Exhibit 2.1
Asset Purchase and Sale Agreement
By and Among
Spectra Systems Corporation,
Hunter Acquisition Corporation,
Hunter Associates Laboratory, Inc.
and
Xxxxxx X. Xxxxxx, Xxxx Xxxxxx,
Xxxxxx Xxxxxx and Xxxxxxx Xxxxxx
Dated
January 24, 2002
Table Of Contents
Tab Description Page
1 Definitions
2 Basic Transaction
(a) Purchase and Sale of Assets
(b) Assumption of Liabilities
(c) Consideration; Escrow
(d) The Closing
(e) Deliveries at the Closing
(f) Consideration Share Legend
(g) Allocation
3 Representations and Warranties Concerning the Seller and Its
Subsidiaries
(a) Organization, Qualification and Corporate Power;
Authorization of Transaction
(b) Capitalization
(c) Noncontravention
(d) Brokers' Fees
(e) Title to Assets
(f) Subsidiaries
(g) Financial Statements
(h) Events Subsequent to Most Recent Fiscal Year End
(i) Undisclosed Liabilities
(j) Legal Compliance
(k) Tax Matters
(l) Real Property
(m) Intellectual Property
(n) Tangible Assets
(o) Inventory
(p) Contracts
(q) Notes and Accounts Receivable
(r) Reserved
(s) Insurance
(t) Litigation
(u) Product Warranty
(v) Product Liability
(w) Employees
(x) Employee Benefits
(y) Guaranties
(z) Environmental, Health and Safety Matters
(aa) Certain Business Relationships with the Seller and its
Subsidiaries
(bb) Major Vendors and Customers
(cc) Disclosure
4 Representations and Warranties of the Buyer and the Acquisition
Subsidiary
(a) Organization
(b) Capitalization
(c) Authorization of Transaction
(d) Noncontravention
(e) Brokers' Fees
(f) Disclosure
(g) Organization of Acquisition Subsidiary
(h) Validity of Stock to be Issued
5 Pre-Closing Covenants
(a) General
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Tab Description Page
(b) Notices and Consents
(c) Regulatory Matters and Approvals
(d) Operation of Business
(e) Full Access
(f) Confidentiality
(g) Notice of Developments
(h) Exclusivity
(i) Insurance and Indemnification
(j) Appraisal Rights
6 Post-Closing Covenants
(a) Change of Name
(b) Reserved
(c) Real Estate Matters
(d) Transfer of Domain Names
(e) Seller's Corporate Records
7 Conditions to Obligation to Close
(a) Conditions to Obligation of the Buyer and the Acquisition
Subsidiary
(b) Conditions to Obligation of the Significant Shareholders and
the Seller
8 Indemnification
(a) Agreement of the Significant Shareholders to Indemnify the
Buyer and the Acquisition Subsidiary
(b) Agreement of the Buyer to Indemnify the Significant
Shareholders
(c) Procedures for Indemnification
(d) Third Party Claims
9 Termination
(a) Termination of Agreement
(b) Effect of Termination by the Seller
(c) Effect of Termination by the Buyer
10 Miscellaneous
(a) Survival
(b) Press Releases and Public Announcements
(c) No Third-Party Beneficiaries
(d) Entire Agreement
(e) Succession and Assignment
(f) Counterparts
(g) Headings
(h) Notices
(i) Governing Law
(j) Amendments and Waivers
(k) Severability
(l) Expenses
(m) Construction
(n) Incorporation of Exhibits and Schedules
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ASSET PURCHASE AND SALE AGREEMENT
This Asset Purchase and Sale Agreement is entered into as of January
24, 2002, by and among Spectra Systems Corporation, a Delaware corporation
("Spectra"), Hunter Acquisition Corporation, a Delaware corporation and a
wholly-owned Subsidiary of the Buyer (the "Acquisition Subsidiary," and
collectively with Spectra, the "Buyer"), Hunter Associates Laboratory, Inc., a
Virginia corporation (the "Seller"), and solely for the purposes of Sections
5(i) and 7(a)(xvii) hereof, Xxxxxx X. Xxxxxx, Xxxx Xxxxxx, Xxxxxx Xxxxxx and
Xxxxxxx Xxxxxx (each a "Significant Shareholder" and collectively, the
"Significant Shareholders"). Spectra, the Acquisition Subsidiary, the Seller and
the Significant Shareholders are referred to collectively herein as the
"Parties."
This Agreement contemplates a transaction in which the Acquisition
Subsidiary will acquire certain of the assets of the Seller in exchange for
shares of the common stock of Spectra and satisfaction or assumption by the
Buyer of certain liabilities of the Seller (the "Transaction").
Now, therefore, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows.
1. Definitions.
"Acquired Assets" means all right, title, and interest in and to all of
the assets of the Seller, including without limitation all of its: (a) tangible
personal property (such as, but not limited to, machinery, equipment,
inventories of raw materials and supplies, manufactured and purchased parts,
goods in process and finished goods, furniture, automobiles, trucks, tractors,
trailers, tools, jigs, and dies); (b) all rights in the names "Hunter Associates
Laboratory, Inc.," "HunterLab," and any other variants of the same heretofore
used by the Seller, and any goodwill associated therewith; (c) Intellectual
Property, goodwill associated therewith, licenses and sublicenses granted and
obtained with respect thereto, and rights thereunder, remedies against
infringements thereof, and rights to protection of interests therein under the
laws of all jurisdictions; (d) leases, subleases, and rights thereunder, unless
explicitly identified as Excluded Assets; (e) agreements, contracts, indentures,
mortgages, instruments, Security Interests, guaranties, other similar
arrangements, and rights thereunder; (f) accounts, notes, and other receivables;
(g) claims, deposits, prepayments, refunds, causes of action, choses in action,
rights of recovery, rights of set off, and rights of recoupment; (h) franchises,
approvals, permits, licenses, orders, registrations, certificates, variances,
and similar rights obtained from governments and governmental agencies, to the
extent that such rights are transferable; (i) books, records, ledgers, files,
documents, correspondence, lists, plats, architectural plans, drawings, and
specifications, creative materials, advertising and promotional materials,
studies, reports, and other printed or written materials to the extent that such
documents relate to the Acquired Assets or the Assumed Liabilities; and (j)
Cash, except as set forth in Excluded Assets; provided, however, that the
Acquired Assets shall not include any asset explicitly identified as an
"Excluded Asset," as defined herein.
"Acquisition Subsidiary" has the meaning set forth in the preface
above.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
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"Assumed Liabilities" means: (a) the Bank Debt and the Hunter Family
Debt, each as defined herein, but in an aggregate amount not to exceed $1.5
million less Cash Retained for Debt Obligations, as defined herein; (b) those
Liabilities of the Seller incurred in the Ordinary Course of Business and
identified on the Most Recent Balance Sheet, as those terms are defined herein;
(c) service obligations pursuant to "standard terms and conditions" warranties
on equipment sold prior to the Closing; provided, however, that neither
warranties, guaranties, and indemnities beyond the Seller's standard sales
terms, nor product liability with respect to, equipment sold prior to the
Closing shall constitute an "Assumed Liability"; (d) obligations of the Seller
pursuant to agreements, contracts, leases, licenses and other arrangements
relating to the Acquired Assets to furnish goods and services or to pay for
goods and services relating to the Acquired Assets, to the extent that such
obligations arose prior to the Closing in the ordinary course of business or are
listed on Schedule 1.
"Bank Debt" shall mean the entire balance outstanding on the Closing
Date, but in any case an amount not to exceed $1 million, under the existing
line of credit issued by the Lender to the Seller.
"Buyer" has the meaning set forth in the preface above.
"Buyer Disclosure Schedule" has the meaning set forth in (S)4 below.
"Buyer Indemnitees" shall mean Spectra, the Acquisition Subsidiary and
their respective agents, representatives, officers, directors, employees,
shareholders, controlling persons and Affiliates.
"Cash" means cash and cash equivalents (including marketable securities
and short term investments) calculated in accordance with GAAP applied on a
basis consistent with the preparation of the Financial Statements.
"Cash Retained for Debt Obligations" shall mean $500,000 in Cash of the
Seller (or, if after allowing for the Cash Retained for Expenses, the Seller
owns less than $500,000 on the Closing Date, then such lesser amount), which
will remain in the Seller after Closing as an Excluded Asset.
"Cash Retained for Expenses" shall mean $50,000 in Cash of the Seller
which, if owned by the Seller on the Closing Date, will remain in the Seller
after Closing as an Excluded Asset.
"CERCLA" has the meaning set forth in (S)3(z) below.
"Closing" has the meaning set forth in (S)2(d) below.
"Closing Date" has the meaning set forth in (S)2(d) below.
"COBRA" means the requirements of Part 6 of Subtitle B of Title I of
ERISA and Code (S)4980B and of any similar state law.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidential Information" has the meaning set forth in (S)5(f) below.
"Consideration" has the meaning set forth in (S)2(c) below.
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"Consideration Shares" has the meaning set forth in (S)2(c) below.
"Delaware General Corporation Law" means the General Corporation Law of
the State of Delaware, as amended.
"Dissenting Share" means any Seller Share as to which any Seller
Stockholder has exercised his or its appraisal rights under the Virginia Stock
Corporation Act.
"Employee Benefit Plan" means any "employee benefit plan" (as such term
is defined in ERISA (S)3(3)) and any other employee benefit plan, program or
arrangement of any kind.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA
(S)3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA
(S)3(1).
"Encumbrance Documents" has the meaning set forth in (S)3(l) below.
"Environmental, Health, and Safety Requirements" shall mean all
federal, state, local and foreign statutes, regulations, ordinances and other
provisions having the force or effect of law, all judicial and administrative
orders and determinations, all contractual obligations and all common law
concerning public health and safety, worker health and safety, and pollution or
protection of the environment, including without limitation all those relating
to the presence, use, production, generation, handling, transportation,
treatment, storage, disposal, distribution, labeling, testing, processing,
discharge, release, threatened release, control, or cleanup of any hazardous
materials, substances or wastes, chemical substances or mixtures, pesticides,
pollutants, contaminants, toxic chemicals, petroleum products or byproducts,
asbestos, polychlorinated biphenyls, noise or radiation, each as amended and as
now or hereafter in effect.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means each entity which is treated as a single
employer with the Seller for purposes of Code (S)414.
"Escrow Agent" shall mean the escrow agent identified in the Escrow
Agreement, as defined herein.
"Escrow Agreement " has the meaning set forth in (S)2(c) below.
"Excluded Assets" shall mean (i) the Seller's interests in its
Subsidiaries; (ii) the corporate charter, qualifications to conduct business as
a foreign corporation, arrangements with registered agents relating to foreign
qualifications, taxpayer and other identification numbers, seals, minute books,
stock transfer books, blank stock certificates, and other documents relating to
the organization, maintenance, and existence of the Seller and its Subsidiaries
as corporations; (iii) any of the rights of the Seller under this Agreement (or
under any side agreement between the Seller on the one hand and the Buyer on the
other hand entered into on or after the date of this Agreement); (iv) any rights
of the Seller with respect to leases or subleases of Leased Real Property, as
defined herein; (v) rights in and with respect to the assets associated with the
Seller's Employee Benefit Plans; (vi) the Retained Cash, as defined below; (vii)
sums paid by Spectra into the trust account of the law firm of Rees, Broome, and
Xxxx under the "no-shop clause" of the Letter of Intent; (viii) any sums
received by the Seller in connection with the Real Estate Refinancing referred
to in Section 2(c); (ix) any net operating loss carryforwards, tax credits, and
long term capital loss carry forwards in connection with the Tax obligations of
the Seller; and (x) a receivable, as
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set forth in the Seller's Most Recent Financial Statements, from the Seller's
Subsidiary Smart Machine Vision in the current amount of $541,408.81 in
connection with funds advances.
"Excluded Liabilities" means all liabilities of the Seller or any of
its Subsidiaries not explicitly identified herein as "Assumed Liabilities".
"Financial Statements" has the meaning set forth in (S)3(g) below.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"Hunter Family Debt" shall mean the outstanding principal and accrued
interest outstanding on the Closing Date, but in any case an amount not to
exceed $1.1 million, with respect to certain loans made to the Seller by The
Xxxxxxx X. Xxxxxx Trust, Xxxxxxxxx X. Xxxxxx and Xxxxxx X. Xxxxxx.
"Indemnification Claim" shall mean a claim for indemnification under
(S)8 of this Agreement.
"Indemnitee" shall mean the party or parties seeking indemnification
under (S)8 of this Agreement.
"Indemnitor" shall mean the party or parties against whom
indemnification is sought under (S)8 of this Agreement.
"Initial Public Offering" means the firmly underwritten initial public
offering of the Spectra Common Stock.
"Intellectual Property" means: (a) all trademarks, service marks, trade
dress, logos, trade names, URLs, websites, domain names, and corporate names,
together with all translations, adaptations, derivations, and combinations
thereof and including all goodwill associated therewith, and all applications,
registrations, and renewals in connection therewith; (b) all copyrightable
works, all copyrights including all goodwill associated therewith, and all
applications, registrations, and renewals in connection therewith; (c) all trade
secrets and confidential business information (including ideas, art work,
advertising data, know-how, technical data, designs, drawings, customer and
supplier lists, pricing and cost information, and business and marketing
information, plans and proposals); (d) all computer software, whether owned or
licensed by the Seller or its Subsidiaries (including data and related
documentation), (e) all other proprietary rights; (f) all copies and tangible
embodiments thereof (in whatever form or medium); and (g) all licenses,
contracts, agreements, records, and documents related to the business of the
Seller and its Subsidiaries.
"IPO Price" has the meaning set forth in (S)2(c).
"Knowledge" with respect to a natural person, shall mean actual
knowledge after reasonable investigation. With respect to a party which is not a
natural person, Knowledge shall mean actual knowledge of any controlling
stockholder, director, officer or responsible employee after reasonable
investigation.
"Leased Real Property" means all leasehold or subleasehold estates and
other rights to use or occupy any land, buildings, structures, improvements,
fixtures or other interest in real property held by the Seller.
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"Leases" means all leases, subleases, licenses, concessions and other
agreements (written or oral), including all amendments, extensions, renewals,
guaranties and other agreements with respect thereto, pursuant to which any of
the Seller or its Subsidiaries holds any Leased Real Property, including the
right to all security deposits and other amounts and instruments deposited by or
on behalf of any of the Seller or its Subsidiaries thereunder.
"Lender" shall mean First Virginia Bank.
"Letter of Intent" shall mean that letter of intent with respect to the
Transaction dated August 21, 2001, between the Seller and Spectra.
"Liability" means any liability (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.
"Losses" shall mean any and all demands, claims, actions or causes of
action, assessments, losses, damages (including special and consequential
damages incurred by Third Party Claims claimants), liabilities, and out of
pocket costs and expenses, including without limitation, interest, penalties,
cost of external investigations (i.e., not including cost of employees of
Indemnitee) and defense, and reasonable attorneys' and other professional fees
and expenses.
"Most Recent Balance Sheet" means the balance sheet contained within
the Most Recent Financial Statements.
"Most Recent Financial Statements" has the meaning set forth in (S)3(g)
below.
"Most Recent Fiscal Quarter End" has the meaning set forth in (S)3(g)
below.
"Most Recent Fiscal Year End" has the meaning set forth in (S)3(g)
below.
"Multiemployer Plan" has the meaning set forth in ERISA (S)3(37).
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Party" has the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"Prohibited Transaction" has the meaning set forth in ERISA (S)406 and
Code (S)4975.
"Proxy Materials" means the proxy materials relating to the Special
Meeting.
"Public Report" has the meaning set forth in (S)3(e) below.
"Real Estate Refinancing" has the meaning set forth in (S)2(c) below.
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"Registration Statement" means the registration statement filed with
the Securities and Exchange Commission on Form S-1 in connection with the
Initial Public Offering.
"Requisite Stockholder Approval" means the affirmative vote of the
holders of a majority in interest of the Seller Shares in favor of the
transactions contemplated by this Agreement.
"Retained Cash" shall mean the "Cash Retained for Expenses" and the
"Cash Retained for Debt Obligations."
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than: (a) mechanic's, materialman's,
and similar liens; (b) liens for taxes not yet due and payable or for taxes that
the taxpayer is contesting in good faith through appropriate proceedings; (c)
purchase money liens and liens securing rental payments under capital lease
arrangements; and (d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.
"Seller" has the meaning set forth in the preface above.
"Seller Disclosure Schedule" has the meaning set forth in (S)3 below.
"Seller Indemnitees" shall mean the Seller and its agents,
representatives, officers, directors, employees, shareholders (including, but
not limited to, the Significant Shareholders), controlling persons and
Affiliates.
"Seller Share" means any outstanding share of the capital stock of the
Seller.
"Seller Stockholder" means any Person who or which holds any Seller
Shares.
"Significant Stockholder" has the meaning set forth in the preface
above.
"Special Meeting" has the meaning set forth in (S)5(c) below.
"Spectra Common Stock" means the Common Stock of Spectra, par value
$0.01.
"Subsidiary" means any corporation with respect to which a specified
Person (or a Subsidiary thereof) owns a majority of the common stock or has the
power to vote or direct the voting of sufficient securities to elect a majority
of the directors.
"Taxes" means any federal, state, county, local or foreign taxes,
charges, fees, levies or other assessments, including all net income, gross
income, sales and use, ad valorem, transfer, gains, profits, excise, franchise,
real and personal property, gross receipt, capital stock, production, business
and occupation, disability, employment, payroll, license, estimated, stamp,
custom duties, severance or withholding taxes or charges imposed by any
governmental entity, and includes any interest and penalties (civil or criminal)
on or additions to any such taxes and any expenses incurred in connection with
the determination, settlement or litigation of any Tax liability.
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"Tax Return" means a report, return or other information required to be
supplied to a governmental entity with respect to Taxes including, without
limitation, where permitted or required, combined or consolidated returns for
any group of entities that includes the Seller or any of its Subsidiaries.
"Third Party Claim" shall mean any claim, suit or proceeding that is
instituted against an Indemnitee by a person or entity other than an Indemnitor
and which, if prosecuted successfully, would result in a Loss for which such
Indemnitee is entitled to indemnification under (S)8 of this Agreement.
"Total Debt" shall mean the Bank Debt and the Hunter Family Debt.
"Transfer Agent" shall mean the transfer agent identified in the
Registration Statement with respect to the Spectra Common Stock.
"Virginia Stock Corporation Act" means the Virginia Stock Corporation
Act, as amended.
2. Basic Transaction.
(a) Purchase and Sale of Assets. On and subject to the terms and
conditions of this Agreement, the Buyer agrees to purchase from the Seller, and
the Seller agrees to sell, transfer, convey, and deliver to the Buyer, all of
the Acquired Assets at the Closing for the consideration specified below in this
(S)2.
(b) Assumption of Liabilities. On and subject to the terms and
conditions of this Agreement, the Buyer agrees to assume and become responsible
for all of the Assumed Liabilities at the Closing. The Buyer will not assume or
have any responsibility, however, with respect to any other obligation or
Liability of the Seller not explicitly included within the definition of Assumed
Liabilities.
(c) Consideration; Escrow. The Parties acknowledge and agree that the
consideration for the Acquired Assets (the "Consideration") shall consist of:
(i) the Consideration Shares (as defined below);
(ii) the satisfaction (or in the case of the Bank Debt, at the
Buyer's sole discretion and subject to the consent of the Lender, the
assumption) by the Buyer at Closing of not more than $1.0 million of the Total
Debt;
(iii) the retention by the Company of the Cash Retained for Debt
Obligations; provided, however, that if the Cash Retained for Debt Obligations
is less than $500,000, the Buyer shall pay the Seller at Closing, as part of the
Consideration, an amount equal to the difference between the amount of the Cash
Retained for Debt Obligations and $500,000; and
(iv) the assumption by the Buyer of any other Assumed Liabilities
explicitly identified herein.
In no case shall the aggregate value of the Consideration described in
(i), (ii), and (iii) above exceed $5.5 million.
The Seller may pay down a portion of the Total Debt prior to the
Closing as a result of the proposed restructuring of its lease of space at that
location (collectively, the "Real Estate Refinancing")
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The "Consideration Shares" shall be defined as that number of shares of
Spectra Common Stock which is equal to $4.0 million, divided by the initial per
share price at which the shares of Spectra Common Stock are purchased by
institutional investors from the underwriters in the proposed Initial Public
Offering of the Buyer (the "IPO Price"). Twenty-five percent (25%) of the total
number of the Consideration Shares shall be placed in escrow and held for a
period of twelve (12) months after the Closing Date in connection with the
Seller's indemnification obligations set forth in (S)8 of this Agreement, in
accordance with an escrow agreement in a form which is mutually agreeable to
each of the parties, to be attached hereto at the Closing as Exhibit A (the
"Escrow Agreement").
(d) The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Xxxxxxxxxxx &
Xxxxxxxx LLP in Boston, Massachusetts, commencing at 9:00 a.m. local time on the
second business day following the satisfaction or waiver of all conditions to
the obligations of the Parties to consummate the transactions contemplated
hereby (other than conditions with respect to actions the respective Parties
will take at the Closing itself) or such other date as the Parties may mutually
determine (the "Closing Date"); provided, however, that the Closing Date shall
be no later than June 30, 2002.
(e) Deliveries at the Closing. At the Closing: (i) the Seller will
deliver to the Buyer the various certificates, instruments, and documents
referred to in (S)7(a) below; (ii) the Buyer will deliver to the Seller various
certificates, instruments, and documents referred to in (S)7(b) below; (iii) the
Seller will execute and deliver to the Buyer: (A) a xxxx of sale and instruments
of assignment in forms which are mutually agreeable to each of the parties, and
which will be attached hereto at the Closing as Exhibits B1 through B#; and (B)
such other instruments of sale, transfer, conveyance, and assignment as the
Buyer and its counsel may request; (iv) the Buyer will execute and deliver to
the Seller: (A) an assumption of liabilities in a form which is mutually
agreeable to each of the parties, and which will be attached hereto at the
Closing as Exhibit C and (B) such other instruments of assumption as the Seller
and its counsel may request; and (v) the Buyer will cause the Transfer Agent to
deliver to the Seller and the Escrow Agent certificates representing the
Consideration Shares as specified in (S)2(c) above.
(f) Consideration Share Legend. Until the Consideration Shares issued
under this Agreement are registered under the Securities Act or unless the
transfer of those securities are exempt from the registration requirements of
the Securities Act, all certificates evidencing those securities, whether upon
initial issuance or upon any transfer thereof, shall bear a legend, prominently
stamped or printed thereon, reading substantially as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED
FOR INVESTMENT, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR UNDER ANY STATE SECURITIES LAWS AND
MAY NOT BE SOLD, TRANSFERRED, OR ASSIGNED EXCEPT: (i) PURSUANT TO AN
EFFECTIVE REGISTRATION THEREOF UNDER THE ACT OR (ii) IF, IN THE OPINION
OF COUNSEL FOR THE COMPANY, THE PROPOSED SALE, TRANSFER OR ASSIGNMENT
MAY BE EFFECTED WITHOUT SUCH REGISTRATION AND WILL NOT BE IN VIOLATION
OF APPLICABLE STATE SECURITIES LAWS.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
THAT CERTAIN REGISTRATION RIGHTS AGREEMENT DATED [Closing Date].
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The Consideration Shares shall be covered by a Registration
Rights Agreement on terms mutually acceptable to Spectra and the Seller,
granting the Seller the right, beginning on the date that is six months after
the Closing Date and thereafter, to demand registration on one occasion of all
of the Consideration Shares, at the expense of Spectra, subject to customary
underwriter provisions (which shall not affect the right of the Seller to sell
the Consideration Shares immediately upon registration) and securities law
requirements.
(g) Allocation. At or as promptly as practicable after the Closing, the
Parties agree to allocate the Consideration (and all other capitalizable costs)
among the Acquired Assets for all purposes (including financial accounting and
tax purposes) in accordance with the allocation schedule attached hereto as
Exhibit D, but in no event will the Parties allocate the Consideration in a
manner inconsistent with the Code.
3. Representations and Warranties Concerning the Seller and Its
Subsidiaries. The Seller represents and warrants to the Buyer that the
statements contained in this (S)3 are correct and complete as of the date of
this Agreement and 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 (S)3), except as set forth in the disclosure
schedule delivered by the Seller to the Buyer on the date hereof and initialed
by the Parties (the "Seller Disclosure Schedule"). The Seller Disclosure
Schedule will be arranged in paragraphs corresponding to the lettered and
numbered paragraphs contained in this (S)3.
(a) Organization, Qualification, and Corporate Power; Authorization of
Transaction. Each of the Seller and its Subsidiaries is a corporation duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation. Each of the Seller and its Subsidiaries is
duly authorized to conduct business and is in good standing under the laws of
each jurisdiction where such qualification is required. Each of the Seller and
its Subsidiaries has full corporate power and authority and all licenses,
permits, and authorizations necessary to carry on the businesses in which it is
engaged and to own and use the properties owned and used by it. (S)3(a) of the
Seller Disclosure Schedule lists the directors and officers of each of the
Seller and its Subsidiaries. The minute books (containing the records of
meetings of the stockholders, the board of directors, and any committees of the
board of directors), the stock certificate books, and the stock record books of
each of the Seller and its Subsidiaries are correct in all material respects.
None of the Seller and its Subsidiaries is in default under or in violation of
any provision of its charter or bylaws. The Seller has full power and authority
(including full corporate power and authority) to execute and deliver this
Agreement and to perform its obligations hereunder. This Agreement constitutes
the valid and legally binding obligation of the Seller, enforceable in
accordance with its terms and conditions.
(b) Capitalization. The entire authorized capital stock of the Seller
consists of 1,000,000 shares of common stock, of which 50,000 are designated as
voting common stock and 950,000 are designated as non-voting common stock. There
are 33,053 voting shares and 352,878 non-voting shares issued and outstanding
(each a "Seller Share"). All of the issued and outstanding Seller Shares have
been duly authorized, are validly issued, fully paid, and nonassessable, and are
held of record as set forth in (S)3(b) of the Seller Disclosure Schedule. There
are no outstanding or authorized options, warrants, purchase rights,
subscription rights, conversion rights, exchange rights, or other contracts or
commitments that could require the Seller to issue, sell, or otherwise cause to
become outstanding any of its capital stock. There are no voting trusts,
proxies, or other agreements or understandings with respect to the voting of the
capital stock of the Seller.
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(c) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will:
(i) to the Knowledge of the Seller, violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which any of the
Seller and its Subsidiaries is subject or any provision of the charter or bylaws
of any of the Seller and its Subsidiaries; or (ii) conflict with, result in a
breach of, constitute a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license, instrument, or other
arrangement to which any of the Seller and its Subsidiaries is a party or by
which it is bound or to which any of its assets is subject (or result in the
imposition of any Security Interest upon any of its assets). None of the Seller
and its Subsidiaries needs to give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any government or governmental
agency in order for the Parties to consummate the transactions contemplated by
this Agreement.
(d) Brokers' Fees. Except as set forth on (S)3(d) of the Seller
Disclosure Schedule, none of the Seller and its Subsidiaries has any liability
or obligation to pay any fees or commissions to any broker, finder, or agent
with respect to the transactions contemplated by this Agreement.
(e) Title to Assets. Except as set forth on (S)3(e) of the Seller
Disclosure Schedule, the Seller and its Subsidiaries have good and marketable
title to, or a valid leasehold interest in, the properties and assets used by
them, located on their premises, or shown on the Most Recent Balance Sheet or
acquired after the date thereof, free and clear of all Security Interests,
except for properties and assets disposed of in the Ordinary Course of Business
since the date of the Most Recent Balance Sheet. Without limiting the generality
of the foregoing, except as set forth on (S)3(e) of the Seller Disclosure
Schedule, the Seller has good and marketable title to all of the Acquired
Assets, free and clear of any Security Interest or restriction on transfer.
(f) Subsidiaries. (S)3(f) of the Seller Disclosure Schedule sets forth
for each Subsidiary of the Seller: (i) its name and jurisdiction of
incorporation; (ii) the number of shares of authorized capital stock of each
class of its capital stock; (iii) the number of issued and outstanding shares of
each class of its capital stock, the names of the holders thereof, and the
number of shares held by each such holder; and (iv) the number of shares of its
capital stock held in treasury. All of the issued and outstanding shares of
capital stock of each Subsidiary of the Seller have been duly authorized and are
validly issued, fully paid, and nonassessable. The Seller holds of record and
owns beneficially all of the outstanding shares of each Subsidiary of the
Seller, free and clear of any restrictions on transfer (other than restrictions
under the Securities Act and state securities laws), taxes, Security Interests,
options, warrants, purchase rights, contracts, commitments, equities, claims,
and demands. There are no outstanding or authorized options, warrants, purchase
rights, subscription rights, conversion rights, exchange rights, or other
contracts or commitments that could require any of the Seller and its
Subsidiaries to sell, transfer, or otherwise dispose of any capital stock of any
of its Subsidiaries or that could require any Subsidiary of the Seller to issue,
sell, or otherwise cause to become outstanding any of its own capital stock.
There are no outstanding stock appreciation, phantom stock, profit
participation, or similar rights with respect to any Subsidiary of the Seller.
There are no voting trusts, proxies, or other agreements or understandings with
respect to the voting of any capital stock of any Subsidiary of the Seller. None
of the Seller and its Subsidiaries controls directly or indirectly or has any
direct or indirect equity participation in any corporation, partnership, trust,
or other business association which is not a Subsidiary of the Seller.
(g) Financial Statements. Attached hereto as Schedule 3(g) are the
following
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financial statements (collectively the "Financial Statements"): (i) for the
Seller and its Subsidiaries' fiscal years ended June 30, 2000 and 2001 (the
"Most Recent Fiscal Year End"), audited consolidated balance sheets (each of
which has been or shall be provided by the Seller) and audited statements of
income, changes in stockholders' equity, and cash flow (each of which the Seller
will cooperate in obtaining to the extent required by the SEC in connection with
the Initial Public Offering) for the Seller and its Subsidiaries; and (ii)
unaudited, management-prepared consolidated and consolidating balance sheets and
statements of income, changes in stockholders' equity, and cash flow (the "Most
Recent Financial Statements") as of and for period between the Most Recent
Fiscal Year End and the end of the last fiscal quarter immediately prior to the
Closing Date (the "Most Recent Fiscal Quarter End") for the Seller and its
Subsidiaries. The Financial Statements (including the notes thereto) have been
prepared in accordance with GAAP applied on a consistent basis throughout the
periods covered thereby, present fairly the financial condition of the Seller
and its Subsidiaries as of such dates and the results of operations of the
Seller and its Subsidiaries for such periods, are correct and complete, and are
consistent with the books and records of the Seller and its Subsidiaries (which
books and records are correct and complete). The Most Recent Financial
Statements are subject to normal year end adjustments (which will not be
material individually or in the aggregate) and lack footnotes or other
presentation items.
(h) Events Subsequent to Most Recent Fiscal Year End. Except as set
forth on (S)3(h) of the Seller Disclosure Schedule, since the Most Recent Fiscal
Year End, there has not been any material adverse change in the business,
financial condition, operations, results of operations, or future prospects of
any of the Seller and its Subsidiaries. Without limiting the generality of the
foregoing, since that date, except as set forth on (S)3(d) of the Seller
Disclosure Schedule:
(i) none of the Seller and its Subsidiaries has sold, leased,
transferred, or assigned any of its assets, tangible or intangible,
other than for a fair consideration in the Ordinary Course of Business;
(ii) none of the Seller and its Subsidiaries has entered into any
agreement, contract, lease, or license (or series of related
agreements, contracts, leases, and licenses) either involving more than
$150,000 or outside the Ordinary Course of Business;
(iii) no party (including any of the Seller and its Subsidiaries)
has accelerated, terminated, modified, or cancelled any agreement,
contract, lease, or license (or series of related agreements,
contracts, leases, and licenses) involving more than $150,000 to which
any of the Seller and its Subsidiaries is a party or by which any of
them is bound;
(iv) none of the Seller and its Subsidiaries has imposed any
Security Interest upon any of its assets, tangible or intangible
outside the Ordinary Course of Business;
(v) none of the Seller and its Subsidiaries has made any capital
expenditure (or series of related capital expenditures) either
involving more than $50,000 or outside the Ordinary Course of Business;
(vi) none of the Seller and its Subsidiaries has made any capital
investment in, any loan to, or any acquisition of the securities or
assets of, any other Person (or series of related capital investments,
loans, and acquisitions) either involving more than $50,000 or outside
the Ordinary Course of Business;
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(vii) none of the Seller and its Subsidiaries has issued any
note, bond, or other debt security or created, incurred, assumed, or
guaranteed any indebtedness for borrowed money or capitalized lease
obligation either involving more than $50,000 in the aggregate;
(viii) none of the Seller and its Subsidiaries has delayed or
postponed the payment of accounts payable and other Liabilities outside
the Ordinary Course of Business;
(ix) none of the Seller and its Subsidiaries has cancelled,
compromised, waived, or released any right or claim (or series of
related rights and claims) either involving more than $50,000 or
outside the Ordinary Course of Business;
(x) none of the Seller and its Subsidiaries has granted any
license or sublicense of any rights under or with respect to any
Intellectual Property outside the Ordinary Course of Business;
(xi) there has been no change made or authorized in the charter
or bylaws of any of the Seller and its Subsidiaries;
(xii) none of the Seller and its Subsidiaries has issued, sold,
or otherwise disposed of any of its capital stock, or granted any
options, warrants, or other rights to purchase or obtain (including
upon conversion, exchange, or exercise) any of its capital stock;
(xiii) none of the Seller and its Subsidiaries has declared, set
aside, or paid any dividend or made any distribution with respect to
its capital stock (whether in cash or in kind) or redeemed, purchased,
or otherwise acquired any of its capital stock;
(xiv) none of the Seller and its Subsidiaries has experienced any
material damage, destruction, or loss (whether or not covered by
insurance) to its property;
(xv) none of the Seller and its Subsidiaries has made any loan
to, or entered into any other transaction with, any of its directors,
officers, and employees outside the Ordinary Course of Business;
(xvi) none of the Seller and its Subsidiaries has entered into
any employment contract or collective bargaining agreement, written or
oral, or modified the terms of any existing such contract or agreement
outside the Ordinary Course of Business;
(xvii) none of the Seller and its Subsidiaries has granted any
increase in the base compensation of any of its directors, officers,
and employees outside the Ordinary Course of Business;
(xviii) none of the Seller and its Subsidiaries has adopted,
amended, modified, or terminated any bonus, profit sharing, incentive,
severance, or other plan, contract, or commitment for the benefit of
any of its directors, officers, and employees (or taken any such action
with respect to any other Employee Benefit Plan);
(xix) none of the Seller and its Subsidiaries has made any other
material change in employment terms for any of its directors, officers,
and employees outside the Ordinary Course of Business;
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(xx) none of the Seller and its Subsidiaries has made or pledged
to make any charitable or other capital contribution outside the
Ordinary Course of Business;
(xxi) there has not been any other material occurrence, event,
incident, action, failure to act, or transaction outside the Ordinary
Course of Business involving any of the Seller and its Subsidiaries;
and
(xxii) none of the Seller and its Subsidiaries has committed to
any of the foregoing.
(i) Undisclosed Liabilities. None of the Seller and its Subsidiaries
has any liability (and there is no basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand against
any of them giving rise to any liability), except for: (i) liabilities set forth
on the face of the Most Recent Balance Sheet (rather than in any notes thereto);
and (ii) liabilities which have arisen after the Most Recent Fiscal Quarter End
in the Ordinary Course of Business (none of which results from, arises out of,
relates to, is in the nature of, or was caused by any breach of contract, breach
of warranty, tort, infringement, or violation of law).
(j) Legal Compliance. Each of the Seller, its Subsidiaries, and their
respective predecessors and Affiliates has complied, in all material respects,
with all applicable laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and charges thereunder) of
federal, state, local, and foreign governments (and all agencies thereof), and
no action, suit, proceeding, hearing, investigation, charge, complaint, claim,
demand, or notice has been filed or commenced against any of them alleging any
failure so to comply.
(k) Tax Matters.
(i) Except as set forth on (S)3(k) of the Seller Disclosure
Schedule, each of the Seller and its Subsidiaries has filed all Tax
Returns that it was required to file. All such Tax Returns were correct
and complete in all material respects. All Taxes owed by any of the
Seller and its Subsidiaries (whether or not shown on any Tax Return)
have been paid. None of the Seller and its Subsidiaries currently is
the beneficiary of any extension of time within which to file any Tax
Return. No claim has ever been made by an authority in a jurisdiction
where any of the Seller and its Subsidiaries does not file Tax Returns
that it is or may be subject to taxation by that jurisdiction. There
are no Security Interests on any of the assets of any of the Seller and
its Subsidiaries that arose in connection with any failure (or alleged
failure) to pay any Tax. None of the Seller and its Subsidiaries has
waived any statute of limitations in respect of Taxes or agreed to any
extension of time with respect to a Tax assessment or deficiency.
(ii) (S)3(k) of the Seller Disclosure Schedule lists all Tax
Returns filed with respect to the Seller for taxable periods ended on
or after June 30, 1999, indicates those Tax Returns that have been
audited, and indicates those Tax Returns that are the subject of audit.
The Seller has delivered to the Buyer correct and complete copies of
all federal Tax Returns, examination reports, and statements of
deficiencies assessed against or agreed to by the Seller since June 30,
1999.
(iii) Each of the Seller and its Subsidiaries has withheld and
paid all Taxes required to have been withheld and paid in connection
with amounts paid or owing to any employee, independent contractor,
creditor, stockholder, or other third party.
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(iv) (S)3(k) of the Seller Disclosure Schedule sets forth the
following information with respect to the Seller as of the most recent
practicable date (as well as on an estimated pro forma basis as of the
Closing giving effect to the consummation of the transactions
contemplated hereby): (A) the basis of the Seller in its assets; (B)
the amount of any net operating loss, net capital loss, unused
investment or other credit, unused foreign Tax, or excess charitable
contribution allocable to the Seller; and (C) the amount of any
deferred gain or loss allocable to the Seller arising out of any
Deferred Intercompany Transaction.
(v) The unpaid Taxes of the Seller and its Subsidiaries: (A) did
not, as of the Most Recent Fiscal Quarter End, exceed the reserve for
Tax liability (rather than any reserve for deferred Taxes established
to reflect timing differences between book and Tax income) set forth on
the face of the Most Recent Balance Sheet (rather than in any notes
thereto); and (B) do not exceed that reserve as adjusted for the
passage of time through the Closing Date in accordance with the past
custom and practice of the Seller and its Subsidiaries in filing their
Tax Returns.
(l) Real Property.
(i) Neither the Seller nor any of its Subsidiaries owns any real
property.
(ii) (S)3(l)(ii) of the Seller Disclosure Schedule sets forth the
address of each parcel of Leased Real Property, and a true and complete
list of all leases for each such Leased Real Property (including the
date and name of the parties to such lease document). Each of the
Seller and its Subsidiaries has delivered to the Buyer a true and
complete copy of each such lease document, and in the case of any oral
lease, a written summary of the material terms of such lease. Except as
set forth in (S)3(l)(ii) of the Seller Disclosure Schedule, with
respect to each of the leases:
(A) such lease is legal, valid, binding, enforceable and in
full force and effect;
(B) the transaction contemplated by this Agreement does
not require the consent of any other party to such lease (except
for those leases for which lease Consents (as hereinafter defined)
are obtained), will not result in a breach of or default under such
lease, and will not otherwise cause such lease to cease to be
legal, valid, binding, enforceable and in full force and effect on
identical terms following the Closing;
(C) None of the Seller's or its Subsidiaries' possession
and quiet enjoyment of the Leased Real Property under such lease
has been disturbed and there are no disputes with respect to such
lease;
(D) none of the Seller, its Subsidiaries or, to the
Knowledge of the Seller, any other party to the lease is in breach
or default under such lease, and no event has occurred or
circumstance exists which, with the delivery of notice, the passage
of time or both, would constitute such a breach or default, or
permit the termination, modification or acceleration of rent under
such lease;
(E) no security deposit or portion thereof deposited with
respect to such lease has been applied in respect of a breach or
default under such lease which has not been redeposited in full;
(F) none of the Seller or its Subsidiaries owes, or will owe
in the future,
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any brokerage commissions or finder's fees with respect to such
lease;
(G) the other party to such lease is not an affiliate of,
and otherwise does not have any economic interest in, any of the
Seller or its Subsidiaries;
(H) none of the Seller or its Subsidiaries has subleased,
licensed or otherwise granted any Person the right to use or
occupy such Leased Real Property or any portion thereof;
(I) none of the Seller or its Subsidiaries has
collaterally assigned or granted any other security interest in
such lease or any interest therein; and
(J) there are no liens or encumbrances on the estate or
interest created by such lease.
(iii) The Leased Real Property identified in (S)3(l)(ii),
comprises all of the real property used or intended to be used in, or
otherwise related to, the Seller's and its Subsidiaries' business; and
none of the Seller or its Subsidiaries is a party to any agreement or
option to purchase any real property or interest therein.
(iv) To the Knowledge of the Seller there is no condemnation,
expropriation or other proceeding in eminent domain, pending or
threatened, materially and adversely affecting any parcel of Leased
Real Property or any portion thereof or interest therein. There is no
injunction, decree, order, writ or judgment outstanding, nor any
claims, litigation, administrative actions or similar proceedings,
pending or threatened, relating to the ownership, lease, use or
occupancy of the Leased Real Property or any portion thereof, or the
operation of the Seller's or its Subsidiary's business as currently
conducted thereon.
(v) All certificates of occupancy, permits, licenses,
franchises, approvals and authorizations (collectively, the "Real
Property Permits") of all governmental authorities, board of fire
underwriters, association or any other entity having jurisdiction over
the Leased Real Property, which are required to use or occupy the
Leased Real Property or operate the Seller's or its Subsidiary's
business as currently conducted thereon, have been issued and are in
full force and effect. (S)3(l)(ix) of the Seller Disclosure Schedule
lists all material Real Property Permits held by any of the Seller and
its Subsidiaries with respect to each parcel of Leased Real Property.
The Seller has delivered to the Buyer a true and complete copy of all
Real Property Permits. None of the Seller or its Subsidiaries has
received any notice from any governmental authority or other entity
having jurisdiction over the Leased Real Property threatening a
suspension, revocation, modification or cancellation of any Real
Property Permit and there is no basis for the issuance of any such
notice or the taking of any such action.
(vi) The classification of each parcel of Leased Real Property
under applicable zoning laws, ordinances and regulations permits the
use and occupancy of such parcel and the operation of the Seller's and
its Subsidiaries' business as currently conducted thereon, and permits
the Improvements located thereon as currently constructed, used and
occupied. The parking spaces, loading docks and other facilities at
such parcel comply with such zoning laws, ordinances and regulations.
The Seller's and its Subsidiaries' use or occupancy of the Leased Real
Property or any portion thereof or the operation of the Seller's or its
Subsidiaries' business as currently conducted thereon is not dependent
on a "permitted nonconforming use" or "permitted non-conforming
structure" or similar variance, exemption or approval from
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any governmental authority.
(vii) To the Knowledge of the Seller, the current use and occupancy
of the Leased Real Property and the operation of the Seller's and its
Subsidiaries' business as currently conducted thereon do not violate any
easement, covenant, condition, restriction or similar provision in any
instrument of record or other unrecorded agreement affecting such Leased
Real Property (the "Encumbrance Documents"). None of the Seller or its
Subsidiaries has received any notice of violation of any Encumbrance
Documents, and there is no basis for the issuance of any such notice or the
taking of any action for such violation.
(viii) None of the Leased Real Property or any portion thereof is
located in a flood hazard area (as defined by the Federal Emergency
Management Agency).
(m) Intellectual Property.
(i) The Seller and its Subsidiaries own or have the right to use
pursuant to license, sublicense, agreement, or permission all Intellectual
Property used in the operation of the businesses of the Seller and its
Subsidiaries as presently conducted. Each item of Intellectual Property
owned or used by any of the Seller and its Subsidiaries immediately prior
to the Closing hereunder will be owned or available for use by the Seller
or the Subsidiary on identical terms and conditions immediately subsequent
to the Closing hereunder. Each of the Seller and its Subsidiaries has taken
all necessary and desirable action to maintain and protect each item of
Intellectual Property that it owns or uses.
(ii) To the best Knowledge of the Seller, none of the Seller and its
Subsidiaries has interfered with, infringed upon, misappropriated, or
otherwise come into conflict with any Intellectual Property rights of third
parties, and none of the directors and officers (and employees with
responsibility for Intellectual Property matters) of the Seller and its
Subsidiaries has ever received any charge, complaint, claim, demand, or
notice alleging any such interference, infringement, misappropriation, or
violation (including any claim that any of the Seller and its Subsidiaries
must license or refrain from using any Intellectual Property rights of any
third party). To the Knowledge of the Seller or the directors and officers
(and employees with responsibility for Intellectual Property matters) of
the Seller or its Subsidiaries, no third party has interfered with,
infringed upon, misappropriated, or otherwise come into conflict with any
Intellectual Property rights of any of the Seller or its Subsidiaries.
(iii) (S)3(m)(iii) of the Seller Disclosure Schedule identifies each
patent or registration which has been issued to any of the Seller and its
Subsidiaries with respect to any of its Intellectual Property, identifies
each pending patent application or application for registration which any
of the Seller and its Subsidiaries has made with respect to any of its
Intellectual Property, and identifies each license, agreement, or other
permission which any of the Seller and its Subsidiaries has granted to any
third party with respect to any of its Intellectual Property (together with
any exceptions) except licenses granted in the ordinary course of business
in conjunction with the sale of instruments by the Seller. The Seller has
delivered to the Buyer correct and complete copies of all such patents,
registrations, applications, licenses, agreements, and permissions (as
amended to date) and have made available to the Buyer correct and complete
copies of all other written documentation evidencing ownership and
prosecution (if applicable) of each such item. (S)3(m)(iii) of the Seller
Disclosure Schedule also identifies each trade name or unregistered
trademark used by any of
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the Seller and its Subsidiaries in connection with any of its businesses.
With respect to each item of Intellectual Property required to be
identified in (S)3(m)(iii) of the Seller Disclosure Schedule:
(A) the Seller and its Subsidiaries possess all right, title, and
interest in and to the item, free and clear of any Security Interest,
license, or other restriction;
(B) the item is not subject to any outstanding injunction,
judgment, order, decree, ruling, or charge;
(C) no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand is pending or, to the Knowledge of any of
the directors and officers (and employees with responsibility for
Intellectual Property matters) of the Seller and its Subsidiaries, is
threatened which challenges the legality, validity, enforceability,
use, or ownership of the item; and
(D) none of the Seller and its Subsidiaries has ever agreed to
indemnify any Person for or against any interference, infringement,
misappropriation, or other conflict with respect to the item.
(iv) (S)3(m)(iv) of the Seller Disclosure Schedule identifies each
item of Intellectual Property that any third party owns and that any of the
Seller and its Subsidiaries uses pursuant to license, sublicense,
agreement, or permission. The Seller and its Subsidiaries have delivered to
the Buyer correct and complete copies of all such licenses, sublicenses,
agreements, and permissions (as amended to date). With respect to each item
of Intellectual Property required to be identified in (S)3(m)(iv) of the
Seller Disclosure Schedule:
(A) the license, sublicense, agreement, or permission covering
the item is legal, valid, binding, enforceable, and in full force and
effect;
(B) the license, sublicense, agreement, or permission will
continue to be legal, valid, binding, enforceable, and in full force
and effect on identical terms following the consummation of the
transactions contemplated hereby (including the assignments and
assumptions referred to in (S)2 above);
(C) to the Knowledge of the Seller, no party to the license,
sublicense, agreement, or permission is in breach or default, and no
event has occurred which with notice or lapse of time would constitute
a breach or default or permit termination, modification, or
acceleration thereunder;
(D) to the Knowledge of the Seller, no party to the license,
sublicense, agreement, or permission has repudiated any provision
thereof;
(E) with respect to each sublicense, the representations and
warranties set forth in subsections (A) through (D) above are true and
correct with respect to the underlying license;
(F) to the Knowledge of the Seller, the underlying item of
Intellectual Property is not subject to any outstanding injunction,
judgment, order, decree, ruling, or charge;
(G) no action, suit, proceeding, hearing, investigation, charge,
complaint,
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claim, or demand is pending or, to the Knowledge of any of the
directors and officers (and employees with responsibility for
Intellectual Property matters) of the Seller and its
Subsidiaries, is threatened which challenges the legality,
validity, or enforceability of the underlying item of
Intellectual Property; and
(H) none of the Seller and its Subsidiaries has granted
any sublicense or similar right with respect to the license,
sublicense, agreement, or permission.
(v) To the Knowledge of any of the directors and officers (and
employees with responsibility for Intellectual Property matters) of
the Seller and its Subsidiaries, none of the Seller and its
Subsidiaries will interfere with, infringe upon, misappropriate, or
otherwise come into conflict with, any Intellectual Property rights of
third parties as a result of the continued operation of its businesses
as presently conducted.
(vi) None of the directors and officers (and employees with
responsibility for Intellectual Property matters) of the Seller and
its Subsidiaries has received any affirmative notice of any new
products, inventions, procedures, or methods of manufacturing or
processing that any competitors or other third parties have developed
which reasonably could be expected to supersede or make obsolete any
product or process of any of the Seller and its Subsidiaries.
(vii) (S)3(m)(vii) of the Seller Disclosure Schedule sets forth
the form and placement of the proprietary legends and copyright
notices displayed in or on all software programs and other products of
the Seller and its Subsidiaries.
(viii) The Seller and its Subsidiaries have used all commercially
reasonable efforts to protect its trade secrets. To the Knowledge of
the Seller and its Subsidiaries, there has been no material breach of
its efforts to protect trade secrets. The source code and system
documentation relating to all software programs of the Seller and its
Subsidiaries: (A) have been, to the Knowledge of the Seller,
maintained in confidence at all times; and (B) have been disclosed by
the Seller and its Subsidiaries only to employees and consultants
having "a need to know" the contents thereof in connection with the
performance of their duties to the Seller and its Subsidiaries.
(ix) Except as set forth in (S)3(m)(ix) of the Seller
Disclosure Schedule, all personnel, including employees, agents,
consultants, and contractors, who have contributed to or participated
in the conception and development of software programs, technical
documentation, or other Intellectual Property on behalf of the Seller
or its Subsidiaries either: (A) have been party to a "work-for-hire"
arrangement or agreement with the Seller or its Subsidiaries, which by
its terms is effective to vest in the Seller or its Subsidiaries full,
effective, exclusive, and original ownership of all tangible and
intangible property thereby arising; or (B) have executed appropriate
instruments of assignment in favor of the Seller or its Subsidiaries
as assignee that have conveyed to the Seller or its Subsidiaries full,
effective, and exclusive ownership of all tangible and intangible
property thereby arising.
(n) Tangible Assets. The Seller and its Subsidiaries own or lease all
buildings, machinery, equipment, and other tangible assets necessary for the
conduct of their businesses as presently conducted. Each such tangible asset is
free from material defects (patent and latent), has been maintained in
accordance with normal industry practice, is in adequate operating condition and
repair (subject to normal wear and tear), and is suitable for the purposes for
which it presently is used.
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(o) Inventory. The inventory of the Seller and its Subsidiaries consists
of raw materials and supplies, manufactured and purchased parts, goods in
process, and finished goods, all of which finished inventory is saleable and no
material quantity of which is slow-moving, obsolete, damaged, or defective,
subject only to the reserve for inventory writedown set forth in the Most Recent
Balance Sheet as adjusted for the passage of time through the Closing Date in
accordance with the past custom and practice of the Seller and its Subsidiaries.
(p) Contracts. (S)3(p) of the Seller Disclosure Schedule lists the
following contracts and other agreements to which any of the Seller and its
Subsidiaries is a party:
(i) any agreement (or group of related agreements) for the lease of
personal property to or from any Person providing for lease payments in
excess of $150,000 per annum;
(ii) any agreement (or group of related agreements) for the purchase
or sale of raw materials, commodities, supplies, products, or other
personal property, or for the furnishing or receipt of services, the
performance of which will extend over a period of more than one year,
result in a material loss to any of the Seller and its Subsidiaries, or
involve consideration in excess of $150,000;
(iii) any agreement concerning a partnership or joint venture;
(iv) any agreement (or group of related agreements) under which it
has created, incurred, assumed, or guaranteed any indebtedness for borrowed
money, or any capitalized lease obligation, in excess of $50,000 or under
which it has imposed a Security Interest on any of its assets, tangible or
intangible;
(v) any agreement concerning confidentiality or noncompetition,
except for Non-disclosure Agreements entered into with the customers of the
Seller or its Subsidiaries in the Ordinary Course of Business;
(vi) any agreement with any of the Significant Shareholders and
their Affiliates (other than the Seller and its Subsidiaries);
(vii) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other material plan or
arrangement for the benefit of its current or former directors, officers,
and employees;
(viii) any collective bargaining agreement;
(ix) any agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis providing annual
compensation in excess of $50,000 or providing severance benefits;
(x) any agreement under which it has advanced or loaned any amount
to any of its directors, officers, and employees outside the Ordinary
Course of Business;
(xi) any written agreement under which the consequences of a default
or termination could have a material adverse effect on the business,
financial condition, operations, results of operations, or future prospects
of any of the Seller and its Subsidiaries; or
(xii) any other agreement (or group of related agreements) the
performance of
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which involves consideration in excess of $150,000.
The Seller has delivered to the Buyer a correct and complete copy of each
written agreement listed in (S)3(p) of the Seller Disclosure Schedule (as
amended to date) and a written summary setting forth the terms and conditions of
each oral agreement referred to in (S)3(p) of the Seller Disclosure Schedule.
Except as set forth in (S)3(p) of the Seller Disclosure Schedule, with respect
to each such agreement: (A) the agreement is legal, valid, binding, enforceable,
and in full force and effect; (B) the agreement will continue to be legal,
valid, binding, enforceable, and in full force and effect on identical terms
following the consummation of the transactions contemplated hereby; (C) to the
Knowledge of the Seller, no party is in breach or default, and no event has
occurred which with notice or lapse of time would constitute a breach or
default, or permit termination, modification, or acceleration, under the
agreement; and (D) to the Knowledge of the Seller, no party has repudiated any
provision of the agreement.
(q) Notes and Accounts Receivable. All notes and accounts receivable of
the Seller and its Subsidiaries are reflected fairly on their books and records,
are valid receivables subject to no setoffs or counterclaims, are current and
collectible, and will be collected in accordance with their terms at their
recorded amounts, subject only to the reserve for bad debts set forth on the
Most Recent Balance Sheet (rather than in any notes thereto) as adjusted for the
passage of time through the Closing Date in accordance with the past custom and
practice of the Seller and its Subsidiaries.
(r) Reserved.
(s) Insurance. (S)3(s) of the Seller Disclosure Schedule sets forth the
following information with respect to each insurance policy (including policies
providing property, casualty, liability, and workers' compensation coverage and
bond and surety arrangements) to which any of the Seller and its Subsidiaries
has been a party, a named insured, or otherwise the beneficiary of coverage at
any time within the past 10 years:
(i) the name, address, and telephone number of the agent;
(ii) the name of the insurer, the name of the policyholder, and the
name of each covered insured;
(iii) the policy number and the period of coverage;
(iv) the scope (including an indication of whether the coverage was
on a claims made, occurrence, or other basis) and amount (including a
description of how deductibles and ceilings are calculated and operate) of
coverage; and
(v) a description of any retroactive premium adjustments or other
loss-sharing arrangements.
With respect to each such insurance policy: (A) the policy is legal, valid,
binding, enforceable, and in full force and effect in accordance with its terms;
(B) the policy will continue to be legal, valid, binding, enforceable, and in
full force and effect on identical terms following the consummation of the
transactions contemplated hereby; (C) neither any of the Seller and its
Subsidiaries nor, to the Knowledge of the Seller, any other party to the policy
is in breach or default (including with respect to the payment of premiums or
the giving of notices), and no event has occurred which, with notice or the
lapse of time, would constitute such a breach or default, or permit termination,
modification, or acceleration, under the policy; and (D) to the Knowledge of the
Seller no party to the policy has repudiated any
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provision thereof. Each of the Seller and its Subsidiaries has been covered
during the past 10 years by insurance in scope and amount customary and
reasonable for the businesses in which it has engaged during the aforementioned
period. (S)3(s) of the Seller Disclosure Schedule describes any self-insurance
arrangements affecting any of the Seller and its Subsidiaries.
(t) Litigation. (S)3(t) of the Seller Disclosure Schedule sets forth each
instance in which any of the Seller and its Subsidiaries: (i) is subject to any
outstanding injunction, judgment, order, decree, ruling, or charge; or (ii) is a
party or, to the Knowledge of any of the directors and officers (and employees
with responsibility for litigation matters) of the Seller and its Subsidiaries,
is threatened to be made a party to any action, suit, proceeding, hearing, or
investigation of, in, or before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction or before any
arbitrator. None of the actions, suits, proceedings, hearings, and
investigations set forth in (S)3(t) of the Seller Disclosure Schedule could
result in any material adverse change in the business, financial condition,
operations, results of operations, or future prospects of any of the Seller and
its Subsidiaries. None of the directors and officers (and employees with
responsibility for litigation matters) of the Seller and its Subsidiaries has
any reason to believe that any such action, suit, proceeding, hearing, or
investigation may be brought or threatened against any of the Seller and its
Subsidiaries within any applicable statute of limitations.
(u) Product Warranty. Each product manufactured, sold, leased, or delivered
by any of the Seller and its Subsidiaries has been in conformity with all
applicable contractual commitments and all express and implied warranties, and
none of the Seller and its Subsidiaries has any liability (and there is no basis
to the Knowledge of the Seller for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand against
any of them giving rise to any liability) for replacement or repair thereof or
other damages in connection therewith, subject only to the reserve for product
warranty claims set forth on the face of the Most Recent Balance Sheet and
listed in "other accrued expenses" thereto (rather than in any notes thereto) as
adjusted for the passage of time through the Closing Date in accordance with the
past custom and practice of the Seller and its Subsidiaries. No product
manufactured, sold, leased, or delivered by any of the Seller and its
Subsidiaries is subject to any guaranty, warranty, or other indemnity beyond the
applicable standard terms and conditions of sale or lease. (S)3(u) of the Seller
Disclosure Schedule includes copies of the standard terms and conditions of sale
or lease for each of the Seller and its Subsidiaries (containing applicable
guaranty, warranty, and indemnity provisions).
(v) Product Liability. None of the Seller and its Subsidiaries has any
liability (and there is no basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand against
any of them giving rise to any liability) arising out of any injury to
individuals or property as a result of the ownership, possession, or use of any
product manufactured, sold, leased, or delivered by any of the Seller and its
Subsidiaries.
(w) Employees. To the Knowledge of any of the directors and officers (and
employees with responsibility for employment matters) of the Seller and its
Subsidiaries, no executive, key employee, or group of employees has any plans to
terminate employment with any of the Seller and its Subsidiaries. None of the
Seller and its Subsidiaries is a party to or bound by any collective bargaining
agreement, nor has any of them experienced any strikes, grievances, claims of
unfair labor practices, or other collective bargaining disputes. None of the
Seller and its Subsidiaries has committed any unfair labor practice. None of the
Significant Shareholders and the directors and officers (and employees with
responsibility for employment matters) of the Seller and its Subsidiaries has
any Knowledge of any
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organizational effort presently being made or threatened by or on behalf of any
labor union with respect to employees of any of the Seller and its Subsidiaries.
(x) Employee Benefits.
(i) (S)3(x) of the Seller Disclosure Schedule lists each Employee
Benefit Plan that any of the Seller and its Subsidiaries maintains, to
which any of the Seller and its Subsidiaries contributes or has any
obligation to contribute, or with respect to which any of the Seller and
its Subsidiaries has any material liability or potential liability.
(A) Each such Employee Benefit Plan (and each related trust,
insurance contract, or fund) has been maintained, funded and
administered in accordance with the terms of such Employee Benefit Plan
and the terms of any applicable collective bargaining agreement and
complies in form and in operation in all material respects with the
applicable requirements of ERISA, the Code, and other applicable laws.
(B) All contributions (including all employer contributions and
employee salary reduction contributions) which are due have been made
within the time periods prescribed by ERISA and the Code to each such
Employee Benefit Plan which is an Employee Pension Benefit Plan. All
premiums or other payments for all periods ending on or before the
Closing Date have been paid with respect to each such Employee Benefit
Plan which is an Employee Welfare Benefit Plan.
(C) Each such Employee Benefit Plan which is intended to meet the
requirements of a "qualified plan" under Code (S)401(a) has received a
determination from the Internal Revenue Service that such Employee
Benefit Plan is so qualified.
(D) The market value of assets under each such Employee Benefit
Plan which is an Employee Pension Benefit Plan (other than any
Multiemployer Plan) equals or exceeds the present value of all vested
and nonvested Liabilities thereunder (determined in accordance with
current funding assumptions).
(ii) None of the Seller and its Subsidiaries maintains, contributes to
or has an obligation to contribute to, or has any material liability or
potential liability with respect to, any Employee Welfare Benefit Plan
providing medical, health, or life insurance or other welfare-type benefits
for current or future retired or terminated directors, officers or
employees of the Seller or any of its Subsidiaries (or any spouse or other
dependent thereof) other than in accordance with COBRA.
(y) Guaranties. None of the Seller and its Subsidiaries is a guarantor or
otherwise is liable for any liability or obligation (including indebtedness) of
any other Person.
(z) Environmental, Health, and Safety Matters.
(i) Each of the Seller, its Subsidiaries, and their respective
predecessors and Affiliates has, in all material respects, complied and is
in compliance with all Environmental, Health, and Safety Requirements.
(ii) Without limiting the generality of the foregoing, each of the
Seller, its Subsidiaries and their respective Affiliates has obtained and
complied with, and is in compliance with, all permits, licenses and other
authorizations pursuant to Environmental, Health, and Safety Requirements
for the occupation of its facilities
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and the operation of its business; a list of all such permits, licenses and
other authorizations is set forth on the Seller Disclosure Schedule.
(iii) Neither the Seller, its Subsidiaries, nor their respective
predecessors or Affiliates has received any written or oral notice, report
or other information regarding any actual or alleged violation of
Environmental, Health, and Safety Requirements, or any liabilities or
potential liabilities (whether accrued, absolute, contingent, unliquidated
or otherwise), including any investigatory, remedial or corrective
obligations, relating to any of them or its facilities arising under
Environmental, Health, and Safety Requirements.
(iv) None of the following exists at any property or facility owned or
operated by the Seller or its Subsidiaries: (A) underground storage tanks;
(B) asbestos-containing material in any form or condition; (C) materials or
equipment containing polychlorinated biphenyls; or (D) landfills, surface
impoundments, or disposal areas.
(v) None of the Seller, its Subsidiaries, or their respective
predecessors or Affiliates has treated, stored, disposed of, arranged for
or permitted the disposal of, transported, handled, or released any
substance, including without limitation any hazardous substance, or owned
or operated any property or facility (and no such property or facility is
contaminated by any such substance) in a manner that has given or would
give rise to liabilities, including any liability for response costs,
corrective action costs, personal injury, property damage, natural
resources damages or attorney fees, pursuant to the Comprehensive
Environmental Response, Compensation and liability Act of 1980, as amended
("CERCLA"), the Solid Waste Disposal Act, as amended ("SWDA") or any other
Environmental, Health, and Safety Requirements.
(vi) Neither this Agreement nor the consummation of the transaction
that is the subject of this Agreement will result in any obligations for
site investigation or cleanup, or notification to or consent of government
agencies or third parties, pursuant to any of the so-called
"transaction-triggered" or "responsible property transfer" Environmental,
Health, and Safety Requirements.
(vii) Neither the Seller, its Subsidiaries, nor any of their respective
predecessors or Affiliates has, either expressly or by operation of law,
assumed or undertaken any liability, including without limitation any
obligation for corrective or remedial action, of any other Person relating
to Environmental, Health, and Safety Requirements.
(viii) No facts, events or conditions relating to the past or present
facilities, properties or operations of the Seller, its Subsidiaries, or
any of their respective predecessors or Affiliates will prevent, hinder or
limit continued compliance with Environmental, Health, and Safety
Requirements, give rise to any investigatory, remedial or corrective
obligations pursuant to Environmental, Health, and Safety Requirements, or
give rise to any other liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise) pursuant to Environmental, Health, and Safety
Requirements, including without limitation any relating to onsite or
offsite releases or threatened releases of hazardous materials, substances
or wastes, personal injury, property damage or natural resources damage.
(aa) Certain Business Relationships with the Seller and Its Subsidiaries.
Except as set forth on(S)3(aa) of the Seller Disclosure Schedule, none of the
Significant Shareholders and their Affiliates have been involved in any business
arrangement or
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relationship with any of the Seller and its Subsidiaries within the past 12
months, and none of the Significant Shareholders and their Affiliates own any
asset, tangible or intangible, which is used in the business of any of the
Seller and its Subsidiaries.
(bb) Major Vendors and Customers. (S)3(bb) of the Seller Disclosure
Schedule lists each licensor, developer, remarketer, distributor, and supplier
of property or services to, and each licensee, end-user, or customer of, the
Seller and its Subsidiaries to whom the Seller or its Subsidiaries paid or
billed in the aggregate $150,000 or more during the most recent fiscal year,
together with, in each case, the amount paid or billed during such period.
Except as disclosed on (S)3(bb) of the Seller Disclosure Schedule, no vendor or
customer listed therein has at any time since January 1, 2001, indicated to the
Seller or its Subsidiaries any intent to materially reduce its business with the
Seller or its Subsidiaries or its purchase of the products and services of the
Seller or its Subsidiaries.
(cc) Disclosure. None of the information that the Seller or its
Subsidiaries will supply specifically for use in the Registration Statement will
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made therein, in the light of the
circumstances under which they will be made, not misleading. Further, the
representations and warranties contained in this (S)3 do not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements and information contained in this (S)3 not
misleading.
4. Representations and Warranties of Spectra and the Acquisition
Subsidiary. Each of Spectra and the Acquisition Subsidiary jointly and severally
represents and warrants to the Seller that the statements contained in this (S)4
are correct and complete as of the date of this Agreement and 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
(S)4), except as set forth in the Buyer Disclosure Schedule. The Buyer
Disclosure Schedule will be arranged in paragraphs corresponding to the numbered
and lettered paragraphs contained in this (S)4.
(a) Organization. Spectra is a corporation duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
incorporation.
(b) Capitalization. The authorized capital stock of Spectra consists of:
(a) 23,000,000 shares of Spectra Common Stock of which, as of December 31, 2001,
1,045,769 shares were issued and outstanding, and 849,500 shares were reserved
for issuance upon exercise of outstanding options or options available for
granting under Spectra's stock option plans, 4,136,096 were reserved for
issuance pursuant to certain warrants; and (b) 10,007,178 shares of Preferred
Stock, $0.01 par value, of which, as of December 31, 2001, 9,214,744 shares were
issued and outstanding. Pursuant to the Initial Public Offering, but in any case
dependent upon market conditions, Spectra intends to offer no less than $50
million of its Common Stock in a firmly underwritten offering by underwriters of
national reputation. Upon the effectiveness of the Initial Public Offering, the
authorized capital stock of Spectra shall be as set forth in the Registration
Statement relating to such Initial Public Offering.
(c) Authorization of Transaction. Each of Spectra and the Acquisition
Subsidiary has full power and authority (including full corporate power and
authority) to execute and deliver this Agreement and to perform its obligations
hereunder. This Agreement constitutes the valid and legally binding obligation
of each of Spectra and the Acquisition Subsidiary, enforceable in accordance
with its terms and conditions.
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(d) Noncontravention. To the Knowledge of any director or officer of
Spectra or the Acquisition Subsidiary, neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated hereby,
will: (i) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which either Spectra or the Acquisition
Subsidiary is subject or any provision of the charter or bylaws of either
Spectra or the Acquisition Subsidiary; or (ii) conflict with, result in a breach
of, constitute a default under, result in the acceleration of, create in any
party the right to accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license, instrument, or other
arrangement to which either Spectra or the Acquisition Subsidiary is a party or
by which it is bound or to which any of its assets is subject, except where the
violation, conflict, breach, default, acceleration, termination, modification,
cancellation, or failure to give notice would not have a material adverse effect
on the ability of the Parties to consummate the transactions contemplated by
this Agreement. To the Knowledge of any director or officer of Spectra or the
Acquisition Subsidiary, and other than in connection with the provisions of the
Delaware General Corporation Law, the Securities Exchange Act, the Securities
Act and the state securities laws, neither Spectra nor the Acquisition
Subsidiary needs to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental agency in
order for the Parties to consummate the transactions contemplated by this
Agreement, except where the failure to give notice, to file, or to obtain any
authorization, consent, or approval would not have a material adverse effect on
the ability of the Parties to consummate the transactions contemplated by this
Agreement.
(e) Brokers' Fees. Neither Spectra nor the Acquisition Subsidiary has any
liability or obligation to pay any fees or commissions to any broker, finder, or
agent with respect to the transactions contemplated by this Agreement for which
any of the Seller and its Subsidiaries could become liable or obligated.
(f) Disclosure. None of the information in the Registration Statement, and
none of the information that Spectra or the Acquisition Subsidiary will supply
specifically for use in the Proxy Materials will contain any untrue statement of
a material fact or omit to state a material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they will
be made, not misleading.
(g) Organization of Acquisition Subsidiary. The Acquisition Subsidiary is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware, with full corporate power and authority to carry
out the transactions contemplated by this Agreement. All of the outstanding
capital stock of the Acquisition Subsidiary has been duly authorized and validly
issued and is fully paid and nonassessable. All of the outstanding capital stock
of the Acquisition Subsidiary is now owned by Spectra and will be owned by it as
of the Closing Date, and no third party has any right to or interest in any
issued or unissued capital stock of the Acquisition Subsidiary.
(h) Validity of Stock to be Issued. The Consideration Shares to be issued
upon consummation of the transactions contemplated hereby will, when issued as
provided herein, be duly authorized, validly issued, fully paid and
nonassessable.
(i) Tax Matters.
(i) The Buyer has filed all Tax Returns that it was required to file.
All Taxes owed by the Buyer (whether or not shown on any Tax Return) have
been paid. There are no Security Interests on any of the assets of the
Buyer that arose in connection with any failure (or alleged failure) to pay
any Tax.
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(ii) The Buyer has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder, or other third party.
(iii) The Buyer has not waived any statute of limitations in respect
of Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency.
(iv) The Buyer is not a party to any Tax allocation or sharing
agreement. The Buyer has not been a member of an Affiliated Group filing a
consolidated federal income Tax Return (other than a group the common
parent of which was the Buyer).
(j) Product Liability. The Buyer has no liability (and there is no basis
for any present or future action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand against any of them giving rise to any
liability) arising out of any injury to individuals or property as a result of
the ownership, possession, or use of any product manufactured, sold, leased, or
delivered by the Buyer.
(k) Legal Compliance. The Buyer and its predecessors and Affiliates have
complied, in all material respects, with all applicable laws (including rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and
charges thereunder) of federal, state, local, and foreign governments (and all
agencies thereof), and no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, demand, or notice has been filed or commenced against
any of them alleging any failure so to comply.
(l) Litigation. (S)4(l) of the Buyer Disclosure Schedule sets forth each
instance in which the Buyer: (i) is subject to any outstanding injunction,
judgment, order, decree, ruling, or charge; or (ii) is a party or, to the
Knowledge of the Buyer and the directors and officers (and employees with
responsibility for litigation matters) of the Buyer, is threatened to be made a
party to any action, suit, proceeding, hearing, or investigation of, in, or
before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator. None of the
actions, suits, proceedings, hearings, and investigations set forth in (S)4(l)
of the Buyer Disclosure Schedule could result in any material adverse change in
the business, financial condition, operations, results of operations, or future
prospects of the Buyer. None of the Buyer and the directors and officers (and
employees with responsibility for litigation matters) of the Buyer has any
reason to believe that any such action, suit, proceeding, hearing, or
investigation may be brought or threatened against the Buyer.
(m) Financial Statements. The financial statements incorporated in the
Registration Statement (including the notes thereto) have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
covered thereby, present fairly the financial condition of the Buyer as of such
dates and the results of operations of the Buyer for such periods, are correct
and complete, and are consistent with the books and records of the Buyer (which
books and records are correct and complete).
5. Pre-Closing Covenants. The Parties agree as follows with respect to
the period between the execution of this Agreement and the Closing:
(a) General. Each of the Parties will use its reasonable best efforts to
take all action and to do all things necessary, proper, or advisable in order to
consummate and make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the closing conditions set forth in
(S)7 below).
-26-
(b) Notices and Consents. The Seller will give any notices (and will cause
each of its Subsidiaries to give any notices) to third parties, and will use its
reasonable best efforts to obtain (and will cause each of its Subsidiaries to
use its reasonable best efforts to obtain) any third party consents, that the
Buyer reasonably may request.
(c) Regulatory Matters and Approvals. Each of the Parties will (and the
Seller will cause each of its Subsidiaries to) give any notices to, make any
filings with, and use its reasonable best efforts to obtain any authorizations,
consents, and approvals of governments and governmental agencies in connection
with the matters referred to in (S)3(c) above. Without limiting the generality
of the foregoing, subject to the provisions of the next sentence, the Seller
will call a special meeting of its stockholders (the "Special Meeting"), as soon
as practicable in order that the stockholders may consider and vote upon the
adoption of this Agreement and the approval of the Merger in accordance with the
Virginia Stock Corporation Act. The Seller will mail the Proxy Materials to its
stockholders within five (5) business days after the effectiveness of the
Initial Public Offering. The Proxy Materials will contain the affirmative
recommendation of the board of directors of the Seller in favor of the adoption
of this Agreement.
(d) Operation of Business. The Seller will not (and will not cause or
permit any of its Subsidiaries to) engage in any practice, take any action, or
enter into any transaction outside the Ordinary Course of Business. Without
limiting the generality of the foregoing:
(i) none of the Seller and its Subsidiaries will authorize or
effect any change in its charter or bylaws;
(ii) none of the Seller and its Subsidiaries will grant any options,
warrants, or other rights to purchase or obtain any of its capital stock or
issue, sell, or otherwise dispose of any of its capital stock (except upon
the conversion or exercise of options, warrants, and other rights currently
outstanding, or in connection with the Seller's Employee Stock Ownership
Plan);
(iii) none of the Seller and its Subsidiaries will declare, set
aside, or pay any dividend or distribution with respect to its capital
stock (whether in cash or in kind), or redeem, repurchase, or otherwise
acquire any of its capital stock, in either case outside the Ordinary
Course of Business, except in connection with the divestiture of its
subsidiary SmartVision and in connection with its Employee Stock Ownership
Plan;
(iv) none of the Seller and its Subsidiaries will issue any note,
bond, or other debt security or create, incur, assume, or guarantee any
indebtedness for borrowed money or capitalized lease obligation outside the
Ordinary Course of Business;
(v) none of the Seller and its Subsidiaries will impose any
Security Interest upon any of its assets outside the Ordinary Course of
Business;
(vi) none of the Seller and its Subsidiaries will make any capital
investment in, make any loan to, or acquire the securities or assets of any
other Person outside the Ordinary Course of Business;
(vii) none of the Seller and its Subsidiaries will make any change in
employment terms for any of its directors, officers, and employees outside
the Ordinary Course of Business; and
(viii) none of the Seller and its Subsidiaries will commit to any of
the foregoing.
-27-
(e) Full Access. The Seller will (and will cause each of its Subsidiaries
to) permit representatives of the Buyer to have full access at all reasonable
times, and in a manner so as not to interfere with the normal business
operations of the Seller and its Subsidiaries, to all premises, properties,
personnel, books, records (including tax records), contracts, and documents of
or pertaining to each of the Seller and its Subsidiaries. Each of the Buyer and
the Acquisition Subsidiary will treat and hold as such any Confidential
Information it receives from any of the Seller and its Subsidiaries in the
course of the reviews contemplated by this (S)5(e), will not use any of the
Confidential Information except in connection with this Agreement, and, if this
Agreement is terminated for any reason whatsoever, agrees to return to the
Seller all tangible embodiments (and all copies) thereof which are in its
possession.
(f) Confidentiality.
(i) Spectra and the Seller are parties to a Non-Disclosure
Agreement dated _________, 2001. To the extent that the provisions of this
(S)5(f) conflict with such Non-Disclosure Agreement, the more stringent
provisions shall bind the Parties.
(ii) Each of the Parties shall, and shall use all commercially
reasonable efforts to cause its employees, representatives and agents to,
hold in strict confidence and not disclose to any person without the prior
written consent of the disclosing Party and shall not use, in any manner
except in connection with the transactions contemplated hereby, any
confidential business or technical information obtained from the disclosing
Party in connection with the transactions contemplated hereby (the
"Confidential Information"). In the event that this Agreement terminates
for any reason, each of the Parties shall return or destroy all materials
in its possession containing any such Confidential Information, including
all copies, extracts, adaptations, and transcriptions thereof.
Notwithstanding the foregoing, a Party may disclose Confidential
Information: (A) where necessary to any regulatory authorities or
governmental agencies pursuant to legal process; or (B) if required by
court order or decree, provided that in so doing such Party shall give
notice to the disclosing Party of the impending disclosure and afford the
disclosing Party with such opportunity to protect its interest in the
confidentiality of such information as is reasonable in the circumstances.
(g) Notice of Developments. Each Party will give prompt written notice to
the others of any material adverse development causing a breach of any of its
own representations and warranties in (S)3 and (S)4 above. No disclosure by any
Party pursuant to this ss.5(g), however, shall be deemed to amend or supplement
the Disclosure Schedule or to prevent or cure any misrepresentation, breach of
warranty, or breach of covenant.
(h) Exclusivity. Section 2(c) of that certain Letter of Intent dated
August 21, 2001 by and between Spectra and the Seller regarding the payments to
be made by the Buyer to the Seller in consideration for the agreement by the
Seller to cease all efforts to sell itself to another party shall remain in full
force and effect and in its entirety shall be incorporated by reference into and
made a part of this Agreement.
(i) Appraisal Rights; Grant of Proxy as to Affirmative Vote. Each
Significant Shareholder agrees that he, she, or it will not exercise appraisal
rights under the Virginia Stock Corporation Act and that he, she, or it will
grant Xxxxxx Xxxxxx an irrevocable proxy to vote all of his, her, or its Seller
Shares in favor of the transactions contemplated by this Agreement, whether at
the Special Meeting or as shareholder approval may otherwise be obtained by the
Seller.
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6. Post-Closing Covenants. The Seller agrees as follows with respect to
the period subsequent to the Closing:
(a) Change of Name. On or immediately after the Closing Date, the Seller
will amend its Articles of Incorporation so as to change its corporate name to
"HL Liquidating Corporation" or if unavailable, a similar name, and will
thereafter take such action as may reasonably be requested by the Buyer to make
its present corporate name available to the Buyer.
(b) Reserved.
(c) Real Estate Matters. The Seller will use its best efforts to cause the
landlord of the Leased Real Property, upon consummation of the Real Estate
Refinancing, to accept an assignment and novation of the Seller's interest in
the Sublease, as defined in Section 7(a)(xv) below, such that the Leased Real
Property shall be leased directly from the landlord of the Leased Real Property
to the Buyer on the same terms as those in the Sublease.
(d) Transfer of Domain Names. The Seller will use its reasonable best
efforts to assist Buyer in the transfer of all domain names owned or used by the
Seller to the Buyer as of the Closing Date. Such transfer shall be at the
expense of the Buyer.
(e) Seller's Corporate Records. The Seller will make available for
inspection and copying all books and records retained by it upon reasonable
request for access thereto, and if at any time within three (3) years after the
Closing, the Seller proposes to discard or destroy such books and records, it
will first offer to transfer them without charge to the Buyer.
7. Conditions to Obligation to Close.
(a) Conditions to Obligation of the Buyer. The obligation of the Buyer to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
(i) this Agreement and the transactions contemplated hereby shall
have received the Requisite Stockholder Approval;
(ii) the Seller and its Subsidiaries shall have procured all of the
third party consents to the consummation of the transactions contemplated
by this Agreement, including but not limited to the consent of the Lender;
(iii) the representations and warranties set forth inss.3 above shall
be true and correct in all material respects at and as of the Closing Date;
(iv) the Seller shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(v) no action, suit, or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree, ruling, or charge would:
(A) prevent consummation of any of the transactions contemplated by this
Agreement; (B) cause any of the transactions contemplated by this Agreement
to be rescinded following consummation; (C) affect adversely the right of
the Buyer to own the capital stock of the Acquisition Subsidiary and to
control the Acquisition Subsidiary and its Subsidiaries; or (D) affect
adversely the right of any of the Acquisition Subsidiary and its
Subsidiaries to own its assets
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and to operate its businesses (and no such injunction, judgment, order,
decree, ruling, or charge shall be in effect);
(vi) the Seller shall have delivered to the Buyer a certificate to
the effect that each of the conditions specified above in ss.7(a)(i)-(v) is
satisfied in all respects;
(vii) the Seller and the Significant Shareholders shall have
cooperated in all reasonable respects with the Buyer in providing any
information about it or them requested by the Buyer or underwriters of the
Initial Public Offering in connection therewith;
(viii) the Parties shall have received all other authorizations,
consents, and approvals of governments and governmental agencies referred
to in ss.3(c) above;
(ix) the Buyer and the Acquisition Subsidiary shall have received
from counsel to the Seller an opinion in form and substance as set forth in
Exhibit E attached hereto, addressed to the Buyer and the Acquisition
Subsidiary, and dated as of the Closing Date;
(x) all actions to be taken by the Seller in connection with
consummation of the transactions contemplated hereby, including the
approval of the Seller's shareholders at a duly called shareholder's
meeting, and all certificates, opinions, instruments, and other documents
required to effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to the Buyer and the Acquisition
Subsidiary;
(xi) Xxxxxx X. Xxxxxx shall have executed and delivered a one (1)
year employment agreement in form and substance satisfactory to the Buyer;
(xii) such key other employees of the Seller as shall be designated
by the Buyer (at its sole discretion) shall have entered into employment
agreements in form and substance satisfactory to the Buyer;
(xiii) prior to the Closing, the Seller shall have used its best
efforts to cause the assignment or sublicense to the Buyer of third-party
intellectual property and other rights necessary to the conduct of the
business of the Seller;
(xiv) there shall have been no material adverse changes in the
business, operations, assets and financial condition of the Seller through
the Closing;
(xv) the Buyer shall have negotiated and entered into a sublease
from the Seller of that part of the Leased Property currently leased and
occupied by the Seller (the "Sublease"), on terms reasonably satisfactory
to the Buyer in its sole discretion, which terms shall include the absolute
right of the Buyer to immediately terminate the Sublease and to quit
occupancy of such space in the event that the landlord thereof does not
agree, upon consummation of the Real Estate Refinancing, to the assignment
and novation of the Seller's interest in the Sublease, such that the Leased
Real Property shall be leased directly from the landlord of the Leased Real
Property to the Buyer;
(xvi) the Seller shall have executed and delivered the Escrow
Agreement;
(xvii) each of the Significant Shareholders shall have executed and
delivered to Xxxxxx Xxxxxx an irrevocable proxy regarding the voting of
their respective Seller
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Shares in favor of the consummation of the transactions contemplated hereby
substantially in the form attached hereto as Exhibit F; and
(xviii) the results of the Buyer's due diligence investigation shall
be satisfactory to the Buyer in its sole discretion.
The Buyer and the Acquisition Subsidiary may waive any condition specified in
this (S)7(a) if they execute a writing so stating at or prior to the Closing.
(b) Conditions to Obligation of the Seller. The obligation of the Seller
to consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in (S)4 above
shall be true and correct in all material respects at and as of the
Closing Date;
(ii) each of Spectra and the Acquisition Subsidiary shall have
performed and complied with all of its covenants hereunder in all material
respects through the Closing;
(iii) each of Spectra and the Acquisition Subsidiary shall have
delivered to the Seller a certificate to the effect that each of the
conditions specified above in (S)7(b)(i)-(ii) is satisfied in all respects;
(iv) this Agreement shall have received the Requisite Stockholder
Approval;
(v) the Parties shall have received all other authorizations,
consents, and approvals of governments and governmental agencies referred
to in (S)3(c) above;
(vi) the Seller shall have received from counsel to Spectra and
the Acquisition Subsidiary an opinion in form and substance as set forth in
Exhibit G attached hereto, addressed to the Seller, and dated as of the
Closing Date;
(vii) all actions to be taken by Spectra or the Acquisition
Subsidiary in connection with consummation of the transactions contemplated
hereby and all certificates, opinions, instruments, and other documents
required to effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to the Seller;
(viii) the Buyer shall have executed and delivered the Registration
Rights Agreement in the form attached hereto as Exhibit H;
(ix) Spectra shall have consummated the Initial Public Offering no
later than May 15, 2002, upon the terms described in the penultimate
sentence of (S)4(b); and
(x) the Buyer shall have negotiated and entered into the Sublease
from the Seller of that part of the Leased Property currently leased and
occupied by the Seller, on terms reasonably satisfactory to the Seller,
which terms shall include the absolute right of the Buyer to immediately
terminate the Sublease and to quit occupancy of such space in the event
that the landlord thereof does not agree, upon consummation of the Real
Estate Refinancing, to the assignment and novation of the Seller's interest
in the Sublease, such that the Leased Real Property shall be leased
directly from the landlord of the Leased Real Property to the Buyer
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The Seller may waive any condition specified in this (S)7(b) if it executes a
writing so stating at or prior to the Closing.
8. Indemnification.
(a) Agreement of the Seller to Indemnify the Buyer Indemnitees. Subject to
the terms and conditions of this Section, the Seller agrees to indemnify,
defend, and hold harmless the Buyer Indemnitees, and each of them, from,
against, for, and in respect of any and all Losses asserted against, or paid,
suffered or incurred by the Buyer Indemnitees and resulting from, based upon, or
arising out of:
(i) the inaccuracy of any representation or warranty of the Seller
or its Subsidiaries contained in this Agreement or in any document
furnished by the Seller or its Subsidiaries at the time such representation
or warranty was made or deemed to be made;
(ii) a breach of or failure to perform any covenant or agreement of
the Seller, any of its Subsidiaries, or any Significant Shareholder made in
this Agreement;
(iii) any unknown or undisclosed liability arising in connection with
events occurring prior to the Closing Date; or
(iv) any failure of the Seller, its Subsidiaries or the Significant
Shareholders or any administrator or trustee prior to the Closing Date to
comply with any law, including, without limitation, ERISA, applicable to
any employee benefit, welfare, incentive, retirement or other plan
established or maintained by the Seller or its Subsidiaries for its
employees or to conform to the requirements of any such plan.
(b) Agreement of the Buyer to Indemnify the Seller Indemnitees. Subject to
the terms and conditions of this Section, the Buyer agrees to indemnify, defend,
and hold harmless the Seller Indemnitees, and each of them, from, against, for,
and in respect of any and all Losses asserted against, or paid, suffered or
incurred by, the Significant Shareholder Indemnitees and resulting from, based
upon, or arising out of:
(i) the inaccuracy of any representation or warranty of the Buyer
contained in this Agreement; or
(ii) a breach of or failure to perform any covenant or agreement of
the Buyer made in this Agreement.
(c) Procedures for Indemnification.
(i) An Indemnification Claim shall be made by an Indemnitee by
delivery of a written notice to the Indemnitor requesting indemnification
and specifying in reasonable detail the basis on which indemnification is
sought and the amount of asserted Losses and, in the case of a Third Party
Claim, containing (by attachment or otherwise) such other information as
such Indemnitee shall have concerning such Third Party Claim.
(ii) If the Indemnification Claim involves a Third Party Claim the
procedures set forth in ss.8(d) hereof shall be observed by the Indemnitee
and the Indemnitor.
(iii) If the Indemnification Claim involves a matter other than a
Third Party Claim, the Indemnitor shall have thirty (30) days to object to
such Indemnification
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Claim by delivery of a written notice of such objection specifying in
reasonable detail the basis for such objection. Failure to so object in a
timely manner shall constitute a final and binding acceptance of the
Indemnification Claim by the Indemnitor, and the Indemnification Claim
shall be paid in accordance with subsection (d) hereof as a Finally
Determined Claim (as that term is defined below). If an objection is timely
interposed by the Indemnitor, then the Indemnitor and the Indemnitee shall
negotiate in good faith for a period of sixty (60) business days from the
date the Indemnitee receives such objection prior to commencing any formal
legal action, suit or proceeding with respect to such Indemnification
Claim.
(iv) Upon final determination of the amount of an Indemnification
Claim, whether by agreement between the Indemnitor and the Indemnitee or by
an arbitration award or other adjudication, including the taking of all
relevant appeals (a "Final Determination"), the Indemnitor shall pay the
amount of such Indemnification Claim (a "Finally Determined Claim") within
ten (10) days of the Final Determination. Any Spectra Shares then held by
the Escrow Agent shall be available for, but shall not limit, the discharge
of the obligations of the Seller as an Indemnitor hereunder in accordance
with the provisions of the Escrow Agreement.
(d) Third Party Claims. The obligations and liabilities of the Parties
hereunder with respect to a Third Party Claim shall be subject to the following
terms and conditions:
(i) The Indemnitee shall give the Indemnitor written notice of a
Third Party Claim promptly after receipt by the Indemnitee of notice
thereof, and the Indemnitor may undertake and have control of the defense,
compromise and settlement thereof with counsel of its own choosing
reasonably acceptable to the Indemnitee. The failure of the Indemnitee to
notify promptly the Indemnitor of such claim shall not relieve the
Indemnitor of any liability that it may have with respect to such claim
except to the extent the Indemnitor demonstrates that the defense of such
claim is prejudiced materially by such failure. The assumption of the
defense, compromise and settlement of any such Third Party Claim by the
Indemnitor shall be an acknowledgment of the obligation of the Indemnitor
to indemnify the Indemnitee with respect to such claim hereunder, unless
the Indemnitor gives written notice to the Indemnitee within fifteen (15)
days after receipt of the Indemnitee's notice that it disputes its
liability to Indemnitee with respect to such Third Party Claim
notwithstanding its assumption of the defense thereof. If the Indemnitee
desires to participate in, but not control, any such defense, compromise
and settlement, it may do so at its sole cost and expense.
(ii) If the Indemnitor fails or refuses to undertake or to continue
the defense of such Third Party Claim within fifteen (15) days after
written notice has been given to the Indemnitor by the Indemnitee, the
Indemnitee shall have the right to control the defense, compromise and
settlement of such Third Party Claim with counsel of its own choosing
reasonably acceptable to Indemnitor, and the costs and expense of the
Indemnitee in connection therewith shall be included as part of the
indemnification claims of the Indemnitee hereunder. If the Indemnitee shall
elect to exercise such right, the Indemnitor shall have the right to
participate in, but not control, the defense, compromise and settlement of
such Third Party Claim at its sole cost and expense.
(iii) No settlement of a Third Party Claim as to which notice has been
given to Indemnitor by Indemnitee pursuant to (S)8(e)(i) shall be made
without the written consent of the Indemnitor which will not be withheld
unreasonably. Consent shall be presumed in the case of settlements of
Twenty Thousand Dollars ($20,000) or less where the Indemnitor has not
responded within fifteen (15) business days of notice of
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a proposed settlement. If the Indemnitor assumes the defense of such a
Third Party Claim, no compromise or settlement thereof may be effected by
the Indemnitor without the Indemnitee's consent (which will not be
unreasonably withheld by the Indemnitee) unless: (A) there is no finding or
admission of any violation of law or any violation of the rights of any
person and no effect on any other claim that may be made against the
Indemnitee; (B) the sole relief provided is monetary damages that are paid
in full by the Indemnitor; and (C) the compromise or settlement includes,
as a term thereof, the giving by the claimant or the plaintiff to the
Indemnitee of an unconditional release, in form and substance reasonably
satisfactory to the Indemnitee, from all liability in respect of such Third
Party Claim.
(iv) In connection with the defense, compromise or settlement of any
Third Party Claim, the Parties shall execute such powers of attorney as may
reasonably be necessary or appropriate to permit participation of counsel
selected by any party hereto and, as may reasonably be related to any such
claim or action, shall provide access to the counsel, accountants and other
representatives of each party during normal business hours to all
properties, personnel, books, tax records, contracts, commitments and all
other business records of such other party and will furnish to such other
party copies of all such documents as may reasonably be requested
(certified, if requested) provided that all requests for information and
exercise of rights of access hereunder shall be conducted through a
representative designated by the party upon whom such request is made and
in a manner that will not impact adversely and unreasonably the normal
conduct of such party's business.
9. Termination.
(a) Termination of Agreement. Any of the Parties may terminate this
Agreement, with the prior authorization of its board of directors where
appropriate (whether before or after stockholder approval) as provided below:
(i) the Parties may terminate this Agreement by mutual written
consent at any time prior to the Closing;
(ii) the Buyer may terminate this Agreement by giving written notice
to the Seller at any time prior to the Closing: (A) in the event the Seller
has breached any material representation, warranty, or covenant contained
in this Agreement in any material respect, the Buyer has notified the
Seller of the breach, and the breach has continued without cure for a
period of 30 days after the notice of breach; or (B) if the Closing shall
not have occurred on or before June 30, 2002, by reason of the failure of
any condition precedent under (S)9(a) hereof (unless the failure results
primarily from Spectra or the Acquisition Subsidiary breaching any
representation, warranty, or covenant contained in this Agreement);
(iii) the Seller may terminate this Agreement by giving written notice
to the Buyer at any time prior to the Closing: (A) in the event that
Spectra or the Acquisition Subsidiary has breached any material
representation, warranty, or covenant contained in this Agreement in any
material respect, the Seller has notified Spectra and the Acquisition
Subsidiary of the breach, and the breach has continued without cure for a
period of 30 days after the notice of breach; or (B) if the Closing shall
not have occurred on or before June 30, 2002, by reason of the failure of
any condition precedent under (S)9(b) hereof (unless the failure results
primarily from the Seller breaching any representation, warranty, or
covenant contained in this Agreement);
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(iv) any Party may terminate this Agreement by giving written notice
to the other Parties at any time after the Special Meeting in the event the
Transaction fails to receive the Requisite Stockholder Approval.
(b) Effect of Termination by the Seller. (i) If the Seller gives
affirmative notice to the Buyer that it does not intend to consummate the
Transaction, for any reason other than that set forth in (S)9(a)(iii) above, or
if, as a result of a failure by the Seller to act in good faith, the Closing has
not occurred by June 30, 2002, then within five days of that date (or within
five days of such earlier date on which the Seller provides notice to the Buyer
that it does not intend to consummate the Transaction), the Seller shall pay to
the Buyer: (A) a termination or break-up fee of ten percent (10%) of the
consideration agreed to hereunder plus (B) all documented fees and expenses
(including but not limited to the fees and expenses of counsel, accountants,
consultants, and other advisors, and in any case not to exceed $150,000 in
total) incurred by the Buyer in connection with the Transaction.
(ii) Furthermore, if the actions in (S)9(b)(i) shall have occurred,
and if within six months from the date of the this Agreement, the Seller then
enters into or becomes subject to a transaction pursuant to which any party or
parties other than the Buyer (the "Other Party") acquires all or substantially
all of the assets or stock of the Seller (the "Other Party Transaction"), then
within five days after the consummation of the Other Party Transaction, either
the Seller shall pay or shall cause the Other Party to pay: (A) a termination or
break-up fee of ten percent (10%) of the fair market value of any and all
consideration received by the Seller and its shareholders pursuant to the Other
Party Transaction plus (B) all documented fees and expenses (including but not
limited to the fees and expenses of counsel, accountants, consultants, and other
advisors) incurred by the Buyer in connection with the Transaction; provided,
however, that any amount payable under this sentence shall be reduced by any
amounts already paid pursuant to (S)9(b)(i).
(iii) The parties acknowledge that a decision by the Buyer to abandon
the Transaction for any reason, including, without limitation, dissatisfaction
with any material information discovered during the Buyer's due diligence
investigation or with the contractual terms offered to the Buyer by third
parties in transactions ancillary to the Transaction, shall not be imputed to
the Seller and thereby trigger a break-up fee under this paragraph, except if
the Seller has acted in bad faith.
(c) Effect of Termination by the Buyer. (i) If the Buyer gives affirmative
notice to the Seller that it does not intend to consummate the transaction
because: (A) the Initial Public Offering has been abandoned; or (B) the Buyer is
unable or unwilling to fulfill a Closing condition that is under the Buyer's
control, or if, as a result of a failure by the Buyer to act in good faith, the
Closing has not occurred by June 30, 2002, then within five days of that date
(or within five days of such earlier date on which the Buyer provides notice to
the Seller that it does not intend to consummate the Transaction), the Buyer
shall reimburse the Seller's documented fees and expenses (including but not
limited to the fees and expenses of counsel, accountants, consultants, and other
advisors, and in any case not to exceed $150,000 in total) incurred by the
Seller in connection with the Real Estate Refinancing.
(ii) The parties acknowledge that a decision by the Buyer to abandon
the Transaction because of dissatisfaction with any material information
discovered during the Buyer's due diligence investigation, actions in bad faith
by the Company, or the failure of a Closing condition not under the Buyer's
control, shall not trigger the Buyer's reimbursement obligation under this
paragraph.
10. Miscellaneous.
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(a) Survival. All representations, warranties, covenants, indemnities and
other agreements made by any Party to this Agreement herein, shall be deemed
made on and as of the Closing Date as though such representations, warranties,
covenants, indemnities and other agreements were made on and as of such date,
and all such representations, warranties, covenants, indemnities and other
agreements shall survive for a period of two (2) years after the Closing Date;
provided, however, that the representations set forth in (S)3(a) (Organization,
Qualification and Corporate Power), 3(b) (Capitalization), 3(c)
(Noncontravention), 3(k) (Tax Matters), 3(x) (Employee Benefits) and 3(z)
(Environmental, Health, and Safety Matters) shall survive until the expiration
of the applicable statute of limitations. Notwithstanding anything herein to the
contrary, any representation, warranty, covenant, agreement or indemnity which
is the subject of a claim which is asserted in writing prior to the expiration
of the applicable period set forth above shall survive solely with respect to
such claim until the final resolution thereof.
(b) Press Releases and Public Announcements. No Party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement without the prior written approval of the other Parties;
provided, however, that any Party may make any public disclosure it believes in
good faith is required by applicable law or any listing or trading agreement
concerning its publicly-traded securities (in which case the disclosing Party
will use its reasonable best efforts to advise the other Party prior to making
the disclosure).
(c) No Third-Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns; provided, however, that: (i) the provisions in
(S)2 above concerning payment of the Merger Consideration are intended for the
benefit of the stockholders of the Seller; and (ii) the provisions in (S)5(i)
above concerning insurance and indemnification are intended for the benefit of
the individuals specified therein and their respective legal representatives.
(d) Entire Agreement. This Agreement (including the exhibits, schedules
and documents referred to herein) constitutes the entire agreement among the
Parties and supersedes any prior understandings, agreements, or representations
by or among the Parties, written or oral, to the extent they related in any way
to the subject matter hereof; provided, however, that Section 2(c) of the Letter
of Intent (regarding the payments to be made by the Buyer to the Seller in
consideration for the agreement by the Seller to cease all efforts to sell
itself to another party) shall remain in effect and Spectra's obligation to make
monthly payments thereunder shall be extended from March 1, 2002, to June 1,
2002 (or, if the Closing shall occur prior to June 1, 2002, then such obligation
shall only continue to the first day of the earlier month in which the Closing
occurs).
(e) Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other Parties.
(f) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(g) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
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(h) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to the Seller:
Hunter Associates Laboratory, Inc.
00000 Xxxxxx Xxxxx Xxxx
Xxxxxx, Xxxxxxxx 00000
Attn: President
Copy to:
Xxxx, Xxxxxx & Xxxx, P.C.
0000 Xxxxxxxx Xxxx
Xxxxx Xxxxx
Xxxxxx, XX 00000
Attn: Xxxx X. Xxxxxx, Esq.
If to the Buyer or the Acquisition Subsidiary:
Spectra Systems Corporation
000 Xxxxx Xxxx Xxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxx 00000
Attn: President
Copy to:
Xxxxxxxxxxx & Xxxxxxxx LLP
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxxx Xxxxx Xxxxx, Esq.
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Parties
notice in the manner herein set forth.
(i) Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Delaware without giving effect
to any choice or conflict of law provision or rule (whether of the State of
Delaware or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Delaware.
(j) Amendments and Waivers. The Parties may mutually amend any provision
of this Agreement at any time prior to the Effective Time with the prior
authorization of their
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respective boards of directors; provided, however, that any amendment effected
subsequent to stockholder approval will be subject to the restrictions contained
in the Delaware General Corporation Law. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by all
of the Parties. No waiver by any Party of any default, misrepresentation, or
breach of warranty or covenant hereunder, whether intentional or not, shall be
deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
(k) Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(l) Expenses. Each of the Parties will bear its own costs and expenses
(including legal fees and expenses) incurred in connection with this Agreement
and the transactions contemplated hereby.
(m) Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context otherwise requires. The
word "including" shall mean including without limitation.
(n) Incorporation of Exhibits and Schedules. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the date first above written.
BUYER
By: /s/ Xxxxx Xxxxxxx
--------------------------
Title: President
--------------------------
SELLER
By: /s/ Xxxxxx Xxxxxx
--------------------------
Title: President
--------------------------
ACQUISITION SUBSIDIARY
By: /s/ Xxxxx Xxxxxxx
--------------------------
Title: President
--------------------------
XXXXXX XXXXXX (solely as to(S)(S)5(i) and 7(a)(xvii) hereof)
By: /s/ Xxxxxx Xxxxxx
--------------------------
Title:
--------------------------
XXXX XXXXXX (solely as to(S)(S)5(i) and 7(a)(xvii) hereof)
By: /s/ Xxxx Xxxxxx
--------------------------
Title:
--------------------------
XXXXXX XXXXXX (solely as to(S)(S)5(i) and 7(a)(xvii) hereof)
By: /s/ Xxxxxx Xxxxxx
--------------------------
Title:
--------------------------
XXXXXXX XXXXXX (solely as to(S)(S)5(i) and 7(a)(xvii) hereof)
By: /s/ Xxxxxxx Xxxxxx
--------------------------
Title:
--------------------------
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