EXHIBIT 2.1
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AGREEMENT
AND
PLAN OF MERGER
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among
SPACETEC IMC CORPORATION,
SIMC ACQUISITION CORPORATION
and
LABTEC, INC.
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Dated as of October 21, 1998
as Amended and Restated as of November 13, 1998
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TABLE OF CONTENTS
Page
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ARTICLE I TERMS AND EFFECT OF MERGER...................................... 1
Section 1.1 The Merger; Name of Surviving Corporation................... 1
Section 1.2 Certificate of Incorporation of Surviving Corporation....... 2
Section 1.3 By-laws of Surviving Corporation............................ 2
Section 1.4 Directors and Officers of Surviving Corporation
and Parent............................................... 2
Section 1.5 Effect of Merger on Capital Stock of
Constituent Corporations................................. 3
Section 1.6 Effect of the Merger Effect of the Merger.................. 7
Section 1.7 Certain Merger Consideration................................ 7
Section 1.8 Initial Expense Reimbursement............................... 9
Section 1.9 Withholding Rights.......................................... 10
ARTICLE II CLOSING; FILING OF ARTICLES OF MERGER.......................... 10
Section 2.1 Closing; Filing of Articles of Merger; Effective Time....... 10
ARTICLE III REPRESENTATIONS AND WARRANTIES OF LABTEC...................... 10
Section 3.1 Organization, Good Standing, Corporate Power and
Authority and Foreign Qualification of Labtec............ 11
Section 3.2 Capitalization of Labtec.................................... 11
Section 3.3 Issuance of Capital Stock of Labtec; Calls Upon Shares...... 11
Section 3.4 Effective Agreement of Labtec............................... 12
Section 3.5 Subsidiaries and Affiliates................................. 12
Section 3.6 Corporate Charters and By-Laws.............................. 13
Section 3.7 Financial Statements........................................ 13
Section 3.8 Undisclosed Liabilities..................................... 14
Section 3.9 Absence of Changes.......................................... 14
Section 3.10 Accuracy of Information..................................... 14
Section 3.11 Brokers and Finders......................................... 14
Section 3.12 Adoption of this Agreement by the Shareholders of Labtec.... 15
Section 3.13 Intellectual Property....................................... 15
Section 3.14 Employee Benefit Plans...................................... 16
Section 3.15 Labor Matters............................................... 16
Section 3.16 Litigation.................................................. 17
Section 3.17 Taxes....................................................... 17
Section 3.18 Ownership of Parent Common Stock............................ 17
Section 3.19 Certain Arrangements........................................ 17
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND NEWCO............. 18
Section 4.1 Organization, Good Standing, Corporate Power and
Authority and Foreign Qualification of Parent and Newco.. 18
Section 4.2 Capitalization of Parent.................................... 19
Section 4.3 Issuance of Capital Stock of the Spacetec Corporations...... 19
Section 4.4 Effective Agreement of Parent and Newco..................... 19
Section 4.5 Subsidiaries and Affiliates................................. 20
Section 4.6 Corporate Charters and By-laws.............................. 21
Section 4.7 Financial Statements........................................ 21
Section 4.8 Undisclosed Liabilities..................................... 22
Section 4.9 Absence of Changes.......................................... 22
Section 4.10 Accuracy of Information..................................... 22
Section 4.11 Brokers and Finders......................................... 22
Section 4.12 Reports and Financial Statements............................ 22
Section 4.13 Adoption of this Agreement by the Shareholders of Newco..... 23
Section 4.14 Certain Arrangements Certain Arrangements................... 23
Section 4.15 Fairness Opinion............................................ 23
Section 4.16 Intellectual Property....................................... 23
Section 4.17 Employee Benefit Plans...................................... 24
Section 4.18 Labor Matters............................................... 25
Section 4.19 Litigation.................................................. 25
Section 4.20 Taxes....................................................... 25
ARTICLE V COVENANTS OF LABTEC............................................. 26
Section 5.1 Action Not Permitted........................................ 26
Section 5.2 Conduct of Business in Ordinary Course...................... 26
Section 5.3 No Change in Corporate Charters or By-laws.................. 26
Section 5.4 No Change in Capital Stock.................................. 26
Section 5.5 No Dividend or Redemption................................... 26
Section 5.6 No Liquidation, Merger or Acquisition....................... 26
Section 5.7 No Change in Accounting Methods; Tax Items.................. 27
Section 5.8 No Sales or Other Dispositions.............................. 27
Section 5.9 Prohibition on Certain Commitments.......................... 27
Section 5.10 No Defaults................................................. 27
Section 5.11 Preservation of Business.................................... 27
Section 5.12 Maintenance of Properties................................... 28
Section 5.13 Access to Labtec and the Subsidiaries....................... 28
Section 5.14 Actions Affecting Representations, Warranties and
Covenants................................................ 28
Section 5.15 Obtaining of Consents; Satisfaction of Other Conditions..... 28
Section 5.16 Books and Records; Notification of Changes.................. 29
Section 5.17 Tax Free Reorganization..................................... 29
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ARTICLE VI COVENANTS OF PARENT AND NEWCO.................................. 29
Section 6.1 Action Not Permitted........................................ 29
Section 6.2 Conduct of Business in Ordinary Course...................... 29
Section 6.3 No Change in Corporate Charters or By-laws.................. 29
Section 6.4 No Change in Capital Stock.................................. 29
Section 6.5 No Dividend or Redemption................................... 30
Section 6.6 No Liquidation, Merger or Acquisition....................... 30
Section 6.7 No Change in Accounting Methods; Tax Items.................. 30
Section 6.8 No Sales or Other Dispositions.............................. 30
Section 6.9 Prohibition on Certain Commitments.......................... 30
Section 6.10 No Defaults................................................. 31
Section 6.11 Preservation of Business.................................... 31
Section 6.12 Maintenance of Properties................................... 31
Section 6.13 Access to Spacetec and the Spacetec Subsidiaries............ 31
Section 6.14 Actions Affecting Representations, Warranties and
Covenants................................................ 32
Section 6.15 Obtaining of Consents; Satisfaction of Other Conditions..... 32
Section 6.16 Books and Records; Notification of Changes.................. 32
Section 6.17 Compliance with the Securities and Exchange Act............. 32
Section 6.18 Tax Free Reorganization..................................... 32
Section 6.19 Bank Consent and Other Voting Agreements.................... 32
ARTICLE VII CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PARENT AND NEWCO... 33
Section 7.1 Proceedings and Documentation............................... 33
Section 7.2 Accuracy of Representations and Warranties;
Compliance with Covenants and Conditions................. 33
Section 7.3 Legal Opinion of Counsel to Labtec.......................... 34
Section 7.4 Fulfillment of Legal Requirements........................... 34
Section 7.5 Obtaining of Consents....................................... 34
Section 7.6 Absence of Pending Proceedings.............................. 34
Section 7.7 Tax Certificates............................................ 34
Section 7.8 No Material Adverse Change.................................. 34
Section 7.9 Effectiveness of Registration Statement..................... 35
Section 7.10 Shareholder Approval........................................ 35
Section 7.11 Due Diligence............................................... 35
Section 7.12 Charter Amendments.......................................... 35
Section 7.13 Parent Restructuring........................................ 35
ARTICLE VIII CONDITIONS PRECEDENT TO THE OBLIGATIONS OF LABTEC............ 35
Section 8.1 Proceedings and Documentation............................... 35
Section 8.2 Accuracy of Representations and Warranties;
Compliance with Covenants and Conditions................. 36
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Section 8.3 Completion of Required Corporate Action..................... 36
Section 8.4 Legal Opinion of Counsel to Spacetec and Newco.............. 36
Section 8.5 Fulfillment of Legal Requirements........................... 36
Section 8.6 Obtaining of Consents....................................... 36
Section 8.7 Absence of Pending Proceedings.............................. 37
Section 8.8 Promissory Note............................................. 37
Section 8.9 No Material Adverse Change.................................. 37
Section 8.10 Effectiveness of Registration Statement..................... 37
Section 8.11 Listing..................................................... 37
Section 8.12 Due Diligence............................................... 37
Section 8.13 Charter Amendments.......................................... 37
Section 8.14 Parent Restructuring........................................ 37
ARTICLE IX ADDITIONAL COVENANTS........................................... 38
Section 9.1 Acquisition Proposals....................................... 38
Section 9.2 Proxy Statement/Prospectus; Registration Statement.......... 39
Section 9.3 Shareholder Approvals....................................... 41
Section 9.4 Agreement of Parent Shareholders............................ 41
Section 9.5 Listing..................................................... 42
ARTICLE X TERMINATION OF AGREEMENT........................................ 42
Section 10.1 Termination................................................. 42
Section 10.2 Liability of the Parties.................................... 44
Section 10.3 Effect of Termination....................................... 45
ARTICLE XI SURVIVAL OF REPRESENTATIONS AND WARRANTIES..................... 45
Section 11.1 Survival of Representatives and Warranties.................. 45
ARTICLE XII MISCELLANEOUS................................................. 46
Section 12.1 Notices..................................................... 46
Section 12.2 Assignability and Parties in Interest....................... 47
Section 12.3 Governing Law............................................... 47
Section 12.4 Counterparts................................................ 47
Section 12.5 Best Efforts................................................ 47
Section 12.6 Publicity................................................... 47
Section 12.7 Complete Agreement.......................................... 47
Section 12.8 Modifications, Amendments and Waivers....................... 47
Section 12.9 Headings.................................................... 48
Section 12.10 Interpretation.............................................. 48
Section 12.11 Knowledge................................................... 48
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EXHIBITS
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Exhibit A -- Example of Valuation Adjustment and Determination of Contingent
Shares Amount
Exhibit B -- Form of Certificate of Merger
DEFINITIONS
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The following terms when used herein have the respective meanings ascribed
thereto in the following Sections:
Term Section
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Acquisition Proposals 9.1
Affiliates 9.1
Agreement Preamble
Applicable Fraction 1.5(b)
Assumed License Terms 1.7(b)
Balance Sheet Date 3.7
Bank 8.12
Bank Consent 8.12
Business 1.7(b)
Certificate of Merger 2.1
Charter Amendments 9.3(b)
Closing 2.1
Code Preamble
Collection Agent 1.7(a)
Confidentiality Agreement 5.13
Contingent Shares 1.7(b)
Contingent Valuation Adjustment 1.7(b)
Disclosure Statement 3.1
DGCL 1.1
Effective Time 2.1
Equity Adjustment 1.7(b)
ERISA 3.14
ERISA Affiliate 3.14
Exchange Agent 1.5(f)
Expenses 10.2(a)
GAAP 3.7
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incentive stock options 1.5(h)
Initial Expense Reimbursement 1.8
IRS 3.14
knowledge 12.11
Labtec Preamble
Labtec Corporation 3.5
Labtec Directors 1.7(b)
Labtec Disclosure 3.8
Labtec Employee Plans 3.14
Labtec Financial Statements 3.7
Labtec Investment Bank 1.7(b)
Labtec IP Rights 3.13
Labtec Option Plan 1.5(h)
Labtec Stock 1.5(b)
Labtec Stock Option 1.5(h)
Labtec Subsidiary 3.5
Limitation Amount 1.7(b)
Material Adverse Change 3.9
Material Adverse Effect 3.1
Merger Preamble
Merger Consideration 1.5(b)
Newco Preamble
New Spacetec Option 1.5(i)
Note Payments 1.7(a)
Other Parent Shareholders 6.19
Outside Date 1.7(b)
Outstanding Options 1.5(i)
Parent Preamble
Parent Additional Termination Fee 10.2(b)
Parent Initial Termination Fee 10.2(b)
Parent Proposals 9.2(a)
Parent Restructuring 7.13
% Factor per Dollar 1.7(b)
Person 5.6
Principal Parent Shareholders 9.4
Prior Day Market Price 1.5(i)
Promissory Note 1.7(a)
Proxy Statement 9.2(a)
Registration Statement 9.2(a)
Reverse Stock Split 9.3(b)
Rhetford 8.12
Sale 1.7(b)
SEC 9.3(a)
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SEC Reports 4.12
Securities Act 3.3
Shareholder Meeting 9.3(b)
Spacetec Corporation 4.5
Spacetec Directors 1.7(b)
Spacetec Disclosure 4.8
Spacetec Employee Plans 4.16
Spacetec Investment Bank 1.7(b)
Spacetec IP Rights 4.16
Spacetec Financial Statements 4.7
Spacetec Plans 9.3(b)
Spacetec Stock 1.5(a)
Spacetec Subsidiary 4.5
Superior Proposal 9.1(b)
Surviving Corporation 1.1
tax 3.17
Terminating Labtec Breach 10.1(d)
Terminating Parent Breach 10.1(e)
Valuation 1.7(b)
Valuation Date 1.7(b)
Valuation Guarantee 1.7(b)
Voting Agreement 9.4
WARN Act 3.15
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AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER dated as of October 21,
1998 as amended and restated by the parties as of November 13, 1998
(this "Agreement"), among LABTEC INC., a Delaware corporation ("Labtec")
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and SIMC ACQUISITION CORPORATION, a Delaware corporation ("Newco"), as the
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"constituent corporations" to the merger contemplated by this Agreement (the
"Merger"), and SPACETEC IMC CORPORATION, a Massachusetts corporation ("Parent"),
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as a party hereto but not as a constituent corporation.
W I T N E S S E T H:
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WHEREAS, the laws of State of Delaware permit the merger of Newco with and
into Labtec; and
WHEREAS, the respective Boards of Directors of Labtec, Newco (all of the
outstanding capital stock of which is owned by Parent) and Parent deem it
desirable and in the best interests of their respective corporations and
shareholders for Newco to merge with and into Labtec, and have approved this
Agreement for that purpose; and
WHEREAS, this Agreement and the Merger have been approved by the
shareholders of Labtec and by Parent, as the sole shareholder of Newco, and will
be submitted to the shareholders of Parent for approval; and
WHEREAS, for Federal income tax purposes, it is intended that the Merger
will qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code");
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NOW, THEREFORE, in consideration of the covenants, agreements,
representations and warranties contained in this Agreement, and in order to
prescribe the terms and conditions of the Merger and the procedures to
effectuate the Merger, the parties hereto agree as follows:
ARTICLE I
TERMS AND EFFECT OF MERGER
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Section 1.1 The Merger; Name of Surviving Corporation. Labtec and Newco
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are the constituent corporations as contemplated by the Delaware General
Corporation Law (the "DGCL"). At the Effective Time and pursuant to the DGCL,
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(a) Newco shall be merged with and into Labtec and the separate existence of
Newco, except to the extent continued by law, shall cease, and (b) Labtec shall
be the "surviving corporation" and shall continue its corporate existence under
the DGCL under the name "Labtec Corporation" (the "Surviving Corporation").
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Section 1.2 Certificate of Incorporation of Surviving Corporation. The
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certificate of incorporation of the Surviving Corporation shall be the
certificate of incorporation of Labtec in effect at the Effective Time, except
that Paragraph 1 of the certificate of incorporation of Labtec shall, at the
Effective Time, be amended to read as follows: "The name of the corporation
(the "Corporation") is "Labtec Corporation."." Except for such amendment, the
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certificate of incorporation of Labtec in effect at the Effective Time shall
remain unchanged and unaffected by the Merger until further amended as provided
by law.
Section 1.3 By-laws of Surviving Corporation. The by-laws of the
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Surviving Corporation shall be the by-laws of Labtec in effect at the Effective
Time, which shall remain unchanged and unaffected by the Merger until amended as
provided by law.
Section 1.4 Directors and Officers of Surviving Corporation and Parent.
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(a) Directors and Officers of Surviving Corporation. From and after
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the Effective Time, the Board of Directors of the Surviving Corporation shall
consist of those individuals designated by Labtec prior to the date that the
definitive Proxy Statement is mailed to Parent's shareholders, each of whom
shall serve as directors of the Surviving Corporation until the first annual
meeting of shareholders of the Surviving Corporation and until their respective
successors shall be duly elected and qualify or until their tenure shall be
otherwise terminated in accordance with the by-laws of the Surviving
Corporation. From and after the Effective Time, the persons designated by
Labtec prior to the date that the definitive Proxy Statements is mailed to
Parent's shareholders shall serve, at the pleasure of the Board of Directors of
the Surviving Corporation, in the respective offices of the Surviving
Corporation designated by the Board of Directors of Labtec at that time.
(b) Directors and Officers of Parent. From and after the Effective Time,
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the Board of Directors of Parent shall consist of twelve (12) directors, (a)
four (4) of whom shall be designated by the Board of Directors of Parent, one
(1) of whom shall be so designated to each of Classes I and III, and two (2) of
whom shall be so designated to Class II, pursuant to Parent's Articles of
Organization, prior to the date that definitive Proxy Statement is mailed to
Parent's shareholders and (b) eight (8) of whom shall be designated by the Board
of Directors of Labtec, three (3) of whom shall be so designated to each of
Classes I and III, and two (2) of whom shall be so designated to Class II,
pursuant to Parent's Articles of Organization, prior to the date that the
definitive Proxy Statement is mailed to Parent's shareholders, and each of whom
shall serve as directors of the Surviving Corporation until the first annual
meeting of shareholders of Parent and until their respective successors shall be
duly elected and qualify or until their tenure shall be otherwise terminated in
accordance with the by-laws of Parent. From and after the Effective Time, the
persons designated by the Board of Directors of Labtec prior to the date that
the
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definitive Proxy Statement is mailed to Parent's shareholders shall serve, at
the pleasure of the Board of Directors of Parent, in the respective offices of
Parent designated by the Board of Directors of Labtec at that time. The Class I
directors shall serve a one-year term or until their successors are duly elected
and qualified, the Class II directors shall serve a two-year term or until their
successors are duly elected and qualified, and the Class III directors shall
serve a three-year term or until their successors are duly elected and
qualified.
Section 1.5 Effect of Merger on Capital Stock of Constituent Corporations.
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(a) All shares of common stock, par value $.01 per share, of Parent
("Spacetec Stock"), which are issued and outstanding immediately prior to the
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Effective Time shall be unchanged and unaffected by the Merger and shall
represent approximately 33.06% of the outstanding Spacetec Stock, as measured
immediately following the Effective Time.
(b) Each share of common stock, par value $.01 per share, of Labtec
("Labtec Stock"), which is issued and outstanding (i) immediately prior to the
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Effective Time (other than shares to be canceled in accordance with Section
1.5(d) hereof) shall, by virtue of the Merger, be converted into and represent
solely the right to receive .55430739 shares of Spacetec Stock (before giving
effect to the Reverse Stock Split), which in the aggregate shall represent
approximately 66.94% of the outstanding Spacetec Stock, as measured
immediately following the Effective Time, (ii) the Applicable Fraction of the
Note Payments (as defined in, and determined in accordance with, Section 1.7
hereof), and (iii) the Applicable Fraction of the Contingent Shares (as defined
in, and determined in accordance with, Section 1.7 hereof; the consideration
described in clauses (i) (ii) and (iii) of this Section 1.5(b) are hereinafter
collectively referred to as the "Merger Consideration"). Each holder of record
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of Labtec Stock shall, subject to the provisions hereof, have the right to
receive the Merger Consideration for each of his or her shares of Labtec Stock.
For purposes of this Agreement, "Applicable Fraction" means a fraction, (A) the
numerator of which is 1 and (B) the denominator of which is the number of shares
of Labtec Stock outstanding immediately prior to the Effective Time.
(c) At the Effective Time, all Labtec Stock shall no longer be outstanding
and shall automatically be canceled and retired and shall cease to exist, and
each certificate previously representing any such Labtec Stock shall thereafter,
subject to the provisions hereof, represent solely the right to receive the
Merger Consideration. Certificates representing Labtec Stock shall be exchanged
for certificates representing whole shares of Spacetec Stock issued in
consideration therefor upon the surrender of such certificate in accordance with
the provisions hereof.
(d) Each share of Labtec Stock held in its treasury immediately prior
to the Effective Time shall be canceled and cease to exist, and no Spacetec
Stock shall be issued in exchange therefor.
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(e) Each share of common stock, par value $.01 per share, of Newco
issued and outstanding immediately prior to the Effective Time shall, by virtue
of the Merger and without any action on the part of the holder thereof, be
converted into one (1) share of common stock of the Surviving Corporation.
(f) Prior to the Effective Time, Parent shall appoint American Stock
Transfer & Trust Company to act as exchange agent hereunder (the "Exchange
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Agent"). No later than the Effective Time, Parent shall make available, and
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each holder of Labtec Stock shall be entitled to receive (whether from the
Exchange Agent or the Collection Agent, as the case may be), upon surrender to
the Exchange Agent of one or more certificates representing Labtec Stock for
cancellation, (i) certificates representing the number of shares of Spacetec
Stock into which such shares of Labtec Stock are converted in the Merger, (ii)
the Applicable Fraction of the Note Payments, when paid, and (iii) the
Applicable Fraction of the Contingent Shares, if any, when issued. The shares
of Spacetec Stock into which the shares of Labtec Stock shall be converted in
the Merger shall be deemed to have been issued at the Effective Time. After the
Effective Time, there shall be no further registration, on the records of
Labtec, of transfers of shares of Labtec Stock.
(g) If any delivery of shares of Spacetec Stock on account of any shares
of Labtec Stock is to be made in a name other than that in which the certificate
surrendered by the shareholder entitled thereto is registered on the stock
transfer books of Labtec at the Effective Time, it shall be a condition to such
delivery that the certificate so surrendered shall be properly endorsed in
blank, or otherwise in proper form for transfer, and that the holder thereof pay
to the Exchange Agent any transfer or other tax required by reason of the
delivery to a person other than the registered holder of the certificate
surrendered, or establish to the satisfaction of the Exchange Agent that such
tax has been paid or is not payable. No party hereto shall be liable to any
holder of shares of Labtec Stock for any amount paid to a public official
pursuant to any abandoned property, escheat or similar law.
Notwithstanding any purported sale, transfer or other disposition by any
Labtec shareholder of any shares of Labtec Stock after the Effective Time, any
delivery of shares of Spacetec Stock to be made to such shareholder pursuant to
this Agreement shall be made with respect to such shares of Labtec Stock as if
such sale, transfer or other disposition had not occurred and none of the
parties hereto nor the Exchange Agent shall recognize such sale, transfer or
other disposition.
(h) At the Effective Time of the Merger, each outstanding option to
purchase Labtec Stock (a "Labtec Stock Option") issued pursuant to the Labtec's
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1997 Employee Stock Option Plan (the "Labtec Option Plan"), whether vested or
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unvested, shall be deemed to
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constitute an option to acquire, on the same terms and conditions as were
applicable under such Labtec Stock Option (including, without limitation, any
vesting schedules), the same number of shares of Parent Stock as the holder of
such Labtec Stock Option would have been entitled to receive pursuant to the
Merger had such holder exercised such option in full immediately prior to the
Effective Time (not taking into account whether or not such option was in fact
exercisable), at a price per share equal to (i) the aggregate exercise price for
the shares of Labtec Stock otherwise purchasable pursuant to such Labtec Stock
Option divided by (ii) the number of full shares of Parent Stock deemed
purchasable pursuant to such Labtec Stock Option; provided, however, that in
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(y) the case of any option to which Section 421 of the Code applies by reason of
its qualification under Section 422 of the Code ("incentive stock options"), the
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option price, the number of shares purchasable pursuant to such option and the
terms and conditions of exercise of such option shall be determined in order to
comply with Section 424(a) of the Code, and (z) the number of shares of Spacetec
Stock that may be purchased upon exercise of any such Labtec Stock Option shall
not include any fractional share and, upon exercise of each Labtec Stock Option
a cash payment shall be made for any fractional share based upon the average
closing price of a share of Spacetec Stock during the ten (10) trading days
immediately preceding the date of exercise. From and after the Effective Time,
Parent shall assume the Labtec Option Plan and comply with the terms thereof
with respect to each outstanding Labtec Stock Option.
(i) No certificates or script representing fractional shares of
Spacetec Stock shall be issued upon surrender for exchange of certificates
representing shares of Labtec
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Stock pursuant to this Section 1.5. In lieu of such fractional securities, each
holder of Labtec Stock who would otherwise have been entitled to a fraction of a
share of Spacetec Stock upon surrender of certificates representing Labtec Stock
shall be paid cash upon such surrender in an amount equal to the product of such
fraction multiplied by the average closing price for Spacetec Stock on the
Nasdaq Stock Market's National Market for the five (5) trading days immediately
prior to the Effective Time.
(j) Notwithstanding anything to the contrary contained in this Section
1.5, neither Spacetec nor Labtec shall be liable to any holder of Labtec Stock
or Spacetec Stock for any Merger Consideration delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
(k) In the event any certificates representing shares of Labtec Stock
shall have been lost, stolen or destroyed, the Exchange Agent shall issue in
exchange for such lost, stolen or destroyed certificates, upon the making of an
affidavit of that fact by the holder thereof, such shares of Spacetec Stock as
may be required pursuant to this Section 1.5; provided, however, that Spacetec
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may, in its discretion and as a condition precedent to the issuance thereof,
require the owner of such lost, stolen or destroyed certificates to deliver a
bond in such sum as it may reasonably direct as indemnity against any claim that
may be made against Spacetec or the Exchange Agent with respect to the
certificates alleged to have been lost, stolen or destroyed.
(l) After the Effective Time of the Merger, the agreements evidencing
the grants of then outstanding Labtec Stock Options shall continue in effect on
the same terms and conditions (subject to adjustments required by this Section
1.5(l) after giving effect to the Merger and the provisions set forth above).
If necessary, Parent shall comply with the terms of the Labtec Option Plan and
ensure, to the extent required by, and subject to the provisions of, the Labtec
Option Plan, that Labtec Stock Options that qualified as incentive stock options
prior to the Effective Time of the Merger continue to qualify as incentive stock
options after the Effective Time of the Merger.
Parent shall take all corporate action necessary to reserve for issuance a
sufficient number of shares of Parent Stock for delivery upon exercise of Labtec
Stock Options. As soon as practicable after the Effective Time of the Merger,
Parent shall file a registration statement on Form S-8 (or any successor or
other appropriate forms) with respect to the shares of Parent Stock subject to
such options and shall use its reasonable best efforts to maintain the
effectiveness of such registration statement or registration statements (and
maintain the current status of the prospectus or prospectuses contained therein)
for so long as such options remain outstanding. With respect to those
individuals who subsequent to the Merger will be subject to the reporting
requirements under Section 16(a) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), where applicable, Parent shall administer the
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Labtec Option Plan
6
in a manner that complies with Rule 16b-3 promulgated under the Exchange Act to
the extent the Labtec Option Plan complied with such rule prior to the Merger.
(m) At the Effective Time, each outstanding option to purchase Spacetec
Stock, whether vested or unvested, then outstanding shall be unchanged and
unaffected by the Merger, except as provided in the Spacetec stock option plan
pursuant to which such option was granted.
Section 1.6 Effect of the Merger Effect of the Merger. At the
------------------------------------------
Effective Time, the constituent corporations shall become a single corporation
and Labtec shall continue to exist as the Surviving Corporation and shall
thereupon and thereafter, pursuant to the DGCL, have all the rights, privileges,
immunities, powers and franchises, and be subject to all the duties,
liabilities, obligations and penalties, of each of the constituent corporations,
and all property, real, personal and mixed, and all debts due on whatever
account and all other chooses in action, and all and every other interest of, or
belonging to or due to each of the constituent corporations shall be vested in
the Surviving Corporation without further act or deed, and the Surviving
Corporation shall be subject to all the liabilities, obligations and penalties
of the respective constituent corporations, not pursuant to contract but by
operation of law, all in the manner and to the full extent provided by the DGCL.
Whenever a conveyance, assignment, transfer, deed or other instrument or act is
necessary to vest any property or right in the Surviving Corporation, the
directors and officers of the respective constituent corporations shall execute,
acknowledge and deliver such instruments and do such acts, for which purpose the
separate existence of the constituent corporations and the authority of their
respective directors and officers shall continue, notwithstanding the Merger.
Section 1.7 Certain Merger Consideration.
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(a) Promissory Note and Note Payments. At the Closing, Parent shall
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issue and deliver to a person designated by Labtec prior to the Effective Time,
as collection agent (the "Collection Agent"), Parent's promissory note in the
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principal amount of $1,065,000 (the "Promissory Note"). The Promissory Note
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shall (i) be payable to the Collection Agent, as collection agent, for the
benefit of each holder of shares of Labtec Stock that are outstanding
immediately prior to the Effective Time, (ii) be unsecured, (iii) be
subordinated to all institutional indebtedness of Parent, (iv) bear interest at
a rate of 10% per annum, (v) mature on the sixth anniversary of the date of the
Closing, (vi) provide for the payment of the principal amount thereof in a lump-
sum on the maturity date, (vii) provide for the payment of interest on a
quarterly basis, (viii) be prepayable at any time, at Parent's option, in whole
or in part, without premium or penalty, and (ix) provide that the Collection
Agent shall be responsible for distributing to each holder of shares of Labtec
Stock that are outstanding immediately prior to the Effective Time such holder's
Applicable Fraction of any payments received from Parent pursuant to the
Promissory Note (the "Note Payments").
---- --------
7
(b) Valuation and Contingent Shares. Following the Effective Time, the
-------------------------------
Board of Directors of Parent shall consider the value of Parent's CAD/CAM
business (the "Business"). Notwithstanding the procedures set forth below, the
--------
Board of Directors of Parent shall have the right to, at any time, establish a
value of the Business (the "Valuation"), for purposes of the matters set forth
---------
below or determine not to sell the Business. In the event that, on or prior to
February 28, 1999, the eight (8) members of Parent's Board of Directors
originally designated by Labtec (the "Labtec Directors") determine not to
----------------
proceed with such a Valuation or sale of the Business, no adjustment shall be
made to the equity of Parent originally issued at the Effective Time to the
holders of Labtec Stock as provided below in this Section 1.7(b)
(the "Equity Adjustment"). In the event that, on or prior to February 28, 1999,
-----------------
the Labtec Directors determine to proceed with a Valuation and are unable to
agree with the Spacetec Directors as to the amount of the Valuation by that
date, the four (4) members of Parent's Board of Directors originally designated
by Parent (the "Spacetec Directors") shall, within ten (10) business days,
------------------
select and retain on behalf of Parent an investment banking firm
(the "Spacetec Investment Bank") to conduct a Valuation.
------------------------
The Spacetec Investment Bank shall then conduct and complete such Valuation
within 30 days of their retention. In the event that the Labtec Directors accept
the Valuation determined by the Spacetec Investment Bank, such Valuation shall
be the basis of the Equity Adjustment, if any. In the event that the Labtec
Directors do not accept such Valuation, the Labtec Directors and the Spacetec
Directors shall negotiate in good faith as to the appropriate amount of such
Valuation. In the event that the parties are able to agree as to the appropriate
amount of such Valuation within ten (10) business days, then such agreed
Valuation shall be the basis of the Equity Adjustment, if any. In the event that
the parties are unable to agree as to such Valuation within such ten (10)
business days, the Labtec Directors shall, within such ten (10) business days,
determine whether Parent shall proceed to sell the Business. In the event that
the Labtec Directors elect, within such 10-day period, not to sell the Business,
then no Equity Adjustment shall be made.
In the event that the Labtec Directors elect to sell the Business (a
"Sale"), the Spacetec Investment Bank shall be engaged, by no later than
----
June 30, 1999, to conduct the Sale. In the event that Parent consummates a Sale
on or before December 31, 1999 (the "Outside Date"), such Sale shall be the
------------
basis of the Equity Adjustment, if any.
In the event that the Business is not sold by the Outside Date, the Labtec
Directors shall, within ten (10) business days following the Outside Date,
select and retain on behalf of Parent an investment banking firm ("Labtec
Investment Bank") to conduct a Valuation. The Labtec Investment Bank shall
----------------------
determine such Valuation within 30 days of their retention, which Valuation
shall be the basis of the Equity Adjustment, if any.
The retention of the Spacetec Investment Bank and the Labtec
Investment Bank shall be by Parent on behalf of all of its stockholders and all
Valuations conducted by such investment banks shall be performed on a basis that
is fair and unbiased to all of the stockholders of Parent.
8
Any Valuation of the Business, other than as determined hereunder through
the actual sale of the Business, shall consist of the expected net sale proceeds
to be received in connection with an arms'-length sale of the Business, after
deduction of all anticipated reasonable transaction expenses. The value of any
actual sale of the Business shall consist of the net sale proceeds received in
connection with such sale, after deduction of all transaction expenses incurred.
In addition, any consolidated net income or net loss of Parent, excluding the
Labtec Corporations (determined in accordance with GAAP), after taxes at an
estimated 38% combined rate, but excluding any interest expense, from October 1,
1998 through the date of consummation of the sale of the Business or the final
Valuation determination (the "Valuation Date"), shall be added to or subtracted
--------------
from the value (as more fully described below). The Valuation or value of any
actual sale shall also be based upon, and shall assume the existence of, a 10-
year license agreement that provides for the payment to Parent of an 8% royalty
based upon net sales generated by the Business (the "Assumed License Terms").
Accordingly, in the event that a Sale either does not include any license or
includes a license upon terms, taken as a whole, having less value to Parent
than the Assumed License Terms, the value of the actual sale shall be reduced by
the amount by which the value of the actual license, if any, is less than the
value of the Assumed License Terms. In the event that a Sale includes a license
upon terms, taken as a whole, having greater value to Parent than the Assumed
License Terms, the value of the actual sale shall be increased by the amount by
which the value of the actual license is greater than the value of the Assumed
License Terms. Similarly, any Valuation shall represent the amount that a third
party purchaser would be willing to pay for the Business, assuming that such
purchaser had also entered into a license with Parent upon the Assumed License
Terms.
If the Valuation or the value of the actual sale, plus the consolidated net
----
income or minus the consolidated net loss of Parent, excluding the Labtec
-----
Corporations (determined in accordance with GAAP), for the period October 1,
1998 through the Valuation Date, is less than $6,000,000 (the "Valuation
----
Guarantee"), then Parent shall issue additional shares (the "Contingent Shares")
-----------------
to each holder of shares of Labtec Stock that are outstanding immediately prior
to the Effective Time (in addition to the shares of Spacetec Stock to be issued
at the Effective Time) sufficient to compensate such holders for such shortfall
(the "Contingent Valuation Adjustment"). For every dollar that the Contingent
-------------------------------
Valuation Adjustment is less than $6,000,000, a "% Factor Per Dollar" of
-------------------
.000002755% (16.53% $6,000,000) shall be applied to determine the incremental
percentage of ownership of Spacetec Stock that such holders shall be entitled to
receive; provided, however, that the maximum number of contingent shares that
-------- -------
may be issued shall be an amount (the "Limitation Amount") which, when added to
-----------------
the number of shares of Spacetec Stock held by all holders of shares of Labtec
Stock immediately prior to the Effective Time would equal 79% of the total
outstanding shares of Spacetec Stock immediately following the Effective Time
(excluding any shares of Spacetec Stock or Labtec Stock issued between October
21, 1998 and the Effective Time pursuant to the exercise of stock options.
Exhibit A hereto sets forth an example of the determination of the number of
---------
Contingent Shares to be issued in the event of a $500,000 Contingent Valuation
Adjustment. For purposes of this Agreement, all references to the "Contingent
----------
Shares" shall refer to shares of the Delaware corporation referred to in Section
------
7.12 hereof.
Section 1.8 Initial Expense Reimbursement. In order to reimburse Labtec for
-----------------------------
certain expenses incurred by Labtec prior to October 21, 1998 in connection with
the Merger and the transactions contemplated hereunder, Parent has
contemporaneously herewith paid to Labtec, in cash, the sum of $250,000 (the
"Initial Expense Reimbursement").
-----------------------------
9
Section 1.9 Withholding Rights. Parent, Labtec and Newco shall be
------------------
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any Labtec shareholder such amounts as Parent,
Labtec or Newco determine they are required to deduct and withhold with respect
to the making of such payment under the Code, or any provision of state, local
or foreign tax law. To the extent that amounts are so withheld, such withheld
amounts shall be treated for all purposes hereof as having been paid to the
holder of the shares in respect of which such deduction and withholding was
made. To the extent that the amount so required to be deducted or withheld from
any payment to a holder exceeds the cash portion of the consideration otherwise
payable to the holder, Parent, Labtec and Newco are hereby authorized to sell or
otherwise dispose of, at fair market value, such portion of such consideration
as is necessary to provide sufficient funds to Parent, Labtec or Newco, as the
case may be, in order to enable it to comply with such deduction or withholding
requirements.
ARTICLE II
CLOSING; FILING OF ARTICLES OF MERGER
-------------------------------------
Section 2.1 Closing; Filing of Articles of Merger; Effective Time. If the
-----------------------------------------------------
conditions to closing set forth in Articles VII and VIII shall have been
satisfied or properly waived, a closing (the "Closing") shall take place
-------
promptly thereafter at the offices of Xxxxxx Xxxxxx Flattau & Klimpl, LLP, 0000
Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at a time and on a date
mutually convenient to the partes to this Agreement, which shall in no event be
later than the fifth business day following the satisfaction or waiver of the
last of such conditions to closing. At the Closing, the parties shall exchange
the certificates, opinions and other documents set forth in Articles VII and
VIII hereof, and the respective Presidents or Vice Presidents and Secretaries or
Assistant Secretaries of the constituent corporations to the Merger shall
execute and verify a Certificate of Merger in the form attached hereto as
Exhibit B (the "Certificate of Merger"), and the appropriate officers of such
--------- ---------------------
constituent corporations shall cause the Certificate of Merger to be filed with
the Secretary of State of the State of Delaware, and the Merger shall become
effective upon acceptance of such filing by the Secretary of State. The date
and time when the Merger shall so become effective is referred to herein as the
"Effective Time."
--------------
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF LABTEC
----------------------------------------
Labtec hereby represents and warrants to Parent as follows:
10
Section 3.1 Organization, Good Standing, Corporate Power and
------------------------------------------------
Authority and Foreign Qualification of Labtec. Labtec is a corporation duly
---------------------------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware and has the corporate power and authority to enter into this Agreement
and to perform the obligations required of it under this Agreement. Labtec has
full power and authority, and holds all licenses, franchises, permits and
authorizations, necessary for the lawful conduct of its business and to own,
lease and operate the assets, properties and business owned or leased and
operated by it. Labtec is duly qualified to transact business, and is in good
standing as a foreign corporation authorized to transact business, in the
jurisdictions set forth in Section 3.1 of the Disclosure Statement hereto among
Parent, Newco and Labtec (the "Disclosure Statement"); such jurisdictions
--------------------
constitute the only jurisdictions in which the failure of Labtec to be so
qualified and in good standing would have a material adverse effect on the
business, assets, financial condition or results of operations (a "Material
--------
Adverse Effect") of the Labtec Corporations, taken as a whole. Neither the
--------------
ownership nor the use of the properties of the Labtec Corporations, nor the
conduct of any of their respective businesses, violates, or with or without the
giving of notice or the passage of time, or both, will violate, conflict with or
result in a default, right to accelerate or loss of rights under, any terms or
provisions of any of their respective charters or by-laws as currently in
effect, or any lien, encumbrance, mortgage, deed of trust, lease, license,
agreement or understanding, to which any Labtec Corporation is a party or by
which any Labtec Corporation or any of their respective properties, assets or
businesses may be bound.
Section 3.2 Capitalization of Labtec. Set forth in Section 3.2 of the
------------------------
Disclosure Statement is the authorized, issued and outstanding and, if
applicable, treasury capital stock of Labtec.
Section 3.3 Issuance of Capital Stock of Labtec; Calls Upon Shares. All
------------------------------------------------------
of the shares of Labtec Stock issued and outstanding as of October 21, 1998 are
now, and at the Effective Time will be, duly authorized, validly issued, fully
paid and non-assessable, and none will have been issued or sold in violation of
any applicable securities laws. The record ownership of all of the issued and
outstanding Labtec Stock as at October 21, 1998 is as set forth in Section 3.3
of the Disclosure Statement. Except as specifically set forth in Section 3.3 of
the Disclosure Statement, there are no options, calls, subscriptions, warrants,
rights, agreements or commitments of any character obligating Labtec,
contingently or otherwise, to issue, redeem or re-acquire shares of its capital
stock or to register shares of its capital stock under the Securities Act of
1933, as amended (the "Securities Act"), or any other applicable securities law,
--------------
and none of the holders of the capital stock of any of the Labtec Corporations
have any pre-emptive rights. There are no outstanding bonds, debentures, notes
or other indebtedness or debt securities of Labtec pursuant to which the holders
have the right to vote (or convertible into, or redeemable for, securities
having the right to vote) on any matters on which stockholders of Labtec may
vote. Except as set
11
forth in Section 3.3 of the Disclosure Statement, to Labtec's knowledge, there
are no voting trusts or agreements, stockholders' agreements, pledge agreements,
buy-sell agreements, rights of first refusal or proxies relating to any
securities of Labtec (whether or not Labtec is a party thereto).
Section 3.4 Effective Agreement of Labtec. The execution and delivery by
-----------------------------
Labtec of this Agreement and the consummation by Labtec of the transactions
contemplated hereby, including the Merger, have been duly authorized by all
necessary corporate action of Labtec, and this Agreement, and any other
agreements or instruments executed and delivered by Labtec pursuant to this
Agreement, when executed and delivered by Labtec, will constitute legal, valid
and binding obligations of Labtec enforceable against it in accordance with
their respective terms. Except as specifically set forth in Section 3.4 of the
Disclosure Statement, none of the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby, including the Merger, and
compliance by the Labtec Corporations with any of the provisions hereof, will
(a) violate any provision of the corporate charter or by-laws of any Labtec
Corporation, (b) with or without the giving of notice and/or the passage of
time, violate, conflict with, result in the breach or termination of, constitute
a default under, or result in the creation of any lien, encumbrance or charge
upon any of the assets or property of any Labtec Corporation pursuant to, any
contract, agreement, lease or commitment to which any Labtec Corporation is a
party, or by which any Labtec Corporation or any of their respective assets or
properties may be bound, or (c) violate any judgment, decree, order, statute,
rule or governmental regulation applicable to any Labtec Corporation or any of
their respective assets, properties or businesses, except, with respect to
clauses (b) and (c) of this sentence, in each case for violations, conflicts,
breaches, terminations, defaults, liens, encumbrances or charges that,
individually or in the aggregate, would not have a Material Adverse Effect on
the Labtec Corporations, taken as a whole.
Section 3.5 Subsidiaries and Affiliates. Except as specifically set forth
---------------------------
in Section 3.5 of the Disclosure Statement, Labtec does not own or control
(directly or indirectly) any capital stock, bonds or other securities of, and
does not have any proprietary interest in, any corporation, partnership, firm,
association or business organization, entity or enterprise and does not control
(directly or indirectly) the management or policies of any corporation,
partnership, firm, association or business organization, entity or enterprise.
Section 3.5 of the Disclosure Statement sets forth the name of each of the
subsidiaries of Labtec (individually referred to herein as a "Labtec Subsidiary"
-----------------
and all of which are collectively referred to herein as the "Labtec
------
Subsidiaries"), its jurisdiction of incorporation, the jurisdiction or
------------
jurisdictions in which it is qualified to transact business as a foreign
corporation, the number of authorized, issued and outstanding shares of each
class of its securities, the number of its securities of each class owned by
Labtec and the number owned by any other person (identifying such other person).
Each Labtec Subsidiary is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation, has full
power and authority, and holds all
12
licenses, franchises, permits and authorizations, necessary for the lawful
conduct of its business and to own, lease and operate the assets, properties and
business owned or leased and operated by it and is duly qualified to transact
business and is in good standing as a foreign corporation authorized to transact
business in the jurisdictions set forth in Section 3.5 of the Disclosure
Statement, which are the only jurisdictions in which the failure of such
subsidiary to be so qualified and in good standing would have a Material Adverse
Effect on the Labtec Corporations, taken as a whole. All of the issued shares of
capital stock of each Labtec Subsidiary are now, and at the Effective Time will
be, duly authorized, validly issued, fully paid and non-assessable and are
owned, of record and beneficially, by Labtec (except as indicated in Section 3.5
of the Disclosure Statement) free and clear of all liens, claims, charges and
encumbrances, and there are no options, calls, subscriptions, warrants, rights,
agreements or commitments of any character obligating Labtec or any Labtec
Subsidiary, contingently or otherwise, to issue, redeem or re-acquire any shares
of capital stock of any Labtec Subsidiary. There are no outstanding bonds,
debentures, notes or other indebtedness or debt securities of any Labtec
Subsidiary pursuant to which the holders have the right to vote (or convertible
into, or redeemable for, securities having the right to vote) on any matters on
which stockholders of any Labtec Subsidiary may vote. Except as set forth in
Section 3.5 of the Disclosure Statement, to Labtec's knowledge, there are no
voting trusts or agreements, stockholders' agreements, pledge agreements, buy-
sell agreements, rights of first refusal or proxies relating to any securities
of any Labtec Subsidiary (whether or not the Labtec Subsidiary is a party
thereto). Labtec and the Labtec Subsidiaries are sometimes referred to herein
collectively as the "Labtec Corporations" or individually as a "Labtec
------------------- ------
Corporation".
-----------
Section 3.6 Corporate Charters and By-Laws. Labtec has delivered to
------------------------------
Parent and Newco true and complete copies of the respective corporate charters
of each of the Labtec Corporations, as in effect on October 21, 1998, certified
in each case as of a recent date by the appropriate governmental official of its
jurisdiction of incorporation, and a true and complete copy of the respective
by-laws of each of the Labtec Corporations, as in effect on October 21, 1998,
certified by their respective Secretaries or Assistant Secretaries.
Section 3.7 Financial Statements. Labtec has delivered to Parent and
--------------------
Newco (a) audited consolidated balance sheets of Labtec and the Labtec
Subsidiaries as at March 31, 1997 and March 31, 1998, and the related audited
consolidated statements of operations, changes in shareholders equity (deficit)
and cash flows for the periods ended on each of such dates, including the
respective notes thereto, all of which are accompanied by the related opinions
of PricewaterhouseCoopers LLP, independent certified public accountants, and (b)
unaudited consolidated balance sheets of Labtec and the Labtec Subsidiaries as
at June 30, 1998 (the "Balance Sheet Date") and the related unaudited
------------------
consolidated statements of operations, changes in shareholders equity (deficit)
and cash flows for the quarterly period ended on the Balance Sheet Date,
including the respective notes thereto (the financial statements described in
clauses
13
(a) and (b) above are hereinafter collectively called the "Labtec Financial
----------------
Statements"). Such financial statements, together with the notes thereto,
----------
reflect the respective books and records of Labtec and the Labtec Subsidiaries,
have been prepared in conformity with generally accepted accounting principles
("GAAP") applied on a consistent basis throughout the periods covered by such
----
statements and fairly present, in the case of the balance sheets, the
consolidated financial condition of Labtec and the Labtec Subsidiaries as of the
respective dates indicated, and in the case of the consolidated statements of
operations, changes in shareholders equity (deficit) and cash flows of Labtec
and the Labtec Subsidiaries for the respective periods indicated.
Section 3.8 Undisclosed Liabilities . Except as set forth on the
-----------------------
Labtec Financial Statements, in Section 3.8 of the Disclosure Statement or in
the sections of the Registration Statement, which specifically relate to the
businesses of the Labtec Corporations (collectively, the "Labtec Disclosure"),
-----------------
none of the Labtec Corporations had, at such date, any indebtedness,
obligations or liabilities of any nature, whether accrued, absolute,
contingent or other, whether due or to become due, which, individually or in
the aggregate, are material and not shown or adequately provided for thereon,
including, without limitation, liabilities or obligations on account of taxes,
other governmental charges, duties, penalties, interest or fines.
Section 3.9 Absence of Changes. Except as specifically set forth in
------------------
Section 3.9 of the Disclosure Statement, the Labtec Corporations have, since
the Balance Sheet Date conducted their respective businesses only in the
ordinary course and, except as set forth in the Labtec Disclosure, there has
not been any material adverse change in the business, assets, financial
condition or results of operations (a "Material Adverse Change") of the Labtec
-----------------------
Corporations, taken as a whole.
Section 3.10 Accuracy of Information. The information included in the
-----------------------
Labtec Disclosure or any other information to be provided by Labtec to Parent
and Newco for use in any press release or filing to be made with any
governmental body in connection with the Merger will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not false or
misleading. The information concerning the Labtec Corporations set forth in this
Agreement, the Disclosure Statement, the copies of documents prepared by Labtec
and referred to herein and delivered by Labtec to Parent and Newco pursuant
hereto, in each case, are true and complete, and such documents and any other
documents furnished by Labtec to Parent and Newco, do not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated herein or therein or necessary to make the statements contained herein or
therein not false or misleading.
Section 3.11 Brokers and Finders. No Labtec Corporation nor any of
-------------------
their respective officers, directors or employees has employed any broker, agent
or finder other than
14
The Valuefinder Group, Inc., or incurred any liability for any brokerage fees,
agents' commissions or finders' fees, in connection with the transactions
contemplated hereby, except for such fees and commissions paid or payable to The
Valuefinder Group, Inc.
Section 3.12 Adoption of this Agreement by the Shareholders of Labtec.
---------------------------------------------------------
This Agreement has been adopted by the shareholders of Labtec pursuant to
written consent, as permitted by, and in accordance with, the DGCL.
Section 3.13 Intellectual Property.
---------------------
(a) The Labtec Corporations own, or have the right to use, sell or
license all intellectual property utilized in their respective businesses as
presently conducted (such intellectual property and the rights thereto are
collectively referred to herein as the "Labtec IP Rights"), except for such
----------------
failures to own or have the right to use, sell or license that, individually or
in the aggregate, would not have a Material Adverse Effect on the Labtec
Corporations, taken as a whole.
(b) The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby will not constitute a
breach of any agreement governing any Labtec IP Rights, will not cause the
forfeiture or termination or give rise to a right of forfeiture or termination
of any Labtec IP Rights or impair the right of the Labtec Corporations or the
Surviving Corporation to use, sell or license any Labtec IP Rights or portions
thereof, except for the occurrence of any such breaches, forfeitures,
terminations or impairments that, individually or in the aggregate, would not
have a Material Adverse Effect on the Labtec Corporations, taken as a whole.
(c) (i) Except as set forth in Section 3.13 of the Disclosure
Statement, neither the manufacture, marketing, license, sale or intended use of
any product or technology currently licensed, sold or under development by the
Labtec Corporations violates any license or agreement between the Labtec
Corporations and any third party or, to the knowledge of Labtec, infringes or
misappropriates any intellectual property right of any other party; and (ii)
there is no pending or, to the knowledge of Labtec, threatened claim or
litigation contesting the validity, ownership or right to use, sell, license or
dispose of any Labtec IP Rights, nor has any Labtec Corporation received any
written notice asserting that any Labtec IP Rights or the proposed use, sale,
license or disposition thereof conflicts or will conflict with the rights of any
other party, except with respect to clauses (i) and (ii), for any violations,
infringements, claims or litigation that, individually or in the aggregate,
would not have a Material Adverse Effect on the Labtec Corporations, taken as a
whole.
15
(d) Labtec has taken reasonable and practicable steps consistent
with industry norms designed to safeguard and maintain the secrecy and
confidentiality of, and its proprietary rights in, all Labtec IP rights.
Section 3.14 Employee Benefit Plans.
----------------------
(a) With respect to each material employee benefit plan, program,
arrangement and contract (including, without limitation, any "employee benefit
plan" as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA")) maintained or contributed to by Labtec or any
-----
trade or business (an "ERISA Affiliate") which is under common control with
---------------
Labtec within the meaning of Section 414 of the Code (the "Labtec Employee
---------------
Plans"), Labtec has made available to Spacetec a true and complete copy of, to
the extent applicable, (i) such Labtec Employee Plan, (ii) the most recent
annual report (Form 5500), (iii) each trust agreement related to such Labtec
Employee Plan, (iv) the most recent summary plan description for each Labtec
Employee Plan for which such description is required, (v) the most recent
actuarial report relating to any Labtec Employee Plan subject to Title IV of
ERISA, and (vi) the most recent United States Internal Revenue Service (the
"IRS") determination letter issued with respect to any Labtec Employee Plan.
---
(b) Each Labtec Employee Plan which is intended to be qualified
under Section 401(a) of the Code has received a favorable determination from the
IRS covering the provisions of the Code stating that such Labtec Employee Plan
is so qualified and nothing has occurred since the date of such letter that
could reasonably be expected to affect the qualified status of such plan. Each
Labtec Employee Plan has been operated in all material respects in accordance
with its terms and the requirements of applicable law. Neither Labtec nor any
ERISA Affiliate of Labtec has incurred or is reasonably expected to incur any
material liability under Title IV of ERISA in connection with the termination of
any plan covered or previously covered by Title IV of ERISA. No Labtec Employee
Plan is a "multiemployer plan" as defined in Section 3(37) of ERISA.
(c) With respect to the employees and former employees of Labtec,
there are no employee post-retirement medical or health plans in effect, except
as required by Section 4980B of the Code. No tax under Section 4980B or Section
4980D of the Code has been incurred in respect of any Employee Plan that is a
group health plan, as defined in Section 5000(b)(1) of the Code.
Section 3.15 Labor Matters. Except as set forth in Section 3.15 of the
-------------
Disclosure Statement, to Labtec's knowledge, there are no activities or
proceedings of any labor union to organize any employees of any of the Labtec
Corporations and there are no strikes, or material slowdowns, work stoppage or
lockouts, or threats thereof by or with respect to any employees of the Labtec
Corporations. Except as set forth in Section 3.15 of the Disclosure
16
Statement, the Labtec Corporations are and have been in compliance with all
applicable laws regarding employment practices, terms and conditions of
employment, and wages and hours (including, without limitation, ERISA, the
Worker Adjustment and Retraining Notification Act of 1988 (the "WARN Act") or
--------
any similar state or local law), except for such cases of noncompliance that,
individually or in the aggregate, would not have a Material Adverse Effect on
the Labtec Corporations, taken as a whole.
Section 3.16 Litigation. Except as set forth in Section 3.16 of the
----------
Disclosure Statement, there are no actions, suits, proceedings, claims,
arbitrations or investigations pending, or as to which the Labtec Corporations
have received any notice of assertion nor, to Labtec's knowledge, are there any
threatened actions, suits, proceedings, claims, arbitrations or investigations
against the Labtec Corporations that, individually or in the aggregate, would
have a Material Adverse Effect on the Labtec Corporations, taken as a whole, or
which in any manner challenge or seek to prevent, enjoin, alter or delay any of
the transactions contemplated by this Agreement.
Section 3.17 Taxes Except as set forth in Section 3.17 of the
-----
Disclosure Statement, the Labtec Corporations have filed all tax returns
required to be filed by any of them and have paid (or Labtec has paid on its
behalf), or have set up a reserve adequate in all respects for the payment of,
all taxes required to be paid (whether or not shown as due on such returns), and
the most recent financial statements delivered to Spacetec reflect a reserve
adequate in all respects for all taxes payable by the Labtec Corporations
accrued through the date of such financial statements. Except as set forth in
Section 3.17 of the Disclosure Statement, no deficiencies for any taxes have
been proposed, asserted or assessed against the Labtec Corporations. No Labtec
Corporation has ever been a member of a group of corporations filing a
consolidated, combined or unitary tax return (except a group of which Labtec was
the common parent). For the purpose of this Agreement, the term "tax" shall
---
include all Federal, state, local and foreign income, profits, franchise, gross
receipts, payroll, sales, employment, use, property, withholding, excise and
other taxes, duties or assessments of any nature whatsoever, together with all
interest, penalties and additions imposed with respect to such amounts.
Section 3.18 Ownership of Parent Common Stock. Neither the Labtec
--------------------------------
Corporations nor, to Labtec's knowledge, any of their respective affiliates or
associates (as such terms are defined under the Exchange Act), (i) beneficially
own, directly or indirectly, or (ii) is party to any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of, in
each case, shares of capital stock of Parent, which in the aggregate represent
5% or more of the outstanding shares of such capital stock.
Section 3.19 Certain Arrangements. Except as set forth in Section 3.19
--------------------
of the Disclosure Statement, the execution and delivery by Labtec of this
Agreement and the
17
consummation by Labtec of the transactions contemplated hereby, including the
Merger, (a) will not require any of the Labtec Corporations to make a payment
to, or obtained any consent or waiver from, any current or former officer,
director, employee, consultant or agent of any of the Labtec Corporations, and
(b) will not result in any change in the nature of any rights of any current or
former officer, director, employee, consultant or agent of any of the Labtec
Corporations under any agreement to which any of the Labtec Corporations is a
party, including any acceleration or change in the award, grant, vesting or
determination of stock options, stock purchase, stock appreciation rights,
phantom stock, restricted stock or other stock-based rights (other than exercise
price and number of shares adjusted in accordance with Section 1.5 hereof),
severance pay, continuation pay, termination pay or other contingent obligations
of any nature whatsoever of any of the Labtec Corporations, or a change in the
term of any such agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND NEWCO
--------------------------------------------------
Parent and Newco hereby, jointly and severally, represent and warrant
to Labtec as follows:
Section 4.1 Organization, Good Standing, Corporate Power and
------------------------------------------------
Authority and Foreign Qualification of Parent and Newco.
-------------------------------------------------------
(a) Parent is a corporation duly organized, validly existing and in
good standing under the laws of the Commonwealth of Massachusetts and has the
corporate power and authority to enter into this Agreement and to perform the
obligations required of it under this Agreement. Parent has full power and
authority, and holds all licenses, franchises, permits and authorizations,
necessary for the lawful conduct of its business and to own, lease and operate
the assets, properties and business owned or leased and operated by it. Parent
is duly qualified to transact business and is in good standing as a foreign
corporation authorized to transact business in the jurisdictions set forth in
Section 4.1 of the Disclosure Statement; such jurisdictions constitute the only
jurisdictions in which the failure of Parent to be so qualified and in good
standing would have a Material Adverse Effect on the Spacetec Corporations,
taken as a whole. Neither the ownership nor the use of the properties of Parent
nor the conduct of its businesses violates, or with or without the giving of
notice or the passage of time, or both, will violate, conflict with or result in
a default, right to accelerate or loss of rights under, any terms or provisions
of its charter or by-laws as currently in effect, or any lien, encumbrance,
mortgage, deed of trust, lease, license, agreement or understanding, to which
Parent is a party or by which Parent or any of its property, assets or
businesses may be bound.
18
(b) Newco is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has the corporate
power and authority to enter into this Agreement and to perform the obligations
required of it under this Agreement. Neither the ownership nor the use of the
properties of Newco and each other Spacetec Subsidiary nor the conduct of any of
their respective businesses violates, or with or without the giving of notice or
the passage of time, or both, will violate, conflict with or result in a
default, right to accelerate or loss of rights under, any terms or provisions of
any of their respective charters or by-laws as currently in effect, or any lien,
encumbrance, mortgage, deed of trust, lease, license, agreement or
understanding, to which Newco or any other Spacetec Subsidiary is a party or by
which Newco, any other Spacetec Subsidiary or any of their respective
properties, assets or businesses may be bound.
Section 4.2 Capitalization of Parent. Set forth in Section 4.2 of the
------------------------
Disclosure Statement is the authorized, issued and outstanding and, if
applicable, treasury capital stock of Parent.
Section 4.3 Issuance of Capital Stock of the Spacetec Corporations.
------------------------------------------------------
All of the shares of Parent issued and outstanding as of October 21, 1998 are
now, and at the Effective Time will be, duly authorized, validly issued, fully
paid and non-assessable and none will have been issued or sold in violation of
any applicable securities laws. Except as specifically set forth in Section 4.3
of the Disclosure Statement, there are no options, calls, subscriptions,
warrants, rights, agreements or commitments of any character obligating any
Spacetec Corporation, contingently or otherwise, to issue, redeem or re-acquire
shares of its capital stock or to register shares of its capital stock under the
Securities Act or any other applicable securities law, and none of the holders
of the capital stock of any of the Spacetec Corporations have any pre-emptive
rights. There are no outstanding bonds, debentures, notes or other indebtedness
or debt securities of the Spacetec Corporations pursuant to which the holders
have the right to vote (or convertible into, or redeemable for, securities
having the right to vote) on any matters on which stockholders of Parent may
vote. Except as set forth in Section 3.3 of the Disclosure Statement, to
Parent's knowledge, there are no voting trusts or agreements, stockholders'
agreements, pledge agreements, buy-sell agreements, rights of first refusal or
proxies relating to any securities of the Spacetec Corporations (whether or not
any Spacetec Corporation is a party thereto).
Section 4.4 Effective Agreement of Parent and Newco. The execution and
---------------------------------------
delivery by Parent and Newco of this Agreement and the consummation by Parent
and Newco of the transactions contemplated hereby, including the Merger, have
been duly authorized by all necessary corporate action of Parent and Newco
(subject to approval of the Parent Proposals at the Shareholder Meeting), and
this Agreement, and any other agreements or instruments executed and delivered
by Parent or Newco pursuant to this Agreement, when executed and delivered by
Parent or Newco, respectively, will constitute legal, valid and binding
obligations of
19
Parent or Newco, respectively, enforceable against such person in accordance
with their respective terms. Except as specifically set forth in Section 4.4 of
the Disclosure Statement, none of the execution and delivery of this Agreement,
the consummation of the transactions contemplated hereby, including the Merger,
nor compliance by any Spacetec Corporation with any of the provisions hereof,
will (a) violate any provision of the corporate charter or by-laws of any
Spacetec Corporation, as amended to date, (b) with or without the giving of
notice and/or the passage of time, violate, conflict with, result in the breach
or termination of, constitute a default under, or result in the creation of any
lien, encumbrance or charge upon any of the assets or properties of any Spacetec
Corporation pursuant to any contract, agreement, lease or commitment to which
any Spacetec Corporation is a party, or by which or any Spacetec Corporation or
any of their respective assets or properties may be bound, or (c) violate any
judgment, decree, order, statute, rule or governmental regulation applicable to
any Spacetec Corporation or any of their respective assets, properties or
businesses, except, with respect to clauses (b) and (c) of this sentence, in
each case for violations, conflicts, breaches, terminations, defaults, liens,
encumbrances or charges that, individually or in the aggregate, would not have a
Material Adverse Effect on the Spacetec Corporations, taken as a whole.
Section 4.5 Subsidiaries and Affiliates. Except as specifically set
---------------------------
forth in Section 4.5 of the Disclosure Statement, Parent does not own or control
(directly or indirectly) any capital stock, bonds or other securities of, and
does not have any proprietary interest in, any corporation, partnership, firm,
association or business organization, entity or enterprise and does not control
(directly or indirectly) the management or policies of any corporation,
partnership, firm, association or business organization, entity or enterprise.
Section 4.5 of the Disclosure Statement sets forth the name of each of the
subsidiaries of Parent (individually referred to herein as a "Spacetec
--------
Subsidiary" and all of which are collectively referred to herein as the
----------
"Spacetec Subsidiaries"), its jurisdiction of incorporation, the jurisdiction or
---------------------
jurisdictions in which it is qualified to transact business as a foreign
corporation, the number of authorized, issued and outstanding shares of each
class of its securities, the number of its securities of each class owned by
Parent and the number owned by any other person (identifying such other person).
Each Spacetec Subsidiary is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation, has
full power and authority, and holds all licenses, franchises, permits and
authorizations, necessary for the lawful conduct of its business and to own,
lease and operate the assets, properties and businesses owned or leased and
operated by it and is duly qualified to transact business and is in good
standing as a foreign corporation authorized to transact business in the
jurisdictions set forth in Section 4.5 of the Disclosure Statement, which are
the only jurisdictions in which the failure of such subsidiary to be so
qualified and in good standing would have a Material Adverse Effect on the
Spacetec Corporations, taken as a whole. All of the issued shares of capital
stock of each Spacetec Subsidiary are now, and at the Effective Time will be,
duly authorized, validly issued, fully paid and non-assessable and are owned, of
record and beneficially, by Parent (except as indicated in
20
Section 4.5 of the Disclosure Statement) free and clear of all liens, claims,
charges and encumbrances, and there are no options, calls, subscriptions,
warrants, rights, agreements or commitments of any character obligating Parent
or any Spacetec Subsidiary, contingently or otherwise, to issue, redeem or re-
acquire any shares of capital stock of any Spacetec Subsidiary. There are no
outstanding bonds, debentures, notes or other indebtedness or debt securities of
any Spacetec Subsidiary pursuant to which the holders have the right to vote (or
convertible into, or redeemable for, securities having the right to vote) on any
matters on which stockholders of any Spacetec Subsidiary may vote. Except as set
forth in Section 4.5 of the Disclosure Statement, to Spacetec's knowledge, there
are no voting trusts or agreements, stockholders' agreements, pledge agreements,
buy-sell agreements, rights of first refusal or proxies relating to any
securities of any Spacetec Subsidiary (whether or not the Spacetec Subsidiary is
a party thereto). Parent and the Spacetec Subsidiaries are sometimes referred to
herein collectively as the "Spacetec Corporations" or individually as a
---------------------
"Spacetec Corporation".
--------------------
Section 4.6 Corporate Charters and By-laws. Parent has delivered to
------------------------------
Labtec true and complete copies of the respective corporate charters of each of
the Spacetec Corporations, as in effect on the date hereof, certified in each
case as of a recent date by the appropriate governmental official of its
jurisdiction of incorporation, and a true and complete copy of the respective
by-laws of each Spacetec Corporation, as in effect on the date hereof, certified
by their respective Secretaries or Assistant Secretaries.
Section 4.7 Financial Statements. Parent has delivered to Labtec (a)
--------------------
audited consolidated balance sheets of Parent and the Spacetec Subsidiaries as
at March 31, 1998, March 31, 1997 and March 31, 1996 and the related audited
consolidated statements of operations, shareholders equity and cash flows for
the twelve-month periods ended on March 31, 1998, March 31, 1997 and March 31,
1996, including the respective notes thereto, all of which are accompanied by
the related opinions of Ernst & Young, LLP, independent certified public
accountants, and (b) unaudited consolidated balance sheets of Parent and the
Spacetec Subsidiaries as at June 30, 1998 and the related unaudited consolidated
statements of operations, shareholders equity and cash flows for the quarterly
periods ended on June 30, 1998 and June 30, 1997, including the respective notes
thereto (the financial statements described in clauses (a) and (b) above are
hereinafter collectively called the "Spacetec Financial Statements"). Such
-----------------------------
financial statements, together with the notes thereto, reflect the respective
books and records of Parent and the Spacetec Subsidiaries, have been prepared in
conformity with GAAP applied on a consistent basis throughout the periods
covered by such statements and fairly present, in the case of the balance
sheets, the consolidated financial condition of Parent and the Spacetec
Subsidiaries as of the respective dates indicated, and in the case of the
consolidated statements of operations, shareholders equity and cash flows of
Parent and the Spacetec Subsidiaries for the respective periods indicated.
21
Section 4.8 Undisclosed Liabilities. Except as set forth in any of the
-----------------------
disclosures made by Parent pursuant to the Exchange Act or in the sections of
the Registration Statement which specifically relate to the business of the
Spacetec Corporations, in the Spacetec Financial Statements or in Section 4.8 of
the Disclosure Statement (collectively, the "Spacetec Disclosure"), no Spacetec
-------------------
Corporation had, at such date, any indebtedness, obligations or liabilities of
any nature, whether accrued, absolute, contingent or other, whether due or to
become due, which, individually or in the aggregate, are material and not shown
or adequately provided for thereon, including, without limitation, liabilities
or obligations on account of taxes, other governmental charges, duties,
penalties, interest or fines.
Section 4.9 Absence of Changes. Except as specifically set forth in
------------------
Section 4.9 of the Disclosure Statement, the Spacetec Corporations have, since
the Balance Sheet Date, conducted their respective businesses only in the
ordinary course and, except as set forth in the Spacetec Disclosure, there has
not been any Material Adverse Change in the Spacetec Corporations, taken as a
whole.
Section 4.10 Accuracy of Information. The information included in the
-----------------------
Spacetec Disclosure has not, and any other information to be provided by Parent
or Newco to Labtec for use in any press release or filing to be made with any
governmental body in connection with the Merger will not, contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not false or
misleading. The information concerning the Spacetec Corporations set forth in
this Agreement and the Disclosure Statement and the copies of documents prepared
by Parent or Newco and referred to herein are true and complete, and such
documents, and any other documents furnished by Parent or Newco to Labtec, do
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated herein or therein or necessary to make the statements
contained herein or therein not false or misleading.
Section 4.11 Brokers and Finders. None of the Spacetec Corporations,
-------------------
nor any of their respective officers, directors or employees has employed any
broker, agent or finder other than Advest, Inc., or incurred any liability for
any brokerage fees, agents' commissions or finders' fees, in connection with the
transactions contemplated hereby, except for such fees paid or payable to
Advest, Inc. solely for the rendering of the opinion described in Section 4.15
hereof.
Section 4.12 Reports and Financial Statements. Parent has filed all
--------------------------------
reports required to be filed by each of them with the SEC pursuant to the
Exchange Act since April 1, 1993 (collectively, the "SEC Reports"), and has
-----------
previously furnished or made available to Labtec true and complete copies of all
such SEC Reports. None of such SEC Reports, as of their respective dates (as
-----------
amended through October 21, 1998), contained any untrue statement of a
22
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
Section 4.13 Adoption of this Agreement by the Shareholders of Newco.
-------------------------------------------------------
This Agreement has been adopted by the shareholders of Newco pursuant to
written consent, as permitted by, and in accordance with, the DGCL.
Section 4.14 Certain Arrangements Certain Arrangements. Except as set
-----------------------------------------
forth in Section 4.14 of the Disclosure Statement, the execution and delivery by
Spacetec of this Agreement and the consummation by Spacetec of the transactions
contemplated hereby, including the Merger, (a) will not require any of the
Spacetec Corporations to make a payment to, or obtained any consent or waiver
from, any current or former officer, director, employee, consultant or agent of
any of the Spacetec Corporations and (b) will not result in any change in the
nature of any rights of any current or former officer, director, employee,
consultant or agent of any of the Spacetec Corporations under any agreement to
which any of the Spacetec Corporations is a party, including any acceleration or
change in the award, grant, vesting or determination of stock options, stock
purchase, stock appreciation rights, phantom stock, restricted stock or other
stock-based rights, severance pay, continuation pay, termination pay or other
contingent obligations of any nature whatsoever of any of the Spacetec
Corporations, or a change in the term of any such agreement.
Section 4.15 Fairness Opinion. Parent has received the opinion of
----------------
Advest, Inc., of even date herewith, stating that the Merger and the other
transactions contemplated by this Agreement are fair to the shareholders of
Parent from a financial point of view, a copy of which opinion has been
delivered to Labtec.
Section 4.16 Intellectual Property.
---------------------
(a) The Spacetec Corporations own, or have the right to use, sell
or license all intellectual property utilized in their respective businesses as
presently conducted (such intellectual property and the rights thereto are
collectively referred to herein as the "Spacetec IP Rights"), except such
------------------
failures to own or have the right to use, sell or license that, individually or
in the aggregate, would not have a Material Adverse Effect on the Spacetec
Corporations, taken as a whole.
(b) The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby will not constitute a
breach of any agreement governing any Spacetec IP Rights, will not cause the
forfeiture or termination or give rise to a right of forfeiture or termination
of any Spacetec IP Rights or impair the right of the Spacetec Corporations to
use, sell or license any Spacetec IP Rights or portions thereof, except
23
for the occurrence of any such breaches, forfeitures, terminations or
impairments that, individually or in the aggregate, would not have a Material
Adverse Effect on the Spacetec Corporations, taken as a whole.
(c) (i) Neither the manufacture, marketing, license, sale or
intended use of any product or technology currently licensed, sold or under
development by the Spacetec Corporations violates any license or agreement
between the Spacetec Corporations and any third party or, to the knowledge of
Spacetec infringes or misappropriates any intellectual property right of any
other party; and (ii) there is no pending or, to the knowledge of Spacetec,
threatened claim or litigation contesting the validity, ownership or right to
use, sell, license or dispose of any Spacetec IP Rights, nor has any Spacetec
Corporation received any written notice asserting that any Spacetec IP Rights or
the proposed use, sale, license or disposition thereof conflicts or will
conflict with the rights of any other party, except, with respect to clauses (i)
and (ii), for any violations, infringements, claims or litigations that,
individually or in the aggregate, would not have a Material Adverse Effect on
the Spacetec Corporations, taken as a whole.
(d) Spacetec has taken reasonable and practicable steps consistent
with industry norms designed to safeguard and maintain the secrecy and
confidentiality of, and its proprietary rights in, all Spacetec IP Rights.
Section 4.17 Employee Benefit Plans.
----------------------
(a) With respect to each material employee benefit plan, program,
arrangement and contract (including, without limitation, any "employee benefit
plan" as defined in Section 3(3) of ERISA) maintained or contributed to by a
Spacetec ERISA Affiliate which is under common control with Spacetec within the
meaning of Section 414 of the Code (the "Spacetec Employee Plans"), Spacetec has
-----------------------
made available to Labtec a true and complete copy of, to the extent applicable,
(i) such Spacetec Employee Plan, (ii) the most recent annual report (Form 5500),
(iii), each trust agreement related to such Spacetec Employee Plan, (iv) the
most recent summary plan description for each Spacetec Employee Plan for which
such description is required, (v) the most recent actuarial report relating to
any Spacetec Employee Plan subject to Title IV of ERISA, and (vi) the most
recent IRS determination letter issued with respect to any Spacetec Employee
Plan.
(b) Each Spacetec Employee Plan which is intended to be qualified
under Section 401(a) of the Code has received a favorable determination from the
IRS covering the provisions of the Code stating that such Spacetec Employee Plan
is so qualified and nothing has occurred since the date of such letter that
could reasonably be expected to affect the qualified status of such plan. Each
Spacetec Employee Plan has been operated in all material respects in accordance
with its terms and the requirements of applicable law. Neither Spacetec nor any
24
ERISA Affiliate of Spacetec has incurred or is reasonably expected to incur any
material liability under Title IV of ERISA in connection with the termination of
any plan covered or previously covered by Title IV of ERISA. No Spacetec
Employee Plan is a "multiemployer plan" as defined in Section 3(37) of ERISA.
(c) With respect to the employees and former employees of Spacetec,
there are no employee post-retirement medical or health plans in effect, except
as required by Section 4980B of the Code. No tax under Section 4980B or Section
4980D of the Code has been incurred in respect of any Employee Plan that is a
group health plan, as defined in Section 5000(b)(1) of the Code.
Section 4.18 Labor Matters. To Spacetec's knowledge, there are no
-------------
activities or proceedings of any labor union to organize any employees of any of
the Spacetec Corporations and there are no strikes or material slowdowns, work
stoppages or lockouts, or threats thereof by or with respect to any employees of
any of the Spacetec Corporations. The Spacetec Corporations are and have been in
compliance with all applicable laws regarding employment practices, terms and
conditions of employment, and wages and hours (including, without limitation,
ERISA, the WARN Act or any similar state or local law), except for such cases of
noncompliance that, individually or in the aggregate, would not have a Material
Adverse Effect on the Spacetec Corporations, taken as a whole.
Section 4.19 Litigation. Except as set forth in Section 4.19 of the
----------
Disclosure Statement, there are no actions, suits, proceedings, claims,
arbitrations or investigations pending, or as to which the Spacetec Corporations
have received any notice of assertion nor, to Spacetec's knowledge, are there
any threatened actions, suits, proceedings, claims, arbitrations or
investigations against the Spacetec Corporations that, individually or in the
aggregate, would have a Material Adverse Effect on the Spacetec Corporations,
taken as a whole, or which in any manner challenge or seek to prevent, enjoin,
alter or delay any of the transactions contemplated by this Agreement.
Section 4.20 Taxes. The Spacetec Corporations have filed all tax
-----
returns required to be filed by any of them and has paid (or Spacetec has paid
on its behalf), or have set up a reserve adequate in all respects for the
payment of, all taxes required to be paid (whether or not shown as due on such
returns), and the most recent financial statements delivered to Labtec reflect a
reserve adequate in all respects for all taxes payable by the Spacetec
Corporations accrued through the date of such financial statements. Except as
set forth in Section 4.20 of the Disclosure Statement, no deficiencies for any
taxes have been proposed, asserted or assessed against the Spacetec
Corporations. No Spacetec Corporation has ever been a member of a group of
corporations filing a consolidated, combined or unitary tax return (except a
group of which Spacetec was the common parent).
25
ARTICLE V
COVENANTS OF LABTEC
-------------------
Labtec covenants and agrees with Parent and Newco that, except as
otherwise consented to in writing by Parent or provided specifically in this
Agreement, from October 21, 1998 until the Effective Time:
Section 5.1 Action Not Permitted. No Labtec Corporation will do or
--------------------
cause to be done anything which is represented and warranted in Article III
hereof (as modified by the Disclosure Statement) not to be true.
Section 5.2 Conduct of Business in Ordinary Course. Each Labtec
--------------------------------------
Corporation will conduct its business only in the ordinary course and
substantially in the same manner as it has heretofore operated such business,
and will not change the character of its business or enter into any contract to
take any such action.
Section 5.3 No Change in Corporate Charters or By-laws. No change will
------------------------------------------
be made in the corporate charter, by-laws or other constituent documents of any
Labtec Corporation.
Section 5.4 No Change in Capital Stock. Except with respect to shares
--------------------------
of Labtec Stock issued pursuant to the exercise of outstanding Labtec Stock
Options, no change will be made in the authorized, issued or outstanding capital
stock of any Labtec Corporation and no subscriptions, options, rights, warrants,
calls, commitments or agreements relating to the authorized, issued or
outstanding capital stock of any Labtec Corporation will be entered into,
issued, granted or created.
Section 5.5 No Dividend or Redemption. No dividend or other
-------------------------
distribution or payment will be declared, set aside, paid or made on or in
respect of shares of the capital stock of any Labtec Corporation, nor will any
Labtec Corporation directly or indirectly redeem, retire, purchase or otherwise
acquire any of such capital stock.
Section 5.6 No Liquidation, Merger or Acquisition. No Labtec
-------------------------------------
Corporation will dissolve, liquidate, adopt a plan of liquidation or merge,
amalgamate or consolidate with any other corporation or acquire all or
substantially all of the business or assets of any other person, corporation,
partnership, limited liability company, firm, association or business
organization, entity or enterprise (each, a "Person"), or acquire ownership or
------
control of any capital stock, bonds or other securities of, or any proprietary
interest in, any Person, or acquire control (directly or indirectly) of the
management or policies thereof, or initiate or engage in any negotiations
relating to any of the aforesaid transactions or solicit any offers in
connection therewith.
26
Section 5.7 No Change in Accounting Methods; Tax Items. Except as
------------------------------------------
required or permitted by GAAP, no change will be made in the accounting methods
and practices followed by any Labtec Corporation or in the depreciation,
amortization or inventory valuation policies, rates or methods heretofore used
or adopted by any Labtec Corporation. Except as otherwise required by law or in
the ordinary course of business, no Labtec Corporation shall make any change in
any tax accounting methods or practices, make any tax election or settle or
compromise any Federal, state, local or foreign tax liability.
Section 5.8 No Sales or Other Dispositions. Other than in the ordinary
------------------------------
course of business consistent with past practice, no Labtec Corporation will
sell, lease, abandon, assign, transfer, license or otherwise dispose of (a) any
real property, patent, trademark, service xxxx, trade name, brand name or
copyright (or pending application for any patent, trademark, service xxxx or
copyright), invention, process, know-how, formula, pattern, design, trade secret
or interest thereunder or other intangible asset or (b) any machinery, equipment
or other operating property, or initiate or engage in any negotiations relating
to any of the aforesaid transactions or solicit any offers in connection
therewith.
Section 5.9 Prohibition on Certain Commitments. Except as set forth in
----------------------------------
Section 5.9 of the Disclosure Statement, no Labtec Corporation will incur or
become subject to, or agree to incur or become subject to, any liability or
obligations, absolute or contingent, except current liabilities incurred in the
ordinary course of business and obligations under contracts entered into in the
ordinary course of business (none of which, individually or in the aggregate,
will be material to the Labtec Corporations, taken as a whole).
Section 5.10 No Defaults. No Labtec Corporation will default under,
-----------
or breach any term or provision of, or suffer or permit to exist any condition
or event which, after notice or lapse of time or both, would constitute a
default under, any contract, agreement, lease, license, commitment, instrument
or obligation to which such Labtec Corporation or its properties or businesses
are bound, which default or breach (i) either individually or in the aggregate
with all such other defaults and breaches, has resulted in, or is reasonably
likely to result in, any material adverse change in the condition (financial or
otherwise), properties, assets, liabilities, earnings, business or prospects of
the Labtec Corporations, taken as a whole, and (ii) shall not have been cured
within 30 days after such Labtec Corporation has given Parent and Newco notice
of such breach or default, and the event giving rise thereto, pursuant to
Section 5.16 hereof.
Section 5.11 Preservation of Business. Labtec will use its best
------------------------
efforts to preserve the business organization of each Labtec Corporation intact,
to continue their operations at their present levels, to keep available the
services of the present employees and agents of each
27
Labtec Corporation, to preserve the goodwill of customers, suppliers and others
having business relations with each Labtec Corporation, to promptly pay all
taxes when due, to maintain all insurance policies in full force and effect, to
make all filings with the appropriate governmental agencies and to comply with
all applicable laws, each consistent with past practice and good business
standards.
Section 5.12 Maintenance of Properties. Each Labtec Corporation will
-------------------------
keep and maintain its buildings, offices, warehouses and other structures and
its machinery, tools, dies, fixtures, vehicles, spare parts and other properties
(whether owned or leased and whether under its control or the control of others)
in good operating condition and in states of repair consistent with their
respective ages and present usage and will take all necessary action to preserve
any intangible assets which are material to its business as conducted presently
or hereafter prior to the Effective Time.
Section 5.13 Access to Labtec and the Subsidiaries. Between
-------------------------------------
October 21, 1998 and the Effective Time, each Labtec Corporation will
give to authorized representatives of Parent and Newco (including, but not
limited to, their respective officers, attorneys and accountants) full access,
during normal business hours, to such personnel, properties, customers, customer
records, contracts, commitments, books and records and other documents of such
Labtec Corporation, and will cause its officers to furnish any and all
financial, technical and operating data and other information pertaining to its
business (certified if requested), as Parent and Newco shall from time to time
reasonably require. Labtec shall hold, and shall cause its authorized
representatives to hold, in confidence all such information in accordance with
the terms of the confidentiality agreement previously entered into among the
parties hereto or their affiliates (the "Confidentiality Agreement").
-------------------------
Section 5.14 Actions Affecting Representations, Warranties and
-------------------------------------------------
Covenants. No Labtec Corporation will do any act or thing, or suffer any act or
---------
thing to be done or to exist, which would result in (a) an inaccuracy in any
representation or breach of any warranty of Labtec under this Agreement if such
representation or warranty were deemed to be restated and made again at the time
of doing or suffering such act or thing or at the Effective Time, or (b) any
failure by Labtec duly to perform or observe any term, provision, covenant,
agreement or condition set forth or provided for in this Agreement.
Section 5.15 Obtaining of Consents; Satisfaction of Other Conditions.
-------------------------------------------------------
Each Labtec Corporation will use its best efforts to obtain all consents,
approvals and agreements of other Persons or governmental authorities which are
necessary to the consummation of the transactions contemplated by this Agreement
and will use its best efforts to cause the satisfaction of the conditions
precedent set forth in Article VII hereof.
28
Section 5.16 Books and Records; Notification of Changes. Each Labtec
------------------------------------------
Corporation will maintain its books and records in accordance with GAAP applied
on a consistent basis by each Labtec Corporation and in the usual, regular and
ordinary manner and will promptly advise Parent and Newco in writing of any
change which occurs prior to the Effective Time in any of the information
contained in the representations and warranties made in Article III hereof and
of the event which effects such a change.
Section 5.17 Tax Free Reorganization. Labtec will use, and cause each
-----------------------
of the Labtec Subsidiaries to use, its reasonable best efforts to cause the
Merger to qualify as a tax-free reorganization under Sections 368(a)(1)(A) and
368(a)(2)(E) of the Code, including, without limitation, complying with the
recording and reporting requirements under Section 1.368-3 of the United States
Treasury Regulations; and Labtec will not take, and will cause each of the
Labtec Subsidiaries not to take, any action that could cause the Merger not to
qualify as a tax-free reorganization under those Sections and take the position
for all purposes that the Merger qualifies as a tax-free reorganization under
those Sections.
ARTICLE VI
COVENANTS OF PARENT AND NEWCO
-----------------------------
Parent and Newco, jointly and severally, covenant and agree with
Labtec that, except as otherwise consented to in writing by Labtec or provided
specifically in this Agreement, from October 21, 1998 until the Effective Time:
Section 6.1 Action Not Permitted. No Spacetec Corporation will do or
--------------------
cause to be done anything which is represented and warranted in Article IV
hereof (as modified by the Disclosure Statement) not to be true.
Section 6.2 Conduct of Business in Ordinary Course. Except as
--------------------------------------
contemplated by Section 9.1 hereof, each Spacetec Corporation will conduct its
business only in the ordinary course and substantially in the same manner as it
has heretofore operated such business, and will not change the character of its
business or enter into any contract to take any such action.
Section 6.3 No Change in Corporate Charters or By-laws. Except as
------------------------------------------
expressly set forth herein, no change will be made in the corporate charter, by-
laws or other constituent documents of any Spacetec Corporation.
Section 6.4 No Change in Capital Stock. Except as contemplated by the
--------------------------
Charter Amendments and with respect to shares of Spacetec Stock issued pursuant
to the exercise
29
of outstanding stock options, no change will be made in the authorized, issued
or outstanding capital stock of any Spacetec Corporation and no subscriptions,
options, rights, warrants, calls, commitments or agreements relating to the
authorized, issued or outstanding capital stock of any Spacetec Corporation will
be entered into, issued, granted or created.
Section 6.5 No Dividend or Redemption. No dividend or other
-------------------------
distribution or payment will be declared, set aside, paid or made on or in
respect of shares of the capital stock of any Spacetec Corporation, nor will any
Spacetec Corporation directly or indirectly redeem, retire, purchase or
otherwise acquire any of such capital stock.
Section 6.6 No Liquidation, Merger or Acquisition. Except as
-------------------------------------
contemplated by Section 9.1 hereof and except in order to effect the Delaware
Reincorporation, no Spacetec Corporation will dissolve, liquidate, adopt a plan
of liquidation or merge, amalgamate or consolidate with any other corporation or
acquire all or substantially all of the business or assets of, or acquire
ownership or control of any capital stock, bonds or other securities of, or any
proprietary interest in, any Person, or acquire control (directly or indirectly)
of the management or policies thereof, or initiate or engage in any negotiations
relating to any of the aforesaid transactions or solicit any offers in
connection therewith.
Section 6.7 No Change in Accounting Methods; Tax Items. Except as
------------------------------------------
required or permitted by GAAP, no change will be made in the accounting methods
and practices followed by any Spacetec Corporation or in the depreciation,
amortization or inventory valuation policies, rates or methods heretofore used
or adopted by any Spacetec Corporation. Except as otherwise required by law or
in the ordinary course of business, no Spacetec Corporation shall make any
change in any tax accounting methods or practices, make any tax election or
settle or compromise any Federal, state, local or foreign tax liability.
Section 6.8 No Sales or Other Dispositions. Other than in the ordinary
------------------------------
course of business consistent with past practice, as contemplated by Section 9.1
hereof, or in order to effect the Parent Restructuring, no Spacetec Corporation
will sell, lease, abandon, assign, transfer, license or otherwise dispose of (a)
any real property, patent, trademark, service xxxx, trade name, brand name or
copyright (or pending application for any patent, trademark, service xxxx or
copyright), invention, process, know-how, formula, pattern, design, trade secret
or interest thereunder or other intangible asset or (b) any machinery, equipment
or other operating property, or initiate or engage in any negotiations relating
to any of the aforesaid transactions or solicit any offers in connection
therewith.
Section 6.9 Prohibition on Certain Commitments. Except as set forth in
----------------------------------
Section 6.9 of the Disclosure Statement, no Spacetec Corporation will incur or
become subject to, or agree to incur or become subject to, any liability or
obligations, absolute or contingent, except current liabilities incurred in the
ordinary course of business and obligations under contracts entered into in the
ordinary course of business (none of which, individually or in the aggregate,
will be material to the Spacetec Corporations, taken as a whole).
30
Section 6.10 No Defaults. No Spacetec Corporation will default under,
-----------
or breach any term or provision of, or suffer or permit to exist any condition
or event which, after notice or lapse of time or both, would constitute a
default under, any contract, agreement, lease, license, commitment, instrument
or obligation to which it or its properties or businesses are bound, which
default or breach (i) either individually or in the aggregate with all such
other defaults and breaches, has resulted in, or is reasonably likely to result
in, any material adverse change in the condition (financial or otherwise),
properties, assets, liabilities, earnings, business or prospects of the Spacetec
Corporations, taken as a whole, and (ii) shall not have been cured within 30
days after such Spacetec Corporation has given Labtec notice of such breach or
default, and the event giving rise thereto, pursuant to Section 6.16 hereof.
Section 6.11 Preservation of Business. Each of Parent and Newco will
------------------------
use its best efforts to preserve the business organization of each Spacetec
Corporation intact, to continue their operations at their present levels, to
keep available the services of the present employees and agents of each Spacetec
Corporation, to preserve the goodwill of customers, suppliers and others having
business relations with each Spacetec Corporation, to promptly pay all taxes
when due, to maintain all insurance policies in full force and effect, to make
all filings with the appropriate governmental agencies and to comply with all
applicable laws, each consistent with past practice and good business standards.
Section 6.12 Maintenance of Properties. Each Spacetec Corporation will
-------------------------
keep and maintain its buildings, offices, warehouses and other structures and
its machinery, tools, dies, fixtures, vehicles, spare parts and other properties
(whether owned or leased and whether under its control or the control of others)
in good operating condition and in states of repair consistent with their
respective ages and present usage and will take all necessary action to preserve
any intangible assets which are material to its business as conducted presently
or hereafter prior to the Effective Time.
Section 6.13 Access to Spacetec and the Spacetec Subsidiaries. Between
------------------------------------------------
October 21, 1998 and the Effective Time, each Spacetec Corporation will give to
authorized representatives of Labtec (including, but not limited to, its
officers, attorneys and accountants) full access, during normal business hours,
to such personnel, properties, customers, customer records, contracts,
commitments, books and records and other documents of such Spacetec Corporation,
and will cause its officers to furnish any and all financial, technical and
operating data and other information pertaining to its business (certified if
requested), as Labtec shall from time to time reasonably require. Parent and
Newco shall hold, and shall cause their respective authorized representatives to
hold, in confidence all such information in accordance with the terms of the
Confidentiality Agreement.
31
Section 6.14 Actions Affecting Representations, Warranties and
-------------------------------------------------
Covenants. No Spacetec Corporation will do any act or thing, or suffer any act
--------
or thing to be done or to exist, which would result in (a) an inaccuracy in any
representation or breach of any warranty of Parent or Newco under this Agreement
if such representation or warranty were deemed to be restated and made again at
the time of doing or suffering such act or thing or at the Effective Time, or
(b) any failure by Parent or Newco duly to perform or observe any term,
provision, covenant, agreement or condition set forth or provided for in this
Agreement.
Section 6.15 Obtaining of Consents; Satisfaction of Other Conditions.
-------------------------------------------------------
Each Spacetec Corporation will use its best efforts to obtain all consents,
approvals and agreements of other Persons or governmental authorities which are
necessary to the consummation of the transactions contemplated by this Agreement
and will use its best efforts to cause the satisfaction of the conditions
precedent set forth in Article VIII hereof.
Section 6.16 Books and Records; Notification of Changes. Each Spacetec
------------------------------------------
Corporation will maintain its books and records in accordance with GAAP applied
on a consistent basis by each Spacetec Corporation and in the usual, regular and
ordinary manner and will promptly advise Labtec in writing of any change which
occurs prior to the Effective Time in any of the information contained in the
representations and warranties made in Article IV hereof and of any other event
which effects such a change.
Section 6.17 Compliance with the Securities and Exchange Act. Parent
-----------------------------------------------
shall timely file with the SEC, and promptly provide Labtec with copies of, all
forms and reports required to be filed by Parent pursuant to the Exchange Act.
Section 6.18 Tax Free Reorganization. Parent will use, and cause each
-----------------------
of the Spacetec Subsidiaries to use, its reasonable best efforts to cause the
Merger to qualify as a tax-free reorganization under Sections 368(a)(1)(A) and
368(a)(2)(E) of the Code, including, without limitation, complying with the
recording and reporting requirements under Section 1.368-3 of the United States
Treasury Regulations; and Parent will not take, and will cause each of the
Spacetec Subsidiaries not to take, any action that could cause the Merger not to
qualify as a tax-free reorganization under those Sections and take the position
for all purposes that the Merger qualifies as a tax-free reorganization under
those Sections.
Section 6.19 Bank Consent and Other Voting Agreements. Parent shall
----------------------------------------
use its best efforts to, as promptly as reasonably practicable, (i) obtain and
deliver to Labtec the written consent, in form and substance reasonably
satisfactory to Labtec, of Australia and New Zealand Banking Group Limited (the
"Bank"), pursuant to the Pledge Agreement dated September 30, 1997, between
----
Rhetford Pty Limited (ACN 001 402 339), a company organized under the laws
32
of New South Wales, Australia ("Rhetford"), and the Bank, in order for Rhetford
--------
to perform its obligations under its Voting Agreement with respect to the shares
of Spacetec Stock pledged by Rhetford to the Bank under such Pledge Agreement,
and (ii) have Xxxxxx X. Xxxxxxx and Xxxx X. Xxxxxx (collectively, the "Other
-----
Parent Shareholders") each execute and deliver to Labtec a voting agreement
-------------------
substantially in the form of the Voting Agreements.
ARTICLE VII
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PARENT AND NEWCO
-----------------------------------------------------------
All obligations of Parent and Newco to effect the Merger are subject,
at the option of Parent and Newco, to the fulfillment, of each of the following
conditions:
Section 7.1 Proceedings and Documentation. All corporate and other
-----------------------------
proceedings required to carry out the transactions contemplated by this
Agreement and all instruments and other documents relating to such transactions
shall be reasonably satisfactory in form and substance to counsel to Parent and
Newco, and Parent and Newco shall have been furnished with (a) copies of
resolutions adopted by the Board of Directors and shareholders of Labtec,
authorizing the execution and delivery by Labtec of this Agreement and the
consummation by Labtec of the transactions contemplated hereby, certified by the
Secretary or Assistant Secretary or other appropriate officer of Labtec, (b) a
certificate of the Secretary or Assistant Secretary of Labtec with respect to
the incumbency of all officers of Labtec executing instruments and other
documents in connection with the transactions contemplated by this Agreement,
and (c) such other instruments and documents as such counsel shall have
reasonably requested.
Section 7.2 Accuracy of Representations and Warranties; Compliance
------------------------------------------------------
with Covenants and Conditions. The representations and warranties of Labtec
-----------------------------
contained in this Agreement shall be true and correct in all respects on and as
of the Effective Time, with the same force and effect as though made on and as
of the Effective Time (except for those representations and warranties that
address matters only as of a particular date or only with respect to a
particular period of time, which representations or warranties shall be true and
correct as of such date or with respect to such period), except where the
failure of such representations or warranties to be so true and correct (without
giving effect to any limitation as to "material, " "materiality," "Material
Adverse Effect," "Material Adverse Change" or other similar qualifiers),
individually or in the aggregate, would not have a Material Adverse Effect on
the Labtec Corporations, taken as a whole. Labtec shall have performed and
complied in all material respects with each and every covenant, agreement and
condition required by this Agreement to be performed or
33
complied with by it prior to or at the Effective Time. Labtec shall have
delivered to Parent and Newco a certificate to such effect signed by the Chief
Executive Officer and the Chief Financial Officer of Labtec.
Section 7.3 Legal Opinion of Counsel to Labtec. Labtec shall have
----------------------------------
delivered to Parent and Newco the opinion of Xxxxxx Xxxxxx Flattau & Klimpl,
LLP, counsel for Labtec, dated the date of the Closing, in form and substance
reasonably satisfactory to Parent and Newco.
Section 7.4 Fulfillment of Legal Requirements. All statutory and other
---------------------------------
legal requirements for the valid consummation of the transactions contemplated
by this Agreement shall have been fulfilled.
Section 7.5 Obtaining of Consents. All consents, approvals and
---------------------
agreements of other parties or governmental authorities which are necessary to
the effective consummation of the transactions contemplated by this Agreement or
to avoid a default under an instrument or document to which any party hereto is
a party or by which it may be bound shall have been obtained, except where the
failure to obtain such consents, approvals or agreements, individually or in the
aggregate, would not have a Material Adverse Effect on the Labtec Corporations,
taken as a whole, or the Spacetec Corporations, taken as a whole.
Section 7.6 Absence of Pending Proceedings. No litigation, action,
------------------------------
investigation, inquiry or request for information by any administrative agency
or governmental body and no legal or administrative proceeding shall have been
instituted which (a) questions the validity or legality of this Agreement or the
transactions contemplated by this Agreement or seeks to restrict, limit,
prohibit or enjoin (or to obtain substantial damages as a result of) such
transactions, or (b) could reasonably be expected to have a Material Adverse
Effect on the Labtec Corporations, taken as a whole, and shall not have been
disclosed to Parent and Newco in the Labtec Disclosure or in the Disclosure
Statement.
Section 7.7 Tax Certificates. Labtec shall have delivered to Parent a
----------------
clearance certificate or similar document or documents which may be required by
any tax authority to relieve Parent of any obligation to withhold taxes in
connection with the transactions contemplated by this Agreement to the extent
permitted by law. Labtec shall have delivered to Parent a properly executed
statement or statements satisfying the requirements of Treasury Regulation
Sections 1.897-2 and 1.1445 in form and substance reasonably satisfactory to
Parent.
Section 7.8 No Material Adverse Change. Since October 21, 1998,
--------------------------
there shall have been no Material Adverse Change in the Labtec Corporations,
taken as a whole; provided, however, that none of the following shall be deemed
-----------------
by itself or by themselves, either
34
alone or in combination, to constitute such a Material Adverse Change: (a)
conditions affecting the personal computing industry as a whole or the U.S.
economy as a whole; or (b) any effect arising primarily out of or resulting
primarily from actions taken by the parties as contemplated hereunder in
connection with, or which is primarily attributable to, the announcement of this
Agreement and the transactions contemplated hereby, to the extent so
attributable.
Section 7.9 Effectiveness of Registration Statement. The Registration
---------------------------------------
Statement shall have become effective in accordance with the provisions of the
Securities Act, and no stop order suspending the effectiveness of the
Registration Statement shall have been issued by the SEC, and no proceeding
shall have been initiated or threatened in writing by the SEC for the purpose of
seeking or obtaining such a stop order.
Section 7.10 Shareholder Approval. The shareholders of Parent shall
--------------------
have duly and validly approved and adopted the Parent Proposals.
Section 7.11 Due Diligence. Parent and Newco shall have completed and
-------------
be satisfied, in their sole discretion, with the results of their due diligence
investigation with respect to the business and operations of the Labtec
Corporations.
Section 7.12 Charter Amendment. Parent shall have effected each of
------------------
the Charter Amendments.
Section 7.13 Parent Restructuring. Immediately following the
--------------------
Effective Time, Parent shall have consummated a restructuring, pursuant to which
it shall have transferred all of its non-cash assets and liabilities to a newly-
formed, wholly-owned subsidiary, incorporated in the State of Delaware solely
for this purpose and which holds no other assets or liabilities at that time
("Parent Restructuring").
ARTICLE VIII
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF LABTEC
-------------------------------------------------
All obligations of Labtec to effect the Merger are subject, at the
option of Labtec, to the fulfillment, of each of the following conditions:
Section 8.1 Proceedings and Documentation. All corporate and other
-----------------------------
proceedings required to carry out the transactions contemplated by this
Agreement and all instruments and other documents relating to such transactions
shall be satisfactory in form and substance to counsel to Labtec, and Labtec
shall have been furnished with (a) copies of resolutions adopted by the Board of
Directors and shareholders of Parent and Newco, authorizing the execution and
delivery by Parent and Newco of this Agreement and the consummation by Parent
and Newco of the transactions contemplated hereby, certified by the Secretary or
Assistant Secretary of Parent or Newco, as the case may be, (b) certificates of
the Secretary or Assistant Secretary of each of Parent and Newco with respect to
the incumbency of all officers of Parent and Newco, respectively, executing
instruments and other documents in connection with the transactions contemplated
by this Agreement, and (c) such other instruments and documents as such counsel
shall have reasonably requested.
35
Section 8.2 Accuracy of Representations and Warranties; Compliance
------------------------------------------------------
with Covenants and Conditions. The representations and warranties of Parent and
-----------------------------
Newco contained in this Agreement shall be true and correct in all respects on
and as of the Effective Time, with the same force and effect as though made on
and as of the Effective Time (except for those representations and warranties
that address matters only as of a particular date or only with respect to a
particular period of time, which representations or warranties shall be true and
correct as of such date or with respect to such period), except where the
failure of such representations or warranties to be so true and correct (without
giving effect to any limitation as to "material, " "materiality," "Material
Adverse Effect," "Material Adverse Change" or other similar qualifiers),
individually or in the aggregate, would not have a Material Adverse Effect on
the Spacetec Corporations, taken as a whole. Parent and Newco shall each have
performed and complied in all material respects with each and every covenant,
agreement and condition required by this Agreement to be performed or complied
with by it prior to or at the Effective Time. Parent and Newco shall each have
delivered to Labtec a certificate to such effect signed by its Chief Executive
Officer and Chief Financial Officer.
Section 8.3 Completion of Required Corporate Action. All action
---------------------------------------
required to be taken by, or on the part of, Parent and Newco to authorize the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby shall have been duly and validly taken. The
shareholders of Parent shall have duly and validly approved and adopted the
Parent Proposals.
Section 8.4 Legal Opinion of Counsel to Spacetec and Newco. Parent and
----------------------------------------------
Newco shall have delivered to Labtec the opinion of Xxxxx, Xxxxxxx & Xxxxxxxxx,
LLP, counsel to Parent and Newco, dated the date of the Closing, in form and
substance reasonably satisfactory to Labtec.
Section 8.5 Fulfillment of Legal Requirements. All statutory and other
---------------------------------
legal requirements for the valid consummation of the transactions contemplated
by this Agreement shall have been fulfilled.
Section 8.6 Obtaining of Consents. All consents, approvals and
---------------------
agreements of other parties or governmental authorities which are necessary to
the effective consummation of the transactions contemplated by this Agreement or
to avoid a default under an instrument or document to which any party hereto is
a party or by which it may be bound shall have been obtained, except where the
failure to obtain such consents, approvals or agreements, individually or in the
aggregate, would not have a Material Adverse Effect on the Labtec Corporations,
taken as a whole, or the Spacetec Corporations, taken as a whole.
36
Section 8.7 Absence of Pending Proceedings. No litigation, action,
------------------------------
investigation, inquiry or request for information by any administrative agency
or governmental body and no legal or administrative proceeding shall have been
instituted which (a) questions the validity or legality of this Agreement or the
transactions contemplated by this Agreement or seeks to restrict, limit,
prohibit or enjoin (or to obtain substantial damages as a result of) such
transactions, or (b) could reasonably be expected to have a Material Adverse
Effect on the Spacetec Corporations, taken as a whole, and shall not have been
disclosed to Labtec in the Spacetec Disclosure or in the Disclosure Statement.
Section 8.8 Promissory Note. Parent shall have executed and delivered
---------------
the Promissory Note to the Collection Agent.
Section 8.9 No Material Adverse Change. Since October 21, 1998,
--------------------------
there shall have been no Material Adverse Change in the Spacetec Corporations,
taken as a whole; provided, however, that none of the following shall be deemed
-----------------
by itself or by themselves, either alone or in combination, to constitute such a
Material Adverse Change: (a) a change in the market price or trading volume of
Spacetec Stock; (b) conditions affecting the CAD/CAM, corporate or consumer
desktop computer, or computer workstation industries as a whole or the U.S.
economy as a whole; or (c) any effect arising primarily out of or resulting
primarily from actions taken by the parties as contemplated hereunder in
connection with, or which is primarily attributable to, the announcement of this
Agreement and the transactions contemplated hereby, to the extent so
attributable.
Section 8.10 Effectiveness of Registration Statement. The Registration
---------------------------------------
Statement shall have become effective in accordance with the provisions of the
Securities Act, and no stop order suspending the effectiveness of the
Registration Statement shall have been issued by the SEC, and no proceeding
shall have been initiated or threatened in writing by the SEC for the purpose of
seeking or obtaining such a stop order.
Section 8.11 Listing. The shares of Spacetec Stock comprising the
-------
Merger Consideration shall have been approved for listing (subject to notice of
issuance) on the Nasdaq Stock Market's National Market.
Section 8.12 Due Diligence. Labtec shall have completed and be
-------------
satisfied, in its sole discretion, with the results of its due diligence
investigation with respect to the business and operations of the Spacetec
Corporations.
Section 8.13 Charter Amendments. Parent shall have effected each of
------------------
the Charter Amendments.
Section 8.14 Parent Restructuring. Parent shall have consummated the
--------------------
Parent Restructuring immediately following the Effective Time.
37
ARTICLE IX
ADDITIONAL COVENANTS
--------------------
Section 9.1 Acquisition Proposals.
---------------------
(a) Parent and its subsidiaries will not, and will use their best
efforts to cause their respective directors, officers, employees, financial
advisors, legal counsel, accountants and other agents and representatives (for
purposes of this Section 9.1 only, being referred to as "affiliates") not to,
----------
initiate, solicit or encourage, directly or indirectly, or take any other action
to facilitate any inquiries or the making of any proposal with respect to,
engage or participate in negotiations concerning, provide any non-public
information or data to, or have any discussions with any person other than
Labtec or its affiliates relating to, any acquisition, tender offer (including a
self-tender offer), exchange offer, merger, consolidation, acquisition of
beneficial ownership of or the right to vote securities representing 10% or more
of the total voting power of Parent or any of its subsidiaries, dissolution,
business combination, purchase of all or any significant portion of the assets
(other than sales of assets and inventory in the ordinary course of business) or
any division of, or any equity interest in, Parent or any subsidiary, or similar
transaction other than the Merger (such proposals, announcements or transactions
being referred to as "Acquisition Proposals"); provided, however, that nothing
--------------------- -------- -------
contained in this Agreement shall prohibit the Board of Directors of Parent from
(i) furnishing information to, or engaging in discussions or negotiations with,
any person in response to an unsolicited bona fide written Acquisition Proposal;
or (ii) recommending such an unsolicited bona fide written Acquisition Proposal
to the shareholders of Parent, if and only to the extent that (w) the Board of
Directors of Parent concludes in good faith (after consultation with its
financial advisors) that such Acquisition Proposal would constitute a Superior
Proposal, and (x) the Board of Directors of Parent determines in good faith
(after consultation with outside legal counsel) that the failure to take such
action would result in a breach by the Board of Directors of Parent of its
fiduciary duties to Parent's shareholders under applicable law, and (y) prior to
furnishing such information to, or entering into discussions or negotiations
with, such person Parent provides prompt written notice to Labtec to the effect
that it is furnishing information to, or entering into discussions or
negotiations with, such person (which notice shall identify the nature and
material terms of the proposal), and (z) prior to providing any information or
data to any person in connection with an Acquisition Proposal by any such
person, the Board of Directors of Parent receives from such person an executed
confidentiality agreement with provisions no less favorable to Parent than the
Confidentiality Agreement. Parent agrees that it will immediately cease and
cause to be terminated any existing activities, discussions, or negotiations
with any parties regarding any Acquisition Proposal existing as of October 21,
1998. Parent agrees to keep Labtec fully and timely informed of the status of
any discussions, negotiations, furnishing of information, or other activities
relating to an Acquisition Proposal.
(b) For purposes of this Agreement, a "Superior Proposal" means a
-----------------
bonafide Acquisition Proposal made by a third person that the Board of Directors
of Parent
38
determines in its good faith judgment (after consultation with the independent
financial advisor of Parent) to be superior to Parent's shareholders from a
financial point of view, and to be more favorable generally to Parent's
shareholders (taking into account all financial and strategic considerations,
including relevant legal, financial, regulatory and other aspects of such
proposal, and the conditions to and prospects for completion of such proposal)
than the Merger.
(c) Nothing contained in this Section 9.1 shall prohibit Parent from
taking and disclosing to its shareholders a position contemplated by Rule 14e-2
promulgated under the Exchange Act or from making any disclosure to Parent's
shareholders which, in the good faith judgment of the Board of Directors of
Parent after consultation with outside counsel, is required under applicable
law; provided that Parent does not withdraw or modify, or propose to withdraw or
modify, its position with respect to the Merger or approve or recommend, or
propose to approve or recommend, an Acquisition Proposal unless Parent and its
Board of Directors have complied with all the provisions of this Section 9.1.
Section 9.2 Proxy Statement/Prospectus; Registration Statement.
--------------------------------------------------
(a) Parent shall promptly prepare and file a Registration Statement
under the Securities Act for the purpose of registering the offering and
issuance of shares of Spacetec Stock comprising the Merger Consideration,
including, without limitation, the maximum number of Contingent Shares issuable
pursuant to Section 1.7 hereof (the "Registration Statement"). Parent shall
----------------------
promptly prepare and file a Proxy Statement (the "Proxy Statement") for the
---------------
purpose of obtaining the approval of the Parent's stockholders of the proposals
described in Section 9.3(b) hereof (the "Parent Proposals"). The Proxy
----------------
Statement shall be included in the Registration Statement as the prospectus.
Parent and Newco, on the one hand, and Labtec, on the other hand shall:
(i) provide promptly to the other such information concerning
its business, financial condition and affairs as may be required
or appropriate for inclusion in the Registration Statement or the
Proxy Statement;
(ii) cause its counsel and auditors to cooperate with the
other's counsel and auditors in the preparation of the
Registration Statement and the Proxy Statement; and
(iii) promptly advise the other if at any time prior to the
Effective Time it should obtain knowledge of any fact that might
make it necessary or appropriate to amend or supplement the
Registration Statement or the Proxy Statement. No amendment or
supplement to the Proxy Statement will be made by Parent without
the approval of Labtec, which approval shall not be unreasonably
withheld or delayed.
39
(b) Parent shall make all filings and take all actions that may be
necessary, proper or advisable under federal and state securities laws, rules
and regulations in connection with the offering and issuance of the Merger
Consideration.
(c) In addition, Parent shall:
(i) use its best efforts to have the Proxy Statement cleared
by the SEC under the Exchange Act and the Registration Statement
declared effective by the SEC under the Securities Act as soon
after filing as may be practicable; and
(ii) advise Labtec, promptly after it receives notice thereof,
of: (A) any requests by the SEC for additional information or
amendment of the Proxy Statement or the Registration Statement or
comments thereon or responses thereto; (B) the time when the
Registration Statement has become effective or any supplement or
amendment thereto has been filed; and (C) the issuance of any
stop order or the suspension of qualification of the shares of
Spacetec Stock issuable in connection with the Merger for
offering or sale in any jurisdiction.
(d) The information supplied by Labtec for inclusion in the
Registration Statement and the Proxy Statement shall not, at (i) the time the
Registration Statement is filed, amended, supplemented or declared effective,
(ii) the time the Proxy Statement (or any amendment thereof or supplement
thereto) is first mailed to the shareholders of Parent, (iii) the time of the
Shareholder Meeting, and (iv) the Effective Time, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading.
(e) The information supplied by Parent for inclusion in the
Registration Statement and the Proxy Statement shall not, at (i) the time the
Registration Statement is filed, amended, supplemented or declared effective,
(ii) the time the Proxy Statement (or any amendment thereof or supplement
thereto) is first mailed to the shareholders of Parent, (iii) the time of the
Shareholder Meeting, and (iv) the Effective Time, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading. All
documents that Parent is responsible for filing with the SEC in connection with
the transactions contemplated herein will comply as to form and substance in all
material respects with the applicable requirements of the Securities Act and the
rules and regulations thereunder and the Exchange Act and the rules and
regulations thereunder.
40
(f) The Proxy Statement shall include the recommendation of the
Board of Directors of Parent that the shareholders of Parent approve the Parent
Proposals and the conclusion of the Board of Directors that the terms and
conditions of the Merger are fair and reasonable to the shareholders of Parent.
Such Board of Directors may withdraw or modify its recommendation if and only to
the extent set forth in the proviso to Section 9.1(a) hereof. No modification or
withdrawal of such recommendation shall relieve Parent of its obligation to
submit this Agreement and the transactions contemplated hereby to its
stockholders in accordance with applicable law.
Section 9.3 Shareholder Approvals. Parent, acting through its Board of
---------------------
Directors, shall, in accordance with applicable law and its charter and by-laws:
(a) cause the definitive Proxy Statement to be mailed to its
shareholders as promptly as practicable after its approval by the Securities and
Exchange Commission (the "SEC"); and
---
(b) within five (5) business days after approval of the Proxy
Statement by the SEC, call a special meeting of its shareholders (the
"Shareholder Meeting") to be held not later than 45 days after the calling of
--------------------
such meeting, for the purpose of the approval of (i) the amendment of the
Articles of Organization of Parent to (A) prior to the Effective Time, to change
the name of Parent to "Labtec Inc.", (B) prior to the Effective Time, to
increase, from 20,000,000 to 25,000,000, the number of shares of Spacetec Stock
authorized for issuance, and (C) immediately following the Effective Time and
the issuance of the shares of Spacetec Stock to Labtec's shareholders, to effect
a one-for-three reverse stock split (the "Reverse Stock Split") of all shares of
Spacetec Stock then outstanding (collectively, the "Charter Amendments"), (ii)
------------------
the issuance of the shares of Spacetec Stock comprising the Merger Consideration
to Labtec's shareholders upon the terms and conditions set forth in this
Agreement and (iii) the election to Parent's Board of Directors of the four (4)
nominees designated by Spacetec and the eight (8) nominees designated by Labtec,
in each case to their respective Classes as so designated in accordance with
Section 1.4 hereof.
Section 9.4 Agreement of Parent Shareholders. Parent shall use its
--------------------------------
best efforts to cause (a) each of Xxxxxx Gain, Gain NZ Trust, Gain Family Trust,
Xxxxxxx Xxxx, Xxxxx Xxxxxxxx, Rhetford, Xxxxxx Xxxxxxxx and Group Superannuation
Fund (collectively, the "Principal Parent Shareholders") to comply with the
-----------------------------
covenants and agreements contained in the Voting Agreement and Irrevocable Proxy
of even date herewith between such Principal Parent Stockholder and Labtec, and
(b) each of the Other Parent Shareholders to comply with the covenants and
agreements contained in the Voting Agreement and Irrevocable Proxy to which they
may in the future become a party (each, a "Voting Agreement").
----------------
41
Section 9.5 Listing. Parent shall use its reasonable best efforts to
-------
list on the Nasdaq Stock Market's National Market, upon official notice of
issuance, the Spacetec Stock to be issued as Merger Consideration pursuant to
the Merger and the shares of Parent Stock to be reserved for issuance upon
exercise of Labtec Stock Options.
ARTICLE X
TERMINATION OF AGREEMENT
------------------------
Section 10.1 Termination. This Agreement may be terminated at any time
-----------
prior to the Effective Time as follows and in no other manner:
(a) by mutual consent of Parent, Newco and Labtec;
(b) by Parent and Newco or Labtec, upon the issuance by a
court of competent jurisdiction or other governmental body of an order, decree
or ruling or their taking of any other action restraining, enjoining or
otherwise prohibiting the Merger, which order, decree, ruling or any other
action shall have become final and non-appealable;
(c) by Parent and Newco or by Labtec, if the Closing shall not
have occurred on or before March 31, 1999, or such later date as may have been
agreed upon by the parties hereto; provided, however, that no termination may be
-----------------
made under this provision if the failure to close shall be caused by the action
or inaction of the terminating party;
(d) by Parent and Newco, upon a breach of any covenant or
agreement on the part of Labtec set forth in this Agreement, or if any
representation or warranty of Labtec shall have become untrue, in either case
such that the condition set forth in Section 7.2 hereof would not be satisfied
(a "Terminating Labtec Breach"); provided that, if such Terminating Labtec
------------------------- --------
Breach is curable by Labtec through the exercise of reasonable efforts and for
so long as Labtec continues to exercise such reasonable efforts, Parent and
Newco may not terminate this Agreement under this Section 10.1(d);
(e) by Labtec, upon a breach of any covenant or agreement on the
part of Parent or Newco set forth in this Agreement, or if any representation or
warranty of Parent or Newco shall have become untrue, in either case such that
the condition set forth in Section 8.2 hereof would not be satisfied (a
"Terminating Parent Breach"); provided that, if such Terminating Parent Breach
------------------------- --------
is curable by Parent and Newco through the exercise of their reasonable efforts
and for so long as Parent and Newco continue to exercise such reasonable
efforts, Labtec may not terminate this Agreement under this Section 10.1(e);
42
(f) by Labtec, if any of the Principal Parent Shareholders or
the Other Parent Shareholders shall have breached, in any material respect, any
representation or warranty made, or defaulted, in any material respect, in any
covenant or agreement contained, in the Voting Agreement to which it is a party;
(g) by Labtec, if (i) the Board of Directors of Parent
withdraws or modifies its recommendation of this Agreement or the Merger in a
manner adverse to Labtec or shall have publicly announced its intention to do
any of the foregoing or the Board of Directors of Parent shall have recommended
to the shareholders of Parent any Acquisition Proposal or resolved to do so, or
(ii) a tender offer or exchange offer for 20% or more of the outstanding shares
of Spacetec Stock is commenced or a registration statement with respect thereto
shall have been filed and the Board of Directors of Parent, within ten (10)
business days after such tender offer or exchange offer is so commenced, either
fails to recommend against acceptance of such tender or exchange offer by its
shareholders or takes no position with respect to the acceptance of such tender
or exchange offer by its shareholders;
(h) by Parent and Newco, if the Board of Directors of Parent
shall have determined to recommend an Acquisition Proposal to its shareholders
after determining, pursuant to Section 9.1, that such Acquisition Proposal
constitutes a Superior Proposal, and Parent and Newco give Labtec at least three
(3) business days prior notice of their intention to effect such termination
pursuant to this Section 10.1(h), and Parent makes the payments required
pursuant to Section 10.2(b) hereof;
(i) by Parent and Newco or Labtec, if the required approval of
the shareholders of Parent contemplated by this Agreement shall not have been
obtained by reason of the failure to obtain the requisite vote upon a vote taken
at a meeting of shareholders convened therefor or at any adjournment thereof;
provided that the right of Parent and Newco to terminate this Agreement pursuant
--------
to this Section 10.1(i) shall not be available to Parent and Newco in the event
that either Parent or Newco has not complied with its obligations under Section
9.1 hereof;
(j) by Labtec, if the Board of Directors of Parent shall have
engaged in discussions or negotiations with any person in connection with an
Acquisition Proposal as permitted under the proviso contained in Section 9.1(a)
hereof and such discussions or negotiations shall not have been definitively
terminated within sixty (60) days following the date of Parent's initial receipt
of such Acquisition Proposal;
(k) by Labtec, on or before November 4, 1998, in the event
that Labtec shall not have been satisfied, in its sole discretion, with the
results of its due diligence investigation with respect to the business and
operations of the Spacetec Corporations; or
43
(l) by Parent and Newco, on or before November 4, 1998, in the event
that Parent and Newco shall not have been satisfied, in their sole discretion,
with the results of their due diligence investigation with respect to the
business and operations of the Labtec Corporations.
Section 10.2 Liability of the Parties.
------------------------
(a) In the event that this Agreement is terminated (i) pursuant to
Section 10.1(d) or 10.1(e) hereof, Parent and Newco or Labtec, whichever shall
have made such a misstatement or so defaulted, or (ii) pursuant to Section
10.1(f) hereof, Parent and Newco, shall be liable to reimburse the terminating
party for all legal, accounting, printing and other out-of-pocket fees and
expenses incurred by the terminating party or parties (including, in the case of
Parent and Newco, the amount of the Initial Expense Reimbursement) in connection
with this Agreement and the transactions contemplated hereby ("Expenses").
--------
(b) In the event that this Agreement is terminated (i) by Labtec
pursuant to Section 10.1(g) or 10.1(j) hereof, (ii) by Parent and Newco pursuant
to Section 10.1(h) hereof, or (iii) by either Parent and Newco or Labtec
pursuant to Section 10.1(i) hereof, Parent shall pay to Labtec a termination fee
(the "Parent Initial Termination Fee"), in cash, in the amount of $300,000, plus
------------------------------
the Expenses of Labtec, within one (1) business day after such termination. In
the event that (y) this Agreement is terminated in a manner which results in the
payment of the Parent Initial Termination Fee and (z) an Acquisition Proposal
involving Parent is thereafter consummated, or Parent enters into a definitive
agreement with respect to an Acquisition Proposal, within twelve (12) months
after the later of the termination of this Agreement or the payment of the
Parent Initial Termination Fee, Parent shall pay to Labtec an additional fee
(the "Parent Additional Termination Fee"), in cash, at or prior to the
---------------------------------
consummation of such Acquisition Proposal, or within one (1) business day
following the effective date of such definitive agreement, whichever is earlier,
in an amount equal to 5% of the amount by which (I) the total value of all
consideration to be received by Parent, any Spacetec Subsidiary and Parent's
shareholders pursuant to the Acquisition Proposal exceeds (II) the total value
of all outstanding shares of Spacetec Stock (including the value of any other
classes of capital stock of Spacetec then outstanding) based on its closing
price per share on October 20, 1998 of $1.375. The value of such Parent
securities or the value of such securities or other consideration to be received
by Parent, any Spacetec Subsidiary and Parent's shareholders pursuant to the
Acquisition Proposal shall be determined as of the date of the receipt thereof.
If Parent and Labtec cannot, within fifteen (15) days of receipt of such
securities or other consideration, agree as to its value, Parent and Labtec will
submit their respective valuations of such securities to a mutually agreed upon
third-party appraiser who will either select one of the submitted valuations or
establish a valuation within the range of the submitted valuations, which
selection or
44
establishment of a valuation shall be binding on the parties hereto. All costs
of the third-party appraiser shall be shared equally by Parent and Labtec.
(c) In the event that this Agreement is terminated for any reason,
any amounts that are payable by Parent and Newco to Labtec pursuant to this
Section 10.2 shall be reduced by the amount of Initial Expense Reimbursement.
(d) In no event shall Parent be required to pay any termination fee
to Labtec if, immediately prior to the applicable termination of this Agreement,
Labtec was in material breach of any of its obligations under this Agreement.
(e) If one party fails to promptly pay to the other any fee or
expense due hereunder, the defaulting party shall pay the costs and expenses
(including, without limitation, reasonable legal fees and expenses) in
connection with any action, including the filing of any lawsuit or other legal
action, taken to collect payment, together with interest on the amount of any
unpaid fee or expense at the publicly announced prime rate of Citibank, N.A.
from the date such fee was required to be paid.
(f) Any payment required to be made pursuant to Section 10.2 of
this Agreement shall be made by wire transfer of immediately available funds to
an account designated by the party entitled to receive payment.
(g) The remedies provided by this Section 10.2 are non-exclusive,
and each party hereto shall not be prohibited from seeking such other equitable
or legal remedies to which it may be entitled.
Section 10.3 Effect of Termination. Notwithstanding anything to the
---------------------
contrary contained herein, the last sentence of Sections 5.13 and 6.13, Sections
10.2 and 10.3 and the applicable Sections of Article XII hereof shall survive
any termination hereof.
ARTICLE XI
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
------------------------------------------
Section 11.1 Survival of Representatives and Warranties. The
------------------------------------------
representations and warranties of each of the parties hereto contained in this
Agreement, or in any document delivered pursuant to the provisions of, or in
connection with, this Agreement shall survive the making of this Agreement and
any examination made by or on behalf of the parties hereto but shall terminate
upon the Closing and Merger hereunder.
45
ARTICLE XII
MISCELLANEOUS
-------------
Section 12.1 Notices. All notices, requests, demands and other
-------
communications hereunder shall be in writing and shall be deemed given if
delivered personally or mailed by certified or registered mail, postage prepaid,
addressed as follows:
If to Parent or Newco:
Spacetec IMC Corporation
The Boott Mill
100 Foot of Xxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: President
with a copy to:
Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP
High Street Tower
000 Xxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxx, Esq.
If to Labtec:
Labtec, Inc.
0000 Xxxxxxxxx Xxxx Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: President
with copies to:
Sun Capital Partners, Inc.
000 Xxxxx Xxxxxxx Xxxxx
Xxxx Xxxxx, Xxxxxx Floor
West Palm Beach, Florida 33401
Attention: Xxxx X. Xxxxx and Xxxxxx X. Xxxxxx
46
and
Xxxxxx Xxxxxx Flattau & Klimpl, LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxx, Esq.
Section 12.2 Assignability and Parties in Interest. Neither this
-------------------------------------
Agreement nor any of the rights, interests or obligations hereunder shall be
assignable by any of the parties hereto without the prior written consent of the
other party, and any purported assignment in contravention of this clause shall
be void. This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors; nothing in this Agreement is
intended to confer, expressly or by implication, upon any other person any
rights or remedies under or by reason of this Agreement.
Section 12.3 Governing Law. This Agreement and all amendments thereof
-------------
shall be governed by, and construed and enforced in accordance with, the laws of
the State of New York applicable to contracts made and to be performed therein.
Section 12.4 Counterparts. This Agreement may be executed
------------
simultaneously in one or more counterparts, each of which shall be deemed an
original.
Section 12.5 Best Efforts. The parties hereto agree to use their
------------
respective best efforts and to cooperate with each other to bring about the
transactions contemplated by this Agreement as soon as practicable, unless
theretofore terminated as herein provided.
Section 12.6 Publicity. The parties hereto agree that the timing and
---------
content of press releases and other public announcements with respect to the
Merger shall be subject to mutual agreement.
Section 12.7 Complete Agreement. This Agreement, the Disclosure
------------------
Statement, the Exhibits hereto, the Confidentiality Agreement and the documents
delivered pursuant hereto or referred to herein contain the entire agreement
between the parties hereto with respect to the transactions contemplated herein
and therein and, except as provided herein, supersede all previous negotiations,
commitments and writings.
Section 12.8 Modifications, Amendments and Waivers. At any time prior
-------------------------------------
to the Effective Time, the parties hereto may, by written agreement:
47
(a) extend the time for the performance of any of the
obligations or other acts of the parties hereto;
(b) waive any inaccuracies in the representations and
warranties contained in this Agreement (including the Exhibits hereto), the
Disclosure Statement or in any document delivered pursuant hereto or in
connection with the transactions contemplated hereby; and
(c) waive compliance with any of the covenants or agreements
contained in this Agreement.
Section 12.9 Headings. The headings contained in this Agreement are
--------
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 12.10 Interpretation. The parties acknowledge and agree that
--------------
each party and its counsel have reviewed and negotiated the terms and provisions
of this Agreement and have contributed to their revision; the normal rule of
construction, to the effect that any ambiguities are resolved against the
drafting party shall not be employed in the interpretation of it; and its terms
and provisions shall be construed fairly as to all parties hereto and not in
favor of or against any party, regardless of which party was generally
responsible for the preparation of this Agreement.
Section 12.11 Knowledge. As used in this Agreement, the term
---------
"knowledge," "to the knowledge of," or similar phrases with respect to Parent,
Newco or Labtec means the actual knowledge of such party's directors and
executive officers.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
48
IN WITNESS WHEREOF, Parent, Newco and Labtec have caused this
Agreement to be duly executed as of the date first above written.
LABTEC INC.
By:______________________________________
Name:
Title:
SPACETEC IMC CORPORATION
By:______________________________________
Name:
Title:
SIMC ACQUISITION CORPORATION
By:______________________________________
Name:
Title:
49
EXHIBIT A
---------
Example of Valuation Adjustment and Determination of Contingent Shares Amount
-----------------------------------------------------------------------------
$6,000,000 Business for 16.53% = "Agreed Valuation Base"
====== ---------------------
Contingent Valuation Adjustment mechanism based on $6,000,000 Valuation
Guarantee with respect to the Business (plus the consolidated net income or
minus the consolidated net loss of Parent, excluding the Labtec Corporations
(determined in accordance with GAAP), after taxes at an estimated 38% combined
rate, but excluding any interest expense, from October 1, 1998 through the
Valuation Date)
. In the event that the Valuation or the value of the Sale is $6,000,000 or
greater, then no Contingent Shares shall be issued by Parent.
. In the event that the Valuation Guarantee is less than $6,000,000, then,
for every dollar that the Valuation Guarantee is less than $6,000,000, each
holder of shares of Labtec Stock that are outstanding immediately prior to
the Effective Time shall be issued additional shares of Spacetec Stock
based on the Agreed Valuation Base of $6,000,000 for 16.53% of the
outstanding shares of Spacetec Stock. Note: Total shares outstanding for
----
the Agreed Valuation Base should be 20,710,947/1/ (which is 13,863,954
shares due to Labtec shareholders and 6,846,993 shares currently held by
Spacetec shareholders).
. Therefore, since the Agreed Valuation Base is $6,000,000 for the equivalent
interest of 16.53% of pro forma October 1, 1998 shares of Spacetec Stock
issued and outstanding, or .000002755% per $1 of value (16.53% (divided by)
$6,000,000), the holders of shares of Labtec Stock that are outstanding
immediately prior to the Effective Time shall be issued Contingent Shares
for every dollar of the amount of the Contingent Valuation Adjustment in
order to increase their percentage of total outstanding shares of Spacetec
Stock pro forma as of October 1, 1998 by .000002755/$1 ("% Factor per
------------
Dollar"), subject to the Limitation Amount.
------
-------------------
/1/All numerical references in this Exhibit A to actual numbers of shares
of Spacetec Stock do not reflect any stock split occurring in connection
with the Delaware Reincorporation.
50
This is illustrated by the following example, based upon a $500,000 Contingent
Valuation Adjustment:
---------------------------------------------------------------------------------------------------------------------
STEP #1: "Dollar shortfall" X "% Factor per Dollar" = % of Additional Outstanding
Shares Due Labtec S/H
("Incremental %")
---------------------------------------------------------------------------------------------------------------------
$500,000 X .000002755 = 1.3775%
======
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
STEP #2: Incremental % + Old % shares held by Labtec = New % of total shares to be held
by Labtec
---------------------------------------------------------------------------------------------------------------------
1.3775% + 66.9402225% = 68.3177225%
(13,863,954 a 20,710,947)
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
STEP #3: 100% - "New Labtec %" = "New Spacetec %"
---------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
100% - 68.3177225% = 31.6822775%
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
STEP #4: "Incremental %" = "Gross Up %" + 1
---------------
"New Spacetec %"
---------------------------------------------------------------------------------------------------------------------
1.3775% = .04347856621 + 1 = 1.04347856621
----------
31.6822775%
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
STEP #5: "Old Base Shares X Gross Up %" = "New Gross Outstanding Shares"
Outstanding"
---------------------------------------------------------------------------------------------------------------------
20,710,947 X 1.04347856621 = 21,611,429
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
STEP #6: "New Gross - "Old Base Shares = "Contingent Shares due Labtec"
Outstanding Shares" Outstanding"
---------------------------------------------------------------------------------------------------------------------
21,611,429 - 20,710,947 = 900,482
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
PROOF: "Contingent Shares due Labtec" + "Old Labtec = "New Labtec %"
--------------------------------------------
Shares"
-------
"New Gross Shares Outstanding"
---------------------------------------------------------------------------------------------------------------------
900,482 + 13,863,954 = 14,764,436 = 68.317722%
-------------------- ----------
21,611,429 21,611,429
---------------------------------------------------------------------------------------------------------------------
FINAL SHARE New Gross Shares a Labtec 68.317722%
ALLOCATION: Outstanding a Spacetec 31.682278%
----------
A X 68.317722% = 14,764,436 (LABTEC)
21,611,429 A X 31.682278% = 6,846,993 (SPACETEC)
-----------
21,611,429
==========
51
EXHIBIT B
---------
CERTIFICATE OF MERGER
OF
SIMC ACQUISITION CORPORATION
INTO
LABTEC INC.
(UNDER SECTION 251 OF THE GENERAL CORPORATION LAW)
It is hereby certified that:
(1) The name and state of incorporation of each of the constituent
corporations participating in the merger herein certified are as follows:
(i) SIMC Acquisition Corporation, which is incorporated under the
laws of the State of Delaware ("SIMC"); and
----
(ii) Labtec Inc., which is incorporated under the laws of the
State of Delaware ("Labtec").
------
(2) An Agreement and Plan of Merger has been approved, adopted,
certified, executed, and acknowledged by each of the aforesaid constituent
corporations in accordance with the provisions of subsection (c) of Section 251
of the General Corporation Law of the State of Delaware.
(3) The name of the surviving corporation in the merger herein
certified is Labtec, Inc., which will continue its existence as said surviving
corporation upon the effective time of said merger pursuant to the provisions of
the General Corporation Law of the State of Delaware.
(4) The Certificate of Incorporation of Labtec, as now in force and
effect, shall continue to be the Certificate of Incorporation of said surviving
corporation until amended pursuant to the provisions of the General Corporation
Law of the State of Delaware, except that, at the effective time of the merger,
said surviving corporation's name shall be changed to "Labtec Corporation".
52
(5) The executed Agreement and Plan of Merger between the aforesaid
constituent corporations is on file at the principal place of business of the
aforesaid surviving corporation, the address of which is as follows:
Labtec Inc.
0000 XX Xxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
(6) A copy of the aforesaid Agreement and Plan of Merger will be
furnished by the aforesaid surviving corporation, on request, and without cost,
to any stockholder of each of the aforesaid constituent corporations.
Dated:
SIMC ACQUISITION CORPORATION
By:______________________________
Name:
Title:
Dated:
LABTEC INC.
By:______________________________
Name:
Title:
53
