UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 10, 2000
DHB Capital Group Inc.
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(Exact name of registrant as specified in its charter)
Delaware 0-22429 11-3129361
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(State or other jurisdiction (Commission (IRS Employer
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of incorporation) File Number) Identification No.)
555 Westbury Avenue, Carle Place, New York 11514
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (516) 997-1155
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Former Address
(11 Old Westbury Road, Old Westbury, NY 11568)
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Item 2. Acquisition or Disposition of Assets:
On March 10, 2000, DHB Capital Group Inc. ("the Company") sold
substantially all of the assets of its subsidiaries Lanxide Electronic
Components Inc. and DHB KK pursuant to DMC2 Electronic Components Corporation
(an unrelated third party.) Both of these subsidiaries are suppliers of silicon
carbide/aluminum composites to the electronics industry. The purchase price was
$4,375,000 less the outstanding loan balance of Lanxide Electronics' Delaware
Economic Loan of $141,217. The proceeds of this sale retired all of the
outstanding bank debt of the Company to the Bank of New York. The sales price
was determined through armslength negotiations, at a price the Company believes
was fair:
The sale of the Lanxide Subsidiaries reflecs the Company's strategic decision to
refocus on its core business, the design, development and production of
technologically advanced soft body armor for the U.S. Military and Law
Enforcement communities.
Item 7. Financial Statements and Exhibits.
(b) Pro forma financial information
It is impractical to provide any pro forma financial information, which
may be required at the time of the filing of this report on Form 8-K. The
required pro forma financial financial information will be included in the
Company's 10-K for the year ended December 31, 1999, which will be filed on or
before March 31, 2000.
(c) Exhibits
Unless otherwise noted the following exhibits are filed herewith:
1 Asset Purchase Agreement
2 Agreement on Transfer of Business
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized
DHB Capital Group, Inc.
Registrant
Date: March 20, 2000 /s/ Dawn M. Schlegel
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Dawn M. Schlegel,
Chief Financial Officer
Exhibit 1
Execution Copy
Asset Purchase Agreement
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This Agreement is made as of March 10, 2000, by and among Lanxide
Electronic Components, Inc., a Delaware corporation ("LEC"), DHB Capital Group,
Inc., a Delaware corporation ("DHB"), and DMC2 Electronic Components
Corporation, a Delaware corporation ("Buyer").
Recitals
Whereas, LEC conducts the business (the "LEC Business") of designing,
developing, manufacturing, producing, processing, assembling, selling,
marketing, distributing and supplying, among other things, thermal management,
packaging, and structural components for the electronics industry ("LEC
Products");
Whereas, DHB is the sole owner of all of the issued and outstanding
capital stock of LEC, and of DHB K.K., a Japanese corporation ("DHB KK");
Whereas, DHB KK sells, markets, distributes and supplies LEC Products
in Japan, and, pursuant to a separate asset purchase agreement (the "Japanese
Purchase Agreement") being executed simultaneously herewith, certain assets of
such business activities are being sold by DHB to Buyer or an affiliate thereof;
Whereas, LEC wishes to transfer, sell, convey, assign and deliver to
Buyer, and Buyer desires to acquire and accept from LEC substantially all of the
assets used by LEC in the conduct of the LEC Business upon the terms and subject
to the conditions hereinafter set forth.
Now, Therefore, in consideration of the promises, the mutual covenants
and agreements contained herein, and other good and valuable considerations, the
parties hereto agree as follows:
Article I
Purchase And Sale
1.1 Assets Sold. Effective as of the Closing Date (as defined in
Section 2.1 hereof) and subject to the terms and conditions herein set forth,
LEC shall sell, convey, assign, transfer and deliver to Buyer and Buyer shall
purchase from LEC substantially all the assets of LEC (the "Assets"). Subject to
Section 1.2 hereof, the Assets shall include, without limitation, the following:
(a) all right and interests of LEC under a lease (the "Facility
Lease") having a primary term that expires on March 30, 2001, with respect to
approximately 19,600 square foot office and manufacturing facility located at
1300 Marrows Road, Newark, Delaware, as more particularly described on Schedule
1.1(a) hereto (the "Leased Facility");
(b) all rights and interests of LEC, if any, in lands or real property
of others used principally in the normal operation and conduct of the LEC
Business (the "Associated Rights"), including, without limitation, all
contracts, easements, rights-of-way, permits, licenses and leases and other
similar rights related to equipment, power and communications cables, and other
related property and equipment used principally in the normal operation and
conduct of the LEC Business;
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(c) all rights and interests of LEC in and to the equipment, furniture,
furnishings, fixtures, machinery, vehicles, tools, spare parts, computers and
other tangible personal property used principally in the normal operation and
conduct of the LEC Business (A) that are located at the Leased Facility, and (B)
that are located elsewhere and are specifically listed on Schedule 1.1(c) hereto
(collectively, the "Equipment") and all warranties and guarantees, if any,
express or implied, existing for the benefit of LEC in connection with the
Equipment to the extent assignable;
(d) all Contracts (as defined in Section 5.1(j) hereof);
(e) all (i) customer lists, customer credit information, customer
payment histories and credit limits, vendor lists, catalogs, (ii) research
material, technical information, marketing information, technology, know-how,
quality control data, specifications, designs, and drawings that are used in (or
are under development for use in) the LEC Business, and (iii) all sales
promotional literature and advertising materials used for the marketing and
promotion of the LEC Business;
(f) all rights and interests of LEC under (i) the license arrangement
between LEC and Advanced Materials Lanxide LLC, as successor to Lanxide
Corporation (the "LEC License") more particularly described on Schedule 1.1(f)
hereto, and (ii) the distribution agreement, dated as of June 10, 1994, by and
between Lanxide Electronic Components, L.P., and Lanxide K.K.. as amended by an
agreement, dated May 29, 1998, by and between Lanxide K.K. and LEC, as successor
to Lanxide Electronic Components, L.P., by which DHB KK sells LEC Products in
Japan (the "DHB KK Agreement");
(g) the "Lanxide"(R)trademark described on Schedule 1.1(g) hereto;
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(h) any other trade names, trademarks, trademark registrations or
trademark applications, brand names, service marks, company names, copyrights,
copyright applications or copyright registrations or any derivative thereof or
design used in connection therewith that are used in and are applicable to the
LEC Business;
(i) all patents, patent applications, patent licenses, trade secrets,
software, designs and recipes of products, general intangibles, and the like
that are owned by or in the possession of LEC and are used in the LEC Business
(all the items referred to in this Section 1.1(i), together with the items
referred to in clauses (ii) and (iii) of Section 1.1(e), Section 1.1(f), Section
1.1(g), and Section 1.1(h), collectively, the "Intellectual Property");
(j) all of LEC's inventory used or useable in the LEC Business,
including, but not limited to, raw materials, equipment, and other related
merchandise and finished goods inventory, as at the Closing Date (collectively,
the "Inventory");
(k) all licenses, permits or franchises issued by any (domestic or
foreign) federal, state, provincial or municipal authority relating to the
development, use, maintenance or occupancy of the Leased Facility or any other
Asset or the LEC Business, including, without limitation, all environmental
permits, to the extent that such licenses, permits or franchises relate to the
operation and conduct of the LEC Business and are transferable (collectively,
the "Government Permits");
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(l) except for the $222,187.00 receivable due from American Competitive
Institute with respect to Invoice #34 dated 15 December 1999 (the "ACI
Receivable"), all of LEC's accounts receivable due from third parties as of the
Closing Date, as reflected in its regular accounts receivable ledger, a copy of
such Closing Date, ledger is attached hereto as Schedule 1.1(l) (the "Accounts
Receivable"); and
(m) such other specific assets of LEC as may be more particularly
described in Schedule 1.1(m) attached hereto.
1.2 Excluded Assets. Notwithstanding anything to the contrary contained
herein, the Assets shall not include (a) any of LEC's assets as of the Closing
Date which constitute insurance policies (copies of which are being provided to
Buyer simultaneously herewith), tax refunds and cash or cash equivalents, (b)
any and all causes of action of LEC against third parties for loss, damage or
the like, (c) LEC's corporate books and records (copies of which are being
provided to Buyer simultaneously herewith), and (d) the ACI Receivable and those
other assets described in Schedule 1.2(a) attached hereto (collectively, the
"Excluded Assets").
1.3 Purchase Price. The aggregate consideration which Buyer agrees to
pay for the Assets shall be Four Million US Dollars ($4,000,000) (the "Purchase
Price"), which Purchase Price shall be payable at the Closing (as defined in
Section 2.1 hereof) of the transactions contemplated herein and shall be
allocated as provided in Section 1.6 below, plus $125,000 for application, to
the extent required by Section 3.5(a)(ii) hereof, by LEC against "accrued
expenses and other current liabilities" (referred to in the Audited Balance
Sheet referred to in Section 5.1(c) below).
1.4 Payment of the Purchase Price. Buyer shall pay (a) $141,216.95,
plus any required accrued interest from the date hereof to Delaware Economic
Development Authority (which payment LEC hereby authorizes, directs and
acknowledges) and (b) the balance of the Purchase Price to LEC in immediately
available funds in cash or by certified check, bank check or wire transfer at
the Closing.
1.5 Rent, etc., Pro-ration. Rent, including both Base Rent and any
Additional Rent (as defined in the Facility Lease), under the Facility Lease for
the then current period and electric, water and sewer charges shall be pro-rated
as of the Closing Date, and the full value shall be adjusted; the net amounts
thereof shall be added to, or deducted from, as the case may be, the total
Purchase Price payable by Buyer to LEC at the Closing.
1.6 Allocation of Purchase Price Among Specific Assets. The Purchase
Price shall be allocated among the specific Assets acquired herein in accordance
with Schedule 1.6 attached hereto, which Schedule shall be prepared by Buyer in
good faith in accordance with Section 1060 of the Internal Revenue Code of 1986,
as amended, and the regulations promulgated thereunder. LEC and Buyer each
hereby covenant and agree that Schedule 1.6 will provide the basis for each
party's Form 8694 to be filed with the Internal Revenue Service and that neither
LEC nor Buyer will take a position on any income tax return, before any
governmental agency charged with the collection of any income tax, or in any
judicial proceeding that is in any way inconsistent with the terms of such Form
or this Section 1.6.
1.7 Assumption of Certain Liabilities of LEC. (a) Effective as of the
Closing Date and subject to the terms and conditions herein set forth, Buyer
agrees to assume and pay, perform and discharge, when due, only the following
specific debts, liabilities and obligations of LEC (collectively, the "Assumed
Liabilities"):
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(i) all obligations arising after the Closing under those of the Contracts
expressly assigned to and assumed by Buyer hereunder at the Closing;
(ii) all obligations arising after the Closing under purchase orders
accepted by LEC in the ordinary course of business that are not filled
as of the Closing;
(iii) all obligations and liabilities, of every kind and nature, without
limitation, to the extent arising out of, in connection with or related
to the ownership, operation or use of the Assets or the LEC Business
after the Closing;
(iv) all obligations and liabilities (contingent or otherwise) of LEC
arising out of any claim, litigation or proceeding based upon LEC
Product sold or service provided by Buyer after the Closing;
(v) trade and other accounts payable of LEC incurred in the ordinary course
of business and specifically identified on Schedule 1.7(a)(v) attached
hereto; and
(vi) the liabilities, if any, of LEC identified on Schedule 1.7(a)(vii)
attached hereto.
(b) In no event, however, shall Buyer assume or incur any other
liability or obligation under this Section 1.7 or otherwise in respect of any of
the following:
(i) any product liability or similar claim for injury to person or
property, regardless of when made or asserted, which arises out of or
is based upon any express or implied representation, warranty,
agreement or guarantee made by LEC, or alleged to have been made by
LEC, or which is imposed or asserted to be imposed by operation of law,
in connection with any service performed or product sold or leased by
or on behalf of LEC on or prior to the Closing Date, including without
limitation any claim relating to any product delivered in connection
with the performance of such service and any claim seeking recovery for
consequential damage, lost revenue or income; or
(ii) any federal, state or local income or other tax (A) payable with
respect to the business, assets, properties or operations of LEC or any
member of any affiliated group of LEC, which, either individually or
collectively, were members for any period prior to the Closing Date, or
(B) incident to or arising as a consequence of the negotiation or
consummation by LEC or any member of any affiliated group of which LEC
is a member, either individually or collectively, of this Agreement and
the transactions contemplated hereby; or
(iii) any liability or obligation relating, in any way, to the Excluded
Assets; or
(iv) any liability or obligation arising on, prior to or as a result of the
Closing to any employees, agents or independent contractors of LEC,
including, but not limited to, any accrued vacation, severance (other
than any severance payments that may arise as a result of termination
of employees of DHB KK in Japan) or WARN act obligations, whether or
not employed by Buyer after the Closing, or under any benefit
arrangement with respect thereto; or
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(v) any amounts necessary to cure defaults by LEC under the Facility Lease
or any other Contract which occurred prior to or as a result of the
Closing; or
(vi) any liabilities or obligations arising out of or relating to LEC's
violation of or liability under Environmental Laws (as defined in
Section 5.1(m)(i)) on or prior to the Closing Date; or
(vii) any liabilities or obligations arising, directly or indirectly, from
the use, generation, manufacture, processing, distribution, treatment,
collection, presence or suspected presence, production, accumulation,
storage, disposal, transport, handling, emission, discharge, release or
threatened release of "hazardous substances" (within the meaning of the
Comprehensive Environmental Response, Compensation and Liability Act of
1980 (42 U.S.C. Section 9601, et seq.), as amended, including gasoline,
fuel oil and petroleum ("Hazardous Substances")) from, on or under the
Leased Facility or the Associated Rights properties, on or prior to the
Closing Date; or
(viii) any liabilities or obligations arising, directly or indirectly, from
the use, generation, manufacture, processing, distribution, treatment,
collection, presence or suspected presence, production, accumulation,
storage, disposal, transport, handling, emission, discharge, release or
threatened release of Hazardous Substances by LEC on or prior to the
Closing Date; or
(ix) any other liability or obligation, of any kind or nature, without
limitation, arising out of, in connection with or related to the
Facility Lease, the Associated Rights properties, or the ownership,
operation or use of the Assets or the LEC Business on or prior to the
Closing; or
(x) except if and to the extent expressly assumed in writing by Buyer at
the Closing in accordance with Section 1.7(a)(v) hereof, any trade or
accounts payable of LEC arising on or prior to the Closing.
1.8 Collection of Accounts Receivable. LEC hereby agrees that all
checks remitted to, and any other amounts received by, LEC with respect to the
Accounts Receivable shall be the property of Buyer and, until further notice by
Buyer, shall be delivered to an employee of Buyer at the Leased Facility on a
daily basis. All such checks shall be endorsed by LEC for deposit by Buyer. LEC
hereby grants to Buyer an irrevocable power of attorney to endorse and deposit
such checks in Buyer's account. LEC shall advise account debtors in writing to
remit amounts payable under the Accounts Receivable directly to Buyer and to
make checks therefor payable to Buyer.
Article II
Closing, Items to be Delivered, Third Party Consents,
Change in Name and Further Assurances
2.1 Closing. The closing of the sale and purchase of the Assets (the
"Closing") shall take place at 10:00 a.m., local time, on March 10, 2000, at the
offices of Phillips Nizer Benjamin Krim & Ballon LLP, 666 Fifth Avenue, New
York, New York, or on such other date or place as may be mutually agreed upon in
writing by Buyer and LEC (the "Closing Date").
2.2 LEC's Closing Procedure. At the Closing, LEC or DHB, as the case may
be, shall deliver to Buyer the following:
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(a) an executed Bill of Sale from LEC for its Inventory in
substantially the form and substance of Exhibit 2.2(a) hereto, which Bill of
Sale shall provide that the Inventory is delivered, as is and where is, by LEC
and accepted by Buyer;
(b) an executed Bill of Sale from LEC for its Equipment not
constituting real property in substantially the form and substance of Exhibit
2.2(b) hereto:
(c) an executed Bill of Sale and Assignment for the Accounts Receivable
from LEC in substantially the form and substance of Exhibit 2.2(c) hereto;
(d) an executed Assignment for the Intellectual Property from LEC in
substantially the form and substance of Exhibit 2.2(d) hereto;
(e) possession of all of the Assets as they exist on the Closing Date;
(f) to the extent available on the Closing Date, such executed
documents as may be required by the relevant jurisdictions to change LEC's name
to another name bearing no similarity to "Lanxide Electronic Components, Inc."
or "Lanxide", including, but not limited to, a name change amendment with the
Secretary of State, or other appropriate governmental authority, of the
jurisdiction in which LEC is organized and an appropriate name change notice for
each jurisdiction where LEC is qualified to do business (all such documents to
be filed as soon as practical, but in no event more than thirty (30) days, after
the Closing Date);
(g) the written consent of the Prime Landlord (as defined in the
Facility Lease) to the assignment of the Facility Lease from LEC to Buyer;
(h) the written consent of Advanced Materials Lanxide LLC to the
assignment of LEC License and, if necessary or appropriate, the DHB KK Agreement
to Buyer;
(i) the executed Japanese Purchase Agreement;
(j) letters signed by Seller to each of Seller's customers advising of,
among other things, the sale of the LEC Business in substantially the form and
substance of Exhibit 2.2(j) hereto; and
(k) such other and further documents and instruments as may be
reasonably necessary or proper to effectuate or evidence the sale, purchase and
conveyance of all of the Assets to Buyer as contemplated by this Agreement.
2.3 Buyer's Closing Procedure. At the Closing, Buyer shall deliver to
LEC each of the following:
(a) the Purchase Price in accordance with the provisions of this
Agreement for the Assets purchased hereunder;
(b) such other and further documents as may be reasonably necessary or
proper to effectuate or evidence the sale, purchase and conveyance of all of the
Assets to Buyer as contemplated by this Agreement.
2.4 Further Assurances. LEC and DHB from time to time after the
Closing, at Buyer's request, will execute, acknowledge and deliver to Buyer such
other instruments of conveyance and transfer and will take such other actions
and execute and deliver such other documents, certifications and further
<PAGE>
assurances as Buyer may reasonably require in order to vest more effectively in
Buyer, or to put Buyer more fully in possession of, the Assets, or to better
enable Buyer to complete, perform or discharge any of the liabilities or
obligations assumed by Buyer at the Closing pursuant to Section 1.8 hereof. Each
of the parties hereto will cooperate with the other and will take such other
actions and execute and deliver such other documents, certifications and further
assurances as may be reasonably requested from time to time by any other party
hereto as necessary to carry out, evidence and confirm the intended purposes of
this Agreement.
Article III
Conditions Precedent to Obligations of Buyer
The obligations of Buyer to consummate the transactions herein
contemplated are subject to the satisfaction on or prior to the Closing Date of
the following conditions (any of which may be waived in writing by Buyer), and
if Buyer and LEC shall not consummate the transactions herein contemplated by
reason of the failure of such conditions to have been satisfied, then Buyer
shall have no liability to LEC or DHB.
3.1 Resolutions. (a) LEC shall have furnished Buyer with certified copies of
resolutions duly adopted by the Board of Directors of LEC (i) approving the
execution and delivery of this Agreement and all other agreements contemplated
hereby; and (ii) authorizing and approving the conveyance and transfer by LEC of
the Assets and Lanxide name, in accordance with the terms hereof.
(b) DHB shall have furnished Buyer with certified copies of resolutions duly
adopted by the Board of Directors of DHB KK authorizing and approving the
Japanese Purchase Agreement and the conveyance and transfer by DHB KK of the DHB
KK Agreement, in accordance with the terms of the Japanese Purchase Agreement.
(c) DHB shall have furnished Buyer with certified copies of resolutions
duly adopted by the Board of Directors of DHB, in its capacity as sole
shareholder of LEC and DHB KK, authorizing and approving the conveyance and
transfer by LEC of the Assets and the Lanxide name and DHB KK Agreement, in
accordance with the terms hereof.
3.2 Truth of Representations and Warranties. The representations and
warranties of LEC contained in this Agreement, and the Schedules hereto, or in
any list, certificate or document delivered by LEC or DHB to Buyer pursuant to
the provisions hereof shall be true and correct in all material respects on and
as of the Closing Date with the same effect as though such representations and
warranties had been made on and as of such date, except to the extent changes
are expressly contemplated by this Agreement.
3.3 Consents. All consents to assignments of material contracts, leases
or other documents relating to the Assets and all other consents to the
consummation of the transactions contemplated herein, which are required in
order to prevent this transaction from constituting a breach of, or a default
under the terms of, or causing a termination of, any material agreement to which
LEC is a party or is bound, shall have been obtained by LEC.
3.4 Approval of Counsel. All actions, proceedings, resolutions,
instruments and documents required to carry out this Agreement or incidental
hereto and all other related legal matters shall have been approved on the
Closing Date by counsel for Buyer in the exercise of its reasonable judgment.
LEC shall also have delivered to Buyer such other documents, instruments,
certifications and further assurances as such counsel for Buyer may reasonably
require.
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3.5 Additional Conditions. The closing of the proposed transactions is
subject to the following additional conditions:
(a) payment in full as of the Closing Date of (i) all outstanding trade
payables of vendors providing goods and/or services to LEC, except to the extent
such trade payables are expressly assumed by Buyer as provided is Section
1.7(a)(v) above, and (ii) all "accrued expenses and other current liabilities"
(referred to in the Audited Balance Sheet) that are related to or arise in
conjunction with the operation of the LEC Business, including, but not limited
to, obligations to third-party vendors, toll manufacturers, employee
compensation and benefits, withholding and other taxes, and services and
utilities provided to LEC and DHB KK;
(b) receipt of (i) copies of all liability insurance policies,
including workers' compensation insurance, in effect at any time prior to the
Closing Date, and (ii) certificates of insurance or other adequate written
evidence that all insurance policies of LEC are in force on the Closing Date;
(c) receipt of certificates of insurance or other adequate written
evidence that all of the medical, life and disability insurance policies for
employees of LEC are in force on the Closing Date;
(d) receipt of evidence that all withholding and other employee related
federal, state and local taxes have been paid;
(e) acceptance by each of the executive officers and employees of LEC
and DHB KK identified by Buyer prior to the Closing of employment with Buyer;
and
(f) payment by LEC on or before the Closing Date of (i) all payroll
obligations, (ii) all accrued, but untaken or otherwise uncompensated, vacation,
and (iii) all other employee entitlements accruing to LEC's employees through
the Closing Date.
Article IV
Conditions Precedent to the Obligations of LEC
All obligations of LEC under this Agreement are subject to the
fulfillment or satisfaction, prior to or at the Closing, of each of the
following conditions precedent:
4.1 Representations and Warranties True as of the Closing Date. The
representations and warranties of Buyer contained in this Agreement, and the
Schedules hereto, or in any list, certificate or document delivered by Buyer to
LEC or DHB pursuant to the provisions hereof shall be true and correct in all
material respects on and as of the Closing Date with the same effect as though
such representations and warranties had been made on and as of such date, except
to the extent changes are expressly contemplated by this Agreement.
4.2 Resolutions. Buyer shall have furnished LEC with certified copies
of resolutions duly adopted by the Board of Directors of Buyer approving the
execution and delivery of this Agreement and all other agreements contemplated
hereby.
4.3 Compliance with this Agreement. Buyer shall have performed and
complied with all agreements and conditions required by this Agreement to be
performed or complied with by them prior to or at the Closing.
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4.4 Approval of Counsel. All actions, proceedings, resolutions,
instruments and documents required to carry out this Agreement or incidental
hereto and all other related legal matters shall have been approved on the
Closing Date by counsel for LEC in the exercise of their reasonable judgment.
Buyer shall also have delivered to LEC such other documents, instruments,
certifications and further assurances as such counsel for LEC may reasonably
require.
Article V
Representations and Warranties
5.1 Representations and Warranties of LEC. LEC represents and warrants
to Buyer that, except as set forth on Schedule 5.1 attached hereto (each of
which exceptions shall specifically identify the relevant subsection hereof to
which it relates and shall be deemed to be representations and warranties as if
made hereunder):
(a) Corporate Existence. LEC is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation. LEC is
duly qualified to do business and is in good standing as a foreign corporation
in each jurisdiction where its conduct of the LEC Business requires it to be so
qualified, all of which jurisdictions are listed on Schedule 5.1(a).
(b) Corporate Power; Authorization; Enforceable Obligations. LEC has
the power (corporate or otherwise), authority and legal right to execute,
deliver and perform this Agreement, and the other agreements, documents and
instruments required to be delivered by LEC in accordance with the provisions
hereof (collectively, "LEC's Documents"). The execution, delivery and
performance of this Agreement and each of LEC's Documents by LEC has been duly
authorized by all necessary corporate and shareholder action. This Agreement has
been duly executed and delivered by LEC's duly authorized officers, and this
Agreement constitutes, and LEC's Documents when executed and delivered will
constitute, the legal, valid and binding obligations of LEC, enforceable against
LEC in accordance with their respective terms.
(c) Financial Statements. LEC has delivered to Buyer true and complete
copies of audited balance sheet of LEC and DHB KK at December 31, 1999, and
related statements of income and cash flow for the periods then ended, all of
which have been prepared in accordance with generally accepted accounting
principles consistently applied through the periods involved (the "Audited
Balance Sheet"). The Audited Balance Sheet, including the related notes, fairly
presents the financial position, assets and liabilities (whether accrued,
absolute, contingent or otherwise) of LEC and DHB KK at the date indicated and
such statements of income, cash flow and changes in shareholder's equity fairly
present the results of operations, cash flow and changes in shareholder's equity
of LEC and DHB KK for the periods indicated. The Audited Balance Sheet contains
all adjustments, which are solely of a normal recurring nature, necessary to
present fairly the consolidated financial position of LEC and DHB KK for the
periods then ended. The Audited Balance Sheet specifically identities the assets
and liabilities which, if the Closing had been held on the date of the Audited
Balance Sheet, would have been transferred to and assumed by Buyer in accordance
herewith.
(d) Accounts Receivable. The Accounts Receivable arising from the LEC
Business as set forth on the Audited Balance Sheet or arising since the date
thereof are valid and genuine; have arisen solely out of bona fide sales and
deliveries of goods, performance of services and other business transactions in
the ordinary course of business consistent with past practice; to the knowledge
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of LEC, are not subject to valid defenses, set-offs or counterclaims; and LEC
believes, based in part on past experience, are collectible within 60 days with
respect to domestic Accounts Receivable and 90 days with respect to
international Accounts Receivable after billing at the full recorded amount
thereof less, in the case of accounts receivable appearing on the Audited
Balance Sheet, the reserves therefor shown on the Audited Balance Sheet. The
allowances for collection losses on the Audited Balance Sheet have been
determined in accordance with generally accepted accounting principles
consistent with past practice.
(e) Inventory. Substantially all Inventory of LEC used in the conduct
of the LEC Business, including without limitation raw materials, work-in process
and finished goods, reflected on the Audited Balance Sheet or acquired since the
date thereof (i) has been maintained in the ordinary course of the LEC Business;
(ii) is of good and merchantable quality; (iii) consists substantially of a
quality, quantity and condition usable or saleable in the ordinary course of the
LEC Business; (iv) is valued at reasonable amounts based on the ordinary course
of business of LEC during the past twelve (12) months; and (v) is not subject to
any write-down or write-off in excess of applicable reserves. LEC is not under
any material liability or obligation with respect to the return of inventory in
the possession of wholesalers, retailers or other customers.
(f) Books of Account. The books, records and accounts of LEC maintained
with respect to the LEC Business accurately and fairly reflect, in reasonable
detail, the operations and the assets and liabilities of LEC with respect to the
LEC Business. LEC has not engaged in any transaction with respect to the LEC
Business, maintained any bank account for the LEC Business or used any of the
funds of LEC in the conduct of the LEC Business except for transactions, bank
accounts and funds which have been and are reflected in the normally maintained
books and records of the LEC Business.
(g) Existing Condition. With respect to the LEC Business, since the
date of the Audited Balance Sheet, LEC has not:
(i) other than the restructuring of certain debt to The Bank of New York or
with the prior written consent of Buyer (A) incurred any liabilities
which in the aggregate exceed $5,000, other than in the ordinary course
of business consistent with past practice, or (B) discharged or
satisfied any lien or encumbrance, or (C) paid any material liabilities
which in the aggregate exceed $5,000, other than in the ordinary course
of business consistent with past practice, or (D) failed to pay or
discharge when due any liabilities of which the failure to pay or
discharge has caused or will cause any material damage or risk of
material loss to it or any of the Assets;
(ii) other than with the prior written consent of Buyer, sold, encumbered,
assigned or transferred any assets or properties which would have been
included in the Assets if the Closing had been held on the date of the
Audited Balance Sheet or on any date since then, except for the sale of
inventory in the ordinary course of business consistent with past
practice;
(iii) other than the restructuring of certain debt to The Bank of New York or
with the prior written consent of Buyer, created, incurred, assumed or
guaranteed any indebtedness for money borrowed in excess of $5,000, or
mortgaged, pledged or subjected any of the Assets to any mortgage,
lien, pledge, security interest, conditional sales contract or other
encumbrance of any nature whatsoever, except for the items set forth on
Schedule 5.1(g)(iii) attached hereto;
<PAGE>
(iv) other than with the prior written consent of Buyer, made or suffered
any amendment or termination of any material agreement, contract,
commitment, lease or plan to which it is a party or by which it is
bound, or canceled, modified or waived any substantial debts or claims
held by it or waived any rights of substantial value, whether or not in
the ordinary course of business;
(v) suffered any damage, destruction or loss, whether or not covered by
insurance, (A) materially and adversely affecting business, operations,
assets properties or prospects of LEC, or (B) of any item or items
carried on books of account of LEC individually or in the aggregate at
more than $15,000 or suffered any repeated, recurring or prolonged
shortage, cessation or interruption of supplies or utility or other
services required to conduct its business and operations;
(vi) suffered any material adverse change in the business, operations,
assets, properties, prospects or condition (financial or otherwise) of
LEC not previously disclosed to Buyer;
(vii) received notice or had knowledge of any actual or threatened labor
trouble, strike or other occurrence, event or condition of any similar
character which has had or might have an adverse effect on business,
operations, assets, properties or prospects of LEC;
(viii) other than with the prior written consent of Buyer, increased the
salaries or other compensation of, or made any advance (excluding
advances for ordinary and necessary business expenses) or loan to, any
employee of LEC or made any increase in, or any addition to, other
benefits to which any such employee may be entitled;
(ix) other than with the prior written consent of Buyer, changed any of the
accounting principles followed by LEC or the methods of applying such
principles; or
(x) other than with the prior written consent of Buyer, entered into any
transaction having a projected economic value in excess of $5,000,
other than in the ordinary course of business consistent with past
practice.
(h) Condition of Fixed Assets. All buildings, structures, facilities,
equipment and other material items constituting Fixed Assets are as of the
Closing Date in good operating condition and repair, subject to normal wear and
maintenance, are usable in the regular and ordinary course of business and
conform to all applicable laws, ordinances, codes, rules and regulations, and
Authorizations relating to their construction, use and operation. No person
other than LEC owns any equipment or other tangible assets or properties
situated on the premises of LEC or necessary to the operation of the business of
LEC, except for leased items disclosed in Schedule 5.1(h) hereto and for items
of immaterial value.
(i) Insurance. The assets, properties and operations of LEC are insured
under various policies of general liability and other forms of insurance, all of
which are described in Schedule 5.1(i), which discloses for each policy the
risks insured against, coverage limits, deductible amounts, all outstanding
claims thereunder, and whether the terms of such policy provide for
<PAGE>
retrospective premium adjustments. All such policies are in full force and
effect in accordance with their terms, no notice of cancellation has been
received, and there is no existing default or, to LEC's knowledge, event which,
with the giving of notice or lapse of time or both, would constitute a default
thereunder. Such policies are in amounts which are adequate in relation to the
business and assets of LEC and all premiums to date have been paid in full.
(j) Contracts and Commitments.
(i) The agreements listed on Schedule 5.1(j) constitute all agreements to
which LEC is a party that are material to the LEC Business as currently
conducted, including, without limitation, agreements with sales
representatives and distributors, and including each amendment,
modification, renewal or extension or other material ancillary document
pertaining thereto (collectively, the "Contracts"). LEC has previously
delivered or made available to Buyer correct and complete copies of
each of the Contracts.
(ii) Each of the Contracts is a legal, valid and binding agreement
enforceable by and against LEC in accordance with its terms (except as
such enforceability may be limited by bankruptcy, insolvency, or other
similar laws affecting the enforcement of creditors' rights generally)
and is in full force and effect as of the Closing Date. LEC has not
received notice of cancellation or termination (written or otherwise)
under any option or right reserved to the other party to any Contract
or any notice of default (written or otherwise) under any Contract.
Except as otherwise disclosed on Schedule 5.1(j), neither LEC nor, to
the knowledge of LEC, any other party is in breach or default of any
Contract that would cause a material adverse effect on the LEC Business
and, to the knowledge of LEC, no event has occurred that, with notice
or lapse of time or both, would constitute such a breach or default or
permit termination, modification or acceleration under any Contract
that would cause a material adverse effect on the LEC Business. Except
as separately identified in Schedule 5.1.10, no approval or consent of
any person is needed in order that the Contracts continue in full force
and effect following their assignment to Buyer. Furthermore, no
Contract, in the reasonable opinion of LEC, contains any contractual
requirement with which there is a reasonable likelihood LEC or any
other party thereto will be unable to comply.
(k) Employees and Related Matters.
-----------------------------
(i) Schedule 5.1(k) contains a complete list of all employee benefit plans,
whether formal or informal, whether or not set forth in writing, and
whether covering one person or more than one person, sponsored or
maintained by LEC. For the purposes hereof, the term "employee benefit
plan" includes all plans, funds, programs, policies, arrangements,
practices, customs and understandings providing benefits of economic
value to any employee, former employee, or present or former
beneficiary, dependent or assignee of any such employee or former
employee other than regular salary, wages or commissions paid
substantially concurrently with the performance of the services for
which paid. Without limitation, the term "employee benefit plan" also
includes all employee welfare benefit plans within the meaning of
section 3(1) of the Employee Retirement Income Security Act of 1974, as
<PAGE>
amended ("ERISA"), and all employee pension benefit plans within the
meaning of section 3(2) of ERISA. Each employee benefit plan providing
benefits which are funded through a policy of insurance is indicated by
the word "insured" placed by the listing of such employee benefit plan
in Schedule 5.1(k). Neither LEC nor any ERISA Affiliate (within the
meaning of ERISA) is a contributing employer to a multi-employer
employee benefit plan as defined in Section 3(37) of ERISA. With
respect to employee benefit plans subject to Title IV of ERISA, LEC has
made full and timely payment of all contributions required under the
terms of each such employee benefit plan and Section 412(m) of the Code
and Section 203(3) of ERISA, and no accumulated funding deficiency (as
defined in Section 412 of the Code and Section 302 of ERISA) exists
with respect to any such plan.
(ii) LEC has no obligation to provide medical, life insurance, disability or
other benefits to its or any of its predecessors retired employees
formerly engaged in the LEC Business.
(iii) There are no collective bargaining agreements to which LEC is a party.
(iv) Upon execution of this Agreement, other than as expressly contemplated
hereby, Buyer shall have no liability to any person with respect to any
present or former employee of LEC, including any liability under any
employee benefit or pension plan of LEC or its predecessors or
affiliates. Buyer shall have no responsibility to or for, and LEC shall
be solely responsible to and for, employees and former employees of LEC
or its predecessors or affiliates whom Buyer does not employ. LEC shall
be responsible for all claims and liabilities arising out of actions or
events occurring prior to the Closing with respect to any present or
former employee of LEC, whether filed or asserted prior to or after the
Closing.
(l) Intellectual Property Matters. LEC in the conduct of the LEC
Business did not and does not utilize any items of Intellectual Property except
for those listed on Schedule 5.1(l), all of which are owned or validly licensed
by LEC. To its best knowledge, LEC does not infringe upon or unlawfully or
wrongfully use any patent, trademark, trade name, service mark, copyright or
trade secret owned or claimed by another. To its knowledge, LEC is not in
default under, and has not received any notice of any claim of infringement or
any other claim or processing relating to any such patent, trademark, trade
name, service mark, copyright or trade secret. Except as disclosed on Schedule
5.1(l), to LEC's best knowledge, no present or former employee of LEC owns or
has any proprietary, financial or other interest, direct or indirect, in whole
or in part, in any patent, trademark, trade name, service mark or copyright, or
in any application therefor, or in any trade secret, which LEC owns, possesses
or uses in the LEC Business as now or heretofore conducted; and no other person
owns or has any proprietary, financial or other interest, direct or indirect, in
whole or in part, in any patent, trademark, trade name, service mark or
copyright, or in any application therefor, or in any trade secret, which LEC
owns and uses in the LEC Business as now or heretofore conducted. Schedule
5.1(l) lists all confidentiality or non-disclosure agreements to which LEC or
any of LEC's employees engaged in the LEC Business is a party which relates to
the LEC Business.
<PAGE>
(m) Environmental Matters.
(i) Except as set forth in Schedule 5.1(m), LEC has obtained, and now
maintains in full force and effect, all permits, licenses and other
authorizations which, to its knowledge after appropriate investigation
and inquiry, are required in connection with the conduct of the LEC
Business under federal, state and local laws, statutes, ordinances or
regulations relating to pollution or protection of the environment,
including those relating to emissions, discharges, releases or
threatened releases of Hazardous Substances into the environment
(including without limitation ambient air, surface water, groundwater,
or land), or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling
of Hazardous Substances (collectively, "Environmental Laws").
(ii) Except as set forth in Schedule 5.1(m), the Leased Facility, the
Associated Rights properties and the LEC Business comply in all
material respects with all Environmental Laws and all terms and
conditions of permits, licenses, authorizations, limitations,
restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in the Environmental
Laws or contained in any regulation, code, plan, order, decree,
judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder.
(iii) Except as set forth in Schedule 5.1(m), LEC is not aware of, nor has
LEC received notice of, any past, present or future events, conditions,
circumstances, activities, practices, incidents, actions or plans which
may interfere with or prevent compliance or continued compliance with
the Environmental Laws or any regulations, code, plan, order, decree,
judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder, or which may give rise to any
common law or legal liability, or otherwise form the basis of any
claim, action, demand, suit, proceeding or order relating in any way to
the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling, or the emission, discharge, release
or threatened release into the environment, of any Hazardous Substance.
(iv) Except as set forth in Schedule 5.1(m), there is no civil, criminal or
administrative action, suit, demand, claim, hearing, notice or demand
letter, notice of violation, investigation, or proceeding pending or,
to LEC's knowledge, threatened in connection with the Leased Facility,
any Associated Rights property or the conduct of the LEC Business
relating in any way to the Environmental Laws or any regulation, code,
plan, order, decree, judgment, injunction, notice or demand letter
issued, entered, promulgated or approved thereunder.
(v) LEC has provided to Buyer all information in the possession or control
of LEC, its parent and affiliates relating to (a) the manufacture,
processing, distribution, use, treatment, storage, disposal, transport,
handling, emission, discharge, release or threatened release of
Hazardous Substances relating to, resulting from, caused by or arising
out of the operation of the LEC Business; (b) environmental, health and
safety permits, licenses and other authorizations, including all
applications therefor, relating to the LEC Business; (c) inspections,
investigations, legal actions, administrative proceedings, suits or
other actions instituted by any federal, state or local governmental
authority under any Environmental Law with respect to the LEC Business,
the Leased Facility or any Associated Rights property; and
<PAGE>
(vi) LEC agrees to cooperate with Buyer in connection with Buyer's
application for the transfer, renewal or issuance of any required
permits, licenses, approvals or other authorizations or to satisfy
regulatory requirements applicable to the LEC Business.
(vii) The environmental representations and warranties set forth in this Section
5.1(m) shall survive the Closing.
(n) Title to Assets; Absence of Liens and Encumbrances.
(i) Real Property Defined. All real property (including, without
limitation, all interests in and rights to real property) and
improvements located thereon which are leased by LEC and/or used in
connection with the LEC Business (including any Associated Rights) or
included in the Assets are listed on Schedule 5.1(n) (the "Real
Property").
(ii) Owned Real Property. LEC owns no Real Property.
(iii) Leased Real Property. With respect to the Real Property that is leased
by LEC:
(A) LEC shall deliver to Buyer at the Closing a true and complete
copy of the Facility Lease and of every other lease and
sublease to which it is a tenant or subtenant (each a "Lease",
and, collectively, the "Leases");
(B) each Lease is, and at Closing shall be, in full force and
effect and has not been assigned, modified, supplemented or
amended except as listed on Schedule 5.1(n), and neither LEC
nor the landlord or sublandlord under any Lease is in default,
and no circumstances or state of facts presently exists which,
with the giving of notice or passage of time, or both, would
permit the landlord or sublandlord under any Lease to
terminate such Lease; and
(C) except as and to the extent Buyer elects not to assume any
Lease, at Closing LEC shall assign to Buyer all right, title
and interest of LEC in and to all Leases (and shall deliver to
Buyer original signed consents required for such assignments).
(iv) LEC has good and marketable title to all of the personal property,
including the Assets, tangible or intangible, purported to be owned,
licensed, leased or otherwise used by it in conjunction with the LEC
Business, free and clear of all liens, security interests, encumbrances
and other claims.
(o) Availability of Documents. LEC has made available to Buyer copies
of all documents, including, without limitation, all agreements, contracts,
commitments, insurance policies, leases, plans, instruments, undertakings,
authorizations, permits, licenses, patents, trademarks, trade names, service
marks, copyrights and applications therefor listed in Schedule 5.1(o) hereto or
referred to herein. Such copies are true and complete and include all
amendments, supplements and modifications thereto or waivers currently in effect
thereunder.
<PAGE>
(p) Capital Stock; Subsidiaries. All of the issued and outstanding
capital stock of LEC (common and preferred) is owned by DHB, and such shares
have been and are validly issued, fully paid and non-assessable and have not
been issued in violation of any preemptive or other right of shareholders. All
of the outstanding shares of capital stock are owned free and clear of any lien,
pledge, claim, liability, encumbrance or other restriction. There is no existing
option, warrant, right, call or commitment of any character relating to the
unissued capital stock of LEC. LEC has no subsidiary or any ownership interest
in any other business organization or entity.
(q) No Approvals or Notices Required; No Conflict with Instruments to
Which LEC is a Party. The Execution, delivery and performance of this Agreement
and LEC's Documents by LEC and the consummation by LEC of the transactions
contemplated hereby and thereby (i) will not violate (with or without the giving
of notice or the lapse of time or both), or require any consent, approval,
filing or notice under, any provision of any applicable law, rule or regulation,
court order, judgment or decree applicable to LEC; and (ii) will not conflict
with, or result in the breach or termination of any provision of, or constitute
a default under, or result in the acceleration of the performance of the
obligations of LEC under, or result in the creation of a lien, charge or
encumbrance upon a portion of the properties, assets or business of the LEC
Business pursuant to, the charter or by-laws of LEC, or any indenture, mortgage,
deed of trust, lease licensing agreement, contract, instrument or other
agreement to which LEC is a party or by which LEC or any of the Assets is bound.
(r) Governmental Licenses and Permits. Set forth on Schedule 5.1(r) are
all (domestic and foreign) licenses, permits or franchises issued by any
federal, state, provincial or municipal authority relating to the development,
use, maintenance or occupancy of LEC facilities, wherever located, or any Asset.
Such licenses, permits and franchises constitute all those necessary for the
operation and conduct of the LEC Business as it is currently operated and
conducted.
(s) All Necessary Assets. The Assets, together with the rights under
the Contracts, expressly including without limiting the generality of the
foregoing, the LEC License and the DHB KK Agreement, constitute all property and
other rights necessary to enable Buyer to operate and conduct the LEC Business
in substantially the same manner as it is being operated and conducted on the
date of this Agreement.
(t) Conduct of Business in Compliance with Regulatory and Contractual
Requirements. To its knowledge, LEC is operating and conducting the LEC Business
in compliance with all applicable (domestic and foreign) laws, ordinances,
rules, regulations, rights of concession, licenses, know-how or other
proprietary rights of others, except to the extent failure to so comply would
not materially adversely affect the LEC Business.
(u) Legal Proceedings. There is no (domestic or foreign) litigation,
proceeding, claim, grievance, arbitration, investigation, or other action to
which LEC is a party that is pending, or to the knowledge of LEC, threatened,
that relates in any way to the Assets, to the operation or conduct of the LEC
Business, or to the transactions contemplated by this Agreement.
5.2 Representations and Warranties of Buyer. Buyer represents and
warrants to LEC as follows:
(a) Legal Existence. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
<PAGE>
(b) Power and Authorization. Buyer has the power, authority and legal
right to execute, deliver and perform this Agreement. The execution, delivery
and performance of this Agreement by Buyer have been duly authorized by all
necessary action of Buyer. This Agreement has been duly executed and delivered
by Buyer and constitutes the legal, valid and binding obligation of Buyer
enforceable against Buyer in accordance with its terms.
(c) Validity of Contemplated Transactions, etc. With respect to Buyer,
except for such governmental consents or other approvals as Buyer shall obtain
prior to Closing, including the expiration of any applicable waiting periods
with respect thereto, the execution, delivery and performance of this Agreement
by it does not and will not violate, conflict with or result in the breach of
any term, condition or provision of, or require the consent of any other party
to, (i) any existing law, ordinance, or governmental rule or regulation to which
it is subject, (ii) any judgment, order, writ, injunction, decree or award of
any court, arbitrator or governmental or regulatory official, body or authority
which is applicable to it, (iii) the charter documents or by-laws of Buyer, or
any securities issued by, it, or (iv) any mortgage, indenture, agreement,
contract, commitment, lease, plan or other instrument, document or
understanding, oral or written, to which it is a party or by which it is
otherwise bound. Except as aforesaid, no authorization, approval or consent of,
and no registration or filing with, any governmental or regulatory official,
body or authority is required in connection with the execution, delivery and
performance of this Agreement by it.
Article VI
Other Matters
6.1 Sales, Transfer and Documentary Taxes, etc. (a) To the extent that
a purchaser of assets would, under business practice in the applicable
jurisdiction, normally pay any federal, state and local sales, documentary and
other transfer taxes, Buyer shall pay such taxes due as a result of the
purchase, sale or transfer of the Assets in accordance herewith whether imposed
by law on LEC or Buyer; and Buyer shall indemnify, reimburse and hold harmless
LEC in respect of the liability for payment of or failure to pay any such taxes
or the filing of or failure to file any reports required in connection
therewith.
(b) To the extent that a seller of assets would, under business
practice in the applicable jurisdiction, normally pay any federal, state and
local sales, documentary and other transfer taxes, LEC shall pay such taxes due
as a result of the purchase, sale or transfer of the Assets in accordance
herewith whether imposed by law on LEC or Buyer; and LEC shall indemnify,
reimburse and hold harmless Buyer in respect of the liability for payment of or
failure to pay any such taxes or the filing of or failure to file any reports
required in connection therewith.
6.2 Expenses. Except as otherwise provided in this Agreement, each
party hereto shall pay its own expenses incidental to the preparation of this
Agreement, the carrying out of the provisions of this Agreement and the
consummation of the transactions contemplated hereby.
6.3 Contents of Agreement; Parties in Interest; etc. This Agreement
sets forth the entire understanding of the parties hereto with respect to the
transactions contemplated hereby. It shall not be amended or modified except by
written instrument duly executed by each of the parties hereto. Any and all
previous agreements and understandings between or among the parties regarding
the subject matter hereof, whether written or oral, are superseded by this
Agreement.
<PAGE>
6.4 Assignment and Binding Effect. This Agreement may not be assigned
prior to the Closing by any party hereto without the prior written consent of
the other parties, except that Buyer may assign the rights to purchase the
Assets to a wholly-owned domestic subsidiary and the rights to purchase the DHB
KK Assets to a Japanese affiliate without the prior consent of LEC. Subject to
the foregoing, all of the terms and provisions of this Agreement shall be
binding upon and insure to the benefit of and be enforceable by the successors
and assigns of LEC and Buyer.
6.5 Waiver. Any term or provision of this Agreement may be waived at
any time by the party entitled to the benefit thereof by a written instrument
duly executed by such party.
6.6 Notices. Any notice, request, demand, waiver, consent, approval or
other communication which is required or permitted hereunder shall be in writing
and shall be deemed given only if delivered personally or sent by telegram or by
registered or certified mail, postage prepaid, as follows:
If to Buyer, to: DMC2 Electronic Components Corporation
P.O. Box 6077
1300 Marrows Road
Newark, Delaware 19714-6077
Attention:
With a copy to: DMC2 Degussa Metals Catalysts Cerdec Corporation
P.O. Box 519
West Wylie Avenue
Washington, Pennsylvania 15301
Attention:
If to DHB or LEC, to: DHB Capital Group, Inc.
555 Westbury Avenue
Carle Place, New York 11514
Attention: David H. Brooks, President
With a copy to: Monte Engler, Esq.
Phillips Nizer Benjamin Krim & Ballon LLP
666 Fifth Avenue
New York, New York 10103-0084
or to such other address as the addressee may have specified in a notice duly
given to the sender as provided herein. Such notice, request, demand, waiver,
consent, approval or other communication will be deemed to have been given as of
the date so delivered, telegraphed or mailed.
6.7 Choice of Law. This Agreement shall be governed by and interpreted
and enforced in accordance with the laws of the Commonwealth of Pennsylvania.
6.8 No Benefit to Others. The representations, warranties, covenants
and agreements contained in this Agreement are for the sole benefit of the
parties hereto, and their heirs, executors, administrators, legal
representatives, successors and assigns, and they shall not be construed as
conferring any rights on any other persons.
<PAGE>
6.9 Headings, Gender and "Person". All section headings contained in
this Agreement are for convenience of reference only, do no forma part of this
Agreement and shall not affect in any way the meaning or interpretation of this
Agreement. Words used herein, regardless of the number and gender specifically
used, shall be deemed and construed to include any other number, singular or
plural, and any other gender, masculine, feminine, or neuter, as the context
requires. Any reference to a "person" herein shall include an individual, firm,
corporation, partnership, trust, governmental authority or body, association,
unincorporated organization or any other entity.
6.10 Schedules and Exhibits. All Exhibits and Schedules referred to
herein are intended to be and hereby are specifically made a part of this
Agreement.
6.11 Severability. Any provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall be ineffective to the extent invalid or
unenforceable without invalidating or rendering unenforceable the remaining
provisions hereof, and any such invalidity or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
6.12 Counterparts. This Agreement may be executed in any number of
counterparts and any party hereto may execute any such counterpart, each of
which when executed and delivered shall be deemed to be an original and all of
which counterparts taken together shall constitute but one and the same
instrument. This Agreement shall become binding when one or more counterparts
taken together shall have been executed and delivered by the parties. It shall
not be necessary in making proof of this Agreement or any counterpart hereof to
produce or account for any of the other counterparts.
[Signature Page is Page 22]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement on the date first written.
DMC2 Electronic Components Corporation Lanxide Electronic Components, Inc.
By:_______________________ By:___________________________
Name: Name:
Title: Title:
DHB Capital Group, Inc.
By:_______________________
Name:
Title:
Exhibit 2
AGREEMENT ON TRANSFER OF BUSINESS
---------------------------------
DMC(2) Co., Ltd. (hereinafter referred to as "DMC") and DHB K.K. (hereinafter
referred to as "DHB") have made the following agreement on transfer of DHB's
business.
1. Purpose --
-------
On March 10, 2000 (hereinafter referred to as "Date of Transfer"), DHB
transfers all its business (hereinafter referred to as `Business") to
DMC. DMC takes over said Business. However, according to progress of
the procedure, if deemed necessary, the Date of Transfer may be changed
after discussions between DHB and DMC.
2. Transferred Assets --
------------------
(1) The assets transferred from DHB to DMC under Paragraph 1 above, are the
assets (hereinafter referred to as "Transferred Assets") described in
the appendix attached to this Agreement, relating to DHB's Business as
of the Date of Transfer. The items thereof are determined after
discussions between DHB and DMC.
(2) DMC also takes over payables and receivables accruing to DHB on or
before the Date of Transfer described in the appendix attached to this
Agreement.
1. Lease --
-----
DMC will take over the present office lease agreement of DHB.
2. Counter-value/Manner of Payment for Transferred Assets --
-------------------------------------------------------
(1) The counter-value for the Transferred Assets is US$250,000 or the Yen
equivalent at the date of payment.
(2) The manner of payment of the counter-value fixed under Paragraph 4(1)
above and the date of payment thereof, are determined after discussions
between DHB and DMC.
1. Date of Delivery --
-----------------
The date of delivery of the Transferred Assets is the Date of Transfer.
However, due to the cause concerning the procedure, it deemed
necessary, the date of delivery may be changed after discussions
between DHB and DMC.
2. Good Manager's Duty of Due Care --
--------------------------------
From conclusion of this Agreement to completion of the delivery DHB is
obliged to manage the Transferred Assets with the obligation for the
care of a good manager. Assets with the obligation for the care of a
good manager.
<PAGE>
3. Employment --
-----------
In principal, DMC is prepared to take over from DHB four employees,
namely:
N. Take
S. Hori
T. Nishida, and
M. Oguma
DHB and DMC separately, after discussions, determine the
manner/concrete terms for taking-over and the treatment of the
employees.
4. Duty to avoid Competition --
-------------------------
DHB agrees that they will not compete with DMC after transfer of the
business under this Agreement.
5. Procedure for Approval of Transfer --
----------------------------------
(1) DHB and DMC will request the approval of this Agreement by each Board
of Directors, no later than the Date of Transfer. (2) DHB also holds
the general meeting of shareholders no later than the Date of Transfer
and asks for approval on this Agreement.
1. Enforcement --
-----------
This Agreement becomes effective, with the decision on approval
stipulated in Paragraph 9 above.
2. Matter to be discussed --
-----------------------
The matter not stipulated in this Agreement and other matter required
for transfer of the business, are settled by discussions between DHB
and DMC.
IN WITNESS WHEREOF, DHB and DMC have prepared this Agreement in duplicate, and
each retains one copy after putting the signature and the seal.
This 10th day of March, 2000.
DMC2 Co. Ltd.
------------------------------------
, Rep. Director/President
DHB K.K.
------------------------------------
, Rep. Director/President
<PAGE>
Appendix
Transferred Assets/Liabilities
------------------------------
A. Assets
------
1. Inventory assets - Identified in Part A of the Schedule
attached hereto
2. Receivables - Identified in Part B of the Schedule attached
hereto
3. Machines/facilities
4. Apparatus/fixtures
5. Other assets determined by discussions between both parties.
B. Liabilities
-----------
1. Payables - Identified in Part C of the Schedule attached
hereto
<PAGE>
Schedule
(All amounts in Yen)
Part A
Inventory as of March 10, 2000
Goods in Transit Toyota - New Model 6,282,000
Stock on Hand Toyota - Old Model 23,780,000
Stock on Hand Toyota -New Model 4,567,000
Stock on Hand Hitachi 286,000
----------
Total Inventory 34,915,000
==========
Part B
Accounts Receivable as of March 10, 2000
A/C# Customer Receivable
2311 Mitsubishi 13,101,511
2311 Nissei Sangyo 3,770,297
2311 Toyota 3,473,400
2311 Tomita 807,974
3500 Kyocers 267,750
3500 Lanxide Electronic
Components, Inc. 353,151
3500 Mitsubishi 36,960
----------
Total Receivables 21,811,043
----------
Part C
Accounts Payable and Accrued Expenses as of March 10, 2000
6311 Lanxide Electronic
Components, Inc. 12,640,423
7000 ND System 15,482,596
7000 Miscellaneous 600,000 (Tel/fax/util/elec, etc.)
7000 Fedex 500,000 (Feb/Mar shipments)
-------
Total Payables 29,223,019
----------
