incurred any liability for
brokers' fees, finders' fees, agents' commissions, financial advisory fees or
other similar forms of compensation in connection with this Agreement or any
transaction contemplated by this Agreement, except for a finder's fee to Donald
Dangott which the Buyer will pay.
Section 3.4. No Conflict with Other Instruments or Proceedings. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated by this Agreement will not : (i) result in the breach
of any of the terms or conditions of, or constitute a default under, the
Articles of Incorporation or the Bylaws of Buyer; or (ii) violate any law, rule
or regulation of any administrative agency or governmental body or any order,
writ, injunction or decree of any court, administrative agency or governmental
body. No consents, approvals, or authorizations of, or declarations, filings or
registrations with, any third parties or governmental or regulatory authorities
are required of Buyer in connection with the execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated by this
Agreement.
Section 3.5. Accuracy of Statements. No representation or warranty made
by Buyer in this Agreement, or any statement, certificate or schedule furnished,
or to be furnished, to Seller pursuant to this Agreement, or in connection with
the transactions contemplated by this Agreement, contains or will contain any
untrue statement of a material fact or omits or will omit to state a material
fact necessary to make the statements contained therein not misleading. The
foregoing representations, warranties and covenants shall be deemed to be made
as of the date of this Agreement, again as of the Closing Date.
ARTICLE 4
CLOSING
Section 4.1. Closing. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place in the offices of Parker, Poe,
Adams & Bernstein L.L.P., at 10:00 a.m., local time, on July 24, 1998, or at
such other place, time and date as the parties may agree (the "Closing Date").
Section 4.2. Closing Obligations of Seller. At the Closing, Seller
shall deliver to Buyer:
(a) Executed bills of sale, endorsements, assignments and such
other instruments of transfer as are sufficient, in the judgment of
Buyer and its counsel, to vest in Buyer ownership of the Purchased
Assets (as contemplated by this Agreement), free and clear of any and
all claims, liens, security interests, encumbrances, charges,
obligations and other restrictions, other than Permitted Encumbrances;
(b) All records and other documents to be acquired by Buyer
pursuant to this Agreement;
16
(c) The Seller's certificate described in Section 6.3 of this
Agreement;
(d) The opinion of Schoenberg, Fisher, Newman & Rosenberg,
counsel to Seller, as described in Section 6.6 of this Agreement;
(e) A certified copy of resolutions of Seller's Board of
Directors authorizing the consummation of the transactions contemplated
by this Agreement; and
(f) Physical possession of the tangible Purchased Assets
(except finished inventory) at the locations and as set forth on
Schedule 2.8. Physical possession of finished inventory shall be
transferred from Seller to Buyer at a location in the United States
agreed to by the parties.
In addition to the documents and other items specifically described above,
Seller shall execute and deliver other instruments at the Closing as described
in Articles 6 and 7 of this Agreement.
Section 4.3. Closing Obligations of Buyer. At the Closing, Buyer shall
deliver to Seller:
(a) The Pre-Closing Value, by wire transfer of immediately
available funds in accordance with wire transfer instructions provided
by Seller to Buyer; and
(b) The certificate of Buyer described in Section 7.3 of this
Agreement;
(c) A certified copy of resolutions of Buyer's Board of
Directors authorizing the consummation of the transactions contemplated
by this Agreement.
(d) The opinion of Parker, Poe, Adams & Bernstein LLP, counsel
to Buyer, as described in Section 7.7 of this Agreement;
In addition to the documents and other items specifically described above, Buyer
shall also execute and deliver other instruments at the Closing as described in
Articles 6 and 7 of this Agreement.
Section 4.4. Obligations of Final Delivery Date. On the Final Delivery
Date, the following transfers shall be made:
(a) Seller shall deliver physical possession in the United
States of any Remaining Assets and other assets of the Buyer.
Section 4.5. Further Documents or Necessary Action. Seller agree to
take all such further reasonable actions on or after the Closing Date and on or
after the Final Delivery Date as Buyer may deem to be reasonably necessary,
desirable or appropriate to effectuate the transactions contemplated in this
Agreement.
17
ARTICLE 5
COVENANTS
Seller agrees with Buyer, and Buyer agrees with Seller to the following
covenants, each of which shall survive the Closing Date pursuant to their terms:
Section 5.1. Conduct of Business. During the period from the date of
this Agreement to the Closing Date, Seller and CD Mexico shall act, and shall
conduct the Business, in the ordinary and usual course and maintain Seller's and
CD Mexico's records and books of account for the Business in a manner that
fairly and accurately reflects the transactions, assets, liabilities, income and
expense, in accordance with GAAP. Seller and CD Mexico shall maintain and
preserve intact the Business in accordance with past practices and sound
business practices, preserve the present goodwill of the Business with all
persons having business dealings with the Business, comply with all laws
applicable to Seller or CD Mexico, the Purchased Assets and the Business, and
continue to meet its obligations and liabilities. Without limiting the
foregoing, Seller agrees that from the date of this Agreement to the Closing
Date, Seller and CD Mexico shall not without the written consent of Buyer:
(a) entertain, enter into or continue any negotiations,
discussions or agreements with anyone other than Buyer contemplating or
respecting the acquisition by such other person or entity of all or
part of the Seller, CD Mexico, the Purchased Assets or the Business,
whatever the form such purchase transaction may contemplate;
(b) take any action that would interfere with or prevent
performance of this Agreement; and
(c) do or suffer to be done any act or event described in
Section 2.5 of this Agreement or otherwise engage in any activity or
enter into any transaction that would be inconsistent in any respect
with any of the representations, warranties or covenants of Seller set
forth in this Agreement, as if those representations, warranties and
covenants were made after the activity or transaction and all
references to the date of this Agreement were deemed to be the later
date.
Section 5.2. Access. During the period from the date of this Agreement
to the Closing Date, Seller shall give Buyer and its designated representatives
access, after reasonable prior notice from Buyer, to the buildings, offices,
records and any and all other records of the Seller or CD Mexico, for the
purpose of conducting an investigation of the Purchased Assets, the Leased
Property, litigation and all other matters relating to the Business; provided,
however, that the investigation shall be conducted in a manner that does not
unreasonably interfere with the normal operations and employee relationships of
the Business. Subject to the foregoing, Seller and CD Mexico shall cause their
officers and other employees to assist Buyer in making such investigation and
shall cause the accountants (both internal and independent), officers and other
employees and representatives of Seller or CD Mexico to be available to,
cooperate with, and assist Buyer. During
18
such investigation, Buyer shall have the right to make copies, at Buyer's
expense, of such records, files, tax returns and other materials relating to the
Business as Buyer may reasonably deem advisable at Buyer's expense. Seller shall
respond fully to all reasonable inquiries.
Section 5.3. Sales and Miscellaneous Taxes. Seller shall pay (whether
prior to or after the Final Delivery Date) all sales, value added, use or
transfer taxes, tariffs or duties imposed by any governmental entity from either
Mexico or the United States arising out of, or incurred in connection with, the
purchase and sale of the Purchased Assets, the assignment to Buyer of any Leased
Property or other Assumed Liabilities, the transportation and exportation of the
Purchased Assets or any Leased Property being assigned to Buyer from time to
time to the United States, and this transaction generally. Seller represents
that no bulk sales or similar notice or notices are required by virtue of the
transaction contemplated by this Agreement. Seller shall reimburse, indemnify
and hold harmless Buyer from and against any and all loss, cost, damage, claim
or expense (including reasonable attorneys' fees) which Buyer may sustain by
reason of either party's or any other entity's failure to comply with any bulk
transfer or bulk sales laws or similar laws of any governmental jurisdiction
within the United States or Mexico.
Section 5.4. Investigation by Buyer. Notwithstanding any other
provision of this Agreement, no investigation by Buyer or its employees,
attorneys, independent accountants, business consultants or other
representatives or agents shall affect in any manner the representations,
warranties or covenants of Seller set forth in this Agreement (or in any
document to be delivered in connection with the consummation of the transactions
contemplated by this Agreement) or Buyer's right to rely thereon, and those
representations, warranties and covenants shall survive the investigation;
provided, if Buyer has actual knowledge, through documentary evidence of Seller
or CD Mexico, that a representation or warranty of Seller is untrue as of the
date such representation or warranty is made, Buyer's right to rely on such
representation or warranty shall be limited by the information in such
documentary evidence.
Section 5.5. Seller Assistance. Seller and its Affiliates shall obtain
all consents and approvals necessary to sell and transfer the Purchased Assets
and assign the Assumed Liabilities to Buyer in accordance with the terms of this
Agreement, and bring about the satisfaction of the conditions required to be
performed, fulfilled and complied with by Seller and its Affiliates pursuant to
this Agreement and take or cause to be taken all action, and to do or cause to
be done all things, necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement. Without limiting the generality of the foregoing, Seller and its
Affiliates shall, to the extent requested, cooperate with and assist Buyer in
obtaining all licenses, permits and the authorizations required to be obtained
by Buyer in connection with the ownership of the Purchased Assets and operation
of the Business, which licenses, permits and authorizations are not included in
the Purchased Assets.
Section 5.6. Employees and Employee Benefit Plans. Buyer shall not be
required to employ or pay any compensation to any employee of Seller who is
engaged in the Business. To the extent Buyer, in its discretion, offers
employment to any employees of Seller engaged in the Business, (i) Seller shall
nevertheless unilaterally terminate such employee from Seller's employ,
19
prior to Buyer employing such person and shall pay such employee all amounts due
to him/her in accordance with applicable law and (ii) Buyer shall be responsible
thereafter for its employment of such individual from the date Buyer employs the
individual. Seller and CD Mexico shall protect and perform any obligation
(contractual, governmental or otherwise) in connection with any of Seller's or
CD Mexico's employees who are or may become adversely affected by virtue of the
transactions to be performed under this Agreement (including, without
limitation, termination from Seller's or CD Mexico's employment). Seller and CD
Mexico will continue to maintain responsibility for and comply with any
applicable Mexican and United States laws and regulations following the Closing
Date and the Final Delivery Date with respect to its Employees and former
employees (including, without limitation, any Employee Benefit Plans,
requirements for continuation of coverage, termination, compensation and
otherwise). Buyer shall not assume nor in any way be liable for any aspect
relating to Seller's or CD Mexico's employment matters including, without
limitation, Employee Benefit Plans or for any other obligations of Seller or CD
Mexico to Employees or former employees of Seller and CD Mexico. Seller and CD
Mexico shall retain all liability and responsibility for its employment matters
including, without limitation, Employees Benefit Plans and all other obligations
of Seller or CD Mexico to Employees and former employees of Seller or CD Mexico.
Without limiting Seller's indemnity obligations otherwise contained in this
Agreement, Seller shall indemnify Buyer, pursuant to Section 8.1 (d), for the
matters contained in this Section 5.6.
Section 5.7. Notice to Vendors and Customers. Seller will provide
reasonable cooperation with Buyer in notifying in writing, after the Closing,
all vendors and customers of Seller or CD Mexico relating to the Business as may
be reasonably requested by Buyer. This obligation includes the issuance of a
press release to be made in the discretion of Buyer.
Section 5.8. Post-Closing Operations. Buyer and Seller agree as
follows with respect to certain activities after the Closing Date:
(i) Although all Purchased Assets, shall be sold and title
shall vest in Buyer on the Closing Date, Buyer shall deposit with
Seller certain items of the Purchased Assets and certain Leased
Property assigned to Buyer (the "Remaining Assets"), pursuant to a
Deposit Agreement, to be dated, executed and delivered as of the
Closing Date, the form of which is attached hereto as Exhibit F (the
"Deposit Agreement"). Buyer may also, from time to time, deliver to
Seller certain other materials, parts and sub-assemblies which Buyer
will own. Buyer and Seller acknowledge that Seller will provide the
Remaining Assets and other materials, parts and sub-assemblies to CD
Mexico at the Premises. Neither Seller nor CD Mexico shall remove the
Remaining Assets and other assets of Buyer from the Premises without
the prior written instruction of Buyer. Buyer shall instruct Seller to
remove all of the Remaining Assets and other assets of Buyer from the
Premises by the end of twelve (12) months after the Closing Date unless
Buyer and Seller shall otherwise hereafter agree in writing on a
different date, and in the event Buyer fails to instruct Seller to
remove same, Buyer shall pay Seller $100 per day for each day such
failure continues. "Final Delivery Date" means the date of possession
of the Remaining Assets and other assets of Buyer are delivered to
Buyer in the United States in accordance with this Agreement.
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(ii) From the Closing Date until the Final Delivery Date, or
earlier if Buyer so instructs Seller, Seller agrees to manufacture
Relays for Buyer and ship Relays to customers of Buyer. Buyer will pay
Seller an amount equal to CD Mexico's Standard Hours (defined below) as
follows: (i) each week for Relays shipped and accepted during the
previous week, and (ii) for work in process remaining at the Final
Delivery Date within fifteen (15) days after the Final Delivery date
for the Relays and all services under this Section 5.8. In no event
will Seller have any obligation to manufacture or ship Relays after the
twelve (12) month period set forth above unless Buyer and Seller shall
otherwise hereafter agree in writing. "Standard Hours" means $9.00 per
standard man-hour for work performed in manufacturing the Relays, as
set forth in more detail in Schedule 5.8, attached hereto. For example,
if the standard man-hours for manufacturing a Relay is .025, the cost
of a finished Relay shall be $.225. Also, the parties recognize that
some of the Purchased Assets will be work in process and Schedule 5.8
sets forth a description of the standard man hours for manufacturing
Relays from various stages of production.
(iii) After the Closing, Seller shall provide Buyer copies of
packing lists on a daily basis. In addition, Seller shall provide Buyer
a written report at least every two (2) weeks informing Buyer of all
Relays manufactured and shipped, inventory levels of finished Relays,
the status of work in process, and the amount of materials, parts and
sub-assemblies in inventory in order to permit Buyer to monitor
activities of Seller and invoice for Relays shipped. Seller will
provide, upon the request of Buyer from time to time, information
available to Seller or its Affiliates relating to the activities under
this Article V. Buyer will order, purchase and supply all materials,
parts and sub-assemblies for Seller's use in producing Relays for Buyer
during this period, and Seller shall reasonably cooperate with Seller
in this regard (including without limitation, keeping Buyer effectively
informed of Seller's need for such materials, parts and sub-assemblies
so Seller can timely produce and deliver the quantity of Relays ordered
by Buyer).
(iv) Buyer shall notify Seller from time to time of the type
and quantity of Relay ordered and the shipment date and Seller also
agrees to manufacture and ship such Relays based on standard lead
times, but Seller also agrees to use reasonable efforts to meet shorter
delivery dates. Seller shall manufacture and test all Relays in
accordance with the specifications and procedures used by CD Mexico
immediately prior to the date of this Agreement and with good
workmanship and materials. CII can request modifications to those
specifications and procedures in accordance with specific customer
requests. CDE shall have the right to reject the specifications and
procedures that CII requests for good cause (including that requested
performance is at or beyond the product design capability) or to
request that the parties negotiate different specification.
(v) Seller agrees to disconnect and tag the Remaining Assets
and other assets of Buyer, at the request of Buyer in preparation for
the Final Delivery Date. Seller shall have primary responsibility for
disconnecting, packaging and moving the Remaining Assets, and all other
assets of Buyer at the Premises. Seller will load the Remaining Assets
and other assets of Buyer onto trucks and/or trailers provided by or on
behalf of Buyer. Seller will
21
not be responsible for the costs of shipping or insurance. Seller
shall, nevertheless, be responsible for the exportation of the
Remaining Assets and other assets of Buyer to the United States and
Seller shall be responsible for all sales, value added, use or transfer
taxes, tariffs or duties as set forth under Section 5.3. Seller shall
deliver to Buyer all manuals and instructions that Seller or its
Affiliates have for the Remaining Assets and other assets of Buyer.
(vi) Buyer shall have the right from time to time to inspect
the Premises, the Remaining Assets and other assets of Buyer, the
Relays and the materials, parts and sub-assemblies upon reasonable
prior notice from time to time. Buyer shall also have the right to
oversee and inspect, to the extent reasonable, any disconnecting,
packaging and loading of the Remaining Assets, the Relays, parts and
sub-assemblies, and any other assets of Buyer at the Premises.
(vii) After the Closing Date and through the Final Delivery
Date, Seller agrees to perform customary day-to-day maintenance and
ordinary repair of the Remaining Assets, in accordance with industry
standards, at Seller's expense, ordinary wear and tear excepted. Seller
shall also be responsible for any damage to the Remaining Assets and
other assets of Buyer at the Premises due to the willful misconduct or
negligence of Seller or its Affiliates. Seller shall have no obligation
to perform maintenance or repairs after the Final Delivery Date, but
shall continue to be bound by its representations and warranties made
in this Agreement.
(viii) Seller shall not sell to Buyer as part of the Purchased
Assets and shall not ship to Buyer or its customers as part of this
Section 5.8 any Relays which do not meet the product warranty provided
by Seller to Buyer in Section 5.8(iv). Seller shall be responsible for
any Relays which do not meet the product warranty provided by Seller to
Buyer in Section 5.8(iv) (including, without limitation, the disposal
of such Relays) and shall indemnify Buyer, its Affiliates and their
respective employees, representatives, officers, shareholders directors
and agents pursuant to this Agreement.
Section 5.9. Delivery of Property Received After Closing. From and
after the Closing, Seller or Buyer, as the case may be, shall within fifteen
(15) days after receipt transfer to the other party, any cash or other property
received by such party or its Affiliates which are properly for the account of
the other party.
Section 5.10. Competition. For a period of five (5) years after the
Closing Date, Seller, CD Mexico and Seller's Affiliates shall not, in any
manner, directly or indirectly, on its behalf or as an agent of, on behalf of,
or in conjunction with any other person, firm or corporation, or as a partner of
any partnership, or as a shareholder of any corporation, own, manage, acquire,
operate, control or participate in the ownership, management, operation or
control of, or have any financial interest in, any person, firm, business,
corporation, or other organization that designs, manufactures, services sells or
represents for sale any relays (a "Competitor") within the Territory.
"Territory" means the United States, Canada and Mexico; the United States and
Canada; and the United States.
22
Notwithstanding the foregoing, nothing contained in this Agreement shall
prohibit Seller from acquiring not more than five percent (5%) of the
outstanding shares of any equity security of a Competitor or an affiliate of a
Competitor listed for trading on the New York Stock Exchange, the American Stock
Exchange or any other established market or quoted on the National Association
of Securities Dealers Automated Quotation System or on the Mexican stock market.
In addition, for a five (5) year period after the Closing Date, Seller, CD
Mexico and Seller's Affiliates shall not induce any person who is then an
employee of Buyer or Electro-Mech, S.A. De C.V., Buyer's Mexican subsidiary to
leave employment or directly or indirectly assist any other person or entity in
requesting or inducing any such employee to leave Buyer or Electro-Mech, S.A. De
C.V., Buyer's Mexican subsidiary, and Seller shall not offer to employ or employ
any person who is then an employee of Buyer or Electro-Mech, S.A. De C.V.,
Buyer's Mexican subsidiary. Buyer shall be entitled (without limitation of any
other remedy and without posting bond) to specific performance and/or injunctive
relief with respect to any breach or threatened breach of the foregoing
covenants. If any court of competent jurisdiction shall at any time deem the
foregoing time periods too lengthy, the Territory to broad or the scope of the
covenants too broad, the restrictive time period shall be deemed to be the
longest period permissible by law, the Territory shall be the broadest
permissible by law and the scope shall be deemed to comprise the largest scope
permissible by law under the circumstances. It is the intent of the parties to
protect and preserve the business and goodwill acquired by Buyer and therefore
the parties agree and direct that the time period, Territory and scope of the
foregoing covenants shall be the maximum permissible duration and size.
The foregoing provisions of this Section 5.10 shall not prohibit Seller
or its Affiliates from acquiring the stock or assets of a company or entity
which is engaged, as a part of its business, in the relay business so long as
(i) the relay business (including, without limitation, assets and goodwill) does
not account for more than 5% of the value of the overall transaction, (ii)
Seller or its Affiliates give Buyer written notice within five (5) business days
following such acquisition, and (iii) Buyer shall have the right, exercisable
anytime within 120 days after Buyer's receipt of such notice, to acquire all or
some of the assets relating to the relay business at a price equal to the
purchase price allocated to such relay business assets by Seller (or its
Affiliate) and the third party in good faith and in accordance with GAAP. Seller
and its Affiliates shall immediately provide Buyer complete information and
documentation, and access to books and records, facilities and personnel, as
requested by Buyer, to enable Buyer to investigate and evaluate such relay
business and Buyer's rights under this Agreement.
Section 5.11. Confidentiality. Neither Seller nor Buyer shall use or
disclose any information obtained from the other for any purpose unrelated to
the transactions contemplated by this Agreement, except that neither party shall
incur any liability to the other for disclosure of information which:
(a) was already know to the recipient party or its Affiliates
at the time of its receipt from the other party;
(b) had been published or was otherwise within the public
domain or was generally known to the public at the time of its
disclosure to the recipient party;
23
(c) comes into the public domain without any breach of this
Agreement; or
(d) becomes known or available to the recipient party or its
Affiliates other than from the other party.
Section 5.12. Sales Representatives. Seller will cooperate, as Buyer
may reasonably request, with providing such additional information and
communications with all representatives, distributors and sales agents of the
Business.
Section 5.13. Slow Moving Inventory. On the Closing Date, Seller shall
consign to Buyer all Slow Moving Inventory. The Slow Moving Inventory shall
remain at CD Mexico until Buyer instructs Seller to ship it into the United
States. Buyer will pay the cost of shipping and insurance during shipping, but
Seller shall be responsible for the exportation of the Slow Moving Inventory.
Buyer will be responsible for all sales, value added, use or transfer taxes,
tariffs or duties imposed by any governmental entity from either Mexico or the
United States arising out of, or incurred in connection with the purchase and
sale of the Slow Moving Inventory or the transportation or exportation of the
Slow Moving Inventory. Upon Buyer's receipt of the Slow Moving Inventory in the
United States, Buyer shall name Seller as an additional insured with respect to
such Slow Moving Inventory on Buyer's insurance and provide Seller a certificate
of insurance. For a period of eighteen (18) months after the Closing Date, Buyer
agrees to pay Seller, according to the formula set forth below, within thirty
(30) days after each quarter for each item of Slow Moving Inventory sold by
Buyer to its customers or used by Buyer during such quarter. Buyer will pay
Seller for all finished Slow Moving Inventory an amount equal to eighty percent
(80%) of the price received from Buyer's customers or Seller's Standard Cost,
whichever is less. Within thirty (30) days after each quarter, Buyer will pay
Seller for all materials, parts and sub-assemblies which are Slow Moving
Inventory and which are used by Buyer an amount equal to the Standard Cost. At
the end of the eighteen (18) months after the Closing Date all Slow Moving
Inventory which has not been sold or used by Buyer shall be owned by Buyer
without charge or cost. Buyer may use the samples and shall not pay for any
samples unless it sells them. Buyer will provide Seller quarterly status reports
on Slow Moving Inventory. Buyer agrees to act in good-faith with respect to the
timing or the sale or use of the Slow Moving Inventory, taking into account
market and customer requirements.
Section 5.14. License of "Cornell-Dubilier" Name and Logo. As of the
Closing Date, Seller grants Buyer a non-exclusive, royalty free, world-wide
licence to use the name "Cornell-Dubilier" or "Cornell-Dubilier Electronics" and
logos and marks (the "Marks"), as now used by Seller in connection with the
Relays (or otherwise permitted by CDE in writing), throughout the world in
connection with the manufacture, marketing, distribution and sale of Relays. For
all Relays or other materials containing a Mark, as of the Closing Date
(including without limitation inventory, work in process and Slow Moving
Inventory), or hereafter manufactured by Seller or CD Mexico pursuant to Section
5.8, this license shall continue for twenty-four (24) months after the Closing
Date in connection with Buyer's resale or use. Buyer agrees to stop having CD
Mexico manufacture Relays with any Marks within thirty (30) days after the
Closing Date.
24
Section 5.15. Sales Representative Commissions. Buyer agrees to pay the
five percent (5%) commission on all sales of Relays on order backlog, as
specified on Schedule 1.5-1 according to the following procedures. After the
Closing Date, Seller shall pay the commissions for Relays on such orders backlog
shipped after Closing and notify Buyer in writing of each such payment (and to
whom paid and for which shipment). Buyer shall reimburse Seller within ten (10)
days the amount of such commission. To the extent Relays covered by such order
backlog are delivered after Closing by Seller's supplier in China directly to
Buyer, Buyer will provide Seller information on such shipments so Seller may pay
the commissions to the sales representatives. Notwithstanding the foregoing,
Buyer is not assuming any agreements or obligations with such sales
representatives and Buyer is under no obligation to use such sales
representatives in Buyer's operation of the Business.
ARTICLE 6
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
All obligations of Buyer under this Agreement are, except to the extent
expressly waived in writing by Buyer, subject to the satisfaction by Seller at
or before the Closing of all of the following conditions:
Section 6.1. Representations and Warranties True at Closing;
Investigation. The representations and warranties of Seller contained in this
Agreement and in any document to be delivered in connection with the
consummation of the transactions contemplated by this Agreement, specifically
including without limitation the disclosure schedules, shall be true and correct
when made and shall be true and correct on the Closing Date as though those
representations and warranties were made again on the Closing Date.
Section 6.2. Performance. Seller and its Affiliates shall have
performed and complied with all agreements, conditions and covenants required by
this Agreement to be performed or complied with by Seller and its Affiliates
before or at the Closing.
Section 6.3. Seller's Certificate. Buyer shall have received a
certificate substantially in the form of attached Exhibit G, signed by Seller
and dated as of the Closing Date, to the effect that all representations and
warranties made in this Agreement by Seller are on the Closing Date true and
correct in all respects and that Seller and its Affiliates have performed in all
respects the agreements, conditions and covenants undertaken by Seller in this
Agreement to be performed on or before the Closing Date.
Section 6.4. No Adverse Changes. Except as contemplated by this
Agreement, there shall have been no material adverse change in the condition,
business or operations, financial or otherwise, of the Seller, CD Mexico, the
Purchased Assets or the Business, in each case taken as a whole, from the date
of this Agreement to the Closing Date.
Section 6.5. Litigation. On the Closing Date, there shall not be any
pending or threatened litigation in any court or any proceedings by or before
any governmental commission, board, agency
25
or other instrumentality with a view to seeking, or in which it is sought, to
restrain or prohibit the consummation of the transactions contemplated by this
Agreement or in which it is sought to obtain divestiture, rescission or damages
in connection with the transactions contemplated by this Agreement, and no
investigation by any governmental or other agency shall be pending or threatened
that might result in any such litigation or other proceeding.
Section 6.6. Opinion of Counsel for Seller. Buyer shall have received
from Schoenberg, Fisher, Newman & Rosenberg, counsel for Seller, a written
opinion dated as of the Closing Date, substantially in the form of attached
Exhibit H.
Section 6.7. Necessary Consents; Notices. All authorizations, consents
and approvals shall have been received and shall be in full force and effect
from (i) federal, state, local and foreign regulatory bodies and officials that
are necessary in the opinion of Buyer for the consummation of the transactions
contemplated by this Agreement and (ii) any third parties that are necessary in
the opinion of Buyer for the transfer and assignment of any Purchased Assets or
Assumed liabilities.
Section 6.8. Board Approval. Approval of this Agreement and the
ancillary documents by the Board of Directors of Buyer.
Section 6.9. Financing. Buyer's securing financing for the transaction
acceptable to Buyer, and Seller providing financial statements relating to the
Business which are available to or reasonably obtainable by Seller, as required
by the financial institution.
Section 6.10. Employment Agreements. Execution by Buyer of employment
agreements, or other arrangements satisfactory to Buyer, with certain employees
of Seller or CD Mexico active in the Business.
Section 6.11. Proceedings Satisfactory. All proceedings taken in
connection with the transactions contemplated by this Agreement and all
documents incident thereto shall be satisfactory in form and substance to Buyer
and its counsel, and Buyer and its counsel shall have received copies of all
such documents (executed or certified, as may be appropriate) as Buyer and its
counsel may reasonably request in connection with such transactions.
Section 6.12. Failure of Conditions. In the event any one of the
conditions set forth in this Article 6 shall not have been satisfied on or
before the Closing Date, or on or before any date to which closing may be
postponed by subclause (c) hereof, Buyer may in its sole discretion:
(a) waive such condition;
(b) postpone the Closing to a date specified by Buyer but not
later than thirty (30) days after the originally selected Closing Date,
during which period Seller and Buyer shall use their best efforts to
remove any impediments to consummation of the transactions by this
Agreement; or
26
(c) if the Closing is postponed pursuant to clause (b) and not
completed by the date specified pursuant to clause (b), terminate this
Agreement without prejudice to the rights and remedies of the parties
hereunder.
ARTICLE 7
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
All obligations of Seller under this Agreement are, except to the
extent expressly waived in writing by Seller, subject to the satisfaction by
Buyer at or before the Closing of all of the following conditions:
Section 7.1. Representations and Warranties True at Closing. The
representations and warranties of Buyer contained in this Agreement shall be
true and correct when made and shall be true and correct on the Closing Date as
though the representations and warranties were made again on the Closing Date.
Section 7.2. Performance. Buyer shall have performed and complied with
all agreements, conditions and covenants required by this Agreement to be
performed or complied with by Buyer before or at the Closing.
Section 7.3. Certificate of Buyer. Seller shall have received a
certificate substantially in the form of attached Exhibit I, signed by Buyer and
dated as of the Closing Date, to the effect that all representations and
warranties made in this Agreement by Buyer are on the Closing Date true and
correct in all respects and that Buyer has performed in all respects the
agreements, conditions and covenants undertaken by Buyer in this Agreement to be
performed on or prior to the Closing Date.
Section 7.4. Litigation. On the Closing Date, there shall not be any
pending or threatened litigation in any court or any proceedings by or before
any governmental commission, board, agency or other instrumentality with a view
to seeking, or in which it is sought, to restrain or prohibit the consummation
of the transactions contemplated by this Agreement or in which it is sought to
obtain divestiture, rescission or damages in connection with the transactions
contemplated by this Agreement, and no investigation by any governmental or
other agency shall be pending or threatened that might result in any such
litigation or other proceeding.
Section 7.5. Proceedings Satisfactory. All proceedings taken in
connection with the transactions contemplated by this Agreement and all
documents incident thereto shall be satisfactory in form and substance to Seller
and its counsel, and Seller and its counsel shall have received copies of all
such documents (executed or certified, as may be appropriate) as Seller and its
counsel may reasonably request in connection with such transactions.
Section 7.6. Board Approval. Approval of this Agreement and the
ancillary documents by the Board of Directors of Seller.
27
Section 7.7. Opinion of Counsel for Buyer. Seller shall have received
from counsel for Buyer a written opinion dated as of the Closing Date,
substantially in the form of attached Exhibit J.
Section 7.8. Failure of Conditions. In the event any one or more of the
conditions set forth in Article 7 shall not have been satisfied on or before the
Closing Date or on or before any date to which the Closing is postponed pursuant
to clause (c) hereof, Seller may in its sole discretion:
(a) waive such condition;
(b) postpone the Closing Date to a date specified by Seller
but not later than thirty (30) days after the originally selected
Closing Date, during which period Seller and Buyer shall use their best
efforts to remove any impediments to consummation of the transactions
contemplated by this Agreement; or
(c) if the Closing is postponed pursuant to clause (b) and is
not completed by the date specified pursuant to clause (b), terminate
this Agreement without prejudice to the rights and remedies of the
parties hereunder.
ARTICLE 8
INDEMNIFICATION
Section 8.1. Indemnification by Seller. Subject to the limitations
contained in this Article 8, Seller shall defend, indemnify and hold harmless
Buyer (which for purposes of this Article 8 shall mean Buyer and its Affiliates,
and their respective employees, representatives, officers, shareholders,
directors and agents) against and in respect of:
(a) Any and all liabilities or obligations of Seller of any
nature, whether accrued, absolute, contingent or otherwise, resulting
from, arising out of or in any way related to (i) Seller's or CD
Mexico's activities, ownership of the Purchased Assets or conduct of
the Business on or before the Closing Date, even if imposed upon Buyer
as a successor to Seller or any other entity, other than the Assumed
Liabilities or (ii) Seller's or CD Mexico's possession of any Remaining
Assets or other assets of Buyer after the Closing Date;
(b) Any and all loss, cost, damage, liability, obligation,
expense and deficiency suffered by Buyer resulting from, arising out of
or in any way related to facts, circumstances, or events constituting a
misrepresentation, breach of warranty or nonfulfillment of any
warranty, representation, covenant, undertaking, condition or agreement
by Seller contained in this Agreement or any other document delivered
to Buyer in connection with the consummation of the transactions
contemplated by this Agreement, regardless of whether the
misrepresentation, breach or omission was deliberate, reckless,
negligent, innocent or unintentional;
28
(c) Any and all loss, cost, damage, liability, obligation and
expense resulting from, arising out of or in any way relating to
Seller's or its Affiliates' noncompliance with any applicable bulk
sales laws or the foreign equivalent and provisions and from the
assertion of claims (excluding Assumed Liabilities) against Buyer by
creditors of Seller or its Affiliates with respect to liabilities and
obligations of Seller;
(d) Any and all loss, cost, damage, liability, obligation and
expense resulting from, arising out of or in any way relating to (i)
the covenants and obligations of Seller in Section 5.6 or (ii) the
operations and activities of CD Mexico after the Closing Date; and
(e) Any and all loss, cost, damage, liability, obligation and
expense resulting from, arising out of or in any way relating to any
finished Relays Purchased by Buyer under this Agreement (whether at the
Closing Date or pursuant to Section 5.8), including without limitation
claims for breach of warranty, product liability, tort or otherwise.
(f) Any and all loss, cost, damage, liability, obligation and
expense incurred with respect to any claims, actions, suits,
proceedings or assessments arising out of matters described in
subsections (a) through (e) above, or the settlement thereof, including
without limitation, reasonable legal fees and expenses.
Section 8.2. Indemnification by Buyer. Subject to the limitations
contained in this Article 8, Buyer shall defend, indemnify and hold harmless
Seller (which for purposes of this Article shall mean Seller and its affiliates,
and their respective employees, representatives, officers, shareholders,
directors and agents) against and in respect of:
(a) Any and all liabilities or obligations of Buyer of any
nature, whether accrued, absolute, contingent or otherwise, resulting
from, arising out of or in any way relating to Buyer's ownership of the
Purchase Assets or assumption of the Assumed Liabilities or conduct of
the Business after the Closing Date, except for the indemnity of Seller
in Section 8.1 (e) above;
(b) Any and all loss, cost, damage, liability, obligation,
expense or deficiency suffered by Seller resulting from, arising out of
or relating to facts, circumstances or events constituting a
misrepresentation, breach of warranty or nonfulfillment of any
warranty, representation, covenant, undertaking, condition or agreement
by Buyer contained in this Agreement, or any other document delivered
to Seller in connection with the consummation of the transactions
contemplated by this Agreement, regardless of whether the
misrepresentation, breach or omission was deliberate, reckless,
negligent, innocent or unintentional; and
(c) Any and all loss, cost, damage, liability, obligation or
expense incurred with respect to any claims, actions, suits,
proceedings or assessments resulting from, arising out of or relating
to matters described in subsections (a) and (b) above, or the
settlement thereof, including without limitation, reasonable legal fees
and expenses.
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Section 8.3. Environmental Liabilities. For purposes hereof, an
"Environmental Liability" shall mean any liability arising under or by reason of
any applicable foreign, federal, state or local laws or regulations or common
law relating to the protection of the environment or public health
(collectively, "Environmental Law"). As between Seller and Buyer, Seller shall
be liable for any Environmental Liability (a "Seller Environmental Liability")
(a) related to conditions (whether known or unknown) existing at, in or under
any real property now or previously owned, leased or used by Seller or its
Affiliates (including without limitation the Premises) prior to or after the
Closing Date, and (b) related to the transportation or offsite disposal prior to
or after the Closing Date of Hazardous Materials generated by Seller or its
Affiliates. Seller shall defend Buyer against, indemnify Buyer for, and hold
Buyer harmless from all loss, cost, damage, liability, obligation and expense
resulting from, arising out of or relating to any Seller Environmental
Liability.
Section 8.4. Limitations on Indemnification. Except for claims relating
to Section 1.5(b)(iii), notwithstanding any other provision of this Agreement or
any applicable law, no Indemnified Party will be entitled to make a claim
against an Indemnifying Party under Section 8.1 or 8.2 of this Agreement unless
and until the aggregate amount of indemnifiable losses incurred under such
Section, as the case may be, exceeds $25,000.00 (the "Deductible"), in which
event the Indemnified Party will be entitled to make a claim against the
Indemnifying Party only to the extent the amount of such aggregate indemnifiable
losses exceeds $10,000.00 (the "Threshold"). (For example, if an Indemnified
Party has an initial claim of $15,000.00, such Indemnified Party will not be
entitled to make a claim because $15,000.00 does not exceed the Deductible
($25,000.00). However, if the same Indemnified Party has a subsequent claim of
$30,000.00, such Indemnified Party will be entitled to make a claim because the
aggregate amount of indemnifiable losses ($15,000.00 + $30,000.00 = $45,000.00)
exceeds the Deductible ($25,000.00), and the extent to which such claim could be
made would be $35,000.00 since the aggregate amount of indemnifiable losses
($45,000.00) exceeds the Threshold ($10,000.00) by $35,000.00.) Except with
respect to a Seller Environmental Liability and Seller's indemnity obligations
under Sections 8.1 (d) through (f) the parties agree as follows: (i) any claim
by either party for indemnification which is not asserted by notice given as
herein provided within two (2) years after the Final Delivery Date may not be
pursued and is hereby irrevocably waived after such time and (ii) neither party
shall be liable for indemnity in excess of the Purchase Price.
Section 8.5. Third Party Claims. The obligation of each party to
indemnify the other party under the provisions of this Article with respect to
claims resulting from the assertion of liability by those not parties to this
Agreement (Including without limitation governmental claims for penalties, fines
and assessments) shall be subject to the following terms and conditions:
(a) The party seeking indemnification hereunder (the
"Indemnified Party") shall give written notice to the other party (the
"Indemnifying Party") within 30 days following any assertion of
liability by a third party which might give rise to a claim for
indemnification, which notice shall state the nature and basis of the
assertion and the amount thereof, in each case to the extent known;
provided, however, that no delay on the part of the Indemnified Party
in giving notice shall relieve the Indemnifying Party of any obligation
to indemnify unless (and then solely to the extent that) the
Indemnifying Party is prejudiced by
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such delay.
(b) If any action, suit or proceeding (a "Legal Action") is
brought against the Indemnified Party with respect to which the
Indemnifying Party may have an obligation to indemnify the Indemnified
Party, the Legal Action shall be defended by the Indemnifying Party,
and such defense shall include all proceedings for appeal or review
which counsel for the Indemnified Party shall reasonably deem
appropriate.
(c) Notwithstanding the provisions of the previous subsection
of this Section 8.5, until the Indemnifying Party shall have assumed
the defense of any such Legal Action, the defense shall be handled by
the Indemnified Party. Furthermore, (A) if the Indemnified Party shall
have reasonably concluded that there are likely to be defenses
available to it that are different from or in addition to those
available to the Indemnifying Party; (B) if the Indemnifying Party
fails to provide the Indemnified Party with evidence reasonably
acceptable to the Indemnified Party that the Indemnifying Party has
sufficient financial resources to defend and fulfill its
indemnification obligation with respect to the Legal Action; (C) if the
Legal Action involves other than money damages and seeks injunctive or
other equitable relief; or (D) if a judgment against the Indemnified
Party will, in the good faith opinion of the Indemnified Party,
establish a custom or precedent which will be materially adverse to the
best interests of its continuing business, the Indemnifying Party shall
not be entitled to assume the defense of the Legal Action and the
defense shall be handled by the Indemnified Party. If the defense of
the Legal Action is handled by the Indemnified Party under the
provisions of this subsection, the Indemnifying Party shall pay all
legal and other expenses reasonably incurred by the Indemnified Party
in conducting such defense.
(d) In any Legal Action initiated by a third party and
defended by the Indemnifying Party (A) the Indemnified Party shall have
the right to be represented by advisory counsel and accountants, at its
own expense, (B) the Indemnifying Party shall keep the Indemnified
Party fully informed as to the status of such Legal Action at all
stages thereof, whether or not the Indemnified Party is represented by
its own counsel, (C) the Indemnifying Party shall make available to the
Indemnified Party and its attorneys, accountants and other
representatives, all books and records of the Indemnifying Party
relating to such Legal Action, and (D) the parties shall render to each
other such assistance as may be reasonably required in order to ensure
the proper and adequate defense of the Legal Action.
(e) In any Legal Action initiated by a third party and
defended by the Indemnifying Party, the Indemnifying Party shall not
make settlement of any claim without the written consent of the
Indemnified Party, which consent shall not be unreasonably withheld.
Without limiting the generality of the foregoing, it shall not be
deemed unreasonable to withhold consent to a settlement involving
injunctive or other equitable relief against the Indemnified Party or
its assets, employees or business, or relief which the Indemnified
Party reasonably believes could establish a custom or precedent which
will be
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materially adverse to the best interests of its continuing business.
Section 8.6. Claims by Indemnified Party. The Indemnified Party shall
notify the Indemnifying Party with reasonable promptness after the discovery of
any claim upon which the Indemnified Party will demand indemnification from the
Indemnifying Party under this Agreement (other than with respect to third party
claims which are addressed in Section 8.5 above). To the extent possible, the
notice shall include an itemized accounting of the claim from the Indemnified
Party. Within fifteen (15) after receipt of the notice, the Indemnifying Party
shall either reimburse the Indemnified Party for the amount of the claim or
notify the Indemnified Party of the Indemnifying Party's intent to dispute the
claim. If the Indemnifying Party does not notify the Indemnified Party within
such fifteen (15) days of its intent to dispute the claim, the Indemnifying
Party shall be deemed to have agreed to reimburse the Indemnified Party for the
claim.
ARTICLE 9
TERMINATION
Section 9.1. Termination by Mutual Consent. At any time on or before
the Closing Date, this Agreement may be terminated by the mutual written consent
of Seller and Buyer without liability on the part of Seller or Buyer or their
respective directors, officers or shareholders. If the Agreement is terminated
pursuant to this Section, the Agreement shall become null and void and shall be
without effect.
Section 9.2. Termination Based Upon Failure of Conditions. This
Agreement may be terminated pursuant to Sections 6.12 or 7.8.
ARTICLE 10
GENERAL
Section 10.1. Risk of Loss. The risk of loss or destruction of, or
damage to, the Purchased Assets shall be on Seller at all times before the
Closing Date.
Section 10.2. Application of and Survival of Representations,
Warranties and Covenants. All representations, warranties and covenants made by
any party to this Agreement in Articles 2 and 3 above shall survive the Closing
Date (and any investigation at any time made by or on behalf of any party before
or after the Closing) and each of the covenants in this Agreement shall survive
the Closing Date according to their terms. Any and all representations,
warranties and covenants relating to CD Mexico or an Affiliate of Seller shall
be deemed representations, warranties and covenants of Seller, and any breach or
failure to perform by CD Mexico or any Affiliate of Seller shall, for purposes
of this Agreement, be deemed a breach and failure to perform by Seller.
Section 10.3. Binding Effect; Benefits; Assignment. All of the terms of
this Agreement shall be binding upon, inure to the benefit of, and be
enforceable by and against the successors and
32
permitted assigns of Seller and Buyer. Nothing in this Agreement, express or
implied, is intended to confer upon any other person any rights or remedies
under or by reason of this Agreement except as expressly indicated in this
Agreement. Seller shall not assign this Agreement, or any of its rights or
obligations under this Agreement, to any other person, firm or corporation
without the prior written consent of Buyer.
Section 10.4. Knowledge; Definition of "Ordinary and Usual Course". For
purposes of this Agreement, an activity will be deemed to be in the "ordinary
and usual course of business" or "ordinary and usual course" if the activity is
performed: (i) in accordance with the customary business practices and usages of
trade prevailing in the industry or industries in which Seller operates the
Business; or (ii) in accordance with Seller's historical and customary practices
with respect to the activity. Any representation, warranty or statement
referring to the "knowledge of" or "known" by Seller shall include any
information contained or known by Seller's Affiliates (including without
limitation CD Mexico).
Section 10.5. Notices. All notices, requests, demands and other
communications to be given pursuant to the terms of this Agreement shall be in
writing and shall be deemed to have been duly given if delivered, mailed by
certified or registered mail (postage prepaid), shipped and receipted by express
courier service (charges prepaid), mailed first class (postage prepaid), or
transmitted by telecopier or similar facsimile transmitter:
(a) If to Buyer:
Communications Instruments, Inc.
1396 Charlotte Highway
Fairview, North Carolina 28730
(facsimile: (704) 628-1439)
Attention: Ramzi Dabbagh, Chairman and CEO
with a copy to:
Parker, Poe, Adams & Bernstein L.L.P.
First Union Capitol Center
150 Fayetteville Street Mall, Suite 1400
Raleigh, North Carolina 27602
(facsimile: (919) 834-4564)
Attention: John J. Butler, Esq.
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(b) If to Seller:
Cornell-Dubilier Electronics, Inc.
1700 Route 23
Wayne, New Jersey 07470
(facsimile: 973-694-8873)
Attention: Ed Brino, Chief Financial Officer
with a copy to:
Schoenberg, Fisher, Newman & Rosenberg
Suite 2100
222 South Riverside Place
Chicago, IL 60606-6101
(facsimile: 312-648-1212)
Attention: Richard Perlman, Esq.
Any party may change its address or telecopier number by prior written notice to
the other party.
Section 10.6. Counterparts. This Agreement may be executed in
counterparts, each of which when so executed shall be deemed to be an original
and the counterparts shall together constitute one and the same instrument.
Section 10.7. Expenses. Buyer and Seller shall pay their own respective
expenses, costs and fees (including without limitation attorneys' and
accountants' fees) incurred in connection with the negotiation, preparation,
execution and delivery of this Agreement and the consummation of the
transactions contemplated by this Agreement.
Section 10.8. Entire Agreement. All exhibits and schedules referenced
herein are incorporated herein by reference. This Agreement, the exhibits and
schedules to this Agreement (including the disclosure schedules), and the
agreements referred to in this Agreement set forth the entire agreement and
understanding of Seller and Buyer in respect of the transactions contemplated by
this Agreement and supersede all prior agreements, arrangements and
understandings relating to the subject matter of this Agreement.
Section 10.9. Amendment and Waiver. This Agreement may be amended,
modified, superseded or canceled and any of the terms, covenants,
representations, warranties or conditions of this Agreement may be waived only
by a written instrument executed by Seller and Buyer or, in the case of a
waiver, by or on behalf of the party waiving compliance. The failure of any
party at any time to require performance of any provision of this Agreement
shall not affect the right of that party at a later time to enforce the same. No
waiver by any party of any condition or of any breach of any term, covenant,
representation or warranty contained in this Agreement, in any one or more
34
instances, shall be deemed to be or construed as a further or continuing waiver
of the condition or of any breach of the term, covenant, representation or
warranty or any other term, covenant, representation or warranty set forth in
this Agreement.
Section 10.10. Severability. Any provision, or clause thereof, of this
Agreement that shall be found to be contrary to applicable law or otherwise
unenforceable shall not affect the remaining terms of this Agreement, which
shall be construed as if the unenforceable provision, or clause thereof, were
absent from this Agreement.
Section 10.11. Headings. The headings of the sections and subsections
of this Agreement have been inserted for convenience of reference only and shall
not restrict or otherwise modify any of the terms or provisions of this
Agreement.
Section 10.12. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of North Carolina, excluding
its conflict of law principles.
Section 10.13. Choice of Forum, Venue, and Consent to Jurisdiction.
Except as provided below in this Section, and with respect to an action
instituted by Buyer for equitable relief, including, without limitation, an
action for temporary or permanent injunctive relief, Buyer and Seller agree that
the General Courts of Justice of the State of North Carolina and the United
States District Courts for the Western District of North Carolina shall
constitute the exclusive forums for the adjudication of any and all disputes or
controversies arising out of or relating to this Agreement. Seller consents to
the exercise of jurisdiction over it by such courts with respect to any such
dispute or controversy, and Seller waives any objection to the assertion or
exercise by such courts of such jurisdiction. Notwithstanding the foregoing,
Buyer may elect to implead, join or add Seller as a third-party defendant in any
legal action (in any forum) brought by a third party against Buyer if such legal
action, or Buyer's defenses or other rights, arises out of or in any manner
relates to the parties' obligations under this Agreement. Seller consents to the
exercise of jurisdiction over it by such courts with respect to any such dispute
or controversy, and Seller waives any objection to the assertion or exercise by
such courts of such jurisdiction.
[SIGNATURES ON NEXT PAGE]
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Signed as of the day and year first written above.
COMMUNICATIONS INSTRUMENTS, INC.,
a North Carolina corporation
By:
-------------------------------
Its: Chairman & CEO
---------------------------
"Buyer"
CORNELL-DUBILIER ELECTRONICS, INC.,
a Delaware corporation
By:
-------------------------------
Its:
---------------------------
"CDE"
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