<PAGE>
FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) December 5, 1994
----------------
Sun Distributors L. P.
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(Exact name of registrant as specified in its charter)
Delaware 1-9375 23-2439550
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(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification
organization) Number)
2600 One Logan Square
Philadelphia, Pennsylvania 19103
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (215) 665-3650
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Page 1 of 11
Exhibit Index on page 11
<PAGE>
Item 2. Acquisition or Disposition of Assets.
On December 5, 1994, the Registrant completed the sale of certain assets of
its Electrical Group divisions (American Electric Company, Keathley-Patterson
Electric and Philips & Company) to Consolidated Electrical Distributors, Inc.
for a cash consideration of approximately $30,000,000 (subject to certain post-
closing adjustments) and the assumption of certain liabilities. The amount of
the consideration was determined by arms-length negotiations between the
parties. The asset purchase agreement, as amended, is attached as an exhibit to
this report.
Item 7. Financial Statements and Exhibits.
(b) Pro forma financial information.
Page
----
Introduction 3
Pro Forma Consolidated Balance Sheet,
September 30, 1994 (Unaudited) 4
Pro Forma Consolidated Statement of Income
for the Nine Months ended September 30,
1994 (Unaudited) 5
Pro Forma Consolidated Statement of Income
for the Year ended December 31, 1993
(Unaudited) 6
Notes to Pro Forma Financial Information
(Unaudited) 7-9
(c) Exhibits.
The following exhibit is filed as part of this Report:
2.1 Asset Purchase Agreement for the Acquisition of the Assets of the
Electrical Products Group Division of SDI Operating Partners, L.P. by
Consolidated Electrical Distributors, Inc., dated as of October 4,
1994, as amended.
Page 2 of 11
<PAGE>
SUN DISTRIBUTORS L.P. AND SUBSIDIARY
PRO FORMA FINANCIAL INFORMATION
INTRODUCTION
On December 5, 1994, SDI Operating Partners L.P., a subsidiary limited
partnership of Sun Distributors L.P. ("the Company") sold certain assets of its
three Electrical Group Divisions for an aggregate consideration of approximately
$30.0 million (subject to certain post-closing adjustments) and the assumption
of certain liabilities. The accompanying pro forma consolidated balance sheet
and pro forma consolidated statements of income give effect to these
divestitures.
The pro forma financial information is unaudited and assumes that the
transaction for which pro forma effects are shown occurred as of September 30,
1994 for the pro forma consolidated balance sheet and as of January 1, 1993 for
the pro forma consolidated statements of income (the "pro forma financial
information").
The pro forma financial information presented herein is not necessarily
indicative of what the financial position or results of operations would have
been had the transaction occurred on those dates, nor are they necessarily
indicative of the future results of operations of the Company. Management
believes the pro forma adjustments reflected in the accompanying consolidated
balance sheet and consolidated statements of income give effect to all material
changes arising from the divestment of the three Electrical Group Divisions.
The pro forma financial information should be read in conjunction with the
historical consolidated financial information and related notes included in the
Company's report on Form 10-K for the year ended December 31, 1993 and report on
Form 10-Q for the quarter ended September 30, 1994.
Page 3 of 11
<PAGE>
SUN DISTRIBUTORS L.P. AND SUBSIDIARY
PRO FORMA CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1994
(UNAUDITED)
(dollars in thousands)
<TABLE>
<CAPTION>
Electrical
Divisions Pro Forma
ASSETS Historical (a) Adjustments Pro Forma
----------------------- ------------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents $2,645 ( $166) $10,338 (b) $12,817
Accounts and notes receivable, net 95,089 ( 13,820) 247 (c) 81,516
Inventories 103,839 ( 15,604) 88,235
Other current assets 4,346 ( 142) 2,500 (d) 6,704
------------- ----------- ----------- ------------
Total current assets 205,919 ( 29,732) 13,085 189,272
Property, plant and equipment, net 28,664 ( 1,936) 224 (e) 26,952
Goodwill 54,320 ( 5,335) 48,985
Other intangibles 2,959 ( 230) 2,729
Deferred income taxes 1,889 1,889
Other assets 2,704 ( 26) 264 (f) 2,942
------------- ----------- ----------- ------------
Total assets $296,455 ( $37,259) $13,573 $272,769
============= =========== =========== ===========
LIABILITIES AND PARTNERS' CAPITAL
--------------------------------------------
Current liabilities:
Accounts payable, trade $61,907 ( 11,425) 50,482
Current portion of senior notes 5,700 5,700
Notes payable 2,308 2,308
Current portion of capitalized lease obligations 498 ( 57) 441
Distributions payable to partners 1,625 978 (g) 2,603
Accrued expenses:
Salaries and wages 6,322 ( 772) 5,550
Interest on senior notes 2,811 2,811
Management fee due the general partner 2,491 2,491
Income and other taxes 3,795 ( 532) 3,263
Other accrued expenses 14,080 ( 855) 1,393 (h) 14,618
------------- ----------- ----------- -----------
Total current liabilities 101,537 ( 13,641) 2,371 90,267
Senior notes 89,300 ( 1,230)(i) 88,070
Bank revolving credit 13,000 ( 13,000)(j)
Capitalized lease obligations 4,535 4,535
Deferred compensation 6,962 6,962
Other liabilities 1,116 ( 1) 1,115
Commitments and contingencies
Partners' capital:
General partner 800 800
Limited partners:
Class A interests 67,642 67,642
Class B interests 13,077 ( 23,617) 25,432 (k) 14,892
Class B interests held in treasury ( 1,514) ( 1,514)
------------- ----------- ----------- ------------
Total liabilities and partners' capital $296,455 ( $37,259) $13,573 $272,769
============= =========== =========== ===========
</TABLE>
SEE ACCOMPANYING NOTES TO PRO FORMA FINANCIAL INFORMATION
Page 4 of 11
<PAGE>
SUN DISTRIBUTORS L.P. AND SUBSIDIARY
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1994
(UNAUDITED)
(dollars in thousands except for partnership interest amounts)
<TABLE>
<CAPTION>
Electrical
Divisions Pro Forma
Historical (l) Adjustments Pro Forma
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $557,016 ( $85,032) $471,984
Cost of sales 344,054 (64,919) 279,135
----------- ----------- ----------- -----------
Gross profit 212,962 (20,113) 192,849
----------- ----------- ----------- -----------
Operating expenses:
Selling, general and administrative expenses 176,694 (16,544) 160,150
Management fee to general partner 2,491 2,491
Depreciation 3,491 (374) 3,117
Amortization 2,010 (212) 1,798
----------- ----------- ----------- -----------
Total operating expenses 184,686 (17,130) 167,556
----------- ----------- ----------- -----------
Income from operations 28,276 (2,983) 25,293
Interest income 51 (1) (m) 50
Interest expense 7,702 (7) ( 998)(n) 6,697
Other income (expense), net (640) (184) ( 824)
----------- ----------- ----------- -----------
Income before provision for income taxes 19,985 (3,161) 998 17,822
Provision for income taxes 138 138
----------- ----------- ----------- -----------
Net income $19,847 ($3,161) 998 $17,684
=========== =========== =========== ===========
Net income allocated to partners:
General partner $198 ( $32) $10 $176
----------- ----------- ----------- -----------
Class A limited partners $9,157 $9,157
----------- ----------- ----------- -----------
Class B limited partners $10,492 ( $3,129) $988 $8,351
----------- ----------- ----------- -----------
Weighted average number of outstanding
limited partnership interests:
- Class A interests 11,099,573 11,099,573 11,099,573 11,099,573
- Class B interests 21,675,746 21,675,746 21,675,746 21,675,746
Earnings per limited partnership interest:
- Class A interest $.82 $.82
- Class B interest $.48 ( $.14) $.05 $.39
</TABLE>
SEE ACCOMPANYING NOTES TO PRO FORMA FINANCIAL INFORMATION
Page 5 of 11
<PAGE>
SUN DISTRIBUTORS L.P. AND SUBSIDIARY
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1993
(UNAUDITED)
(dollars in thousands except for partnership interest amounts)
<TABLE>
<CAPTION>
Electrical
Divisions Pro Forma
Historical (o) Adjustments Pro Forma
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $655,707 ( $102,081) $553,626
Cost of sales 402,441 ( 77,937) 324,504
----------- ----------- ----------- -----------
Gross profit 253,266 (24,144) 229,122
----------- ----------- ----------- -----------
Operating expenses:
Selling, general and administrative expenses 213,101 ( 20,339) 192,762
Management fee to general partner 3,330 3,330
Depreciation 5,106 ( 548) 4,558
Amortization 2,848 ( 206) 2,642
----------- ----------- ----------- -----------
Total operating expenses 224,385 (21,093) 203,292
----------- ----------- ----------- -----------
Income from operations 28,881 (3,051) 25,830
Interest income 92 ( 4) (p) 88
Interest expense 10,096 ( 15) ( 1,177)(q) 8,904
Other income (expense), net 498 ( 234) 264
----------- ----------- ----------- -----------
Income before provision for income taxes 19,375 (3,274) 1,177 17,278
Provision for income taxes 869 869
----------- ----------- ----------- -----------
Net income $18,506 ($3,274) 1,177 $16,409
=========== =========== =========== ===========
Net income allocated to partners:
General partner $185 ( $33) $12 $164
----------- ----------- ----------- -----------
Class A limited partners $12,210 $12,210
----------- ----------- ----------- -----------
Class B limited partners $6,111 ( $3,241) $1,165 $4,035
----------- ----------- ----------- -----------
Weighted average number of outstanding
limited partnership interests:
- Class A interests 11,099,573 11,099,573 11,099,573 11,099,573
- Class B interests 21,675,746 21,675,746 21,675,746 21,675,746
Earnings per limited partnership interest:
- Class A interest $1.10 $1.10
- Class B interest $.28 ( $.15) $.05 $.19
</TABLE>
SEE ACCOMPANYING NOTES TO PRO FORMA FINANCIAL INFORMATION
Page 6 of 11
<PAGE>
SUN DISTRIBUTORS L. P. AND SUBSIDIARY
NOTES TO PRO FORMA FINANCIAL INFORMATION
(UNAUDITED)
(dollars in thousands)
1. Basis of Presentation
The pro forma financial information is unaudited and assumes that the
transaction for which the pro forma effects are shown occurred as of
September 30, 1994, for the pro forma consolidated balance sheet and as of
January 1, 1993, for the pro forma consolidated statements of income.
The gain on the sale of the three Electrical Group Divisions of
approximately $2,800 and other non-recurring items related to the sale have
been excluded from the accompanying pro forma consolidated statements of
income, as such amounts do not represent on-going income or costs of
operations.
2. Pro forma adjustments to consolidated balance sheet:
(a) Adjustment to reflect the elimination of historical assets and
liabilities as of September 30, 1994 of the three Electrical
Group Divisions.
(b) Adjustment to reflect remaining cash proceeds from the sale of the
three Electrical Group Divisions after application of cash reflected
in pro forma adjustments (d), (h), (i), (j) and (k) listed below.
(c) Adjustment to reflect the estimated Electrical Group Divisions'
accounts receivable balances not sold on December 5, 1994.
(d) Adjustment to reflect the portion of aggregate consideration held in
escrow as of December 5, 1994.
(e) Adjustment to reflect Electrical Group Divisions' properties not sold
on December 5, 1994.
(f) Adjustment to reflect a division of the Electrical Group prepaid
pension asset not sold on December 5, 1994.
Page 7 of 11
<PAGE>
SUN DISTRIBUTORS L.P. AND SUBSIDIARY, Continued
NOTES TO PRO FORMA FINANCIAL INFORMATION
(UNAUDITED)
(dollars in thousands)
2. Pro forma adjustments to consolidated balance sheet (continued):
(g) Adjustment to reflect estimated tax distribution required to be paid
to Class B interest holders as a result of the capital gain recognized
from the sale transaction.
(h) Adjustment to reflect accrued expenses related to sale of three
Electrical Group Divisions, such as investment banking fees, legal,
severance and other divestiture costs.
(i) Adjustment to reflect mandatory repayment of senior notes in
accordance with Note Purchase Agreement dated December 15, 1992.
(j) Adjustment to reflect repayment of outstanding bank revolving credit
borrowings.
(k) Adjustment to reflect net assets sold based on September 30, 1994 book
values plus estimated capital gain recognized less required tax
distribution (reference Note 1 and pro forma adjustments (a) and (g).
3. Pro forma adjustments to consolidated statement of income for the nine
months ended September 30, 1994:
(l) Adjustments to reflect elimination of the results of operations for
the Electrical Group Divisions for the nine months ended September 30,
1994.
(m) Interest income that would have been earned from excess cash balances
approximates $130 for the nine months ended September 30, 1994 based
on an assumed short-term investment rate of 3.5%. This amount is not
reflected in the accompanying pro forma consolidated statement of
income.
Page 8 of 11
<PAGE>
SUN DISTRIBUTORS L.P. AND SUBSIDIARY, Continued
NOTES TO PRO FORMA FINANCIAL INFORMATION
(UNAUDITED)
(dollars in thousands)
3. Pro forma adjustments to consolidated statement of income for the nine
months ended September 30, 1994 (continued):
(n) Adjustment to reflect reduced interest expense resulting from the
repayment of the outstanding bank revolving credit borrowings and
senior notes (reference pro forma adjustments (i) and (j).
4. Pro forma adjustments to consolidated statement of income for the year
ended December 31, 1993:
(o) Adjustments to reflect elimination of the results of operations for
the Electrical Group Divisions for the year ended December 31, 1993.
(p) Interest income that would have been earned from excess cash balances
approximates $308 for the year ended December 31, 1993 based on an
assumed short-term investment rate of 3.7%. This amount is not
reflected on the accompanying pro forma consolidated statement of
income.
(q) Adjustment to reflect reduced interest expense resulting from the
repayment of the outstanding bank revolving credit borrowings and
senior notes (reference pro forma adjustments (i) and (j).
Page 9 of 11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SUN DISTRIBUTORS L.P.
By /s/ Louis J. Cissone
--------------------------
Louis J. Cissone
Senior Vice President and
Chief Financial Officer
DATE: December 20, 1994
Page 10 of 11
<PAGE>
EXHIBIT INDEX
Exhibit
Number Page
- - ------ ----
2.1 Asset Purchase Agreement for the Acquisition
of the Assets of the Electrical Products Group
Division of SDI Operating Partners, L.P. by
Consolidated Electrical Distributors, Inc.,
dated as of October 4, 1994, as amended. 12
Page 11 of 11
<PAGE>
FINAL
Exhibit 2.1
ASSET PURCHASE AGREEMENT
FOR THE
ACQUISITION OF THE ASSETS
OF
THE ELECTRICAL PRODUCTS GROUP DIVISION
OF
SDI OPERATING PARTNERS, L.P.
BY
CONSOLIDATED ELECTRICAL DISTRIBUTORS, INC.
Dated as of October 4, 1994
<PAGE>
ASSET PURCHASE AGREEMENT
AGREEMENT dated as of October 4, 1994 between SDI OPERATING PARTNERS, L.P.,
a Delaware limited partnership (the "Seller") and CONSOLIDATED ELECTRICAL
DISTRIBUTORS, INC., a Delaware corporation (the "Buyer").
The Electrical Products Group Division of the Seller (the "Division") is
engaged principally in the business of distribution of electrical products and
components in the Midwestern and Southern United States. The Seller desires to
sell certain assets and properties of the Seller, comprising the Division, to
the Buyer, and the Buyer desires to acquire the same from the Seller, upon and
subject to the terms and conditions hereinafter set forth.
NOW, THEREFORE, the parties hereto, intending to be legally bound hereby,
agree as follows:
1. Sale and Purchase of Assets.
---------------------------
1.1 Assets to be Purchased. At the Closing hereunder, the Seller will
sell to the Buyer, and the Buyer will purchase from the Seller, (a) all of
Seller's right, title and interest in and to those assets reflected in the
Division's June 30 Balance Sheet (as hereinafter defined), with only such
changes therein as shall have occurred between June 30, 1994 and the Closing
Date (as hereinafter defined) in the ordinary course of business or as are
permitted or contemplated by this Agreement, (b) all rights of Seller with
<PAGE>
respect to the business of the Division under all trade names, agreements,
contracts, commitments, leases, plans, bids, quotations, proposals, licenses,
permits, authorizations, instruments and other documents to which it is a party
or by which it has rights, but only to the extent that such items relate
specifically and directly to the Division, and (c) the business and operations
of the Division as a going concern; provided, however, that the assets to be
-----------------
sold shall not include (i) cash and cash items other than petty cash and bonds
or deposits with suppliers or customers, (ii) tax refunds and (iii) insurance
policies and claims thereunder.
All of the assets and business to be sold by the Seller are hereinafter
referred to collectively as the "Purchased Assets".
1.2 Determination and Payment of Purchase Price. The Seller and the
-------------------------------------------
Buyer shall cause a physical inventory (under the observation of Coopers &
Lybrand, the Seller's accountants, and Price Waterhouse, the Buyer's
accountants) and valuation (herein called the "Closing Valuation") to be made
with respect to the Division as of the close of business on the Transfer Date
(the Thursday preceding the Closing) to determine the value of the Purchased
Assets and the consideration to be paid by the Buyer to the Seller, on the
following basis:
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<PAGE>
(a) Inventory. Inventory shall be priced on an item-by-item basis
---------
at the lower of cost or market. For purposes of the preceding sentence "cost"
shall be determined with reference to the inventory valuation systems used by
the Division in the ordinary course of its business, and "market" shall be
determined by using current manufacturers' price sheets to distributors and
applying all discounts available to the Division. The inventory obsolescence
reserve shall equal the greater of 5% of total gross inventory value or
$675,000.
(b) Trade Accounts Receivable. All of the Seller's trade accounts
-------------------------
receivable which are outstanding at the close of business on the Transfer Date
shall be valued at the face amount thereof, except those which at the Transfer
Date (i) constitute inter-company accounts, (ii) have been assigned or
otherwise turned over for collection, (iii) are the subject matter of any then
outstanding litigation, (iv) have been on the Seller's books for more than 90
days, irrespective of whether there is collateral security therefor, or (v) have
heretofore been written off as uncollectible by the Seller.
(c) Other Assets. All of the Purchased Assets, other than those
------------
specifically valued in the preceding subparagraphs hereof, shall be valued
based on generally accepted accounting principles adopted by the Division, on a
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<PAGE>
consistent basis, except that Goodwill and Other Intangible Assets shall be
valued at zero.
The cash consideration payable to the Seller by the Buyer
hereunder shall be $12,300,000 plus the value of the Seller's Purchased Assets
as hereinabove determined, reduced by the amount of the Seller's liabilities
and credit balances to be assumed by the Buyer pursuant to Section 1.3 hereof.
(d) Liabilities Not Assumed. The Buyer shall not assume or be
-----------------------
liable for any liabilities or obligations of the Seller other than those herein
expressly agreed to by the Buyer. All other liabilities and obligations of the
Seller shall be paid, performed and discharged by it in due course as such
liabilities and obligations become due.
(e) Payment, Escrow and Post-Closing Adjustments. At the Closing,
--------------------------------------------
the Buyer shall pay to the Seller by wire transfer in accordance with the
Seller's written instructions the estimated aggregate cash consideration for the
Purchased Assets, calculated as set forth in this Section 1.2, less $2,500,000.
The Buyer shall deposit said sum of $2,500,000 in escrow with CoreStates Bank,
N.A., Philadelphia, from which the Seller shall be paid any balance of said
consideration after effecting post-closing adjustments, including adjustments
for (x) inventory valuation pursuant to this Section 1.2 and (y) the accounts
receivable adjustments provided for in Section 1.2(f) hereof, (the "Post-Closing
Adjustments"), and the satisfaction of
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<PAGE>
claims against the escrow as provided in Section 13 of this Agreement. The
Escrow Agreement shall be substantially in the form attached hereto as
Exhibit A. Post-closing Adjustments shall be prepared by the Buyer and
submitted to the Seller and its accountants within sixty days following the
closing. The Seller's accountants shall be entitled to have the same access to
the Division's records and personnel as they would have in conducting an annual
audit. The Seller shall have thirty days thereafter within which to object to
the Buyer's calculation of Post-closing Adjustments. Upon objection the matter
of the Post-closing Adjustments shall be submitted to the firm of Deloitte
Touche which shall act as arbitrator to conclusively determine the Post-closing
Adjustments in accordance with the provisions of this Agreement. Upon
determination of the Post-closing Adjustments as herein provided, the amount of
the escrow shall be reduced to $400,000, and the parties shall give appropriate
written instructions to the Escrow Holder to that effect.
(f) Uncollected Accounts Receivable. At any time within thirty days
-------------------------------
after four months from the Closing Date, the Buyer may notify the Seller of any
accounts receivable of the Seller which were included in the Closing Valuation
and are then unpaid, and the Seller shall thereupon pay to the Buyer the amount
of such accounts less any collections received after the Transfer Date on
accounts
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<PAGE>
which were not included in the Closing Valuation. If the collections should
exceed the amount of unpaid accounts, the excess shall be paid by the Buyer to
the Seller. For purposes of this Section, all payments received after the
Transfer Date from a customer of the Seller shall, unless application to a
specified account is otherwise directed by the customer, be applied first to
the oldest account owing by such customer as of the Transfer Date. The Buyer
shall use its best efforts and exercise due diligence to collect all accounts
receivable of the Seller shown on the Closing Valuation; provided that any
collection or attorneys' fees or other costs incurred in connection therewith
shall be charged to the Seller; and provided further that the Buyer shall not be
required to take any action against an account debtor if, in the opinion of the
Buyer, it would be detrimental to the business relationship between any such
debtor and Buyer to do so.
The Buyer shall provide the Seller with reports as of the first day of each
month with respect to the collection of the accounts receivable. Upon payment
by the Seller pursuant to this Section 1.2(f), the Buyer shall transfer and
assign to the Seller, without recourse, all accounts receivable which are
uncollected.
1.3 Assumption of Liabilities and Obligations.
-----------------------------------------
(a) Except as otherwise provided in paragraph (b) of this Section
1.3 at and effective as of the Closing,
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<PAGE>
the Buyer shall assume and agree to pay, discharge and perform, as appropriate,
the following liabilities and obligations of the Seller relating to the
Division:
(i) all liabilities and obligations of the Seller relating to
the Division as of the Closing reflected or reserved against in the
Closing Valuation and not paid or discharged prior to the Closing;
(ii) all liabilities and obligations of the Seller relating to
the Division arising in the ordinary course from and after the Closing
Date;
(iii) all liabilities and obligations of the Seller relating to
the Division arising from and after the Closing Date in respect of
contracts, agreements, leases, mortgages and commitments that are (A)
specifically identified as being assumed by the Buyer hereunder in the
Schedule (as hereinafter defined) called for by Section 3.8 or (B) not
required to be identified in the Schedule in accordance with the
provisions of that Section; and
(iv) all other liabilities and obligations listed in the
Schedule as being assumed by the Buyer.
(b) Notwithstanding paragraph (a) of this Section 1.3, in no event
shall the Buyer assume, agree to pay, discharge or perform, or incur, as the
case may be, any liability or obligation under this Section 1.3 or otherwise
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<PAGE>
in respect of any liability or obligation in respect of any federal, state
or local income or sales tax.
All of the liabilities and obligations assumed by the Buyer pursuant to
this Section 1.3 are hereinafter referred to collectively as the "Assumed
Liabilities".
1.4 Allocation of Purchase Price. The Purchase Price shall be allocated
----------------------------
among the Purchased Assets as mutually agreed between the parties and the
parties agree that neither of them will take any position for income tax
purposes which is inconsistent with such allocation.
1.5 Use of Name. The Seller agrees that following the Closing it shall
-----------
refrain from using the names American Electric Company, Keathley-Patterson and
Philips & Co. and that all rights of the Seller in those names shall be
assigned to the Buyer.
2. Closing.
-------
2.1 Time and Place of Closing. The closing (the "Closing") of the sale
-------------------------
and purchase of the Purchased Assets shall take place at 10:00A.M. on December
5, 1994 (the "Closing Date") at the offices of Morgan, Lewis & Bockius,
2000 One Logan Square, Philadelphia, Pennsylvania, or at such other time and
place as the parties shall mutually agree in writing.
2.2 Items to be Delivered at Closing.
--------------------------------
(a) At the Closing, the Seller will deliver to the Buyer a bill of
sale for the Purchased Assets, deeds
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<PAGE>
for the Real Property disclosed in the Schedule pursuant to Section 3.7(c)
and such other assignments, endorsements and other good and sufficient
instruments and documents of conveyance and transfer, in form satisfactory to
the Buyer and its counsel, as shall be necessary and effective to convey,
transfer and assign to, and vest in, the Buyer all of the Seller's right, title
and interest in and to the Purchased Assets, including without limitation, (i)
good, valid and marketable title in and to all of the Purchased Assets owned by
the Seller, (ii) good and valid leasehold interests in and to all of the
Purchased Assets leased by the Seller and (iii) all of the Seller's rights
under all agreements, contracts, commitments, leases, plans, bids, quotations,
proposals, licenses, permits, authorizations, instruments and other documents
comprising the Purchased Assets to which the Seller is a party or by which it
has rights on the Closing Date.
(b) At the Closing, the Buyer will deliver to the Seller an
undertaking whereby the Buyer will assume and agree to pay, discharge or
perform, as appropriate, the Assumed Liabilities as provided in Section 1.3.
2.3 Further Assurances. Following the Closing, at the request of the
------------------
Buyer, the Seller will execute, acknowledge and deliver to the Buyer such other
instruments of conveyance and transfer and will take such other actions and
execute and deliver such other documents, certifications
- 9 -
<PAGE>
and further assurances as the Buyer may reasonably require in order to vest
more effectively in the Buyer, or to put the Buyer more fully in possession of,
any of the Purchased Assets, or to better enable the Buyer to complete,
perform or discharge any of the Assumed Liabilities assumed by the Buyer at the
Closing pursuant to Section 1.3 hereof.
3. Representations and Warranties of the Seller. The Seller represents and
--------------------------------------------
warrants to the Buyer as follows:
3.1 Organization and Powers. The Seller is a limited partnership duly
-----------------------
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite power and authority to own its properties and
assets and carry on its business as now conducted.
3.2 Power and Authorization. The Seller has full authority to execute
-----------------------
and deliver this Agreement and to carry out the transactions contemplated
hereby. The execution and delivery of this Agreement by the Seller have been
duly authorized by all necessary partnership action. This Agreement is binding
and enforceable upon the Seller in accordance with its terms.
3.3 Conflict with Other Agreements, Approvals. With respect to the
-----------------------------------------
following:
(a) the Agreement of Limited Partnership of the Seller,
(b) any applicable law, statute, rule or regulation,
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<PAGE>
(c) any material agreement or instrument to which the Seller is a
party or may be bound, or
(d) any judgment, order, injunction, decree or ruling of any court
or governmental authority to which the Seller is a party or subject, except as
disclosed in the schedule to be delivered by the Seller to the Buyer as soon as
practicable after the date of this Agreement (the "Schedule"), the execution and
delivery by the Seller of this Agreement and the consummation of the
transactions contemplated hereby will not, to the knowledge of the Seller, (i)
result in any violation, conflict or default, or give to others any interest or
rights, including rights of termination, cancellation or acceleration, or (ii)
require any authorization, consent, approval, exemption or other action by any
court or administrative or governmental body which has not been obtained, or any
notice to or filing with any court or administrative or governmental body which
has not been given or done except for filings pursuant to the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 and the rules and regulations thereunder (the
"H-S-R Act").
3.4 Compliance with Law. Except as disclosed in the Schedule, to the
-------------------
knowledge of the Seller, the Seller's conduct of the business of the Division
is and has been in substantial compliance with all material applicable federal,
state, local or other governmental laws or ordinances, foreign or domestic, and
any material order, rule or
- 11 -
<PAGE>
regulation of any federal, state, local or other governmental agency or body,
foreign or domestic (including, without limitation, all environmental, energy,
safety, health, zoning, anti-discrimination, antitrust, wage and hour and price
and wage control laws, ordinances, orders, rules or regulations to the extent
any or all of the foregoing are applicable), the non-compliance with which, or
the violation of which would have a material adverse effect on the Purchased
Assets, Assumed Liabilities, financial condition, results of operations or
business prospects of the Division, and the Seller has received no claim or
notice of violation with respect thereto.
3.5 Financial Statements.
--------------------
(a) The Seller has delivered to the Buyer true and complete copies
of the following financial statements of the Division attached hereto as Exhibit
B:
Unaudited Balance Sheet of American Electric Company as of June 30, 1994
Unaudited Balance Sheet of Keathley-Patterson Electric Company as of June
30, 1994
Unaudited Balance Sheet of Philips & Company as of June 30, 1994
(b) Such financial statements have been prepared in accordance with
generally accepted accounting principles. The balance sheets fairly present the
financial condition, assets and liabilities of the Division at the date
- 12 -
<PAGE>
indicated. The balance sheets as of June 30, 1994 are referred to herein as
the June 30 Balance Sheet.
3.6 Absence of Adverse Changes or Events. Except as otherwise reflected
------------------------------------
in the Schedule, since June 30, 1994 there has been no change in the Purchased
Assets, Assumed Liabilities, financial condition, results of operations or
business prospects of the Division which has materially adversely affected or,
in the judgment of the Seller might materially adversely affect, the Purchased
Assets, Assumed Liabilities, financial condition, results of operations or
business prospects of the Division.
3.7 Assets.
------
(a) Except as disclosed in the Schedule, the Seller is the owner of
and has good and marketable title to all of the Purchased Assets, free and clear
of all mortgages, liens, pledges, charges or encumbrances or other third party
interests of any nature whatsoever, except (i) the lien of current taxes not yet
due and payable; and (ii) such imperfections of title, easements and
encumbrances, if any, as are not substantial in character, amount or extent and
do not materially detract from the value, or interfere with the present or
proposed use, of the properties subject thereto.
(b) The Purchased Assets are in good operating condition in all
material respects and are usable in the ordinary course of business, subject to
ordinary wear and tear.
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<PAGE>
(c) The Schedule sets forth all real estate included in the
Purchased Assets (the "Real Property") and the location of the Real Property.
The Seller will deliver to the Buyer as soon as practicable after the date of
this Agreement (i) a copy of each deed by which the Seller acquired title to or
interest in the Real Property, (ii) a copy of title abstracts and title
insurance policies which the Seller has for the Real Property, (iii) a copy of
the most recent survey or surveys the Seller has for the Real Property, (iv) a
copy of certificates of occupancy (or, if a copy is not readily obtainable,
confirmation that a certificate was in the past issued) for the improvements on
the Real Property and any notices of violation with respect to the Real
Property, including without limitation, notices relating to environmental laws,
and (v) a copy of any variance granted with respect to any of the Real Property
pursuant to applicable zoning laws or ordinances, all of which documents are
true and complete copies thereof as in effect on the date hereof. The Real
Property is zoned as set forth in the Schedule, and, to the knowledge of the
Seller, the conduct of the business of the Seller which is currently conducted
on the Real Property does not violate such zoning classification. To the
knowledge of the Seller, there are no public improvements, condominium or
association assessments against the Real Property. Except as set forth in the
Schedule, to the knowledge of the Seller, there is no
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<PAGE>
easement, covenant, right-of-way, agreement, license, lease, sublease,
occupancy agreement or restriction with respect to the Real Property. The
Seller has received no notices, oral or written, and has no reason to believe,
that any government body having jurisdiction over the Real Property intends to
exercise the power of eminent domain or similar power with respect to all or
any part of the Real Property.
3.8 Contracts. All written or oral contracts, agreements, leases,
---------
mortgages and commitments ("Contracts"), to which, with respect to the Division,
the Seller is a party or may be bound, are listed in the Schedule, except
Contracts relating to purchase or sales orders in the ordinary course of
business or involving a payment of less than $25,000 and which can be terminated
by the Seller within 30 days after written notice. To the knowledge of the
Seller, all Contracts are valid and in full force and effect on the date hereof
and the Seller has not violated any provision of, or committed or failed to
perform any act, which with notice, lapse of time or both would constitute a
default under the provisions of any Contract the termination of which would have
a material adverse effect upon the Purchased Assets, Assumed Liabilities,
financial condition, results of operations or business prospects of the
Division. Copies of all material written Contracts disclosed in the Schedule
have been made available to the Buyer.
- 15 -
<PAGE>
3.9 Litigation. Except as disclosed in the Schedule, to the knowledge
----------
of the Seller, (a) no claim, action, suit, arbitration, investigation or other
proceeding is pending or, to the knowledge of the Seller, threatened or known to
be contemplated, against the Seller with respect to the Division or any of its
properties before any court, governmental agency, authority or commission,
arbitrator or "impartial mediator", (b) there are no judgments, consents,
decrees, injunctions, or any other judicial or administrative mandates
outstanding against the Seller with respect to the Division and (c) no
litigation or claims have been brought or threatened, or are known to be
contemplated, respecting the transactions contemplated by this Agreement.
3.10 Employee Benefit Plans and Arrangements. The Schedule contains a
---------------------------------------
complete list of all employee benefit plans sponsored or maintained by the
Seller with respect to the Division. For the purposes hereof, the term
"employee benefit plan" includes all employee welfare benefit plans within the
meaning of section 3(1) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), and all employee pension benefit plans within the meaning
of section 3(2) of ERISA.
3.11 Patents and Trademarks. To the knowledge of the Seller, the Seller
----------------------
owns all foreign and United States patents, trademarks, service marks, trade
names, copyrights and applications with respect thereto, or has entered into a
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<PAGE>
subsisting license agreement with respect thereto, which are necessary for
the conduct of the business of the Division as now conducted and as heretofore
conducted, with no known conflict with, or infringement of, any patent,
trademark, service mark, trade name or copyright owned by any person. The
Schedule contains a complete and correct listing of all such patents,
trademarks, service marks, trade names, copyrights and applications with
respect thereto and license agreements.
3.12 Franchises, Licenses, Permits, etc.. To the knowledge of the
-----------------------------------
Seller, the Seller owns or possesses in the operation of the business of the
Division all franchises, licenses, permits, consents, approvals, waivers and
other authorizations, governmental or otherwise, which are necessary for it to
conduct the business of the Division as now or heretofore conducted
("Authorizations"), all of which are listed in the Schedule. To the knowledge of
the Seller, the Seller is not in default and has not received any notice of any
claim of default, with respect to any such Authorization, or any notice of any
other claim or proceeding or threatened proceeding relating to any such
Authorization or claimed lack of any necessary Authorization. Neither the
execution or delivery of this Agreement nor the consummation of the transactions
contemplated hereby will have any materially adverse effect upon any such
Authorization except as disclosed in the Schedule.
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<PAGE>
3.13 Right to Rescind. The Buyer shall have the right to rescind this
----------------
Agreement within 15 days after the delivery of the Schedule if in its good
faith judgment the Schedule is not reasonably satisfactory to the Buyer.
4. Representations and Warranties of the Buyer. The Buyer represents and
-------------------------------------------
warrants to the Seller as follows:
4.1 Organization and Powers. The Buyer is a corporation duly organized,
-----------------------
validly existing and in good standing under the laws of the State of Delaware
and has all requisite power and authority to own its properties and assets and
carry on its business as now conducted.
4.2 Power and Authorization. The Buyer has full authority to execute
-----------------------
and deliver this Agreement and carry out the transactions contemplated hereby.
The execution and delivery of this Agreement by the Buyer have been duly
authorized by all necessary corporate action. This Agreement is binding and
enforceable upon the Buyer in accordance with its terms.
4.3 Conflict with Other Agreements, Approvals. With respect to the
-----------------------------------------
following:
(a) the Articles of Incorporation or Bylaws of the Buyer,
(b) any applicable law, statute, rule or regulation,
(c) any material agreement or instrument to which the Buyer is a
party or may be bound, or
- 18 -
<PAGE>
(d) any judgment, order, injunction, decree or ruling of any court
or governmental authority to which the Buyer is a party or subject, the
execution and delivery by the Buyer of this Agreement and the consummation of
the transactions contemplated hereby will not (i) result in any violation,
conflict or default, or give to others any interest or rights, including rights
of termination, cancellation or acceleration, or (ii) require any authorization,
consent, approval, exemption or other action by any court or administrative or
governmental body which has not been obtained, or any notice to or filing with
any court or administrative or governmental body which has not been obtained or
any notice to or filing with any court or administrative or governmental body
which has not been given or done except for filings pursuant to the H-S-R Act.
5. Conduct of Business of the Division Prior to Closing. The Seller
----------------------------------------------------
covenants to the Buyer that, except as may be approved in writing by the Buyer,
from and after the date hereof to the Closing Date:
5.1 Business. The Seller will conduct and operate the business of the
--------
Division only in the ordinary course consistent with past practice so as to
protect such business and to maintain the good will it now enjoys and, to the
extent consistent with such operations, use all reasonable efforts to preserve
intact the present business organization, keep available the services of its
present officers and
- 19 -
<PAGE>
employees, and preserve its relationships with suppliers, jobbers, distributors,
customers and others having business dealings with it. The Division shall not
enter into lease or purchase agreements pertaining to computers or related
equipment or software between the date hereof and the Closing without first
obtaining written consent of the Buyer.
5.2 Adverse Changes. The Seller will not take or omit to take any
---------------
action which action or omission would in its reasonable judgment cause any
material adverse change to occur in the Purchased Assets, Assumed Liabilities,
financial condition, results of operations or business prospects of the
Division.
5.3 Maintenance of Properties, Permits, Franchises, Licenses, etc. The
-------------------------------------------------------------
Seller will, at its own expense, maintain all of the properties used or useful
in the business of the Division in customary repair, order and condition,
except for reasonable wear and tear and damage by fire and unavoidable
casualty, and maintain in full force and effect all Authorizations currently in
effect.
5.4 Encumbrances. The Seller will not mortgage, pledge or otherwise
------------
subject to any lien, security interest, encumbrance or charge of any nature, any
of the Purchased Assets or become committed to do so, or permit or suffer any of
the Purchased Assets to become subject to any mortgage, pledge, lien, security
interest, encumbrance or charge of any
- 20 -
<PAGE>
nature, other than liens of current taxes not yet due and payable, or
become committed so to do.
6. H-S-R Act. As promptly as practicable after the execution of this
---------
Agreement, the Seller and the Buyer shall each make appropriate filings with
the Federal Trade Commission and the Department of Justice pursuant to the
H-S-R Act and shall comply with any and all reasonable requests for additional
information as soon as possible after receipt of such requests.
7. Consents. The Seller and the Buyer shall each use their best efforts to
--------
obtain all consents or authorizations of third parties which may be necessary
or reasonably required in order to effect the transactions contemplated by this
Agreement.
8. Access to Business and Records. (a) Between the date hereof and the
------------------------------
Closing Date and in the absence of any breach of this Agreement by either party,
the Seller grants to the Buyer and its officers, employees, attorneys,
accountants and agents, the right, during normal business hours, to inspect and
copy the books, records, properties and inventory of the Seller with respect to
the Division and to consult with officers, employees, attorneys and agents of
the Seller for the purpose of investigating the business of the Division and
determining the accuracy of the representations and warranties made herein;
provided that no visit or inspection of records shall be made pursuant to and
for the
- 21 -
<PAGE>
purposes of this Section 8 unless the Buyer shall first inform a Group Vice
President of the Seller of the proposed time and place of the proposed visit
and the general purposes thereof and coordinate with him the arrangements
therefor.
(b) For a period of five years after the Closing, the Buyer shall
preserve all files and records relating to the Division and shall allow
representatives of the Seller access to such files and records and the right to
make copies and extracts therefrom during normal business hours, provided that
commencing three years after the Closing the Buyer may give the Seller written
notice of its intention to dispose of any specified part of such files and
records, in which case the Seller may notify the Buyer within 60 days of
receipt of the notice of the Seller's desire to retain one or more of the items
to be disposed of and the Buyer shall thereupon deliver such items to the
Seller.
9. Confidential Information. If Closing does not take place hereunder, the
------------------------
Buyer shall keep confidential, and shall cause any of its representatives to
keep confidential, any information (unless ascertainable from public or
published information or trade sources) obtained from the Seller concerning the
operations and business of the Division.
10. Employees. Effective as of the Closing, the Buyer will offer employment
---------
to all active employees of the Division with compensation and benefit plans and
programs
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<PAGE>
substantially comparable to those in effect prior to the Closing.
10.A Covenant Not to Compete. The Seller agrees that for a period of five
-----------------------
years after the Closing Date it will not directly or indirectly engage in any
competitive business involving the sale or distribution of electrical products
in any market in which the Division conducts business on the Closing Date;
provided, however, that the Seller shall be entitled to engage in the inventory
- - -----------------
management business in the manner presently conducted by its SIMCO division
even though it involves the purchase and sale of electrical products.
11. Conditions to Obligation of the Buyer to Consummate Acquisition. The
---------------------------------------------------------------
obligation of the Buyer to consummate the asset purchase provided for in this
Agreement shall be subject to the following conditions:
11.1 Representations, Warranties and Covenants of the Seller. The
-------------------------------------------------------
representations and warranties of the Seller herein contained and the
information contained in the Schedule and any closing and other documents
delivered by the Seller in connection with this Agreement shall be true and
correct in all material respects at the Closing Date with the same effect as
though made at such time except to the extent waived hereunder or affected by
the transactions contemplated herein; the Seller shall have performed all
obligations and complied with all agreements, undertakings, covenants and
- 23 -
<PAGE>
conditions required by this Agreement to be performed or complied with by
it at or prior to the Closing Date; and the Seller shall have delivered to the
Buyer a certificate in form and substance reasonably satisfactory to the Buyer
dated the Closing Date and signed by a Vice President of the Seller to all such
effects.
11.2 Pending Litigation. There shall not be any litigation or proceeding
------------------
pending or threatened to restrain or invalidate the transactions contemplated
by this Agreement, the defense of which would, in the judgment of the Buyer,
made in good faith, involve expense or lapse of time that would be materially
adverse to the interests of the Buyer.
11.3 H-S-R Act Compliance. All applicable waiting periods under the
--------------------
H-S-R Act shall have expired or early termination thereof shall have been
granted.
11.4 Third Party Consents. The consent to or approval of the
--------------------
transactions contemplated by this Agreement from each person whose consent or
approval is required in the reasonable opinion of the Buyer shall have been
obtained.
11.5 Title Insurance, Surveys and Environmental Reports. The Buyer shall
--------------------------------------------------
have received current surveys and policies of title insurance as to each parcel
of the Real Property from reputable title insurance companies licensed to do
business in the State in which such Real Property is located, free of all
encroachments, exceptions, liens and
- 24 -
<PAGE>
encumbrances except those disclosed in the Schedule pursuant to Section 3.7(c).
In addition, the Buyer shall have received phase I environmental reports
satisfactory to it with respect to each parcel of Real Property which is
designated by the Buyer for such purpose within 15 days from the date the
Schedule is delivered hereunder. The costs of the surveys, title insurance and
environmental reports shall be borne by the Buyer.
11.6 Opinion of Counsel for the Seller. The Buyer shall have received an
---------------------------------
opinion dated the Closing Date of Morgan, Lewis & Bockius, counsel for the
Seller, satisfactory to the Buyer and its counsel, to the effect that:
(a) The Seller is a limited partnership duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
the requisite power under its Agreement of Limited Partnership to carry on its
business as now being conducted.
(b) All action required to have been taken by the Seller to
authorize and effect the execution and delivery of this Agreement by the Seller
and the carrying out of the transactions contemplated hereby has been taken;
this Agreement constitutes the legal, valid and binding obligation of the Seller
and is enforceable against it in accordance with its terms subject to any
bankruptcy, insolvency,
- 25 -
<PAGE>
moratorium or other laws affecting the enforcement of creditors' rights.
(c) With respect to the following:
(i) the Agreement of Limited Partnership of the Seller,
(ii) any applicable law, statute, rule or regulation,
(iii) any material agreement or instrument with respect to the
Division to which the Seller is a party or may be bound of which such
counsel has knowledge, or
(iv) any judgment, order, injunction, decree or ruling of any
court or governmental authority to which the Seller is a party or subject
of which such counsel has knowledge,
except as disclosed in the Schedule, the execution and delivery by the Seller of
this Agreement and the consummation of the transactions contemplated hereby will
not (A) result in any violation, conflict or default, or give to others any
interest or rights, including rights of termination, cancellation or
acceleration, or (B) require any g authorization, consent, approval, exemption
or other action by any court or administrative or governmental body which has
not been obtained, or any notice to or filing with any court or administrative
or governmental body which has not been given or done.
- 26 -
<PAGE>
11.7 Approval of Counsel. All steps to be taken and all papers and
-------------------
documents to be executed, and all other legal matters in connection with the
transactions contemplated by this Agreement shall be subject to the reasonable
approval of B. E. Lyons, Vice President and General Counsel of the Buyer.
11.8 Closing Documents. The Buyer shall have received such certificates
-----------------
and other closing documentation, as B. E. Lyons, Vice President and General
Counsel of the Buyer, may reasonably request.
12. Conditions to Obligation of the Seller to Consummate the Acquisition.
--------------------------------------------------------------------
The obligation of the Seller to consummate the asset purchase provided for in
this Agreement shall be subject to the following conditions:
12.1 Representations, Warranties and Covenants of the Buyer. The
------------------------------------------------------
representations and warranties of the Buyer contained herein and the
information contained in the closing and other documents delivered by the Buyer
in connection with this Agreement shall be true and correct in all material
respects at the Closing Date with the same effect as though made at such time;
the Buyer shall have performed all obligations and complied with all
agreements, undertakings, covenants and conditions required hereunder to be
performed or complied with by it at or prior to the Closing Date; and the Buyer
shall have delivered to the Seller a certificate of the Buyer in form and
substance satisfactory to the Seller
- 27 -
<PAGE>
dated the Closing Date and signed by a Vice President of the Buyer to all such
effects.
12.2 Pending Litigation. There shall not be any litigation or proceeding
------------------
pending or threatened to restrain or invalidate the transactions contemplated
by this Agreement, the defense of which would in the judgment of the Seller
made in good faith, involve expense or lapse of time that would be materially
adverse to the interests of the Seller.
12.3 H-S-R Act Compliance. All applicable waiting periods under the
--------------------
H-S-R Act shall have expired or early termination thereof shall have been
granted.
12.4 Opinion of Counsel for the Buyer. The Seller shall have received an
--------------------------------
opinion dated the Closing Date of B. E. Lyons, Vice President and General
Counsel of the Buyer, satisfactory to the Seller and its counsel, to the effect
that:
(a) The Buyer is a corporation duly formed, validly existing and in
good standing under the laws of the State of Delaware.
(b) All action required to have been taken by or on behalf of the
Buyer to authorize and effect the execution and delivery of this Agreement by
the Buyer and-the carrying out by the Buyer of the transactions contemplated
hereby has been taken; this Agreement constitutes the legal, valid and binding
obligation of the Buyer and is enforceable against it in accordance with its
terms, subject to any
- 28 -
<PAGE>
bankruptcy, insolvency, moratorium or other laws affecting the enforcement of
creditors' rights.
(c) With respect to the following:
(i) the Articles of Incorporation or Bylaws of the Buyer,
(ii) any applicable law, statute, rule or regulation,
(iii) any material agreement or instrument to which the Buyer
is a party or may be bound of which such counsel has knowledge, or
(iv) any judgment, order, injunction, decree or ruling of any
court or governmental authority to which the Buyer is a party or subject of
which such counsel has knowledge,
the execution and delivery by the Buyer of this Agreement and the consummation
of the transactions contemplated hereby will not (A) result in any violation,
conflict or default, or give to others any interest or rights, including rights
of termination, cancellation or acceleration, or (B) require any authorization,
consent, approval, exemption, or other action by any court or administrative or
governmental body which has not been obtained, or any notice to or filing with
any court or administrative or governmental body which has not been given or
done.
12.5 Approval of Counsel. All steps to be taken and all papers and
-------------------
documents to be executed, and all other
- 29 -
<PAGE>
legal matters in connection with the transactions contemplated by this
Agreement shall be subject to the reasonable approval of Morgan, Lewis &
Bockius, counsel for the Seller.
12.6 Closing Documents. The Seller shall have received such certificates
-----------------
and other closing documentation as Morgan, Lewis & Bockius, counsel for the
Seller, may reasonably request.
13. Survival of Representations and Warranties: Indemnification.
-----------------------------------------------------------
13.1 Survival Period. The representations and warranties given by the
---------------
Seller or the Buyer under this Agreement shall survive the Closing for a period
ending April 30, 1996; provided that in the case of claims by the Buyer against
the Seller recoverable damages for breach shall not in the aggregate exceed the
amount remaining in the Escrow Account provided for in Section 1.2(e) hereof.
13.2 Indemnification. The Seller hereby agrees to indemnify, defend and
---------------
hold the Buyer harmless from any and all losses, liabilities, claims, demands,
causes of action; suits or expenses which shall arise against or be incurred by
the Buyer because any of the representations or warranties made by the Seller
in this Agreement shall be alleged or shall prove to be false (whether or not
actually known to the Seller), or because of any breach by the Seller or any
- 30 -
<PAGE>
warranty or agreement contained in this Agreement; provided, that the Seller
shall not be liable to the Buyer except to the extent that the amount or amounts
for which it would otherwise (but for this provision) be liable exceed in the
aggregate the sum of $25,000 and then only to the extent of such excess.
13.3 Indemnification by the Buyer. The Buyer hereby agrees to indemnify,
----------------------------
defend and hold the Seller harmless from any and all losses, liabilities,
claims, demands, causes of action, suits or expenses which shall arise against
or be incurred bv the Seller with respect to the Assumed Liabilities.
13.4 Bulk Sales Laws. The parties hereby waive compliance with the bulk
---------------
sales law and any other similar laws in any applicable jurisdiction in respect
of the transactions contemplated by this Agreement.
14. Termination of Agreement.
------------------------
(a) Anything herein or elsewhere to the contrary notwithstanding,
this Agreement may be terminated by written notice of termination at any time
before the Closing Date only as follows:
(i) by mutual consent of the Buyer and the Seller;
(ii) by the Buyer (A) at any time if the representations and
warranties of the Seller contained in Section 3 hereof were materially
incorrect when made
- 31 -
<PAGE>
or (B) upon written notice to the Seller given at any time after January
31, 1995 (or such later date as shall have been specified in a writing
authorized on behalf of the Buyer and the Seller) if all of the conditions
precedent set forth in Section 11 hereof have not been met; or
(iii) by the Seller (A) at any time if the representations and
warranties of the Buyer contained in Section 4 hereof were materially
incorrect when made or (B) upon written notice to the Buyer by the Seller
given at any time after January 31, 1995 (or such later date as shall have
been specified in a writing authorized on behalf of the Buyer and the
Seller) if all of the conditions precedent set forth in Section 12 hereof
have not been met.
(b) In the event of the termination and abandonment hereof pursuant
to the provisions of this Section 15, this Agreement shall become void and have
no effect, without any liability on the part of any of the parties or their
partners, affiliates, directors, officers or shareholders in respect of this
Agreement except that the Buyer's obligations under Section 9 hereof shall
survive such termination.
15. Waiver of Terms. Any of the terms or conditions of this Agreement may
---------------
be waived at any time by the party which
- 32 -
<PAGE>
is entitled to the benefit thereof but only by a written notice signed by a
Vice President of the Seller or the Buyer.
16. Amendment of Agreement. This Agreement may be amended, supplemented or
----------------------
interpreted at any time only by written instrument duly executed by the Buyer
and the Seller.
17. Payment of Expenses. The Buyer and the Seller shall each pay their own
-------------------
expenses, including, without limitation, the expenses of their own counsel and
accountants and any broker's, finder's or similar agent's fee, incurred in
connection with this Agreement and the transactions contemplated hereby. The
Buyer shall pay any sales or other transfer taxes that may be due in connection
with the sale of the Purchased Assets to the Buyer.
18. Cooperation. Subject to the terms and conditions herein provided, each
-----------
of the parties hereto shall use its or their best efforts to take, or cause to
be taken, such action, to execute and deliver, or cause to be executed and
delivered, such governmental notifications and additional documents and
instruments and to do, or cause to be done, all things necessary, proper or
advisable under the provisions of this Agreement and under applicable law to
consummate and make effective the transactions contemplated by this Agreement.
19. Counterparts. This Agreement may be executed in two counterparts, each
------------
of which shall be deemed an original, but both of such counterparts together
shall be deemed to be
- 33 -
<PAGE>
one and the same instrument. It shall not be necessary in making proof of this
Agreement or any counterpart hereof to produce or account for the other
counterpart.
20. Contents of Agreement, Parties in Interest, Assignment, etc. This
------------------------------------------------------------
Agreement sets forth the entire understanding of the parties with respect to
the subject matter hereof. Any previous agreements or understandings between
the parties regarding the subject matter hereof are merged into and superseded
by this Agreement. All representations, warranties, covenants, terms and
conditions of this Agreement shall be binding upon and inure to the benefit of
and be enforceable by the respective successors and assigns of the parties
hereto. Nothing herein express or implied is intended or shall be construed to
confer upon or to give any person, other than the Buyer and the Seller and
their respective successors or assigns, any rights or remedies under or by
reason of this Agreement.
21. Section Headings, Gender and "Person". The section headings herein have
------------------------------------
been inserted for convenience of reference only and shall in no way modify or
restrict any of the terms or provisions hereof. The use of the masculine or any
other pronoun herein when referring to any party has been for convenience only
and shall be deemed to refer to the particular party intended regardless of the
actual gender of such party or whether such party is a corporate or other
entity. Any reference to a "person" herein shall include an
- 34 -
<PAGE>
individual, firm, corporation, partnership, trust, government or political
subdivision or agency or instrumentality thereof, association, unincorporated
organization or any other entity.
22. Notices. All notices, consents, waivers or other communications which
-------
are required or permitted hereunder shall be sufficient if given in writing and
delivered personally, by Federal Express or similar overnight delivery, by
telecopy or facsimile transmission, or by registered or certified mail, return
receipt requested, postage prepaid, as follows (or to such other addressee or
address as shall be set forth in a notice given in the same manner):
- 35 -
<PAGE>
If to the Seller:
SDI Operating Partners, L.P.
2600 One Logan Square
Philadelphia, PA 19103
Attention: Norman V. Edmonson
Group Vice President
With a required copy to:
Morgan, Lewis & Bockius
2000 One Logan Square
Philadelphia, PA 19103
Attention: Donald A. Scott, Esq.
If to the Buyer:
Consolidated Electrical Distributors, Inc.
31356 Via Colinas
Westlake Village, CA 91362
Attention: Thomas A. Lullo
Vice President-Finance & Administration
With a required copy to:
B. E. Lyons, Esquire
1516 Pontius Avenue
Los Angeles, CA 90025
All such notices shall be deemed to have been given on the date delivered,
telecopied or mailed in the manner provided above.
23. Governing Law. This Agreement shall be construed and interpreted in
-------------
accordance with the laws of the Commonwealth of Pennsylvania.
- 36 -
<PAGE>
IN WITNESS WHEREOF, this Asset Purchase Agreement has been executed as of
the day and year first above written.
SELLER:
-------
SDI OPERATING PARTNERS, L.P.
By SDI Partners I, L.P.,
Its General Partner
By Lehman/SDI, Inc.,
Its General Partner
By Norman V. Edmonson
-------------------------
Norman V. Edmonson
Vice President
BUYER:
-----
CONSOLIDATED ELECTRICAL
DISTRIBUTORS, INC.
By Thomas A. Lullo
-------------------------
Thomas A. Lullo
Vice President
- 37 -
<PAGE>
The Schedule to the Agreement is a
three volume notebook set on file
with Seller and Morgan, Lewis & Bockius.
<PAGE>
EXHIBIT A
<PAGE>
ESCROW AGREEMENT
THIS AGREEMENT, dated as of this __ day of October, 1994, is made and
entered into by and between CONSOLIDATED ELECTRICAL DISTRIBUTORS, INC., a
Delaware corporation ("Buyer"), SDI OPERATING PARTNERS, L.P., a Delaware limited
partnership ("Seller"), and _______________________ BANK ("Escrow Holder").
WITNESSETH:
WHEREAS, Buyer and Seller have entered into an Asset Purchase Agreement
dated October __, 1994, ("Purchase Agreement"), whereby Buyer is to acquire from
Seller substantially all of its assets;
WHEREAS, it is a condition to the Closing of the Purchase Agreement that
this Escrow Agreement be entered into by the parties hereto; and
WHEREAS, copies of the Purchase Agreement have been delivered to the Escrow
Holder, and the Escrow Holder is willing to act as an escrow agent hereunder;
NOW, THEREFORE, in consideration of the promises and of the mutual
covenants and agreements hereinafter set forth, and of other good and valuable
consideration, the parties hereto agree as follows:
1. Establishment of Escrow Fund.
----------------------------
(a) On the Closing, Buyer shall wire transfer to Escrow Holder the sum
of $________, as provided in Section 1.2(e) or the Purchase Agreement.
EXHIBIT A
-
l
<PAGE>
(b) As used herein, the term "Escrow Fund" moans (i) the funds being
delivered to the Escrow Holder pursuant to Section l(a) hereof, in whatever
form from time to time held or invested, and (ii) all amounts received on or in
respect of the aforesaid funds in whatever form from time to time held or
invested as provided herein.
(c) On the Closing, Buyer and Seller shall each provide Escrow Holder
with a completed Internal Revenue Service Form W-9.
(d) Capitalized terms not otherwise defined in this Agreement have the
meaning given to them in the Purchase Agreement.
2. Purpose of Escrow Fund. The Escrow Fund is established to make
----------------------
available funds in connection with (a) adjustments to the purchase price, as
provided in Section 1.2 of the Purchase Agreement, and (b) the satisfaction of
certain claims by Buyer against Seller, as provided in Section 13 and elsewhere
in the Purchase Agreement.
3. Investment of Funds: Income to be Retained as Past of Escrow Fund. The
-----------------------------------------------------------------
Escrow Holder shall invest (or reinvest) the Escrow Fund upon verbal
instructions followed up in writing from Seller and Buyer. Investments shall be
solely in U.S. Government obligations with a maximum term of ninety (90) days or
U.S. Government money market funds. Income from investment of the funds in the
Escrow Fund shall be retained in the Escrow Fund and shall be paid to either
2
<PAGE>
Buyer or Seller along with the principal to which it relates in accordance with
the provisions of Section 4 hereof.
4. Payments from Escrow Fund.
-------------------------
(a) For each payment from the Escrow Fund, Seller and Buyer shall
deliver to Escrow Holder a certificate executed by Seller and Buyer (the
"Certificate"), which Certificate shall specify (i) the dollar amount of the
funds in the Escrow Fund to be paid to Buyer and the dollar amount of the funds
in the Escrow Fund to be paid to Seller, and (ii) the date on which such payment
or payments shall be made by Escrow Holder. The Certificate must be delivered to
Escrow Holder at least five (5) calendar days prior to the date on which any
payment is to be made by Escrow Holder.
(b) Escrow Holder shall make any payment to Seller by direct deposit
to the account of Seller at ________________________ Bank, New York, account
number to be specified by Seller. Escrow Holder shall make any payment to Buyer
by wire transfer to the account of Buyer at Bank of America, N.T. & S.A.,
Corporate Services #1233, 1850 Gateway Boulevard, Concord, California 94520,
account number 6003-24150.
5. Termination of Escrow Fund.
--------------------------
(a) Except as hereinafter provided, the Escrow Fund shall terminate
upon the later of: (i) the date on which the Escrow Holder completes paying out
all of the Escrow Fund to either Buyer or Seller or both, or (ii) April 30,
1996.
3
<PAGE>
(b) Notwithstanding the foregoing, if there is any dispute between
Buyer and Seller concerning any matter relating to the transactions contemplated
by the Purchase Agreement and such dispute is being resolved in accordance with
the procedures described in the Purchase Agreement or otherwise, Escrow Holder
will continue to serve as Escrow Holder and to invest the Escrow Fund or a
portion thereof until Seller and Buyer deliver the Certificate required by
Section 4 hereof, or such Certificate is obviated by an order, judgment or award
which is issued by competent authority requiring disbursement of part or all of
the Escrow Fund.
(c) In the event of any dispute or misunderstanding, Escrow Holder
shall have the option to pursue any legal remedies which may be available to it,
including the right to deposit the subject matter hereof in interpleader in the
U.S. District Court for the Southern District of New York, and upon so doing to
be absolved from all further obligations or liability hereunder. Buyer and
Seller jointly and severally agree to pay to Escrow Holder a11 costs and
expenses incurred by Escrow Holder, including actual attorney's fees, in any
interpleader action.
6. Duties of Escrow Agent. Buyer and Seller hereby appoint the Escrow
----------------------
Holder to act as escrow holder hereunder and agree with the Escrow Holder that:
(a) The Escrow Holder shall have no duties or responsibilities except
as expressly provided in this
4
<PAGE>
Agreement and shall neither be obligated to recognize nor have any liability or
responsibility arising under any other agreement to which the Escrow Holder is
not a party, except as to provisions of such agreements which are expressly
incorporated herein.
(b) The Escrow Holder shall not be responsible for the sufficiency,
genuineness or validity of any instrument or writing delivered to it pursuant
to this Escrow Agreement; provided that the Escrow Holder reasonably believes
that such instrument or writing is genuine, sufficient and properly presented.
(c) The Escrow Holder shall not be liable or responsible for any act it
may do or not do in the exercise of reasonable care.
(d) In case any property held by the Escrow Holder hereunder shall be
attached, garnished or levied upon under any order of court, or the delivery
thereof shall be stayed or enjoined by any order of court, or any other order,
judgment or decree shall be made or entered by any court or arbitrator
affecting such property, or any part thereof, or any act of the Escrow Holder,
it is hereby expressly authorized, in its sole discretion, to obey and comply
with all writs, orders, judgments, decrees or arbitration awards. The Escrow
Holder shall not be liable to any of the parties hereof, their successors,
heirs or personal representatives or to any other person, firm or corporation
by reason of such compliance, notwithstanding
5
<PAGE>
that any such writ, order, judgment, decree or arbitration award be subsequently
reversed, modified, annulled, set aside or vacated.
(e) The Escrow Holder shall be entitled to reasonable compensation for
its services hereunder and shall be reimbursed for all reasonable expenses,
disbursements and advances (including reasonable attorneys' fees and expenses)
incurred or made by it in performance of its duties hereunder. One-half (1/2) of
such compensation and reimbursements shall be paid by Buyer and one-half (1/2)
by Seller upon request by Escrow Holder and, in the case of any reimbursement,
upon submission to Buyer and Seller of a reasonably detailed itemized statement
relating to the amounts to be reimbursed.
(f) The Escrow Holder may resign by transmitting thirty (30) days'
advance written notice thereof to Buyer and Seller. In the event of any such
resignation, Buyer and Seller may jointly appoint a successor Escrow Holder
which shall be a National Bank doing business in New York. Any successor Escrow
Holder shall have all of the rights, obligations and immunities of the Escrow
Holder as set forth herein.
7. Notices. Any notice or other communication
-------
6
<PAGE>
provided for or allowed hereunder shall be considered to have been validly given
if delivered personally, and evidenced by a receipt signed by an authorized
agent or addressee, or 72 hours after being deposited in the United States mail,
registered or certified, postage prepaid, return receipt requested, or 48 hours
after being sent by Federal Express or other courier service, or, in the case of
telecopied notice, when telecopied receipt acknowledged, and addressed as
provided below.
If to Buyer, at: 31356 Via Colinas
Westlake Village, CA 91362
Attn.: T. A. Lullo,
Vice President
Telephone: (818) 991-9000
Telecopier: (818) 991-6842
If to Seller, at: Sun Distributors, L.P.
c/o Lehman Brothers, Inc.
3 World Financial Ctr.
18th Floor
New York, NY 10285
Attn.: Mr. Peter A. Hunt,
Vice President
Telephone: (212) 298-2992
Telecopier: (212) 619-7165
If to Escrow Holder, at: __________________ Bank
______________________________
______________________________
Attn.: _______________________
Telephone: ( ) -
--------------------
Telecopier: ( ) -
--------------------
The addresses to which notices or demands are to be given
7
<PAGE>
may be changed from time to time by notice served as provided above.
8. Sections and Other Headings. Sections and other headings contained in
---------------------------
this Agreement are for reference purposes only and shall not affect in any way
the meaning and interpretation of this Agreement.
9. Counterpart Execution. This Agreement may be executed in two or more
---------------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one and the same instrument.
10. Integrated Agreement. The Purchase Agreement and this Agreement
--------------------
constitute the entire agreement between the parties hereto, and there are no
agreements, understandings, restrictions, warranties or representations between
the parties other than those set forth herein or herein provided for. No
amendment or modification of this Agreement shall be binding on the parties
unless the same shall be in writing and executed by them.
11. Succession. Subject to provisions herein contained with respect
----------
to the assignment of rights hereunder, this Agreement shall be binding on and
inure to the benefit of the respective parties' heirs, executors,
8
<PAGE>
administrators, successors and assigns.
WITNESS the due execution hereof as of the day and year first above
written.
SDI OPERATING PARTNERS, L.P. CONSOLIDATED ELECTRICAL
DISTRIBUTORS, INC.
By_____________________________ By_____________________________
Its__________________________ Its__________________________
____________________ Bank
By_____________________________
Its__________________________
9
<PAGE>
EXHIBIT B
<PAGE>
AMERICAN ELECTRIC COMPANY
BALANCE SHEET
As of 6/30/94
(In Thousands)
<TABLE>
<CAPTION>
ASSETS
- - ------
<S> <C>
Current Assets
Cash $ 53
Cash Equivalents ---
Accounts Receivable 6,596
Intercompany Receivable (Payable) 41
Notes Receivable 70
Less: Reserve for Bad Debts (172)
Inventories
Materials and Supplies 7,999
Less: Inventory Reserves (80)
Other Current Assets 44
TOTAL CURRENT ASSETS 14,551
------
Long Term Accounts and Notes Receivable:
Accounts Receivable ---
Notes Receivable ---
Investment in Affiliated Companies ---
Other Investments ---
Property, Plant, & Equipment 3,694
Less: Accumulated Depreciation (2,456)
Property, Plant & Equipment, Net 1,238
Deferred Charges & Other Assets
Prepaid Pension ---
Goodwill 2,746
Intangible Assets 260
Other Assets 20
TOTAL ASSETS $18,815
======
</TABLE>
<PAGE>
AMERICAN ELECTRIC COMPANY
BALANCE SHEET
As of 6/30/94
(In Thousands)
<TABLE>
<CAPTION>
LIABILITIES & STOCKHOLDERS' EOUITY
- - ----------------------------------
<S> <C>
Current Liabilities
Accounts Payable $ 5,322
Trade Notes Payable ---
Short-Term Bank Borrowings ---
Current Portion of Long Term Debt ---
Current Portion of Capitalized Lease Obligations 60
Taxes, Other than Income Taxes Payable 223
Income Taxes Payable ---
Accrued Salaries, Wages, and Bonuses 225
Other Accrued Liabilities 282
TOTAL CURRENT LIABILITIES 6,112
Long Term Debt ---
Long Term Capitalized Lease Obligations 12
Deferred Credits & Other Non-Current Liabilities 2
Capital
Capital Investment - Beginning of Year 12,302
Capital Contributions ---
(Dividends) (674)
Net Income (Loss) 1,061
End of Period - Capital Investment 12,689
Capital Investment - End of Period 12,689
TOTAL LIABILITIES AND CAPITAL $18,815
======
</TABLE>
<PAGE>
KEATHLEY-PATTERSON ELECTRIC COMPANY
BALANCE SHEET
As of 6/30/94
(In Thousands)
<TABLE>
<CAPTION>
ASSETS
- - ------
<S> <C>
Current Assets
Cash $ (12)
Cash Equivalents ---
Accounts Receivable 4,796
Intercompany Receivable (Payable) 49
Notes Receivable 43
Less: Reserve for Bad Debts (123)
Inventories
Materials and Supplies 3,920
Less: Inventory Reserves (175)
Other Current Assets 26
TOTAL CURRENT ASSETS 8,524
------
Long Term Accounts and Notes Receivable
Accounts Receivable ---
Notes Receivable ---
Investment in Affiliated Companies ---
Other Investments ---
Property, Plant, & Equipment 1,573
Less: Accumulated Depreciation (1,192)
Property, Plant & Equipment, Net 381
Deferred Charges & Other Assets:
Prepaid Pension ---
Goodwill 1,698
Intangible Assets ---
Other Assets 7
TOTAL ASSETS $10,610
======
</TABLE>
<PAGE>
KEATHLEY-PATTERSON ELECTRIC COMPANY
BALANCE SHEET
As of 6/30/94
(In Thousands)
<TABLE>
<CAPTION>
LIABILITIES & STOCKHOLDERS' EQUITY
- - ----------------------------------
<S> <C>
Current Liabilities
Accounts Payable $ 3,415
Trade Notes Payable ---
Short-Term Bank Borrowings ---
Current Portion of Long Term Debt ---
Current Portion of Capitalized Lease Obligations ---
Taxes, Other than Income Taxes Payable 22
Income Taxes Payable ---
Accrued Salaries, Wages, and Bonuses 129
Other Accrued Liabilities 651
TOTAL CURRENT LIABILITIES 4,217
Long Term Debt ---
Long Term Capitalized Lease Obligations ---
Deferred Credits & Other Non-Current Liabilities ---
Capital
Capital Investment - Beginning of Year 6,389
Capital Contributions ---
(Dividends) (792)
Net Income (Loss) 796
End of Period - Capital Investment 6,393
Capital Investment - End of Period 6,393
TOTAL LIABILITIES AND CAPITAL $10,610
======
</TABLE>
<PAGE>
Philips & Company
Balance Sheet
As Of: June 30, 1994
($M)
<TABLE>
<CAPTION>
ASSETS
- - ------
<S> <C>
Current Assets
Cash (62)
Cash Equivalents 0
Accounts Receivable 2,719
Intercompany Receivable (Payable) 0
Notes Receivable 24
Less: Reserve for Bad Debts (50)
Inventories
Materials and Supplies 3,058
Less: Inventory Reserves (15)
Other Current Assets 84
TOTAL CURRENT ASSETS 5,758
Long-Term Accounts and Notes Receivable
Accounts Receivable 0
Notes Receivable 0
Investment in Affiliated Companies 0
Other Investments 0
Property, Plant, & Equipment 1,113
Less: Accumulated Depreciation (703)
Property, Plant & Equipment, Net 410
Deferred Charges & Other Assets:
Prepaid Pension 0
Goodwill 932
Intangible Assets 0
Other Assets 0
TOTAL ASSETS 7,100
</TABLE>
<PAGE>
Philips & Company
Balance Sheet
As Of: June 30, 1994
($M)
<TABLE>
<CAPTION>
LIABILITIES & CAPITAL
- - ---------------------
<S> <C>
Current Liabilities
Accounts Payable 1,836
Trade Notes Payable 0
Short-Term Bank Borrowings 0
Current Portion of Long Term Debt 0
Current Portion of Capitalized Lease Obligations 0
Taxes, Other than Income Taxes Payable 193
Income Taxes Payable 0
Accrued Salaries, Wages, and Bonuses 176
Other Accrued Liabilities 114
TOTAL CURRENT LIABILITIES 2,319
Long-Term Debt 0
Long-Term Capitalized Lease Obligations 0
Deferred Credits & Other Non-Current Liabilities 0
TOTAL LIABILITIES 2,319
<CAPTION>
Capital
- - -------
<S> <C>
Capital Investment - Beginning of Year 5,053
Capital Contributions 0
(Dividends) (444)
Net Income (Loss) 172
End of Period - Capital Investment 4,781
Capital Investment - End of Period 4,781
TOTAL LIABILITIES AND CAPITAL 7,100
</TABLE>
<PAGE>
AMENDMENT TO ASSET PURCHASE AGREEMENT
AMENDMENT TO ASSET PURCHASE AGREEMENT dated as of October 4, 1994
("Agreement"), between SDI OPERATING PARTNERS, L.P. ("Seller") and CONSOLIDATED
ELECTRICAL DISTRIBUTORS, INC. ("Buyer"). Capitalized terms defined in the
Agreement shall have the same meaning in this Amendment.
Seller and Buyer, intending to be legally bound hereby, amend the Agreement
as follows:
1. Notwithstanding any provision of the Agreement or the Schedule to the
contrary or in any way limiting Seller's liability to Buyer, such as the
"basket" provision contained in Section 13.2 of the Agreement:
1.1 Buyer shall not assume any obligations by way of Assumed
Liabilities or otherwise, and Seller shall indemnify, defend and hold Buyer
harmless, with respect to:
(a) All claims referred to and described in Schedule 3.9;
(b) All tax audits and claims for taxes, interest and penalties,
including without limitation sales, use and property taxes, relating to any
period prior to the date hereof;
(c) All employee compensation claims (including without limitation
vacation pay, sales commissions, individual incentive plans and sales promotions
in excess of
1
<PAGE>
the amounts accrued in the Closing Valuation) relating to any period prior to
the date hereof;
(d) Disputes between Seller and vendors; and
(e) Sales returns and chargebacks in connection with material
supplied by Seller prior to the date hereof.
1.2 With respect to disputes between Seller and vendors, as well as
sales returns and chargebacks, Buyer shall have the right to settle all such
matters on behalf of Seller in compliance with custom, usage and standards
applicable to the electrical distribution industry. Such right of Buyer shall
continue for the period following the Closing up to and including April 30,
1996. Any amounts payable by Seller as a consequence of the resolution of such
matters shall be paid promptly by Seller to the vendor, customer or Buyer, as
the case may be; provided that the foregoing provisions are not intended to
duplicate the provisions of Section 1.2(f) of the Agreement. Buyer shall inform
Seller in writing of any such matter involving more than $2,500 promptly upon
learning of it.
1.3 Seller shall be responsible for, and shall indemnify, defend and
hold Buyer harmless for, all compensation in the nature of severance pay which
becomes payable during a period ending June 5, 1994, to any employee
2
<PAGE>
of Seller who is not hired by Buyer or who is terminated by Buyer.
2. Notwithstanding any provision of the Agreement or the Schedule to the
contrary, merchandise credits or rebates from suppliers shall not be included in
the Closing Valuation; provided that Buyer shall pay Seller as, when and if
received, fifty percent (50%) of such items which are earned in 1994 with
respect to purchases made prior to the date hereof.
3. Notwithstanding the provisions of Sections 1.1 and 3.7(c) of the
Agreement, the following Real Property of Seller shall not be included in the
Purchased Assets, nor shall any obligations or values with respect thereto be
included in either the Assumed Liabilities or the Closing Valuation:
(a) Sedalia, MO
(b) Great Bend, KS
(c) Hot Springs, AR
(d) Colorado Springs, CO
(e) Eddy County, NM
4. Notwithstanding the provisions of Sections 1.1 and 3.8 of the
Agreement, the following leased properties of Seller and any Contracts related
thereto shall not be assigned to Buyer, nor shall any obligations with respect
to such properties or Contracts be included in the Assumed Liabilities:
(a) Fort Worth, TX
3
<PAGE>
(b) Wichita, KS
5. The parties agree that Section 1.2(a) of the Agreement shall be
supplemented on a branch by branch basis with reference to items not appearing
in manufacturers' price lists to distributors in that inventory items which have
had sales movement in such branch during the twelve (12) month period preceding
the date hereof shall be valued at cost times the lesser of the number of items
on hand or the number of units sold during said twelve (12) month period.
6. Notwithstanding the provisions of Sections 1.1 and 3.7(c) of the
Agreement, the Real Property shall not be purchased until commitments for title
insurance have been issued by the various title insurance companies heretofore
engaged by Buyer to issue such commitments, but in any event on or before
December 23, 1994. Such purchases shall be completed in accordance with local
custom in effect where said properties are located, including aspects of such
custom providing for delays if defects of title are discovered; provided that
the foregoing shall not in any way affect the provisions of Section 17 of the
Agreement; and provided further that the purchase of the Real Property located
in St. Joseph, MO shall not be completed until Seller, at its sole cost and
expense, remediates the friable asbestos which exists on the property; and then
notwithstanding any other provision of the Agreement or the Schedule to the
contrary, the purchase
4
<PAGE>
price for said property shall be $170,000. The date for the proration of tax and
expense items for the Real Property (other than St. Joseph, MO) shall be the
date hereof.
7. Except as herein modified or amended, the parties reaffirm the terms
and conditions of the Agreement.
WITNESS the due execution hereof on the 5th day of December, 1994, but
as of October 4, 1994, the date of execution of the Agreement.
SELLER:
------
SDI OPERATING PARTNERS, L.P.
By SDI Partners I, L.P.,
Its General Partner
By Lehman/SDI, Inc.,
Its General Partner
By /s/Norman V. Edmonson
------------------------------
Norman V. Edmonson
Vice President
BUYER:
-----
CONSOLIDATED ELECTRICAL
DISTRIBUTORS, INC.
By /s/Thomas A. Lullo
------------------------------
Thomas A. Lullo
Vice President
5
