EXHIBIT 2.3
FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER
THIS FIRST AMENDMENT, dated October 21, 1998 ("Amendment"), to the
Agreement and Plan of Merger (the "Original Agreement"), dated June 12, 1998,
among Nationwide Electric, Inc., a Delaware corporation ("NEI"), Henderson
Electric Company, Inc., a Kentucky corporation (the "Company"), and the
shareholders of the Company ("Shareholders") identified in Schedule A to the
Original Agreement and executing counterparts of this Agreement (capitalized
terms used herein and not otherwise defined shall have the meanings ascribed to
them in the Original Agreement).
WHEREAS, NEI has determined not to conduct its IPO of its common stock at
this time; and
WHEREAS, notwithstanding the decision not to proceed with the IPO at this
time, the parties to the Original Agreement desire to proceed with the merger of
the Company into NEI, pursuant to which Company Stock will be exchanged for cash
and stock of NEI in accordance with the terms and conditions of the Original
Agreement as amended by this Amendment; and
WHEREAS, in lieu of the IPO, NEI has determined to conduct a private
offering of its securities, a portion of the proceeds of which will be used to
provide cash necessary to consummate the transactions contemplated by the NEI
Plan of Organization.
NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements herein contained, the parties hereto,
intending to be legally bound hereby, agree to amend the Agreement as follows:
1. Amendment to Article I. Article I of the Agreement is hereby amended
as follows:
(a) The following shall be added to such Article I:
"Private Offering Memorandum" shall mean the private offering
memorandum, dated September 29, 1998, prepared by NEI in connection with
the offering of capital stock of NEI in an offering which will be exempt
from the registration requirements of the 1933 Act, as it may be amended to
reflect negotiations between the proposed purchasers of such stock.
"Purchasers" shall mean the prospective purchasers of stock of NEI
offered pursuant to the Private Offering Memorandum.
"Series B Convertible Preferred Stock" shall mean the Series B
Convertible Preferred Stock, par value $.01 per share, of NEI.
"Series C Convertible Preferred Stock" shall mean the Series C
Convertible Preferred Stock, par value $.01 per share, of NEI.
(b) All references to the Registration Statement" and/or the
"Prospectus" (except as either of those terms may be used in the Agreement
without initial capital letters) shall be deleted and replaced by the
"Private Offering Memorandum."
(c) The following definitions as set forth in the Original Agreement
shall be deleted in their entirety and the following definition shall be
substituted in lieu thereof:
"Other Founding Company" shall mean The ▇▇▇▇▇▇▇ Company, a Georgia
corporation.
"NEI Plan of Organization" shall mean the acquisition or merger of the
Founding Companies by or into NEI or its subsidiaries.
(d) The following definitions set forth in the Original Agreement
shall be deleted in their entirety: "IPO," "Pricing" and "Underwriters."
2. Amendment to Section 2.6. Section 2.6 of the Agreement is amended by
deleting the first sentence of Section 2.6 of the Original Agreement in its
entirety and substituting in lieu thereof the following sentence:
The aggregate Merger Consideration to be received by the Shareholders in
exchange for the Company Stock shall consist of cash and shares of NEI
Stock determined in accordance with SCHEDULE 2.6 attached hereto; provided
however, that the actual number of shares of NEI Stock shall be based upon
a value of $12.00 per share of NEI Stock, rounded up to the nearest whole
share; provided further, that if the price per share in NEI's next round of
financing subsequent to the private placement to Kansas City Power & Light
Company or its affiliates, whether in a private placement or an initial
public offering (the "Price") is less than $12.00 per share, then an
additional number of shares shall be issued to the Shareholders, in the
same proportions set forth above, as if such Price had been used in making
the computation in the immediately preceding clause, less the number of
shares of NEI Stock issued pursuant to the Merger.
3. Amendment to Section 2.9. Section 2.9 of the Agreement is amended by
deleting the clause "which may be prior or subsequent to the Pricing," in the
first sentence of Section 2.9 of the Original Agreement.
4. Amendment to Section 2.10. Section 2.10 of the Agreement is amended by
deleting the clause "which shall be not later than 15 days after the closing of
the IPO," in the first sentence of Section 2.10 of the Original Agreement.
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5. Deletion of Section 2.11. Section 2.11 of the Original Agreement is
deleted in its entirety.
6. Amendment to Section 2.13. Section 2.13 of the Agreement is amended by
deleting the clause "244 shares of the Company Stock" in the first sentence of
Section 2.13 of the Original Agreement and replacing it with "150 shares of the
Company Stock."
7. Amendment to Section 2.15. Section 2.15 of this Agreement is amended
by deleting the second sentence of Section 2.15 of the Original Agreement and
replacing it with the following sentence:
Within thirty (30) days after the Merger Date, NEI shall pay as additional
Merger Consideration an amount equal to 100% of the after-tax income of the
Company for the period from August 15, 1998 through the Merger Date, which
amount shall be paid pro rata among the Shareholders in accordance with
their respective Company Stock ownership; provided that 5% of such amount
shall be reserved by NEI and retained in the Basket in accordance with the
provisions relating thereto in Section 2.6.
8. Amendment to Section 3.23.2. Section 3.23.2 of the Agreement is
amended by deleting the first sentence of Section 3.23.2 of the Original
Agreement in its entirety and substituting in lieu thereof the following
sentence:
If, prior to the Merger Date, the Company or any Shareholder becomes aware
of any fact or circumstance which would affect in any material respect the
accuracy of a representation or warranty of the Company or the Shareholders
in this Agreement or a representation or disclosure with respect to the
Company or the Shareholders in the Private Offering Memorandum, the Company
and the Shareholders shall immediately give notice of such fact or
circumstance to NEI.
9. Amendment to Section 3.24. Section 3.24 of the Agreement is amended by
deleting the first sentence of Section 3.24 of the Original Agreement in its
entirety and substituting in lieu thereof the following sentence:
3.24 Acknowledgment. The Shareholders acknowledge and agree: (a) that
there exists no firm commitment, binding agreement or promise of any kind,
express or implied, that the offering described in the Private Offering
Memorandum will be consummated; (b) that neither NEI or any of its
officers, directors, agents or representatives nor any Purchasers shall
have any liability to the Company, the Shareholders or any other Person for
any failure of the private offering described in the Private Offering
Memorandum to be consummated or the failure of NEI to sell its securities
in such offering at a particular price or within a particular range of
prices or to occur at all; (c) that NEI has not committed to pay any
dividends on the NEI Stock and that, in all likelihood, no dividends will
be paid on the NEI Stock in the foreseeable future;
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(d) that there is no guaranty the NEI Stock will appreciate or not
depreciate in value, that an active market will exist for the NEI Stock, or
that the Shareholders will be able in the future to sell their NEI Stock at
a price equal to or greater than the offering price described in the
Private Offering Memorandum; and (e) that the decision of the Shareholders
to enter into this Agreement and to exchange the Company Stock for NEI
Stock and cash has been made independent of, and without reliance upon, any
statements, opinions, communications or due diligence investigations made
or performed by any Purchasers.
10. Amendment to Section 4.3. Section 4.3 of the Agreement is hereby
amended by deleting the first sentence of Section 4.3 of the Original Agreement
in its entirety and substituting in lieu thereof the following sentence:
The authorized capital stock of NEI consists of (a) 30,000,000 shares of
voting common stock, par value $.01 per share, (b) 1,200,000 shares of
Class A Nonvoting Common Stock, par value $.01 per share, (c) 1,250,000
shares of Class B Nonvoting Common Stock, par value $.01 per share, and (d)
10,000,000 shares of Preferred Stock, par value $.01 per share, of which
6,000 shares have been designated Series A Nonvoting Convertible Preferred
Stock, 1,000,000 shares have been designated Series B Convertible Preferred
Stock and 1,000,000 shares have been designated Series C Convertible
Preferred Stock, and all such shares are free and clear of all liens,
security interests, pledges, charges, voting trusts, restrictions,
encumbrances and claims of every kind.
11. Amendment to Section 4.4. Section 4.4 of the Agreement is hereby
amended by deleting Section 4.4 set forth in the Original Agreement in its
entirety and substituting in lieu thereof the following new Section 4.4:
4.4 Transactions in Capital Stock. Except as otherwise contemplated
with respect to (i) the Other Agreements and the rights and privileges
associated with the 6,000 shares of Series A Nonvoting Convertible
Preferred Stock, 500,000 shares of Series B Preferred Stock, 1,089,999
shares of Class A Nonvoting Common Stock and 1,000,000 shares of Class B
Nonvoting Common Stock issued to KLT Energy Services, Inc. and ▇▇▇▇▇▇▇
Capital, LLC, (ii) the shares of Series C Preferred Stock available for
issuance upon exchange of NEI Stock being offered to the shareholders of
the Founding Companies, (iii) as contemplated by the Private Offering
Memorandum, including, without limitation, the grant and exercise of
options to employees of Nationwide and its subsidiaries, and (iv) in
connection with any future acquisitions, mergers or financings which may be
conducted by NEI or its subsidiaries: (a) there are no options, warrants,
calls, conversion rights or commitments of any kind which obligate NEI to
issue any of its authorized but unissued capital stock; and (b) NEI has no
obligation (contingent or otherwise) to purchase, redeem or otherwise
acquire any of its securities or any interest therein nor any obligation to
pay any dividend or make any distribution in respect of any of its capital
stock.
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12. Amendment to Section 4.8.3. Section 4.8.3 of the Agreement is hereby
amended by deleting clauses (a) and (b) of Section 4.8.3 set forth in the
Original Agreement in their entirety.
13. Deletion of Section 4.13. Section 4.13 of the Original Agreement is
deleted in its entirety.
14. Amendment to Section 5.1. Section 5.1 of the Agreement is hereby
amended by deleting Section 5.1 set forth in the Original Agreement in its
entirety and substituting in lieu thereof the following new Section 5.1:
5.1 Access. Shareholders and the Company shall permit NEI and its
representatives and the Purchasers and their representatives to perform
such inspections, investigations and due diligence with respect to the
Company, its assets, business and financial condition, as NEI or the
Purchasers deem advisable. Shareholders and the Company shall provide NEI
and its representatives and the Purchasers and their representatives full
access to and an opportunity to inspect all properties, facilities, books,
records, accounts, contracts and documents of the Company, and shall make
themselves, their counsel and the officers of the Company available to NEI
and the Purchasers and otherwise cooperate with NEI's and the Purchasers'
due diligence investigations. Shareholders and the Company shall furnish
NEI and its representatives and the Purchasers and their representatives
all information with respect to the business and affairs of the Company as
NEI or the Purchasers reasonably request. Shareholders and the Company
shall permit NEI and the Purchasers to have access to other third parties,
including contractors, suppliers and bankers with which the Company does
business, as reasonably required for verification of any information
obtained by NEI or the Purchasers during their due diligence investigation,
provided such investigation is conducted only in the presence of
representatives of the Company and at times reasonably acceptable to the
Company. Shareholders and the Company shall permit NEI to conduct
appraisals of the Company's equipment and/or real estate at NEI's expense.
NEI will coordinate such due diligence investigations with Shareholders to
avoid disruption or undue interference with the operations of the Company.
Shareholders shall deliver to NEI copies of all environmental audits, risk
assessments and other investigations performed with respect to the Company
or its assets at any time prior to the Merger Date. Notwithstanding the
foregoing, the representations and warranties in Article III shall not be
affected by any due diligence investigation conducted by NEI, the
Purchasers or their respective representatives. NEI will promptly advise
the Company and Shareholders if it learns of any facts which conflict with
any of the representations and warranties made by the Company and
Shareholders herein.
15. Amendment to Section 5.16. Section 5.16 of the Agreement is hereby
amended by deleting Section 5.16 set forth in the Original Agreement in its
entirety and substituting in lieu thereof the following new Section 5.16:
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5.16 Cooperation in Preparation of Private Offering Memorandum. The
Company and the Shareholders shall furnish or cause to be furnished to NEI
all information concerning the Company and the Shareholders required for
inclusion in, and will cooperate with NEI in the preparation of, the
Private Offering Memorandum (including audited and unaudited historical and
pro forma financial statements prepared in accordance with GAAP, in form
suitable for inclusion in the Private Offering Memorandum). The disclosure
of information with respect to the Company and the Shareholders in the
Private Offering Memorandum and in the conduct of the offering described
therein shall not constitute a violation of any confidentiality agreement,
including Section 11.2 of this Agreement, among the parties hereto. All
information and disclosures provided by Shareholders or the Company in
accordance with this Section 5.16 shall be subject to the provisions of
Sections 3.23, 3.24 and 3.26 hereof. The Company and the Shareholders agree
promptly to advise NEI if at any time prior to the Merger Date they
discover that any information contained in the Private Offering Memorandum
concerning the Company or the Shareholders becomes inaccurate or incomplete
in any material respect, and to provide the information needed to correct
any such inaccuracy.
16. Amendment to Section 5.17. Section 5.17 of the Agreement is hereby
amended by deleting Section 5.17 set forth in the Original Agreement in its
entirety and substituting in lieu thereof the following new Section 5.17:
5.17 Authorized Capital. Prior to the Merger Date, NEI shall maintain
its authorized capital stock as set forth in Section 4.3 hereof.
17. Amendment to Section 6.3. Section 6.3 of the Agreement is hereby
amended by deleting Section 6.3 set forth in the Original Agreement in its
entirety and substituting in lieu thereof the following new Section 6.3:
6.3 No Litigation. No action or proceeding before any court or
governmental agency shall have been instituted or threatened to restrain or
prohibit the Merger or the private offering described in the Private
Offering Memorandum.
18. Deletion of Section 6.4. The second sentence of Section 6.4 of the
Original Agreement is deleted in its entirety.
19. Deletion of Section 6.5. Section 6.5 of the Original Agreement is
deleted in its entirety.
20. Amendment to Section 6.8. Section 6.8 of the Agreement is hereby
amended by deleting Section 6.8 set forth in the Original Agreement in its
entirety and substituting in lieu thereof the following new Section 6.8:
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6.8 Opinion of Counsel. Shareholders shall have received from NEI's
counsel a written opinion, dated as of the Merger Date, in substantially
the form attached hereto as Schedule 6.8.
21. Amendment to Section 7.6. Section 7.6 of the Agreement is hereby
amended by deleting Section 7.6 set forth in the Original Agreement in its
entirety and substituting in lieu thereof the following new Section 7.6:
7.6 Employment Agreements. NEI or its Affiliate shall have entered
into Employment Agreements acceptable to NEI with ▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ in accordance with the terms recited in Section 6.4, and shall
have made such other arrangements with respect to the Company's key
employees as NEI deems advisable.
22. Amendment to Section 7.8. Section 7.8 of the Agreement is hereby
amended by deleting Section 7.8 set forth in the Original Agreement in its
entirety and substituting in lieu thereof the following new Section 7.8:
7.8 Opinion of Counsel for Shareholders. NEI shall have received from
Shareholders' counsel a written opinion, dated as of the Merger Date, in
substantially the form attached hereto as Schedule 7.8.
23. Amendment to Section 7.11. Section 7.11 of the Agreement is hereby
amended by deleting Section 7.11 set forth in the Original Agreement in its
entirety and substituting in lieu thereof the following new Section 7.11:
7.11 No Litigation. No action or proceeding before any court or
governmental agency shall have been instituted or threatened to restrain or
prohibit the Merger or the private offering described in the Private
Offering Memorandum.
24. Amendment to Section 7.14. Section 7.14 of the Agreement is hereby
amended by deleting Section 7.14 set forth in the Original Agreement in its
entirety and substituting in lieu thereof the following new Section 7.14:
7.14 Other Founding Company. NEI shall have entered into the Other
Agreement with the Other Founding Company and the closing of Other
Agreement with the Other Founding Company shall have occurred, or shall
occur simultaneously with Closing of this Agreement.
25. Deletion of Section 7.16. Section 7.16 of the Original Agreement is
deleted in its entirety.
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26. New Section 8.4. The Agreement is amended by adding the following new
Section 8.4:
8.4 Exchange Right. If on or before December 31, 1999, NEI has not
consummated an initial public offering of its NEI Stock, the Shareholders
shall have the right to exchange their shares of NEI Stock received
pursuant to the Merger for an equal number of shares of Series C
Convertible Preferred Stock upon the surrender to NEI of the certificates
evidencing such shares of NEI Stock endorsed in blank. Upon receipt of such
certificates from a Shareholder endorsed in blank, NEI shall promptly
deliver to such Shareholder a certificate evidencing an equal number of
shares of Series C Convertible Preferred Stock.
27. Amendment to Section 9.1. Clause (c) of the first sentence of Section
9.1 of the Agreement is hereby amended by deleting such clause in the Original
Agreement in its entirety and substituting in lieu thereof the following new
clause (c) to the first sentence of Section 9.1:
(c) any liability under the 1933 Act, the 1934 Act or other federal or
state law or regulation, at common law or otherwise, arising out of or
based upon any untrue statement or alleged untrue statement of material
fact relating to the Company or the Shareholders which was based upon
information provided to NEI or its counsel by the Company or the
Shareholders and contained in the Private Offering Memorandum, or arising
out of or based upon any omission or alleged omission to state therein a
material fact relating to the Company or the Shareholders required to be
stated therein or necessary to make the statements therein not misleading;
provided, that such indemnity shall not inure to the benefit of NEI to the
extent such untrue statement (or alleged untrue statement) was made in, or
omission (or alleged omission) occurred in, any preliminary draft of the
Private Offering Memorandum and the Shareholders provided written corrected
information to NEI for inclusion in the final Private Offering Memorandum
and such information was not so included, and provided further, that no
Shareholder shall be liable for any indemnification pursuant to this
Section 9.1(c) to the extent solely attributable to a breach of any
representation, warranty or agreement made by any other Shareholder;
28. Amendment to Section 9.2. Clause (c) of the first sentence of Section
9.2 of the Agreement is hereby amended by deleting such clause in the Original
Agreement in its entirety and substituting in lieu thereof the following new
clause (c) to the first sentence of Section 9.2:
(c) any liability under the 1933 Act, the 1934 Act or other federal or
state law or regulation, at common law or otherwise arising out of or based
upon any untrue statement or alleged untrue statement of material fact
relating to NEI or any of the Other Founding Company contained in the
Private Offering Memorandum or arising out of or based upon any omission or
alleged omission to state therein a material fact relating to NEI or any of
the Other Founding Company required to be stated therein or necessary to
make the
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statements therein not misleading, except to the extent such statement or
omission relates to the Company or the Shareholders;
29. Amendment to Section 10.1. Section 10.1 of the Agreement is hereby
amended by deleting Section 10.1 set forth in the Original Agreement in its
entirety and substituting in lieu thereof the following new Section 10.1:
10.1 Termination. This Agreement may be terminated at any time prior
to the Merger Date, but only:
10.1.1 By the mutual written consent of NEI and the
Shareholders;
10.1.2 By the Shareholders and the Company if the applicable
conditions set forth in Article VI hereof have not been satisfied or
waived by December 31, 1998;
10.1.3 By NEI if the applicable conditions set forth in Article
VII hereof have not been satisfied or waived by December 31, 1998; or
10.1.4 By NEI if NEI in its sole discretion elects not to
consummate the securities offering described in the Private Offering
Memorandum or if NEI in its sole discretion elects not to proceed with
the NEI Plan of Organization.
30. Amendment to Section 11.2.1. Section 11.2.1 of the Agreement is
hereby amended by deleting Section 11.2.1 set forth in the Original Agreement in
its entirety and substituting in lieu thereof the following new Section 11.2.1:
11.2.1 Shareholders jointly and severally agree that they shall not
disclose to any Person (other than NEI and its representatives and the
Purchasers and their representatives) nor use for any purpose (other than
in connection with the offering described in the Private Offering
Memorandum or the conduct of the Company's business prior to the Merger
Date or pursuant to any subpoena or order of any court or administrative
agency) any confidential information, trade secrets, customer lists, price
lists, bids, technical know-how or other confidential or proprietary
information of or with respect to the Company, whether or not marked or
specifically identified as confidential.
31. Amendment to Section 14.1. Section 14.1 of the Agreement is amended
by adding the following clause (c) to the end of the first sentence of Section
14.1 of the Original Agreement:
or, (c) a registration statement filed with the SEC pursuant to the 1933
Act in connection with NEI's initial public offering.
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32. Amendment to Section 14.6.1. Section 14.6.1 of the Agreement is
hereby amended by deleting Section 14.6.1 set forth in the Original Agreement in
its entirety and substituting in lieu thereof the following new Section 14.6.1:
14.6.1 Make current public information regarding NEI available as
contemplated in Rule 144 under the 1933 Act for a period of five years
beginning 90 days following the effective date of the registration
statement filed with the SEC pursuant to the 1933 Act in connection with
NEI's initial public offering.
33. Amendment to Section 15.3. The addresses and facsimile numbers for
notice pursuant to Section 15.3 of the Agreement for NEI are amended in their
entirety by substituting in the following addresses and facsimile numbers:
If to NEI: Nationwide Electric, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: President
with a copy to: ▇▇▇▇▇▇▇, Mag & Fizzell, P.C.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
34. Amendment to Schedules. Schedules A, 2.6, 3.1, 3.3, 3.4, 3.6.2,
3.10.1, 3.10.3, 3.10.6 and 5.3 of the Agreement are hereby amended by deleting
such Schedules attached to the Original Agreement in their entirety and
substituting in lieu thereof the new Schedules A, 2.6, 3.1, 3.3, 3.4, 3.6.2,
3.10.1, 3.10.3, 3.10.6 and 5.3 attached hereto. Schedules 3.6.1 and 3.13.1 of
the Agreement are hereby amended by adding to such Schedules the new Schedules
3.6.1 and 3.13.1 attached hereto. Schedule 3.10.2 of the Agreement is hereby
amended by deleting the first two pages of such Schedule in its entirety and
substituting in lieu thereto the new Schedule 3.10.2, with no amendment or
deletion of the pages following the second page of such Schedule attached to the
Original Agreement.
35. Waiver of Certain Consents. The Shareholders hereby waive as a
condition under Section 6.7 of the Agreement to their obligations on the Merger
Date, of and NEI hereby waives as a condition under Section 7.18 of the
Agreement, the receipt by the Company of consents to the merger from Toyota
Motor Manufacturing North America, Inc., ▇▇▇▇▇, Inc., and H K Systems, Inc.
36. Full Force and Effect. All provisions of the Original Agreement not
specifically affected by this Amendment shall remain in full force and effect
without alteration or modification.
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Sections of the Original Agreement which are deleted by this Amendment shall
remain intentionally omitted and no renumbering of subsequent Section headings
shall be made.
37. Counterparts. This Amendment may be executed in counterparts, each of
which shall be deemed an original and all of which, taken together, shall
constitute a single instrument.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
set forth above.
NATIONWIDE ELECTRIC, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
"NEI"
▇▇▇▇▇▇▇▇▇ ELECTRIC COMPANY, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------------------------
The "Company"
SHAREHOLDERS:
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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SCHEDULE 2.6
MERGER CONSIDERATION
TOTAL AGGREGATE MERGER CONSIDERATION $11,835,026
Cash/(1)(2)/ $5,305,767
NEI Stock $6,250,008
Basket $279,251
-----------------------
/(1)/ This amount takes into account $6,912,331 which was the consolidated
book value of the Company as of March 31, 1998 (computed in accordance
with GAAP, after reflecting the entries related to consummation of the
redemption transaction referred to in Section 2.13 (without taking
into account the Tax consequences thereof) and after deducting the
Company's investment in Eagle Electric Company, Inc. in the amount of
$518,445). The Shareholders and NEI have agreed that to the extent
such amount is greater than $6,577,305, the cash portion of the Merger
Consideration shall be increased by the amount of such excess.
Accordingly, the cash portion of the Merger Consideration is equal to
$5,250,000 plus $335,018.
/(2)/ Subject to increase in accordance with the provisions of Section 2.15.
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