Exhibit 2.2
AMENDMENT TO
ASSET PURCHASE AND SALE AGREEMENT
Reference is made to that certain Asset Purchase and Sale Agreement (the
"Agreement"), dated as of January 24, 2002, by and among Spectra Systems
Corporation, a Delaware corporation ("Spectra"), Hunter Acquisition Corporation,
a Delaware corporation (the "Acquisition Subsidiary," and collectively with
Spectra, the "Buyer"), Hunter Associates Laboratory, Inc., a Virginia
corporation (the "Seller") and Xxxxxx X. Xxxxxx, Xxxx Xxxxxx, Xxxxxx Xxxxxx and
Xxxxxxx Xxxxxx (each a "Significant Shareholder" and collectively the
"Significant Shareholders"). This Amendment is made as of June 17, 2002, by and
between the Buyer, the Seller and the Significant Shareholders. Spectra, the
Acquisition Subsidiary, the Seller and the Significant Shareholders are referred
to collectively herein as the "Parties." Capitalized terms not defined in this
Amendment shall have the meaning given to them in the Agreement.
For good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Parties hereby agree as follows:
1. Paragraph 2 of the preamble of the Agreement, which currently provides
"This Agreement contemplates a transaction in which the Acquisition
Subsidiary will acquire certain of the assets of the Seller in
exchange for shares of the common stock of Spectra and satisfaction or
assumption by the Buyer of certain liabilities of the Seller (the
"Transaction")." is hereby deleted in its entirety and replaced with
the following: "This Agreement contemplates a transaction in which the
Acquisition Subsidiary will acquire certain of the assets of the
Seller in exchange for the Consideration described in Section 2(c)
hereof (the "Transaction")."
2. Section 2(c) of the Agreement is hereby deleted in its entirety and
replaced with the following:
(c) Consideration; Escrow. The Parties acknowledge and agree that
the consideration for the Acquired Assets (the "Consideration") shall
consist of:
(i) the Consideration Shares (as defined below);
(ii) $2.5 million in cash, payable by certified check or
wire transfer of immediately available funds to an account or accounts
of the Seller designated by Xxxxxx Xxxxxx;
(iii) the payment of the Hunter Family Debt and the payment
or the assumption (at the Buyer's sole discretion subject to the
consent of the Lender) of the Bank Debt by the Buyer at Closing, but
in no event shall the total of the payments of the Hunter Family Debt
and the Bank Debt exceed $1.0 million;
(iv) the retention by the Company of the Cash Retained for
Debt Obligations; provided, however, that if the Cash Retained for
Debt Obligations is less than $500,000, the Buyer shall pay the Seller
at Closing, as part of the Consideration, an amount equal to
the difference between the amount of the Cash Retained for Debt
Obligations and $500,000; and
(v) the assumption by the Buyer of any other Assumed
Liabilities explicitly identified herein.
In no case shall the aggregate value of the Consideration
described in (i), (ii), (iii) and (iv) above exceed $6 million.
The Seller may pay down a portion of the Total Debt prior to the
Closing as a result of the proposed restructuring of its lease of
space at that location (collectively, the "Real Estate Refinancing").
The "Consideration Shares" shall be defined as that number
of shares of Spectra Common Stock which is equal to $2.0 million,
divided by the initial per share price at which the shares of Spectra
Common Stock are purchased by institutional investors from the
underwriters in the proposed Initial Public Offering of Spectra (the
"IPO Price"), provided that no fractional shares shall be issued.
Cash, Consideration Shares, or a combination of cash and Consideration
Shares with an aggregate value of $1.0 million shall be placed in
escrow and held for a period of twelve (12) months after the Closing
Date in connection with the Seller's indemnification obligations set
forth in (S) 8 of this Agreement, in accordance with an escrow
agreement in a form which is mutually agreeable to each of the
parties, to be attached hereto at the Closing as Exhibit A (the
"Escrow Agreement"). The type of the Consideration to be placed in
Escrow, whether Cash, Consideration Shares or a combination thereof,
shall be determined by the Seller in its sole discretion immediately
prior to the Closing.
3. Section 2(d) of the Agreement is hereby amended by striking "June 30,
2002" and replacing it with "December 31, 2002."
4. Section 2(e) of the Agreement is hereby amended by striking the word
"and" before Subsection (v), deleting the period at the end of
Subsection (v), and inserting the following after Subsection (v): ";
and (vi) the cash referred to in Section 2(c)(ii)."
5. A new Section 5(j) is hereby added to the Agreement. Section 5(j)
shall read: "(j) Letter of Credit. To secure the payment of the
obligations of the Buyer described in the last sentence of Section
9(c)(i) of this Agreement, the Buyer shall, on or before the earlier
of (i) one day prior to the date the Buyer initially files for
registration of its securities with the Securities and Exchange
Commission in connection with the IPO (the "Initial Registration"); or
(ii) July 15, 2002, secure an irrevocable, stand-by letter of credit
in the form attached hereto as Exhibit 5(j) in an amount equal to
$500,000 (the "Letter of Credit"). In the event that the Letter of
Credit is not secured by such date, then this Agreement will
automatically terminate and be of no further force or effect, and each
other parties will release and waive any claims that such party may
have against the other, and will covenant not to xxx the other party
with respect to any action or omission arising from this Agreement or
the Transaction."
6. Section 6(b) of the Agreement is hereby deleted in its entirety and
replaced with the following: "(b) Retention Bonuses. Within ten (10)
business days after the Closing, Spectra shall pay to each of Xxxxxx
X. Xxxxxx, Xxxxxx Xxxxxx, Xxxxx Xxxxx, Xxxxx Xxxxxxx, Xxxxxx Xxxxxxxx
and Xxxxx Xxxxxxx (each, a "Subject Employee") a retention bonus equal
to one-half of such Subject Employee's annual base salary as of May 1,
2002, provided that such Subject Employee is employed by Seller as of
the Closing. The Buyer shall also pay to each such Subject Employee an
additional retention bonus equal to one-half of such Subject
Employee's annual base salary as of May 1, 2002 and shall continue the
health insurance coverage of such Subject Employee for a period of
twelve (12) months after the Closing, provided that: (i) such Subject
Employee has been employed by the Buyer for the full six (6) months
following the Closing Date; or (ii) such individual's employment has
been terminated by the Buyer for a reason other than Cause prior to
such date. The additional retention bonus referred to in the preceding
sentence shall be paid by the Buyer to each eligible Subject Employee
within ten (10) business days after the six (6) month anniversary of
the Closing Date. For purposes of this Section 6(b), "Cause" shall be
defined as: (A) the knowing refusal to follow reasonable and lawful
directives of the President, Chief Executive Officer or Board of
Directors of Buyer, which directives are consistent with such Subject
Employee's title and experience, and the nature of the Subject
Employee's responsibilities prior to the Closing, and which continues
after 15 days' notice and the opportunity to cure (if capable of
cure), and which directive, if requested in writing by the Subject
Employee during such period, is ratified and confirmed in writing by
the Board of Directors of the Buyer; (B) any act of fraud or
dishonesty with respect to any aspect of the Buyer's or any
Affiliate's business; (C) the use of illegal drugs in a manner which
has a material adverse effect on the Buyer or the Seller; (D) gross
negligence or willful misconduct that causes, or the failure to take
reasonable and appropriate action to prevent, any material injury to
the financial condition or business or scientific reputation of the
Seller, the Buyer or any Affiliate thereof; or (E) conviction of a
felony." The Subject Employees shall be third party beneficiaries of
the Agreement solely for the purposes of enforcing this Section 6(b).
The Buyer agrees not to change the salary or benefits (except with
respect to benefits only, as may be commensurate with similarly
situated employees of the Buyer) of any Subject Employee during the
six month period after Closing; provided, however, that each of the
Subject Employees shall remain "at will employees" of the Buyer.
8. 6(f) shall read: "(f) Announcement to Employees and Customers. The
Parties hereto agree that, within six (6) business days after the
filing of the Registration Statement with the Securities and Exchange
Commission, the Chief Executive Officer of Spectra and the Chief
Executive Officer of Seller (or their respective designees) will
jointly announce to the employees, customers, representatives and
distributors of the Seller the existence of the pending Transaction.
With respect to the announcement by the Chief Executive Officer of
Spectra and the Chief Executive Officer of Seller (or their respective
designees) to the employees of the Seller, the Buyer will prepare a
script to be read to the employees. Such script shall be subject to
the prior approval of the Seller, which approval shall not be
unreasonably withheld. To have the maximum positive effect, said
script will include future positive business plans, including probable
investment in the acquired business. Customers jointly considered to
be "Key Accounts", shall be
informed by a composite letter drafted and signed by both parties; the
Seller's domestic sales force shall be informed by a joint phone call
of the Buyer's and Seller's sales/marketing personnel; the Seller's
International Distributors shall be informed by a joint e-mail, and
other seller customers (i.e., those not deemed a "Key Account") shall
be informed by a combined press release and an announcement on the
Seller's webpage. To the extent employees, customers, representatives
or distributors of the Seller ask questions of the Seller at the time
of such announcements, the Seller will be permitted to respond to such
inquiries, provided that such response is consistent with the tone and
content of the formal announcement. The parties agree to work together
to develop a "frequently asked questions" document or similar handout
for employees outlining the impact of the Transaction on employee's
employment status, benefits, etc."
8. Section 7(b)(ix) of the Agreement is hereby amended by striking "May
15, 2002" and replacing it with "November 15, 2002."
9. Section 9(a)(ii)(B) of the Agreement is hereby amended by striking
"June 30, 2002" and replacing it with "December 31, 2002."
10. Section 9(a)(iii)(B) of the Agreement is hereby amended by striking
"June 30, 2002" and replacing it with "December 31, 2002."
11. Section 9(b)(i) of the Agreement is hereby amended by striking "June
30, 2002" and replacing it with "December 31, 2002."
12. Section 9(c)(i) of the Agreement is hereby deleted in its entirety and
replaced with the following: "(i) If the conditions set forth in and
Section 5(k), Section 5(l) and Section 7(a) of the Agreement (other
than Sections 7(a)(vii), 7(a)(xi), 7(a)(xii), and 7(a)(xviii) and
7(a)(xv)) have been met, but (A) the Initial Registration has not
occurred by November 10, 2002; or (B) the Initial Public Offering has
not been consummated by December 24, 2002, or (C); the Initial Public
Offering has been abandoned, or (D) the Buyer is unable or unwilling
to fulfill a Closing condition that is under the Buyer's control, or
(E) the Closing has not occurred by December 31, 2002, then the Buyer
shall pay to the Seller $500,000 and the Buyer shall reimburse the
Seller for its documented and reasonable fees and expenses incurred in
connection with the Real Estate Refinancing (up to an aggregate of
$150,000), as liquidated damages (which shall represent Seller's sole
and exclusive remedy) and the Seller shall be entitled to draw upon
the Letter of Credit for $500,000 of such claim."
13. A new Section 5(k) is hereby added to the Agreement. Section 5(k)
shall read: "Within a reasonable period of time after Buyer's request,
Seller shall provide financial and similar information relating to
Seller and permit Buyer to incorporate such data into the Buyer's
Registration Statement for the IPO (and any amendments to that
Registration Statement) and as may be required by the Securities Act
of 1933, as amended. Seller agrees to cooperate with the reasonable
requests of the Buyer's underwriters in connection with their analysis
of Seller for the IPO. Seller agrees to promptly inform Buyer of any
material change or development to the business of Seller that would
cause the description of the business and/or financials of Seller in
the Registration Statement to be untrue or omit to state a material
fact."
14. A new Section 5(l) is hereby added to the Agreement. Section 5(l)
shall read: "If the IPO is consummated, each of the parties agrees to
negotiate in good faith with the other with respect to a reasonable
Sublease (as defined in Section 7(a)(xv)), which terms shall (i)
include the absolute right of the Buyer to immediately terminate the
Sublease and to quit occupancy of such space in the event that the
landlord thereof does not agree, upon consummation of the Real Estate
Refinancing, to the assignment and novation of the Seller's interest
in the Sublease, such that the Leased Real Property shall be leased
directly from the landlord of the Leased Real Property to the Buyer,
and (ii) be otherwise generally consistent with the rates, terms and
conditions for equivalent corporate manufacturing and office space in
Reston, Virginia."
15. In all other respects, the Agreement is hereby ratified and confirmed.
16. In order to induce the Seller to enter into this Amendment, the Buyer
hereby waives (i) any and all claims or allegations it currently has
or may in the future bring of bad faith on the part of the Selling
Parties (as defined below) with respect to the conduct of the Selling
Parties known to the Buyer as of the date of this Amendment, and (ii)
any and all claims with respect to financial statements previously
presented to the Buyer, including without limitation any breach of the
representation in Section 3(g) of the Agreement, known by the Buyer as
of the date of this Amendment. "Selling Parties" means the Seller and
its officers, directors, employees, shareholders, accountants,
attorneys and other advisors.
17. This Amendment may be executed in counterparts, each of which will be
considered an original and each of which will constitute one and the
same document.
18. Notwithstanding the foregoing, Seller agrees to provide the Seller
Disclosure Schedule to the Buyer no later than 5:00 p.m. (Providence,
R.I. time) on June 17, 2002. No later than June 19, 2002 (or two
business days after the delivery to the Buyer of the Seller Disclosure
Schedule, whichever is earlier) (the "Affirmation Date"), the Buyer
shall notify the Seller whether such Seller Disclosure Schedule
discloses Liabilities not previously disclosed to Buyer that would
reasonably result in Losses to Buyer or Seller equal to or in excess
of $50,000 ("Previously Undisclosed Matters"). In the event that the
Seller Disclosure Schedule discloses Previously Undisclosed Matters
that would reasonably result in Losses to Buyer or Seller equal to or
in excess of $50,000, on the Affirmation Date, the Buyer shall either
(i) the Buyer and Seller shall each affirm their obligations in
writing under this Amendment and the Agreement, and Buyer shall waive
its rights under Section 8(a) of the Agreement with respect to the
Previously Undisclosed Matters; or (ii) the Buyer shall terminate the
Agreement and this Amendment, in which case the Buyer and the Seller
shall mutually release each other from any claims or demands arising
from the Agreement or this Amendment. The election of clause (i) or
(ii) as set forth in the prior sentence shall be in the sole
discretion of the Buyer. In the event that the Seller Disclosure
Schedules disclose Previously Undisclosed Matters which would
reasonably result in Losses to Buyer or Seller of less than $50,000,
then, on the Affirmation Date, the Buyer and Seller shall affirm their
obligations in writing under this Amendment and the Agreement, and
Buyer shall waive its rights under Section 8(a) of the Agreement with
respect to claims arising from the Previously
Undisclosed Matters. Nothing in this Amendment will be deemed to cause
the Buyer to assume any Excluded Liabilities, or to waive any rights
with respect to Third Party Claims.
19. Section 8(a) of the Agreement is hereby amended by adding the
following to the end of that Section: "Provided, however, that the
Seller shall not have any obligation to indemnify the Buyer from and
against any Losses until the Buyer has suffered Losses by reason of
all such breaches in excess of an aggregate $150,000 threshold (at
which point the Seller will be obligated to indemnify the Buyer from
and against all such Adverse Consequences relating back to the first
dollar)."
* * *
IN WITNESS WHEREOF, the parties have executed and delivered this Amendment
as of the date first written above.
SPECTRA SYSTEMS CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
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Name: Xxxxx X. Xxxxxxx
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Title: President
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HUNTER ACQUISITION CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
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Name: Xxxxx X. Xxxxxxx
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Title: President
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HUNTER ASSOCIATES LABORATORY, INC.
By: /s/ Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
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Title: President
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/s/ Xxxxxx X. Xxxxxx
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XXXXXX X. XXXXXX
/s/ Xxxx Xxxxxx
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/s/ Xxxxxx Xxxxxx
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/s/ Xxxxxxx Xxxxxx
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