Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
among
Spectre Industries, Inc.,
Spectre Merger Sub, Inc.,
Xxx Xxxxx
and
Advanced Custom Sensors, Inc.
Dated as of March 13, 2004
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS..........................................................................1
1.1 Certain Definitions..................................................................1
1.2 Other Definitions....................................................................5
ARTICLE II THE MERGER...........................................................................6
2.1 Merger; Surviving Corporation........................................................6
2.2 Articles of Incorporation............................................................6
2.3 By-Laws..............................................................................6
2.4 Effective Time. ....................................................................6
2.5 Merger Shares; Conversion and Cancellation of Securities.............................7
2.6 Surrender of Company Certificates....................................................7
2.7 Stock Transfer Books. ..............................................................9
2.8 Dissenting Shares. .................................................................9
2.9 Restriction on Transfer..............................................................9
2.10 Restrictive Legend..................................................................10
2.11 Closing. ..........................................................................10
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................................10
3.1 Organization and Qualification. ...................................................10
3.2 Capitalization......................................................................11
3.3 Authority and Validity. ...........................................................11
3.4 No Breach or Violation. ...........................................................12
3.5 Consents and Approvals. ...........................................................12
3.6 Intellectual Property...............................................................12
3.7 Compliance with Legal Requirements. ...............................................12
3.8 Financial Statements................................................................13
3.9 Ordinary Course. ..................................................................13
3.10 Litigation. .......................................................................13
3.11 Taxes. ............................................................................13
3.12 Books and Records. ................................................................13
3.13 Brokers or Finders..................................................................13
3.14 Proxies. ..........................................................................13
3.15 Liabilities. ......................................................................13
3.16 Disclosure. .......................................................................13
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE SPECTRE PARTIES...............................14
4.1 Organization and Qualification. ...................................................14
4.2 Capitalization......................................................................14
4.3 Authority and Validity. ...........................................................15
4.4 No Breach or Violation. ...........................................................15
4.5 Consents and Approvals. ...........................................................15
4.6 Compliance with Legal Requirements..................................................16
4.7 Litigation..........................................................................16
4.8 Ordinary Course.....................................................................16
4.9 Assets and Liabilities..............................................................16
4.10 Taxes...............................................................................16
4.11 Books and Records...................................................................16
4.12 Environmental Matters...............................................................16
4.13 Financial and Other Information.....................................................16
4.14 Brokers or Finders..................................................................17
4.15 Disclosure. .......................................................................17
4.16 Filings.............................................................................17
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Page(s)
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ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER...................................17
5.1 Authority to Execute and Perform Agreements. ......................................17
5.2 Enforceability. ...................................................................17
ARTICLE VI COVENANTS OF THE COMPANY............................................................18
6.1 Additional Information. ...........................................................18
6.2 Continuity and Maintenance of Operations............................................18
6.3 Consents and Approvals..............................................................18
6.4 Meeting of the Company Shareholders. ..............................................18
6.5 Notification of Certain Matters. ..................................................18
6.6 Company Disclosure Schedule.........................................................19
6.7 State Statutes. ...................................................................19
ARTICLE VII COVENANTS OF THE SPECTRE PARTIES....................................................19
7.1 Additional Information..............................................................19
7.2 No Solicitations. .................................................................20
7.3 Continuity and Maintenance of Operations. .........................................20
7.4 Consents and Approvals..............................................................20
7.5 Notification of Certain Matters. ..................................................20
7.6 Spectre Disclosure Schedule.........................................................20
7.7 Securities Filings..................................................................20
7.8 Election to Spectre's Board of Directors............................................21
ARTICLE VIII CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SPECTRE PARTIES..........................21
8.1 Accuracy of Representations.........................................................21
8.2 Covenants. ........................................................................21
8.3 Consents and Approvals. ...........................................................21
8.4 Delivery of Documents. ............................................................21
8.5 No Material Adverse Change. .......................................................22
ARTICLE IX CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY..................................22
9.1 Accuracy of Representations.........................................................22
9.2 Covenants. ........................................................................22
9.3 Consents and Approvals..............................................................22
9.4 Delivery of Documents. ............................................................22
9.5 No Material Adverse Change..........................................................23
9.6 No Litigation. ....................................................................23
9.7 Restructuring.......................................................................23
9.8 Dissenters' Rights..................................................................24
9.9 Exchange Act Requirements...........................................................24
9.10 Expenses............................................................................24
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Page(s)
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ARTICLE X INDEMNIFICATION.....................................................................24
10.1 Indemnification by the Company......................................................24
10.2 Indemnification by the Spectre Parties..............................................24
10.3 Notice to Indemnifying Party........................................................24
10.4 Defense by Indemnifying Party.......................................................25
ARTICLE XI TERMINATION.........................................................................25
11.1 Termination. ......................................................................25
11.2 Effect of Termination...............................................................26
ARTICLE XII MISCELLANEOUS.......................................................................26
12.1 Parties Obligated and Benefited. ..................................................26
12.2 Publicity...........................................................................26
12.3 Notices. ..........................................................................26
12.4 Attorneys' Fees. ..................................................................27
12.5 Headings. .........................................................................27
12.6 Choice of Law. ....................................................................27
12.7 Rights Cumulative. ................................................................28
12.8 Further Actions. ..................................................................28
12.9 Time of the Essence. ..............................................................28
12.10 Counterparts. .....................................................................28
12.11 Entire Agreement. .................................................................28
12.12 Expenses............................................................................28
12.13 Survival of Representations and Covenants...........................................28
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EXECUTION COPY
AGREEMENT AND PLAN OF MERGER, dated as of March 13, 2004 (the
"Agreement"), among Spectre Industries, Inc., a Nevada Corporation ("Spectre"),
Spectre Merger Sub, Inc., a California corporation and wholly owned subsidiary
of Spectre ("Merger Sub"), Xxx X. Xxxxx ("Shareholder") and Advanced Custom
Sensors, Inc., a California corporation (the "Company"). Spectre, Shareholder,
Merger Sub and the Company are collectively referred to herein as the "Parties."
Spectre and Merger Sub are sometimes referred to herein collectively as the
"Spectre Parties."
RECITALS:
WHEREAS, the respective boards of directors of each of Spectre, Merger Sub
and the Company have approved the merger of Merger Sub with and into the Company
(the "MERGER") upon the terms and subject to the conditions set forth in this
Agreement;
WHEREAS, Shareholder is a director, officer and shareholder of Spectre and
will benefit from the transactions contemplated herein;
WHEREAS, it is intended that, for federal income tax purposes, the Merger
shall qualify as a reorganization under the provisions of Section 368(a) of the
Internal Revenue Code of 1986, as amended, and the rules and regulations
promulgated thereunder (the "CODE"); and
WHEREAS, the Company, Spectre and Merger Sub desire to make certain
representations, warranties, covenants and agreements in connection with this
Agreement.
NOW, THEREFORE, in consideration of the premises and mutual promises
herein made, and in consideration of the representations, warranties, covenants
and agreements herein contained, and intending to be legally bound hereby, the
Parties agree as follows:
ARTICLE I
DEFINITIONS
1.1 CERTAIN DEFINITIONS. The following terms shall, when used in this
Agreement, have the following meanings:
"Acquisition" means the acquisition by a Person of any businesses, assets
or property other than in the ordinary course, whether by way of the purchase of
assets or stock, by merger, consolidation or otherwise.
"Affiliate" means, with respect to any Person: (i) any Person directly or
indirectly owning, controlling, or holding with power to vote 10% or more of the
outstanding voting securities of such other Person (other than passive or
institutional investors); (ii) any Person 10% or more of whose outstanding
voting securities are directly or indirectly owned, controlled, or held with
power to vote, by such other Person; (iii) any Person directly or indirectly
controlling, controlled by, or under common control with such other Person; and
(iv) any officer, director or partner of such other Person. "Control" for the
foregoing purposes shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities or voting interests,
by contract or otherwise.
"Business Day" means any day other than Saturday, Sunday or a day on which
banking institutions in Los Angeles, California, are required or authorized to
be closed.
"Code" means the United States Internal Revenue Code of 1986, as amended.
"Collateral Documents" mean the Exhibits and any other documents,
instruments and certificates to be executed and delivered by the Parties
hereunder or thereunder.
"Commission" means the Securities and Exchange Commission or any
Regulatory Authority that succeeds to its functions.
"Company Assets" mean all properties, assets, privileges, powers, rights,
interests and claims of every type and description that are owned, leased, held,
used or useful in the Company Business and in which the Company has any right,
title or interest or in which the Company acquires any right, title or interest
on or before the Closing Date, wherever located, whether known or unknown, and
whether or not now or on the Closing Date on the books and records of the
Company, but excluding any of the foregoing, if any, transferred prior to the
Closing pursuant to this Agreement or any Collateral Documents.
"Company Business" means the developing, marketing and sale of advanced
Micro-Electro-Mechanical Systems.
"Company Common Stock" shall mean all of the issued and outstanding common
shares of the Company.
"Company Shareholders" means, as of any particular date, the holders of
Company Common Stock on that date.
"Encumbrance" means any material mortgage, pledge, lien, encumbrance,
charge, security interest, security agreement, conditional sale or other title
retention agreement, limitation, option, assessment, restrictive agreement,
restriction, adverse interest, restriction on transfer or exception to or
material defect in title or other ownership interest (including restrictive
covenants, leases and licenses).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time.
"Legal Requirement" means any statute, ordinance, law, rule, regulation,
code, injunction, judgment, order, decree, ruling, or other requirement enacted,
adopted or applied by any Regulatory Authority, including judicial decisions
applying common law or interpreting any other Legal Requirement.
2
"Losses" shall mean all damages, awards, judgments, assessments, fines,
sanctions, penalties, charges, costs, expenses, payments, diminutions in value
and other losses, however suffered or characterized, all interest thereon, all
costs and expenses of investigating any claim, lawsuit or arbitration and any
appeal therefrom, all actual attorneys', accountants' investment bankers' and
expert witness' fees incurred in connection therewith, whether or not such
claim, lawsuit or arbitration is ultimately defeated and, subject to Section
10.4, all amounts paid incident to any compromise or settlement of any such
claim, lawsuit or arbitration.
"Liability" means any liability or obligation (whether known or unknown,
whether asserted or unasserted, whether absolute or contingent, whether accrued
or unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
"Material Adverse Effect" shall mean a material adverse effect on (i) the
assets, Liabilities, properties or business of the Parties, (ii) the validity,
binding effect or enforceability of this Agreement or the Collateral Documents
or (iii) the ability of any Party to perform its obligations under this
Agreement and the Collateral Documents; provided, however, that none of the
following shall constitute a Material Adverse Effect on the Company: (i) the
filing, initiation and subsequent prosecution, by or on behalf of shareholders
of any Party, of litigation that challenges or otherwise seeks damages with
respect to the Merger, this Agreement and/or transactions contemplated thereby
or hereby, (ii) occurrences due to a disruption of a Party's business as a
result of the announcement of the execution of this Agreement or changes caused
by the taking of action required by this Agreement, (iii) general economic
conditions, or (iv) any changes generally affecting the industries in which a
Party operates.
"Merger Shares" shall mean the shares of Spectre Common Stock deliverable
by Spectre in exchange for Company Common Stock pursuant to Section 2.5.
"Merger Warrants" shall mean the warrants to purchase shares of Spectre
Common Stock deliverable by Spectre in exchange for Company Common Stock
pursuant to Section 2.5.
"Merger Warrant Shares" shall mean the shares of Spectre Common Stock
issuable upon exercise of the Merger Warrants.
"Permit" means any license, permit, consent, approval, registration,
authorization, qualification or similar right granted by a Regulatory Authority.
"Permitted Liens" means (i) liens for Taxes not yet due and payable or
being contested in good faith by appropriate proceedings; (ii) rights reserved
to any Regulatory Authority to regulate the affected property; (iii) statutory
liens of banks and rights of set-off; (iv) as to leased assets, interests of the
lessors and sublessors thereof and liens affecting the interests of the lessors
and sublessors thereof; (v) inchoate materialmen's, mechanics', workmen's,
repairmen's or other like liens arising in the ordinary course of business; (vi)
liens incurred or deposits made in the ordinary course in connection with
workers' compensation and other types of social security; (vii) licenses of
trademarks or other intellectual property rights granted by the Company or
Spectre, as the case may be, in the ordinary course and not interfering in any
material respect with the ordinary course of the business of the Company or
Spectre, as the case may be; and (viii) as to real property, any encumbrance,
adverse interest, constructive or other trust, claim, attachment, exception to
or defect in title or other ownership interest (including, but not limited to,
reservations, rights of entry, rights of first refusal, possibilities of
reverter, encroachments, easement, rights-of-way, restrictive covenants, leases,
and licenses) of any kind, which otherwise constitutes an interest in or claim
against property, whether arising pursuant to any Legal Requirement, under any
contract or otherwise, that do not, individually or in the aggregate, materially
and adversely affect or impair the value or use thereof as it is currently being
used in the ordinary course.
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"Person" means any natural person, corporation, partnership, trust,
unincorporated organization, association, limited liability company, Regulatory
Authority or other entity.
"Proposed Acquisition" means any of the following transactions (other than
the transactions contemplated by this Agreement): (i) a merger, consolidation,
business combination, recapitalization, liquidation, dissolution or similar
transaction involving the Company pursuant to which the shareholders of the
Company immediately preceding such transaction hold less than 50% of the
aggregate equity interests in the surviving or resulting entity of such
transaction, (ii) a sale or other disposition by the Company of assets
representing in excess of 50% of the aggregate fair market value of the Company
Business immediately prior to such sale or (iii) the acquisition by any person
or group (including by way of a tender offer or an exchange offer or issuance by
the Company), directly or indirectly, of beneficial ownership or a right to
acquire beneficial ownership of shares representing in excess of 50% of the
voting power of the then outstanding shares of capital stock of the Company.
"Regulatory Authority" means: (i) the United States of America; (ii) any
state, commonwealth, territory or possession of the United States of America and
any political subdivision thereof (including counties, municipalities and the
like); (iii) Canada and any other foreign (as to the United States of America)
sovereign entity and any political subdivision thereof; or (iv) any agency,
authority or instrumentality of any of the foregoing, including any court,
tribunal, department, bureau, commission or board.
"Representative" means any director, officer, employee, agent, consultant,
advisor or other representative of a Person, including legal counsel,
accountants and financial advisors.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
"Spectre Assets" mean all properties, assets, privileges, powers, rights,
interests and claims of every type and description that are owned, leased, held,
used or useful in the Spectre Business and in which Spectre or any of its
Subsidiaries has any right, title or interest or in which Spectre or any of its
Subsidiaries acquires any right, title or interest on or before the Closing
Date, wherever located, whether known or unknown, and whether or not now or on
the Closing Date on the books and records of Spectre or any of its Subsidiaries.
"Spectre Business" means the business conducted by Spectre and its
Subsidiaries.
"Spectre Common Stock" means the common shares of Spectre.
4
"Spectre Securities Filings" means Spectre's Annual Report on Form 10K-SB
and its quarterly reports on Form 10-QSB, and all other reports filed and to be
filed with the Commission prior to the Effective Time.
"Spectre Liabilities" shall mean all Liabilities of Spectre existing on or
before the Closing Date, whether known or unknown, and whether or not now or on
the Closing Date on the books and records of Spectre or any of its Subsidiaries.
"Subsidiary" of a specified Person means (a) any Person if securities
having ordinary voting power (at the time in question and without regard to the
happening of any contingency) to elect a majority of the directors, trustees,
managers or other governing body of such Person are held or controlled by the
specified Person or a Subsidiary of the specified Person; (b) any Person in
which the specified Person and its subsidiaries collectively hold a 50% or
greater equity interest; (c) any partnership or similar organization in which
the specified Person or subsidiary of the specified Person is a general partner;
or (d) any Person the management of which is directly or indirectly controlled
by the specified Person and its Subsidiaries through the exercise of voting
power, by contract or otherwise.
"Tax" means any U.S. or non U.S. federal, state, provincial, local or
foreign income, gross receipts, license, payroll, employment, excise, severance,
stamp, occupation, premium, windfall profits, environmental, customs duties,
capital, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, intangible property,
recording, occupancy, sales, use, transfer, registration, value added minimum,
estimated or other tax of any kind whatsoever, including any interest, additions
to tax, penalties, fees, deficiencies, assessments, additions or other charges
of any nature with respect thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, and claim for refund
or credit or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"Treasury Regulations" means regulations promulgated by the U.S. Treasury
Department under the Code.
1.2 OTHER DEFINITIONS. The following terms shall, when used in this
Agreement, have the meanings assigned to such terms in the Sections indicated.
TERM SCHEDULE
---- --------
"Agreement".............................................. Preamble
"CCC".................................................... 2.1
"Certificate of Merger".................................. 2.4
"Closing"................................................ 2.11
"Closing Date"........................................... 2.11
"Company Common Stock"................................... 2.6(a)
"Company Certificates"................................... 2.7(a)
"Company Convertible Debenture".......................... 3.2(b)
"Company Derivative Securities".......................... 3.2(b)
5
"Company Financial Statements"........................... 3.8
"Company Intellectual Property Rights"................... 3.6
"Company Stock Plan"..................................... 3.2(b)
"Company Warrants"....................................... 3.2(b)
"Conversion"............................................. 2.6(a)(ii)
"Current Market Price"................................... 2.6(a)
"Dissenting Shares"...................................... 2.8
"Effective Time"......................................... 2.4
"Excluded Shares"........................................ 2.6(a)
"Spectre Parties"........................................ Preamble
"Material Company Contract".............................. 3.4
"Material Spectre Contract".............................. 4.4
"Merger"................................................. 2.1
"Parties"................................................ Preamble
"Preferred Shares"....................................... 2.6(a)(ii)
"Shareholder Meeting".................................... 6.4
"Spectre Preferred Stock"................................ 2.6(a)
"Surviving Corporation".................................. 2.1
ARTICLE II
THE MERGER
2.1. MERGER; SURVIVING CORPORATION. In accordance with and subject to the
provisions of this Agreement and the California Corporations Code ("CCC"), at
the Effective Time, the Merger Sub shall be merged with and into the Company
(the "Merger"), and the Company shall be the surviving corporation in the Merger
(hereinafter sometimes called the "Surviving Corporation") and shall continue
its corporate existence under the laws of the State of California. At the
Effective Time, the separate existence of the Merger Sub shall cease. All
properties, franchises and rights belonging to the Company and Merger Sub, by
virtue of the Merger and without further act or deed, shall be vested in the
Surviving Corporation, which shall thenceforth be responsible for all the
liabilities and obligations of each of Merger Sub and the Company.
2.2 ARTICLES OF INCORPORATION. The Company's articles of incorporation, as
in effect at the Effective Time, shall continue in full force and effect as the
articles of incorporation of the Surviving Corporation until altered or amended
as provided therein or by law.
2.3 BY-LAWS. The Company's by-laws, as in effect at the Effective Time,
shall be the by-laws of the Surviving Corporation until altered, amended or
repealed as provided therein or by law.
2.4 EFFECTIVE TIME. The Merger shall become effective at the time and date
that the certificate of merger with an Officers' Certificate of each of the
Merger Sub and the Company (the "Certificate of Merger"), in form and substance
acceptable to the Parties, is accepted for filing by the Secretary of State of
the State of California in accordance with the provisions of Section 1103 of the
CCC. The Certificate of Merger shall be executed by the Merger Sub and the
Company and delivered to the Secretary of State of the State of California for
filing on the Closing Date. The date and time when the Merger becomes effective
are referred to herein as the "Effective Time."
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2.5 MERGER SHARES; CONVERSION AND CANCELLATION OF SECURITIES.
(a) CONVERSION OF COMPANY COMMON STOCK. At the Effective Time, all
shares of Company Common Stock outstanding immediately prior to the Effective
Time, other than shares described in Section 2.5(b) and other than Dissenting
Shares, collectively, the "Excluded Shares", shall be converted, by virtue of
the Merger, into such number of shares of Spectre Common Stock (the "Merger
Shares") and warrants to acquire shares of Spectre Common Stock (the "Merger
Warrants") on terms attached as Exhibit A so, that the holders of the Company
Common Stock will own 65% of Spectre's issued and outstanding capital stock on a
fully diluted basis as of the Effective Date after giving effect to the Merger
and, upon exercise of the Warrants, 85% of the outstanding capital stock on a
fully diluted basis as of the Effective Date, subject to the following:
(i) The allocation of the Merger Shares and the Merger Warrants
among the Company Shareholders excluding the holders of Dissenting Shares
shall be as set forth on Exhibit 2.5 to be delivered to Spectre at least
one business day prior to the Closing. The allocation shall include the
shares issuable pursuant to the Company Derivative Securities on a fully
diluted basis;
(ii) if between the date of this Agreement and the Closing Date,
Spectre shall declare a stock split or declare a dividend on Spectre
Common Stock payable in Spectre Common Stock (or set a record date with
respect thereto), the number of Merger Shares and shares issuable upon
exercise of the Merger Warrants (the "Merger Warrant Shares") determined
above shall be adjusted to reflect fully the appropriate effect of any
such subdivision, combination or dividend.
At the Effective Time, all Company Shares shall no longer be outstanding
and shall be cancelled and retired and shall cease to exist, and each
certificate formerly representing any Company Common Stock (other than Excluded
Shares) shall thereafter represent only the right to the Merger Shares, the
Merger Warrants and any distribution or dividend pursuant to Section 2.6(b).
(b) TREASURY SHARES, ETC. Each share of Company Common Stock held in
the treasury of the Company and each share of Company Common Stock, if any, held
by Spectre or any Subsidiary of Spectre or of the Company immediately before the
Effective Time shall be cancelled and extinguished, and nothing shall be issued
or paid in respect thereof.
(c) FRACTIONAL SHARES. No certificates or scrip evidencing
fractional shares of Spectre Common Stock or Warrants shall be issued in
exchange for Company Common Stock. All fractional share amounts shall be rounded
up to the nearest whole share.
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2.6 SURRENDER OF COMPANY CERTIFICATES.
(a) EXCHANGE PROCEDURES. Promptly after the Effective Time, Spectre
or its appointed designee shall mail to each holder of a certificate or
certificates of Company Common Stock ("Company Certificates") whose shares are
converted into the right to receive the Merger Shares and the Merger Warrants,
(i) a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Company Certificates shall pass to
Spectre, only upon delivery of the Company Certificates to Spectre and which
shall be in such form and have such other provisions as Spectre may reasonably
specify) and (ii) instructions for use in effecting the surrender of the Company
Certificates in exchange for the Merger Shares and the Merger Warrants and any
dividends or other distributions pursuant to Section 2.6(b). Upon surrender of
Company Certificates for cancellation to Spectre, together with such letter of
transmittal, duly completed and validly executed in accordance with the
instructions thereto, the holders of such Company Certificates shall be entitled
to receive the Merger Shares and the Merger Warrants in exchange therefor and
any dividends or distributions payable pursuant to Section 2.6(b), and the
Company Certificates so surrendered shall forthwith be canceled. Until so
surrendered, outstanding Company Certificates will be deemed from and after the
Effective Time, for all corporate purposes, subject to Section 2.8, to evidence
the ownership of the number of full shares of Spectre Common Stock and Warrants
into which such shares of the Company Common Stock shall have been so converted
and any dividends or distributions payable pursuant to Section 2.6(b).
Notwithstanding the foregoing, if any Company Certificate is lost, stolen,
destroyed or mutilated, such holder shall provide evidence reasonably
satisfactory to Spectre as to such loss, theft, destruction or mutilation and an
affidavit in form and substance satisfactory to Spectre, and, thereupon, such
holder shall be entitled to receive the Merger Shares and the Merger Warrants in
exchange therefor and any dividends or distributions payable pursuant to Section
2.6(b), and the Company Certificates so surrendered shall forthwith be canceled.
(b) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No dividends
or other distributions declared or made after the date of this Agreement with
respect to Spectre Common Stock with a record date after the Effective Time,
will be paid to the holders of any unsurrendered Company Certificates with
respect to the shares of Spectre Common Stock represented thereby until the
holders of record of such Company Certificates shall surrender such Company
Certificates or, in the case of any Company Certificate which is lost, stolen,
destroyed or mutilated, an affidavit in form and substance satisfactory to
Spectre. Subject to applicable law, following surrender of any such Company
Certificates or delivery of such affidavit, Spectre shall deliver to the record
holders thereof, without interest, the Merger Shares and the Merger Warrants and
the amount of any such dividends or other distributions with a record date after
the Effective Time payable with respect to such whole shares of Spectre Common
Stock.
(c) TRANSFERS OF OWNERSHIP. If certificates for shares of Spectre
Common Stock and the Warrants are to be issued in a name other than that in
which the Company Certificates surrendered in exchange therefor are registered,
it will be a condition of the issuance thereof that the Company Certificates so
surrendered will be properly endorsed and otherwise in proper form for transfer
and that the persons requesting such exchange will have paid to Spectre or any
agent designated by it any transfer or other taxes required by reason of the
issuance of certificates for shares of Spectre Common Stock and the Warrants in
any name other than that of the registered holder of the Company Certificates
surrendered, or established to the satisfaction of Spectre or any agent
designated by it that such tax has been paid or is not payable.
8
(d) REQUIRED WITHHOLDING. In connection with any payment to any
holder or former holder of the Company Common Stock, each of Spectre and the
Surviving Corporation shall be entitled to deduct and withhold from any
consideration payable or otherwise deliverable pursuant to this Agreement to any
holder or former holder of the Company Common Stock such amounts as may be
required to be deducted or withheld therefrom under the Code or under any
provision of state, local or foreign tax law or under any other applicable laws.
To the extent such amounts are so deducted or withheld, such amounts shall be
treated for all purposes under this Agreement as having been paid to the person
to whom such amounts would otherwise have been paid.
(e) NO LIABILITY. Notwithstanding anything to the contrary in this
Section 2.6, neither Spectre, the Surviving Corporation nor any party hereto
shall be liable to any Person for any amount properly paid to a public official
pursuant to any applicable abandoned property, escheat or similar law. If any
Company Certificate shall not have been surrendered prior to the date
immediately prior to the date on which such property would otherwise escheat to
or become the property of any Governmental or Regulatory Authority, any such
property, to the extent permitted by applicable law, shall become the property
of the Surviving Corporation, free and clear of all claims or interest of any
person previously entitled thereto.
(f) TERMINATION. Any holders of the Company Certificates who have
not complied with this ARTICLE II shall look only to Spectre or the Surviving
Corporation for, and Spectre and the Surviving Corporation shall remain liable
for, payment of their claim for Merger Shares and any dividends or distributions
with respect to Spectre Common Stock, without interest thereon.
2.7 STOCK TRANSFER BOOKS. At the Effective Time, the stock transfer books
of the Company shall be closed, and there shall be no further registration of
transfers of shares of Company Common Stock thereafter on the records of the
Company.
2.8 DISSENTING SHARES. Shares of Company Common Stock which are issued and
outstanding immediately prior to the Effective Time and which are held by
persons who have properly exercised, and not withdrawn or waived, appraisal
rights with respect thereto in accordance with the CCC (the "Dissenting
Shares"), will not be converted into the right to receive the Merger Shares and
the Warrants, and holders of such shares of Company Common Stock will be
entitled, in lieu thereof, to receive payment of the appraised value of such
shares of Company Common Stock in accordance with the provisions of the CCC
unless and until such holders fail to perfect or effectively withdraw or lose
their rights to appraisal and payment under the CCC. If, after the Effective
Time, any such holder fails to perfect or effectively withdraws or loses such
right, such shares of Company Common Stock will thereupon be treated as if they
had been converted at the Effective Time into the right to receive the Merger
Shares and the Warrants, without any interest thereon. The Company will give
Spectre prompt notice of any demands received by the Company for appraisal of
shares of Company Common Stock. Prior to the Effective Time, the Company will
not, except with the prior written consent of Spectre make any payment with
respect to, or settle or offer to settle, any such demands.
9
2.9 RESTRICTION ON TRANSFER. The Merger Shares, the Merger Warrants and
the Warrant Shares may not be sold, transferred, or otherwise disposed of
without registration under the Act or an exemption there from, and that in the
absence of an effective registration statement covering the Merger Shares, the
Merger Warrants and the Warrant Shares or any available exemption from
registration under the Act, the Merger Shares the Merger Warrants and the
Warrant Shares must be held indefinitely. The Company Shareholders are aware
that the Merger Shares, the Merger Warrants and the Warrant Shares may not be
sold pursuant to Rule 144 promulgated under the Act unless all of the conditions
of that Rule are met. Among the conditions for use of Rule 144 may be the
availability of current information to the public about Spectre.
2.10 RESTRICTIVE LEGEND. All certificates representing the Merger Shares,
the Merger Warrants and the Warrant Shares shall contain the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE, ARE SUBJECT TO THE
TERMS OF AN AGREEMENT AND PLAN OF MERGER, DATED AS OF MARCH 13,
2004, AMONG SPECTRE INC., SPECTRE MERGER SUB, INC., AND ADVANCED
CUSTOM SENSORS, INC., AND XXX X. XXXXX A COPY OF WHICH IS ON FILE IN
THE PRINCIPAL OFFICE OF THE ISSUER. FURTHER, THE SECURITIES
REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, TRANSFERRED, OR
OTHERWISE DISPOSED OF WITHOUT REGISTRATION UNDER THE ACT OR AN
EXEMPTION THEREFROM."
2.11 CLOSING. The closing of the transactions contemplated by this
Agreement and the Collateral Documents (the "Closing") shall take place at the
offices of Loeb & Loeb LLP, 00000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxx 0000, Xxx
Xxxxxxx, Xxxxxxxxxx 00000, or at such other location as the parties may agree at
11:00 a.m., Pacific Time on a date agreed by the Parties hereto (the "Closing
Date").
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Spectre that the statements
contained in this ARTICLE III are correct and complete as of the date of this
Agreement and, except as provided in Section 8.1, will be correct and complete
as of the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this ARTICLE III, except
in the case of representations and warranties stated to be made as of the date
of this Agreement or as of another date and except for changes contemplated or
permitted by this Agreement).
3.1 ORGANIZATION AND QUALIFICATION. The Company and each of its
Subsidiaries, collectively referred to herein as the Company, is a corporation
duly organized, validly existing and in good standing under the laws of its
respective jurisdiction of organization. The Company has all requisite power and
authority to own, lease and use its assets as they are currently owned, leased
and used and to conduct its business as it is currently conducted. The Company
is duly qualified or licensed to do business in and is in good standing in each
jurisdiction in which the character of the properties owned, leased or used by
it or the nature of the activities conducted by it make such qualification
necessary, except any such jurisdiction where the failure to be so qualified or
licensed would not have a Material Adverse Effect on the Company or a material
adverse effect on the validity, binding effect or enforceability of this
Agreement or the Collateral Documents or the ability of the Company to perform
its obligations under this Agreement or any of the Collateral Documents.
10
3.2 CAPITALIZATION.
(a) The authorized, issued and outstanding capital stock and other
ownership interests of the Company consists of 10,000,000 shares of common
stock, of which 1,788,195 shares were outstanding as of the date hereof. All of
the outstanding Company Common Stock have been duly authorized and are validly
issued, fully paid and nonassessable.
(b) There are 151,500 shares of Company Common Stock subject to
outstanding Company Stock Options issued pursuant to the 2001 Stock Option/Stock
Issuance Plan (the "Company Stock Plan"), 200,000 shares are reserved for and
subject to issuance pursuant to the Company Stock Plan, additional shares set
forth in Section 3.2(b) of the Company's Disclosure Schedule which are reserved
for and subject to issuance upon conversion of the 10% Subordinated Convertible
Debentures (the "Company Convertible Debentures") and warrants to purchase
815,666 shares of Company Common Stock (the "Company Warrants"). Section 3.2(b)
of the Company Disclosure Letter sets forth a true and complete list of all
outstanding Company Stock Options, Company Convertible Debentures, Company
Warrants and all other rights, if any (collectively, the "Company Derivative
Securities").
(c) All of the issued and outstanding shares of Company Common Stock
have been duly authorized and are validly issued and outstanding, fully paid and
nonassessable and have been issued in compliance with applicable securities laws
and other applicable Legal Requirements or transfer restrictions under
applicable securities laws.
3.3 AUTHORITY AND VALIDITY. The Company has all requisite corporate power
to execute and deliver, to perform its obligations under, and to consummate the
transactions contemplated by, this Agreement (subject to the approval of the
Company Shareholders as contemplated by Section 6.4 and to receipt of any
consents, approvals, authorizations or other matters referred to in Sections 6.4
and 6.5). The execution and delivery by the Company of, the performance by the
Company of its obligations under, and the consummation by the Company of the
transactions contemplated by, this Agreement have been duly authorized by all
requisite action of the Company (subject to the approval of the Company
Shareholders as contemplated by Section 6.4). This Agreement has been duly
executed and delivered by the Company and (assuming due execution and delivery
by the Spectre Parties and approval by the Company Shareholders) is the legal,
valid, and binding obligation of the Company, enforceable against it in
accordance with its terms, except that such enforcement may be subject to (i)
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting or relating to enforcement of creditors' rights generally and (ii)
general equitable principles. Upon the execution and delivery of the Collateral
Documents by each Person (other than the Spectre Parties) that is required by
this Agreement to execute, or that does execute, this Agreement or any of the
Collateral Documents, and assuming due execution and delivery thereof by the
Spectre Parties, the Collateral Documents will be the legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with
their respective terms, except that such enforcement may be subject to (i)
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting or relating to enforcement of creditors' rights generally and (ii)
general equitable principles.
11
3.4 NO BREACH OR VIOLATION. Subject to obtaining the consents, approvals,
authorizations, and orders of and making the registrations or filings with or
giving notices to Regulatory Authorities and Persons identified herein, the
execution, delivery and performance by the Company of this Agreement and the
Collateral Documents to which it is a party, and the consummation of the
transactions contemplated hereby and thereby in accordance with the terms and
conditions hereof and thereof, do not and will not conflict with, constitute a
violation or breach of, constitute a default or give rise to any right of
termination or acceleration of any right or obligation of the Company under, or
result in the creation or imposition of any Encumbrance upon the Company, the
Company Assets, the Company Business or the Company Common Stock by reason of
the terms of (i) the articles of incorporation, by-laws or other charter or
organizational document of the Company or any Subsidiary of the Company, (ii)
any material contract, agreement, lease, indenture or other instrument to which
the Company is a party or by or to which the Company, or the Assets may be bound
or subject and a violation of which would result in a Material Adverse Effect on
the Company, (iii) any order, judgment, injunction, award or decree of any
arbitrator or Regulatory Authority or any statute, law, rule or regulation
applicable to the Company or (iv) any Permit of the Company, which in the case
of (ii), (iii) or (iv) above would have a Material Adverse Effect on the Company
or a material adverse effect on the validity, binding effect or enforceability
of this Agreement or the Collateral Documents or the ability of the Company to
perform its obligations under this Agreement or any of the Collateral Documents.
3.5 CONSENTS AND APPROVALS. Except for requirements described in Sections
6.3 and 6.4, no consent, approval, authorization or order of, registration or
filing with, or notice to, any Regulatory Authority or any other Person is
necessary to be obtained, made or given by the Company in connection with the
execution, delivery and performance by the Company of this Agreement or any
Collateral Document or for the consummation by the Company of the transactions
contemplated hereby or thereby, except to the extent the failure to obtain any
such consent, approval, authorization or order or to make any such registration
or filing would not have a Material Adverse Effect on the Company or a material
adverse effect on the validity, binding effect or enforceability of this
Agreement or the Collateral Documents or the ability of the Company to perform
its obligations under this Agreement or any of the Collateral Documents.
3.6 INTELLECTUAL PROPERTY. To the knowledge of the Company, the Company
has good title to or the right to use all material company intellectual property
rights and all material inventions, processes, designs, formulae, trade secrets
and know-how necessary for the operation of the Company Business without the
payment of any royalty or similar payment.
3.7 COMPLIANCE WITH LEGAL REQUIREMENTS. The Company has operated the
Company Business in compliance with all Legal Requirements applicable to the
Company except to the extent the failure to operate in compliance with all
material Legal Requirements would not have a Material Adverse Effect on the
Company or Material Adverse Effect on the validity, binding effect or
enforceability of this Agreement or the Collateral Documents.
12
3.8 FINANCIAL STATEMENTS. The Company has provided Spectre with an
unaudited balance sheet of the Company as of December 31, 2003 and a statement
of operations and cash flow for the period then ended. Such financial statements
("Company Financial Statements") present fairly in all material respects the
financial condition of the Company and its results of operations as of the date
and for the period indicated subject to year-end adjustments based on the
Company's outside auditors' review of such Financial Statements.
3.9 ORDINARY COURSE. The Company conducted its business and kept its books
of accounts, records and files, substantially in the same manner as previously
conducted.
3.10 LITIGATION. As of the date of this Agreement (i) there are no
outstanding judgments or orders against or otherwise affecting or related to the
Company, the Company Business or the Company Assets; (ii) there is no action,
suit, complaint, proceeding or investigation, judicial, administrative or
otherwise, that is pending or, to the Company's knowledge, threatened that, if
adversely determined, would have a Material Adverse Effect on the Company or a
material adverse effect on the validity, binding effect or enforceability of
this Agreement or the Collateral Documents.
3.11 TAXES. The Company has duly and timely filed in proper form all Tax
Returns for all Taxes required to be filed with the appropriate Regulatory
Authority, except where such failure would not have a Material Adverse Effect on
the Company.
3.12 BOOKS AND RECORDS. The books and records of the Company accurately
and fairly represent the Company Business and its results of operations in all
material respects. All accounts receivable and inventory of the Company Business
are reflected properly on such books and records in all material respects.
3.13 BROKERS OR FINDERS. Except as set forth on Schedule 3.13, all
negotiations relative to this Agreement and the transactions contemplated hereby
have been carried out by the Company or any of its Affiliates in connection with
the transactions contemplated by this Agreement, and neither the Company, nor
any of its Affiliates has incurred any obligation to pay any brokerage or
finder's fee or other commission in connection with the transaction contemplated
by this Agreement.
3.14 PROXIES. Company management holds, or prior to the Closing will hold,
irrevocable proxies from the Company Shareholders adequate to ensure Company
Shareholder approval of the Merger as required by applicable law.
3.15 LIABILITIES. As of the date of this Agreement, the Company has no
liabilities except for (i) the Liabilities disclosed on Schedule 3.15 and (ii)
the Liabilities incurred in connection with this Agreement.
3.16 DISCLOSURE. No representation or warranty of the Company in this
Agreement or in the Collateral Documents and no statement in any certificate
furnished or to be furnished by the Company pursuant to this Agreement
contained, contains or will contain on the date such agreement or certificate
was or is delivered, or on the Closing Date, any untrue statement of a material
fact, or omitted, omits or will omit on such date to state any material fact
necessary in order to make the statements made, in light of the circumstances
under which they were made, not misleading.
13
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SPECTRE PARTIES
Each of the Spectre Parties, jointly and severally, represent and warrant
to the Company that the statements contained in this ARTICLE IV are correct and
complete as of the date of this Agreement and, except as provided in Section
9.1, will be correct and complete as of the Closing Date (as though made then
and as though the Closing Date were substituted for the date of this Agreement
throughout this ARTICLE IV, except in the case of representations and warranties
stated to be made as of the date of this Agreement or as of another date and
except for changes contemplated or permitted by the Agreement).
4.1 ORGANIZATION AND QUALIFICATION. Each of Spectre and Merger Sub is a
corporation duly organized, validly existing and in good standing under the laws
of Nevada and California, respectively. Each of Spectre and Merger Sub has all
requisite power and authority to own, lease and use its assets as they are
currently owned, leased and used and to conduct its business as it is currently
conducted. Both Spectre and Merger Sub are duly qualified or licensed to do
business in and are each in good standing in each jurisdiction in which the
character of the properties owned, leased or used by it or the nature of the
activities conducted by it makes such qualification necessary, except any such
jurisdiction where the failure to be so qualified or licensed and in good
standing would not have a Material Adverse Effect on Spectre or a Material
Adverse Effect on the validity, binding effect or enforceability of this
Agreement or the Collateral Documents or the ability of the Company or any of
the Spectre Parties to perform their obligations under this Agreement or any of
the Collateral Documents.
4.2 CAPITALIZATION.
(a) As of the date hereof, the authorized capital stock of Spectre
consists of 100,000,000 shares of common stock $0.001 par value of which there
are 20,878,082 shares outstanding. The shares of Spectre Common Stock included
in the Merger Shares, the Warrants and the Warrant Shares, when issued in
accordance with this Agreement, will have been duly authorized, validly issued
and outstanding and will be fully paid and nonassessable.
(b) As of the date hereof, the authorized capital stock of Merger
Sub consists of 100 shares of common stock no par value of which there are 100
shares outstanding. Each outstanding share of Merger Sub is duly authorized,
validly issued and outstanding and will be fully paid and nonassessable and is
owned by Spectre.
(c) Schedule 4.2(c) lists all outstanding or authorized options,
warrants, purchase rights, preemptive rights or other contracts or commitments
that could require Spectre or any of its Subsidiaries to issue, sell, or
otherwise cause to become outstanding any of its capital stock or other
ownership interests.
(d) All of the issued and outstanding shares of Spectre Capital
Stock, and all outstanding ownership interests of each of Spectre's Subsidiaries
have been duly authorized and are validly issued and outstanding, fully paid and
nonassessable (with respect to Subsidiaries that are corporations) and have been
issued in compliance with applicable securities laws and other applicable Legal
Requirements.
14
4.3 AUTHORITY AND VALIDITY. Each Spectre Party has all requisite power to
execute and deliver, to perform its obligations under, and to consummate the
transactions contemplated by, this Agreement and the Collateral Documents. The
execution and delivery by each Spectre Party of, the performance by each Spectre
Party of its respective obligations under, and the consummation by the Spectre
Parties of the transactions contemplated by, this Agreement and the Collateral
Documents have been duly authorized by all requisite action of each Spectre
Party. This Agreement has been duly executed and delivered by each of the
Spectre Parties and (assuming due execution and delivery by the Company) is the
legal, valid and binding obligation of each Spectre Party, enforceable against
each of them in accordance with its terms. Upon the execution and delivery by
each of the Spectre Parties of the Collateral Documents to which each of them is
a party, and assuming due execution and delivery thereof by the other parties
thereto, the Collateral Documents will be the legal, valid and binding
obligations of each such Person, as the case may be, enforceable against each of
them in accordance with their respective terms.
4.4 NO BREACH OR VIOLATION. Subject to obtaining the consents, approvals,
authorizations, and orders of and making the registrations or filings with or
giving notices to Regulatory Authorities and Persons identified herein, the
execution, delivery and performance by the Spectre Parties of this Agreement and
the Collateral Documents to which each is a party and the consummation of the
transactions contemplated hereby and thereby in accordance with the terms and
conditions hereof and thereof, do not and will not conflict with, constitute a
violation or breach of, constitute a default or give rise to any right of
termination or acceleration of any right or obligation of any Spectre Party
under, or result in the creation or imposition of any Encumbrance upon the
property of Spectre or Merger Sub by reason of the terms of (i) the articles of
incorporation, by-laws or other charter or organizational document of any
Spectre Party, (ii) any contract, agreement, lease, indenture or other
instrument to which any Spectre Party is a party or by or to which any Spectre
Party or their property may be bound or subject and a violation of which would
result in a Material Adverse Effect on the Company taken as a whole, (iii) any
order, judgment, injunction, award or decree of any arbitrator or Regulatory
Authority or any statute, law, rule or regulation applicable to any Spectre
Party or (iv) any Permit of Spectre or Merger Sub, which in the case of (ii),
(iii) or (iv) above would have a Material Adverse Effect on Spectre or a
material adverse effect on the validity, binding effect or enforceability of
this Agreement or the Collateral Documents or the ability of any Spectre Party
to perform its obligations hereunder or thereunder.
4.5 CONSENTS AND APPROVALS. Except for requirements under applicable
United States or state securities laws, no consent, approval, authorization or
order of, registration or filing with, or notice to, any Regulatory Authority or
any other Person is necessary to be obtained, made or given by any Spectre Party
in connection with the execution, delivery and performance by them of this
Agreement or any Collateral Documents or for the consummation by them of the
transactions contemplated hereby or thereby, except to the extent the failure to
obtain such consent, approval, authorization or order or to make such
registration or filings or to give such notice would not have a Material Adverse
Effect on Spectre or a material adverse effect on the validity, binding effect
or enforceability of this Agreement or the Collateral Documents or the ability
of the Company or any of the Spectre Parties to perform its obligations under
this Agreement or any of the Collateral Documents.
15
4.6 COMPLIANCE WITH LEGAL REQUIREMENTS. Spectre and its Subsidiaries have
operated Spectre Business in compliance with all material Legal Requirements
including, without limitation, the Exchange Act and the Securities Act
applicable to Spectre and its Subsidiaries, except to the extent the failure to
operate in compliance with all material Legal Requirements, would not have a
Material Adverse Effect on Spectre or a Material Adverse Effect on the validity,
binding effect or enforceability of this Agreement or the Collateral Documents.
4.7 LITIGATION. There are no outstanding judgments or orders against or
otherwise affecting or related to Spectre, any of its Subsidiaries, or their
business or assets; and (ii) there is no action, suit, complaint, proceeding or
investigation, judicial, administrative or otherwise, that is pending or, to the
best knowledge of any Spectre Party, threatened that, if adversely determined,
would have a Material Adverse Effect on Spectre or a material adverse effect on
the validity, binding effect or enforceability of this Agreement or the
Collateral Documents.
4.8 ORDINARY COURSE. Since the date of the balance sheet included in the
most recent Spectre Securities Filings filed through the date hereof, there has
not been any occurrence, event, incident, action, failure to act or transaction
involving Spectre or any of its Subsidiaries which is reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect on Spectre.
4.9 ASSETS AND LIABILITIES. As of the date of this Agreement, neither
Spectre nor any of its Subsidiaries has any Assets or Liability, except for the
(i) Assets and Liabilities disclosed on Schedule 4.9 and (ii) Liabilities
incurred in connection with this Agreement.
4.10 TAXES. Spectre has, and each of its Subsidiaries has, duly and timely
filed in proper form all Tax Returns for all Taxes required to be filed with the
appropriate Governmental Authority, except where such failure to file would not
have a Material Adverse Effect on Spectre.
4.11 BOOKS AND RECORDS. The books and records of Spectre and its
Subsidiaries accurately and fairly represent the Spectre Business and its
results of operations in all material respects. All accounts receivable and
inventory of the Spectre Business are reflected properly on such books and
records in all material respects.
4.12 ENVIRONMENTAL MATTERS. Neither Spectre nor any of the Spectre
Subsidiaries has violated any Environmental Laws, lacks any permits, licenses or
other approvals required of them under applicable Environmental Laws or is
violating any term or condition of any such permit, license or approval, except
in each case as would not, individually or in the aggregate, result in a
Material Adverse Effect on Spectre.
16
4.13 FINANCIAL AND OTHER INFORMATION.
(a) The historical financial statements (including the notes
thereto) contained (or incorporated by reference) in the Spectre Securities
Filings have been prepared in accordance with GAAP applied on a consistent basis
throughout the periods covered thereby (except as may be indicated in the notes
thereto), and present fairly the financial condition of Spectre and its results
of operations as of the dates and for the periods indicated, subject in the case
of the unaudited financial statements only to normal year-end adjustments (none
of which will be material in amount) and the omission of footnotes.
(b) To the knowledge of current management, the Spectre Securities
Filings did not, as of their filing dates, contain (directly or by incorporation
by reference) 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 (or incorporated therein by reference), in light of the circumstances
under which they were or will be made, not misleading.
4.14 BROKERS OR FINDERS. No broker or finder has acted directly or
indirectly for Spectre, any Spectre Party or any of their Affiliates in
connection with the transactions contemplated by this Agreement, and neither
Spectre, any Spectre Party nor any of their Affiliates has incurred any
obligation to pay any brokerage or finder's fee or other commission in
connection with the transaction contemplated by this Agreement.
4.15 DISCLOSURE. No representation or warranty of Spectre in this
Agreement or in the Collateral Documents and no statement in any certificate
furnished or to be furnished by Spectre pursuant to this Agreement contained,
contains or will contain on the date such agreement or certificate was or is
delivered, or on the Closing Date, any untrue statement of a material fact, or
omitted, omits or will omit on such date to state any material fact necessary in
order to make the statements made, in light of the circumstances under which
they were made, not misleading.
4.16 FILINGS. To the knowledge of current management, Spectre has made all
of the filings required by the Securities Act of 1933, as amended, and the
Exchange Act of 1934, as amended, required to be made and no such filing
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements made, not misleading.
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER
The Shareholder represents and warrants to the Company that:
4.17 AUTHORITY TO EXECUTE AND PERFORM AGREEMENTS. The Shareholder has the
requisite rights, power and authority to enter into, execute and deliver this
Agreement.
4.18 ENFORCEABILITY. This Agreement has been duly and validly executed by
the Shareholder and (assuming the due authorization, execution and delivery of
the Spectre Parties and the Company) constitutes the legal, valid and binding
obligation of the Shareholder, enforceable in accordance with its terms, except
as the same may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally or by general
equitable principles affecting the enforcement of contracts.
17
ARTICLE V
COVENANTS OF THE COMPANY
Between the date of this Agreement and the Closing Date:
5.1 ADDITIONAL INFORMATION. The Company shall provide to Spectre and its
Representatives such financial, operating and other documents, data and
information relating to the Company, the Company Business and the Company Assets
and Liabilities of the Company, as Spectre or its Representatives may reasonably
request. In addition, the Company shall take all action necessary to enable
Spectre and its Representatives to review, inspect and audit the Company Assets,
the Company Business and Liabilities of the Company and discuss them with the
Company's officers, employees, independent accountants, customers, licensees,
and counsel. Notwithstanding any investigation that Spectre may conduct of the
Company, the Company Business, the Company Assets and the Liabilities of the
Company, the Spectre Parties may fully rely on the Company's warranties,
covenants and indemnities set forth in this Agreement.
5.2 CONTINUITY AND MAINTENANCE OF OPERATIONS. The Company shall, and shall
cause each of its Subsidiaries to use its commercially reasonable efforts to
promote the financial success of the Company Business and promptly notify
Spectre of any material adverse change in the condition (financial or otherwise)
of the Company Business and use its commercially reasonable efforts to promote,
develop and preserve its relationships with its present employees as well as the
goodwill of its customers and promptly notify Spectre of any material adverse
change in such relationships.
5.3 CONSENTS AND APPROVALS. As soon as practicable after execution of this
Agreement, the Company shall use commercially reasonable efforts to obtain any
necessary consent, approval, authorization or order of, make any registration or
filing with or give any notice to, any Regulatory Authority or Person as is
required to be obtained, made or given by the Company to consummate the
transactions contemplated by this Agreement and the Collateral Documents.
5.4 MEETING OF THE COMPANY SHAREHOLDERS. Promptly after the date hereof,
the Company will take all action necessary in accordance with its articles of
incorporation and by-laws to convene a meeting of the Company's shareholders to
consider the adoption and approval of this Agreement and approval of the Merger
to be held as promptly as practicable. The Company will use its reasonable
efforts to solicit from its shareholders proxies in favor of the adoption and
approval of this Agreement and the approval of the Merger and will take all
other action necessary or advisable to secure the vote or consent of its
shareholders required by the CCC to obtain such approvals. In lieu of such
meeting, the adoption and approval of this Agreement and the Merger may be
approved by shareholder consent.
5.5 NOTIFICATION OF CERTAIN MATTERS. The Company shall promptly notify
Spectre of any fact, event, circumstance or action known to it that is
reasonably likely to cause the Company to be unable to perform any of its
covenants contained herein or any condition precedent in ARTICLE VIII not to be
satisfied, or that, if known on the date of this Agreement, would have been
required to be disclosed to Spectre pursuant to this Agreement or the existence
or occurrence of which would cause any of the Company's representations or
warranties under this Agreement not to be correct and/or complete. The Company
shall give prompt written notice to Spectre of any adverse development causing a
breach of any of the representations and warranties in ARTICLE III as of the
date made.
18
5.6 COMPANY DISCLOSURE SCHEDULE. The Company shall, from time to time
prior to Closing, supplement the Company Disclosure Statement with additional
information that, if existing or known to it on the date of delivery to the
Spectre Parties, would have been required to be included therein. For purposes
of determining the satisfaction of any of the conditions to the obligations of
the Spectre Parties in ARTICLE VIII, the Company Disclosure Statement shall be
deemed to include only (a) the information contained therein on the date of this
Agreement and (b) information added to the Company Disclosure Statement by
written supplements delivered prior to Closing by the Company that (i) are
accepted in writing by Spectre, or (ii) reflect actions taken or events
occurring after the date hereof prior to Closing.
5.7 STATE STATUTES. The Company and its Board of Directors shall, if any
state takeover statute or similar law is or becomes applicable to the Merger,
this Agreement or any of the transactions contemplated by this Agreement, use
all reasonable efforts to ensure that the Merger and the other transactions
contemplated by this Agreement may be consummated as promptly as practicable on
the terms contemplated by this Agreement and otherwise to minimize the effect of
such statute or regulation on the Merger, this Agreement and the transactions
contemplated hereby.
ARTICLE VI
COVENANTS OF THE SPECTRE PARTIES
Between the date of this Agreement and the Closing Date,
6.1 ADDITIONAL INFORMATION. Spectre shall provide to the Company and its
Representatives such financial, operating and other documents, data and
information relating to Spectre and its Subsidiaries, the Spectre Business and
the Spectre Assets and the Liabilities of Spectre and its Subsidiaries, as the
Company or its Representatives may reasonably request. In addition, the Company
shall take all action necessary to enable the Company and its Representatives to
review and inspect the Spectre Assets, the Spectre Business and the Liabilities
of Spectre and its Subsidiaries and discuss them with the Company's officers,
employees, independent accountants and counsel. Notwithstanding any
investigation that the Company may conduct of Spectre and its Subsidiaries, the
Spectre Business, the Spectre Assets and the Liabilities of Spectre and its
Subsidiaries, the Company may fully rely on the Spectre Parties' warranties,
covenants and indemnities set forth in this Agreement.
19
6.2 NO SOLICITATIONS. From and after the date of this Agreement until the
Effective Time or termination of this Agreement pursuant to ARTICLE XI, Spectre
will not nor will it authorize or permit any of its officers, directors,
affiliates or employees or any investment banker, attorney or other advisor or
representative retained by it, directly or indirectly, (i) solicit or initiate
the making, submission or announcement of any other acquisition proposal, (ii)
participate in any discussions or negotiations regarding, or furnish to any
person any non-public information with respect to any other acquisition
proposal, (iii) engage in discussions with any Person with respect to any other
acquisition proposal, except as to the existence of these provisions, (iv)
approve, endorse or recommend any other acquisition proposal or (v) enter into
any letter of intent or similar document or any contract agreement or commitment
contemplating or otherwise relating to any other acquisition proposal.
6.3 CONTINUITY AND MAINTENANCE OF OPERATIONS. Spectre shall promptly
notify the Company of any material adverse change in the condition (financial or
otherwise) of Spectre.
6.4 CONSENTS AND APPROVALS. As soon as practicable after execution of this
Agreement, the Spectre Parties shall use their commercially reasonable efforts
to obtain any necessary consent, approval, authorization or order of, make any
registration or filing with or give notice to, any Regulatory Authority or
Person as is required to be obtained, made or given by any of the Spectre
Parties to consummate the transactions contemplated by this Agreement and the
Collateral Documents.
6.5 NOTIFICATION OF CERTAIN MATTERS. Spectre shall promptly notify the
Company of any fact, event, circumstance or action known to it that is
reasonably likely to cause any Spectre Party to be unable to perform any of its
covenants contained herein or any condition precedent in ARTICLE IX not to be
satisfied, or that, if known on the date of this Agreement, would have been
required to be disclosed to the Company pursuant to this Agreement or the
existence or occurrence of which would cause any of the Spectre Parties'
representations or warranties under this Agreement not to be correct and/or
complete. The Spectre Parties shall give prompt written notice to the Company of
any adverse development causing a breach of any of the representations and
warranties in ARTICLE IV.
6.6 SPECTRE DISCLOSURE SCHEDULE. The Spectre Parties shall, from time to
time prior to Closing, supplement the Spectre Disclosure Statement with
additional information that, if existing or known to it on the date of this
Agreement, would have been required to be included therein. For purposes of
determining the satisfaction of any of the conditions to the obligations of the
Company in ARTICLE IX, the Spectre Disclosure Statement shall be deemed to
include only (a) the information contained therein on the date of delivery to
the Company and (b) information added to the Spectre Disclosure Statement by
written supplements delivered prior to Closing by the Spectre Parties that (i)
are accepted in writing by the Company or (ii) reflect actions taken or events
occurring after the date hereof and prior to Closing.
6.7 SECURITIES FILINGS. Spectre will timely file all reports and other
documents relating to the operation of Spectre required to be filed with the
Securities and Exchange Commission, which reports and other documents do not and
will not contain any misstatement of a material fact, and do not and will not
omit any material fact necessary to make the statements therein not misleading.
20
6.8 ELECTION TO SPECTRE'S BOARD OF DIRECTORS. At the Effective Time of the
Merger, Spectre shall take all steps necessary so that there will be a three
member board consisting of one continuing director (the "Spectre Director") and
two directors designated by the Company. The Spectre Director will deliver a
letter or resignation with an effective date six months from the Effective Time.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SPECTRE PARTIES
All obligations of the Spectre Parties under this Agreement shall be
subject to the fulfillment at or prior to Closing of each of the following
conditions, it being understood that the Spectre Parties may, in their sole
discretion, to the extent permitted by applicable Legal Requirements, waive any
or all of such conditions in whole or in part.
7.1 ACCURACY OF REPRESENTATIONS. All representations and warranties of the
Company contained in this Agreement, the Collateral Documents and any
certificate delivered by any of the Company at or prior to Closing shall be, if
specifically qualified by materiality, true in all respects and, if not so
qualified, shall be true in all material respects, in each case on and as of the
Closing Date with the same effect as if made on and as of the Closing Date,
except for representations and warranties expressly stated to be made as of the
date of this Agreement or as of another date other than the Closing Date and
except for changes contemplated or permitted by this Agreement. The Company
shall have delivered to Spectre and Merger Sub a certificate dated the Closing
Date to the foregoing effect.
7.2 COVENANTS. The Company shall, in all material respects, have performed
and complied with each of the covenants, obligations and agreements contained in
this Agreement and the Collateral Documents that are to be performed or complied
with by them at or prior to Closing. The Company shall have delivered to Spectre
and Merger Sub a certificate dated the Closing Date to the foregoing effect.
7.3 CONSENTS AND APPROVALS. All consents, approvals, permits,
authorizations and orders required to be obtained from, and all registrations,
filings and notices required to be made with or given to, any Regulatory
Authority or Person as provided herein.
7.4 DELIVERY OF DOCUMENTS. The Company shall have delivered, or caused to
be delivered, to Spectre and Merger Sub the following documents:
(i) Certified copies of the Company's articles of incorporation and
by-laws and certified resolutions of the board of directors and
Shareholders of the Company authorizing the execution of this Agreement
and the Collateral Documents to which it is a party and the consummation
of the transactions contemplated hereby and thereby.
(ii) Such other documents and instruments as Spectre may reasonably
request: (A) to evidence the accuracy of the Company's representations and
warranties under this Agreement, the Collateral Documents and any
documents, instruments or certificates required to be delivered
thereunder; (B) to evidence the performance by the Company of, or the
compliance by the Company with, any covenant, obligation, condition and
agreement to be performed or complied with by the Company under this
Agreement and the Collateral Documents; or (C) to otherwise facilitate the
consummation or performance of any of the transactions contemplated by
this Agreement and the Collateral Documents.
21
7.5 NO MATERIAL ADVERSE CHANGE. Since the date hereof, there shall have
been no material adverse change in the Company Assets, the Company Business or
the financial condition or operations of the Company, taken as a whole.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY
All obligations of the Company under this Agreement shall be subject to
the fulfillment at or prior to Closing of the following conditions, it being
understood that the Company may, in its sole discretion, to the extent permitted
by applicable Legal Requirements, waive any or all of such conditions in whole
or in part.
8.1 ACCURACY OF REPRESENTATIONS. All representations and warranties of the
Spectre Parties contained in this Agreement and the Collateral Documents and any
other document, instrument or certificate delivered by any of the Spectre
Parties at or prior to the Closing shall be, if specifically qualified by
materiality, true and correct in all respects and, if not so qualified, shall be
true and correct in all material respects, in each case on and as of the Closing
Date with the same effect as if made on and as of the Closing Date, except for
representations and warranties expressly stated to be made as of the date of
this Agreement or as of another date other than the Closing Date and except for
changes contemplated or permitted by this Agreement. The Spectre Parties shall
have delivered to the Company a certificate dated the Closing Date to the
foregoing effect.
8.2 COVENANTS. The Spectre Parties shall, in all material respects, have
performed and complied with each obligation, agreement, covenant and condition
contained in this Agreement and the Collateral Documents and required by this
Agreement and the Collateral Documents to be performed or complied with by the
Spectre Parties at or prior to Closing. The Spectre Parties shall have delivered
to the Company a certificate dated the Closing Date to the foregoing effect.
8.3 CONSENTS AND APPROVALS. All consents; approvals, authorizations and
orders required to be obtained from, and all registrations, filings and notices
required to be made with or given to, any Regulatory Authority or Person as
provided herein.
8.4 DELIVERY OF DOCUMENTS. The Spectre Parties, as applicable, shall have
executed and delivered, or caused to be executed and delivered, to the Company
the following documents:
(i) Certified copies of the articles of incorporation and by-laws of
Spectre and certified resolutions by the board of directors authorizing
the execution of this Agreement and the Collateral Documents and the
consummation of the transactions contemplated hereby.
22
(ii) Such other documents and instruments as the Company may
reasonably request: (A) to evidence the accuracy of the representations
and warranties of the Spectre Parties under this Agreement and the
Collateral Documents and any documents, instruments or certificates
required to be delivered thereunder; (B) to evidence the performance by
the Spectre Parties of, or the compliance by the Spectre Parties with, any
covenant, obligation, condition and agreement to be performed or complied
with by the Spectre Parties under this Agreement and the Collateral
Documents; or (C) to otherwise facilitate the consummation or performance
of any of the transactions contemplated by this Agreement and the
Collateral Documents.
(iii) Letters of resignation from Spectre's current officers and, as
provided in Section 7.8, directors to be effective upon the Closing.
(iv) Board resolutions from Spectre's current directors appointing
the designees of the Company to Spectre's board of directors.
8.5 NO MATERIAL ADVERSE CHANGE. There shall have been no material adverse
change in the business, financial condition or operations of Spectre and its
Subsidiaries taken as a whole.
8.6 NO LITIGATION. No action, suit or proceeding shall be pending or
threatened by or before any Regulatory Authority and no Legal Requirement shall
have been enacted, promulgated or issued or deemed applicable to any of the
transactions contemplated by this Agreement and the Collateral Documents that
would: (i) prevent consummation of any of the transactions contemplated by this
Agreement and the Collateral Documents; (ii) cause any of the transactions
contemplated by this Agreement and the Collateral Documents to be rescinded
following consummation; or (iii) have a Material Adverse Effect on Spectre.
8.7 RESTRUCTURING.
(a) SPIN-OFF. Pursuant to the terms of the Asset Distribution
Agreement, dated as of December __, 2003, upon approval of the Spectre
shareholders, Spectre shall transfer all of the Spectre Assets and the Spectre
Liabilities (the "Spin-off") to Spectre Holdings, Inc., a Nevada corporation
("Spectre Holdings"). The Parties agree that as soon as practicable after the
Closing, they shall use their best efforts to (i) file and clear all comments,
if any, from the Commission on a Schedule 14A or Schedule 14C ("Proxy Material)
for use in connection with the solicitation of Spectre shareholder approval for
the Spin-off, the name change of Spectre, and for a reverse stock split as
determined by the board of directors of Spectre after the Closing (the Spin-off,
together with the name change and the reverse stock split are hereinafter
collectively referred to as the "Restructuring"), and (ii) file and clear all
comments, if any, from the Commission on a registration statement ("Registration
Statement") covering the shares of Spectre Holdings which shall be distributed
to those Persons who were shareholders of Spectre prior to the Closing Date in
connection with the Spin-off. The preparation of the Proxy Material and the
Registration Statement shall be completed at the direction of the Shareholder
with approval and review by the Surviving Corporation.
23
(b) EXPENSES. Shareholder shall pay for or arrange for the payment
of all of the costs and expenses (the "Restructuring Expenses") associated with
the Restructuring.
(c) TIMING. If the Restructuring has not been completed within 120
days from the Closing Date, the Parties hereby agree to that all of the Spectre
Assets will be transferred to the Shareholder and/or his designee(s) and the
Shareholder shall assume all of the Spectre Liabilities and Restructuring
Expenses.
8.8 DISSENTERS' RIGHTS. No shareholder of Spectre shall have taken steps
to perfect dissenters' appraisal rights under the CCC in connection with the
Merger.
8.9 EXCHANGE ACT REQUIREMENTS. Spectre shall have complied with the
provisions of Rule 14f-1 of the Exchange Act, if necessary.
8.10 EXPENSES. Spectre shall have paid or arranged for the payment of all
of the costs and expenses of the Spectre Parties associated with this Agreement
and the transaction contemplated hereby.
ARTICLE IX
INDEMNIFICATION
9.1 INDEMNIFICATION BY THE COMPANY. The Company shall, prior to (but not
after) the Closing, indemnify, defend and hold harmless (i) Spectre, (ii) each
of Spectre's assigns and successors in interest to the Company Shares, and (iii)
each of their respective shareholders, members, partners, directors, officers,
managers, employees, agents, attorneys and representatives, from and against any
and all Losses which may be incurred or suffered by any such party and which may
arise out of or result from any breach of any representation, warranty, covenant
or agreement of the Company contained in this Agreement.
9.2 INDEMNIFICATION BY THE SPECTRE PARTIES. The Spectre Parties shall,
prior to (but not after) the closing, indemnify, defend and hold harmless the
Company and each of the Company Shareholders from and against any and all Losses
which may be incurred or suffered by any such party hereto and which may arise
out of or result from any breach of any representation, warranty, covenant or
agreement of the Spectre Parties contained in this Agreement.
9.3 NOTICE TO INDEMNIFYING PARTY. If any party (the "Indemnified Party")
receives notice of any claim or other commencement of any action or proceeding
with respect to which any other party (or parties) (the "Indemnifying Party") is
obligated to provide indemnification pursuant to Sections 10.1 or 10.2, the
Indemnified Party shall promptly give the Indemnifying Party written notice
thereof, which notice shall specify in reasonable detail, if known, the amount
or an estimate of the amount of the liability arising therefrom and the basis of
the claim. Such notice shall be a condition precedent to any liability of the
Indemnifying Party for indemnification hereunder, but the failure of the
Indemnified Party to give prompt notice of a claim shall not adversely affect
the Indemnified Party's right to indemnification hereunder unless the defense of
that claim is materially prejudiced by such failure. The Indemnified Party shall
not settle or compromise any claim by a third party for which it is entitled to
indemnification hereunder without the prior written consent of the Indemnifying
Party (which shall not be unreasonably withheld or delayed) unless suit shall
have been instituted against it and the Indemnifying Party shall not have taken
control of such suit after notification thereof as provided in Section 10.4.
24
9.4 DEFENSE BY INDEMNIFYING PARTY. In connection with any claim giving
rise to indemnity hereunder resulting from or arising out of any claim or legal
proceeding by a Person who is not a party to this Agreement, the Indemnifying
Party at its sole cost and expense may, upon written notice to the Indemnified
Party, assume the defense of any such claim or legal proceeding (i) if it
acknowledges to the Indemnified Party in writing its obligations to indemnify
the Indemnified Party with respect to all elements of such claim (subject to any
limitations on such liability contained in this Agreement) and (ii) if it
provides assurances, reasonably satisfactory to the Indemnified Party, that it
will be financially able to satisfy such claims in full if the same are decided
adversely. If the Indemnifying Party assumes the defense of any such claim or
legal proceeding, it may use counsel of its choice to prosecute such defense,
subject to the approval of such counsel by the Indemnified Party, which approval
shall not be unreasonably withheld or delayed. In this regard, Loeb & Loeb LLP
is hereby approved by Spectre as counsel to the Company (in its capacity as the
Indemnifying Party). The Indemnified Party shall be entitled to participate in
(but not control) the defense of any such action, with its counsel and at its
own expense; PROVIDED, HOWEVER, that if the Indemnified Party, in its sole
discretion, determines that there exists a conflict of interest between the
Indemnifying Party (or any constituent party thereof) and the Indemnified Party,
the Indemnified Party (or any constituent party thereof) shall have the right to
engage separate counsel, the reasonable costs and expenses of which shall be
paid by the Indemnified Party. If the Indemnifying Party assumes the defense of
any such claim or legal proceeding, the Indemnifying Party shall take all steps
necessary to pursue the resolution thereof in a prompt and diligent manner. The
Indemnifying Party shall be entitled to consent to a settlement of, or the
stipulation of any judgment arising from, any such claim or legal proceeding,
with the consent of the Indemnified Party, which consent shall not be
unreasonably withheld or delayed; provided, however, that no such consent shall
be required from the Indemnified Party if (i) the Indemnifying Party pays or
causes to be paid all Losses arising out of such settlement or judgment
concurrently with the effectiveness thereof (as well as all other Losses
theretofore incurred by the Indemnified Party which then remain unpaid or
unreimbursed), (ii) in the case of a settlement, the settlement is conditioned
upon a complete release by the claimant of the Indemnified Party and (iii) such
settlement or judgment does not require the encumbrance of any asset of the
Indemnified Party or impose any restriction upon its conduct of business.
ARTICLE X
TERMINATION
10.1 TERMINATION. This Agreement may be terminated, and the transactions
contemplated hereby may be abandoned, at any time prior to the Effective Time.
(a) by mutual written agreement of Spectre and the Company hereto
duly authorized by action taken by or on behalf of their respective Boards of
Directors; or
(b) by either the Company or Spectre upon notification to the
non-terminating party by the terminating party:
25
(i) if the terminating party is not in material breach of its
obligations under this Agreement and there has been a material breach of
any representation, warranty, covenant or agreement on the part of the
non-terminating party set forth in this Agreement such that the conditions
in Sections 8.1, 8.2, 9.1 or 9.2 will not be satisfied; provided, however,
that if such breach is curable by the non-terminating party and such cure
is reasonably likely to be completed prior to the date specified in
Section 11.1(b)(i), then, for so long as the non-terminating party
continues to use commercially reasonable efforts to effect and cure, the
terminating party may not terminate pursuant to this Section 11.1(b)(i);
(ii) if the Closing has not transpired on or before March 28, 2004.
(iii) if any court of competent jurisdiction or other competent
Governmental or Regulatory Authority shall have issued an order making
illegal or otherwise permanently restricting, preventing or otherwise
prohibiting the Merger and such order shall have become final and
nonappealable; or
10.2 EFFECT OF TERMINATION. If this Agreement is validly terminated by
either the Company or Spectre pursuant to Section 11.1, this Agreement will
forthwith become null and void and there will be no liability or obligation on
the part of the parties hereto, except that nothing contained herein shall
relieve any party hereto from liability for willful breach of its
representations, warranties, covenants or agreements contained in this
Agreement.
ARTICLE XI
MISCELLANEOUS
11.1 PARTIES OBLIGATED AND BENEFITED. This Agreement shall be binding upon
the Parties and their respective successors by operation of law and shall inure
solely to the benefit of the Parties and their respective successors by
operation of law, and no other Person shall be entitled to any of the benefits
conferred by this Agreement, except that the Company Shareholders shall be third
party beneficiaries of this Agreement. Without the prior written consent of the
other Party, no Party may assign this Agreement or the Collateral Documents or
any of its rights or interests or delegate any of its duties under this
Agreement or the Collateral Documents.
11.2 PUBLICITY. The initial press release shall be a joint press release
and thereafter the Company and Spectre each shall consult with each other prior
to issuing any press releases or otherwise making public announcements with
respect to the Merger and the other transactions contemplated by this Agreement
and prior to making any filings with any third party and/or any Regulatory
Authorities (including any national securities interdealer quotation service)
with respect thereto, except as may be required by law or by obligations
pursuant to any listing agreement with or rules of any national securities
interdealer quotation service.
26
11.3 NOTICES. Any notices and other communications required or permitted
hereunder shall be in writing and shall be effective upon delivery by hand or
upon receipt if sent by certified or registered mail (postage prepaid and return
receipt requested) or by a nationally recognized overnight courier service
(appropriately marked for overnight delivery) or upon transmission if sent by
telex or facsimile (with request for immediate confirmation of receipt in a
manner customary for communications of such respective type and with physical
delivery of the communication being made by one or the other means specified in
this Section as promptly as practicable thereafter). Notices shall be addressed
as follows:
(a) If to the Spectre Parties to:
Spectre, Inc.
#0-000 X. Xxxxxxxxx, Xxxxx Xxxxxxxxx
Xxxxxxx Xxxxxxxx, Xxxxxx X0X0X0
Attention: Xxxxxx Xxxxxx
If to the Company to:
Advanced Custom Sensors, Inc.
00 Xxxxxx, Xxxxx X
Xxxxxx, XX 00000
Attention: Xxxxxxx Xxxxx
Facsimile No. 000-000-0000
With a copy to:
Loeb & Loeb LLP
00000 Xxxxx Xxxxxx Xxxx., Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxxxx, Esq.
Facsimile No. (000) 000-0000
Any Party may change the address to which notices are required to be sent by
giving notice of such change in the manner provided in this Section.
11.4 ATTORNEYS' FEES. In the event of any action or suit based upon or
arising out of any alleged breach by any Party of any representation, warranty,
covenant or agreement contained in this Agreement or the Collateral Documents,
the prevailing Party shall be entitled to recover reasonable attorneys' fees and
other costs of such action or suit from the other Party.
11.5 HEADINGS. The Article and Section headings of this Agreement are for
convenience only and shall not constitute a part of this Agreement or in any way
affect the meaning or interpretation thereof.
11.6 CHOICE OF LAW. This Agreement and the rights of the Parties under it
shall be governed by and construed in all respects in accordance with the laws
of the State of California, without giving effect to any choice of law provision
or rule (whether of the State of California or any other jurisdiction that would
cause the application of the laws of any jurisdiction other than the State of
California).
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11.7 RIGHTS CUMULATIVE. All rights and remedies of each of the Parties
under this Agreement shall be cumulative, and the exercise of one or more rights
or remedies shall not preclude the exercise of any other right or remedy
available under this Agreement or applicable law.
11.8 FURTHER ACTIONS. The Parties shall execute and deliver to each other,
from time to time at or after Closing, for no additional consideration and at no
additional cost to the requesting party, such further assignments, certificates,
instruments, records, or other documents, assurances or things as may be
reasonably necessary to give full effect to this Agreement and to allow each
party fully to enjoy and exercise the rights accorded and acquired by it under
this Agreement.
11.9 TIME OF THE ESSENCE. Time is of the essence under this Agreement. If
the last day permitted for the giving of any notice or the performance of any
act required or permitted under this Agreement falls on a day which is not a
Business Day, the time for the giving of such notice or the performance of such
act shall be extended to the next succeeding Business Day.
11.10 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.11 ENTIRE AGREEMENT. This Agreement (including the Exhibits, the
Company Disclosure Statement, the Spectre Disclosure Statement and any other
documents, instruments and certificates referred to herein, which are
incorporated in and constitute a part of this Agreement) contains the entire
agreement of the Parties.
11.12 EXPENSES. Each party will be responsible for payment of its expenses
in connection with the transactions contemplated by this Agreement.
11.13 SURVIVAL OF REPRESENTATIONS AND COVENANTS. Notwithstanding any right
of the Spectre Parties fully to investigate the affairs of the Company and
notwithstanding any Knowledge of facts determined or determinable by the Spectre
Parties pursuant to such investigation or right of investigation, the Spectre
Parties shall have the right to rely fully upon the representations, warranties,
covenants and agreements of the Company contained in this Agreement. Each
representation, warranty, covenant and agreement of the Company contained herein
shall survive the execution and delivery of this Agreement and the Closing and
shall thereafter terminate and expire on the first anniversary of the Closing
Date unless, prior to such date, Spectre has delivered to the Company
Shareholders a written notice of a claim with respect to such representation,
warranty, covenant or agreement.
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IN WITNESS WHEREOF, the Parties hereto have duly executed this Agreement
as of the day and year first above written.
SPECTRE, INC., A NEVADA CORPORATION
By:
--------------------------------------
Name: Xxxxxxx Xxxxxx
Title: Secretary
SPECTRE MERGER SUB, INC.,
A CALIFORNIA CORPORATION
By:
--------------------------------------
Name: Xxxxxxx Xxxxxx
Title: President
ADVANCED CUSTOM SENSORS, INC.,
A CALIFORNIA CORPORATION
By:
--------------------------------------
Name: Xxxxxxx Xxxxx
Title: President
SHAREHOLDER
--------------------------------------
Xxx Xxxxx
30
EXHIBIT A
Terms of Warrants
1. Term: Three years
2. Exercise Price: .0001 per share
3. Restriction on Exercise: cannot be exercised for a six month period
from Closing
Exhibit 2.5
Exhibit 2.6 - Merger Share Allocation
COMPANY DISCLOSURE SCHEDULE
Schedule 3.2(b)(i) - Derivative Securities
COMPANY DISCLOSURE SCHEDULE
Schedule 3.13 - Brokers or Finders
COMPANY DISCLOSURE SCHEDULE
Schedule 3.15 - Liabilities
1. ACSI owes University of California $100,000 for a technology development
contract. (This should have been included in the audit report.)
2. ACSI owes about $30,000 in payroll tax.
3. ACSI has issued following Promissory Notes.
$190,665.44 to Xxxx Xxxxx
$100,000 to Xxxx Xxxxx
$25,000 to Pei Xxx Xxx
$500,000 to CAAS (Not sure if this money will be wired in before signing
this doc and if Xx. Xxxx is going to use the name of CAAS.)
4. ACSI owes $250,000 to Brick Laboratories.
5. ACSI owes $90,000 business loan to Bank of America.
6. ACSI owes $40,000 business loan to General Bank.
SPECTRE PARTIES' DISCLOSURE SCHEDULE
Schedule 4.2(c) - Derivative Securities
None.
SPECTRE PARTIES' DISCLOSURE SCHEDULE
Schedule 4.9 - Assets and Liabilities
