AMENDMENT AND WAIVER AGREEMENT
Exhibit 2.2
THIS AMENDMENT AND WAIVER AGREEMENT (this “Agreement”) is made and entered into as of May 11,
2005, by and among Spectrum Sciences & Software Holdings Corp., a Delaware corporation (“Buyer”),
Xxxxx Acquisition LLC, a Virginia limited liability company and wholly owned subsidiary of Buyer
(“Acquisition LLC”), Xxxxx Engineering Services, Inc., a Virginia corporation (the “Company”), and
Xxxxxx X. Xxxxx (“Xxxxx”), Xxxxxxxx X. Xxxxx and Xxxxxxx Xxxxxxx (“Megless”), the shareholders of
the Company (collectively, the “Shareholders”).
R E C I T A L S
WHEREAS, pursuant to that certain Agreement and Plan of Merger, dated as of April 14, 2005
(the “Merger Agreement”), by and among Buyer, Acquisition LLC, the Company and the Shareholders,
Buyer will acquire the Company by means of a merger transaction whereby the Company will merge with
and into Acquisition LLC, with Acquisition LLC continuing as the surviving corporation and as a
wholly owned subsidiary of Buyer (the “Merger”);
WHEREAS, the Merger Agreement currently contemplates that Xxxxx and Megless will serve as
Chief Executive Officer and Chief Financial Officer, respectively, of Buyer commencing as of the
Closing pursuant to employment agreements, the forms of which are attached to the Merger Agreement
as Exhibits A and B, respectively (the “Employment Agreements”);
WHEREAS, the Merger Agreement currently contemplates that the employment agreements of Xxxxxxx
X. Xxx, Xx. (“Ham”), as Chief Executive Officer of Buyer, and Xxxxx X. Xxxxxxxx (“Xxxxxxxx”), as
Chief Financial Officer of Buyer, are to be assigned by Buyer to its wholly-owned subsidiary,
Spectrum Sciences & Software, Inc. (“SPSC”) as of the Closing (such assignments being referred to
herein as the “Assignments”);
WHEREAS, the Merger Agreement contemplates the satisfaction of certain conditions and
performance of certain covenants by the parties before or at the Closing of the Merger; and
WHEREAS, the parties desire to amend the Merger Agreement as set forth below, waive
performance of certain covenants and certain conditions to the Closing of the Merger and make
additional covenants related to the Merger.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereby agree as follows:
1. Definitions. All capitalized terms herein not otherwise defined shall have the
meaning ascribed to them in the Merger Agreement.
2. Waiver of Covenants and Conditions by Buyer. Buyer hereby agrees that the
condition to Closing set forth in Section 6.2(h) of the Merger Agreement is hereby waived, subject
to the terms and conditions set forth in Section 3 of this Agreement.
3. Hold-Back Shares. In consideration for Buyer’s waiver set forth in Section 2
above, the Shareholders agree that Buyer shall reserve and hold-back Four Million (4,000,000)
shares of Buyer Common Stock that are payable to the Shareholders pursuant to Section 1.8(b) of the
Merger Agreement (the “Hold-Back Shares”), to be disposed of in accordance with the following
provisions:
(a) Upon receipt by Buyer of all, but not less than all, of the consents and novations set
forth on Schedule A attached hereto, Buyer shall promptly release to the Shareholders an
aggregate of Three Million (3,000,000) Hold-Back Shares. The Hold-Back Shares released hereunder
shall be distributed to the Shareholders on a pro rata basis as determined in accordance with
Section 1.8(b) of the Merger Agreement.
(b) To the extent the 2005 EBITDA (as defined below), is less than $3.25 million (such
shortfall being referred to herein as the “EBITDA Shortfall”), Buyer shall be entitled to recover a
number of Hold-Back Shares that is equal to the lesser of (i) three (3) times the EBITDA Shortfall
divided by the Closing Date Price (as defined below) and (ii) the number of Hold-Back Shares that
have not then been released (or which Buyer is not then obligated to release) pursuant to Section
3(a) above. Any Hold-Back Shares not recoverable by Buyer pursuant to this Section 3(b) shall be
promptly distributed to the Shareholders following the determination of 2005 EBITDA on a pro rata
basis as determined in accordance with Section 1.8(b) of the Merger Agreement.
(c) For the purposes of this Agreement, “2005 EBITDA” shall mean the EBITDA of the Surviving
Entity for the fiscal year ending December 31, 2005, together with the EBITDA of the Company for
the fiscal year ending December 31, 2005 prior to the Merger, based on Buyer’s audited financial
statements for such fiscal year as filed in Buyer’s Annual Report on Form 10-K filed with the U.S.
Securities and Exchange Commission (the “SEC”). For the purposes of this Agreement, “Closing Date
Price” shall mean the closing price of the Buyer Common Stock on the NASD OTC Bulletin Board, or
other public securities market, on the Closing Date.
4. Waiver of Conditions by the Company and the Shareholders. The Company and the
Shareholders hereby agree as follows with respect to the specified conditions to the Closing:
(a) The conditions set forth in Section 6.1(e) and 6.1(f) shall be waived.
(b) The condition set forth in Section 6.1(k) shall be waived as to the receipt by the
Shareholders (or their designees) of the Merger Consideration from Buyer to the extent of (i)
non-delivery of the Hold-Back Shares and (ii) subject to Section 6(b) below, non-delivery of stock
certificates representing shares of Buyer’s common stock, other than the Hold-Back Shares, to be
issued by Buyer as part of the Merger Consideration pursuant to Section 1.8(b) of the Merger
Agreement.
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5. Covenants of the Shareholders. The Shareholders hereby covenant to Buyer that the
Shareholders will use their best efforts to obtain and deliver to Buyer each of the consents and
novations contemplated by Section 6.2(h) (the “Designated Consents”) as soon as practicable after
the Closing Date.
6. Covenants of Buyer and Acquisition LLC.
(a) Buyer and Acquisition LLC hereby covenant to the Shareholders that Buyer and Acquisition
LLC will cooperate with the Shareholders and use their best efforts to obtain the Designated
Consents as soon as practicable after the Closing Date.
(b) Buyer hereby covenants to the Shareholders that Buyer will deliver stock certificates
representing shares of Buyer’s common stock (other than the Hold-Back Shares) to be issued by Buyer
as part of the Merger Consideration pursuant to Section 1.8(b) of the Merger Agreement not later
than three(3) business days after the Closing Date, and that notwithstanding delayed delivery of
the certificates, the certificates shall be dated and shall be deemed for all purposes to have been
issued as of the Closing Date.
7. Amendments to Merger Agreement. Buyer, the Company and the Shareholders hereby
agree that the Merger Agreement shall be amended as follows:
(a) Xxxxx and Megless shall serve as Chief Executive Officer and Chief Financial Officer,
respectively, of Buyer commencing immediately upon the filing with the SEC of Buyer’s Quarterly
Report on Form 10-Q for the fiscal quarter ended March 31, 2005, and the Employment Agreements
shall be amended to the extent necessary to give effect to the foregoing.
(b) The employment agreements of Ham and Xxxxxxxx shall be assigned by Buyer to SPSC
immediately upon the filing with the SEC of Buyer’s Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 2005 with the SEC, and the Assignments shall be amended to the extent
necessary to give effect to the foregoing.
Any other provisions in the Merger Agreement that are inconsistent with the provisions of this
Section 7 shall be deemed amended to the extent necessary to give effect to the foregoing. The
amendments to the Merger Agreement pursuant to this Section 7 shall not relieve the applicable
parties of their obligations to deliver executed Employment Agreements and Assignments, as amended,
pursuant to the provisions of Article VI of the Merger Agreement.
8. Effect of Agreement. This Agreement, together with each schedule referred and
attached hereto, constitutes the entire and only understanding and agreement among the parties, and
supersedes all proposals, oral or written, all negotiations, conversations or discussions among the
parties, with respect to the subject matter hereof. This Agreement shall not be deemed to provide
any third parties with any claim, right of action, remedy or right. Except to the extent
specifically provided herein, the Merger Agreement shall remain in full force and effect in
accordance with its terms.
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9. Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware, without giving effect to the conflicts of laws rules and
principles of such state.
10. Assignment and Successors. This Agreement may not be assigned except with the
prior written consent of each of the parties hereto. This Agreement shall apply to and bind the
heirs, executors, administrators, successors and assigns of the parties hereto.
11. Captions. The marginal headings or titles to the sections and paragraphs of this
Agreement and the title of this instrument are not part of this Agreement but are inserted for
convenience only and shall have no effect upon the construction or interpretation of any part of
this Agreement.
12. Amendments. No provision of this Agreement may be amended, changed or waived
except by a written instrument signed by all of the parties (or, in the case of a waiver, by the
party against whom enforcement of the waiver is sought).
13. Severability. Any provision of this Agreement that is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions hereof or affecting
the validity or enforceability of such provision in any other jurisdiction.
14. Counterparts. This Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original, but all such
counterparts shall together constitute one and the same instrument.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the undersigned have executed this Amendment and Waiver Agreement
effective as of the date first written above.
| XXXXX ENGINEERING SERVICES, INC. | SPECTRUM SCIENCES & SOFTWARE HOLDINGS CORP. | |||||||||
By:
|
/s/ Xxxxxx X. Xxxxx | By: | /s/ Xxxxxxx X. Xxx, Xx. | |||||||
| Name: Xxxxxx X. Xxxxx | Name: Xxxxxxx X. Xxx, Xx. | |||||||||
| Title: President and CEO | Title: President and CEO | |||||||||
XXXXXX X. XXXXX |
||||||||
| XXXXX ACQUISITION LLC | ||||||||
/s/ Xxxxxx X. Xxxxx |
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| By: Spectrum Sciences
& Software Holdings Corp., its sole member |
||||||||
| XXXXXXX XXXXXXX | ||||||||
/s/ Xxxxxxx Xxxxxxx
|
By: | /s/ Xxxxxxx X. Xxx, Xx. | ||||||
| Name: Xxxxxxx X. Xxx, Xx. | ||||||||
| Title: President and CEO | ||||||||
XXXXXXXX X. XXXXX |
||||||||
/s/ Xxxxxxxx X. Xxxxx |
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[SIGNATURE PAGE TO WAIVER AGREEMENT]
